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Timothy M. Donahue

Nextel Chief Credits Adversity for Firm's Strong Turnaround

By Yuki Noguchi
Washington Post Staff Writer
Monday, December 27, 2004; Page E01

Timothy M. Donahue is the type of executive who regards hardship as a way to build a company's character. In Nextel Communications Inc.'s formative years, he said, adversity made its employees think faster, act faster and work harder than the competition, and it's paying off for the Reston-based mobile phone company.

Now Nextel is a big company, with expectations to get even bigger next year with its pending merger with Sprint Corp. But Donahue hopes it will retain the feel of the scrappy, nimble company he made Nextel.

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"Nextel has always been synonymous with innovation, entrepreneurship, and being the underdog," Donahue said in an interview. "I don't see that changing. Sprint's culture is very much like that."

Donahue has been chief executive since August 1999. At that time, Nextel was a bit player with just more than 3 million customers. Now it's the region's largest wireless company with 15.3 million customers.

Donahue, 55, has been in the wireless industry since its inception. As a protege of billionaire investor Craig O. McCaw, Donahue started his career working at McCaw Cellular Communications Inc. (later bought by AT&T Wireless Services Inc.), where eventually he ran its paging division, then its central U.S. regional operations.

In 1996, Donahue joined Nextel, another McCaw-backed investment, as its president and chief operating officer. When chief executive Daniel F. Akerson resigned in the summer of 1999, Donahue took the post. He is now one of Washington's best-paid executives, collecting $29 million in total compensation last year.

Donahue shies away from the spotlight, deflecting questions about himself by talking about the company. But his personality shapes how Nextel is run. Donahue says his greatest virtue as a manager is that he is a good listener -- something his colleagues and Nextel board members agree is true. He is constantly gleaning ideas from conversations with employees in elevators and hallways at the office.

In making decisions, however, Donahue isn't a consensus builder. Once he chooses a course of action, whether it's a software fix or a multimillion-dollar deal, it's expected to happen quickly. Donahue likes the methodical approach, but is also impatient.

Employees say Donahue's rallying cry is to beat the big guys, which more often than not means Verizon Wireless Communications Inc. This year, the competition boiled into a fierce and expensive lobbying and public relations battle.

Verizon Wireless opposed Nextel's attempt to receive new wireless spectrum worth $4.8 billion from the Federal Communications Commission. The airwaves were critical for Nextel if it wanted to offer new high-speed Internet services in the future and solve its interference problem with police and fire radio systems. Nextel countered Verizon Wireless's assault, piecing together a lobbying team of former congressional and FCC staff members. Donahue called members of the FCC. Nextel prevailed in the biggest regulatory fight of its life.

Also this year, Nextel's multimillion-dollar sponsorship of NASCAR series paid off big, raising the company's name recognition to 90 percent of NASCAR's millions of fans.

Donahue capped the year with the Sprint deal, which he and Sprint chief executive Gary D. Forsee began discussing in April. The companies said that by combining their customers and assets they would be better able to take on giant competitors.

Donahue will be chairman of the new company, ceding the chief-executive slot to Forsee. Donahue will run the company's long-term strategic planning and its regulatory and legal operations. Over the next few years, he said, he hopes Sprint Nextel will overtake Cingular Wireless and Verizon Wireless as the nation's largest carrier. After two years, Donahue will become non-executive chairman, leaving behind his day-to-day management role.

The first priority will be to find ways to cut $12 billion in costs from the combined company, Donahue said. He said it is too early to discuss specific plans. To ensure that the merger is quick and clean, it will be important to make "swift" decisions and make sure that people leave their egos at the door, he said.

"I hope people will say this company came out of nowhere and it proved the pundits wrong -- that this company that most people wrote off proved them wrong time and time again," Donahue said.

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