Sprint - Nextel 2012 Annual Report Download - page 4

Table of Contents
SPRINT NEXTEL CORPORATION
SECURITIES AND EXCHANGE COMMISSION
ANNUAL REPORT ON FORM 10 - K
PART I
OVERVIEW
Sprint Nextel Corporation, incorporated in 1938 under the laws of Kansas, is mainly a holding company, with its operations primarily
conducted by its subsidiaries. Our Series 1 voting common stock trades on the New York Stock Exchange (NYSE) under the symbol “ S. ” Sprint Nextel
Corporation and its subsidiaries (“Sprint,” “ we, ” “us,” “our” or the “Company” ) is a communications company offering a comprehensive range of
wireless and wireline communications products and services that are designed to meet the needs of individual consumers, businesses, government
subscribers and resellers. Our operations are organized to meet the needs of our targeted subscriber groups through focused communications
solutions that incorporate the capabilities of our wireless and wireline services. We are the third largest wireless communications company in the
United States based on wireless revenue, one of the largest providers of wireline long distance services, and one of the largest Internet carriers in the
nation. Our services are provided through our ownership of extensive wireless networks, an all - digital global long distance network and a Tier 1
Internet backbone.
We offer wireless and wireline voice and data transmission services to subscribers in all 50 states, Puerto Rico, and the U.S. Virgin Islands
under the Sprint corporate brand, which includes our retail brands of Sprint® , Boost Mobile® , Virgin Mobile
®
, and Assurance Wireless® on networks
that utilize third generation (3G) code division multiple access (CDMA), integrated Digital Enhanced Network (iDEN), or Internet protocol (IP)
technologies. We also offer fourth generation (4G) services through our deployment of Long Term Evolution (LTE) as part of our network
modernization plan, Network Vision, and also utilize Worldwide Interoperability for Microwave Access (WiMAX) technology through our mobile
virtual network operator (MVNO) wholesale relationship with Clearwire Corporation and its subsidiary Clearwire Communications LLC (together,
"Clearwire"). We utilize these networks to offer our wireless and wireline subscribers differentiated products and services whether through the use of a
single network or a combination of these networks.
Recent Developments
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), and 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
1
Item 1.
Business