Sprint - Nextel 2007 Annual Report Download - page 22

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Risks Related to the Sprint-Nextel Merger and the Spin-off of Embarq
We may continue to face difficulties in integrating the businesses of Nextel, the acquired PCS Affiliates or
Nextel Partners with ours.
We continue to devote significant management attention and resources to integrating the Nextel wireless
network and other wireless technologies with ours, as well as the business practices, operations and support
functions of the two companies. The challenges we are facing and/or may face in the future in connection with
these integration efforts include the following:
• integrating our CDMA and iDEN wireless networks, which operate on different technology platforms
and use different spectrum bands, and developing wireless devices and other products and services that
operate seamlessly on both technology platforms;
• developing and deploying next generation wireless technologies;
• combining and simplifying diverse product and service offerings, subscriber plans and sales and
marketing approaches;
• preserving subscriber, supplier and other important relationships;
• consolidating and integrating duplicative facilities and operations, including back-office systems; and
• addressing differences in business cultures, preserving employee morale and attracting and retaining
key employees, including in connection with our headquarters consolidation in Kansas, while
maintaining focus on providing consistent, high quality customer service and meeting our operational
and financial goals.
The process of integrating the operations of Nextel, the seven acquired PCS Affiliates and Nextel Partners
with ours has caused, and may in the future cause, interruptions of, or loss of momentum in, our business and
financial performance. The diversion of management’s attention and any delays or difficulties encountered in
connection with the integration of the two companies’ operations has had, and could continue to have, an adverse
effect on our business, financial condition or results of operations. We may also incur additional and unforeseen
expenses in connection with the integration efforts.
We are subject to exclusivity provisions and other restrictions under our arrangements with the remaining
independent PCS Affiliates. Continued compliance with those restrictions may limit our ability to fully
integrate the operations of Nextel and Nextel Partners in the geographic areas served by those PCS Affiliates,
and we could incur significant costs to resolve issues related to the merger under these arrangements.
The arrangements with the three independent PCS Affiliates restrict our and their ability to own, operate,
build or manage specified wireless communication networks or to sell certain wireless services within specified
geographic areas. One of these PCS Affiliates has litigation pending against us asserting that actions that we have
taken or may take in the future in connection with our integration efforts are inconsistent with our obligations
under our agreement with them, particularly with respect to the restrictions noted above. Continued compliance
with those restrictions may limit our ability to fully integrate the operations of Nextel and Nextel Partners in the
areas served by those PCS Affiliates. We could incur significant costs to resolve these issues.
We are subject to restrictions on acquisitions involving our stock and other stock issuances and possibly other
corporate opportunities in order to enable the spin-off of Embarq to qualify for tax-free treatment.
The spin-off of Embarq cannot qualify for tax-free treatment if 50% or more (by vote or value) of our stock,
or the stock of Embarq, is acquired or issued as part of a plan, or series of related transactions, that includes the
spin-off. Because the Sprint-Nextel merger generally is treated as involving the acquisition of 49.9% of our stock
(and the stock of Embarq) for purposes of this analysis, we are subject to restrictions on certain acquisitions
using our stock and other issuances of our stock in order to enable the spin-off to qualify for tax-free treatment.
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