NEXTEL INTERNATIONAL INC, 424B1, 1998-08-06

NEXTEL INTERNATIONAL INC
424B1, 1998-08-06
RADIOTELEPHONE COMMUNICATIONS

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PROSPECTUS

NEXTEL LOGO

OFFER TO EXCHANGE
12 1/8% SENIOR DISCOUNT NOTES DUE
APRIL 15, 2008 FOR ANY AND ALL OUTSTANDING
12 1/8% SENIOR DISCOUNT NOTES DUE APRIL 15, 2008
------------------------

THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME ON
WEDNESDAY, SEPTEMBER 2, 1998 UNLESS EXTENDED.

NEXTEL INTERNATIONAL, INC., a Washington corporation ("Nextel
International" or the "Company"), is hereby offering (the "Exchange Offer"),
upon the terms and subject to the conditions set forth in this Prospectus and in
the accompanying Letter of Transmittal (the "Letter of Transmittal"), to
exchange its 12 1/8% Senior Discount Notes due April 15, 2008 (the "Exchange
Notes"), which have been registered under the Securities Act of 1933, as amended
(the "Securities Act"), pursuant to a registration statement of which this
Prospectus is a part (together with all amendments and exhibits thereto, the
"Registration Statement"), for an equal principal amount at maturity of its
outstanding 12 1/8% Senior Discount Notes due April 15, 2008 (the "Private
Notes"), of which $730.0 million aggregate principal amount at maturity was
issued on March 12, 1998 and is outstanding on the date hereof.

The Private Notes were offered and sold by the Company in a transaction
that was exempt from the registration requirements of the Securities Act (the
"1998 Notes Offering"), which was consummated on March 12, 1998 (the "Closing
Date").

The form and terms of the Exchange Notes are identical in all material
respects to those of the Private Notes, except for certain transfer restrictions
and registration rights relating to the Private Notes and except for certain
interest provisions related to such registration rights. The Exchange Notes will
evidence the same indebtedness as the Private Notes (which they replace) and
will be entitled to the benefits of an Indenture dated as of March 12, 1998,
governing the Private Notes and the Exchange Notes (the "Indenture"). The
Exchange Notes will mature on April 15, 2008. No cash interest will be payable
on the Exchange Notes prior to October 15, 2003. Interest on the Exchange Notes
will accrue from April 15, 2003 and will be payable in cash on each April 15 and
October 15, commencing October 15, 2003. The Exchange Notes and payments due in
respect thereof are solely the obligation of the Company and will not be
guaranteed by the Operating Companies (as defined herein). The Private Notes and
the Exchange Notes are sometimes collectively referred to herein as the "Notes."
See "The Exchange Offer" and "Description of the Notes."

The Notes may be redeemed, at the option of the Company, in whole or in
part, at any time on or after April 15, 2003, at the redemption prices set forth
herein, plus accrued and unpaid interest, if any, to the date of redemption. In
addition, prior to April 15, 2001, the Company may redeem up to 35% of the
aggregate principal amount at maturity of the Notes with the proceeds of one or
more sales of Capital Stock (other than Redeemable Stock) (each as defined
herein) at the redemption price set forth herein; provided, however, that after
any such redemption at least $474.5 million aggregate principal amount at
maturity of the Notes remains outstanding.

[continued on next page]
------------------------

SEE "RISK FACTORS" COMMENCING ON PAGE 20 FOR CERTAIN INFORMATION THAT
SHOULD BE CONSIDERED IN CONNECTION WITH THE EXCHANGE OFFER AND AN INVESTMENT IN
THE EXCHANGE NOTES.
------------------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE> 2

[continued from front cover]

The Exchange Notes will be senior unsecured indebtedness of the Company,
will rank pari passu in right of payment with all unsubordinated unsecured
indebtedness of the Company and will be senior in right of payment to all
subordinated indebtedness of the Company. As of March 31, 1998, the Company had
$1,059.3 million of indebtedness outstanding other than guarantees by the
Company of indebtedness of the Company's Restricted Group Members (as defined
herein) (such guarantee obligations would rank pari passu in right of payment
with the Notes, but the underlying guaranteed indebtedness is assumed to be
satisfied from the assets of the primary obligors). All existing and future
liabilities (including trade payables) of the Company's Restricted Group Members
will be effectively senior to the Notes. As of March 31, 1998, the Company's
Restricted Group Members had approximately $319.1 million of liabilities,
including $98.5 million of indebtedness.

The Company will accept for exchange any and all validly tendered Private
Notes not withdrawn prior to 5:00 p.m., New York City time, on Wednesday,
September 2, 1998, unless the Exchange Offer is extended by the Company in its
sole discretion (the "Expiration Date"). Tenders of Private Notes may be
withdrawn at any time prior to the Expiration Date. Private Notes may be
tendered only in integral multiples of $1,000 principal amount at maturity. The
Exchange Offer is subject to certain customary conditions. See "The Exchange
Offer."

The Exchange Notes are being offered hereunder in order to satisfy certain
obligations of the Company under the Registration Rights Agreement, dated as of
March 9, 1998 (the "Registration Rights Agreement"), between the Company and the
Placement Agents (as defined herein). The Company believes that the Exchange
Notes issued pursuant to the Exchange Offer in exchange for the Private Notes
may be offered for resale, resold and otherwise transferred by a holder thereof
(other than (i) a broker-dealer who purchased such Private Notes directly from
the Company to resell pursuant to Rule 144A or any other available exemption
under the Securities Act or (ii) a person that is an affiliate of the Company
within the meaning of Rule 405 under the Securities Act), without compliance
with the registration and prospectus delivery requirements of the Securities
Act; provided, that the holder is acquiring Exchange Notes in the ordinary
course of its business and is not participating, does not intend to participate,
and has no arrangement or understanding with any person to participate, in the
distribution of the Exchange Notes. Holders of Private Notes wishing to accept
the Exchange Offer must represent to the Company that such conditions have been
met. Each broker-dealer that receives Exchange Notes for its own account in
exchange for Private Notes, where such Private Notes were acquired by such
broker-dealer as a result of market-making activities or other trading
activities, must acknowledge that it will deliver a prospectus meeting the
requirements of the Securities Act in connection with any resale of such
Exchange Notes, which contains a plan of distribution with respect to such
resale transactions. The Letter of Transmittal states that by so acknowledging
and by delivering a prospectus, a broker-dealer will not be deemed to admit that
it is an "underwriter" within the meaning of the Securities Act. This
Prospectus, as it may be amended or supplemented from time to time, may be used
by a broker-dealer in connection with any resale of the Exchange Notes received
for Private Notes where such Private Notes were acquired by a broker-dealer as a
result of market-making or other trading activities (other than Private Notes
acquired directly from the Company). The Company has agreed that, for a period
of 90 days after the Expiration Date, it will make this Prospectus available to
any broker-dealer for use in connection with any such resales. See "Plan of
Distribution." The Company believes that none of the registered holders of the
Private Notes is an affiliate (as such term is defined in Rule 405 under the
Securities Act) of the Company.

The Company does not intend to apply for listing of the Exchange Notes on
any securities exchange or to seek approval through any automated quotation
system nor do the Placement Agents (as defined herein) intend to make a market
in the Exchange Notes. There can be no assurance regarding the future
development of a market for the Exchange Notes, or the ability of holders of the
Exchange Notes to sell their Exchange Notes or the price at which such holders
may be able to sell their Exchange Notes. If such a market were to develop, the
Exchange Notes could trade at prices that may be higher or lower than the
initial public offering price depending on many factors, including prevailing
interest rates, the Company's operating results and the market for similar
securities. See "Risk Factors -- Lack of Public Market."

Holders of Private Notes whose Private Notes are not tendered and accepted
in the Exchange Offer will continue to hold such Private Notes and will be
entitled to all the rights and preferences and will be subject to the
limitations applicable thereto under the Indenture. Following consummation of
the Exchange Offer, the holders of Private Notes will continue to be subject to
the existing restrictions upon transfer thereof and the Company will have no
further obligation to such holders to provide for the registration under the
Securities Act of the Private Notes held by them.

The Company will not receive any proceeds from, and has agreed to bear all
registration expenses of, the Exchange Offer. No underwriter is being used in
connection with the Exchange Offer. See "The Exchange Offer -- Resale of the
Exchange Notes."

THIS PROSPECTUS IS DATED AUGUST 4, 1998
<PAGE> 3

NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS OR ANY ACCOMPANYING PROSPECTUS SUPPLEMENT AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY. NEITHER THE DELIVERY OF THIS PROSPECTUS OR ANY SUCH PROSPECTUS
SUPPLEMENT NOR ANY RESALE MADE THEREUNDER SHALL, UNDER ANY CIRCUMSTANCE, CREATE
AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE
THE DATE HEREOF OR THEREOF. THIS PROSPECTUS AND ANY SUCH RELATED PROSPECTUS
SUPPLEMENT DO NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO
BUY ANY OF THE SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO
WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION IN SUCH JURISDICTION.
------------------------

THIS PROSPECTUS INCLUDES "FORWARD-LOOKING STATEMENTS" WITHIN THE MEANING OF
THE SECURITIES LAWS. ALL STATEMENTS REGARDING THE COMPANY'S AND THE OPERATING
COMPANIES' EXPECTED FINANCIAL POSITION, BUSINESS AND FINANCING PLANS ARE
FORWARD-LOOKING STATEMENTS. ALTHOUGH THE COMPANY AND ITS MAJORITY-OWNED
OPERATING COMPANIES BELIEVE THAT THE EXPECTATIONS REFLECTED IN SUCH
FORWARD-LOOKING STATEMENTS ARE REASONABLE, THEY CAN GIVE NO ASSURANCE THAT SUCH
EXPECTATIONS WILL PROVE TO HAVE BEEN CORRECT. IMPORTANT FACTORS THAT COULD CAUSE
ACTUAL RESULTS TO DIFFER MATERIALLY FROM SUCH EXPECTATIONS ("CAUTIONARY
STATEMENTS") ARE DISCLOSED IN THIS PROSPECTUS, INCLUDING, WITHOUT LIMITATION, IN
CONJUNCTION WITH THE FORWARD-LOOKING STATEMENTS INCLUDED IN THIS PROSPECTUS AND
UNDER "RISK FACTORS." ALL SUBSEQUENT WRITTEN AND ORAL FORWARD-LOOKING STATEMENTS
ATTRIBUTABLE TO THE COMPANY, THE OPERATING COMPANIES OR PERSONS ACTING ON THEIR
BEHALF ARE EXPRESSLY QUALIFIED IN THEIR ENTIRETY BY THE CAUTIONARY STATEMENTS.
------------------------

Unless otherwise indicated, industry and demographic data used throughout
this Prospectus have been obtained from the following industry publications and
have not been independently verified or updated by the Company: Strategis Group
Latin America Cellular/PCS Markets, 1997; Strategis Group Asia Pacific
Cellular/PCS Markets, 1997; Strategis World Cellular and PCS Markets, 1997;
Pyramid Research Wireless Markets and Strategies Brazil, 1997; Pyramid Research
Wireless Markets and Strategies Mexico/Central America, 1997; Pyramid Research
Wireless Markets and Strategies Southeast Asia, 1997; International Mobile
Telecommunications Association (IMTA); The Global Digest for Commercial Trunked
Radio Systems (SMR, PAMR, TRS), 1997; and World Telecom Development Report.

The population data are estimates, do not represent the current number of
the Company's subscribers and are not necessarily indicative of potential
subscribers of the Company in the future. Information with respect to Asia does
not reflect the effect of the recent Asian economic crisis.

"Nextel"; "iDEN" and "FLEX"; "Infopage"; and "MiKE" are trademarks of
Nextel Communications, Inc. ("Nextel Communications"), Motorola, Inc.
("Motorola"), Infocom Communications Network, Inc. ("Nextel Philippines") and
Clearnet Communications Inc. ("Clearnet"), respectively. Nextel Communications
currently licenses to the Company the use of the "Nextel" tradename in
jurisdictions outside of the United States on a royalty-free basis but there can
be no assurance that the Company's rights to use the "Nextel" tradename will
continue or will continue on terms not involving the payment of royalties or
other amounts to Nextel Communications.

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AVAILABLE INFORMATION

This Prospectus constitutes a part of an exchange offer Registration
Statement on Form S-4 filed by the Company with the Securities and Exchange
Commission (the "Commission") under the Securities Act with respect to the
Exchange Notes. This Prospectus does not contain all the information set forth
in the Registration Statement, certain parts of which are omitted in accordance
with the rules and regulations of the Commission. Reference is made to such
Registration Statement and to the exhibits relating thereto for further
information with respect to the Company and the Exchange Notes. Any statement
contained herein concerning the provisions of certain documents are not
necessarily complete, and in each instance, reference is made to the copy of
such document filed as an exhibit to the Registration Statement for a more
complete description of the matter involved. Each such statement is qualified in
its entirety by such reference.

The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports and other information with the Commission. Statements
made in this Prospectus as to the contents of any contract or other document are
not necessarily complete, and in each instance reference is made to the copy of
such contract or document as filed as an exhibit to the Company's filings with
the Commission, each such statement being qualified in all respects by such
reference. Such reports and other information filed by the Company with the
Commission can be inspected and copied at the public reference facilities
maintained by the Commission at Room 1024 Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549, and at the Commission's regional offices at
Northwestern Atrium Center, 800 West Madison Street, Suite 1400, Chicago,
Illinois 60661 and at Seven World Trade Center, Suite 1300, New York, New York
10048. Copies of such material can be obtained at prescribed rates upon request
from the Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549. Such material may be accessed electronically by means of
the Commission's Web site on the Internet at http://www.sec.gov. Pursuant to the
Indenture, the Company has agreed, whether or not required by the rules and
regulations of the Commission, to file with the Commission and to furnish to the
Trustee (as defined herein) and to holders (the "Holders") of the Notes, without
cost to the Trustee or such Holders, reports and other information as it would
be required to file with the Commission if the Company were subject to the
reporting requirements of the Exchange Act.
------------------------

The Company's principal executive and administrative offices are located at
1191 Second Avenue, Suite 1600, Seattle, Washington 98101 and its telephone
number at that location is (206) 749-8000.

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SUMMARY

The following summary is qualified in its entirety by the more detailed
information and the consolidated financial statements, including the notes
thereto, appearing elsewhere in this Prospectus. Unless the context otherwise
requires, the terms "Company" and "Nextel International" refer to Nextel
International, Inc. (formerly McCaw International, Ltd.) and the Operating
Companies and all references herein to "Nextel Brazil" refer to McCaw
International (Brazil), Ltd. and its subsidiaries and affiliates. The Company is
an indirect wholly owned subsidiary of Nextel Communications. Except as
otherwise indicated, all dollar amounts are expressed in U.S. dollars and
references to "dollars" and "$" are to U.S. dollars. All consolidated historical
financial statements, other than the pro forma financial information, contained
in this Prospectus are prepared in accordance with U.S. generally accepted
accounting principles ("U.S. GAAP") and are presented in U.S. dollars.

Unless otherwise indicated, the information contained in this Prospectus
gives effect to the following transactions: (i) the issuance of 82.54 shares of
the Company's Series A Redeemable Exchangeable Preferred Stock, par value $10.00
per share (the "Series A Preferred Stock"), to a wholly owned subsidiary of
Nextel Communications for consideration of approximately $8.3 million which
occurred on March 12, 1998; (ii) the transfer to the Company by a wholly owned
subsidiary of Nextel Communications of 6,777,778 Class D Shares of Clearnet
Communications Inc., a Canadian wireless services company ("Clearnet"), in
exchange for 906.32 shares of Series A Preferred Stock (the "Clearnet
Transaction") which occurred on March 12, 1998; (iii) the acquisition by the
Company (the "Argentina Acquisition") of the remaining 50% equity interest in
the holding company for Nextel Argentina S.R.L. ("Nextel Argentina," formerly
McCaw Argentina S.A.) on January 30, 1998 for $46 million; (iv) the acquisition
by the Company of a 70.1% equity interest in Comunicaciones Nextel del Peru
S.A., a Peruvian company ("Nextel Peru," formerly Valorcom S.A.), on January 29,
1998 for $27.9 million of which approximately $7.0 million was paid on such date
and (v) the purchase by the Company of an equity interest in J-Com Co., Ltd.
("J-Com") for a purchase price of Y77.2 million (approximately $593,000 based on
the exchange rate on the date of purchase) plus a shareholder loan of Y4.1
billion (approximately $31.5 million based on the exchange rate on the date of
purchase) to J-Com. As a result of these transactions, the Company currently
owns 100% of the outstanding capital stock of Nextel Argentina, 70.1% of the
outstanding capital stock of Nextel Peru, a 21% equity interest in J-Com and an
approximately 15% equity interest in Clearnet.

THE COMPANY

Nextel International is a leading international wireless communications
services company based on the number of people and the number of specialized
mobile radio ("SMR") channels in its licensed service areas. The Company
provides wireless communications services in five of the largest cities in Latin
America and three of the largest cities in Asia. The Company's markets cover
approximately 373 million people ("POPs"), approximately 131 million of which
are in Latin America. Nextel International is the largest SMR service provider
in Brazil and Mexico, and holds the largest SMR channel position in Argentina.
The Company's strategy is focused on using its leading analog dispatch or SMR
channel positions in its principal markets, together with Nextel Communications'
experience and supplier relationships, to upgrade its services from analog
dispatch to digital enhanced specialized mobile radio ("ESMR") services. The
Company intends to use digital "iDEN(TM)" technology developed by Motorola in
its ESMR networks. The Company launched commercial ESMR service in Sao Paulo and
Buenos Aires in the second quarter of 1998 and currently plans to launch
commercial ESMR service in Rio de Janeiro and Mexico City during the third
quarter of 1998. The Company's Japanese affiliate, J-Com, introduced a
multi-functional commercial ESMR service in the Kanto region of Japan (which
includes Tokyo) in July 1998. Nextel Philippines completed initial system
construction and launched commercial ESMR service in Manila in July 1998. The
timing of the Company's currently planned launch schedule depends on a number of
factors, some of which are beyond the Company's control. See "Recent
Developments" and "Business -- Operations and Investments." The Company's
upgrade to digital networks will allow it to increase capacity significantly and
to offer, in a single digital subscriber unit, additional services and advanced
features, such as direct connect (group calling and instant conferencing),
telephone interconnect and text messaging services.
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The Company owns majority controlling interests in wireless communications
services companies in Brazil, Mexico, Argentina and Peru and owns equity
interests and actively participates in the management of wireless communications
services companies in the Philippines and Japan. The Company also owns an
approximately 15% equity interest in Clearnet, a Canadian wireless
communications services company, and has a contractual right through its Chinese
joint venture to receive 12.1% of the profits generated by a Global System for
Mobile communications ("GSM") network in Shanghai, China (the "Shanghai GSM
System"). The wireless communications services companies that the Company owns
or has interests in and the right to receive profits in the Shanghai GSM System
are referred to in this Prospectus as the "Operating Companies." The Company
does not actively participate in the management or in formulation of the
business plans or policies of Clearnet or the Shanghai GSM System and considers
them passive investments. The Operating Companies have wireless communications
networks in some of the largest cities in their respective countries, including
Sao Paulo, Rio de Janeiro, Mexico City, Buenos Aires, and Lima, which are five
of the largest cities in Latin America, and Shanghai, Manila and Tokyo, which
are three of the largest cities in Asia.

The Company holds licenses covering more SMR channels than any other SMR or
ESMR system operator in Brazil and Argentina and believes it is among the
largest SMR (and potential ESMR) service providers, based on its channel
position, in its principal markets in Mexico, Peru, the Philippines and Japan.
The Company's asset base includes (i) licenses or management rights to over
5,600 SMR channels in the 800 MHz band (which is adjacent to and functionally
equivalent to cellular frequencies) to provide wireless communications services
over such channels and (ii) deployed analog or digital wireless communications
services networks in the markets where the Operating Companies conduct business.
The Company's licenses were acquired for approximately $569 million, or under
$4.00 per POP, which is significantly less than the prices paid for cellular and
personal communications services ("PCS") licenses in comparable markets around
the world.

Nextel International markets its wireless communications services primarily
to business customers and mobile work forces, such as service companies,
security firms, contractors and delivery services. Companies with mobile work
forces represent growing sectors of the economies in the Company's markets.
These types of businesses often have the need to provide their personnel with
the ability to communicate directly with one another, either on a one-to-one or
one-to-many basis. By upgrading its operations to provide ESMR services, the
Company will increase significantly the quality and capacity of its wireless
communications networks utilizing SMR frequencies and be in a position to offer
a broader array of digital wireless services to a larger customer base.

Nextel International has built and retained a senior management team
composed of executives with substantial experience in the telecommunications
industry in the United States and in emerging markets. In addition, senior
management teams at the Operating Companies are composed primarily of nationals
of the countries in which the Operating Companies are located, all of whom have
experience in the telecommunications industry and/or extensive functional area
expertise. See "Management."

Nextel International is an indirect wholly owned subsidiary of Nextel
Communications, which is the largest provider of SMR and ESMR services in the
United States with revenues of approximately $739 million for the twelve months
ended December 31, 1997 and $327 million for the three months ended March 31,
1998. Nextel Communications offers a differentiated, integrated package of
digital wireless communications services primarily to business users. As of June
30, 1998, Nextel Communications provided service to approximately 2,042,100
digital subscriber units in the United States. At June 30, 1998, the Nextel
Communications digital network provided coverage in various markets throughout
the United States, including in and around 83 of the top 100 metropolitan
statistical areas ("MSAs") in the United States. Nextel Communications' largest
shareholders include certain entities controlled by Craig O. McCaw, the founder
of McCaw Cellular Communications, Inc. (now AT&T Wireless Services, Inc.), and
Motorola.

RECENT DEVELOPMENTS

On March 12, 1998, the Company completed the sale of the Private Notes (the
"1998 Notes Offering") for aggregate net proceeds to the Company of
approximately $387 million. The 1998 Notes Offering is part of

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the Company's financing plan designed to meet expected funding requirements that
are estimated to total approximately $810 million during fiscal year 1998. See
"Financing Plan."

In connection with the 1998 Notes Offering, on March 12, 1998, the Company
consummated the Clearnet Transaction, pursuant to which a wholly owned
subsidiary of Nextel Communications transferred to the Company 6,777,778 Class D
Shares of Clearnet in exchange for 906.32 shares of the Company's Series A
Preferred Stock. See "Business -- Recent Developments" and "Business --
Operations and Investments -- Canada." Additionally, in connection with the 1998
Notes Offering, on March 12, 1998, the Company issued 82.54 shares of Series A
Preferred Stock to a wholly owned subsidiary of Nextel Communications for
consideration of approximately $8.3 million.

The Company expects to amend its Restated Articles of Incorporation (the
"Restated Articles of Incorporation") by the end of August 1998 to amend certain
terms of the Series A Preferred Stock and the Company's Series B Redeemable
Preferred Stock (the "Series B Preferred Stock"). The amendments to the terms
will be as follows:

(i) an amendment to provide that any dividends payable on the
outstanding shares of Series B Preferred Stock may, at the option of the
Company, be paid in additional shares of Series B Preferred Stock, except
in certain specified circumstances;

(ii) an amendment to provide that the Company will at all times
reserve and maintain for issuance a sufficient quantity of shares of
Series B Preferred Stock to provide for the payment of the maximum amount
of Series B Preferred Stock issuable pursuant to subparagraph (i) above;

(iii) an amendment revising the definition of "Exchange Trigger Event"
with respect to the Series A Preferred Stock to remove the requirement that
Nextel Communications must own less than 50% of the Company's outstanding
shares following (A) a recapitalization or reorganization of the Company or
(B) a registered, underwritten public offering of any capital stock of the
Company in order for such event to be considered an "Exchange Trigger
Event"; and

(iv) an amendment revising the Company's right to redeem the Series A
Preferred Stock to provide that any partial redemption of the Series A
Preferred Stock will require the prior consent of the holders of a majority
of the shares of Series A Preferred Stock outstanding (rather than the
prior consent of the affected holders).

In addition to the amendments noted above, the Company is amending the
Restated Articles of Incorporation, to provide, as permitted under Washington
corporate law, that as long as the Company is not a public company, any action
required or permitted to be taken at a shareholders' meeting may be taken by a
written consent of the shareholders of the Company holding in the aggregate the
minimum number of shares required to take such action at a meeting in which all
shares entitled to vote on the action were present and voted.

The following is an overview of the Company's recent investments,
acquisitions and other recent developments:

Brazil. On September 26, 1997, Nextel S.A. (formerly Airlink S.A.), a
subsidiary of Nextel Brazil and the indirect holder of Nextel Brazil's SMR
channels and related operating assets in Brazil acquired (i) 49% of the capital
stock of MCS Telefonia, Ltda. ("MCS"), an indirect wholly owned subsidiary of
Motorola; (ii) an option to purchase the remaining 51% of the capital stock of
MCS; and (iii) certain assets of MCS (collectively the "MCS Transaction"). The
MCS option is exercisable for $3.2 million upon receipt of certain necessary
approvals from Brazilian regulatory authorities. In connection with the MCS
Transaction, Motorola acquired 5% of the outstanding capital stock of Nextel
S.A., which effectively diluted the Company's ownership in its Brazilian
operations to 77%. MCS owns SMR licenses in 13 of the largest Brazilian cities,
including Sao Paulo, Rio de Janeiro and Belo Horizonte. The MCS Transaction
increased Nextel S.A.'s SMR channel holdings in each major city in Brazil. See
"Business -- Operations and Investments -- Brazil."

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conduct a nationwide paging business. Nextel Argentina currently has
approximately 4,000 paging subscribers in Buenos Aires and Mar del Plata. In
December 1997, Nextel Argentina acquired an additional 60 SMR channels in Buenos
Aires for $12 million in a government auction, increasing its SMR spectrum
holdings in Buenos Aires to 12 MHz. See "Business -- Operations and
Investments -- Argentina."

Mexico. Since January 1, 1997, through a series of transactions, the
Company has increased its equity interest in Comunicaciones Nextel de Mexico
S.A. de C.V. ("Nextel Mexico," formerly Corporacion Mobilcom S.A. de C.V.) from
30.1% to 100% for consideration equal to approximately $132.2 million. As a
result of such transactions, the Company has effectively satisfied the former
shareholders' put rights and is no longer subject to their corporate governance
rights. See "Business -- Operations and Investments -- Mexico."

On June 30, 1998, the Mexican Federal Telecommunications Commission
("COFETEL") issued a press release in which it ordered Nextel Mexico to cease
its pre-launch marketing campaign for its ESMR services because, according to
the COFETEL press release, Nextel Mexico's SMR concessions did not authorize the
Company to offer the services specified in Nextel Mexico's marketing materials.
On July 8, 1998, Nextel Mexico received a letter from COFETEL containing such
order. Prior to receipt of COFETEL's order, and based on the press reports
regarding COFETEL's press release, Nextel Mexico had ceased its pre-launch
marketing campaign. On July 9, 1998, Nextel Mexico sent a written reply to
COFETEL in which it informed COFETEL that the Company had ceased its pre-launch
marketing campaign and intended to revise its pre-launch marketing campaign to
insure that any terms describing its ESMR services were consistent with its SMR
licenses. After meeting with COFETEL, Nextel Mexico revised the language in its
pre-launch marketing campaign and, with COFETEL's authorization, resumed its
pre-launch marketing campaign. Although the Company believes that its licenses
authorize all of the services contemplated to be offered on its ESMR network and
that COFETEL will not have any further objections to Nextel Mexico's marketing
campaigns, there can be no assurance that COFETEL will accept Nextel Mexico's
interpretation of its SMR licenses or that COFETEL will not object to Nextel
Mexico's future marketing campaigns.

Peru. On January 29, 1998, the Company purchased 70.1% of the common
equity of Nextel Peru for $27.9 million, $23.8 million of which will represent
new capital to be contributed to Nextel Peru to finance the expansion, upgrade
and operation of its wireless services business. As of March 31, 1998, the
Company had paid $7.2 million to Nextel Peru, and the remaining $20.7 million
was paid since such date in the form of capital contributions. Nextel Peru,
through its subsidiaries, currently offers analog SMR services in the greater
Lima area, and holds licenses covering 138 SMR channels. Nextel Peru currently
plans to upgrade to ESMR service in 1999. See "Business -- Operations and
Investments -- Peru."

Philippines. In February 1998, the Company reached an agreement in
principle with the three groups of local shareholders of Nextel Philippines (the
"Philippines Shareholders"), including the Gotesco group (the "Gotesco Group")
which owns a 20% interest in Nextel Philippines, and finalized such agreements
in April 1998 (the "Philippines Partner Agreements"). Pursuant to the
Philippines Partner Agreements (i) the Nextel Philippines corporate governance
arrangements were restructured to give the Company increased minority
shareholder rights and the Philippines Shareholders agreed to vote for the
election of new, professional senior management of Nextel Philippines; (ii) the
Company purchased existing shareholder loans of the Philippines Shareholders
totaling approximately $19.6 million, which loans bear interest at 18% per annum
and are convertible into equity of Nextel Philippines; (iii) the Company may, at
its option, fund Nextel Philippines' future capital needs, currently estimated
to be $50 million for fiscal year 1998, pursuant to loans that, at the option of
the Company, may be converted into equity of Nextel Philippines; (iv) the
Gotesco Group has the right to put its 20% interest to the Company for
approximately $9.4 million, beginning in January 1999 (the "Gotesco Put"); and
(v) the Company has the right to call the Gotesco Group's 20% interest for
approximately $11.6 million, if the Gotesco Group does not exercise the Gotesco
Put. The ability of the Company to convert shareholders' loans into equity,
satisfy the Gotesco Put or call the Gotesco Group's 20% interest is subject to
applicable Philippines foreign ownership rules. Despite the provisions of the
Philippines Partner Agreements, two of the Philippines Shareholders, Jetcom,
Inc. ("Jetcom") and Foodcamp Industries and Marketing, Inc. ("Foodcamp"), have
taken actions or failed to take actions to effect the terms of such agreement,
including the failure to convene a meeting of the board of directors of Nextel

7
<PAGE> 9

Philippines and a vote on the election of the senior management of such company
and other steps necessary to complete the restructuring of Nextel Philippines'
corporate governance framework in accordance with the Philippines Partner
Agreements. On June 19, 1998, the Company sent a written notice to such
shareholders asserting the Company's belief that such shareholders have failed
to perform their respective obligations under the Philippines Partner Agreements
and informing such shareholders that the Company will pursue all remedies
available to it under the Philippines Partner Agreements and applicable laws in
order to enforce its rights. These shareholders have sent written responses to
the Company's letter in which they denied all of the Company's assertions.

On June 26, 1998, the Company and the Gotesco Group entered into an
Agreement to Accelerate Put Rights (the "Gotesco Put Acceleration Agreement")
pursuant to which the exercise date of the Gotesco Put was accelerated from
January 1999 to August 21, 1998. The Company also agreed to pay the Gotesco
Group (i) $500,000 upon the delivery of irrevocable proxies covering the voting
rights on the shares of Nextel Philippines owned by the Gotesco Group to a third
party or parties selected mutually by the Company and the Gotesco Group; (ii)
$500,000 to the Gotesco Group upon the conclusion of the Nextel Philippines
annual shareholder meeting, provided that the Gotesco Group's shares of Nextel
Philippines are voted in favor of the corporate governance provisions of the
Philippines Partner Agreements at such annual meeting; and (iii) $8,000,000 upon
the transfer of the shares covered by the Gotesco Put to a qualified third-party
purchaser in accordance with Philippines law, which transfer shall occur no
later than August 21, 1998. The Company is in discussion with several Philippine
groups regarding the purchase of an equity interest in Nextel Philippines,
including the purchase of the shares covered by the Gotesco Put and the Gotesco
Put Acceleration Agreement. Pursuant to the Gotesco Put Acceleration Agreement,
the Gotesco Group pledged its shares of Nextel Philippines to the Company,
delivered such shares to an escrow agent and granted irrevocable proxies
covering the voting rights on such shares to third parties selected mutually by
the Company and the Gotesco Group. The Company has made the payment of $500,000
to the Gotesco Group due upon execution and delivery of the Gotesco Put
Acceleration Agreement.

On July 13, 1998, Nextel Philippines held the 1998 annual shareholders
meeting and organizational board of directors meeting pursuant to which certain
corporate governance provisions of the Philippines Partner Agreements were
implemented, including the appointment of new, professional senior management.
Immediately prior to the meetings, the Philippines Securities and Exchange
Commission (the "ROP SEC") issued a temporary restraining order (the "TRO") upon
petition of one of the Philippines Shareholders and certain individual
shareholders who hold shares in Nextel Philippines in their capacity as members
of the board of directors of Nextel Philippines representing the interests of
Jetcom and Foodcamp (collectively, the "Petitioners"). The Petitioners requested
the nullification of the amendments of the bylaws of Nextel Philippines
contemplated by the corporate governance provisions of the Philippines Partner
Agreements (the "Bylaw Amendments") and the TRO enjoined Nextel Philippines from
implementing such Bylaw Amendments for a 72-hour period. The Petitioners further
requested that a preliminary injunction be issued with the same effect pending a
trial on the merits with respect to the validity of the Bylaw Amendments. On
July 15, 1998, pursuant to the agreement of Nextel Philippines and the
Petitioners and confirmed by the ROP SEC (a) the TRO was permitted to expire and
(b) pending a trial on the merits as to the validity of the Bylaw Amendments (i)
the Petitioners agreed to withdraw their petition for a preliminary injunction
and (ii) Nextel Philippines agreed that the provisions of the Bylaw Amendments
granting the Company certain veto rights (the "Company Veto Rights") would not
be implemented.

8
<PAGE> 10

several telecommunication companies have initiated legal proceedings that place
Nextel Philippines' PA in jeopardy. The letter states that Jetcom and Foodcamp
intend to hold the Company liable for any and all damages as a result of the
foregoing. The Company denies the substance of the allegations in the letter
described above and specifically denies that the Company or any agent of the
Company authorized the issuance of the press release in question.

Although the Company believes that the provisions of the Philippines
Partner Agreements are enforceable against each of the Philippines Shareholders
and that the Company will eventually be successful in asserting its claims
against Jetcom and Foodcamp regarding such agreements, there can be no assurance
that the Company will prevail in any arbitration or legal action against Jetcom
and Foodcamp or that such claims will be resolved in a timely manner. To the
extent the Company is not successful in resolving these issues with Jetcom and
Foodcamp, the Company may decide not to continue to fund Nextel Philippines. Any
failure to resolve the legal issues among the shareholders of Nextel Philippines
in a timely manner, and any resulting decision by the Company not to continue to
provide additional funding to Nextel Philippines, would have a material adverse
effect on Nextel Philippines' business, prospects, financial condition and
results of operation. The Company does not believe that any of the Philippines
Shareholders intend to fund Nextel Philippines in fiscal year 1998. Further,
Nextel Philippines is currently overdue on payments to creditors totaling
approximately $5 million. Although none of Nextel Philippines' creditors has
commenced action against Nextel Philippines to date, Nextel Philippines' failure
to make payments required by its obligations could cause such creditors to
commence legal action against Nextel Philippines, including attempting to take
possession of any assets pledged to secure Nextel Philippines' debt. Any lack of
funding of Nextel Philippines, either from the Company, the Philippines
Shareholders or other sources, would have a material adverse effect on Nextel
Philippines' business, prospects, financial condition and results of operation,
including its ability to meet its obligations, and, accordingly, on the value of
the Company's investment in Nextel Philippines. See "Business -- Operations and
Investments -- Philippines" and "Business -- Corporate
Governance -- Philippines" and "Risk Factors -- Significant Capital Requirements
for Operations."

Japan. On March 17, 1998, the Company purchased a 21% equity interest in
J-Com for a purchase price of Y77.2 million (approximately $593,000 based on the
exchange rate on the date of purchase) (the "Japan Transaction"). The Company
also provided a shareholder loan of Y4.1 billion (approximately $31.5 million
based on the exchange rate on the date of purchase) to J-Com. J-Com has a
contractual right to provide service in Japan under a sublicense covering more
than 125 million POPs. DJSMR Business Partnership, a Japanese partnership in
which an affiliate of Motorola is the majority partner ("DJSMR"), holds a 49%
equity interest in J-Com. The remaining equity interests in J-Com are held by
Nichimen Corporation, an investment firm ("Nichimen"), and ORIX Corporation, a
leasing firm, ("ORIX") which hold, respectively, a 25% and a 5% equity interest
in J-Com. See "Business -- Operations and Investments -- Japan" and
"Business -- Corporate Governance -- Japan."

PENDING INVESTMENT

Indonesia. On August 15, 1997, the Company entered into a preliminary
agreement with PT Gunung Sewu Kencana ("GSK"), a large diversified Indonesian
company, which gives the Company the right, upon receipt of required regulatory
approval, to purchase a 37.5% interest in PT Mitra Kencana Telekomunindo
("MKT"), an Indonesian corporation owned by GSK. MKT holds a provisional license
for 80 SMR channels in Indonesia that can be converted into an operating license
upon satisfaction of certain regulatory approvals by June 30, 1998. The Company
and GSK agreed to amend the preliminary agreement to extend the deadline for
receipt of regulatory approvals to December 31, 1998. Although the Company
believes that MKT presents it with significant opportunities to expand its SMR
network in Asia, the Company does not intend to make any substantial investment
in MKT until the economic and political conditions in Indonesia, in particular,
and the economic conditions in Asia generally, have stabilized. To date, the
Company has advanced $1.5 million to MKT in the form of a loan that is
guaranteed by GSK.

9
<PAGE> 11

THE NETWORK

The following table provides a brief overview of the wireless
communications systems of each of the Operating Companies and MKT as of June 30,
1998, except as otherwise noted.

Brazil................... 77%(2) 60.0(3) 46.2 SMR/ESMR 19,000 October 1994/May
1998(4)
Mexico................... 100% 45.0 45.0 SMR/ESMR 30,000 September 1993/1998(4)
Argentina................ 100% 19.3 19.3 Paging/SMR/ESMR 16,000 April 1996/February
1997/June 1998(4)
Peru(5).................. 70.1% 7.0 4.9 SMR/ESMR 3,000 April 1995/1999
Philippines.............. 30% 73.0 21.9 Paging/ESMR 55,000 February 1995/July
1998(4)
Canada(6)................ 15% 30.0 4.5 SMR/ESMR/PCS 151,000 April 1994/October
1996/October 1997
Japan(7)................. 21% 125.0 26.5 SMR/ESMR 38,000 May 1997/July 1998(4)
China (Shanghai)......... 12.1%(8) 14.0 1.7 GSM 66,000 June 1995
----- ----- -------
Subtotal............... 373.3 170.0 378,000
PENDING TRANSACTION:
Indonesia................ 37.5%(9) 19.8 7.4
----- ----- -------
Total.................. 393.1 177.4 378,000
----- ----- -------
</TABLE>

- ---------------
(1) Represents estimated population of areas covered by Operating Companies'
licensed frequencies as of December 31, 1997. See "Business -- Spectrum
Position."

(2) Giving effect to the MCS Transaction, the Company through its 81% equity
interest in Nextel Brazil, and Nextel Brazil's 95% equity interest in Nextel
S.A., holds a 77% equity interest in Nextel S.A.

(3) Brazilian law provides that SMR and ESMR service may only be provided to
businesses and not to individuals.

(4) The Company launched commercial ESMR service in Sao Paulo and Buenos Aires
in the second quarter of 1998 and currently plans to launch commercial ESMR
service in Rio de Janeiro and Mexico City during the third quarter of 1998.
The Company's Japanese affiliate, J-Com, introduced a multi-functional ESMR
service in the Kanto region of Japan (which includes Tokyo) in July 1998.
Nextel Philippines completed initial system construction and launched
commercial ESMR service in Manila in July 1998. The timing of the Company's
currently planned launch schedule depends on a number of factors, some of
which are beyond the Company's control. See "Business -- Operations and
Investments."

(5) Nextel Peru currently offers analog SMR services in the greater Lima area.
The Company currently plans to launch commercial ESMR services in the
greater Lima area in 1999. See "Business -- Operations and
Investments -- Peru."

(6) Clearnet publicly reported that it had launched commercial ESMR and PCS
services in Canada's largest urban centers in 1996 and 1997, respectively.
The subscriber numbers are based on 1997 year end subscriber counts publicly
reported by Clearnet and include SMR, ESMR and PCS services.

(7) Until its launch of multi-functional commercial ESMR services in the Kanto
region of Japan (which includes Tokyo) in July 1998, J-Com offered digital
dispatch SMR services in the Kanto region of Japan. The subscriber count is
based on information furnished to the Company in connection with its March
1998 investment in J-Com. See "Business -- Operations and
Investments -- Japan."

(8) Represents the Company's share of profits from the Shanghai GSM System,
which is accounted for under the cost method. The Company's share of profits
was diluted from 25.2% to 12.1% in 1997 as a result of an equity investment
by a new shareholder. The subscriber number is based on the most current
subscriber count reported to the Company. See "Business -- Operations and
Investments -- Shanghai, People's Republic of China."

(9) Represents the right to acquire a 37.5% equity interest in MKT upon receipt
of required regulatory approvals by June 30, 1998. MKT holds a provisional
license for 80 SMR channels that can be converted to an operating license
upon satisfaction of certain regulatory approvals. The Company and GSK
agreed to amend the preliminary agreement to extend the deadline for receipt
of regulatory approvals to December 31, 1998.

THE MARKETS

The Company primarily targets emerging markets characterized by large,
unsatisfied demand for telecommunications services, strong long-term economic
growth prospects, highly concentrated population centers and favorable
competitive environments.

Large, Unsatisfied Demand for Telecommunications Services. The emerging
markets in which the Company operates are characterized by large, unsatisfied
demand for telecommunications services, resulting in long waiting lists for
phone lines that range from approximately 1.5 years in Brazil to 3.6 years in
the Philippines. In these markets, wireless communications are often a
substitute for landline telephone service.

10
<PAGE> 12

The following comparative market estimates illustrate the differences between
telecommunications services in the emerging markets in which the Company
operates and the United States:

<TABLE>
<CAPTION>
UNITED
EMERGING MARKETS(1)(2) STATES(1)
---------------------- -------------
<S> <C> <C>
Access lines per 100 POPs........................... 8.1 59.4
Cellular penetration rate........................... 1.3% 16.6%
SMR penetration rate(3)............................. .05% .9%
Average monthly revenue per cellular subscriber..... $88 $48
Average monthly revenue per analog SMR subscriber... $47 $16
</TABLE>

- ---------------
(1) All information is for 1996.

(2) Excludes Canada, China and Japan; information with respect to the
Philippines does not reflect the effect of the recent Asian economic crisis.
See "Risk Factors -- Currency Risks and Exchange Controls" and "-- Local
Economies; Potential Inflation."

(3) Includes only commercial SMR subscribers.

Strong Economic Growth Prospects. The Company operates primarily in
emerging markets that it believes offer favorable long-term economic growth
prospects. The average annual real GDP growth for the period 1997 through 2001
in countries in which the Company operates is projected to be 4.4%.

Highly Concentrated Population Centers. The Company focuses its operations
primarily in major population centers of emerging markets, including Sao Paulo,
Rio de Janeiro, Buenos Aires, Mexico City, Lima and Manila. These cities are
characterized by extremely high population densities and a relatively high
concentration of the country's wealth. In addition, vehicle traffic congestion,
low landline penetration and unreliability of the telecommunications
infrastructure encourage the use of wireless communications services in these
cities.

Favorable Competitive Environments. Although there is large, unsatisfied
demand for telecommunications services in the emerging markets in which the
Company operates, there are relatively few licensed wireless communications
service providers currently operating in most of its markets.

STRATEGY

The Company's principal strategy is to grow by continuing to upgrade and
expand its existing analog SMR wireless communications operations to incorporate
digital wireless communications services, which will enable the Company to
increase its subscriber base and revenues. The Company's strategy also involves
seeking new investment opportunities in markets that satisfy the characteristics
described above. The key elements of the Company's strategy are:

Capitalize on Leading Position. The Company holds licenses covering more
SMR channels than any other SMR or ESMR system operator in Brazil and Argentina
and believes it is among the largest SMR (and potential ESMR) service providers,
based on its channel position, in its principal markets in Mexico, Peru, the
Philippines and Japan. This leading channel position has been established at a
low cost relative to cellular and PCS providers. The Company believes its SMR
channel position will allow it to incur lower capital expenditures to upgrade to
digital networks compared to any of its competitors who control fewer SMR
channels and also will create operating synergies.

Expand by Providing Digital Enhanced Services. In markets where the
Company operates analog SMR networks, it is upgrading its analog SMR networks to
digital multi-functional ESMR networks using Motorola's iDEN technology. In
Japan, J-Com upgraded its digital dispatch SMR network to digital ESMR. The
upgrade to digital ESMR networks will allow the Company to increase capacity and
quality significantly and also offer, in a single digital subscriber handset,
additional services and advanced features, which the Company believes will lead
to increases in its subscriber base and average monthly revenue per subscriber.
The Company launched commercial ESMR service in Sao Paulo and Buenos Aires in
the second quarter of 1998 and currently plans to launch commercial ESMR service
in Rio de Janeiro and Mexico City during the third quarter of 1998. The
Company's Japanese affiliate, J-Com, introduced a multi-functional ESMR service
in the Kanto region of Japan (which includes Tokyo) in July 1998. Nextel
Philippines completed initial

11
<PAGE> 13

system construction and launched commercial ESMR service in Manila in July 1998.
The timing of the Company's currently planned launch schedule depends on a
number of factors, some of which are beyond the Company's control. See
"Business -- Operations and Investments."

Provide a Broad International Network. The Company intends to deploy a
broad international digital wireless network that will provide roaming
capabilities on a single digital subscriber handset to its subscribers in
selected markets where it provides service. By the end of 1998, the Company
believes that its network will constitute one of the largest ESMR wireless
communications systems in Latin America utilizing a single transmission
technology. The Company's ESMR network is being designed, constructed and
implemented to deliver uniform functionality by providing the same package of
integrated, multiple-feature digital wireless communications services throughout
its network.

Benefit from Nextel Communications and Motorola Relationships. Nextel
Communications is the largest SMR and ESMR provider in the United States with
approximately 2,042,100 digital subscriber units in service and approximately
486,400 analog SMR units in service at June 30, 1998. The Company intends to
continue to access the technology, operations, supplier relationships, network
development and marketing expertise of Nextel Communications in upgrading its
SMR networks to ESMR in its existing markets and to continue to leverage its
relationship with Nextel Communications in entering new markets. In addition,
the Company believes that it will continue to benefit from its relationship with
Motorola, which supplies Nextel Communications and the Company with digital
iDEN(TM) equipment and services. By utilizing Nextel Communications' expertise
and relationships with suppliers, in particular with Motorola, the Company
believes that it will be able to deploy ESMR networks that are competitive with
cellular and PCS networks in its principal markets.

Maintain Active Management Role. The Company has acquired controlling
ownership and management positions in its principal markets to the extent local
law does not restrict such foreign ownership or management control positions. As
of June 30, 1998, the Company had a controlling interest in its Operating
Companies in Brazil, Mexico, Argentina and Peru. Where the Company holds less
than a majority interest in an Operating Company, it manages its investment
through contractual arrangements that ensure representation on the board of
directors or comparable governing body and enable it to veto or require its
approval of certain corporate actions. The Company actively participates in the
management of such Operating Companies, other than in China and in Canada, by
(i) selecting key members of the local management team, (ii) managing the
system's technology and infrastructure deployment, (iii) developing business
plans and marketing plans together with local management, (iv) maintaining close
working relationships with partners, suppliers, regulators and others and (v)
obtaining or arranging for financing.

Pursue New Investments in Attractive Markets. The Company is pursuing new
investment opportunities in geographic areas that offer attractive market
fundamentals. At present, the Company plans to focus primarily on emerging
markets in Latin America and Asia. The Company believes that such markets offer
favorable long-term economic growth prospects and that geographic concentration
may provide significant business synergies. In addition, the Company strives to
purchase SMR channels in Latin American and Asian markets at a significantly
lower cost than cellular and PCS providers have paid for their spectrum holdings
in such markets.

Partner with Strong Local Groups. Nextel International intends to seek
strong local groups with the financial resources to invest as equity holders at
the Company and Operating Company level. In addition, the Company intends to
seek local partners who can play an active role in assisting the Operating
Companies in securing licenses, obtaining necessary regulatory approvals and
managing governmental relations for the Operating Companies.

PRINCIPAL EXECUTIVE OFFICES

The Company's principal executive offices are located at 1191 Second
Avenue, Suite 1600, Seattle, Washington 98101, and the telephone number at that
location is (206) 749-8000.

12
<PAGE> 14

THE EXCHANGE OFFER

The Exchange Offer

The Exchange Offer.............. The Company is hereby offering to exchange
Exchange Notes for an equal principal amount
at maturity of Private Notes that are
properly tendered and accepted. The Company
will issue Exchange Notes on or as promptly
as practicable after the Expiration Date. As
of the date hereof, there is $730.0 million
aggregate principal amount at maturity of
Private Notes outstanding. See "The Exchange
Offer."

Based on interpretations by the staff of the
Commission set forth in no-action letters
issued to third parties, the Company believes
that the Exchange Notes issued pursuant to
the Exchange Offer in exchange for Private
Notes may be offered for resale, resold and
otherwise transferred by a holder thereof
without compliance with the registration and
prospectus delivery provisions of the
Securities Act, provided that the holder is
acquiring Exchange Notes in the ordinary
course of its business, is not participating,
does not intend to participate and has no
arrangement or understanding with any person
to participate in the distribution of the
Exchange Notes and is not an "affiliate" of
the Company within the meaning of Rule 405
under the Securities Act. Each broker-dealer
who holds Private Notes acquired for its own
account as a result of market-making or other
trading activities and who receives Exchange
Notes pursuant to the Exchange Offer for its
own account in exchange therefor must
acknowledge that it will deliver a prospectus
in connection with any resale of such
Exchange Notes.

This Prospectus, as it may be amended or
supplemented from time to time, may be used
by a broker-dealer in connection with resales
of Exchange Notes received in exchange for
Private Notes acquired by such broker-dealer
as a result of market-making activities or
other trading activities. The Letter of
Transmittal that accompanies this Prospectus
states that by so acknowledging and by
delivering a prospectus, a broker-dealer will
not be deemed to admit that it is an
"underwriter" within the meaning of the
Securities Act. Any holder of Private Notes
who tenders in the Exchange Offer with the
intention to participate in a distribution of
the Exchange Notes could not rely on the
above-referenced position of the staff of the
Commission and, in the absence of an
exemption under the Securities Act, would
have to comply with the registration and
prospectus delivery requirements therein in
connection with any resale transaction.
Failure to comply with such requirements in
such instance could result in such holder
incurring liability under the Securities Act
for which the holder is not indemnified by
the Company. See "The Exchange
Offer -- Resale of the Exchange Notes."

Termination of Registration
Rights........................ The Private Notes were sold by the Company on
March 12, 1998 to Morgan Stanley & Co.,
Incorporated, Chase Securities Inc. and
Goldman, Sachs & Co. (together, the
"Placement Agents") pursuant to a Placement
Agreement, dated as of

13
<PAGE> 15

March 9, 1998 (the "Placement Agreement"),
between the Company and the Placement Agents.
Pursuant to the Placement Agreement, the
Company entered into the Registration Rights
Agreement with the Placement Agents, which
agreement grants the holders of Private Notes
certain exchange and registration rights. The
Exchange Offer is intended to satisfy, as to
all Notes, such rights, which will terminate
upon the consummation of the Exchange Offer.
Holders of the Exchange Notes will not be
entitled to any exchange or registration
rights with respect to the Exchange Notes.
Holders of Private Notes who do not
participate in the Exchange Offer will hold
securities that are not freely transferable
and may, as a result be less liquid. See "The
Exchange Offer -- Termination of Certain
Rights." The Company will not receive any
proceeds from, and has agreed to bear the
expenses of, the Exchange Offer.

Expiration Date................. The Exchange Offer will expire at 5:00 p.m.,
New York City time, on Wednesday, September
2, 1998, unless the Exchange Offer is
extended by the Company in its sole
discretion, in which case the term
"Expiration Date" shall mean the latest date
and time to which the Exchange Offer is
extended. See "The Exchange
Offer -- Expiration Date; Extensions;
Amendments."

Procedures for Tendering
Private Notes................. Each holder of Private Notes wishing to
accept the Exchange Offer must complete, sign
and date the Letter of Transmittal, or a
facsimile thereof, in accordance with the
instructions contained herein and therein,
and mail or otherwise deliver such Letter of
Transmittal, or such facsimile, together with
such Private Notes and any other required
documentation to The Bank of New York, as
Exchange Agent (the "Exchange Agent"), at the
address set forth herein. By executing the
Letter of Transmittal, the holder will
represent to and agree with the Company that,
among other things, (i) the Exchange Notes to
be acquired by such holder of Private Notes
in connection with the Exchange Offer are
being acquired by such holder in the ordinary
course of its business, (ii) such holder is
not participating, does not intend to
participate and has no arrangement or
understanding with any person to participate
in a distribution of the Exchange Notes, and
(iii) such holder is not an "affiliate," as
defined in Rule 405 under the Securities Act,
of the Company. If the holder is a
broker-dealer that will receive Exchange
Notes for its own account in exchange for
Private Notes that were acquired as a result
of market-making or other trading activities,
such holder will be required to acknowledge
in the Letter of Transmittal that such holder
will deliver a prospectus in connection with
any resale of such Exchange Notes; however,
by so acknowledging and by delivering a
prospectus, such holder will not be deemed to
admit that it is an "underwriter" within the
meaning of the Securities Act. See "The
Exchange Offer -- Procedures for Tendering."

Special Procedures for
Beneficial Owners............. Any beneficial owner whose Private Notes are
registered in the name of a broker, dealer,
commercial bank, trust company or
14
<PAGE> 16

other nominee and who wishes to tender such
Private Notes in the Exchange Offer should
contact such registered holder promptly and
instruct such registered holder to tender on
such beneficial owner's behalf. If such
beneficial owner wishes to tender on such
owner's own behalf, such owner must, prior to
completing and executing the Letter of
Transmittal and delivering such owner's
Private Notes, either make appropriate
arrangements to register ownership of the
Private Notes in such owner's name or obtain
a properly completed bond power from the
registered holder. The transfer of registered
ownership may take considerable time and may
not be able to be completed prior to the
Expiration Date. See "The Exchange Offer --
Procedures for Tendering."

Guaranteed Delivery
Procedures.................... Holders of Private Notes who wish to tender
their Private Notes and whose Private Notes
are not immediately available or who cannot
deliver their Private Notes, the Letter of
Transmittal or any other documentation
required by the Letter of Transmittal to the
Exchange Agent prior to the Expiration Date
must tender their Private Notes according to
the guaranteed delivery procedures set forth
under "The Exchange Offer -- Guaranteed
Delivery Procedures."

Acceptance of the Private Notes
and Delivery of the Exchange
Notes......................... Subject to the satisfaction or waiver of the
conditions to the Exchange Offer, the Company
will accept for exchange any and all Private
Notes that are properly tendered and not
withdrawn in the Exchange Offer prior to the
Expiration Date. The Exchange Notes issued
pursuant to the Exchange Offer will be
delivered on the earliest practicable date
following the Expiration Date. See "The
Exchange Offer -- Terms of the Exchange
Offer."

Withdrawal Rights............... Tenders of Private Notes may be withdrawn at
any time prior to the Expiration Date. See
"The Exchange Offer -- Withdrawal of
Tenders."

Certain Tax Considerations...... For a discussion of certain tax
considerations relating to the Exchange
Notes, see "Certain U.S. Federal Income Tax
Considerations."

Exchange Agent.................. The Bank of New York is serving as the
Exchange Agent in connection with the
Exchange Offer. The Bank of New York also
serves as trustee (the "Trustee") under the
Indenture.

15
<PAGE> 17

The Notes

The Exchange Offer applies to the $730.0 million aggregate principal amount
at maturity of Private Notes. The form and terms of the Exchange Notes are
identical in all material respects to the form and terms of the Private Notes
except that the Exchange Notes will not bear legends restricting the transfer
thereof and holders of the Exchange Notes will not be entitled to any of the
registration rights of holders of the Private Notes under the Registration
Rights Agreement, which rights will terminate upon consummation of the Exchange
Offer. The Exchange Notes will evidence the same indebtedness as the Private
Notes (which they replace) and will be issued under, and be entitled to the
benefits of, the Indenture. For further information and for definitions of
certain capitalized terms, see "Description of the Notes."

Issuer.......................... Nextel International, Inc.

Notes........................... $730.0 million aggregate principal amount at
maturity of 12 1/8% Senior Discount Notes due
April 15, 2008.

Maturity Date................... April 15, 2008.

Interest........................ The Private Notes were sold at a substantial
discount from their principal amount at
maturity, and there will not be any payment
of interest on the Notes prior to October 15,
2003. The Notes will fully accrete to face
value on April 15, 2003. From and after April
15, 2003, the Notes will bear interest, which
will be payable in cash, at a rate of 12 1/8%
per annum on each April 15 and October 15,
commencing October 15, 2003.

Optional Redemption............. The Notes will be redeemable, at the option
of the Company, in whole or in part, at any
time on or after April 15, 2003, at 106.063%
of their principal amount at maturity, plus
accrued and unpaid interest, declining
ratably to 100% of their principal amount at
maturity, plus accrued and unpaid interest,
on or after April 15, 2006. In addition, at
any time prior to April 15, 2001, the Company
may redeem up to 35% of the aggregate
principal amount at maturity of the Notes
with the proceeds of one or more sales of
Capital Stock (other than Redeemable Stock)
(each as defined under "Description of the
Notes") at 112.125% of their Accreted Value
on the redemption date; provided, however,
that after any such redemption at least
$474.5 million aggregate principal amount at
maturity of the Notes remains outstanding and
that notice of redemption is mailed to the
holders of the Notes within 60 days after the
consummation of such sale or sales. See
"Description of the Notes -- Optional
Redemption."

Ranking......................... The Notes will be senior unsecured
indebtedness of the Company, will rank pari
passu in right of payment with all existing
and future unsubordinated indebtedness of the
Company (including the 1997 Notes) and will
be senior in right of payment to all existing
and future subordinated indebtedness of the
Company. As of March 31, 1998, the Company
had $1,059.3 million of indebtedness
outstanding other than guarantees by the
Company of indebtedness of the Company's
Restricted Group Members (such guarantee
obligations would rank pari passu in right of
payment with the Notes, but the underlying
guaranteed indebtedness is assumed to be
satisfied from the assets of the primary
obligors). In addition, all existing and
future liabilities (including trade payables)
of the Company's subsidiaries will be
effectively senior to the Notes. As of March
31, 1998 the Company's Restricted Group
Members had

16
<PAGE> 18

$319.1 million of liabilities, including
$98.5 million of indebtedness. See "Risk
Factors -- Substantial Indebtedness; Ability
to Service Debt; Refinancing Risks" and "--
Holding Company Structure; Effective
Subordination; Secured Indebtedness."

Change of Control............... Upon a Change of Control (as defined under
"Description of the Notes -- Certain
Definitions"), the Company will be required
to make an offer to purchase the Notes at a
purchase price equal to 101% of their
Accreted Value on the date of purchase, plus
accrued interest. There can be no assurance
that the Company will have sufficient funds
available at the time of any Change of
Control to make any required debt repayment
(including repurchases of the Notes). See
"Description of the Notes -- Repurchase of
Notes Upon a Change of Control."

Certain Covenants............... The Indenture contains certain covenants for
the benefit of the Holders of the Notes
which, among other things, restrict the
ability of the Company and each Restricted
Group Member to incur additional
indebtedness, create liens, engage in sale-
leaseback transactions, pay dividends or make
distributions in respect of their capital
stock, make investments or certain other
restricted payments, sell assets, issue or
sell stock of Restricted Group Members, enter
into transactions with stockholders or
affiliates or effect a consolidation or
merger. These limitations will, however, be
subject to important qualifications and
exceptions. See "Description of the
Notes -- Covenants."

Book-Entry, Delivery and Form... It is expected that delivery of the Exchange
Notes will be made in book-entry or
certificated form. The Company expects that
Exchange Notes exchanged for Private Notes
currently represented by Global Notes (as
defined under "Description of the Notes")
deposited with, or on behalf of The
Depository Trust Company (the "Depository" or
"DTC") and registered in the name of Cede &
Co., its nominee, will be represented by
Global Notes and deposited upon issuance with
the Depository and registered in its name or
the name of its nominee. Beneficial interests
in Global Note(s) representing the Notes will
be shown on, and transfers thereof will be
effected through, records maintained by the
Depository and its participants.

For additional information regarding the Notes, see "Description of the
Notes" and "Certain U.S. Federal Income Tax Considerations."

NO CASH PROCEEDS TO THE COMPANY

This Exchange Offer is intended to satisfy certain obligations of the
Company under the Registration Rights Agreement. The Company will not receive
any proceeds from the issuance of the Exchange Notes offered hereby and has
agreed to pay the expenses of the Exchange Offer. In consideration for issuing
the Exchange Notes as contemplated in this Prospectus, the Company will receive,
in exchange, the Private Notes representing an equal aggregate principal amount
at maturity. The form and terms of the Exchange Notes are identical in all
material respects to the form and terms of the Private Notes, except as
otherwise described herein under "The Exchange Offer -- Terms of the Exchange
Offer." The Private Notes surrendered in exchange for Exchange Notes will be
retired and canceled and cannot be reissued. Accordingly, issuance of the
Exchange Notes will not result in any increase in the outstanding indebtedness
of the Company.

RISK FACTORS

See "Risk Factors," immediately following this Summary, for a discussion of
certain factors to be considered in evaluating the Company, its business and an
investment in the Exchange Notes.

17
<PAGE> 19

SUMMARY CONSOLIDATED FINANCIAL DATA

The following table sets forth summary consolidated financial data of the
Company for the year ended December 31, 1997, the three months ended March 31,
1997 and as of and for the three months ended March 31, 1998. The summary
historical consolidated financial data of the Company for the year ended
December 31, 1997 were derived from the consolidated financial statements of the
Company and the notes thereto, which have been audited by Deloitte & Touche LLP,
independent auditors, whose report has been included herein. The summary
historical consolidated financial data of the Company for the three months ended
March 31, 1997 and as of and for the three months ended March 31, 1998 are
derived from the Company's unaudited consolidated financial statements. The
following table also sets forth pro forma financial data for the year ended
December 31, 1997 and for the three months ended March 31, 1998. The pro forma
data are unaudited and are not necessarily indicative of the results that would
have been achieved by the Company, nor are they intended to be indicative of the
Company's future results. The financial statements for the three months ended
March 31, 1997 and as of and for the three months ended March 31, 1998 reflect
all adjustments that are, in the opinion of management, necessary for a fair
statement of the results for the interim period. All adjustments made were
normal recurring accruals.

The summary consolidated financial data should be read in conjunction with
"Selected Consolidated Historical Financial Data," "Pro Forma Consolidated
Financial Statements," including the notes thereto, "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and the consolidated
financial statements of the Company, Nextel Brazil and Nextel Mexico including
the notes thereto, and the other financial and operating information appearing
elsewhere in this Prospectus.

<TABLE>
<CAPTION>
YEAR ENDED THREE MONTHS
DECEMBER 31, ENDED MARCH 31,
----------------------- ----------------------------------
1997 1998
1997 PRO FORMA(1) 1997 1998 PRO FORMA(1)
-------- ------------ -------- -------- ------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF OPERATIONS DATA:
Revenues.................................... $ 13,015 $ 26,312 $ 1,460 $ 8,558 $ 9,133
Costs and expenses related to revenues...... 7,424 11,087 758 3,552 3,697
Selling, general and administrative......... 26,768 44,810 4,051 15,227 16,605
Depreciation and amortization............... 18,381 35,220 2,581 9,192 9,970
-------- --------- -------- -------- --------
Operating loss.............................. (39,558) (64,805) (5,930) (19,413) (21,139)
Interest income............................. 19,666 20,088 2,798 4,324 4,324
Interest expense............................ (56,583) (120,549) (5,591) (18,968) (25,265)
Loss from equity method investments......... (11,401) (3,660) (1,867) (1,314) (502)
Other, net.................................. 5,561 5,784 (157) 1,198 1,134
Minority interest........................... 2,085 2,737 437 1,230 1,230
-------- --------- -------- -------- --------
Loss before income tax benefit.............. (80,230) (160,405) (10,310) (32,943) (40,218)
Income tax benefit.......................... 6,282 8,478 499 4,374 4,374
-------- --------- -------- -------- --------
Net loss.................................... $(73,948) $(151,927) $ (9,811) $(28,569) $(35,844)
======== ========= ======== ======== ========
Net loss per share, basic and diluted....... $ (2.03) $ (4.16) $ (0.27) $ (0.78) $ (0.98)
OTHER FINANCIAL DATA:
Ratio of earnings to fixed charges(2)....... -- -- -- -- --
</TABLE>

(footnotes on following page)

18
<PAGE> 20

<TABLE>
<CAPTION>
AS OF
MARCH 31, 1998
--------------
(IN THOUSANDS)
<S> <C>
CONSOLIDATED BALANCE SHEET DATA:
Cash and cash equivalents(3)........... $463,380
Marketable securities.................. 5,236
Property, plant and equipment, net..... 266,196
Investment in unconsolidated
subsidiaries......................... 81,045
Intangible assets, net................. 593,455
Total assets........................... 1,626,758
Long-term debt (including current
portion)............................. 1,028,732
Stockholders' equity................... 369,387
</TABLE>

- ---------------

(1) The unaudited pro forma statement of operations data for the year ended
December 31, 1997 and for the three months ended March 31, 1998 give effect
to the following transactions (collectively, the "Transactions"), in each
case as if they had occurred on January 1, 1997: (i) Nextel Communications'
acquisition of an 81% interest in Nextel Brazil for $186.3 million in market
value of Nextel Communications Class A Common Stock and the simultaneous
contribution of such interest to the Company; (ii) the MCS Transaction;
(iii) the increase in the Company's ownership interest in Nextel Mexico,
through a series of transactions, from 30.1% to 100%; (iv) the Argentina
Acquisition; (v) the 1997 Notes Offering (as defined herein); (vi) the
Clearnet Transaction; (vii) the other issuances of the Series A Preferred
Stock; and (viii) the 1998 Notes Offering. No adjustment has been made to
include interest income earned on the net proceeds from the 1998 Notes
Offering pending their application as set forth under "Financing Plan" or on
the net proceeds from the 1997 Notes Offering during the period from January
1, 1997 to March 6, 1997, the issuance date of the 1997 Notes (as defined
herein).

(2) For the purpose of computing the ratio of earnings to fixed charges,
earnings consist of losses before income taxes, income (loss) from equity
method investments and loss attributable to minority interests. Fixed
charges consist of interest on all indebtedness, amortization of deferred
financing costs and amortization of original issue discount, whether
expensed or capitalized, and that portion of rental expense which the
Company believes to be representative of interest. The deficiency for
purposes of calculating the ratio of earnings to fixed charges was $7,650,
$30,948 for the years ended December 31, 1997 and 1997 pro forma,
respectively, and $1,916, $3,865 and $5,654 for the three months ended March
31, 1997, 1998 and 1998 pro forma, respectively.

(3) Includes $104.5 million of cash held by the Company which is restricted for
use as equity investments under the Company's financing agreements and
equipment purchases under certain infrastructure purchase contracts.

19
<PAGE> 21

RISK FACTORS

In evaluating whether to tender Private Notes for Exchange Notes pursuant
to the Exchange Offer, prospective investors should consider carefully the
following factors in addition to the other information presented in this
Prospectus. A number of the matters and subject areas discussed in this
Prospectus are not historical or current facts but rather address potential
future circumstances and developments. The discussion of such matters and
subject areas is qualified by the inherent risks and uncertainties surrounding
future expectations generally, and also may materially differ from the Company's
actual future experience. The Company has attempted to identify certain of the
factors that it currently believes may cause actual future experience and
results to differ from the Company's current expectations. See
"-- Forward-Looking Statements."

SHORT OPERATING HISTORY; HISTORICAL AND FUTURE NET OPERATING LOSSES

Each of the Operating Companies has a short operating history.
Additionally, if the Company acquires or commences additional operations in
markets in which it currently does not operate, any such additional operations
will likely have either a limited or no operating history. The Company's
prospects must therefore be considered in light of the risks, expenses,
uncertainties and obstacles inherent in establishing a new business in an
evolving industry. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations." From inception through March 31, 1998, the
Company incurred net losses of $131.3 million. During the next several years,
the Company expects to continue to incur significant and increasing operating
and net losses, and negative cash flow from operations due to the expansion of
its operations and continued build-out and upgrade of its wireless
communications systems. There can be no assurance that the Company will achieve
or sustain profitability or positive cash flow from operations in the future. If
the Company cannot achieve operating profitability or positive cash flow from
operations, it may not be able to meet its debt service or working capital
requirements (including its obligations with respect to the Notes).

SUBSTANTIAL INDEBTEDNESS; ABILITY TO SERVICE DEBT; REFINANCING RISKS

At March 31, 1998, the Company had, other than guarantees by the Company of
indebtedness of the Company's Restricted Group Members (such guarantee
obligations would rank pari passu in right of payment with the Notes, but the
underlying guaranteed indebtedness is assumed to be satisfied from the assets of
the primary obligors), approximately $1,059.3 million of outstanding
indebtedness and the Restricted Group Members had approximately $98.5 million of
outstanding indebtedness. The accretion of original issue discount on the
Company's 13% Senior Discount Notes due 2007 (the "1997 Notes") and the Notes
will cause an increase in the Company's recorded liabilities of approximately
$720.6 million by April 15, 2003. Additionally, on a pro forma basis for the
year ended December 31, 1997 and for the three months ended March 31, 1998, the
Company's deficiency of earnings before fixed charges to cover fixed charges
would have been $36.2 million and $5.7 million, respectively. The indenture
governing the 1997 Notes (the "1997 Indenture") and the Indenture (collectively,
the "Indentures") limit, but do not prohibit, the incurrence of additional
indebtedness by the Company and certain of its affiliates and subsidiaries. The
Company anticipates that it and the Operating Companies will incur substantial
additional indebtedness in the future. At March 31, 1998, Motorola had provided
Nextel Brazil and Nextel Philippines with $73.3 million of secured equipment
financing to fund the purchase of equipment supplied by Motorola and an
additional $66.4 million of financing was available from Motorola to fund
additional purchases by Nextel Brazil of equipment supplied by Motorola. The
Indentures do not limit the amount of vendor financing indebtedness that may be
incurred by the Company or the other Restricted Group Members. Nextel Argentina
entered into an $83 million senior secured credit facility (the "Argentina
Credit Facility"), dated as of February 27, 1998, which facility, as amended on
May 8, 1998, was increased to $100 million. See "Description of Other
Indebtedness." The existing committed secured equipment financing facilities
obtained from Motorola and any additional financing arrangements obtained from
Motorola under the Motorola MOU (as defined herein) are referred to herein
collectively as the "Motorola Financings."

The Indentures restrict, among other things, the Company's, and certain of
its subsidiaries' and affiliates', ability to incur indebtedness, create liens,
pay dividends or make certain other restricted payments, sell assets, enter into
certain transactions with affiliates or merge or consolidate with any other
person. In addition, the

20
<PAGE> 22

existing Motorola Financings and the Argentina Credit Facility include, and any
future Motorola Financings and bank financings will, or are expected to, include
restrictive covenants, including prohibitions on the Operating Companies'
ability to pay dividends. The assets and capital stock of Nextel Brazil and the
assets of Nextel Philippines are pledged to secure such Operating Companies'
obligations under their respective Motorola Financings and the assets and
capital stock of Nextel Argentina are pledged to secure its obligations under
the Argentina Credit Facility. Because the Brazil Motorola Financing matures,
and future Motorola Financings and bank financings may mature, after the time
that cash interest payments on the Notes are required, as long as any such
indebtedness at an Operating Company level remains outstanding, such Operating
Company will be unable to pay dividends to the Company as a source of cash to
make interest payments on the Notes and the Company would therefore need to
obtain funds from other sources.

The level of the Company's indebtedness could have important consequences
to Holders, including the following: (i) the debt service requirements of any
additional indebtedness could make it more difficult for the Company to make
payments of interest on the Notes; (ii) the ability of the Company to obtain any
necessary financing in the future for working capital expenditures, debt service
requirements or other purposes may be limited or on terms that are not favorable
to the Company; (iii) a substantial portion of the Company's cash flow from
operations, if any, must be dedicated to the payment of principal and interest
on its indebtedness and other obligations, and will not be available for use in
its business; (iv) the Company's level of indebtedness could limit its
flexibility in planning for, or reacting to, changes in its business; (v) the
Company is more highly leveraged than some of its competitors, which may place
it at a competitive disadvantage; and (vi) the Company's high degree of
indebtedness will make it more vulnerable in the event of a downturn in its
business or in economic conditions in the countries in which it operates.

The Company must substantially increase its net cash flow in order to meet
its debt service obligations, including its obligations under the Notes. If the
Company is unable to generate sufficient cash flow or otherwise obtain funds
necessary to make required payments, or if it otherwise fails to comply with the
various covenants in its indebtedness, it would be in default under the terms
thereof, which would permit the holders of such indebtedness to accelerate the
maturity of the indebtedness and could cause defaults under other indebtedness
of the Company. Such defaults could result in a default on the Notes and could
delay or preclude payment of interest or principal thereon. The Company's
ability to meet its obligations will depend on its future performance, which
will be subject to prevailing economic conditions and to financial, business and
other factors, including factors beyond the Company's control.

The 1997 Notes, the existing Motorola Financings and the Argentina Credit
Facility mature, and other financings may mature, prior to the maturity of the
Notes. The Company also expects that the existing Motorola Financings and
Argentina Credit Facility as well as any future Motorola Financing and bank
financings may need to be refinanced at their respective maturities and that the
1997 Notes and the Notes also may need to be refinanced when cash interest
becomes payable thereon. The Company's ability to refinance its indebtedness
will depend, among other factors, on its financial condition at the time, the
restrictions contained in the instruments governing its other indebtedness and
upon other factors beyond the Company's control, including market conditions.
There can be no assurance that the Company will be able to refinance any
existing or future indebtedness, including the Notes. If any of the Company's or
the Operating Companies' indebtedness cannot be refinanced, it may cause a
default under the Notes and the Company may be unable to meet its obligations
under the Notes.

SIGNIFICANT CAPITAL REQUIREMENTS FOR OPERATIONS

Expansion and upgrade of the Company's existing wireless communications
systems, development of the Company's new ESMR networks systems and the
continued funding of operating losses will require substantial additional cash
over the next several years. For fiscal year 1998, the Company estimates that
its funding requirements will be approximately $810 million. The Company
believes that the net proceeds from the 1998 Notes Offering, together with
available cash, cash equivalents and marketable securities and borrowings
expected to be available under the existing Motorola Financings and the
Argentina Credit Facility, will be sufficient to fund the Company's current
operations, including the planned expansion of its existing operations,
including any optional additional funding of Nextel Philippines, currently
estimated to be $50 million during fiscal year 1998; however, there can be no
assurance that such funds will be sufficient. If,
21
<PAGE> 23

among other things, the Company's plans change, its assumptions regarding its
funding needs associated with the further build-out, expansion and enhancement
of its ESMR networks at the Operating Company level prove to be inaccurate, the
other shareholders in certain of the Operating Companies do not fund their
expected capital requirements, it consummates acquisitions or investments in
addition to those currently contemplated or at prices higher than currently
contemplated, it increases its existing equity ownership interests in certain of
the Operating Companies beyond those currently contemplated, it experiences
growth in its business or subscriber base greater than that which was
anticipated in developing the 1998 Plan (as defined below), it experiences
unanticipated costs or competitive pressures, the relevant Operating Companies
are unable to access funds under the existing Motorola Financings and/or the
Argentina Credit Facility, or the net proceeds from the 1998 Notes Offering
together with any other funds available to the Company and the Operating
Companies or any other borrowings otherwise prove to be insufficient to meet
cash needs through 1998, the Company may be required to seek additional capital
sooner than currently anticipated. The availability of borrowings under the
existing Motorola Financings and the Argentina Credit Facility are subject to
the satisfaction or waiver of certain conditions. The Company will also require
significant additional capital in subsequent years to fund the further
build-out, expansion and enhancement of its ESMR networks, to fund operating
losses and for other purposes. To the extent the Company's then-existing
financing sources are insufficient to meet such needs, the Company may seek to
raise such additional capital from public or private equity or debt sources.
There can be no assurance that the Company will be able to raise such capital on
satisfactory terms, if at all. If the Company decides and is able to raise
additional funds through the incurrence of debt, it may become subject to
additional or more restrictive financial covenants and its interest obligations
will increase. In the event that the Company is unable to obtain such additional
capital or to obtain it on acceptable terms, it may be required to reduce the
scope of its presently anticipated construction and expansion of its ESMR
networks, which could have a material adverse effect on its ability to compete,
and its ability to meet its obligations on the Notes. Nextel Communications is
not obligated to provide any additional funds to the Company. See "Financing
Plan."

CONTINGENT CAPITAL REQUIREMENTS

The Telcom Group (as defined herein), a group of shareholders of Nextel
Brazil, has the right between October 31, 2001 and November 1, 2003, to require
Nextel Brazil to redeem its 19% interest in Nextel Brazil (or approximately 18%
interest in Nextel S.A.) at fair market value as determined pursuant to an
appraisal procedure (the "Nextel Brazil Put"). Motorola has the right to cause
Nextel Peru to acquire all shares of Nextel Peru held by Motorola and its
affiliates (the "Nextel Peru Put") at the appraised fair market value of such
shares if Motorola owns at least 19% of the outstanding shares of Nextel Peru
and Nextel Peru does not purchase ESMR infrastructure equipment from Motorola,
provided that such ESMR infrastructure equipment is technologically competitive
and is offered to Nextel Peru on competitive commercial terms. Pursuant to the
Philippines Partner Agreements, the Gotesco Group had the right (the "Gotesco
Put" and collectively with the Nextel Brazil Put and the Nextel Peru Put the
"Operating Company Puts"), beginning in January 1999, to put its 20% interest in
Nextel Philippines to the Company at a purchase price of approximately $9.4
million. However, on June 26, 1998, the Company and the Gotesco Group entered
into the Gotesco Put Acceleration Agreement pursuant to which the exercise date
of the Gotesco Put was accelerated from January 1999 to August 21, 1998. The
Company anticipates that it would seek any required funding to meet any
obligation under its Operating Company Puts through the issuance of additional
debt and equity securities at both the Company level and the applicable
Operating Company level, future equity investments in such Operating Companies
by new local partners and capital contributions from Nextel Communications in
the form of cash or common stock of Nextel Communications. Nextel Communications
has no obligation to provide any financing in any form and there can be no
assurance that the Company or any of the Operating Companies will be successful
in obtaining all of the amounts required to fund the Operating Company Put
obligations. The failure to fund any Operating Company Put may have a material
adverse effect on the Company.

22
<PAGE> 24

tions services and performing many of the tasks formerly performed by the
Ministry of Communications of Brazil (the "Brazil Ministry of Communications"),
the Company will be required to pay approximately $4.6 million to finalize the
transfer, pursuant to a number of option agreements entered into with the
respective shareholders of Nextel Brazil's corporate licensees, of 1,180 of its
1,955 channels. See "Business -- Brazil -- Regulatory and Legal Overview."
Pursuant to a services agreement entered into between Nextel Mexico and certain
shareholders of Grupo Comunicaciones San Luis ("Grupo San Luis"), in connection
with the Company's purchase of Grupo San Luis' equity interest in Nextel Mexico,
Nextel Mexico has agreed to pay such shareholders aggregate consulting fees of
approximately $6.6 million in January 1999 as consideration for regulatory
advice and consulting services rendered to Nextel Mexico. The Company is
obligated to pay to Nextel Peru the remaining purchase price of $20.7 million
for its equity interest in Nextel Peru by July 30, 1998. Additionally, in
connection with the Argentina Credit Facility, the Company has agreed to
contribute at least $50 million of additional capital in the form of cash or new
equipment to Nextel Argentina by December 31, 1999. As of March 31, 1998, the
Company had made contributions totaling $32.3 million to Nextel Argentina in
satisfaction of the required $50 million.

HOLDING COMPANY STRUCTURE; EFFECTIVE SUBORDINATION; SECURED INDEBTEDNESS

The Company intends to invest or loan substantially all of the net proceeds
from the 1998 Notes Offering in or to the Operating Companies (other than China
and Canada). The Company is a holding company and therefore must rely on
dividends and other payments from the Operating Companies to generate the funds
necessary to meet its obligations, including the payment of principal and
interest on the Notes. The Operating Companies are legally distinct from the
Company and have no obligation, contingent or otherwise, to pay amounts due with
respect to the Notes, or to make funds available for such payments. The
Operating Companies do not guarantee the 1997 Notes or the Notes. Additionally,
the Operating Companies and subsidiaries through which the Company holds its
interests in certain of the Operating Companies are organized in jurisdictions
outside the United States. The ability of the Operating Companies to make
distributions to the Company will be subject to, among other things, the
availability of funds, contractual restrictions and applicable local laws.
Nextel Brazil and Nextel Philippines are currently prohibited from paying
dividends until their respective Motorola Financings are repaid. J-Com is
restricted from paying dividends until it has repaid all shareholder loans,
including the Company's. The Brazil Motorola Financing matures after the time
cash interest is required to be paid on the Notes. The Argentina Credit
Facility, which matures on March 31, 2003, restricts Nextel Argentina's ability
to pay dividends until all amounts borrowed thereunder have been paid in full.
The Company anticipates that future indebtedness incurred at the Operating
Company level (including any future Motorola Financings and bank financings)
will include restrictions on the ability of any such Operating Company to make
dividend or other payments to the Company until such indebtedness is repaid. In
addition to the restrictions imposed under the Philippines Motorola Financing,
the payment of dividends by Nextel Philippines also requires the approval of
certain of the other equity holders of Nextel Philippines.

Claims of creditors of the Operating Companies, including trade creditors,
will generally have priority as to the assets of such Operating Companies over
the claims of the Company and the holders of the Company's indebtedness.
Accordingly, the Notes will be effectively subordinated to the liabilities of
the Operating Companies, including any such liabilities under the existing and
any future Motorola Financings, the Argentina Credit Facility and any future
bank financings. Any right of the Company to receive assets of any Operating
Company upon the liquidation or reorganization of such Operating Company (and
the consequent right of the Holders to participate in those assets) will be
effectively subordinated to the claims of such Operating Company's creditors,
except to the extent that the Company is itself recognized as a creditor, in
which case the claims of the Company still would be subordinate to any security
in the assets of such Operating Company (including the assets of such Operating
Company securing any Motorola Financing or any bank financing) and any
indebtedness of such Operating Company senior to that held by the Company. In
addition, holders of secured indebtedness of the Company would have a claim on
the assets securing such indebtedness that is prior to the Holders of the Notes
and would have a claim that is pari passu with the Holders of the Notes to the
extent such security did not satisfy such indebtedness. The stock and assets of
Nextel Brazil and the assets of Nextel Philippines have been pledged to secure
such Operating Companies'

23
<PAGE> 25

obligations under its respective Motorola Financing, the stock and assets of
Nextel Argentina are pledged to secure its obligations under the Argentina
Credit Facility and the stock and assets of other Operating Companies that may
in the future obtain Motorola Financings or bank financings are expected to be
pledged to secure such Operating Company's obligations thereunder. As of March
31, 1998, the Company had no significant assets other than the stock of the
Operating Companies (or other intermediate holding companies) held by the
Company, and cash and cash equivalents of approximately $463.4 million
consisting primarily of proceeds remaining from the 1998 Notes Offering. In
addition, it is expected that substantially all of the net cash proceeds from
the 1998 Notes Offering will be invested in or loaned to the Operating
Companies, other than those in China and Canada. A substantial portion of the
assets of the Operating Companies consists of goodwill and licenses. As of March
31, 1998, the Company's Restricted Group Members had approximately $319.1
million of liabilities, including $98.5 million of indebtedness.

MINORITY INTERESTS; SHAREHOLDER CONSENT REQUIREMENTS

The Company currently holds minority interests in its Operating Companies
in China, Canada, the Philippines and Japan. The Company intends to invest or
loan substantially all of the net proceeds from the 1998 Notes Offering in or to
the Operating Companies, other than those in China and Canada. During the period
from the consummation of the Company's offering of its 1997 Notes on March 6,
1997 (the "1997 Notes Offering") to March 31, 1998, the Company used $471.9
million of the net proceeds from the 1997 Notes Offering and the 1998 Notes
Offering to increase its ownership interest in certain Operating Companies and
to acquire licenses, and to fund capital expenditures, operating losses, working
capital and general corporate purposes. The Company has made, and anticipates
that it will make in the future, minority investments in international wireless
communications operations, partly because of limitations on foreign ownership in
telecommunications companies in some countries. The Company's ability to
withdraw funds from its joint venture in China, the Philippines and Japan,
depends on receiving the consent of its partners over which the Company has no
control. In addition, although the Company owns a controlling equity interest in
Nextel Brazil and Nextel Peru, the other shareholders in those Operating
Companies have the ability to veto certain other corporate actions. While the
terms of the arrangements vary, the Company's investments in the Operating
Companies may be adversely affected in the event that the other Operating
Company shareholders have economic or business interests or goals that are
inconsistent with those of the Company or take actions that are contrary to the
Company's policies or objectives. The Company believes that it has adequate
negative control mechanisms and contractual rights concerning those Operating
Companies in which it has a minority equity ownership position to prevent such
Operating Companies from taking actions that would seriously disadvantage or
materially adversely affect the Company's interests. However, if certain
Operating Companies that are Restricted Group Members take actions that violate
the covenants contained in the Indentures, such actions may result in an event
of default thereunder. See "Description of the Notes" and "Description of Other
Indebtedness." In addition, disagreements may arise between the Company and any
of the other shareholders in the Operating Companies, which, in some cases,
could lead to the Company purchasing such shareholders' interest in the
Operating Company. The Company is currently involved in a legal dispute with two
of the Philippines Shareholders regarding the corporate governance provisions of
the Philippines Partner Agreements. See "Recent Developments,"
"Business -- Operations and Investments -- Philippines" and
"Business -- Corporate Governance -- Philippines."

The Company may owe certain obligations to the holders of various minority
interests in its subsidiaries. Accordingly, the Company may not have the right
to exercise unfettered control over such subsidiaries and may be required in
certain instances to deal with such subsidiaries on terms no less favorable to
such subsidiaries than could be obtained from unaffiliated third parties. In
addition, dividends or other distributions paid or made by such subsidiaries
must be paid or made on a pro rata basis to all shareholders.

GOVERNMENT REGULATION

General. The licensing, construction, ownership and operation of wireless
communications systems, and the grant, maintenance and renewal of applicable
licenses and radio frequency allocations, are regulated by governmental entities
in the markets in which the Operating Companies conduct business. In addition,
such matters and certain other aspects of wireless communications system
operations, including rates charged to

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customers and the resale of wireless communications services, may be subject to
public utility regulation in the jurisdiction in which service is provided.
Further, statutes and regulations in certain of the markets in which such
Operating Companies conduct business impose limitations on the ownership of
telecommunications companies by foreign entities. Changes in the current
regulatory environments in such countries, or future judicial intervention,
including with respect to interconnection arrangements, requirements for
increased capital investments, regulations affecting prices the Operating
Companies are able to charge for their services or foreign ownership
limitations, could have a material adverse effect on the Company. Because of the
uncertainty as to the interpretation of regulations in certain jurisdictions,
there can be no assurance the Company can provide planned services in each
jurisdiction and it is possible that the Company may be prohibited from
providing services it intends to provide in the future in certain jurisdictions,
including particularly its ESMR services. On June 30, 1998, COFETEL issued a
press release in which it ordered Nextel Mexico to cease its pre-launch
marketing campaign for its ESMR services because, according to the COFETEL press
release, Nextel Mexico's SMR concessions did not authorize the Company to offer
the services specified in Nextel Mexico's marketing materials. On July 8, 1998,
Nextel Mexico received a letter from COFETEL containing such order. Prior to
receipt of COFETEL's order, and based on the press reports regarding COFETEL's
press release, Nextel Mexico had ceased its pre-launch marketing campaign. On
July 9, 1998, Nextel Mexico sent a written reply to COFETEL in which it informed
COFETEL that the Company had ceased its pre-launch marketing campaign and
intended to revise its pre-launch marketing campaign to insure that any terms
describing its ESMR services were consistent with its SMR licenses. After
meeting with COFETEL, Nextel Mexico revised the language in its pre-launch
marketing campaign and, with COFETEL's authorization, resumed its pre-launch
marketing campaign. Although the Company believes that its licenses authorize
all of the services contemplated to be offered on its ESMR network and that
COFETEL will not have any further objections to Nextel Mexico's marketing
campaigns, there can be no assurance that COFETEL will accept Nextel Mexico's
interpretation of its SMR licenses or that COFETEL will not object to Nextel
Mexico's future marketing campaigns. For a more detailed description of the
regulatory environment in each of the countries in which the Operating Companies
conduct business, see the "Regulatory and Legal Overview" discussion for each
Operating Company under "Business -- Operations and Investments."

Wireless communications licenses and spectrum allocations are subject to
ongoing review and, in some cases, to modification or early termination for
failure to comply with applicable regulations. Most of the Company's wireless
communications licenses have fixed terms and are not automatically renewable. In
cases where license terms are fixed, there can be no assurance that license
renewal will be effected, or if effected that renewal will be on acceptable
economic terms.

Compliance with System Construction, Operation or Loading
Requirements. Compliance with the terms of the Operating Companies' licenses
and certain regulatory requirements, such as installation deadlines and minimum
loading requirements, can be difficult. There can be no assurance that such
requirements will be met or that the Company will not lose any applicable
wireless communications licenses as a result of its failure to meet such
requirements. The Company currently is not in compliance with applicable
installation deadlines and minimum loading requirements with respect to certain
channels located in various parts of Brazil outside Sao Paulo. The Company has
not yet met minimum loading requirements with respect to certain channels in
some markets located in Argentina outside of Buenos Aires. Nextel Peru has not
satisfied its minimum expansion plans for operation. Failure to get waivers,
extensions, or similar relief of the relevant deadlines or to otherwise comply
with such requirements may result in revocation of the licenses affected.

In the Philippines, cellular mobile operators are required to install at
least 400,000 local exchange lines. The Company does not believe that Nextel
Philippines is subject to this requirement, however no assurance can be given
that this will be the case. If this requirement were found to be applicable to
Nextel Philippines, it would require a significant capital investment.

Interconnect Agreements. Each of the jurisdictions in which the Operating
Companies operate permits wireless communications companies to interconnect to
the landline telephone service provider. The Company has entered into
interconnect agreements for SMR and ESMR service in Brazil, Argentina and Mexico
and for ESMR service in the Philippines. Although interconnection services are
currently being provided to Nextel

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Peru for analog SMR services, Nextel Peru has not entered into definitive
interconnect agreements with the landline telephone service providers for its
ESMR networks. Although Nextel Mexico has entered into an interconnect agreement
with Telefonos de Mexico, S.A. de C.V. ("Telmex") for the provision of
interconnect services on its ESMR services in Mexico City, Telmex has yet to
provide such services to Nextel Mexico. Any failure to obtain such interconnect
services from Telmex will delay Nextel's Mexico's commercial launch of its ESMR
services and would have a material adverse effect on the Company's results of
operation. There can be no assurance that the Company will enter into a
satisfactory interconnect agreement for its digital networks in Peru and the
failure to enter into interconnect agreements in such market on favorable terms
could have a material adverse effect on Nextel Peru's results of operations. As
discussed below, the Company's interconnect capacity in Brazil is subject to the
limitations imposed by Norma 14/97.

Brazilian Telecommunications Regulations. With respect to its current
operations in Sao Paulo and planned operations in Rio de Janeiro, Nextel Brazil
has applied for certain additional site and other licenses. While the Company
believes that such licenses will be granted in due course there can be no
assurance that such licenses will be obtained in a timely manner. The failure to
receive such licenses in a timely manner may have a material adverse effect on
Nextel Brazil.

On November 3, 1997, the Brazil Ministry of Communications issued new
regulations governing SMR service providers in Brazil. These new regulations
(Ordinance 557, which adopted Norma 14/97 ("Norma 14/97")) impose limits on the
types of customers that an SMR provider can serve, the number of telephone
numbers granted to an SMR provider, the amount of interconnect traffic allowed
with respect to a provider's network, the number of channels a provider can
hold, and provides for consolidation of multiple licenses under one license and
various technical specifications for wireless communications networks. Norma
14/97 is implemented by the newly formed Anatel, an independent agency in charge
of regulating telecommunications services and performing many of the tasks
formerly performed by the Brazil Ministry of Communications.

Many aspects of the law, rules and regulations applicable to the Company's
SMR and ESMR business in Brazil are relatively new and still developing and as a
result it is difficult to determine how regulators will interpret rules or judge
compliance and what if any enforcement action would be taken. The Company has
had numerous meetings and discussions with various Brazilian governmental and
regulatory authorities, including representatives of the Brazil Ministry of
Communications and Anatel, regarding its ownership and operation of SMR
frequencies and its planned launch and operation of its ESMR network in markets
in Brazil. These discussions have been informal and are not binding on the
regulatory authorities. Although the Company expects that further clarifying
interpretations and refinements will be promulgated by the appropriate Brazilian
governmental and regulatory authorities in the future, the Company believes that
it has a fundamentally sound and well-informed understanding of and basis for
interpreting the current regulatory framework (including Norma 14/97), and will
be able to implement its business plans in Brazil substantially as currently
contemplated. There can be no assurance that the Brazilian governmental and
regulatory authorities, including Anatel, in particular, in the future will not
modify or interpret the existing regulatory framework, or adopt further or
replacement legislation, rules, or regulations, that could significantly
restrict or otherwise materially adversely affect the Company's Brazilian
operations.

Norma 14/97 requires that SMR service may only be provided to legal
entities or groups of legal entities that perform specific activities. SMR
service may not be provided to individual subscribers and all SMR subscriber
units must be capable of providing dispatch service. Under Norma 14/97 an SMR
service provider must apply to an operator of a public switch telecommunications
network ("PSTN") to obtain blocks of telephone numbers to be issued by such PSTN
for use by the SMR service provider subscribers. The PSTN will forward the
request to Anatel and Anatel will inform the SMR provider of the allotment of
numbers. The telephone numbers granted to an SMR provider cannot exceed 50% of
the total number of SMR mobile subscriber units that the SMR service provider
projects to be in operation in accordance with its schedule for deployment of
services.

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agreements with the operators of the PSTN. The Company has executed interconnect
agreements with Telecomunicacoes de Sao Paulo S.A. ("Telesp") and
Telecomunicacoes Brasileiras S.A. ("Telebras") for interconnect services in Sao
Paulo and Telecomunicacoes de Rio de Janeiro S.A. ("Telerj") and Telebras for
interconnect services in Rio de Janeiro and has obtained blocks of telephone
numbers from the respective PSTNs for the provision of interconnect services on
its ESMR network in each city.

Norma 14/97 also limits the volume of interconnect traffic for SMR service
providers. Norma 14/97 provides that within an SMR service provider's network,
the volume of traffic interconnected with the PSTN cannot exceed one-third of
the sum of intra-network traffic volume and outgoing calls interconnected to the
PSTN. For purposes of calculating the number of intra-network calls, each
subscriber unit called during a one-to-many dispatch call counts as one
intra-network call. The evaluation of the traffic volumes for the purposes of
the above restrictions is to take place every four months. In the event that the
interconnect regulations are violated by the license holders, the licensee is
subject to the imposition of a penalty under Norma 14/97.

In addition, Norma 14/97 provides that SMR licenseholders may not hold more
than 200 SMR channels (10 MHz) in each geographic area. Norma 14/97 permits SMR
licensees that are under common ownership or control to request Anatel to
consolidate their SMR licenses subject to the 200 channel limitation, under one
SMR licensee. Anatel has approved the consolidation of Nextel Brazil's SMR
licenses under common ownership or control under one SMR licensee in each of Sao
Paulo and Rio de Janeiro. The Company held 210 channels in Sao Paulo and Anatel,
as part of its approval of the consolidation of Nextel Brazil's SMR licenses in
Sao Paulo, canceled, without compensation, 10 of Nextel Brazil's SMR channels in
Sao Paulo. Under Norma 14/97, Nextel Brazil has until November 3, 1998 to
eliminate any extra SMR channels and to seek approval of the consolidation of
its licenses, including those that it has options to acquire from third parties.
Accordingly, Nextel Brazil intends to appeal Anatel's cancellation of its 10 SMR
channels in Sao Paulo. Although the Company has applied for approval to
consolidate the ownership of its SMR licenses in the other cities in Brazil
where it holds licenses, there can be no assurance that such approval will be
granted by Anatel.

Nextel Brazil's interest in licensees holding 1,180 of its 1,955 channels
is structured pursuant to a number of option agreements (the "Option
Agreements") entered into with the shareholders of the respective corporate
licensees of such channels. Pursuant to the Option Agreements, Nextel Brazil,
through its subsidiaries has acquired a minority interest in each such licensee
not exceeding 49%. While Nextel Brazil has exercised its options under all the
Option Agreements, the actual transfer of the balance of the ownership interest
in each such licensee is subject to the approval of Anatel. Approval for change
of control can only be granted after the commencement of commercial operations,
and many channels that are the subject of Option Agreements have not been
installed. The Company is currently conducting analog SMR system installation
with regard to a significant portion of the channels that are the subject to the
Option Agreements. While the Company believes it will receive Anatel approval
when it has met the installation requirements and after the commencement of
commercial operations, no assurance can be given that such approval will be
obtained. To the extent the Company is not able to acquire the balance of the
ownership interest in a particular licensee, the Company believes that Nextel
S.A., a subsidiary of Nextel Brazil and the holding company for Nextel Brazil's
SMR Brazilian licensee companies, would be able to continue to maintain its
contractual right to render management services for the operations subject to
the license held by such licensee pursuant to a service agreement and receive
fees under such service agreement. However, the Company would not own such
licensee and the Company's rights with respect to such license could be limited.
There can be no assurance that Anatel would not challenge the validity of such
service agreements. All of Nextel Brazil's channels in Sao Paulo are indirectly
and entirely owned by Nextel S.A. and are not held pursuant to the Option
Agreements.

COMPETITION

The Company's success will depend on the Operating Companies' ability to
compete effectively with other communications services providers, including
landline telephone companies and other wireless communications companies, in the
markets in which the Operating Companies offer services. Many of the Company's
competitors are well-established companies with substantially greater financial
and marketing resources, larger customer bases, and better name recognition than
the Company, and in certain markets may be able to
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provide coverage to a larger number of subscribers. In addition, many existing
telecommunications enterprises in the markets in which the Operating Companies
conduct business have successfully attracted significant investments from
multinational communications companies. Because of their financial resources,
these competitors may be able to reduce prices in order to gain market share. In
Brazil, some of the largest telecommunications companies in the world have been
granted licenses in the on-going Band B cellular license auctions, which is
expected to result in significant competition when those services are launched.
In addition, the Argentine and Mexican governments have announced their
intention to auction a number of licenses to provide wireless communications
services, and, as a result, the Company expects competition in the wireless
communications services industry in these countries to increase. The Company
expects that the prices it charges for its products and services will decline
over the next few years as competition intensifies in its markets. Because iDEN
technology is not compatible with other digital cellular or PCS technologies,
the Company's customers will not be able to roam on cellular or PCS systems.
There can be no assurance that the Company will be able to compete effectively
in operating ESMR networks in any of its markets, or whether such networks, if
competitive with existing systems will be able to compete effectively in the
future. For a more detailed description of the competitive factors affecting
each Operating Company, see the "Competition" discussion for each Operating
Company under "Business -- Operations and Investments."

In addition, the regulatory environment in the countries where the
Operating Companies conduct their business impose or may impose limitations that
adversely affect the Company's competitive position. Certain provisions of Norma
14/97 impose limitations or restrictions on the Company that are not imposed on
other Brazilian wireless service providers, including limitations on the
Company's ability to (i) provide services to individual customers (service can
only be provided to business entities and subscriber units must provide dispatch
service); (ii) obtain direct telephone numbers for all of its subscriber units
in Brazil and (iii) interconnect with the public telecommunications network.
Accordingly, Norma 14/97 may limit the Company's ability to compete effectively
with other wireless communications service providers in Brazil, including the
operators of the Band B cellular licenses. See "-- Government Regulation."

The Company continuously reviews opportunities to acquire additional
licenses in new markets, primarily in emerging countries. In each new market,
the Company expects to face competition for such licenses from major
international telecommunications entities, as well as from local competitors.

RAPID TECHNOLOGICAL CHANGES

The telecommunications industry is subject to rapid and significant changes
in technology, which could lead to new products and services that compete with
those offered by the Company or lower the cost of current competing products and
services to the point where the Company's products and services could become
noncompetitive, thereby requiring the Company to reduce the prices of its
products and services. While the Company is not aware of any proposed changes
that will materially affect the attractiveness of its product and service
offerings, the effect of technological changes on the Company's businesses
cannot be predicted. In the future, the Company expects to experience
competition from new technologies such as PCS and possibly satellite technology,
as well as from advances with respect to existing technologies such as ESMR,
cellular, paging and mobile data transmission. There can be no assurance that
the Company will be able to adopt new technologies or to keep pace with ongoing
advances in existing technology.

RELIANCE ON LIMITED NUMBER OF EQUIPMENT SUPPLIERS

Motorola is expected to provide most of the infrastructure and all of the
subscriber handset equipment to the Company for its ESMR systems for the
foreseeable future. It is expected that for the first few years of the Company's
ESMR operations, Motorola will be the only manufacturer of subscriber equipment
that is compatible with the Company's ESMR networks. During 1997, the Company
acquired from Motorola approximately $87.3 million in infrastructure equipment
and related services, and in 1998, the Company has committed to purchase from
Motorola $140 million of additional infrastructure equipment and related
services. In addition, the Company purchases all of its switching equipment from
Northern Telecom Limited. Although the Company believes that it has or will be
able to secure contractual rights to procure sufficient equipment for its
anticipated requirements, there can be no assurance that such equipment will
continue to be available to the Company or that additional equipment would be
available if demand for the Company's

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services exceeds that currently projected in the Company's business plan.
Substantially all of the infrastructure and subscriber handset equipment
required by the Operating Companies is manufactured in North America.
Accordingly, in addition to any potential equipment manufacturing problems,
delays or disruptions affecting suppliers, the Company also could be adversely
affected by any inability or delays in shipping such equipment from its place of
manufacture to the overseas market where it is required.

EXPANSION; MANAGEMENT OF GROWTH

The Company has experienced rapid growth and intends to continue to grow
through further expansion and upgrade of its existing operations, through
acquisitions and joint ventures and through the establishment of new operations.
The Company continually seeks additional opportunities in its existing and new
markets. The Company's future success and its ability to meet its debt service
obligations depends on the expansion of its operations and development of a
large subscriber base on a timely basis.

The Company's planned ESMR network construction and expansion projects will
be subject to numerous risks, any of which could require substantial changes to
proposed plans or otherwise alter the time frames or budgets currently
contemplated. Such risks include (i) securing the necessary channel grants and
adhering to regulatory requirements relating thereto; (ii) locating suitable
sites for the Company's towers, obtaining any required zoning variances or other
governmental or local regulatory approvals, and negotiating acceptable purchase,
lease, joint venture or other agreements; (iii) negotiating favorable
interconnection agreements; (iv) delays that may be caused by frequency
cross-interference with other radio spectrum users, such as television stations;
and (v) risks typically associated with any construction project, including
possible shortages of equipment or skilled labor, engineering or environmental
problems, work stoppages, weather interference and unanticipated cost increases.
There can be no assurance that the Company's currently planned ESMR network
construction and expansion activities will be successful. Moreover, numerous
factors could cause the Company not to proceed with all or a portion of its ESMR
network construction and expansion plans or otherwise delay or alter its current
expansion plans. See "-- Government Regulation -- Requirements for Launch of
ESMR Service in Brazil."

Once the Company's ESMR network operations are in place in a particular
market, the Company's development of a significant subscriber base depends on
the success of its sales and marketing efforts and the receptiveness of the
marketplace. In most of its markets, the Company has limited experience in
marketing its wireless communications services and in tailoring its sales and
marketing to local conditions, and there can be no assurance that the Company's
sales and marketing teams will be able to successfully establish a large
subscriber base in its markets. In most of its markets, the Company will need to
rely in part on the efforts of independent dealers and distributors to market
its services.

The Company's planned ESMR construction and expansion activities include
planned commercial launches of service in six markets in 1998, two of which
occurred in the second quarter of 1998 and two of which occurred in the third
quarter of 1998. See "Business -- Operations and Investments." As a result of
its aggressive construction and expansion plans, the Company faces significant
challenges in managing its expanded operations. The Company must hire and train
a significant number of key personnel to manage its growth, and its construction
and expansion plans will place substantial burdens on the Company's current
management resources, information systems and financial controls. In order to
alleviate the burden on the Company's management and to ensure that the ESMR
service launches are effected consistently in each country and with minimal
difficulty, the Company has assembled a U.S. based operations team, which will
work on-site with the Operating Company management teams of each country to
supervise the commercial launch of ESMR services in such country and on-going
management. In addition, the Company expects to face significant challenges in
integrating newly acquired businesses with its existing operations. There can be
no assurance that the Company will be able to manage its growth effectively.
Failure to do so would have a material adverse effect on the Company's results
of operations.

CONTROL BY NEXTEL COMMUNICATIONS AND ITS SIGNIFICANT STOCKHOLDERS;
CONFLICTS OF INTEREST; DEPENDENCE ON NEXTEL COMMUNICATIONS

The Company is an indirect wholly owned subsidiary of Nextel Communications
and Nextel Communications therefore has the power to elect all the directors of
the Company. Of the seven directors that comprise
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the board of directors of the Company, five are also directors and/or officers
of Nextel Communications. Nextel Communications and directors and officers of
Nextel Communications who are also directors of the Company are in positions
that may result in conflicts of interests with respect to transactions involving
the Company. The Company currently engages in and expects, in the future, to
continue to engage in transactions with Nextel Communications and its
affiliates. See "Certain Relationships and Related Transactions."

Based on securities ownership information relating to Nextel Communications
as of April 30, 1998, and after giving effect to the conversion of the
outstanding shares of preferred stock of Nextel Communications and the exercise
in full of outstanding options and warrants held by the entities controlled by
Craig O. McCaw (the "McCaw Group") and Motorola, the McCaw Group and Motorola
would beneficially own 24.2% and 15% of the Nextel Communications Class A Common
Stock, respectively, outstanding as of such date. Pursuant to the Securities
Purchase Agreement (the "McCaw Securities Purchase Agreement") dated as of April
4, 1995, as amended, among Nextel Communications, a member of the McCaw Group
(the "McCaw Investor") and Craig O. McCaw, the McCaw Investor has the right to
designate not less than 25% of the board of directors of Nextel Communications
(the "Nextel Communications Board"). Additionally, the McCaw Investor is
effectively entitled to designate a majority of the members of the Operations
Committee (the "Operations Committee") of the Nextel Communications Board and
therefore has the ability to formulate key aspects of the business strategy of
Nextel Communications. As a result, the McCaw Investor is in a position to exert
significant influence over the affairs of Nextel Communications, and thereby
over the affairs of the Company.

Certain decisions concerning the operations or financial structure of the
Company may present conflicts of interest between Nextel Communications as the
owner of the Company's capital stock and the Holders of the Notes. Nextel
Communications may have an interest in pursuing acquisitions, divestitures,
financings or other transactions which, in its judgment, could enhance the value
of its equity, even though such transactions might involve risk to the Holders
of the Notes.

The Company and Nextel Communications have entered into a first-opportunity
agreement (the "Non-Compete Agreement") effective as of March 6, 1997, pursuant
to which Nextel Communications has agreed that neither Nextel Communications nor
any Affiliate (as defined in the agreement) controlled by Nextel Communications
will in the future participate in the ownership or operation of two-way
terrestrial-based mobile wireless communications systems ("Wireless Entities")
anywhere other than in the United States and Canada (for so long as Nextel
Communications owns an equity interest in Clearnet) unless such opportunities
("Future Wireless Opportunity") have first been presented to the Company. Such
restriction will not apply to, among other things, any commercial relationship
with any Wireless Entity (including channel or frequency sharing, roaming,
purchase or sale of goods or services, licensing of intellectual property or
other intangible rights or similar business related arrangement) that does not
involve the directing or participating in the management of such Wireless
Entity. The Company has agreed that, without the consent of Nextel
Communications, neither it, its Restricted Affiliates nor any of its
Unrestricted Affiliates (each as defined in the Indentures) will participate in
the ownership or management of any wireless communications service business in
the United States or Canada other than with respect to its interest in Clearnet.
Such restrictions terminate upon the earliest to occur of (i) April 15, 2007 and
(ii) the date on which a Change of Control occurs (as defined in the
Indentures).

If Nextel Communications gives the Company notice (the "Initial Notice") of
a Future Wireless Opportunity, the Company will have 60 days to notify Nextel
Communications that it intends to pursue such opportunity and how it intends to
finance its participation. The Company must have secured a financing commitment
within 90 days of the date of the Initial Notice and the Future Wireless
Opportunity must be consummated within nine months of the date of the Initial
Notice. In the event the Company fails to respond to Nextel Communications
within the 60 and 90 day periods or fails to consummate the transaction within
the nine-month period, Nextel Communications will be free to pursue the Future
Wireless Opportunity.

Nextel Communications and the Company have agreed not to amend the
Non-Compete Agreement if such amendment is material and adverse to the holders
of the 1997 Notes without the consent of such holders and to provide such
holders with written notice 30 days prior to effectiveness of any amendment of
such Non-Compete Agreement. The Company and Nextel Communications, on March 12,
1998, entered into an

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amendment to the Non-Compete Agreement to extend its benefits to the holders of
the Notes, which amendment became effective as of April 12, 1998.

Each of the McCaw Group and Motorola has and (subject to the terms of
applicable agreements between such parties and Nextel Communications) may have
an investment or interest in entities that provide wireless communications
services that could potentially compete with Nextel Communications and the
Company. Under the McCaw Securities Purchase Agreement, the McCaw Investor,
Craig O. McCaw and their Controlled Affiliates (as defined in the McCaw
Securities Purchase Agreement) may not, for a period of time, participate in
other two-way terrestrial based mobile wireless communications systems in the
region that includes any part of North America or South America unless such
opportunities have first been presented to and rejected by Nextel
Communications. Such restrictions terminate on the later to occur of July 28,
2000 and one year after the termination of the Operations Committee.

The Company also depends on Nextel Communications to provide it with
various services including technology assistance, as well as certain
administrative services. Such services are provided pursuant to an overhead
services agreement. See "Certain Relationships and Related Transactions."

In November 1996, Nextel Communications, the Company and Motorola entered
into a binding memorandum of understanding regarding the provision of equipment
financing by Motorola, including the Motorola Financings (the "Motorola MOU").
Under the Motorola MOU, Motorola agreed to provide an aggregate of up to $400
million in vendor financing to Nextel Communications and Nextel International
for the worldwide purchase of iDEN equipment and services and ancillary products
(such as switches). In March 1997, Motorola and Nextel Communications entered
into a term sheet increasing the maximum worldwide vendor financing available to
Nextel Communications and the Company to $650 million, with a maximum non-U.S.
amount outstanding of $400 million, subject to certain per country limits as
agreed in the Motorola MOU. The Motorola MOU does not provide for equipment
financing to Nextel Mexico. The Motorola MOU sets a limit of $125 million per
country (other than the United States and Canada) on the amount that may be
borrowed under the Motorola Financings. In June 1997 and October 1997, the
Company and Motorola entered into definitive agreements for financing the
purchase of up to $14.7 million and $125 million of equipment by Nextel
Philippines and Nextel Brazil, respectively.

Commitments provided by Motorola to provide financing to any Operating
Company (other than Clearnet and J-Com), including Nextel Brazil and Nextel
Philippines, count 100% against Motorola's $650 million aggregate commitment.
Currently, Motorola has not committed any financing to any Operating Company
other than the existing Motorola Financings described above. The Motorola MOU
contemplates that the loans under the Motorola Financings will bear interest at
a rate of 2% to 4% over prime rate, depending on the Operating Company placing
the order and the country in which such company is installing the iDEN
equipment, and that such loans could have a maturity of up to six years.
Borrowings by an Operating Company may be secured by all the assets and stock of
such Operating Company and it is expected that the Company will guarantee such
borrowings on a pro rata basis based on the equity interest of the Company in
the Operating Company incurring such borrowings. For a description of the
definitive terms of the existing Motorola Financings entered into by Nextel
Brazil and Nextel Philippines, see "Description of Other Indebtedness."

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U.S. subsidiaries. Accordingly, there can be no assurance that more than $95
million of the Motorola Financing will be available to fund the Operating
Companies' equipment purchases. In addition, to the extent total amounts
outstanding from Motorola to Nextel Communications and its subsidiaries,
including the Company and the Operating Companies (other than Clearnet and
J-Com), plus requests for additional financing from Motorola by Nextel
Communications and its subsidiaries (other than the Company and the Operating
Companies) would exceed $650 million, the Company is required to repay or cause
to be repaid sufficient borrowings such that after giving effect to such
repayment, the total amount of loans outstanding from Motorola to Nextel
Communications and its subsidiaries, including the Company and the Operating
Companies (other than Clearnet and J-Com), will not exceed $650 million. Nextel
Communications (on behalf of itself and its subsidiaries other than the Company
and the Operating Companies) has agreed with the Company not to borrow more than
$400 million under the Motorola MOU.

Although Nextel Communications has provided a substantial amount of
financing to the Company prior to the 1997 Notes Offering, it has not done so
since that time and is under no obligation to do so in the future.

DEPENDENCE ON KEY PERSONNEL

The success of the Company and its growth strategy depends in large part on
the Company's ability to attract and retain key management, marketing, finance
and operating personnel, both at the Company and the Operating Companies. In
many of the countries in which the Operating Companies conduct business,
experienced management and other highly skilled personnel are in great demand.
There can be no assurance that the Company will continue to attract and retain
the qualified personnel necessary for its business. In addition, the loss of the
services of one or more members of its senior management team, in particular
Keith D. Grinstein, the Company's President and Chief Executive Officer, could
have a material adverse effect on the Company. The Company does not maintain key
person life insurance.

RISKS ASSOCIATED WITH EMERGING MARKETS; UNCERTAINTIES ASSOCIATED WITH A NEW
INDUSTRY

Most of the Company's markets are considered to be "emerging markets."
Although political, economic and social conditions differ in each country in
which the Company currently operates, developments in one country may affect the
market value and liquidity of the Notes and the Company's access to
international capital markets. In Peru, for example, there was significant
terrorist activity in the 1980s and the early 1990s, during which period
anti-government groups escalated violence against the government, the private
sector and Peruvian residents. Although the government of Peru has made progress
in suppressing terrorist activity since 1990, incidents of terrorist activity
continue to occur, including the hostage incident at the residence of the
Japanese Ambassador to Peru in 1997. There can be no assurance that such
activity will not recur in the future or have a material adverse effect on the
operations of Nextel Peru. The Company currently does not have political risk
insurance in the countries in which the Operating Companies conduct business.

The success of the Company's operating strategies is subject to factors
that are beyond the Company's control and impossible to predict due, in part, to
the limited history of wireless communications services in the Company's
existing and targeted markets. Consequently, the size of these markets for
wireless communications services, the rates of penetration of these markets, the
sensitivity and ability of potential subscribers to pay subscription and other
fees, the extent and nature of the competitive environment and the immediate and
long-term viability of wireless communications services in these markets are
uncertain.

CURRENCY RISKS AND EXCHANGE CONTROLS

All of the Company's revenues will be denominated in non-U.S. currencies,
although a significant portion of its capital and operating expenditures,
including imported infrastructure and subscriber handset equipment, and the
interest expense on substantially all of its outstanding debt, will be
denominated in U.S. dollars. Accordingly, fluctuations in exchange rates
relative to the U.S. dollar may have a material adverse effect on the Company's
earnings or assets. In particular, the recent economic turmoil in Asia has
resulted in a significant devaluation of the currencies in several countries in
Asia and has caused fluctuations in the currencies of other emerging countries,
particularly in Latin America. Any devaluation of local currencies in the
countries in which the Operating Companies conduct business will result in
increased costs for imported goods and services, and may, as a result, decrease
demand for the Company's products and services in the

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<PAGE> 34

affected markets. To the extent the Operating Companies distribute dividends in
local currencies in the future, the amount of cash to be received by the Company
will be affected by fluctuations in exchange rates and currency devaluations
recently experienced by many Asian and Latin American countries. In addition,
certain of the countries in which the Company has operations restrict the
expatriation or conversion of currency. While the Company routinely assesses its
foreign currency exposure, the Company has not entered into any hedging
transactions.

LOCAL ECONOMIES; POTENTIAL INFLATION

The Company's operations depend on the economies of the markets in which it
has interests. These markets are in countries with economies in various stages
of development or structural reform, some of which are subject to rapid
fluctuations in terms of consumer prices, employment levels, gross domestic
product and interest and foreign exchange rates. The Company may be subject to
such fluctuation in the local economies. To the extent such fluctuations have an
effect on the ability of customers to pay for the Operating Companies' services,
the growth of the Company's wireless services could be impacted negatively. In
particular, several countries in Asia, including the Philippines, have
experienced a significant devaluation of their currencies and a decline in the
value of their capital markets. In addition, these countries have experienced a
number of bank failures and consolidations. The economic conditions in Asia have
also affected other emerging markets, particularly those in Latin America.
Because of the foregoing, the Company may experience (i) lower demand for its
products and services by customers in the affected markets; (ii) increased local
costs of imported goods and services due to the local currency devaluations in
the affected markets; and (iii) a decline in revenues derived from customers in
the affected markets. In addition, as a result of the foregoing, the other
shareholders in Operating Companies may have difficulty in funding their capital
requirements.

In addition, many of the countries in which the Operating Companies operate
do not have established credit bureaus, thereby making it more difficult to
ascertain the creditworthiness of potential customers. Accordingly, the Company
may experience a higher level of bad debt expense than otherwise would be the
case. In particular, the Company's bad debt expense as a percentage of revenues
in Brazil and Argentina has been significantly higher than in the Company's
other markets.

Certain of the Operating Companies conduct business in countries in which
the rate of inflation is significantly higher than that of the United States.
There can be no assurance that any significant increase in the rate of inflation
in such countries could be offset, in whole or in part, by corresponding price
increases by the Operating Companies, even over the long term.

IMPORT DUTIES ON NETWORK EQUIPMENT AND HANDSETS

The Company's operations are highly dependent upon the successful and
cost-efficient importation of infrastructure equipment and handsets from North
America and, to a lesser extent, Europe and Japan. In the countries in which the
Company operates, network equipment and handsets are subject to significant
import duties and other taxes that can be as high as 50%. Although the Company
believes there is a trend away from increased import duties, any significant
increase in the future could have a material adverse effect on the Company's
results of operations.

INTERNATIONAL TAX RISKS

Distributions of earnings and other payments (including interest) received
from the Company's operating subsidiaries and affiliates may be subject to
withholding taxes imposed by the jurisdictions in which such entities are formed
or operating, which will reduce the amount of after-tax cash the Company can
receive from the Operating Companies. In general, a U.S. corporation may claim a
foreign tax credit against its federal income tax expense for such foreign
withholding taxes and for foreign income taxes paid directly by foreign
corporate entities in which the Company owns 10% or more of the voting stock.
The ability to claim such foreign tax credits and to utilize net foreign losses
is, however, subject to numerous limitations, and the Company may incur
incremental tax costs as a result of these limitations or because the Company is
not in a tax-paying position in the United States.

The Company may also be required to include in its income for U.S. federal
income tax purposes its proportionate share of certain earnings of those foreign
corporate subsidiaries that are classified as "controlled
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<PAGE> 35

foreign corporations" without regard to whether distributions have been actually
received from such subsidiaries.

LEGAL ENFORCEMENT

A number of the agreements the Company enters into with the Operating
Companies are governed by the laws of, and are subject to dispute resolution in
the courts of, or through arbitration proceedings in, the country or region in
which the operation is located. The Company cannot accurately predict whether
such forum will provide it with an effective and efficient means of resolving
disputes that may arise in the future. Even if the Company is able to obtain a
satisfactory decision through arbitration or a court proceeding, it could have
difficulty enforcing any award or judgment on a timely basis. The Company's
ability to obtain or enforce relief in the United States is uncertain.

ORIGINAL ISSUE DISCOUNT CONSEQUENCES

The Private Notes were issued with original issue discount for U.S. federal
income tax purposes. The Exchange Notes should be treated as a continuation of
the Private Notes. Consequently, Holders of the Exchange Notes generally will be
required to include amounts in gross income for U.S. federal income tax purposes
in advance of receipt of the cash payments to which the income is attributable.
The Exchange Notes may be subject to the high-yield discount obligation rules,
which will defer and may, in part, eliminate the Company's ability to deduct for
U.S. federal income tax purposes the original issue discount attributable to the
Exchange Notes. Accordingly, the Company's after-tax cash flow might be less
than if the original issue discount on the Exchange Notes was deductible when it
accrued. See "Certain U.S. Federal Income Tax Considerations" for a more
detailed discussion of the U.S. federal income tax consequences resulting from
the Exchange Offer.

If a bankruptcy case is commenced by or against the Company under the U.S.
Bankruptcy Code after the issuance of the Notes, the claim of a Holder with
respect to the principal amount thereof may be limited to an amount equal to the
sum of (i) the initial offering price and (ii) that portion of the original
issue discount that is not deemed to constitute "unmatured interest" for
purposes of the U.S. Bankruptcy Code. Any original issue discount that was not
amortized as of any such bankruptcy filing would constitute "unmatured
interest."

FOREIGN CORRUPT PRACTICES ACT

The Company is subject to the Foreign Corrupt Practices Act (the "FCPA"),
which generally prohibits U.S. companies and their intermediaries from bribing
foreign officials for the purpose of obtaining or keeping business. Although the
Company has taken precautions to comply with the FCPA, there can be no assurance
that such precautions will protect the Company against liability under the FCPA,
particularly as a result of actions which may in the past have been taken or
which may be taken in the future by agents and other intermediaries for whom the
Company may have exposure under the FCPA. In particular, the Company may be held
responsible for actions taken by its local representatives or by other
shareholders in an Operating Company even though the Company has no ability to
control them. Any determination that the Company had violated the FCPA could
have a material adverse effect on the Company.

LACK OF PUBLIC MARKET

The Exchange Notes are new securities for which there is currently no
active trading market. The Company does not intend to list the Exchange Notes on
any national securities exchange or to seek the admission thereof to trading in
the Nasdaq Stock Market and there can be no assurance as to the development of
any market or liquidity of any market that may develop for the Exchange Notes.
If a market for the Exchange Notes does develop, the price of such Exchange
Notes may fluctuate and liquidity may be limited. If a market for the Exchange
Notes does not develop, purchasers may be unable to resell such Exchange Notes
for an extended period of time, if at all. Historically, the market for
non-investment grade debt has been subject to disruptions that have caused
substantial volatility in the prices of securities similar to the Exchange
Notes. There can be no assurance that, if a market for the Exchange Notes were
to develop, such market would not be subject to similar disruptions.

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<PAGE> 36

RADIO FREQUENCY EMISSION CONCERNS

Allegations have been made, but not proven, that the use of portable mobile
communications devices may pose health risks due to radio frequency emissions
from such devices. Studies performed by wireless telephone equipment
manufacturers have rebutted these allegations, and a major industry trade
association and certain governmental agencies in the United States have stated
publicly that the use of such phones poses no undue health risk. Certain
consumers have alleged that serious health risks have resulted from the use of
certain mobile communications devices. The actual or perceived health risks of
mobile communications devices could adversely affect mobile communications
services providers, including the Company, through reduced subscriber growth,
reduced network usage, the threat of product liability suits or limitations on
financing available to the mobile communications industry.

FORWARD-LOOKING STATEMENTS

A number of the matters and subject areas discussed in this Prospectus that
are not historical or current facts deal with potential future circumstances and
developments. The discussion of such matters and subject areas is qualified by
the inherent risks and uncertainties surrounding future expectations generally,
and also may differ materially from the Company's actual future experience
involving any one or more of such matters and subject areas. The Company has
attempted to identify, in context, certain of the factors that it currently
believes may cause actual future experience and results to differ from the
Company's current expectations regarding the relevant matter or subject area.
The operations and results of the Company's business also may be subject to the
effect of other risks and uncertainties in addition to the relevant qualifying
factors identified elsewhere in the foregoing "Risk Factors" section, including,
but not limited to, general economic conditions in Latin America and Asia, as a
result of the recent Asian economic crisis, the market segments that the Company
is targeting for SMR and ESMR commercial services, future legislation or
regulation by governmental entities in the markets in which the Operating
Companies conduct their business, the availability of adequate quantities of
system infrastructure and subscriber equipment and components to meet the
Company's service and deployment and marketing plans and customer demand, access
to sufficient debt and equity financing to meet the Company's operating and
financial needs, the successful deployment of the iDEN digital technology, the
ability to achieve market penetration and average subscriber revenue level
sufficient to provide financial viability to the Company's wireless
communications business, the Company's ability to accomplish required scale-up
of its billing, customer care and similar administrative support timely and
successfully to keep pace with anticipated customer growth and increased system
usage, the quality and price of similar or comparable wireless communications
services offered or to be offered by the Company's competitors, including
providers of cellular and PCS, other wireless communications services or
telecommunications generally and other risks and uncertainties described from
time to time in the Company's reports filed with the Commission.

FAILURE TO EXCHANGE PRIVATE NOTES

The Exchange Notes will be issued in exchange for Private Notes only after
timely receipt by the Exchange Agent of such Private Notes, a properly completed
and duly executed Letter of Transmittal and all other required documentation.
Therefore, holders of Private Notes desiring to tender such Private Notes in
exchange for Exchange Notes should allow sufficient time to ensure timely
delivery. Neither the Exchange Agent nor the Company are under any duty to give
notification of defects or irregularities with respect to tenders of Private
Notes for exchange. Private Notes that are not tendered or are tendered but not
accepted will, following consummation of the Exchange Offer, continue to be
subject to the existing restrictions upon transfer thereof. In addition, any
holder of Private Notes who tenders in the Exchange Offer for the purpose of
participating in a distribution of the Exchange Notes will be required to comply
with the registration and prospectus delivery requirements of the Securities Act
in connection with any resale transaction. Each broker-dealer who holds Private
Notes acquired for its own account as a result of market making or other trading
activities and who receives Exchange Notes for its own account in exchange for
such Private Notes pursuant to the Exchange Offer, must acknowledge that it will
deliver a prospectus in connection with any resale of such Exchange Notes. To
the extent that Private Notes are tendered and accepted in the Exchange Offer,
the trading market for untendered and tendered but unaccepted Private Notes
could be adversely affected due to

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<PAGE> 37

the limited amount, or "float," of the Private Notes that are expected to remain
outstanding following the Exchange Offer. Generally, a lower "float" of a
security could result in less demand to purchase such security and could,
therefore, result in lower prices for such security. For the same reason, to the
extent that a large amount of Private Notes are not tendered or are tendered and
not accepted in the Exchange Offer, the trading market for the Exchange Notes
could be adversely affected. See "Plan of Distribution" and "The Exchange
Offer."

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THE COMPANY

Nextel International (formerly McCaw International, Ltd.) was founded in
February 1995 by Craig O. McCaw to invest in and manage international wireless
communications operations. In August 1995, a wholly owned subsidiary of Nextel
Communications purchased all the outstanding shares of the Company from Craig O.
McCaw, who was at the time and remains (through the McCaw Group) a significant
shareholder of Nextel Communications.

The chart below sets forth a summary of the corporate ownership structure
of the Company and the Operating Companies and the Company's pending investments
in MKT as of June 15, 1998. The chart gives effect to the Clearnet Transaction
and the MCS Transaction, but does not depict the holding company structure
through which Nextel Communications and Nextel International hold their
respective subsidiaries.

[FLOW CHART GRAPHIC]

- ---------------
(1) Represents the Company's right to receive 12.1% of the profits generated by
the Shanghai GSM System.

(2) Represents the Company's right to acquire 37.5% of MKT upon receipt of the
required regulatory approvals by December 31, 1998.

Brazil. On January 30, 1997, Nextel Communications acquired an 81% equity
interest in Nextel Brazil for a purchase price of $186.3 million, which was paid
with Nextel Communications Class A Common Stock, and simultaneously contributed
its equity interest in Nextel Brazil to the Company. In September 1997, the
Company reorganized its Brazil equity holdings, and as a result, Nextel S.A.
(formerly AirLink S.A.), a subsidiary of Nextel Brazil, became a holding company
for substantially all of Nextel Brazil's SMR licenses and operating assets. The
Company, through its 81% interest in Nextel Brazil and through Nextel Brazil's
95% equity interest in Nextel S.A., holds an effective 77% equity interest in
Nextel S.A.

Nextel Brazil commenced analog SMR commercial operations in October 1994
and grew quickly through a series of acquisitions of Brazilian SMR
license-holding companies. Nextel Brazil is currently the largest SMR operator
in Brazil both in terms of the number of channels and the number of subscribers
in its licensed service areas. Nextel Brazil, through Nextel S.A. and other
subsidiaries, owns or has options to purchase licenses for 1,955 SMR channels in
Brazil, including 200 in Sao Paulo (representing 10.0 MHz) and 160 in Rio de
Janeiro (representing 8.0 MHz). These licenses cover more than 60 million POPs,
including the

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<PAGE> 39

15 largest cities in Brazil. Nextel Brazil currently offers analog SMR services
in 15 of Brazil's largest cities, including Sao Paulo, Rio de Janeiro, Belo
Horizonte, Brasilia, Porto Alegre and Curitiba. Nextel Brazil launched
commercial ESMR service in Sao Paulo in the second quarter of 1998 and currently
plans to launch commercial ESMR services in Rio de Janeiro during the third
quarter of 1998. See "Business -- Operations and Investments -- Brazil."

Telcom Ventures, LLC ("Telcom Ventures") and certain other entities
(together, the "Telcom Group") through their 19% equity interest in Nextel
Brazil, own an effective 18% interest in Nextel S.A. Telcom Ventures is the
indirect majority shareholder of LCC International, Inc., a leading wireless
engineering consulting services firm, and is owned by the family of Dr. Rajendra
Singh and affiliates of the Carlyle Group, a United States based principal
investment firm. Motorola International Development Corporation ("Motorola
International"), a wholly owned subsidiary of Motorola, owns the remaining 5%
equity interest in Nextel S.A.

Mexico. Nextel Mexico (formerly Corporacion Mobilcom S.A. de C.V.) was
formed in 1993 by an affiliate of Grupo San Luis to pursue SMR opportunities in
Mexico and began commercial analog SMR operations in September 1993. In March
1995, Nextel Communications made its first investment in Nextel Mexico by
purchasing a 16.5% equity interest. Since January 1, 1997, through a series of
transactions, the Company has increased its ownership interest in Nextel Mexico
from 30.1% to 100% for consideration totaling approximately $132.2 million.

Nextel Mexico offers, through its subsidiaries, analog SMR services
throughout Mexico, including in its 10 largest cities, and along a number of
important highways. The cities in which Nextel Mexico holds SMR licenses include
Mexico City (with a total of 204 channels representing approximately 10 MHz),
Guadalajara (with a total of 60 channels representing approximately 3 MHz) and
Monterrey (with a total of 25 channels representing 1.25 MHz). The company's SMR
licenses cover over 45 million POPs. Nextel Mexico intends to launch commercial
ESMR services in Mexico City during the third quarter of 1998. See "Business --
Operations and Investments -- Mexico."

Argentina. In 1995, Nextel Argentina purchased a license to operate 100
SMR channels in each of Buenos Aires, Cordoba, Rosario and Mendoza, the four
largest cities in Argentina. Nextel Argentina commenced commercial analog SMR
operations in February 1997. Nextel Argentina became the largest channel holder
in Argentina after it merged its Argentina operations with Wireless Ventures of
Argentina, L.L.C. ("WVA"), an affiliate of the Telcom Group, in exchange for a
50% equity interest. In December 1997, Nextel Argentina acquired an additional
60 SMR channels in Buenos Aires for $12 million in a government auction,
increasing its spectrum holdings in Buenos Aires to 12 MHz. The Company acquired
the remaining 50% equity interest in Nextel Argentina for $46 million on January
30, 1998.

Nextel Argentina has 240 SMR channels (12 MHz) in Buenos Aires, 200 SMR
channels (10 MHz) in each of the three other major cities and 20 additional SMR
channels in each of Mar del Plata and Tucuman. Nextel Argentina also operates a
paging business under a nationwide paging license. Nextel Argentina's analog SMR
licenses cover 19.3 million POPs. Nextel Argentina launched commercial ESMR
services in Buenos Aires in the second quarter of 1998. See
"Business -- Operations and Investments -- Argentina."

Peru. On January 29, 1998, Nextel International purchased, from Nextel
Peru, 70.1% of its common equity for $27.9 million, $23.8 million of which will
represent new capital to be contributed to Nextel Peru to finance the expansion,
upgrade and operation of its wireless services business. As of March 31, 1998,
the Company had paid $7.2 million to Nextel Peru, and the remaining $20.7
million will be paid in the form of capital contributions to Nextel Peru which
the Company expects will be made prior to July 30, 1998. Nextel Peru, through
its subsidiaries, holds licenses for 138 SMR channels (6.9 MHz) in the greater
Lima area. These licenses cover more than seven million POPs. Nextel Peru,
through its subsidiaries, offers analog SMR services in the greater Lima area
under the tradenames "Dualcom" and "Mastercom." Nextel Peru currently plans to
upgrade its analog SMR operations to an ESMR network in 1999. See
"Business -- Operations and Investments -- Peru." Motorola International owns a
19.9% equity interest in Nextel Peru. A Peruvian individual owns the remaining
10% of Nextel Peru.

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<PAGE> 40

Philippines. In June 1996, Nextel International acquired a 30% equity
interest in Nextel Philippines. Nextel Philippines owns nationwide licenses
(with a total of 100 channels representing approximately 5 MHz), covering more
than 73 million POPs, to provide ESMR and paging services. Nextel Philippines
began commercial operations of its paging network in February 1995 under the
brand name "Infopage" and launched commercial ESMR services in Manila in July
1998. See "Business -- Operations and Investments -- Philippines."

The Company is currently engaged in a dispute regarding certain provisions
of the Philippines Partner Agreements with Jetcom and Foodcamp, two of the
Philippines Shareholders. See "Business -- Operations and
Investments -- Philippines," "Business -- Corporate Governance -- Philippines"
and "Risk Factors -- Significant Capital Requirements for Operations."

The Company's partners in J-Com are DJSMR (which holds a 49% equity
interest), Nichimen (which holds a 25% equity interest), and ORIX (which holds a
5% equity interest). See "Business -- Operations and Investments -- Japan" and
"Business -- Corporate Governance -- Japan."

Canada. The Company currently owns 583,104 Class A Shares and 7,790,741
Class D Shares of Clearnet (each Class D Share is convertible at the option of
the holder into one Class A Share). Clearnet is the largest SMR operator in
Canada as measured by the number of current subscribers, the number of 800 MHz
channels and the population of its service territory. Clearnet has publicly
reported that as of March 31, 1998, it provided analog SMR services in over 40
cities across Canada to approximately 57,100 subscriber units and ESMR services
in Ontario and Quebec to approximately 57,400 subscriber units. Additionally,
Clearnet holds one of the two national 30 MHz licenses to provide PCS in Canada.
Clearnet launched PCS services in Canada's largest urban centers in October 1997
and reported that as of March 31, 1998, it had approximately 89,700 PCS
subscribers. The Company has two representatives on Clearnet's board of
directors. Clearnet files periodic and other reports with the Commission
pursuant to the requirements of the Exchange Act. More detailed and specific
information concerning Clearnet and information regarding the Company's rights
to representation on the Clearnet Board of Directors is contained in such
Exchange Act reports.

Shanghai. The Company has a contractual right to receive 12.1% of the
profits generated by the Shanghai GSM System operated by China United
Telecommunications, Ltd. ("Unicom") through its Shanghai branch ("Shanghai
Unicom"). The Company's interest in the Shanghai GSM System is held through its
30% equity interest in a Chinese joint venture, Shanghai CCT-McCaw
Telecommunications, Systems Co., Ltd. ("Shanghai CCT McCaw"). Commencing in
1998, the Company's contractual right to receive profits from the Shanghai GSM
System was reduced from 25.2% to 12.1% as a result of the admission of CCT
Technology Services Limited ("CCT") as a new shareholder in Shanghai CCT McCaw,
and CCT's agreement to make a total investment of approximately $44 million in
the form of equity, shareholder loans, shareholder guarantees and fees.

Shanghai CCT McCaw participates in the Shanghai GSM System through a
profit-sharing arrangement under (i) the Shanghai Mobile Telecommunications GSM
Project Cooperation Contract, dated April 21, 1995 (the "Unicom Agreement"),
between Unicom and Shanghai Science Technology Investment Corp. Ltd. ("SSTIC"),
one of the Company's partners in Shanghai CCT McCaw and (ii) the China Unicom
Shanghai GSM Phase III Cooperation Agreement, dated March 29, 1997 (the "Phase
III Agreement"), between Shanghai CCT McCaw and Unicom, which modified the
arrangements under the Unicom Agreement. The Phase III Agreement requires
Shanghai CCT McCaw to provide 60% of the funds required to expand the Shanghai
GSM System (the "Phase III Expansion"), which is estimated by Shanghai CCT McCaw
to be
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<PAGE> 41

approximately $38 million. The Shanghai GSM System covers the greater Shanghai
area, which is comprised of more than 14 million POPs. The Company's interest in
the Shanghai GSM System has been structured as a profit-sharing arrangement
because current Chinese laws prohibit a foreign party from direct participation
in the ownership and operation of telecommunications systems. The Company made
its subscribed equity contribution to Shanghai CCT McCaw in 1995. In addition to
its equity investment, the Company loaned Shanghai CCT McCaw a portion of the
funds necessary to fund the Shanghai GSM System. As of March 31, 1998, the
outstanding balance of this loan was $9.2 million (the "Shanghai Loan") and the
Company may be required to increase such loan by approximately $400,000. See
"Business -- Operations and Investments -- China" and "Business -- Corporate
Governance -- China."

Unicom was established in 1994 by the Ministry of Electronics Industry, the
Ministry of Railways, the Ministry of Power and 13 other shareholders including
SSTIC. SSTIC is an investment holding company established by the Municipal
Government of Shanghai, six major Shanghai banks as well as two major
diversified Shanghai conglomerates for the purpose of developing the Shanghai
high-technology industry.

CCT is a subsidiary of CCT Telecom Holdings Limited, a Cayman Islands
limited liability company ("CCT Telecom") based in Hong Kong and publicly traded
on the Hong Kong stock exchange. CCT is CCT Telecom's holding company for its
domestic telecommunications business in China. Its investments include a
communications project in Guangzhou and a second GSM project in Shanxi province.
SSTIC is also a shareholder of Unicom.

Unicom has requested that Shanghai CCT McCaw participate in financing the
continued expansion of the Shanghai GSM System ("Phase IV"). The Company has
informed SSTIC and CCT that it is not willing to finance Phase IV and that
without the Company's consent, Shanghai CCT McCaw will not be permitted to
finance Phase IV. However, either or both of the Company's partners in Shanghai
CCT McCaw, SSTIC and CCT, may enter into an agreement on their own behalves with
Unicom to finance Phase IV or Unicom may find a new investor to finance Phase
IV. If Shanghai CCT McCaw declines to participate in the proposed expansion, it
may have a material adverse effect on Shanghai CCT McCaw's interest in the
Shanghai GSM System and the value of the Company's interest in Shanghai CCT
McCaw.

PENDING INVESTMENT

Indonesia. On August 15, 1997, the Company entered into a preliminary
agreement with GSK which gives the Company the right, upon receipt of required
regulatory approval, to purchase a 37.5% interest in MKT. MKT holds a
provisional license for 80 SMR channels in Indonesia that can be converted into
an operating license upon satisfaction of certain regulatory approvals by June
30, 1998. The Company and GSK agreed to amend the preliminary agreement to
extend the deadline for receipt of regulatory approvals to December 31, 1998.
The operating license will entitle MKT to provide SMR and ESMR services in the
city of Jakarta and the regions of West Java, East Java and Bandor Lampang. Upon
such deployment of services in accordance with the operating license, MKT will
have the right to continue developing a national wireless communications network
across Indonesia and providing SMR and ESMR services on a nationwide basis.

To the extent the Company does decide to purchase a 37.5% equity interest
in MKT, which is subject to the receipt of regulatory approval, the Company has
agreed to fund 44% (rather than 37.5%) of the capital requirements of MKT in
order to maintain its then-current ownership interest. The remaining equity
interest in MKT will be owned by GSK. Profits and losses are to be allocated and
dividends are to be distributed based on the Company's 37.5% equity interest.

Although the Company believes that MKT presents it with significant
opportunities to expand its SMR network in Asia, the Company does not intend to
make any substantial investment in MKT until the economic and political
conditions in Indonesia, in particular, and the economic conditions in Asia,
generally, have stabilized. To date, the Company has advanced $1.5 million to
MKT in the form of a loan that is guaranteed by GSK.

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NO CASH PROCEEDS TO THE COMPANY

This Exchange Offer is intended to satisfy certain obligations of the
Company under the Registration Rights Agreement. The Company will not receive
any proceeds from the issuance of the Exchange Notes offered hereby and has
agreed to pay the expenses of the Exchange Offer. In consideration for issuing
the Exchange Notes as contemplated in this Prospectus, the Company will receive,
in exchange, Private Notes representing an equal aggregate principal amount at
maturity. The form and terms of the Exchange Notes are identical in all material
respects to the form and terms of the Private Notes, except as otherwise
described herein under "The Exchange Offer -- Terms of the Exchange Offer." The
Private Notes surrendered in the exchange for Exchange Notes will be retired and
canceled and cannot be reissued. Accordingly, issuance of the Exchange Notes
will not result in any increase in the outstanding debt of the Company.

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<PAGE> 43

FINANCING PLAN

The net proceeds to the Company from the 1998 Notes Offering were
approximately $387 million, after deducting discounts and commissions and other
expenses payable by the Company. The 1998 Notes Offering is part of the
Company's financing plan designed to meet expected funding requirements that are
estimated to total approximately $810 million during fiscal year 1998 (the "1998
Plan"). Nextel International's expected funding sources and uses with respect to
its 1998 Plan are described in the table below:

SOURCES
-------------------------------------------------

(IN MILLIONS)

<TABLE>
<S> <C>
Gross proceeds from the 1998 Notes
Offering........................ $401
Available cash, cash equivalents
and marketable securities at
December 31, 1997............... 259(2)
Operating Company vendor and bank
financings...................... 150(4)
----
Total................... $810
====

USES(1)
-------------------------------------------------

System and related capital
expenditures.................... $449
Cash used by operating activities,
financing fees and other
corporate purposes.............. 203(3)
Potential acquisitions of licenses
and investments................. 29(5)
Completed acquisitions and
investments..................... 120(6)
Contingent liabilities............ 9(7)
----
Total................... $810
====
</TABLE>

- ---------------
(1) Reflects the Company's anticipated share of the Operating Companies' capital
expenses and other funding uses.

(2) Excludes cash held at the Operating Company level and includes $69 million
of cash held by the Company which is restricted for use as equity
investments under the Company's financing agreements and equipment purchases
under certain infrastructure purchase contracts.

(3) Includes interest expense related to the existing Motorola Financings and
the Argentina Credit Facility (as defined herein).

(4) Includes approximately $80 million assumed to be drawn during 1998 under the
Argentina Credit Facility and the remaining $75 million (of which the
Company's allocated share is approximately $70 million) assumed to be drawn
during 1998 under the Brazil Motorola Financing (as defined herein).

(5) Represents amounts budgeted for potential SMR license purchases and new
investments.

(6) Includes $46 million for the acquisition of the remaining 50% equity
interest in Nextel Argentina on January 30, 1998, $22 million representing
the final payment for the remaining equity interest in Nextel Mexico, $19.6
million used to purchase Philippines Shareholders' loans and $32 million to
acquire an equity interest in and shareholder loans to J-Com.

(7) Reflects the $9 million contingent liability for the put right relating to
Nextel Philippines, which is exercisable by August 21, 1998.

The Company believes that the sources described above will provide funds
that in the aggregate are expected to be sufficient to implement the 1998 Plan,
including all currently anticipated cash needs of its business activities,
including any optional additional funding of Nextel Philippines, currently
estimated to be $50 million during fiscal year 1998; however, there can be no
assurance that such funds will be sufficient. If, among other things, Nextel
International's plans change, its assumptions regarding its funding needs
associated with the further build-out, expansion and enhancement of the ESMR
networks at the Operating Company level prove to be inaccurate, the other
shareholders in certain of the Operating Companies do not fund their expected
capital requirements, it consummates acquisitions or investments in addition to
those currently contemplated or at prices higher than currently contemplated, it
increases its equity ownership interests in certain of the Operating Companies
beyond those currently contemplated, it experiences growth in its business or
subscriber base greater than that which was anticipated in developing the 1998
Plan, it experiences unanticipated costs or competitive pressures, the relevant
Operating Companies are unable to access funds under the existing Motorola
Financings and/or the Argentina Credit Facility, or the net proceeds from the
1998 Notes Offering, together with any other funds available to the Company and
the Operating Companies or any other borrowings, otherwise prove to be
insufficient to meet such cash needs during fiscal year 1998, the Company may be
required to seek additional capital sooner than anticipated. The availability of
borrowings under the existing Motorola Financings and under the Argentina Credit
Facility are subject to the satisfaction or waiver of certain conditions. See
"Description of Other Indebtedness." The Company will also

42
<PAGE> 44

require significant additional capital in years subsequent to 1998 to fund the
further build-out, expansion and enhancement of its ESMR networks, to fund
operating losses and for other purposes. To the extent the Company's
then-existing financing sources are insufficient to meet such needs, the Company
may seek to raise such additional capital from public or private equity or debt
sources. There can be no assurance that the Company will be able to raise such
capital on satisfactory terms, if at all. Additionally, the Company and the
Restricted Group Members may incur indebtedness only in compliance with the
terms of covenants contained in the Indentures. See "Risk Factors -- Significant
Capital Requirements for Operations."

43
<PAGE> 45

CAPITALIZATION

The following table sets forth the capitalization of the Company as of
March 31, 1998 on a historical basis. This table should be read in conjunction
with the Company's consolidated financial statements and the notes thereto,
appearing elsewhere in this Prospectus. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations" appearing elsewhere
in this Prospectus.

<TABLE>
<CAPTION>
MARCH 31, 1998
--------------
(IN THOUSANDS)
<S> <C>
Current portion of long-term debt........................... $ 2,345
==========
Long-term debt, excluding current portion:
1998 Notes(1).......................................... $ 403,446
1997 Notes(2).......................................... 557,422
Brazil Motorola Financing(3)........................... 58,574
Other long-term debt................................... 6,945
----------
Total long-term debt.............................. 1,026,387
Stockholders' equity:
Series A exchangeable redeemable preferred stock,
$10.00 par value; 1,250 shares authorized and 988.86
issued and outstanding................................ 98,886
Series B redeemable preferred stock, $10.00 par value;
2,500 shares authorized and no shares issued and
outstanding........................................... --
Common stock, no par value; 73,000,000 shares
authorized, 36,500,000 shares issued and
outstanding........................................... 395,428
Accumulated deficit.................................... (131,258)
Unrealized gain on investments, net of tax............. 9,801
Cumulative translation adjustment...................... (3,470)
----------
Total stockholders' equity........................ 369,387
----------
Total capitalization.............................. $1,398,119
==========
</TABLE>

- ---------------
(1) Net of original issue discount of $326,554.

(2) Net of unamortized original issue discount of $394,041.

(3) The weighted average interest rate is 10.55% at March 31, 1998 for the
Brazil Motorola Financing.

44
<PAGE> 46

THE EXCHANGE OFFER

PURPOSE OF THE EXCHANGE OFFER

The Private Notes were sold by the Company on the Closing Date to the
Placement Agents pursuant to the Placement Agreement. The Placement Agents
subsequently sold the Private Notes to (i) "qualified institutional buyers"
("QIBs"), as defined in Rule 144A under the Securities Act ("Rule 144A"), in
reliance on Rule 144A and (ii) other investors in offshore transactions in
reliance on Regulation S under the Securities Act. As a condition to the sale of
the Private Notes, the Company and the Placement Agents entered into the
Registration Rights Agreement on March 9, 1998. Pursuant to the Registration
Rights Agreement, the Company agreed that (i) it would use its bests efforts to
cause to be filed with the Commission an exchange offer registration statement
under the Securities Act with respect to the Exchange Notes, (ii) it would cause
such Registration Statement to remain effective under the Securities Act until
the closing of the Exchange Offer, (iii) it would commence the Exchange Offer
promptly after such Registration Statement has been declared effective and (iv)
it would use its best efforts to have the Exchange Offer consummated not later
than 60 days after the effective date of the Registration Statement. The Company
agreed to issue and exchange Exchange Notes for all Private Notes validly
tendered and not withdrawn before the Expiration Date of the Exchange Offer. A
copy of the Registration Rights Agreement has been filed as an exhibit to the
Registration Statement of which this Prospectus is a part. The Registration
Statement and the Exchange Offer are intended to satisfy the Company's
obligations under the Registration Rights Agreement.

TERMS OF THE EXCHANGE OFFER

Upon the terms and subject to the conditions set forth in this Prospectus
and in the Letter of Transmittal, the Company will accept any and all Private
Notes validly tendered and not withdrawn prior to the Expiration Date.

The Company will issue Exchange Notes in exchange for an equal aggregate
principal amount at maturity of outstanding Private Notes validly tendered
pursuant to the Exchange Offer and not withdrawn prior to the Expiration Date.
Private Notes may be tendered only in integral multiples of $1,000 principal
amount at maturity.

The form and terms of the Exchange Notes are the same as the form and terms
of the Private Notes except that (i) the Exchange Notes will be registered under
the Securities Act and, therefore, the Exchange Notes will not bear legends
restricting the transfer thereof and (ii) holders of the Exchange Notes will not
be entitled to any of the registration rights of holders of Private Notes under
the Registration Rights Agreement, which rights will terminate upon the
consummation of the Exchange Offer. The Exchange Notes will evidence the same
indebtedness as the Private Notes (which they replace) and will be issued under,
and be entitled to the benefits of, the Indenture, which also authorized the
issuance of the Private Notes, such that both series of Notes will be treated as
a single class of debt securities under the Indenture.

As of the date of this Prospectus, $730.0 million in aggregate principal
amount at maturity of the Private Notes was outstanding. Only a registered
holder of the Private Notes (or such holder's legal representative or
attorney-in-fact), as reflected on the records of the Trustee under the
Indenture may participate in the Exchange Offer. There will be no fixed record
date for determining registered holders of the Private Notes entitled to
participate in the Exchange Offer.

Holders of the Private Notes do not have any appraisal or dissenters'
rights under the Washington Business Corporation Act Law or the Indenture in
connection with the Exchange Offer. The Company intends to conduct the Exchange
Offer in accordance with the provisions of the Registration Rights Agreement and
the applicable requirements of the Securities Act and the rules and regulations
of the Commission thereunder.

The Company shall be deemed to have accepted validly tendered Private Notes
when, and if, the Company has given oral or written notice thereof to the
Exchange Agent. The Exchange Agent will act as agent for the tendering holders
of Private Notes for the purposes of receiving the Exchange Notes from the
Company.

45
<PAGE> 47

Holders who tender Private Notes in the Exchange Offer will not be required
to pay brokerage commissions or fees or, subject to the instructions in the
Letter of Transmittal, transfer taxes with respect to the exchange of Private
Notes pursuant to the Exchange Offer. The Company will pay all charges and
expenses, other than certain applicable taxes described below, in connection
with the Exchange Offer. See "-- Fees and Expenses."

EXPIRATION DATE; EXTENSIONS; AMENDMENTS

The term "Expiration Date" shall mean 5:00 p.m., New York City time on
Wednesday, September 2, 1998, unless the Company, in its sole discretion,
extends the Exchange Offer, in which case the term "Expiration Date" shall mean
the latest date and time to which the Exchange Offer is extended.

In order to extend the Exchange Offer, the Company will notify the Exchange
Agent of any extension by oral or written notice and mail to the registered
holders an announcement thereof, each prior to 9:00 a.m., New York City time, on
the next business day after the previously scheduled Expiration Date.

The Company reserves the right, in its sole discretion, (i) to delay
accepting any Private Notes, (ii) to extend the Exchange Offer or (iii) if, in
the opinion of counsel for the Company, the consummation of the Exchange Offer
would violate any applicable law, rule or regulation or any applicable
interpretation of the staff of the Commission, to terminate or amend the
Exchange Offer by giving oral or written notice of such delay, extension,
termination or amendment to the Exchange Agent. Any such delay in acceptance,
extension, termination or amendment will be followed as promptly as practicable
by oral or written notice thereof to the registered holders. If the Exchange
Offer is amended in a manner determined by the Company to constitute a material
change, the Company will promptly disclose such amendment by means of a
prospectus supplement that will be distributed to the registered holders, and
the Company will extend the Exchange Offer for a period of five to ten business
days, depending upon the significance of the amendment and the manner of
disclosure to the registered holders, if the Exchange Offer would otherwise
expire during such five to ten business day period.

Without limiting the manner in which the Company may choose to make a
public announcement of any delay, extension, amendment or termination of the
Exchange Offer, the Company shall have no obligation to publish, advertise, or
otherwise communicate any such public announcement, other than by making a
timely release to an appropriate news agency.

INTEREST ON THE EXCHANGE NOTES

The Exchange Notes will not bear interest prior to April 15, 2003. From and
after April 15, 2003, the Private Notes bear interest and the Exchange Notes
will bear interest, which will be payable in cash, at a rate of 12 1/8% per
annum, on each April 15 and October 15, commencing October 15, 2003 to holders
of record on the immediately preceding April 1 and October 1, respectively.

RESALE OF THE EXCHANGE NOTES

With respect to the Exchange Notes, based upon interpretations by the staff
of the Commission set forth in certain no-action letters issued to third
parties, the Company believes that a holder who exchanges Private Notes for
Exchange Notes in the ordinary course of business, who is not participating,
does not intend to participate, and has no arrangement with any person to
participate in a distribution of the Exchange Notes, and who is not an
"affiliate" of the Company within the meaning of Rule 405 of the Securities Act,
will be allowed to resell Exchange Notes to the public without further
registration under the Securities Act and without delivering to the purchasers
of the Exchange Notes a prospectus that satisfies the requirements of Section 10
of the Securities Act. However, if any holder acquires Exchange Notes in the
Exchange Offer for the purpose of distributing or participating in the
distribution of the Exchange Notes, such holder cannot rely on the position of
the staff of the Commission enumerated in certain no-action letters issued to
third parties and must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with any resale transaction,
unless an exemption from registration is otherwise available. Each broker-dealer
that receives Exchange Notes for its own account in exchange for Private Notes
acquired by
46
<PAGE> 48

such broker-dealer as a result of market-making or other trading activities must
acknowledge that it will deliver a prospectus in connection with any resale of
Exchange Notes. The Letter of Transmittal states that by so acknowledging and by
delivering a prospectus, a broker-dealer will not be deemed to admit that it is
an "underwriter" within the meaning of the Securities Act. This Prospectus, as
it may be amended or supplemented from time to time, may be used by a
broker-dealer in connection with resales of any Exchange Notes received in
exchange for Private Notes acquired by such broker-dealer as a result of
market-making or other trading activities. Pursuant to the Registration Rights
Agreement, the Company has agreed to make this Prospectus, as it may be amended
or supplemented from time to time, available to any such broker-dealer that
requests copies of such Prospectus in the Letter of Transmittal for use in
connection with any such resale for a period not to exceed 90 days after the
closing of the Exchange Offer. See "Plan of Distribution."

PROCEDURES FOR TENDERING

Only a registered holder of Private Notes may tender such Private Notes in
the Exchange Offer. To tender in the Exchange Offer, a holder of Private Notes
must complete, sign and date the Letter of Transmittal, or a facsimile thereof,
have the signatures thereon guaranteed if required by the Letter of Transmittal,
and mail or otherwise deliver such Letter of Transmittal or such facsimile to
the Exchange Agent at the address set forth below under "-- Exchange Agent" for
receipt prior to the Expiration Date. In addition, either (i) certificates for
such Private Notes must be received by the Exchange Agent along with the Letter
of Transmittal, (ii) a timely confirmation of a book-entry transfer (a
"Book-Entry Confirmation") of such Private Notes, if such procedure is
available, into the Exchange Agent's account at the Depository pursuant to the
procedure for book-entry transfer described below, must be received by the
Exchange Agent prior to the Expiration Date or (iii) the holder must comply with
the guaranteed delivery procedures described below.

The tender by a holder that is not withdrawn prior to the Expiration Date
will constitute an agreement among such holder and the Company in accordance
with the terms and subject to the conditions set forth herein and in the Letter
of Transmittal.

THE METHOD OF DELIVERY OF PRIVATE NOTES AND THE LETTER OF TRANSMITTAL AND
ALL OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND RISK
OF THE HOLDER. INSTEAD OF DELIVERY BY MAIL, IT IS RECOMMENDED THAT HOLDERS USE
AN OVERNIGHT OR HAND DELIVERY SERVICE, PROPERLY INSURED. IN ALL CASES,
SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE DELIVERY TO THE EXCHANGE AGENT
BEFORE THE EXPIRATION DATE. DO NOT SEND THE LETTER OF TRANSMITTAL OR ANY PRIVATE
NOTES TO THE COMPANY. HOLDERS MAY REQUEST THEIR RESPECTIVE BROKERS, DEALERS,
COMMERCIAL BANKS, TRUST COMPANIES OR NOMINEES TO EFFECT THE ABOVE TRANSACTIONS
FOR SUCH HOLDERS.

Any beneficial owner(s) of the Private Notes whose Private Notes are
registered in the name of a broker, dealer, commercial bank, trust company or
other nominee and who wish(es) to tender should contact the registered holder
promptly and instruct such registered holder to tender on such beneficial
owner's behalf. If such beneficial owner wishes to tender on such owner's own
behalf, such owner must, prior to completing and executing the Letter of
Transmittal and delivering such owner's Private Notes, either make appropriate
arrangements to register ownership of the Private Notes in such owner's name or
obtain a properly completed bond power from the registered holder. The transfer
of registered ownership may take considerable time.

Signatures on a Letter of Transmittal or a notice of withdrawal described
below (see "-- Withdrawal of Tenders"), as the case may be, must be guaranteed
by an Eligible Institution (as defined below) unless the Private Notes tendered
pursuant thereto are tendered (i) by a registered holder who has not completed
the box titled "Special Delivery Instructions" on the Letter of Transmittal or
(ii) for the account of an Eligible Institution. In the event that signatures on
a Letter of Transmittal or a notice of withdrawal, as the case may be, are
required to be guaranteed, such guarantee must be made by a member firm of a
registered national securities exchange or of the National Association of
Securities Dealers, Inc., a commercial bank or trust company having an office or
correspondent in the United States or an "eligible guarantor institution"
(within

47
<PAGE> 49

the meaning of Rule 17Ad-15 under the Exchange Act) that is a member of one of
the recognized signature guarantee programs identified in the Letter of
Transmittal (an "Eligible Institution").

If the Letter of Transmittal is signed by a person other than the
registered holder of any Private Notes listed therein, such Private Notes must
be endorsed or accompanied by a properly completed bond power, signed by such
registered holder exactly as such registered holder's name appears on such
Private Notes.

If the Letter of Transmittal or any Private Notes are signed by trustees,
executors, administrators, guardians, attorneys-in-fact, officers of
corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and, unless waived by the Company,
evidence satisfactory to the Company of their authority to so act must be
submitted with the Letter of Transmittal.

THE EXCHANGE AGENT AND THE DEPOSITORY HAVE CONFIRMED THAT ANY FINANCIAL
INSTITUTION THAT IS A PARTICIPANT IN THE DEPOSITORY'S SYSTEM MAY UTILIZE THE
DEPOSITORY'S AUTOMATED TENDER OFFER PROGRAM ("ATOP") TO TENDER PRIVATE NOTES. TO
EFFECT A TENDER PURSUANT TO THE ATOP SYSTEM, HOLDERS SHOULD TRANSMIT THEIR
ACCEPTANCE TO DTC THROUGH ATOP BY CAUSING DTC TO TRANSFER PRIVATE NOTES TO THE
EXCHANGE AGENT IN ACCORDANCE WITH ATOP'S PROCEDURES FOR TRANSFER. DTC WILL THEN
SEND AN AGENT'S MESSAGE TO THE EXCHANGE AGENT. THE TERM "AGENT'S MESSAGE" MEANS
A MESSAGE TRANSMITTED BY DTC TO, AND RECEIVED BY, THE EXCHANGE AGENT AND FORMING
A PART OF THE BOOK-ENTRY CONFIRMATION, WHICH STATES THAT DTC HAS RECEIVED AN
EXPRESS ACKNOWLEDGMENT FROM THE PARTICIPANT IN DTC TENDERING THE PRIVATE NOTES
REFERRED TO IN SUCH AGENT'S MESSAGE, THAT SUCH PARTICIPANT HAS RECEIVED THE
LETTER OF TRANSMITTAL AND AGREES TO BE BOUND BY THE TERMS OF THE LETTER OF
TRANSMITTAL AND THAT THE COMPANY MAY ENFORCE SUCH AGREEMENT AGAINST SUCH
PARTICIPANT.

All questions as to the validity, form, eligibility (including time of
receipt), acceptance and withdrawal of tendered Private Notes will be determined
by the Company in its sole discretion, which determination will be final and
binding. The Company reserves the absolute right to reject any and all Private
Notes not properly tendered or any Private Notes the Company's acceptance of
which would, in the opinion of counsel for the Company, be unlawful. The Company
also reserves the right to waive any defects, irregularities or conditions of
tender as to particular Private Notes. The Company's interpretation of the terms
and conditions of the Exchange Offer (including the instructions in the Letter
of Transmittal) will be final and binding on all parties. Unless waived, any
defects or irregularities in connection with tenders of Private Notes must be
cured within such time as the Company shall determine. Although the Company
intends to notify holders of defects or irregularities with respect to tenders
of Private Notes, neither the Company, the Exchange Agent nor any other person
shall incur any liability for failure to give such notification. Tenders of
Private Notes will not be deemed to have been made until such defects or
irregularities have been cured or waived.

While the Company has no present plan to acquire any Private Notes that are
not tendered in the Exchange Offer or to file a registration statement to permit
resales of any Private Notes that are not tendered pursuant to the Exchange
Offer, the Company reserves the right in its sole discretion to purchase or make
offers for any Private Notes that remain outstanding subsequent to the
Expiration Date and, to the extent permitted by applicable law, purchase Private
Notes in the open market, in privately negotiated transactions or otherwise. The
terms of any such purchases or offers could differ from the terms of the
Exchange Offer.

By tendering, each holder of Private Notes will represent to the Company
that, among other things, (i) the Exchange Notes to be acquired by such holder
of Private Notes in connection with the Exchange Offer are being acquired by
such holder in the ordinary course of business of such holder, (ii) such holder
has no arrangement or understanding with any person to participate in the
distribution of the Exchange Notes, (iii) such holder acknowledges and agrees
that any person who is participating in the Exchange Offer for the purposes of
distributing the Exchange Notes must comply with the registration and prospectus
delivery requirements of the Securities Act in connection with a secondary
resale transaction of the Exchange Notes acquired by such person and cannot rely
on the position of the staff of the Commission set forth in certain
48
<PAGE> 50

no-action letters, (iv) such holder understands that a secondary resale
transaction described in clause (iii) above and any resales of Exchange Notes
obtained by such holder in exchange for Private Notes acquired by such holder
directly from the Company should be covered by an effective registration
statement containing the selling security holder information required by Item
507 or Item 508, as applicable, of Regulation S-K of the Commission and (v) such
holder is not an "affiliate," as defined in Rule 405 under the Securities Act,
of the Company. If the holder is a broker-dealer that will receive Exchange
Notes for such holder's own account in exchange for Private Notes that were
acquired as a result of market-making activities or other trading activities,
such holder will be required to acknowledge in the Letter of Transmittal that
such holder will deliver a prospectus in connection with any resale of such
Exchange Notes; however, by so acknowledging and by delivering a prospectus,
such holder will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act.

RETURN OF PRIVATE NOTES

If any tendered Private Notes are not accepted for any reason set forth in
the terms and conditions of the Exchange Offer or if Private Notes are
withdrawn, such unaccepted, withdrawn or non-exchanged Private Notes will be
returned without expense to the tendering holder thereof (or, in the case of
Private Notes tendered by book-entry transfer into the Exchange Agent's account
at the Depository pursuant to the book-entry transfer procedures described
below, such Private Notes will be credited to an account maintained with the
Depository) as promptly as practicable.

BOOK-ENTRY TRANSFER

The Exchange Agent will make a request to establish an account with respect
to the Private Notes with the Depository for purposes of the Exchange Offer
within two business days after the date of this Prospectus, and any financial
institution that is a participant in the Depository's systems may make
book-entry delivery of Private Notes by causing the Depository to transfer such
Private Notes into the Exchange Agent's account at the Depository in accordance
with the Depository's procedures for transfer. However, although delivery of
Private Notes may be effected through book-entry transfer at the Depository, the
Letter of Transmittal or facsimile thereof, with any required signature
guarantees and any other required documents, must, in any case, be transmitted
to and received by the Exchange Agent at the address set forth below under
"-- Exchange Agent" on or prior to the Expiration Date or pursuant to the
guaranteed delivery procedures described below.

GUARANTEED DELIVERY PROCEDURES

Holders who wish to tender their Private Notes and (i) whose Private Notes
are not immediately available or (ii) who cannot deliver their Private Notes,
the Letter of Transmittal or any other required documents to the Exchange Agent
prior to the Expiration Date, may effect a tender if:

(a) The tender is made through an Eligible Institution;

(b) Prior to the Expiration Date, the Exchange Agent receives from
such Eligible Institution a properly completed and duly executed Notice of
Guaranteed Delivery substantially in the form provided by the Company (by
facsimile transmission, mail or hand delivery) setting forth the name and
address of the holder and the certificate number(s) of such Private Notes,
stating that the tender is being made thereby and guaranteeing that, within
three business days after the Expiration Date, the Letter of Transmittal
(or a facsimile thereof), together with the certificate(s) representing the
Private Notes in proper form for transfer or a Book-Entry Confirmation, as
the case may be, and any other documents required by the Letter of
Transmittal, will be deposited by the Eligible Institution with the
Exchange Agent; and

(c) Such properly executed Letter of Transmittal (or facsimile
thereof) as well as the certificate(s) representing all tendered Private
Notes in proper form for transfer and all other documents required by the
Letter of Transmittal are received by the Exchange Agent within three
business days after the Expiration Date.

49
<PAGE> 51

Upon request to the Exchange Agent, a Notice of Guaranteed Delivery will be
sent to holders who wish to tender their Private Notes according to the
guaranteed delivery procedures set forth above.

WITHDRAWAL OF TENDERS

Except as otherwise provided herein, tenders of Private Notes may be
withdrawn at any time prior to the Expiration Date. To withdraw a tender of
Private Notes in the Exchange Offer, a written or facsimile transmission notice
of withdrawal must be received by the Exchange Agent at its address set forth
herein prior to the Expiration Date. Any such notice of withdrawal must (i)
specify the name of the person having deposited the Private Notes to be
withdrawn, (ii) identify the Private Notes to be withdrawn (including the
certificate number or numbers) and (iii) be signed by the holder in the same
manner as the original signature on the Letter of Transmittal by which such
Private Notes were tendered (including any required signature guarantees). All
questions as to the validity, form and eligibility (including time of receipt)
of such notices will be determined by the Company, in its sole discretion, whose
determination shall be final and binding on all parties. Any Private Notes so
withdrawn will be deemed not to have been validly tendered for purposes of the
Exchange Offer, and no Exchange Notes will be issued with respect thereto unless
the Private Notes so withdrawn are validly retendered. Properly withdrawn
Private Notes may be retendered by following one of the procedures described
above under "The Exchange Offer -- Procedures for Tendering" at any time prior
to the Expiration Date.

TERMINATION OF CERTAIN RIGHTS

All registration rights under the Registration Rights Agreement accorded to
holders of the Private Notes (and all rights to receive additional interest on
the Notes to the extent and in the circumstances specified therein) will
terminate upon consummation of the Exchange Offer except with respect to the
Company's duty to keep the Registration Statement effective until the closing of
the Exchange Offer and, for a period of 90 days after the closing of the
Exchange Offer, to provide copies of the latest version of the Prospectus to any
broker-dealer that requests copies of such Prospectus in the Letter of
Transmittal for use in connection with any resale by such broker-dealer of
Exchange Notes received for its own account pursuant to the Exchange Offer in
exchange for Private Notes acquired for its own account as a result of
market-making or other trading activities.

EXCHANGE AGENT

The Bank of New York has been appointed as Exchange Agent for the Exchange
Offer. Questions and requests for assistance, requests for additional copies of
this Prospectus or of the Letter of Transmittal and requests for Notice of
Guaranteed Delivery should be directed to the Exchange Agent addressed as
follows:

<TABLE>
<S> <C> <C>
By Mail: By Facsimile Transmission: By Hand:
The Bank of New York (For Eligible Institutions The Bank of New York
101 Barclay Street Only)
Floor 7 East (212) 815-6339 101 Barclay Street
New York, New York 10286 New York, New York 10286
Attention: Reorganization Confirm by Telephone: Attention: Ground Level
Section (212) 815-5942 Corporate Trust
Theresa Gass Services Window

By Overnight Delivery:
The Bank of New York
101 Barclay Street
Floor 7 East
New York, New York 10286
Attention: Reorganization Section
Theresa Gass
The Bank of New York also serves as Trustee under the Indentures.
</TABLE>

50
<PAGE> 52

FEES AND EXPENSES

The expenses of soliciting tenders will be borne by the Company. The
principal solicitation is being made by mail; however, additional solicitation
may be made by telegraph, facsimile transmission, telephone or in person by
officers and regular employees of the Company and their affiliates.

The Company has not retained any dealer-manager in connection with the
Exchange Offer and will not make any payments to brokers, dealers or others
soliciting acceptances of the Exchange Offer. The Company, however, will pay the
Exchange Agent reasonable and customary fees for its services and will reimburse
it for its reasonable, out-of-pocket expenses in connection therewith. The cash
expenses to be incurred in connection with the Exchange Offer will be paid by
the Company and are estimated in the aggregate to be approximately $500,000.
Such expenses consist primarily of registration fees, fees and expenses of the
note agent, accounting and legal fees and printing costs.

The Company will pay all transfer taxes, if any, applicable to the exchange
of Private Notes pursuant to the Exchange Offer. If, however, a transfer tax is
imposed for any reason other than the exchange of the Private Notes pursuant to
the Exchange Offer, then the amount of any such transfer taxes (whether imposed
on the registered holder or any other persons) will be payable by the tendering
holder. If satisfactory evidence of payment of such taxes or exemption therefrom
is not submitted with the Letter of Transmittal, the amount of such transfer
taxes will be billed directly to such tendering holder and no Exchange Notes
shall be required to be issued to or on the instructions of such tendering
holder until such transaction taxes have been paid.

CONSEQUENCE OF FAILURE TO EXCHANGE

Participation in the Exchange Offer is voluntary. Holders of the Private
Notes are urged to consult their financial and tax advisors in making their own
decisions on what action to take.

Private Notes that are not exchanged for the Exchange Notes pursuant to the
Exchange Offer will remain "restricted securities" within the meaning of Rule
144(a)(3)(iv) of the Securities Act. Accordingly, such Private Notes may not be
offered, sold, pledged or otherwise transferred except (i) to a person whom the
seller reasonably believes is a "qualified institutional buyer" within the
meaning of Rule 144A under the Securities Act purchasing for its own account or
for the account of a qualified institutional buyer in a transaction meeting the
requirements of Rule 144A, (ii) in an offshore transaction complying with Rule
903 or Rule 904 of Regulation S under the Securities Act, (iii) pursuant to an
exemption from registration under the Securities Act provided by Rule 144
thereunder (if available), (iv) pursuant to an effective registration statement
under the Securities Act or (v) to institutional accredited investors in a
transaction exempt from the registration requirements of the Securities Act,
and, in each case, in accordance with all other applicable securities laws and
the transfer restrictions set forth in the Indenture.

ACCOUNTING TREATMENT

For accounting purposes, the Company will recognize no gain or loss as a
result of the Exchange Offer. The expenses of the Exchange Offer will be
amortized over the remaining term of the Notes.

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<PAGE> 53

PRO FORMA CONSOLIDATED HISTORICAL FINANCIAL DATA

The unaudited pro forma consolidated statements of operations for the year
ended December 31, 1997 and for the three months ended March 31, 1998 give
effect to the following transactions (collectively, the "Transactions"): (i)
Nextel Communications' acquisition of an 81% interest in Nextel Brazil for
$186.3 million in market value of Nextel Communications Class A Common Stock and
the simultaneous contribution of such interest to the Company; (ii) the MCS
Transaction; (iii) the increase in the Company's ownership interest in Nextel
Mexico through a series of transactions, from 30.1% to 100%; (iv) the Argentina
Acquisition; (v) the 1997 Notes Offering; (vi) the Clearnet Transaction; (vii)
other issuances of the Series A Preferred Stock; and (viii) the 1998 Notes
Offering. As all such transactions are reflected in the Company's historical
consolidated balance sheet as of March 31, 1998, no pro forma balance sheet
information is presented herein. The following pro forma consolidated financial
statements have been derived from, and should be read in conjunction with, the
consolidated historical financial statements of the Company, Nextel Mexico and
Nextel Brazil including the notes thereto, and the other financial and operating
information appearing elsewhere in this Prospectus. The pro forma adjustments
are described in the notes to the pro forma consolidated financial statements
and investors are encouraged to read such information carefully. The pro forma
consolidated financial statements are not necessarily indicative of the
operating results or financial position that would have been achieved by the
Company, nor are they intended to be indicative of the Company's future
operating results or financial position.

52
<PAGE> 54

PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS(1)
FOR THE YEAR ENDED DECEMBER 31, 1997
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
NEXTEL NEXTEL NEXTEL
THE BRAZIL MEXICO MCS ARGENTINA
COMPANY (HISTORICAL) (HISTORICAL) (HISTORICAL) (HISTORICAL)
(HISTORICAL) (2) (3) (4) (5) ADJUSTMENTS PRO FORMA
------------ ------------ ------------ ------------ ------------ ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues.................... $ 13,015 $1,137 $ 4,781 $3,686 $ 3,693 $ -- $ 26,312
Costs and expenses related
to revenues............... 7,424 200 1,356 721 1,386 -- 11,087
Selling, general and
administrative............ 26,768 1,130 3,072 2,289 11,551 -- 44,810
Depreciation and
amortization.............. 18,381 453 1,824 514 3,150 8,597(6)
2,301(7) 35,220
-------- ------ ------- ------ -------- -------- ---------
Operating loss.............. (39,558) (646) (1,471) 162 (12,394) (10,898) (64,805)
Interest income............. 19,666 26 396 -- -- -- 20,088
Interest expense............ (56,583) (237) (1,492) -- -- (10,489)(8)
(51,748)(9) (120,549)
Loss from equity method
investments............... (11,401) -- -- -- -- 3,255(10)
4,486(11) (3,660)
Other, net.................. 5,561 49 355 -- (181) -- 5,784
Minority interest........... 2,085 -- -- -- -- 652(12) 2,737
-------- ------ ------- ------ -------- -------- ---------
Income (loss) before income
tax benefit (provision)... (80,230) (808) (2,212) 162 (12,575) (12,994) (160,405)
Income tax benefit
(provision)............... 6,282 115 (1) -- -- 2,082(13) 8,478
-------- ------ ------- ------ -------- -------- ---------
Net income (loss)........... $(73,948) $ (693) $(2,213) $ 162 $(12,575) $(10,912) $(151,927)
======== ====== ======= ====== ======== ======== =========
Net loss per share, basic
and diluted............... $ (2.03) $ (4.16)
Weighted average shares
outstanding............... 36,500 36,500
</TABLE>

PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS(1)
FOR THE THREE MONTHS ENDED MARCH 31, 1998
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
NEXTEL
THE ARGENTINA
COMPANY (HISTORICAL)
(HISTORICAL) (5) ADJUSTMENTS PRO FORMA
------------ ------------ ----------- ---------
<S> <C> <C> <C> <C>
Revenues.................................................... $ 8,558 $ 575 $ -- $ 9,133
Costs and expenses related to revenues...................... 3,552 145 -- 3,697
Selling, general and administrative......................... 15,227 1,378 -- 16,605
Depreciation and amortization............................... 9,192 612 128(6)
38(7) 9,970
-------- ------- ------- --------
Operating loss.............................................. (19,413) (1,560) (166) (21,139)
Interest income............................................. 4,324 -- -- 4,324
Interest expense............................................ (18,968) -- (6,297)(9) (25,265)
(812)(11)
Loss from equity method investments......................... (1,314) -- (502)
Other, net.................................................. 1,198 (64) -- 1,134
Minority interest........................................... 1,230 -- 1,230
-------- ------- ------- --------
Loss before income tax benefit.............................. (32,943) (1,624) (5,651) (40,218)
Income tax benefit.......................................... 4,374 -- 4,374
-------- ------- ------- --------
Net loss.................................................... $(28,569) $(1,624) $(5,651) $(35,844)
======== ======= ======= ========
Net loss per share, basic and diluted....................... $ (0.78) $ (0.98)
Weighted average shares outstanding......................... 36,500 36,500
</TABLE>

(footnotes on following page)

53
<PAGE> 55

- ---------------
(1) For purposes of conforming the presentation of the pro forma consolidated
financial statements, certain historical amounts have been summarized.

(2) Represents historical results of Nextel Brazil prior to the acquisition on
January 30, 1997.

(3) Represents historical results of Nextel Mexico prior to its consolidation
with the Company's financial statements effective September 1, 1997.

(4) Represents historical results of MCS prior to the acquisition on September
26, 1997.

(5) Represents the historical results of the Argentina Joint Venture (as
defined herein) prior to the Company acquiring the remaining 50% equity
interest on January 30, 1998 as well as the historical results of the
subsidiaries of WVA prior to the formation of the Argentina Joint Venture.

(6) Gives effect to the amortization of licenses totaling approximately $377.0
million recognized in the Nextel Brazil, Nextel Mexico, MCS and Nextel
Argentina transactions over 20 years.

(7) Gives effect to the amortization of goodwill totaling approximately $113.7
million recognized in the Nextel Brazil, Nextel Mexico and Nextel Argentina
transactions over 20 years.

(8) Gives effect to the interest expense and amortization of debt issue costs
related to the 1997 Notes Offering as if it had occurred on January 1,
1997. No adjustment has been made to include interest income earned on the
net proceeds from the 1997 Notes Offering prior to the actual issuance of
the 1997 Notes on March 6, 1997.

(9) Gives effect to the interest expense and amortization of estimated debt
issue costs related to the 1998 Notes Offering. No adjustment has been made
to include interest income earned on the net proceeds from the 1998 Notes
Offering pending their application in accordance with the 1998 Plan.

(10) Gives effect to the reversal of the equity in net loss of Nextel Mexico
previously recognized by the Company.

(11) Gives effect to the reversal of the equity in net loss of the Argentina
Joint Venture previously recognized by the Company.

(12) Gives effect to the additional 4% minority interest in Nextel Brazil
recognized as a result of the MCS Transaction.

(13) Gives effect to the tax benefit derived from the amortization of the
licenses obtained in the Nextel Brazil and Nextel Mexico transactions.

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<PAGE> 56

SELECTED CONSOLIDATED HISTORICAL FINANCIAL DATA

The following table sets forth certain selected financial data on a
consolidated historical basis for the Company as of and for the years ended
December 31, 1994, 1995, 1996 and 1997, for the three months ended March 31,
1997 and as of and for the three months ended March 31, 1998. The selected
consolidated historical financial data of the Company as of and for the years
ended December 31, 1994, 1995, 1996 and 1997 were derived from the consolidated
financial statements and the notes thereto of the Company, which have been
audited by Deloitte & Touche LLP, independent auditors, whose report, with
respect to each of the three years ended December 31, 1995, 1996 and 1997 and as
of December 31, 1996 and 1997 has been included herein. The selected
consolidated historical financial data of the Company for the three months ended
March 31, 1997 and as of and for the three months ended March 31, 1998 are
derived from the unaudited consolidated financial statements of the Company.

The selected consolidated historical financial data should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and the Company's consolidated financial statements,
including the notes thereto, appearing elsewhere in this Prospectus.

<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED DECEMBER 31, ENDED MARCH 31,
------------------------------------------ -------------------
1994 1995 1996 1997 1997 1998
-------- -------- -------- --------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF OPERATIONS DATA:
Revenues.................................................... $ -- $ -- $ -- $ 13,015 $ 1,460 $ 8,558
Costs and expenses related to revenues...................... -- -- -- 7,424 758 3,552
Selling, general and administrative......................... -- 277 9,318 26,768 4,051 15,227
Depreciation and amortization............................... 2 19 168 18,381 2,581 9,192
-------- -------- -------- --------- -------- --------
Operating loss.............................................. (2) (296) (9,486) (39,558) (5,930) (19,413)
Interest income............................................. 2,688 6,233 4,300 19,666 2,798 4,324
Interest expense, net....................................... -- -- (323) (56,583) (5,591) (18,968)
Loss from equity method investments......................... -- (6,853) (5,991) (11,401) (1,867) (1,314)
Other, net(1)............................................... -- (15,002) 379 5,561 (157) 1,198
Minority interest........................................... 2,085 437 1,230
-------- -------- -------- --------- -------- --------
Income (loss) before income tax benefit (provision)......... 2,686 (15,918) (11,121) (80,230) (10,310) (32,943)
Income tax benefit (provision).............................. (914) (2,119) (1,355) 6,282 499 4,374
-------- -------- -------- --------- -------- --------
Net income (loss)........................................... $ 1,772 $(18,037) $(12,476) $ (73,948) $ (9,811) $(28,569)
======== ======== ======== ========= ======== ========
Net income (loss) per share, basic and diluted.............. $ 0.05 $ (0.49) $ (0.34) $ (2.03) $ (0.27) $ (0.78)
Weighted average shares outstanding(2)...................... 36,500 36,500 36,500 36,500 36,500 36,500
OTHER FINANCIAL DATA:
Ratio of earnings to fixed charges(3)....................... -- -- -- -- -- --
</TABLE>

<TABLE>
<CAPTION>
AS OF DECEMBER 31,
------------------------------------------ AS OF
1994 1995 1996 1997 MARCH 31, 1998
-------- -------- -------- --------- -------------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
Cash and cash equivalents................................... $125,542 $ 85,302 $ 53,029 $ 159,790 $ 463,430(4)
Marketable securities....................................... -- -- -- 128,560 5,236
Property, plant and equipment, net.......................... -- 36 8,703 136,210 266,196
Investment in unconsolidated subsidiaries................... -- 47,951 98,982 106,489 81,045
Intangible assets, net...................................... -- 10,135 10,878 526,000 593,455
Total assets................................................ 171,536 169,675 199,367 1,123,038 1,626,758
Long-term debt (including current portion).................. -- -- -- 600,020 1,028,732
Stockholders' equity........................................ 1,772 11,939 39,203 296,029 369,387
</TABLE>

- ---------------
(1) Other, net includes a $15.0 million charge in 1995 representing an other
than temporary decline in the fair value of the Company's investment in
Nextel Mexico as a result of a decline in the Mexican Peso.

(2) As adjusted for the 100,000-for-1 stock split effective March 6, 1997 and
the 3.65-for-1 stock split effective August 25, 1997.

(3) For purposes of computing the ratio of earnings to fixed charges, earnings
consist of loss before income taxes, loss from equity method investments and
loss attributable to minority interest. Fixed charges consist of interest on
all indebtedness, amortization of deferred financing costs and amortization
of original issue discount, whether expensed or capitalized, and that
portion of rental expense which the Company believes to be representative of
interest. The deficiency (excess) for purposes of calculating the ratio of
earnings to fixed charges was $(2,686), $9,065, $4,807, and $7,650 for
December 31, 1994, 1995, 1996 and 1997, respectively, and $1,916 and $3,865
for the three months ended March 31, 1997 and 1998, respectively.

(4) Includes approximately $104.5 million of cash held by the Company which is
restricted for use as equity investments under the Company's financing
agreements and equipment purchases under certain infrastructure purchase
contracts.

55
<PAGE> 57

MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis should be read in conjunction with
the Company's consolidated financial statements and the notes thereto appearing
elsewhere in this Prospectus.

OVERVIEW

GENERAL

Nextel International is a leading international wireless communications
services company based on the number of people and the number of SMR channels in
its licensed service areas. The Company provides wireless communications
services in five of the largest cities in Latin America and three of the largest
cities in Asia. The Company's markets cover approximately 373 million POPs,
approximately 131 million of which are in Latin America. Nextel International is
the largest SMR service provider in Brazil and Mexico, and holds the largest SMR
channel position in Argentina. The Company's strategy is focused on using its
leading analog dispatch or SMR channel positions in its principal markets,
together with Nextel Communications' experience and supplier relationships, to
upgrade its services from analog dispatch to digital ESMR services. The Company
intends to use digital iDEN(TM) technology developed by Motorola in its ESMR
networks. The Company launched commercial ESMR service in Sao Paulo and Buenos
Aires in the second quarter of 1998 and currently plans to launch commercial
ESMR service in Rio de Janeiro and Mexico City during the third quarter of 1998.
The Company's Japanese affiliate, J-Com, introduced a multi-functional
commercial ESMR service in the Kanto region of Japan (which includes Tokyo) in
July 1998. Nextel Philippines completed initial system construction and launched
commercial ESMR service in Manila in July 1998. See "Risk Factors." The
Company's upgrade to digital networks will allow it to increase capacity
significantly and to offer, in a single digital subscriber unit, additional
services and advanced features, such as direct connect (group calling and
instant conferencing), telephone interconnect and text messaging services.

As of March 31, 1998, the Company directly or indirectly owned 100% of
Nextel Mexico; 100% of Nextel Argentina; 70.1% of Nextel Peru; 30% of Nextel
Philippines, accounted for using the equity method; 21% of J-Com accounted for
using the equity method; approximately 15% of Clearnet, accounted for as an
investment available-for-sale and reflected at fair market value and a
contractual right to receive 12.1% of the profits of the Shanghai GSM System,
accounted for as a cost method investment. Additionally, the Company, through an
81% equity interest in Nextel Brazil and Nextel Brazil's 95% equity interest in
Nextel S.A., held a 77% equity interest in Nextel S.A. The Company's
consolidated financial statements include the accounts of Nextel Brazil, Nextel
Mexico, Nextel Argentina and Nextel Peru commencing January 30, 1997, September
1, 1997, February 1, 1998 and February 1, 1998, respectively, which are the
approximate dates when the Company acquired a controlling interest in the
respective companies.

The accounts of the Company's consolidated foreign subsidiaries and those
foreign subsidiaries accounted for under the equity method are presented
utilizing accounts as of a date one month earlier than the accounts of the
Company and its United States subsidiaries to ensure timely reporting of
consolidated results.

REVENUES

The Company derives its revenues primarily from (i) activation fees, which
are the initial charges paid by a new subscriber for service; (ii) monthly fixed
access charges, which vary depending on the plan chosen by the subscriber; (iii)
airtime charges, which are billed based on usage; (iv) monthly rental charges,
which are derived from the leasing of wireless equipment; (v) the sale of
handsets to subscribers; and (vi) in certain markets, various local taxes and
fees which are passed on to customers. Each Operating Company sets the pricing
of the different components of its services in accordance with its marketing
plan in each of the markets in which it operates, taking into account, among
other things, competitive factors. Usage revenues are accrued for during the
month incurred and billed at the end of the monthly billing cycle. Rental fee
revenues and monthly fixed access charges are billed in advance and recognized
in the period service was delivered. Equipment sales are recognized at the time
of sale.

56
<PAGE> 58

In general, revenue per subscriber is higher in the Company's markets than
in the United States. In 1996 the average monthly analog SMR revenue per
subscriber in the United States was approximately $16 compared to $47 in the
Company's Latin American markets. In 1996, the average monthly cellular revenue
per subscriber in the United States was approximately $48 compared to $88 in the
Company's principal markets ($88 represents the combined average monthly
cellular bill for Argentina, Brazil, Mexico, Peru and the Philippines). In part,
this is due to the poor quality of landline service and unsatisfied demand for
telephony services generally found in emerging markets. In many emerging
markets, including most of those in which the Operating Companies conduct
business, wireless service is often used as a substitute for landline service,
which increases the relative usage per subscriber and the revenue per
subscriber. As the Company upgrades its existing analog SMR networks to ESMR
networks and begins to offer enhanced services and features, it expects
increased revenue per subscriber. Over time, the Company expects such increases
will be partially offset by a decline in rates resulting from increased
competition and lower average usage per subscriber.

By principally targeting business customers, the Company believes it
experiences lower customer turnover, lower acquisition costs per subscriber and
a generally more stable customer base than if it targeted customers in the
general population. In addition, customers using the Company's ESMR systems will
be required to have ESMR handsets, which are not compatible with or adaptable
for use on a cellular or PCS system. The Company believes that the cost incurred
by a customer switching to a competing cellular or PCS service may also result
in lower turnover.

Historically, the Company has experienced relatively high rates of churn
and bad debt expenses. However, the Company has taken a number of steps to
reduce these levels, including tightening the credit screening process,
instituting the requirement of longer term contracts and formulating more
aggressive collection processes.

The Company expects the revenues of the Operating Companies to increase
significantly over the next few years due to the launch of commercial ESMR
service in Sao Paulo and Buenos Aires during the second quarter of 1998 and the
planned launch of such services in Rio de Janeiro and Mexico City during the
third quarter of 1998. See "Business -- Operations and Investments." In
addition, as the Company upgrades its existing analog SMR networks to ESMR
networks, it anticipates its revenues will increase substantially due to the
large increase in subscriber capacity that results from ESMR system design and
operation and the expected increase in average revenue per subscriber that is
expected to result from the Company's ability to offer enhanced services and
features for which it can charge higher fees. Although the Company believes it
will be able to obtain the necessary licenses and launch its services as
planned, no assurance can be given that it will be able to do so. See "Risk
Factors -- Government Regulation."

The Company is subject to the laws and regulations governing
telecommunication services in effect in each of the countries in which the
Operating Companies conduct business. These laws and regulations cover, among
other things, the number of licenses that can be used in any one service area by
affiliated companies, the construction and loading requirements necessary to
retain a license, the number of telephone numbers that can be assigned to an
individual licensee, the type of customer to whom service can be provided and
the rights of a licensee to interconnect with a public telecommunications
network. Each of these factors can have a significant influence on the Company's
ability to generate revenues and are subject to change by the governmental
agency responsible for determining the laws and regulations in the respective
countries. The Company cannot predict what future laws and regulations might be
passed that could have a material effect on the Company's results of operations.
The Company assesses the impact of significant changes in laws and regulations
on a regular basis.

COSTS AND EXPENSES RELATED TO REVENUES

Costs and expenses related to revenues include both the cost of radio
service revenue and the cost of equipment sales and maintenance. Cost of radio
service revenue represents the cost of maintaining networks, interconnection
charges, site lease costs, technical expenses and utilities. The Company
anticipates the cost of radio service revenue will increase with the expansion
of its wireless networks. However, as a percentage of

57
<PAGE> 59

revenue, the Company anticipates that cost of radio service revenue will
decrease over time as a result of economies of scale in operations and
efficiencies achieved through digital technology. Cost of equipment sales and
maintenance represents the cost of equipment sold or leased. As the Company
expands, the cost of equipment sales and maintenance as a percentage of related
revenue is expected to decrease over time as a result of the expected decrease
in the cost of handsets and other wireless communications equipment.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

At the corporate level, selling, general and administrative expenses
consist primarily of compensation expenses and to a lesser extent include
expenses such as rent, professional fees and other general corporate expenses.
At the Operating Company level, selling, general and administrative expenses
consist primarily of customer acquisition costs, advertising and to a lesser
degree salaries and office expenses. Prior to 1997, substantially all of
selling, general and administrative expenses were incurred at the Nextel
International level. As the consolidated Operating Companies continue to expand
their wireless communications networks and add subscribers, the Company expects
a larger portion of selling, general and administrative expenses to be incurred
at the Operating Company level. The Company expects selling, general and
administrative expenses to increase over time as it continues to expand its
operations. As a percentage of revenues, however, the Company expects these
expenses will decrease as a result of anticipated revenue growth as the number
of subscribers increases.

The Company is billed directly on a monthly basis by landline telephone
companies for interconnect services and by various governments for taxes. The
Company bills its subscribers for these charges and taxes and is responsible for
collecting the charges and taxes from them. Many of the countries in which the
Company operates do not have established credit bureaus, thereby making it more
difficult for the Company to ascertain the creditworthiness of potential
customers. Accordingly, the Company experiences a relatively high level of bad
debt expense in most of its markets. In particular, the Company's bad debt
expense as a percentage of revenue and customer turnover in Brazil and Argentina
have been significantly higher than that in the Company's other markets.

DEPRECIATION AND AMORTIZATION

Prior to 1997, the Company's depreciation and amortization expense was
primarily attributable to the depreciation of property, plant and equipment at
its corporate headquarters. As a result of the acquisitions of a controlling
interest in Nextel Brazil in January 1997, Nextel Mexico in August 1997 and
Nextel Argentina and Nextel Peru in January 1998 and possible future
acquisitions, the Company expects depreciation and amortization to increase
significantly.

INTEREST INCOME

Interest income represents income earned on notes receivable, cash and cash
equivalents and marketable securities. Interest income is expected to increase
temporarily in 1998 as the net proceeds of the 1998 Notes Offering are invested
pending their application as set forth under "Financing Plan."

INTEREST EXPENSE

Historically, interest expense has consisted of amounts payable on the 1997
Notes and to a lesser extent outstanding borrowings under the Brazil Motorola
Financing. Interest expense is expected to increase in future periods as a
result of the 1998 Notes Offering and the incurrence of additional indebtedness,
including the Brazil Motorola Financing and the Argentina Credit Facility.

LOSS FROM EQUITY METHOD INVESTMENTS

Loss from equity method investments represents the Company's proportionate
share of net income or loss from its investments in companies of which it owns
between 20% and 50%. For the year ended December 31, 1997, loss from equity
method investments consisted of the Company's proportionate share of net losses
from its interest in Nextel Mexico prior to obtaining a controlling interest in
August 1997, 30% interest in Nextel
58
<PAGE> 60

Philippines and 50% interest in Nextel Argentina after May 6, 1997. For the
three months ended March 31, 1998, loss from equity method investments consists
of the Company's proportionate share of net losses from its 30% interest in
Nextel Philippines and 21% interest in J-Com after March 17, 1998. Loss from
equity method investments also includes amortization of the excess purchase
price over net assets acquired in its investments in entities accounted for
under the equity method.

OTHER, NET

Other, net consists primarily of foreign currency transaction gains and
losses. In addition, it also includes fees received for management services
provided to Shanghai CCT McCaw and Nextel Philippines.

MINORITY INTEREST

Minority interest represents the 19% interest in Nextel Brazil (or
approximately 23% interest in Nextel S.A. subsequent to the MCS Transaction) not
owned by the Company, the 23% minority interest in Nextel Mexico not owned by
the Company prior to acquiring 100% of Nextel Mexico and the 30% minority
interest in Nextel Peru not owned by the Company.

INCOME TAX BENEFIT (PROVISION)

The Company is subject to income taxes in the United States and in each of
the jurisdictions in which the Operating Companies conduct business. In the
United States, the Company is included in the consolidated tax return of Nextel
Communications; however, the tax accounts are stated as if the Company filed a
separate return pursuant to the terms of a Tax Sharing Agreement between the
Company and Nextel Communications dated as of March 6, 1997 (the "Tax Sharing
Agreement").

In the periods prior to the Company's merger with Nextel International
(CANMEX), Ltd. ("Nextel Canmex"), the Company was precluded from recognizing
income tax benefits associated with its U.S. net operating losses because it was
not reasonably certain that the Company would generate taxable income.
Historically on a stand-alone basis, Nextel Canmex generated taxable income from
the interest earned on its investments of cash and cash equivalents. Because
accounting rules related to the pooling of interest method of accounting
preclude the offsetting of the Company's historical net operating losses against
Nextel Canmex's historical taxable income, the Company has recognized only the
Nextel Canmex income tax expense in the combined financial statements presented
prior to the merger date. Subsequent to the merger, which occurred in the first
quarter of 1997, the Company combined the tax attributes of the merged
companies. The Company is obligated to pay to Nextel Communications, pursuant to
the Tax Sharing Agreement, amounts for taxes paid by Nextel Communications
because net operating losses at the Operating Company level cannot be used for
United States income tax purposes and interest expense on the 1997 Notes is not,
and interest expense on the Notes is not expected to be, deductible for United
States income tax purposes.

Subsequent to the acquisitions of Nextel Brazil and Nextel Mexico, the
Company recognized income tax benefit related to its operations in Brazil and
Mexico. Certain of the Brazilian and Mexican subsidiaries have taxable temporary
differences allowing for the recognition of the tax benefits derived from net
operating losses. The Company expects that the tax benefits from net operating
losses in these Brazilian and Mexican subsidiaries will continue to be
recognized in its financial statements throughout 1998.

HISTORICAL RESULTS OF OPERATIONS

THREE MONTHS ENDED MARCH 31, 1998 VS. THREE MONTHS ENDED MARCH 31, 1997

Revenues increased $7.1 million to $8.6 million for the three months ended
March 31, 1998 from $1.5 million for the three months ended March 31, 1997.
Costs and expenses related to revenues increased $2.8 million to $3.6 million
for the three months ended March 31, 1998, compared to $0.8 million for the
three months ended March 31, 1997. The increases were primarily attributable to
the acquisition of controlling interests in Nextel Mexico, MCS and Nextel
Argentina in August 1997, September 1997 and January 1998, respectively
(collectively, the "Acquisitions"). For the periods ended subsequent to the
Acquisitions, the

59
<PAGE> 61

results of Nextel Mexico, MCS and Nextel Argentina are included in the Company's
consolidated financial statements. For the three months ended March 31, 1997,
substantially all of the revenues and costs and expenses related to revenues
result from the two months of SMR operations of Nextel Brazil included in the
Company's consolidated financial statements.

Selling, general and administrative expenses increased $11.1 million to
$15.2 million for the three months ended March 31, 1998, compared to $4.1
million for the three months ended March 31, 1997. The increase is primarily
attributable to the effect of the Acquisitions as well as increased costs at
Nextel Brazil necessary to support the launch of ESMR commercial service,
including sales, marketing and administrative support costs.

Depreciation and amortization expense increased $6.6 million to $9.2
million for the three months ended March 31, 1998, compared to $2.6 million for
the three months ended March 31, 1997. The increase is primarily attributable to
the effect of the Acquisitions.

Interest income increased $1.5 million to $4.3 million for the three months
ended March 31, 1998, compared to $2.8 million for the three months ended March
31, 1997. The increase was primarily attributable to income recognized on the
investment of the then-remaining net proceeds from the 1997 Notes Offering. See
"-- Liquidity and Capital Resources."

Interest expense increased $13.4 million to $19.0 million for the three
months ended March 31, 1998, compared to $5.6 million for the three months ended
March 31, 1997. The increase is primarily attributable to interest expense
associated with the 1997 Notes Offering.

Loss from equity method investments decreased $0.6 million to $1.3 million
for the three months ended March 31, 1998, compared to $1.9 million for the
three months ended March 31, 1997. The decrease was primarily attributable to
the effect of the Acquisitions. As of March 31, 1998, the only Operating
Companies being accounted for under the equity method were Nextel Philippines
and J-Com.

Other income totaling $1.2 million for the three months ended March 31,
1998 is primarily comprised of foreign currency transaction gains in Mexico
partially offset by foreign currency transaction losses in Brazil.

Minority interest increased $0.8 million to $1.2 million for the three
months ended March 31, 1998, compared to $0.4 million for the three months ended
March 31, 1997. The increase is primarily attributable to the increase in both
the net loss and minority ownership interest of Nextel Brazil.

Income tax benefit increased $3.9 million to $4.4 million for the three
months ended March 31, 1998, compared to $0.5 million for the three months ended
March 31, 1997. The increase is primarily attributable to the effect of the
Acquisitions as well as increased tax net operating losses in Brazil.

YEAR ENDED DECEMBER 31, 1997 VS. 1996

The Company's consolidated financial statements include the accounts of
Nextel Brazil and Nextel Mexico commencing January 30, 1997 and September 1,
1997, respectively, which are the dates when the Company acquired a controlling
interest in the respective companies. Prior to September 1, 1997, Nextel Mexico
was accounted for using the equity method. The Company's consolidated financial
statements also include the accounts of Nextel Argentina prior to May 6, 1997,
when it was contributed to the Argentina Joint Venture. On and after May 6,
Nextel Argentina is accounted for using the equity method. In 1997,
substantially all of the revenues and costs and expenses related to revenues
result from the eleven months of Nextel Brazil's SMR operations and four months
of Nextel Mexico's SMR operations included in the Company's consolidated
financial statements.

Revenues increased to $13.0 million in 1997 from $0 in 1996. The increase
in revenues is primarily attributable to fees generated from analog SMR services
provided in Brazil in 1997 by affiliates of Nextel Brazil and from analog SMR
services provided in Mexico in 1997 by affiliates of Nextel Mexico. Nextel
Argentina commenced commercial operations in February 1997; therefore, minimal
revenues were recognized in 1997 and no revenues were recognized in 1996.

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Selling, general and administrative expenses increased $17.5 million to
$26.8 million in 1997 from $9.3 million in 1996. Approximately $17.4 million of
the increase is attributable to Nextel Brazil. Additionally, approximately $2.4
million of the increase is attributable to the four months of Nextel Mexico's
SMR operations. The increase in selling, general and administrative expenses
from Nextel Brazil's and Nextel Mexico's operations was partially offset by a
$2.0 million decrease attributable to the contribution of Nextel Argentina to
the Argentina Joint Venture.

Depreciation and amortization increased to $18.4 million in 1997 from
$200,000 in 1996. Approximately $14.0 million and $3.8 million of the increase
is attributable to the depreciation and amortization expense of Nextel Brazil
and Nextel Mexico, respectively. The remaining increase is due to the
amortization of licenses in Nextel Argentina.

Interest income increased $15.4 million to $19.7 million in 1997 from $4.3
million in 1996. The increase was primarily attributable to income recognized on
the investment of the net proceeds from the 1997 Notes Offering prior to their
application in the Company's business.

Interest expense of $56.6 million was recognized in 1997, which primarily
represents accretion on the 1997 Notes and amortization of associated debt issue
costs. In 1997, the Company capitalized $2.5 million of interest expense in
connection with the construction and development of its digital ESMR networks.
No significant interest expense was recognized in 1996.

Loss from equity method investments increased $5.4 million to $11.4 million
in 1997 from $6.0 million in 1996. The increase was primarily attributable to
approximately $5.1 million in losses associated with the Company's 50% interest
in Nextel Argentina. Additionally, losses associated with its 30% interest in
Nextel Philippines increased $2.6 million primarily due to the effect of the
devaluation of the Philippine Peso. The increase in loss from equity method
investments was partially offset by the effect of Nextel Mexico no longer being
accounted for under the equity method.

Other net of $5.6 million increased from $400,000 in 1996. The increase in
1997 is primarily attributable to approximately $6.0 million in foreign currency
transaction gains recognized upon the remeasurement of Nextel Brazil's and
Nextel Mexico's net monetary liabilities denominated in the local currency to
the U.S. dollar.

Minority interest in the net loss of Nextel Brazil and Nextel Mexico
totaled $2.1 million in 1997. The amount is primarily attributable to the
minority shareholders' approximately 23% interest in the net loss of Nextel
Brazil.

The Company recognized an income tax benefit of $6.3 million in 1997
compared to an income tax provision of $1.4 million in 1996. The income tax
benefit recognized in 1997 was primarily attributable to $8.0 million of
operating losses and changes in temporary timing differences of Nextel Brazil
and Nextel Mexico. The foreign income tax benefits recognized during 1997 were
partially offset by a U.S. tax provision of $1.7 million resulting from the
taxes payable on the interest income associated with the investment of the net
proceeds from the 1997 Notes Offering pending their application in the Company's
business. The income tax provision recognized in 1996 was primarily attributable
to the taxes associated with Nextel Canmex's interest income.

YEAR ENDED DECEMBER 31, 1996 VS. 1995

Nextel Argentina commenced commercial operations in February 1997.
Accordingly, there were no revenues or costs and expenses related to revenues in
1996 and 1995.

Selling, general and administrative expenses increased $9.0 million to $9.3
million in 1996 from $300,000 in 1995. The increase is attributable to $6.3
million of additional expenses related to the increase in staffing and expenses
associated with the corporate oversight function, $1.3 million related to Nextel
Argentina start-up costs and $1.4 million of inventory write-offs at Nextel
Argentina.

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Depreciation and amortization expense increased to $200,000 in 1996 from $0
in 1995. The increase is primarily attributable to depreciation from property,
plant and equipment associated with the corporate oversight function.

Interest income decreased $1.9 million to $4.3 million in 1996 from $6.2
million in 1995. The decrease is primarily due to lower amounts of cash and cash
equivalents on hand during 1996.

Interest expense of $300,000 represents interest accrued on an intercompany
note payable to Nextel Communications outstanding during the fourth quarter of
1996. No interest-bearing intercompany notes existed during 1995.

Loss from equity method investments decreased $900,000 to $6.0 million in
1996 from $6.9 million in 1995. The decrease is primarily attributable to the
net loss of Nextel Mexico decreasing from $31.3 million in 1995 to $11.8 million
in 1996. The decrease in the net loss of Nextel Mexico was partially offset by
the Company's increase in ownership percentage during 1996 and $1.3 million of
additional amortization of the excess purchase price over net assets acquired in
its Nextel Philippines and additional Nextel Mexico investments. The decrease in
the net loss of Nextel Mexico was primarily due to foreign currency exchange
losses incurred in 1995 and interest expense reductions during 1996.

Other, net consisted of income of $400,000 in 1996 compared to expense of
$15.0 million in 1995. Other income recognized during 1996 primarily relates to
amounts recognized under technical services agreements with Nextel Philippines
and Shanghai CCT McCaw. Other expenses recognized during 1995 consists primarily
of a $15.0 million write-down of the Company's investment in Nextel Mexico,
which represented an other than temporary decline in value resulting from the
decline in the Mexican Peso.

Income tax expense decreased $700,000 to $1.4 million in 1996 from $2.1
million in 1995. The decrease in income tax expense is attributable to Nextel
Canmex's interest income decreasing during 1996 as a result of lower amounts of
cash and cash equivalents on hand throughout the year.

LIQUIDITY AND CAPITAL RESOURCES

The Company has incurred historical net losses of approximately $131.3
million from inception through March 31, 1998. These losses resulted from
operating expenses required to support the development of the Company's wireless
communications networks, other start-up costs and the fact that through March
31, 1998 only $21.6 million of consolidated revenues had been recorded. The
Company expects to continue to incur increasing losses and negative operating
cash flows as it continues to build-out and upgrade its existing wireless
communications networks. Through March 31, 1998, funds necessary to finance the
Company's activities have been provided to the Company primarily (prior to March
1997) by its parent, which is an unrestricted subsidiary of Nextel
Communications, in the form of equity contributions and (since March 1997) from
the net proceeds of the 1997 Notes Offering and the 1998 Notes Offering, and to
a lesser extent from vendor financing, including the existing Motorola
Financings. Nextel Communications is not obligated to provide any additional
funding to the Company.

Net cash used by operating activities for the three months ended March 31,
1998 was approximately $26.8 million. Net cash provided by (used in) operating
activities for 1995, 1996 and 1997 was approximately $6.1 million, $(2.9)
million and $(16.5) million, respectively. In 1995 and 1996, cash from operating
activities consisted mainly of interest income generated from cash held by
Nextel Canmex offset by selling, general and administrative expenses of the
Company. During 1997 and for the three months ended March 31, 1998, cash used in
operations consisted primarily of selling, general and administrative expenses
related to the development and management of wireless communication networks in
Brazil and Mexico offset by interest income earned on the proceeds of the 1997
Notes.

Net cash used by investing activities for the three months ended March 31,
1998 was approximately $69.7 million consisting primarily of investment in the
Operating Companies to buildout the Company's ESMR infrastructure, to fund
acquisitions of Nextel Peru and J-Com, and to acquire the remaining 50% interest
in Nextel Argentina. Net cash used in investing activities approximated $47.9
million, $72.3 million and $389.2 million, for 1995, 1996, and 1997,
respectively. In 1995, investing activities consisted of the
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purchase of SMR licenses and investments in Nextel Mexico. During 1996, the
Company's investments consisted primarily of the purchase of analog
infrastructure equipment and equity interests in Nextel Mexico and Nextel
Philippines. During 1997, cash used in investing activities consisted of the
purchase of ESMR infrastructure equipment, additional ownership interests in
Nextel Mexico and investments in marketable securities.

Net cash provided by financing activities for the three months ended March
31, 1998 was approximately $400.1 million. Net cash provided by financing
activities approximated $1.6 million, $43.0 million and $512.4 million, for
1995, 1996, and 1997, respectively. In both 1995 and 1996, financing activities
consisted mainly of capital contributions from Nextel Communications, which were
partially offset by repayment of amounts due to Nextel Communications. During
1997, cash provided by the Company's financing activities consisted mainly of
proceeds from the issuance of the 1997 Notes, offset by repayment of other
long-term debt and amounts due to Nextel Communications. Cash and cash
equivalents increased to approximately $303.6 million at March 31, 1998. Working
capital as of March 31, 1998 increased to $441.8 million compared to $223.3
million at December 31, 1997. The cash provided by financing activities and the
increase in working capital are primarily a result of the Company receiving
approximately $387 million of net proceeds from the 1998 Notes Offering.

The Company currently estimates its funding requirements for fiscal year
1998 to be approximately $810 million. These amounts consist primarily of the
purchase of switches and other equipment, the acquisition of cell sites, the
cost of constructing the ESMR network, loading subscribers, the acquisition of
licenses and investments and funding of operating losses. The Company currently
estimates that approximately $227 million of such requirements will be related
to expenditures in Brazil, $161 million in Argentina, $152 million in Mexico,
$29 million in Peru and $74 million in the Philippines, including any additional
funding of Nextel Philippines, currently estimated to be $50 million during
fiscal year 1998. See "Financing Plan" and "Risk Factors -- Significant Capital
Requirements for Operations."

MOTOROLA FINANCINGS AND BANK FACILITY

Motorola MOU. In November 1996, Nextel Communications, Nextel
International and Motorola entered into the Motorola MOU regarding the provision
of equipment financing by Motorola including the Motorola Financings. Under the
Motorola MOU, Motorola agreed to provide an aggregate of up to $400 million in
vendor financing to Nextel Communications and Nextel International for the
worldwide purchase of iDEN equipment and services and ancillary products (such
as switches). In March 1997, Motorola and Nextel Communications entered into a
term sheet increasing the maximum worldwide vendor financing available to Nextel
Communications and Nextel International to $650 million, with a maximum non-U.S.
amount outstanding of $400 million, subject to certain per country limits as
agreed in the Motorola MOU. The Motorola MOU does not provide for equipment
financing to Nextel Mexico. The Motorola MOU sets a limit of $125 million per
country (other than the United States and Canada) on the amount that may be
borrowed under the Motorola Financings. In June 1997 and October 1997, pursuant
to the Motorola MOU, the Company and Motorola entered into definitive agreements
for financing the purchase of up to $14.7 million and $125 million of equipment
and related services by Nextel Philippines and Nextel Brazil, respectively.

Commitments provided by Motorola to provide financing to any Operating
Company (other than Clearnet and J-Com) including Nextel Brazil and Nextel
Philippines, count 100% against Motorola's $650 million aggregate commitment.
Currently, Motorola has not committed any financing to any Operating Company
other than the existing Motorola Financings described below. The Motorola MOU
contemplates that the loans under the Motorola Financings will bear interest at
a rate of 2% to 4% over prime rate, depending on the Operating Company placing
the order and the country in which such company is installing the iDEN
equipment, and that such loans could have a maturity of up to six years.
Borrowings by an Operating Company may be secured by all the assets and stock of
such Operating Company and it is expected that the Company will guarantee such
borrowings on a pro rata basis based on the equity interest of the Company in
the Operating Company incurring such borrowings.

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Any amounts available to be borrowed by the Operating Companies under the
Motorola Financings will be reduced by any amounts borrowed by Nextel
Communications and its subsidiaries other than the Company and the Operating
Companies. Nextel Communications has committed to the Company that at least $95
million of the financing contemplated to be provided by Motorola pursuant to the
Motorola MOU will be available to the Company. On March 13, 1998, Nextel
Communications and its relevant subsidiaries entered into a new and increased
bank credit facility with respect to its United States operations, and upon
consummation of such new facility, Nextel Communications made certain initial
borrowings thereunder for, among other purposes, the repayment in full of all
amounts then outstanding under its United States vendor financing arrangements
with, among other lenders, Motorola. Simultaneously with such repayment, Nextel
Communications terminated all related agreements and lines of credit with
Motorola that relate to the United States. However, Motorola and Nextel
Communications are not precluded in the future from entering into agreements to
make financing available pursuant to the Motorola MOU to Nextel Communications
and its U.S. subsidiaries. Accordingly, there can be no assurance that more than
$95 million of the Motorola Financing will be available to fund the Operating
Companies' equipment purchases. In addition, to the extent total amounts
outstanding from Motorola to Nextel Communications and its subsidiaries,
including the Company and the Operating Companies (other than Clearnet and
J-Com), plus requests for additional financing from Motorola by Nextel
Communications and its subsidiaries (other than the Company and the Operating
Companies) would exceed $650 million, the Company is required to repay or cause
to be repaid sufficient borrowings such that after giving effect to such
repayment, the total amount of loans outstanding from Motorola to Nextel
Communications and its subsidiaries, including the Company and the Operating
Companies (other than Clearnet and J-Com), will not exceed $650 million. Nextel
Communications (on behalf of itself and its subsidiaries other than the Company
and the Operating Companies) has agreed with the Company not to borrow more than
$400 million under the Motorola MOU.

Philippines Motorola Financing. In June 1997, Nextel Philippines and
Motorola entered into the Philippines Motorola Financing pursuant to which
Motorola committed to provide a maximum amount of $14.7 million in term loans to
Nextel Philippines to finance the purchase of infrastructure equipment and
services from Motorola. The Philippines Motorola Financing matures in June 1999
and provides for an annual interest rate of LIBOR plus 506 basis points.
Pursuant to the Philippines Motorola Financing the term loans are secured by a
first-priority lien on substantially all of Nextel Philippines' assets and a pro
rata guarantee of such financing by each of Nextel Philippines' shareholders,
including the Company. As of March 31, 1998, all of the $14.7 million had been
borrowed.

Brazil Motorola Financing. In October 1997, Nextel Brazil and Motorola
Credit entered into the Brazil Motorola Financing, pursuant to which Motorola
Credit agreed to provide up to $125 million in term loans to Nextel Brazil to
finance the purchase of infrastructure equipment and services from Motorola. The
Brazil Motorola Financing is repayable in semiannual installments over a period
of 42 months commencing June 30, 2000 and bears interest at an annual rate
periodically determined by the Company at either LIBOR plus 4.63% or the Prime
Rate plus 2.5%. Pursuant to the Brazil Motorola Financing, the loans are secured
by a first priority lien on substantially all of Nextel Brazil's assets, a
pledge of all of the stock of Nextel Brazil and its subsidiaries, including
Nextel S.A., and guarantees by the Company and Motorola International (which
indirectly holds a 5% equity interest in Nextel S.A.) of 93.9% and 6.1%,
respectively, of Nextel Brazil's obligations under such financing. Additionally,
approximately $66.6 million of the Company's cash, cash equivalents and
marketable securities was restricted at March 31, 1998 for use as future equity
investments in Nextel Brazil and its subsidiaries. The Brazil Motorola Financing
contains certain financial covenants that require the following: (i) a Fixed
Charge Coverage Ratio of not less than 1.25:1.00 at the end of each fiscal
quarter; provided, however, if the stockholder guaranties have not terminated,
not less than 1.00:1.00; (ii) a net worth of greater than $0 at the end of each
fiscal quarter; (iii) EBITDA at the end of each quarter ranging from
$(10,000,000) at June 30, 1998 to $125,000,000 at June 30, 2002 and thereafter;
and (iv) minimum recurring revenues ranging from $10,000,000 at June 30, 1998 to
$225,000,000 at December 31, 2001. As of March 31, 1998, approximately $58.6
million had been drawn, and the remaining $66.4 million was available for future
borrowings under the Brazil Motorola Financing.

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During the period from the consummation of the 1997 Notes Offering to March
31, 1998, the Company used $471.9 million of the net proceeds from the 1997
Notes Offering and the 1998 Notes Offering to increase its ownership interest in
certain Operating Companies and to acquire licenses, and to fund capital
expenditures, operating losses, working capital and general corporate purposes.

Argentina Credit Facility. As of February 27, 1998, Nextel Argentina
entered into the Argentina Credit Facility, an $83 million senior secured credit
facility, which facility, as amended on May 8, 1998, was increased to $100
million. Borrowings under the Argentina Credit Facility are subject to the
satisfaction or waiver of certain conditions. Loans under the Argentina Credit
Facility will bear interest at a rate equal to either (i) the ABR plus 2.75%
(ABR is the highest of the prime rate, the base CD rate plus 1% and the federal
funds rate plus 0.5%) or (ii) the Eurodollar rate plus 3.75% (the Eurodollar
rate is the LIBO rate multiplied by the statutory reserve rate). Tranche A loans
may be used for financing the import of capital goods; Tranche B loans may be
used for financing the import of capital goods, financing capital expenditures
related to development, expansion and upgrade of Nextel Argentina's network
system, permitted spectrum acquisitions and general working capital needs. In
addition, Nextel Argentina may request additional term loans (the "Incremental
Facility Loans") from $10 million to $50 million, provided that Nextel
International matches such loans on a dollar-for-dollar basis. The maximum
amount available under the Incremental Facility Loans is $50 million. The
Argentina Credit Facility is secured by a pledge of the stock of Nextel
Argentina and a first priority lien on the assets of Nextel Argentina and its
subsidiaries and each of Nextel Argentina's material subsidiaries have
guaranteed the Argentina Credit Facility. The loans under the Argentina Credit
Facility will be repaid in quarterly installments beginning September 30, 2000
and ending March 31, 2003. The first nine installments will be equal to 1/18 of
the then-outstanding balance and the final installment will be in an amount
equal to the then-outstanding balance. As of May 29, 1998, $21 million of the
$100 million available had been borrowed under the Argentina Credit Facility and
no amounts had been borrowed under the Incremental Facility Loans.

In connection with the Argentina Credit Facility, Nextel International has
entered into a Capital Subscription Agreement whereby it agreed to make
aggregate equity contributions in cash or equipment to Nextel Argentina as
follows: $115.5 million on or before June 30, 1998, $133 million on or before
December 31, 1998, $140.1 million on or before June 30, 1999 and $148 million on
or before December 31, 1999. As of March 31, 1998, the Company has made
contributions totaling $145.5 million to Nextel Argentina. Nextel Argentina will
be required to make mandatory prepayments under the Argentina Credit Facility
equal to 50% of Excess Cash Flow commencing with the fiscal year ending December
31, 2000. Borrowings may be made in minimum amounts of $5 million. The Argentina
Credit Facility also contains certain financial and operating covenants. See
"Description of Other Indebtedness."

FUTURE CAPITAL NEEDS AND RESOURCES

The Company believes that the net proceeds from the 1998 Notes Offering,
together with available cash, cash equivalents and marketable securities and
borrowings expected to be available under the existing Motorola Financings and
the Argentina Credit Facility, will be sufficient to fund the Company's current
operations during fiscal year 1998, including the planned expansion of its
existing operations, including any optional additional funding of Nextel
Philippines, currently estimated to be $50 million during fiscal year 1998;
however, there can be no assurance that such funds will be sufficient. If, among
other things, the Company's plans change, its assumptions regarding its funding
needs associated with the further build-out, expansion and enhancement of its
ESMR network at the Operating Company level prove to be inaccurate, the other
shareholders in certain of the Operating Companies do not fund their expected
capital requirements, it consummates acquisitions or investments in addition to
those currently contemplated or at higher prices than currently contemplated, if
it increases its equity ownership interests in certain of the Operating
Companies beyond those currently contemplated, it experiences growth in its
business or subscriber base greater than that which was anticipated in
developing the 1998 Plan, it experiences unanticipated costs or competitive
pressures, the relevant Operating Companies are unable to access funds under the
existing Motorola Financings and/or the Argentina Credit Facility, or the net
proceeds from the 1998 Notes Offering together with any other funds available to
the Company and the Operating Companies or any other borrowings otherwise prove
to be

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insufficient to meet such cash needs during fiscal year 1998, the Company may be
required to seek additional capital sooner than anticipated. Additionally, the
Company and other Restricted Group Members can incur indebtedness only in
compliance with the terms of the covenants contained in the Indentures. See
"Description of the Notes" and "Description of Other Indebtedness." The
availability of borrowings under the existing Motorola Financings and under the
Argentina Credit Facility are subject to the satisfaction or waiver of certain
conditions. See "Description of Other Indebtedness." The Company will also
require significant additional capital in years subsequent to 1998 to fund the
further build-out, expansion and enhancement of its ESMR networks, to fund
operating losses and for other purposes. To the extent the Company's
then-existing financing sources are insufficient to meet such needs, the Company
may seek to raise such additional capital from public or private equity or debt
sources. There can be no assurance that the Company will be able to raise such
capital on satisfactory terms, if at all. See "Risk Factors -- Significant
Capital Requirements."

Pursuant to the Nextel Brazil Put, the Telcom Group has the right between
October 31, 2001 and November 1, 2003, to require Nextel Brazil to redeem such
shareholder's interest in Nextel Brazil at fair market value as determined
pursuant to an appraisal procedure. Motorola has the right to exercise the
Nextel Peru Put if Motorola owns at least 19% of the outstanding shares of
Nextel Peru and Nextel Peru does not purchase ESMR infrastructure equipment from
Motorola, provided that such ESMR infrastructure equipment is technologically
competitive and is offered to Nextel Peru by Motorola on competitive commercial
terms. Pursuant to the Philippines Partner Agreements, the Gotesco Group had the
right, beginning in January 1999, to exercise the Gotesco Put at a purchase
price of approximately $9.4 million. However, on June 26, 1998, the Company and
the Gotesco Group entered into the Gotesco Put Acceleration Agreement pursuant
to which the exercise date of the Gotesco Put was accelerated from January 1999
to August 21, 1998. Additionally, the Company, pursuant to the Philippines
Partner Agreements, may, at its option, fund Nextel Philippines' future capital
needs, currently estimated to be $50 million for 1998, pursuant to loans that
may be converted into equity of Nextel Philippines at the option of the Company.
See "Recent Developments," "Business -- Operations and
Investments -- Philippines" and "Business -- Corporate Governance --
Philippines." See "Risk Factors -- Significant Capital Requirements for
Operations." The Company anticipates that it would seek any required funding to
meet any such obligations through the issuance of additional debt and equity
securities at both the Company level and the applicable Operating Company
levels, future equity investments in such Operating Companies by new local
partners and capital contributions from Nextel Communications in the form of
cash or common stock of Nextel Communications. Nextel Communications has no
obligation to provide any financing in any form and there can be no assurance
that the Company or any of the other Operating Companies will be successful in
obtaining all of the amounts required to fund any Operating Company Put
obligations. The failure to fund any such obligation may have a material adverse
effect on the Company.

In addition to the Operating Company Puts, the Company and certain
Operating Companies have certain deferred payment obligations that will mature
during or after 1998. Upon approval by Anatel, the Company will be required to
pay approximately $4.6 million to finalize the transfer, pursuant to a number of
option agreements entered into with the respective shareholders of Nextel
Brazil's corporate licensees, of 1,180 of its 1,955 channels. See
"Business -- Brazil -- Regulatory and Legal Overview." Pursuant to a services
agreement entered into between Nextel Mexico and certain shareholders of Grupo
San Luis, in connection with the Company's purchase of Grupo San Luis' equity
interest in Nextel Mexico, Nextel Mexico has agreed to pay such shareholders'
aggregate consulting fees of approximately $6.6 million in January 1999 as
consideration for regulatory advice and consulting services rendered to Nextel
Mexico. The Company is obligated to pay to Nextel Peru the remaining purchase
price of $20.7 million for its equity interest in Nextel Peru by July 30, 1998.
Additionally, in connection with the Argentina Credit Facility, the Company has
agreed to contribute at least $50 million of additional capital in the form of
cash or new equipment to Nextel Argentina by December 31, 1999. As of March 31,
1998, the Company had made contributions totaling $32.3 million to Nextel
Argentina in satisfaction of the required $50 million.

In the future, the Company may consider obtaining financing from various
sources, including vendor financing provided by equipment suppliers (including
the Motorola Financings), project financing from commercial banks and
international agencies such as International Finance Corporation and Overseas
Private

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Investment Corporation, bank lines of credit and sales of equity and debt issued
by the Operating Companies and/or the Company. To the extent the Company issues
debt, its leverage and debt service obligations will increase. There can be no
assurance that the Company will be able to raise such capital on satisfactory
terms, if at all.

The Company owns 100% of Nextel Mexico and Nextel Argentina, 81% of Nextel
Brazil (or approximately 77% of Nextel S.A.) and 70.1% of Nextel Peru. The
Company's other assets consist of minority ownership interests in Nextel
Philippines and J-Com, passive minority investment stakes in the Shanghai GSM
System and Clearnet and as of March 31, 1998, cash, cash equivalents and
marketable securities of approximately $468.6 million consisting primarily of
net cash proceeds remaining from the 1997 Notes Offering and the 1998 Notes
Offering. Even though the Company participates in the management of the
Operating Companies (except in China and Canada) and has certain contractual
rights designed to protect its interests as a minority shareholder, it cannot
control the outcome of matters submitted to the shareholders of the Operating
Companies in which it has less than a majority interest. In addition, the
Company may be unable to access the cash flow of its affiliated companies
because (i) it does not have the requisite control to cause such entities to pay
dividends and (ii) substantially all of such entities are parties to or expected
to become parties to vendor financing or other borrowing agreements that
severely restrict the payment of dividends, and such entities are likely to
continue to be subject to such restrictions and prohibitions for the foreseeable
future. The existing Motorola Financings and the Argentina Credit Facility
restrict the payment of dividends to the Company by the Operating Companies that
have debt outstanding thereunder. Any future vendor or bank financings are
likely to include similar covenants restricting the payment of dividends. See
"Risk Factors -- Substantial Indebtedness; Ability to Service Debt; Refinancing
Risks."

INFLATION AND FOREIGN CURRENCY EXCHANGE

The net monetary assets of the Company's subsidiaries are subject to
foreign currency exchange risks since they are maintained in local currency.
Certain of the Operating Companies conduct business in countries in which the
rate of inflation is significantly higher than that of the United States. The
Company will attempt to protect its earnings from inflation and possible
currency devaluation by trying to periodically adjust the relevant Operating
Companies' prices in local currencies and in some cases setting such prices in
direct relation to the U.S. dollar. However, there can be no assurance that any
significant devaluation against the U.S. dollar could be offset, in whole or in
part, by a corresponding price increase. While the Company routinely assesses
its foreign currency exposure, the Company has not entered into any hedging
transactions.

The countries in which the Operating Companies now conduct business
generally do not restrict the repatriation or conversion of local or foreign
currency. There can be no assurance, however, that this will be the case in each
market that the Company may enter in the future or that this situation will
continue in the Company's existing markets. The Operating Companies are all
directly affected by their respective countries' governmental, economic, fiscal
and monetary policies and other political factors. See "Risk Factors -- Currency
Risks and Exchange Controls."

NET OPERATING LOSS CARRYFORWARDS

As of December 31, 1997, there were the following net operating losses
("NOLs") at the Operating Company level: (i) $13.7 million in Brazil; (ii) $20.0
million in Argentina and (iii) $67.8 million in Mexico. Such NOLs are only
available to be utilized as a potential future reduction of taxes at the
Operating Company level and their use in any one year may be limited by the
Operating Companies' ability to generate sufficient taxable income.

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<PAGE> 69

IMPACT OF YEAR 2000 ISSUE

The Company and Nextel Communications are evaluating the Company's computer
systems and software to determine whether they will function properly with
respect to dates in the year 2000 and thereafter. Management believes that most
of the Company's computer systems and software are year 2000 compliant. However,
the Company cannot assess the impact of the Year 2000 on operators of PSTNs or
other (such as electric and other utility) service providers in the countries in
which the Company operates. Because the Company's systems will be interconnected
with those of the relevant PSTN and will be dependent upon the systems of other
service providers, any disruption of operations in the computer programs of the
relevant PSTN or of such service providers would likely have an impact on the
Company's systems in such countries and there can be no assurance that such
impact will not have a material adverse effect on the Company's operations in
such countries.

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INDUSTRY OVERVIEW

DEMAND FOR COMMUNICATIONS SERVICES IN EMERGING MARKETS

The rapid expansion and modernization of economies in many emerging markets
have resulted in a significant increase in demand for telecommunications
services. Telecommunications services are viewed as essential to sustaining
rapid economic growth and to improving productivity and competitiveness in
emerging markets. Telephone service and system quality in most of these markets,
however, remains poor due to under investment in landline infrastructure. In
addition, telecommunications providers in such markets have been unable to meet
the rising demand for telecommunications service which has resulted in long
waiting lists for the installation of telephone lines and service. The countries
in which the Operating Companies currently conduct business, other than Japan,
Canada and China, have an average of 8.1 access lines per 100 people compared to
59.4 access lines per 100 people in the United States. Waiting time for the
installation of a landline telephone ranges from approximately 1.5 years in
Brazil to 3.6 years in the Philippines.

While wireless communications in the United States provides an attractive
supplemental service to a well developed and reliable landline telephone system,
in many emerging markets wireless communications have become an important
alternative to the relatively antiquated, overburdened and unreliable landline
telephone systems. Furthermore, in most of the emerging markets where the
Operating Companies conduct business, wireless communications services tend to
be more readily available and in many cases provide higher quality service than
landline systems. In addition, wireless networks can be constructed relatively
quickly and are less expensive to install than landline networks. In 1996, the
average cellular penetration rate in the emerging markets in which the Operating
Companies conduct business (which excludes Japan, Canada and China) was 1.3%
(compared to a cellular penetration rate of 16.6% in the United States). By
2000, the average cellular penetration rate in those countries is expected to
increase to 6.5% representing an average annual growth rate of 51%, compared to
an average annual growth rate of 22% in the United States. In terms of regional
cellular growth from year end 1996 through year end 2000, the number of cellular
subscribers is estimated to grow an average of 46% per year in Latin America and
37% per year in the Asia Pacific region.

The following table sets forth certain information with respect to the
emerging markets in which the Company operates, together with comparative
information for the United States.

<TABLE>
<CAPTION>
WAITING CELLULAR/PCS
TIME FOR MONTHLY
TELEPHONE INSTALLATION AVERAGE
COUNTRY POPULATION GNP/ LINES PER OF LANDLINE CELLULAR/PCS REVENUE PER
POPULATION GROWTH CAPITA PPP 100 POPS TELEPHONE PENETRATION SUBSCRIBER
(1)(2) (1)(2) (1)(3) 1996(1) (1)(4) 1996(1) (1)(5)
------------- ---------- ---------- --------- ------------ ------------ ------------
(IN MILLIONS) (YEARS)
<S> <C> <C> <C> <C> <C> <C> <C>
Brazil....................... 160 1.9% $ 5,630 7.5 1.5 1.7% $ 99
Mexico....................... 91 2.0 7,050 9.6 0.3 1.1 54
Argentina.................... 35 1.3 8,920 16.0 0.2 1.9 121
Peru......................... 24 1.8 3,690 4.7 0.8 0.7 120
Philippines.................. 73 2.2 2,800 2.6 3.6 1.2 45
United States................ 264 1.1 25,860 59.4 -- 16.6 48
</TABLE>

- ---------------
(1) Source: The Strategis Group, Latin America Cellular/PCS Markets, 1997,
Asia-Pacific Cellular/PCS Markets, 1997, Pyramid Research Wireless Markets
and Strategies, World Telecom Development Report, Cellular
Telecommunications Industry Association Data Survey and the International
Mobile Telecommunications Association.

(2) Data for the United States is for 1995; all other data is for 1996.

(3) Data is calculated using the purchasing power method; data for the United
States is for 1994; all other data is for 1995.

(4) Data for Brazil is for 1996; all other data is for 1995.

(5) Data for Mexico is for 1997; all other data is for 1996.

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WIRELESS TECHNOLOGY

Currently, three systems dominate the market for wireless communications
services: SMR/ESMR, cellular/PCS and paging. The Operating Companies utilize one
or more of each of these forms of wireless communications. The following is a
brief description of each type of wireless communications system.

SMR/ESMR

SMR, also referred to as "trunked radio" or wireless dispatch
communications, is primarily a business communications tool which provides cost
effective point-to-multipoint or "one-to-many" voice communications. This
service allows reliable, flexible and convenient communications among a defined
group of users, typically within a business or "work group."

Historically, SMR operators have generally been unable to provide mobile
telephone service competitive with that provided by cellular operators because
of various factors affecting SMR system capacity and voice quality. The primary
factors affecting capacity and voice quality include: the smaller portion of the
radio spectrum allocated to SMR; regulations and procedures that initially
served to spread ownership of SMR licenses among a large number of operators in
each market, thereby limiting the amount of SMR spectrum available to any
particular operator; and the limitations of traditional SMR technology which
employs analog transmission and a single site, high power transmitter
configuration which precludes the use of any given SMR frequency by more than
one caller at a time within a given service area.

Partially as a result of the constraints on capacity, SMR operators,
including the Operating Companies that offer SMR services, have traditionally
emphasized radio dispatch service, which involves shorter duration
communications than mobile telephone service and places less demand on system
capacity. The traditional SMR market, therefore, has been oriented primarily to
business customers such as contractors, service companies, security firms and
delivery services that have significant field operations and need to provide
their personnel with the ability to communicate directly with one another,
either on a one-to-one or on a one-to-many basis. The broader market of
businesses and individuals that are primarily interested in mobile telephone
service has been largely beyond the reach of traditional SMR operators.

The 800 MHz SMR spectrum in the United States and in other countries is
generally adjacent and functionally equivalent to cellular frequencies. As a
result, iDEN digital ESMR technology has been developed by Motorola specifically
to provide digital service using the SMR frequency band. The Company intends to
use iDEN technology in its ESMR networks.

Similar to cellular telephone technology, digital ESMR technology is based
upon the division of a given geographical area into a number of cells and the
simultaneous re-use of radio channels in non-contiguous cells within the system.
Each cell contains a low power transmitter-receiver at a base station that
communicates by central switching point or mobile switching center that controls
the routing of calls and that, in turn, is connected to the public switched
telephone network. The switch enables ESMR mobile telephone users to move freely
from cell to cell while continuing their calls. In general, an ESMR network
requires fewer sites than are needed for a PCS network.

ESMR technology provides the capability to offer integrated wireless
communications services over one network utilizing common cell and digital
switching infrastructures as well as multi-functional handsets. Historically,
the mobile telephone, paging, dispatch and mobile data market segments were
served by discrete networks utilizing separate technologies, handsets and phone
numbers despite the fact that a number of users subscribed to one or more of
these services. In contrast to this historical segmentation of the wireless
industry, the Company believes that ESMR technology will make it possible to
integrate all such segments of wireless mobile communications.

Motorola has developed its proprietary iDEN digital technology, which
allows analog SMR networks to be upgraded to digital ESMR networks offering
enhanced services such as instant conferencing (enhanced dispatch), mobile
telephone (interconnect), short-text messaging with acknowledgment (alphanumeric
paging) and data transmission. The iDEN technology uses a version of the Time
Division Multiple Access ("TDMA") digital transmission technology used by
certain providers of digital cellular services. The iDEN
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<PAGE> 72

technology carries up to three voice and/or control paths per channel for the
ESMR network's mobile telephone function and up to six voice and/or control
paths per channel for the ESMR network's instant conferencing function.

During the third and fourth quarters of 1996, Nextel Communications
launched commercial service of its current generation iDEN digital ESMR networks
in several markets in the United States and, during the fourth quarter of 1996,
Clearnet launched commercial services of its iDEN digital ESMR network in the
Ontario-Quebec market under the "MiKE(TM)" brand name. Since then, both Nextel
Communications and Clearnet have continued expanding their iDEN digital ESMR
networks in additional markets. As of March 31, 1998, Nextel Communications
provided services to approximately 1,641,500 ESMR subscriber units and Clearnet
publicly reported that it provided services to approximately 57,400 ESMR
subscriber units. See "Risk Factors -- Technology Risks."

The implementation of an ESMR network utilizing iDEN digital technology
involves upgrading existing SMR systems via two fundamental changes in system
architecture. First, the analog transmission format of traditional SMR systems
is replaced by a digital TDMA transmission format. Second, the single
high-powered transmitter typical of traditional SMR systems is replaced or
augmented by a number of low powered transmitters, dispersed across the coverage
area, enabling frequency reuse. Additionally, the ESMR frequency reuse system
uses a mobile switching office to enable the hand-off of transmissions from one
transmitter to another as subscribers move across the coverage area.

Cellular/PCS

Cellular telephone systems are capable of providing high quality, high
capacity voice and data communications to and from vehicle-mounted and hand-held
radio telephones. Cellular telephone systems are capable of handling thousands
of calls at any one time and providing service to hundreds of thousands of
subscribers in any particular area.

Cellular telephone technology is based upon the division of a given
geographical area into a number of cells and the simultaneous re-use of radio
channels in non-contiguous cells within the system. Each cell contains a low
power transmitter-receiver at a base station that communicates by a switch that
controls the routing of calls and that, in turn, is connected to the public
switched telephone network. The switch enables cellular telephone users to move
freely from cell to cell while continuing their calls.

Cellular telephone systems generally offer subscribers the features offered
by the most up-to-date landline telephone services. Cellular telephone systems
are interconnected with the landline telephone network which allows subscribers
to receive and originate local, long-distance and international calls from their
cellular telephones. As a result, cellular telephone system operators require an
interconnection arrangement with the local landline telephone companies and the
terms of such arrangements are material to the economic viability of the system.

A cellular telephone system's capacity can be increased in various ways.
Initially, increasing demand may be satisfied by adding available channel
capacity to cells. When all available channels are used, further growth can be
accomplished through a process known as cell splitting. Cell splitting entails
dividing a single cell into a number of smaller cells allowing for greater
channel re-use, thereby increasing the number of calls that can be handled in a
given area.

Currently, the three most widely deployed analog air-interface cellular
standards are Advanced Mobile Phone System ("AMPS"), Nordic Mobile Telephone
("NMT"), and Total Access Communications System ("TACS"). The AMPS and TACS
systems currently operate in the 800 and 900 MHz frequency band and the NMT
systems can operate in either the 450 or 900 MHz ranges. The most prevailing
air-interface standards utilizing digital technology include GSM and Digital
Advanced Mobile Phone System ("DAMPS"). DAMPS systems are currently deployed in
the 800 MHz frequency range and also have been employed in PCS systems
constructed on the 1.8-1.9 GHz frequency ranges. DAMPS utilizes either TDMA or
Code Division Multiple Access transmission techniques. Both AMPS and DAMPS are
the most widely

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<PAGE> 73

deployed systems in the Americas. GSM, which is widely deployed in Europe and
Asia, can operate at either the 900 MHz or (in an upbanded variant referred to
as GSM/PCS) at the 1.8-2.0 GHz frequency ranges.

Paging

Paging is a well-established wireless technology, and is widely available
in many countries. A paging system typically consists of a number of transmitter
sites connected to a central messaging center. The messaging center receives
incoming messages from the public telephone network and prepares batches of
messages for transmission to subscribers. There are two basic types of paging
services: numeric (digital display) and alphanumeric, which allows subscribers
to receive and store messages of up to 5,000 characters consisting of both
letters and numbers. Historically, paging was a one-way communication service;
however, technological advances in wireless messaging have made two-way
communications possible. Two-way paging systems allow message acknowledgment
responses and the transmission of short data messages by the paging subscriber.
In emerging markets where telephone penetration is low, paging often provides an
affordable alternative to public telephone service.

The table below illustrates some of the main differences between SMR/ESMR,
cellular/PCS and paging.

COMPARISON OF SMR/ESMR, CELLULAR/PCS AND PAGING

<TABLE>
<CAPTION>
SMR/ESMR CELLULAR/PCS PAGING
-------- ------------ ------
<S> <C> <C> <C>
Services Offered.......... Voice, data, Voice and data Data only
direct connect (one-to-one) (one- to-one
(one-to-many and one-
and to-many)
one-to-one)
Typical Frequency Range... 800 MHz 800 MHz Lowband and
(cellular) 1.8 931 MHz
and 1.9 GHz
(PCS)
</TABLE>

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BUSINESS

Nextel International is a leading international wireless communications
services company based on the number of people and the number of SMR channels in
its licensed service areas. The Company provides wireless communications
services in five of the largest cities in Latin America and three of the largest
cities in Asia. The Company's markets cover approximately 373 million POPs,
approximately 131 million of which are in Latin America. Nextel International is
the largest SMR service provider in Brazil and Mexico, and holds the largest SMR
channel position in Argentina. The Company's strategy is focused on using its
leading analog dispatch or SMR channel positions in its principal markets,
together with Nextel Communications' experience and supplier relationships, to
upgrade its services from analog dispatch to digital ESMR services. The Company
intends to use digital iDEN(TM) technology developed by Motorola in its ESMR
networks. The Company launched commercial ESMR service in Sao Paulo and Buenos
Aires in the second quarter of 1998 and currently plans to launch commercial
ESMR service in Rio de Janeiro and Mexico City during the third quarter of 1998.
The Company's Japanese affiliate, J-Com, introduced a multi-functional
commercial ESMR service in the Kanto region of Japan (which includes Tokyo) in
July 1998. Nextel Philippines completed initial system construction and launched
commercial ESMR service in Manila in July 1998. The timing of the Company's
currently planned launch schedule depends on a number of factors, some of which
are beyond the Company's control. See "-- Operations and Investments." The
Company's upgrade to digital networks will allow it to increase capacity
significantly and to offer, in a single digital subscriber unit, additional
services and advanced features, such as direct connect (group calling and
instant conferencing), telephone interconnect and text messaging services.

The Company owns majority controlling interests in wireless communications
services companies in Brazil, Mexico, Argentina and Peru and owns equity
interests and actively participates in the management of wireless communications
services companies in the Philippines and Japan. The Company also owns an
approximately 15% equity interest in Clearnet and has a contractual right
through its Chinese joint venture to receive 12.1% of the profits generated by
the Shanghai GSM System. The Company does not actively participate in the
management or in formulation of the business plans or policies of Clearnet or
the Shanghai GSM System and considers them passive investments. The Operating
Companies have wireless communications networks in some of the largest cities in
their respective countries, including Sao Paulo, Rio de Janeiro, Mexico City,
Buenos Aires, and Lima, which are five of the largest cities in Latin America,
and Shanghai, Manila and Tokyo, which are three of the largest cities in Asia.

The Company holds licenses covering more SMR channels than any other SMR or
ESMR system operator in Brazil and Argentina and believes it is among the
largest SMR (and potential ESMR) service providers, based on its channel
position, in its principal markets in Mexico, Peru, the Philippines and Japan.
The Company's asset base includes (i) licenses or management rights to over
5,600 SMR channels in the 800 MHz band (which is adjacent to and functionally
equivalent to cellular frequencies) to provide wireless communications services
over such channels and (ii) deployed analog or digital wireless communications
services networks in the markets where the Operating Companies conduct business.
The Company's licenses were acquired for approximately $569 million, or under
$4.00 per POP, which is significantly less than the prices paid for cellular and
PCS licenses in comparable markets around the world.

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<PAGE> 75

countries in which the Operating Companies are located, all of whom have
experience in the telecommunications industry and/or extensive functional area
expertise. See "Management."

Nextel International is an indirect wholly owned subsidiary of Nextel
Communications, which is the largest provider of SMR and ESMR services in the
United States with revenues of approximately $739 million for the twelve months
ended December 31, 1997 and $327 million for the three months ended March 31,
1998. Nextel Communications offers a differentiated, integrated package of
digital wireless communications services primarily to business users. As of June
30, 1998, Nextel Communications provided service to approximately 2,042,100
digital subscriber units in the United States. At June 30, 1998, the Nextel
Communications digital network provided coverage in various markets throughout
the United States, including in and around 83 of the top 100 MSA's in the United
States. Nextel Communications' largest shareholders include certain entities
controlled by Craig O. McCaw and Motorola.

For a discussion of the Company's financial data by geographic segments,
see Note 15 to the Company's consolidated financial statements appearing
elsewhere in this Prospectus.

RECENT DEVELOPMENTS

On March 12, 1998, the Company completed the sale of the Private Notes for
aggregate net proceeds to the Company of approximately $387 million. The 1998
Notes Offering is part of the Company's financing plan designed to meet expected
funding requirements that are estimated to total approximately $810 million
during 1998. See "Financing Plan."

In connection with the 1998 Notes Offering, on March 12, 1998, the Company
consummated the Clearnet Transaction, pursuant to which a wholly owned
subsidiary of Nextel Communications transferred to the Company 6,777,778 Class D
Shares of Clearnet in exchange for 906.32 shares of the Company's Series A
Preferred Stock. See "-- Operations and Investments -- Canada." Additionally, in
connection with the 1998 Notes Offering, on March 12, 1998, the Company issued
82.54 shares of Series A Preferred Stock to a wholly owned subsidiary of Nextel
Communications for consideration of approximately $8.3 million.

The Company expects to amend the Restated Articles of Incorporation by the
end of August 1998 to amend certain terms of the Series A Preferred Stock and
the Series B Preferred Stock. The amendments to the terms will be as follows:

(ii) an amendment to provide that the Company will at all times
reserve and maintain for issuance a sufficient quantity of shares of Series
B Preferred Stock to provide for the payment of the maximum amount of
Series B Preferred Stock issuable pursuant to subparagraph (i) above;

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The following is an overview of the Company's recent investments,
acquisitions and other recent developments:

Brazil. On September 26, 1997, Nextel S.A. (formerly Airlink S.A.), a
subsidiary of Nextel Brazil and the indirect holder of Nextel Brazil's SMR
channels and related operating assets in Brazil acquired (i) 49% of the capital
stock of MCS, an indirect wholly owned subsidiary of Motorola; (ii) an option to
purchase the remaining 51% of the capital stock of MCS; and (iii) certain assets
of MCS. The MCS option is exercisable for $3.2 million upon receipt of certain
necessary approvals from Brazilian regulatory authorities. In connection with
the MCS Transaction, Motorola acquired 5% of the outstanding capital stock of
Nextel S.A., which effectively diluted the Company's ownership in its Brazilian
operations to 77%. MCS owns SMR licenses in 13 of the largest Brazilian cities,
including Sao Paulo, Rio de Janeiro and Belo Horizonte. The MCS Transaction
increased Nextel S.A.'s SMR channel holdings in each major city in Brazil. See
"-- Operations and Investments -- Brazil."

Argentina. The Company acquired the remaining 50% equity interest in
Nextel Argentina for $46 million on January 30, 1998. Nextel Argentina is the
largest SMR channel holder in Argentina and has licenses to conduct a nationwide
paging business. Nextel Argentina currently has approximately 4,000 paging
subscribers in Buenos Aires and Mar del Plata. In December 1997, Nextel
Argentina acquired an additional 60 SMR channels in Buenos Aires for $12 million
in a government auction, increasing its SMR spectrum holdings in Buenos Aires to
12 MHz. See "-- Operations and Investments -- Argentina."

Mexico. Since January 1, 1997, through a series of transactions, the
Company has increased its equity interest in Nextel Mexico from 30.1% to 100%
for consideration equal to approximately $132.2 million. As a result of such
transactions, the Company has effectively satisfied the former shareholders' put
rights and is no longer subject to their corporate governance rights. See
"-- Operations and Investments -- Mexico."

On June 30, 1998, COFETEL issued a press release in which it ordered Nextel
Mexico to cease its pre-launch marketing campaign for its ESMR services because,
according to the COFETEL press release, Nextel Mexico's SMR concessions did not
authorize the Company to offer the services specified in Nextel Mexico's
marketing materials. On July 8, 1998, Nextel Mexico received a letter from
COFETEL containing such order. Prior to receipt of COFETEL's order, and based on
the press reports regarding COFETEL's press release, Nextel Mexico had ceased
its pre-launch marketing campaign. On July 9, 1998, Nextel Mexico sent a written
reply to COFETEL in which it informed COFETEL that the Company had ceased its
pre-launch marketing campaign and intended to revise its pre-launch marketing
campaign to insure that any terms describing its ESMR services were consistent
with its SMR licenses. After meeting with COFETEL, Nextel Mexico revised the
language in its pre-launch marketing campaign and, with COFETEL's authorization,
resumed its pre-launch marketing campaign. Although the Company believes that
its licenses authorize all of the services contemplated to be offered on its
ESMR network and that COFETEL will not have any further objections to Nextel
Mexico's marketing campaigns, there can be no assurance that COFETEL will accept
Nextel Mexico's interpretation of its SMR licenses or that COFETEL will not
object to Nextel Mexico's future marketing campaigns.

Philippines. In February 1998, the Company reached an agreement in
principle with the Philippines Shareholders, including the Gotesco Group which
owns a 20% interest in Nextel Philippines, and finalized the Philippines Partner
Agreements in April 1998. Pursuant to the Philippines Partner Agreements (i) the
Nextel Philippines corporate governance arrangements were restructured to give
the Company increased minority shareholder rights and the Philippines
Shareholders agreed to vote for the election of new, professional senior
management of Nextel Philippines; (ii) the Company purchased existing
shareholder loans of the Philippines

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Shareholders totaling approximately $19.6 million, which loans bear interest at
18% per annum and are convertible into equity of Nextel Philippines; (iii) the
Company may, at its option, fund Nextel Philippines' future capital needs,
currently estimated to be $50 million for fiscal year 1998, pursuant to loans
that, at the option of the Company, may be converted into equity of Nextel
Philippines; (iv) the Gotesco Group has the right to exercise the Gotesco Put
for approximately $9.4 million, beginning in January 1999; and (v) the Company
has the right to call the Gotesco Group's 20% interest for approximately $11.6
million, if the Gotesco Group does not exercise the Gotesco Put. The ability of
the Company to convert shareholders' loans into equity, satisfy the Gotesco Put
or call the Gotesco Group's 20% interest is subject to applicable Philippines
foreign ownership rules. Despite the provisions of the Philippines Partner
Agreements, two of the Philippines Shareholders, Jetcom and Foodcamp, have taken
actions or failed to take actions to effect the terms of such agreement,
including the failure to convene a meeting of the board of directors of Nextel
Philippines and a vote on the election of the senior management of such company
and other steps necessary to complete the restructuring of Nextel Philippines'
corporate governance framework in accordance with the Philippines Partner
Agreements. On June 19, 1998, the Company sent a written notice to such
shareholders asserting the Company's belief that such shareholders have failed
to perform their respective obligations under the Philippines Partner Agreements
and informing such shareholders that the Company will pursue all remedies
available to it under the Philippines Partner Agreements and applicable laws in
order to enforce its rights. These shareholders have sent written responses to
the Company's letter in which they denied all of the Company's assertions.

On June 26, 1998, the Company and the Gotesco Group entered into the
Gotesco Put Acceleration Agreement pursuant to which the exercise date of the
Gotesco Put was accelerated from January 1999 to August 21, 1998. The Company
also agreed to pay the Gotesco Group (i) $500,000 upon the delivery of
irrevocable proxies covering the voting rights on the shares of Nextel
Philippines owned by the Gotesco Group to a third party or parties selected
mutually by the Company and the Gotesco Group; (ii) $500,000 to the Gotesco
Group upon the conclusion of the Nextel Philippines annual shareholder meeting,
provided that the Gotesco Group's shares of Nextel Philippines are voted in
favor of the corporate governance provisions of the Philippines Partner
Agreements at such annual meeting; and (iii) $8,000,000 upon the transfer of the
shares covered by the Gotesco Put to a qualified third-party purchaser in
accordance with Philippines law, which transfer shall occur no later than August
21, 1998. The Company is in discussion with several Philippine groups regarding
the purchase of an equity interest in Nextel Philippines, including the purchase
of the shares covered by the Gotesco Put and the Gotesco Put Acceleration
Agreement. Pursuant to the Gotesco Put Acceleration Agreement, the Gotesco Group
pledged its shares of Nextel Philippines to the Company, delivered such shares
to an escrow agent and granted irrevocable proxies covering the voting rights on
such shares to third parties selected mutually by the Company and the Gotesco
Group. The Company has made the payment of $500,000 to the Gotesco Group due
upon execution and delivery of the Gotesco Put Acceleration Agreement.

On July 13, 1998, Nextel Philippines held the 1998 annual shareholders
meeting and organizational board of directors meeting pursuant to which certain
corporate governance provisions of the Philippines Partner Agreements were
implemented, including the appointment of new, professional senior management.
Immediately prior to the meetings, the ROP SEC issued a TRO upon petition of one
of the Philippines Shareholders and certain individual shareholders who hold
shares in Nextel Philippines in their capacity as members of the board of
directors of Nextel Philippines representing the interests of Jetcom and
Foodcamp (the "Petitioners"). The Petitioners requested the nullification of the
amendments of the bylaws of Nextel Philippines contemplated by the corporate
governance provisions of the Philippines Partner Agreements and the TRO enjoined
Nextel Philippines from implementing such Bylaw Amendments for a 72-hour period.
The Petitioners further requested that a preliminary injunction be issued with
the same effect pending a trial on the merits with respect to the validity of
the Bylaw Amendments. On July 15, 1998, pursuant to the agreement of Nextel
Philippines and the Petitioners and confirmed by the ROP SEC (a) the TRO was
permitted to expire and (b) pending a trial on the merits as to the validity of
the Bylaw Amendments (i) the Petitioners agreed to withdraw their petition for a
preliminary injunction and (ii) Nextel Philippines agreed that the provisions of
the Bylaw Amendments granting the Company Veto Rights would not be implemented.

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In addition, on July 11, 1998, the Company received a letter from counsel
to Jetcom and Foodcamp alleging that the Company had engaged a public relations
firm to undertake an advertising campaign on behalf of Nextel Philippines and
that pursuant to such campaign the Company issued misleading press releases
regarding the launching of commercial ESMR services by Nextel Philippines,
including press releases stating that the Company and Nextel Philippines
intended to provide cellular services. The letter stated, among other things,
that the Company's retention of the public relations firm was unauthorized, that
while Nextel Philippines' franchise includes authorization to operate a cellular
system its PA does not permit such operations, that the Company has been
informed by Nextel Philippines management not to use the word cellular in
describing its telecommunications services and that as a consequence of the
foregoing, several telecommunication companies have initiated legal proceedings
that place Nextel Philippines' PA in jeopardy. The letter states that Jetcom and
Foodcamp intend to hold the Company liable for any and all damages as a result
of the foregoing. The Company denies the substance of the allegations in the
letter described above and specifically denies that the Company or any agent of
the Company authorized the issuance of the press release in question.

Although the Company believes that the provisions of the Philippines
Partner Agreements are enforceable against each of the Philippines Shareholders
and that the Company will eventually be successful in any litigation against
Jetcom and Foodcamp regarding such agreements, there can be no assurance that
the Company will prevail in any arbitration or legal action against Jetcom and
Foodcamp or that such claims will be resolved in a timely manner. To the extent
the Company is not successful in resolving these issues with Jetcom and
Foodcamp, the Company may decide not to continue to fund Nextel Philippines. Any
failure to resolve the legal issues among the shareholders of Nextel Philippines
in a timely manner, and any resulting decision by the Company not to continue to
provide additional funding to Nextel Philippines, would have a material adverse
effect on Nextel Philippines' business, prospects, financial condition and
results of operation. The Company does not believe that any of the Philippines
Shareholders intend to fund Nextel Philippines in fiscal year 1998. Further,
Nextel Philippines is currently overdue on payments to creditors totaling
approximately $5 million. Although none of Nextel Philippines' creditors has
commenced action against Nextel Philippines to date, Nextel Philippines' failure
to make payments required by its obligations could cause such creditors to
commence legal action against Nextel Philippines, including attempting to take
possession of any assets pledged to secure Nextel Philippines' debt. Any lack of
funding of Nextel Philippines, either from the Company, the Philippines
Shareholders or other sources, would have a material adverse effect on Nextel
Philippines' business, prospects, financial condition and results of operation,
including its ability to meet its obligations, and, accordingly, on the value of
the Company's investment in Nextel Philippines. See "Recent Developments,"
"-- Operations and Investments -- Philippines," "-- Corporate
Governance -- Philippines" and "Risk Factors -- Significant Capital Requirements
for Operations."

Japan. On March 17, 1998, the Company purchased a 21% equity interest in
J-Com for a purchase price of Y77.2 million (approximately $593,000 based on the
exchange rate on the date of purchase). The Company also provided a shareholder
loan of Y4.1 billion (approximately $31.5 million based on the exchange rate on
the date of purchase) to J-Com. J-Com has a contractual right to provide service
in Japan under a sublicense covering more than 125 million POPs. DJSMR, a
Japanese partnership in which an affiliate of Motorola is the majority partner,
holds a 49% equity interest in J-Com. The remaining equity interests in J-Com
are held by Nichimen (which holds a 25% equity interest), and ORIX (which holds
a 5% equity interest).

PENDING INVESTMENT

Indonesia. On August 15, 1997, the Company entered into a preliminary
agreement with GSK which gives the Company the right, upon receipt of required
regulatory approval, to purchase a 37.5% interest in MKT. MKT holds a
provisional license for 80 SMR channels in Indonesia that can be converted into
an operating license upon satisfaction of certain regulatory approvals by June
30, 1998. The Company and GSK agreed to amend the preliminary agreement to
extend the deadline for receipt of regulatory approvals to December 31, 1998.
Although the Company believes that MKT presents it with significant
opportunities to expand its SMR network in Asia, the Company does not intend to
make any substantial investment in MKT

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until the economic and political conditions in Indonesia, in particular, and the
economic conditions in Asia generally, have stabilized. To date, the Company has
advanced $1.5 million to MKT in the form of a loan that is guaranteed by GSK.

THE NETWORK

The following table provides a brief overview of the wireless
communications systems of each of the Operating Companies and MKT as of June 30,
1998, except as otherwise noted.

<TABLE>
<CAPTION>
START DATE
NEXTEL SUBSCRIBERS OF
INTERNATIONAL PROPORTIONATE SYSTEM AS OF COMMERCIAL
MARKET OWNERSHIP POPULATION(1) POPULATION TYPE 12/31/97 SERVICES
- ------------------------ ------------- ------------- ------------- --------------- ----------- --------------------------
(MILLIONS) (MILLIONS)
<S> <C> <C> <C> <C> <C> <C>
OPERATING COMPANIES:
Brazil................ 77%(2) 60.0(3) 46.2 SMR/ESMR 19,000 October 1994/May 1998(4)
Mexico................ 100% 45.0 45.0 SMR/ESMR 30,000 September 1993/1998(4)
Argentina............. 100% 19.3 19.3 Paging/SMR/ESMR 16,000 April 1996/
February 1997/June 1998(4)
Peru(5)............... 70.1% 7.0 4.9 SMR/ESMR 3,000 April 1995/1999
Philippines........... 30% 73.0 21.9 Paging/ESMR 55,000 February 1995/July 1998(4)
Canada(6)............. 15% 30.0 4.5 SMR/ESMR/PCS 151,000 April 1994/October 1996/
October 1997
Japan(7).............. 21% 125.0 26.5 SMR/ESMR 38,000 May 1997/July 1998(4)
China (Shanghai)...... 12.1%(8) 14.0 1.7 GSM 66,000 June 1995
----- ----- -------
Subtotal............ 373.3 170.0 378,000
PENDING TRANSACTION:
Indonesia............. 37.5%(9) 19.8 7.4
----- ----- -------
Total............... 393.1 177.4 378,000
----- ----- -------
</TABLE>

- ---------------
(1) Represents estimated population of areas covered by Operating Companies'
licensed frequencies as of December 31, 1997. See "-- Spectrum Position."

(3) Brazilian law provides that SMR and ESMR service may only be provided to
businesses and not to individuals.

STRATEGY

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<PAGE> 80

seeking new investment opportunities in markets that satisfy the characteristics
described above. The key elements of the Company's strategy are:

Benefit from Nextel Communications and Motorola Relationships. Nextel
Communications is the largest SMR and ESMR provider in the United States with
approximately 2,042,100 digital subscriber units in service and approximately
486,400 analog SMR units in service at June 30, 1998. The Company intends to
continue to access the technology, operations, supplier relationships, network
development and marketing expertise of Nextel Communications in upgrading its
SMR networks to ESMR in its existing markets and to continue to leverage its
relationship with Nextel Communications in entering new markets. In addition,
the Company believes that it will continue to benefit from its relationship with
Motorola, which supplies Nextel Communications and the Company with iDEN
equipment and services. By utilizing Nextel Communications' expertise and
relationships with suppliers, in particular with Motorola, the Company believes
that it will be able to deploy ESMR networks that are competitive with cellular
and PCS networks in its principal markets.

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<PAGE> 81

SPECTRUM POSITION

The Operating Companies' current license holdings represent one of the
largest international wireless footprints, covering approximately 373 million
POPs. The Company's spectrum strategy in the short-term is to strengthen its
channel position in its existing markets in Latin America and Asia (other than
China). The Company will also seek to acquire SMR channels or other wireless
communications spectrum in other selected urban centers having attractive
economic characteristics on an opportunistic basis. See "Summary -- The
Company -- Recent Developments."

In order to construct a digital network utilizing iDEN technology, the
Company believes that at least 100 SMR channels are necessary in any given
market. Generally, the Company estimates that each SMR channel has the capacity
to provide service to approximately 100 subscribers using analog SMR technology.
Deploying digital technology on these SMR channels will increase subscriber
capacity significantly. Moreover, the Company believes its large channel
position reduces capital expenditures required to upgrade to digital networks.
Nextel International generally owns or has options to acquire at least 100
channels in the principal markets in which it intends to construct digital
networks. In smaller markets, Nextel International will continue to focus its
efforts on growing its analog SMR operations and subscriber base. The Company's
licenses were acquired for approximately $569 million, or under $4.00 per POP,
which is significantly less than the prices paid for cellular or PCS licenses in
comparable markets around the world.

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<PAGE> 82

The Company believes it has established a leading market position in terms
of number of SMR channels in each of its principal markets. The following chart
summarizes the Company's spectrum position as of June 30, 1998.

<TABLE>
<CAPTION>
POPULATION OF TOTAL SMR TOTAL
LICENSED AREA(1) CHANNELS SPECTRUM
---------------- --------- --------
(MILLIONS) (MHZ)
<C> <S> <C> <C> <C>
I. SMR PROPERTIES
(a) EXISTING MARKETS:

BRAZIL(2)
Greater Sao Paulo area:
Sao Paulo........................ 18.4 200(3) 10.0
Campinas......................... 1.0 140 7.0
Santos........................... 0.5 120 6.0
Sao Jose dos Campos.............. 0.5 120 6.0
----- -----
Total Greater Sao Paulo Area....... 20.4 580 --
Greater Rio de Janeiro area:
Rio de Janeiro................... 12.0 160 8.0
Niteroi.......................... 0.4 60 3.0
----- -----
Total Greater Rio de Janeiro Area 12.4 220 --
Belo Horizonte..................... 3.9 160 8.0
Porto Alegre....................... 3.1 120 6.0
Recife............................. 3.0 80 4.0
Salvador........................... 2.6 60 3.0
Fortaleza.......................... 2.3 40 2.0
Curitiba........................... 2.1 140 7.0
Brasilia........................... 1.9 80 4.0
Belem.............................. 1.5 20 1.0
Other Cities....................... 7.2 455 --
----- -----
Total Brazil..................... 60.4 1,955 --

MEXICO(4)
Mexico City........................ 18.3 204 10.2
Monterrey.......................... 3.1 25 1.3
Guadalajara........................ 3.5 60 3.0
Tijuana............................ 1.0 60 3.0
Other Cities....................... 19.1 2,221 --
----- -----
Total Mexico..................... 45.0 2,570 --

ARGENTINA(5)
Buenos Aires....................... 13.0 240 12.0
Cordoba............................ 2.4 200 10.0
Rosario............................ 2.0 200 10.0
Mendoza............................ 0.9 200 10.0
Other Cities....................... 1.0 40 --
----- -----
Total Argentina.................. 19.3 880 --

PERU
Greater Lima Area.................. 7.0 138 6.9

PHILIPPINES
Nationwide......................... 73.0 100 5.0

JAPAN(6)
Nationwide......................... 125.0 239 12.0
</TABLE>

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<PAGE> 83

<TABLE>
<CAPTION>
POPULATION OF TOTAL SMR TOTAL
LICENSED AREA(1) CHANNELS SPECTRUM
---------------- --------- --------
(MILLIONS) (MHZ)
<C> <S> <C> <C> <C>
CANADA
Nationwide......................... 30.0 NA 30.0
-----
Subtotal......................... 359.3 5,882
----- -----
(B) PENDING TRANSACTIONS:
INDONESIA(7)
Greater Jakarta.................... 11.6 80 4.0
Bandung............................ 2.4....... 80 4.0
Surabaya........................... 2.7....... 80 4.0
Other Cities....................... 3.1 80 4.0
----- -----
Total Indonesia.................... 19.8 80 --
----- -----
TOTAL SMR.......................... 379.1 5,962 --
===== =====
II. CELLULAR PROPERTIES
CANADA
Nationwide PCS..................... 30.0 -- 30.0
CHINA
Shanghai GSM....................... 14.0 -- 12.0
----- -----
TOTAL CELLULAR..................... 44.0 -- --
===== =====
III. PAGING LICENSES
PHILIPPINES
Nationwide......................... 73.0 -- --
ARGENTINA
Nationwide......................... 35.0 -- --
----- -----
TOTAL PAGING....................... 108.0 -- --
===== =====
</TABLE>

- ---------------
(1) Represents the estimated POPs in the markets in which the Operating
Companies holds licenses for or manages channels.

(2) Interest in 1,180 channels in Brazil is structured pursuant to a number of
Option Agreements entered into with the respective corporate licensees of
such channels. None of such channels are located in Sao Paulo. See
"-- Brazil -- Regulatory and Legal Overview."

(3) Nextel Brazil intends to appeal Anatel's cancellation of 10 of its SMR
channels in Sao Paulo.

(4) Excludes 1,040 channels in the 400 MHz frequency range.

(5) Includes 60 additional SMR channels acquired through a government auction in
December 1997 for $12 million.

(6) J-Com has a sublicense to operate its SMR business using 239 nationwide
channels in the 1.5 GHz frequency.

(7) In Indonesia, the Company has the right to acquire 80 SMR channels
nationwide upon receipt of certain regulatory approvals by June 30, 1998.
The Company and GSK agreed to amend their preliminary agreement to extend
the deadline for receipt of regulatory approvals to December 31, 1998.

NETWORK IMPLEMENTATION, DESIGN AND CONSTRUCTION

The Company's networks are in various stages of development. In 1997, the
Company commenced the design, development and construction of its ESMR networks
in Argentina, Brazil, Mexico and the Philippines. The Company launched
commercial ESMR service in Sao Paulo and Buenos Aires in the second quarter of
1998 and currently plans to launch commercial ESMR service in Rio de Janeiro and
Mexico City during the third quarter of 1998. The Company's Japanese affiliate,
J-Com, introduced a multi-functional commercial ESMR service in the Kanto region
of Japan (which includes Tokyo) in July 1998. Nextel Philippines completed
initial system construction and launched commercial ESMR service in Manila in
July 1998.

As the Company builds out its ESMR networks, it intends to leverage Nextel
Communications' expertise and relationships in converting its United States SMR
networks to ESMR networks. Nextel Communications

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is the largest operator of SMR and ESMR services in the United States with
approximately 1,641,500 digital subscriber units in service and approximately
493,600 analog subscriber units in service as of March 31, 1998.

The Company's critical design criteria for its upgrade to ESMR networks
include:

- Contiguous wide area coverage of substantially all of the major
population areas and traffic corridors in its licensed areas;

- Signal quality comparable to that currently provided by existing
cellular and/or PCS carriers in such licensed areas;

- Call "hand-off" for mobile telephone service throughout the ESMR
networks;

- Minimization of blocked and dropped calls;

- The ability to offer advanced features such as data transmission and
message services; and

- Cost-efficient routing of calls to minimize local interconnection
costs and toll charges and to provide maximum utilization of the
Company's ESMR network facilities.

The Company believes careful frequency planning is necessary prior to
commencing network construction in order to ensure satisfactory coverage over
the entire network. Frequency planning involves the selection of specific areas
in the Company's markets for the placement of transmitter sites and the
identification of specific frequencies that will be employed at each site in the
initial configuration. Sites will be selected on the basis of their coverage and
on frequency propagation characteristics.

In addition to frequency planning and system design, the implementation of
the proposed digital wireless networks requires site acquisition, equipment
procurement, construction and equipment installation, testing and optimization.
Sites are selected on the basis of their proximity to targeted customers, the
ability to acquire and build the site and frequency propagation characteristics.
Site procurement efforts include obtaining leases and permits and, in many
cases, zoning approvals. Once the requisite governmental approvals are obtained,
the preparation of each site, including grounding, ventilation, air conditioning
and construction, typically takes three months, while equipment installation,
testing and optimization generally takes an additional four weeks. Following
commencement of system operations in a selected market, the Company expects to
add new sites to its networks continually in order to improve coverage and
capacity.

The Company's ability to proceed with the build-out of its ESMR networks in
its coverage areas or elsewhere may be subject to successful negotiation of site
acquisitions or leases, the availability of equipment and receiving necessary
governmental approvals. In addition, the timing of the scheduled build-out will
be subject to obtaining additional financing on a timely basis and typical
construction and other delays. See "Risk Factors -- Significant Capital
Requirements for Operations" and "-- Expansion; Management of Growth."

BUSINESS DEVELOPMENT

The Company's business development objective is to pursue undervalued
SMR/ESMR license opportunities in major population centers, primarily in
emerging markets throughout the world. Consistent with this objective, the
Company intends to expand its subscriber base by building high-quality digital
wireless networks in select countries. The Company will pursue such
opportunities by acquiring or investing in projects in markets that meet the
Company's investment criteria. In addition, the Company intends to pursue
opportunities to enter into roaming agreements in contiguous countries in Latin
America. The Company's criteria for investment include: (i) large, unsatisfied
demand for telecommunications; (ii) favorable economic growth, business and
regulatory climate; (iii) the prospects for locating strong local equity
partners; (iv) the ability to have an active management role; (v) emerging
market economies and high-density population areas; and (vi) favorable SMR/ESMR
investment opportunities.

OPERATIONS AND INVESTMENTS

The Operating Companies offer wireless communications services in Latin
America (Brazil, Argentina, Mexico and Peru), Asia (Japan, the Philippines and
Shanghai, China) and Canada. In addition, the
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<PAGE> 85

Company has the right to purchase a 37.5% equity interest in MKT, which holds a
provisional license for 80 SMR channels in Indonesia, subject to the receipt of
regulatory approvals by June 30, 1998. The Company and GSK have agreed to amend
their preliminary agreement to extend the deadline for receipt of regulatory
approvals to December 31, 1998. See "The Company -- Pending Investments."

BRAZIL

Country Overview. With a population of approximately 160 million, Brazil
is the largest country in Latin America and the fifth largest in the world. Over
77% of Brazil's inhabitants reside in urban areas. The two largest cities in
Brazil are Sao Paulo, with a population of approximately 18 million, and Rio de
Janeiro, with a population of approximately 12 million. Brazil has the highest
GDP in Latin America, accounting for approximately 40% of Latin America's
aggregate GDP. Sao Paulo and Rio de Janeiro, urban areas in which Nextel Brazil
has its largest SMR channel positions, account for over 50% of the economic
activity in Brazil. In addition, Sao Paulo has the highest average per capita
annual income in the country.

Beginning in December 1993, the Brazilian government launched an economic
stabilization plan called the Real Plan (the "Real Plan"), which was intended to
reduce inflation by decreasing certain public expenditures, collecting
liabilities owed to the Brazilian government, increasing tax revenues,
continuing a privatization program and introducing a new currency, the Real.
Following the implementation of the Real Plan, according to the IGP-M/FGV
General Index of Market Prices calculated by Getulio Vargas Foundation,
inflation dropped significantly from previous levels, which at times had
exceeded 40% per month, to monthly rates below 1% in 1997, and the value of the
Brazilian Real has been relatively stable since its introduction.

Although Brazil is the fifth most populous country in the world, it ranks
only thirty-ninth in terms of telephone density. Less than 2% of the rural
population and only 19% percent of all residences have telephone service,
compared to 94% in the United States. In addition, 45% of Brazilian businesses
do not own a telephone. The waiting list for landline telephone service in
Brazil is approximately 1.5 years.

Although Brazil was the last major country in Latin America to grant
cellular licenses, it is now Latin America's largest cellular market, with more
than 2.7 million subscribers as of December 31, 1996, which represented 40% of
the total Latin American cellular subscriber base. Despite the large number of
cellular subscribers in Brazil, the country's cellular penetration rate is only
1.7%, which is well below the United States 1996 cellular penetration rate of
16.6%. Driven by the backlogged demand for telecommunications, Brazil's cellular
market has experienced substantial growth over the past few years, making it one
of the fastest growing wireless markets in Latin America. The number of cellular
subscribers in Brazil increased from 191,300 in 1993 to 2.7 million in 1996, a
compound annual growth rate of 143%. Of these subscribers, approximately 25%
were in Sao Paulo. Brazil's subscriber growth is expected to continue, with the
number of subscribers projected to increase to over 13 million in 2000, an
average annual growth rate of 48%. By the year 2000, Brazil's penetration rate
is expected to be 8% and the country's share of Latin America subscribers is
expected to reach 42%. At an average revenue per subscriber of $99 per month,
Brazil's revenue per cellular subscriber is more than two times the average in
the United States.

The SMR business in Brazil is underdeveloped compared to the U.S. market.
In 1996, Brazil had approximately 38,500 SMR subscribers or a .02% SMR
penetration rate compared to .9% in the U.S. The average revenue per SMR
subscriber per month of $62 was approximately four times the comparable U.S.
average in 1996.

Operating Company Overview. Nextel Brazil provides analog SMR services in
15 of Brazil's largest cities, including Sao Paulo, Rio de Janeiro, Belo
Horizonte, Brasilia, Porto Alegre and Curitaba under the tradename "Airlink."
Nextel Brazil launched commercial ESMR service in Sao Paulo under the tradename
"Nextel(TM)" during the second quarter of 1998 and currently plans to launch
commercial ESMR service in Rio de Janeiro in the third quarter of 1998.

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<PAGE> 86

Nextel Brazil has over 390 SMR channels installed and operational in Brazil
and operates 26 radio-antenna sites. Nextel Brazil has a centralized customer
service and installation center located in Sao Paulo. As of December 31, 1997,
Nextel S.A. provided service to approximately 19,000 analog SMR subscriber
units.

The Company intends to evaluate the timing of any steps in connection with
an upgrade to ESMR in Belo Horizonte and any other cities in Brazil where the
Company owns or has options to acquire at least 100 channels, based on the
competitive and regulatory environment. The upgrade to a digital system will
increase system capacity and allow Nextel Brazil to offer a broader range of
options to a larger group of business customers. With regard to Nextel Brazil's
ESMR network in Rio de Janeiro, system design is complete, construction is under
way and the Company has purchased iDEN equipment from Motorola. See "Risk
Factors -- Government Regulation" and "-- Expansion; Management of Growth."

Nextel S.A. is headquartered in Sao Paulo and has branch offices in seven
other major cities. As of December 31, 1997, Nextel S.A. had 311 employees.

Marketing. Nextel Brazil offers both a broad range of options and pricing
plans designed to meet the specific needs of its targeted business customers. It
currently offers digital ESMR dispatch and integrated service plans (dispatch
and interconnect) in Sao Paulo and analog SMR dispatch and integrated service
plans in Nextel Brazil's other markets. The sales and marketing efforts of
Nextel Brazil currently focus primarily on providing cost-effective local and
regional integrated services (dispatch and interconnect) for their digital ESMR
customers in Sao Paulo and analog SMR customers in the other markets. In
accordance with the requirements of Norma 14/97, the Company markets its
services to businesses and not to individuals. The Company's target markets are
businesses engaged in transportation, construction, security, services and also
include utilities and government agencies. Nextel Brazil utilizes both a direct
sales force as well as dealers and independent agents. It currently has over 81
direct sales representatives and 8 dealers and independent agents.

Competition. Nextel Brazil is the largest analog SMR service provider in
Brazil. In addition, it has the largest SMR channel position of any other
service provider in Brazil. There are a number of SMR competitors in Brazil,
including MComCast (a joint venture between Comcast Corporation and Banco
Garantia), Radio Movel Digital Americas, Inc. and Via Um.

On February 20, 1997, the Ministry of Communications released the new SMR
Rules (the "New SMR Rules") (i) permitting the combination of adjacent channels
in certain frequencies in the 400 MHz, 800 MHz and 900 MHz band and (ii)
mandating the use of digital technology for SMR systems operating in channels
401 to 600 of the 806-821 MHz and 851-866 MHz bands. The New SMR Rules also
provide that channels which have already been assigned to licensees, including
the Company, will be the object of a study addressing the prospective regrouping
of such channels for application in systems using digital technology. In
addition, Norma 14/97 established that the Brazil Ministry of Communications by
request of all permit holders involved can change the SMR channels consigned to
a particular holder provided that this alteration: (a) does not involve channels
intended exclusively for digital modulation techniques, according to the SMR
implementation planning; (b) exclusively includes channels already consigned to
the interested parties; (c) involves only channels that are in the same radio
frequency band and refer to the same service rendering area; and (d) provides
each of the permit holders involved with the same number of consigned channels.
Because the New SMR Rules allow SMR operators to combine adjacent channels to
create contiguous blocks and may provide for a regrouping of SMR channels to
create more contiguous blocks in the future, SMR operators may have additional
technology choices available to them. Although the Company does not believe that
the New SMR Rules will materially affect its technology decisions or the
attractiveness of Nextel Brazil's product or service offerings, the New SMR
Rules and technology decisions by other SMR operators, including existing and
future competitors, may increase competition in Brazil.

From June 1997 to February 1998, the Government of Brazil awarded Band B
cellular licenses covering four of the ten areas throughout Brazil, including
the city of Sao Paulo, pursuant to the Band B Rules released January 13, 1997.
The Band B Rules divide the country into ten regions for the auction of Band B
cellular licenses. The total of the minimum bids required by the Brazilian
government for each of Brazil's ten regions is $3.7 billion. This equates to a
value of approximately $23 per POP in Brazil. The minimum bid for the city of
Sao Paulo was $600 million or approximately $33 per POP and the winning bid was
approximately
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$2.4 billion or $135 per POP. Under the Band B Rules, a cellular license winner
can provide service in only one major Brazilian market and one secondary market
(e.g., the winner of the Sao Paulo license will be precluded from owning the Rio
de Janeiro license). In addition, future licensing and commencement of cellular
services, as well as the initiation of operations by certain other mobile
telecommunications service providers in the areas covered by the Band B
licenses, will not be permitted until December 31, 1999, except by the existing
Brazilian cellular system operator (Telebras) and the holders of the Band B
cellular licenses. Some of the largest telecommunications companies in the world
have been and are expected to be granted cellular licenses in the Band B
auction, which will result in significant competition in the Company's Brazilian
markets. The Company does not believe that the Band B Rules are applicable to
its planned ESMR operations in Brazil. There can be no assurance, however, that
Anatel or companies bidding for Band B licenses will not challenge the Company's
offering of ESMR services before December 31, 1999. In May 1998, BCP
Telecomunicacoes S.A., an affiliate of BellSouth Corp., began offering digital
cellular service in Sao Paulo.

Brazil is one of the last major emerging countries to have only one
cellular provider in most of its markets. Telebras, the government-owned holding
company that controls the local telephone operators is currently the only
provider of cellular service in most of Brazil. The current waiting list for a
cellular telephone is estimated to be three million people, with more than one
million in Sao Paulo where the average waiting time for a cellular telephone has
been more than one year. Due to the demand for cellular telephony, the average
price of a new cellular telephone on the secondary market is currently estimated
to be approximately $1,200. In addition, there is reported to be a 1.5 year
waiting list for a landline phone. The average price on the secondary market for
a landline in Sao Paulo is estimated to be between $1,500 and $2,500.

Partner Description. On January 30, 1997, Nextel Communications acquired
an 81% equity interest in Nextel Brazil for a purchase price of $186.3 million,
which was paid with shares of Nextel Communications Class A Common Stock, and
simultaneously contributed its interest in Nextel Brazil to the Company. The
Telcom Group owns the remaining 19% equity interest in Nextel Brazil.

On September 26, 1997, Nextel S.A. acquired 49% percent of the capital
stock of MCS, an indirect wholly owned subsidiary of Motorola in exchange for
$1.9 million and 5% of the outstanding capital stock of Nextel S.A., thereby
diluting the Company's effective ownership interest in its Brazilian operations
to 77%. Upon the approval of the Brazilian regulatory authorities, Nextel S.A.
has the option to purchase the remaining 51% of the capital stock of MCS for an
exercise price of $3.2 million.

Regulatory and Legal Overview. With respect to its current operations in
Sao Paulo and planned operations in Rio de Janeiro, Nextel Brazil has applied
for certain additional site and other licenses. While the Company believes that
such licenses will be granted in due course there can be no assurance that such
licenses will be obtained in a timely manner. The failure to receive such
licenses in a timely manner may have a material adverse effect on Nextel Brazil.

On November 3, 1997, the Brazil Ministry of Communications issued new
regulations governing SMR service providers in Brazil. These new regulations
(Ordinance 557, which adopted Norma 14/97) impose limits on the types of
customers that an SMR provider can serve, the number of telephone numbers
granted to an SMR provider, the amount of interconnect traffic allowed with
respect to a provider's network, the number of channels a provider can hold, and
provides for consolidation of multiple licenses under one license and various
technical specifications for wireless communications networks.

On July 16, 1997, Anatel was created by the General Law as an independent
agency in charge of regulating telecommunications services and performing many
of the tasks formerly performed by the Brazil Ministry of Communications. Anatel
is in charge of implementing Norma 14/97, issuing specific regulations and
licenses (concessions, authorizations and permissions) and applying the relevant
penalties for each segment of the telecommunications services. Anatel is
governed by a Board of Directors composed of five members appointed by the
President of Brazil after approval by the Senate.

Many aspects of the law, rules and regulations applicable to the Company's
SMR and proposed ESMR business in Brazil are relatively new and still developing
and as a result it is difficult to determine how regulators will interpret rules
or judge compliance and what if any enforcement action would be taken. The

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Company has had numerous meetings and discussions with various Brazilian
governmental and regulatory authorities, including representatives of the Brazil
Ministry of Communications and Anatel, regarding its ownership and operation of
SMR frequencies and its planned launch and operation of its ESMR network in
markets in Brazil. These discussions have been informal and are not binding on
the regulatory authorities. Although the Company expects that further clarifying
interpretations and refinements will be promulgated by the appropriate Brazilian
governmental and regulatory authorities in the future, the Company believes that
it has a fundamentally sound and well-informed understanding of and basis for
interpreting the current regulatory framework (including Norma 14/97), and will
be able to implement its business plans in Brazil substantially as currently
contemplated. There can be no assurance that the Brazilian governmental and
regulatory authorities, including Anatel, in particular, in the future will not
modify or interpret the existing regulatory framework, or adopt further or
replacement legislation, rules, or regulations, that could significantly
restrict or otherwise materially adversely affect the Company's Brazilian
operations.

Norma 14/97 requires that SMR service be provided only to legal entities or
groups of legal entities that perform specific activities. SMR service may not
be provided to individual subscribers and all SMR subscriber units must be
capable of providing dispatch service. Under Norma 14/97, an SMR service
provider must apply to the PSTN to obtain blocks of telephone numbers to be
issued by such PSTN for use by the SMR service provider subscribers. The PSTN
will forward the request to Anatel and Anatel will inform the SMR provider of
the allotment of numbers. The telephone numbers granted to an SMR provider by
Anatel cannot exceed 50% of the total number of SMR mobile subscriber units that
the SMR service provider projects to be in operation in accordance with its
schedule for the deployment of services.

Norma 14/97 prohibits an operator of a PSTN from adopting practices that
inhibit competition or procedures that result in discrimination of any kind
against SMR licenseholders. Accordingly, Norma 14/97 contemplates that each SMR
provider may obtain interconnect to the PSTN pursuant to interconnect agreements
with the operators of the PSTN. If interconnect negotiations do not produce an
interconnect agreement within 60 days of the commencement of negotiations or if
full interconnection is not implemented within 90 days of the conclusion of
negotiations, either party to the negotiation may refer the matter to Anatel for
resolution.

In addition, Norma 14/97 provides that SMR licenseholders may not hold more
than 200 SMR channels (10 MHz) in each geographic area. Norma 14/97 permits SMR
licensees that are under common ownership or control to request Anatel to
consolidate their SMR licenses subject to the 200 channel limitation, under one
SMR licensee. Anatel has approved the consolidation of Nextel Brazil's SMR
licenses under common ownership or control under one SMR licensee in each of Sao
Paulo and Rio de Janeiro. The Company held 210 channels in Sao Paulo and Anatel,
as part of its approval of the consolidation of Nextel Brazil's SMR licenses in
Sao Paulo, canceled, without compensation, 10 of Nextel Brazil's SMR channels in
Sao Paulo. Under Norma 14/97, Nextel Brazil has until November 3, 1998 to
eliminate any extra SMR channels and to seek approval of the consolidation of
its licenses, including those that it has options to acquire from third parties.
Anatel must approve any request for consolidation within three months of receipt
of such request. Accordingly, Nextel Brazil intends to appeal Anatel's
cancellation of its 10 SMR channels in Sao Paulo. Although the Company has
applied for approval to consolidate the ownership of its SMR licenses in other
cities in Brazil where it holds licenses, there can be no assurance that such
approval will be granted by Anatel.
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Upon effectuation of such consolidation by Anatel, the Company intends (i) to
request permission from Anatel that the SMR licensees holding the consolidated
channels be merged into Nextel S.A. and (ii) to cause the SMR licensees which no
longer hold SMR channels to be merged into Nextel S.A. or dissolved.

Nextel Brazil's interest in licensees holding 1,180 of its 1,955 channels
in Brazil is structured pursuant to a number of Option Agreements entered into
with the shareholders of the respective corporate licensees of such channels.
Pursuant to the Option Agreements, Nextel Brazil, through its subsidiaries, has
acquired a minority interest in each such licensee not exceeding 49%. While
Nextel Brazil has exercised the options under all of the Option Agreements, the
actual transfer of the balance of the ownership interest in each such licensee
is subject to approval of Anatel. Approval for change of control can only be
granted after the commencement of commercial operations and many of the channels
that are the subject of Option Agreements have not been installed. The Company
is currently conducting analog SMR system installation with regard to a
significant portion of the channels that are subject to the Option Agreements.
While the Company believes it will receive Anatel approval when it has met the
installation requirements and after the commencement of commercial operations,
no assurance can be given that such approval will be obtained. To the extent the
Company is not able to acquire the balance of the ownership interest in a
particular licensee, the Company believes that Nextel S.A., a subsidiary of
Nextel Brazil and the holding company for Nextel Brazil's SMR licensee
companies, would be able to continue to maintain its contractual right to render
management services for the operations subject to the license held by such
licensee pursuant to a service agreement and receive fees under such service
agreement. However, the Company would not own such license and the Company's
rights with respect to such license could be limited. There can be no assurance
that Anatel would not challenge the validity of such service agreements. All of
Nextel Brazil's channels in Sao Paulo are indirectly and entirely owned by
Nextel S.A. and are not held pursuant to Option Agreements.

Since July 13, 1994, it had been the Brazil Ministry of Communication's
practice to grant SMR licenses for a 15-year period and to renew such licenses
for an equal period upon submission of an application to the Brazil Ministry of
Communications. Certain of the Company's licenses granted prior to July 13, 1994
were granted for a term of five years and the Company has been informed by the
Ministry of Communications that such licenses have been automatically extended
for a term of 15 years from their original issuance date. Effective July 20,
1996, however, Law No. 9295 (the "Minimum Law"), modified existing law so that
SMR licenses granted after such effective date are issued for a period of ten
years and renewable for an additional ten-year period upon submission of an
application to the Brazil Ministry of Communications. The reduction to ten years
of the term and renewal periods for the licenses was confirmed by Decree No.
2197, effective April 19, 1997. In either case, a license will be renewed absent
existing violations of applicable rules and regulations and upon application 18
months prior to the expiration of the license. All of the Company's licenses
were granted prior to July 20, 1996. Notwithstanding the Minimum Law, a bill was
signed into law on July 16, 1997 (the "General Law"), which, among other things,
revokes several provisions of the Minimum Law, including the ten-year license
term. Pursuant to the General Law, absent any new regulations, existing SMR
licenses will remain valid for the term for which they were issued. However, to
be renewed or extended, the term of the licenses must be adapted to comply with
the General Law. The General Law does not specify the term of renewal or
extension of SMR licenses.

Brazil Ministry of Communications has previously established comprehensive
operating standards and requirements applicable to SMR licensees which remain in
effect notwithstanding the enactment of Norma 14/97. A license holder of SMR
channels is required to meet certain installation and minimum loading
requirements. Failure to comply with such requirements may subject the licenses
relating to such channels to revocation by the Brazil Ministry of
Communications. Certain SMR equipment must be installed within 12 months after
receiving an SMR license from the Brazil Ministry of Communications. Additional
installation time may be permitted if more than four repeater stations are being
installed. The installation time also may be extended at the discretion of the
Brazil Ministry of Communications if circumstances beyond the control of the
licensee contribute to the delay. Under the former rules, which still apply to
the Brazilian operating companies' SMR licenses, the period for installation of
the equipment was 12 months, which could be extended, in case of occurrence of
events beyond the control of the license holder, at the discretion of the Brazil
Ministry of Communications. Further, installation cannot be extended for longer
than six months after

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the agreed upon installation date. The Brazil Ministry of Communications
requires each channel to be loaded with 30 SMR radios within six months of the
completion of the installation, and with 70 SMR radios within four years of such
date. The Brazilian operating companies currently are not in compliance with
applicable installation deadlines and minimum loading requirements with respect
to licenses covering 545 channels, all of which are outside of Sao Paulo.
Requests for extensions of the deadlines relating to all such licenses have been
filed with the Brazil Ministry of Communications, except for channels where the
Brazilian operating companies failed to comply with applicable installations
requirements due to television frequency interference, for which extensions were
granted automatically by statute. No responses, however, have been received to
date with respect to such requests. There can be no assurance that the Brazil
Ministry of Communications will not take action in response to such failure to
comply which would have an adverse effect on Nextel Brazil.

Any Brazilian company headquartered in Brazil is eligible to obtain
licenses to operate SMR services and there are no limitations on foreign
ownership of such companies. However, under Decree No. 2197, SMR licenses can
only be obtained pursuant to a public bid.

On January 13, 1997, the Brazil Ministry of Communications released the
Band B Rules, which contain a provision prohibiting the initiation of operations
by certain mobile telecommunications service providers in the areas covered by
the Band B licenses until December 31, 1999. The Company does not believe that
the Band B Rules are applicable to its planned ESMR operations in Brazil. There
can be no assurance, however, that Anatel or companies bidding for Band B
licenses will not challenge the Company's offering of ESMR services before
December 31, 1999. In addition, companies bidding for the Band B licenses may
request that the December 31, 1999 date be extended or seek clarification as to
the applicability of the Band B Rules to ESMR services. Such a challenge, if
successful, would have a material adverse effect on the Company's competitive
position in Brazil and on its business and results of operations.

On April 26, 1997 and in the beginning of June 1997, news reports appeared
in the Brazilian newspapers and international wire services that an anonymous
source had forwarded to the Brazil Ministry of Communications a copy of the
Company's offering memorandum prepared in connection with the 1997 Notes
Offering and a letter alleging that the Company was operating in Brazil without
authorization of the Ministry of Communications. Based on these allegations, the
Brazil Ministry of Communications sent to the Company a copy of the letter
requesting its comments regarding the allegations. On June 6, 1997, the Company
sent to the Brazil Ministry of Communications a letter in response to the
allegations. The Company has not received any further inquiry or comment from
the Brazil Ministry of Communications or Anatel regarding such allegations. The
Company believes that the then current regulatory framework permitted the
operation of its then-existing business in Brazil and believes that the
provisions of Norma 14/97 further support that belief.

The purchase and sale of foreign currency in Brazil are subject to
governmental control. There are two foreign exchange markets in Brazil that are
subject to Central Bank of Brazil regulations. The first is the
commercial/financial floating exchange rate market which is reserved generally
for (i) trade-related transactions, such as import and export transactions; (ii)
registered foreign currency investments in Brazil; and (iii) certain other
transactions involving remittances abroad. The second is the tourism floating
exchange rate market. The commercial/financial exchange market is restricted to
transactions which require prior approval of the Brazilian monetary authorities.
Both markets operate at floating rates freely negotiated between the parties.
The purchase of currency for repatriation of capital invested in the country and
for payment of dividends to foreign shareholders of Brazilian companies is made
in the commercial/financial floating market, provided that the original
investment of foreign capital and capital increases were registered with the
Central Bank of Brazil. In this case, there are no significant restrictions on
the repatriation of share capital and remittance of dividends. The majority of
the capital of Nextel S.A., the Brazilian subsidiary through which any dividends
are expected to flow, has been registered with the Brazilian monetary
authorities, and Nextel S.A. intends to structure future capital contributions
to Brazilian subsidiaries to maximize the amount of share capital and dividends
that can be repatriated through the commercial financial exchange market. There
can be no assurance that Nextel S.A. can repatriate through the commercial
financial exchange market share capital and dividends on foreign investments
that have not been registered.

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Brazilian law provides that whenever there is a material imbalance or a
serious risk of a material imbalance in Brazil's balance of payments, the
Brazilian government may, for a limited period of time, impose restrictions on
the remittance by Brazilian companies to foreign investors of the proceeds of
investments in Brazil. The Brazilian government may also impose restrictions on
the conversion of Brazilian currency into foreign currency. Any such
restrictions may hinder or prevent the Company from purchasing equipment
required to be paid for in any currency other than Brazilian reais. Under
current law, there is a 15% withholding tax on interest payments. Dividends paid
out of profits generated after December 31, 1996 are currently not subject to
withholding tax.

MEXICO

Country Overview. Mexico is the second most populous country in Latin
America, with a population of 91 million. Mexico's population is 75% urban, and
approximately 18 million people, or approximately one-fifth of the country's
total population, reside in the Mexico City metropolitan area. Other major
metropolitan population centers include Guadalajara (3.5 million POPs) and
Monterrey (3.1 million POPs). In addition, Mexico's income level is above
average relative to other countries in Latin America.

The Mexican government's fiscal and monetary policies since the 1994 peso
devaluation have been credited with preventing a deeper economic crisis and have
stabilized the country's economic recovery. The year 1996 marked Mexico's
strongest expansion since 1994, as GDP growth rates reached 5.1%. In 1997 GDP
growth is estimated at 6.5%.

Mexico has a relatively low teledensity, with approximately 9.6 lines per
100 inhabitants. Mexico's cellular market is the second largest in Latin America
based on the number of subscribers, but with a penetration rate of 1.1% in 1996,
cellular penetration in the Mexican market is still significantly below the U.S.
cellular penetration rate of 16.6% and the Latin American cellular penetration
rate of 1.4%. In a country where fewer than 10 out of every 100 inhabitants have
a telephone line, cellular telephony can serve as a landline substitute.

Mexico has an SMR penetration rate of approximately .08%. The average
revenue per SMR subscriber per month in Mexico is $27, which is higher than the
U.S. monthly average of $16.

Operating Company Overview. Nextel Mexico began commercial analog SMR
operations in September 1993 under the brand name "Tricom." Nextel Mexico,
through its subsidiaries and management agreements, provides analog SMR services
in 15 cities and along a number of major highways. As of December 31, 1997,
Nextel Mexico provided service to approximately 30,000 analog SMR subscriber
units. The cities in which Nextel Mexico holds SMR licenses include: Mexico City
(with a total of 204 channels representing approximately 10 MHz), Guadalajara
(with a total of 60 channels) and Monterrey (with a total of 25 channels). As of
December 31, 1997, Nextel Mexico had 56 analog SMR transmitter sites in
operation. Nextel Mexico has deployed Motorola, Uniden, Nokia and General
Electric technology in its analog SMR networks.

Nextel Mexico currently plans to launch commercial service in Mexico City
on its ESMR network in the third quarter of 1998 under the brand name
"Nextel(TM)." While migrating its analog SMR customers in Mexico City to the
digital network, the Company plans to operate parallel digital and analog
networks. As part of the migration process, the company will encourage its
higher usage customers to convert to the digital ESMR network so they can
benefit from the broader range of service offerings. Digital service offerings
will include interconnect services, dispatch radio and paging using one
multi-functional handset. Initially, the company will target the mobile
workforce, which it believes will be the most likely users of its ESMR network's
integrated services.

Nextel Mexico's assets also include 1,040 channels in the 400 MHz frequency
band covering central and northern Mexico. Nextel Mexico currently is
considering a sale of its 400 MHz channels because such channels are not central
to Nextel Mexico's business plan. In addition, Nextel Mexico has built a digital
microwave network throughout central and northern Mexico to provide long
distance services for its customers. The Company has entered into arrangements
for the lease of excess capacity on its digital

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microwave network with Telecomunicaciones Globales, S.A. de C.V., a company in
which the Company holds a 3.0% equity interest.

In 1995 and 1996, Nextel Mexico experienced high rates of churn (reaching
an average of 3.7% per month over the two-year period), which the Company
believes were caused primarily by the economic downturn in Mexico. Further, the
company suffered from a high level of bad debt expense. To address these
problems, Nextel Mexico's board of directors appointed a new chief operating
officer in the fourth quarter of 1996. The primary short-term objectives of the
company were to: (i) implement a plan to reduce overall operating expenses; (ii)
build a high quality customer base and focus on maximizing profitability rather
than building market share; and (iii) establish a high level of customer
service, comparable in quality to the customer service provided by wireless
communications companies in the United States. Since the appointment of the new
chief operating officer, the bad debt expense has decreased significantly.

Nextel Mexico is headquartered in Mexico City and has branch offices in
Guadalajara, Monterrey and Tijuana. As of December 31, 1997, Nextel Mexico had
215 employees in Mexico.

Marketing. Nextel Mexico offers its analog SMR customers a broad range of
services and pricing plans designed to meet the specific needs of these
customers. Nextel Mexico offers both dispatch-only and integrated service plans
(dispatch and interconnect) on its analog SMR network. These plans include sale
or rental of various models of handsets. The basic price package consists of a
monthly fee and interconnect and dispatch charges depending on minutes of use.
Unlike many SMR providers, the Company sells the majority of its handsets
instead of leasing handsets.

Nextel Mexico's sales and marketing efforts focus primarily on providing
cost-effective local and regional analog SMR dispatch radio services to its
target customers, which are generally businesses engaged in manufacturing and
distribution. Nextel Mexico markets its analog SMR services through a
multichannel distribution network including direct sales representatives and
independent dealers. Direct sales representatives account for approximately 30%
of new customers and distributors account for approximately 70%.

Competition. Nextel Mexico is the largest SMR provider in Mexico, both in
terms of channels and subscribers and has an approximately 30% market share. The
second largest SMR operator in Mexico is Radiocel, S.A. de C.V., with a 27%
market share. Other significant operators include Intercom and Multicom. The
Mexican cellular market is divided into nine regions and there are two cellular
licensees per region. Telmex, Mexico's national telephone company, has a
nationwide cellular license. In the Mexico City region and throughout most of
the southern portion of Mexico, the second cellular carrier is Iusacell, S.A. de
C.V. (a joint venture controlled by Bell Atlantic). In the northern part of
Mexico, cellular carriers include Movitel S.A. de C.V., Cedetel, Norcel and Baja
Celular Mexicana. Motorola is a shareholder of each of the foregoing companies.
Poctatel del Sureste is also active in Southern Mexico.

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As part of its drive to improve and increase Mexican telecommunications
services, the Mexican government has announced its intention to auction a number
of licenses to provide wireless communications services, including licenses for
dispatch services in the 900 MHz frequency band, for narrowband dispatch
services in the 220 MHz frequency band and for PCS. These auctions, which are
anticipated to occur during 1998, will increase the number of actual and
potential competitors that Nextel Mexico will face.

Regulatory and Legal Overview. The Secretary of Communications and
Transportation regulates the telecommunications industry in Mexico. Since early
1994, the Mexican government has been deregulating the telecommunications
industry in order to improve the quality and expand the coverage of
telecommunications services. The Mexican government has stated its intention to
increase competition within the telecommunication industries and its desire to
attract foreign investment for the purpose of improving Mexico's
telecommunications infrastructure. Mexico's Federal Telecommunications Law (the
"Mexican Federal Telecommunications Law"), which became effective in June 1995,
outlines the broad rules for opening the local and long distance service markets
to competition.

The Mexican Federal Telecommunications Law requires that all
telecommunications licenses (referred to as "concesiones" in Mexico) must be
owned by entities that do not have more than 49% of their voting equity interest
owned by non-Mexican entities. Although such 49% limitation existed prior to the
enactment of the Mexican Federal Telecommunications Law for certain types of
telecommunications licenses, SMR licenses issued prior to the effectiveness of
the legislation could be owned by entities wholly owned by non-Mexicans. Nextel
Mexico believes that in accordance with the terms of the Mexican Federal
Telecommunications Law and Mexican constitutional law principles, the 49%
limitation on non-Mexican participation does not apply to the SMR licenses in
which it had an interest at the time of the effectiveness of the Mexican Federal
Telecommunications Law. Consistent with this view, in May 1996, the Mexican
Secretary of Communications and Transportation amended all of the 800 MHz SMR
licenses issued prior to the effective date of the Mexican Federal
Telecommunications Law in which Nextel Mexico had an interest to delete a
provision limiting non-Mexican participation to 49%. Accordingly, all of the 800
MHz SMR licenses in which Nextel Mexico has an interest, except for one license
covering 10 channels along a major highway from Mexico City to Guadalajara, were
amended to remove the 49% foreign-ownership limitation. Although licenses to
provide cellular services are also subject to the 49% limitation on foreign
ownership, the Mexican Federal Telecommunications Law explicitly provides for a
waiver procedure of such limitations for cellular providers upon receipt of a
favorable opinion from the Mexican National Foreign Investments Commission.
Unless Nextel Mexico obtains a waiver with respect to the 49% limitation on
foreign ownership with respect to the license covering the 10 channels between
Mexico City and Guadalajara or is otherwise able to structure future SMR license
acquisitions to comply with such limitation, the provisions of the Mexican
Federal Telecommunications Law will prevent the company from having a
controlling interest in such license and/or obtaining a controlling interest in
additional licenses, including licenses for additional channels needed to
build-out digital mobile networks in markets outside of Mexico City.

The Mexican Federal Telecommunications Law provides all wireless services
providers with the right to interconnect to the public switched network operated
by Telmex. Certain telecommunications companies, however, have had difficulty
obtaining interconnect services from Telmex despite negotiating and executing an
interconnect agreement with Telmex. Nextel Mexico has entered into interconnect
agreements with Telmex for the provision of interconnect services on its analog
SMR networks in Mexico and currently provides interconnect services through
Telmex to a limited number of its analog SMR subscribers. Nextel Mexico plans to
increase subscriber interconnection significantly as it upgrades its analog SMR
network to an ESMR network. Nextel Mexico has also entered into an interconnect
agreement with Telmex for the provision of interconnect services on its ESMR
network in Mexico City, Telmex has yet to provide such services to Nextel
Mexico. Any failure to obtain interconnect services from Telmex will delay
Nextel Mexico's commercial launch of ESMR services and would have a material
adverse effect on the Company's results of operations.

Mexican companies may remit dividends and profits outside of Mexico if the
Mexican company meets certain distribution and legal reserve requirements. A
Mexican company must distribute 10% of its pretax profits to employees and
allocate 5% of net profits to the legal reserve until 20% of the stated capital
is set aside. Although the Company's investment in Nextel Mexico is registered
with the Mexican National
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Registry of Foreign Investments, registration is no longer a prerequisite for
the remittance of dividends and profits outside of Mexico. Under Mexican
corporate law, approval of a majority of shareholders of a corporation is
required to pay dividends. Dividends paid by Nextel Mexico to its U.S.
shareholders are subject to a 10% withholding tax unless Nextel Mexico chooses
to pay the Mexican corporate income tax on the net earnings from which the
dividends are being paid. Interest paid by Nextel Mexico to U.S. residents is
subject to a 10% withholding tax.

ARGENTINA

Country Overview. With a population of approximately 35 million, Argentina
is the third most populous country in Latin America. In 1996, over 87% of the
country's inhabitants resided in urban areas and approximately 50% of the total
population resided in the three largest metropolitan areas: Buenos Aires
metropolitan area (13.0 million POPs), Cordoba (2.4 million POPs) and Rosario
(2.0 million POPs). Argentina is characterized by above-average income levels
relative to other Latin American countries and had a GNP per capita of
approximately $8,920 in 1996, the highest in Latin America. Buenos Aires, where
the Company has its largest channel position, is considered the economic engine
of Argentina, accounting for over 60% of the entire nation's GNP. The annual GNP
per capita of the Federal Capital, which is in the heart of Buenos Aires, is
$22,000, over two times the national average. The high penetration of passenger
vehicles in Argentina, approximately 18 per 100 inhabitants, is another
indication of the relative wealth of Argentines and the potential demand for
mobile communications services.

In 1991, the Argentine government implemented a stabilization and
structural reform program. Such efforts resulted in a sharp turnaround in
economic conditions. Real GDP growth accelerated to an average of approximately
5% a year from 1991 to 1996, up from 0.2% in the previous six years. In 1997,
Real GDP growth is estimated at 4.6%. In 1995, the annual rate of inflation
declined to 1.6% from 2,300% in 1990. The government also carried out a
substantial privatization program which included politically sensitive sectors
such as telecommunications, public utilities, oil, railroads, provincial banks
and the pension system.

The Argentine government was the first Latin American government to issue a
cellular license to a private entity. In July 1988, the Secretary of
Communications granted the first cellular license to Movicom. Despite the
relative maturity of the Argentine cellular market, it is one of the fastest
growing cellular markets in Latin America. From 1993 to 1996, cellular
subscribers grew at a compound annual growth rate of 73%, reaching approximately
670,000 at the end of 1996. Cellular penetration levels at the end of 1996
reached 3.2% in Buenos Aires, 1.0% and 1.2% in the northern and southern
interiors, respectively, and 1.9% for the entire country, as compared to 16.6%
cellular penetration in the United States. Strong cellular growth is expected to
continue, with 3.7 million projected subscribers nationwide by 2000, reflecting
a penetration rate of 10.2% for the entire country. On a regional basis, Buenos
Aires is projected to reach 16.6% market penetration by the year 2000 and
account for 60% of Argentina's total subscriber base. At a monthly average of
$121, Argentina's revenue per cellular subscriber is one of the highest in Latin
America. By comparison, average monthly revenue per cellular subscriber is $48
in the United States.

The analog SMR business in Argentina is underdeveloped compared to the U.S.
market. In 1996, there were approximately 33,600 analog SMR subscribers in
Argentina (a penetration rate of less than .1%), compared to approximately 2.3
million analog SMR subscribers in the United States (a penetration rate of .9%).
Argentina's monthly average revenue per analog SMR subscriber is approximately
$82 compared to $16 in the United States.

Operating Company Overview. Nextel Argentina has 240 SMR channels (12 MHz)
in Buenos Aires, 200 SMR channels (10 MHz) in each of Cordoba, Rosario and
Mendoza and an additional 20 SMR channels in each of Mar del Plata and Tucuman.
The Company believes its channel position will allow Nextel Argentina to compete
effectively with other wireless communications providers. Nextel Argentina also
operates a paging business and offers paging services in Buenos Aires and Mar
del Plata under a nationwide paging license.

In February 1997, Nextel Argentina launched commercial analog SMR service
in Buenos Aires. In the second quarter of 1997, the company began offering
commercial analog SMR service in Cordoba and Rosario.
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In the second quarter of 1998, Nextel Argentina launched commercial ESMR service
in Buenos Aires. As of December 31, 1997, Nextel Argentina provided service to
approximately 12,000 analog SMR subscriber units and 4,000 paging subscriber
units.

In addition to its ESMR network in Buenos Aires, Nextel Argentina plans to
construct an ESMR network in each of Cordoba, Rosario and Mendoza utilizing
Motorola's iDEN technology. While migrating its analog SMR customers to the
digital ESMR network, the company plans to operate parallel digital and analog
networks. As part of the migration process, the company will encourage its
higher usage customers to convert to the digital ESMR network so they can
benefit from the broader range of service offerings.

Nextel Argentina is headquartered in Buenos Aires. As of December 31, 1997,
Nextel Argentina had 152 employees.

Marketing. Nextel Argentina currently offers analog SMR dispatch and
interconnect service utilizing both Motorola and Ericsson equipment. Analog SMR
service offerings include private call, call alert and scanning. The company
differentiates itself from other analog SMR providers by providing extensive
service coverage and maintaining a high level of customer service. The company's
ESMR network service offerings include interconnect services and dispatch radio
and paging, using one multi-functional handset. Initially, the company will
target the mobile workforce, which it believes are the most likely users of its
ESMR network's integrated service offerings. The company has a centralized
customer service and installation center located in Buenos Aires.

Nextel Argentina's analog SMR and ESMR services are designed to be a
business tool for the mobile workforce in its Argentine markets. The company
focuses its marketing efforts on businesses that have a need for mobile
communications such as trucking and transportation companies, real estate firms,
construction companies, suppliers and distributors and security companies.
Nextel Argentina has developed a distribution network and believes a strong
direct sales force is essential to reaching potential business customers. At
December 31, 1997, the company had a direct sales force consisting of 37 sales
representatives. In addition, the company has contracted with independent
dealers to market Nextel Argentina's products and is providing extensive
training to each of its distribution channels in order to ensure a high level of
customer satisfaction.

Competition. The two largest SMR providers in Argentina, as measured by
subscribers, are owned by Movicom (a joint venture that includes BellSouth
Corporation and Motorola) and Miniphone S.A. ("Miniphone") (a joint venture
among the two Argentine telephone companies, Telefonica de Argentina S.A. and
Telecom Argentina STET-France Telecom S.A.) and operate under the tradenames
"Movilink" and "Starcom," respectively. Movicom owns 100 SMR channels in Buenos
Aires and 40 SMR channels in each of the three other major cities. In addition
to operating various SMR networks, Movicom also operates an iDEN system in
Buenos Aires. Movicom's iDEN-based digital ESMR system utilizes the
higher-capacity, "first-generation" voice algorithm system. Starcom owns and
operates 60 channels in Buenos Aires and additional SMR channels in two other
major cities. There are two cellular service providers in each of the major
markets in Argentina. In Buenos Aires, the two service providers are Movicom and
Miniphone. In 1996, over 425,000, or 64%, of Argentina's cellular subscribers
were located in Buenos Aires. In the northern region of Argentina, the two
cellular service providers are Compania de Telefonos del Interior S.A. ("CTI")
(a joint venture that includes GTE and Lucent Technologies, Inc.) and Telecom
Personal S.A. (a wholly owned subsidiary of Telecom Argentina STET-France
Telecom S.A.). In the southern region of Argentina, the two cellular service
providers are CTI and Telefonica Comunicaciones Personales S.A., a wholly owned
subsidiary of Telefonica de Argentina S.A., which operates under the name
UNIFON.

The company expects additional competition following the auction of PCS
licenses, which has been temporarily postponed but is expected to occur during
1998.

Regulatory and Legal Overview. The Comision Nacional de Comunicaciones
("CNC") and the Argentine Secretary of Communications are the Argentine
telecommunications authorities responsible for administration and regulation of
the SMR industry.

CNC regulations require SMR operators to build-out their channels within 12
months of the channel authorization issuance if the system is multi-site and to
guarantee their performance by posting a letter of
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credit equivalent to the price paid in the spectrum auction. The letter of
credit is released once the installation and activation of the SMR site or sites
have been verified by the CNC. Nextel Argentina has built out its channels in a
timely fashion and the letters of credit posted by Nextel Argentina in
connection with its prior build-out obligations have expired and are not
required to be replaced. In December 1997, Nextel Argentina acquired an
additional 60 SMR channels in Buenos Aires in a public auction. Nextel Argentina
posted a $12 million letter of credit and is required to complete the build out
of such channels within 12 months.

SMR licenses have an indefinite term, but are subject to revocation for
violation of applicable regulatory rules as discussed below. SMR service must
commence within six months to one year after receipt of the channel assignment
(depending on the type of network configuration). Failure to meet service or
loading requirements can result in revocation of the channel authorizations. The
CNC will revoke the licensee's license upon the finding of a third breach by a
licensee of service requirements. Licenses and channel authorizations may be
revoked for violation of other regulatory authority rules and regulations. All
SMR channel holders that received their channel authorizations pursuant to the
November 1995 SMR auction, including Nextel Argentina, were granted an extension
to December 1997 from the original December 1996 deadline to meet initial
loading requirements. The Company met the initial loading requirements in Buenos
Aires, for its channels granted pursuant to such auction by the deadline and
believes it will retain its rights to substantially all of its licenses in its
other Argentine markets. Argentina imposes no limitation on foreign ownership of
SMR licenses.

SMR providers are assured interconnection with the PSTN pursuant to the
terms of the tender rules under which the channels were awarded, as well as
pursuant to applicable laws. Furthermore, interconnection with the PSTN must be
on a nondiscriminatory basis. On February 2, 1998, Nextel Argentina executed an
interconnect agreement with Telefonica de Argentina S.A. and connection with the
PSTN has been completed.

Under current law, Argentine currency is convertible into U.S. dollars
without restrictions, and Argentina has a free exchange market for all foreign
currency transactions.

Under applicable Argentine corporate law, dividends may be paid only from
liquid and realized profits as shown on the company's financial statements
prepared in accordance with Argentine generally accepted accounting principles.
Five percent of such profits must be set aside until a reserve equal to twenty
percent of the company's capital stock has been established. Subject to these
requirements, the balance of profits may be declared as dividends and paid in
cash pursuant to a majority vote of the shareholders. Under current law, there
is a 13.2% withholding tax on interest payments and no withholding taxes on
dividends.

PERU

Country Overview. With a population of 24 million, Peru is the fifth
largest country in Latin America. Peru's population is 72% urban, and
approximately seven million people, or just under one-third of the country's
total population, reside in Lima.

From 1997 to 2001, Peru is expected to achieve an average annual GDP growth
rate of 5% and sustain single-digit inflation. The primary component of economic
growth in Peru is expected to be strong export activity, as the nation moves
closer to an export-led development model. The liberalization and reform
measures instituted by the Fujimori administration work in favor of such an
approach, as trade barriers have been lowered, restrictions on capital flows
lifted, and the economy opened to foreign investors.

Although Peru is the fifth largest country in Latin America, its telephone
penetration of 4.7 lines per 100 inhabitants is among the lowest in Latin
America. The wait list for landline telephone service in Peru is approximately
one year, making cellular telephony a substitute for landline service.

In 1996, Peru was one of the fastest growing cellular markets in Latin
America. From 1995 to 1996, cellular subscribers grew by 127%, reaching
approximately 170,000 at the end of 1996, with most of this base concentrated in
Lima. Although Peru experienced high subscriber growth in 1996, the country's
cellular penetration rate was only 0.7%, which is significantly below the U.S.
cellular penetration rate of 16.6% and the Latin American cellular penetration
rate of 1.4%. Peru's strong subscriber growth is expected to continue, with
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the number of subscribers projected to increase to 980,000 in 2000, representing
an average annual growth rate of 55% and a cellular penetration rate of 3.8%. At
a monthly average of $120, Peru's revenue per cellular subscriber is one of the
highest in Latin America. By comparison, average monthly revenue per cellular
subscriber is $48 in the United States.

The SMR business in Peru is underdeveloped compared to the U.S. market. In
1996, Peru had approximately 5,900 SMR subscribers or a .02% SMR penetration
rate as compared to an SMR penetration rate of .9% in the U.S. The average
monthly revenue per SMR subscriber in Peru is $28, compared to the U.S. monthly
average of $16.

Operating Company Overview. Nextel Peru provides analog SMR services in
the greater Lima area under the tradenames "Dualcom" and "Mastercom." Nextel
Peru's subsidiaries have an aggregate of 138 SMR channels (6.9 MHz) in the
greater Lima area. As of December 31, 1997, Nextel Peru provided services to
approximately 3,000 analog SMR subscriber units.

Nextel Peru plans to construct a digital ESMR network in the greater Lima
area utilizing Motorola's iDEN technology and expects to launch commercial
digital ESMR service in 1999. Nextel Peru must file an application with the
Ministry of Transportation, Communications, Housing and Construction of Peru
(the "Peruvian Ministry of Communications") to begin operation of digital ESMR
services. Based upon the current legal and regulatory framework, Nextel Peru
expects such application to be granted, although no assurance can be given.
While migrating its analog SMR customers to the digital network, the company
intends to operate parallel digital and analog SMR networks. As part of the
migration process, the company will encourage its higher usage customers to
convert to the digital network so they can benefit from the broader range of
service offerings. Digital service offerings will include interconnect services,
dispatch radio and paging using one multi-functional handset. In order to begin
offering data and paging transmission services, Nextel Peru must apply for
specific authorizations from the Peruvian Ministry of Communications, which the
Company expects will be granted based on the current legal and regulatory
framework, although no assurance can be given that this will be the case.
Initially, the company will target the mobile workforce, which it believes will
be the most likely users of iDEN's integrated service offerings.

Nextel Peru is headquartered in Lima. As of December 31, 1997, Nextel
Peru's subsidiaries had an aggregate of 34 employees.

Marketing. Nextel Peru offers its customers a broad range of services and
pricing plans designed to meet the specific needs of its customers. Nextel Peru
offers both dispatch-only and integrated service plans (dispatch and
interconnect). These plans include sale or rental of various models of handsets.
The basic price package consists of a monthly fee and interconnect and dispatch
charges depending on minutes of use.

Nextel Peru's sales and marketing efforts focus primarily on providing
cost-effective local dispatch radio services to its target customers, which are
businesses such as trucking and transportation companies, manufacturing
companies, distributors and construction companies.

To establish brand identity, Nextel Peru plans to undertake a promotional
advertising campaign targeting the business segment of the market. In addition
to advertising, the company initially will rely heavily on its direct sales
force to educate potential customers on the benefits of using Nextel Peru
services.

Competition. The largest SMR provider in Peru, as measured by subscribers,
is Radio Trunking del Peru. Nextel Peru is the country's second largest SMR
provider. Tele2000 and Telefonica del Peru are Peru's two cellular operators.
Telefonica del Peru (a joint venture between Telefonica Internacional of Spain
and Peruvian investors) provides nationwide coverage and operates under the
brand name "Moviline." Tele2000 (a joint venture between BellSouth and Peruvian
investors) offers service in the greater Lima area, and recently established
nationwide roaming agreements with Telefonica del Peru. Tele2000 operates under
the brand name "Celular2000."

Partner Description. The Company's partners in Nextel Peru are Motorola
International which holds approximately 19.9%, and a Peruvian individual who
holds 10% of the capital stock of Nextel Peru.

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Regulatory and Legal Overview. The Organismo Supervisor de Inversion
Privada en Telecomunicaciones ("OSIPTEL") and the Peruvian Ministry of
Communications regulate the telecommunications industry in Peru. OSIPTEL is
responsible for overseeing private investments in the telecommunications
industry and the Peruvian Ministry of Communications grants telecommunications
licenses and issues regulations governing the telecommunications industry. In
1994, the Peruvian government began to deregulate the telecommunications
industry in order to promote free and open competition for the provision of
telecommunications services. The Telecommunications Law of Peru (the "Peruvian
Telecommunications Law"), the general regulations thereunder (the "Peruvian
General Regulations") and the specific regulations governing trunking services
outline the rules for the operation of SMR services in Peru.

In Peru, SMR and paging service providers are granted licenses for
twenty-year terms which may be extended for an additional 20-year term (subject
to compliance with the terms of the license). SMR and paging licenses may also
be revoked prior to expiration for violations of applicable regulatory rules as
discussed below. SMR and paging licensees must comply with a five-year minimum
expansion plan that sets forth the minimum loading requirements for the
licensees (the "Minimum Expansion Plan"). The Minimum Expansion Plan may be
amended at the licensee's request at the end of the first and second years of
the license terms if the licensee determines that market demand for its services
is insufficient for the licensee to meet the requirements of the Minimum
Expansion Plan. Failure to meet the Minimum Expansion Plan may result in
revocation of the licenses. Licenses and channel authorizations may be revoked
for violation of other regulatory authority rules and regulations. Nextel Peru
failed to meet the Minimum Expansion Plan for 1997, but it has filed requests
for modification of such Minimum Expansion Plan for the licenses in question. To
date, Nextel Peru has not received a response from the Peruvian Ministry of
Communications with regard to its requests for modification.

Pursuant to the Peruvian General Regulations, all wireless
telecommunications licensees have the right to connect to the PSTNs.
Furthermore, interconnection with the PSTN must be on an equal and
nondiscriminatory basis and the terms and conditions of interconnect agreements
must be negotiated in good faith between the parties in accordance with the
interconnect regulations and procedures issued by OSIPTEL. Nextel Peru intends
to begin negotiating interconnect agreements with the applicable parties later
in 1998. Peru imposes no limitation on foreign ownership of SMR or paging
licenses or licensees.

Under current law, Peruvian currency is convertible into U.S. dollars
without restrictions, and Peru has a free exchange market for all foreign
currency transactions. Nextel Peru is currently negotiating a legal stability
agreement with the Peruvian government which, among other things, would
guarantee free conversion of foreign currency for Nextel Peru and its
shareholders for a period of 10 years.

The payment and amount of dividends on the company's common stock is
subject to the approval of a majority of the shareholders at a mandatory meeting
of the shareholders of the company, as well as to the availability of earnings
to distribute determined in accordance with Peruvian GAAP. According to Peruvian
corporate law, interim dividends may be distributed subject to the prior
approval of the shareholders' meetings.

Available earnings are subject to the following priorities: (i) the
mandatory employee profit sharing of 10% of pre-tax profits and (ii) 10% of the
net profits must be allocated to a legal reserve, which is not further available
for use except to cover losses in the profit and loss statement. The latter
obligation remains until the legal reserve constitutes 20% of the capital stock.
After the legal reserve has been allocated, the shareholders at a shareholders'
meeting can then allocate any portion of the net profits to any special reserve.
The remaining amount of the net profits is available for distribution.

Dividends paid by Nextel Peru to its U.S. shareholders are not subject to
withholding tax and interest paid by Nextel Peru to U.S. residents is subject to
a 30% withholding tax.

Under Peruvian labor law, any telecommunications company with more than 20
employees is required to distribute among its employees 10% of its annual
pre-tax profits. Neither Nextel Peru nor any of its subsidiaries currently have
more than 20 employees.

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PHILIPPINES

Country Overview. The Philippines has a population of approximately 73
million people and population density of 245 people per square kilometer,
compared to a population density of 29 people per square kilometer in the United
States. The principal cities include Metropolitan Manila, Quezon City, Davao
City, Caloocan City and Cebu City. Historically, the country has experienced
strong economic growth. In 1996, GNP grew by 6.8% and in the first half of 1997,
GNP growth levels remained above 6%. However, in the second half of 1997 as a
result of the recent Asian economic crisis, projected 1997 GNP growth declined
to 5.3%.

The Philippines has one of the lowest teledensities in Southeast Asia, with
2.6 lines per 100 inhabitants. It is estimated that only 57% of total demand has
been satisfied. Further, Metropolitan Manila, the country's most urban area, has
80% of all telephone lines. The waiting list for landline telephone service
contains approximately 850,000 names and it can take 3.6 years to get a landline
telephone. Current efforts to increase landline installation are expected to
bring teledensity to ten lines per 100 inhabitants by the year 2000.

The demand for wireless telephone services has grown significantly,
principally due to low teledensity, competition and rising income levels
resulting from strong economic growth in the country. In 1995 and 1996, the
market for wireless services grew by 206% and 72% respectively. Despite this
growth, the Philippines has one of the lowest cellular penetration rates in
Southeast Asia at 1.2%. Comparatively, Singapore and Malaysia have penetration
rates of 13% and 8%, respectively. Currently, there are 850,000 cellular
subscribers nationwide, with most of this base concentrated in Metropolitan
Manila. The Philippines subscriber growth is expected to continue, with the
number of subscribers projected to increase to over 4 million in 2000, an
average annual growth rate of 49%. By the year 2000, the Philippines penetration
rate is expected to be 5.4%.

The Philippine paging market has experienced substantial growth over the
past few years. From 1993 to 1996, paging subscribers grew at a compound annual
growth rate of 66%, reaching 491,000 subscribers at the end of 1996. Despite the
rapid growth of the Philippine paging market, it remains largely underdeveloped
with a penetration rate of only .7%. Strong paging growth is expected to
continue, with 1.3 million paging subscribers projected in the year 2000,
reflecting a four year compound annual growth rate of 35% and a penetration rate
of 1.8%. The Philippine SMR market is underdeveloped as well, with only 19,000
SMR subscribers at the end of 1996, or a penetration rate of .03%.

Operating Company Overview. Nextel Philippines owns nationwide licenses
(with a total of 100 channels representing approximately 5 MHz), to provide SMR,
ESMR and paging services. Nextel Philippines commercially launched paging
services in February 1995 under the brand name "Infopage." Nextel Philippines
currently offers paging coverage across Metropolitan Manila and Subic Bay. The
company provided service to approximately 55,000 paging subscriber units at
December 31, 1997 and was the third largest paging company in the country.

Nextel Philippines has a nationwide SMR license and completed initial
system construction and launched commercial ESMR service in Manila in July 1998,
utilizing Motorola's iDEN technology. In December 1996, Nextel Philippines
signed an equipment purchase contract with Motorola and in June 1997 entered
into the Philippines Motorola Financing for the financing of up to $14.7 million
of equipment purchases. See "Description of Other Indebtedness -- Equipment
Financing -- Philippines." Nextel Philippines launched commercial ESMR service
in Manila in July 1998. See "-- Partner Description" and "Business -- Corporate
Governance -- Philippines."

Nextel Philippines is headquartered in Metropolitan Manila. As of December
31, 1997, Nextel Philippines had 915 employees of which 560 were operators
serving its paging customers.

Marketing. Nextel Philippines offers both alphanumeric and numeric paging
services utilizing Motorola's FLEX technology and differentiates itself from its
competitors by offering a variety of value-added services including secretarial
services, voice mail, call forwarding, fax mail and group call. Moreover, the
company places considerable emphasis on providing a high level of customer
service through its customer service center located at the company's
headquarters in Manila.

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Paging services in the Philippines are targeted at both the business and
consumer segments. Nextel Philippines has developed a comprehensive and diverse
distribution network and believes that such a diverse distribution mix will
contribute to an increased growth in its subscriber base. In order to capture
the consumer segment and create brand awareness, Nextel Philippines has 14 owned
and operated retail outlets, primarily located within large shopping malls, that
exclusively carry the company's products. To target the business segment, the
company has a direct sales force of 80 people. Finally, the company has
contracted with five major dealers and 75 sub-dealers to market Infopage's
products.

Nextel Philippines' ESMR business will target the larger business customers
in its markets. The company will focus on building profitability rather than
building market share in a similar fashion to its efforts in its paging
business. Within the business segment, the company believes the mobile workforce
including construction, service, real estate and sales companies will be the
most likely users of iDEN's integrated service offerings.

Although the company intends to fully utilize its established paging
distribution network and leverage Infopage's brand recognition, the company also
intends to substantially augment its direct sales force in order to effectively
target other business customers. The company has begun to formulate a strategy
for its pricing plans and aims to charge a premium to low usage subscribers and
a slight discount to high usage subscribers while offering a significantly
greater number of services.

Competition. There are two major SMR license holders in the Philippines,
each owning 100 channels nationwide, and 12 licensed paging operators. Nextel
Philippines believes that it is uniquely positioned to compete effectively in
the Philippines as a result of its nationwide SMR license and its fast-growing
paging business. There are currently five cellular providers with nationwide
licenses in the Philippines, two of which are AMPS operators, one of which is a
TACS operator and two of which are GSM operators. Pilipino Telephon Corporation
("Piltel"), the operator of the public switched telephone network, is the
largest cellular provider, with an approximately 40% market share. As part of
its effort to improve teledensity, the government requires cellular providers to
meet certain landline buildout requirements, which require the installation of
400,000 telephone lines. This represents a significant investment for each of
these providers. See "-- Regulatory and Legal Overview."

Partner Description. The Company's partners in Nextel Philippines
currently include AIG, which holds 10% of the outstanding shares of Nextel
Philippines, and the three Philippines Shareholders who hold the remaining 60%
of the capital stock of Nextel Philippines, including the Gotesco Group, which
owns a 20% interest in Nextel Philippines. AIG has notified the Company that it
has exercised its right to sell its 10% in Nextel Philippines back to the
Philippines shareholder from which it had originally purchased such interest.

Pursuant to the Philippines Partner Agreements (i) the Nextel Philippines
corporate governance arrangements were restructured to give the Company
increased minority shareholder rights and the Philippines Shareholders agreed to
vote for the election of new, professional senior management of Nextel
Philippines; (ii) the Company purchased existing shareholder loans of the
Philippines Shareholders totaling approximately $19.6 million, which loans bear
interest at 18% per annum and are convertible into equity of Nextel Philippines;
(iii) the Company may, at its option, fund Nextel Philippines' future capital
needs, currently estimated to be $50 million for 1998, pursuant to loans that,
at the option of the Company, may be converted into equity of Nextel
Philippines; (iv) the Gotesco Group has the right to exercise the Gotesco Put
for approximately $9.4 million, beginning in January 1999; and (v) the Company
has the right to call the Gotesco Group's 20% interest for approximately $11.6
million, if the Gotesco Group does not exercise the Gotesco Put. The ability of
the Company to convert shareholders' loans into equity, satisfy the Gotesco Put
or call the Gotesco Group's 20% interest is subject to applicable Philippines
foreign ownership rules. On June 26, 1998, the Company and the Gotesco Group
entered into the Gotesco Put Acceleration Agreement pursuant to which the
exercise date of the Gotesco Put was accelerated from January 1999 to August 21,
1998. The Company also agreed to pay the Gotesco Group (i) $500,000 upon the
delivery of irrevocable proxies covering the voting rights on the shares of
Nextel Philippines owned by the Gotesco Group to a third party or parties
selected mutually by the Company and the Gotesco Group; (ii) $500,000 to the
Gotesco Group upon the conclusion of the Nextel Philippines annual shareholder
meeting scheduled for July 13, 1998, provided that

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the Gotesco Group's shares of Nextel Philippines are voted in favor of the
corporate governance provisions of the Philippines Partner Agreements at such
annual meeting; and (iii) $8,000,000 upon the transfer of the shares covered by
the Gotesco Put to a qualified third-party purchaser in accordance with
Philippines law, which transfer shall occur no later than August 21, 1998. The
Company is in discussion with several Philippines groups regarding the purchase
of an equity interest in Nextel Philippines, including the purchase of the
shares covered by the Gotesco Put and the Gotesco Put Acceleration Agreement.
Pursuant to the Gotesco Put Acceleration Agreement, the Gotesco Group pledged
its shares of Nextel Philippines to the Company, delivered such shares to an
escrow agent and granted irrevocable proxies covering the voting rights on such
shares to third parties selected mutually by the Company and the Gotesco Group.
The Company has made the required payment of $500,000 to the Gotesco Group due
upon execution and delivery of the Gotesco Put Acceleration Agreement.

Regulatory and Legal Overview. In the Philippines, the telecommunications
industry is principally governed by Republic Act No. 7925 (the "Telecoms Act")
enacted on March 1, 1995. Under the Telecoms Act, the National
Telecommunications Commission (the "Philippines National Commission"), an agency
under the Department of Transportation and Communications, is mandated to
regulate the telecommunications industry.

Engaging in telecommunications operations requires a franchise from the
Philippine Congress, which is the country's legislative body. After securing a
Congressional franchise, a franchise holder must apply to the Philippines
National Commission for an operating license called a Certificate of Public
Convenience and Necessity ("CPCN"). The grant of a CPCN goes through a process
of public notice and hearing. After receipt of an application for a CPCN for a
particular telecommunications service, and pending its legal, technical and
financial evaluation through a public hearing, the Philippines National
Commission will initially issue a PA, which serves as a temporary operating
permit for the particular telecommunications services applied for. Pursuant to
the PA an applicant can commence construction and commercial operations. Nextel
Philippines has a PA authorizing it to operate a nationwide digital trunked
radio dispatch communications system. Nextel Philippines' PA is subject to
revocation for failure to (i) operate continuously for two years or (ii)
commence operations within two years of the issuance of the PA. Under the terms
of its PA, as amended, Nextel Philippines is required to commence digital ESMR
trunking services by January 20, 1999. Nextel Philippines launched commercial
ESMR service in Manila in July 1998.

The Telecoms Act provides that a telecommunications entity with regulated
types of services must make a public offering of at least 30% of its aggregate
common stock within a period of five years from the effective date of the
Telecoms Act or the entity's first start of commercial operations, whichever
occurs later. Accordingly, Nextel Philippines is mandated to make a public
offering of 30% of its common stock by March 1, 2000.

Under Philippine law, foreign entities' direct ownership of a public
utility telecommunications company is limited to 40% of the company's capital
stock (the "40% Rule"). Philippine law also limits the participation of foreign
investors in the governing body of any public utility enterprise to their
proportionate share in its capital; therefore, a foreign investor's
participation in the management of a telecommunications company is limited
solely to membership on its board of directors and committees of the board of
directors, including but not limited to the executive committee. Accordingly,
all the executive and managing officers (e.g., president, chief executive
officer, treasurer) are required to be citizens of the Philippines.

Presidential Executive Order No. 59 (1993) prescribes, as a matter of
national policy, the compulsory and nondiscriminatory interconnection of
authorized public telecommunications carriers. Interconnection is

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negotiated and effected through bilateral negotiations between the parties
involved subject to certain technical/operational and traffic settlement rules
of the Philippines National Commission. Nextel Philippines is discussing an
interconnection agreement with Piltel.

Presidential Executive Order No. 109 Series of 1993, and, subsequently, the
Telecoms Act (as implemented by the Philippines National Commission's Memorandum
Circular No. 8-9-25) require cellular mobile operators to install at least
400,000 local exchange lines. The Company does not believe that Nextel
Philippines is subject to such requirement, however, there can be no assurance
that this will be the case. If this requirement were found to be applicable to
Nextel Philippines, it would require a significant capital investment.

Under current regulations of the Central Bank of the Philippines (the
"Central Bank"), foreign exchange may be freely sold and purchased outside the
Philippine banking system. Restrictions exist on the sale and purchase of
foreign exchange in the banking system. The Philippine monetary authority, with
the approval of the President of the Philippines, has the statutory authority,
during a foreign exchange crisis or in times of national emergency, to
temporarily suspend or restrict sales of foreign exchange, require licensing of
foreign exchange transactions or require delivery of foreign exchange in the
Central Bank or its designee.

Foreign investments need not be registered with the Central Bank. The
registration of a foreign investment with the Central Bank is only required if
the foreign exchange needed to service the repatriation and the remittance of
capital and dividends are to be sourced from the Philippine banking system.
Nevertheless, even without Central Bank registration, foreign exchange needed
for capital repatriation and remittance of dividends of unregistered investments
can be sourced lawfully outside of the Philippine banking system. The Company's
investment in 30% of the equity of Nextel Philippines has been registered with
the Central Bank.

Under current law there is a 15% withholding tax on dividends and a 20%
withholding tax on interest payments.

JAPAN

Country Overview. With a population of approximately 125 million people,
Japan is the fifth most populous Asian country. The country consists of four
major islands, Hokkaido, Honshu, Shikoku and Kyushu, and 6,848 smaller islands.
More than 78% of the country's inhabitants reside in urban areas and, given the
relatively small area of Japan (148,000 square miles), the country has one of
the highest population densities in the world. More than 26 million people, or
approximately 21% of the Japanese population, live in Japan's thirteen major
cities. Tokyo, with approximately 8 million people, is the largest city in
Japan. Japan is characterized by above-average income levels relative to other
Asian countries and in 1996 had a GDP per capita of approximately $36,000, one
of the highest in the world. Japan also has one of the most advanced road
systems, as well as one of the highest rates of vehicular ownership in Asia. The
country's advanced transportation network and its highly concentrated urban
centers have resulted in a strong demand for cellular service.

Japan has become one of the world's most powerful economies, with a
relatively stable currency, high rates of savings and fixed investment, and the
highest per capita GDP in Asia. Political and economic uncertainties, both
within Japan's borders and across Asia, however, have produced a climate in
which the Japanese economy is poised to expand more moderately than in the past.
The Japanese government confirmed recently that its economy is in recession and
reconfirmed its official forecast of 1.9% GDP growth for 1998. Many economists,
however, forecast negative GDP growth for Japan for 1998.

The Japanese enjoy one of the most advanced telecommunications
infrastructures in the Asia. At the end of 1996, the country had nearly 65
million wireline telephone lines, representing a teledensity of 51%. Japan's
first cellular license was issued in 1979 by the Japanese Ministry of Posts and
Telecommunications (the "MPT") to the state-owned Nippon Telegraph and Telephone
("NTT"). Despite the relative maturity of the Japanese cellular market, it has
experienced explosive growth over the past few years, due in part to the MPT
lifting its ban on cellular handset ownership in 1994. At the end of 1994, after
14 years of operation, the Japanese cellular industry had achieved only 2.7%
penetration. From 1994 to 1996, however, cellular subscribers grew at a compound
annual growth rate of 159%, reaching approximately 22.8 million at the end of

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1996, representing a cellular penetration rate of 18%. In 1996, Japan's cellular
subscribers accounted for 50% of the subscriber base in Asia. Strong cellular
growth is expected to continue, with 58.7 million additional subscribers
projected by 2000, reflecting a penetration rate of 46%. Japan's average revenue
per cellular subscriber of approximately $50 per month is comparable to the
monthly average revenue per cellular subscriber in the United States.

The analog and digital SMR business in Japan is relatively well developed
compared to the United States. In 1996, Japan had approximately 851,000 SMR
subscribers (a penetration rate of 0.7%), compared to approximately 2.3 million
SMR subscribers in the United States (a penetration rate of 0.9%).

Operating Company Overview. J-Com provides digital dispatch SMR service in
the Kanto region of Japan (which includes Tokyo) pursuant to a subentrustment
agreement with Nippon Motorola Ltd., a subsidiary of Motorola ("NML"). J-Com's
digital SMR network operates on the 1.5 GHz frequency rather than the 800 MHz
frequency used by the Company's other SMR Operating Companies. As of March 31,
1998, J-Com had approximately 38,000 digital SMR subscribers.

J-Com currently offers digital SMR dispatch service to its subscribers.
J-Com upgraded its digital SMR network to offer multi-functional ESMR service
and offers, in addition to digital dispatch service, mobile telephone and
alphanumeric messaging on a single, multifunction handset. J-Com launched
commercial ESMR service in the Kanto region utilizing Motorola's iDEN technology
in July 1998.

J-Com is headquartered in Tokyo. As of December 31, 1997, J-Com had 45
employees.

Marketing. J-Com's current sales and marketing efforts focus primarily on
providing cost-effective, local dispatch radio services to its target customers,
which are primarily businesses in the transportation industry. J-Com believes
that businesses with mobile workforces will be the most likely users of its
integrated digital service offerings and accordingly, J-Com will target such
business customers. In addition to advertising, J-Com initially will rely on its
network of independent dealers to sell J-Com's services to potential
subscribers.

Competition. Japan has two licensed SMR providers, both of which are
nonprofit organizations. MPT regulations provide that SMR licenses may only be
granted to nonprofit organizations. Such organizations may, however, entrust the
operation of the network under such license to a commercial entity or entities.
The MPT has granted licenses to two commercial SMR providers: (1) National
Mobile Radio Centers Council ("MRC"), which began offering commercial analog SMR
service in 1982, is an association of eight mobile radio centers that are
regionally organized and supported financially by the Japanese government and
several other companies, such as manufacturers and dealers and (2) Japan Mobile
Telecommunications Association ("JAMTA") which was founded in 1994 and began
offering commercial analog SMR service the same year. Pursuant to an entrustment
agreement, NML is authorized to operate JAMTA's SMR business. MRC and JAMTA are
licensed to offer both analog and digital SMR services.

Japan is divided into ten cellular licensing regions including Kanto and
Shin-etsu (the Tokyo metro area), Tokai, Kansai, Hokuriku, Chugoku, Shikoku,
Kyushu, Hokkaido, Tohoku and Okinawa. For the most populous and economically
active regions, Kanto, Tokai and Kansai, the MPT licensed four operators in each
region. With the exception of Okinawa, three service providers have been
licensed to operate in each of the remaining six regions. In Okinawa, Daini
Denden Incorporated ("DDI") is the only operator. In July 1995, Japan launched
the world's first commercial PCS network (referred to as "Personal Handyphone
Service" or "PHS" in Japan). The MPT divided the country into ten PHS licensing
regions, allowing up to three operators in each region.

The largest cellular operator is NTT DoCoMo, with a market share of more
than 50%, followed by DDI, Digital Phone Group, Nippon Idou Tsushin Corp. (IDO),
TU-KA Group and Digital TU-KA Group, respectively. DDI Pocket Telephone is the
largest PHS operator, with a 42% market share, followed by NTT Personal and
Astel.

Partner Description. The Company holds a 21% equity interest in J-Com. The
Company's partners in J-Com are DJSMR, which holds a 49% equity interest,
Nichimen, which holds a 25% equity interest, and ORIX, which holds a 5% equity
interest.

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Regulatory and Legal Overview. The MPT regulates the telecommunications
industry in Japan. The Radio Wave Law ("RWL") governs all users of radio
spectrum. Additionally, the Telecommunications Business Law ("TBL") governs the
operations of telecommunications providers. The MPT classifies
telecommunications service providers as either "Type One" or "Type Two." Type
One operators, which include cellular, PHS and paging providers, are governed by
both the RWL and the TBL. Type Two providers, which are all services under the
MPT's jurisdictions not classified as Type One, are governed only by the RWL.
The MPT has not classified JAMTA as a Type One operator. The TBL requires Type
One service providers to comply with certain infrastructure and network
requirements, but provides specific procedures and rates for interconnection to
the PSTN.

MPT regulations provide that SMR licenses may only be granted to nonprofit
organizations. Such organizations may, however, entrust the operation of the
network under such license to a commercial entity or entities. The MPT has
granted licenses to two commercial SMR providers, MRC and JAMTA, both of which
are nonprofit organizations. Pursuant to an entrustment agreement, NML is
authorized to operate JAMTA's SMR business. Pursuant to a subentrustment
agreement, NML has sublicensed the operation of JAMTA's digital SMR business on
the 1.5 GHz frequency to J-Com. NML continues to operate JAMTA's analog SMR
business, which uses the 800 MHz frequency.

The MPT regulates the use of radio frequency assigned for SMR services by
the grant of licenses for radio equipment to be installed on the SMR network.
Each license is granted for terms of up to five years, which may be renewed for
additional five-year terms. There are no loading requirements with respect to
such licenses.

Wireless telecommunications services operators have the right to
interconnect to the PSTN subject to approval by the MPT of the interconnect
agreement between the wireless telecommunications services operator and the
PSTN. The MPT has approved J-Com's interconnect agreement with NTT.

There are no foreign-ownership restrictions for Japanese telecommunications
companies other than for ownership of NTT and Kokusai Denshin Denwa.

Under current law, the Japanese Yen is convertible into U.S. dollars
without restrictions, and Japan has a free exchange market for all foreign
currency transactions. Dividends and interest paid by J-Com to its U.S.
shareholders are subject to a 10% withholding tax.

CANADA

Operating Company Overview. The Company currently owns 583,104 Class A
Shares and 7,790,741 Class D Shares of Clearnet (each Class D Share is
convertible at the option of the holder into one Class A Share). Clearnet is the
largest SMR operator in Canada as measured by the number of current subscribers,
the number of 800 MHz channels and the population of its service territory.
Clearnet has publicly reported that as of March 31, 1998, it provided analog SMR
services in over 40 cities across Canada to approximately 57,100 subscriber
units and ESMR services in Ontario and Quebec to approximately 57,400 subscriber
units. Additionally, Clearnet holds one of the two national 30 MHz licenses to
provide PCS in Canada. Clearnet launched PCS services in Canada's largest urban
centers in October 1997 and reported that as of March 31, 1998, it had
approximately 89,700 PCS subscribers. The Company has two representatives on
Clearnet's board of directors. Clearnet files periodic and other reports with
the Commission pursuant to the requirements of the Exchange Act. More detailed
and specific information concerning Clearnet and information regarding the
Company's rights to representation on the Clearnet Board of Directors is
contained in such Exchange Act reports.

SHANGHAI, PEOPLE'S REPUBLIC OF CHINA

Country Overview. With a population of approximately 1.2 billion, the
People's Republic of China is the most populous country in the world and the
third largest behind Russia and Canada in terms of geographic size. Shanghai is
one of China's leading cities. It is one of four cities in China which has been
accorded provincial level status and also has the largest port in China. The
city covers an area of over 6,000 square

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kilometers and has a population of approximately 14 million. Shanghai's annual
GDP per capita was $1,841 in 1996, over three times the national average of
$565.

In 1990, the State Council approved the establishment of a new economic
trade zone in the "Pudong New Area" section of Shanghai. The Pudong New Area is
similar to China's Special Economic Zones, which have been established to
attract foreign investment, and is expected to be the region's primary
international business conduit.

The demand for telecommunications services continues to grow and
teledensity remains at one of the lowest levels in the world at 4.4 lines per
100 inhabitants. China was the third largest cellular market in the world in
1996, with approximately seven million subscribers. The cellular market has
grown at a compounded annual growth rate of 145% from 1991 to 1996. Although
China has one of the lowest cellular penetration rates in the world at 0.6%, its
cellular penetration rate is expected to reach 3.4% by the end of the decade.

Operating Company Overview. The Shanghai GSM System is a cooperative
project established by Unicom and SSTIC to construct and operate a GSM cellular
network in Shanghai. The Shanghai GSM System has grown quickly since the
commencement of commercial operations in July 1995 and as of December 31, 1997
reported that it had approximately 66,000 subscribers. The current network has
93 cell sites covering the greater Shanghai region (including the Pudong New
Area). Under the current laws of the People's Republic of China, foreign
investors are not permitted to be involved directly in the ownership or
operation of telecommunications services. In the event that such laws change,
the Company may seek to convert its contractual right to share profits generated
by the Shanghai GSM System to a direct ownership interest, although there can be
no assurance that this would be possible.

In August 1995, the Company formed a joint venture with SSTIC pursuant to
which the Company provided financial support to the Shanghai GSM System for
construction of the initial phases of the system in exchange for a contractual
right to share profits from the system with SSTIC. The Company also provides
advice and direction to the Shanghai GSM System in the key areas of engineering,
customer care, billing practices, quality assurance and system performance.
Shanghai McCaw was renamed Shanghai CCT McCaw following the admission of CCT as
a new shareholder to the joint venture in November 1997.

In December 1997, CCT, a subsidiary of CCT Telecom Holdings Limited, a
Grand Caymans limited liability company, which is publicly traded on the Hong
Kong stock exchange, acquired a 51% ownership interest in Shanghai CCT McCaw, in
which the Company had a 60% equity interest, in exchange for approximately $46
million of investments in the forms of equity, shareholder loans, shareholder
guarantees and fees. CCT's 51% interest represents the right to receive 20.5% of
the profits generated by the Shanghai GSM System. CCT's proposed investment in
Shanghai CCT McCaw received the necessary governmental approvals, whereupon a
new business license reflecting CCT's admission as a new shareholder of Shanghai
CCT McCaw and the change of the name to Shanghai CCT McCaw, was issued. In
consideration for its admission as a shareholder of Shanghai CCT McCaw, CCT
agreed to provide the funds necessary to enable Shanghai CCT McCaw to meet its
funding obligations with respect to the Phase III Expansion. As a result of
CCT's acquisition of a 51% ownership interest in Shanghai CCT McCaw, the
Company's ownership interest in Shanghai CCT McCaw was diluted from 60% to 30%
and the Company's contractual rights to the profits generated by the Shanghai
GSM System was diluted from 25.2% to 12.1%.

Shanghai CCT McCaw currently employs six people all of whom are local
Chinese. CCT has appointed the General Manager of Shanghai CCT McCaw, who is
seconded by CCT to Shanghai CCT McCaw and remains on the payroll of CCT.

Shanghai CCT McCaw initially provided technical advice to the Shanghai GSM
System during the construction phase of the network. Shanghai CCT McCaw has
continued to provide technical support in the ongoing process of upgrading the
quality and coverage of the GSM network and has become increasingly involved in
supporting the development of a diversified sales and marketing plan to compete
with the systems operated by the Ministry of Post and Telecommunications (the
"MPT").

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Competition. There are only two authorized cellular providers in Shanghai,
Unicom and the Shanghai PTA (the local branch of the MPT). The Shanghai PTA has
been in operation since 1989 and operates three cellular networks (two TACS
systems and one GSM system).

Partner Description. SSTIC, one of the Company's partners in Shanghai CCT
McCaw, is an investment holding company which was established for the purpose of
developing the Shanghai high-technology industry. SSTIC was formed by the
Municipal Government of Shanghai, six major Shanghai banks as well as two major
diversified Shanghai conglomerates. SSTIC is also a shareholder of Unicom.

CCT, a subsidiary of CCT Telcom, is the Company's other partner in Shanghai
CCT McCaw. CCT is CCT Telecom's holding company for its domestic
telecommunications business in China. Its investments include a communications
project in Guangzhou and a second GSM project in Shanxi province.

Regulatory and Legal Overview. Until 1994, the MPT was the sole entity
authorized to provide public telecommunications services in China. In July 1994,
the State Council established Unicom with the authority to provide public
telecommunications services. In addition, pursuant to a 1995 agreement the MPT
and the Peoples Liberation Army (the "PLA") agreed to jointly develop 800 MHz
cellular communications networks to provide wireless communications services to
the public using spectrum originally allocated to the PLA for military
communications use. Accordingly, there are three entities in China authorized to
provide cellular telecommunications services to the public. The MPT continues in
its role as the central government's regulatory authority over the
telecommunications sector.

Under current Chinese law, foreign investors are not permitted to be
involved directly in the ownership or operation of telecommunications services.

Pursuant to the current PRC Regulation on Foreign Exchange Control,
Renminbi, the currency of China, is freely convertible under current account,
however, it is not freely convertible under capital account. A foreign invested
enterprise is permitted to convert its Renminbi earnings to foreign currencies
for the purpose of enabling the foreign investors to receive dividends and
interest payments. Conversion of Renminbi to foreign currencies for the purpose
of repatriating foreign investors' capital contributions to, and principal
payments from, a foreign invested enterprise is subject to approval by relevant
government authorities, which approval will be granted upon showing that the
foreign invested enterprise has been lawfully terminated and dissolved or the
loan has been properly registered, as the case may be. The company's loan to
Shanghai CCT McCaw has been registered with the relevant governmental authority.
Under current law there is a 10% withholding tax on interest payments and no
withholding tax on dividends paid to foreign investors out of the foreign
invested enterprise.

CORPORATE GOVERNANCE

Nextel International owns 100% of its Operating Companies in Mexico and
Argentina. The following is a description of the Company's contractual
relationships with its partners in the other Operating Companies.

Brazil. The Company owns 81% of the capital stock of Nextel Brazil, which
entitles it to 90% of the voting rights. The Company, therefore, has the right
to make management and operating decisions of Nextel Brazil. The Telcom Group
owns 19% of the capital stock, which entitles it to 10% of the voting rights.
The Telcom Group has the right to designate candidates representing at least 10%
of the directors of Nextel Brazil, but at least one candidate so long as the
Telcom Group owns at least 10% of Nextel Brazil. The Telcom Group holds veto
rights with respect to the following actions: (i) amending the articles of
incorporation or bylaws of Nextel Brazil; (ii) creating any equity senior to the
existing shares of Nextel Brazil or changing or adversely affecting any
provisions or rights of the existing shares of Nextel Brazil; (iii) permitting
or causing Nextel Brazil or any of its material subsidiaries to issue voting
securities with voting rights different from those to which then-issued
securities are entitled; (iv) entering into a merger, a sale of substantially
all of the assets, a dissolution, a liquidation or a spinoff of Nextel Brazil or
any of its material subsidiaries; (v) permitting Nextel Brazil or any of its
subsidiaries to enter into a material contract with the Company or its
affiliates other than on an arm's-length, fair-market-value basis; or (vi)
permitting Nextel Brazil or any of its affiliates to issue or dispose of
securities of the company other than for cash at fair market value. If the
Telcom Group exercises its

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veto rights, Nextel Brazil has the right to purchase (upon vote of a simple
majority of its board of directors) all of the Telcom Group's shares of Nextel
Brazil then owned by them at their appraised fair market value. The repurchase
price can be paid in cash or in shares of Nextel Communications common stock or
a combination thereof. Nextel Brazil has the right to declare dividends without
the approval of the Telcom Group.

The Telcom Group has the right to defer making its pro rata share of any
capital calls that may arise until April 1999 without suffering any dilution of
its right to receive dividends and other cash or noncash distributions;
provided, however, that the failure by the Telcom Group to ultimately make such
capital contributions (and interest thereon) by April 1999 will result in the
proportionate dilution of its economic interest in Nextel Brazil. The Telcom
Group has the right at any time between October 31, 2001 and November 1, 2003,
or at any time after a change of control of Nextel Brazil, to require Nextel
Brazil to redeem the Telcom Group's entire interest at its appraised fair market
value. The redemption price is payable in cash, or, at Nextel Brazil's election,
publicly-traded common stock of any entity owning 50% or more of Nextel Brazil
or a combination thereof. In the event that Nextel Brazil issues additional
shares of its common stock to such a third party and, as a result, the Telcom
Group's interest in Nextel Brazil is reduced to less than 17%, the Telcom Group
has the right to purchase additional shares in Nextel Brazil such that after the
issuance to a third party, the Telcom Group would own no more than 17% of the
outstanding common stock.

The Company has a right of first refusal with respect to proposed transfers
by members of the Telcom Group of their respective interests in Nextel Brazil
and has the right to compel the Telcom Group to join in any proposed transfer by
the Company of its entire interest in Nextel Brazil. The Telcom Group has the
right to join in any proposed transfer by the Company of its entire interest in
Nextel Brazil.

Nextel Brazil is the owner of 95% of the share capital of Nextel S.A. in
the form of Nextel S.A. Class A Common Stock. In September 1997, the Company
sold 5% of Nextel S.A. to Motorola International in the form of Nextel S.A.
Class B Common Stock. Except for the veto rights of the Telcom Group described
above and except for the restrictions described below, the Company has the right
to make management and operating decisions of Nextel S.A. Nextel Brazil has a
right of first refusal with respect to transfers of Nextel S.A. capital stock by
any other shareholder of Nextel S.A. Each shareholder of Nextel S.A., other than
Nextel Brazil, has the right to include all, but not less than all, of such
shareholder's shares in any transfer by Nextel Brazil to a third party. If the
Company transfers control of Nextel Brazil, the Company is obligated to ensure
that all other shareholders of Nextel S.A. are provided the right to receive
economic benefits comparable to those described in the previous sentence. Nextel
Brazil has the right to cause the other shareholders of Nextel S.A. to sell
their shares if Nextel Brazil transfers its entire interest in Nextel S.A.

Peru. The Company owns 70.05% of the capital stock of Nextel Peru,
Motorola International owns 19.95% and a corporation controlled by Oscar
Benalcazar Coz, a Peruvian citizen, owns 10%. As long as the Company controls
Nextel Peru, the Company will have the right to designate for election five
members of the seven-member board of directors of Nextel Peru. If the Company's
equity interest in Nextel Peru is 60.05% or less at any time, however, the
Company will have the right to designate for election four of the seven members
of the Nextel Peru board of directors. Each shareholder of 10% or more of the
outstanding shares of Nextel Peru has a right to designate one of the seven
members of Nextel Peru's board of directors. If any shareholder fails to
maintain at least a 10% ownership interest in Nextel Peru, the directors
designated for election by such shareholder will be required to resign.

The following actions require the approval of at least five members of the
board of directors of Nextel Peru (including each of the directors designated by
each shareholder holding at least 19% of the outstanding shares of Nextel Peru):
(i) participation in and approval of the selection of the senior management of
Nextel Peru (which approval shall not be unreasonably withheld); (ii) adoption
or amendment of any three-year business plan and budget; and (iii) approval of
any expenditures for any year that would cause free cash flow for such year to
be more than 15% less than the amount approved in the business plan for such
year. In addition, the following actions must be approved by an absolute
majority of the outstanding shares at a shareholders' meeting having a quorum of
at least 83% of the outstanding shares: (i) increasing or decreasing

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the authorized share capital of Nextel Peru; (ii) issuing debentures; (iii)
entering into a merger, or sale of substantially all of the assets of Nextel
Peru; or (iv) dissolving, liquidating or winding-up of Nextel Peru.

Each shareholder of 5% or more of the outstanding shares of Nextel Peru has
a right of first refusal with respect to transfers by the other shareholders.
The other shareholders have the right to join in any proposed transfer by the
Company of its controlling interest in Nextel Peru. The Company has the right to
cause the other shareholders of Nextel Peru to join in any proposed transfer of
all of the outstanding shares of Nextel Peru. Nextel Peru may not transfer any
shares of capital stock of its subsidiaries without the prior written consent of
each holder of 15% or more of the outstanding shares of Nextel Peru.

Until July 29, 1998, the Company may transfer up to 20% of the outstanding
shares of Nextel Peru to a new Peruvian partner without regard to the transfer
restrictions described above, subject to certain conditions. If a new Peruvian
partner does not purchase any or all of such 20% of the outstanding shares of
Nextel Peru, the Company may sell to Motorola or its affiliates, by written
notice delivered to Motorola within 30 days of July 29, 1998, and Motorola and
its affiliates have agreed to purchase up to 10% of the outstanding shares of
Nextel Peru at a price equal to the Company's cost for such shares plus interest
of 7% per annum.

If Nextel Peru makes a capital call on its shareholders and a shareholder
fails to make a required capital contribution, subject to certain conditions,
(i) the director or directors nominated by such shareholder will be required to
resign, (ii) the other shareholders may make all or any part of such capital
contribution and receive shares of Nextel Peru in exchange and (iii) the other
shareholders may purchase, or Nextel Peru may redeem, all or any of the shares
of Nextel Peru owned by such shareholder. If any shareholder materially breaches
any provision of the Shareholders Agreement dated as of January 29, 1998, by and
among Nextel Peru and the shareholders of Nextel Peru, the other shareholders
have the right to purchase any or all of the shares of Nextel Peru owned by such
shareholder at a value based on total paid-in capital, if the breach occurs
prior to January 29, 2000, and at 75% of appraised fair market value thereafter.

Motorola has the right to cause Nextel Peru to acquire all shares of Nextel
Peru held by Motorola and its affiliates at the appraised fair market value of
such shares if Motorola owns at least 19% of the outstanding shares of Nextel
Peru and Nextel Peru does not purchase ESMR infrastructure equipment from
Motorola; provided that such ESMR infrastructure equipment is technologically
competitive and is offered to Nextel Peru on competitive commercial terms.

Philippines. The Company owns 30% of the outstanding shares of Nextel
Philippines and has the right to designate three of 11 members of the board of
directors and one of five members of the executive committee of the board.
Pursuant to the revised corporate structure, the Company holds veto rights with
respect to decisions involving a number of significant corporate actions
including the following: (i) the acquisition of any entity; (ii) the merger;
consolidation or sale of the company or any subsidiary or any disposition of a
material amount of assets; (iii) the amendment of the articles of incorporation
or by-laws; (iv) any amendment affecting the preemptive rights of stockholders;
(v) appointment and removal of the President and Secretary; (vi) approval of or
amendment to the annual business plan; (vii) entering other lines of business;
(viii) issuances of stock; (ix) the approval of annual operating and capital
budgets; (x) any borrowings in excess of $200,000; (xi) any transactions with
affiliates in excess of $200,000; (xii) any dispositions of assets or making
loans other than in the ordinary course of business; (xiii) appointment and
removal of the chief executive officer and chief financial officer of Nextel
Philippines; (xiv) election of members of the Executive Committee; (xv) filling
of vacancies of the board of directors for causes other than removal or
expiration of term; and (xvi) decisions of the executive committee of the board.
The presence of the member nominated by the Company is required to satisfy the
quorum requirement for meetings of the executive committee.

currently estimated to be $50 million for 1998, pursuant to loans that, at the
option of the Company, may be converted into equity of Nextel Philippines; (iv)
the Gotesco Group has the right to exercise the Gotesco Put for approximately
$9.4 million, beginning in January 1999; and (v) the Company has the right to
call the Gotesco Group's 20% interest for approximately $11.6 million, if the
Gotesco Group does not exercise the Gotesco Put. The ability of the Company to
convert shareholder loans into equity, satisfy the Gotesco Put or call the
Gotesco Group's 20% interest is subject to applicable Philippines foreign
ownership rules. See "Risk Factors -- Significant Capital Requirements for
Operations." Despite the provisions of the Philippines Partner Agreements,
Jetcom and Foodcamp, two of the Philippines Shareholders, have taken actions or
failed to take actions to effect the terms of such agreement, including the
failure to convene a meeting of the board of directors of Nextel Philippines and
a vote on the election of the senior management of such company and other steps
necessary to complete the restructuring of Nextel Philippines' corporate
governance framework in accordance with the Philippines Partner Agreements. On
June 19, 1998, the Company sent a written notice to such shareholders asserting
the Company's belief that such shareholders have failed to perform their
respective obligations under the Philippines Partner Agreements and informing
such shareholders that the Company will pursue all remedies available to it
under the Philippines Partner Agreements and applicable laws in order to enforce
its rights. These shareholders have sent written responses to the Company's
letter in which they denied all of the Company's assertions.

On July 13, 1998, Nextel Philippines held the 1998 annual shareholders
meeting and organizational board of directors meeting pursuant to which certain
corporate governance provisions of the Philippines Partner Agreements were
implemented, including the appointment of new, professional senior management.
Immediately prior to the meetings, the ROP SEC issued a TRO upon petition of one
of the Philippines Shareholders and certain individual shareholders who hold
shares in Nextel Philippines in their capacity as members of the board of
directors of Nextel Philippines representing the interests of Jetcom and
Foodcamp (the "Petitioners"). The Petitioners requested the nullification of the
amendments of the bylaws of Nextel Philippines contemplated by the corporate
governance provisions of the Philippines Partner Agreements and the TRO enjoined
Nextel Philippines from implementing such Bylaw Amendments for a 72-hour period.
The Petitioners further requested that a preliminary injunction be issued with
the same effect pending a trial on the merits with respect to the validity of
the Bylaw Amendments. On July 15, 1998, pursuant to the agreement of Nextel
Philippines and the Petitioners and confirmed by the ROP SEC (a) the TRO was
permitted to expire and (b) pending a trial on the merits as to the validity of
the Bylaw Amendments (i) the Petitioners agreed to withdraw their petition for a
preliminary injunction and (ii) Nextel Philippines agreed that the provisions of
the Bylaw Amendments granting the Company Veto Rights would not be implemented.

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of Nextel Philippines and that pursuant to such campaign the Company issued
misleading press releases regarding the launching of commercial ESMR services by
Nextel Philippines, including press releases stating that the Company and Nextel
Philippines intended to provide cellular services. The letter stated, among
other things, that the Company's retention of the public relations firm was
unauthorized, that while Nextel Philippines' franchise includes authorization to
operate a cellular system its PA does not permit such operations, that the
Company has been informed by Infocom management not to use the word cellular in
describing its telecommunications services and that as a consequence of the
foregoing, several telecommunication companies have initiated legal proceedings
that place Nextel Philippines' PA in jeopardy. The letter states that Jetcom and
Foodcamp intend to hold the Company liable for any and all damages as a result
of the foregoing. The Company denies the substance of the allegations in the
letter described above and specifically denies that the Company or any agent of
the Company authorized the issuance of the press release in question.

Nextel Philippines and the Company have entered into a technical services
agreement pursuant to which the Company agreed to provide Nextel Philippines
with engineering and other technical services, marketing assistance and system
operation assistance on a cost reimbursement basis. The agreement has an initial
term of three years. Nextel Philippines and the Company have agreed in principle
to restructure the technical services agreement into a secondment agreement upon
substantially the same financial terms and the revised agreement remains to be
reduced to definitive documentation.

Japan. The Company owns 21% of the outstanding shares of J-Com and has the
right to designate two of seven members of the J-Com board of directors. Certain
significant actions by J-Com require the vote of at least six of the seven
members of the J-Com board of directors, including the following: (i) the
merger, consolidation or sale of the company or any subsidiary or any
disposition of a material amount of assets; (ii) the amendment of the articles
of incorporation or by-laws; (iii) issuances of stock; (iv) the approval of
annual business plans; (v) any borrowings in excess of Y760 million
(approximately $5.8 million); (vi) any transactions with affiliates; and (vii)
the making of any investments other than certain permitted short-term
investments.

China. Under current Chinese law, foreign entities or individuals are
prohibited from participating directly in the ownership and operation of
telecommunications services. Because of this limitation, the Company's interest
in the Shanghai GSM System is held through its 30% equity interest in a Chinese
equity joint venture, Shanghai CCT McCaw. Shanghai CCT McCaw participates in the
Shanghai GSM System through the Unicom Agreement originally between SSTIC, its
Chinese partner, and Unicom. SSTIC and CCT hold 19% and 51% equity interests in
Shanghai CCT McCaw, respectively.

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On March 29, 1997, Unicom and Shanghai CCT McCaw entered into the Phase III
Unicom Agreement, which modifies certain arrangements under the Unicom
Agreement. Pursuant to the Phase III Unicom Agreement Shanghai CCT McCaw has
agreed to provide 60% of the funds required to expand the capacity of the
Shanghai GSM System to provide service for an additional 100,000 subscribers.
Shanghai CCT McCaw's share of the funds is estimated to be equal to
approximately RMB 386.4 million (approximately $44 million). Pursuant to the
Phase III Unicom Agreement, since September 15, 1997, Shanghai CCT McCaw has
received 40.2% of the profits of the Shanghai GSM System. The Phase III Unicom
Agreement expires January 15, 2012.

Unicom has requested that Shanghai CCT McCaw participate in financing Phase
IV of the Shanghai GSM System. The Company has informed SSTIC and CCT that it is
not willing to finance Phase IV and that without the Company's consent, Shanghai
CCT McCaw will not be permitted to finance Phase IV. However, either or both of
the Company's partners in Shanghai CCT McCaw, SSTIC and CCT, may enter into an
agreement on their own behalves with Unicom to finance Phase IV or Unicom may
find a new investor to finance Phase IV. If Shanghai CCT McCaw declines to
participate in the proposed expansion, it may have a material adverse effect on
Shanghai CCT McCaw's interest in the Shanghai GSM System and the value of the
Company's interest in Shanghai CCT McCaw.

Pursuant to a joint venture agreement and other agreements entered into
between the Company, CCT and SSTIC, membership of the nine person board of
directors of Shanghai CCT McCaw is allocated as follows: (i) five directors are
appointed by CCT Telecom, (ii) two directors appointed by SSTIC; and (iii) two
directors appointed by the Company. Certain significant corporate actions
require unanimous approval of the board of directors, including: (i) an
amendment to the articles of association; (ii) changes in the ratio of the
partners' capital contribution; and (iii) the merger or dissolution of Shanghai
CCT McCaw. Certain other matters require the approval of at least five members
of the board of directors (including approval of at least one director appointed
by each shareholder). Those matters include the following: (i) allowing a third
party to participate in the ownership of Shanghai CCT McCaw; (ii) certain
changes to capitalization; (iii) borrowing money; (iv) paying dividends; (v)
approving operating and capital budgets; (vi) changing the management structure;
(vii) entering into transactions with affiliates; (viii) the purchase and sale
of capital equipment; and (ix) any action not in the ordinary course of business
of Shanghai CCT McCaw. None of the parties is permitted to sell its interest in
Shanghai CCT McCaw without the consent of the other two parties.

In addition to its capital contribution, the Company was responsible for
providing the Shanghai Loan of $13.2 million to fund the Shanghai GSM System. As
of March 31, 1998, the outstanding balance of the Shanghai Loan was $9.2
million. The Company may be required to increase the Shanghai Loan by
approximately $400,000.

In addition to its capital contribution, CCT agreed to provide to Shanghai
CCT McCaw (i) the Shanghai Loan of $13.2 million and (ii) the CCT Additional
Loan of up to $3 million to cover cost overruns for Phase III Expansion required
to be borne by Shanghai CCT McCaw. CCT and Shanghai CCT McCaw have agreed that
CCT may not accept any payment of principal or interest in respect of the CCT
Loan or the CCT Additional Loan during any period when Shanghai CCT McCaw is in
default under the Shanghai Loan.

EMPLOYEES

As of December 31, 1997, the Company, at the corporate level, employed 35
employees and the Operating Companies (excluding Clearnet and the Shanghai GSM
System) had an aggregate of 1,672 employees. The Company is not a party to any
collective bargaining agreements and the Company believes its relationship with
its employees is good.

PROPERTIES

The Company currently leases 6,559 square feet for its principal executive
and administrative offices in Seattle, Washington, and payments under such lease
equals approximately $110,000 per year. In addition, the

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Company's subsidiaries have leases for office space and transmission sites in
each of the countries where the Operating Companies conduct business.

LITIGATION

On June 19, 1998, the Company sent a written notice to Jetcom and Foodcamp,
two of the Philippines Shareholders, asserting the Company's belief that such
shareholders have failed to perform their respective obligations under the
Philippines Partner Agreements and informing such shareholders that the Company
will pursue all remedies available to it under the Philippines Partner
Agreements and applicable laws in order to enforce its rights. In addition,
immediately prior to the Nextel Philippines annual shareholders meeting on July
13, 1998, the ROP SEC issued a TRO upon petition of one of the Philippines
Shareholders and certain individual shareholders who hold shares in Nextel
Philippines in their capacity as members of the board of directors of Nextel
Philippines representing the interests of Jetcom and Foodcamp (the
"Petitioners"). The Petitioners requested the nullification of the amendments of
the bylaws of Nextel Philippines contemplated by the corporate governance
provisions of the Philippines Partner Agreements and the TRO enjoined Nextel
Philippines from implementing such Bylaw Amendments for a 72-hour period. The
Petitioners further requested that a preliminary injunction be issued with the
same effect pending a trial on the merits with respect to the validity of the
Bylaw Amendments. On July 15, 1998, pursuant to the agreement of Nextel
Philippines and the Petitioners and confirmed by the ROP SEC (a) the TRO was
permitted to expire and (b) pending a trial on the merits as to the validity of
the Bylaw Amendments (i) the Petitioners agreed to withdraw their petition for a
preliminary injunction and (ii) Nextel Philippines agreed that the Company Veto
Rights would not be implemented. See "Business -- Operations and
Investments -- Philippines" and "Business -- Corporate
Governance -- Philippines."

Other than the proceeding described above, neither the Company nor the
Company's subsidiaries are party to any material litigation.

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<PAGE> 113

MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

The executive officers and directors of the Company, as of June 15, 1998,
are set forth below:

<TABLE>
<CAPTION>
NAME AGE POSITIONS
---- --- ---------
<S> <C> <C>
Daniel F. Akerson 49 Chairman of the Board
Keith D. Grinstein 37 President, Chief Executive Officer and Director
Heng-Pin Kiang 49 Vice President and General Counsel
William S. Roberts 43 Vice President of Country Operations
David E. Rostov 32 Vice President and Chief Financial Officer
Thomas J. Truesdale 39 Vice President of International Operations
Brian A. Vincent 40 Vice President of Business Development
C. James Judson 53 Vice Chairman of the Board
Timothy M. Donahue 49 Director
Craig O. McCaw 48 Director
Steven M. Shindler 35 Director
Dennis M. Weibling 47 Director
</TABLE>

Daniel F. Akerson has served as Chairman of the Board of the Company since
March 1996. Mr. Akerson is also Chairman of the Board and Chief Executive
Officer of Nextel Communications, positions he has held since March 1996. From
June 1993 to March 1996, Mr. Akerson served as a general partner of Forstmann
Little & Co., a private investment firm ("Forstmann Little"), and also held the
positions of Chairman of the Board and Chief Executive Officer of General
Instrument Corporation, a technology company acquired by Forstmann Little. From
1983 to 1993, Mr. Akerson held various senior management positions with MCI
Communications Corporation, including President and Chief Operating Officer. Mr.
Akerson currently serves as a director of American Express Company and America
Online, Inc. Mr. Akerson received a B.S. from the United States Naval Academy
and a M.S. from the London School of Economics.

Keith D. Grinstein has served as President, Chief Executive Officer and as
a director of the Company since January 1996. From January 1991 to December
1995, Mr. Grinstein was President and Chief Executive Officer of the aviation
communications division of AT&T Wireless Services, Inc. (formerly known as McCaw
Cellular Communications, Inc. ("McCaw Cellular")). Mr. Grinstein held a number
of positions at McCaw Cellular and its subsidiaries, including Vice President,
General Counsel and Secretary of LIN Broadcasting Company, a subsidiary of McCaw
Cellular, and Vice President and Assistant General Counsel of McCaw Cellular.
Mr. Grinstein received a B.A. from Yale University and a J.D. from Georgetown
University. Mr. Grinstein currently is a director of Clearnet.

Heng-Pin Kiang has served as Vice President and General Counsel of the
Company since January 1996. From September 1984 to December 1995, Mr. Kiang was
a partner in the Perkins Coie law firm. Mr. Kiang received a B.S.E. in Chemical
Engineering from Princeton University and a J.D. from Columbia University.

William S. Roberts has served as Vice President of Country Operations since
November 1996. From 1983 to November 1996, Mr. Roberts held various management
positions with BellSouth Corporation ("BellSouth"), an international
telecommunications services company, most recently as the Chief Financial
Officer and the Chief Operating Officer of BellSouth Investment S.A. (Chile), a
Chilean investment and services company owned by BellSouth. Prior to joining
BellSouth, Mr. Roberts was a senior internal auditor for a satellite
communications company. Mr. Roberts is a certified public accountant and
received a B.A. in accounting from the University of West Florida.

David E. Rostov has served as Vice President and Chief Financial Officer
since joining the Company in January 1996. From 1992 to 1996, Mr. Rostov held
various positions at McCaw Cellular, most recently as Assistant Vice President
in the Development Group. Mr. Rostov was a financial analyst with Goldman,

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<PAGE> 114

Sachs & Co. from 1987 to 1989. Mr. Rostov received a B.A. from Oberlin College
and an M.B.A. and M.A. in Public Policy from The University of Chicago.

Thomas J. Truesdale has served as Vice President of International
Operations since September 1997. Prior to his employment with the Company, Mr.
Truesdale was employed by Nextel Communications as Vice President
Finance/Operations from March 1997, General Manager from November 1996 and Vice
President Operations from November 1994. Prior to his employment with Nextel
Communications, Mr. Truesdale was employed by AirTouch Communications in various
positions including Director Operations, Director Revenue Assurance, Director
Marketing Operations and Director MIS. Mr. Truesdale holds an M.S. in Business
Administration from Humboldt University.

Brian A. Vincent has served as Vice President of Business Development. Mr.
Vincent joined the Company in January 1996. From 1986 to 1995, Mr. Vincent
served as Vice President of Worldwide Marketing Operations at Intermec
Corporation, a leading manufacturer of handheld data collection computers and
on-premise wireless communication networks. Mr. Vincent received a B.A. from the
University of California at Berkeley and an M.B.A. from the University of
Washington. Mr. Vincent currently is a director of Clearnet.

C. James Judson has served as a director of the Company since February
1995. Mr. Judson is Vice President, Secretary and General Counsel of Eagle
River, Inc., a company formed to make strategic investments in
telecommunications ventures ("Eagle River"), a position he has held since
January 1995. From 1969 to January 1995, Mr. Judson was a partner in the Davis
Wright Tremaine law firm. Mr. Judson received a B.A. and a L.L.B. from Stanford
University.

Timothy M. Donahue has served as a director of the Company since August
1997. Mr. Donahue has served as President of Nextel Communications since
February 1, 1996 and has served as a director of Nextel Communications since May
1996. On February 29, 1996, Mr. Donahue was elected to the additional position
of Chief Operating Officer of Nextel Communications. From 1986 to January 1996,
Mr. Donahue held various senior management positions with AT&T Wireless
Services, Inc., most recently Regional President for the Northeast.

Craig O. McCaw served as a director of the Company from February 1995 until
the acquisition of the Company by Nextel Communications in August 1995. Mr.
McCaw was reelected to the Company's board of directors in February 1997. From
February 1995 to August 1995, Mr. McCaw served as Chairman of the Board and
Chief Executive Officer of Eagle River, the indirect majority owner of Digital
Radio, L.L.C., a company formed for the purpose of making an equity investment
in Nextel Communications. From March 1990 to November 1994, Mr. McCaw served as
Chairman of the Board and Chief Executive Officer of LIN Broadcasting Company.
From 1974 to September 1994, Mr. McCaw served as Chairman of the Board and Chief
Executive Officer of McCaw Cellular, which was sold to AT&T Corporation in
September 1994. Mr. McCaw serves as a director of Nextel Communications and as
Chairman of the Operations Committee of the Nextel Communications Board. Mr.
McCaw is an appointee to the President's National Security Telecommunications
Advisory Committee.

Steven M. Shindler has served as a director of the Company since May 1997.
Mr. Shindler is Vice President and Chief Financial Officer of Nextel
Communications, a position he has held since May 1996. Between 1987 and 1996,
Mr. Shindler was an officer with Toronto Dominion Bank where most recently he
was a Managing Director in its Communications Finance Group.

Dennis M. Weibling has served as a director of the Company since February
1995. From October 1995 to March 1996, Mr. Weibling served as Nextel
Communications' acting Chief Executive Officer. Mr. Weibling is President of
Eagle River, a position he has held since 1993. From 1981 to 1993, Mr. Weibling
was a shareholder of Clark, Nuber and Co., P.S., a public accounting firm in
Bellevue, Washington. Mr. Weibling received a B.A. from Wittenberg University
and a J.D. from the University of Nebraska. Mr. Weibling is a director of Nextel
Communications and is a member of the Operations Committee, Audit Committee and
Compensation Committee of the Nextel Communications Board. He is also a director
of NextLink Communications, Inc., a facilities-based local exchange carrier and
majority-owned subsidiary of Eagle River, Teledesic Corporation and Cable Plus,
Inc.

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<PAGE> 115

OPERATING COMPANY CHIEF EXECUTIVE OFFICERS

The chief executive officers of Nextel S.A., Nextel Mexico and Nextel
Argentina are set forth below:

<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Sebastiao Esteves Alpha................. 59 General Manager, Nextel S.A.
Alberto Buentello Garza................. 46 Chief Operating Officer, Nextel Mexico
Alejandro Garcia Calabria............... 43 General Manager, Nextel Argentina
</TABLE>

Sebastiao Esteves Alpha has served as General Manager of Nextel S.A. since
September 1997. Prior to joining Nextel S.A., Mr. Alpha held senior management
positions in various telecommunications companies and technology companies in
Brazil, including Proceda Tecnologia Informatica S.A., a technology company,
Telebahia S.A., a regional telecommunications provider, and Machline Tecnologia
de Telecomunicacoes Ltda., an analog SMR provider.

Alberto Buentello Garza has served as Chief Operating Officer of Nextel
Mexico since October 1996. Prior to joining Nextel Mexico, Mr. Buentello held
various senior management positions at Cedetel-Norcel, a Mexican cellular
services provider.

Alejandro Garcia Calabria has served as General Manager of Nextel Argentina
since December 1997. Prior to joining Nextel Argentina, Mr. Calabria served as
Deputy Director of Telefonica de Argentina S.A. and prior to that as General
Manager of Sadetel S.A., an Argentine telecommunications company.

COMMITTEES OF THE BOARD OF DIRECTORS

The Company established an audit committee in November 1997. During 1997,
no meetings of the audit committee were held. The Company has no other standing
committees.

COMPENSATION OF DIRECTORS

Currently, the Company's directors do not receive any compensation or
reimbursements for out-of-pocket expenses for their service on the Company's
board of directors.

COMPENSATION OF EXECUTIVE OFFICERS

The following table and discussion summarize the compensation earned by the
Company's President and Chief Executive Officer and the four other most highly
compensated executive officers of the Company, who

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<PAGE> 116

earned more than $100,000 in salary and bonuses (collectively, the "Named
Executive Officers") for services rendered in all capacities to the Company
during the fiscal years ended December 31, 1996 and 1997.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG-TERM(1)
COMPENSATION
AWARDS
ANNUAL COMPENSATION --------------
---------------------------------- SECURITIES
OTHER ANNUAL UNDERLYING ALL OTHER(2)
SALARY BONUS COMPENSATION OPTIONS/SARS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($) (#) ($)
--------------------------- ---- ------- ------ ------------ -------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Keith D. Grinstein.................... 1997 180,000 60,000 -- 540,000/-- 3,200
President and Chief Executive 1996 150,000 -- -- 50,000/400,000 2,500
Officer
Heng-Pin Kiang........................ 1997 160,940 52,500 -- 290,000/-- 5,572
Vice President and General Counsel 1996 150,000 -- -- 25,000/250,000 3,625
Brian A. Vincent...................... 1997 152,940 56,000 -- 145,000/-- 2,714
Vice President of Business 1996 140,000 -- -- 10,000/100,000 2,450
Development
David E. Rostov....................... 1997 132,940 50,000 -- 145,000/-- 4,868
Vice President and Chief Financial 1996 94,744(3) -- -- 15,000/100,000 1,895
Officer
William S. Roberts.................... 1997 170,000 40,000 -- 130,000/-- 6,200
Vice President and Chief 1996 20,705(4) -- -- --/75,000 --
Operating Officer
</TABLE>

- ---------------
(1) Options were granted pursuant to the Nextel International 1997 Stock Option
Plan and the Nextel Communications Incentive Equity Plan. Options vest over
a four-year period and become exercisable, subject to the provisions of each
plan, for shares of the Company's common stock (the "Company's Common
Stock") and Nextel Communications Class A Common Stock, respectively. SARs
were granted pursuant to the Company's Stock Appreciation Rights Plan. All
but two SAR holders of the then outstanding SARs, including all of the
members of the senior management team, agreed to exchange their SARs for
options granted pursuant to the Company's 1997 Stock Option Plan. See
"Benefit Plans -- Nextel International Stock Appreciation Rights Plan."

(2) Comprised of the Company's contributions to the Nextel Communications
Section 401(k) Plan and the value received from purchases under the Nextel
Communications Stock Purchase Plan which reflect the difference between the
purchase price (which is the lower of 85% of market value at the beginning
or the end of each quarter) and the market value.

(3) Reflects salary paid from January 22, 1996 to December 31, 1996.

(4) Reflects salary paid from November 18, 1996 to December 31, 1996.

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<PAGE> 117

OPTION GRANTS IN FISCAL YEAR 1997

The following table sets forth certain information with respect to options
exercisable for shares of the Company's Common Stock and Nextel Communications
Class A Common Stock granted to the Named Executive Officers during fiscal year
1997.

<TABLE>
<CAPTION>
PERCENT OF
NUMBER OF TOTAL
SECURITIES OPTIONS GRANT
UNDERLYING GRANTED TO EXERCISE DATE
OPTIONS EMPLOYEES OR BASE PRESENT
GRANTED IN FISCAL PRICE(2) EXPIRATION VALUE
NAME (#)(1) YEAR(%) ($/SHARE) DATE ($)(3)
---- ---------- ---------- --------- ---------- ---------
<S> <C> <C> <C> <C> <C>
Keith D. Grinstein
NI Options.............................. 500,000 30.85 10.00 8/15/07 3,295,000
NC Options.............................. 40,000 .66 15.13 2/12/07 398,400
Heng-Pin Kiang
NI Options.............................. 275,000 16.96 10.00 8/15/07 1,812,220
NC Options.............................. 15,000 .25 15.13 2/12/07 149,400
Brian A. Vincent
NI Options.............................. 130,000 8.02 10.00 8/15/07 856,700
NC Options.............................. 15,000 .25 15.13 2/12/07 149,400
David E. Rostov
NI Options.............................. 130,000 8.02 10.00 8/15/07 856,700
NC Options.............................. 15,000 .25 15.13 2/12/07 149,400
William S. Roberts
NI Options.............................. 110,000 6.79 10.00 8/15/07 724,900
NC Options.............................. 20,000 .33 15.13 2/12/07 199,200
</TABLE>

- ---------------
(1) Options were granted pursuant to the Nextel International 1997 Stock Option
Plan ("NI Options") and pursuant to the Nextel Communications Incentive
Equity Plan ("NC Options"). NI Options vest over a four-year period with
1/48th of the option grant vesting at the end of each month of employment
with the Company. Vested NI Options may be exercised when an optionee
becomes 50% vested with respect to a single option grant, provided that no
more than 20% of the options conveyed in a specific grant may be exercised
in any fiscal year of the Company. NC Options granted vest over a four-year
period, becoming exercisable with respect to 25% of the shares on each of
the first four anniversary dates following the date of grant.

(2) The Company's Common Stock is not registered or publicly traded and
therefore a public market price for the Company's Common Stock is not
available. The base price per share is based on the Board of Directors'
estimate of fair market value at the time of grant. The actual value, if
any, an employee may realize will depend on the excess of fair market value
of the Company's Common Stock over the base price on the date the option is
exercised.

(3) The Company used the Black-Scholes pricing model to estimate the present
value of the options at date of grant.

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<PAGE> 118

OPTION EXERCISES IN FISCAL YEAR 1997 AND YEAR-END OPTION VALUES

The following table sets forth information concerning the exercise of
options during the year ended December 31, 1997 and unexercised option values as
of the fiscal year ended December 31, 1997 with respect to each of the Named
Executive Officers.

AGGREGATED OPTION EXERCISES IN FISCAL YEAR 1997 AND FISCAL YEAR-END OPTION
VALUES

<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
SHARES OPTIONS AT FISCAL YEAR- IN-THE-MONEY OPTIONS
ACQUIRED ON VALUE END(#) AT FISCAL YEAR-END($)
EXERCISE REALIZED --------------------------- ---------------------------
NAME (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Keith D. Grinstein
NI Options................ -- -- -- 500,000 -- --
NC Options................ -- -- 25,000 65,000 259,375 694,375
Heng-Pin Kiang
NI Options................ -- -- -- 275,000 -- --
NC Options................ -- -- 12,500 27,500 129,688 292,813
Brian A. Vincent
NI Options................ -- -- -- 130,000 -- --
NC Options................ -- -- 2,500 22,500 27,188 244,688
David E. Rostov
NI Options................ -- -- -- 130,000 -- --
NC Options................ -- -- 3,750 26,250 40,781 285,469
William S. Roberts
NI Options................ -- -- -- 110,000 -- --
NC Options................ -- -- -- 20,000 -- 217,500
</TABLE>

EMPLOYMENT AGREEMENTS

In November 1995, the Company entered into an employment agreement with Mr.
Grinstein providing for his employment as President and Chief Executive Officer
which renewed automatically on July 1, 1997. The agreement with Mr. Grinstein
terminates on June 30, 1998. The agreement provides for a base salary of
$150,000 per year, subject to an annual performance evaluation (plus performance
bonuses based on the achievement of mutually determined objectives).

The Company also entered into an employment agreement with Mr. Kiang in
November 1995 providing for his employment as Senior Vice President and General
Counsel which renewed automatically on July 1, 1997. The agreement with Mr.
Kiang terminates on June 30, 1998. The agreement provides for a base salary of
$150,000 per year, subject to an annual performance review (plus performance
bonuses based on the achievement of mutually determined objectives).

In January 1996, the Company entered into an employment agreement with Mr.
Vincent providing for his employment as Senior Vice President of Business
Development which renewed automatically on January 1, 1998 and is renewable for
subsequent one-year terms. Either party may terminate the agreement upon 60
days' written notice. The agreement provides for a base salary of $140,000 per
year, subject to an annual performance evaluation (plus performance bonuses
based on the achievement of certain objectives).

In January 1996, the Company entered into an employment agreement with Mr.
Rostov providing for his employment as Vice President and Chief Financial
Officer which renewed automatically on January 12, 1998 and is renewable for
subsequent one-year terms. Either party may terminate the agreement upon 60
days' written notice. The agreement provides for a base salary of $100,000 per
year, subject to an annual performance evaluation (plus performance bonuses
based on the achievement of certain objectives).

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<PAGE> 119

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The Company's Board of Directors does not currently have a compensation
committee. The Company's Board of Directors is responsible for executive
compensation matters. During 1996, Mr. Grinstein served on the Company's Board
of Directors and as Chief Executive Officer and President of the Company.

BENEFIT PLANS

Nextel Communications Incentive Equity Plan. All officers, key employees
of and consultants to Nextel Communications and its subsidiaries, including
Nextel International, are eligible to participate in the Nextel Incentive Equity
Plan (the "Incentive Equity Plan"). The Compensation Committee of the Nextel
Communications Board (the "Nextel Communications Compensation Committee") may
grant each eligible participant options entitling the optionee to purchase
shares of Nextel Communications Class A Common Stock at a price equal to or
greater than market value on the date of grant, except that the option price of
an option that is granted in exchange for the surrender and cancellation of an
option to purchase shares of another corporation that has been acquired by
Nextel Communications or one of its subsidiaries ("Replacement Options") or
options granted to a consultant may be less than the market value on the date of
grant. Replacement Options and options granted to consultants are otherwise
subject to the same terms, conditions and discretion as other options granted
under the Incentive Equity Plan.

The option price is payable at the time of exercise (i) in cash, (ii) by
the transfer to Nextel Communications of nonforfeitable, nonrestricted shares of
Nextel Communications Class A Common Stock that are already owned by the
optionee and have a value at the time of exercise equal to the option price,
(iii) with any other legal consideration the Nextel Communications Compensation
Committee may deem appropriate or (iv) by any combination of the foregoing
methods of payment. Any grant of options may provide for deferred payment of the
option price from the proceeds of sale through a bank or broker on the date of
exercise of some or all of the shares of Nextel Communications Class A Common
Stock to which the exercise relates.

No option may be exercised more than 10 years from the date of grant. Each
option must specify the vesting period and other terms for the exercise of such
option and may provide for the earlier exercise of the options in the event of a
change in control of Nextel Communications or other similar transaction or
event. Options granted under the Incentive Equity Plan may be designated as
"incentive stock options" within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code"), or may be designated as options
that are not intended to so qualify.

The Nextel Communications Compensation Committee may also grant eligible
participants in the Incentive Equity Plan Appreciation Rights, Restricted
Shares, Deferred Shares, Performance Shares or Performance Units (each as
defined in the Incentive Equity Plan). The Nextel Communications Compensation
Committee must specify at the time of grant the vesting period and other terms
of any such award.

No option, appreciation right or other "derivative security" within the
meaning of Rule 16b-3 under the Exchange Act is transferable by a recipient
except by will or the laws of descent and distribution. Options and Appreciation
Rights may not be exercised during a recipient's lifetime except by the
recipient or, in the event of his or her incapacity, by his or her guardian or
legal representative acting in a fiduciary capacity on behalf of the recipient
under state law and court supervision. The Nextel Communications Compensation
Committee may specify at the date of grant that all or any part of the shares of
Nextel Communications Class A Common Stock that are to be issued or transferred
by Nextel Communications pursuant to the Incentive Equity Plan shall be subject
to further restrictions on transfer.

The Incentive Equity Plan is administered by the Nextel Communications
Compensation Committee, which consists of not less than three nonemployee
directors who are "disinterested persons" within the meaning of Rule 16b-3 under
the Exchange Act. The Nextel Communications Compensation Committee may make
grants to participants under any or a combination of all of the various
categories of awards that are authorized under the Incentive Equity Plan and may
provide for special terms for awards to participants who either are foreign
nationals or are employed by or provide consulting services to Nextel
Communications or

118
<PAGE> 120

any of its subsidiaries outside of the United States, as the Nextel
Communications Compensation Committee may consider necessary or appropriate to
accommodate differences in local law, tax policy or custom.

The Incentive Equity Plan may be amended from time to time by the Nextel
Communications Compensation Committee, but without further approval by the
stockholders of Nextel Communications no such amendment may (i) increase the
aggregate number of shares of Nextel Communications Class A Common Stock that
may be issued or transferred and covered by outstanding awards, or increase the
aggregate number of Performance Units that may be granted, thereunder or (ii)
otherwise cause Rule 16b-3 under the Exchange Act to cease to be applicable to
the Incentive Equity Plan.

Nextel Communications Stock Purchase Plan. All employees of Nextel
Communications and its subsidiaries, including Nextel International, who are
customarily employed for more than 20 hours per week are eligible to elect to be
granted options under the Nextel Communications Stock Purchase Plan (the "Stock
Purchase Plan"). Section 423 of the Code, however, prohibits the granting of an
option to any employee who would own stock possessing five percent or more of
the total combined voting power or value of all classes of stock of Nextel
Communications or any of its subsidiaries following the granting of the option.
For purposes of the foregoing, shares of stock that are subject to outstanding
options or other vested or contingent rights to acquire the same are deemed to
be owned by the optionee.

The option price per share upon exercise of an option granted under the
Stock Purchase Plan is an amount equal to 85 percent of the lesser of (i) the
fair market value of a share of Nextel Communications Class A Common Stock on
the date of grant or (ii) the fair market value of a share of Nextel
Communications Class A Common Stock on the date of exercise. For purposes of the
Stock Purchase Plan, "fair market value" means the closing price of the Nextel
Communications Class A Common Stock on the Nasdaq National Market on the last
trading date preceding the date of the grant or the date of exercise, as the
case may be.

The option price is payable by the optionee on the date of exercise with
funds accumulated through payroll withholding over the term of the option or, at
the discretion of the Nextel Communications Compensation Committee, with funds
paid to Nextel Communications by the optionee in a lump sum on or before the
date of exercise. An optionee may elect to have not less than one percent and
not more than ten percent of his or her "basic compensation," which includes
base salary and any commissions paid pursuant to an ongoing sales incentive
compensation program but does not include cash bonuses or any form of noncash
compensation, withheld from payroll and applied to the purchase of Nextel
Communications Class A Common Stock upon the exercise of options granted under
the Stock Purchase Plan.

The maximum number of shares of Nextel Communications Class A Common Stock
that an optionee may purchase upon exercise of an option granted under the Stock
Purchase Plan is equal to ten percent of his or her basic compensation divided
by an amount equal to 85 percent of the lesser of (i) the fair market value of a
share of Nextel Communications Class A Common Stock on the date of grant or (ii)
the fair market value of a share of Nextel Communications Class A Common Stock
on the date of exercise, subject to further limitations imposed by Section 423
of the Code. Section 423 of the Code provides that, among other things, the
right of an optionee to purchase stock under all "employee stock purchase plans"
(as defined in Section 423 of the Code) of a corporation and its subsidiaries
may not accrue at a rate that exceeds $25,000 of fair market value (determined
at the time of grant) for each calendar year in which the option is outstanding
at any time.

Options granted under the Stock Purchase Plan may have terms of not less
than three months and not more than one year, as determined by the Nextel
Communications Compensation Committee in its sole discretion, provided that all
options granted pursuant to any particular offering under the Stock Purchase
Plan must have the same term for all optionees. The first day of the relevant
term of an option granted under the Stock Purchase Plan is the grant date with
respect to such option, and the date of exercise of an option granted under the
Stock Purchase Plan is the last day of its term. No option granted under the
Stock Purchase Plan may be transferred by the optionee.

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<PAGE> 121

The Stock Purchase Plan is administered by the Nextel Communications
Compensation Committee, which may establish such policies or procedures and
adopt such rules for the operation and administration of the Stock Purchase Plan
as it deems appropriate. Nextel Communications may engage the services of a
professional plan administrator on such terms and conditions as the Nextel
Communications Compensation Committee deems appropriate for the purposes of
establishing and maintaining custodial accounts and holding shares of Nextel
Communications Class A Common Stock acquired by employees upon the exercise of
options granted under the Stock Purchase Plan and otherwise operating the Stock
Purchase Plan. The Nextel Communications Compensation Committee also has the
authority to promulgate terms and conditions (to the extent not inconsistent
with the terms and conditions prescribed in the Stock Purchase Plan) applicable
to grants made under the Stock Purchase Plan, including, without limitation,
holding periods for shares of Nextel Communications Class A Common Stock
purchased upon the exercise of an option granted under the Stock Purchase Plan
beyond those required to obtain favorable tax treatment under Section 423 of the
Code and sanctions for failing to comply with the terms and conditions
applicable to particular grants (in addition to those otherwise imposed by law
or the terms of the Stock Purchase Plan).

The Stock Purchase Plan will terminate on the tenth anniversary of its
adoption by the Nextel Communications Board, unless sooner terminated by the
Nextel Communications Board, and no options will thereafter be granted
thereunder. The Stock Purchase Plan may be amended from time to time by the
Nextel Communications Board of Directors, but without further approval by the
stockholders of Nextel Communications, no such amendment may (i) increase the
aggregate number of shares of Nextel Communications Class A Common Stock covered
by the Stock Purchase Plan, except for adjustments to reflect the effects of
stock dividends, stock splits, combinations of shares or other changes in the
capital structure of Nextel Communications, (ii) permit the granting of options
under the Stock Purchase Plan to persons other than employees of Nextel
Communications and its subsidiaries who are customarily employed for more than
20 hours per week, (iii) cause options granted under the Stock Purchase Plan to
fail to satisfy any of the conditions of Section 423 of the Code or (iv) cause
Rule 16b-3 under Section 16(b) of the Exchange Act (or any successor rule to the
same effect) to cease to be applicable to the Stock Purchase Plan.

Nextel International Stock Appreciation Rights Plan. The Company granted
to selected employees and agents SARs in accordance with the Company's Stock
Appreciation Rights Plan (the "SAR Plan"). The surrender of a SAR, in accordance
with the terms of the SAR Plan, entitles the holder thereof to receive the
increase in fair market value of one share of the Company's Common Stock between
the date of its grant and the date of surrender. The SAR Plan contains
provisions establishing how the fair market value of the Company's Common Stock
will be determined. As of December 31, 1996, 1,240,000 SARs had been granted
pursuant to the SAR Plan. SARs vest on a monthly basis over a four-year period
and once vested may be surrendered by a holder in installments of 20% per year;
provided, however, that no more than a maximum of $5 million in the aggregate
will be paid out in any one year to all SAR holders. Certain of the senior
officers of the Company were granted rights whereby their SARs would have vested
automatically upon a change of control of the Company (as defined in the SAR
Plan).

On June 23, 1997, the Company adopted the Company's 1997 Stock Option Plan
(the "1997 Stock Option Plan") and approved a plan to terminate the SAR Plan.
Each holder of SARs granted previously under the SAR Plan was given the option
to exchange his or her SARs for stock options to be granted under the 1997 Stock
Option Plan. The Company agreed to grant additional stock options to certain SAR
holders who exchanged their SARs for stock options as an inducement to such SAR
holders. All but two SAR holders, including all of the Company's senior
officers, agreed to exchange their SARs for options granted under the 1997 Stock
Option Plan. With respect to the SAR holders who elected not to exchange their
SARs for stock options, the Company continues to be obligated by the terms and
conditions of the SAR agreements previously entered into with such holders.

Nextel International Stock Option Plan. All employees, officers,
directors, agents, independent contractors of and advisors and consultants to
Nextel International, its subsidiaries and affiliates are eligible to
participate in the 1997 Stock Option Plan. The Nextel International Board of
Directors or a committee designated thereby (the "Plan Administrator") may grant
each eligible participant options entitling the optionee to purchase shares of
Nextel International common stock at a price equal to at least 100% of the
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market value on the date of grant. A maximum of 1,825,000 shares of the
Company's Common Stock is currently available for issuance under the 1997 Stock
Option Plan.

The option price is payable at the time of exercise (i) in cash, (ii) by
the transfer to the Company of shares of the Company's Common Stock already
owned by the optionee for at least six months and having a value at the time of
exercise equal to the aggregate option exercise price, (iii) with any other
legal consideration the Plan Administrator may deem appropriate or (iv) at the
discretion of the Plan Administrator, by any combination of the foregoing
methods of payment.

No option may be exercised more than 10 years from the date of grant. Each
option must specify the vesting period and other terms for the exercise of such
option. Options granted under the 1997 Stock Option Plan vest over four years
but may not be exercised prior to two years following the date of grant. Options
granted under the 1997 Stock Option Plan may be designated as "incentive stock
options" within the meaning of Section 422 of the Code, or may be designated as
options that are not intended to so qualify.

Each optionee has the right to sell any shares acquired pursuant to the
exercise of an option to the Company or an affiliate of the Company after such
shares have been held for at least six months. The sale price for such shares is
the fair market value as of the date of sale. Additionally, the Company has a
right of first refusal on any proposed sale of shares acquired pursuant to the
exercise of an option. Options are not transferable by a recipient except by
will or the laws of descent and distribution. Options may not be exercised
during a recipient's lifetime except by the recipient or, in the event of his or
her incapacity, by his or her guardian or legal representative acting in a
fiduciary capacity on behalf of the recipient under state law and court
supervision. The Plan Administrator may specify at the date of grant that all or
any part of the shares of the Company's Common Stock are to be issued pursuant
to the 1997 Stock Option Plan shall be subject to further restrictions on
transfer.

The Plan Administrator may provide for special terms for awards to
participants who either are foreign nationals or are employed by or provide
consulting services to the Company or any of its subsidiaries outside of the
United States, as the Plan Administrator may consider necessary or appropriate
to accommodate differences in local law, tax policy or custom. Certain of the
senior officers of the Company have been granted rights whereby their options
will vest automatically upon a change of control of the Company (as defined in
the 1997 Stock Option Plan).

The 1997 Stock Option Plan may be amended from time to time by the Board of
Directors of Nextel International; provided, however, to the extent required for
compliance with any applicable law or regulation, shareholder approval will be
required for any amendment that will (i) increase the aggregate number of shares
of the Company's Common Stock as to which options may be granted under the plan;
(ii) modify the class of persons eligible to receive options; or (iii) otherwise
require shareholder approval under any applicable law or regulations.

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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

TAX SHARING AGREEMENT

The Tax Sharing Agreement effective as of January 1, 1997, between Nextel
Communications and the Company (the "Tax Sharing Agreement") provides that the
Company must pay Nextel Communications its federal income tax liability computed
as if the Company had filed a separate federal income tax return. Such
computation would take into account any carryovers and carrybacks of losses and
credits that would be allowed if the Company had filed a separate federal income
tax return except that, in making such computation for any taxable year, such
liability will be determined at the highest corporate tax rate, and without an
exemption for purposes of calculating the alternative minimum tax and the
environmental tax. The Tax Sharing Agreement further provides that the Company
may be included in any consolidated, combined, or unitary state or local income
or franchise tax return or report, and the Company's liability with respect to
such taxes will be computed in a manner similar to and consistent with the
calculation of the Company's federal income tax liability.

Furthermore, the Tax Sharing Agreement provides that Nextel Communications
is entitled to utilize on behalf of the consolidated group all of the tax
attributes and other items of income, gain, loss, deduction, expense, credit and
similar treatments of the Company arising in the current taxable year or another
taxable year or years and which properly may be carried back or carried forward
to such taxable year. The Company is not entitled to receive any compensation by
reason of Nextel Communications' utilization of such attributes or items on
behalf of the group in determining for any taxable year or years the
consolidated taxable income and consolidated tax liability for such taxable year
or years.

Nextel Communications will not be required to compensate the Company for
the benefit of loss or credit carryback from the Company's separate filing to
the consolidated group should the Company leave the Nextel Communications
consolidated group.

Under the U.S. consolidated income tax rules, the Company and each other
member of the U.S. consolidated tax group of which it is a member will be
jointly and severally liable for the U.S. tax liabilities of each other member
of such group.

OVERHEAD SERVICES AGREEMENT

Pursuant to an Overhead Services Agreement between the Company and Nextel
Communications (the "Services Agreement"), Nextel Communications has agreed to
provide to the Company certain services, including those relating to accounts
payable, cash management, payroll, human resources, finance reporting and audit
and legal, engineering and technical and marketing and sales assistance. The fee
for services provided pursuant to the Services Agreement is the actual cost
incurred by Nextel Communications, which is billed monthly and payable in 45
days. Pursuant to the Services Agreement, Nextel Communications has agreed to
apportion the aggregate cost incurred by it to provide such services to the
Company and Nextel Communications' other subsidiaries on the basis that Nextel
Communications determines in good faith, from time to time, represents the
relative portion of such services provided by Nextel Communications and used by
each such subsidiary, including the Company, for the relevant period. The
Company has the right to review Nextel Communications' determination and to
discuss with Nextel Communications adjustments that the Company considers
appropriate in light of the services provided to the Company. Nextel
Communications' good faith determination after such consultation is final and
binding. The Services Agreement has a ten-year term, which commenced on March 3,
1997, and, with the consent of Nextel Communications, the Company may elect to
discontinue a particular service or services provided by Nextel Communications
and/or obtain any service from an independent third party.

Pursuant to the Services Agreement the Company has agreed that the legal
counsel employed by Nextel Communications as part-time or full-time employees
will provide legal services to Nextel Communications as well as to other
subsidiaries of Nextel Communications and potentially to other entities in which
Nextel Communications holds an ownership interest. The Company has agreed that
such legal counsel may represent the Company as well as Nextel Communications or
any such other subsidiary or any other entity.
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NON-COMPETE AGREEMENT

The Company and Nextel Communications entered into the Non-Compete
Agreement pursuant to which Nextel Communications has agreed that neither Nextel
Communications nor any Affiliate (as defined in the agreement) controlled by
Nextel Communications will in the future participate in the ownership or
operation of two-way terrestrial-based mobile wireless communications systems
anywhere other than in the United States and Canada (for so long as Nextel
Communications owns an equity interest in Clearnet) unless such opportunities
have first been presented to the Company. Such restriction does not apply to,
among other things, any commercial relationship with any Wireless Entity
(including channel or frequency sharing, roaming, purchase or sale of goods or
services, licensing of intellectual property or other intangible rights or
similar business related arrangement) that does not involve the directing or
participating in the management of such Wireless Entity. The Company has agreed
that, without the consent of Nextel Communications, neither it, its Restricted
Affiliates nor any of its Unrestricted Affiliates (each as defined in
"Description of the Notes") will participate in the ownership or management of
any wireless communications service business in the United States or Canada
other than with respect to its interest in Clearnet. Such restrictions terminate
upon the earliest to occur of (i) April 15, 2007 and (ii) the date on which a
Change of Control (as defined in "Description of the Notes") occurs.

If Nextel Communications gives the Company an Initial Notice of a Future
Wireless Opportunity, the Company will have 60 days to notify Nextel
Communications that it intends to pursue such opportunity, and how it intends to
finance its participation. The Company must have secured a financing commitment
within 90 days of the date of the Initial Notice and the Future Wireless
Opportunity must be consummated within nine months of the date of the Initial
Notice. In the event the Company fails to respond to Nextel Communications
within the 60 and 90 day time frames or fails to consummate the transaction
within the nine-month period, Nextel Communications will be free to pursue the
Future Wireless Opportunity.

Nextel Communications and the Company have agreed not to amend the
Non-Compete Agreement if such amendment is material and adverse to the holders
of the 1997 Notes to provide such holders with written notice 30 days prior to
any amendment. The Company and Nextel Communications entered into an amendment
to the Non-Compete Agreement as of March 12, 1998 to extend its benefits to the
holders of the Notes, which became effective as of April 12, 1998.

MOTOROLA RELATIONSHIPS

Motorola, a significant shareholder of Nextel Communications, provides
equipment and vendor financing to the Operating Companies. For a description of
the Motorola Financing, see "Description of Other Indebtedness."

Nextel Communications and the Company have entered into an agreement
relating to the Motorola Financing pursuant to which Nextel Communications has
agreed to make at least $95 million of the $650 million of vendor financing
available to the Company. Nextel Communications is not obligated to make any
additional amounts available to the Company under the Motorola Financing.
However, based on discussions with Nextel Communications the Company believes
that it will be able to obtain sufficient funding under the Motorola Financing
to meet its business plan.

Motorola, through Motorola International, is also a shareholder in Nextel
Brazil and Nextel Peru. See "Business -- Operations and Investments -- Partner
Description" for Brazil and Peru.

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DESCRIPTION OF OTHER INDEBTEDNESS

The following is a description of the principal agreements governing the
indebtedness of the Company. The following summaries are qualified in their
entirety by reference to the credit and security agreement and indenture to
which each summary relates, copies of which have been filed as an exhibit to the
registration statement of which this Prospectus is a part. Defined terms used
below and not defined in the applicable subsection have meanings set forth in
the respective agreements.

1997 NOTES

In March 1997, the Company completed a private placement of 951,463 units
yielding approximately $482 million in net proceeds. Each unit is comprised of a
1997 Note (with a principal amount at maturity of $1,000) and a detachable
Warrant to purchase .38748 shares of the Company's Common Stock. The 1997 Notes
are senior unsecured indebtedness of the Company and mature on April 15, 2007.
The 1997 Notes are redeemable at the option of the Company, in whole or in part,
at any time on or after April 15, 2002, and require no interest payments prior
to October 15, 2002.

Interest. The 1997 Notes will fully accrete to face value on April 15,
2002. From and after April 15, 2002, the 1997 Notes will bear interest at a rate
of 13% per annum, payable on each April 15 and October 15, commencing October
15, 2002.

Optional Redemption. The 1997 Notes are redeemable, at the Company's
option, in whole or in part, at any time or from time to time, on or after April
15, 2002 at 106.5% of their principal amount at maturity, plus accrued and
unpaid interest, declining ratably to 100% of their principal amount at
maturity, plus accrued and unpaid interest, on or after April 15, 2004. In
addition, at any time prior to April 15, 2000, the Company may redeem up to 35%
of the principal amount at maturity of the 1997 Notes with the Net Cash Proceeds
of one or more sales by the Company of Capital Stock (other than Redeemable
Stock) at 113% of their Accreted Value on the redemption date; provided that
after any such redemption, at least $618.5 million aggregate principal amount at
maturity of 1997 Notes remains outstanding.

Ranking. The 1997 Notes are senior unsecured indebtedness of the Company
and rank pari passu in right of payment with all existing and future
unsubordinated unsecured indebtedness of the Company and are senior in right of
payment to all existing and future indebtedness of the Company that by its terms
is subordinated to the 1997 Notes. All existing and future liabilities
(including trade payables) of the Company's Restricted Group Members will be
effectively senior to the 1997 Notes.

Covenants. The 1997 Indenture contains certain covenants for the benefit
of the holders of the 1997 Notes which, among other things, restrict the ability
of the Company and each Restricted Group Member to incur additional
indebtedness, create liens, engage in sale-leaseback transactions, pay dividends
or make distributions in respect of their capital stock, make investments or
certain other restricted payments, sell assets, issue or sell stock of
Restricted Group Members, enter into transactions with stockholders or
affiliates or effect a consolidation or merger.

Events of Default. "Events of Default" in the 1997 Indenture include: (a)
defaults in the payment of principal of any 1997 Note; (b) defaults in the
payment of interest on any 1997 Note which continues for a period of 30 days;
(c) defaults in the performance or breach of the 1997 Indenture applicable to
mergers, consolidations and transfers of all or substantially all of the assets
of the Company or the failure to make an Offer to Purchase in accordance with
the Limitation on Asset Sales or upon a Change of Control; (d) the Company's
default in the performance of, or breach of any other covenant or agreement of,
the Company in the 1997 Indenture or under the 1997 Notes (other than a default
specified in clause (a), (b) or (c) above) not cured within 60 days after
written notice of such default or breach; (e) certain events of default or
failure to make principal payments under Indebtedness of the Company or any
Significant Group Member greater that $5 million in the aggregate; (f) final
judgments or orders (not covered by insurance) exceeding $5 million in the
aggregate against the Company or any Significant Group Member which are not paid
or discharged for 30 days and which are not Involuntary Events; (g) certain
instances of voluntary or involuntary bankruptcy,

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insolvency, appointment of a receiver, liquidator or similar official or the
winding up or liquidation of the Company or any Significant Group Member.

If an Event of Default (other than an Event of Default specified in clause
(g) above that occurs with respect to the Company) occurs and is continuing
under the 1997 Indenture, the Trustee or Holders of 25% the aggregate principal
amount at maturity of the 1997 Notes may declare the Accreted Value of, premium,
if any, and accrued interest on the 1997 Notes immediately due and payable. If
an Event of Default specified in clause (g) above occurs with respect to the
Company, the Accreted Value of, premium, if any, and accrued interest on the
1997 Notes then outstanding shall become and be immediately due and payable.

Change of Control. The Company must commence, within 30 days of the
occurrence of a Change of Control, and consummate an Offer to Purchase for all
1997 Notes then outstanding, at a purchase price equal to 101% of the Accreted
Value thereof on the relevant Payment Date, plus accrued interest (if any) to
the Payment Date.

EQUIPMENT FINANCING

Motorola MOU. In November 1996, Nextel Communications, Nextel
International and Motorola entered into the Motorola MOU regarding the provision
of equipment financing by Motorola including the Motorola Financings. Under the
Motorola MOU, Motorola agreed to provide an aggregate of up to $400 million in
vendor financing to Nextel Communications and Nextel International for the
worldwide purchase of iDEN equipment and services and ancillary products (such
as switches). In March 1997, Motorola and Nextel Communications entered into
term sheet increasing the maximum worldwide vendor financing available to Nextel
Communications and Nextel International to $650 million, with a maximum non-U.S.
amount outstanding of $400 million, subject to certain per country limits as
agreed to in the Motorola MOU. The Motorola MOU does not provide for equipment
financing to Nextel Mexico. The Motorola MOU sets a limit of $125 million per
country (other than the United States and Canada) on the amount that may be
borrowed under the Motorola Financings. In June 1997 and October 1997, the
Company and Motorola entered into definitive agreements for financing the
purchase of up to $14.7 million and $125 million of equipment by Nextel
Philippines and Nextel Brazil, respectively.

Commitments provided by Motorola to provide financing to any Operating
Company (other than Clearnet and J-Com), including Nextel Brazil and Nextel
Philippines, count 100% against Motorola's $650 million aggregate commitment.
Currently, Motorola has not committed any financing to any Operating Company
other than the existing Motorola Financings described below. The Motorola MOU
contemplates that the loans under the Motorola Financings will bear interest at
a rate of 2% to 4% over prime rate, depending on the Operating Company placing
the order and the country in which such company is installing the iDEN
equipment, and that such loans could have a maturity of up to six years.
Borrowings by an Operating Company may be secured by all the assets and stock of
such Operating Company and it is expected that the Company will guarantee such
borrowings on a pro rata basis based on the equity interest of the Company in
the Operating Company incurring such borrowings.

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Financing will be available to fund the Operating Companies' equipment
purchases. In addition, to the extent total amounts outstanding from Motorola to
Nextel Communications and its subsidiaries, including the Company and the
Operating Companies (other than Clearnet and J-Com), plus requests for
additional financing from Motorola by Nextel Communications and its subsidiaries
(other than the Company and the Operating Companies) would exceed $650 million,
the Company is required to repay or cause to be repaid sufficient borrowings
such that after giving effect to such repayment, the total amount of loans
outstanding from Motorola to Nextel Communications and its subsidiaries,
including the Company and the Operating Companies (other than Clearnet and
J-Com), will not exceed $650 million. Nextel Communications (on behalf of itself
and its subsidiaries other than the Company and the Operating Companies) has
agreed with the Company not to borrow more than $400 million under the Motorola
MOU.

Philippines. In June 1997, Nextel Philippines and Motorola entered into
the Philippines Motorola Financing, pursuant to which Motorola committed to
provide a maximum amount of $14.7 million in term loans to Nextel Philippines to
finance the purchase of infrastructure equipment and services from Motorola. The
Philippines Motorola Financing matures in June 1999 and provides for an annual
interest rate of LIBOR plus 506 basis points. Pursuant to the Philippines
Motorola Financing the term loans are secured by a first-priority lien on
substantially all of Nextel Philippines' assets and a pro rata guarantee of such
financing by each of Nextel Philippines' shareholders, including the Company. As
of March 31, 1998, all of the $14.7 million had been borrowed.

Brazil. In October 1997, Nextel Brazil and Motorola Credit entered into
the Brazil Motorola Financing, pursuant to which Motorola Credit agreed to
provide up to $125 million in term loans to Nextel Brazil to finance the
purchase of infrastructure equipment and services from Motorola. The Brazil
Motorola Financing is repayable in semiannual installments over a period of 42
months commencing June 30, 2000 and bears interest at an annual rate
periodically determined by the Company at either LIBOR plus 4.63% or the Prime
Rate plus 2.5%. Pursuant to the Brazil Motorola Financing, the loans are secured
by a first priority lien on substantially all of Nextel Brazil's assets, a
pledge of all of the stock of Nextel Brazil and its subsidiaries, including
Nextel S.A., and guarantees by the Company and Motorola International (which
indirectly holds a 5% equity interest in Nextel S.A.) of 93.9% and 6.1%,
respectively, of Nextel Brazil's obligations under such financing. Additionally,
approximately $66.6 million of the Company's cash, cash equivalents and
marketable securities was restricted at March 31, 1998 for use as future equity
investments in Nextel Brazil and its subsidiaries. The Brazil Motorola Financing
contains certain financial covenants that require the following: (i) a Fixed
Charge Coverage Ratio of not less than 1.25:1.00 at the end of each fiscal
quarter; provided, however, if the stockholder guaranties have not terminated,
not less than 1.00:1.00; (ii) a net worth of greater than $0 at the end of each
fiscal quarter; (iii) EBITDA at the end of each quarter ranging from
$(10,000,000) at June 30, 1998 to $125,000,000 at June 30, 2002 and thereafter;
and (iv) minimum recurring revenues ranging from $10,000,000 at June 30, 1998 to
$225,000,000 at December 31, 2001. As of March 31, 1998, approximately $58.6
million had been drawn, and the remaining $66.4 million was available for future
borrowings under the Brazil Motorola Financing.

ARGENTINA CREDIT FACILITY

As of February 27, 1998, Nextel Argentina entered into the Argentina Credit
Facility, an $83 million senior secured credit facility, which facility, as
amended on May 8, 1998, was increased to $100 million. Loans under the Argentina
Credit Facility bear interest at a rate equal to either (i) the ABR plus 2.75%
(ABR is the highest of the prime rate, the base CD rate plus 1% and the federal
funds rate plus 0.5%) or (ii) the Eurodollar rate plus 3.75% (Eurodollar rate is
the LIBO rate multiplied by the statutory reserve rate). Tranche A loans may be
used for financing the import of capital goods; Tranche B loans may be used for
financing the import of capital goods, financing capital expenditures related to
development, expansion and upgrade of Nextel Argentina's network system,
permitted spectrum acquisitions and general working capital needs. In addition,
Nextel Argentina may request additional term loans (the "Incremental Facility
Loans") from $10 million to $50 million, provided that Nextel International
matches such loans on a one-to-one basis. The maximum amount available under the
Incremental Facility Loans is $50 million. The Argentina Credit Facility is
secured by a pledge of the stock of Nextel Argentina and a first priority lien
on the assets of Nextel

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Argentina and its subsidiaries and each of Nextel Argentina's material
subsidiaries have guaranteed the Argentina Credit Facility. The loans under the
Argentina Credit Facility will be repaid in quarterly installments beginning
September 30, 2000 and ending March 31, 2003. The first nine installments will
be equal to 1/18 of the then outstanding balance and the final installment will
be in an amount equal to the then-outstanding balance. As a condition to the
Argentina Credit Facility, Nextel International has entered into a Capital
Subscription Agreement whereby it has agreed to make aggregate equity
contributions in cash or equipment to Nextel Argentina as follows: $115.5
million on or before June 30, 1998, $133 million on or before December 31, 1998,
$140.1 million on or before June 30, 1999 and $148 million on or before December
31, 1999. As of March 31, 1998, the Company had made aggregate equity
contributions (as defined in the Argentina Credit Agreement) totaling $130.1
million to Nextel Argentina. Nextel Argentina is required to make mandatory
prepayments equal to 50% of Excess Cash Flow commencing with the fiscal year
ending December 31, 2000. Borrowings may be made in minimum amounts of $5
million and maximum amounts. The Argentina Credit Facility also contains certain
financial and operating covenants. As of May 29, 1998, $21 million of the $100
million available had been borrowed under the Argentina Credit Facility and no
amounts had been borrowed under the Incremental Facility Loans.

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DESCRIPTION OF PREFERRED STOCK

The description set forth below of the Series A Preferred Stock and the
Series B Preferred Stock is based on the Restated Articles of Incorporation as
expected to be amended. See "Business -- Recent Developments."

SERIES A PREFERRED STOCK

The Series A Exchangeable Redeemable Preferred Stock, $10.00 par value per
share (the "Series A Preferred Stock"), was issued, on March 12, 1998, at a
stated liquidation preference of $100,000 per share. Thereafter, the liquidation
preference on the Series A Preferred Stock will accrete at an annual rate equal
to 13.625%. Except as required by law, the Series A Preferred Stock will not be
entitled to receive dividends or other distributions. The Company will have the
right at any time to redeem the Series A Preferred Stock in full (or with the
consent of the holders of a majority of the shares of Series A Preferred Stock
outstanding, in part) at a redemption price equal to 100% of the accreted
liquidation preference thereof on the redemption date.

Upon the earliest to occur of (i) a recapitalization or reorganization of
the Company, (ii) a registered, underwritten public offering of any capital
stock of the Company, (iii) the sale or other disposition by Nextel
Communications of the Company's Common Stock or (iv) the issuance of Common
Stock by the Company and provided that following any event covered by clause
(iii) or (iv) above, Nextel Communications owns less than 50% of the outstanding
shares of the Company's Common Stock, the holders of the Series A Preferred
Stock will have the right to exchange the Series A Preferred Stock for shares of
Series B Preferred Stock having a liquidation preference equal to the accreted
liquidation preference of the Series A Preferred Stock so exchanged. See
"-- Series B Preferred Stock."

Except as required by law, holders of the Series A Preferred Stock will
vote as a class with holders of the Series B Preferred Stock with respect to the
following: (i) the creation or issuance of any additional series or class of
capital stock (other than the Series B Preferred Stock) having rights or
preferences with respect to dividends or liquidation on a parity with or senior
to the Series A Preferred Stock or the Series B Preferred Stock; (ii)
alterations to or changes in the powers, preferences or rights of shares of
Series A Preferred Stock or Series B Preferred Stock in a manner adverse to the
holders of Series A Preferred Stock or Series B Preferred Stock; and (iii) any
merger, reorganization, recapitalization or other similar transaction to the
extent that after giving effect thereto (x) the GAAP Net Worth (as defined in
Article III of the Company's Restated Articles of Incorporation) of the
surviving entity is not equal to or greater than the GAAP Net Worth of the
Company immediately prior to such merger, reorganization, recapitalization or
other transaction or (y) the Series A Preferred Stock's or the Series B
Preferred Stock's position in the capital structure of the successor or
resulting entity will rank on parity with or junior to any class or series of
capital stock that has been created or issued without the approval of a majority
of the holders of the Series A Preferred Stock and the Series B Preferred Stock,
voting together as a class.

No dividends or distributions may be paid on or in respect of any shares of
capital stock of the Company ranking junior or pari passu (except with respect
to any outstanding Series B Preferred Stock) to the Series A Preferred Stock in
right of liquidation or dividends without the consent of the holders of a
majority of the outstanding shares of the Series A Preferred Stock and until any
legally required dividends or distributions owing on the Series A Preferred
Stock have been paid in full. In addition, the Company may not issue shares of
Series A Preferred Stock, except pursuant to the terms of any agreement in
effect on the date that the amendment to the Company's Restated Articles of
Incorporation establishing the powers, preferences and rights of the Series A
Preferred Stock was filed with the Secretary of State of the State of
Washington, without the consent of the holders of a majority of the outstanding
shares of Series A Preferred Stock and Series B Preferred Stock, voting together
as a class.

SERIES B PREFERRED STOCK

The Series B Redeemable Preferred Stock (the "Series B Preferred Stock") to
be issued in exchange for shares of Series A Preferred Stock will have an
initial liquidation preference equal (at the time of such
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exchange) to the accreted liquidation preference of the Series A Preferred Stock
exchanged for the Series B Preferred Stock. The Series B Preferred Stock will
have terms substantially similar to those of the Series A Preferred Stock,
except that: (i) holders of the Series B Preferred Stock will have the right to
elect one director to the Company's Board of Directors; (ii) the Series B
Preferred Stock will accrue cumulative dividends, payable quarterly in arrears
in cash or, at the Company's option, additional shares of Series B Preferred
Stock, from the date of issuance, to March 12, 2010 at a rate of 13.625% per
year and from March 13, 2010 and thereafter at a rate of 18.00% per year; and
(iii) to the extent the Company is in arrears on four consecutive dividend
payments or any six dividend payments, whether or not consecutive, holders of
the Series B Preferred Stock will be entitled to elect an additional director to
the Company's Board of Directors. In addition, the Company may not issue shares
of Series B Preferred Stock, except in exchange for shares of Series A Preferred
Stock, without the consent of the holders of a majority of the outstanding
shares of Series A Preferred Stock and Series B Preferred Stock, voting together
as a class.

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DESCRIPTION OF THE NOTES

The Private Notes were, and the Exchange Notes will be, issued under the
Indenture, dated as of March 12, 1998, between the Company, as issuer, and The
Bank of New York, as Trustee. A copy of the Indenture has been filed as an
Exhibit to the Registration Statement of which this Prospectus is a part. The
following summary of certain provisions of the Indenture does not purport to be
complete and is subject to, and is qualified in its entirety by reference to,
all the provisions of the Indenture, including the definitions of certain terms
therein and those terms made a part thereof by reference to the Trust Indenture
Act of 1939, as amended. Whenever particular defined terms of the Indenture not
otherwise defined herein are referred to, such defined terms are incorporated
herein by reference. For definitions of certain capitalized terms used in the
following summary, see "-- Certain Definitions."

GENERAL

The Exchange Notes will be unsecured unsubordinated obligations of the
Company and will mature on April 15, 2008. Although for federal income tax
purposes a significant amount of original issue discount, taxable as ordinary
income, will be recognized by a Holder as such discount accrues from the issue
date of the Exchange Notes, no interest will be payable on the Exchange Notes
prior to October 15, 2003. From and after April 15, 2003, interest on the
Exchange Notes will accrue at the rate shown on the front cover of this
Prospectus from April 15, 2003 or from the most recent interest payment date to
which interest has been paid or provided for, payable semiannually (to Holders
of record at the close of business on the April 1 or October 1 immediately
preceding the interest payment date) on April 15 and October 15 of each year,
commencing October 15, 2003. Interest will be computed on the basis of a 360-day
year of twelve 30-day months.

Principal of, premium, if any, and interest on the Exchange Notes will be
payable, and the Exchange Notes may be exchanged or transferred, at the office
or agency of the Company in the Borough of Manhattan, the City of New York
(which initially will be the corporate trust office of the Trustee at 101
Barclay Street, 21 West, New York, New York 10286); provided, that, at the
option of the Company, payment of interest may be made by check mailed to the
address of the Holders as such address appears in the Security Register.

The Company may, subject to the covenants described below under "Covenants"
and applicable law, issue additional Notes under the Indenture.

BOOK-ENTRY; DELIVERY AND FORM

Exchange Notes issued in exchange for the Private Notes currently
represented by one or more fully registered global notes will be represented by
one or more fully registered global notes (collectively, the "Global Note"), and
will be deposited upon issuance with The Depository Trust Company (the
"Depository") or an agent of the Depository and registered in the name of the
Depository or a nominee of the Depository (the "Global Note Registered Owner").
Except as set forth below, the Global Note may be transferred, in whole and not
in part, only to another nominee of the Depository or to a successor of the
Depository or its nominee.

Exchange Notes issued in exchange for other Private Notes will be issued in
registered, certificated form without interest coupons.

The Depository has advised the Company that the Depository is a
limited-purpose trust company created to hold securities for its participating
organizations (collectively, the "Participants") and to facilitate the clearance
and settlement of transactions in those securities between Participants through
electronic book-entry changes in the accounts of its Participants. The
Participants include securities brokers and dealers, banks, trust companies,
clearing corporations and certain other organizations. Access to the
Depository's system is also available to other entities such as banks, brokers,
dealers and trust companies that clear through or maintain a custodial
relationship with a Participant, either directly or indirectly (collectively,
the "Indirect Participants"). Persons who are not Participants or Indirect
Participants may beneficially own securities held by or on behalf of the
Depository only through the Participants or the Indirect Participants. The
ownership interests

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and transfer of ownership interests of such persons held by or on behalf of the
Depository are recorded on the records of the Participants and Indirect
Participants.

The Depository has also advised the Company that pursuant to procedures
established by it, (i) upon deposit of the Global Note, the Depository will
credit the accounts of its Participants with portions of the principal amount of
the Global Note representing the Exchange Notes issued in exchange for the
Private Notes that each such Participant has instructed the Depository to
surrender for exchange and (ii) ownership of such interests in the Global Note
will be shown on, and the transfer of ownership thereof will be effected only
through, records maintained by the Depository (with respect to the Participants)
or by the Participants and the Indirect Participants (with respect to other
owners of beneficial interests in the Global Note).

Under the terms of the Indenture, the Company and the Trustee will treat
the persons in whose names the Exchange Notes, including the Global Note, are
registered as the owners thereof for the purpose of receiving payments in
respect of the principal of and premium, if any, and interest on any Exchange
Notes and for any and all other purposes whatsoever. Payments on any Exchange
Notes registered in the name of the Global Note Registered Owner will be payable
by the Trustee to the Global Note Registered Owner in its capacity as the
registered holder under the Indenture. Consequently, neither the Company, the
Trustee nor any agent of the Company or the Trustee has or will have any
responsibility or liability for (i) any aspect of the Depository's records or
the records of any Participant or Indirect Participant relating to or payments
made on account of beneficial ownership interests in the Global Note, or for
maintaining, supervising or reviewing any of the Depository's records or records
of any Participant or Indirect Participant relating to the beneficial ownership
interests in the Global Note or (ii) any other matter relating to the actions
and practices of the Depository or any of its Participants or Indirect
Participants. The Depository has advised the Company that its current practice,
upon receipt of any payment in respect of securities such as the Exchange Notes
(including principal and interest), is to credit the accounts of the relevant
Participants with the payment on the payment date, in amounts proportionate to
their respective holdings in principal amount of beneficial interests in the
relevant security as shown on the records of the Depository unless the
Depository has reason to believe it will not receive payment on such payment
date. Payments by the Participants and the Indirect Participants to the
beneficial owners of Exchange Notes will be governed by standing instructions
and customary practices and will be the responsibility of the Participants or
the Indirect Participants and will not be the responsibility of the Depository,
the Trustee or the Company. Neither the Company nor the Trustee will be liable
for any delay by the Depository or any of its Participants or Indirect
Participants in identifying the beneficial owners of the Exchange Notes, and the
Company and the Trustee may conclusively rely on and will be protected in
relying on instructions from the Global Note Registered Owner for all purposes.

OPTIONAL REDEMPTION

The Exchange Notes will be redeemable, at the Company's option, in whole or
in part, at any time or from time to time, on or after April 15, 2003 and prior
to maturity, upon not less than 30 nor more than 60 days' prior notice mailed by
first class mail to each Holder's last address as it appears in the Note
Register, at the following Redemption Prices (expressed in percentages of
principal amount at maturity), plus accrued and unpaid interest, if any, to the
Redemption Date (subject to the right of Holders of record on the relevant
Regular Record Date that is on or prior to the Redemption Date to receive
interest due on an Interest Payment Date), if redeemed during the 12-month
period commencing April 15, of the years set forth below:

<TABLE>
<CAPTION>
YEAR REDEMPTION PRICE
- ---- ----------------
<S> <C>
2003........................................................ 106.063%
2004........................................................ 104.042
2005........................................................ 102.021
2006 and thereafter......................................... 100.000
</TABLE>

In addition, at any time prior to April 15, 2001, the Company may redeem up
to 35% of the principal amount at maturity of the Exchange Notes with the Net
Cash Proceeds of one or more sales by the Company of its Capital Stock (other
than Redeemable Stock), at any time as a whole or from time to time in part, at
a

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Redemption Price (expressed as a percentage of Accreted Value on the Redemption
Date) of 112.125%, plus accrued and unpaid interest, if any, to the Redemption
Date (subject to the right of Holders of record on the relevant Regular Record
Date that is on or prior to the Redemption Date to receive interest due on an
Interest Payment Date); provided that at least $474.5 million aggregate
principal amount at maturity of Exchange Notes remains outstanding after each
such redemption and notice of such redemption is mailed to Holders of the Notes
within 60 days after the consummation of such sale or sales.

In the case of any partial redemption, selection of the Exchange Notes for
redemption will be made by the Trustee in compliance with the requirements of
the principal national securities exchange, if any, on which the Exchange Notes
are listed or, if the Exchange Notes are not listed on a national securities
exchange by lot or by such other method as the Trustee in its sole discretion
shall deem to be fair and appropriate; provided that no Note of $1,000 in
principal amount at maturity or less shall be redeemed in part. If any Note is
to be redeemed in part only, the notice of redemption relating to such Note
shall state the portion of the principal amount at maturity thereof to be
redeemed. A new Note in principal amount equal to the unredeemed portion thereof
will be issued in the name of the Holder thereof upon cancellation of the
original Note.

REGISTRATION RIGHTS

Pursuant to the Registration Rights Agreement, the Company agreed, for the
benefit of the Holders, that it would use its best efforts, at its cost, to
consummate this Exchange Offer. In satisfaction of this obligation, the Company
is hereby offering the Exchange Notes in return for surrender of the Private
Notes. It is intended by the Company that the Exchange Offer will satisfy these
registration rights, which will terminate upon the consummation of the Exchange
Offer. For each Private Note surrendered to the Company pursuant to the Exchange
Offer, the Holder will receive an Exchange Note of equal principal amount at
maturity. The Accreted Value of each Exchange Note shall be identical to, and
shall be determined in the same manner as, the Accreted Value of the Private
Notes so surrendered and exchanged therefor. Interest on each Exchange Note
shall be calculated and paid in the same manner as interest on the Private Notes
so surrendered and exchanged therefor.

RANKING

The indebtedness evidenced by the Exchange Notes will rank pari passu in
right of payment with all existing and future unsubordinated unsecured
indebtedness of the Company and senior in right of payment to all existing and
future indebtedness of the Company that by its terms is subordinated to the
Exchange Notes. As of March 31, 1998, the Company had $1,059.3 million
indebtedness outstanding other than guarantees by the Company of indebtedness of
the Company's Restricted Group Members (such guarantee obligations would rank
pari passu in right of payment with the Exchange Notes, but the underlying
guaranteed indebtedness is assumed to be satisfied from the assets of the
primary obligors) all of which indebtedness would rank pari passu to the
Exchange Notes. In addition, all existing and future liabilities (including
trade payables) of the Company's subsidiaries will be effectively senior to the
Exchange Notes. At March 31, 1998 the Company's Restricted Group Members had
approximately $319.1 million of liabilities, including $98.5 million of
indebtedness.

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CERTAIN DEFINITIONS

Set forth below is a summary of certain of the defined terms used in the
covenants and other provisions of the Indenture. Reference is made to the
Indenture for the full definition of all terms as well as any other capitalized
term used herein for which no definition is provided.

"Accreted Value" is defined to mean, for any "Specified Date", the amount
calculated pursuant to (i), (ii), (iii) or (iv) for each $1,000 principal amount
at maturity of Exchange Notes:

(i) if the Specified Date occurs on one or more of the following dates
(each a "Semi-Annual Accrual Date"), the Accreted Value will equal the
amount set forth below for such Semi-Annual Accrual Date:

<TABLE>
<CAPTION>
SEMI-ANNUAL ACCRETED
ACCRUAL DATE VALUE
------------ --------
<S> <C>
April 15, 1998.............................................. $ 555.11
October 15, 1998............................................ $ 588.76
April 15, 1999.............................................. $ 624.46
October 15, 1999............................................ $ 662.31
April 15, 2000.............................................. $ 702.47
October 15, 2000............................................ $ 745.05
April 15, 2001.............................................. $ 790.22
October 15, 2001............................................ $ 838.13
April 15, 2002.............................................. $ 888.94
October 15, 2002............................................ $ 942.84
April 15, 2003.............................................. $1,000.00
</TABLE>

(ii) if the Specified Date occurs before the first Semi-Annual Accrual
Date, the Accreted Value will equal the sum of (a) $549.15 and (b) an
amount equal to the product of (1) the Accreted Value for the first
Semi-Annual Accrual Date less $549.15 multiplied by (2) a fraction, the
numerator of which is the number of days from the issue date of the
Exchange Notes to the Specified Date, using a 360-day year of twelve 30-day
months, and the denominator of which is the number of days elapsed from the
issue date of the Exchange Notes to the first Semi- Annual Accrual Date,
using a 360-day year of twelve 30-day months;

(iii) if the Specified Date occurs between two Semi-Annual Accrual
Dates, the Accreted Value will equal the sum of (a) the Accreted Value for
the Semi-Annual Accrual Date immediately preceding such Specified Date and
(b) an amount equal to the product of (1) the Accreted Value for the
immediately following Semi-Annual Accrual Date less the Accreted Value for
the immediately preceding Semi-Annual Accrual Date multiplied by (2) a
fraction, the numerator of which is the number of days from the immediately
preceding Semi-Annual Accrual Date to the Specified Date, using a 360-day
year of twelve 30-day months, and the denominator of which is 180; or

(iv) if the Specified Date occurs after the last Semi-Annual Accrual
Date, the Accreted Value will equal $1,000.

"Acquired Indebtedness" means Indebtedness of a Person existing at the time
such Person becomes a Restricted Group Member or assumed in connection with an
Asset Acquisition by a Restricted Group Member and not Incurred in connection
with, or in anticipation of, such Person becoming a Restricted Group Member or
such Asset Acquisition; provided that Indebtedness of such Person which is
redeemed, defeased, retired or otherwise repaid at the time of or immediately
upon consummation of the transactions by which such Person becomes a Restricted
Group Member or such Asset Acquisition shall not be Acquired Indebtedness.

"Adjusted Consolidated Net Income" means, for any period, the aggregate net
income (or loss) of the Company and its Restricted Group Members for such period
determined in conformity with GAAP; provided that the following items shall be
excluded in computing Adjusted Consolidated Net Income (without

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duplication): (i) the net income (or loss) of any Unrestricted Subsidiary or
Unrestricted Affiliate, except (x) with respect to net income, to the extent of
the amount of dividends or other distributions actually paid to the Company or
any Restricted Group Member by such Unrestricted Subsidiary or Unrestricted
Affiliate during such period, and (y) with respect to net losses, to the extent
of the amount of cash contributed by the Company or any Restricted Group Member
to such Unrestricted Subsidiary or Unrestricted Affiliate during such period;
(ii) solely for the purposes of calculating the amount of Restricted Payments
that may be made pursuant to clause (C) of the first paragraph of the
"Limitation on Restricted Payments" covenant described below (and in such case,
except to the extent includable pursuant to clause (i) above), the net income
(or loss) of any Person accrued prior to the date it becomes a Restricted Group
Member or is merged into or consolidated with the Company or any Restricted
Group Member or all or substantially all of the property and assets of such
Person are acquired by the Company or any Restricted Group Member; (iii) the net
income of any Restricted Group Member to the extent that the declaration or
payment of dividends or similar distributions by such Restricted Group Member of
such net income is not at the time permitted by the operation of the terms of
its charter or any agreement, instrument, judgment, decree, order, statute, rule
or governmental regulation applicable to such Restricted Group Member; provided,
in the case of restrictions imposed in connection with outstanding Indebtedness,
that the amount of net income excluded during any period shall not exceed the
aggregate amount of such Indebtedness that would need to be repaid to enable
such Restricted Group Member to declare and pay dividends or similar
distributions of such net income; (iv) any gains or losses (on an after-tax
basis) attributable to Asset Sales; (v) except for purposes of calculating the
amount of Restricted Payments that may be made pursuant to clause (C) of the
first paragraph of the "Limitation on Restricted Payments" covenant described
below, any amount paid or accrued as dividends on Preferred Stock of the Company
or any Restricted Group Member owned by Persons other than the Company and any
Restricted Group Member; (vi) all extraordinary gains and extraordinary losses;
and (vii) to the extent not otherwise excluded in accordance with GAAP, the net
income (or loss) of any Restricted Group Member in an amount that corresponds to
the percentage ownership interest in the income of such Restricted Group Member
not owned on the last day of such period, directly or indirectly, by the
Company.

"Adjusted Consolidated Net Tangible Assets" means the total amount of
assets of the Company and its Restricted Group Members (less applicable
depreciation, amortization and other valuation reserves), except to the extent
resulting from write-ups of capital assets (excluding write-ups in connection
with accounting for acquisitions in conformity with GAAP), after deducting
therefrom (i) all current liabilities of the Company and its Restricted Group
Members (excluding intercompany items) and (ii) all goodwill, trade names,
trademarks, patents, unamortized debt discount and expense and other like
intangibles other than radio frequency licenses, all as set forth on the most
recent quarterly or annual consolidated balance sheet of the Company and its
Restricted Group Members, prepared in conformity with GAAP and filed with the
Commission pursuant to the "Commission Reports and Reports to Holders" covenant;
provided that Adjusted Consolidated Net Tangible Assets shall be reduced (to the
extent not otherwise reduced in accordance with GAAP) by an amount that
corresponds to the percentage ownership interest in the assets of each
Restricted Group Member not owned on the date of determination, directly or
indirectly, by the Company.

"Affiliate" means, as applied to any Person, any other Person directly or
indirectly controlling, controlled by, or under direct or indirect common
control with, such Person. For purposes of this definition, "control'
(including, with correlative meanings, the terms "controlling," "controlled by'
and "under common control with"), as applied to any Person, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities, by contract or otherwise.

"Asset Acquisition" means (i) an investment by the Company or any
Restricted Group Member in any other Person pursuant to which such Person shall
become a Restricted Group Member or shall be merged into or consolidated with
the Company or any Restricted Group Member; provided that such Person's primary
business is related, ancillary or complementary to the businesses of the Company
and its Restricted Group Members on the date of such investment or (ii) an
acquisition by the Company or any Restricted Group Member of the property and
assets of any Person other than the Company or any Restricted Group Member

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<PAGE> 136

that constitute substantially all of a division or line of business of such
Person; provided that the property and assets acquired are related, ancillary or
complementary to the businesses of the Company and its Restricted Group Members
on the date of such acquisition.

"Asset Disposition" means the sale or other disposition by the Company or
any Restricted Group Member (other than to the Company or another Restricted
Group Member) of (i) all or substantially all of the Capital Stock of any
Restricted Group Member or (ii) all or substantially all of the assets that
constitute a division or line of business of the Company or any Restricted Group
Member.

"Asset Sale" means any sale, transfer or other disposition (including by
way of merger, consolidation or sale-leaseback transaction) in one transaction
or a series of related transactions by the Company or any Restricted Group
Member to any Person other than the Company or any Restricted Group Member of
(i) all or any of the Capital Stock of any Restricted Group Member, (ii) all or
substantially all of the property and assets of an operating unit or business of
the Company or any Restricted Group Member or (iii) any other property and
assets of the Company or any Restricted Group Member outside the ordinary course
of business of the Company or such Restricted Group Member and, in the case of
any of the foregoing clauses (i) through (iii), that is not governed by the
provisions of the Indenture applicable to mergers, consolidations and sales of
assets of the Company; provided that "Asset Sale" shall not include (a) sales or
other dispositions of inventory, receivables and other current assets, (b) sales
or other dispositions of assets for consideration at least equal to the fair
market value of the assets sold or disposed of, provided that the consideration
received would satisfy clause (B) of the "Limitation on Asset Sales" covenant,
(c) sales or other dispositions of obsolete equipment, (d) sales or other
dispositions of the Capital Stock of an Unrestricted Subsidiary or an
Unrestricted Affiliate or (e) sales or other distributions of assets with a fair
market value (as certified in an officers' certificate) not in excess of $1
million.

"Average Life" means, at any date of determination with respect to any debt
security, the quotient obtained by dividing (i) the sum of the products of (a)
the number of years from such date of determination to the dates of each
successive scheduled principal payment of such debt security and (b) the amount
of such principal payment by (ii) the sum of all such principal payments.

"Capital Stock" means, with respect to any Person, any and all shares,
interests, participations or other equivalents (however designated, whether
voting or non-voting) in equity of such Person, whether now outstanding or
issued after the Closing Date, including, without limitation, all Common Stock
and Preferred Stock.

"Capitalized Lease" means, as applied to any Person, any lease of any
property (whether real, personal or mixed) of which the discounted present value
of the rental obligations of such Person as lessee, in conformity with GAAP, is
required to be capitalized on the balance sheet of such Person; and "Capitalized
Lease Obligations" means the discounted present value of the rental obligations
under such lease.

"Change of Control" means such time as (i) (a) prior to the occurrence of a
Public Market, a "person" or "group" (within the meaning of Section 13(d) or
14(d)(2) of the Exchange Act) becomes the ultimate "beneficial owner" (as
defined in Rule 13d-3 of the Exchange Act) of Voting Stock representing a
greater percentage of the total voting power of the Voting Stock of the Company,
on a fully diluted basis, than is held by the Existing Stockholders and their
Affiliates on such date and (b) after the occurrence of a Public Market, a
"person" or "group" (within the meaning of Sections 13(d) and 14(d)(2) of the
Exchange Act) becomes the ultimate "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act) of more than 35% of the total voting power of the Voting
Stock of the Company on a fully diluted basis and such ownership is greater than
the amount of voting power of the Voting Stock, on a fully diluted basis, held
by the Existing Stockholders and their Affiliates on such date; or (ii)
individuals who on the Closing Date constitute the Board of Directors (together
with any new directors whose election by the Board of Directors or whose
nomination for election by the Company's stockholders was approved by a vote of
at least two-thirds of the members of the Board of Directors then in office who
either were members of the Board of Directors on the Closing Date or whose
election or nomination for election was previously so approved) cease for any
reason to constitute a majority of the members of the Board of Directors then in
office.

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"Closing Date" means March 12, 1998, the date on which the Notes were
originally issued under the Indenture.

"Consolidated EBITDA" means, for any period, the sum of the amounts for
such period of (i) Adjusted Consolidated Net Income, (ii) Consolidated Interest
Expense, to the extent such amount was deducted in calculating Adjusted
Consolidated Net Income, (iii) income taxes, to the extent such amount was
deducted in calculating Adjusted Consolidated Net Income (other than income
taxes (either positive or negative) attributable to extraordinary and
nonrecurring gains or losses or sales of assets), (iv) depreciation expense as
determined in conformity with GAAP, to the extent such amount was deducted in
calculating Adjusted Consolidated Net Income, (v) amortization expense as
determined in conformity with GAAP, to the extent such amount was deducted in
calculating Adjusted Consolidated Net Income, and (vi) all other non-cash items
to the extent reducing Adjusted Consolidated Net Income (other than items that
will require cash payments and for which an accrual or reserve is, or is
required by GAAP to be, made), less all non-cash items to the extent increasing
Adjusted Consolidated Net Income, as determined in conformity with GAAP.

"Consolidated Interest Expense" means, for any period, the aggregate amount
of interest in respect of Indebtedness (including, without limitation,
amortization of original issue discount on any Indebtedness and the interest
portion of any deferred payment obligation, calculated in accordance with the
effective interest method of accounting; all commissions, discounts and other
fees and charges owed with respect to letters of credit and bankers' acceptance
financing; the net costs associated with Interest Rate Agreements; and interest
in respect of any Indebtedness that is Guaranteed or secured by the Company or
any Restricted Group Member) and all but the principal component of rentals in
respect of Capitalized Lease Obligations paid, accrued or scheduled to be paid
or to be accrued by the Company and its Restricted Group Members during such
period; excluding, however, (i) any amount of such interest of any Restricted
Group Member if the net income of such Restricted Group Member is excluded in
the calculation of Adjusted Consolidated Net Income pursuant to clause (iii) or
(vii) of the definition thereof (but only in the same proportion as the net
income of such Restricted Group Member is excluded from the calculation of
Adjusted Consolidated Net Income pursuant to clause (iii) or (vii) of the
definition thereof) and (ii) any premiums, fees and expenses (and any
amortization thereof) payable in connection with the offering of the Exchange
Notes, all as determined (without taking into account Unrestricted Subsidiaries
or Unrestricted Affiliates) in conformity with GAAP.

"Consolidated Leverage Ratio" means, on any Transaction Date, the ratio of
(i) the aggregate amount (determined as set forth in the definition of
"Indebtedness") of Indebtedness of the Company and its Restricted Group Members
as at such Transaction Date to (ii) the aggregate amount of Consolidated EBITDA
for the latest fiscal quarter for which financial statements of the Company have
been filed with the Commission pursuant to the "Commission Reports and Reports
to Holders" covenant described below (such fiscal quarter being the "One Quarter
Period"), multiplied by four; provided that (A) pro forma effect shall be given
to (x) any Indebtedness Incurred from the beginning of the One Quarter Period
through the Transaction Date (the "Reference Period"), to the extent such
Indebtedness is outstanding on the Transaction Date and (y) any Indebtedness
that was outstanding during such Reference Period but that is not outstanding or
is to be repaid on the Transaction Date; (B) pro forma effect shall be given to
Asset Dispositions and Asset Acquisitions (including giving pro forma effect to
the application of proceeds of any Asset Disposition) that occur during such
Reference Period, as if they had occurred and such proceeds had been applied on
the first day of such Reference Period; and (C) pro forma effect shall be given
to asset dispositions and asset acquisitions (including giving pro forma effect
to the application of proceeds of any asset disposition) that have been made by
any Person that has become a Restricted Group Member or has been merged with or
into the Company or any Restricted Group Member during such Reference Period and
that would have constituted Asset Dispositions or Asset Acquisitions had such
transactions occurred when such Person was a Restricted Group Member as if such
asset dispositions or asset acquisitions were Asset Dispositions or Asset
Acquisitions that occurred on the first day of such Reference Period; provided
that to the extent that clause (B) or (C) of this sentence requires that pro
forma effect be given to an Asset Acquisition or Asset Disposition, such pro
forma calculation shall be based upon the full fiscal quarter immediately

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<PAGE> 138

preceding the Transaction Date of the Person, or division or line of business of
the Person, that is acquired or disposed of for which financial information is
available, multiplied by four.

"Consolidated Net Worth" means, at any date of determination, stockholders'
equity as set forth on the most recently available quarterly or annual
consolidated balance sheet of the Company and its Restricted Group Members
(which shall be as of a date not more than 90 days prior to the date of such
computation, and which shall not take into account Unrestricted Subsidiaries or
Unrestricted Affiliates), less any amounts attributable to Redeemable Stock or
any equity security convertible into or exchangeable for Indebtedness, the cost
of treasury stock and the principal amount of any promissory notes receivable
from the sale of the Capital Stock of the Company or any Restricted Group
Member, each item to be determined in conformity with GAAP.

"Default" means any event that is, or after notice or passage of time or
both would be, an Event of Default.

"Existing Stockholders" means Craig O. McCaw and Nextel Communications,
Inc.

"fair market value" means the price that would be paid in an arm's-length
transaction between an informed and willing seller under no compulsion to sell
and an informed and willing buyer under no compulsion to buy, as determined in
good faith by the Board of Directors, whose determination shall be conclusive if
evidenced by a Board Resolution; provided that for purposes of clause (viii) of
the second paragraph of the "Limitation on Indebtedness" covenant (x) the fair
market value of any security registered under the Exchange Act shall be the
average of the closing prices, regular way, of such security for the 20
consecutive trading days immediately preceding the capital contribution or sale
of Capital Stock and (y) in the event the aggregate fair market value of any
other property received by the Company exceeds $10 million, the fair market
value of such property shall be determined by a nationally recognized investment
banking firm and set forth in their written opinion which shall be delivered to
the Trustee.

"GAAP" means generally accepted accounting principles in the United States
of America as in effect as of the Closing Date, including, without limitation,
those set forth in the opinions and pronouncements of the Accounting Principles
Board of the American Institute of Certified Public Accountants and statements
and pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as approved by a significant segment of the
accounting profession. Except as specifically provided, all ratios and
computations contained or referred to in the Indenture shall be computed in
conformity with GAAP applied on a consistent basis, except that calculations
made for purposes of determining compliance with the terms of the covenants and
with other provisions of the Indenture shall be made without giving effect to
the amortization of any expenses incurred in connection with the offering of the
Exchange Notes.

"Guarantee" means any obligation, contingent or otherwise, of any Person
directly or indirectly guaranteeing any Indebtedness of any other Person and,
without limiting the generality of the foregoing, any obligation, direct or
indirect, contingent or otherwise, of such Person (i) to purchase or pay (or
advance or supply funds for the purchase or payment of) such Indebtedness of
such other Person (whether arising by virtue of partnership arrangements, or by
agreements to keep-well, to purchase assets, goods, securities or services
(unless such purchase arrangements are on arm's-length terms and are entered
into in the ordinary course of such Person's business), to take-or-pay, or to
maintain financial statement conditions or otherwise) or (ii) entered into for
purposes of assuring in any other manner the obligee of such Indebtedness of the
payment thereof or to protect such obligee against loss in respect thereof (in
whole or in part); provided that the term "Guarantee" shall not include
endorsements for collection or deposit in the ordinary course of business. The
term "Guarantee" used as a verb has a corresponding meaning.

"Incur" means, with respect to any Indebtedness, to incur, create, issue,
assume, Guarantee or otherwise become liable for or with respect to, or become
responsible for, the payment of, contingently or otherwise, such Indebtedness,
including an "Incurrence" of Indebtedness by reason of a Person becoming a
Restricted Group Member; provided that neither the accrual of interest nor the
accretion of original issue discount shall be considered an Incurrence of
Indebtedness.

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"Indebtedness" means, with respect to any Person at any date of
determination (without duplication), (i) all indebtedness of such Person for
borrowed money, (ii) all obligations of such Person evidenced by bonds,
debentures, notes or other similar instruments, (iii) all obligations of such
Person in respect of letters of credit or other similar instruments (including
reimbursement obligations with respect thereto, but excluding obligations
(including reimbursement obligations) with respect to (x) letters of credit
(including trade letters of credit) securing obligations (other than obligations
described in (i) or (ii) above or (v), (vi) or (vii) below) entered into in the
ordinary course of business of such Person to the extent such letters of credit
are not drawn upon or, if drawn upon, to the extent such drawing is reimbursed
no later than the third Business Day following receipt by such Person of a
demand for reimbursement and (y) letters of credit secured by cash collateral,
to the extent secured thereby), (iv) all obligations of such Person to pay the
deferred and unpaid purchase price of property or services, which purchase price
is due more than six months after the date of placing such property in service
or taking delivery and title thereto or the completion of such services, except
Trade Payables, (v) all obligations of such Person as lessee under Capitalized
Leases, (vi) all Indebtedness of other Persons secured by a Lien on any asset of
such Person, whether or not such Indebtedness is assumed by such Person;
provided that the amount of such Indebtedness shall be the lesser of (A) the
fair market value of such asset at such date of determination and (B) the amount
of such Indebtedness, (vii) all Indebtedness of other Persons Guaranteed by such
Person to the extent such Indebtedness is Guaranteed by such Person and (viii)
to the extent not otherwise included in this definition, obligations under
Currency Agreements and Interest Rate Agreements. The amount of Indebtedness of
any Person at any date shall be the outstanding balance at such date of all
unconditional obligations as described above and, with respect to contingent
obligations, the maximum liability upon the occurrence of the contingency giving
rise to the obligation, provided (A) that the amount outstanding at any time of
any Indebtedness issued with original issue discount is the face amount of such
Indebtedness less the unamortized portion of the original issue discount of such
Indebtedness at the time of its issuance as determined in conformity with GAAP,
(B) that the amount of Indebtedness at any time of any Restricted Group Member
shall be reduced by an amount that corresponds to the percentage ownership
interest in the assets of such Restricted Group Member not owned on the date of
determination, directly or indirectly, by the Company, (C) money borrowed at the
time of the Incurrence of any Indebtedness in order to pre-fund the payment of
interest on such Indebtedness shall be deemed not to be "Indebtedness" and (D)
that Indebtedness shall not include any liability for federal, state, local or
other taxes.

"Investment" in any Person means any direct or indirect advance, loan or
other extension of credit (including, without limitation, by way of Guarantee or
similar arrangement; but excluding advances to customers in the ordinary course
of business that are, in conformity with GAAP, recorded as accounts receivable
on the balance sheet of the Company or its Restricted Group Members) or capital
contribution to (by means of any transfer of cash or other property to others or
any payment for property or services for the account or use of others), or any
purchase or acquisition of Capital Stock, bonds, notes, debentures or other
similar instruments issued by, such Person and shall include (i) the designation
of a Restricted Subsidiary of the Company as an Unrestricted Subsidiary, (ii)
the designation of a Restricted Affiliate as an Unrestricted Affiliate and (iii)
the fair market value of the Capital Stock (or any other Investment), held by
the Company or any Restricted Group Member, of (or in) any Person that has
ceased to be a Restricted Group Member, including without limitation, by reason
of any transaction permitted by clause (iii) of the "Limitation on the Issuance
and Sale of Capital Stock of Restricted Group Members" covenant or an Investment
ceasing to be a Permitted Investment pursuant to clause (ii)(y) of the
definition of "Permitted Investment"; provided that the fair market value of the
Investment remaining in any Person that has ceased to be a Restricted Group
Member shall not exceed (x) the value of the aggregate amount of Investments
previously made in such Person valued at the time such Investments were made
less (y) the net reduction of such Investments. For purposes of the definition
of "Unrestricted Affiliate" and "Unrestricted Subsidiary" and the "Limitation on
Restricted Payments" covenant described below, (i) "Investment" shall include
the fair market value of the assets (net of liabilities (other than liabilities
to the Company or any of its Subsidiaries)) of any Restricted Group Member at
the time that such Restricted Group Member is designated an Unrestricted
Subsidiary or Unrestricted Affiliate, (ii) the fair market value of the assets
(net of liabilities (other than liabilities to the Company or any of its
Subsidiaries)) of any Unrestricted Subsidiary or Unrestricted Affiliate at the
time that such Unrestricted Subsidiary or Unrestricted Affiliate is designated a
Restricted Subsidiary or Restricted

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Affiliate shall be considered a reduction in outstanding Investments and (iii)
any property transferred to or from an Unrestricted Subsidiary or Unrestricted
Affiliate shall be valued at its fair market value at the time of such transfer;
provided that the amount of any Investment made by a Restricted Group Member
shall be reduced by an amount that corresponds to the percentage ownership
interest in the assets of such Restricted Group Member not owned on the date of
determination, directly or indirectly, by the Company.

"Involuntary Event" has the meaning specified in the definition of
"Permitted Investments."

"Lien" means any mortgage, pledge, security interest, encumbrance, lien or
charge of any kind (including, without limitation, any conditional sale or other
title retention agreement or lease in the nature thereof or any agreement to
give any security interest); provided that the amount of assets of a Restricted
Group Member subject to a Lien shall be reduced by an amount that corresponds to
the percentage ownership interest in the assets of such Restricted Group Member
not owned on the date of determination, directly or indirectly, by the Company.

"Minority Owned Affiliate," of any specified Person, means any other Person
in which an Investment in the Capital Stock of such Person has been made by such
specified Person other than a direct or indirect Subsidiary of such specified
Person.

"Moody's" means Moody's Investors Service, Inc. and its successors.

"Motorola Credit Agreement" means any credit agreement, loan or other
similar agreement entered into pursuant to the Motorola Vendor Financing
Template Memorandum of Understanding, together with all other agreements,
instruments and documents executed or delivered pursuant thereto or in
connection therewith, as such agreements, instruments or documents may be
amended, supplemented, extended, renewed, replaced or otherwise modified from
time to time.

"Net Cash Proceeds" means, (a) with respect to any Asset Sale, the proceeds
of such Asset Sale in the form of cash or cash equivalents, including payments
in respect of deferred payment obligations (to the extent corresponding to the
principal, but not interest, component thereof) when received in the form of
cash or cash equivalents (except to the extent such obligations are financed or
sold with recourse to the Company or any Restricted Group Member) and proceeds
from the conversion of other property received when converted to cash or cash
equivalents, net of (i) brokerage commissions and other fees and expenses
(including fees and expenses of counsel and investment bankers) related to such
Asset Sale, (ii) provisions for all taxes (whether or not such taxes will
actually be paid or are payable) as a result of such Asset Sale without regard
to the consolidated results of operations of the Company and its Restricted
Group Members, taken as a whole, (iii) payments made to repay Indebtedness or
any other obligation outstanding at the time of such Asset Sale that either (A)
is secured by a Lien on the property or assets sold or (B) is required to be
paid as a result of such sale and (iv) appropriate amounts to be provided by the
Company or any Restricted Group Member as a reserve against any liabilities
associated with such Asset Sale, including, without limitation, pension and
other post-employment benefit liabilities, liabilities related to environmental
matters and liabilities under any indemnification obligations associated with
such Asset Sale, all as determined in conformity with GAAP; provided that with
respect to any Asset Sale by a Restricted Group Member, Net Cash Proceeds shall
be reduced by an amount that corresponds to the percentage ownership interest in
the assets of such Restricted Group Member not owned on the date of such Asset
Sale, directly or indirectly, by the Company; and (b) with respect to any
capital contribution or issuance or sale of Capital Stock, the proceeds of such
capital contribution or issuance or sale in the form of cash or cash
equivalents, including payments in respect of deferred payment obligations (to
the extent corresponding to the principal, but not interest, component thereof)
when received in the form of cash or cash equivalents (except to the extent such
obligations are financed or sold with recourse to the Company or any Restricted
Group Member) and proceeds from the conversion of other property received when
converted to cash or cash equivalents, net of attorney's fees, accountants'
fees, underwriters' or placement agents' fees, discounts or commissions and
brokerage, consultant and other fees incurred in connection with such capital
contribution or issuance or sale and net of taxes paid or payable as a result
thereof.

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"Offer to Purchase" means an offer to purchase Exchange Notes by the
Company from the Holders commenced by mailing a notice to the Trustee and each
Holder stating: (i) the covenant pursuant to which the offer is being made and
that all Exchange Notes validly tendered will be accepted for payment on a pro
rata basis; (ii) the purchase price and the date of purchase (which shall be a
Business Day no earlier than 30 days nor later than 60 days from the date such
notice is mailed) (the "Payment Date"); (iii) that any Note not tendered will
continue to accrue interest (or amortize original issue discount, as the case
may be) pursuant to its terms; (iv) that, unless the Company defaults in the
payment of the purchase price, any Note accepted for payment pursuant to the
Offer to Purchase shall cease to accrue interest (or amortize original issue
discount, as the case may be) on and after the Payment Date; (v) that Holders
electing to have a Note purchased pursuant to the Offer to Purchase will be
required to surrender the Note, together with the form entitled "Option of the
Holder to Elect Purchase" on the reverse side of the Note completed, to the
Paying Agent at the address specified in the notice prior to the close of
business on the Business Day immediately preceding the Payment Date; (vi) that
Holders will be entitled to withdraw their election if the Paying Agent
receives, not later than the close of business on the third Business Day
immediately preceding the Payment Date, a telegram, facsimile transmission or
letter setting forth the name of such Holder, the principal amount of Exchange
Notes delivered for purchase and a statement that such Holder is withdrawing his
election to have such Exchange Notes purchased; and (vii) that Holders whose
Exchange Notes are being purchased only in part will be issued new Exchange
Notes equal in principal amount to the unpurchased portion of the Exchange Notes
surrendered; provided that each Note purchased and each new Note issued shall be
in a principal amount at maturity of $1,000 or integral multiples thereof. On
the Payment Date, the Company shall (i) accept for payment on a pro rata basis
Exchange Notes or portions thereof tendered pursuant to an Offer to Purchase;
(ii) deposit with the Paying Agent money sufficient to pay the purchase price of
all Exchange Notes or portions thereof so accepted; and (iii) deliver, or cause
to be delivered, to the Trustee all Exchange Notes or portions thereof so
accepted together with an Officers' Certificate specifying the Exchange Notes or
portions thereof accepted for payment by the Company. The Paying Agent shall
promptly mail to the Holders of Exchange Notes so accepted payment in an amount
equal to the purchase price, and the Trustee shall promptly authenticate and
mail to such Holders a new Note equal in principal amount to any unpurchased
portion of the Note surrendered; provided that each Note purchased and each new
Note issued shall be in a principal amount at maturity of $1,000 or integral
multiples thereof. The Company will publicly announce the results of an Offer to
Purchase as soon as practicable after the Payment Date. The Trustee shall act as
the Paying Agent for an Offer to Purchase. The Company will comply with Rule
14e-1 under the Exchange Act and any other securities laws and regulations
thereunder to the extent such laws and regulations are applicable, in the event
that the Company is required to repurchase Exchange Notes pursuant to an Offer
to Purchase.

"Overhead Services Agreement" means the Overhead Services Agreement, dated
as of March 3, 1997, between the Company and Nextel Communications.

"Permitted Investment" means (i) an Investment in the Company or a
Restricted Subsidiary of the Company or a Person which will, upon the making of
such Investment, become a Restricted Subsidiary of the Company or be merged or
consolidated with or into or transfer or convey all or substantially all its
assets to, the Company or a Restricted Subsidiary of the Company; provided that
such Person's primary business is related, ancillary or complementary to the
businesses of the Company and its Restricted Subsidiaries on the date of such
Investment; (ii) an Investment by the Company or a Restricted Group Member in a
Restricted Affiliate or a Person which will, upon the making of such Investment,
become a Restricted Affiliate or be merged or consolidated with or into or
transfer or convey all or substantially all its assets to, a Restricted
Affiliate; provided that (x) such Person's primary business is related,
ancillary or complementary to the businesses of the Company and its Restricted
Group Members on the date of such Investment and (y) any such Investment shall
cease to be a Permitted Investment in the event such Restricted Affiliate shall
cease to be a Restricted Affiliate or shall cease to observe any of the
provisions of the covenants that are applicable to such Restricted Affiliate,
provided that in the event such Restricted Affiliate ceases to be a Restricted
Affiliate or such Restricted Affiliate ceases to observe any of the provisions
of the covenants applicable to it solely as a result of circumstances,
developments or conditions beyond the control of the Company (such failure to be
a Restricted Affiliate or failure to observe a covenant as a result of any such
circumstance, development or condition, being an "Involuntary Event") any such
Investment previously made in such Restricted Affiliate
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will not cease to be a Permitted Investment unless such Involuntary Event
continues for 90 days; (iii) an Investment by a Restricted Affiliate in a
Restricted Subsidiary of such Restricted Affiliate or a Person which will, upon
the making of such Investment, become a Restricted Subsidiary of such Restricted
Affiliate or be merged or consolidated with or into or transfer or convey all or
substantially all its assets to, such Restricted Affiliate or a Restricted
Subsidiary of such Restricted Affiliate; provided that such Person's primary
business is related, ancillary or complementary to the businesses of the Company
and its Restricted Group Members on the date of such Investment; (iv) Temporary
Cash Investments; (v) payroll, travel and similar advances to cover matters that
are expected at the time of such advances ultimately to be treated as expenses
in accordance with GAAP; and (vi) stock, obligations or securities received in
satisfaction of judgments or as part of or in connection with the bankruptcy,
winding up or liquidation of a Person, except if such stock, obligations or
securities are received in consideration for an Investment made in such Person
in connection with or anticipation of such bankruptcy, winding up or
liquidation.

"Permitted Liens" means (i) Liens for taxes, assessments, governmental
charges or claims that are being contested in good faith by appropriate legal
proceedings promptly instituted and diligently conducted and for which a reserve
or other appropriate provision, if any, as shall be required in conformity with
GAAP shall have been made; (ii) statutory and common law Liens of landlords and
carriers, warehousemen, mechanics, suppliers, materialmen, repairmen or other
similar Liens arising in the ordinary course of business and with respect to
amounts not yet delinquent or being contested in good faith by appropriate legal
proceedings promptly instituted and diligently conducted and for which a reserve
or other appropriate provision, if any, as shall be required in conformity with
GAAP shall have been made; (iii) Liens incurred or deposits made in the ordinary
course of business in connection with workers' compensation, unemployment
insurance and other types of social security; (iv) Liens incurred or deposits
made to secure the performance of tenders, bids, leases, statutory or regulatory
obligations, bankers' acceptances, surety and appeal bonds, government
contracts, performance and return-of-money bonds and other obligations of a
similar nature incurred in the ordinary course of business (exclusive of
obligations for the payment of borrowed money); (v) easements, rights-of-way,
municipal and zoning ordinances and similar charges, encumbrances, title defects
or other irregularities that do not materially interfere with the ordinary
course of business of the Company or any Restricted Group Member; (vi) Liens
(including extensions and renewals thereof) upon real or personal property
acquired after the Closing Date; provided that (a) such Lien is created solely
for the purpose of securing Indebtedness Incurred, in accordance with the
"Limitation on Indebtedness" covenant described below, (1) to finance the cost
(including the cost of design, development, construction, improvement,
installation or integration) of the item of property or assets subject thereto
and such Lien is created prior to, at the time of or within six months after the
later of the acquisition, the completion of construction or the commencement of
full operation of such property or (2) to refinance any Indebtedness previously
so secured, (b) the principal amount of the Indebtedness secured by such Lien
does not exceed 100% of such cost and (c) any such Lien shall not extend to or
cover any property or assets other than such item of property or assets and any
improvements on such item; (vii) leases or subleases granted to others that do
not materially interfere with the ordinary course of business of the Company and
its Restricted Group Members, taken as a whole; (viii) Liens encumbering
property or assets under construction arising from progress or partial payments
by a customer of the Company or its Restricted Group Members relating to such
property or assets; (ix) any interest or title of a lessor in the property
subject to any Capitalized Lease or operating lease; (x) Liens arising from
filing Uniform Commercial Code financing statements (or substantially equivalent
filings outside the United States) regarding leases; (xi) Liens on property of,
or on shares of Capital Stock or Indebtedness of, any Person existing at the
time such Person becomes, or becomes a part of, any Restricted Group Member;
provided that such Liens do not extend to or cover any property or assets of the
Company or any Restricted Group Member other than the property or assets
acquired; (xii) Liens in favor of the Company or any Restricted Group Member;
(xiii) Liens arising from the rendering of a final judgment or order against the
Company or any Restricted Group Member that does not give rise to an Event of
Default; (xiv) Liens securing reimbursement obligations with respect to letters
of credit that encumber documents and other property relating to such letters of
credit and t he products and proceeds thereof; (xv) Liens in favor of customs
and revenue authorities arising as a matter of law to secure payment of customs
duties in connection with the importation of goods; (xvi) Liens encumbering
customary initial deposits and margin deposits, and

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other Liens that are either within the general parameters customary in the
industry and incurred in the ordinary course of business, in each case, securing
Indebtedness under Interest Rate Agreements and Currency Agreements and forward
contracts, options, future contracts, futures options or similar agreements or
arrangements designed solely to protect the Company or any of its Restricted
Group Members from fluctuations in interest rates, currencies or the price of
commodities; (xvii) Liens arising out of conditional sale, title retention,
consignment or similar arrangements for the sale of goods entered into by the
Company or any Restricted Group Member in the ordinary course of business in
accordance with the past practices of the Company and its Restricted Group
Members prior to the Closing Date; (xviii) Liens on or sales of receivables;
(xix) Liens on the Capital Stock of Unrestricted Subsidiaries and Unrestricted
Affiliates; and (xx) Liens securing Indebtedness in an amount not to exceed at
any one time outstanding 10% of Adjusted Consolidated Net Tangible Assets.

"Public Equity Offering" means an underwritten primary public offering of
Common Stock of the Company pursuant to an effective registration statement
under the Securities Act.

A "Public Market" shall be deemed to exist if (i) a Public Equity Offering
has been consummated and (ii) at least 15% of the total issued and outstanding
Common Stock of the Company has been distributed by means of an effective
registration statement under the Securities Act or sales pursuant to Rule 144
under the Securities Act.

"Redeemable Stock" means any class or series of Capital Stock of any Person
that by its terms or otherwise is (i) required to be redeemed prior to the
Stated Maturity of the Exchange Notes, (ii) redeemable at the option of the
holder of such class or series of Capital Stock at any time prior to the Stated
Maturity of the Exchange Notes or (iii) convertible into or exchangeable for
Capital Stock referred to in clause (i) or (ii) above or Indebtedness having a
scheduled maturity prior to the Stated Maturity of the Exchange Notes; provided
that any Capital Stock that would not constitute Redeemable Stock but for
provisions thereof giving holders thereof the right to require such Person to
repurchase or redeem such Capital Stock upon the occurrence of an "asset sale"
or "change of control" occurring prior to the Stated Maturity of the Exchange
Notes shall not constitute Redeemable Stock if the "asset sale" or "change of
control" provisions applicable to such Capital Stock are no more favorable to
the holders of such Capital Stock than the provisions contained in "Limitation
on Asset Sales" and "Repurchase of Exchange Notes Upon a Change of Control'
covenants described below and such Capital Stock specifically provides that such
Person will not repurchase or redeem any such stock pursuant to such provision
prior to the Company's repurchase of such Exchange Notes as are required to be
repurchased pursuant to the "Limitation on Asset Sales" and "Repurchase of
Exchange Notes Upon a Change of Control" covenants described below.

"Required Consent" means except as otherwise expressly provided in the
Indenture with respect to matters requiring the consent of each holder of Notes
affected thereby, (i) the consent of holders of not less than a majority in
aggregate principal amount at Stated Maturity of the outstanding Notes for any
action to (x) direct the time, method and place of conducting any proceeding for
any remedy available to the Trustee, or exercising any power conferred upon such
Trustee, or (y) consent to or waive, on behalf of the holders of all the Notes,
any past default and its consequences, and (ii) with respect to all other
actions requiring the consent of holders of the Notes, the consent of either (x)
a majority in aggregate principal amount at Stated Maturity of the outstanding
Notes or (y) a majority in aggregate principal amount at Stated Maturity of (I)
the Notes and (II) any other issue of unsubordinated, unsecured notes issued by
the Company, if such notes or the indenture pursuant to which such notes were
issued both (A) require the consent of the holders of such notes to such action
and (B) provide that the holders thereof will vote with the holders of the Notes
with respect to such action.

"Restricted Affiliate" means any direct or indirect Minority Owned
Affiliate of the Company or a Restricted Subsidiary of the Company that has been
designated by the Board of Directors as a Restricted Affiliate based on a
determination by the Board of Directors that the Company has, directly or
indirectly, the requisite control over such Minority Owned Affiliate to prevent
it from Incurring Indebtedness, or taking any other action at any time, in
contravention of any of the provisions of the Indenture that are applicable to
Restricted Affiliates; provided that immediately after giving effect to such
designation (x) the Liens and

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Indebtedness of such Minority Owned Affiliate outstanding immediately after such
designation would, if Incurred at such time, have been permitted to be Incurred
for all purposes of the Indenture and (y) no Default or Event of Default shall
have occurred and be continuing. The Company will be required to deliver an
Officers' Certificate to the Trustee upon designating any Minority Owned
Affiliate as a Restricted Affiliate.

"Restricted Group Members" means collectively, each Restricted Subsidiary
of the Company, each Restricted Affiliate and each Restricted Subsidiary of a
Restricted Affiliate.

"Restricted Subsidiary" means any Subsidiary other than an Unrestricted
Subsidiary.

"Significant Group Member" means, at any date of determination, any
Restricted Group Member that, together with its Restricted Subsidiaries and
Restricted Affiliates, (i) for the most recent fiscal year of the Company,
accounted for more than 10% of the consolidated revenues of the Company and its
Restricted Group Members or (ii) as of the end of such fiscal year, was the
owner of more than 10% of the consolidated assets of the Company and its
Restricted Group Members, all as set forth on the most recently available
consolidated financial statements of the Company for such fiscal year.

"S&P" means Standard & Poor's Ratings Services and its successors.

"Stated Maturity" means, (i) with respect to any debt security, the date
specified in such debt security as the fixed date on which the final installment
of principal of such debt security is due and payable and (ii) with respect to
any scheduled installment of principal of or interest on any debt security, the
date specified in such debt security as the fixed date on which such installment
is due and payable.

"Subsidiary" means, with respect to any Person, any corporation,
association or other business entity of which more than 50% of the voting power
of the outstanding Voting Stock is owned, directly or indirectly, by such Person
and one or more other Subsidiaries of such Person.

"Temporary Cash Investment" means any of the following: (i) direct
obligations of the United States of America or any agency thereof or obligations
fully and unconditionally guaranteed by the United States of America or any
agency thereof, (ii) time deposit accounts, certificates of deposit and money
market deposits maturing within 180 days of the date of acquisition thereof
issued by a bank or trust company which is organized under the laws of the
United States of America, any state thereof or any foreign country recognized by
the United States, and which bank or trust company has capital, surplus and
undivided profits aggregating in excess of $50 million (or the foreign currency
equivalent thereof) and has outstanding debt which is rated "A" (or such similar
equivalent rating) or higher by at least one nationally recognized statistical
rating organization (as defined in Rule 436 under the Securities Act) or any
money-market fund sponsored by a registered broker dealer or mutual fund
distributor, (iii) repurchase obligations with a term of not more than 30 days
for underlying securities of the types described in clause (i) above entered
into with a bank meeting the qualifications described in clause (ii) above, (iv)
commercial paper, maturing not more than 90 days after the date of acquisition,
issued by a corporation (other than an Affiliate of the Company) organized and
in existence under the laws of the United States of America, any state thereof
or any foreign country recognized by the United States of America with a rating
at the time as of which any investment therein is made of "P-1" (or higher)
according to Moody's or "A-1" (or higher) according to S&P, and (v) securities
with maturities of six months or less from the date of acquisition issued or
fully and unconditionally guaranteed by any state, commonwealth or territory of
the United States of America, or by any political subdivision or taxing
authority thereof, and rated at least "A" by S&P or Moody's.

"Trade Payables" means, with respect to any Person, any accounts payable or
any other indebtedness or monetary obligation to trade creditors created,
assumed or Guaranteed by such Person or any of its Subsidiaries arising in the
ordinary course of business in connection with the acquisition of goods or
services.

"Transaction Date" means, with respect to the Incurrence of any
Indebtedness by the Company or any Restricted Group Member, the date such
Indebtedness is to be Incurred and, with respect to any Restricted Payment, the
date such Restricted Payment is to be made.

"Unrestricted Affiliate" means any Minority Owned Affiliate of the Company
other than a Restricted Affiliate. The Board of Directors may designate any
Restricted Affiliate to be an Unrestricted Affiliate unless
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such Minority Owned Affiliate owns any Capital Stock of, or owns or holds any
Lien on any property of, the Company or any Restricted Group Member; provided
that (A) any Guarantee by the Company or any Restricted Group Member of any
Indebtedness of the Minority Owned Affiliate being so designated shall be deemed
an "Incurrence" of such Indebtedness and an "Investment" by the Company or such
Restricted Group Member (or both, if applicable) at the time of such
designation; (B) either (I) the Minority Owned Affiliate to be so designated has
total assets of $1,000 or less or (II) if such Minority Owned Affiliate has
assets greater than $1,000, such designation would be permitted under the
"Limitation on Restricted Payments" covenant described below and (C) if
applicable, the Incurrence of Indebtedness and the Investment referred to in
clause (A) of this proviso would be permitted under the "Limitation on
Indebtedness" and "Limitation on Restricted Payments" covenants described below.
Any such designation by the Board of Directors shall be evidenced to the Trustee
by promptly filing with the Trustee a copy of the Board Resolution giving effect
to such designation and an Officers' Certificate certifying that such
designation complied with the foregoing provisions.

"Unrestricted Subsidiary" means (i) any Subsidiary of the Company that at
the time of determination shall be designated an Unrestricted Subsidiary by the
Board of Directors in the manner provided below and (ii) any Subsidiary of an
Unrestricted Subsidiary. The Board of Directors may designate any Restricted
Subsidiary (including any newly acquired or newly formed Subsidiary of the
Company) to be an Unrestricted Subsidiary unless such Subsidiary owns any
Capital Stock of, or owns or holds any Lien on any property of, the Company or
any Restricted Subsidiary; provided that (A) any Guarantee by the Company or any
Restricted Subsidiary of any Indebtedness of the Subsidiary being so designated
shall be deemed an "Incurrence" of such Indebtedness and an "Investment" by the
Company or such Restricted Subsidiary (or both, if applicable) at the time of
such designation; (B) either (I) the Subsidiary to be so designated has total
assets of $1,000 or less or (II) if such Subsidiary has assets greater than
$1,000, such designation would be permitted under the "Limitation on Restricted
Payments" covenant described below and (C) if applicable, the Incurrence of
Indebtedness and the Investment referred to in clause (A) of this proviso would
be permitted under the "Limitation on Indebtedness" and "Limitation on
Restricted Payments" covenants described below. The Board of Directors may
designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided
that immediately after giving effect to such designation (x) the Liens and
Indebtedness of such Unrestricted Subsidiary outstanding immediately after such
designation would, if Incurred at such time, have been permitted to be Incurred
for all purposes of the Indenture and (y) no Default or Event of Default shall
have occurred and be continuing. Any such designation by the Board of Directors
shall be evidenced to the Trustee by promptly filing with the Trustee a copy of
the Board Resolution giving effect to such designation and an Officers'
Certificate certifying that such designation complied with the foregoing
provisions.

"Voting Stock" means with respect to any Person, Capital Stock of any class
or kind ordinarily having the power to vote for the election of directors,
managers or other voting members of the governing body of such Person.

"Wholly Owned" means, with respect to any Subsidiary of any Person, the
ownership of all of the outstanding Capital Stock of such Subsidiary (other than
any director's qualifying shares or Investments by foreign nationals mandated by
applicable law) by such Person or one or more Wholly Owned Subsidiaries of such
Person.

COVENANTS

The Indenture contains, among others, the following covenants.

Limitation on Indebtedness

(a) The Company will not, and will not permit any Restricted Group Member
to, Incur any Indebtedness (other than the Exchange Notes and Indebtedness
existing on the Closing Date); provided that the Company may Incur Indebtedness,
and any Restricted Group Member may Incur Acquired Indebtedness, if, after
giving effect to the Incurrence of such Indebtedness and the receipt and
application of the proceeds therefrom,

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the Consolidated Leverage Ratio would be less than 9 to 1, for Indebtedness
Incurred on or prior to December 31, 1999, or 7 to 1, for Indebtedness Incurred
thereafter.

Notwithstanding the foregoing, the Company and any Restricted Group Member
(except as specified below) may Incur each and all of the following: (i)
Indebtedness outstanding at any time in an aggregate principal amount not to
exceed $100 million, less any amount of such Indebtedness permanently repaid as
provided under the "Limitation on Asset Sales" covenant described below; (ii)
Indebtedness (A) to the Company evidenced by an unsubordinated promissory note
or (B) to any Restricted Group Member; provided that any event which results in
any such Restricted Group Member ceasing to be a Restricted Group Member or any
subsequent transfer of such Indebtedness (other than to the Company or another
Restricted Group Member) shall be deemed, in each case, to constitute an
Incurrence of such Indebtedness not permitted by this clause (ii); (iii)
Indebtedness of the Company or any Restricted Group Member issued in exchange
for, or the net proceeds of which are used to refinance or refund, then
outstanding Indebtedness of the same Person (other than Indebtedness Incurred
under clause (i), (ii), (iv) or (vi) of this paragraph) or any refinancings
thereof in an amount not to exceed the amount so refinanced or refunded (plus
premiums, accrued interest, fees and expenses); provided that Indebtedness the
proceeds of which are used to refinance or refund the Exchange Notes or
Indebtedness that is pari passu with, or subordinated in right of payment to,
the Exchange Notes shall only be permitted under this clause (iii) if (A) in
case the Exchange Notes are refinanced in part or the Indebtedness to be
refinanced is pari passu with the Exchange Notes, such new Indebtedness, by its
terms or by the terms of any agreement or instrument pursuant to which such new
Indebtedness is outstanding, is expressly made pari passu with, or subordinate
in right of payment to, the remaining Exchange Notes, (B) in case the
Indebtedness to be refinanced is subordinated in right of payment to the
Exchange Notes, such new Indebtedness, by its terms or by the terms of any
agreement or instrument pursuant to which such new Indebtedness is issued or
remains outstanding, is expressly made subordinate in right of payment to the
Exchange Notes at least to the extent that the Indebtedness to be refinanced is
subordinated to the Exchange Notes and (C) such new Indebtedness, determined as
of the date of Incurrence of such new Indebtedness, does not mature prior to the
Stated Maturity of the Indebtedness to be refinanced or refunded, and the
Average Life of such new Indebtedness is at least equal to the remaining Average
Life of the Indebtedness to be refinanced or refunded; (iv) Indebtedness (A) in
respect of performance, surety or appeal bonds provided in the ordinary course
of business, (B) under Currency Agreements and Interest Rate Agreements;
provided that such agreements (a) are designed solely to protect the Company or
its Restricted Group Members against fluctuations in foreign currency exchange
rates or interest rates and (b) do not increase the Indebtedness of the obligor
outstanding at any time other than as a result of fluctuations in foreign
currency exchange rates or interest rates or by reason of fees, indemnities and
compensation payable thereunder; and (C) arising from agreements providing for
indemnification, adjustment of purchase price or similar obligations, or from
Guarantees or letters of credit, surety bonds or performance bonds securing any
obligations of the Company or any Restricted Group Member pursuant to such
agreements, in any case Incurred in connection with the disposition of any
business, assets or Restricted Group Member (other than Guarantees of
Indebtedness Incurred by any Person acquiring all or any portion of such
business, assets or Restricted Group Member for the purpose of financing such
acquisition), in a principal amount not to exceed the gross proceeds actually
received by the Company or any Restricted Group Member in connection with such
disposition; (v) Indebtedness of the Company, to the extent the net proceeds
thereof are promptly (A) used to purchase Exchange Notes tendered in an Offer to
Purchase made as a result of a Change in Control or (B) deposited to defease the
Exchange Notes as described below under "Defeasance"; (vi) Guarantees of the
Exchange Notes and Guarantees of Indebtedness of the Company by any Restricted
Group Member provided the Guarantee of such Indebtedness is permitted by and
made in accordance with the "Limitation on Issuance of Guarantees by Restricted
Group Members" covenant described below; (vii) Indebtedness Incurred to finance
the cost (including the cost of design, development, construction, improvement,
installation or integration and all import duties) of telecommunications network
assets, equipment or inventory acquired by the Company or a Restricted Group
Member after the Closing Date; and (viii) Indebtedness of the Company not to
exceed, at any one time outstanding, two times, or Indebtedness of a Restricted
Group Member not to exceed at any one time outstanding, one times (x) the Net
Cash Proceeds received by the Company after the Closing Date from contributions
of capital or the issuance and sale of its

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Capital Stock (other than Redeemable Stock) to a Person that is not a Subsidiary
of the Company or a Restricted Affiliate, to the extent such Net Cash Proceeds
have not been used pursuant to clause (C)(2) of the first paragraph of the
"Limitation on Restricted Payments' covenant described below to make a
Restricted Payment and (y) 80% of the fair market value of property other than
cash received by the Company after the Closing Date from contributions of
capital or the issuance and sale of its Capital Stock (other than Redeemable
Stock) to a Person that is not a Subsidiary of the Company or a Restricted
Affiliate. Notwithstanding the foregoing, the securities transferred to the
Company as part of the Clearnet Transaction were deemed received by the Company
after the Closing Date.

(b) Notwithstanding any other provision of this "Limitation on
Indebtedness' covenant, the maximum amount of Indebtedness that the Company or a
Restricted Group Member may Incur pursuant to this "Limitation on Indebtedness"
covenant shall not be deemed to be exceeded, with respect to any outstanding
Indebtedness due solely to the result of fluctuations in the exchange rates of
currencies.

(c) For purposes of determining any particular amount of Indebtedness under
this "Limitation on Indebtedness" covenant, (1) Guarantees of, Liens securing or
obligations with respect to letters of credit supporting Indebtedness otherwise
included in the determination of such particular amount shall not be included
and (2) any Liens granted pursuant to the equal and ratable provisions referred
to in the "Limitation on Liens" covenant described below shall not be treated as
Indebtedness. For purposes of determining compliance with this "Limitation on
Indebtedness" covenant, in the event that an item of Indebtedness meets the
criteria of more than one of the types of Indebtedness described in the above
clauses the Company, in its sole discretion, shall classify such item of
Indebtedness and only be required to include the amount and type of such
Indebtedness in one of such clauses.

Limitation on Restricted Payments

The Company will not, and will not permit any Restricted Group Member to,
directly or indirectly, (i) declare or pay any dividend or make any distribution
on or with respect to its Capital Stock (other than (x) dividends or
distributions payable solely in shares of its Capital Stock (other than
Redeemable Stock) or in options, warrants or other rights to acquire shares of
such Capital Stock and (y) pro rata dividends or distributions on Capital Stock
of Restricted Group Members held by Persons other than the Company or other
Restricted Group Members, provided that the Company or any other Restricted
Group Members holding shares of Capital Stock of such dividend or distribution
paying Restricted Group Member shall receive such pro rata dividends or
distributions as may be due to such other Restricted Group Members or the
Company at or prior to the payment of such pro rata dividends or distributions
to such other Persons) held by Persons other than the Company or any Restricted
Group Member, (ii) purchase, redeem, retire or otherwise acquire for value any
shares of Capital Stock of (A) the Company or an Unrestricted Subsidiary
(including options, warrants or other rights to acquire such shares of Capital
Stock) held by any Person or (B) a Restricted Group Member (including options,
warrants or other rights to acquire such shares of Capital Stock) held by any
Affiliate of the Company (other than a Restricted Group Member) or any holder
(or any Affiliate of such holder) of 5% or more of the Capital Stock of the
Company, (iii) make any voluntary or optional principal payment, or voluntary or
optional redemption, repurchase, defeasance, or other acquisition or retirement
for value, of Indebtedness of the Company that is subordinated in right of
payment to the Exchange Notes (other than the purchase, repurchase or the
acquisition of Indebtedness in anticipation of satisfying a sinking fund
obligation, principal installment or final maturity, in any case due within one
year of the date of acquisition) or (iv) make any Investment, other than a
Permitted Investment, in any Person (such payments or any other actions
described in clauses (i) through (iv) being collectively "Restricted Payments")
if, at the time of, and after giving effect to, the proposed Restricted Payment:
(A) a Default or Event of Default shall have occurred and be continuing, (B)
except with respect to Investments, the Company could not Incur at least $1.00
of Indebtedness under the first paragraph of the "Limitation on Indebtedness"
covenant or (C) the aggregate amount of all Restricted Payments (the amount, if
other than in cash, to be determined in good faith by the Board of Directors,
whose determination shall be conclusive and evidenced by a Board Resolution)
made after the Closing Date shall exceed the sum of (1) 50% of the aggregate
amount of the Adjusted Consolidated Net Income (or, if the Adjusted Consolidated
Net Income is a loss, minus 100% of

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the amount of such loss) (determined by excluding income resulting from
transfers of assets by the Company or a Restricted Group Member to an
Unrestricted Subsidiary or Unrestricted Affiliate) accrued on a cumulative basis
during the period (taken as one accounting period) beginning on the first day of
the fiscal quarter immediately following the Closing Date and ending on the last
day of the last fiscal quarter preceding the Transaction Date for which reports
have been filed pursuant to the "Commission Reports and Reports to Holders"
covenant plus (2) the aggregate Net Cash Proceeds received by the Company after
the Closing Date from the issuance and sale permitted by the Indenture of its
Capital Stock (other than Redeemable Stock) to a Person who is not a Subsidiary
or Restricted Affiliate of the Company (except to the extent such Net Cash
Proceeds are used to Incur Indebtedness outstanding pursuant to clause (viii) of
the second paragraph of the "Limitation on Indebtedness" covenant) or from the
issuanc e to a Person who is not a Subsidiary or Restricted Affiliate of the
Company of any options, warrants or other rights to acquire Capital Stock of the
Company (in each case, exclusive of any Redeemable Stock or any options,
warrants or other rights that are redeemable at the option of the holder, or are
required to be redeemed, prior to the Stated Maturity of the Exchange Notes)
plus (3) an amount equal to the net reduction in Investments (other than
reductions in Permitted Investments, reductions in Investments made pursuant to
clause (ix) of the following paragraph) in any Person resulting from payments of
interest on Indebtedness, dividends, repayments of loans or advances, or other
transfers of assets, in each case to the Company or any Restricted Group Member
or from the Net Cash Proceeds from the sale of any such Investment (except, in
each case, to the extent any such payment or proceeds are included in Adjusted
Consolidated Net Income), or from redesignations of Unrestricted Subsidiaries as
Restricted Subsidiaries of the Company or a Restricted Affiliate or from
redesignations of Unrestricted Affiliates as Restricted Affiliates (valued in
each case as provided in the definition of "Investments"), not to exceed, in
each case, the amount of Investments previously made by the Company or any
Restricted Group Member in such Person, Unrestricted Subsidiary or Unrestricted
Affiliate.

The foregoing provision shall not be violated by reason of: (i) the payment
of any dividend within 60 days after the date of declaration thereof if, at said
date of declaration, such payment would comply with the foregoing paragraph;
(ii) the redemption, repurchase, defeasance or other acquisition or retirement
for value of Indebtedness that is subordinated in right of payment to the
Exchange Notes including premium, if any, and accrued and unpaid interest, with
the proceeds of, or in exchange for, Indebtedness Incurred under clause (iii) of
the second paragraph of part (a) of the "Limitation on Indebtedness' covenant;
(iii) the repurchase, redemption or other acquisition of Capital Stock of the
Company (or options, warrants or other rights to acquire such Capital Stock) in
exchange for, or out of the proceeds of a substantially concurrent offering of,
shares of Capital Stock (other than Redeemable Stock) of the Company; (iv) the
making of any principal payment or the repurchase, redemption, retirement,
defeasance or other acquisition for value of Indebtedness of the Company which
is subordinated in right of payment to the Exchange Notes in exchange for, or
out of the proceeds of, a substantially concurrent offering of, shares of the
Capital Stock of the Company (other than Redeemable Stock); (v) the declaration
or payment of dividends on the Common Stock of the Company following a Public
Equity Offering of such Common Stock, of up to 6% per annum of the Net Cash
Proceeds received by the Company in such Public Equity Offering; (vi) payments
or distributions, to dissenting stockholders pursuant to applicable law,
pursuant to or in connection with a consolidation, merger or transfer of assets
that complies with the provisions of the Indenture applicable to mergers,
consolidations and transfers of all or substantially all of the property and
assets of the Company; (vii) Investments acquired as a capital contribution to
the Company or in exchange for Capital Stock (other than Redeemable Stock) of
the Company or Capital Stock of Nextel Communications or any of its subsidiaries
(other than the Company and its Subsidiaries); (viii) the repurchase, redemption
or other acquisition for value of Capital Stock of the Company to the extent
necessary to prevent the loss or secure the renewal or reinstatement of any
license or franchise held by the Company or any of its Subsidiaries from any
governmental agency; (ix) Investments in an aggregate amount not to exceed $30
million, plus reductions in such Investments (except to the extent any such
reduction is included in Adjusted Consolidated Net Income) not to exceed the
amount of the Investments previously made; (x) Investments in a Person which has
ceased to be a Restricted Affiliate or ceases to observe any of the provisions
of the covenants applicable to it as a result of an Involuntary Event; provided
(I) such Investment is made with the proceeds of a substantially concurrent
capital contribution to, or sale of Capital Stock (other than Redeemable Stock)
of, the Company and (II) after such Investment

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such Involuntary Event shall no longer continue and such person shall be a
Restricted Affiliate; or (xi) repurchases of Warrants pursuant to a Repurchase
Offer; provided that, except in the case of clauses (i) and (iii), no Default or
Event of Default shall have occurred and be continuing or occur as a consequence
of the actions or payments set forth therein, other than with respect to clause
(x), a Default or Event of Default that will cease to exist substantially
contemporaneously with such Investment.

Each Restricted Payment permitted pursuant to the preceding paragraph
(other than the Restricted Payment referred to in clause (ii) thereof and an
exchange of Capital Stock for Capital Stock or Indebtedness referred to in
clause (iii) or (iv) thereof), and the Net Cash Proceeds from any issuance of
Capital Stock referred to in clauses (iii) and (iv), shall be included in
calculating whether the conditions of clause (C) of the first paragraph of this
"Limitation on Restricted Payments" covenant have been met with respect to any
subsequent Restricted Payments.

Limitation on Dividend and Other Payment Restrictions Affecting Restricted Group
Members

The Company will not, and will not permit any Restricted Group Member to,
create or otherwise cause or suffer to exist or become effective any consensual
encumbrance or restriction of any kind on the ability of any Restricted Group
Member to (i) pay dividends or make any other distributions permitted by
applicable law on any Capital Stock of such Restricted Group Member owned by the
Company or any other Restricted Group Member, (ii) pay any Indebtedness owed to
the Company or any other Restricted Group Member, (iii) make loans or advances
to the Company or any other Restricted Group Member or (iv) transfer any of its
property or assets to the Company or any other Restricted Group Member.

The foregoing provisions shall not restrict any encumbrances or
restrictions: (i) existing on the Closing Date in the Indenture or any other
agreements in effect on the Closing Date, and any extensions, refinancings,
renewals or replacements of such agreements; provided that the encumbrances and
restrictions in any such extensions, refinancings, renewals or replacements are
no less favorable in any material respect to the Holders than those encumbrances
or restrictions that are then in effect and that are being extended, refinanced,
renewed or replaced; (ii) existing under or by reason of applicable law; (iii)
existing with respect to any Person or the property or assets of such Person
acquired by the Company or any Restricted Group Member, existing at the time of
such acquisition and not incurred in contemplation thereof, which encumbrances
or restrictions are not applicable to any Person or the property or assets of
any Person other than such Person or the property or assets of such Person so
acquired; (iv) in the case of clause (iv) of the first paragraph of this
"Limitation on Dividend and Other Payment Restrictions Affecting Restricted
Group Members" covenant, (A) that restrict in a customary manner the subletting,
assignment or transfer of any property or asset that is a lease, license,
conveyance or contract or similar property or asset, (B) existing by virtue of
any transfer of, agreement to transfer, option or right with respect to, or Lien
on, any property or assets of the Company or any Restricted Group Member not
otherwise prohibited by the Indenture or (C) arising or agreed to in the
ordinary course of business, not relating to any Indebtedness, and that do not,
individually or in the aggregate, detract from the value of property or assets
of the Company or any Restricted Group Member in any manner material to the
Company or any Restricted Group Member; (v) with respect to a Restricted Group
Member and imposed pursuant to an agreement that has been entered into for the
sale or disposition of all or substantially all of the Capital Stock of, or
property and assets of, such Restricted Group Member; (vi) contained in the
terms of any Indebtedness or any agreement pursuant to which such Indebtedness
was issued if the encumbrance or restriction applies only in the event of a
default with respect to a financial covenant contained in such Indebtedness or
agreement is not materially more disadvantageous to the Holders of the Exchange
Notes than is customary in comparable financings (as determined by the Company)
and the Company determines that any such encumbrance or restriction will not
materially affect the Company's ability to make principal or interest payments
on the Exchange Notes; (vii) contained in any stockholders or similar agreement,
so long as such encumbrance or restriction is not materially more
disadvantageous to the Holders of the Exchange Notes than the encumbrances and
restrictions contained in comparable agreements entered into in the past by the
Company or a Restricted Group Member; or (viii) contained in any agreement
entered into after the Closing Date, so long as such encumbrance or restriction
is not materially more disadvantageous to the Holders of the Exchange Notes than
the encumbrances and restrictions contained in the Motorola

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Credit Agreement. Nothing contained in this "Limitation on Dividend and Other
Payment Restrictions Affecting Restricted Group Members" covenant shall prevent
the Company or any Restricted Group Member from (1) creating, incurring,
assuming or suffering to exist any Liens otherwise permitted in the "Limitation
on Liens" covenant or (2) restricting the sale or other disposition of property
or assets of the Company or any Restricted Group Member that secure Indebtedness
of the Company or any Restricted Group Member.

Limitation on the Issuance and Sale of Capital Stock of Restricted Group Members

The Company will not sell, and will not permit any Restricted Group Member,
directly or indirectly, to issue or sell, any shares of Capital Stock of a
Restricted Group Member (including options, warrants or other rights to purchase
shares of such Capital Stock) except (i) to the Company or a Wholly Owned
Restricted Subsidiary of the Company; (ii) issuances of director's qualifying
shares or sales to foreign nationals of shares of Capital Stock of a foreign
Restricted Group Member, to the extent required by applicable law; (iii) if,
immediately after giving effect to such issuance or sale, such Restricted Group
Member would no longer constitute a Restricted Group Member, provided any
Investment in such Person remaining after giving effect to such issuance or sale
would have been permitted to be made under the "Limitation on Restricted
Payments" covenant, if made on the date of such issuance or sale; and (iv)
issuances or sales of Common Stock (including options, warrants or other rights
to purchase Common Stock) of a Restricted Group Member, provided the Net Cash
Proceeds, if any, of such sale are applied in accordance with clause (A) or (B)
of the "Limitation on Asset Sales" covenant described below.

Limitation on Issuances of Guarantees by Restricted Group Members

The Company will not permit any Restricted Group Member, directly or
indirectly, to Guarantee any Indebtedness of the Company which is pari passu
with or subordinate in right of payment to the Exchange Notes ("Guaranteed
Indebtedness"), unless (i) such Restricted Group Member simultaneously executes
and delivers a supplemental indenture to the Indenture providing for a Guarantee
(a "Subsidiary Guarantee") of payment of the Exchange Notes by such Restricted
Group Member and (ii) such Restricted Group Member waives and will not in any
manner whatsoever claim or take the benefit or advantage of, any rights of
reimbursement, indemnity or subrogation or any other rights against the Company
or any other Restricted Group Member as a result of any payment by such
Restricted Group Member under its Subsidiary Guarantee; provided that this
paragraph shall not be applicable to (x) any Guarantee of any Restricted Group
Member that existed at the time such Person became a Restricted Group Member and
was not Incurred in connection with, or in contemplation of, such Person
becoming a Restricted Group Member or (y) any Guarantee of any Restricted Group
Member of Indebtedness Incurred (I) under a revolving credit, vendor financing
or working capital facility pursuant to clause (i) of the second paragraph of
the "Limitation on Indebtedness" covenant or (II) pursuant to clause (vii) of
the second paragraph of the "Limitation on Indebtedness" covenant. If the
Guaranteed Indebtedness is (A) pari passu with the Exchange Notes, then the
Guarantee of such Guaranteed Indebtedness shall be pari passu with, or
subordinated to, the Subsidiary Guarantee or (B) subordinated to the Exchange
Notes, then the Guarantee of such Guaranteed Indebtedness shall be subordinated
to the Subsidiary Guarantee at least to the extent that the Guaranteed
Indebtedness is subordinated to the Exchange Notes.

Notwithstanding the foregoing, any Subsidiary Guarantee by a Restricted
Group Member may provide by its terms that it shall be automatically and
unconditionally released and discharged upon (i) any sale, exchange or transfer,
to any Person not an Affiliate of the Company, of all of the Company's and each
Restricted Group Member's Capital Stock in, or all or substantially all the
assets of, such Restricted Group Member (which sale, exchange or transfer is not
prohibited by the Indenture) or (ii) the release or discharge of the Guarantee
which resulted in the creation of such Subsidiary Guarantee, except a discharge
or release by or as a result of payment under such Guarantee.

Limitation on Transactions with Shareholders and Affiliates

The Company will not, and will not permit any Restricted Group Member to,
directly or indirectly, enter into, renew or extend any transaction (including,
without limitation, the purchase, sale, lease or exchange of
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property or assets, or the rendering of any service) with any holder (or any
Person known by the Company to be an Affiliate of such holder) of 5% or more of
any class of Capital Stock of the Company or with any Affiliate of the Company
or any Restricted Group Member, except upon fair and reasonable terms no less
favorable to the Company or such Restricted Group Member than could be obtained,
at the time of such transaction or, if such transaction is pursuant to a written
agreement, at the time of the execution of the agreement providing therefor, in
a comparable arm's-length transaction with a Person that is not such a holder or
an Affiliate.

The foregoing limitation does not limit, and shall not apply to (i)
transactions (A) approved by a majority of the disinterested members of the
Board of Directors of the Company or (B) for which the Company or a Restricted
Group Member delivers to the Trustee a written opinion of a nationally
recognized investment banking firm stating that the transaction is fair to the
Company or such Restricted Group Member from a financial point of view; (ii) any
transaction solely between the Company and any of its Wholly Owned Restricted
Subsidiaries or solely between Wholly Owned Restricted Subsidiaries of the
Company; (iii) the payment of reasonable and customary regular fees to directors
of the Company who are not employees of the Company; (iv) any payments or other
transactions pursuant to any tax-sharing agreement between the Company and any
other Person with which the Company files a consolidated tax return or with
which the Company is part of a consolidated group for tax purposes; (v) any
Restricted Payments not prohibited by the "Limitation on Restricted Payments"
covenant; (vi) any payments or other transactions pursuant to the Overhead
Services Agreement as in effect on the Closing Date; or (vii) any transaction or
series of related transactions involving consideration or payments of less than
$5 million. Notwithstanding the foregoing, any transaction covered by the first
paragraph of this "Limitation on Transactions with Shareholders and Affiliates"
covenant and not covered by clauses (ii) through (v) of this paragraph, the
aggregate amount of which exceeds $10 million in value, must be approved or
determined to be fair in the manner provided for in clause (i)(A) or (B) above.

Limitation on Liens

The Company will not, and will not permit any Restricted Group Member to,
create, incur, assume or suffer to exist any Lien on any of its assets or
properties of any character, or any shares of Capital Stock or Indebtedness of
any Restricted Group Member, without making effective provision for all of the
Exchange Notes and all other amounts due under the Indenture to be directly
secured equally and ratably with (or, if the obligation or liability to be
secured by such Lien is subordinated in right of payment to the Exchange Notes,
prior to) the obligation or liability secured by such Lien.

The foregoing limitation does not apply to (i) Liens existing on the
Closing Date; (ii) Liens granted after the Closing Date on any assets or Capital
Stock of the Company or its Restricted Group Members created in favor or for the
benefit of the Holders; (iii) Liens with respect to the assets of a Restricted
Group Member granted by such Restricted Group Member to the Company or another
Restricted Group Member to secure Indebtedness owing to the Company or such
other Restricted Group Member; (iv) Liens securing Indebtedness which is
Incurred to refinance secured Indebtedness which is permitted to be Incurred
under clause (iii) of the second paragraph of the "Limitation on Indebtedness"
covenant; provided that such Liens do not extend to or cover any property or
assets of the Company or any Restricted Group Member other than the property or
assets securing the Indebtedness being refinanced; (v) Liens securing
Indebtedness Incurred under clause (i) or clause (vii) of the second paragraph
of the "Limitation on Indebtedness" covenant; or (vi) Permitted Liens.

Limitation on Sale-Leaseback Transactions

The Company will not, and will not permit any Restricted Group Member to,
enter into any sale-leaseback transaction involving any of its assets or
properties whether now owned or hereafter acquired, whereby the Company or a
Restricted Group Member sells or transfers such assets or properties and then or
thereafter leases such assets or properties or any part thereof or any other
assets or properties which the Company or such Restricted Group Member, as the
case may be, intends to use for substantially the same purpose or purposes as
the assets or properties sold or transferred.
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The foregoing restriction does not apply to any sale-leaseback transaction
if (i) the lease is for a period, including renewal rights, of not in excess of
three years; (ii) the lease secures or relates to industrial revenue or
pollution control bonds; (iii) the transaction is solely between the Company and
any Wholly Owned Restricted Subsidiary of the Company or solely between Wholly
Owned Restricted Subsidiaries of the Company; or (iv) the Company or such
Restricted Group Member, within twelve months after the sale or transfer of any
assets or properties is completed, applies an amount not less than the net
proceeds received from such sale in accordance with clause (A) or (B) of the
first paragraph of the "Limitation on Asset Sales" covenant described below.

Limitation on Asset Sales

The Company will not, and will not permit any Restricted Group Member to,
consummate any Asset Sale, unless (i) the consideration received by the Company
or such Restricted Group Member is at least equal to the fair market value of
the assets sold or disposed of and (ii) at least 75% of the consideration
received consists of cash or Temporary Cash Investments or the assumption of
Indebtedness of the Company or any Restricted Group Member relating to such
assets, provided that the Company or such Restricted Group Member is irrevocably
released and discharged from such Indebtedness. In the event and to the extent
that the Net Cash Proceeds received by the Company or any Restricted Group
Member from one or more Asset Sales occurring on or after the Closing Date in
any period of 12 consecutive months exceed $5 million, then the Company shall or
shall cause the relevant Restricted Group Member to (i) within twelve months
after the date Net Cash Proceeds so received exceed $5 million (A) apply an
amount equal to such excess Net Cash Proceeds to permanently repay
unsubordinated Indebtedness of the Company or any Restricted Group Member
providing a Subsidiary Guarantee pursuant to the "Limitation on Issuances of
Guarantees by Restricted Group Members" covenant described above or Indebtedness
of any other Restricted Group Member, in each case owing to a Person other than
the Company or any Restricted Group Member, provided that in the event
Indebtedness of a Restricted Group Member is repaid, only the Company's pro rata
portion (determined as provided in the definition of "Indebtedness") of such
repaid Indebtedness shall be deemed to have been repaid in accordance with this
clause (A), or (B) invest an equal amount, or the amount not so applied pursuant
to clause (A) (or enter into a definitive agreement committing to so invest
within twelve months after the date of such agreement), in property or assets
(other than current assets) of a nature or type or that are used in a business
(or in a company having property and assets of a nature or type, or engaged in a
business) similar or related to the nature or type of the property and assets
of, or the business of, the Company and its Restricted Group Members existing on
the date of such investment and (ii) apply (no later than the end of the
twelve-month period referred to in clause (i)) such excess Net Cash Proceeds (to
the extent not applied pursuant to clause (i)) as provided in the last paragraph
of this "Limitation on Asset Sales" covenant. The amount of such excess Net Cash
Proceeds required to be applied (or to be committed to be applied) during such
twelve-month period as set forth in clause (i) of the preceding sentence and not
applied as so required by the end of such period shall constitute "Excess
Proceeds."

Notwithstanding the foregoing, to the extent that any or all of the Net
Cash Proceeds of any Asset Sale of assets based outside the United States are
prohibited or delayed by applicable local law from being repatriated to the
United States and such Net Cash Proceeds are not actually applied in accordance
with the foregoing paragraphs, the Company shall not be required to apply the
portion of such Net Cash Proceeds so affected but may permit the applicable
Restricted Group Members to retain such portion of the Net Cash Proceeds so
long, but only so long, as the applicable local law will not permit repatriation
to the United States (the Company hereby agreeing to cause the applicable
Restricted Group Member to promptly take all actions required by the applicable
local law to permit such repatriation) and once such repatriation of any such
affected Net Cash Proceeds is permitted under the applicable local law, such
repatriation will be immediately effected and such repatriated Net Cash Proceeds
will be applied in the manner set forth in this covenant as if the Asset Sale
had occurred on such date; provided that to the extent that the Company has
determined in good faith that repatriation of any or all of the Net Cash
Proceeds of such Asset Sale would have a material adverse tax cost consequence,
the Net Cash Proceeds so affected may be retained by the applicable Restricted
Group Member for so long as such material adverse tax cost event would continue.

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If, as of the first day of any calendar month, the aggregate amount of
Excess Proceeds not theretofore subject to an Offer to Purchase pursuant to this
"Limitation on Asset Sales" covenant totals at least $5 million, the Company
must commence, not later than the fifteenth Business Day of such month, and
consummate an Offer to Purchase from the Holders on a pro rata basis an
aggregate Accreted Value of Exchange Notes on the relevant Payment Date equal to
the Excess Proceeds on such date, at a purchase price equal to 101% of the
Accreted Value of the Exchange Notes on the relevant Payment Date, plus, in each
case, accrued interest (if any) to the Payment Date.

REPURCHASE OF EXCHANGE NOTES UPON A CHANGE OF CONTROL

The Company must commence, within 30 days of the occurrence of a Change of
Control, and consummate an Offer to Purchase for all Exchange Notes then
outstanding, at a purchase price equal to 101% of the Accreted Value thereof on
the relevant Payment Date, plus accrued interest (if any) to the Payment Date.

There can be no assurance that the Company will have sufficient funds
available at the time of any Change of Control to make any debt payment
(including repurchases of Exchange Notes) required by the foregoing covenant (as
well as may be contained in other securities of the Company which might be
outstanding at the time). The above covenant requiring the Company to repurchase
the Exchange Notes will, unless consents are obtained, require the Company to
repay all indebtedness then outstanding which by its terms would prohibit such
Note repurchase, either prior to or concurrently with such Note repurchase.

COMMISSION REPORTS AND REPORTS TO HOLDERS

Whether or not the Company is required to file reports with the Commission,
for so long as any Notes are outstanding, the Company shall file with the
Commission all such reports and other information as it would be required to
file with the Commission by Sections 13(a) or 15(d) under the Exchange Act if it
were subject thereto. See "Available Information." The Company shall supply the
Trustee and each Holder or shall supply to the Trustee for forwarding to each
such Holder, without cost to such Holder, copies of such reports and other
information.

EVENTS OF DEFAULT

The following events will be defined as "Events of Default" in the
Indenture: (a) default in the payment of principal of (or premium, if any, on)
any Note when the same becomes due and payable at maturity, upon acceleration,
redemption or otherwise; (b) default in the payment of interest on any Note when
the same becomes due and payable, and such default continues for a period of 30
days; (c) default in the performance or breach of the provisions of the
Indenture applicable to mergers, consolidations and transfers of all or
substantially all of the assets of the Company or the failure to make or
consummate an Offer to Purchase in accordance with the "Limitation on Asset
Sales" or "Repurchase of Exchange Notes upon a Change of Control" covenant;
provided that a default or breach of the "Limitation on Asset Sales" covenant
arising from an Involuntary Event shall not constitute an Event of Default
unless such Involuntary Event continues for 90 days; (d) the Company defaults in
the performance of or breaches any other covenant or agreement of the Company in
the Indenture or under the Exchange Notes (other than a default specified in
clause (a), (b) or (c) above) and such default or breach continues for a period
of 60 consecutive days after written notice by the Trustee or the Holders of 25%
or more in aggregate principal amount at maturity of the Exchange Notes,
provided that a default or breach of a covenant or agreement arising from a
Restricted Affiliate ceasing to observe any covenant applicable to it resulting
from an Involuntary Event shall not constitute an Event of Default unless such
Involuntary Event continues for 90 days; (e) there occurs with respect to any
issue or issues of Indebtedness of the Company or any Significant Group Member
having an outstanding principal amount of $5 million or more in the aggregate
for all such issues of all such Persons, whether such Indebtedness now exists or
shall hereafter be created, (I) an event of default that has caused the holder
thereof to declare such Indebtedness to be due and payable prior to its Stated
Maturity and such Indebtedness has not been discharged in full or such
acceleration has not been rescinded or annulled within 30 days of such
acceleration and/or (II) the failure to make a principal payment at the final
(but not any interim) fixed
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maturity and such defaulted payment shall not have been made, waived or extended
within 30 days of such payment default; provided that an acceleration or payment
default arising from an Involuntary Event shall not constitute an Event of
Default unless such Involuntary Event continues for 90 days; (f) any final
judgment or order (not covered by insurance) for the payment of money in excess
of $5 million in the aggregate for all such final judgments or orders against
all such Persons (treating any deductibles, self-insurance or retention as not
so covered) shall be rendered against the Company or any Significant Group
Member and shall not be paid or discharged, and there shall be any period of 30
consecutive days following entry of the final judgment or order that causes the
aggregate amount for all such final judgments or orders outstanding and not paid
or discharged against all such Persons to exceed $5 million during which a stay
of enforcement of such final judgment or order, by reason of a pending appeal or
otherwise, shall not be in effect; provided that a final judgment or order
arising from an Involuntary Event shall not constitute an Event of Default
unless such Involuntary Event continues for 90 days; (g) a court having
jurisdiction in the premises enters a decree or order for (A) relief in respect
of the Company or any Significant Group Member in an involuntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, (B) appointment of a receiver, liquidator, assignee, custodian, trustee,
sequestrator or similar official of the Company or any Significant Group Member
or for all or substantially all of the property and assets of the Company or any
Significant Group Member or (C) the winding up or liquidation of the affairs of
the Company or any Significant Group Member and, in each case, such decree or
order shall remain unstayed and in effect for a period of 60 consecutive days;
or (h) the Company or any Significant Group Member (A) commences a voluntary
case under any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, or consents to the entry of an order for relief in an
involuntary case under any such law, (B) consents to the appointment of or
taking possession by a receiver, liquidator, assignee, custodian, trustee,
sequestrator or similar official of the Company or any Significant Group Member
or for all or substantially all of the property and assets of the Company or any
Significant Group Member or (C) effects any general assignment for the benefit
of creditors.

If an Event of Default (other than an Event of Default specified in clause
(g) or (h) above that occurs with respect to the Company) occurs and is
continuing under the Indenture, the Trustee or the Holders of at least 25% in
aggregate principal amount at maturity of the Exchange Notes, then outstanding,
by written notice to the Company (and to the Trustee if such notice is given by
the Holders), may, and the Trustee at the request of such Holders shall, declare
the Accreted Value of, premium, if any, and accrued interest on the Exchange
Notes to be immediately due and payable. Upon a declaration of acceleration,
such Accreted Value of, premium, if any, and accrued interest shall be
immediately due and payable. In the event of a declaration of acceleration
because an Event of Default set forth in clause (e) above has occurred and is
continuing, such declaration of acceleration shall be automatically rescinded
and annulled if the event of default triggering such Event of Default pursuant
to clause (e) shall be remedied or cured by the Company or the relevant
Significant Group Member or waived by the holders of the relevant Indebtedness
within 60 days after the declaration of acceleration with respect thereto. If an
Event of Default specified in clause (g) or (h) above occurs with respect to the
Company, the principal of, premium, if any, and accrued interest on the Exchange
Notes then outstanding shall ipso facto become and be immediately due and
payable without any declaration or other act on the part of the Trustee or any
Holder. The Holders, by Required Consent, by written notice to the Company and
to the Trustee, may waive all past defaults and rescind and annul a declaration
of acceleration and its consequences if (i) all existing Events of Default,
other than the nonpayment of the principal of, premium, if any, and interest on
the Exchange Notes that have become due solely by such declaration of
acceleration, have been cured or waived and (ii) the rescission would not
conflict with any judgment or decree of a court of competent jurisdiction. For
information as to the waiver of defaults, see "-- Modification and Waiver."

The Holders, by Required Consent, may direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or exercising
any trust or power conferred on the Trustee. However, the Trustee may refuse to
follow any direction that conflicts with law or the Indenture, that may involve
the Trustee in personal liability, or that the Trustee determines in good faith
may be unduly prejudicial to the rights of Holders of Exchange Notes not joining
in the giving of such direction and may take any other action it deems proper
that is not inconsistent with any such direction received from Holders of
Exchange Notes. A Holder may not pursue any remedy with respect to the Indenture
or the Exchange Notes unless: (i) the
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Holder gives the Trustee written notice of a continuing Event of Default; (ii)
the Holders of at least 25% in aggregate principal amount at maturity of
outstanding Exchange Notes make a written request to the Trustee to pursue the
remedy; (iii) such Holder or Holders offer the Trustee indemnity satisfactory to
the Trustee against any costs, liability or expense; (iv) the Trustee does not
comply with the request within 60 days after receipt of the request and the
offer of indemnity; and (v) during such 60-day period, the Holders of a majority
in aggregate principal amount at maturity of the outstanding Exchange Notes do
not give the Trustee a direction that is inconsistent with the request. However,
such limitations do not apply to the right of any Holder of a Note to receive
payment of the principal of, premium, if any, or interest on, such Note or to
bring suit for the enforcement of any such payment, on or after the due date
expressed in the Exchange Notes, which right shall not be impaired or affected
without the consent of the Holder.

The Indenture will require certain officers of the Company to certify, on
or before a date not more than 90 days after the end of each fiscal year, that a
review has been conducted of the activities of the Company and its Restricted
Group Members and the Company's and its Restricted Group Members' performance
under the Indenture and that the Company has fulfilled all obligations
thereunder, or, if there has been a default in the fulfillment of any such
obligation, specifying each such default and the nature and status thereof. The
Company will also be obligated to notify the Trustee of any default or defaults
in the performance of any covenants or agreements under the Indenture.

CONSOLIDATION, MERGER AND SALE OF ASSETS

The Company will not consolidate with, merge with or into, or sell, convey,
transfer, lease or otherwise dispose of all or substantially all of its property
and assets (as an entirety or substantially an entirety in one transaction or a
series of related transactions) to, any Person or permit any Person to merge
with or into the Company unless: (i) the Company shall be the continuing Person,
or the Person (if other than the Company) formed by such consolidation or into
which the Company is merged or that acquired or leased such property and assets
of the Company shall expressly assume, by a supplemental indenture, executed and
delivered to the Trustee, all of the obligations of the Company on all of the
Exchange Notes and under the Indenture; (ii) immediately after giving effect to
such transaction, no Default or Event of Default shall have occurred and be
continuing; (iii) immediately after giving effect to such transaction on a pro
forma basis, the Company or any Person becoming the successor obligor of the
Exchange Notes shall have a Consolidated Net Worth equal to or greater than the
Consolidated Net Worth of the Company immediately prior to such transaction;
(iv) immediately after giving effect to such transaction on a pro forma basis
the Company, or any Person becoming the successor obligor of the Exchange Notes,
as the case may be, shall have a Consolidated Leverage Ratio not greater than
110% of the Consolidated Leverage Ratio of the Company immediately prior to the
transaction; and (v) the Company delivers to the Trustee an Officers'
Certificate (attaching the arithmetic computations to demonstrate compliance
with clauses (iii) and (iv)) and Opinion of Counsel, in each case stating that
such consolidation, merger or transfer and such supplemental indenture complies
with this provision, that all conditions precedent provided for herein relating
to such transaction have been complied with and, in the event that the
continuing Person is organized under the laws of any jurisdiction other than the
United States of America or any jurisdiction thereof, that the indenture and the
Exchange Notes constitute legal, valid and binding obligations of the continuing
Person, enforceable in accordance with their terms; provided, however, that
clauses (iii) and (iv) above do not apply if, in the good faith determination of
the Board of Directors of the Company, whose determination shall be evidenced by
a Board Resolution, the principal purpose of such transaction is to change the
state of incorporation of the Company; and provided further that any such
transaction shall not have as one of its purposes the evasion of the foregoing
limitations.

DEFEASANCE

Defeasance and Discharge. The Indenture will provide that the Company will
be deemed to have paid and will be discharged from any and all obligations in
respect of the Exchange Notes on the 123rd day after the deposit referred to
below, and the provisions of the Indenture will no longer be in effect with
respect to the Exchange Notes (except for, among other matters, certain
obligations to register the transfer or exchange of

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the Exchange Notes, to replace stolen, lost or mutilated Exchange Notes, to
maintain paying agencies and to hold monies for payment in trust) if, among
other things, (A) the Company has deposited with the Trustee, in trust, money
and/or U.S. Government Obligations that through the payment of interest and
principal in respect thereof in accordance with their terms will provide money
in an amount sufficient to pay the principal of, premium, if any, and accrued
interest on the Exchange Notes on the Stated Maturity of such payments in
accordance with the terms of the Indenture and the Exchange Notes, (B) the
Company has delivered to the Trustee (i) either (x) an Opinion of Counsel to the
effect that Holders will not recognize income, gain or loss for federal income
tax purposes as a result of the Company's exercise of its option under this
"Defeasance" provision and will be subject to federal income tax on the same
amount and in the same manner and at the same times as would have been the case
if such deposit, defeasance and discharge had not occurred, which Opinion of
Counsel must be based upon (and accompanied by a copy of) a ruling of the
Internal Revenue Service to the same effect unless there has been a change in
applicable federal income tax law after the Closing Date such that a ruling is
no longer required or (y) a ruling directed to the Trustee received from the
Internal Revenue Service (the "IRS") to the same effect as the aforementioned
Opinion of Counsel and (ii) an Opinion of Counsel to the effect that the
creation of the defeasance trust does not violate the Investment Company Act of
1940 and after the passage of 123 days following the deposit, the trust fund
will not be subject to the effect of Section 547 of the United States Bankruptcy
Code or Section 15 of the New York Debtor and Creditor Law, (C) immediately
after giving effect to such deposit on a pro forma basis, no Event of Default,
or event that after the giving of notice or lapse of time or both would become
an Event of Default, shall have occurred and be continuing on the date of such
deposit or during the period ending on the 123rd day after the date of such
deposit, and such deposit shall not result in a breach or violation of, or
constitute a default under, any other agreement or instrument to which the
Company or any of its Subsidiaries is a party or by which the Company or any of
its Subsidiaries is bound, and (D) if at such time the Exchange Notes are listed
on a national securities exchange, the Company has delivered to the Trustee an
Opinion of Counsel to the effect that the Exchange Notes will not be delisted as
a result of such deposit, defeasance and discharge.

Defeasance of Certain Covenants and Certain Events of Default. The
Indenture further will provide that the provisions of the Indenture will no
longer be in effect with respect to clauses (iii) and (iv) under "Consolidation,
Merger and Sale of Assets" and all the covenants described herein under
"Covenants," clauses (c) and (d) under "Events of Default" with respect to such
clauses (iii) and (iv) under "Consolidation, Merger and Sale of Assets" and such
covenants and clauses (e) and (f) under "Events of Default" shall be deemed not
to be Events of Default, upon, among other things, the deposit with the Trustee,
in trust, of money and/or U.S. Government Obligations that through the payment
of interest and principal in respect thereof in accordance with their terms will
provide money in an amount sufficient to pay the principal of, premium, if any,
and accrued interest on the Exchange Notes on the Stated Maturity of such
payments in accordance with the terms of the Indenture and the Exchange Notes,
the satisfaction of the provisions described in clauses (B)(ii), (C) and (D) of
the preceding paragraph and the delivery by the Company to the Trustee of an
Opinion of Counsel to the effect that, among other things, the Holders will not
recognize income, gain or loss for federal income tax purposes as a result of
such deposit and defeasance of certain covenants and Events of Default and will
be subject to federal income tax on the same amount and in the same manner and
at the same times as would have been the case if such deposit and defeasance had
not occurred.

Defeasance and Certain Other Events of Default. In the event the Company
exercises its option to omit compliance with certain covenants and provisions of
the Indenture with respect to the Exchange Notes as described in the immediately
preceding paragraph and the Exchange Notes are declared due and payable because
of the occurrence of an Event of Default that remains applicable, the amount of
money and/or U.S. Government Obligations on deposit with the Trustee will be
sufficient to pay amounts due on the Exchange Notes at the time of their Stated
Maturity but may not be sufficient to pay amounts due on the Exchange Notes at
the time of the acceleration resulting from such Event of Default. However, the
Company will remain liable for such payments.

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MODIFICATION AND WAIVER

Modifications and amendments of the Indenture may be made by the Company
and the Trustee with the Required Consent; provided, however, that no such
modification or amendment may, without the consent of each Holder affected
thereby, (i) change the Stated Maturity of the principal of, or any installment
of interest on, any Note, (ii) reduce the Accreted Value of, or premium, if any,
or interest on, any Note, (iii) change the place or currency of payment of
principal of, or premium, if any, or interest on, any Note, (iv) impair the
right to institute suit for the enforcement of any payment on or after the
Stated Maturity (or, in the case of a redemption, on or after the Redemption
Date) of any Note, (v) reduce the above-stated percentage of outstanding
Exchange Notes the consent of whose Holders is necessary to modify or amend the
Indenture, (vi) waive a default in the payment of principal of, premium, if any,
or interest on the Exchange Notes or (vii) reduce the percentage or aggregate
principal amount at maturity of outstanding Exchange Notes the consent of whose
Holders is necessary for waiver of compliance with certain provisions of the
Indenture or for waiver of certain defaults.

NO PERSONAL LIABILITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS, DIRECTORS, OR
EMPLOYEES

The Indenture provides that no recourse for the payment of the principal
of, premium, if any, or interest on any of the Exchange Notes or for any claim
based thereon or otherwise in respect thereof, and no recourse under or upon any
obligation, covenant or agreement of the Company in the Indenture, or in any of
the Exchange Notes or because of the creation of any Indebtedness represented
thereby, shall be had against any incorporator, stockholder, officer, director,
employee or controlling person of the Company or of any successor Person
thereof. Each Holder, by accepting the Exchange Notes, waives and releases all
such liability.

CONCERNING THE TRUSTEE

The Indenture provides that, except during the continuance of a Default,
the Trustee will not be liable, except for the performance of such duties as are
specifically set forth in such Indenture. If an Event of Default has occurred
and is continuing, the Trustee will use the same degree of care and skill in its
exercise as a prudent person would exercise under the circumstances in the
conduct of such person's own affairs.

The Indenture and provisions of the Trust Indenture Act of 1939, as
amended, incorporated by reference therein contain limitations on the rights of
the Trustee, should it become a creditor of the Company, to obtain payment of
claims in certain cases or to realize on certain property received by it in
respect of any such claims, as security or otherwise. The Trustee is permitted
to engage in other transactions; provided, however, that if it acquires any
conflicting interest, it must eliminate such conflict or resign.

CERTAIN TAX CONSIDERATIONS

Chadbourne & Parke LLP has advised the Company that because the Exchange
Notes should not be considered to differ materially from the Private Notes, the
exchange of the Private Notes for the Exchange Notes pursuant to the Exchange
Offer should not result in any material federal income tax consequences to
Holders. For a full description of the basis of, and limitations on, this
opinion, see "Certain U.S. Federal Income Tax Considerations."

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CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS

The following discussion, which was prepared by Chadbourne & Parke LLP,
summarizes the material U.S. federal income tax consequences of the exchange of
the Private Notes for the Exchange Notes pursuant to the Exchange Offer. This
discussion is based on provisions of the Internal Revenue Code of 1986, as
amended (the "Code"), its legislative history, judicial authority, current
administrative rulings and practice, and existing and proposed Treasury
Regulations, all as in effect and existing on the date hereof. Legislative,
judicial or administrative changes or interpretations after the date hereof
could alter or modify the validity of this discussion and the conclusions set
forth below. Any such changes or interpretations may be retroactive and could
adversely affect a Holder of the Private Notes or the Exchange Notes.

THE FOLLOWING DISCUSSION IS FOR GENERAL INFORMATION ONLY. EACH HOLDER OF A
PRIVATE NOTE THAT IS CONSIDERING THE EXCHANGE OF THE PRIVATE NOTE FOR AN
EXCHANGE NOTE IN THE EXCHANGE OFFER IS STRONGLY URGED TO CONSULT WITH ITS OWN
TAX ADVISORS CONCERNING THE TAX CONSEQUENCES ARISING UNDER FEDERAL, STATE,
LOCAL, FOREIGN OR OTHER TAX LAWS FROM THE EXCHANGE OF THE PRIVATE NOTES FOR THE
EXCHANGE NOTES PURSUANT TO THE EXCHANGE OFFER.

EXCHANGE OFFER

The exchange of the Private Notes for the Exchange Notes pursuant to the
Exchange Offer should not be treated as a taxable transaction for U.S. federal
income tax purposes because the Exchange Notes will not be considered to differ
materially in kind or extent from the Private Notes. Rather, the Exchange Notes
received by any Holder should be treated as a continuation of such Holder's
investment in the Private Notes. As a result, there should be no material U.S.
federal income tax consequences to Holders exchanging the Private Notes for the
Exchange Notes pursuant to the Exchange Offer, and each Holder should have the
same adjusted issue price, adjusted basis and holding period in the Exchange
Notes as it had in the Private Notes immediately prior to the exchange.

PLAN OF DISTRIBUTION

This Prospectus, as it may be amended or supplemented from time to time,
may be used by a broker-dealer in connection with resales of any Exchange Notes
received in exchange for Private Notes acquired by such broker-dealer as a
result of market-making or other trading activities. Each broker-dealer that
receives Exchange Notes for its own account in exchange for such Private Notes
pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such Exchange Notes. The Company has
agreed that for a period of up to 90 days after the closing of the Exchange
Offer, it will make this Prospectus, as amended or supplemented, available to
any such broker-dealer that requests copies of this Prospectus in the Letter of
Transmittal for use in connection with any such resale.

The Company will not receive any proceeds from any sale of Exchange Notes
by broker-dealers or any other persons. Exchange Notes received by
broker-dealers for their own account pursuant to the Exchange Offer may be sold
from time to time in one or more transactions in the over-the-counter market, in
negotiated transactions or through the writing of options on the Exchange Notes,
or a combination of such methods of resale, at market prices prevailing at the
time of resale or negotiated prices. Any such resale may be made directly to
purchasers or to or through brokers or dealers who may receive compensation in
the form of commissions or concessions from any such broker-dealer and/or the
purchasers of any such Exchange Notes. Any broker-dealer that resells Exchange
Notes that were received by it for its own account pursuant to the Exchange
Offer in exchange for Private Notes acquired by such broker-dealer as a result
of market-making or other trading activities and any broker-dealer that
participates in a distribution of such Exchange Notes may be deemed to be an
"underwriter" within the meaning of the Securities Act and any profit on any
such resale of Exchange Notes and any commissions or concessions received by any
such persons may be deemed to be underwriting compensation under the Securities
Act. The Letter of Transmittal states that by acknowledging

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that it will deliver and by delivering a prospectus, a broker-dealer will not be
deemed to admit that it is an "underwriter" within the meaning of the Securities
Act.

The Company has agreed to pay all expenses incident to the Company's
performance of, or compliance with, the Registration Rights Agreement and will
indemnify the holders of Private Notes (including any broker-dealers), and
certain parties related to such holders, against certain liabilities, including
liabilities under the Securities Act.

LEGAL MATTERS

The validity of the Exchange Notes and certain U.S. federal income tax
consequences relating to the Exchange Notes will be passed upon for the Company
by Chadbourne & Parke LLP, New York, New York, special counsel to the Company.
With respect to matters of Washington law, Chadbourne & Parke LLP will rely on
Perkins Coie, Seattle, Washington.

EXPERTS

The financial statements of the Company and its consolidated subsidiaries,
as of December 31, 1997 and 1996 and for each of the three years in the period
ended December 31, 1997, the financial statements of Wireless Ventures of
Brazil, Inc. and subsidiaries as of and for the year ended December 31, 1996,
and the financial statements of Corporacion Mobilcom, S.A. de C.V. and
subsidiaries as of and for the years ended December 31, 1996 and 1995 included
in this Prospectus have been audited by Deloitte & Touche LLP, independent
auditors, as stated in their reports appearing herein and are included in
reliance upon the reports of such firm given upon their authority as experts in
accounting and auditing.

The consolidated financial statements of Wireless Ventures of Brazil, Inc.
and subsidiaries as of December 31, 1995 and for the year then ended have been
included herein and in the registration statement in reliance upon the report of
KPMG Peat Marwick LLP, independent certified public accountants, appearing
elsewhere herein, and upon the authority of said firm as experts in accounting
and auditing.

158
<PAGE> 160

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<S> <C>
NEXTEL INTERNATIONAL, INC. AND SUBSIDIARIES
Independent Auditors' Report.............................. F-2
Consolidated Balance Sheets as of December 31, 1996 and
December 31, 1997....................................... F-3
Consolidated Statements of Operations for the Years Ended
December 31, 1995, 1996 and 1997........................ F-4
Consolidated Statements of Stockholders' Equity for the
Years Ended December 31, 1995, 1996 and 1997............ F-5
Consolidated Statements of Cash Flows for the Years Ended
December 31, 1995, 1996 and 1997........................ F-6
Notes to Consolidated Financial Statements................ F-7
Condensed Consolidated Balance Sheets as of March 31, 1998
and December 31, 1997................................... F-24
Condensed Consolidated Statements of Operations for the
Three Months Ended March 31, 1998 and 1997.............. F-25
Condensed Consolidated Statement of Stockholders' Equity
for the Three Months Ended March 31, 1998............... F-26
Condensed Consolidated Statements of Cash Flows for the
Three Months Ended March 31, 1998 and 1997.............. F-27
Notes to Condensed Consolidated Financial Statements...... F-28
WIRELESS VENTURES OF BRAZIL, INC. AND SUBSIDIARIES
Independent Auditors' Report.............................. F-32
Consolidated Balance Sheet as of December 31, 1996........ F-33
Consolidated Statement of Operations for the Year Ended
December 31, 1996....................................... F-34
Consolidated Statement of Stockholders' Equity for the
Year Ended December 31, 1996............................ F-35
Consolidated Statement of Cash Flows for the Year Ended
December 31, 1996....................................... F-36
Notes to Consolidated Financial Statements................ F-37
Independent Auditors' Report.............................. F-48
Consolidated Balance Sheet as of December 31, 1995........ F-49
Consolidated Statement of Operations for the Year Ended
December 31, 1995....................................... F-50
Consolidated Statement of Stockholders' Equity for the
Year Ended December 31, 1995............................ F-51
Consolidated Statement of Cash Flows for the Year Ended
December 31, 1995....................................... F-52
Notes to Consolidated Financial Statements................ F-53
CORPORACION MOBILCOM, S.A. DE C.V. AND SUBSIDIARIES
Independent Auditors' Report.............................. F-62
Consolidated Balance Sheets as of December 31, 1996 and
1995.................................................... F-63
Consolidated Statements of Operations for the Years Ended
December 31, 1996 and 1995.............................. F-64
Consolidated Statements of Stockholders' Equity for the
Years Ended December 31, 1996 and 1995.................. F-65
Consolidated Statements of Cash Flows for the Years Ended
December 31, 1996 and 1995.............................. F-66
Notes to Consolidated Financial Statements................ F-67
Condensed Consolidated Statements of Operations for the
Three Months Ended March 31, 1997....................... F-78
Condensed Consolidated Statements of Cash Flows for the
Three Months Ended March 31, 1997....................... F-79
Notes to Condensed Consolidated Financial Statements...... F-80
</TABLE>

F-1
<PAGE> 161

NEXTEL INTERNATIONAL, INC. AND SUBSIDIARIES

INDEPENDENT AUDITORS' REPORT

Board of Directors of
Nextel International, Inc.
Seattle, Washington

We have audited the accompanying consolidated balance sheets of Nextel
International, Inc. and subsidiaries (the Company) as of December 31, 1996 and
1997, and the related consolidated statements of operations, stockholders'
equity, and cash flows for each of the three years in the period ended December
31, 1997. These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such financial statements present fairly, in all material
respects, the financial position of the Company at December 31, 1996 and 1997,
and the results of its operations and its cash flows for each of the three years
in the period ended December 31, 1997 in conformity with generally accepted
accounting principles.

DELOITTE & TOUCHE LLP
Seattle, Washington

February 19, 1998

F-2
<PAGE> 162

NEXTEL INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 1996 AND 1997
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
1996 1997
-------- ----------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents (of which $68,992 is
restricted as of December 31, 1997)................... $ 53,029 $ 159,790
Marketable securities.................................. -- 128,560
Accounts receivable, less allowance for doubtful
accounts of $0 and $1,003............................. 540 3,838
Radios and accessories................................. 830 1,749
Prepaid and other...................................... 183 15,884
Notes receivable....................................... 5,704 --
-------- ----------
Total current assets.............................. 60,286 309,821
PROPERTY, PLANT AND EQUIPMENT, net of accumulated
depreciation of $74 and $1,992............................ 8,703 136,210
INVESTMENT IN UNCONSOLIDATED SUBSIDIARIES, at cost less
equity in net losses of $5,991 and $7,526................. 98,982 106,489
INTANGIBLE ASSETS, net of accumulated amortization of $0 and
$14,664................................................... 10,878 526,000
INVESTMENTS AND OTHER ASSETS................................ 20,518 44,518
-------- ----------
$199,367 $1,123,038
======== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable....................................... $ 1,306 $ 24,456
Accrued expenses and other............................. 4,513 51,592
Due to parent.......................................... 152,783 8,254
Current portion of long-term debt...................... -- 2,211
-------- ----------
Total current liabilities......................... 158,602 86,513
LONG-TERM DEBT.............................................. -- 597,809
DEFERRED INCOME TAXES....................................... 1,562 120,777
-------- ----------
Total liabilities...................................... 160,164 805,099
MINORITY INTEREST........................................... -- 21,910
COMMITMENTS AND CONTINGENCIES (NOTES 2, 8 AND 11)
STOCKHOLDERS' EQUITY:
Common stock (73,000,000 shares authorized, no par
value, 36,500,000 shares issued and outstanding)...... 65,043 395,428
Accumulated deficit.................................... (28,741) (102,689)
Unrealized gain on investments, net of tax............. 2,901 3,290
-------- ----------
Total stockholders' equity........................ 39,203 296,029
-------- ----------
$199,367 $1,123,038
======== ==========
</TABLE>

See notes to consolidated financial statements.

F-3
<PAGE> 163

NEXTEL INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
1995 1996 1997
------------ ------------ -----------
<S> <C> <C> <C>
REVENUES
Radio service revenue....................... $ -- $ -- $ 10,589
Equipment sales and maintenance............. -- -- 2,426
------------ ------------ -----------
-- -- 13,015
------------ ------------ -----------
OPERATING EXPENSES
Cost of radio service revenue............... -- -- 6,189
Cost of equipment sales and maintenance..... -- -- 1,235
Selling, general and administrative......... 277 9,318 26,768
Depreciation and amortization............... 19 168 18,381
------------ ------------ -----------
296 9,486 52,573
------------ ------------ -----------
OPERATING LOSS................................... (296) (9,486) (39,558)
------------ ------------ -----------
OTHER INCOME (EXPENSE)
Interest income............................. 6,233 4,300 19,666
Interest expense............................ -- (323) (56,583)
Loss from equity method investments......... (6,853) (5,991) (11,401)
Other, net.................................. (15,002) 379 5,561
Minority interest........................... -- -- 2,085
------------ ------------ -----------
(15,622) (1,635) (40,672)
------------ ------------ -----------
LOSS BEFORE INCOME TAX BENEFIT (PROVISION)....... (15,918) (11,121) (80,230)
INCOME TAX BENEFIT (PROVISION)................... (2,119) (1,355) 6,282
------------ ------------ -----------
NET LOSS......................................... $ (18,037) $ (12,476) $ (73,948)
------------ ------------ -----------
NET LOSS PER COMMON SHARE, BASIC AND DILUTED..... $ (0.49) $ (0.34) $ (2.03)
============ ============ ===========
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING.................................... 36,500,000 36,500,000 36,500,000
============ ============ ===========
</TABLE>

See notes to consolidated financial statements.

F-4
<PAGE> 164

NEXTEL INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
RETAINED
COMMON STOCK EARNINGS UNREALIZED
--------------------- (ACCUMULATED GAIN (LOSS)
SHARES AMOUNT DEFICIT) ON INVESTMENTS TOTAL
---------- -------- ------------ -------------- --------
<S> <C> <C> <C> <C> <C>
BALANCE, January 1, 1995............ -- $ -- $ 1,772 $ -- $ 1,772
Common stock issued............ 36,500,000 -- -- -- --
Capital contributions from
parent....................... -- 20,181 -- -- 20,181
Net loss....................... -- -- (18,037) -- (18,037)
Unrealized gain on investments,
net of tax................... -- -- -- 8,023 8,023
---------- -------- --------- ------- --------
BALANCE, December 31, 1995.......... 36,500,000 20,181 (16,265) 8,023 11,939
Capital contributions from
parent....................... -- 44,862 -- -- 44,862
Net loss....................... -- -- (12,476) -- (12,476)
Unrealized loss on investments,
net of tax................... -- -- -- (5,122) (5,122)
---------- -------- --------- ------- --------
BALANCE, December 31, 1996.......... 36,500,000 65,043 (28,741) 2,901 39,203
Capital contributions from
parent....................... -- 315,585 -- -- 315,585
Issuance of warrants in
connection with private
placement.................... -- 14,800 -- -- 14,800
Net loss....................... -- -- (73,948) -- (73,948)
Unrealized gain on investments,
net of tax................... -- -- -- 389 389
---------- -------- --------- ------- --------
BALANCE, December 31, 1997.......... 36,500,000 $395,428 $(102,689) $ 3,290 $296,029
========== ======== ========= ======= ========
</TABLE>

See notes to consolidated financial statements.

F-5
<PAGE> 165

NEXTEL INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
1995 1996 1997
------------ ------------ ------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss............................................. $(18,037) $(12,476) $(73,948)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Depreciation and amortization................... 19 168 18,381
Interest accretion on long-term debt, net of
capitalization................................ -- -- 53,681
Loss from equity method investments............. 6,853 5,991 11,401
Deferred income taxes........................... -- -- (14,292)
Minority interest............................... -- -- (2,085)
Investment impairment........................... 15,000 -- --
Change in current assets and liabilities:
Accounts receivable........................ -- (540) 1,374
Radios and accessories..................... -- (830) 586
Prepaid and other.......................... (11) (172) (13,167)
Accounts payable, accrued expenses and
other.................................... 2,239 7,052 8,052
Other...................................... -- (2,176) (6,447)
-------- -------- --------
Net cash provided by (used in) operating
activities.................................... 6,063 (2,983) (16,464)
-------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures............................ (36) (8,818) (101,892)
Purchase of marketable securities............... -- -- (227,957)
Proceeds from sale of marketable securities..... -- -- 100,729
Purchase of licenses............................ (10,135) (743) --
Issuance of notes receivable.................... -- (5,703) --
Acquisition of additional equity interests in
consolidated subsidiaries..................... -- -- (35,131)
Investments in unconsolidated subsidiaries...... (36,962) (57,022) (120,976)
Other........................................... (762) -- (3,926)
-------- -------- --------
Net cash used in investing activities........... (47,895) (72,286) (389,153)
-------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments to parent, net....................... (18,589) (1,866) (23,556)
Capital contributions from parent............... 20,181 44,862 6,366
Capital contributions from minority
stockholders.................................. -- -- 1,387
Proceeds from issuance of warrants.............. -- -- 14,800
Net proceeds from issuance of long-term debt.... -- -- 517,828
Repayment of long-term debt..................... -- -- (4,447)
-------- -------- --------
Net cash provided by financing activities....... 1,592 42,996 512,378
-------- -------- --------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS..... (40,240) (32,273) 106,761
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD....... 125,542 85,302 53,029
-------- -------- --------
CASH AND CASH EQUIVALENTS, END OF PERIOD............. $ 85,302 $ 53,029 $159,790
======== ======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the year for interest.......... $ -- $ -- $ 1,993
======== ======== ========
Cash paid during the year for income taxes...... $ -- $ -- $ --
======== ======== ========
</TABLE>

See notes to consolidated financial statements.

F-6
<PAGE> 166

NEXTEL INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997
(DOLLARS IN THOUSANDS, UNLESS OTHERWISE NOTED)

1. SIGNIFICANT ACCOUNTING POLICIES

NATURE OF OPERATIONS AND BUSINESS ORGANIZATION: Nextel International, Inc.
(the "Company") is an indirect, wholly owned subsidiary of Nextel
Communications, Inc. (Nextel Communications, Inc. and its wholly owned
subsidiaries are referred to herein as "Nextel Communications"). The Company
currently provides wireless communications services in five of the largest
cities in Latin America and two of the largest cities in Asia, primarily
utilizing specialized mobile radio ("SMR") channels in its licensed service
areas. The Company is the largest SMR service provider in Brazil and Mexico, and
holds the largest SMR channel position in Argentina.

The Company's strategy is focused on using its leading analog dispatch or
SMR channel positions in its principal markets, together with Nextel
Communications' experience and supplier relationships, to upgrade its services
from analog dispatch to digital enhanced specialized mobile radio ("ESMR")
services. The Company's upgrade to digital networks will allow it to increase
capacity significantly and offer in a single digital subscriber unit, additional
services and advanced features such as direct connect (group calling and instant
conferencing), telephone interconnect and text messaging services. The Company
is upgrading its analog SMR networks to digital ESMR networks using the
integrated Digital Enhanced Network ("iDEN") technology developed by Motorola,
Inc. ("Motorola") and deployed by Nextel Communications in certain of its
markets. The Company also continues to assess opportunities to enter into new
markets, particularly in Latin America and Asia.

PRINCIPLES OF CONSOLIDATION: As of December 31, 1997, the Company directly
or indirectly owned 100% of Comunicaciones Nextel de Mexico S.A. de C.V.
("Nextel Mexico") (formerly Corporacion Mobilcom S.A. de C.V.); 50% of McCaw
Argentina S.R.L. ("Nextel Argentina") (formerly McCaw Argentina S.A.), accounted
for using the equity method; 30% of Infocom Communications Network, Inc.
("Nextel Philippines"), a Philippine company, accounted for using the equity
method; 3.7% of Clearnet Communications, Inc. ("Clearnet"), accounted for as an
investment available-for-sale and reflected at fair market value; and a
contractual right to receive 12.1% of the profits of the Shanghai GSM System
(See Note 2), accounted for as a cost method investment. Additionally, the
Company through an 81% equity interest in McCaw International (Brazil), Ltd.
("Nextel Brazil") (formerly Wireless Ventures of Brazil ("WVB")) and Nextel
Brazil's 95% equity interest in Nextel S.A. (formerly Airlink S.A.), held a 77%
equity interest in Nextel S.A., a Brazilian company. Accordingly, the Company's
consolidated financial statements include the accounts of Nextel Brazil and
Nextel Mexico commencing January 30, 1997 and September 1, 1997, respectively,
which are the dates when the Company acquired a controlling interest in the
companies (See Note 2). Prior to September 1, 1997, Nextel Mexico was accounted
for using the equity method. The Company's consolidated financial statements
also include the accounts of Nextel Argentina prior to May 6, 1997, at which
time it was contributed to Nextel International (Argentina), Ltd., (the
"Argentina Joint Venture") a joint venture in which the Company owns 50% (See
Note 2). Subsequent to May 6, 1997, the Argentina Joint Venture is accounted for
using the equity method.

The accounts of the Company's consolidated foreign subsidiaries and foreign
subsidiaries accounted for under the equity method are presented utilizing
accounts as of a date one month earlier than the accounts of the Company and its
U.S. subsidiaries to ensure timely reporting of consolidated results.

The consolidated financial statements include the accounts of the Company
and its majority owned subsidiaries. All significant intercompany transactions
and balances have been eliminated.

F-7
<PAGE> 167
NEXTEL INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

1. SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)
CONCENTRATIONS OF RISK: For the year ended December 31, 1997, $3,348 and
$9,605 of the Company's revenues were generated in Mexico and Brazil,
respectively. As of December 31, 1997, $288,695 and $420,242 of the Company's
assets were located in Mexico and Brazil, respectively (See Note 15).
Additionally, the Company's assets include $106,489 related to its investments
in unconsolidated subsidiaries located in Argentina, China and the Philippines
(See Note 4).

The Company is party to certain equipment purchase agreements with Motorola
(See Notes 11 and 14). For the foreseeable future the Company expects that it
will need to rely on Motorola for the manufacture of a substantial portion of
the equipment necessary to construct its digital ESMR networks.

USE OF ESTIMATES: The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosures of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.

The Company is subject to the laws and regulations governing
telecommunication services in effect in each of the countries in which it
operates. These laws and regulations can have a significant influence on the
Company's results of operations and are subject to change by the responsible
governmental agencies. The financial statements as presented reflect certain
assumptions based on laws and regulations currently in effect in each of the
various countries. The Company cannot predict what future laws and regulations
might be passed that could have a material effect on the Company's results of
operations. The Company assesses the impact of significant changes in laws and
regulations on a regular basis and updates the assumptions used to prepare its
financial statements accordingly.

CASH AND EQUIVALENTS: The Company considers all highly liquid investments
with an original maturity of three months or less to be cash equivalents.

MARKETABLE SECURITIES: Marketable securities, consisting primarily of
short-term investments in certificates of deposit and commercial paper, are
classified as "available for sale" and are recorded at fair value based on
quoted market prices.

RADIOS AND ACCESSORIES: Radios and accessories are held for sale to
customers. Radios and accessories are stated at the lower of cost or market.
Cost is determined using the first-in, first-out method.

PROPERTY, PLANT AND EQUIPMENT: Property, plant and equipment are stated at
cost. Depreciation is provided using the straight line method over estimated
useful lives as follows:

<TABLE>
<S> <C>
Equipment................................................... 3-10 years
Computer equipment and software............................. 3-5 years
Furniture and fixtures...................................... 3 years
Leasehold improvements...................................... Life of lease
</TABLE>

Construction in progress includes labor, material, transmission and related
equipment, engineering, site development, capitalized interest, and other costs
relating to the construction and development of wireless networks. The Company
will begin depreciating the cost of the wireless networks over a ten year period
upon commencement of commercial operations in each market.

Expenditures which increase value or extend useful lives are capitalized,
while maintenance and repairs are charged to operations as incurred.

INTANGIBLE ASSETS: Intangible assets consist of SMR licenses, goodwill and
trademarks which are recorded at cost. SMR licenses in the countries in which
the Company operates are issued conditionally for various periods of time. The
SMR licenses are generally renewable providing the licensee has complied with
applicable rules and policies. In most instances, the Company believes it has
complied and intends to comply
F-8
<PAGE> 168
NEXTEL INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

1. SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)
with these standards and is amortizing the related costs using the straight line
method over their estimated useful life of 20 years. In some cases, the Company
currently is not in compliance with applicable requirements and, where
appropriate, has filed requests for extensions with the appropriate government
agency. The Company expects that such extension requests will be granted and the
risk of having these or any other licenses revoked is remote. The Company begins
amortizing the cost of SMR licenses upon commencement of commercial operations
in each market. The excess of the purchase price paid over the fair value of net
assets acquired is recorded as goodwill and amortized using the straight-line
method over its estimated useful life of 20 years. Trademarks are amortized over
their respective useful lives.

INVESTMENTS: The Company's investment in Clearnet is included in
investments and other assets and classified as available-for-sale as of the
balance sheet date. Accordingly, it is reported at fair value, with unrealized
gains and losses, net of tax, recorded in stockholders' equity.

Investments where the Company has the ability to exercise significant
influence over operating and financial policies and possesses a voting interest
of 50% or less are accounted for using the equity method. The excess of the cost
of the Company's investments over the net assets acquired is being amortized
over 20 years. Amortization of this excess of $2,361, $3,677 and $3,137 for the
years ended December 31, 1995, 1996 and 1997, respectively, is reflected in the
accompanying consolidated statements of operations in loss from equity method
investments.

LONG-LIVED ASSETS: Long-lived assets and identifiable intangibles to be
held and used are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount may not be recoverable.
Impairment is measured by comparing the carrying value of the long-lived asset
to the estimated undiscounted future cash flows expected to result from use of
the assets and their eventual disposition. The Company determined that as of
December 31, 1997, there had been no impairment in the carrying value of
long-lived assets.

REVENUE RECOGNITION: Radio service revenues are recorded when earned.
Equipment sales and maintenance revenues are recorded when the related goods and
services are delivered. Monthly access charges are billed in advance and
recognized as revenue when the services are provided. Rental fee revenue and
monthly fixed access charges are recognized in the period service was provided.

FOREIGN EXCHANGE: Results of the Company's international operations are
translated from the designated functional currency to the U.S. dollar using
average exchange rates during the period, while assets and liabilities are
translated from the designated functional currency to the U.S. dollar using
end-of-period rates. The resulting translation gains or losses, if any, are
accumulated in the "cumulative translation adjustment" account, a component of
stockholders' equity. No translation gains or losses were recorded during the
three year period ended December 31, 1997.

All gains or losses resulting from foreign currency transactions are
included in other income or expense in the Company's consolidated statements of
operations. During the year ended December 31, 1997, the Company recognized
$6,000 of foreign currency transaction gains. There were no foreign currency
transactions gains or losses for the years ended December 31, 1995 and 1996.

During 1997, Nextel Mexico and Nextel Brazil were considered to be
operating in "highly inflationary" economies, as defined in Statement of
Financial Accounting Standards No. 52, Foreign Currency Translation.
Accordingly, Nextel Mexico and Nextel Brazil used the U.S. dollar as their
functional currency. Effective January 1, 1998, Nextel Brazil will no longer be
considered to be operating in a "highly inflationary" economy and will begin
using the Brazilian real as its functional currency. Nextel Mexico will continue
to use the U.S. dollar as its functional currency in 1998.

INCOME TAXES: The Company accounts for U.S. federal income taxes under the
asset and liability method. Under this method, deferred income taxes are
recorded for the temporary differences between the

F-9
<PAGE> 169
NEXTEL INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

1. SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)
financial reporting basis and tax basis of the Company's assets and liabilities.
These deferred taxes are measured by the provisions of currently enacted tax
laws. The Company is included in the consolidated tax return of Nextel
Communications; however, the income tax accounts of Nextel International are
stated as if the Company filed a separate return, which is consistent with the
tax sharing agreement between the Company and Nextel Communications.

Each of the Company's Brazilian and Mexican subsidiaries file a separate
tax return.

NET LOSS PER SHARE: Net loss per share is computed based on the weighted
average number of common shares outstanding during the period.

NEW ACCOUNTING STANDARDS: During 1997, the Company adopted Statements of
Financial Accounting Standards No. 128, Earnings per Share, and No. 129,
Disclosure of Information about Capital Structure. The adoption of these
standards did not have a significant effect on the Company's current or prior
year financial statements or disclosures.

RECLASSIFICATIONS: Certain prior year amounts have been reclassified to
conform with the current presentation.

2. BUSINESS COMBINATIONS AND INVESTMENTS

NEXTEL SERVICES AND NEXTEL CANMEX: On January 1, 1997, Nextel Services, a
wholly owned subsidiary of Nextel Communications, was merged into the Company.
Nextel Services includes all amounts associated with the Company's expatriate
employees. Subsequent to the merger, all intercompany liabilities were converted
to contributed capital.

On March 3, 1997, Nextel Canmex, a wholly owned subsidiary of Nextel
Communications, was merged into the Company. Nextel Canmex is primarily an
investment and asset holding company.

Immediately prior to the merger, all of Nextel Canmex's assets were
transferred to Nextel Communications with the exception of an investment in 38%
of the outstanding common stock of Nextel Mexico and related assets and 3.7% of
the outstanding common stock of Clearnet. The remaining intercompany liability
was converted to contributed capital subsequent to the merger.

As the mergers described above represent transfers of companies under
common control, they have been accounted for in a manner similar to poolings of
interests. The pooling-of-interests method of accounting is intended to present
as a single interest two or more common shareholders' interests which were
previously independent; accordingly, the historical financial statements for the
periods presented prior to the mergers are restated as though the companies had
been combined.

NEXTEL ARGENTINA: On August 6, 1996, Nextel Communications contributed its
investment in Nextel Argentina to the Company. Nextel Argentina has licenses to
provide SMR services in the Argentine cities of Buenos Aires, Cordoba, Rosario,
and Mendoza.

As the contribution of Nextel Argentina to the Company represented a
transfer of companies under common control, it was accounted for in a manner
similar to a pooling of interests. Accordingly, the historical financial
statements of the Company for the periods presented prior to the contribution
were restated as though Nextel Argentina had been combined.

On May 6, 1997, the Company contributed its 100% ownership interest in
Nextel Argentina into Nextel International (Argentina), Ltd. (the "Argentina
Joint Venture"), a joint venture between the Company and Wireless Ventures of
Argentina, L.L.C. ("WVA"). WVA's contribution included all of the outstanding
common stock of a paging company and two companies that own SMR licenses in
Argentina (collectively the "WVA Entities"). During 1997, Nextel Argentina and
the WVA Entities were merged, with Nextel Argentina being the surviving entity
(the merged entities are herein collectively referred to as "Nextel

F-10
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NEXTEL INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

2. BUSINESS COMBINATIONS AND INVESTMENTS -- (CONTINUED)
Argentina" subsequent to the formation of the Argentina Joint Venture). The
Company has a 50% voting interest and shares equally in the profits and losses
of the Argentina Joint Venture. Capital contributions are made equally unless
otherwise agreed to by both the Company and WVA. Commencing on May 6, 1997, the
Company accounted for its investment in the Argentina Joint Venture under the
equity method of accounting.

On January 30, 1998, the Company acquired the remaining 50% interest in the
Argentina Joint Venture from WVA for a purchase price of $46 million in cash. As
a result of the purchase, the Company increased its effective ownership interest
in Nextel Argentina from 50% to 100%, and will consolidate the accounts of
Nextel Argentina commencing February 1, 1998 under the purchase method of
accounting. The carrying value of the Company's investment in Nextel Argentina
as of January 30, 1998 approximates $63.0 million and will be allocated to the
net assets acquired based on their estimated fair values, including licenses and
goodwill, which will be amortized over their estimated useful lives of 20 years.

NEXTEL PHILIPPINES: On June 14, 1996, the Company acquired a 30% interest
in Nextel Philippines, a Philippine wireless telecommunications company, for $16
million in cash. Nextel Philippines provides paging services to subscribers in
the Philippines through a nationwide license granted by the Philippine
government. In addition, Nextel Philippines has a nationwide license to provide
digital ESMR services. The Company's investment in Nextel Philippines is
accounted for using the equity method. The excess purchase price over the net
assets acquired totaled $16.2 million and is being amortized over 20 years.

The Company has reached an agreement in principle with three groups of
local shareholders of Nextel Philippines (the "Philippines Shareholders") and is
in the process of finalizing definitive documentation (the "Philippine Partner
Agreement") that would: (i) restructure the existing corporate governance
arrangements to give the Company increased minority shareholder rights; (ii)
provide for the purchase by the Company of existing shareholder loans of the
Philippines Shareholders totaling approximately $19.6 million ($2.0 million of
which the Company had purchased as of February 19, 1998) which loans, upon
purchase by the Company, bear interest at 18% per annum and will be convertible
into equity of Nextel Philippines; (iii) provide for the funding by the Company
of Nextel Philippines' future capital needs pursuant to loans which could, at
the option of the Company, be converted into equity of Nextel Philippines; (iv)
provide one Philippine Shareholder group with the right to put its 20% interest
in Nextel Philippines to the Company for approximately $9.4 million, beginning
on the date which is nine months after closing of the Philippines Partner
Agreement; and (v) provide the Company with the right to purchase such
shareholder's interest in Nextel Philippines for approximately $11.6 million if
the Philippine Shareholder's put right is not exercised. The ability of the
Company to convert shareholder loans into equity or to satisfy the Nextel
Philippines shareholder put or call rights are subject to applicable Philippine
foreign ownership rules. The Company expects to continue to account for its
investment in Nextel Philippines using the equity method subsequent to
consummating the Philippine Partner Agreement.

SHANGHAI CCT McCAW: As of December 31, 1997, the Company maintained a 30%
ownership interest in Shanghai CCT-McCaw Telecommunications Systems Co., Ltd.
("Shanghai CCT McCaw"), a Chinese equity joint venture. Shanghai CCT McCaw
currently participates in a Global System for Mobile communications network in
Shanghai, China (the "Shanghai GSM System") through a profit sharing arrangement
(the "Unicom Agreement") with China United Communications, Ltd., the owner of
the Shanghai GSM system. Foreign entities or individuals are not permitted to
directly own or operate telecommunications systems in China under current law.
The Company does not have the right to influence the operations of the Shanghai
GSM System and therefore accounts for its investment in Shanghai CCT McCaw under
the cost method.

Under the Unicom Agreement as amended, Shanghai CCT McCaw has the right to
receive 40.2% of the profits, as defined, of the Shanghai GSM System. The
Company, through its 30% interest in Shanghai CCT McCaw and Shanghai CCT McCaw's
right to receive 40.2% of the profits of the Shanghai GSM System, has

F-11
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NEXTEL INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

2. BUSINESS COMBINATIONS AND INVESTMENTS -- (CONTINUED)
the right to receive approximately 12.1% of the profits of the Shanghai GSM
System. Cash payments are made to the Company from Shanghai CCT McCaw in the
form of distributions, which are made at the discretion of Shanghai CCT McCaw's
board of directors. Through December 31, 1997, the Company has received
distributions totaling $1,218 which have been remitted to Shanghai CCT McCaw in
the form of a loan (See Note 11).

NEXTEL MEXICO: Through a series of investments from March 1995 to December
1996, Nextel Canmex acquired approximately 30.1% of the outstanding shares of
Nextel Mexico, a Mexican company with licenses to provide SMR services in
various cities in Mexico, including Mexico City, Guadalajara, Monterey, and
Tijuana. Upon acquiring a 30.1% ownership interest in Nextel Mexico, the Company
commenced accounting for Nextel Mexico using the equity method of accounting.

In January 1997, Nextel Communications purchased additional common shares
of Nextel Mexico at a cost of $16.6 million, in exchange for shares of Nextel
Communications Common Stock. Such interest was simultaneously contributed to the
Company. In February 1997, Nextel Mexico shareholders approved a $27.0 million
capital call (the "Nextel Mexico Capital Call"), and the Company funded its pro
rata share (approximately $10.3 million) with a cash contribution. On April 16,
1997, the Company purchased additional shares of Nextel Mexico by funding the
unsubscribed portion of the Nextel Mexico Capital Call (approximately $11.1
million), thereby increasing the Company's ownership interest to approximately
46.3%.

Through a series of transactions from June 30, 1997 to December 12, 1997,
the Company acquired substantially all of the remaining shares of Nextel Mexico
at an aggregate cost of $104.5 million, thereby increasing the Company's equity
interest in Nextel Mexico to approximately 100%. Approximately $22.1 million of
the purchase price was paid in January 1998 and is included in accrued expenses
and other as of December 31, 1997.

Upon obtaining greater than 50% of the outstanding common stock and
obtaining control of Nextel Mexico, on September 1, 1997 the Company commenced
consolidating the accounts of Nextel Mexico under the purchase method of
accounting. The total purchase price of the Company's investment in Nextel
Mexico was approximately $199.7 million and was allocated to the net assets
acquired based on their estimated fair values, including licenses and goodwill,
which are being amortized over their estimated useful lives of 20 years.

During the year ended December 31, 1995, the Company recorded a $15.0
million charge to operations representing an other than temporary decline in the
fair value of this investment as a result of the decline in the Mexican peso.

CLEARNET: The Company owns 1,596,067 shares of common stock representing
3.7% of Clearnet. Clearnet provides analog SMR and ESMR services in Canada and
holds a nationwide license to provide PCS services in Canada. The Company's
investment in Clearnet is accounted for at fair market value. The market value
of Clearnet common stock at December 31, 1997 was $11 3/8 per share.

As a condition of the high-yield offering (See Note 17), Nextel
Communications agreed to transfer securities representing 6,777,778 shares of
common stock of Clearnet (or an approximately 15.7% equity interest in Clearnet)
to the Company in exchange for Series A Redeemable Exchangeable Preferred Stock
of the Company with a value to be determined at the date of the exchange based
on the current fair value of the contributed Clearnet shares, net of tax.

NEXTEL BRAZIL: On January 30, 1997, Nextel Communications purchased 81% of
the issued and outstanding capital stock of Nextel Brazil from Telcom Ventures,
Inc. and affiliates (collectively "Telcom Ventures") in exchange for $186.3
million in Nextel Communications Class A Common Stock ("Nextel Common Stock").
Nextel Communications' investment in Nextel Brazil was simultaneously
contributed to the Company. Nextel Brazil and its subsidiaries hold or have
options to acquire licenses to provide SMR services in 23 cities in Brazil
including Sao Paulo, Rio de Janeiro, Belo Horizonte, Curitiba, and Brasilia.

F-12
<PAGE> 172
NEXTEL INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

2. BUSINESS COMBINATIONS AND INVESTMENTS -- (CONTINUED)
Telcom Ventures has the right between October 31, 2001 and November 1, 2003, to
require the Company to redeem their 19% interest in Nextel Brazil at fair market
value as determined pursuant to an appraisal procedure. The Company is currently
required to fund 100% of Nextel Brazil's capital requirements until April 30,
1999 when Telcom Ventures must either: (i) contribute its pro rata share plus
accrued interest or (ii) dilute its ownership interest. Dividends may be
declared at the discretion of Nextel Brazil's board of directors and are
allocated based on the ownership percentages in effect at the date of
declaration. No dividends have been declared to date.

The total cost of the acquisition, which was accounted for as a purchase,
was $187.2 million and was allocated to the net assets acquired based on their
estimated fair values, including licenses and goodwill, which are being
amortized over their estimated useful lives of 20 years.

MCS: On September 26, 1997, Nextel S.A. acquired 49% of the capital stock
of MCS Radio Telefonia, Ltda. ("MCS"), an indirect wholly owned subsidiary of
Motorola, an option to purchase the remaining 51% of the capital stock of MCS
upon receipt of the approval of the applicable Brazilian regulatory authorities,
and certain assets of MCS. Upon the approval from Brazilian regulatory
authorities, the option for the remaining 51% will be exercisable for
approximately $3.2 million. In connection with the transaction, Motorola,
through a wholly owned subsidiary, acquired 5% of the outstanding capital stock
of Nextel S.A. MCS owns SMR licenses in 13 of the largest Brazilian cities,
including Sao Paulo, Rio de Janeiro and Belo Horizonte. Immediately subsequent
to the acquisition, the Company, through its 81% equity interest in Nextel
Brazil and Nextel Brazil's 95% equity interest in Nextel S.A. held a 77% equity
interest in Nextel S.A.

The total cost of the acquisition, which was accounted for as a purchase,
was $19.3 million and was allocated to the net assets acquired based on their
estimated fair values, including licenses and goodwill, which are being
amortized over their estimated useful lives of 20 years.

INDONESIA: On August 15, 1997, the Company entered into a preliminary
agreement with PT Gunung Sewu Kencana ("GSK"), a large diversified Indonesian
company, which gives the Company the right, upon receipt of required regulatory
approval, to purchase a 37.5% interest in PT Mitra Kencana Telekomunindo
("MKT"), an Indonesian corporation owned by GSK. MKT holds a provisional license
for 80 SMR channels in Indonesia that can be converted into an operating license
upon satisfaction of certain regulatory approvals. Although the Company believes
that MKT presents it with significant opportunities to expand its SMR network in
Asia, the Company does not intend to make any substantial investment in MKT
until the economic and political conditions in Indonesia, and the economic
conditions in Asia generally, have stabilized. To date, the Company has advanced
$1.5 million to MKT in the form of a loan that is guaranteed by GSK.

F-13
<PAGE> 173
NEXTEL INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

2. BUSINESS COMBINATIONS AND INVESTMENTS -- (CONTINUED)
PRO FORMA INFORMATION: The following summarized pro forma (unaudited)
information is for the years ended December 31, 1996 and 1997 and assumes the
Nextel Argentina, Nextel Mexico, Nextel Brazil and MCS transactions had occurred
on January 1, 1996.

<TABLE>
<CAPTION>
1996 1997
----------- -----------
<S> <C> <C>
Revenues................................................... $ 24,697 $ 26,312
=========== ===========
Net loss................................................... $ (55,245) $ (89,717)
=========== ===========
Net loss per share, basic and diluted...................... $ (1.51) $ (2.46)
=========== ===========
Weighted average shares outstanding........................ 36,500,000 36,500,000
=========== ===========
</TABLE>

The above amounts consolidate the historical results of Nextel Argentina,
the WVA Entities, Nextel Mexico, Nextel Brazil and MCS prior to the acquisitions
and reflect adjustments for the recognition of the minority ownership interests
and the amortization of licenses and goodwill. The pro forma information is not
necessarily indicative of the results that would actually have occurred had the
transactions been consummated on the date indicated, nor are they necessarily
indicative of future operating results of the Company.

3. NOTES RECEIVABLE

At December 31, 1996, notes receivable consisted of the following:

<TABLE>
<S> <C>
Due from affiliated companies............................... $5,378
Due from officer of Nextel Communications................... 250
Interest receivable......................................... 76
------
$5,704
======
</TABLE>

All of the balances outstanding as of December 31, 1996 plus accrued
interest were transferred to Nextel Communications prior to the merger of Nextel
Canmex and the Company.

4. INVESTMENT IN UNCONSOLIDATED SUBSIDIARIES

Balances at December 31, 1996 consist of the Company's 30% interest in
Nextel Philippines and its results of operations from June 14, 1996 (date of
acquisition) to December 31, 1996, 30.1% of Nextel Mexico and its results of
operations for the year ended December 31, 1996 and the Company's investment in
Shanghai CCT McCaw, accounted for under the cost method. At December 31, 1997,
investments in unconsolidated subsidiaries consists of the Company's 30%
interest in Nextel Philippines and its results of operations for the year ended
December 31, 1997, the Company's 50% interest in the Argentina Joint Venture and
its results of operations from May 6, 1997 (date of inception) to December 31,
1997, and the Company's investment in Shanghai CCT McCaw, accounted for under
the cost method.

Summarized financial information for the Company's investments in
unconsolidated subsidiaries accounted for on the equity method as of and for the
year ended December 31, 1996 and 1997 is as follows:

<TABLE>
<CAPTION>
1996 1997
------- --------
<S> <C> <C>
Assets...................................................... $57,605 $133,315
Liabilities................................................. 38,453 111,997
Operating loss.............................................. 6,123 12,167
</TABLE>

F-14
<PAGE> 174
NEXTEL INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

5. PROPERTY, PLANT AND EQUIPMENT

<TABLE>
<CAPTION>
1996 1997
------ --------
<S> <C> <C>
Land........................................................ $ -- $ 85
Leasehold improvements...................................... 16 1,442
Equipment................................................... 245 59,836
Furniture and fixtures...................................... 124 990
Construction in progress.................................... 8,392 75,849
------ --------
8,777 138,202
Less accumulated depreciation and amortization.............. (74) (1,992)
------ --------
$8,703 $136,210
====== ========
</TABLE>

For the year ended December 31, 1997, the Company capitalized $2,511 of
interest related to expenditures for construction of significant additions to
property, plant and equipment. No interest expense was capitalized during the
years ended December 31, 1995 and 1996.

6. INTANGIBLE ASSETS

<TABLE>
<CAPTION>
1996 1997
------- --------
<S> <C> <C>
Licenses.................................................... $10,878 $429,258
Goodwill.................................................... -- 109,894
Trademarks and other........................................ -- 1,512
------- --------
10,878 540,664
Less accumulated amortization............................... -- (14,664)
------- --------
$10,878 $526,000
======= ========
</TABLE>

7. DUE TO PARENT

At December 31, 1996, due to parent represents amounts paid by Nextel
Communications on behalf of the Company since the Company's inception to fund
its operations and investments. In February 1997, the remaining amount due to
parent was converted to capital in connection with the merger of Nextel Canmex
and Nextel Services into the Company. (See Note 2.)

At December 31, 1997, due to parent represents amounts owed to Nextel
Communications as consideration for certain assets transferred to the Company as
well as amounts due under the terms of the tax sharing agreement between the
Company and Nextel Communications. These liabilities are to be extinguished as a
condition of the high-yield offering (See Note 17) through the issuance of
Series A Redeemable Exchangeable Preferred Stock of the Company with a value to
be determined based on the fair value of the extinguished liability.

8. LONG-TERM DEBT

<TABLE>
<CAPTION>
1997
--------
<S> <C>
13% Senior discount notes due 2007, net of unamortized
discount of $411,571...................................... $539,892
Nextel Brazil equipment financing, at 2.5% over prime rate
(11% at December 31, 1997)................................ 50,250
Nextel Mexico equipment financing, at rates varying from
9.7% to 14.7%............................................. 9,878
--------
600,020
Less current portion........................................ (2,211)
--------
$597,809
========
</TABLE>

F-15
<PAGE> 175
NEXTEL INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

8. LONG-TERM DEBT -- (CONTINUED)
SENIOR DISCOUNT NOTES: In March 1997, the Company issued through a private
placement 951,463 units generating approximately $482.0 million in net proceeds.
Each unit is comprised of a 10-year senior discount note (the "Notes") (with a
principal amount due at maturity of $1,000) and one warrant to purchase .38748
shares of Company's common stock (the Warrant) (See Note 12). The Notes have a
13% yield to maturity, are noncallable until April 15, 2002, and require no
interest payments for the first five years. Interest on the Notes is payable in
cash on each April 15 and October 15, commencing October 15, 2002. The Company
is restricted from paying dividends under the terms of the Notes, and the Notes
contain covenants restricting certain transactions.

NEXTEL BRAZIL EQUIPMENT FINANCING: In October, 1997, Nextel Brazil and
Motorola Credit Corp. a subsidiary of Motorola ("Motorola Credit"), entered into
an equipment financing agreement whereby Motorola Credit agreed to provide up to
$125 million in revolving loans (the "Brazil Motorola Financing") to Nextel
Brazil to be used to acquire infrastructure equipment and related services from
Motorola. The Brazil Motorola Financing is repayable in semi-annual installments
over 42 months commencing June 30, 2000 and bears interest at an annual rate
periodically determined by the Company of either the LIBOR rate plus 463 basis
points or the prime rate plus 250 basis points. Currently, the Brazil Motorola
Financing bears an interest rate of prime rate plus 250 basis points (11% at
December 31, 1997). Pursuant to the Brazil Motorola Financing, the revolving
loans are secured by a first priority lien on substantially all of Nextel
Brazil's assets, a pledge of all of the stock of Nextel Brazil and its
subsidiaries, including Nextel S.A., and guarantees by the Company and Motorola
International Development Corporation (which indirectly holds a 5% equity
interest in Nextel S.A.) of 93.9% and 6.1%, respectively, of Nextel Brazil's
obligations under such financing. The Brazil Motorola Financing prohibits the
payment of dividends by Nextel S.A. until the existing loan balance is paid in
full and contains covenants restricting certain transactions and requiring the
maintenance of certain financial ratios. As of December 31, 1997, approximately
$35.5 million of the Company's cash, cash equivalents and marketable securities
have been restricted for use as future equity investments in Nextel Brazil and
its subsidiaries.

NEXTEL MEXICO EQUIPMENT FINANCING: Nextel Mexico holds several secured
financing agreements, with various payment terms and maturities through 2007 and
interest rates ranging from 9.7% to 14.7%. The term loans are secured by a first
priority lien on substantially all of Nextel Mexico's assets. Additionally, the
shares of one of Nextel Mexico's subsidiaries are pledged as collateral for the
loan denominated in Mexican pesos. At December 31, 1997 loans made in Mexican
pesos total approximately $176. All remaining notes are payable in U.S. dollars.

For the years subsequent to December 31, 1997, annual maturities of
long-term obligations are as follows:

<TABLE>
<CAPTION>
PAYABLE IN PAYABLE IN
MEXICAN PESOS U.S. DOLLARS TOTAL
------------- ------------ -----
<S> <C> <C> <C>
1998.................................................... $176 $ 2,035 $ 2,211
1999.................................................... -- 2,105 2,105
2000.................................................... -- 11,823 11,823
2001.................................................... -- 10,989 10,989
2002.................................................... -- 15,593 15,593
Thereafter.............................................. -- 968,870 968,870
---- ---------- ----------
176 1,011,415 1,011,591
Less unamortized discount............................... -- 411,571 411,571
---- ---------- ----------
$176 $ 599,844 $ 600,020
==== ========== ==========
</TABLE>

F-16
<PAGE> 176
NEXTEL INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

9. FAIR VALUE OF FINANCIAL INSTRUMENTS

The estimated fair value amounts have been determined by the Company, using
available market information and appropriate valuation methodologies. However,
considerable judgment is required in interpreting market data to develop the
estimates of fair value. Accordingly, the estimates presented herein are not
necessarily indicative of the amounts that the Company could realize in a
current market exchange. The use of different market assumptions and/or
estimation methodologies may have a material effect on the estimated fair value
amounts.

The carrying amounts and fair values of the Company's financial instruments
at December 31, 1996 and 1997 are as follows:

CURRENT ASSETS AND CURRENT LIABILITIES: The carrying amounts of these
items are a reasonable estimate of their fair value.

SHANGHAI CCT McCAW: Included in investments in unconsolidated subsidiaries
is the Company's investment in Shanghai CCT McCaw, accounted for under the cost
method. As there is no active market for this investment, it is impracticable to
estimate its fair value.

INVESTMENTS AND OTHER ASSETS: Included in investments and others assets is
the Company's investment in Clearnet, which approximates its fair value of
$17,607 and $18,155 based on its current stock price of $11 and $11 3/8 per
share as of December 31, 1996 and 1997, respectively.

LONG-TERM DEBT: At December 31, 1997, the fair value of the Notes is
estimated based on quoted market prices and exceeds their carrying value by
$11,957. Fair value of the Company's equipment financing agreements is estimated
based on the Company's current borrowing rates and approximates carrying value
at December 31, 1997 (See Note 8).

INVESTMENT PURCHASE AND SALES OPTIONS: The Company maintains or has
granted certain stock purchase and sale rights in connection with its
investments in Nextel Brazil and Nextel Philippines (See Note 2). The Company
believes that a reasonable estimate of the fair value of these instruments is
not practicable to determine as of December 31, 1997, as there is no active
market for such instruments.

10. INCOME TAXES

The components of income tax benefit (provision) for each of the three
years ended December 31 are as follows:

<TABLE>
<CAPTION>
1995 1996 1997
------- ------- -------
<S> <C> <C> <C>
Current:
Federal................................................ $(2,119) $(1,355) $(1,745)
Deferred:
Foreign................................................ -- -- 8,027
------- ------- -------
Total income tax benefit (provision)..................... $(2,119) $(1,355) $ 6,282
======= ======= =======
</TABLE>

The reconciliation of income taxes computed at the statutory rate to the
income tax benefit for each of the three years ended December 31 is as follows:

<TABLE>
<CAPTION>
1995 1996 1997
------- -------- --------
<S> <C> <C> <C>
Income tax provision (benefit) at statutory rate........ $(5,412) $(3,781) $(27,095)
Nonconsolidated subsidiary adjustments.................. 7,430 2,209 2,559
Other................................................... 6 330 1,470
Increase in valuation allowance......................... 95 2,597 16,784
------- ------- --------
Tax provision (benefit)................................. $ 2,119 $ 1,355 $ (6,282)
======= ======= ========
</TABLE>

F-17
<PAGE> 177
NEXTEL INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

10. INCOME TAXES -- (CONTINUED)
Deferred taxes as of December 31 consist of the following:

<TABLE>
<CAPTION>
1996 1997
------- --------
<S> <C> <C>
Deferred tax assets:
Operating loss carryforwards................................ $ 2,692 $ 29,088
Deferred interest........................................... -- 17,019
Other....................................................... -- 1,714
------- --------
2,692 47,821
Valuation allowance......................................... (2,692) (40,654)
------- --------
-- 7,167
------- --------
Deferred tax liabilities:
Intangibles................................................. -- 126,172
Unrealized gain on investment............................... 1,562 1,772
------- --------
1,562 127,944
------- --------
Net deferred tax liability.................................. $ 1,562 $120,777
======= ========
</TABLE>

At December 31, 1997, the Company had approximately $67.8 million of net
operating loss carryforwards for Mexican income tax purposes which expire
through 2007. Additionally, the Company had approximately $13.7 million of net
operating loss carryforwards for Brazilian income tax purposes which have no
expiration date and can only be utilized up to the limit of 30% of taxable
income for the year. The Company may be limited in its ability to use tax net
operating losses in any one year depending on its ability to generate sufficient
taxable income.

11. COMMITMENTS AND CONTINGENCIES

OPERATING LEASE COMMITMENTS: The Company leases various cell sites and
office facilities under operating leases with terms of one to five years. Total
rent expense under operating leases for the years ended December 31, 1995, 1996
and 1997 totaled $50, $161 and $3,325, respectively.

Future minimum lease payments for years ending after December 31, 1997
under operating leases that have initial noncancelable lease terms exceeding one
year are as follows:

<TABLE>
<S> <C>
1998........................................................ $ 7,912
1999........................................................ 8,048
2000........................................................ 7,601
2001........................................................ 6,813
2002........................................................ 5,843
Thereafter.................................................. 16,136
-------
$52,353
=======
</TABLE>

PURCHASE COMMITMENTS: Motorola is the principal supplier of the Company's
ESMR infrastructure equipment and handsets. During the year ended December 31,
1997, the Company acquired approximately $87,300 in infrastructure equipment and
related services from Motorola and has committed to purchase $140,000 of
additional infrastructure equipment and related services. As of December 31,
1997 the Company's consolidated balance sheets include amounts payable to
Motorola related to such purchases of $11,905 in accounts payable and $50,250 in
long-term debt (See Note 8). As of February 19, 1998, cash and cash equivalents
contractually restricted for future purchases, representing primarily Motorola
equipment, is $59,928, of which $33,525 was restricted as of December 31, 1997.

F-18
<PAGE> 178
NEXTEL INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

11. COMMITMENTS AND CONTINGENCIES -- (CONTINUED)
FINANCING COMMITMENTS: Since March 1996, the Company has advanced Shanghai
CCT McCaw $12,483, of a total maximum commitment of $13,200, to fund the
buildout of the Shanghai GSM System. The amount outstanding as of December 31,
1997 totals $11,253, bears interest at 7% per annum and requires payments of
principal and interest in four annual installments, commencing December 31,
1997. Due to the lack of significant control over the Company's investment in
Shanghai CCT McCaw, the note is recorded as an addition to the Company's
investment in Shanghai CCT McCaw.

FINANCING GUARANTEES: In June 1997, Nextel Philippines and Motorola
entered into an equipment financing agreement (the "Philippines Motorola
Financing"), pursuant to which Motorola agreed to provide up to $14.7 million in
term loans, denominated in U.S. dollars, to Nextel Philippines to finance the
acquisition of infrastructure equipment and related services from Motorola. The
terms of the Philippines Motorola Financing provides for a maturity of two years
and an annual interest rate of LIBOR plus 506 basis points. Pursuant to the
Philippines Motorola Financing, the term loans are secured by a first priority
lien on substantially all of Nextel Philippines' assets and guarantee of such
financing by the Company. As of December 31, 1997, Nextel Philippines has
borrowed the maximum amount available under the Philippines Motorola Financing.

12. COMMON STOCK WARRANTS

In March 1997, the Company issued through a private placement, 951,463
units consisting of one 10-year senior discount note (See Note 8), and one
warrant to purchase .38748 shares of the Company's common stock (the "Warrant").
The Warrants are exercisable at a price of $9.99 per share any time after March
6, 1998 and prior to March 6, 2007. The Warrants entitle the holders to
purchase, in the aggregate, approximately 368,673 shares of the Company's common
stock which approximates 1% of the current outstanding shares on a fully diluted
basis as of December 31, 1997.

13. EMPLOYEE BENEFIT PLANS

Nextel Communications Incentive Equity Plan:

Certain of the Company's employees participate in Nextel Communications'
Incentive Equity Plan (the "Nextel Plan"). Generally, options outstanding under
the Nextel Plan (i) are granted at prices equal to or exceeding the market value
of Nextel Communications' stock on the grant date; (ii) vest ratably over either
a four or five year service period; and (iii) expire ten years subsequent to
award.

A summary of the Nextel Plan activity related to the Company's employees is
as follows:

<TABLE>
<CAPTION>
OPTION WEIGHTED AVERAGE
SHARES PRICE RANGE EXERCISE PRICE
------- ----------------- ----------------
<S> <C> <C> <C> <C>
Outstanding, December 31, 1995....................... 81,500 $14.87 - $18.37 $15.63
Granted......................................... 59,700 15.12 15.12
Canceled........................................ (5,100) 14.87 - 15.12 14.88
------- ------ ------ ------
Outstanding, December 31, 1996....................... 136,100 15.12 - 18.37 15.44
Granted......................................... 175,550 15.12 - 23.81 15.52
------- ------ ------ ------
Outstanding, December 31, 1997....................... 311,650 $15.12 - $23.81 $15.11
======= ====== ====== ======
Exercisable, December 31, 1997....................... 55,420 $14.87 - $18.37 $15.37
======= ====== ====== ======
</TABLE>

Nextel International Employee Stock Option Plan:

On June 23, 1997, the board of directors adopted the 1997 Nextel
International Employee Stock Option Plan (the "Company Plan"), under which
certain of the Company's employees participate. Generally, options outstanding
under the Company Plan (i) are granted at fair value, based on periodic
valuations of the

F-19
<PAGE> 179
NEXTEL INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

13. EMPLOYEE BENEFIT PLANS -- (CONTINUED)
Company using standard industry valuation techniques; (ii) vest ratably over a
four year service period; and (iii) expire ten years subsequent to award.

A summary of Company Plan activity is as follows:

<TABLE>
<CAPTION>
WEIGHTED
OPTION AVERAGE
PRICE EXERCISE
SHARES RANGE PRICE
--------- ------ --------
<S> <C> <C> <C>
Outstanding, December 31, 1996.............................. -- $ -- $ --
Granted................................................... 1,621,000 10.00 10.00
Canceled.................................................. 30,000 10.00 10.00
--------- ------ ------
Outstanding, December 31, 1997.............................. 1,591,000 $10.00 $10.00
========= ====== ======
Exercisable, December 31, 1997.............................. -- $ -- $ --
========= ====== ======
</TABLE>

The Company accounts for stock-based compensation using the intrinsic value
method prescribed in Accounting Principles Board Opinion No. 25, Accounting for
Stock Issued to Employees, and related Interpretations. If the Company had
elected to recognize compensation expense based on the fair value of the awards
granted in 1997 consistent with the provisions of SFAS 123, Accounting for Stock
Based Compensation, the Company's net loss and net loss per common share for the
year ended December 31 would have been increased to the pro forma amounts
indicated below:

<TABLE>
<CAPTION>
1997
--------
<S> <C>
Net loss:
As reported............................................... $(73,948)
========
Pro forma................................................. $(76,024)
========
Loss per common share, basic and diluted:
As reported............................................... $ (2.03)
========
Pro forma................................................. $ (2.08)
========
Weighted average fair value of options granted.............. $ 6.59
========
</TABLE>

The fair value of each option grant is estimated on the date of grant using
the Black-Scholes option pricing model with the following assumptions:

<TABLE>
<S> <C>
Expected stock price volatility............................. 53%
Risk-free interest rate..................................... 6.6%
Expected life of options.................................... 8 years
Expected dividend yield..................................... 0.00%
</TABLE>

The Company's stock options are not transferable, and the actual value of
the stock options that an employee may realize, if any, will depend on the
excess of the market price on the date of exercise over the exercise price. The
Company has based its assumption for stock price volatility on the historical
variance of weekly closing prices of Nextel Communications' stock. The risk-free
rate of return used equals the yield on eight year zero-coupon U.S. Treasury
issues on the grant date. No discount was applied to the value of the grants for
non-transferability or risk of forfeiture.

F-20
<PAGE> 180
NEXTEL INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

13. EMPLOYEE BENEFIT PLANS -- (CONTINUED)
Stock Appreciation Rights:

On November 1, 1996, the Company adopted a Stock Appreciation Rights Plan
(the "SAR Plan"), which was effective as of November 1, 1995, whereby selected
employees and agents of the Company may be granted rights to share in the future
appreciation in the value of the Company. Such rights do not represent an equity
interest in the Company, only a right to compensation under the terms of the
plan.

The Company retroactively granted 1,140,000 rights under the plan, at an
exercise price of $10.00 per right, on dates ranging from October 1, 1995 to
December 31, 1996, with vesting periods of four years. Under the provisions of
the plan, the number of shares used in calculating the fair value per share is
adjusted periodically to reflect capital contributed to the Company by its
parent. This adjustment is generally only for purposes of valuing the SAR's. It
does not necessarily reflect the actual issuance of additional shares of common
stock. Rights under the plan may not be exercised until 50% of the employee's
grant has vested. As of December 31, 1996 and 1997, there were 1,240,000 and
25,000 rights outstanding, respectively. None of the rights are exercisable
under the terms of the plan.

In conjunction with the adoption of the 1997 Stock Option Plan, the board
of directors also approved a plan to terminate the SAR Plan. Each holder of SARs
granted previously has been given the option to exchange the SARs for stock
options to be granted at fair value under the 1997 Stock Option Plan. As of
December 31, 1997, 1,070,000 rights have been exchanged for options under the
1997 Stock Option Plan and 25,000 SARs remain outstanding. With respect to SAR
holders who elected not to exchange their SARs for stock options, the Company
will continue to be obligated by the terms and conditions of the SAR agreements
previously entered into with such holders.

Employee Benefit Plan:

Certain officers and employees of the Company are eligible to participate
in Nextel Communications' defined contribution plans pursuant to Section 401(k)
of the Internal Revenue Code. The Company provides a matching contribution of
$.50 for every $1.00 contributed by the employee up to 4% of each employee's
salary. Such contributions were approximately $0, $10, and $29 for the years
ended December 31, 1995, 1996 and 1997, respectively. At December 31, 1997, the
Company had no other pension or post employment benefit plans.

14. RELATED PARTIES

Nextel Communications performs certain administrative functions for the
Company, consisting of accounting, legal and other services, totaling $504 and
$318 for the years ended December 31, 1996 and 1997, respectively. No amounts
were incurred for the year ended December 31, 1995 due to the limited operations
of the Company.

At December 31, 1997, Motorola owned approximately 19.9% and 100% of Nextel
Communications' outstanding Class A and Class B common stock, respectively. The
Company maintains various business relationships with Motorola, including
purchases of infrastructure equipment and handsets, equipment financing
agreements, and joint venture partnerships (See Notes 2, 8 and 11).

F-21
<PAGE> 181
NEXTEL INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

15. GEOGRAPHICAL SEGMENT INFORMATION

The Company's operations are principally located in three geographic areas:
Brazil, Argentina and Mexico. The following is a summary of data by geographic
area for the three years ended December 31, 1995, 1996 and 1997 and as of
December 31, 1996 and 1997:

<TABLE>
<CAPTION>
1995 1996 1997
---- ---- ----
<S> <C> <C> <C>
Net sales to unaffiliated customers
Brazil................................................. $ -- $ -- $ 9,605
Argentina.............................................. -- -- 60
Mexico................................................. -- -- 3,348
Corporate and other.................................... -- -- 2
----- -------- ----------
$ -- $ -- $ 13,015
===== ======== ==========
Net operating loss
Brazil................................................. $ -- $ -- $ (28,436)
Argentina.............................................. (24) (2,738) (1,257)
Mexico................................................. -- -- (3,718)
Corporate and other.................................... (272) (6,748) (6,147)
----- -------- ----------
$(296) $ (9,486) $ (39,558)
===== ======== ==========
<CAPTION>
1996 1997
-------- ----------
<S> <C> <C> <C>
Total assets
Brazil................................................. $ -- $ 420,242
Argentina.............................................. 22,362 --
Mexico................................................. -- 288,695
Corporate and other.................................... 177,005 414,101
-------- ----------
$199,367 $1,123,038
======== ==========
</TABLE>

The Company's investment in Nextel Mexico was accounted for under the
equity method prior to September 1, 1997. Nextel Brazil was purchased effective
January 30, 1997. Accordingly, no segmented information is reflected as of
December 31, 1996 and for the years ended December 31, 1995 and 1996 for Nextel
Brazil and Nextel Mexico.

In May 1997, the Company reduced its effective ownership interest in Nextel
Argentina to 50%; therefore, the accompanying table only includes the net sales,
operating losses and assets of Nextel Argentina prior to May 6, 1997. As the
Company's investment in Nextel Argentina is accounted for under the equity
method of accounting, as of December 31, 1997, the related asset is reflected in
Corporate and other.

Corporate and other includes operating losses relating to the selling,
general and administrative expenses of the Company's corporate offices for the
years ended December 31, 1995, 1996 and 1997. Total assets consist mainly of
cash and cash equivalents, marketable securities and investments in
unconsolidated subsidiaries at December 31, 1996 and 1997.

F-22
<PAGE> 182
NEXTEL INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

16. QUARTERLY FINANCIAL DATA (UNAUDITED)

<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH
------- -------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>

1997
Revenues............................................. $ 1,460 $ 2,504 $ 3,085 $ 5,966
Operating loss....................................... (5,930) (8,571) (9,674) (15,383)
Net loss............................................. (9,811) (18,338) (20,621) (25,178)
Net loss per common share, basic and diluted......... (0.27) (0.50) (0.56) (0.69)

1996
Revenues............................................. $ -- $ -- $ -- $ --
Operating loss....................................... (829) (2,043) (3,475) (3,139)
Net loss............................................. (1,348) (2,451) (4,347) (4,330)
Net loss per common share, basic and diluted......... (0.04) (0.07) (0.12) (0.12)
</TABLE>

17. PENDING DEBT TRANSACTIONS

HIGH-YIELD OFFERING: The Company is planning to issue $300 million of
senior discount notes due 2008 (the "Notes") in March 1998. The Notes are
expected to be unsecured obligations of the Company and are expected to carry a
market interest rate. The Notes are being privately placed. The indenture
governing the Notes is expected to contain substantial covenants and
restrictions.

NEXTEL ARGENTINA FINANCING: Nextel Argentina entered into a binding
commitment letter with The Chase Manhattan Bank for a $100 million Senior
Secured credit facility (the "Argentina Financing"), primarily to fund
infrastructure equipment expenditures, development, expansion and upgrade of
network systems, and spectrum acquisitions. The Argentina Financing is subject
to the execution of definitive loan and security documentation and the
commitment letter expires on March 27, 1998. The Argentina Financing will be
repayable in quarterly installments commencing 30 months after the closing date
of the loan, with a 50% balloon payment due at the end of five years. The
Argentina Financing will bear interest at an annual rate periodically determined
by the Company of either (a) the ABR plus 2.75% (ABR is the highest of the prime
rate, the base CD rate plus 1% and the federal funds rate plus 0.5%) or (b) the
Eurodollar rate plus 3.75% (Eurodollar rate is the LIBO rate multiplied by the
statutory reserve rate). The Argentina Financing is subject to certain capital
requirements and covenants and will be secured by first priority liens on
substantially all of Nextel Argentina's assets. As of February 19, 1998, there
are no amounts outstanding on the Argentina Financing.

F-23
<PAGE> 183

NEXTEL INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF MARCH 31, 1998 AND DECEMBER 31, 1997
(DOLLARS IN THOUSANDS)
UNAUDITED

<TABLE>
<CAPTION>
1998 1997
---------- ----------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents (of which $104,540 is
restricted as of March 31, 1998)...................... $ 463,380 $ 159,790
Marketable securities.................................. 5,236 128,560
Accounts receivable, less allowance for doubtful
accounts of $2,112 and $1,003......................... 6,162 3,838
Subscriber equipment inventory......................... 12,728 1,749
Prepaid and other...................................... 31,176 15,884
---------- ----------
Total current assets.............................. 518,682 309,821
PROPERTY, PLANT AND EQUIPMENT, net of accumulated
depreciation of $4,156 and $1,992......................... 266,196 136,210
INVESTMENT IN UNCONSOLIDATED SUBSIDIARIES, at cost less
equity in net losses of $1,313 and $7,526................. 81,045 106,489
INTANGIBLE ASSETS, net of accumulated amortization of
$21,729 and $14,664....................................... 593,455 526,000
INVESTMENTS AND OTHER ASSETS................................ 167,380 44,518
---------- ----------
$1,626,758 $1,123,038
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable, accrued expenses and other........... $ 74,501 $ 76,048
Due to parent.......................................... -- 8,254
Notes payable and current portion of long-term debt.... 2,345 2,211
---------- ----------
Total current liabilities......................... 76,846 86,513
LONG-TERM DEBT.............................................. 1,026,387 597,809
DEFERRED INCOME TAXES....................................... 125,829 120,777
---------- ----------
Total liabilities...................................... 1,229,062 805,099
---------- ----------
MINORITY INTEREST........................................... 28,309 21,910

STOCKHOLDERS' EQUITY:
Series A exchangeable redeemable preferred stock (1,250
shares authorized, $10.00 par value, 988.86 shares
issued and outstanding)............................... 98,886 --
Series B redeemable preferred stock (2,500 shares
authorized, $10.00 par value, no shares issued and
outstanding).......................................... -- --
Common stock (73,000,000 shares authorized, no par
value, 36,500,000 shares issued and outstanding)...... 395,428 395,428
Accumulated deficit.................................... (131,258) (102,689)
Unrealized gain on investments......................... 9,801 3,290
Cumulative translation adjustment...................... (3,470) --
---------- ----------
Total stockholders' equity........................ 369,387 296,029
---------- ----------
$1,626,758 $1,123,038
========== ==========
</TABLE>

The accompanying notes are an integral part of these condensed consolidated
financial statements.

F-24
<PAGE> 184

NEXTEL INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
1998 1997
---------- ----------
<S> <C> <C>
REVENUES
Radio service revenue.................................. $ 6,138 $ 1,180
Equipment sales and maintenance........................ 2,420 280
---------- ----------
8,558 1,460
---------- ----------
OPERATING EXPENSES
Cost of radio service revenue.......................... 2,499 593
Cost of equipment sales and maintenance................ 1,053 165
Selling, general and administrative.................... 15,227 4,051
Depreciation and amortization.......................... 9,192 2,581
---------- ----------
27,971 7,390
---------- ----------
OPERATING LOSS.............................................. (19,413) (5,930)
---------- ----------
OTHER INCOME (EXPENSE)
Interest income........................................ 4,324 2,798
Interest expense....................................... (18,968) (5,591)
Loss from equity method investments.................... (1,314) (1,867)
Other, net............................................. 1,198 (157)
Minority interest...................................... 1,230 437
---------- ----------
(13,530) (4,380)
---------- ----------
LOSS BEFORE INCOME TAX BENEFIT.............................. (32,943) (10,310)
INCOME TAX BENEFIT.......................................... 4,374 499
---------- ----------
NET LOSS.................................................... $ (28,569) $ (9,811)
---------- ----------
NET LOSS PER COMMON SHARE, BASIC AND DILUTED................ $ (0.78) $ (0.27)
========== ==========
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING........ 36,500,000 36,500,000
========== ==========
</TABLE>

The accompanying notes are an integral part of these condensed consolidated
financial statements.

F-25
<PAGE> 185

NEXTEL INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 1998
(DOLLARS IN THOUSANDS)
UNAUDITED
<TABLE>
<CAPTION>

SERIES A SERIES B
PREFERRED STOCK PREFERRED STOCK COMMON STOCK
----------------- --------------- --------------------- ACCUMULATED
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT DEFICIT
------ -------- ------ ------ ---------- -------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE, January 1, 1998......... -- -- -- -- 36,500,000 $395,428 $(102,689)
Issuance of Series A
preferred stock........... 988.86 $98,886 -- -- -- -- --
Unrealized gain on
investments............... -- -- -- -- -- -- --
Cumulative translation
adjustment................ -- -- -- -- -- -- --
Net loss.................... -- -- -- -- -- -- (28,569)
------ ------- -- -- ---------- -------- ---------
BALANCE, March 31, 1998.......... 988.86 $98,886 36,500,000 $395,428 $(131,258)
====== ======= == == ========== ======== =========

<CAPTION>
ACCUMULATED OTHER
COMPREHENSIVE INCOME
-------------------------
UNREALIZED CUMULATIVE
GAIN ON TRANSLATION
INVESTMENTS ADJUSTMENT TOTAL
----------- ----------- --------
<S> <C> <C> <C>
BALANCE, January 1, 1998......... $3,290 -- $296,029
Issuance of Series A
preferred stock........... -- -- 98,886
Unrealized gain on
investments............... 6,511 -- 6,511
Cumulative translation
adjustment................ -- $(3,470) (3,470)
Net loss.................... -- -- (28,569)
------ ------- --------
BALANCE, March 31, 1998.......... $9,801 $(3,470) $369,387
====== ======= ========
</TABLE>

The accompanying notes are an integral part of these condensed consolidated
financial statements.

F-26
<PAGE> 186

NEXTEL INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997
(DOLLARS IN THOUSANDS)
UNAUDITED

<TABLE>
<CAPTION>
1998 1997
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss............................................... $(28,569) $ (9,811)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization..................... 9,192 2,581
Interest accretion on long-term debt, net of
capitalization.................................. 17,256 4,849
Loss from equity method investments............... 1,314 1,867
Deferred income taxes............................. (8,549) (548)
Minority interest................................. (1,230) (437)
Change in current assets and liabilities:
Accounts receivable.......................... (847) 236
Subscriber equipment inventory............... (7,895) 243
Prepaid and other............................ (13,784) (2,149)
Accounts payable, accrued expenses and
other...................................... 9,743 399
Other........................................ (3,431) 2,299
-------- --------
Net cash used in operating activities.................. (26,800) (471)
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures................................... (87,296) (6,193)
Purchase of marketable securities...................... (3,994) --
Proceeds from sale of marketable securities............ 126,018 --
Issuance of notes receivable........................... -- (2,144)
Business acquisitions, net of cash acquired............ (66,625) --
Investments in unconsolidated subsidiaries............. (37,774) (26,916)
Other.................................................. -- (2,498)
-------- --------
Net cash used in investing activities.................. (69,671) (37,751)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments to parent, net.............................. (8,254) (23,556)
Capital contributions from parent...................... -- 6,366
Capital contributions from minority stockholders....... 4,016 --
Proceeds from issuance of preferred stock.............. 8,254 --
Proceeds from issuance of warrants..................... -- 14,800
Net proceeds from issuance of long-term debt........... 396,772 467,578
Repayment of long-term debt............................ (727) --
-------- --------
Net cash provided by financing activities.............. 400,061 465,188
-------- --------
INCREASE IN CASH AND CASH EQUIVALENTS....................... 303,590 426,966
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD.............. 159,790 53,029
-------- --------
CASH AND CASH EQUIVALENTS, END OF PERIOD.................... $463,380 $479,995
======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest................................. $ 1,008 $ --
======== ========
Cash paid for income taxes............................. $ 1,685 $ --
======== ========
</TABLE>

The accompanying notes are an integral part of these condensed consolidated
financial statements.

F-27
<PAGE> 187

NEXTEL INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
UNAUDITED

1. BASIS OF PRESENTATION

The condensed consolidated interim financial statements of Nextel
International, Inc. and subsidiaries ("Nextel International" or the "Company"),
an indirect wholly owned subsidiary of Nextel Communications, Inc. ("Nextel
Communications"), included herein have been prepared by the Company without
audit, pursuant to the rules and regulations of the Securities and Exchange
Commission (the "Commission") and reflect all adjustments that are, in the
opinion of management, necessary for a fair statement of the results for the
interim periods. All adjustments made were normal recurring accruals.

The interim financial statements should be read in conjunction with the
consolidated financial statements and notes thereto included in the Company's
Annual Report on Form 10-K for the fiscal year ended December 31, 1997.
Operating results for the interim periods are not necessarily indicative of
results for an entire year.

Certain prior period amounts have been reclassified to conform with the
current presentation.

SUPPLEMENTAL CASH FLOW INFORMATION: In March 1998, a wholly owned
subsidiary of Nextel Communications transferred to the Company 6,777,778 Class D
Shares of Clearnet Communications Inc. ("Clearnet") with a fair value of $90.6
million in exchange for 906.32 shares of the Company's Series A Exchangeable
Redeemable Preferred Stock, $10 par value per share (the "Series A Preferred
Stock"). See Note 3.

RESTRICTED CASH AND CASH EQUIVALENTS: As of March 31, 1998, approximately
$104.5 million of cash and cash equivalents was restricted for use as equity
investments under certain of the Company's financing agreements and as equipment
purchases under certain infrastructure purchase contracts.

COMPREHENSIVE INCOME: Effective January 1, 1998, the Company adopted
Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive
Income," ("SFAS 130") that establishes new rules for the reporting and display
of comprehensive income and its components. Adoption of SFAS 130 requires
unrealized gains or losses on the Company's available-for-sale securities and
foreign currency translation adjustments be included in other comprehensive
income. The components of comprehensive income, net of related tax, are as
follows (dollars in thousands):

<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-------------------
1998 1997
-------- --------
<S> <C> <C>
Net loss.................................................... $(28,569) $ (9,811)
Other comprehensive income:
Unrealized gain (loss) on investments, net of tax......... 6,511 (1,685)
Foreign currency translation adjustments.................. (3,470) --
-------- --------
$(25,528) $(11,496)
======== ========
</TABLE>

2. SIGNIFICANT TRANSACTIONS

NEXTEL BRAZIL: On January 30, 1997, Nextel Communications purchased 81% of
the issued and outstanding capital stock of Wireless Ventures of Brazil, Inc.
("WVB") from Telcom Ventures, Inc. and affiliates (collectively "Telcom
Ventures") in exchange for $186.3 million in Nextel Communications Class A
Common Stock. Nextel Communications' investment in WVB was simultaneously
contributed to the Company, and WVB changed its name to McCaw International
(Brazil), Ltd. ("Nextel Brazil").

F-28
<PAGE> 188
NEXTEL INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

2. SIGNIFICANT TRANSACTIONS -- (CONTINUED)
MCS: On September 26, 1997, Nextel S.A., a subsidiary of Nextel Brazil
that is the indirect holder of substantially all of Nextel Brazil's specialized
mobile radio channels and related operating assets in Brazil, acquired 49% of
the capital stock of MCS Radio Telefonia, Ltda. ("MCS"), an indirect wholly
owned subsidiary of Motorola, Inc. ("Motorola"), an option to purchase the
remaining 51% of the capital stock of MCS upon receipt of the approval of the
applicable Brazilian regulatory authorities, and certain assets of MCS. Upon the
approval of the Brazilian regulatory authorities, the option for the remaining
51% will be exercisable for approximately $3.2 million. In exchange, Motorola,
through a wholly owned subsidiary, acquired 5% of the outstanding capital stock
of Nextel S.A. Immediately subsequent to the acquisition, the Company, through
its 81% equity interest in Nextel Brazil and Nextel Brazil's 95% equity interest
in Nextel S.A., held a 77% equity interest in Nextel S.A.

NEXTEL MEXICO: During the year ended December 31, 1997, through a series
of transactions, the Company increased its equity interest in Comunicaciones
Nextel de Mexico S.A., de C.V. ("Nextel Mexico") from 30.1% to 100% for
consideration equal to approximately $132.2 million.

NEXTEL ARGENTINA: On May 6, 1997, the Company contributed its 100%
ownership interest in Nextel Argentina S.R.L. ("Nextel Argentina") into Nextel
International (Argentina), Ltd. (the "Argentina Joint Venture"), a joint venture
between the Company and Wireless Ventures of Argentina, L.L.C. ("WVA"). WVA's
contribution included all of the outstanding common stock of a paging company
and two companies that own SMR licenses in Argentina (collectively the "WVA
Entities"). During 1997, Nextel Argentina and the WVA Entities were merged, with
Nextel Argentina being the surviving entity (the merged entities are herein
collectively referred to as "Nextel Argentina" subsequent to the formation of
the Argentina Joint Venture). The Company had a 50% voting interest, shared
equally in the profits and losses of the Argentina Joint Venture, and accounted
for its investment in the Argentina Joint Venture under the equity method of
accounting.

On January 30, 1998, the Company acquired the remaining 50% interest in the
Argentina Joint Venture from WVA for a purchase price of $46 million in cash. As
a result of the purchase, the Company increased its effective ownership interest
in Nextel Argentina from 50% to 100%. The acquisition is accounted for as a
purchase and, accordingly, the Company consolidated the accounts of Nextel
Argentina commencing February 1, 1998. The carrying value of the Company's
investment in Nextel Argentina as of January 30, 1998 approximated $63.0 million
and was allocated to the net assets acquired based on their preliminary
estimated fair values, including licenses and goodwill, which are being
amortized over their estimated useful lives of 20 years.

NEXTEL PERU: On January 29, 1998, the Company acquired a 70.1% interest in
Valorcom S.A. ("Nextel Peru"), a Peruvian wireless telecommunications company,
for $27.9 million, of which $7.2 million had been paid through March 31, 1998.
The remaining balance of $20.7 million is to be paid in the form of capital
contributions, which the Company expects will be made prior to July 30, 1998.
Nextel Peru, through its subsidiaries, holds licenses to operate 138 SMR
channels in the greater Lima area. Motorola, through an indirect wholly owned
subsidiary, holds a 19.9% interest in Nextel Peru. The acquisition is accounted
for as a purchase and, accordingly, the Company consolidated the accounts of
Nextel Peru commencing February 1, 1998. The purchase price was allocated to the
net assets acquired based on their preliminary estimated fair values, including
licenses and goodwill, which are being amortized over their estimated useful
lives of 20 years. Nextel Peru's historical operations are insignificant
relative to the results of the Company.

NEXTEL PHILIPPINES: In February 1998, the Company reached an agreement in
principle with the three groups of local shareholders of Infocom Communications
Network, Inc. ("Nextel Philippines"), including the Gotesco group (the "Gotesco
Group" and together with the other local shareholders, the "Philippines
Shareholders"), and consummated such agreements in April 1998 (the "Philippines
Partner Agreements"). Pursuant to the Philippines Partner Agreements (i) the
Nextel Philippines corporate governance arrange-

F-29
<PAGE> 189
NEXTEL INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

2. SIGNIFICANT TRANSACTIONS -- (CONTINUED)
ments were restructured to give the Company increased minority shareholder
rights; (ii) the Company purchased existing shareholder loans of the Philippines
Shareholders totaling approximately $19.6 million, which loans, bear interest at
18% per annum and are convertible into equity of Nextel Philippines; (iii) the
Company may, at its option, fund Nextel Philippines' future capital needs,
currently estimated to be $50 million for 1998, pursuant to loans that, at the
option of the Company, may be converted into equity of Nextel Philippines; (iv)
the Gotesco Group has the right to put its 20% interest to the Company for
approximately $9.4 million, beginning in January 1999 (the "Gotesco Put"); and
(v) the Company has the right to call the Gotesco Group's 20% interest for
approximately $11.6 million, if the Gotesco Group does not exercise the Gotesco
Put. The ability of the Company to convert shareholders loans into equity,
satisfy the Gotesco Put or call the Gotesco Group's 20% interest is subject to
applicable Philippines foreign ownership rules.

J-COM: On March 17, 1998, the Company purchased a 21% equity interest in
J-Com Co., Ltd., a digital SMR provider in Japan ("J-Com"), for a purchase price
of Y77.2 million (approximately $593,000) (the "Japan Acquisition"). The Company
also provided a shareholder loan of Y4.1 billion (approximately $31.5 million)
to J-Com. J-Com has a contractual right to provide service in Japan under a
sublicense covering more than 125 million people. DJSMR Business Partnership, a
Japanese partnership in which an affiliate of Motorola is the majority partner,
holds a 49% equity interest in J-Com. J-Com's historical operations are
insignificant relative to the results of the Company. The Company's investment
in J-Com is accounted for under the equity method.

PRO FORMA INFORMATION: The following summarized pro forma (unaudited)
information assumes the Nextel Brazil, MCS, Nextel Mexico and Nextel Argentina
transactions had occurred on January 1, 1997 (dollars in thousands, except for
share data).

<TABLE>
<CAPTION>
THREE MONTHS
ENDED
MARCH 31,
1997
------------
<S> <C>
Revenues.................................................... $ 5,880
==========
Net loss.................................................... $ (15,090)
==========
Net loss per share.......................................... $ (0.41)
==========
Weighted average shares outstanding......................... 36,500,000
==========
</TABLE>

The above amounts consolidate the historical results of Nextel Brazil, MCS,
Nextel Mexico and Nextel Argentina prior to the acquisitions and reflect
adjustments for the recognition of the minority ownership interests and the
amortization of licenses and goodwill. Pro forma information for the three
months ended March 31, 1998 does not differ materially from historical results.
The pro forma information is not necessarily indicative of the results that
would actually have occurred had the transactions been consummated on the date
indicated, nor is it necessarily indicative of future operating results of the
Company.

3. FINANCING ARRANGEMENTS

MARCH 1998 OFFERING: On March 12, 1998, the Company completed a private
placement offering (the "March 1998 Offering") of its 12 1/8% Senior Discount
Notes due 2008 (the "March 1998 Notes"). The March 1998 Offering generated
aggregate net proceeds to the Company of approximately $387 million. The March
1998 Notes are noncallable for five years and require no cash interest payments
for the first five years.

ISSUANCE OF PREFERRED STOCK: On March 12, 1998, in connection with the
March 1998 Offering, a wholly owned subsidiary of Nextel Communications
transferred to the Company 6,777,778 Class D Shares of Clearnet in exchange for
906.32 shares of the Company's Series A Preferred Stock. As a result of such

F-30
<PAGE> 190
NEXTEL INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

3. FINANCING ARRANGEMENTS -- (CONTINUED)
transaction (the "Clearnet Transaction"), the Company currently owns 583,104
Class A Shares and 7,790,741 Class D Shares of Clearnet (each Class D Share is
convertible at the option of the holder into one Class A Share). Additionally,
the Company issued 82.54 shares of Series A Preferred Stock to a wholly owned
subsidiary of Nextel Communications for consideration of $8,254,000.

The Series A Preferred Stock was issued at an original liquidation
preference of $100,000 per share and thereafter the liquidation preference on
the Series A Preferred Stock accretes at an annual rate equal to 13.625%. At
March 31, 1998, the accreted liquidation preference on the Series A Preferred
Stock totaled $99,597,000. Except as required by law, the holders of the Series
A Preferred Stock are not entitled to receive dividends or other distributions.
The Company has the right at any time to redeem the Series A Preferred Stock in
full (or with the consent of the holder of the affected shares of Series A
Preferred Stock, in part) at a redemption price equal to 100% of the accreted
liquidation preference thereof on the redemption date and under certain
circumstances, the holders of the Series A Preferred Stock have the right to
exchange the Series A Preferred Stock for shares of the Company's Series B
Redeemable Preferred Stock, par value $10.00 per share (the "Series B Preferred
Stock"), having a liquidation preference equal to the accreted liquidation
preference of the Series A Preferred Stock so exchanged.

The Series B Preferred Stock to be issued in exchange for shares of Series
A Preferred Stock will have an initial annual dividend rate equal to 13.625%,
increasing to 18.00% as of March 13, 2010. The Series B Preferred Stock will
have terms substantially similar to those of the Series A Preferred Stock,
except for the right to elect one director to the Company's Board of Directors
and the accrual of cumulative dividends payable quarterly in cash. In addition,
the Company may not issue shares of Series B Preferred Stock, except in exchange
for shares of Series A Preferred Stock, without the consent of the holders of a
majority of the outstanding shares of Series A Preferred Stock and Series B
Preferred Stock, voting together as a class.

ARGENTINA CREDIT FACILITY: As of February 27, 1998, Nextel Argentina
entered into an $83 million senior secured credit facility (the "Argentina
Credit Facility") with The Chase Manhattan Bank. Borrowings under the Argentina
Credit Facility are subject to finalizing certain security arrangements as well
as the satisfaction or waiver of certain other conditions. Loans under the
Argentina Credit Facility will bear interest at a rate equal to either (i) the
ABR plus 2.75% (ABR is the highest of the prime rate, the base CD rate plus 1%
and the federal funds rate plus 0.5%) or (ii) the Eurodollar rate plus 3.75%
(the Eurodollar rate is the LIBO rate multiplied by the statutory reserve rate).
The loans under the Argentina Credit Facility will be repaid in quarterly
installments beginning September 30, 2000 and ending March 31, 2003. As of March
31, 1998, no amounts had been borrowed under the Argentina Credit Facility.

F-31
<PAGE> 191

WIRELESS VENTURES OF BRAZIL, INC. AND SUBSIDIARIES

INDEPENDENT AUDITORS' REPORT

The Board of Directors of
Wireless Ventures of Brazil, Inc.
Washington, D.C.:

We have audited the accompanying consolidated balance sheet of Wireless
Ventures of Brazil, Inc. and subsidiaries (the Company) as of December 31, 1996,
and the related consolidated statements of operations, stockholders' equity, and
cash flows for the year then ended. These consolidated financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these consolidated financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Wireless Ventures of Brazil,
Inc. and subsidiaries as of December 31, 1996, and the results of their
operations and their cash flows for the year then ended in conformity with
generally accepted accounting principles.

DELOITTE & TOUCHE LLP
Seattle, Washington

March 27, 1997

F-32
<PAGE> 192

WIRELESS VENTURES OF BRAZIL, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET
AS OF DECEMBER 31, 1996

<TABLE>
<S> <C>
ASSETS
Current assets:
Cash and cash equivalents.............................. $ 389,816
Trade accounts receivable, net of allowance for
doubtful accounts of $3,005,653....................... 2,647,314
Inventory, net......................................... 1,839,116
Prepaid expenses and other current assets.............. 784,576
Due from officers and employees........................ 147,137
------------
Total current assets.............................. 5,807,959
Property and equipment, net of accumulated depreciation of
$3,117,813................................................ 8,842,875
License rights, net of accumulated amortization of
$10,299,391............................................... 48,291,499
Intangible assets, net of accumulated amortization of
$154,167.................................................. 95,833
Other assets................................................ 6,344
------------
Total assets................................................ $ 63,044,510
============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses.................. $ 10,473,831
Due to affiliates...................................... 863,572
Interest payable....................................... 2,060,377
Income taxes payable................................... 200,000
Bank loans payable..................................... 1,257,677
Deferred income taxes.................................. 204,421
Short-term note payable to majority stockholder........ 16,973,004
------------
Total current liabilities......................... 32,032,882
Other liabilities:
Other taxes payable.................................... 2,789,949
Deferred income taxes.................................. 15,738,568
------------
Total liabilities................................. 50,561,399
------------
Commitments and contingencies
Stockholders' equity:
Common stock; $.01 par value; 1,000,000 shares
authorized; 90,341 shares issued and outstanding...... 903
Additional paid-in capital............................. 39,528,659
Accumulated deficit.................................... (27,046,451)
------------
Total stockholders' equity........................ 12,483,111
------------
Total liabilities and stockholders' equity.................. $ 63,044,510
============
</TABLE>

See notes to consolidated financial statements.

F-33
<PAGE> 193

WIRELESS VENTURES OF BRAZIL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996

<TABLE>
<S> <C>
Revenue..................................................... $ 14,212,379
Cost of operations.......................................... 9,589,401
Selling, general and administrative expenses................ 13,019,232
Depreciation and amortization expense....................... 5,277,024
------------
Operating loss.............................................. (13,673,278)
Other income (expense):
Interest income........................................ 449,303
Gain on foreign currency translation................... 172,909
Interest expense....................................... (3,085,430)
Other.................................................. (50,000)
------------
Loss before provision for income tax........................ (16,186,496)
Provision for income tax.................................... (556,202)
------------
Net loss.................................................... $(16,742,698)
============
</TABLE>

See notes to consolidated financial statements.

F-34
<PAGE> 194

WIRELESS VENTURES OF BRAZIL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE YEAR ENDED DECEMBER 31, 1996

<TABLE>
<CAPTION>
ADDITIONAL TOTAL
COMMON PAID-IN ACCUMULATED STOCKHOLDERS'
STOCK CAPITAL DEFICIT EQUITY
------ ----------- ------------ -------------
<S> <C> <C> <C> <C>
BALANCE, JANUARY 1, 1996.................... $903 $39,212,452 $(10,303,753) $ 28,909,602
Capital distribution................... -- (458,000) -- (458,000)
Contributed capital -- expenses paid by
majority stockholder................. -- 774,207 -- 774,207
Net loss............................... -- -- (16,742,698) (16,742,698)
---- ----------- ------------ ------------
BALANCE, DECEMBER 31, 1996.................. $903 $39,528,659 $(27,046,451) $ 12,483,111
==== =========== ============ ============
</TABLE>

See notes to consolidated financial statements.

F-35
<PAGE> 195

WIRELESS VENTURES OF BRAZIL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1996

<TABLE>
<S> <C>
Cash flows from operating activities:
Net loss............................................... $(16,742,698)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization expense............. 5,277,024
Provision for doubtful accounts................... 1,470,598
Provision for income tax.......................... 556,202
Change in assets and liabilities, net of effects
from business acquisitions:
Increase in trade accounts receivable........ (988,555)
Decrease in inventory........................ 808,221
Increase in prepaid expenses and other
current assets............................... (261,847)
Increase in due from officers and
employees.................................... (111,328)
Decrease in other assets..................... 78,446
Increase in accounts payable and accrued
expenses..................................... 2,318,781
Increase in due to affiliates................ 458,969
Increase in interest payable................. 1,378,657
Increase in other taxes payable.............. 2,789,949
------------
Net cash used in operating activities... (2,967,581)
------------
Cash flows from investing activities:
Purchase of property and equipment..................... (755,349)
Payments on acquisitions of licensee companies......... (1,130,000)
------------
Net cash used in investing activities... (1,885,349)
------------
Cash flows from financing activities:
Capital contributions.................................. 774,207
Stockholder distributions.............................. (458,000)
Proceeds from short-term note payable to majority
stockholder........................................... 4,413,334
Payments on bank loans payable......................... (806,919)
Proceeds from bank loans payable....................... 1,257,677
------------
Net cash provided by financing
activities.............................. 5,180,299
------------
Net increase in cash and cash equivalents................... 327,369
Cash and cash equivalents, beginning of year................ 62,447
------------
Cash and cash equivalents, end of year...................... $ 389,816
============
Supplemental disclosure of cash flow information:
Cash paid during the year for interest................. $ 1,291,432
============
</TABLE>

See notes to consolidated financial statements.

F-36
<PAGE> 196

WIRELESS VENTURES OF BRAZIL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 1996

1. DESCRIPTION OF OPERATIONS AND LIQUIDITY

Wireless Ventures of Brazil, Inc. (WVB), a Virginia corporation whose
majority stockholder on December 31, 1996 is Telcom Ventures, L.L.C. (Telcom
Ventures), which is a Delaware limited liability company, was organized in
August 1993 for the purpose of pursuing wireless communications investment
opportunities in Brazil. As of December 31, 1996, WVB, through Brazilian
licensee companies, holds licenses to provide a class of mobile
telecommunications services known as specialized mobile radio (SMR) or trunking
services in the 800 MHz frequency band in Brazil. SMR services use radio
frequencies to allow multiple subscribers to communicate between remote portable
or mobile radios.

As of December 31, 1996, WVB's subsidiaries held licenses for a total of
1,400 SMR channels in 23 cities in Brazil, including 195 channels in Sao Paulo
and channels in Rio de Janeiro, Belo Horizonte, Curitiba, and Brasilia. The
initial term for such licenses is 15 years, although such licenses are issued at
the sole discretion of the Brazilian Ministry of Communications (the Ministry),
which can seek to cancel the Company's licenses if certain license requirements
are not met. In addition, licensees are required by the Ministry to complete
build-out of the channels and loading of subscribers by a certain date. Failure
to comply with the requirements could result in the revocation of the licenses
by the Ministry. At December 31, 1996, WVB had several channels that had not
been constructed and loaded with subscribers within the specified time frame.
Although there can be no assurance that the Ministry will not revoke these or
any other licenses, the management of WVB has either filed for extensions from
the Ministry or has taken other corrective action and believes the risk of loss
of the licenses due to noncompliance is remote.

In September 1994, WVB formed an indirect wholly owned subsidiary, a
Brazilian service company, AirLink Service e Comercio. Ltda (AirLink). AirLink
holds no licenses but owns equipment and, pursuant to service contracts,
provides technical support, billing, and other administrative functions to the
licensee companies in Brazil.

WVB and its subsidiaries (collectively, "the Company") expect to expand
their operations through continued capital investment in current analog and
future digital technologies to create a national mobile telecommunications
system in Brazil. The Company currently is not generating sufficient cash flows
from operations to support its current operating and capital requirements. The
Company has and will continue to be dependent upon its stockholders to fund
these requirements. The Company's future profitability is dependent upon its
ability to further develop its existing system and successfully market its
mobile radio services in its primary Brazilian markets.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION: The consolidated financial statements include
the accounts of WVB and its direct and indirect wholly owned subsidiaries, Via
Radio Administracao e Participacoes Ltda. (VRA), Air-fone Participacoes e
Empreendimentos Ltda. (Airfone), and AirLink, and its indirect 49 percent
interest in Master-Tec Industria e Comercio de Produtos Eletronicos Ltda.
(Master-Tec), Telemobile Telecomunicacoes Ltda. (Telemobile), Promobile
Telecomunicacoes Ltda. (Promobile), LMP Consultoria e Representacoes Ltda. (LMP)
and Telecomunicacoes Brastel S/C Ltd. (Brastel). VRA wholly owns seven Brazilian
subsidiaries, the accounts of which are consolidated with the accounts of the
Company. In addition, Airfone wholly owns two Brazilian subsidiaries, the
accounts of which are consolidated with the accounts of the Company. WVB
acquired indirect 49 percent interests in MasterTec, Telemobile, Promobile, LMP
and Brastel and has the right to obtain the remaining 51 percent for nominal
consideration when it receives approval from the Ministry. As WVB has effective
control of these five companies, the accounts of Master-Tec, Telemobile,
Promobile, LMP and Brastel are consolidated with the accounts of the Company and
no minority interest is recorded. All significant intercompany balances and
transactions have been eliminated in consolidation.
F-37
<PAGE> 197
WIRELESS VENTURES OF BRAZIL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)
The following companies are included in the consolidated financial
statements:

<TABLE>
<CAPTION>
DIRECT AND
INDIRECT INTEREST
BRAZILIAN SUBSIDIARIES HELD BY WVB
---------------------- -----------------
<S> <C>
AirLink Servicos e Comercio Ltda. .......................... 100%
Air-fone Participacoes e Empreendimentos S/C Ltda. ......... 100%
SOW Comercio e Servicos de Radiofonia Movel Ltda. .......... 100%
Air-fone Comercio e Servicos de Radiofonia Movel Ltda. ..... 100%
Via Radio Administracao e Partcipacoes Ltda. ............... 100%
Via Radio 1 Telecomunicacoes Ltda. ......................... 100%
Comercial Telecar Ltda. .................................... 100%
Telemovel Servicos Ltda. ................................... 100%
Radio Telecomunicacoes do Brasil Ltda. ..................... 100%
ATG -- Telecomunicacoes e Comercio Ltda. ................... 100%
Car-Tel Telefonia Movel S/C Ltda. .......................... 100%
Comercial Teleservice Ltda. ................................ 100%
Promobile Telecomunicacoes Ltda. ........................... 49%(a)
Telemobile Telecomunicacoes Ltda. .......................... 49%(a)
Master-Tec Industria e Comercio de Produtos Eletronicos
Ltda...................................................... 49%(a)
Telecomunicacoes Brastel S/C Ltda. ......................... 49%(a)
LMP Consultoria e Representacoes Ltda. ..................... 49%(a)
</TABLE>

- ---------------
(a) Under the respective purchase agreements, the Company has the
right to obtain the remaining 51 percent for nominal consideration
when the Ministry approves the transfer of the license rights. As
of December 31, 1996, these companies had no significant
operations and their principal assets recorded were represented by
license rights.

CASH EQUIVALENTS: For purposes of the statement of cash flows, the Company
considers all highly liquid investments with original maturities of three months
or less to be cash equivalents. Cash equivalents consisted of approximately
$218,111 in overnight investments and short-term deposits as of December 31,
1996.

INVENTORY, NET: Inventory, which consists primarily of telecommunications
equipment (radios), is stated at the lower of cost or market. Cost is determined
using the first-in, first-out method. The inventory of the Company is subject to
rapid technological changes that could have an adverse financial impact on its
full realization in future periods.

PROPERTY AND EQUIPMENT: Property and equipment are stated at cost.
Depreciation is computed using the straight-line method over the estimated
useful lives of the assets, which range from 3 to 10 years. Depreciation on
constructed assets, which includes radio towers and analog mobile radio systems,
begins when the assets are substantially completed and ready for their intended
use.

For constructed assets, all costs necessary to bring such assets to the
condition and location necessary for their intended use are initially
capitalized as construction-in-progress and are subsequently transferred to
telecommunications equipment.

LICENSE RIGHTS: License rights consist of licenses to operate channels for
the provision of SMR services in Brazil. Amortization is calculated on the
straight-line method over 15 years, the initial term of the licenses. The
amortization is also calculated for the licenses of those companies that have
not yet started their operations.

F-38
<PAGE> 198
WIRELESS VENTURES OF BRAZIL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)
The license rights are held by the Brazilian subsidiaries that WVB has
acquired directly and indirectly, through its holding companies both inside and
outside Brazil from 1993 to 1996. The acquisitions have been accounted for using
the purchase method of accounting. At the time of such acquisitions, a
substantial portion of the purchase cost was allocated to the license rights.
These costs have no basis for income tax reporting purposes. Therefore, the
Company has established a deferred tax liability. This deferred tax liability
was offset by an increase in the acquisition costs of the license rights and is
being amortized over 15 years.

INTANGIBLE ASSETS: Intangible assets consist of the cost allocated to a
covenant not to compete associated with an acquisition. Amortization is
calculated on the straight-line method over 5 years, the term of the noncompete
arrangement.

REVENUE RECOGNITION: The Company's principal sources of revenue are the
provision of mobile telecommunications services to businesses and individuals
and the sale and rental of telecommunications equipment (radios) to its service
subscribers. Service revenue consists of a usage fee based on the number of
minutes the subscriber uses each month (airtime revenues) plus a fixed monthly
service fee. Revenue for equipment sales is recognized at the time the
merchandise is shipped. Service and rental revenue are recognized ratably over
the term of the agreements.

FOREIGN CURRENCY TRANSLATION: The Company accounts for translation of
foreign currency in accordance with Statement of Financial Accounting Standards
No. 52 (SFAS No. 52), Foreign Currency Translations. During the year ended
December 31, 1996, the Company's Brazilian operations were considered to be in a
"highly inflationary" economy, as defined in SFAS No. 52. Accordingly, the
Company uses the U.S. dollar as the functional currency. Therefore, certain
assets and liabilities are remeasured at historical exchange rates while other
assets and liabilities are remeasured at current exchange rates, as follows:

- Inventories, property and equipment, license rights, and stockholders'
equity are remeasured at their appropriate current exchange rates.

- Accounts receivable, other assets, accounts payable and other
liabilities denominated in U.S. dollars are stated at their actual U.S.
dollar amounts.

- Accounts receivable, certain other assets, accounts payable, and other
liabilities denominated in Brazilian reais are remeasured at the
commercial transaction foreign exchange rate published by the Brazilian
Central Bank at the balance sheet date.

- Income and expenses are remeasured at monthly average exchange rates,
except for those related to balance sheet accounts remeasured at
historical rates.

- The net gain or loss on remeasurement is recognized in the results of
operations currently.

The remeasurement into U.S. dollar equivalent should not be construed as
representation that the Brazilian real amounts actually represent or have been
or could be converted into U.S. dollars at these or any other rates.

INCOME TAXES: In accordance with Statement of Financial Accounting
Standards No. 109, Accounting for Income Taxes, the Company uses the asset and
liability method to recognize deferred tax assets and liabilities. Under the
asset and liability method, deferred tax assets and liabilities are recognized
for the future tax consequences attributable to differences between the
financial statement carrying amounts of existing assets and liabilities and
their respective tax bases. Deferred tax assets and liabilities are measured
using enacted tax rates expected to apply to taxable income in the years in
which those temporary differences are expected to be recovered or settled. The
effect on deferred tax assets and liabilities of a change in tax rates is
recognized in income in the period that includes the enactment date.
F-39
<PAGE> 199
WIRELESS VENTURES OF BRAZIL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)
VAT (ICMS AND ISS TAXES): The provision of telecommunication services by
the Company's Brazilian subsidiaries is subject to ICMS taxes, a state-level
value-added tax (VAT) levied at a rate of 25 percent. Non-telecommunication
services provided by the Brazilian subsidiaries are subject to ISS taxes, a
municipal service tax levied at rates of five percent or less depending on the
Brazilian city in which the services are provided. The Brazilian subsidiaries
generate revenues that encompass both aspects of telecommunication services and
non-telecommunication services. The management of the Company has adopted an
allocation method for segregating the revenue for tax reporting purposes. The
allocation method utilized by the Company could be subjected to review by the
Brazilian tax authorities and could be altered as a result of such examination.
Accordingly, the Company could be assessed additional taxes by the Brazilian tax
authorities. The management of the Company periodically reviews its allocation
method and accrues additional reserves for taxes to cover such exposure.
Management believes that such assessments, if any, by the Brazilian taxing
authorities would not have a material impact on the financial statements.

CONCENTRATIONS OF RISKS: Financial instruments that potentially subject
the Company to significant concentrations of credit risk consist principally of
trade accounts receivable. The Company sells its products to commercial and
individual customers in Brazil, and extends credit, generally without requiring
collateral. The Company monitors its exposure for credit losses and maintains
allowances for anticipated losses. Since its inception the Company has suffered
significant credit losses, and these losses could continue in the future. Also,
the Company's core business is in Brazil and its operations may be adversely
affected by economic fluctuations.

USE OF ESTIMATES: The preparation of the consolidated financial statements
in conformity with generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenue and expenses during
the reporting period. Actual results could differ from those estimates.

LONG-LIVED ASSETS: Effective January 1, 1996, the Company adopted
Statement of Financial Accounting Standards No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of."
Long-lived assets and identifiable intangibles held and used are reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying amounts may not be recoverable. Impairment is measured by comparing the
carrying value of the long-lived asset to the estimated undiscounted future cash
flows expected to result from use of the assets and their eventual disposition.
The Company determined that as of December 31, 1996, there had been no
impairment in the carrying value of long-lived assets.

F-40
<PAGE> 200
WIRELESS VENTURES OF BRAZIL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

3. PROPERTY AND EQUIPMENT

Property and equipment consists of the following at December 31, 1996:

<TABLE>
<S> <C>
Telecommunications equipment................................ $ 8,940,967
Furniture and equipment..................................... 582,700
Computer equipment.......................................... 1,180,886
Telephone lines............................................. 255,992
Construction-in-progress (see Notes 2 and 5)................ 910,445
Leasehold improvements...................................... 78,743
Vehicles.................................................... 10,955
-----------
11,960,688
Less accumulated depreciation............................... (3,117,813)
-----------
$ 8,842,875
===========
</TABLE>

Property and equipment at December 31, 1996, includes approximately
$453,554 in rental radios that have been shipped to customers under short-term
rental agreements. Rental radios are depreciated using the straight-line method
over the estimated useful life of the radios, which is three years.

4. BUSINESS ACQUISITIONS

ACQUISITION OF INTEREST IN TELEMOBILE AND PROMOBILE: In November 1994, the
Company entered into an agreement to purchase 49 percent of the capital stock of
Telemobile and Promobile for a total of approximately $6,782,000 with an option
to acquire the remaining 51 percent for no additional purchase price. Prior to
December 31, 1994, $3,000,000 of such purchase price was paid. Telemobile and
Promobile collectively hold licenses to operate 540 channels for the provision
of trunking services in Brazil. Of the remaining balance of the purchase price,
$3,282,000 was paid during 1995 and 1996. The remaining amount of $500,000 is
included in current liabilities within the accompanying consolidated financial
statements, and is expected to be paid prior to December 31, 1997.

The acquisition of Telemobile and Promobile has been accounted for using
the purchase method of accounting. Accordingly, the purchase price was allocated
to the licenses for the 540 channels held by Telemobile and Promobile.
Additionally, the Company established a deferred tax liability in connection
with the acquisition since the license rights acquired have no basis for tax
reporting purposes in Brazil. Such amount has been allocated as an increase in
the license rights acquired.

ACQUISITION OF INTEREST IN LMP: In May 1996, the Company entered into an
agreement to purchase all of the capital stock of LMP for a total of $900,000.
As of December 31, 1996, $450,000 of such purchase price is included in current
liabilities. Under the terms of the purchase agreement, the remaining purchase
price will be due and payable upon approval from the Ministry for transfer of
control of the licenses. LMP holds licenses to operate 220 SMR channels in
Brazil.

The acquisition of LMP has been accounted for using the purchase method of
accounting. Accordingly, the purchase price was allocated to the licenses for
the 220 channels held by LMP. Additionally, the Company established a deferred
tax liability in connection with the acquisition since the license rights
acquired have no basis for tax reporting purposes in Brazil. Such amount has
been allocated as an increase in the license rights acquired.

ACQUISITION OF INTEREST IN BRASTEL: In May 1996, the Company entered into
an agreement to purchase all of the capital stock of Brastel for a total of
$240,000. As of December 31, 1996, $60,000 of such purchase price is included in
current liabilities. Under the terms of the purchase agreement, the remaining
purchase

F-41
<PAGE> 201
WIRELESS VENTURES OF BRAZIL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

4. BUSINESS ACQUISITIONS -- (CONTINUED)
price will be due and payable upon approval from the Ministry for transfer of
control of the licenses. Brastel holds licenses to operate 40 SMR channels in
Brazil.

The acquisition of Brastel has been accounted for using the purchase method
of accounting. Accordingly, the purchase price was allocated to the licenses for
the 40 channels held by Brastel. Additionally, the Company established a
deferred tax liability in connection with the acquisition since the license
rights acquired have no basis for tax reporting purposes in Brazil. Such amount
has been allocated as an increase in the license rights acquired.

PURCHASE OF AUGUSTUS AND MULTIPONTO: In September 1995, the Company
entered into a purchase agreement with Augustus Administracao e Participacoes
S.A. (Augustus) to purchase its 100 SMR channels in Brazil. The total purchase
price is approximately $408,000. Once the Ministry has approved transfer of
control of the SMR licenses from Augustus to the Company, the purchase price
will become due and payable.

In September 1995, the Company entered into a purchase agreement with
Multiponto Telecomunicacoes, Ltda. (Multiponto) to purchase its 200 SMR channels
in Brazil. The total purchase price is approximately $856,800. Once the Ministry
has approved transfer of control of the SMR licenses from Multiponto to the
Company, the purchase price will become due and payable.

These transactions will be reflected in the financial statements on
approval from the Ministry. The Company expects to receive approval for both
transfers from the Ministry by December 31, 1997.

5. RELATED PARTY TRANSACTIONS

In 1994, LCC International, Inc. (LCC), formerly LCC, L.L.C., an affiliate
of Telcom Ventures, performed design engineering services to develop the
Company's mobile radio communications system in Brazil. Systems development
activities included development of terrain databases, channel loading,
preliminary site design, initial frequency planning, and candidate site
evaluation. The cost of such services, which amounted to $910,455, were paid
during the year ended December 31, 1994, by the Company's majority stockholder,
Telcom Ventures, on behalf of the Company, and remain in
construction-in-progress with a corresponding increase in additional paid-in
capital within the accompanying consolidated financial statements as of December
31, 1996.

In October 1994, LCC licensed its software to the Company for $200,000 per
year over the next five years. The Company's management intends to use such
software to aid in the development of a digital mobile radio communications
system. In March 1996, the software license agreement was amended to make the
software license fee a total of $200,000 for the period commencing October 21,
1994, until December 31, 1996. As of December 31, 1996, such amount was
outstanding and recorded as a due to affiliate. Amortization expense associated
with this software was $50,000 for the year ended December 31, 1996.

During 1996, Telcom Ventures paid certain expenses including salaries,
travel, consulting fees, and overhead expenses totaling $774,207 on behalf of
the Company. This amount has been reported as selling, general and
administrative expenses with a corresponding increase in additional paid-in
capital within the accompanying consolidated financial statements.

During 1996, AirLink contracted with LCC for certain engineering services
totaling $467,434. This amount is included in due to affiliates within the
accompanying consolidated financial statements.

Prior to the Company's acquisition of Air-fone, the former owners of
Air-fone made certain payments on behalf of the Company totaling $319,730. In
December 1994, $133,193 of such debt was forgiven, and reported as additional
paid-in capital within the accompanying consolidated financial statements. At
December 31, 1996, the Company has a remaining payable balance to such
individuals in the amount of
F-42
<PAGE> 202
WIRELESS VENTURES OF BRAZIL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

5. RELATED PARTY TRANSACTIONS -- (CONTINUED)
$183,072. This amount is included in due to affiliates within the accompanying
consolidated financial statements.

In December 1994, the Company acquired certain telecommunications equipment
from K-Tel prior to its sale to a third party. The purchase price for the
equipment of $10,000 is included in due to affiliates within the accompanying
consolidated financial statements as of December 31, 1996.

6. INCOME TAXES

WVB is subject to corporate tax in the United States of America (U.S.)
based on its net annual earnings generated in the U.S. and distributions from
its Brazilian subsidiaries. WVB's direct and indirect Brazilian subsidiaries are
separately obligated for Brazilian taxes on their annual earnings.

The income tax provision consists of the following at December 1996:

<TABLE>
<CAPTION>
CURRENT DEFERRED TOTAL
-------- -------- --------
<S> <C> <C> <C>
U.S. federal.......................................... $ -- $ -- $ --
Brazilian............................................. -- 556,202 556,202
-------- -------- --------
$ -- $556,202 $556,202
======== ======== ========
</TABLE>

The income tax provision was $556,202 for the year ended December 31, 1996,
and differed from the amount computed by applying the U.S. federal income tax
rate of 34 percent as a result of the following:

<TABLE>
<S> <C>
Computed expected tax benefit............................... $(5,503,409)
Increase in income taxes resulting from:
Change in the valuation allowance for deferred tax
assets................................................ 3,314,727
Permanent differences.................................. 1,007,822
Effect of differential between U.S. federal and
Brazilian income taxes and changes in enacted tax
rates of Brazil....................................... 1,737,062
-----------
$ 556,202
===========
</TABLE>

The significant components of the U.S. and Brazilian deferred tax benefits
are as follows for the year ended December 31, 1996:

<TABLE>
<CAPTION>
U.S. BRAZILIAN TOTAL
-------- ----------- -----------
<S> <C> <C> <C>
Deferred tax benefit (exclusive of the effects of
other components listed below)................. $(12,667) $(3,520,597) $(3,533,264)
Increase in the valuation allowance for
deferred tax assets....................... 12,667 3,302,060 3,314,727
Effects of enacted changes in tax rates of
Brazil.................................... -- 774,739 774,739
-------- ----------- -----------
$ -- $ 556,202 $ 556,202
======== =========== ===========
</TABLE>

F-43
<PAGE> 203
WIRELESS VENTURES OF BRAZIL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

6. INCOME TAXES -- (CONTINUED)
The tax effects of temporary differences that gave rise to significant
portions of the deferred tax assets and liabilities at December 31, 1996, are
presented below:

<TABLE>
<S> <C>
Deferred tax assets:
Net operating loss carryforwards....................... $ 5,191,781
Due from affiliates.................................... 545,347
Fixed assets depreciation.............................. 296,170
Noncompete agreement................................... 39,056
-----------
Total gross deferred tax assets................... 6,072,354
Less valuation allowance............................... (5,329,383)
-----------
742,971
-----------
Deferred tax liabilities:
Intangible license rights.............................. 15,936,192
Accounts receivable.................................... 120,905
Inventory.............................................. 83,516
Due to affiliates...................................... 545,347
-----------
Total gross deferred tax liabilities.............. 16,685,960
-----------
Net deferred tax liabilities................................ $15,942,989
===========
</TABLE>

The valuation allowance for deferred tax assets as of January 1, 1996, was
$2,014,656. The net change in the total valuation allowance for the year ended
December 31, 1996, was an increase of $3,314,727.

The change in net deferred tax liablities from the prior year includes
$560,540 of deferred tax liabilities resulting from the acquisition of LMP and
Brastel. Such amount has been recorded as an increase in intangible license
rights.

Under the Brazilian tax legislation, each subsidiary is required to file
its tax return as a separate entity; consolidated returns are not allowed.

7. OFFICE FACILITIES AND OTHER LEASES

The Company has operating leases for office space in Sao Paulo as well as
tower sites throughout Brazil. Rental expense for the office and other operating
leases was approximately $1,190,383 during the year ended December 31, 1996.

Future minimum lease payments under operating leases as of December 31,
1996, calculated using the exchange rate in effect at December 31, 1996, are
approximately as follows:

<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31:
------------------------
<S> <C>
1997.............................................. $1,196,115
1998.............................................. 978,542
1999.............................................. 978,542
2000.............................................. 978,542
2001.............................................. 982,729
----------
Total minimum lease payments...................... $5,114,470
==========
</TABLE>

F-44
<PAGE> 204
WIRELESS VENTURES OF BRAZIL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

8. BANK LOANS PAYABLE

The Company utilizes various short-term borrowing arrangements with
financial institutions in Brazil as a method of financing current operations.
The Company had bank loans payable as of December 31, 1996, as follows:

<TABLE>
<S> <C>
Short-term notes payable.................................... $ 736,363
Discounted accounts receivable.............................. 521,314
----------
$1,257,677
==========
</TABLE>

At December 31, 1996, short-term notes payable consisted of four unsecured
loans from financial institutions in Brazil. These notes are due on various
dates up to June 1997, and carry interest at rates of 4.8 percent and 4.96
percent per month.

At December 31, 1996, the Company had an outstanding bank loan in the
amount of $521,314 from a financial institution in Brazil. This note was
collateralized by discounting with recourse an equal amount of the Company's
trade accounts receivable. The Company must pay a discount rate of 4.5 percent
per month on the outstanding balance.

9. OTHER TAXES PAYABLE

Certain taxes have not been paid at their initial due date. The Company's
management has negotiated with the tax authorities payment extensions in monthly
installments. For the taxes due in 1995, agreements were reached with the tax
authorities for payments in 24 to 68 monthly installments (see detail below).
Such balances are subject to monetary adjustments based on the Brazilian
inflation rates, plus interest at a rate of 1% per month. The taxes due in 1996
are under negotiation and management believes that agreements for payment
extension will be reached with the tax authorities in the near future. Fines and
interest have been calculated and recorded for these past-due taxes based on the
rates negotiated with the tax authorities. A total of $2,838,455 has been
included in current liabilities as of December 31, 1996. Other taxes payable
included in other liabilities is payable, as follows:

<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31:
------------------------
<S> <C>
1998.............................................. $ 806,023
1999.............................................. 530,622
2000.............................................. 515,565
2001.............................................. 937,739
----------
$2,789,949
==========
</TABLE>

10. SHORT-TERM NOTE PAYABLE TO MAJORITY STOCKHOLDER

At December 31, 1996, the Company has a revolving unsecured promissory note
payable to its majority stockholder, Telcom Ventures, in the amount of
$16,973,004. The note bears interest at the rate of 9 percent per annum, and
principal and interest are due on demand. During 1996, the Company recognized
interest expense of $1,378,657 related to this note payable. The note can be
converted to shares of capital stock of WVB at the option of the noteholder.

11. DISTRIBUTION TO SHAREHOLDER

During 1996, the Company distributed to a shareholder $458,000 that
represented contributions made in the prior years in excess of amounts required
under certain capitalization arrangements.
F-45
<PAGE> 205
WIRELESS VENTURES OF BRAZIL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

12. CONTINGENCIES

GENERAL: There are contingent liabilities of a general nature with respect
to taxes. The Company's tax returns filed in previous years are subject to final
approval by tax authorities. The application of U.S. and Brazilian tax laws to
the Company can be subjective and is dependent upon administrative
interpretations which are subject to change.

RISK OF LICENSE CANCELLATIONS: As discussed in Note 1, licenses are issued
at the sole discretion of the Brazilian Ministry of Communications, which can
seek to cancel the Company's licenses if certain license requirements are not
met. The Company's strategy is to install the required minimum number of
channels and load them as dictated by the applicable rules and edicts,
particularly when dealing with major cities like the capitals of the various
states. In certain instances, the Company has filed for extensions to the
pre-established installation dates. Management has received no reply to its
extension requests and believes that the Ministry has tacitly approved the
extensions.

Revocation of licenses must be performed by the Ministry in accordance with
applicable rules, which require that the following two conditions be met prior
to revocation:

- The licensee company has not installed and loaded the channels as
required; and

- Third parties have applied for channels in the same area and the Ministry
does not have other available radio spectrum to fulfill the application
requirements.

In certain cases, spectrum has not been available as a result of conflicts
with TV link service providers, who were provided frequencies that have been
subsequently granted to trunking operators. This conflict is regulated by edict
number 1267 dated August 31, 1993, which requires the TV link service providers
to clear these frequencies by established deadlines to permit their use by the
granted trunking operators. The edict established a deadline for the clearing of
channels 70, 77, 78, and 80 by December 1996 and a clearing deadline for
channels 71, 72, and 79 by August 1998. For channels where this conflict exists,
the time period for determining compliance with the channel installation and
loading requirements begins from the date the corresponding channels are cleared
out, rather than the date of grant. Management believes the risk of having these
or any other licenses revoked is remote.

13. FAIR VALUE OF FINANCIAL INSTRUMENTS

The following table presents the carrying amounts and estimated fair values
of the Company's financial instruments at December 31, 1996. Statement of
Financial Accounting Standards No. 107, Disclosure about Fair Value of Financial
Instruments, defines the fair value of a financial instrument as the amount at
which the instrument could be exchanged in a current transaction between willing
parties:

<TABLE>
<CAPTION>
CARRYING FAIR
AMOUNTS VALUE
----------- -----------
<S> <C> <C>
Financial assets:
Cash and cash equivalents............................. $ 389,816 $ 389,816
Trade accounts receivable............................. 2,647,314 2,647,314
Due from officers and employees....................... 147,137 147,137
Prepaid expenses and other current assets............. 784,576 --
Financial liabilities:
Accounts payable and accrued expenses................. 10,473,831 10,473,831
Bank loans payable.................................... 1,257,677 1,257,677
Due to affiliates..................................... 1,347,307 1,347,307
Short-term note payable to majority stockholder....... 16,973,004 16,973,004
</TABLE>

F-46
<PAGE> 206
WIRELESS VENTURES OF BRAZIL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

13. FAIR VALUE OF FINANCIAL INSTRUMENTS -- (CONTINUED)
The following methods and assumptions were used to estimate the fair value
of each class of financial instruments:

- Cash and cash equivalents, trade accounts receivables, due from officers
and employees, other accounts receivable, accounts payable and accrued
expenses, bank loans payable, amounts payable for business acquisitions,
due to affiliates and short-term note payable to majority stockholder:
the carrying amounts approximate fair values because of the short
maturity of those instruments.

- Prepaid expenses and other current assets: It is not practicable to
estimate the fair value since this balance includes amounts related to
recoverable VAT, which are not transferable, and other prepaid expenses
that do not have market values.

14. SUBSEQUENT EVENTS

AGREEMENT AND PLAN OF MERGER: On October 29, 1996, the Company entered
into an Agreement and Plan of Merger (the Merger Agreement) with Nextel
Communications, Inc. (Nextel) and Dial Call Indimich, Inc., a direct wholly
owned subsidiary of Nextel. Pursuant to this Merger Agreement which was
consummated on January 30, 1997, Nextel acquired 81% of the issued and
outstanding capital stock of the Company in exchange for $186,300,000 worth of
Nextel Class A Common Stock in a tax-free reorganization. Under this Merger
Agreement, the existing Company stockholders retained the remaining 19% interest
in the Company. In addition, the Company's common stock was reclassified into
two classes with different voting rights: 1) Nextel acquired 100% of the Class A
common stock, which have 90% of the voting rights, and 2) the existing
stockholders received the Class B common stock, which have 10% of the voting
rights. On the closing date, Nextel contributed its equity interest in the
Company to McCaw International, Ltd. and the Company was renamed McCaw
International (Brazil), Ltd.

STOCK OPTIONS: The Company had entered into individual stock option
agreements with certain employees of the Company and an affiliate company. These
agreements allowed for such individuals to purchase Company common stock at an
exercise price equal to a pro rata share of the total capital contribution per
share on the option exercise date. The agreements had a five year vesting
period, as well as provisions for immediate vesting in the event of a change of
control. The Merger Agreement, as described above, qualified as a change of
control. Accordingly, these employees would have been entitled to receive a
total of 163,733 shares of Nextel Communications, Inc. common stock, based on an
assumed value of the Company at the time of the merger (i.e., the difference
between the assumed exercise price and the assumed value of the Nextel shares
purchasable as of the merger date), and would not receive any shares of the
Company's common stock. On January 23, 1997, such options were canceled and,
therefore, no compensation expense amounts were recorded for the year ended
December 31, 1996.

REPAYMENT OF NOTE PAYABLE AND RELATED INTEREST PAYABLE: Pursuant to the
Merger Agreement, the short-term note payable to majority stockholder and the
related interest payable in the amounts of $16,973,004 and $2,060,377,
respectively as of December 31, 1996, were forgiven at the time of the closing
on January 30, 1997.

INFUSION OF CAPITAL: On February 28, 1997, McCaw International, Ltd.,
infused $5,000,000 of additional paid-in capital to AirLink Servicos e Comercio
Ltda. to repay bank loans and trade payables of the Brazilian subsidiaries.

F-47
<PAGE> 207

WIRELESS VENTURES OF BRAZIL, INC. AND SUBSIDIARIES

INDEPENDENT AUDITORS' REPORT

The Board of Directors
Wireless Ventures of Brazil, Inc.:

We have audited the accompanying consolidated balance sheet of Wireless
Ventures of Brazil, Inc. and subsidiaries as of December 31, 1995, and the
related consolidated statements of operations, stockholders' equity, and cash
flows for the year then ended. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audit.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Wireless Ventures of Brazil,
Inc. and subsidiaries as of December 31, 1995, and the results of their
operations and their cash flows for the year then ended in conformity with
generally accepted accounting principles.

KPMG PEAT MARWICK LLP

Washington, D.C.
May 31, 1996, except as to footnote 15
which is as of June 14, 1996

F-48
<PAGE> 208

WIRELESS VENTURES OF BRAZIL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
AS OF DECEMBER 31, 1995

<TABLE>
<S> <C>
ASSETS
Current assets:
Cash and cash equivalents.............................. $ 62,447
Trade accounts receivable, net of allowance for
doubtful accounts of $1,535,055 (note 8).............. 3,129,357
Prepaid expenses and other current assets.............. 522,729
Inventory, net......................................... 3,433,337
Due from officers and employees........................ 35,809
------------
Total current assets.............................. 7,183,679
Property and equipment, net of accumulated depreciation of
$1,756,323 (notes 3 and 5)................................ 8,663,016
License rights, net of accumulated amortization of
$6,433,857................................................ 50,466,493
Intangible assets, net of accumulated amortization of
$104,167.................................................. 145,833
Other assets................................................ 84,790
------------
$ 66,543,811
============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses.................. $ 6,547,627
Due to affiliates (note 5)............................. 404,603
Bank loans payable (note 8)............................ 806,919
Interest payable (note 9).............................. 681,720
Income taxes payable................................... 200,000
Amounts payable for business acquisitions (note 4)..... 1,000,000
Deferred income taxes (note 6)......................... 292,893
Short-term note payable to majority stockholder (note
9).................................................... 12,559,670
------------
Total current liabilities......................... 22,493,432
Other....................................................... 607,423
Deferred income taxes (note 6).............................. 14,533,354
------------
Total liabilities................................. 37,634,209
------------
Commitments and contingencies (notes 1, 2, 4, 7, 10, 14, and
15)
Stockholders' equity:
Common stock; $.01 par value; 1,000,000 shares
authorized; 90,341 shares issued and outstanding
(notes 9, 12, and 13)................................. 903
Additional paid-in capital (notes 5 and 13)............ 39,212,452
Accumulated deficit.................................... (10,303,753)
------------
Total stockholders' equity........................ 28,909,602
------------
$ 66,543,811
============
</TABLE>

See notes to consolidated financial statements.

F-49
<PAGE> 209

WIRELESS VENTURES OF BRAZIL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995

<TABLE>
<S> <C>
Revenues.................................................... $10,099,117
Cost of operations.......................................... 7,621,663
Selling, general and administrative expenses (note 5)....... 10,100,903
Depreciation and amortization expense....................... 5,305,773
-----------
Operating loss.............................................. (12,929,222)
Other income (expense):
Interest income........................................ 125,050
Gain on foreign currency translation................... 13,301
Interest expense (note 9).............................. (964,437)
Other, net............................................. 30,096
-----------
Loss before income tax benefit.............................. (13,725,212)
Income tax benefit (note 6)................................. 8,693,505
-----------
Net loss.................................................... $(5,031,707)
===========
</TABLE>

See notes to consolidated financial statements.

F-50
<PAGE> 210

WIRELESS VENTURES OF BRAZIL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE YEAR ENDED DECEMBER 31, 1995

<TABLE>
<CAPTION>
ADDITIONAL TOTAL
COMMON PAID-IN ACCUMULATED STOCKHOLDERS'
STOCK CAPITAL DEFICIT EQUITY
------ ----------- ------------ -------------
<S> <C> <C> <C> <C>
Balance at December 31, 1994................. $903 $36,386,585 $ (5,272,046) $31,115,442
Capital contributions................... -- 2,060,917 -- 2,060,917
Contributed capital -- expenses paid by
majority stockholder (note 5)......... -- 747,450 -- 747,450
Net loss................................ -- -- (5,031,707) (5,031,707)
Issuance of 31 shares of common stock
(note 13)............................. -- 12,500 -- 12,500
Issuance of 10 shares of common stock... -- 5,000 -- 5,000
---- ----------- ------------ -----------
Balance at December 31, 1995................. $903 $39,212,452 $(10,303,753) $28,909,602
==== =========== ============ ===========
</TABLE>

See notes to consolidated financial statements.

F-51
<PAGE> 211

WIRELESS VENTURES OF BRAZIL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1995

<TABLE>
<S> <C>
Cash flows from operating activities:
Net loss............................................... $(5,031,707)
Adjustments to reconcile net loss to net cash used by
operating activities:
Depreciation and amortization expense............. 5,305,773
Provision for doubtful accounts................... 1,480,416
Deferred tax benefit.............................. (8,693,505)
Stock grant....................................... 12,500
Change in assets and liabilities, net of effects
from business acquisitions:
Increase in accounts receivable.............. (4,381,004)
Increase in prepaid expenses and other
current assets............................... (111,380)
Increase in inventory........................ (2,382,991)
Decrease in due from officers and
employees.................................... 23,462
Increase in accounts payable and accrued
expenses..................................... 3,559,668
Increase in due to affiliates................ 8,065
Increase in interest payable................. 671,020
Increase in income taxes payable............. --
-----------
Net cash used in operating activities....................... (9,539,683)
-----------
Cash flows from investing activities:
Purchase of property and equipment..................... (3,677,736)
Acquisition of licensee companies, net of cash
acquired.............................................. (3,074,648)
-----------
Net cash used in investing activities....................... (6,752,384)
-----------
Cash flows from financing activities:
Capital contributions and stock issuances.............. 2,813,367
Proceeds from note payable to majority stockholder..... 12,559,670
Payments on bank loans payable......................... (397,447)
Proceeds from bank loans payable....................... 806,919
-----------
Net cash provided by financing activities................... 15,782,509
-----------
Net decrease in cash and cash equivalents................... (509,558)
Cash and cash equivalents at beginning of period............ 572,005
-----------
Cash and cash equivalents at end of period.................. $ 62,447
===========
Supplemental disclosure of cash flow information
Cash paid during the period for interest............... $ 282,717
</TABLE>

See notes to consolidated financial statements.

F-52
<PAGE> 212

WIRELESS VENTURES OF BRAZIL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 1995

1. DESCRIPTION OF OPERATIONS AND LIQUIDITY

Wireless Ventures of Brazil, Inc. (WVB), a Virginia corporation whose
majority stockholder on December 31, 1995 is Telcom Ventures, L.L.C. (Telcom
Ventures), a Delaware limited liability company, was organized in August 1993
for the purpose of pursuing wireless communications investment opportunities in
Brazil. As of December 31, 1995, WVB, through Brazilian licensee companies,
holds licenses to provide a class of mobile telecommunications services known as
specialized mobile radio (SMR) or trunking services in the 800 MHz frequency
band in Brazil. SMR services use radio frequencies to allow multiple subscribers
to communicate between remote portable or mobile radios.

As of December 31, 1995, WVB's subsidiaries held licenses for a total of
1,140 SMR channels in 23 cities in Brazil, including 195 channels in Sao Paulo,
and channels in Rio de Janeiro, Belo Horizonte, Curitiba, and Brasilia. The
initial term for such licenses is 15 years, although such licenses are issued at
the sole discretion of the Brazilian Ministry of Communications (the Ministry),
which can seek to cancel the Company's licenses at any time. In addition,
licensees are required by the Ministry to complete build-out of the channels and
loading of subscribers by a certain date. Failure to comply with the
requirements could result in the revocation of the licenses by the Ministry. At
December 31, 1995, WVB had several channels which had not been constructed and
loaded with subscribers within the specified timeframe. Although there can be no
assurance that the Ministry will not revoke these or any other licenses, the
management of WVB has either filed for extensions from the Ministry or has taken
other corrective action and believes the risk of loss of the licenses due to
noncompliance is remote.

In September 1994, WVB formed an indirect wholly owned subsidiary, a
Brazilian service company, AirLink Servicos e Comercio, Ltda. (AirLink). AirLink
holds no licenses, but owns equipment and, pursuant to service contracts,
provides technical support, billing, and other administrative functions to the
licensee companies in Brazil.

WVB and its subsidiaries (collectively, the Company) expect to expand their
operations through continued capital investment in current analog and future
digital technologies to create a national mobile telecommunications system in
Brazil. The Company currently is not generating sufficient cash flows from
operations to support its current operating and capital requirements. The
Company has and will continue to be dependent upon its stockholders to fund
these requirements. During 1995, WVB's majority stockholder contributed
approximately $800,000 to the Company. Additionally, in 1995 WVB's majority
stockholder provided approximately $12,600,000 to the Company under a short-term
unsecured note payable. Subsequent to year-end, WVB borrowed an additional
$3,000,000 under the note payable agreement (see note 9). The Company's future
profitability is dependent upon its ability to further develop its existing
system and successfully market its mobile radio services in its primary
Brazilian markets.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

The consolidated financial statements include the accounts of WVB and its
direct and indirect wholly owned subsidiaries, Via Radio Administradora e
Participacoes Ltda. (VRA), Airfone Participacoes e Empreendimentos Ltda.
(Airfone), and AirLink, and its indirect 49 percent interest in Master-Tec
Telecomunicacoes Ltda. (Master-Tec), Telemobile-Telecomunicacoes Ltda.
(Telemobile) and Promobile-Telecomunicacoes Ltda. (Promobile). VRA wholly owns
seven Brazilian subsidiaries, the accounts of which are consolidated with the
accounts of the Company. In addition, Airfone wholly owns two Brazilian
subsidiaries, the accounts of which are consolidated with the accounts of the
Company. WVB acquired indirect 49 percent interests in Master-Tec, Telemobile,
and Promobile, and has the right to obtain the
F-53
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WIRELESS VENTURES OF BRAZIL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)
remaining 51 percent when it receives approval from the Ministry at no
additional cost to WVB. As WVB has effective control of these three companies,
the accounts of Master-Tec, Telemobile, and Promobile are consolidated with the
accounts of the Company. All significant intercompany balances and transactions
have been eliminated in consolidation.

Cash Equivalents

For purposes of the statement of cash flows, the Company considers all
highly liquid investments with original maturities of 3 months or less to be
cash equivalents. Cash equivalents consisted of approximately $3,686 in
overnight investments and short-term deposits as of December 31, 1995.

Inventory, Net

Inventory, which consists primarily of telecommunications equipment
(radios), is stated at the lower of cost or market. Cost is determined using the
first-in, first-out (FIFO) method. The inventory of the Company is subject to
rapid technological changes which could have an adverse financial impact on its
full realization in future periods.

Property and Equipment

Property and equipment are stated at cost. Depreciation is computed using
the straight-line method over the estimated useful lives of the assets which
range from 3 to 10 years. Depreciation on constructed assets, which include
radio towers and analog mobile radio systems, begins when the assets are
substantially completed and ready for their intended use.

License Rights

License rights consist of licenses to operate channels for the provision of
SMR services in Brazil, which had been issued to the licensee companies acquired
(see notes 1 and 4). Amortization is calculated on the straight-line method over
15 years, the initial term of the licenses.

Intangible Assets

Intangible assets consist of the cost allocated to a covenant not to
compete associated with an acquisition. Amortization is calculated on the
straight-line method over 5 years, the term of the non-compete arrangement.

Revenue Recognition

The Company's principal sources of revenue are the provision of mobile
telecommunications services to businesses and individuals and the sale and
rental of telecommunications equipment (radios) to its service subscribers.
Service revenues consist of a usage fee based on the number of minutes the
subscriber uses the system each month (airtime revenues) plus a fixed monthly
service fee, which are recognized when the services are provided. Revenue for
equipment sales is recognized at the time the merchandise is shipped. Rental
revenue is recorded monthly over the term of each rental agreement.

F-54
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WIRELESS VENTURES OF BRAZIL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)
Foreign Currency Translation

The Company accounts for translation of foreign currency in accordance with
Statement of Financial Accounting Standards No. 52, Foreign Currency
Translations (Statement No. 52). During the year ending December 31, 1995, the
Company's Brazilian operations were considered to be in a "highly inflationary"
economy, as such term is defined in Statement No. 52. Accordingly, the Company
uses the U.S. dollar as the functional currency. Therefore, certain assets and
liabilities are translated at historical exchange rates while other assets and
liabilities are translated at current exchange rates.

Income Taxes

The Company uses the asset and liability method to recognize deferred tax
assets and liabilities. Under the asset and liability method, deferred tax
assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases. Deferred tax
assets and liabilities are measured using enacted tax rates expected to apply to
taxable income in the years in which those temporary differences are expected to
be recovered or settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes the
enactment date.

ICMS and ISS Taxes

The provision of telecommunication services by the Company's Brazilian
subsidiaries is subject to ICMS taxes, a state level value-added tax (VAT)
levied at a rate of 25 percent. Non-telecommunication services provided by the
Brazilian subsidiaries are subject to ISS taxes, a municipal service tax levied
at rates of 5 percent or less depending on the Brazilian city in which the
services are provided. The Brazilian subsidiaries generate revenues that
encompass both aspects of telecommunication services and non-telecommunication
services. The management of the Company has adopted an allocation method for
segregating the revenue for tax reporting purposes. The allocation method
utilized by the Company could be subjected to review by the Brazilian tax
authorities and could be altered as result of such examination. Accordingly, the
Company could be assessed additional taxes by the Brazilian tax authorities. The
management of the Company periodically reviews its allocation method and accrues
additional reserves for taxes to account for such exposure. Management believes
that such assessments, if any, by the Brazilian taxing authorities would not
have a material impact on the financial statements.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to significant
concentrations of credit risk consist principally of trade accounts receivable.
The Company sells its products to commercial and individual customers in Brazil,
and extends credit, generally without requiring collateral. The Company monitors
its exposure for credit losses and maintains allowances for anticipated losses.
Since inception the Company has suffered significant credit losses, and these
losses could continue in the future.

Pervasiveness of Estimates

The preparation of the consolidated financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the reporting
period. Actual results could differ from those estimates.

F-55
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WIRELESS VENTURES OF BRAZIL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

3. PROPERTY AND EQUIPMENT

Property and equipment consists of the following at December 31, 1995:

<TABLE>
<S> <C>
Telecommunications equipment................................ $ 8,502,834
Furniture and equipment..................................... 357,299
Computer equipment.......................................... 402,622
Telephone lines............................................. 173,666
Construction-in-progress (see note 5)....................... 910,445
Leasehold improvements...................................... 65,627
Vehicles.................................................... 6,846
-----------
10,419,339
Less accumulated depreciation and amortization.............. (1,756,323)
-----------
$ 8,663,016
===========
</TABLE>

4. BUSINESS ACQUISITIONS

Acquisition of Interest in Telemobile and Promobile

In November 1994, the Company entered into an agreement to purchase 49
percent of the capital stock of Telemobile and Promobile for a total of
approximately $6,782,000 with an option to acquire the remaining 51 percent for
no additional purchase price. As of December 31, 1995, $5,782,000 of such
purchase price was paid. Telemobile and Promobile collectively hold licenses to
operate 540 channels for the provision of trunking services in Brazil. The
remaining balance of the purchase price of $1,000,000 is included in current
liabilities within the accompanying 1995 consolidated balance sheet. The Company
expects the remaining amount of $1,000,000 to be paid prior to December 31,
1996.

Contingencies

In connection with an acquisition made in prior years, the Company became
aware of certain tax contingencies which arose prior to the acquisition. Based
on discussions with legal counsel, management of the Company believes that the
probability of material impact on the financial statements is remote.

5. RELATED PARTY TRANSACTIONS

During 1995 Telcom Ventures paid certain expenses including salaries,
travel, consulting fees, and overhead expenses totaling $747,450 on behalf of
the Company. These amounts have been reported as selling, general and
administrative expenses with a corresponding increase in additional paid-in
capital within the accompanying consolidated financial statements.

In October 1994, LCC licensed its software to the Company for $200,000 per
year over the next five years. The Company's management intends to use such
software to aid in the development of a digital mobile radio communications
system. In March 1996, the software license agreement was amended to make the
software license fee a total of $200,000 for the period commencing October 21,
1994 until December 31, 1997. Accordingly, the license fee of $200,000, which is
due in four installments from June 1996 to December 1996, has been included in
telecommunications equipment and due to affiliates within the accompanying
consolidated financial statements, and is being amortized using the straight
line method over the three year license period. Amortization expense associated
with this software was $24,000 for the year ended December 31, 1995.

F-56
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WIRELESS VENTURES OF BRAZIL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

5. RELATED PARTY TRANSACTIONS -- (CONTINUED)
At December 31, 1995 the Company had recorded a payable to the former
owners of Airfone in the amount of $194,603. These amounts are included in due
to affiliates within the accompanying consolidated financial statements.

6. INCOME TAXES

WVB is subject to corporate tax in the United States of America (U.S.) on
its net annual earnings generated in the U.S. and distributions from its
Brazilian subsidiaries. WVB's direct and indirect Brazilian subsidiaries are
separately obligated for Brazilian taxes on their annual earnings.

Income tax benefit consists of the following for the year ended December
31, 1995:

<TABLE>
<CAPTION>
CURRENT DEFERRED TOTAL
-------- ----------- -----------
<S> <C> <C> <C>
U.S. federal............................. $ -- $ -- $ --
Brazilian federal........................ -- (8,693,505) (8,693,505)
-------- ----------- -----------
$ -- $(8,693,505) $(8,693,505)
======== =========== ===========
</TABLE>

Income tax benefit was $8,693,505 for the year ended December 31, 1995 and
differed from the amount computed by applying the U.S. federal income tax rate
of 34 percent as a result of the following:

<TABLE>
<S> <C>
Computed expected tax benefit............................... $(4,666,572)
Increase (reduction) in income taxes resulting from:
Change in beginning of the period balance of the
valuation allowance for deferred tax assets........... 1,537,129
Effect of differential between U.S. federal and
Brazilian income taxes and changes in enacted tax
rates of Brazil....................................... (5,564,062)
-----------
$(8,693,505)
===========
</TABLE>

The significant components of the U.S. and Brazilian deferred tax benefit
are as follows for the year ended December 31, 1995:

<TABLE>
<CAPTION>
U.S. BRAZILIAN TOTAL
---- --------- -----
<S> <C> <C> <C>
Deferred tax benefit (exclusive of the
effects of other components listed
below).................................... $(12,682) $(2,639,365) $(2,652,047)
Increase in beginning of the year balance of
the valuation allowance for deferred tax
assets.................................... 12,682 1,524,447 1,537,129
Effects of enacted changes in tax rates of
Brazil.................................... -- (7,578,587) (7,578,587)
-------- ----------- -----------
$ -- $(8,693,505) $(8,693,505)
======== =========== ===========
</TABLE>

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WIRELESS VENTURES OF BRAZIL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

6. INCOME TAXES -- (CONTINUED)
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and liabilities at December 31, 1995 are
presented below:

<TABLE>
<S> <C>
Deferred tax assets:
Net operating loss carryforwards....................... $ 2,198,357
Deferred assets........................................ 48,116
Due from affiliate..................................... 414,872
Fixed assets depreciation and amortization............. 73,046
Accounts receivable.................................... 468,552
Accounts payable....................................... 169,014
Noncompete agreement................................... 26,389
-----------
Total gross deferred tax assets........................ 3,398,346
Less valuation allowance............................... 2,014,656
-----------
Net deferred tax assets..................................... 1,383,690
-----------
Deferred tax liabilities:
Intangible license rights.............................. 15,725,100
Accounts receivable.................................... 48,928
Inventory.............................................. 21,037
Due to affiliate....................................... 414,872
-----------
Total gross deferred tax liabilities........................ 16,209,937
-----------
Net deferred tax liabilities................................ $14,826,247
===========
</TABLE>

The valuation allowance for deferred tax assets as of January 1, 1995 was
$477,527. The net change in the total valuation allowance for the year ended
December 31, 1995 was an increase of $1,537,129.

7. OFFICE FACILITIES AND OTHER LEASES

The Company has operating leases for office space in Sao Paulo, as well as
tower sites throughout Brazil. Rental expense for the office and other operating
leases was approximately $850,000 during the year ended December 31, 1995.

Future minimum lease payments under operating leases as of December 31,
1995, calculated using the exchange rate at December 31, 1995, of R$.972 to US
$1, are approximately as follows:

<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31:
------------------------
<S> <C>
1996........................................................ $ 655,000
1997........................................................ 222,000
1998........................................................ 171,000
1999........................................................ 162,000
2000........................................................ 94,000
----------
Total minimum lease payments................................ $1,304,000
==========
</TABLE>

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WIRELESS VENTURES OF BRAZIL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

8. BANK LOANS PAYABLE

The Company utilizes various short-term borrowing arrangements with
financial institutions in Brazil as a method of financing current operations.
The Company had bank loan payables as of December 31, 1995 as follows:

<TABLE>
<S> <C>
Short-term notes payable.................................... $337,253
Discounted accounts receivable.............................. 314,302
Bank overdrafts............................................. 155,364
--------
$806,919
========
</TABLE>

At December 31, 1995, short-term notes payable consisted of three unsecured
loans from financial institutions in Brazil, due on various dates in January
1996 and carrying interest at rates varying from 4.8 percent to 5.1 percent per
month. All principal and interest was repaid in full on the due dates.

At December 31, 1995, the Company had an outstanding bank loan in the
amount of $314,302 from a financial institution in Brazil. This note was
collateralized by discounting with recourse an equal amount of the Company's
trade accounts receivable. The Company must pay a discount rate of 4.5 percent
per month on the outstanding balance. During 1996, the Company has continued to
discount portions of its trade accounts receivable to obtain short-term
financing.

At December 31, 1995, the Company had bank overdrafts of $155,364.

9. SHORT-TERM NOTE PAYABLE TO MAJORITY STOCKHOLDER

At December 31, 1995, the Company has a revolving unsecured promissory note
payable to its majority stockholder, Telcom Ventures, in the amount of
$12,559,670. The note bears interest at the rate of 9 percent per annum and
principal and interest are due on demand. During 1995, the Company recognized
interest expense of $681,720 related to this note payable. The note can be
converted to shares of capital stock of WVB at the option of the noteholder. As
of May 31, 1996, the Company had borrowed an additional $3,051,538 against the
promissory note.

10. PURCHASE OF AUGUSTUS AND MULTIPONTO

In September 1995, the Company entered into a purchase agreement with
Augustus Administracao e Participacoes S.A. (Augustus) to purchase its 100 SMR
channels in Brazil. The total purchase price is approximately $408,000. Once the
Ministry has approved transfer of control of the SMR licenses from Augustus to
the Company, the purchase price will become due and payable.

These transactions will be reflected in the financial statements on
approval from the Ministry. The Company expects to receive approval for both
transfers from the Ministry by December 31, 1996.

11. FAIR VALUE OF FINANCIAL INSTRUMENTS

The following table presents the carrying amounts and estimated fair values
of the Company's financial instruments at December 31, 1995. FASB Statement No.
107, Disclosure about Fair Value of Financial

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WIRELESS VENTURES OF BRAZIL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

11. FAIR VALUE OF FINANCIAL INSTRUMENTS -- (CONTINUED)
Instruments, defines the fair value of a financial instrument as the amount at
which the instrument could be exchanged in a current transaction between willing
parties:

<TABLE>
<CAPTION>
CARRYING FAIR
AMOUNTS VALUE
----------- ----------
<S> <C> <C>
Financial assets:
Cash and cash equivalents.............................. $ 62,447 $ 62,447
Trade accounts receivable.............................. 3,129,357 3,129,357
Due from officers and employees........................ 35,809 35,809
Other accounts receivable.............................. 464,432 464,432
Financial liabilities:
Trade accounts payable and
accrued.............................................. 7,155,050 7,155,050
Bank loans payable..................................... 806,919 806,919
Other short-term payables.............................. 1,000,000 1,000,000
Due to affiliates...................................... 404,603 404,603
Short-term note payable to majority stockholder........ 12,559,670 --
</TABLE>

The following methods and assumptions were used to estimate the fair value
of each class of financial instruments:

Cash and cash equivalents, trade accounts receivables, due from
officers and employees, other accounts receivable, trade accounts payable,
bank loans payable, due to affiliates, and other short-term payables: the
carrying amounts approximate fair values because of the short maturity of
those instruments.

Short-term note payable to majority stockholder: It is not practicable
to estimate the fair value since the note payable is due to the majority
stockholder, and although the repayment term is due on demand, the actual
timing of repayment is uncertain.

12. COMMON STOCK

Stock Options

The Company has entered into individual stock option agreements with
certain employees of the Company and an affiliated company. These agreements
allow for such individuals to purchase a total of 1,303 shares, or approximately
2 percent, of the common stock of the Company at an exercise price equal to a
pro rata share of the total capital contribution per share on the option
exercise date, which management believes approximates market value. At December
31, 1995, the per share capital contribution was approximately $428. The
agreements expire in November 1996 and April 1997. As of December 31, 1995, both
options were exercisable and neither had been exercised.

13. STOCK GRANT

In January 1995, the Company entered into an agreement with an employee of
Telcom Ventures, whereby the Company granted such employee 31 shares of common
stock of WVB. The Company recognized compensation expense in the amount of
$12,500, which management believes approximates fair value of the shares
granted. This amount has been reported as selling, general, and administrative
expenses with a corresponding increase in additional paid-in capital within the
accompanying consolidated financial statements.

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WIRELESS VENTURES OF BRAZIL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

14. SUBSEQUENT EVENTS

In May 1996, WVB entered into a purchase agreement to acquire the
outstanding capital stock of LMP Consultoria Representcoes Ltd. (LMP) for
$900,000. LMP holds licenses to operate 220 SMR channels in Brazil. By
agreement, payment of one-half of the purchase price is due upon WVB building
out the channels and the balance is due upon obtaining approval from the
Ministry for the transfer of control of the SMR licenses.

In May 1996, WVB entered into a purchase agreement to acquire the
outstanding capital stock of Telecomunicacoes Brastel S/C Ltd. (Brastel) for
$240,000. Brastel holds licenses to operate 40 SMR channels in Brazil. WVB paid
$50,000 of the purchase price upon signing the agreement. The remainder of the
purchase price is due upon WVB building out the channels and obtaining approval
from the Ministry for the transfer of control of the SMR licenses.

15. PENDING SALE OF THE COMPANY

In June 1996, the stockholders of WVB entered into a preliminary agreement
to sell all of the outstanding capital stock of the Company to a U.S. publicly
traded company. Pursuant to the agreement, the shareholders of WVB would receive
common stock of the purchaser as consideration for the sale. The negotiations
are in the preliminary stages, and therefore, are subject to the completion of
due diligence procedures by the purchaser.

F-61
<PAGE> 221

CORPORACION MOBILCOM, S. A. DE C. V. AND SUBSIDIARIES

INDEPENDENT AUDITORS' REPORT

The Board of Directors and Stockholders of
Corporacion Mobilcom, S. A. de C. V. and Subsidiaries:

We have audited the accompanying consolidated balance sheets of Corporacion
Mobilcom, S. A. de C. V. and Subsidiaries as of December 31, 1996 and 1995, and
the related consolidated statements of operations, stockholders' equity and cash
flows for the years then ended (all expressed in thousands of U.S. dollars).
These consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statements presentation. We believe that our audits provide a
reasonable basis for our opinion.

The accompanying financial statements have been translated in accordance
with the standards set forth in Statements of Financial Accounting Standards No.
52 from Mexican pesos (the functional currency of the Company) into U.S. dollars
(the reporting currency of the Company) for purposes of incorporation into the
consolidated financial statements of McCaw International, Ltd. by the equity
method.

In our opinion, for the purpose of incorporation into the consolidated
financial statements of McCaw International, Ltd. by the equity method, the
translated consolidated financial statement referred to above present fairly, in
all material respects, the financial position of Corporacion Mobilcom, S. A. de
C. V. and Subsidiaries as of December 31, 1996 and 1995, and the results of
their operations, the changes in their stockholders' equity and the changes in
their financial position for the years then ended in conformity with accounting
principles generally accepted in the United States of America.

Deloitte & Touche
Mexico City, Mexico
March 10, 1997

F-62
<PAGE> 222

CORPORACION MOBILCOM, S. A. DE C. V. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 1996 AND 1995
(THOUSANDS OF U.S. DOLLARS)

<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1996 1995
------------ ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents.............................. $ 468 $ 5,058
Accounts receivable (note 5)........................... 2,250 2,179
Due from related parties (note 4)...................... 427 544
Inventories (note 6)................................... 385 709
Advances to suppliers.................................. 75 590
-------- --------
Total current assets.............................. 3,605 9,080
Investment in affiliate (note 7)....................... 7,553 7,989
Property, furniture and equipment, net of accumulated
depreciation of $2,947 and $1,974 (note 8)........... 13,978 14,875
Cost of licenses, net of accumulated amortization of
$2,896 and $1,971 ................................... 19,960 21,130
Goodwill, net of accumulated amortization of $908 and
$619................................................. 6,848 7,138
-------- --------
Total............................................. $ 51,944 $ 60,212
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable (note 9)................................. $ 3,501 $ 23,908
Current portion and long-term debt (note 10)........... 17,706 394
Accounts payable....................................... 923 2,962
Payable to stockholders................................ 1,049
Accrued expenses....................................... 6,031 3,164
Income tax and tax on assets........................... 13
Due to related parties................................. 629 1,537
-------- --------
Total current liabilities......................... 28,790 33,027
Long-term debt, excluding current portion (note 10).... 1,403
Deferred income taxes (note 12)........................ 3,867 3,917
Other long-term obligations............................ 199 135
-------- --------
Total liabilities................................. 32,856 38,482
-------- --------
Commitments and contingencies
Stockholders' equity (note 11):
Common stock, 1,304 and 972 shares authorized, 510 and
469 shares issued and outstanding, in thousands...... 103,378 50,745
Additional paid-in capital............................. 6,843 48,520
Accumulated deficit.................................... (84,229) (72,387)
Cumulative effect of translation....................... (6,904) (5,148)
-------- --------
Total stockholders' equity........................ 19,088 21,730
-------- --------
Total........................................ $ 51,944 $ 60,212
======== ========
</TABLE>

See notes to consolidated financial statements.

F-63
<PAGE> 223

CORPORACION MOBILCOM, S. A. DE C. V. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995
(THOUSANDS OF U.S. DOLLARS)

<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1996 1995
------------ ------------
<S> <C> <C>
Revenue:
Service revenue........................................ $ 4,326 $ 3,297
Equipment sales and maintenance........................ 1,059 1,192
-------- --------
5,385 4,489
-------- --------
Cost and expenses related to revenue:
Cost of service........................................ 1,007 1,274
Cost of equipment sales and maintenance................ 897 1,406
-------- --------
1,904 2,680
Operating expenses:
Selling general and administrative..................... 7,026 9,707
Depreciation........................................... 1,024 1,104
Amortization of cost of licenses....................... 925 1,152
Amortization of goodwill............................... 289 366
-------- --------
Operating loss.................................... (5,783) (10,520)
-------- --------
Other expenses:
Interest expenses, net................................. (5,608) (9,041)
Foreign exchange loss, net............................. (227) (11,013)
Equity in the results of affiliate (note 7)............ (176) (721)
Other, net............................................. (48) (556)
-------- --------
Loss before income taxes.......................... (11,842) (31,851)
-------- --------
Income taxes (note 12)................................. 516
-------- --------
Net loss.................................................... $(11,842) $(31,335)
======== ========
</TABLE>

See notes to consolidated financial statements.

F-64
<PAGE> 224

CORPORACION MOBILCOM, S. A. DE C. V. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995
(THOUSANDS OF U.S. DOLLARS)

<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL CUMULATIVE
------------------ PAID-IN ACCUMULATED EFFECT OF
SHARES AMOUNT CAPITAL DEFICIT TRANSLATION TOTAL
------- -------- ---------- ----------- ----------- --------
<S> <C> <C> <C> <C> <C> <C>
BALANCES AT JANUARY 1, 1995........... 380,962 $ 45,407 $ $(41,052) $(1,438) $ 2,917
Capital contributions............. 87,924 5,338 48,520 53,858
Translation adjustment............ (3,710) (3,710)
Net loss for the year............. (31,335) (31,335)
------- -------- -------- -------- ------- --------
BALANCES AT DECEMBER 31, 1995......... 468,886 50,745 48,520 (72,387) (5,148) 21,730
Capital contributions............. 41,022 52,633 (41,677) 10,956
Translation adjustment............ (1,756) (1,756)
Net loss for the year............. (11,842) (11,842)
------- -------- -------- -------- ------- --------
BALANCES AT DECEMBER 31, 1996......... 509,908 $103,378 $ 6,843 $(84,229) $(6,904) $ 19,088
======= ======== ======== ======== ======= ========
</TABLE>

See notes to consolidated financial statements.

F-65
<PAGE> 225

CORPORACION MOBILCOM, S. A. DE C. V. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995
(THOUSANDS OF U.S. DOLLARS)

<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1996 1995
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net loss............................................... $(11,842) $(31,335)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation...................................... 1,024 1,104
Amortization of licenses and goodwill............. 1,214 1,518
Unrealized exchange losses........................ 219 3,658
Equity in the results of affiliate................ 176 721
Deferred taxes.................................... (516)
Allowance for obsolescence........................ 403
Changes in operating assets and liabilities:
Accounts receivable............................... (326) (2,034)
Inventories....................................... (127)
Accounts payable and accrued expenses............. (452) 1,536
-------- --------
Cash used by operating activities............ (9,711) (25,348)
-------- --------
Cash flows from financing activities:
Capital contributions.................................. 9,926 12,278
Proceeds from loans.................................... 26,762
Repayment of loans..................................... (4,498) (1,251)
-------- --------
Cash provided by financing activities.................. 5,428 37,789
-------- --------
Cash flows from financing activities:
Acquisition of furniture and equipment................. (307) (6,291)
Investment in affiliate, net........................... (1,564)
-------- --------
Cash used in investing activities................. (307) (7,855)
-------- --------
Increase (decrease) in cash and cash equivalents............ (4,590) 4,586
Cash and cash equivalents:
At beginning of year................................... 5,058 472
-------- --------
At end of year......................................... $ 468 $ 5,058
======== ========
Supplemental cash flow disclosures:
Cash paid for interest................................. $ 1,730 $ 7,350
======== ========
</TABLE>

See notes to consolidated financial statements.

F-66
<PAGE> 226

CORPORACION MOBILCOM, S. A. DE C. V. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995
(THOUSANDS OF U. S. DOLLARS)

1. OPERATIONS

Corporacion Mobilcom, S. A. de C. V. (Mobilcom), is a holding company,
established in 1993. The principal operations of the subsidiary companies of
Mobilcom (the companies) consist of providing specialized mobile radio (SMR)
services to users (subscribers) through licenses granted by the Mexican
Department of Communications and Transportation (SCT) under the terms of the Ley
Federal de Telecomunicaciones (Federal Telecomunications Law) and Ley de Vias
Generales de Comunicacion (General Communications Law and Regulations),
establishing, constructing and exploting, public communication networks for the
transmission of signals between the subscribers' terminal SMR equipment and
interfacing with telecommunication networks authorized by the SCT.

The Companies have licenses that were granted for periods primarily of 15
years and that may be extended under the terms of the licenses granted covering
the principal cities and routes (roads) of Mexico. The terms of the contracts
stipulate that the grantee register the rates of services rendered with the STC.
There is also an obligation to pay the Mexican Federal Government 5% of gross
revenues from the services licensed, as well as an obligation to comply with the
terms established in the licenses granted.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Significant accounting policies and practices followed by Mobilcom and
subsidiaries (the Company) in the preparation of consolidated financial
statements are described below:

a. PRINCIPLES OF CONSOLIDATION -- The consolidated financial
statements include the assets, liabilities and results of operations of
subsidiaries in which Mobilcom owns more than 50% of the voting stock. For
all periods presented, Mobilcom owns over 99% of the voting stock of its
consolidated subsidiaries. All significant intercompany balances and
transactions have been eliminated in consolidation.

The investment in affiliate of which Mobilcom owns less than 50% of
the stock, is accounted for using the equity method.

b. FOREIGN CURRENCY TRANSLATION -- The Company's accounting records
are maintained in its functional currency, the Mexican peso. The financial
statements have been translated into U. S. dollars using the exchange rate
at each balance sheet date for assets and liabilities and a weighted
average exchange rate for each period for revenues, expenses, gains, and
losses. The resulting translation adjustments are recorded as a separate
component of stockholders' equity.

c. FOREIGN CURRENCY TRANSACTIONS -- Transactions denominated in
foreign currencies are initially recorded at the prevailing exchange rate
on the transaction date. Assets and liabilities denominated in foreign
currencies at year end are recorded at the prevailing exchange rate on the
balance sheet date. Fluctuations in exchange rates from the transaction
date to the settlement date or year end are charged to operations.

d. CASH AND CASH EQUIVALENTS -- The Company considers all highly
liquid, temporary cash investments with original maturities of three months
or less to be cash equivalents.

e. INVENTORIES -- Inventories are stated at the lower of cost or
market, as determined using the average cost method.

F-67
<PAGE> 227
CORPORACION MOBILCOM, S. A. DE C. V. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)
f. PROPERTY, FURNITURE AND EQUIPMENT -- Property, furniture and
equipment are stated at cost. Depreciation is calculated using the
straight-line method over the estimated useful lives of the assets, as
follows:

<TABLE>
<CAPTION>
USEFUL LIFE
-----------
<S> <C>
Building................................................. 40 years
Transmission equipment................................... 13 years
Office furniture......................................... 9 years
Computer equipment....................................... 3 years
Transportation equipment................................. 7 years
</TABLE>

g. REVENUE RECOGNITION -- Service revenue is recognized at the time
service is rendered. Revenue from the sale of terminal equipment is
recognized when the goods are delivered and rental from leasing of terminal
equipment is recognized as rental income is earned.

h. INCOME TAXES -- Income taxes are provided for in accordance with
Statements of Financial Accounting Standards No. 109, "Accounting for
Income Taxes" ("SFAS 109"). Under SFAS 109, deferred tax assets and
liabilities are determined based on differences between the financial
reporting and tax basis of assets and liabilities and are measured by
applying enacted tax rates.

i. SENIORITY PREMIUMS AND SEVERANCE COMPENSATION -- Seniority premiums
and severance compensation which employees are entitled, upon retirement
after fifteen years or more of service, in accordance with the Mexican
Federal Labor Law, are recognized as costs during the years in which the
related services are rendered, based on actuarial calculations. Net
periodic expense recognized in 1996 and 1995 was $77, and $115
respectively.

j. CONCENTRATION OF CREDIT RISKS -- The companies provide SMR services
to subscribers in geographic areas throughout Mexico. The companies do not
have any single customer which accounts for a significant amount of
revenues or significant accounts receivables at December 31, 1996 and 1995.
The companies perform evaluations of their customers' credit histories and
establish an allowance for doubtful accounts based upon the credit risk of
specific customers and historical trends.

k. USE OF ESTIMATES -- The preparation of financial statements in
conformity with generally accepted accounting principles in the United
States of America requires management to make estimates and assumptions
that affect the amounts reported in the consolidated financial statements
and related notes to financial statements. Actual results in such estimated
may affect amounts reported in future periods.

l. GOODWILL AND COSTS OF LICENSES -- The excess of cost over fair
value of net assets acquired of subsidiaries and the costs of licenses are
amortized on a straight-line basis over the estimated economic useful life
of 25 years.

m. RECLASSIFICATIONS -- Certain 1995 amounts have been reclassified to
conform with 1996 presentation.

3. FAIR VALUE OF FINANCIAL INSTRUMENT DISCLOSURE

U. S. Statement of Financial Accounting Standards No. 107 ("SFAS No. 107"),
"Disclosures Fair Value of Financial Instruments", requires disclosure of the
estimated fair value of certain financial instruments. The estimated fair value
amounts have been determined using available market information or other
appropriate valuation methodologies that require considerable judgment in
interpreting market data and
F-68
<PAGE> 228
CORPORACION MOBILCOM, S. A. DE C. V. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

3. FAIR VALUE OF FINANCIAL INSTRUMENT DISCLOSURE -- (CONTINUED)
developing estimates. Accordingly, the estimates presented herein are not
necessarily indicative of the amounts that the Company could realize in a
current market exchange. The use of different market assumptions and/or
estimation methodologies may have a material effect on the estimated fair value
amounts.

The carrying amounts of the Company's cash equivalents, accounts receivable
and short-term notes payable approximate their fair values. Cash equivalents and
accounts receivable are short-term, in nature and notes payable have relatively
short maturities and bear interest at variable rates tied to market indicators.
The Company's long-term debt consists of debt instruments which bear interest at
fixed rates and variable rates tied to market indicators. Except for long-term
debt due to related parties, the fair value of long-term debt is estimated by
discounting future cash flow amounts using current interest rates at which
similar notes would be issued to similar borrowers. The fair value of these
amounts approximated the carrying value at December 31, 1996 and 1995.

The fair value information presented herein is based on information
available to management as of the above presented dates. Although management is
not aware of any factors that would significantly affect the estimated fair
value, amounts have not been comprehensively revalued for purposes of these
financial statements since those dates and, therefore, the current estimates of
fair value may difference significantly from the amounts presented herein.

4. BALANCES AND TRANSACTIONS WITH RELATED PARTIES

Transactions with related parties carried out during the years ended
December 31, 1996 and 1995, in addition to those described in notes 14 and 15,
were as follows:

<TABLE>
<CAPTION>
1996 1995
-------- --------
<S> <C> <C>
Expenses:
Interest............................................... $409 $500
Cost of service........................................ 145
Administrative services................................ 341
Income:
Interest............................................... 204 87
Administrative services................................ 26 469
</TABLE>

F-69
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CORPORACION MOBILCOM, S. A. DE C. V. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

4. BALANCES AND TRANSACTIONS WITH RELATED PARTIES -- (CONTINUED)
The balances due from and to related parties at December 31, 1996 and 1995
are summarized as follows:

<TABLE>
<CAPTION>
INTEREST RATE
OR AVERAGE
INTEREST RATE
--------------
1996 1995 1996 1995
----- ----- ---- ------
<S> <C> <C> <C> <C>
Due from related parties:
Investcom, S. A. de C. V...................... 42% $ 15 $
Com-L.D., S. A. de C. V....................... 42% 301
Nextel Communications, Inc.................... 42% 54
Nacional de Telecomunicaciones, S. A. de C.
V........................................... 42% 55% 50 544
Other......................................... 42% 7
---- ------
$427 $ 544
==== ======
Due to related parties:
Grupo Comunicaciones San Luis, S. A. de C.
V........................................... 6% 6% $ 91 $ 933
Comunicaciones Troncales, S. A. de C. V....... 42% 55% 538 604
---- ------
$629 $1,537
==== ======
</TABLE>

Nacional de Telecomunicaciones, S. A. de C. V. is a 49% owned affiliate of
Mobilcom that is accounted for using the equity method (Note 7). December 31,
1996, Grupo Communicaciones San Luis, S. A. de C. V. owned approximately 50%, of
the outstanding shares of the common stock of Mobilcom, Intercom, S. A. de C. V.
and Communicaciones Troncales, S. A. de C. V. are subsidiaries of Grupo
Communicaciones San Luis, S. A. de C. V.

5. ACCOUNTS RECEIVABLE

Accounts receivable are summarized as follows:

<TABLE>
<CAPTION>
1996 1995
-------- --------
<S> <C> <C>
Trade....................................................... $1,230 $ 1,457
Officer and employees....................................... 867 95
Recoverable value added tax................................. 575 1,611
Other....................................................... 164 157
------ -------
2,836 3,320
Less allowance for doubtful accounts........................ (586) (1,141)
------ -------
$2,250 $ 2,179
====== =======
</TABLE>

6. INVENTORIES

Inventories, which consist entirely of finished goods, include the
following:

<TABLE>
<CAPTION>
1996 1995
----- ----
<S> <C> <C>
Communication equipment..................................... $ 829 $702
Communication equipment at bonded warehouse................. 48
Less allowance for obsolete inventories..................... (444) (41)
----- ----
$ 385 $709
===== ====
</TABLE>

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<PAGE> 230
CORPORACION MOBILCOM, S. A. DE C. V. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

7. INVESTMENT IN AFFILIATE

During 1995, the Company acquired a 49 percent interest in Nacional de
Telecomunicaciones, S. A. de C. V. (Natel), a Mexican company with operations
similar to Mobilcom's. (See Note 14) Relating to letter of interest to acquire
the remaining 51% of Natel. Natel's operations and the Company's equity in net
loss of Natel included:

<TABLE>
<CAPTION>
1996 1995
----- -----
<S> <C> <C>
NATEL:
Net sales.............................................. $ 850 $ 526
Operating loss......................................... 635 839
Net gain (loss)........................................ 215 (904)

MOBILCOM 49% EQUITY IN (LOSS):
Mobilcom equity in (gain) loss......................... 105 (443)
Amortization of excess of cost over the fair value of
equity interest in net assets acquired................ (281) (278)
----- -----
Equity in loss of Natel..................................... $(176) $(721)
===== =====
</TABLE>

The Company's investment in Natel included the unamortized excess cost over
the fair value of equity interest in Natel's net assets. This excess was $6,303
and $6,663 at December 31, 1996 and 1995 and is being amortized on a
straight-line basis over the estimated economic useful life of 25 years.

Condensed balance sheet information for Natel at December 31, 1996 and 1995
was as follows:

<TABLE>
<CAPTION>
1996 1995
------ ------
<S> <C> <C>
Current assets.............................................. $1,641 $ 636
Noncurrent assets........................................... 1,447 1,654
Current liabilities......................................... 1,681 728
</TABLE>

The Company's investment in affiliate was comprised of the following at
December 31, 1996 and 1995:

<TABLE>
<CAPTION>
1996 1995
------ ------
<S> <C> <C>
Stockholders' equity -- Natel............................... $1,407 $1,562
Contribution not recognized................................. 1,144 1,144
------ ------
$2,551 $2,706
====== ======
Equity participation at 49%................................. $1,250 $1,326
Excess of cost over the fair value of equity interest in net
assets acquired net of accumulated amortization........... 6,303 6,663
------ ------
Total....................................................... $7,553 $7,989
====== ======
</TABLE>

Under the purchase agreement with Natel, the Company owes Natel $1,144 and
its shareholders $40 or a total of $1,184 at December 31, 1996 and 1995 for the
shares acquired during 1995, which is recorded as a liability and is being
offset against receivables from Natel for services provided.

F-71
<PAGE> 231
CORPORACION MOBILCOM, S. A. DE C. V. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

8. PROPERTY, FURNITURE AND EQUIPMENT

Property, furniture and equipment include the following:

<TABLE>
<CAPTION>
1996 1995
------- -------
<S> <C> <C>
Land........................................................ $ 44 45
Building.................................................... 131 133
Transmission equipment...................................... 15,188 12,624
Office furniture and fixtures............................... 196 181
Computer equipment.......................................... 296 209
Transportation equipment.................................... 117 90
Equipment at bonded warehouse............................... 801 2,633
Construction in progress.................................... 152 934
------- -------
16,925 16,849
Less accumulated depreciation............................... (2,947) (1,974)
------- -------
$13,978 $14,875
======= =======
</TABLE>

9. NOTES PAYABLE

Short-term debt is summarized as follows:

<TABLE>
<CAPTION>
WEIGHTED AVERAGE
INTEREST RATE
FOR THE YEAR
-------------------
1996 1995 1996 1995
-------- -------- -------------- --------------
<S> <C> <C> <C> <C>
Arrendadora Financiera Invermexico, S. A.
de C. V. (Arrendadora)(1)............... 14% $ $14,306
Unsecured financing loan:
In Mexican pesos..................... 37.25% 59.5% 683 1,245
In U.S. dollars...................... 15.% 15.2% 2,194 2,532
Union de Credito Regional, S. A. de C. V.:
Unsecured............................ 38.5% 61% 624 646
Banco Mercantil del Norte, S. A., credit
letters
Fimexpo, S. A. de C. V. secure loans in
U.S. dollars............................ 25% 589
Financing loans in U. S. dollars.......... 12.2% 4,590
------ -------
$3,501 $23,908
====== =======
</TABLE>

- ------------------
(1) During 1994 a Mexican bank made a loan in the amount of U. S. $8,365 to the
Company collateralized by fixed assets. Additionally in 1994, Arrendadora,
which is a leasing company, advanced U. S. $14,428 to the Company which was
used to pay off the loan from the Mexican bank plus accrued interest. The
advance was made by Arrendadora in anticipation of a sale leaseback
transaction involving the collateralized equipment. At December 31, 1995,
the Company was in arrears on accrued interest related to the notes payable
to Arrendadora in the amount of $1,331 and accordingly the amount was
classified as current liabilities. The anticipated sale leaseback
transaction occurred as of June 10, 1996. (See Note 10).

F-72
<PAGE> 232
CORPORACION MOBILCOM, S. A. DE C. V. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

10. CURRENT PORTION AND LONG-TERM DEBT

Long-term debt is summarized as follows:

<TABLE>
<CAPTION>
1996 1995
-------- --------
<S> <C> <C>
Loans in Mexican pesos, bearing Nafin interest plus 6 points
and CPP interest, plus 6 to 10 points, average 40.5% 1996,
and 62% in 1995, payable in monthly installments through
2000, collaterized by fixed assets and goods purchased with
the proceeds from the loans and with the guarantee from
subsidiary of the company and one of the shareholders....... $ 2,104 $ 701
Arrendadora Financiera Invermexico, S. A. de C. V.
(Arrendadora), payable in semi-annual payments in U.S.
dollars up to $2,007. Interest rate libor plus 3.6 to 8.6
and one note at 22% (average 16%)(2)........................ 14,493
Loan in U.S. dollars, bearing annual interest of 15%,
payable in
September 1997.............................................. 690 605
Capital leases in Mexican pesos, bearing the highest
interest rate, plus 9 points or CPP interest, plus 8 to 10
points, average 41.80% in 1996 and 57.85% in 1995 payable in
monthly installments through 1999, collateralized by fixed
assets purchased............................................ 290 339
Capital lease in U.S. dollars, bearing LIBOR interest plus 7
points, average 12.50% and 12.45% in 1996 and 1995,
respectively, payable in monthly installments through March
1998, collateralized by fixed assets purchased.............. 73 109
Others:
In Mexican pesos....................................... 56
In U.S. dollars........................................ 43
------- ------
Current portion and long-term debt(1).................. 17,706 1,797
------- ------
Less current installments:
Capital lease agreements............................... 105
Notes payable.......................................... 289
------- ------
Current installments of long-term debt................. 394
------- ------
Long-term debt, excluding current installments.............. $ -- $1,403
======= ======
</TABLE>

-----------------------
(1) As of January 31, 1997 all of the above long term debt agreements were
in technical default as the Company has not made all of the scheduled
installments required pursuant to the respective agreement in addition
to non-compliance with other covenants (See Note 14), and accordingly
all

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<PAGE> 233
CORPORACION MOBILCOM, S. A. DE C. V. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

10. CURRENT PORTION AND LONG-TERM DEBT -- (CONTINUED)
long-term debt was classified as current liabilities. Contractual
maturities of long-term debt at December 31, 1996 are as follows:

<TABLE>
<CAPTION>
PAYABLE IN
MEXICAN U.S.
PESOS DOLLARS TOTAL
---------- ------- -------
<S> <C> <C> <C>
1998............................................. $325 $1,045 $ 1,370
1999............................................. 194 1,031 1,225
2000............................................. 137 1,031 1,168
2001............................................. 110 1,031 1,141
2002............................................. 84 1,031 1,115
Thereafter....................................... 38 4,535 4,573
---- ------ -------
$888 $9,704 $10,592
==== ====== =======
</TABLE>

-----------------------
(2) On February 1997 the capital lease was signed with an effective date of
June 1996. It establishes some covenants which are not fully complied
with. See also footnote 9.

At December 31, 1996 and 1995, substantially all of the Company's
property, furniture and equipment was pledged as collateral under the
Company's notes payable and long-term debt agreements. Additionally, at
December 31, 1996 and 1995, the shares of one of the Company's
subsidiaries were pledged as collateral for loans in Mexican pesos. The
liabilities of such subsidiary exceeded the book value of its assets at
December 31, 1996 and 1995.

11. STOCKHOLDERS' EQUITY

In June 1996, the Company's board of directors agreed to increase the
variable portion of common stock through a 2.65 to 1 stock split, resulting in
the issuance of 292,117 series "B" shares, with a par value of 1,000 Mexican
pesos each. Share data for all periods presented reflect this stock split.

At December 31, 1996 and 1995 1,304,481 and 971,637 shares of series "B"
shares with a par value of 1,000 Mexican pesos were authorized of which 509,908
and 468,886 shares were issued and outstanding respectively. Prior to March
1995, the company also had series "A" and "C" shares outstanding, all of which
conferred the same rights and privileges to stockholders as series "B" shares.
During 1995 the company exchanged all outstanding series "A" and "C" shares for
series "B" shares.

During 1996, the following transactions occurred:

-- The variable portion of common stock was increased through issuance
of 19,995 series "B" shares, with a par value of 1,000 Mexican pesos
each. The total subscription value was $8,240, including a premium of
$5,562, paid in cash and by capitalizing liabilities for $1,030.

-- The Company's board of directors also agreed to increase the variable
portion, through issuance of 16,427 series "B" shares, with a par
value of 1,000 Mexican pesos each; 811 shares were subscribed and
paid-in by employees, under certain conditions.

-- Common stock, was increased through payment for 4,600 series "B"
shares, with a par value of 1,000 Mexican pesos each, in the amount
of $1,896, including a premium of $1,281.

During 1995, 87,924 additional shares of common stock were acquired by
Nextel. In conjunction with this purchase, the Company received $12,519 in cash
and contributed $43,625 of debt to capital.

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CORPORACION MOBILCOM, S. A. DE C. V. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

12. INCOME TAXES

Deferred income taxes reflect the net tax effects of (a) temporary
differences between carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes, and (b)
operating loss carryforwards. The net deferred tax liability represents deferred
tax on the nondeductible cost of licenses less amounts included in the net
operating loss carryforwards for a ten year period. Significant components of
the Company's deferred tax liability are as follows:

<TABLE>
<CAPTION>
1996 1995
-------------- --------------
<S> <C> <C>
Net operating loss carryforwards.......................... $ 19,560 $14,606
Site development costs.................................... 90
Property, furniture and equipment......................... 1,035 (2,387)
-------- -------
Deferred tax asset........................................ 20,595 12,309
Valuation reserve......................................... (17,679) (9,169)
-------- -------
Net deferred tax asset.................................... 2,916 3,140
Non deductible cost of licenses........................... (6,783) (7,057)
-------- -------
Net liability............................................. $ (3,867) $(3,917)
======== =======
</TABLE>

The Company had net operating loss carryforwards of approximately $57,536
at December 31, 1996. These net operating loss carryforwards, which are indexed
to reflect the impact of inflation in accordance with Mexican tax law, expire as
follows:

The Company and its subsidiaries file their tax returns individually and a
consolidated tax return is not prepared.

Even though the Company has incurred tax losses for the past 5 years,
management believes that it is more likely than not that it will generate
taxable income sufficient to realize the portion of the tax benefit associated
with the net deferred tax asset of $2,916 and $3,140 respectively. The belief is
based upon, among other factors, the expected reversal of existing deferred tax
liabilities. If the company is unable to generate sufficient taxable income in
the future through operating results, increases in valuation allowance will be
required through a charge to expense. However, if the Company achieves
sufficient profitability to utilize a greater portion of the deferred tax asset,
the valuation allowance will be reduced through a credit to income.

The actual income tax expense attributable to earnings for the years ended
December 31, 1996 and 1995 differ from the amounts computed by applying the
Mexican income tax rate of 34 percent to losses before income taxes and equity
in the results of affiliate as a result of the following:

<TABLE>
<CAPTION>
1996 1995
-------- --------
<S> <C> <C>
Income tax benefit at statutory rate........................ $(4,026) $(10,579)
Limitation on net operating loss carryforwards -- net....... 966 9,193
Differences between tax and financial accounting for effects
of inflation.............................................. 3,060 (1,371)
Other....................................................... 2,241
------- --------
Benefit for income tax...................................... $ -- $ (516)
======= ========
</TABLE>

F-75
<PAGE> 235
CORPORACION MOBILCOM, S. A. DE C. V. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

12. INCOME TAXES -- (CONTINUED)
The significant components of the deferred income tax benefit for the years
ended December 31, 1996 and 1995 are as follows:

<TABLE>
<CAPTION>
1996 1995
-------- --------
<S> <C> <C>
Deferred income tax benefit (exclusive of the effects of
other components listed below)............................ $(4,026) $ (4,256)
Net operating losses generated and other.................... (4,601) (5,453)
Increase in valuation allowance............................. 8,627 9,193
------- --------
Deferred income tax benefit................................. $ -- $ (516)
======= ========
</TABLE>

13. ASSOCIATION WITH NEXTEL COMMUNICATIONS, INC. (NEXTEL)

On March 3, 1995 Mobilcom had closed a share purchase and subscription
agreement with Nextel, pursuant to which Nextel Investment Company a subsidiary
of Nextel, acquired 16.5% minority interest in Mobilcom. This transaction
reflects the renegotiation of the terms associated with a previously
contemplated transaction involving Nextel, Nextel Investment Company, Mobilcom
and certain stockholders of Mobilcom which was initially announced in October
1994. Pursuant to this transaction, Nextel Investment Company purchased newly
issued shares comprising 16.5% of the shares of capital stock of Mobilcom
(calculated after issuance of such shares) for a cash payment of $12,519 and
$43,625 of notes representing funds advanced to Mobilcom in 1994.

In addition, Nextel made additional investments in January 1996 for an
additional 1.5% of the shares of capital stock of Mobilcom. (See Note 11). As
part of this transaction, Nextel also received two options to increase its
ownership of Mobilcom equity. The first option was an 18 month option to acquire
an additional 19.5% of Mobilcom for $76,800 and a second option is a three-year
option to acquire an additional 10% of Mobilcom for $67,500.

The agreement grants the following privileges to Nextel: (1) certain
preferred rights to acquire additional shares of Mobilcom, in order to maintain
its equity percentage; (2) certain rights to subscribe the shares proposed to be
issued in the transaction; (3) the right to designate members of the Board of
Mobilcom; and (4) veto rights with regard to various matters presented to the
Board of Directors of Mobilcom, including acquisitions, disposals, business
plans and technology rights. This agreement also set the rules for Nextel and
Mobilcom's other stockholders to acquire or dispose of their equity interests in
Mobilcom. Also executed at closing of the Mobilcom transaction were agreement
related to an interpretability relationship between Nextel and Mobilcom and the
sharing between Nextel and Mobilcom of channels along the United States-Mexican
border.

At January 31, 1997 Nextel owns 38% of the outstanding shares, of Mobilcom
and still has the option to purchase before March 1998, up to an additional
29.5% of Mobilcom's common stock. Furthermore, certain shareholders of Mobilcom,
holders of approximately 37% of Mobilcom's common stock retain the right for a
period of two years commencing October 24, 1997 to put (the "Mobilcom Put") the
entire amount of their holdings to Nextel at its appraised fair market value for
cash upon the occurrence of certain events (the "Put Events"). The Mobilcom Put
is automatically exercisable on October 24, 1999 whether or not a Put Event
occurs.

F-76
<PAGE> 236
CORPORACION MOBILCOM, S. A. DE C. V. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

14. SUBSEQUENT EVENTS

(a) On March 10, 1997 the Company has signed a purchase agreement to
acquire the remaining 51% interest in its equity investee, Natel for $6,500,
subject to the approval of the SCT. The company is exploring the possibility of
acquiring additional channels in other markets.

On February 6, 1997 the Company requested from its shareholders a capital
call of $27,000 by April 14, 1997. The funds obtained through the capital call
will be used to assist the Company to meet its cash obligations and make certain
strategic investments as follows:

<TABLE>
<CAPTION>
CAPITAL CALL
------------
<S> <C>
Pay-off of certain obligations and funds for current
operating expenses........................................ $16,000
Purchase of 51% of Natel.................................... 7,000
Completion of microwave network build-out................... 4,000
-------
$27,000
=======
</TABLE>

Nextel's pro rata share of the capital call is approximately $10,000 which
Nextel has committed to fund. Nextel also expects to fund an additional $12,000
which would increase its equity interest in Mobilcom by approximately 10%.

(b) At the March 10, 1997 Board meeting, the Company decided to explore the
possibility of disposing of its 400 mhz business which has a net book value of
licenses and equipment of approximately $6,500 as of December 31, 1996. As the
negotiations with potential buyers are in the early stages, there can be no
assurance that a sale will be consummated. Management believes that the disposal
will not result in losses and expects to utilize the proceeds to reduce debt.
Disposition of the 400 mhz business will allow the Company to more effectively
focus on its core business.

F-77
<PAGE> 237

CORPORACION MOBILCOM S.A. DE C.V. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(THOUSANDS OF U.S. DOLLARS)

<TABLE>
<CAPTION>
THREE MONTHS
ENDED
MARCH 31,
1997
------------
<S> <C>
Revenue..................................................... $ 1,656
Cost of operations.......................................... 698
Selling, general and administrative expenses................ 2,200
Depreciation and amortization............................... 712
-------
Operating loss......................................... (1,954)
Other expenses, net......................................... 390
-------
Net loss.................................................... $(2,344)
=======
</TABLE>

See accompanying notes to the condensed consolidated financial statements.

F-78
<PAGE> 238

CORPORACION MOBILCOM S.A. DE C.V. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(THOUSANDS OF U.S. DOLLARS)

<TABLE>
<CAPTION>
THREE MONTHS
ENDED
MARCH 31,
1997
------------
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss............................................... $(2,344)
Depreciation and amortization expense.................. 712
Equity in subsidiary................................... 17
Foreign currency translation and exchange (gain) loss,
net................................................... (201)
Changes in operating accounts, net..................... 712
-------
Net cash used by operating activities.................. (1,104)
-------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment..................... (102)
-------
Net cash used by investing activities.................. (102)
-------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from sale of stock and net capital
contributions......................................... 13,619
-------
Net cash provided by financing activities.............. 13,619
-------
NET DECREASE IN CASH AND CASH EQUIVALENTS................... 12,413
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR.............. 468
-------
CASH AND CASH EQUIVALENTS AT END OF PERIOD.................. $12,881
=======
</TABLE>

See accompanying notes to the condensed consolidated financial statements.

F-79
<PAGE> 239

CORPORACION MOBILCOM, S. A. DE C. V. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
MARCH 31, 1997
(THOUSANDS OF U. S. DOLLARS)

1. BASIS OF PRESENTATION

In the opinion of management, the accompanying unaudited condensed
financial statements reflect all adjustments, consisting of only normal
recurring accruals, necessary for a fair presentation of the statement of
operations and statement of cash flows of Corporacion Mobilcom. S.A. de C.V. and
Subsidiaries (the "Company") for the three months ended March 31, 1997. The
results of operations for the three months ended March 31, 1997 are not
necessarily indicative of the results that may be expected for the full year.
These condensed consolidated financial statements are unaudited, and do not
include all related footnote disclosures.

The interim unaudited condensed consolidated financial statements should be
read in conjunction with the audited consolidated financial statements of the
Company.

2. FOREIGN CURRENCY TRANSLATION

In accordance with Statement of Financial Accounting Standards No. 52
Foreign Currency Translation the Mexican economy, in which the Company primarily
conducts operations, is considered to be highly inflationary as of January 1,
1997. Accordingly the financial statements have been remeasured to reflect the
U.S. dollar as the functional currency of the Company. Pursuant to SFAS No. 52
the translated December 31, 1996 balance sheet has become the accounting basis
for subsequent periods. Transactions subsequent to January 1, 1997 will be
recorded at current exchange rates with translation gains and losses recorded as
a component of net income before taxes.

For the three months ended March 31, 1997 net foreign currency gains of
$447 have been recognized as a component of net income.

3. NOTES PAYABLE AND LONG-TERM DEBT

The Company was in arrears with respect to principal and interest payments
on certain notes payable and long-term debt agreements as of March 31, 1997.
Consequently certain long-term debt agreements were in technical default as the
Company had not made payment of all of the required installments pursuant to
debt agreements, in addition to non-compliance with other debt covenants.

During February 1997 the Company placed a capital call to shareholders
requesting $27,000 in additional capital of which $13,619 was contributed during
March 1997. The remaining $13,381 was contributed during April 1997. Portions of
the funds obtained as a result of the capital call were used to make payments on
the portions of debt in arrears and to make advanced payments in anticipation of
certain debt service requirements. As a result of the payments, the Company is
in compliance with its debt covenants.

4. SUBSEQUENT EVENTS

In April 1997 the Company acquired the remaining 51% interest in its equity
investee, Natel. In order to accomplish this transaction the Company contributed
cash to Natel in the amount of $5,356. Concurrently, the other shareholders
holding a 51% interest in Natel received $6,500 from Natel for their interest in
Natel. As a result of the transaction the Company became a 100% owner of Natel.
The excess of the cost to acquire 100% of Natel over the fair value of net
assets acquired of $11,098 is expected to be attributed to the cost of licenses
to be amortized over a period of 25 years. The Company will consolidate Natel
using purchase accounting in subsequent periods.

F-80
<PAGE> 240

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NO PERSON HAS BEEN AUTHORIZED IN CONNECTION WITH THE EXCHANGE OFFER TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS,
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY. NEITHER THE MAKING OF THE
EXCHANGE OFFER PURSUANT TO THIS PROSPECTUS NOR THE ACCEPTANCE OF PRIVATE NOTES
FOR SURRENDER FOR EXCHANGE PURSUANT THERETO SHALL UNDER ANY CIRCUMSTANCES CREATE
ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY
SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF
ANY TIME SUBSEQUENT TO THE DATE HEREOF.

------------------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information................. 3
Summary............................... 4
Risk Factors.......................... 20
The Company........................... 37
No Cash Proceeds to the Company....... 41
Financing Plan........................ 42
Capitalization........................ 44
The Exchange Offer.................... 45
Pro Forma Consolidated Historical
Financial Data...................... 52
Selected Consolidated Historical
Financial Data...................... 55
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 56
Industry Overview..................... 69
Business.............................. 73
Management............................ 112
Certain Relationships and Related
Transactions........................ 122
Description of Other Indebtedness..... 124
Description of Preferred Stock........ 128
Description of the Notes.............. 130
Certain U.S. Federal Income Tax
Considerations...................... 157
Plan of Distribution.................. 157
Legal Matters......................... 158
Experts............................... 158
Index to Financial Statements......... F-1
</TABLE>

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[NEXTEL INTERNATIONAL, INC. LOGO]
---------------------------------------

OFFER TO EXCHANGE
---------------------------------------
12 1/8% SENIOR DISCOUNT NOTES DUE
APRIL 15, 2008 FOR ANY AND ALL OUTSTANDING
12 1/8% SENIOR DISCOUNT NOTES DUE APRIL 15, 2008
AUGUST 4, 1998

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