Sprint - Nextel 2012 Annual Report Download - page 53

Table of Contents
Wireline Revenue
Voice Revenues
Voice revenues decreased
$288 million , or 15% , in 2012 as compared to 2011 and $334 million , or 15% , in 2011 as compared to 2010 . The 2012
decrease was primarily driven by overall price declines of which $174 million was related to the decline in prices for the sale of services to our Wireless
segment as well as volume declines due to customer churn. The
2011 decrease was also primarily driven by volume declines due to customer churn as
well as overall price declines. Voice revenues generated from the sale of services to our Wireless segment represented 32% of total voice revenues in
2012 as compared to 34% in 2011 and 33% in 2010.
Data Revenues
Data revenues reflect sales of data services, primarily Private Line, and also includes ATM, frame relay and managed network services
bundled with non
- IP data access. Data revenues decreased $62 million , or 13% , in 2012 as compared to 2011 and $59 million , or 11% , in 2011 as
compared to 2010 as a result of customer churn driven by the focus to no longer provide frame relay and ATM services in each of those periods. Data
revenues generated from the provision of services to the Wireless segment represented
44% of total data revenue in 2012 as compared to 35% in 2011
and
27% in 2010.
Internet Revenues
Internet revenues reflect sales of IP
- based data services, including MPLS, VoIP and SIP and managed services bundled with IP - based data
access. Internet revenues decreased
$97 million , or 5% , in 2012 from 2011 and $297 million , or 14% , in 2011 from 2010 . Certain cable MSO's have
decided to in - source their digital voice products resulting in a $98 million decrease in 2012 as compared to 2011 . The 2011 decrease was primarily due to
the in
- sourcing of their digital voice products by certain cable MSO's, combined with a decline in prices related to the sale of services to our Wireless
segment. Internet revenues generated from the provision of services to the Wireless segment represented
11% of total Internet revenues in 2012 as
compared to 8% in 2011 and 10% in 2010.
Other Revenues
Other revenues, which primarily consist of sales of customer premises equipment, increased by
$2 million , or 3% in 2012 as compared to
2011 and decreased $24 million , or 25% , in 2011 as compared to 2010 as a result of fewer projects in 2011.
Costs of Services and Products
Costs of services and products include access costs paid to local phone companies, other domestic service providers and foreign phone
companies to complete calls made by our domestic subscribers, costs to operate and maintain our networks, and costs of equipment. Costs of services
and products decreased
$224 million , or 7% , in 2012 from 2011 and $314 million , or 9% , in 2011 from 2010 . The decrease in 2012 and 2011 was primarily
due to lower access expense as a result of savings initiatives and declining voice, data and Internet volumes. Service gross margin percentage
decreased from 34% in
2010 to 31% in 2011 and further decreased to 28% in 2012 as a result of a decrease in net service revenue partially offset by a
decrease in costs of services and products.
Selling, General and Administrative Expense
Selling, general and administrative expense decreased
$70 million , or 13% , in 2012 as compared to 2011 and $110 million , or 17% , in 2011 as
compared 2010 . The decrease in 2012 and 2011 was primarily due to a reduction in shared administrative and employee related costs required to
support the Wireline segment as a result of the decline in revenue. Total selling, general and administrative expense as a percentage of net services
revenue was
12% in 2012 and 2011 and 13% in 2010.
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