Sprint - Nextel 2005 Annual Report Download - page 106

SPRINT NEXTEL CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Summary of Operations and Significant Accounting Policies
Operations
We are a global communications company offering a comprehensive suite of wireless and wireline
communications products and services that are designed to meet the needs of our targeted customer groups:
individuals and business and government customers. Although our operations are divided into three lines of
business: Wireless, Long Distance and Local, we have organized our sales and distribution efforts to focus on the
needs of two distinct customer types – individuals and businesses and government agencies, which enable us to
create customer-focused communications solutions. We are one of the three largest wireless companies in the
United States based on the number of wireless subscribers. We own extensive wireless networks and a global
long distance, Tier 1 Internet backbone. Our Series 1 voting common stock trades on the New York Stock
Exchange, or NYSE, under the symbol “S.”
We, together with third party affiliates, each referred to as a PCS Affiliate, and Nextel Partners, Inc., offer digital
wireless service in all 50 states, Puerto Rico and the U.S. Virgin Islands. The PCS Affiliates, through commercial
arrangements with us, provide wireless personal communication services, or PCS, under the Sprint®brand name
in certain mid-sized and tertiary U.S. markets on wireless networks built and operated at their expense using
spectrum licensed to and controlled by us. Nextel Partners provides digital wireless communications services
under the Nextel brand name in certain mid-sized and tertiary U.S. markets on wireless networks built and
operated at its expense.
We offer a wide array of wireless mobile telephone and wireless data transmission services on networks that
utilize code division multiple access, or CDMA, and integrated Digital Enhanced Network, or iDEN®,
technologies. We market wireless services provided on our CDMA network under the Sprint brand. We are
deploying high-speed evolution data optimized, or EV-DO, technology across our CDMA network. We first
introduced EV-DO commercially in the second quarter 2005, and we will continue to expand EV-DO into
additional markets. We operate an all-digital long distance and Tier 1 Internet protocol, or IP, network, over
which we provide a broad suite of wireline communications services targeted to domestic business and
residential customers, multinational corporations and other communications companies.
We also provide regulated local exchange telephone services and long distance voice and data services, including
digital subscriber line, or DSL, services, and other telecommunications-related services to customers in our local
service areas. We also operate a wholesale product distribution business. This entire business is expected to be
spun-off to our shareholders in the second quarter 2006 and will be known as Embarq Corporation. See note 25
for more information.
Basis of Consolidation and Presentation
On August 12, 2005, a subsidiary of ours merged with Nextel Communications, Inc. for aggregate consideration
of $37.8 billion. In connection with the Nextel merger, we changed our name to Sprint Nextel Corporation, or
Sprint Nextel. On August 12, 2005, we acquired US Unwired Inc. for $968 million in cash. We also acquired
Gulf Coast Wireless Limited Partnership for $211 million in cash on October 3, 2005 as well as IWO Holdings,
Inc. for $192 million in cash on October 20, 2005. Each of these companies is now a wholly owned subsidiary of
Sprint Nextel. Each transaction was accounted for as a purchase. See note 2 for further discussion of these
transactions.
The accompanying consolidated financial statements include our accounts, and those of our wholly owned
subsidiaries, and subsidiaries we control, as well as variable interest entities where we are the primary
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