Kirkland-based Nextel Partners found a special way to celebrate its fifth anniversary as a public company yesterday: It announced its first...

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Kirkland-based Nextel Partners found a special way to celebrate its fifth anniversary as a public company yesterday: It announced its first full-year profit.

Nextel Partners reached other milestones as well, exceeding $1 billion in service revenues, adding a record number of customers during the fourth quarter and reporting a new low in customer turnover.

The stock rose 38 cents to close at $20.20.

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In the fourth quarter, Nextel Partners had a profit of $37.4 million, or 13 cents a share, on revenue of $372.4 million. For the full year, Nextel Partners earned $58.2 million, or 21 cents a share, on revenue of $1.4 billion.

The company, which sells wireless services in rural and small-town America through an agreement with Nextel Communications, added 369,200 net subscribers during the year, while holding on to most of its existing customers. had. Nextel Partners ended the year with 1,602,400 digital subscribers, an increase of 30 percent.

It said monthly turnover, or churn, reached an all-time low of 1.3 percent in the fourth quarter. For the year, turnover averaged 1.4 percent, one of the lowest in the industry.

Nextel Partners’ Chief Executive John Chapple said during a conference call yesterday that the company accomplished such results by focusing on customer service, attracting valuable customers, expanding network coverage, adding stores and introducing new products.

He said the average revenue per user was about $67 in the fourth quarter and for the year, among the highest in the industry.

“We continue to serve some of the most profitable and loyal customers in the country,” said Chief Financial Officer Barry Rowan.

Yesterday, the company set some ambitious financial targets for the upcoming year. It expects to add about 375,000 subscribers and increase service revenue to $1.57 billion. Churn is projected to be no higher than 1.6 percent, and average revenue per user will remain in the mid-to-high $60s. Chapple reacted defensively to analysts who questioned why churn may rise to 1.6 percent after declining to 1.4 percent in 2004.

“It seems like we get beat up for our churn guidance,” Chapple said. “It’s somewhat ironic. We had 1.3 percent churn last quarter and we say we’ll have 1.6 percent or better this year. We read about how other carriers have 2.6 percent churn and how they had a wonderful quarter. We are amused by that.”

As a result of the proposed merger between Nextel Communications and Sprint, Nextel Partners may be acquired.

Nextel Communications, which owns 32 percent of Nextel Partners, could be required to buy most or all of Nextel Partners if its shareholders vote to sell the remainder of the company after the Sprint-Nextel merger becomes final later this year.

Tricia Duryee: 206-464-3283 or tduryee@seattletimes.com

Nextel Partners
Figures in parentheses are losses.
Dec. 31 %
4th QTR 2004 2003 CHG
Profit $37,443,000 $(24,973,000)
Per share 0.13 (0.10)
Sales 372,355,000 296,052,000 27.1
Annual 2004 2003 CHG
Profit $58,233,000 $(207,199,000)
Per share 0.21 (0.82)
Sales 1,368,427,000 1,019,044,000 34.3