- The Washington Times - Monday, November 27, 2000

15 minutes with … Steven Schindler

Wireless giant Nextel Communications has been profitless for all its 13 years, yet it's expanding overseas, and the person charged with making the move work is Steven Schindler.
Mr. Schindler last week took over as head of Nextel International, the Reston company's international subsidiary. He's charged with establishing operations in Latin America and Asia, and overseeing the subsidiary's planned $920 million initial public offering.
The potential for Nextel to emerge as an international powerhouse, especially in Latin America, is substantial. It already does business in Brazil, Mexico, Chile, Peru and Argentina.
With its operations focused on major population centers, Nextel can aim at 240 million people in markets where it currently has a paltry 740,000 subscribers.
Beyond that, Nextel is active in Asia. It has the rights to the electromagnetic spectrum that carries wireless telephony in Japan and the Philippines. It is also a partner in a Chinese venture.
Nextel took in $3.3 billion last year, and it has grown rapidly in the United States mainly because of the popular walkie-talkie feature built into its mobile telephone service. But Nextel International has frequently been overshadowed by its parent, observers say. That could change with new funding from the IPO even though parent Nextel will hold a majority of the new company.
Mr. Schindler is no stranger to this Nextel world, or to the difficult task of pulling together investors. He has served as the parent's chief financial officer since May 1996 and raised over $20 billion for the company.
Q: What kind of company do you want Nextel International to be?
A: I'd like Nextel International to follow in Nextel's footsteps. The original objective with Nextel International was to take advantage of some of the key highlights that we focused on in the United States: the same spectrum position, the same approach in going after business customers and highlighting the direct-connect service. We wanted to emulate the same growth we saw early in the United States.
Q: So you want to export the American experience with wireless?
A: We typify a global wireless company more than anyone else in this business. Nextel has rolled out a service in the United States, and we have a footprint throughout Latin America and parts of the Asia-Pacific region. In those places, we can dictate the pace and the other key things. Where we don't have ownership, we have established roaming arrangements based on the number one [technical] standard in the world. You have a single handset that can be taken all places, a product we can offer our customers on a worldwide sale.
Q: Will the Nextel product look different overseas?
A: The standardization of the product [developed in the United States] is where we get our ultimate leverage. We can buy and aggregate our purchases from Motorola. That brings down our costs to build the infrastructure. We know where to go to acquire similar spectrum, and how to work with the various governments. It brings down the costs of buying the spectrum. Also for handsets: we have a much larger volume worldwide than we would in any individual country. Our financial practices and our billing systems and our procurement practices really give us the opportunity to bring down the fundamental costs.
Q: Deploying these networks is expensive, and some telecommunications companies have miscalculated their costs. What about Nextel?
A: We know what we are capable of. We had a cautious approach at Nextel in which we tried to establish a threshold and meet our numbers each and every time. Once you prove yourself the first time, [lenders and investors] are willing to extend a bit more. That cycle continues each time. And the capital gets pulled away if you stub your toe or fall short. At Nextel International, we launched our markets in the middle of 1998, not necessarily the best time for gaining access to capital. And throughout 1999, we didn't have the funding we would have liked to grow the business as quickly as possible. Then, the capital markets opened up. And now, we can showcase solid results over the last few quarters.
Q: So you're not worried about the general skittishness that equity markets are currently displaying toward the technology sector?
A: I wouldn't say I'm not worried. A strong equity market is always comforting. But we had a euphoria that peaked well above where it should have a year ago, and capital was extended to businesses without solid fundamentals. But Nextel, our parent, is an extremely well-funded company, and it recognizes that investing in its international business is going to be a very strong return. Having said that, the board of directors of Nextel would like to see Nextel International be able to access its own capital.
Q: So where does that leave your IPO plans?
A: We're still in registration with the SEC. We're going to update our filing. Once that process is completed, we'll make judgments as to where the strength of the market is and whether it's appropriate to go out at this time, or whether we'll postpone.
Q: It has almost become a cliche that Europe and Japan are well ahead of the United States. Is that justified?
A: Certainly Japan is further ahead on the technology side. Europe is more heavily penetrated because [it] made an early decision to go to a single standard. The United States went to several types of platforms, and we're now finally getting to the point where four or five providers are building out a national network. I think the United States will see some pretty impressive growth in the coming years and will start to close the gap with Europe. Japan, on the other hand, is more technology-creative. [It has] gotten ahead. It will serve as a good learning platform for other parts of the world.
Q: The productivity revolution in the American economy over the past few years has been due largely to the integration of information technology into business processes. Will wireless have a role in this revolution?
A: That plays to Nextel's strength, which is about being a productivity enhancer for business users. The direct-connect feature is the key: instant communication to one colleague or a group of colleagues over a large geographic territory. In the New York area, our phones have been adopted by many trading desks to allow them to effectively communicate with each other. They have become a substitute for the squawk box. It used to be about shouting beyond rhyme or reason. We have been all about improving productivity for U.S. customers. Now we want to follow suit on the international side.

Self-portrait

Name: Steven M. Schindler
Title: Chairman and Chief Executive Officer, Nextel International
Age: 37
Education: B.A. in economics from the University of Michigan, and an MBA from Cornell University
Family: Married, three children
Current reading: Analyst reports. "I don't know that I get a whole lot of time to read things for my personal enjoyment, other than when I read to my kids."
Next travel destinations: Japan and the Philippines. He says: "We can do teleconferences that bring down the costs of moving people from one country to another. But we do make trips several times per year."
How to contact me: www.nextel.com

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