Exhibit 99
[SPRINT LOGO]
News Release
Sprint Nextel
2001 Edmund Halley Drive
Reston, Va. 20191
Media Contact:
Leigh Horner, 703-433-3044
leigh.horner@sprint.com
Investor Contact:
Kurt Fawkes, 800-259-3755
investor.relations@sprint.com
SPRINT NEXTEL PROVIDES UPDATE
ON FINANCIAL OUTLOOK AND OPERATING PERFORMANCE
Expects 2006 Results In Line with Prior Forecast;
Outlines Initiatives Designed to Improve Competitive Position;
Business Investments to Impact Near-Term Operating Results, Expected
to Drive Long-Term Growth and Profitability
RESTON, Va. - Jan. 8, 2007 - Sprint Nextel Corp. (NYSE: S) announced today an
update to its financial outlook and detailed its plans designed to improve
operational performance and drive long-term shareholder value. The company will
be hosting a conference call to discuss these plans with the investment
community today beginning at 5 pm EST. The call will be open to the public, and
details on how to access it are provided at the end of this release.
Current Performance
Based on preliminary data, Sprint Nextel expects to report full-year 2006
consolidated operating revenues of approximately $41.0 billion, while Adjusted
Operating Income Before Depreciation and Amortization (adjusted OIBDA) continues
to be projected in a range of $12.6 billion to $12.9 billion. Total capital
expenditures are estimated to be $7.0 billion to $7.3 billion.
During the fourth quarter, Sprint Nextel added 742,000 total net subscribers and
ended the period with a base of 53.1 million. The fourth quarter net additions
include 876,000 from wholesale and affiliates, and 171,000 new Boost customers,
which were offset by a decline of 306,000 post-paid subscribers. Post-paid
performance in the quarter reflects solid gains in CDMA subscribers, offset by a
decline in the iDEN base.
In the quarter, total post-paid gross additions were approximately 2.64 million.
As expected, credit tightening actions initiated in the second half of the year
impacted fourth-quarter customer growth. These actions improved the credit mix
of acquisitions in the quarter. Fourth quarter post-paid churn modestly improved
sequentially to 2.3 percent, and Boost Mobile churn improved to 6.5 percent. For
the quarter, Sprint Nextel expects to report average revenues per customer above
competitor levels, driven by steady voice usage and growth of wireless data on
CDMA. The company also expects to report strong Wireline IP results.
"Sprint Nextel ended 2006 in a solid financial position," said Gary D. Forsee,
the company's chairman and chief executive officer. "We expect our full-year
projected financial results will be in line with our prior guidance, and we
remain on or ahead of plan in integrating our pre-merger operations, systems and
product and service line up.
"While it was a challenging year, we initiated actions to improve our operating
performance and enter 2007 with signs of progress underway," said Forsee. "There
was solid demand for CDMA voice and data services in the fourth quarter, and we
had a strong performance in our Mobile Virtual Network Operator (MVNO) channels.
We are also pleased with the early customer acceptance of our enhanced device
portfolio.
"As we indicated last year, issues related to the iDEN platform resulted in
decreased demand for iDEN services and increased churn. We expect the widespread
introduction of our first combined CDMA-iDEN phones and improvements in iDEN
network performance to benefit push-to-talk subscriber trends.
"Our plans for the coming year build on the efforts we initiated in the second
half of 2006. Sprint Nextel has substantial assets, including unparalleled
spectrum ownership and network capabilities and a significant head start on
providing converged services and fourth-generation wireless services. In the
near term, a lower margin revenue mix, investment of an additional $1.1 billion
in our business operations and start-up costs associated with the build-out of
our fourth generation WiMAX wireless network will pressure profitability. We
will continue to adjust our cost structure, which will include a workforce
reduction, as we meet the changing demands of the business. Over the course of
the year we expect to resume growth of the post-paid customer base and
stabilize these revenues, improve post-paid churn to below two percent and
achieve increasing merger synergies. We expect these actions to support a return
to mid-single digit revenue growth and mid-to-high teen adjusted OIBDA growth in
2008, prior to dilutive impacts from the 4G initiative."
Initiatives to Enhance Competitive Position
Sprint Nextel initiated a series of actions in the latter half of 2006 designed
to improve network performance, raise brand awareness, enhance customer
satisfaction, stabilize average customer revenues, reduce churn and increase
sales and distribution productivity. The company's 2007 plans build upon and
enhance these actions.
Network Performance and Investment
- The company added more than 3,400 cell sites in 2006 to improve network
performance and expand its mobile broadband services to 200 million people
across the country. In the fourth quarter, Sprint Nextel enhanced it
broadband capability by being the first U.S. carrier to deploy higher data
speed CDMA EVDO Rev A service. It is now available in markets covering more
than 75 million people.
- In the coming year, Sprint Nextel expects to further increase network
coverage and capacity with the addition of approximately 4,800 new cell
sites and to extend mobile broadband technology throughout its CDMA
network.
- The company will increasingly focus its wireline efforts on fast-growing
domestic and global IP-based services while de-emphasizing selected legacy
voice and data products.
Brand Awareness and Marketing
- Sprint Nextel's "Power Up" campaign has been gaining traction, and
additional advertising initiatives will be aggressively pursued as the
company continues to emphasize the capabilities and reach of its voice and
data networks. In 2007, the company will reinforce these messages through
significantly increased media-related spending.
- In the fourth quarter, the company named a new senior executive for
advertising, and it is conducting an advertising agency review to open up
the selection of a lead advertising agency as it seeks to further improve
its brand and product advertising, promotion and marketing. The company
expects to reach a decision on an agency in the first quarter.
Improved Customer Satisfaction
- The company expects to complete the conversion of its entire customer base
to a unified billing platform in 2007 from the multiple legacy platforms in
place today.
- A new call center dedicated to serving Boost customers will be opened and
the number of business and consumer centers will be expanded during the
year.
- As part of its efforts to improve customer satisfaction, in the second half
of 2006 business and consumer customer service operations were consolidated
into one organization, allowing for greater efficiency in supporting the
customer experience. New executives have been named to lead customer
retention and customer operations activities.
Handset Portfolio and Distribution
- The handset portfolio has been re-energized with 10 new models, including
ultra-thin CDMA phones from Motorola and Samsung. The company has made
initial customer deliveries of combined CDMA-iDEN devices and plans to
launch national marketing in mid-January under the name PowerSource.
- Beginning in the fourth quarter, the company adopted a regional sales,
service, and distribution structure to streamline operations, increase
productivity and move decision-making closer to the customer.
- In the fourth quarter, the company began providing enhanced incentives to
improve third-party sales distribution and accelerate growth and retention
of high-value customers across all channels, which showed signs of
incremental productivity late in 2006.
- The company intends to use the Boost Mobile brand and leverage its lower
cost structure in a trial of a new local unlimited calling plan that will
operate on the CDMA network in selected markets.
- The company expects handset subsidies to increase in 2007 as compared to
subsidies in 2006.
Cable Voice over Internet Protocol Service and Wireless Joint Venture
- The company's VoIP offering with its cable partners now covers 30
million cable households. Sprint Nextel currently serves nearly 1.5 million
cable telephony subscribers, and this base is expected to double by the end
of 2007.
- Wireless service offered through the joint venture with the cable partners
was commercially launched in four markets in November. More than 40
additional markets are expected to be launched throughout the year and
development continues on new products and services.
WiMAX 4G Investment and Deployment
- In 2007 Sprint Nextel expects to make substantial progress on WiMAX 4G
network development. Nokia and LG are the most recent major vendors to join
Intel, Samsung, and Motorola in supplying WiMAX infrastructure and devices.
The company continues to hold discussions with a number of other potential
strategic partners about investment in the 4G deployment. The company's
capital investment plan anticipates initial infrastructure deployments in
2007 and expects to roll out service in selected markets reaching
approximately 100 million people in 2008.
Synergies
- In 2007 the company expects to complete the transition to unified customer
care, financial systems, device activation, billing and service and
technology platforms. The resulting efficiencies, along with other business
simplification and process improvement initiatives will enable the company
to further streamline its cost structure. As a result, the company will
reduce its overall full-time headcount by approximately 5,000 from the 2006
year-end level of 64,600. Staff reductions are expected to be applied
across the company with a majority of the reductions completed in the first
quarter of the year. The company expects to achieve $1 billion in adjusted
OIBDA benefit in 2007 from anticipated synergy attainment and incremental
cost management initiatives.
- Sprint Nextel expects to incur a total of approximately $700 million in
merger integration and severance costs in 2007 with the bulk of these costs
coming in the first half of the year. The company remains on course to
achieve the $14.5 billion of net present value of merger synergies.
2007 Financial Outlook
Sprint Nextel's initial assessment of key financial performance in 2007
includes:
- Consolidated operating revenues of $41 billion to $42 billion. In 2007,
revenue growth from a larger subscriber base is expected to be offset by
lower average revenue per subscriber and lower wireline revenues.
- Adjusted OIBDA of $11 billion to $11.5 billion, inclusive of approximately
$300 million of start-up operating costs associated with WiMAX 4G broadband
services.
- Capital expenditures of approximately $8.5 billion, consisting of $7.1
billion for core wireless networks and spectrum re-banding efforts, $600
million for wireline and up to $800 million for the company's WiMAX
initiative.
- The company expects to continue with its previously announced share
buy-back program. The company will vary the amount and timing of its
common stock purchases from time to time as the program proceeds. Since
the initiation of the program in August 2006, the company has repurchased
98 million shares for approximately $1.6 billion.
Conference Call and Webcast information
The company will conduct a conference call and webcast to discuss its plans and
outlook beginning at 5 pm EST today. A link to the live webcast will be
available at www.sprint.com/investors. A replay of the webcast will be available
at that site two hours afterward. To access the call, dial 866-297-0891, (U.S.
and Canada) or 706-679-8981 (International). For a replay of the call, dial
800-642-1687 (U.S. and Canada) or 706-645-9291 (International) and provide the
Conference ID number: 5525914.
Financial Measures
Sprint Nextel provides financial measures generated using generally accepted
accounting principles (GAAP) and using adjustments to GAAP (non-GAAP). The
non-GAAP financial measures reflect industry conventions, or standard measures
of liquidity, profitability or performance commonly used by the investment
community for comparability purposes. These non-GAAP measures are not
measurements under accounting principles generally accepted in the United
States. These measurements should be considered in addition to, but not as a
substitute for, the information contained in our financial statements prepared
in accordance with GAAP. We have defined below each of the non-GAAP measures we
use, but these measures may not be synonymous to similar measurement terms used
by other companies.
Because Sprint Nextel does not predict special items that might occur in the
future, and its forecasts are developed at a level of detail different than that
used to prepare GAAP-based financial measures, Sprint Nextel does not provide
reconciliations to GAAP of its forward-looking financial measures.
Adjusted OIBDA is defined as operating income before depreciation, amortization,
restructuring and asset impairments, and special items. This non-GAAP measure
should be used in addition to, but not as a substitute for, the analysis
provided in the statements of operations. We believe that adjusted OIBDA
provides useful information to investors because it is an indicator of the
strength and performance of our ongoing business operations, including our
ability to fund discretionary spending such as capital expenditures, spectrum
acquisitions and other investments and our ability to incur and service debt.
While depreciation and amortization are considered operating costs under
generally accepted accounting principles, these expenses primarily represent
non-cash current period allocation of costs associated with long-lived assets
acquired or constructed in prior periods. Adjusted OIBDA is a calculation
commonly used as a basis for investors, analysts and credit rating agencies to
evaluate and compare the periodic and future operating performance and value of
companies within the telecommunications industry.
Safe Harbor
This press release includes "forward-looking statements" within the meaning of
the securities laws. The statements in this press release regarding the future
outlook of the business, planned and expected investments, expenditures,
purchases of common stock of the company and other actions
in future periods,and assessments of future performance, as well as other
statements that are not historical facts, are forward-looking statements. The
words "estimate,"Sproject," "forecast," "intend," "expect," "believe," "target,"
"providing guidance" and similar expressions are intended to identify
forward-looking statements. Forward-looking statements are estimates and
projections reflecting management's judgment based on currently available
information and involve a number of risks and uncertainties that could cause
actual results to differ materially from those suggested by the forward-looking
statements. With respect to these forward-looking statements, management has
made assumptions regarding, among other things, customer and network usage,
customer growth and retention, pricing, operating costs, the timing of various
events and the economic environment. Future performance cannot be ensured.
Actual results may differ materially from those in the forward-looking
statements. Some factors that could cause actual results to differ include:
o the effects of vigorous competition, including the impact of competition on
the price we are able to charge customers for services we provide and our
ability to attract new customers and retain existing customers; the overall
demand for our service offerings, including the impact of decisions of new
subscribers between our post-paid and prepaid services offerings and
between our two network platforms; and the impact of new, emerging and
competing technologies on our business;
o the impact of overall wireless market penetration on our ability to attract
and retain customers with good credit standing and the intensified
competition among wireless carriers for those customers;
o the uncertainties related to the benefits of our merger with Nextel
Communications, Inc., including anticipated synergies and cost savings and
the timing thereof;
o the potential impact of difficulties we may encounter in connection with
the integration of the pre-merger Sprint and Nextel businesses, and the
integration of the businesses and assets of certain of the third party
affiliates, or PCS Affiliates, that provide wireless personal
communications services, or PCS, under the Sprint(R) brand that we have
acquired, and Nextel Partners, Inc., including the risk that these
difficulties could prevent or delay our realization of the cost savings and
other benefits we expect to achieve as a result of these integration
efforts and the risk that we will be unable to continue to retain key
employees;
o the uncertainties related to the implementation of our business strategies,
investments in our networks, our systems, and other businesses, including
investments required in connection with our planned deployment of a next
generation broadband wireless network;
o the costs and business risks associated with providing new services and
entering new geographic markets, including with respect to our development
of new services expected to be provided using the next generation broadband
wireless network that we plan to deploy;
o the impact of potential adverse changes in the ratings afforded our debt
securities by ratings agencies;
o the ability of our wireless segment to continue to grow and improve
profitability;
o the ability of our long distance segment to achieve expected revenues;
o the effects of mergers and consolidations and new entrants in the
communications industry and unexpected announcements or developments from
others in the communications industry;
o unexpected results of litigation filed against us;
o the inability of third parties to perform to our requirements under
agreements related to our business operations;
o no significant adverse change in Motorola, Inc.'s ability or willingness to
provide handsets and related equipment and software applications or to
develop new technologies or features for our integrated Digital Enhanced
Network, or iDEN(R), network;
o the impact of adverse network performance, including, but not limited to,
any performance issues resulting from reduced network capacity and other
adverse impacts resulting from the reconfiguration of the 800 megahertz, or
MHz, band used to operate our iDEN network, as contemplated by the Federal
Communications Commission's, or FCC's, Report and Order, released in August
2004 as supplemented thereafter;
o the costs of compliance with regulatory mandates, particularly requirements
related to the FCC's Report and Order, deployment of enhanced 911, or E911,
services on the iDEN network and privacy-related matters;
o equipment failure, natural disasters, terrorist acts, or other breaches of
network or information technology security;
o one or more of the markets in which we compete being impacted by changes in
political or other factors such as monetary policy, legal and regulatory
changes or other external factors over which we have no control; and
o other risks referenced from time to time in our filings with the SEC,
including our Form 10-K for the year ended December 31, 2005, as amended,
in Part I, Item 1A, "Risk Factors," as well as in Exhibit 99.1 to our Form
8-K filed September 18, 2006, and our quarterly reports on Form 10-Q for
the first three quarters of 2006 filed with the SEC.
About Sprint Nextel
Sprint Nextel offers a comprehensive range of wireless and wireline
communications services bringing the freedom of mobility to consumers,
businesses and government users. Sprint Nextel is widely recognized for
developing, engineering and deploying innovative technologies, including two
robust wireless networks serving more than 51 million customers at the end of
third quarter 2006; industry-leading mobile data services; instant national and
international walkie-talkie capabilities; and an award-winning and global Tier 1
Internet backbone. For more information, visit www.sprint.com.
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