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sprint nextel Quarterly Presentations  2006 3rd
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  1. 1. ! quot; #$ % &! % $ !' % $ $ # % ! % ! quot; #$ % ' ! % & (& & & & & $& $$ & % ) ! quot; #$ % '* ! quot; # $ % % ( $% $% +( $ % ) % % # % ) % $$ ) ! quot; #$ % ', ! quot; #$ % % $% % % $ $%$ $ % !# $ % $! $ $ %$ % % '* % '- %) % ) % ! quot; #$ % '% . • $ % $ % % ! $ % ! / ) ! % $ % 0 % / $ $ % ! ! / quot; $ ! /! !# %0 % ! % $$ % $ $ / 0 • % ! %# / ) % ! $ $ % % $ ! %0 • quot; %$ $ ) $ $ %$ 0 • % ! %) ! $ quot;% $ $ ) 1- 2 ! %% 12 3 ! 4 1 ' $ # ) / 5 $ ! $ # ! #) % ) 0 • % % / $ / % !# )% $ % 4 ! / )% $ ! !#0 • # ! $ ! $ !$ $ %# $! / % ! $ $ ! !# ! )0 • % $ $ / ) $$ 0 • ) , $! % )0 • ) 6 $7 0 • %$ %% ) % % % %% )0 • $ $ 0 • ) % /4 % $ % / 0 • $ $ 8 '/ ) ! $ 4 % ! ! $ 79 !# 0 • % !# % $ % ) % $ % !# ) % $ % $ : 8$ 5 79 !# % ) * 2 %% 2 %% / *2 2/ ; -$ < % 0 • % ! $ )% ) 4 % *2 ; 2/ )% =>> 9> => 79 !# )quot; % 0 •4 % !# % $) )0 • % %# ! % $% ) $ % ) ) $ $ ) $ ! 0 • # %% % / $! 9 $ 2 %% $ * % > quot;? ) 7 % > @ % 1 % > ; #* - '& ! quot; #$ % 0 ! ) ! quot; #$ % ! #) ' $ ) ) ! quot; #$ % '
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  5. 5. = -! Follow Through on 2Q Additional Achievements Commitments !# % F %# 2 G H 9 $ - <I $) 2 $ $ 6 % - $- 1 ; $ 9 $5 % %$ ) $) $ $ $ ; E
  6. 6. 5, , Proform a # quot; J' > @K J FK =' :L J 'K > @L -. # ! J< :8 J:F<8 quot;L J @8 : quot;@L -. #96- J' K J' =@K >L < J' K @L -. #96- * <:L ' 'L M>@ <FL ' M> -. #96- 2 J' K >@ J' >@@K quot;L J' K >: quot;>:L -. 37 - J' J' FL J' quot; •1 =>8 %% ' >@K J' • @>=8 ' $ 4 F
  7. 7. , quot;4 3Q06 Results Actions •1 ) $ ! •1 quot; 'L < % ) quot; ; $ ) @@L )A quot; $ $ <@L ) • N$ quot; $ $ 4 79 ) quot; ) $ 2 8- 7 %# ) • $ % ! quot; N$ 79 % ) ) quot;K ! #E quot; N$ O1 $% $ ! quot; :
  8. 8. - quot; CDMA iDEN •I ! •I 4 ) ! • $$ ! $ ) )quot; quot;) •7 $ • 1% $ $ ) $ $ F4 E$ •K 8 ! % $$ $! E % 1 quot;1 1 quot;1 8H - - - - - - )( (= > )= > )& &= > (= ? = =
  9. 9. :9 * ; • 1! & /% ! !# •1 !# A • -$ $ ) $$ $ ! !# • *6 -2; - $! 1! H • ! % $ >
  10. 10. @ 6 A , : B 3! 3 @ 6 -quot; 14% 1,500 $7 12% 1,200 10% 900 $5 8% 600 6% 300 0 $3 4% 4Q05 1Q06 2Q06 3Q06 3Q05 4Q05 1Q06 2Q06 3Q06 Data ARPU % of Post-Paid ARPU • / $ ! !# quot; ! > :8 $ 8 )P9 •7 -1 ; J F@ 2 8- F' 7 -1 ; J> • ) JK < 5 •N) ! $ >>
  11. 11. 3 quot; , Wireline Cable Joint Venture •F %# •> %# $ % •- QF 5 J F@ % •1 % $ • >% ' $ ) H1 N7 $ > L )quot; quot;) > • $ ) % • $ % ) $ $ $! >
  12. 12. 9 *3 C *B # MVNOs •- • 5 J@ 8 : L )quot; quot;) • @' @8 • ' :8 L )quot; quot;) = L )quot; quot;) •% 4 $ • $ K -% $ 7 E % •8 # ) $ ) 8H % >
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  15. 15. 1! - & Improving Operating Growing the Business Performance D D !# D2 5 ! D % ) $ D6 $ ! $ D2 %# $ % $ %$ ) $ D2 D2 % D9 $) D2 % % % >
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  17. 17. 1 ! 5, , quot; 4 - 2 $ 2 $ Wireless B% J C ; J: = L >L < -( K - ' 7 J>@= :L L - ( K -8 $ ' 7 :'L < M: M>= Long Distance ; J> quot;>L quot;L -( K - ' 7 J quot; @L quot; FL - ( K -8 $ ' 7 >' FL quot;<> quot; Consolidated $; J< >= @L :L -( K- 7 J < @L >L < -( K -8 $ 7 <:L ' M> M>@ ! K -% $ 7 ( K-B 7 A, M! C ' $ % @ % $ ' >:
  18. 18. @ -quot; D • 4 ! 7F ) $64.5 $62 $61 quot;B ! -quot; ! Data ARPU 7 73 -quot; :, quot;6 -quot; : 2$ ' H && %F Voice ARPU •I I-quot; ! : J%F 7 . 7 !7 !4 Q3-05 Q2-06 Q3-06 • 4 ! 7F $37 $34 quot;6 ! ! $32.5 quot; ! 7! Q3-05 Q2-06 Q3-06 >=
  19. 19. @ -. #96- * • 3 7 !4 38.4% 7 73 :- quot; H, , !, 37.6% 3 3 •* !! 36.5% 7 ! ! quot; 7 quot; ! ! ! • 7! ! ! Q3-05 Q2-06 Q3-06 Note: Adjusted OIBDA margin is defined as Adjusted OIBDA /(wireless service revenues plus wholesale affiliate and other revenues)
  20. 20. @ -. #96- * 38.4% 37.6% •* !! • 7! ! ! 36.5% • 2 ! 3 7 7 3 ! 7: - quot;H, , !, 3 3 Q3-05 Q2-06 Q3-06 Investing for Long-term Value D* , ! D- +3 D9 ! +4 D , 3 D- ! ! B 6# 3 D ! ! >
  21. 21. 1 ,1 : 0 H (Millions) -. #96- $H % ! K) & $ L #, ! H K$ L 2 K )( L $ H( 6 K& L $% #, ! H K) L $& 1 ,1 : $/ & .Other operating activities, net includes the change in working capital, change in deferred income taxes, miscellaneous operating activities and non-operating items in net income (loss).
  22. 22. 1 ! (Billions) $ '9 , ) 3 3!; $ ' $ '9 )( 3 $' ) $ '9 ! ) 4 7 $ // )' 34 D ,+ *; 3 6 3C- -. ' ! #96- 7 ' E ) - ! 7 3 J&F D 3 63
  23. 23. !, 0 ! •2 $ !# quot; ! #% quot; $& • -( K- 7 ! '( #$ ! ') # $& •2 !$ *+ ! $& *# $ quot; $ <
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  26. 26. quot;I - 8 -1 ; % $ $$ ) $ B- 1 I -C $ (% I- B -1 quot;I - C - 1' quot; I- -1 % ) % 4 ) ) % %% ) ) % %% ) % ) ' quot;I - % -1 % % $ $ ) ' % % % % ! I -' -1, ! quot;I - % -1 ! % %) ) )% % % % % ) % ' quot;I - % -1 $K ' % %$ I -quot; -1 % I- -1 ! quot; #$ % ' % !$. -. , K L % % $ % 91 ' -. 37 - % % $ % % 5 91 ' quot;I - % -1 ) % ', % ) ! % % % ) $ % 4 % 5 $ $ $ ' -. ! %B C % $ % '- . ! 37 - %B C % $ % % 5 ' quot;I - % -1 ) % ' , % ) ! % % % ) $ % $ $ ' -. # ! $ % %' quot;I - % -1 ) % ', % ! $ % % ) $ %' -. #9 6- $ % % 5 $ % % %' -. #9 6- * -( K- 7 ) quot;4 % $ , -( K- 7 ) $ 6 $7 '- $! ) % % ! ! -( 9 7 &! K- ! %-( K- 7 -( K -8 $ 7 % ! % ) % % ' quot;I - % -1 ) % ', -( K- 7 -( K -8 $ 7 % ) $ % $$ $ ) ) $ % 4 % ) ', % 5 $ $ ) $ % ) quot; ! $quot; 4 '( - K- 7 -( K -8 $ 7 %% ) ) $$ % $ % % ! %% )' 1 ,1 : $ 4 $ % % %% # % )/ %% # $ % $ ' quot;I - % -1 ) % !', * 2 *! % ) % $% $ ) ) % $ $ ) $ % % ' 63 $ % 4 %# ' quot;I - -1 % ) % ! ', 7 % ) $$ ) % ) % ' 6 3 C- -. #96- $quot; % $ % -( K- 7 4 % ) ' quot;I - % -1 ) % ! ', % % ) $$ ) % ) % ' F
  27. 27. quot;I - ; -1 RECONCILIATIONS OF EARNINGS PER SHARE (Unaudited) (millions, except per share data) (c) Pro Forma As Reported Quarter Ended Year-to-Date Quarter Ended Year-to-Date September 30, September 30, September 30, September 30, September 30, September 30, September 30, September 30, 2006 2005 2006 2005 2006 2005 2006 2005 Income Available to Common Shareholders $ 247 $ 514 $ 1,034 $ 1,583 $ 247 $ 407 $ 1,034 $ 1,377 Preferred stock dividends paid - 2 2 5 - 2 2 5 Net Income (Loss) 247 516 1,036 1,588 247 409 1,036 1,382 Discontinued operations, net - (253) (334) (772) - (253) (334) (772) Income from Continuing Operations 247 263 702 816 247 156 702 610 (a) Special items (net of taxes) Restructuring and asset impairments 31 24 77 43 31 24 77 43 Merger and integration expense 66 149 181 166 66 204 181 248 Hurricane charges (excluding asset impairments) - 49 - 49 - 49 - 49 Net gains on investment activities - (90) (40) (90) - (90) (40) (90) (Gain) Loss on early retirement of debt (4) - (9) - (4) - (9) 22 Tax audit settlement (42) - (42) - (42) - (42) - Motorola consent fee - - - - - 50 - 50 Adjusted Net Income* $ 298 $ 395 $ 869 $ 984 $ 298 $ 393 $ 869 $ 932 Amortization (net of taxes) 650 276 1,792 281 650 504 1,792 1,492 Adjusted Net Income before Amortization* $ 948 $ 671 $ 2,661 $ 1,265 $ 948 $ 897 $ 2,661 $ 2,424 Diluted Earnings Per Share $ 0.08 $ 0.23 $ 0.35 $ 0.91 $ 0.08 $ 0.14 $ 0.35 $ 0.47 Discontinued operations - (0.11) (0.11) (0.45) - (0.09) (0.11) (0.26) Earnings Per Share from Continuing Operations 0.08 0.12 0.24 0.46 0.08 $ 0.05 0.24 $ 0.21 Special items 0.02 0.06 0.05 0.10 0.02 0.08 0.05 0.11 Adjusted Earnings Per Share* (b) $ 0.10 $ 0.18 $ 0.29 $ 0.56 $ 0.10 $ 0.13 $ 0.29 $ 0.32 (d) Amortization (net of taxes) 0.22 0.12 0.60 0.16 0.22 0.17 0.60 0.50 Adjusted Earnings Per Share before Amortization* (b) $ 0.32 $ 0.30 $ 0.89 $ 0.72 $ 0.32 $ 0.30 $ 0.89 $ 0.82 (a) See accompanying Notes to Financial Data for more information on special items. (b) Earnings per share data may not add due to rounding. (c) Pro forma consolidated information has been presented as if the Sprint Nextel merger occurred at the beginning of 2005. The 2006 periods reflect actual results. (d) Rounding difference is pushed to this line. :
  28. 28. quot;I - ; -1 (millions) Long Corporate & For the Quarter Ended September 30, 2006 Consolidated Wireless Distance Eliminations Operating Income (Loss) $ 667 $ 702 $ 73 $ (108) (a) Special items Severance, lease exit costs and asset impairments 50 41 9 - Merger and integration expense 107 - - 107 Adjusted Operating Income* 824 743 82 (1) Depreciation and amortization 2,540 2,416 124 - Adjusted OIBDA* 3,364 3,159 206 (1) Capital expenditures 1,843 1,473 255 115 Adjusted OIBDA* less Capex $ 1,521 $ 1,686 $ (49) $ (116) Long Corporate & For the Quarter Ended September 30, 2005 Consolidated Wireless Distance Eliminations Operating Income (Loss) $ 488 $ 572 $ 124 $ (208) Special items Severance, lease exit costs and asset impairments 37 16 21 - Merger and integration expense 234 - - 234 Hurricane charges 79 65 14 - Adjusted Operating Income* 838 653 159 26 Depreciation and amortization 1,487 1,362 124 1 Adjusted OIBDA* 2,325 2,015 283 27 Capital expenditures 1,051 914 83 54 Adjusted OIBDA* less Capex $ 1,274 $ 1,101 $ 200 $ (27) Pro forma Pro forma Long Corporate & For the Quarter Ended September 30, 2005 Consolidated Wireless Distance Eliminations Operating Income (Loss) $ 440 $ 608 $ 124 $ (292) Special items Severance, lease exit costs and asset impairments 37 16 21 - Merger and integration expense 318 - - 318 Hurricane charges 79 65 14 - Adjusted Operating Income* 874 689 159 26 Depreciation and amortization 2,079 1,954 124 1 Adjusted OIBDA* 2,953 2,643 283 27 Capital expenditures 1,406 1,262 83 61 Adjusted OIBDA* less Capex $ 1,547 $ 1,381 $ 200 $ (34) (a) See accompanying Notes to Financial Data for more information on special items. =
  29. 29. quot;I - ; -1 (millions) Long Corporate & For the Quarter Ended June 30, 2006 Consolidated Wireless Distance Eliminations $ 712 $ 660 $ 155 $ (103) Operating Income (Loss) Special items Severance, lease exit costs and asset impairments 40 33 7 - Merger and integration expense 113 - - 113 865 693 162 10 Adjusted Operating Income* Depreciation and amortization 2,354 2,242 113 (1) 3,219 2,935 275 9 Adjusted OIBDA* Capital expenditures 1,359 1,064 200 95 $ 1,860 $ 1,871 $ 75 $ (86) Adjusted OIBDA* less Capex Long Corporate & For the Quarter Ended March 31, 2006 Consolidated Wireless Distance Eliminations $ 484 $ 436 $ 104 $ (56) Operating Income (Loss) Special items Severance, lease exit costs and asset impairments 38 28 10 - Merger and integration expense 76 - - 76 598 464 114 20 Adjusted Operating Income* Depreciation and amortization 2,346 2,223 122 1 2,944 2,687 236 21 Adjusted OIBDA* Capital expenditures 1,243 1,071 92 80 $ 1,701 $ 1,616 $ 144 $ (59) Adjusted OIBDA* less Capex (a) See accompanying Notes to Financial Data for more information on special items.
  30. 30. quot;I - ; -1 RECONCILIATIONS OF EARNINGS PER SHARE (Unaudited) (millions, except per share data) As Reported Quarter Ended June 30, 2006 $ 370 Income Available to Common Shareholders Preferred stock dividends paid - 370 Net Income (Loss) Discontinued operations, net (79) 291 Income from Continuing Operations Special items (net of taxes) (a) Severance, lease exit costs and asset impairments 23 Merger and integration expense 69 Net gains on investment activities (8) (Gain) Loss on early retirement of debt (5) $ 370 Adjusted Net Income* Amortization (net of taxes) 577 $ 947 Adjusted Net Income before Amortization* $ 0.12 Diluted Earnings Per Share Discontinued operations (0.02) 0.10 Earnings Per Share from Continuing Operations Special items 0.02 Adjusted Earnings Per Share* (b) $ 0.12 Amortization (net of taxes) 0.20 $ 0.32 Adjusted Earnings Per Share before Amortization* >
  31. 31. quot;I - ; -1 (millions) Quarter Ended Year-to-date September 30, June 30, September 30, September 30, September 30, 2006 2006 2005 2006 2005 Wireless Pro Forma Adjusted OIBDA* $ 3,159 $ 2,935 $ 2,643 $ 8,781 $ 7,616 Service, wholesale, affiliate and other net operating revenues 8,229 7,800 7,249 23,714 21,243 Adjusted OIBDA margin* 38.4% 37.6% 36.5% 37.0% 35.9% Operating income $ 702 $ 660 $ 608 $ 1,798 $ 1,727 Operating income margin 8.5% 8.5% 8.4% 7.6% 8.1% Long Distance Adjusted OIBDA* $ 206 $ 275 $ 283 $ 717 $ 801 Total net operating revenues 1,626 1,641 1,735 4,936 5,172 Adjusted OIBDA margin* 12.7% 16.8% 16.3% 14.5% 15.5% Operating income $ 73 $ 155 $ 124 $ 332 $ 395 Operating income margin 4.5% 9.4% 7.1% 6.7% 7.6% Consolidated Pro Forma Adjusted OIBDA* $ 3,364 $ 3,219 $ 2,953 $ 9,527 $ 8,493 Service, wholesale, affiliate and other net operating revenues 9,653 9,290 8,881 28,187 26,132 Adjusted OIBDA margin* 34.8% 34.7% 33.3% 33.8% 32.5% Operating income $ 667 $ 712 $ 440 $ 1,863 $ 1,807 Operating income margin 6.9% 7.7% 5.0% 6.6% 6.9%
  32. 32. quot;I - ; -1 (millions) Quarter Ended Year-to-Date September 30, September 30, September 30, September 30, 2006 2005 2006 2005 $ 3,364 $ 2,325 $ 9,527 $ 5,268 Adjusted OIBDA* Adjust for special items (157) (350) (424) (408) Proceeds from communications towers lease transactions - - - 1,195 Other operating activities, net (a) (303) (711) (1,511) (839) Capital expenditures (1,885) (1,051) (4,798) (2,365) Dividends paid (74) (74) (224) (447) Proceeds from sales of assets 54 378 211 589 Other investing activities, net (230) 284 (443) 831 Free Cash Flow* 769 801 2,338 3,824 Decrease in debt, net (1,783) (9) (5,746) (1,024) Retirement of redeemable preferred shares - - (247) - Purchase of treasury shares (1,523) - (1,523) - Cash transferred to Embarq, net of cash received and - - 6,268 - proceeds from the sale of Embarq notes Discontinued operations activity, net (b) - 68 367 83 Cash acquired in Nextel merger, net of cash paid - 1,183 - 1,183 (867) (949) (10,483) (949) Purchase of PCS Affiliates, Nextel Partners and Velocita, net of cash acquired Change in restricted cash 1,124 - 93 - Distributions from unconsolidated investees, net - 181 - 181 Investments in debt securities, net 91 134 1,128 49 Proceeds from common shares issued 46 187 372 293 Other financing activities, net 12 7 12 12 Change in cash and cash equivalents - GAAP $ (2,131) $ 1,603 $ (7,421) $ 3,652 September 30, 2006 Total Debt $ 21,961 Less: Cash on hand (1,482) Less: Current marketable securities (626) $ 19,853 Net Debt* (a) Other operating activities, net includes the change in working capital, change in deferred income taxes, miscellaneous operating activities and non-operating items in net income (loss). (b) Discontinued operations activity, net includes $6.6 billion from the issuance of long-term debt.
  33. 33. quot;I - ; -1 As of September 30, 2006 Total Debt $ 21,961 Less: Cash on Hand (1,482) Less: Current Marketable Securities (626) Net Debt * $ 19,853 Pro Forma Net Debt $ 19,853 Adjusted OIBDA for the three months ended, September 30, 2006 $ 3,364 *4 Annualizd Adjusted OIBDA * $ 13,456 Pro Forma Net Debt/Annualized Adjusted OIBDA * 1.5 <
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