================================================================================

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1997

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

COMMISSION FILE NUMBER 333-26649

NEXTEL INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)

WASHINGTON 91-167-1412
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

1191 SECOND AVENUE, SUITE 1600, SEATTLE, WA 98101
(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code: (206) 749-8000

MCCAW INTERNATIONAL, LTD.
(Former name, former address and former fiscal year, if changed since last
report)

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days: Yes [ ] No [X]

Indicate the number of shares outstanding of each of issuer's classes of
common stock as of the latest practicable date:

Number of Shares Outstanding
Title of Class on September 1, 1997
- ----------------------------------------------------------------------------------------------

Common Stock, no par value 36,500,000

[THE REGISTRANT, A WHOLLY OWNED SUBSIDIARY OF NEXTEL COMMUNICATIONS, INC.,
MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTION H(1)(a) AND (b) OF FORM
10-Q AND IS THEREFORE FILING THIS FORM WITH REDUCED DISCLOSURE FORMAT PURSUANT
TO GENERAL INSTRUCTION H(2).]

================================================================================
2

NEXTEL INTERNATIONAL, INC.

INDEX

PAGE NO.
--------

PART I FINANCIAL INFORMATION.
Item 1. Financial Statements -- Unaudited.................................. 3
Condensed Consolidated Balance Sheets --
As of June 30, 1997 and December 31, 1996........................ 3
Condensed Consolidated Statements of Operations --
For the Three Months Ended June 30, 1997 and 1996................ 4
Condensed Consolidated Statements of Operations --
For the Six Months Ended June 30, 1997 and 1996.................. 5
Condensed Consolidated Statement of Changes in Stockholder's
Equity --
For the Six Months Ended June 30, 1997........................... 6
Condensed Consolidated Statements of Cash Flows --
For the Six Months Ended June 30, 1997 and 1996.................. 7
Notes to Condensed Consolidated Interim Financial Statements....... 8
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations............................................ 12
PART II OTHER INFORMATION.
Item 1. Legal Proceedings.................................................. 18
Item 4. Submission of Matters to a Vote of Security Holders................ 18
Item 6. Exhibits and Reports on Form 8-K................................... 18

2
3

PART I

ITEM 1. FINANCIAL STATEMENTS -- UNAUDITED.

NEXTEL INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF JUNE 30, 1997 AND DECEMBER 31, 1996
(DOLLARS IN THOUSANDS)
UNAUDITED

1997 1996
-------- --------

ASSETS
CURRENT ASSETS
Cash and cash equivalents............................................. $379,077 $ 53,029
Marketable securities................................................. 69,962 --
Accounts receivable, less allowance for doubtful accounts of $2,829
and $0............................................................. 2,771 540
Radios and accessories................................................ 1,540 830
Prepaid and other..................................................... 1,729 183
Notes receivable...................................................... -- 5,704
-------- --------
Total current assets............................................... 455,079 60,286
PROPERTY, PLANT AND EQUIPMENT, net...................................... 22,088 8,703
INVESTMENT IN UNCONSOLIDATED SUBSIDIARIES, at cost less equity in net
loss.................................................................. 166,827 98,982
INTANGIBLE ASSETS, net.................................................. 259,339 10,878
INVESTMENTS AND OTHER ASSETS............................................ 37,866 20,518
-------- --------
$941,199 $199,367
======== ========
LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES
Accounts payable, accrued expenses and other.......................... $ 17,309 $ 5,819
Due to parent......................................................... 1,763 152,783
-------- --------
Total current liabilities.......................................... 19,072 158,602
DEFERRED INCOME TAXES................................................... 69,010 1,562
LONG-TERM DEBT.......................................................... 506,170 --
-------- --------
Total liabilities.................................................. 594,252 160,164
-------- --------
MINORITY INTEREST....................................................... 4,341 --
STOCKHOLDER'S EQUITY
Common stock (73,000,000 shares authorized, no par value, 36,500,000
shares issued and outstanding)..................................... 395,428 65,043
Accumulated deficit................................................... (56,890) (28,741)
Unrealized gain on investments........................................ 4,068 2,901
-------- --------
Total stockholder's equity......................................... 342,606 39,203
-------- --------
$941,199 $199,367
======== ========

The accompanying notes are an integral part of these condensed consolidated
financial statements.

3
4

NEXTEL INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED JUNE 30, 1997 AND 1996
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
UNAUDITED

1997 1996
---------- ----------

REVENUES............................................................. $ 2,504 $ --
OPERATING EXPENSES
Costs and expenses related to revenues............................. 720 --
Selling, general and administrative................................ 6,245 2,030
Depreciation and amortization...................................... 4,110 13
---------- ----------
11,075 2,043
---------- ----------
OPERATING LOSS....................................................... (8,571) (2,043)
---------- ----------
OTHER INCOME (EXPENSE)
Interest income.................................................... 6,168 1,300
Interest expense................................................... (16,762) (1)
Loss from equity method investments................................ (2,015) (1,269)
Other.............................................................. 310 1
---------- ----------
(12,299) 31
---------- ----------
MINORITY INTEREST.................................................... 910 --
---------- ----------
LOSS BEFORE INCOME TAX BENEFIT (PROVISION)........................... (19,960) (2,012)
INCOME TAX BENEFIT (PROVISION)....................................... 1,622 (439)
---------- ----------
NET LOSS............................................................. $ (18,338) $ (2,451)
========== ==========
NET LOSS PER COMMON SHARE............................................ $ (0.50) $ (0.07)
========== ==========
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING................. 36,500,000 36,500,000
========== ==========

The accompanying notes are an integral part of these condensed consolidated
financial statements.

4
5

NEXTEL INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND 1996
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
UNAUDITED

1997 1996
---------- ----------

REVENUES............................................................. $ 3,964 $ --
OPERATING EXPENSES
Costs and expenses related to revenues............................. 1,478 --
Selling, general and administrative................................ 10,296 2,851
Depreciation and amortization...................................... 6,691 21
---------- ----------
18,465 2,872
---------- ----------
OPERATING LOSS....................................................... (14,501) (2,872)
---------- ----------
OTHER INCOME (EXPENSE)
Interest income.................................................... 8,966 2,445
Interest expense................................................... (22,353) (1)
Loss from equity method investments................................ (3,882) (2,539)
Other.............................................................. 153 (4)
---------- ----------
(17,116) (99)
---------- ----------
MINORITY INTEREST.................................................... 1,347 --
---------- ----------
LOSS BEFORE INCOME TAX BENEFIT (PROVISION)........................... (30,270) (2,971)
INCOME TAX BENEFIT (PROVISION)....................................... 2,121 (828)
---------- ----------
NET LOSS............................................................. $ (28,149) $ (3,799)
========== ==========
NET LOSS PER COMMON SHARE............................................ $ (0.77) $ (0.10)
========== ==========
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING................. 36,500,000 36,500,000
========== ==========

The accompanying notes are an integral part of these condensed consolidated
financial statements.

5
6

NEXTEL INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDER'S EQUITY
FOR THE SIX MONTHS ENDED JUNE 30, 1997
(DOLLARS IN THOUSANDS)
UNAUDITED

COMMON STOCK UNREALIZED
---------------------- ACCUMULATED GAIN ON
SHARES AMOUNT DEFICIT INVESTMENTS TOTAL
---------- -------- ----------- ----------- --------

BALANCE, January 1, 1997............... 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
Unrealized gain on investments......... 1,167 1,167
Net loss............................... (28,149) (28,149)
---------- -------- ----------- ----------- --------
BALANCE, June 30, 1997 36,500,000 $395,428 $ (56,890) $ 4,068 $342,606
========= ======== ========= ======== ========

The accompanying notes are an integral part of these condensed consolidated
financial statements.

6
7

NEXTEL INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND 1996
(DOLLARS IN THOUSANDS)
UNAUDITED

1997 1996
--------- --------

CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss............................................................. $ (28,149) $ (3,799)
Adjustment to reconcile net loss to net cash used in operating
activities:
Depreciation and amortization..................................... 6,691 21
Interest accretion on long-term debt.............................. 21,558 --
Loss from equity method investments............................... 3,882 2,539
Deferred income taxes............................................. (1,295) --
Minority interest................................................. (1,347) --
Change in current assets and liabilities
Accounts receivable............................................. 684 --
Radios and accessories.......................................... 34 --
Prepaid and other............................................... (2,418) (497)
Accounts payable, accrued expenses and other.................... (2,703) 3,481
Other........................................................... 2,205 216
--------- --------
Net cash provided by (used in) operating activities.......... (858) 1,961
--------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures................................................. (15,524) (1,928)
Purchase of marketable securities.................................... (69,962) --
Investments in unconsolidated subsidiaries........................... (48,990) (21,168)
Other................................................................ (3,806) (234)
--------- --------
Net cash used in investing activities........................ (138,282) (23,330)
--------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings from (repayments to) parent, net.......................... (23,556) 1,433
Capital contribution from parent..................................... 6,366 21,264
Proceeds from issuance of warrants................................... 14,800 --
Net proceeds from issuance of long-term debt......................... 467,578 --
--------- --------
Net cash provided by financing activities.................... 465,188 22,697
--------- --------
INCREASE IN CASH AND CASH EQUIVALENTS.................................. 326,048 1,328
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD......................... 53,029 85,302
--------- --------
CASH AND CASH EQUIVALENTS, END OF PERIOD............................... $ 379,077 $ 86,630
========= ========

The accompanying notes are an integral part of these condensed consolidated
financial statements.

7
8

NEXTEL INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
DOLLARS IN THOUSANDS UNLESS OTHERWISE NOTED
UNAUDITED

NOTE 1 -- BASIS OF PRESENTATION

The condensed consolidated interim financial statements of Nextel
International, Inc. (formerly McCaw International, Ltd.) and subsidiaries ("NII"
or the "Company") 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
Exchange Offer Registration Statement on Form S-4 (Registration No. 333-26649),
as amended, which was declared effective by the Commission on August 8, 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.

NOTE 2 -- ACCOUNTING CHANGES

In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 131, "Disclosures about Segments of an
Enterprise and Related Information," ("SFAS 131"). SFAS 131 establishes
standards for reporting information about operating segments in annual financial
statements and requires reporting of selected information in interim reports.
The Company will adopt SFAS 131 in 1998. The Company is currently evaluating the
impact of SFAS 131 on its operating segment disclosures.

In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 130, "Reporting Comprehensive Income," ("SFAS
130"). SFAS 130 establishes standards for reporting and displaying comprehensive
income and its components in a full set of financial statements. The Company
will adopt SFAS 130. The Company is currently evaluating the impact of SFAS 130
on its reporting disclosures.

NOTE 3 -- SIGNIFICANT TRANSACTIONS

MCCAW BRAZIL: On January 30, 1997, the Company's parent, Nextel
Communications, Inc. ("NCI"), 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 NCI Class A Common Stock ("NCI Common Stock"). NCI's investment in
WVB was simultaneously contributed to the Company, and the Company changed WVB's
name to McCaw International (Brazil), Ltd. ("McCaw Brazil"). McCaw Brazil and
its subsidiaries hold licenses for 1,700 channels and provide specialized mobile
radio ("SMR") services in 23 cities in Brazil including Sao Paulo, Rio de
Janeiro, Belo Horizonte, Curitiba, and Brasilia. Telcom Ventures has the right
between October 31, 2001 and November 1, 2003, to require the Company to redeem
their 19% interest in McCaw Brazil at fair market value as determined pursuant
to an appraisal procedure. The Company is currently required to fund 100% of
McCaw 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 are declared at the discretion of McCaw
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 exceeded the net liabilities of McCaw Brazil by $215.7
million, which was allocated to licenses and goodwill based on their preliminary
estimated fair values and is being amortized over their estimated useful lives
of 20 years.

8
9

NEXTEL INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS -- (CONTINUED)

MOBILCOM: In January 1997, NCI purchased additional common shares of
Corporacion Mobilcom S.A. de C.V., a Mexican SMR operator ("Mobilcom") at a cost
of $16.5 million, in exchange for shares of NCI Common Stock. Such interest was
simultaneously contributed to the Company. In February 1997, Mobilcom
shareholders approved a $27.0 million capital call (the "Mobilcom 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 Mobilcom by funding the unsubscribed portion of the Mobilcom 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 August 31, 1997, the
Company acquired additional shares of Mobilcom from shareholders that held a
right to put (the "Mobilcom Put") the entire amount of their holding to the
Company at its appraised fair market value. The transactions were consummated at
an aggregate cost of $57.1 million and increased the Company's equity interest
in Mobilcom to approximately 76.5%. As a result of such acquisitions, the
Company is no longer subject to the rights formerly held by the Mobilcom Put
holders.

As the Mobilcom acquisitions resulted in the Company owning greater than
50% of the outstanding common stock of Mobilcom, the Company will consolidate
the accounts of Mobilcom commencing on September 1, 1997 under the purchase
method of accounting. The carrying amount of the Company's investment in
Mobilcom as of August 31, 1997 totals approximately $152.3 million and exceeds
the preliminary estimate of Mobilcom's net assets by $107.8 million The excess
will be allocated to licenses and goodwill based on their estimated fair values
and will be amortized over their estimated useful lives of 20 years.

MCCAW ARGENTINA: On May 6, 1997, the Company contributed its 100%
ownership interest in McCaw Argentina S.A. ("MCASA") into McCaw International
(Argentina), Ltd. ("McCaw Argentina"), 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. The Company has a 50% voting interest and shares
equally in the profits and losses of the joint venture. Capital contributions
are to be made equally unless otherwise agreed to by both the Company and WVA.
Commencing on May 6, 1997, the Company is accounting for its investment in the
joint venture under the equity method of accounting. Prior to May 6, 1997, the
Company's consolidated financial statements included selling, general and
administrative expenses related to MCASA totalling $772 and $415 for the six
months ended June 30, 1997 and 1996 and $202 and $339 for the three months ended
June 30, 1997 and 1996, respectively. Other results of operations related to
MCASA were insignificant.

INDONESIA: On August 15, 1997 the Company entered into an agreement to
form a joint venture with PT Gunung Sewu Kencana, an Indonesian corporation
("GSK"), using PT Mitra Kencana Telekomunindo, an Indonesian corporation owned
by GSK ("MKT"), as the joint venture company. MKT holds a provisional license
for 80 SMR channels that can be converted by MKT, upon satisfaction of certain
regulatory requirements, into an operating license whereby MKT will be entitled
to provide SMR and ESMR services in the city of Jakarta and the regions of West
Java, East Java and Bandar Lampung. 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.

Upon receiving the required regulatory approval to become a shareholder of
MKT ("Ministry Approval"), which is expected to occur by March 31, 1998, the
Company will acquire an equity interest in MKT representing 37.5% of the
outstanding stock of MKT. Notwithstanding its 37.5% equity interest in MKT, the
Company has agreed to fund 44% of the capital requirements of MKT in order to
maintain its then-current ownership interest. Profits and losses are to be
allocated and dividends are to be distributed based on the Company's 37.5%
equity interest.

9
10

NEXTEL INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS -- (CONTINUED)

The Company has committed to loan MKT sufficient funds to meet 44% of the
interim cash needs of MKT in advance of the receipt of Ministry Approval (the
aggregate of such advances, the "MKT Loan"). The Company's share of such funds
is currently estimated to be approximately $16 million through March 31, 1998.
The Company is not obligated to provide funds to MKT after March 31, 1998 if
Ministry Approval has not been obtained by such date. The MKT Loan is guaranteed
by GSK.

Upon receipt of Ministry Approval, the MKT Loan will be converted to equity
and applied to the Company's initial capital contribution. If the Company does
not receive Ministry Approval by March 31, 1998, the MKT Loan will be payable on
demand together with interest accruing as of the date of demand. No interest
will be payable on the MKT Loan if the Company converts such loan into an equity
interest in MKT. Upon conversion of the MKT Loan into equity, the MKT Loan will
be extinguished and the Company will account for its investment in MKT under the
equity method of accounting.

The following summarized pro forma (unaudited) information assumes the
McCaw Brazil, Mobilcom and McCaw Argentina transactions had occurred on January
1, 1996.

SIX MONTHS ENDED
------------------------------
JUNE 30, 1997 JUNE 30, 1996
------------- -------------

Revenues............................................ $ 8,968 $ 10,058
========== ==========
Net loss............................................ $ (31,127) $ (17,827)
========== ==========
Net loss per share.................................. $ (0.85) $ (0.49)
========== ==========
Weighted average shares outstanding................. 36,500,000 36,500,000
========== ==========

The above amounts consolidate the historical results of McCaw Brazil and
Mobilcom prior to the acquisitions and reflect adjustments for the recognition
of the minority ownership interests and the amortization of licenses and
goodwill. Additionally, the above amounts combine the historical results of
MCASA and WVA under the equity method of accounting as if the McCaw Argentina
joint venture had occurred on January 1, 1996. The pro forma information is not
necessarily indicative of the results that would actually have occurred had the
transactions been consummated on the dates indicated, nor are they necessarily
indicative of future operating results of the Company.

NOTE 4 -- INVESTMENT IN UNCONSOLIDATED SUBSIDIARIES

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 under the equity method. The Company's equity
in net loss of its only significant equity investee (Mobilcom) was $931 and
$1,269 for the three months ended June 30, 1997 and 1996, and $2,736 and $2,539
for the six months ended June 30, 1997 and 1996, respectively. The Company's
equity in net loss of Mobilcom differs from its proportionate share of its
reported net income in the table below primarily due to the amortization of the
excess purchase price over net assets acquired. Commencing September 1, 1997,
the Company will consolidate the accounts of Mobilcom. See Note 3, "Significant
Transactions." Condensed operating results for Mobilcom are as follows:

THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30
------------------ ------------------
1997 1996 1997 1996
------ ------- ------- -------

Mobilcom
Revenues.............................. $2,270 $ 1,345 $ 3,926 $ 2,566
Operating income (loss)............... 591 (849) (1,363) (2,800)
Net income (loss)..................... 403 (2,433) (1,941) (5,668)

10
11

NEXTEL INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 5 -- COMPANY FINANCING

LONG-TERM DEBT: In March 1997, the Company completed a private placement
of 951,463 units yielding approximately $482.0 million in net proceeds. Each
unit is comprised of a 10-year senior discount note and a detachable warrant to
purchase 0.38748 shares of the Company's common stock. The notes have a 13%
yield to maturity, are noncallable for five years, and require no interest
payments for the first five years. The warrants are exercisable at a price of
$9.99 per share and entitle the holders to purchase, in the aggregate,
approximately 1% of the Company's common stock on a fully-diluted basis.

PHILIPPINES FINANCING: In June 1997, Infocom Communication Network, Inc.
("Infocom") and Motorola, Inc. ("Motorola") entered into an equipment financing
agreement (the "Philippines Motorola Financing"), pursuant to which Motorola
provided up to $15 million of vendor financing to Infocom. 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 loans are secured by a first-priority lien on substantially all of
Infocom's assets and a pro rata guarantee of such financing by each of Infocom's
shareholders, including the Company.

NOTE 6 -- STOCKHOLDER'S EQUITY

As a result of approval by the Company's Board of Directors on August 15,
1997, the total number of shares of authorized stock was increased from 20
million to 73 million and a 3.65-for-1 stock split was effective as of August
25, 1997. All share and per share data presented reflect this stock split. The
number of shares of common stock outstanding increased from 10,000,000 to
36,500,000 immediately after the stock split.

11
12

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.

OVERVIEW.

The following is a discussion of the condensed consolidated financial
condition and results of operations of Nextel International, Inc. ("Nextel
International" or the "Company"), an indirectly wholly owned subsidiary of
Nextel Communications, Inc. ("Nextel Communications"), for the six-month periods
ended June 30, 1996 and 1997. The Company changed its name from McCaw
International, Ltd. to Nextel International, Inc. effective as of September 1,
1997.

The Company currently provides wireless communications services in the four
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 wireless services companies in which the Company holds interests
operate in markets covering approximately 230 million people, approximately 120
million of which are in Latin America. Nextel International, through its
operating subsidiaries, is the largest SMR service provider in Brazil and
Mexico, and holds the largest SMR channel position in Argentina.

The Company's strategy is to focused on leveraging its analog dispatch or
SMR channel positions in its principal markets and using Nextel Communication's
experience and supplier relationships to upgrade its services from analog
dispatch to digital enhanced specialized mobile services ("ESMR"). The upgrade
to digital networks will allow the Company to increase capacity significantly
and to offer additional services and features such as enhanced dispatch (group
calling and instant conferencing), high-quality telephone interconnect and text
messaging. The Company intends to upgrade 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 additional
opportunities to enter into new markets, particularly in Latin American and
Asia.

The Company owns interests in and actively participates in the management
of wireless communications services companies in Brazil, Argentina, Mexico and
the Philippines. In addition, the Company currently has a contractual right
through its Chinese joint venture to receive 25.2% of the profits generated by a
Global System for Mobile communications ("GSM") network in Shanghai, China (the
"Shanghai GSM System") and has a 3.7% interest in Clearnet Communications Inc.,
a Canadian wireless communications services company. The wireless services
companies in which the Company holds interests or a contractual right are
referred to herein as the "Operating Companies." Additionally, upon formation of
the Indonesian joint venture company described below, the Company will hold a
37.5% equity interest in an SMR operator in Indonesia.

RECENT EVENTS AND DEVELOPMENTS

MEXICO. From June 1997 to August 1997, the Company increased its equity
interest in its Mexican subsidiary, Corporacion Mobilcom S.A. de C.V.
("Mobilcom"), by purchasing all of the shares owned by certain then-current
shareholders of Mobilcom for an aggregate purchase price of approximately $57.1
million. As a result of such transactions, the Company's equity interest in
Mobilcom increased from approximately 46.3% to approximately 76.5%.

INDONESIA. On August 15, 1997 the Company entered into an agreement to form
a joint venture with PT Gunung Sewu Kencana, an Indonesian corporation ("GSK"),
using PT Mitra Kencana Telekomunindo, an Indonesian corporation owned by GSK
("MKT"), as the joint venture company. MKT holds a provisional license for 80
SMR channels that can be converted by MKT, upon satisfaction of certain
regulatory requirements, into an operating license whereby MKT will be entitled
to provide SMR and ESMR services in the city of Jakarta and the regions of West
Java, East Java and Bandar Lampung. 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.

Upon receiving the required regulatory approval to become a shareholder of
MKT ("Ministry Approval"), which is expected to occur by March 31, 1998, the
Company will acquire an equity interest in MKT

12
13

representing 37.5% of the outstanding stock of MKT. Notwithstanding its 37.5%
equity interest in MKT, the Company has agreed to fund 44% of the capital
requirements of MKT in order to maintain its then-current ownership interest.
Profits and losses are to be allocated and dividends are to be distributed based
on the Company's 37.5% equity interest.

CAPITAL CHANGES. In August 1997, the Company increased the number of
authorized shares of common stock from 20 million to 73 million and effected a
3.65-for-1 stock split. The number of shares of the Company's common stock
outstanding immediately following such stock split was 36,500,000.

RESULTS OF OPERATIONS.

Six Months Ended June 30, 1997 vs. Six Months Ended June 30, 1996

The Company acquired McCaw International (Brazil), Ltd. ("McCaw Brazil") on
January 30, 1997 and commenced commercial SMR operations in Argentina in
February 1997. Accordingly, there were no revenues or costs and expenses related
to revenues in the six months ended June 30, 1996. For the first six months of
1997, substantially all of the revenues and costs and expenses related to
revenues result from the five months of McCaw Brazil's SMR operations included
in the Company's consolidated financial statements.

Selling, general and administrative expenses increased $7.4 million to
$10.3 million for the six months ended June 30, 1997 from $2.9 million for the
six months ended June 30, 1996. The increase is primarily attributable to $7.3
million of expenses from the McCaw Brazil operations which have been included in
the Company's consolidated results of operations commencing January 30, 1997.

Depreciation and amortization expense totaled $6.7 million for the six
months ended June 30, 1997. The amount is primarily attributable to depreciation
and amortization expense of approximately $6.2 million related to McCaw Brazil.
The remaining amount is due to the depreciation of assets associated with the
corporate oversight function and the amortization of licenses in Argentina which
commenced commercial operations in February, 1997. No significant depreciation
and amortization expense was recognized during the six months ended June 30,
1996.

Interest income increased $6.6 million to $9.0 million for the six months
ended June 30, 1997 from $2.4 million for the six months ended June 30, 1996.
The increase was primarily attributable to income recognized on the investment
of the net proceeds from the Company's issuance in March 1997 of units
consisting of senior discount notes due 2007 and detachable warrants to purchase
up to 1% of the Company's outstanding common stock (the "Units Issuance").
See -- "Liquidity and Capital Resources."

Interest expense of $22.4 million was recognized during the six months
ended June 30, 1997 of which $21.6 million represented interest accretion on the
long-term debt associated with the Units Issuance and amortization of associated
debt issue costs. Additionally, McCaw International (CANMEX), Ltd. ("Canmex"), a
wholly owned subsidiary of the Company recognized $0.4 million of interest on a
note payable to the Company's parent, and McCaw Brazil incurred approximately
$0.4 million of interest on short term borrowings. No interest expense was
recognized during the six months ended June 30, 1996.

Loss from equity method investments increased $1.4 million to $3.9 million
for the six months ended June 30, 1997 from $2.5 million for the six months
ended June 30, 1996. The increase was primarily attributable to approximately
$0.8 million in losses associated with the Company's investment in McCaw

13
14

International (Argentina), Ltd. ("McCaw Argentina"), which has been accounted
for under the equity method since May 6, 1997. The remaining increase can be
attributed to $0.4 million of losses from the Company's 30% equity interest in
Infocom Communications Network, Inc. ("Infocom") which was acquired in June 1996
and a $0.2 increase in the amount of loss recognized in connection with the
Company's investment in Mobilcom.

Minority interest in the net loss of McCaw Brazil totaled $1.3 million
during the six months ended June 30, 1997. The amount is attributable to the
minority shareholder's interest in McCaw Brazil subsequent to the acquisition of
an 81% interest by the Company on January 30, 1997.

The Company recognized an income tax benefit of $2.1 million during the six
months ended June 30, 1997 compared to an income tax provision of $0.8 million
during the six months ended June 30, 1996. The income tax benefit recognized
during the six months ended June 30, 1997 was primarily attributable to net
operating losses of Brazil allowed to be recognized due to the existence of
Brazilian taxable temporary differences. The income tax expense recognized for
the six months ended June 30, 1996 was primarily attributable to the taxes
associated with Canmex's interest income.

THREE MONTHS ENDED JUNE 30, 1997 VS. THREE MONTHS ENDED JUNE 30, 1996

The Company acquired McCaw Brazil on January 30, 1997 and commenced
commercial SMR operations in Argentina in February 1997. Accordingly, there were
no revenues or costs and expenses related to revenues in the three months ended
June 30, 1996. For the second quarter of 1997, substantially all of the revenues
and costs and expenses related to revenues result from the McCaw Brazil SMR
operations included in the Company's consolidated financial statements.

Selling, general and administrative expenses increased $4.2 million to $6.2
million for the three months ended June 30, 1997 from $2.0 million for the three
months ended June 30, 1996. The increase is primarily attributable to the
expenses from the McCaw Brazil operations which have been included in the
Company's consolidated results of operations commencing January 30, 1997.

Depreciation and amortization expense totaled $4.1 million for the three
months ended June 30, 1997. The amount is primarily attributable to depreciation
and amortization expense of approximately $3.8 million related to McCaw Brazil.
The remaining amount is due to the depreciation of assets associated with the
corporate oversight function and the amortization of licenses in Argentina which
commenced commercial operations in February 1997. No significant depreciation
and amortization expense was recognized during the three months ended June 30,
1996.

Interest income increased $4.9 million to $6.2 million for the three months
ended June 30, 1997 from $1.3 million for the three months ended June 30, 1996.
The increase was primarily attributable to income recognized on the investment
of the proceeds from the Units Issuance.

Interest expense of $16.8 million was recognized during the three months
ended June 30, 1997 of which $16.4 million represented accretion on the
long-term debt associated with the Units Issuance and amortization of debt issue
costs. Additionally, McCaw Brazil incurred approximately $0.4 million of
interest on short term borrowings. No interest expense was recognized during the
three months ended June 30, 1996.

Loss from equity method investments increased $0.7 million to $2.0 million
for the three months ended June 30, 1997 from $1.3 million for the three months
ended June 30, 1996. The increase was primarily attributable to approximately
$0.8 million in losses associated with the Company's investment in McCaw
Argentina, which has been accounted for under the equity method since May 6,
1997.

Minority interest in the net loss of McCaw Brazil totaled $0.9 million
during the three months ended June 30, 1997. The amount is attributable to the
minority shareholder's interest in McCaw Brazil subsequent to the acquisition of
an 81% interest in McCaw Brazil by the Company on January 30, 1997.

The Company recognized an income tax benefit of $1.6 million during the
three months ended June 30, 1997 compared to an income tax provision of $0.4
million during the three months ended June 30, 1996. The income tax benefit
recognized during the three months ended June 30, 1997 was primarily
attributable to net

14
15

operating losses of Brazil allowed to be recognized due to the existence of
Brazilian taxable temporary differences. The income tax expense recognized for
the three months ended June 30, 1996 was primarily attributable to the taxes
associated with Canmex's interest income.

LIQUIDITY AND CAPITAL RESOURCES.

The Company has incurred historical net losses of approximately $56.9
million since inception through June 30, 1997. These losses result from
expenditures required for the design, development and build-out of the Company's
wireless communications networks and associated activities and interest
accretion on the long-term debt associated with the Units Issuance.

Net cash used by operating activities for the six months ended June 30,
1997 equaled $0.9 million. Net cash used by investing activities for the six
months ended June 30, 1997 equaled $138.3 million. Net cash provided by
financing activities for the six months ended June 30, 1997 equaled $465.2
million. Working capital as of June 30, 1997 increased to $436.1 million
compared to a negative $98.3 million at December 31, 1996. The cash used by
investing activities primarily represented investments in the Operating
Companies to fund the build-out of the Company's ESMR networks and acquire
additional equity ownership interests. The cash provided by financing activities
and the increase in working capital are primarily a result of the Company
receiving approximately $482.0 million of net proceeds from the Units Issuance.
As a result of the above activities, cash and cash equivalents increased
approximately $326.0 million during the six months ended June 30, 1997.

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 3, 1997, funds necessary to
finance the Company's activities were provided to the Company primarily by its
parent company (which is an unrestricted subsidiary of Nextel Communications),
in the form of equity contributions. The Company's parent company is not
obligated to provide any additional funding to the Company. For the next several
years, the Company anticipates using its existing cash and investments and
externally generated funds from debt and equity sources as discussed below to
cover future needs, including the design, implementation and operation of the
Company's ESMR networks and the acquisition of additional equity interests in
the Operating Companies. Additionally, the Company is considering expanding its
operations into other markets through investments in unaffiliated companies.

In November 1996, Nextel, Nextel International and Motorola entered into a
binding memorandum of understanding (the "Motorola MOU") regarding the terms of
financing to be provided by Motorola to fund the purchase of Motorola equipment
by the Operating Companies other than Clearnet (the "Motorola Financing"). Under
the Motorola MOU, the significant terms of which are more fully described in the
Company's Exchange Offer Registration Statement on Form S-4, as amended
(Registration No. 333-26649), 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
entered into a term sheet increasing the maximum worldwide vendor financing
available to Nextel 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 terms of any borrowings under the
Motorola Financing are subject to negotiation and execution of definitive
agreements. The availability of borrowings pursuant to the Motorola Financing
are expected to be subject to certain conditions, and there can be no assurance
that such conditions will be met. In July 1997, in accordance with the Motorola
MOU, Infocom and Motorola entered into an equipment financing agreement (the
"Philippines Motorola Financing"), pursuant to which Motorola will provide up to
$15 million of vendor financing to Infocom.

Any amounts available to be borrowed by the Operating Companies under the
Motorola Financing will be reduced by any amounts borrowed by Nextel and its
subsidiaries other than the Company and the Operating Companies. Nextel has
committed to the Company that at least $95 million of the Motorola Financing
will be available to the Company. As of June 30, 1997, Nextel had borrowed $50
million pursuant to the Motorola Financing. Accordingly, there can be no
assurance that more than $95 million of the Motorola

15
16

Financing will be available to fund the Operating Companies' equipment
purchases. In addition, to the extent total amounts outstanding under the
Motorola Financing to Nextel and its subsidiaries, including the Company and the
Operating Companies (other than Clearnet), plus requests for additional
financing under the Motorola Financing by Nextel and its subsidiaries other than
the Company and the Operating Companies would exceed $400 million, Nextel
International 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 and its subsidiaries, including the Company
and the Operating Companies (other than Clearnet), will not exceed $400 million
(any such repayment is referred to as a "Forced Repayment"). Nextel has agreed
with the Company not to cause a Forced Repayment.

The Company expects approximately $220 million of the capital expenditures
for equipment will be funded at the Operating Company level through the Motorola
Financing. However, the amount of borrowings under the Motorola Financing that
Nextel has agreed to make available to the Company is limited to $95 million.
Based on discussions with Nextel and Motorola, the Company believes that it will
be able to obtain sufficient funding under the Motorola Financing, together with
other funding sources, to meet its current business plan.

The Company believes that its current available cash and cash equivalents,
together with borrowings expected to be available under existing and proposed
vendor financing, including the Motorola Financing, will be sufficient to fund
the cash needs of the Company's current operations, including the planned
expansion of its existing operations, but excluding any additional investments
or acquisitions, through the end of fiscal year 1999. Thereafter, the Company
may require substantial additional capital. If the Company's plans or
assumptions change, if its assumptions prove to be inaccurate, if it consummates
additional investments or acquisitions, if it experiences unanticipated costs or
competitive pressures, or if the Company's available cash and cash equivalents,
together with the proceeds of any borrowings under the Motorola Financing or
other sources identified above, otherwise prove to be insufficient, the Company
may be required to seek additional capital sooner than currently anticipated.
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 "-- Forward-Looking
Statements."

In the future, the Company may consider obtaining financing from various
other sources, including capital contributions from Nextel Communications in the
form of cash or Nextel Communications common stock, vendor financing provided by
equipment suppliers, project financing from commercial banks and international
agencies such as International Finance Corporation and Overseas Private
Investment Corporation, bank lines of credit and sales of equity and debt issued
by the Operating Companies and/or the Company. Nextel Communications has no
obligation to provide any such financing and 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. See "-- Forward-Looking Statements."

FORWARD-LOOKING STATEMENTS.

"SAFE HARBOR" STATEMENTS UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT
OF 1995. A number of the matters and subject areas discussed in the foregoing
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" 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 materially differ 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 experiences and results to differ
from the Company's current expectations regarding the relevant matter or subject
area. The operation and results of the Company's wireless communications
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 "Management's Discussion and Analysis of Financial Condition and
Results of Operations" section, including, but not limited to, general economic
conditions in the countries where the Company operates and those that the
Company is targeting for its wireless communications

16
17

services, the availability of adequate quantities of system infrastructure and
subscriber equipment and components to meet the Company's service deployment and
marketing plans and customer demand, the successful deployment of the iDEN
technology, the ability to achieve market penetration and average subscriber
revenue levels sufficient to provide financial viability to the Company's
wireless communications business, the Company's ability to timely and
successfully accomplish required scale-up of its billing, customer care and
similar back-room operations to keep pace with customer growth and increased
system usage, access to sufficient debt or equity capital to meet the Company's
operating and financial needs, 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 personal communications
services, future legislative or regulatory actions in the countries where the
Company operates relating to SMR services, 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.

17
18

PART II

ITEM 1. LEGAL PROCEEDINGS

The Company is not currently involved in any material legal proceedings.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

On August 20, 1997, the Company's sole shareholder approved the following
actions by written consent in lieu of a special meeting:

(a) amendment of the Company's articles of incorporation to change the
name of the Company from McCaw International, Ltd. to Nextel International,
Inc. effective September 1, 1997.

(b) increase in the number of authorized shares of common stock from
20,000,000 to 73,000,000 shares.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) List of Exhibits.

EXHIBIT NO. EXHIBIT DESCRIPTION
- ----------- ---------------------------------------------------------------------------------

3.1 Restated Articles of Incorporation of the Company.
27* Financial Data Schedule.

- ---------------
* Submitted only with the electronic filing of this document with the Commission
pursuant to Regulation S-T under the Securities Act of 1933, as amended.

(b) Reports on Form 8-K.

None.

18
19

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

NEXTEL INTERNATIONAL, INC.

By: /s/ DAVID E. ROSTOV
------------------------------------
September 19, 1997 David E. Rostov
Senior Vice President and
Chief Financial Officer

19
20

EXHIBIT INDEX

EXHIBIT NO. EXHIBIT DESCRIPTION
- ----------- ---------------------------------------------------------------------------------

3.1 Restated Articles of Incorporation of the Company.
27* Financial Data Schedule.

- ---------------
* Submitted only with the electronic filing of this document with the Commission
pursuant to Regulation S-T under the Securities Act of 1933, as amended.