Sprint - Nextel 2012 Annual Report Download - page 37

Table of Contents
to focus on profitable growth through service provided on an enhanced wireless network on the Sprint platform while continuing to achieve our key
priorities.
Our business strategy is to be responsive to changing customer mobility demands by being innovative and differentiated in the
marketplace. Our future growth plans and strategy revolve around achieving the following three key priorities:
To simplify and improve the customer experience, we continue to offer Ready Now, which trains our customers before they leave the store
on how to use their mobile devices. For our business customers, we aim to increase their productivity by providing differentiated services that utilize
the advantages of combining IP networks with wireless technology. This differentiation enables us to retain and acquire both wireline, wireless and
combined wireline
- wireless subscribers on our networks. We have also continued to focus on further improving customer care. We implemented
initiatives that are designed to improve call center processes and procedures, and standardized our performance measures through various metrics,
including customer satisfaction ratings with respect to customer care, first call resolution, and calls per subscriber.
We distinguish ourselves from the other wireless providers through our truly unlimited offerings of data, text and calling to any mobile, any
time. We are rated one of the highest in satisfaction of purchase experience for full
- service wireless providers and have been named one of the nation's
greenest companies. In addition to our improvements in the customer experience, we continue to strengthen our brand through offering a broad
selection of some of the most desired and iconic devices while focusing on continued enhancements to our network and our upgrade to LTE.
In addition to our brand and customer - oriented goals, we continue to focus on generating increased operating cash flow through
competitive rate plans for postpaid and prepaid subscribers, multi
- branded strategies, and effectively managing our cost structure. Certain of our
strategic decisions, such as Network Vision and the introduction of the iPhone® , which on average carries a higher equipment net subsidy, will result
in a reduction in cash flows from operations in the near term. However, we believe these actions will generate long
- term benefits, including growth in
valuable postpaid subscribers, a reduction in variable cost of service per unit and long
- term accretion to cash flows from operations. See “Liquidity
and Capital Resources” for more information.
Proposed Business Transactions
On October 15, 2012 we entered into an Agreement and Plan of Merger (Merger Agreement) with SOFTBANK CORP., a kabushiki kaisha
organized and existing under the laws of Japan, and certain of its wholly
- owned subsidiaries (together, "SoftBank"). Upon consummation of the
merger (SoftBank Merger), (i) Sprint will become a wholly
- owned subsidiary of a subsidiary of SoftBank (New Sprint), (ii) New Sprint will be a publicly
traded company, (iii) SoftBank will indirectly own approximately 70% of New Sprint on a fully diluted basis, and (iv) the former stockholders and other
equityholders of Sprint will own approximately 30% of the fully diluted equity of New Sprint. The SoftBank merger is subject to various conditions,
including receipt of required regulatory approvals and approval of Sprint's stockholders, and is expected to close in mid
- 2013.
In addition, on October 15, 2012, Sprint and SoftBank entered into a Bond Purchase Agreement (Bond Agreement), an on October 22, 2012,
Sprint issued a convertible bond (Bond) under the Bond Agreement to New Sprint with a face amount of $3.1 billion, stated interest rate of 1%, and
maturity date of October 15, 2019. The Bond is convertible into approximately 590 million shares of Sprint common stock, subject to adjustment. The
Bond will convert into shares of Sprint common stock immediately prior to consummation of the SoftBank Merger and may not otherwise be converted
prior to the termination of the Merger Agreement.
On November 6, 2012, Sprint entered into a definitive agreement with United States Cellular Corporation (U.S. Cellular) to acquire personal
communications services (PCS) spectrum and approximately 585,000 customers in parts of Illinois, Indiana, Michigan, Missouri and Ohio, including the
Chicago and St. Louis markets, for $480 million in cash. Sprint has agreed, in connection with the acquisition, to reimburse U.S. Cellular for certain
network shut
- down costs in these markets. These costs are expected to range from $130 million to $150 million on a net present value basis, but in no
event will Sprint's reimbursement obligation exceed
$200 million on an undiscounted basis. The additional spectrum will be used to supplement Sprint's
coverage in these areas.
34
•
Improve the customer experience;
•
Strengthen our brands; and
•
Generate operating cash flow.