Sprint - Nextel 2013 Annual Report Download - page 53

Table of Contents
Strategic Initiatives
Apple Contract
Our commitment with Apple requires us to purchase a minimum number of smartphones. Since our launch of the iPhone, we have sold in excess of 15
million iPhones and continue to project that we will meet our minimum obligation over the contract term.
Network Capital Expenditures
We are currently in the process of modernizing our network and deploying new technology to allow for the consolidation and optimization of our
existing 800 MHz and 1.9 GHz spectrum, along with the 2.5 GHz spectrum into our base stations. Our expected timeline, our capital needs to maintain and operate
our existing infrastructure, and our integration of the recently acquired Clearwire 2.5 GHz spectrum are expected to require substantial amounts of capital
expenditures and increased operating expenditures during the period of integration and deployment.
Long - Term Debt and Scheduled Maturities
The following debt issuances and retirements occurred during
2013 :
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Date
Interest rate
Maturity
Amount
(in millions)
Issuances:
Senior notes
September 2013
7.875%
2023
$
4,250
Senior notes
September 2013
7.250%
2021
2,250
Senior notes
December 2013
7.125%
2024
2,500
Secured equipment credit facility(1)
Various
2.030%
2017
704
Total issuances
$
9,704
Retirements:
iPCS, Inc. first-lien secured notes
May 2013
Floating rate
2013
$
300
Clearwire Communications LLC senior secured notes (2)
September 2013
12.000%
2015
414
Clearwire Communications LLC second-priority secured notes (2)
October 2013
12.000%
2017
175
Clearwire Communications LLC senior secured notes (2)
December 2013
12.000%
2015
2,349
Clearwire Communications LLC second-priority secured notes (2)
December 2013
12.000%
2017
325
Secured equipment credit facility(1)
Various
2.030%
2017
111
Total retirements
$
3,674
(1)
In May 2012, certain of our subsidiaries entered into a $1.0 billion secured equipment credit facility that expires in March 2017 to finance equipment-related purchases from
Ericsson for our network modernization. The facility is secured by a lien on the equipment purchased and is fully and unconditionally guaranteed by Sprint Communications, Inc.
The facility was equally divided into two consecutive tranches of $500 million, which were both fully drawn as of December 31, 2013. Repayments of outstanding amounts under
the secured equipment credit facility cannot be re-drawn. The cost of funds under this facility includes a fixed interest rate of 2.03%, and export credit agency premiums and other
fees that, in total, equate to an expected effective interest rate of approximately 6% based on assumptions such as timing and amounts of drawdowns.
(2)
Notes of Clearwire Communications LLC were also direct obligations of Clearwire Finance, Inc. and were guaranteed by certain Clearwire subsidiaries.