Sprint - Nextel 2005 Annual Report Download - page 21

business and residential customers, our established national brand and offerings available from our other
operating entities.
Products and Services
Through our Long Distance segment, we provide a broad suite of wireline voice and data communications
services, including domestic and international voice and data communications using various protocols such as
next generation MPLS technologies, as well as IP, ATM, frame relay and managed network services. We also
provide services to cable companies that resell our long distance service and/or use our back office systems and
network assets in support of their telephone service provided over cable facilities. Although we continue to
provide voice services to consumers, we no longer actively market those services. In 2004, we sold our Dial IP
business, a data service that was focused largely on the consumer market.
Competition
Our Long Distance segment competes with AT&T, Verizon, Level 3, other major local incumbent operating
companies, cable operators and other telecommunications providers in all segments of the long distance
communications market. Some competitors are targeting the high-end data market and are offering deeply
discounted rates in exchange for high-volume traffic as they attempt to fill their networks. In addition, we face
increasing competition from other wireless and IP-based service providers. Many carriers are competing in the
residential and small business markets by offering bundled packages of both local and long distance services.
Competition in long distance is based on price and pricing plans, the types of services offered, customer service,
and communications quality, reliability and availability. Our ability to compete successfully will depend on our
ability to anticipate and respond to various competitive factors affecting the industry, including new services that
may be introduced, changes in consumer preferences, demographic trends, economic conditions and pricing
strategies. See “Item 1A. — Risk Factors — We face intense competition that may reduce our market share and
harm our financial performance.”
Local
Our Local segment primarily provides regulated incumbent local phone services in local service territories in 18
states. At December 31, 2005, we provided these services to approximately 7.4 million access lines, with our
largest presence in Florida, North Carolina, Nevada and Ohio. Through this segment, we provide local voice,
long distance and data services, including DSL, to customers located within our local service territories, access
by consumers and other carriers to the local network, sales of telecommunications equipment, and other services
within specified calling areas to residential and business customers. We also provide wireless and video services
to customers in our local service territories through agency relationships. Our wholesale telecommunications
product distribution business, known as Sprint North Supply Company, or North Supply, also is part of the Local
segment. We plan to spin-off the Local segment to our shareholders on a tax-free basis in the second quarter
2006.
The financial performance for our Local segment for 2005, 2004 and 2003 is summarized as follows:
Year Ended December 31,
2005 2004 2003
(in millions)
Net operating revenues ................................. $ 6,527 $ 6,421 $ 6,486
Operating income(1) ................................... 1,758 1,736 1,820
(1) See “Part II, Item 7 Management’s Discussion and Analysis of Financial Condition and Results of
Operations - Results of Operations – Segmental Results of Operations – Local” for more information
regarding the financial performance of the Local segment.
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