Sprint - Nextel 2011 Annual Report Download - page 83

Table of Contents
SPRINT NEXTEL CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Property, plant and equipment consists primarily of network equipment and other long-lived assets used to provide service to our subscribers. In the first
quarter 2012, we formalized our plans to decommission roughly one-third of our total Nextel platform, or 9,600 towers, by the end of 2012. We also expect to be
completed with our transition of customers from the Nextel platform to our Sprint platform by the end of 2013, which should allow us to decommission the remainder of
our Nextel platform sites. As a result, in the first quarter 2012, we revised our estimates of the expected useful lives of certain assets and asset retirement obligations
through the end of 2013. The exact timing of the acceleration is dependent upon when the assets are expected to be phased out of service. In addition, increasing data
usage by subscribers is expected to require additional data capacity equipment that will not be compatible with the deployment of Network Vision's multi-mode
technology. As a result, the estimated useful lives of such equipment will be shortened, as compared to similar prior capital expenditures, through the date in which
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etwork Vision equipment is deployed and in-service. The incremental effect of accelerated depreciation expense in 2012 and 2013 is expected to be material to our
consolidated financial statements.
In connection with Network Vision, certain spectrum licenses that were not previously placed in service are now being prepared for their intended use. As
qualifying activities are performed related to Network Vision, interest expense primarily related to the carrying value of these spectrum licenses is being capitalized to
construction in progress within property, plant and equipment. Interest capitalized in connection with the construction of long-lived assets totaled $413 million, $13
million and $12 million for the years ended December 31, 2011, 2010 and 2009, respectively. Construction in progress (including any capitalized interest) associated with
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etwork Vision, which began in 2011, is expected to be depreciated using the straigh
t
-line method based on estimated economic useful lives, which are expected to be
depreciated over a weighted average useful life of approximately eight years, once the assets are placed in service.
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etwork equipment, site costs and related software includes switching equipment, cell site towers, site development costs, radio frequency equipment, network
software, digital fiber optic cable, transport facilities and transmission-related equipment. Buildings and improvements principally consists of owned general office
facilities, retail stores and leasehold improvements. Non-network internal use software, office equipment and other primarily consists of furniture, information technology
systems and equipment and vehicles. Construction in progress, which is not depreciated until placed in service, primarily includes materials, transmission and related
equipment, labor, engineering, site development costs, interest and other costs relating to the construction and development of our network.
The components of property, plant and equipment, and the related accumulated depreciation were as follows:
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Note 5. Propert
y
, Plant and Equipment
December 31,
2011 December 31,
2010
(in millions)
Land $333 $332
Network equipment, site costs and related software 37,600 37,514
Buildings and improvements 4,895 4,823
Non-network internal use software, office equipment and other 2,111 2,465
Construction in progress 1,752 995
Less accumulated depreciation (32,682) (30,915)
Property, plant and equipment, net $ 14,009 $ 15,214