Suncom Wireless 10-Q 2006 Q2 Quarterly report

UNITED STATES

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, 2006

OR

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

For the transition period from            to            

COMMISSION FILE NUMBER: 333-57715

SUNCOM WIRELESS, INC.

(Exact name of Registrant as specified in its charter)

Delaware	23-2930873
(State or other jurisdiction of incorporation or organization)	(I.R.S. employer identification no.)

1100 Cassatt Road

Berwyn, Pennsylvania 19312

(Address and zip code of principal executive offices)

(610) 651-5900

(Registrant’s telephone number, including area code)

Indicate by a 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 by a check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.

Large accelerated filer  ¨    Accelerated filer  ¨    Non-accelerated filer  x

Indicate by a check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x.

As of July 31, 2006, 100 shares of the registrant’s common stock were outstanding.

SUNCOM WIRELESS, INC.

SECOND QUARTER REPORT

TABLE OF CONTENTS

		Page No.
	PART I.Financial Information
Item 1	Financial Statements(unaudited)
	Consolidated Balance Sheets at June 30, 2006 and December 31, 2005	3
	Consolidated Statements of Operations for the three and six months ended June 30, 2006 and 2005	4
	Consolidated Statements of Cash Flows for the six months ended June 30, 2006 and 2005	5
	Notes to Consolidated Financial Statements	6
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18
Item 3	Quantitative and Qualitative Disclosures About Market Risk	32
Item 4	Controls and Procedures	32
	Part II.Other Information
Item 1	Legal Proceedings	33
Item 1A	Risk Factors	33
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	33
Item 3	Defaults Upon Senior Securities	33
Item 4	Submission of Matters to a Vote of Security Holders	33
Item 5	Other Information	33
Item 6	Exhibits	33

2

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

SUNCOM WIRELESS, INC.

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except par value)

(Unaudited)

	June 30, 2006			December 31, 2005
ASSETS:
Current assets:
Cash and cash equivalents	$	25,115		$	15,800
Short-term investments		225,850			139,050
Restricted cash and restricted short-term investments		1,620			—
Accounts receivable, net of allowance for doubtful accounts of $8,448 and $12,352, respectively		82,985			82,898
Accounts receivable – roaming partners		17,202			18,188
Due from related parties		454			5,703
Inventory		16,369			23,930
Prepaid expenses		18,213			13,492
Other current assets		12,954			12,022
Total current assets		400,762			311,083
Long-term assets:
Property and equipment, net		502,935			650,284
Intangible assets, net		824,362			844,113
Other long-term assets		5,168			4,324
Total assets	$	1,733,227		$	1,809,804
LIABILITIES AND STOCKHOLDER’S DEFICIT:
Current liabilities:
Accounts payable	$	94,308		$	97,355
Accrued liabilities		60,110			73,477
Current portion of long term debt		2,803			2,786
Other current liabilities		24,787			23,271
Total current liabilities		182,008			196,889
Long-term debt:
Capital lease obligations		661			864
Senior secured term loan		243,750			245,000
Senior notes		713,732			713,148
Total senior long-term debt		958,143			959,012
Subordinated notes		731,328			730,339
Total long-term debt		1,689,471			1,689,351
Deferred income taxes, net		137,974			130,803
Deferred revenue		1,910			1,809
Deferred gain on sale of property and equipment		47,276			48,530
Other		2,548			2,483
Total liabilities		2,061,187			2,069,865
Commitments and contingencies		—			—
Stockholder’s deficit
Common Stock, $0.01 par value, 1,000 shares authorized; 100 shares issued and outstanding as of June 30, 2006 and December 31, 2005		—			—
Additional paid-in capital		747,212			555,191
Accumulated deficit		(1,075,172	)		(815,252	)
SunCom Wireless Holdings, Inc. common stock held in trust		(150	)		(145	)
Deferred compensation		150			145
Total stockholder’s deficit		(327,960	)		(260,061	)
Total liabilities and stockholder’s deficit	$	1,733,227		$	1,809,804

See accompanying notes to financial statements.

3

SUNCOM WIRELESS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollars in thousands)

(Unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
	2006			2005			2006			2005
Revenues:
Service	$	164,430		$	166,479		$	319,897		$	329,328
Roaming		19,519			22,978			40,985			46,809
Equipment		22,739			23,423			47,698			40,696
Total revenue		206,688			212,880			408,580			416,833
Operating expenses:
Cost of service (excluding the below amortization, excluding depreciation and asset disposal of $82,843 and $62,977 for the three months ended June 30, 2006 and 2005, respectively, and $184,453 and $102,430 for the six months ended June 30, 2006 and 2005, respectively)		66,717			65,004			134,665			126,804
Cost of equipment		32,270			49,511			71,491			84,157
Selling, general and administrative (excluding depreciation and asset disposal of $1,675 and $2,830 for the three months ended June 30, 2006 and 2005, respectively, and $3,503 and $5,868 for the six months ended June 30, 2006 and 2005, respectively)		83,133			92,744			171,727			173,048
Termination benefits and other-related charges		658			—			1,556			—
Depreciation and asset disposal		84,518			65,807			187,956			108,298
Amortization		10,689			15,616			22,193			32,572
Total operating expenses		277,985			288,682			589,588			524,879
Loss from operations		(71,297	)		(75,802	)		(181,008	)		(108,046	)
Interest expense		(38,180	)		(37,039	)		(75,983	)		(73,766	)
Other expense		—			—			—			(74	)
Interest and other income		2,740			2,112			4,280			4,049
Loss before taxes		(106,737	)		(110,729	)		(252,711	)		(177,837	)
Income tax provision		(3,858	)		(4,000	)		(7,209	)		(7,758	)
Net loss	$	(110,595	)	$	(114,729	)	$	(259,920	)	$	(185,595	)

See accompanying notes to financial statements.

4

SUNCOM WIRELESS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

(Unaudited)

	Six Months Ended June 30,
	2006			2005
Cash flows from operating activities:
Net loss	$	(259,920	)	$	(185,595	)
Adjustments to reconcile net loss to net cash used in operating activities, net of effects from acquisitions and divestitures:
Depreciation, asset disposal and amortization		210,149			140,870
Deferred income taxes		7,171			7,624
Accretion of interest		2,289			2,176
Bad debt expense		10,065			3,686
Non-cash compensation		3,021			6,401
Other non-operating losses		—			74
Change in operating assets and liabilities:
Accounts receivable		(10,707	)		(36,145	)
Inventory		7,561			(1,995	)
Prepaid expenses and other current assets		(6,273	)		(12,741	)
Intangible and other assets		(807	)		350
Accounts payable		(1,763	)		28,416
Accrued payroll and liabilities		(7,051	)		781
Deferred revenue		2,829			(730	)
Accrued interest		(46	)		(496	)
Other liabilities		(2,421	)		1,160
Net cash used in operating activities		(45,903	)		(46,164	)
Cash flows from investing activities:
Purchase of available for sale securities		(314,600	)		(628,450	)
Proceeds from sale of available for sale securities		421,150			714,900
Proceeds from sale of assets		1,590			45,619
Payment of direct costs on business transactions		(54	)		(1,018	)
Capital expenditures		(42,173	)		(43,230	)
Other		(37	)		(51	)
Net cash provided by investing activities		65,876			87,770
Cash flows from financing activities:
Payments under senior secured term loan		(1,250	)		(1,250	)
Change in bank overdraft		(6,270	)		(9,816	)
Principal payments under capital lease obligations		(151	)		(628	)
Payment of direct costs on business transaction		(2,886	)		—
Capital contribution from SunCom Investment Company		50			—
Repayments from (advances to) related party		(151	)		1,803
Other		—			(28	)
Net cash used in financing activities		(10,658	)		(9,919	)
Net increase in cash and cash equivalents		9,315			31,687
Cash and cash equivalents, beginning of period		15,800			8,351
Cash and cash equivalents, end of period	$	25,115		$	40,038
Non-cash investing and financing activities
Capital contribution from SunCom Investment Company	$	188,950		$	—
Repayments from SunCom Investment Company		5,400			—
Equipment acquired under capital lease obligation		—			1,000
Change in capital expenditures included in accounts payable		(1,284	)		(8,830	)
Change in direct transaction costs included in accrued expenses		—			(503	)
Adjustment to goodwill related to an exchange agreement, net		—			(15,425	)

See accompanying notes to financial statements.

5

SUNCOM WIRELESS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2006

1. Basis of Presentation

The accompanying consolidated financial statements are unaudited and have been prepared by management. In the opinion of management, these consolidated financial statements contain all of the adjustments, consisting of normal recurring adjustments, necessary to state fairly, in summarized form, the financial position and the results of operations of SunCom Wireless, Inc. (“SunCom”). SunCom and its wholly-owned subsidiaries are collectively referred to as the “Company”. The results of operations for the three and six months ended June 30, 2006 may not be indicative of the results that may be expected for the year ending December 31, 2006. The financial information presented herein should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2005, which include information and disclosures not included herein.

SunCom is a direct, wholly-owned subsidiary of SunCom Wireless Investment Co., LLC. (“SunCom Investment Company”). SunCom Investment Company is a direct, wholly-owned subsidiary of SunCom Wireless Holdings, Inc., (“Holdings”). Accordingly, SunCom and its subsidiaries are indirect, wholly-owned subsidiaries of Holdings. SunCom has no independent assets or operations, and all of SunCom’s subsidiaries, other than Triton PCS Property Company L.L.C. and Triton PCS License Company L.L.C., have guaranteed on a full, unconditional and joint and several basis SunCom’s 8 ¹/2% senior notes due 2013 (the “8 ¹/2% Notes”), its 9 ³/8% senior subordinated notes due 2011 (the “9 ³/8% Notes”) and its 8 ³/4% senior subordinated notes due 2011 (the “8 ³/4% Notes”). The 8 ¹/2% Notes are effectively subordinated in right of payment to all of SunCom’s senior secured debt, including its current senior secured term loan (the “Term Loan”). The 9 ³/8% Notes and the 8 ³/4% Notes constitute unsecured obligations of SunCom and rank subordinate in right of payment to all of SunCom’s existing and future senior debt, including the 8 ¹/2% Notes and the Term Loan.

All significant intercompany accounts or balances have been eliminated in consolidation.

Certain reclassifications have been made to prior period financial statements to conform to the current period presentation. The information for the second quarter of 2005 was corrected during the fourth quarter of 2005 to properly reflect the impact of the Company’s second quarter 2005 tower sale on the statement of operations. This correction was a result of previously excluding an income lease intangible asset associated with the disposed towers from the accounting for the calculation of the gain on the tower sale. For the second quarter of 2005, this correction had the effect of increasing the loss from operations and net loss by approximately $7.4 million. The Company deemed this correction to be immaterial to its financial statements based upon its quantitative and qualitative analysis.

2. New Accounting Pronouncements

In February 2006, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards No. 155, “Accounting for Certain Hybrid Financial Instruments - an amendment of FASB Statements No. 133 and 140”, which is effective for fiscal years beginning after September 15, 2006. The statement was issued to clarify the application of FASB Statement No. 133 to beneficial interests in securitized financial assets and to improve the consistency of accounting for similar financial instruments, regardless of the form of the instruments. The Company does not expect this statement to have a material effect on its financial statements or its results of operations.

In March 2006, the FASB issued Statement of Financial Accounting Standards No. 156, “Accounting for Servicing of Financial Assets – an amendment of FASB Statement No. 140”, which is effective for fiscal years beginning after September 15, 2006. This statement was issued to simplify the accounting for servicing rights and to reduce the volatility that results from using different measurement attributes. The Company does not expect this statement to have a material effect on its financial statements or its results of operations.

In June 2006, the FASB issued Interpretation No. 48, “Accounting for Uncertainty in Income Taxes – an interpretation of FASB Statements No. 109”, which is effective for fiscal years beginning after December 15, 2006. The interpretation was issued to clarify the accounting for uncertainty in income taxes recognized in financial statements in accordance with FASB Statement No. 109. This interpretation describes a recognition threshold and measurement attributes for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The Company is currently assessing the effect, if any, this interpretation will have on its financial statements or its results of operations.

In July 2006, the Emerging Issues Task Force (“EITF”) issued EITF 06-3, “How Taxes Collected from Customers and Remitted to Governmental Authorities Should Be Presented in the Income Statement”, which is effective for fiscal years beginning after December 15, 2006. This interpretation was issued to clarify the financial statement presentation requirements for taxes collected from customers and remitted to a government authority. Whether taxes are reported on a gross basis (included in

6

SUNCOM WIRELESS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

revenue and costs) or on a net basis (excluded from revenues and costs), the accounting policy should be disclosed in the financial statement footnotes. The Company is currently assessing the effect this interpretation will have on its financial statements or its results of operations.

3. Stock-Based Compensation

Holdings makes grants of restricted stock under its Amended and Restated Stock and Incentive Plan and its Directors’ Stock and Incentive Plan to provide incentives to key employees and non-management directors and to further align the interests of such individuals with those of its stockholders. Grants of restricted stock generally are made annually under these stock and incentive plans, and the grants generally vest over a four or five year period.

Effective January 1, 2006, the Company adopted Statement of Financial Accounting Standards No. 123(R), “Share-Based Payment” (“SFAS 123R”), which sets forth accounting requirements for “share-based” compensation to employees and non-employee directors, and requires companies to recognize in the statement of operations the grant-date fair value of equity-based compensation. The Company adopted this statement using the modified prospective application transition method, which requires the recognition of compensation expense in financial statements issued subsequent to the date of adoption for all stock-based payments granted, modified or settled after the date of adoption, as well as for any unvested awards that were granted prior to the date of adoption. Because the Company previously adopted the fair value recognition provisions of Accounting Principles Board Opinion 25, “Accounting for Stock Issued to Employees”, for Holdings’ restricted stock grants, the adoption of SFAS No. 123R did not have a significant impact on its financial position or its results of operations.

The Company measures the fair value of restricted stock awards based upon the market price of Holdings’ common stock as of the date of grant, and these grants are amortized over their applicable vesting period using the straight-line method. In accordance with SFAS 123R, the Company has estimated that its forfeiture rate is 3% based on historical experience. The Company’s net loss for the three months ended June 30, 2006 and 2005 included approximately $0.8 million and $2.4 million, respectively, of stock-based compensation expense, and the Company’s net loss for the six months ended June 30, 2006 and 2005 included approximately $3.0 million and $6.4 million, respectively, of stock-based compensation expense. The following table summarizes the allocation of this compensation expense.

	Three months ended June 30,				Six months ended June 30,
	2006		2005		2006		2005
	(Dollars in thousands)
Cost of service	$	91	$	260	$	239	$	410
Selling, general and administrative		734		2,103		2,782		5,991
Total stock-based compensation expense	$	825	$	2,363	$	3,021	$	6,401

The following activity occurred under Holdings’ restricted stock plans for the six months ended June 30, 2006:

	Shares		Weighted Average Grant-Date Fair Value
Unvested balance at December 31, 2005	2,310,440		$	3.68
Granted	998,565			1.50
Vested	(700,387	)		4.99
Forfeited	(206,313	)		2.85
Unvested balance at June 30, 2006	2,402,305		$	2.41

As of June 30, 2006, there was approximately $4.1 million of total unrecognized compensation costs related to Holdings’ stock plans. These costs are expected to be recognized over a weighted average period of 2.5 years. In addition, an aggregate of 1,702,993 shares were authorized for future grants under Holdings’ stock plans as of June 30, 2006.

7

SUNCOM WIRELESS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

During the six months ended June 30, 2006 and 2005, the following activity occurred under Holdings’ stock plans:

	Six months ended June 30,
	2006		2005
Stock awards granted		998,565		1,125,559
Weighted average grant-date fair value	$	1.50	$	2.06

4. Restricted Cash and Restricted Short-term Investments

Restricted cash and restricted short-term investments represent deposits that are pledged as collateral for the Company’s surety bonds on its cell site leases. As of June 30, 2006, the Company had total restricted cash and short-term investments of $1.6 million.

5. Property and Equipment

The following table summarizes the Company’s property and equipment as of June 30, 2006 and December 31, 2005, respectively.

	June 30, 2006			December 31, 2005
	(Dollars in thousands)
Property and equipment:
Land	$	313		$	313
Network infrastructure and equipment		1,189,529			1,204,516
Furniture, fixtures and computer equipment		107,383			108,704
Capital lease assets		1,402			1,556
Construction in progress		17,691			20,981
		1,316,318			1,336,070
Less accumulated depreciation		(813,383	)		(685,786	)
Property and equipment, net	$	502,935		$	650,284

During the second and fourth quarters of 2005, the Company accelerated depreciation on its time division multiple access (“TDMA”) wireless communications equipment by shortening service lives to fully depreciate all TDMA equipment by June 30, 2006 for the continental United States reporting unit and by March 31, 2006 for the Puerto Rico and U.S. Virgin Islands reporting unit. This additional depreciation resulted from a more aggressive migration from the Company’s TDMA network to its global system for mobile communications and general packet radio service (“GSM/GPRS”) network as well as a higher rate of churn for TDMA customers than the Company had originally planned. As of June 30, 2006, all TDMA assets were fully depreciated for the Puerto Rico and U.S. Virgin Islands reporting unit and the continental United States reporting unit.

6. Detail of Certain Liabilities

The following table summarizes certain current liabilities as of June 30, 2006 and December 31, 2005, respectively:

	June 30, 2006		December 31, 2005
	(Dollars in thousands)
Accrued liabilities:
Bank overdraft liability	$	10,902	$	17,172
Accrued payroll and related expenses		14,313		20,962
Accrued expenses		11,804		12,206
Accrued interest		23,091		23,137
Total accrued liabilities	$	60,110	$	73,477
Other current liabilities:
Deferred revenue	$	15,939	$	13,211
Deferred gain on sale of property and equipment		2,205		2,211
Security deposits		6,643		7,849
Total other current liabilities	$	24,787	$	23,271

8

SUNCOM WIRELESS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

7. Long-Term Debt

The following table summarizes the Company’s indebtedness as of June 30, 2006 and December 31, 2005, respectively:

	June 30, 2006		December 31, 2005
	(Dollars in thousands)
Current portion of long-term debt:
Current portion of capital lease obligations	$	303	$	286
Current portion of senior secured term loan		2,500		2,500
Total current portion of long-term debt		2,803		2,786
Long-term debt:
Capital lease obligations	$	661	$	864
Senior secured term loan		243,750		245,000
81/2% senior notes		713,732		713,148
93/8% senior subordinated notes		340,124		339,542
83/4% senior subordinated notes		391,204		390,797
Total long-term debt		1,689,471		1,689,351
Total debt	$	1,692,274	$	1,692,137

8. Termination Benefits and Other Related Charges

In January 2006, the Company announced that it would reorganize its continental United States operations during 2006. This reorganization will consolidate and relocate operations and will result in the termination of approximately 48 positions, or 3% of its workforce. In addition, approximately 13 employees will be relocated as a result of this streamlining. These changes were a result of the Company’s recent strategic planning process. The workforce reduction and relocation resulted in $0.7 million and $1.6 million of expenses incurred during the three and six months ended June 30, 2006, respectively, consisting of $0.5 million and $1.2 million, respectively, for one-time termination benefits and $0.2 million and $0.4 million, respectively, for relocation and other related workforce reduction expenses. These costs were recognized in accordance with SFAS No. 146, “Accounting for Costs Associated with Exit or Disposal Activities”, and have been recorded in termination benefits and other related charges in the statement of operations for the three and six months ended June 30, 2006. The Company expects to incur approximately $0.3 million of additional costs during the remainder of 2006 as a result of this streamlining. As of June 30, 2006, the severance charge accrual consisted of the following:

	Six months ended
(Dollars in thousands)	June 30, 2006
Accrual as of January 1, 2006	$	—
Charged to expense		1,556
Amounts paid		(1,030	)
Accrual as of June 30, 2006	$	526

9. Related party transactions

The Company has made payments on behalf of SunCom Investment Company and Holdings for certain business activities, including, but not limited to, administrative expenses and tax payments. As described in Note 10, on May 2, 2006, SunCom Investment Company contributed $194.4 million to SunCom, and of this amount, $5.4 million was used to substantially satisfy the receivable due from SunCom Investment Company and Holdings. As of June 30, 2006, total receivables outstanding from SunCom Investment Company and Holdings were $0.5 million. These payments are due on demand.

9

SUNCOM WIRELESS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

10. SunCom Investment Company Contribution

SunCom has been participating in discussions with holders of its senior and senior subordinated notes with respect to a possible restructuring of its long-term debt obligations. No agreement regarding such a restructuring has been reached. In that context, certain noteholders questioned the November 2004 $189 million dividend (the “Dividend”) paid by SunCom to SunCom Investment Company. After reviewing the totality of the facts and circumstances concerning the Dividend, Holdings determined that facts existed that support the noteholders’ arguments that the Dividend was not properly paid. Accordingly, on May 2, 2006, SunCom Investment Company contributed approximately $194.4 million, the amount of the Dividend plus an additional $5.4 million, to SunCom. The Company believes that the contribution of this incremental capital addresses the primary concerns regarding its liquidity and financial condition raised in Note 1(b) to its consolidated financial statements included in its annual report on Form 10-K for the year ended December 31, 2005, as filed on March 16, 2006.

11. Segment Information

In 2005, as a result of the Company’s December 2004 acquisition of AT&T Wireless’ business in certain North Carolina markets, Puerto Rico and the U.S. Virgin Islands, the Company began operating as two reportable segments, which it operates and manages as strategic business units. Reportable segments are defined as components of an enterprise for which separate financial information is available and is evaluated regularly by the chief operating decision makers in deciding how to allocate resources and in assessing performance. The Company’s reporting segments are based upon geographic area of operation; one segment consists of the Company’s operations in the continental United States and the other consists of the Company’s operations in Puerto Rico and the U.S. Virgin Islands. The “Corporate and other” segment column below includes centralized services that largely support both segments. The Company’s reporting segments follow the same accounting policies used for the Company’s consolidated financial statements.

Financial information by reportable business segment is as follows:

	As of and for the three months ended June 30, 2006											As of and for the six months ended June 30, 2006
	Continental U. S.			Puerto Rico and U.S. Virgin Islands		Corporate and other			Consolidated			Continental U. S.			Puerto Rico and U.S. Virgin Islands			Corporate and other			Consolidated
	(Dollars in thousands)
Revenues:
Service	$	117,778		$	46,652	$	—		$	164,430		$	227,835		$	92,062		$	—		$	319,897
Roaming		17,692			1,827		—			19,519			35,547			5,438			—			40,985
Equipment		16,787			5,952		—			22,739			36,912			10,786			—			47,698
Total revenue		152,257			54,431		—			206,688			300,294			108,286			—			408,580
Depreciation, asset disposal and amortization		82,655			8,035		4,517			95,207			166,476			34,554			9,119			210,149
Income (loss) from operations	$	(60,245	)	$	2,294	$	(13,346	)	$	(71,297	)	$	(137,017	)	$	(17,005	)	$	(26,986	)	$	(181,008	)
Total assets	$	1,107,620		$	346,565	$	279,042		$	1,733,227		$	1,107,620		$	346,565		$	279,042		$	1,733,227
Capital expenditures		24,166			5,499		1,206			30,871			29,819			10,050			2,304			42,173

	As of and for the three months ended June 30, 2005												As of and for the six months ended June 30, 2005
	Continental U.S.			Puerto Rico and U.S. Virgin Islands			Corporate and other			Consolidated			Continental U.S.			Puerto Rico and U.S. Virgin Islands			Corporate and other			Consolidated
	(Dollars in thousands)
Revenues:
Service	$	119,856		$	46,623		$	—		$	166,479		$	238,422		$	90,906		$	—		$	329,328
Roaming		19,863			3,115			—			22,978			40,401			6,408			—			46,809
Equipment		17,802			5,621			—			23,423			32,841			7,855			—			40,696
Total revenue		157,521			55,359			—			212,880			311,664			105,169			—			416,833
Depreciation, asset disposal and amortization		59,709			17,319			4,395			81,423			100,554			31,618			8,698			140,870
Loss from operations	$	(44,540	)	$	(16,811	)	$	(14,451	)	$	(75,802	)	$	(64,199	)	$	(14,719	)	$	(29,128	)	$	(108,046	)
Total assets	$	1,411,055		$	395,176		$	326,475		$	2,132,706		$	1,411,055		$	395,176		$	326,475		$	2,132,706
Capital expenditures		10,504			1,139			2,903			14,546			37,048			2,311			3,871			43,230

10

SUNCOM WIRELESS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

A reconciliation from segment loss from operations to consolidated loss before taxes is set forth below:

	For the three months ended June 30,						For the six months ended June 30,
	2006			2005			2006			2005
	(Dollars in thousands)
Total segment loss from operations	$	(71,297	)	$	(75,802	)	$	(181,008	)	$	(108,046	)
Unallocated amounts:
Interest expense		(38,180	)		(37,039	)		(75,983	)		(73,766	)
Other expense		—			—			—			(74	)
Interest and other income		2,740			2,112			4,280			4,049
Consolidated loss before taxes	$	(106,737	)	$	(110,729	)	$	(252,711	)	$	(177,837	)

12. Guarantor Financial Information

The following tables set forth condensed consolidating financial information of SunCom (the “Parent Company”), for all of SunCom’s subsidiaries other than Triton PCS License Company L.L.C. and Triton PCS Property Company L.L.C. (collectively, the “Subsidiary Guarantors”) and Triton PCS License Company L.L.C. and Triton PCS Property Company L.L.C. (together, the “Subsidiary Non-Guarantors”). Set forth below are the balance sheets as of June 30, 2006 and December 31, 2005, the statements of operations for the three and six months ended June 30, 2006 and 2005 and the statements of cash flows for the six months ended June 30, 2006 and 2005 for the Parent Company, the Subsidiary Guarantors and the Subsidiary Non-Guarantors.

11

SUNCOM WIRELESS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Consolidating Balance Sheets as of June 30, 2006

(Dollars in thousands)

	Parent Company			Subsidiary Guarantors			Subsidiary Non-Guarantors			Eliminations			Consolidated
ASSETS:
Current assets:
Cash and cash equivalents	$	9,439		$	15,676		$	—		$	—		$	25,115
Short-term investments		225,850			—			—			—			225,850
Restricted cash and restricted short-term investments		1,620			—			—			—			1,620
Accounts receivable, net of allowance for doubtful accounts		—			82,985			—			—			82,985
Accounts receivable – roaming partners		—			17,202			—			—			17,202
Due from related parties		—			454			—			—			454
Inventory		—			16,369			—			—			16,369
Prepaid expenses		39			10,132			8,042			—			18,213
Intercompany receivable		77,713			264,669			—			(342,382	)		—
Other current assets		331			12,623			—			—			12,954
Total current assets		314,992			420,110			8,042			(342,382	)		400,762
Long term assets:
Property and equipment, net		—			502,622			313			—			502,935
Investments in subsidiaries		1,066,690			240,516			—			(1,307,206	)		—
Intangible assets, net		5,259			88,310			730,793			—			824,362
Other long-term assets		—			4,451			717			—			5,168
Total assets	$	1,386,941		$	1,256,009		$	739,865		$	(1,649,588	)	$	1,733,227
LIABILITIES AND STOCKHOLDER’S EQUITY (DEFICIT):
Current liabilities:
Accounts payable	$	—		$	75,315		$	18,993		$	—		$	94,308
Accrued liabilities		23,591			36,519			—			—			60,110
Current portion of long-term debt		2,500			303			—			—			2,803
Other current liabilities		—			24,787			342,382			(342,382	)		24,787
Total current liabilities		26,091			136,924			361,375			(342,382	)		182,008
Long-term debt:
Capital lease obligations		—			661			—			—			661
Senior secured term loan		243,750			—			—			—			243,750
Senior notes		713,732			—			—			—			713,732
Total senior long-term debt		957,482			661			—			—			958,143
Subordinated notes		731,328			—			—			—			731,328
Total long-term debt		1,688,810			661			—			—			1,689,471
Deferred income taxes, net		—			—			137,974			—			137,974
Deferred revenue		—			1,910			—			—			1,910
Deferred gain on sale of property and equipment		—			47,276			—			—			47,276
Other		—			2,548			—			—			2,548
Total liabilities		1,714,901			189,319			499,349			(342,382	)		2,061,187
Commitments and contingencies		—			—			—			—			—
Stockholder’s equity (deficit):
Common Stock, $0.01 par value, 1,000 shares authorized; 100 shares issued and outstanding as of June 30, 2006		—			—			—			—			—
Additional paid-in-capital		747,212			1,564,052			495,456			(2,059,508	)		747,212
Accumulated deficit		(1,075,172	)		(497,362	)		(254,940	)		752,302			(1,075,172	)
SunCom Wireless Holdings, Inc. common stock held in trust		(150	)		—			—			—			(150	)
Deferred compensation		150			—			—			—			150
Total stockholder’s equity (deficit)		(327,960	)		1,066,690			240,516			(1,307,206	)		(327,960	)
Total liabilities and stockholder’s equity (deficit)	$	1,386,941		$	1,256,009		$	739,865		$	(1,649,588	)	$	1,733,227

12

SUNCOM WIRELESS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Consolidating Statements of Operations for the Three Months Ended June 30, 2006

(Dollars in thousands)

	Parent Company			Subsidiary Guarantors			Subsidiary Non- Guarantors			Eliminations		Consolidated
Revenues:
Service	$	—		$	164,430		$	—		$	—	$	164,430
Roaming		—			19,519			—			—		19,519
Equipment		—			22,739			—			—		22,739
Total revenue		—			206,688			—			—		206,688
Operating expenses:
Cost of service		—			52,302			14,415			—		66,717
Cost of equipment		—			32,270			—			—		32,270
Selling, general and administrative		24			79,414			3,695			—		83,133
Termination benefits and other related charges		—			658			—			—		658
Depreciation and asset disposal		—			84,518			—			—		84,518
Amortization		—			10,689			—			—		10,689
Total operating expenses		24			259,851			18,110			—		277,985
Loss from operations		(24	)		(53,163	)		(18,110	)		—		(71,297	)
Interest expense		(38,161	)		(19	)		—			—		(38,180	)
Interest and other income		2,714			26			—			—		2,740
Loss before taxes		(35,471	)		(53,156	)		(18,110	)		—		(106,737	)
Income tax provision		—			(38	)		(3,820	)		—		(3,858	)
Loss before equity in earnings of subsidiaries		(35,471	)		(53,194	)		(21,930	)		—		(110,595	)
Equity in earnings of subsidiaries		(75,124	)		(21,930	)		—			97,054		—
Net income (loss)	$	(110,595	)	$	(75,124	)	$	(21,930	)	$	97,054	$	(110,595	)

Consolidating Statements of Operations for the Six Months Ended June 30, 2006

(Dollars in thousands)

	Parent Company			Subsidiary Guarantors			Subsidiary Non- Guarantors			Eliminations		Consolidated
Revenues:
Service	$	—		$	319,897		$	—		$	—	$	319,897
Roaming		—			40,985			—			—		40,985
Equipment		—			47,698			—			—		47,698
Total revenue		—			408,580			—			—		408,580
Operating expenses:
Cost of service		—			105,806			28,859			—		134,665
Cost of equipment		—			71,491			—			—		71,491
Selling, general and administrative		48			164,440			7,239			—		171,727
Termination benefits and other related charges		—			1,556			—			—		1,556
Depreciation and asset disposal		—			187,956			—			—		187,956
Amortization		—			22,193			—			—		22,193
Total operating expenses		48			553,442			36,098			—		589,588
Loss from operations		(48	)		(144,862	)		(36,098	)		—		(181,008	)
Interest expense		(75,893	)		(90	)		—			—		(75,983	)
Interest and other income		4,209			71			—			—		4,280
Loss before taxes		(71,732	)		(144,881	)		(36,098	)		—		(252,711	)
Income tax provision		—			(38	)		(7,171	)		—		(7,209	)
Loss before equity in earnings of subsidiaries		(71,732	)		(144,919	)		(43,269	)		—		(259,920	)
Equity in earnings of subsidiaries		(188,188	)		(43,269	)		—			231,457		—
Net income (loss)	$	(259,920	)	$	(188,188	)	$	(43,269	)	$	231,457	$	(259,920	)

13

SUNCOM WIRELESS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Consolidating Statements of Cash Flows for the Six Months Ended June 30, 2006

(Dollars in thousands)

	Parent Company			Subsidiary Guarantors			Subsidiary Non-Guarantors			Eliminations			Consolidated
Cash flows from operating activities:
Net cash provided by (used in) operating activities	$	(70,151	)	$	58,724		$	(34,476	)	$	—		$	(45,903	)
Cash flows from investing activities:
Purchase of available for sale of securities		(314,600	)		—			—			—			(314,600	)
Proceeds from sale of available for sale securities		421,150			—			—			—			421,150
Capital expenditures		—			(42,173	)		—			—			(42,173	)
Proceeds from sale of assets		—			1,320			270			—			1,590
Payment of direct costs on business transactions		—			(54	)		—			—			(54	)
Other		—			(37	)		—			—			(37	)
Investment in subsidiaries		(37,207	)		—			—			37,207			—
Dividends received		37,207			—			—			(37,207	)		—
Net intercompany loans		(38,489	)		—			—			38,489			—
Net cash provided by (used in) investing activities		68,061			(40,944	)		270			38,489			65,876
Cash flows from financing activities:
Dividends paid		—			(37,207	)		—			37,207			—
Payments under senior secured term loan		(1,250	)		—			—			—			(1,250	)
Change in bank overdraft		—			(6,270	)		—			—			(6,270	)
Principal payment under capital lease obligations		—			(151	)		—			—			(151	)
Payment of direct costs on business transactions		—			(2,886	)		—			—			(2,886	)
Repayments from (advances to) related parties		—			(151	)		—			—			(151	)
Capital contributions from parent		50			37,207			—			(37,207	)		50
Net intercompany loans		—			4,283			34,206			(38,489	)		—
Net cash provided by (used in) financing activities		(1,200	)		(5,175	)		34,206			(38,489	)		(10,658	)
Net increase (decrease) in cash and cash equivalents		(3,290	)		12,605			—			—			9,315
Cash and cash equivalents, beginning of period		12,729			3,071			—			—			15,800
Cash and cash equivalents, end of period	$	9,439		$	15,676		$	—		$	—		$	25,115

14

SUNCOM WIRELESS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Consolidating Balance Sheets as of December 31, 2005

(Dollars in thousands)

	Parent Company			Subsidiary Guarantors			Subsidiary Non-Guarantors			Eliminations			Consolidated
ASSETS:
Current assets:
Cash and cash equivalents	$	12,729		$	3,071		$	—		$	—		$	15,800
Short-term investments		139,050			—			—			—			139,050
Accounts receivable, net of allowance for doubtful accounts		—			82,628			270			—			82,898
Accounts receivable – roaming partners		—			18,188			—			—			18,188
Due from related parties		—			5,703			—			—			5,703
Inventory		—			23,930			—			—			23,930
Prepaid expenses		72			6,225			7,195			—			13,492
Intercompany receivable		41,586			266,590			—			(308,176	)		—
Other current assets		279			11,743			—			—			12,022
Total current assets		193,716			418,078			7,465			(308,176	)		311,083
Long term assets:
Property and equipment, net		—			649,971			313			—			650,284
Investments in subsidiaries		1,254,878			283,785			—			(1,538,663	)		—
Intangible assets, net		5,919			107,401			730,793			—			844,113
Other long-term assets		—			3,590			734			—			4,324
Total assets	$	1,454,513		$	1,462,825		$	739,305		$	(1,846,839	)	$	1,809,804
LIABILITIES AND STOCKHOLDER’S EQUITY (DEFICIT):
Current liabilities:
Accounts payable	$	—		$	80,814		$	16,541		$	—		$	97,355
Accrued liabilities		23,587			49,890			—			—			73,477
Current portion of long-term debt		2,500			286			—			—			2,786
Other current liabilities		—			23,271			308,176			(308,176	)		23,271
Total current liabilities		26,087			154,261			324,717			(308,176	)		196,889
Long-term debt:
Capital lease obligations		—			864			—			—			864
Senior secured term loan		245,000			—			—			—			245,000
Senior notes		713,148			—			—			—			713,148
Total senior long-term debt		958,148			864			—			—			959,012
Subordinated notes		730,339			—			—			—			730,339
Total long-term debt		1,688,487			864			—			—			1,689,351
Deferred income taxes, net		—			—			130,803			—			130,803
Deferred revenue		—			1,809			—			—			1,809
Deferred gain on sale of property and equipment		—			48,530			—			—			48,530
Other		—			2,483			—			—			2,483
Total liabilities		1,714,574			207,947			455,520			(308,176	)		2,069,865
Commitments and contingencies		—			—			—			—			—
Stockholder’s equity (deficit):
Common Stock, $0.01 par value, 1,000 shares authorized; 100 shares issued and outstanding as of December 31, 2005		—			—			—			—			—
Additional paid-in-capital		555,191			1,526,845			495,456			(2,022,301	)		555,191
Accumulated deficit		(815,252	)		(271,967	)		(211,671	)		483,638			(815,252	)
SunCom Wireless Holdings, Inc common stock held in trust		(145	)		—			—			—			(145	)
Deferred compensation		145			—			—			—			145
Total stockholder’s equity (deficit)		(260,061	)		1,254,878			283,785			(1,538,663	)		(260,061	)
Total liabilities and stockholder’s equity (deficit)	$	1,454,513		$	1,462,825		$	739,305		$	(1,846,839	)	$	1,809,804

15

SUNCOM WIRELESS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Consolidating Statement of Operations for the Three Months Ended June 30, 2005

(Dollars in thousands)

	Parent Company			Subsidiary Guarantors			Subsidiary Non- Guarantors			Eliminations		Consolidated
Revenues:
Service	$	—		$	166,479		$	—		$	—	$	166,479
Roaming		—			22,978			—			—		22,978
Equipment		—			23,423			—			—		23,423
Total revenue		—			212,880			—			—		212,880
Operating expenses:
Cost of service		—			52,026			12,978			—		65,004
Cost of equipment		—			49,511			—			—		49,511
Selling, general and administrative		23			89,527			3,194			—		92,744
Depreciation and asset disposal		—			65,807			—			—		65,807
Amortization		—			15,616			—			—		15,616
Total operating expenses		23			272,487			16,172			—		288,682
Loss from operations		(23	)		(59,607	)		(16,172	)		—		(75,802	)
Interest expense		(37,008	)		(31	)		—			—		(37,039	)
Interest and other income		2,112			—			—			—		2,112
Loss before taxes		(34,919	)		(59,638	)		(16,172	)		—		(110,729	)
Income tax provision		—			(134	)		(3,866	)		—		(4,000	)
Loss before equity in earnings of subsidiaries		(34,919	)		(59,772	)		(20,038	)		—		(114,729	)
Equity in earnings of subsidiaries		(79,810	)		(20,038	)		—			99,848		—
Net income (loss)	$	(114,729	)	$	(79,810	)	$	(20,038	)	$	99,848	$	(114,729	)

Consolidating Statement of Operations for the Six Months Ended June 30, 2005

(Dollars in thousands)

		Parent Company			Subsidiary Guarantors			Subsidiary Non- Guarantors			Eliminations		Consolidated
Revenues:
Service		$	—		$	329,328		$	—		$	—	$	329,328
Roaming			—			46,809			—			—		46,809
Equipment			—			40,696			—			—		40,696
Total revenue			—			416,833			—			—		416,833
Operating expenses:
Cost of service			—			101,520			25,284			—		126,804
Cost of equipment			—			84,157			—			—		84,157
Selling, general and administrative			47			166,647			6,354			—		173,048
Depreciation and asset disposal			—			108,298			—			—		108,298
Amortization			—			32,572			—			—		32,572
Total operating expenses			47			493,194			31,638			—		524,879
Loss from operations			(47	)		(76,361	)		(31,638	)		—		(108,046	)
Interest expense			(73,647	)		(119	)		—			—		(73,766	)
Other expense			—			(74	)		—			—		(74	)
Interest and other income			4,049			—			—			—		4,049
Loss before taxes	��		(69,645	)		(76,554	)		(31,638	)		—		(177,837	)
Income tax provision			—			(134	)		(7,624	)		—		(7,758	)
Loss before equity in earnings of subsidiaries			(69,645	)		(76,688	)		(39,262	)		—		(185,595	)
Equity in earnings of subsidiaries			(115,950	)		(39,262	)		—			155,212		—
Net income (loss)		$	(185,595	)	$	(115,950	)	$	(39,262	)	$	155,212	$	(185,595	)

16

SUNCOM WIRELESS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Consolidating Statement of Cash Flows for the Six Months Ended June 30, 2005

(Dollars in thousands)

	Parent Company			Subsidiary Guarantors			Subsidiary Non-Guarantors			Eliminations			Consolidated
Cash flows from operating activities:
Net cash provided by (used in) operating activities	$	(67,485	)	$	62,750		$	(30,948	)	$	(10,481	)	$	(46,164	)
Cash flows from investing activities:
Purchase of available for sale of securities		(628,450	)		—			—			—			(628,450	)
Proceeds from sale of available for sale securities		714,900			—			—			—			714,900
Proceeds from sale of assets		—			45,619			—			—			45,619
Capital expenditures		—			(43,230	)		—			—			(43,230	)
Payment of direct costs on business transactions		—			(1,018	)		—			—			(1,018	)
Other		—			(51	)		—			—			(51	)
Investment in subsidiaries		(14,254	)		—			—			14,254			—
Dividends received		14,254			—			—			(14,254	)		—
Net intercompany loans		—			(53,834	)		—			53,834			—
Net cash provided by (used in) investing activities		86,450			(52,514	)		—			53,834			87,770
Cash flows from financing activities:
Payments under senior secured term loan		(1,250	)		—			—			—			(1,250	)
Change in bank overdraft		—			(9,816	)		—			—			(9,816	)
Principal payment under capital lease obligations		—			(628	)		—			—			(628	)
Repayments from (advances to) related parties		1,803			—			—			—			1,803
Other		(28	)		—			—			—			(28	)
Dividends paid		—			(14,254	)		—			14,254			—
Capital contribution from parent		—			14,254			—			(14,254	)		—
Net intercompany loans		22,886			—			30,948			(53,834	)		—
Net cash provided by (used in) financing activities		23,411			(10,444	)		30,948			(53,834	)		(9,919	)
Net increase (decrease) in cash and cash equivalents		42,376			(208	)		—			(10,481	)		31,687
Cash and cash equivalents, beginning of period		8,143			208			—			—			8,351
Cash and cash equivalents, end of period	$	50,519		$	—		$	—		$	(10,481	)	$	40,038

17

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

General

In this section, the termsSunCom, we, us, our and similar terms refer collectively to SunCom Wireless, Inc. and its consolidated subsidiaries.Holdings refers to our parent corporation, SunCom Wireless Holdings, Inc., andSunCom Wireless refers only to SunCom Wireless, Inc. The following discussion and analysis is based upon our financial statements as of the dates and for the periods presented in this section. You should read this discussion and analysis in conjunction with our financial statements and the related notes contained elsewhere in this report.

Forward-Looking Statements

When used in this Form 10-Q and in future filings by us with the Securities and Exchange Commission, in our press releases and in oral statements made with the approval of an authorized executive officer of SunCom, statements concerning possible or assumed future results of operations of SunCom and those preceded by, followed by or that include the words “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of such terms and other comparable terminology (including confirmations by an authorized executive officer of SunCom or any such expressions made by a third party with respect to SunCom) are intended to identify “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Readers are cautioned not to place undue reliance on any such forward-looking statements, each of which speaks only as of the date made. Such statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical earnings and those presently anticipated or projected. For a discussion of certain risks and uncertainties that could affect our results of operations, liquidity and capital resources, see the “Risk Factors” section of our Form 10-K for the year ended December 31, 2005, our Forms 10-Q and our other Securities and Exchange Commission filings. We have no obligation to release publicly the result of any revisions, which may be made to any forward-looking statements to reflect anticipated or unanticipated events or circumstances occurring after the date of such statements.

Overview

We are a provider of digital wireless communications services in the southeastern United States, Puerto Rico and the U.S. Virgin Islands. As of June 30, 2006, our wireless communications network covered a population of approximately 14.8 million potential customers in a contiguous geographic area encompassing portions of North Carolina, South Carolina, Tennessee and Georgia. In addition, we operate a wireless communications network covering a population of approximately 4.1 million potential customers in Puerto Rico and the U.S. Virgin Islands.

We provide wireless communications services under the SunCom Wireless brand name. From 1998 until December 2004, we were a member of the AT&T Wireless network and a strategic partner with AT&T Wireless. Beginning in 1998, AT&T Wireless contributed to us personal communication services, orPCS, licenses covering various markets in the southeastern United States in exchange for an equity position in Holdings. As part of our transactions with AT&T Wireless, we were granted the right to be the exclusive provider of wireless mobility services co-branded with AT&T Corp. within our markets.

In October 2004, Cingular Wireless acquired all of the outstanding stock of AT&T Wireless through a merger of a Cingular Wireless subsidiary with and into AT&T Wireless. In connection with this transaction, SunCom, AT&T Wireless and Cingular Wireless (and/or certain of their subsidiaries) entered into various agreements to modify our relationships with AT&T Wireless. Under these agreements, AT&T Wireless surrendered to Holdings, following the October 2004 consummation of the AT&T Wireless-Cingular Wireless merger, all of the equity interests in Holdings held by AT&T Wireless, and the parties concurrently terminated the agreement under which AT&T Wireless had granted us the exclusive right to provide AT&T Wireless branded wireless services within our region. The termination of the exclusivity arrangement permitted Cingular Wireless entry into our service area and provided us the opportunity to offer service in markets where we were previously prohibited from doing so.

In addition, in December 2004, SunCom, AT&T Wireless and Cingular Wireless completed an exchange of wireless network properties, pursuant to which SunCom transferred PCS network assets held for use in its Virginia markets to AT&T Wireless in exchange for PCS network assets held by AT&T Wireless for use in certain of its North Carolina markets, Puerto Rico and the U.S. Virgin Islands, plus the payment by Cingular Wireless to SunCom of $175 million. This exchange transaction transformed the geographic strategic focus of our wireless network by giving us a substantial new presence in the Charlotte, Raleigh/Durham and Greensboro, North Carolina markets and entry into the Puerto Rico and U.S. Virgin Islands market. Our entry into these markets allows us to operate a contiguous footprint in the Carolinas and provides us with a greater ability to grow our subscriber base.

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Our strategy is to provide extensive coverage to customers within our region, to offer our customers high-quality, innovative voice and data services with coast-to-coast coverage via compelling rate plans and to benefit from roaming revenues generated by other carriers’ wireless customers who roam into our covered area.

We believe our markets are strategically attractive because of their strong demographic characteristics for wireless communications services. According to the 2005 Paul Kagan Associates Report, our service area includes 11 of the top 100 markets in the country with population densities that are higher than the national average. We currently provide wireless voice and data services in Puerto Rico and the U.S. Virgin Islands segment utilizing global system for mobile communications and general packet radio service, orGSM/GPRS, technology, which is capable of providing enhanced voice and data services. Our continental U.S. segment also uses GSM/GPRS technology, and we are in the process of migrating our remaining time division multiple access, orTDMA, subscribers to GSM/GPRS technology. We expect this migration to be completed during the third quarter of 2006.

Results of Operations

Beginning in 2005, as a result of our acquisition of AT&T Wireless’ business in certain North Carolina markets, Puerto Rico and the U.S. Virgin Islands, we began operating as two reportable segments, which we operate and manage as strategic business units. Our reporting segments are based upon geographic area of operation; one segment consists of our operations in the continental United States, and the other consists of our operations in Puerto Rico and the U.S. Virgin Islands. Each geographic area of operations markets wireless rate plans to consumers that are specific to its respective geographic area. For purposes of this discussion, corporate expenses are included in the continental U.S. segment results.

Three Months Ended June 30, 2006 Compared to the Three Months Ended June 30, 2005

Consolidated operations

The table below summarizes the consolidated key metrics of our operations as of and for the three months ended June 30, 2006 and 2005. These results are further described in our segment discussions.

	As of and for the three months ended June 30,
	2006			2005			Change			Change %
Gross additions		92,131			95,991			(3,860	)	(4.0	)%
Net additions		24,329			3,979			20,350		511.4	%
Subscribers (end of period)		1,031,443			965,106			66,337		6.9	%
Monthly subscriber churn		2.2	%		3.2	%		1.0	%	31.3	%
Average revenue per user	$	52.89		$	56.73		$	(3.84	)	(6.8	)%
Cost per gross addition	$	409		$	427		$	18		4.2	%

Gross additions are new subscriber activations, and net additions are gross additions less subscriber deactivations. Monthly subscriber churn is calculated by dividing subscriber deactivations by our average subscriber base for the period. These statistical measures may not be compiled in the same manner as similarly titled measures of other companies. In addition, average revenue per user, orARPU, and cost per gross addition, orCPGA, are performance measures not calculated in accordance with accounting principles generally accepted in the United States, orGAAP. For more information about ARPU and CPGA, see “Reconciliation of Non-GAAP Financial Measures” below.

Continental U.S. segment operations

The table below summarizes the continental U.S. segment key metrics of our operations as of and for the three months ended June 30, 2006 and 2005.

	As of and for the three months ended June 30,
	2006			2005			Change			Change %
Gross additions		59,193			67,641			(8,448	)	(12.5	)%
Net additions		15,379			298			15,081		5,060.7	%
Subscribers (end of period)		750,332			716,028			34,304		4.8	%
Monthly subscriber churn		2.0	%		3.1	%		1.1	%	35.5	%
Average revenue per user	$	52.86		$	56.09		$	(3.23	)	(5.8	)%
Cost per gross addition	$	440		$	431		$	(9	)	(2.1	)%

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SubscribersThe net subscriber increase of 15,081 was driven by lower subscriber churn quarter-over-quarter, offset by an 8,448 decrease in gross subscriber additions. We believe the lower quarter-over-quarter gross subscriber additions was the result of increased competitive pressure for a diminishing pool of potential subscribers. We believe the lower quarter-over-quarter churn was the result of the North Carolina market stabilizing after the disruption caused by the transition of the subscribers we acquired from AT&T Wireless in December 2004. The 34,304 increase in total subscribers was attributable to net subscriber additions resulting from the factors described above, offset by the sale of 28,648 subscribers to Cingular Wireless in September 2005.

Monthly Subscriber ChurnThe decrease in monthly subscriber churn stemmed primarily from decreased voluntary subscriber deactivations resulting from the reduced impact of the AT&T subscriber transition that occurred in 2005. Due to voluntary churn caused by our forced migration of TDMA subscribers to GSM/GPRS technology and increased involuntary churn as a result of planned offerings to credit challenged customers, we believe that churn in the continental U.S. segment may increase in the near term.

Average Revenue Per UserARPU reflects the average amount billed to subscribers based on rate plan and calling feature offerings. ARPU is calculated by dividing service revenue, excluding service revenue credits made to existing subscribers and revenue not generated by wireless subscribers, by our average subscriber base for the respective period. The ARPU decrease was primarily the result of a decrease in average access revenue per subscriber and billed airtime revenue per subscriber, partially offset by an increase in revenue from usage of new features offered for additional fees. The decline in access revenue was the result of adding new subscribers on lower priced rate plans, such as family plans. The decline in airtime revenue was partially the result of adding new subscribers on rate plans that include more minutes of use than previously offered rate plans. In addition, airtime revenue has declined as a result of subscribers optimizing their rate plan by migrating to plans with more included minutes and/or high use subscribers deactivating service. The increase in feature revenue was primarily the result of subscribers increased usage of our data offerings, such as SMS messaging and downloadable ring tones. As a result of the anticipated mix of new rate plan offerings, we expect this lower ARPU to remain relatively flat in the foreseeable future. For more details regarding our calculation of ARPU, refer to “Reconciliation of Non-GAAP Financial Measures” below.

Cost Per Gross AdditionCPGA is calculated by dividing the sum of equipment margin for handsets sold to new subscribers (equipment revenues less cost of equipment, which costs have historically exceeded the related revenues) and selling expenses (exclusive of the non-cash compensation portion of the selling expenses) related to adding new subscribers by total gross subscriber additions during the relevant period. The CPGA decrease of $9, or 2.1%, was primarily the result of lower net equipment costs. In addition, commission expense per gross addition was lower due to a change in the distribution mix. These favorable variances were partially offset by decreased leverage on fixed acquisition costs, such as advertising and promotional costs and retail store costs, due to decreased gross subscriber additions. Retail customer service expenses and the equipment margin on handsets sold to existing subscribers, including handset upgrade transactions, are excluded from CPGA, as these costs are incurred specifically for existing subscribers. For more details regarding our calculation of CPGA, refer to “Reconciliation of Non-GAAP Financial Measures” below.

Results from Operations

	For the three months ended June 30,
(Dollars in thousands)	2006			2005			Change $			Change %
Revenues:
Service	$	117,778		$	119,856		$	(2,078	)	(1.7	)%
Roaming		17,692			19,863			(2,171	)	(10.9	)%
Equipment		16,787			17,802			(1,015	)	(5.7	)%
Total revenue		152,257			157,521			(5,264	)	(3.3	)%
Operating expenses
Cost of service		55,879			55,453			(426	)	(0.8	)%
Cost of equipment		22,276			32,992			10,716		32.5	%
Selling, general and administrative		59,863			63,963			4,100		(6.4	)%
Termination benefits and other related charges		658			—			(658	)	n/a
Depreciation, asset disposal and amortization		87,172			64,104			(23,068	)	(36.0	)%
Total operating expenses		225,848			216,512			(9,336	)	(4.3	)%
Loss from operations	$	(73,591	)	$	(58,991	)	$	(14,600	)	(24.7	)%

RevenueService revenue decreased by $2.1 million for the three months ended June 30, 2006, compared to the three months ended June 30, 2005, primarily as a result of a $3.3 million decrease in access revenue and an additional $3.3 million decline in airtime revenue. These decreases resulted from rate plan offerings and competitive pressures, and were

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partially offset by increased revenue of $5.4 million generated from enhanced features offered for a fee. We expect subscriber growth to continue and ARPU to remain relatively flat; hence, we expect service revenue to increase. The decrease of roaming revenue was primarily due to reductions in roaming rates and lower roaming minutes of use. As a result of the industry trend of declining roaming rates, we expect roaming revenue to continue to decline. Equipment revenue includes the revenue earned on the sale of a handset and handset accessories to new and existing subscribers. The equipment revenue decrease was due to decreased revenue on lower new activations, partially offset by increased revenue on transactions with existing subscribers.

Cost of ServiceCost of service for the three months ended June 30, 2006 increased by $0.4 million, compared to the same period of 2005. This increase related to a $0.5 million increase in third-party roaming costs attributable to the growth of our subscriber base and the introduction of rate plans that included free long distance and third-party roaming, which resulted in increased in minutes of use. This increase was also due to an incremental $1.1 million of subscriber handset insurance fees incurred subsequent to the acquired subscribers migrating from AT&T Wireless in the second and third quarter of 2005. This increase was partially offset by $0.6 million of interconnect costs as a result of network optimization and $0.3 million of toll costs due to a lower rate per minute of use. As a result of the variable components of cost of service, such as interconnect and toll, our cost of service may increase in conjunction with the growth of our subscriber base. Cost of service as a percentage of service revenue was 47.4% and 46.3% for the quarters ended June 30, 2006 and 2005, respectively. The increase of 1.1% was primarily attributable to the increased subscriber usage and the related cost, increased operating expenses and decreased service revenue. Cost of service as a percentage of service revenue may decline in the future, as we expect to leverage the fixed components of cost of service, such as cell site rent, against increased revenue.

Cost of Equipment Cost of equipment decreased $10.7 million in the second quarter of 2006, compared to the same period of 2005. This decrease was due to the absence of $3.2 million of migration costs incurred in the second quarter of 2005 to provide certain subscribers in the acquired North Carolina markets with a new handset compatible with our system. The decrease was also due to the lower cost per handset quarter-over-quarter and lower gross subscriber additions.

Selling, General and Administrative ExpenseSelling, general and administrative expenses decreased for the three months ended June 30, 2006, compared to the same period of 2005. The decrease was primarily due to a $1.5 million decrease in commissions as the result of lower gross subscriber additions, a $2.0 million decrease in general and administrative expenses and a $1.4 million decrease in non-cash compensation expense due to the lower market price of stock grants. These decreases were partially offset by a $0.4 million increase in fixed selling expenses due to an increase in retail locations and a $0.5 million increase of advertising and promotional expense. General and administrative expense has decreased due to the absence of incremental migration costs incurred in 2005 for such customer care items as temporary help, temporary facilities, fees related to number porting and amounts paid to indirect agents to assist with the subscriber migration process. Our selling, general and administrative expenses may increase as a function of the growth of our subscriber base. General and administrative expense as a percentage of service revenue was 30.4% and 32.6% for the quarter ended June 30, 2006 and 2005, respectively. This decrease was primarily the result of lower general and administrative expenses, partially offset by lower service revenue for the three months ended June 30, 2006. This percentage may continue to decline in the future as we expect to leverage our fixed general and administrative costs, such as headcount and facilities costs, against increased revenue. In addition, as of June 30, 2006, we had approximately $2.9 million of deferred transaction costs recorded as an asset on our balance sheet primarily related to legal and consulting charges associated with our efforts to complete a restructuring of our long-term debt obligations. If negotiations related to this restructuring are terminated, or if the likelihood of negotiations terminating becomes probable, we will charge the deferred transaction costs to general and administrative expense in the period that this occurs.

Termination Benefit ExpenseWe incurred termination benefit expense of $0.7 million for the second quarter of 2006 related to the reorganization of our continental U.S. operations. See Note 8 to our consolidated financial statements for more information. We did not incur any termination benefit expense for the same period of 2005.

Depreciation, Asset Disposal and Amortization Expense Depreciation, asset disposal and amortization expense increased for the three months ended June 30, 2006, compared to the same period of 2005. This increase was primarily driven by the acceleration of depreciation on our TDMA wireless communications equipment in the fourth quarter of 2005. The TDMA assets in our continental U.S. operation unit were fully depreciated as of June 30, 2006.

Puerto Rico and U.S. Virgin Islands segment operations

The table below summarizes the Puerto Rico and U.S. Virgin Islands segment key metrics of our operations as of and for the three months ended June 30, 2006 and 2005.

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	As of and for the three months ended June 30,
	2006			2005			Change			Change %
Gross additions		32,938			28,350			4,588		16.2	%
Net additions		8,950			3,681			5,269		143.1	%
Subscribers (end of period)		281,111			249,078			32,033		12.9	%
Monthly subscriber churn		2.9	%		3.3	%		0.4	%	12.1	%
Average revenue per user	$	52.97		$	58.59		$	(5.62	)	(9.6	)%
Cost per gross addition	$	351		$	419		$	68		16.2	%

SubscribersThe increase in net subscribers of 5,269 was due to a 4,588 increase in gross subscriber additions and lower subscriber churn. The quarter-over-quarter gross subscriber addition increase was the result of the cumulative effect of a significant marketing and branding initiative associated with the SunCom brand. The lower quarter-over-quarter churn was the result of the market stabilizing following the disruption caused by the transition of the subscribers we acquired from AT&T Wireless in December 2004. The increase in total subscribers was attributable to net subscriber additions resulting from the factors described above, offset by the sale of 491 subscribers to Cingular Wireless in September 2005.

Monthly Subscriber ChurnThe decrease in monthly subscriber churn stemmed primarily from decreased voluntary subscriber deactivations resulting from the reduced impact of the AT&T subscriber transition that occurred in 2005, partially offset by increased involuntary subscriber deactivations due to non-payment. As a result of contractual obligations with customers, we expect that churn of Puerto Rico and U.S. Virgin Islands segment customers may remain relatively flat in the near term.

Average Revenue Per UserThe ARPU decrease was primarily the result of a decrease in average billed access and airtime revenue per subscriber. These declines were partially offset by an increase for the usage of new features for additional fees. The decline in access revenue was the result of adding new subscribers on lower priced rate plans. The decline in airtime revenue was the result of adding new subscribers on rate plans that include more minutes of use, which include nights and weekends and mobile to mobile, than previously offered rate plans. In addition, airtime revenue has also declined as a result of existing subscribers optimizing their rate plan by migrating to plans with more included minutes or high use subscribers deactivating service. As the result of the anticipated mix of new rate plan offerings, we expect this lower ARPU to remain relatively flat in the foreseeable future.

Cost Per Gross AdditionThe CPGA decrease of $68, or 16.2%, was primarily the result of increased leverage on fixed acquisition costs as the result of increased gross subscriber additions as well as lower net equipment costs due to declining handset prices.

Results from Operations

	For the three months ended June 30,
(Dollars in thousands)	2006		2005			Change $			Change %
Revenues:
Service	$	46,652	$	46,623		$	29		0.1	%
Roaming		1,827		3,115			(1,288	)	(41.3	)%
Equipment		5,952		5,621			331		5.9	%
Total revenue		54,431		55,359			(928	)	(1.7	)%
Operating expenses
Cost of service		10,838		9,551			(1,287	)	(13.5	)%
Cost of equipment		9,994		16,519			6,525		39.5	%
Selling, general and administrative		23,270		28,781			5,511		19.1	%
Depreciation, asset disposal and amortization		8,035		17,319			9,284		53.6	%
Total operating expenses		52,137		72,170			20,033		27.8	%
Income (loss) from operations	$	2,294	$	(16,811	)	$	19,105		113.6	%

RevenueService revenue was relatively flat for the three months ended June 30, 2006, compared to the three months ended June 30, 2005 primarily due to an increased number of subscribers, which resulted in increased access revenue of $1.6 million. In addition, feature revenue increased by $0.7 million as a result of additional usage of new features offered for an additional fee. These increases were offset by a lower ARPU due to reduced billed airtime revenue per user. The decrease in roaming revenue was primarily due to lower rate per minute of use and lower minutes of use on our network. Equipment sales revenue increased due to increased transactions with existing subscribers, partially offset by lower equipment revenue for new activations.

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Cost of ServiceCost of service for the three months ended June 30, 2006 increased $1.3 million, compared to the same period of 2005. This increase was largely due to $0.8 million of incremental handset insurance fees incurred subsequent to the acquired subscribers migrating from AT&T Wireless in the second and third quarters of 2005. The remaining increase was largely usage based as the result of the growth of our subscriber base and the resulting increase in minutes of use. As a result of the variable components of cost of service, such as interconnect and toll, our cost of service may increase in conjunction with the growth of our subscriber base. Cost of service as a percentage of service revenue was 23.2% and 20.5% for the quarter ended June 30, 2006 and 2005, respectively. The increase of 2.7% was primarily attributable to increased variable costs discussed above. Cost of service as a percentage of service revenue may decline in the future, as we expect to leverage the fixed components of cost of service, such as cell site rent, against increased revenue.

Cost of Equipment Cost of equipment decreased in the second quarter of 2006, compared to the same period of last year. This decrease was primarily due to the absence of $7.1 million of equipment costs on migrations incurred in the second quarter of 2005 to provide certain subscribers in the acquired market with a handset compatible with our system as well as a lower cost per handset quarter-over-quarter for gross subscriber additions. This was partially offset by increased non-migration related transactions with existing subscribers, such as upgrades.

Selling, General and Administrative ExpenseSelling, general and administrative expenses decreased $5.5 million for the three months ended June 30, 2006, compared to the same period of 2005. The decrease was primarily due to the absence of $8.7 million in customer care related expenses as a result of migrating acquired subscribers to our systems during the second quarter of last year. The decrease was partially offset by increased bad debt expense of $3.1 million due to significantly higher involuntary deactivations. As a result of the variable components of selling, general and administrative expense, such as customer care personnel and billing costs, our selling, general and administrative expenses may increase as a function of the growth of our subscriber base. General and administrative expense as a percentage of service revenue was 30.5% and 42.3% for the quarter ended June 30, 2006 and 2005, respectively. This percentage may continue to decline in the future as we expect to leverage our fixed general and administrative costs, such as headcount and facilities costs, against increased revenue.

Depreciation, Asset Disposal and Amortization Expense Depreciation, asset disposal and amortization expense decreased for the three months ended June 30, 2006, compared to the same period of 2005. This decrease was primarily due to there being no additional depreciation expense on our TDMA wireless communications equipment, which was decommissioned during the first quarter of 2006, and fully depreciated as of March 31, 2006.

Consolidated operations

Interest ExpenseInterest expense was $38.2 million, net of capitalized interest of $0.3 million, for the three months ended June 30, 2006. Interest expense was $37.0 million, net of capitalized interest of $0.2 million, for the three months ended June 30, 2005. The increase of $1.2 million, or 3.2%, relates primarily to an increase of $1.2 million on our senior secured term loan resulting from rising interest rates quarter-over-quarter.

We had a weighted average interest rate of 8.69% for the three months ended June 30, 2006 on our average obligation for our senior and subordinated debt as well as our senior secured term loan, compared with an 8.40% weighted average interest rate for the three months ended June 30, 2005.

Interest and Other IncomeInterest and other income was $2.7 million for the three months ended June 30, 2006, an increase of $0.6 million, compared to $2.1 million for the three months ended June 30, 2005. This increase was primarily due to a higher rate of return for the quarter ended June 30, 2006.

Income Tax ExpenseIncome tax expense was $3.9 million for the three months ended June 30, 2006, a decrease of $0.1 million, or 2.5%, compared to $4.0 million for the three months ended June 30, 2005. We continue to recognize a deferred tax liability associated with our licensing costs. Pursuant to our adoption of Statement of Financial Accounting Standards No. 142, we can no longer reasonably estimate the period of reversal, if any, for the deferred tax liabilities related to our licensing costs, therefore, we will continue to incur deferred tax expense as additional deferred tax liabilities associated with the amortization of the tax basis of our FCC licenses are incurred.

Net Loss Net loss was $110.6 million and $114.7 million for the three months ended June 30, 2006 and 2005, respectively. The net loss decrease of $4.1 million primarily resulted from the items discussed above.

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Six Months Ended June 30, 2006 Compared to the Six Months Ended June 30, 2005

Consolidated operations

The table below summarizes the consolidated key metrics of our operations as of and for the six months ended June 30, 2006 and 2005. These results are further described in our segment discussions.

	As of and for the six months ended June 30,
	2006			2005			Change			Change %
Gross additions		208,446			188,302			20,144		10.7	%
Net additions		65,621			13,361			52,260		391.1	%
Subscribers (end of period)		1,031,443			965,106			66,337		6.9	%
Monthly subscriber churn		2.4	%		3.0	%		0.6	%	20.0	%
Average revenue per user	$	52.23		$	56.29		$	(4.06	)	(7.2	)%
Cost per gross addition	$	394		$	444		$	50		11.3	%

Continental U.S. segment operations

The table below summarizes the continental U.S. segment key metrics of our operations as of and for the six months ended June 30, 2006 and 2005.

	As of and for the six months ended June 30,
	2006			2005			Change			Change %
Gross additions		138,153			135,337			2,816		2.1	%
Net additions		51,361			5,500			45,861		833.8	%
Subscribers (end of period)		750,332			716,028			34,304		4.8	%
Monthly subscriber churn		2.0	%		3.0	%		1.0	%	33.3	%
Average revenue per user	$	52.05		$	55.88		$	(3.83	)	(6.9	)%
Cost per gross addition	$	421		$	457		$	36		7.9	%

SubscribersThe net subscriber addition increase of 45,861 was driven by lower subscriber churn period-over-period, as well as a 2,816 increase in gross subscriber additions. We believe the lower churn and gross subscriber addition increase was the result of further stabilization of our acquired North Carolina market and the successful launch of the SunCom brand in the acquired market. The increase in total subscribers was attributable to net subscriber additions resulting from the factors described above, partially offset by the sale of 28,648 subscribers to Cingular Wireless in September 2005.

Monthly Subscriber ChurnThe decrease in monthly subscriber churn primarily stemmed from decreased voluntary subscriber deactivations resulting from the reduced impact of the AT&T subscriber transition that occurred in 2005. This year’s decline in voluntary subscriber deactivations was slightly offset by higher involuntary subscriber deactivations due to certain service offerings to credit challenged subscribers.

Average Revenue Per UserThe ARPU decrease was primarily the result of a decrease in average access revenue per subscriber and billed airtime revenue per subscriber, partially offset by an increase from usage of new features offered for additional fees. The decline in access revenue was the result of adding new subscribers on lower priced rate plans, such as family plans. The decline in airtime revenue was partially the result of adding new subscribers on rate plans that include more minutes of use than previously offered rate plans. In addition, airtime revenue has declined as a result of subscribers optimizing their rate plan by migrating to plans with more included minutes and/or high use subscribers deactivating service. The increase in feature revenue was primarily the result of subscribers increased usage of our data offerings, such as SMS messaging and downloadable ring tones.

Cost Per Gross AdditionThe CPGA decrease of $36, or 7.9%, was primarily the result of lower net equipment costs due to declining handset prices.

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Results from Operations

	For the six months ended June 30,
(Dollars in thousands)	2006			2005			Change $			Change %
Revenues:
Service	$	227,835		$	238,422		$	(10,587	)	(4.4	)%
Roaming		35,547			40,401			(4,854	)	(12.0	)%
Equipment		36,912			32,841			4,071		12.4	%
Total revenue		300,294			311,664			(11,370	)	(3.6	)%
Operating expenses
Cost of service		112,809			108,625			(4,184	)	(3.9	)%
Cost of equipment		50,803			61,551			10,748		17.5	%
Selling, general and administrative		123,534			125,563			2,029		1.6	%
Termination benefits and other related charges		1,556			—			(1,556	)	n/a
Depreciation, asset disposal and amortization		175,595			109,252			(66,343	)	(60.7	)%
Total operating expenses		464,297			404,991			(59,306	)	(14.6	)%
Loss from operations	$	(164,003	)	$	(93,327	)	$	(70,676	)	(75.7	)%

RevenueService revenue decreased $10.6 million for the six months ended June 30, 2006, compared to the six months ended June 30, 2005, as a result of decreased access and airtime revenue of $11.5 million and $7.3 million, respectively. This decrease resulted from rate plan offerings and competitive pressures. These decreases were partially offset by increased revenue of $11.7 million generated from enhanced features offered for a fee. The decrease of roaming revenue was primarily due to reductions in roaming rates and decreased roaming minutes of use. The equipment revenue increase was due to increased revenue on transactions with existing subscribers, partially offset by decreased revenue on new activations.

Cost of ServiceCost of service for the six months ended June 30, 2006 increased, compared to the same period of 2005. This increase related to a $1.6 million increase in third-party roaming and toll costs attributable to the growth of our subscriber base and the introduction of rate plans that included free long distance and third-party roaming, which resulted in increased in minutes of use. This increase was also due to an incremental $2.8 million of subscriber handset insurance fees incurred subsequent to the acquired subscribers migrating from AT&T Wireless in the second and third quarter of 2005. Cost of service as a percentage of service revenue was 49.5% and 45.6% for the quarters ended June 30, 2006 and 2005, respectively. The increase of 3.9% was primarily attributable to the increased subscriber usage and the related cost, increased handset insurance costs and decreased service revenue.

Cost of Equipment Cost of equipment decreased for the six months ended June 30, 2006, compared to the same period of 2005. This decrease was due to the absence of $3.6 million of migration costs incurred for the first six months of 2005 to provide certain subscribers in the acquired North Carolina markets with a new handset compatible with our system. The decrease was also due to the lower cost per handset period-over-period, offset by an increase in the number of phones used for new activations and transactions with existing subscribers.

Selling, General and Administrative ExpenseSelling, general and administrative expenses decreased for the six months ended June 30, 2006, compared to the same period of 2005. The decrease was primarily due to a $3.2 million decrease in non-cash compensation expense and a $0.8 million decrease in commissions due to changes in the distribution channel mix. These increases were partially offset by a $0.4 million increase in advertising and promotion expenses and a $1.0 million increase in fixed selling expenses due to an increase in retail locations. In addition, general and administrative expenses increased by $0.8 million due to increased headcount expenses that were partially offset by customer care costs incurred in 2005 to assist with the subscriber migration process. General and administrative expense as a percentage of service revenue was 31.4% and 30.9% for the six months ended June 30, 2006 and 2005, respectively. This increase was primarily the result of lower service revenue for the six months ended June 30, 2006.

Termination Benefit ExpenseWe incurred termination benefit expense of $1.6 million for the six months ended June 30, 2006 related to the reorganization of our continental U.S. operations. See Note 8 to our consolidated financial statements for more information. We did not incur any termination benefit expense for the same period of 2005.

Depreciation, Asset Disposal and Amortization Expense Depreciation, asset disposal and amortization expense increased for the six months ended June 30, 2006, compared to the same period of 2005. This increase was primarily driven by the acceleration of depreciation on our TDMA wireless communications equipment in the second and fourth quarters of 2005. The TDMA assets in our continental U.S. operation unit were fully depreciated as of June 30, 2006.

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Puerto Rico and U.S. Virgin Islands segment operations

The table below summarizes the Puerto Rico and U.S. Virgin Islands segment key metrics of our operations as of and for the six months ended June 30, 2006 and 2005.

	As of and for the six months ended June 30,
	2006			2005			Change			Change %
Gross additions		70,293			52,965			17,328		32.7	%
Net additions		14,260			7,861			6,399		81.4	%
Subscribers (end of period)		281,111			249,078			32,033		12.9	%
Monthly subscriber churn		3.4	%		3.1	%		(0.3	)%	(9.7	)%
Average revenue per user	$	52.71		$	57.48		$	(4.77	)	(8.3	)%
Cost per gross addition	$	341		$	411		$	70		17.0	%

SubscribersThe increase in net subscriber additions of 6,399 was due to a 17,328 increase in gross subscriber additions, which was partially offset by higher subscriber churn period-over-period. We believe the period-over-period gross subscriber addition increase was the result of the cumulative effect of a significant marketing and branding initiative associated with the SunCom brand. The increase in total subscribers was attributable to net subscriber additions resulting from the factors described above, partially offset by the sale of 491 subscribers to Cingular Wireless in September 2005.

Monthly Subscriber ChurnThe increase in monthly subscriber churn stemmed primarily from increased involuntary subscriber deactivations due to non-payment.

Average Revenue Per UserThe ARPU decrease was primarily the result of a decrease in average billed access and airtime revenue per subscriber, partially offset by an increase in revenue from usage of new features offered for additional fees. The decline in access revenue was the result of adding new subscribers on lower priced plans. The decline in airtime revenue was the result of adding new subscribers on rate plans that include more minutes of use, including nights and weekends and mobile to mobile, than previously offered rate plans. In addition, airtime revenue has also declined as a result of existing subscribers optimizing their rate plan by migrating to plans with more included minutes or high use subscribers deactivating service.

Cost Per Gross AdditionThe CPGA decrease of $70, or 17.0%, was primarily the result of greater leverage on advertising and promotional costs as well as fixed acquisition costs due to increased gross subscriber additions as well as lower net equipment costs.

Results from Operations

	For the six months ended June 30,
(Dollars in thousands)	2006			2005			Change $			Change %
Revenues:
Service	$	92,062		$	90,906		$	1,156		1.3	%
Roaming		5,438			6,408			(970	)	(15.1	)%
Equipment		10,786			7,855			2,931		37.3	%
Total revenue		108,286			105,169			3,117		3.0	%
Operating expenses
Cost of service		21,856			18,179			(3,677	)	(20.2	)%
Cost of equipment		20,688			22,606			1,918		8.5	%
Selling, general and administrative		48,193			47,485			(708	)	(1.5	)%
Depreciation, asset disposal and amortization		34,554			31,618			(2,936	)	(9.3	)%
Total operating expenses		125,291			119,888			(5,403	)	(4.5	)%
Loss from operations	$	(17,005	)	$	(14,719	)	$	(2,286	)	(15.5	)%

RevenueService revenue increased $1.2 million for the six months ended June 30, 2006, compared to the six months ended June 30, 2005 primarily due to an increased number of subscribers, which resulted in increased access revenue of $4.0 million. In addition, feature revenue increased by $2.2 million as a result of additional usage of new features offered for an additional fee. These increases were partially offset by reduced billed airtime revenue of $4.8 million due to the introduction of rate plans with more minutes of use during the period. The decrease in roaming revenue was primarily due to a lower rate per minute of use and lower minutes of use on our network. Equipment sales revenue increased primarily due to increased activations and transactions with existing subscribers.

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Cost of ServiceCost of service for the six months ended June 30, 2006 increased $3.7 million, compared to the same period of 2005. This increase was largely due to $2.1 million of incremental handset insurance fees incurred subsequent to the acquired subscribers migrating from AT&T Wireless in the second and third quarters of 2005. The remaining increase was largely usage based as the result of the growth of our subscriber base and the resulting increase in minutes of use. Cost of service as a percentage of service revenue was 23.7% and 20.0% for the quarter ended June 30, 2006 and 2005, respectively. The increase of 3.7% was primarily attributable to increased subscriber handset insurance and usage costs, partially offset by increased service revenue.

Cost of Equipment Cost of equipment decreased $1.9 million for the six months ended June 30, 2006, compared to the same period of last year. This decrease was due primarily to the absence of $7.1 million of equipment costs on migrations incurred in 2005 due to the acquisition discussed above. This decrease was also due to a lower cost per handset, partially offset by increased activations and an increase in the number of handsets used for transactions with existing subscribers.

Selling, General and Administrative ExpenseSelling, general and administrative expenses increased for the six months ended June 30, 2006, compared to the same period of 2005. The increase was primarily due to a $1.1 million increase in advertising and promotional costs, a $0.9 million increase in commissions related to higher gross additions and a $7.2 million increase in bad debt expense due to significantly higher involuntary deactivations. These increases were partially offset by the absence of $8.6 million of customer care related expenses as a result of migrating the acquired subscribers from AT&T to our network. General and administrative expense as a percentage of service revenue was 32.5% and 33.8% for the quarter ended June 30, 2006 and 2005, respectively. This decrease was primarily the result of the increased service revenue discussed above.

Depreciation, Asset Disposal and Amortization Expense Depreciation, asset disposal and amortization expense increased for the six months ended June 30, 2006, compared to the same period of 2005. This increase was primarily due to the acceleration of depreciation on our TDMA wireless communications equipment in the second and fourth quarters of 2005. As of March 31, 2006, we had fully depreciated all TDMA assets in the Puerto Rico and the U.S. Virgin Islands segment.

Consolidated operations

Interest ExpenseInterest expense was $76.0 million, net of capitalized interest of $0.7 million, for the six months ended June 30, 2006. Interest expense was $73.8 million, net of capitalized interest of $0.4 million, for the six months ended June 30, 2005. The increase of $2.2 million, or 3.0%, relates primarily to an increase of $2.4 million on our senior secured term loan resulting from rising interest rates period-over-period.

We had a weighted average interest rate of 8.66% for the six months ended June 30, 2006 on our average obligation for our senior and subordinated debt as well as our senior secured term loan, compared with an 8.37% weighted average interest rate for the six months ended June 30, 2005.

Other Expense There was no other expense for the six months ended June 30, 2006. We incurred $0.1 million of other expense for the six months ended June 30, 2005, which consisted of additional transaction costs related to the Cingular Wireless and AT&T Wireless agreements consummated in the fourth quarter of 2004.

Interest and Other IncomeInterest and other income was $4.3 million for the six months ended June 30, 2006, an increase of $0.3 million, compared to $4.0 million for the six months ended June 30, 2005. This increase was primarily due to a higher rate of return for the six months ended June 30, 2006.

Income Tax ExpenseIncome tax expense was $7.2 million for the six months ended June 30, 2006, a decrease of $0.6 million, or 7.7%, compared to $7.8 million for the six months ended June 30, 2005. The decrease is primarily the result of lower difference between the book and tax basis of our FCC licenses due to the sale of our Kentucky licenses and an asset impairment charge recorded in the fourth quarter of 2005. We continue to recognize a deferred tax liability associated with our licensing costs. Pursuant to our adoption of Statement of Financial Accounting Standards No. 142, we can no longer reasonably estimate the period of reversal, if any, for the deferred tax liabilities related to our licensing costs, therefore, we will continue to incur deferred tax expense as additional deferred tax liabilities associated with the amortization of the tax basis of our FCC licenses are incurred.

Net Loss Net loss was $259.9 million and $185.6 million for the six months ended June 30, 2006 and 2005, respectively. The net loss increase of $74.3 million primarily resulted from the items discussed above.

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Liquidity and Capital Resources

As of June 30, 2006, we had $25.1 million in cash and cash equivalents, compared to $15.8 million in cash and cash equivalents at December 31, 2005. In addition, we had $225.9 million of short-term investments as of June 30, 2006, compared to $139.1 million of short-term investments as of December 31, 2005. We also held $1.6 million of restricted cash and short-term investments as of June 30, 2006, which is pledged as collateral for our surety bonds on our cell site lease agreements. Net working capital was $218.8 million as of June 30, 2006 and $114.2 million as of December 31, 2005. Cash used in operating activities was $45.9 million for the six months ended June 30, 2006, a decrease of $0.3 million, compared to $46.2 million for the six months ended June 30, 2005. The decrease in cash used in operating activities was primarily due to decreased service revenue of $9.4 million and increased cost of service expenses of $7.9 million, partially offset by decreased cost of equipment of $12.7 million and a decrease in cash used in working capital of $2.7 million. Cash provided by investing activities was $65.9 million for the six months ended June 30, 2006, a decrease of $21.9 million, or 24.9%, compared to $87.8 million for the six months ended June 30, 2005. The decrease in cash provided by investing activities was primarily related to a net decrease in proceeds from the tower sale of $43.7 million, partially offset by a $20.1 million increase in cash provided from the net sale of auction rate securities. Cash used in financing activities was $10.7 million for the six months ended June 30, 2006, an increase of $0.8 million, compared to $9.9 million for the six months ended June 30, 2005. The decrease in cash used by financing activities relates primarily to a $3.5 million decrease in the change in bank overdraft, partially offset by $2.9 million of deferred transaction costs related to our efforts to complete a restructuring of our long-term debt obligations.

Liquidity

The construction of our network and the marketing and distribution of wireless communications products and services have required, and will continue to require, substantial capital. Our capital outlays have included license acquisition costs, capital expenditures for network construction, funding of operating cash flow losses and other working capital costs and debt service related expenditures. We will have additional capital requirements for future upgrades due to advances in new technology.

We have been participating in discussions with holders of our senior and senior subordinated notes with respect to a restructuring of our long-term debt obligations. No agreement regarding such a restructuring has been reached. In that context, certain noteholders questioned the November 2004 $189 million dividend paid by SunCom to SunCom Wireless Investment Co., LLC, our immediate parent company and a wholly owned subsidiary of Holdings. After reviewing the totality of the facts and circumstances concerning the dividend, Holdings determined that facts exist that support our noteholders’ arguments that the dividend was not properly paid. Accordingly, on May 2, 2006, SunCom Wireless Investment Co. contributed approximately $194.4 million, the amount of the dividend plus an additional $5.4 million, to SunCom. Subsequent to this capital contribution, approximately $4.0 million of Holdings’ short-term investments were held by SunCom Wireless Investment Co., and therefore not currently available to us. The cash remaining at SunCom Wireless Investment Co. will be utilized to pay any expenditures specific to Holdings and SunCom Wireless Investment Co.

Our projected cash flow from operations is expected to be sufficient to pay our debt service and fund our operating expenses and required capital expenditures for at least the next twelve months. We estimate that capital expenditures will be approximately $75.0 million to $90.0 million for 2006, including $42.2 million paid during the six months ended June 30, 2006. The annual debt service on our long-term indebtedness is approximately $150.0 million. As of June 30, 2006, we were in compliance with all debt covenants. Our inability to pay our debt service could result in a default on such indebtedness, which, unless cured or waived, would have a material adverse effect on our liquidity and financial position. Therefore, we continue to retain financial and legal advisors to assist us in evaluating options to improve our financial condition, but no definitive course of action has yet been adopted.

Reconciliation of Non-GAAP Financial Measures

We utilize certain financial measures that are not calculated in accordance with GAAP, to assess our financial performance. A non-GAAP financial measure is defined as a numerical measure of a company’s financial performance that (i) excludes amounts, or is subject to adjustments that have the effect of excluding amounts, that are included in the comparable measure calculated and presented in accordance with GAAP in the statement of income or statement of cash flows; or (ii) includes amounts, or is subject to adjustments that have the effect of including amounts, that are excluded from the comparable measure so calculated and presented. The discussion of each non-GAAP financial measure we use in this report appear above under “Results of Operations”. A brief description of the calculation of each measure is included where the particular measure is first discussed. Our method of computation may or may not be comparable to other similarly titled measures of other companies. The following tables reconcile our non-GAAP financial measures with our financial statements presented in accordance with GAAP.

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Average revenue per user

We believe ARPU, which calculates the average service revenue billed to an individual subscriber, is a useful measure to evaluate our past billable service revenue and assist in forecasting our future billable service revenue. ARPU is exclusive of service revenue credits made to retain existing subscribers and revenue not generated by wireless subscribers. Service revenue credits are discretionary reductions of the amount billed to a subscriber. We have no contractual obligation to issue these credits; therefore, ARPU reflects the amount subscribers have contractually agreed to pay us based on their specific usage pattern. Revenue not generated by wireless subscribers, which primarily consists of Universal Service Fund program revenue, is excluded from our calculation of ARPU, as this revenue does not reflect amounts billed to subscribers. ARPU is calculated by dividing service revenue, exclusive of service revenue credits made to existing subscribers and revenue not generated by wireless subscribers, by our average subscriber base for the respective period. For quarterly periods, average subscribers is calculated by adding subscribers at the beginning of the quarter to subscribers at the end of the quarter and dividing by two; for year to date periods, average subscribers is calculated by adding the average subscriber amount calculated for the quarterly periods during the period and dividing by the number of quarters in the period.

Consolidated ARPU

	Three Months Ended June 30,						Six Months Ended June 30,
Average revenue per user (ARPU)	2006			2005			2006			2005
	(Dollars in thousands, except ARPU)
Service revenue	$	164,430		$	166,479		$	319,897		$	329,328
Subscriber retention credits		189			690			445			1,345
Revenue not generated by wireless subscribers		(2,887	)		(3,248	)		(6,062	)		(6,532	)
Adjusted service revenue	$	161,732		$	163,921		$	314,280		$	324,141
Average subscribers		1,019,279			963,117			1,002,873			959,776
ARPU	$	52.89		$	56.73		$	52.23		$	56.29

Segment ARPU

Average revenue per user	Continental U.S.					Puerto Rico and U.S. Virgin Islands						Continental U.S.					Puerto Rico and U.S. Virgin Islands
	Three Months Ended June 30,											Six Months Ended June 30,
	2006			2005		2006			2005			2006			2005		2006			2005
	(Dollars in thousands, except ARPU)
Service revenue	$	117,778		$	119,856	$	46,652		$	46,623		$	227,835		$	238,422	$	92,062		$	90,906
Subscriber retention credits		125			607		64			83			328			1,131		117			214
Revenue not generated by wireless subscribers		(131	)		—		(2,756	)		(3,248	)		(247	)		—		(5,815	)		(6,532	)
Adjusted service revenue		117,772			120,463		43,960			43,458			227,916			239,553		86,364			84,588
Average subscribers		742,643			715,879		276,636			247,238			729,802			714,504		273,071			245,272
ARPU	$	52.86		$	56.09	$	52.97		$	58.59		$	52.05		$	55.88	$	52.71		$	57.48

Cost per gross addition

We believe CPGA is a useful measure that quantifies the costs to acquire a new subscriber. This measure also provides a gauge to compare our average acquisition costs per new subscriber to that of other wireless communication providers. CPGA is calculated by dividing the sum of equipment margin for handsets sold to new subscribers (equipment revenue less cost of equipment, which costs have historically exceeded the related revenue) and selling expenses, exclusive of non-cash compensation, related to adding new subscribers by total gross subscriber additions during the relevant period. Retail customer service expenses are excluded from CPGA, as these costs are incurred specifically for existing subscribers.

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Consolidated CPGA

	Three Months Ended June 30,						Six Months Ended June 30,
Cost per gross addition (CPGA)	2006			2005			2006			2005
	(Dollars in thousands, except CPGA)
Selling expenses	$	33,108		$	34,001		$	70,304		$	68,613
Less: non-cash compensation included in selling expenses		(105	)		(270	)		(369	)		(543	)
Plus: termination benefits allocated to selling expense		48			—			104			—
Total cost of equipment – transactions with new subscribers		15,156			25,348			34,897			46,222
CPGA operating expenses	$	48,207		$	59,079		$	104,936		$	114,292
Cost of service	$	66,717		$	65,004		$	134,665		$	126,804
Non-cash compensation included in selling expenses		105			270			369			543
Total cost of equipment – transactions with existing subscribers		17,114			24,163			36,594			37,935
General and administrative expense		50,025			58,743			101,423			104,435
Termination benefits other than selling expense portion		610			—			1,452			—
Depreciation and asset disposal		84,518			65,807			187,956			108,298
Amortization		10,689			15,616			22,193			32,572
Total operating expenses	$	277,985		$	288,682		$	589,588		$	524,879
CPGA operating expenses (from above)	$	48,207		$	59,079		$	104,936		$	114,292
Equipment revenue – transactions with new subscribers		(10,568	)		(18,060	)		(22,879	)		(30,613	)
CPGA costs, net	$	37,639		$	41,019		$	82,057		$	83,679
Gross subscriber additions		92,131			95,991			208,446			188,302
CPGA	$	409		$	427		$	394		$	444

Segment CPGA for the Three Months Ended June 30, 2006 and 2005

Cost per gross addition (CPGA)	Continental U.S.						Puerto Rico and U.S. Virgin Islands
	Three Months Ended June 30,
	2006			2005			2006			2005
	(Dollars in thousands, except CPGA)
Selling expenses	$	24,045		$	24,928		$	9,063		$	9,073
Less: non-cash compensation included in selling expenses		(86	)		(259	)		(19	)		(11	)
Plus: termination benefits allocated to selling expense		48			—			—			—
Total cost of equipment – transactions with new subscribers		8,907			17,286			6,249			8,062
CPGA operating expenses		32,914			41,955			15,293			17,124
Cost of service		55,879			55,453			10,838			9,551
Non-cash compensation included in selling expenses		86			259			19			11
Total cost of equipment – transactions with existing subscribers		13,369			15,706			3,745			8,457
General and administrative expense		35,818			39,035			14,207			19,708
Termination benefits other than selling expense portion		610			—			—			—
Depreciation and asset disposal		82,367			57,097			2,151			8,710
Amortization		4,805			7,007			5,884			8,609
Total operating expenses		225,848			216,512			52,137			72,170
CPGA operating expenses (from above)		32,914			41,955			15,293			17,124
Equipment revenue – transactions with new subscribers		(6,845	)		(12,813	)		(3,723	)		(5,247	)
CPGA costs, net	$	26,069		$	29,142		$	11,570		$	11,877
Gross subscriber additions		59,193			67,641			32,938			28,350
CPGA	$	440		$	431		$	351		$	419

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Segment CPGA for the Six Months Ended June 30, 2006 and 2005

Cost per gross addition (CPGA)	Continental U.S.						Puerto Rico and U.S. Virgin Islands
	Six Months Ended June 30,
	2006			2005			2006			2005
	(Dollars in thousands, except CPGA)
Selling expenses	$	51,988		$	51,811		$	18,316		$	16,802
Less: non-cash compensation included in selling expenses		(333	)		(532	)		(36	)		(11	)
Plus: termination benefits allocated to selling expense		104			—			—			—
Total cost of equipment – transactions with new subscribers		22,043			34,683			12,854			11,539
CPGA operating expenses		73,802			85,962			31,134			28,330
Cost of service		112,809			108,625			21,856			18,179
Non-cash compensation included in selling expenses		333			532			36			11
Total cost of equipment – transactions with existing subscribers		28,760			26,868			7,834			11,067
General and administrative expense		71,546			73,752			29,877			30,683
Termination benefits other than selling expense portion		1,452			—			—			—
Depreciation and asset disposal		165,752			94,750			22,204			13,548
Amortization		9,843			14,502			12,350			18,070
Total operating expenses		464,297			404,991			125,291			119,888
CPGA operating expenses (from above)		73,802			85,962			31,134			28,330
Equipment revenue – transactions with new subscribers		(15,700	)		(24,069	)		(7,179	)		(6,544	)
CPGA costs, net	$	58,102		$	61,893		$	23,955		$	21,786
Gross subscriber additions		138,153			135,337			70,293			52,965
CPGA	$	421		$	457		$	341		$	411

Inflation

We do not believe that inflation has had a material impact on our operations.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are highly leveraged and, as a result, our cash flows and earnings are exposed to fluctuations in interest rates. Our debt obligations are U.S. dollar denominated. Our market risk, therefore, is the potential loss arising from adverse changes in interest rates. As of June 30, 2006, our debt can be categorized as follows (in thousands):

Fixed interest rates:
Senior notes	$	713,732
Senior subordinated notes	$	731,328
Subject to interest rate fluctuations:
Senior secured term loan	$	246,250

Our interest rate risk management program focuses on minimizing exposure to interest rate movements, setting an optimal mixture of floating and fixed rate debt and minimizing liquidity risk.

Our cash and cash equivalents consist of short-term assets having initial maturities of three months or less, and our investments consist of auction rate securities with maturities of one year or less. While these investments are subject to a degree of interest rate risk, this risk is not considered to be material relative to our overall investment income position.

If interest rates rise over the remaining term of the senior secured term loan at the June 30, 2006 outstanding principal balance, we would realize increased annual interest expense of approximately $1.2 million for each 50 basis point increase in rates. If interest rates decline over the remaining term of the senior secured term loan, we would realize decreased annual interest expense of approximately $1.2 million for each 50 basis point decrease in rates.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Controls and Procedures.

SunCom has carried out an evaluation under the supervision and with the participation of its management, including Eric Haskell, of the effectiveness of the design and operation of its disclosure controls and procedures. As a result of this evaluation, SunCom’s Interim Chief Executive Officer and Chief Financial Officer has concluded that as of June 30, 2006, SunCom’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) are effective to ensure that information required to be disclosed by SunCom in the reports filed or submitted by it under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and include controls and procedures designed to ensure that information required to be disclosed by SunCom in such reports is accumulated and communicated to SunCom’s management, including the Interim Chief Executive Officer and Chief Financial Officer and the Controller, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Controls.

There were no changes in SunCom’s internal controls over financial reporting that occurred during the six months ended June 30, 2006 that have materially affected, or are reasonably likely to materially affect, SunCom’s internal control over financial reporting.

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PART II OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

None.

ITEM 1A. RISK FACTORS

The following risk factors were disclosed in the SunCom Wireless, Inc.’s (“SunCom”) Form 10-K filed March 16, 2006 and have been updated to reflect material changes. These updates were previously disclosed in SunCom’s Form 10-Q for the quarter ended March 31, 2006.

If we are unable to continue as a going concern, we may be required to substantially modify our business plan, restructure our balance sheet or file for bankruptcy protection.

On May 2, 2006, SunCom Wireless Investment Co. LLC, our immediate parent, contributed approximately $194.4 million to our capital. This enhanced liquidity strengthens our ability to implement our business plan. This plan involves financing the growth and maintenance of our network and the marketing and distribution of wireless communications products and services, as well as customer acquisition costs, funding of operations and other working capital costs and debt service related expenditures. We believe that the contribution of this incremental capital addresses the primary concerns regarding our liquidity and financial condition raised in Note 1(b) to our consolidated financial statements included on our annual report on Form 10-K for the year ended December 31, 2005, as filed on March 16, 2006, but there can be no assurances that such amount will be sufficient to implement our business plan or prevent a restructuring or reorganization of our long-term debt obligations, including possibly seeking bankruptcy protection or the implementation of an alternative financial plan.

We are highly leveraged, and absent Holdings’ determination to make additional future investments in us or our ability to secure another source of liquidity, we will need to restructure our balance sheet and/or implement an alternative financial plan.

As of December 31, 2005, we had total consolidated long-term indebtedness of approximately $1.7 billion, represented by a senior secured term loan, a series of senior notes and two series of senior subordinated notes. On May 2, 2006, SunCom Wireless Investment Co. LLC contributed approximately $194.4 million to our capital. As a result of this capital contribution, our projected cash flow from operations is expected to be sufficient to pay our debt service and fund our operating expenses and capital expenditure requirements for at least the next twelve months. The annual debt service on our long-term indebtedness is approximately $150 million. Our failure to pay such debt service will result in a default on such indebtedness which, unless cured or waived, would cause all $1.7 billion of long-term indebtedness to become immediately due and payable, and would therefore have a material adverse effect on our liquidity and financial position. If such debt were accelerated, we would likely be forced to file for bankruptcy protection. Accordingly, we continue to retain financial and legal advisors to assist us in evaluating options to improve our financial condition, but no definitive course of action has yet been adopted.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

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

None.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

Exhibit Number	Description
3.1	Certificate of Incorporation of Triton PCS, Inc. (incorporated by reference to Exhibit 3.1 to the Form S-4/A, Amendment No. 1, Registration Statement of Triton PCS, Inc., File No. 333-57715).

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3.2	Amendments to Certificate of Incorporation of Triton PCS, Inc. changing the corporate name to SunCom Wireless, Inc. (incorporated by reference to Exhibit 3.2 to the Form 10-K of SunCom Wireless, Inc. for the year ended December 31, 2004).
3.3	Bylaws of SunCom Wireless, Inc., as amended.
4.1	Indenture, dated as of January 19, 2001, among Triton PCS, Inc., the Guarantors party thereto and The Bank of New York, as trustee (incorporated by reference to Exhibit 4.5 to Amendment No. 2 to the Form S-3 Registration Statement of Triton PCS Holdings, Inc., File No. 333-49974).
4.2	Supplemental Indenture, dated as of November 18, 2004, by and among Triton PCS, Inc., Affiliate License Co., L.L.C. and The Bank of New York, to the Indenture, dated as of January 19, 2001, among Triton PCS, Inc., the Guarantors party thereto and The Bank of New York, as trustee (incorporated by reference to Exhibit 4.3 to the Form 10-K of Triton PCS Holdings, Inc. for the year ended December 31, 2004).
4.3	Supplemental Indenture, dated as of January 27, 2005, by and among Triton PCS, Inc., AWS Network Newco, LLC, SunCom Wireless International, LLC, SunCom Wireless Puerto Rico Operating Company, LLC, Triton Network Newco, LLC and The Bank of New York to the Indenture, dated as of January 19, 2001, among Triton PCS, Inc., the Guarantors party thereto and The Bank of New York, as trustee (incorporated by reference to Exhibit 4.4 to the Form 10-K of Triton PCS Holdings, Inc. for the year ended December 31, 2004).
4.4	Indenture, dated as of November 14, 2001, among Triton PCS, Inc., the Guarantors thereto and The Bank of New York, as trustee (incorporated by reference to Exhibit 4.1 to the Form 8-K/A of Triton PCS Holdings, Inc. filed November 15, 2001).
4.5	Supplemental Indenture, dated as of November 18, 2004, by and among Triton PCS, Inc., Affiliate License Co., L.L.C. and The Bank of New York to the Indenture, dated as of November 14, 2001, among Triton PCS, Inc., the Guarantors thereto and The Bank of New York, as trustee (incorporated by reference to Exhibit 4.6 to the Form 10-K of Triton PCS Holdings, Inc. for the year ended December 31, 2004).
4.6	Supplemental Indenture, dated as of January 27, 2005, by and among Triton PCS, Inc., AWS Network Newco, LLC, SunCom Wireless International, LLC, SunCom Wireless Puerto Rico Operating Company, LLC, Triton Network Newco, LLC and The Bank of New York to the Indenture, dated as of November 14, 2001, among Triton PCS, Inc., the Guarantors thereto and The Bank of New York, as trustee (incorporated by reference to Exhibit 4.7 to the Form 10-K of Triton PCS Holdings, Inc. for the year ended December 31, 2004).
4.7	Indenture, dated as of June 13, 2003, among Triton PCS, Inc., the Guarantors thereto and The Bank of New York, as trustee (incorporated by reference to Exhibit 4.1 to the Form 8-K/A of Triton PCS Holdings, Inc. filed June 16, 2003).
4.8	Supplemental Indenture, dated as of November 18, 2004, by and among Triton PCS, Inc., Affiliate License Co., L.L.C. and The Bank of New York, to the Indenture, dated as of June 13, 2003, among Triton PCS, Inc., the Guarantors thereto and The Bank of New York, as trustee (incorporated by reference to Exhibit 4.9 to the Form 10-K of Triton PCS Holdings, Inc. for the year ended December 31, 2004).
4.9	Supplemental Indenture, dated as of January 27, 2005, by and among Triton PCS, Inc., AWS Network Newco, LLC, SunCom Wireless International, LLC, SunCom Wireless Puerto Rico Operating Company, LLC, Triton Network Newco, LLC and The Bank of New York, to the Indenture, dated as of June 13, 2003, among Triton PCS, Inc., the Guarantors thereto and The Bank of New York, as trustee (incorporated by reference to Exhibit 4.10 to the Form 10-K of Triton PCS Holdings, Inc. for the year ended December 31, 2004).
10.1	Term Loan Agreement, dated as of November 18, 2004, among Triton PCS, Inc., the lenders party thereto, Lehman Commercial Paper Inc., as Administrative Agent, and Merrill Lynch, Pierce, Fenner & Smith Incorporated, as Syndication Agent (incorporated by reference to Exhibit 10.1 to the Form 8-K of Triton PCS Holdings, Inc. filed November 23, 2004).
10.2	Pledge Agreement, dated as of November 18, 2004, among Triton PCS, Inc., each Subsidiary of the Borrower party thereto, SunCom Wireless Investment Company LLC and Lehman Commercial Paper Inc., as Collateral Agent for the Secured Parties (incorporated by reference to Exhibit 10.2 to the Form 8-K of Triton PCS Holdings, Inc. filed November 23, 2004).

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10.3	Security Agreement, dated as of November 18, 2004, among Triton PCS, Inc., each Subsidiary of the Borrower party thereto and Lehman Commercial Paper Inc., as Collateral Agent for the Secured Parties (incorporated by reference to Exhibit 10.3 to the Form 8-K of Triton PCS Holdings, Inc. filed November 23, 2004).
10.4	Guarantee Agreement, dated as of November 18, 2004, among each Subsidiary of Triton PCS, Inc. party thereto and Lehman Commercial Paper Inc., as Collateral Agent for the Secured Parties (incorporated by reference to Exhibit 10.4 to the Form 8-K of Triton PCS Holdings, Inc. filed November 23, 2004).
10.5	Indemnity, Subrogation and Contribution Agreement, dated as of November 18, 2004, among Triton PCS, Inc., each Subsidiary of the Borrower party thereto and Lehman Commercial Paper Inc., as Collateral Agent for the Secured Parties (incorporated by reference to Exhibit 10.5 to the Form 8-K of Triton PCS Holdings, Inc. filed November 23, 2004).
31.1	Certification of Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended.
31.2	Certification of Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended.
31.3	Certification of Controller pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended.
32.1	Certification of Chief Executive Officer and Chief Financial Officer pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934, as amended.

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SIGNATURES

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

	SUNCOM WIRELESS, INC.
Date: August 14, 2006	By:	/s/ Eric Haskell
		Eric Haskell
		Interim Chief Executive Officer and Chief Financial Officer
		(principal executive officer and principal financial officer)

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