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A TELECOM IPO FOR TRUE BELIEVERS

CAN EVEN CRAIG McCAW PULL this off? The cellular pioneer is aiming to take his latest telecom venture public in the next few weeks, but an early peek at the offering documents show that investors who buy in will be betting more on the man than on the business.

Nextlink Communications is building phone networks nationwide to market local, long-distance, and data services to small- and medium-size businesses. While the business is promising, Nextlink's stock looks expensive. McCaw wants to sell about a third of the company for $243 million, giving it a market capitalization of $766.9 million. What powerhouse lies behind these rich figures? Not a very big one yet. Nextlink's 1996 revenues totaled $25.7 million, and the company lost $71.1 million last year. A market value of 30 times earnings is considered pricey--30 times revenues is almost unheard of.

Of course, the potential is huge. Local and long distance revenues were about $183 billion last year. And Nextlink is growing rapidly--its customer access lines more than doubled, to 17,409, in the first six months. The real question for McCaw, who is seeking investors for an also dicey Teledesic venture: Is he spreading his golden name a bit too thin?

EDITED BY PAT WECHSLER
Peter Elstrom


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Updated Sept. 11, 1997 by bwwebmaster
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