Sprint Nextel 1Q12 Earnings Conference Call April 25, 2012

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Ralf Terry
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1 Sprint Nextel 1Q12 Earnings Conference Call April 25,

2 Cautionary Statement This news release includes forward-looking statements within the meaning of the securities laws. The statements in this news release regarding the business outlook, expected performance and forward-looking guidance, as well as other statements that are not historical facts, are forward-looking statements. The words may, could, should, "estimate," "project," "forecast," "intend," "expect," "believe," anticipate, "target," "providing guidance" and similar expressions are intended to identify forward-looking statements. Forward-looking statements are estimates and projections reflecting management's judgment based on currently available information and involve a number of risks and uncertainties that could cause actual results to differ materially from those suggested by the forward-looking statements. With respect to these forward-looking statements, management has made assumptions regarding, among other things, customer and network usage, customer growth and retention, pricing, operating costs, the timing of various events and the economic and regulatory environment. Future performance cannot be assured. Actual results may differ materially from those in the forward-looking statements. Some factors that could cause actual results to differ include: our ability to retain and attract subscribers; the ability of our competitors to offer products and services at lower prices due to lower cost structures; the effects of vigorous competition on a highly penetrated market, including the impact of competition on the price we are able to charge subscribers for services and equipment we provide and our ability to retain existing subscribers and attract new subscribers; the impact of equipment net subsidy costs; the impact of increased purchase commitments; the overall demand for our service offerings, including the impact of decisions of new or existing subscribers between our postpaid and prepaid services offerings and between our two network platforms; and the impact of new, emerging and competing technologies on our business; the ability to generate sufficient cash flow to fully implement our network modernization plan, Network Vision, to improve and enhance our networks and service offerings, improve our operating margins, implement our business strategies and provide competitive new technologies; the effective implementation of Network Vision, including timing, execution, technologies, and costs; our ability to migrate subscribers off the Nextel platform and mitigate related increases in churn; our ability to access additional spectrum capacity, including through spectrum hosting arrangements; changes in available technology and the effects of such changes, including product substitutions and deployment costs; our ability to obtain additional financing on terms acceptable to us, or at all; volatility in the trading price of our common stock, current economic conditions and our ability to access capital; the impact of unrelated parties not meeting our business requirements, including a significant adverse change in the ability or willingness of such parties to provide devices or infrastructure equipment for our networks; the costs and business risks associated with providing new services and entering new geographic markets; the financial performance of Clearwire and its ability to fund build, operate, and maintain its 4G network, including an LTE network; our ability to access Clearwire s spectrum capacity; the compatibility of Sprint's LTE network with Clearwire's LTE network; the effects of mergers and consolidations and new entrants in the communications industry and unexpected announcements or developments from others in the communications industry; unexpected results of litigation filed against us or our suppliers or vendors; the impact of adverse network performance; the costs or potential customer impacts of compliance with regulatory mandates including, but not limited to, compliance with the FCC's Report and Order to reconfigure the 800 MHz band; equipment failure, natural disasters, terrorist acts or other breaches of network or information technology security; one or more of the markets in which we compete being impacted by changes in political, economic or other factors such as monetary policy, legal and regulatory changes or other external factors over which we have no control; and other risks referenced from time to time in our filings with the Securities and Exchange Commission, including the Risk Factors described in our annual report on Form 10-K for the year ended Dec. 31, Sprint Nextel believes these forward-looking statements are reasonable; however, you should not place undue reliance on forward-looking statements, which are based on current expectations and speak only as of the date of this release. Sprint Nextel is not obligated to publicly release any revisions to forward-looking statements to reflect events after the date of this release. Clearwire s first quarter 2012 results from operations have not yet been finalized. As a result, the amount reflected for Sprint s share of Clearwire s results of operations for the quarter ended March 31, 2012, is an estimate and, based upon the finalization of Clearwire s results, may need to be revised if our estimate materially differs from Clearwire s actual results. Changes in our estimate, if any, would affect the carrying value of our investment in Clearwire, net loss, basic and diluted net loss per common share, and comprehensive loss but would have no effect on Sprint s operating income, OIBDA*, Adjusted OIBDA* or consolidated statement of cash flows. 2

3 *Non-GAAP Financial Measures Sprint Nextel provides financial measures determined in accordance with accounting principles generally accepted in the United States (GAAP) and adjusted GAAP (non-gaap). The non-gaap financial measures reflect industry conventions, or standard measures of liquidity, profitability or performance commonly used by the investment community for comparability purposes. These measurements should be considered in addition to, but not as a substitute for, financial information prepared in accordance with GAAP. We have defined below each of the non-gaap measures we use, but these measures may not be synonymous to similar measurement terms used by other companies. Sprint Nextel provides reconciliations of these non-gaap measures in its financial reporting. Because Sprint Nextel does not predict special items that might occur in the future, and our forecasts are developed at a level of detail different than that used to prepare GAAP-based financial measures, Sprint Nextel does not provide reconciliations to GAAP of its forward-looking financial measures. The measures used in this presentation include the following: OIBDA is operating income/(loss) before depreciation and amortization. Adjusted OIBDA is OIBDA excluding severance, exit costs, and other special items. Adjusted OIBDA Margin represents Adjusted OIBDA divided by non-equipment net operating revenues for Wireless and Adjusted OIBDA divided by net operating revenues for Wireline. We believe that Adjusted OIBDA and Adjusted OIBDA Margin provide useful information to investors because they are an indicator of the strength and performance of our ongoing business operations, including our ability to fund discretionary spending such as capital expenditures, spectrum acquisitions and other investments and our ability to incur and service debt. While depreciation and amortization are considered operating costs under GAAP, these expenses primarily represent noncash current period costs associated with the use of long-lived tangible and definite-lived intangible assets. Adjusted OIBDA and Adjusted OIBDA Margin are calculations commonly used as a basis for investors, analysts and credit rating agencies to evaluate and compare the periodic and future operating performance and value of companies within the telecommunications industry. Free Cash Flow is the cash provided by operating activities less the cash used in investing activities other than short-term investments and equity method investments during the period. We believe that Free Cash Flow provides useful information to investors, analysts and our management about the cash generated by our core operations after interest and dividends, if any, and our ability to fund scheduled debt maturities and other financing activities, including discretionary refinancing and retirement of debt and purchase or sale of investments. 3

4 1Q12 Earnings Per Share Results Diluted Earnings/(Loss) Per Share ($0.29) Includes pre-tax impact of: Accelerated depreciation predominately related to the expected shut down of the Nextel platform ($0.18) One-time benefit related to termination of Lightsquared arrangement $.06 4

5 CEO Update Dan Hesse 5

6 Key First Quarter Highlights Higher than forecast and consensus Adjusted OIBDA* More than 1.5 million iphone activations; 44% new customers Sprint platform postpaid ARPU growth of $4.03 year-overyear, best on record in the industry Sixth consecutive quarter of >1 million total company net subscriber additions Eighth consecutive quarter of positive postpaid net additions on the Sprint platform Sprint now serves record 56 million customers Highest level ever 6

7 Cash Sprint Platform revenue growth of 16% year-over-year ($ in Millions) $6,600 $6,400 $6,200 $6,000 $5,800 $5,600 $5,400 $5,200 $5,000 1Q11 2Q11 3Q11 4Q11 1Q12 $63 $62 $61 $60 $59 $58 $57 $56 Sprint Platform Service Revenue Sprint Platform Postpaid ARPU 7

8 iphone More than 1.5 million iphone gross adds and upgrades 44% to new customers Unlimited offering and stronger Sprint brand is attracting new iphone customers Positive early-life customer experience metrics reinforce expectation of churn benefit Lower calls to care and returns versus other smartphones 8

per subscriber Best ever Postpaid overall Customer Satisfaction Best ever Postpaid Customer

9 Customer Experience Recognized by JD Power five times for three brands Four 2012 Domestic Best-In-Class Awards from ATLANTIC-ACM Notable Achievements in 1Q12 Best ever Calls to care per subscriber Best ever Postpaid overall Customer Satisfaction Best ever Postpaid Customer Care Credits 46% recapture rate of Nextel Postpaid Subscribers Best Prepaid Churn in over six years 9

10 Brand Only Major Carrier to Improve Net Promoter Score year-overyear Port-ins Port-outs Sprint Postpaid Platform Net Port Positive for seven consecutive quarters 10

11 (Millions) Sprint Platform Total Subscribers up 42% in 2 years 1.9 Million Total Sprint Platform Net Adds in 1Q12 263,000 Sprint Platform Postpaid Net Adds in 1Q12 Sprint Platform Postpaid SOGA Best on Record* M Sprint Platform Subscribers M Sprint Platform Subscribers Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 * VZ, T, S actuals and TMo consensus Total Sprint Platform Ending Subscribers 11

12 Strong Device Portfolio Samsung Galaxy Nexus 4G LTE (Announced 4/16) HTC EVO 4G LTE (Announced 4/4) LG Viper 4G LTE (Announced 4/12) LG Rumor Reflex (Boost Mobile Announced 3/8) 12

13 4G Innovation 4G WiMax coming to Sprint Prepaid brands 13

Delivering on the Sprint Turnaround Phases of the Sprint

duplicative network cost structure Focus on growth of core

14 Delivering on the Sprint Turnaround Phases of the Sprint Turnaround I. Recovery Improve the Brand Reverse subscriber trends Begin growing Revenue Eliminate costs Conserve Capital in preparation for investment phase II. Investment Build world-class network platform Eliminate duplicative network cost structure Focus on growth of core Sprint Platform business III. Margin Expansion Expect strong margin improvement from Network Vision and continued revenue growth

15 Network Vision Update Steve Elfman President Network Operations & Wholesale 15

16 Network Vision Scorecard Network Vision deployment continues on track Continue to expect six major cities to launch 4G LTE by mid-year To Date: Zoning complete Leasing complete Notice to Proceed status Construction underway Sites on air ~9,700 sites nearly 7,700 sites >3,200 sites ~3,000 sites ~600 sites 16

Nextel Network Thinning Nearly 1,300 sites taken off air to date. Expect 9,600 sites to come off air by the end of third quarter 2012 Platform was built to support 20 million subscribers; 5.

17 Nextel Network Thinning Nearly 1,300 sites taken off air to date. Expect 9,600 sites to come off air by the end of third quarter 2012 Platform was built to support 20 million subscribers; 5.4 million subscribers on the platform at the end of 1Q12 No material change expected to on-street coverage Calls picked up by surrounding sites Considerable progress made and many technical risks behind us 17

18 CFO Update Joe Euteneuer 18

19 Sprint Platform Postpaid Performance Sprint Platform Postpaid Net Additions In Thousands Q11 2Q11 3Q11 4Q11 1Q12 10% year over year growth in Sprint platform postpaid gross adds 46% recapture rate of Nextel postpaid subscribers (1) 7.0% 6.0% 5.0% Sprint Platform Postpaid ARPU Growth 6.0% 6.4% 6.9% 4.0% 3.0% 2.0% 1.0% 0.0% 3.9% 2.9% 1.7% 1.9% 1.7% 2.2% 0.9% 1Q11 2Q11 3Q11 4Q11 1Q12 YoY change QoQ change (1) Approximately 46 percent of total subscribers that left the postpaid Nextel platform during the period were retained on the Sprint postpaid platform 19

20 Prepaid and Wholesale Subscriber Growth 5.50% Sprint Platform Prepaid Churn 5.00% 4.50% 4.00% 3.50% 2010 Sprint platform prepaid churn of 2.92% in 1Q12 - our lowest since the launch of prepaid on the Sprint platform in % 2.50% % 1Q 2Q 3Q 4Q 14.0 Sprint Platform Wholesale & Affiliate and Prepaid Ending Subscribers In Millions Wholesale, affiliate & other revenues grew 39% sequentially and 49% year-over-year Q11 2Q11 3Q11 4Q11 1Q12 Wholesale & Affiliates EOP Subs Sprint Platform Prepaid EOP Subs 20

21 Wireless Operating Expenses $1,000 $800 $600 $400 $200 $0 Sprint Platform Variable Network Expense $ In Millions 1Q11 4Q11 1Q12 Other Variable Network Expense 4G Roaming 3G Roaming Year-over-year Sprint platform variable network expenses increased 10%, while Sprint platform service revenues have grown 16% 3G Roaming costs declined $15 million sequentially 4G roaming costs declined $40 million sequentially due to new flat rate/unlimited model with Clearwire $2,500 Wireless SG&A (1) iphone POS Discount (subsidy) of 4Q11 $75 million 1Q12 $59 million $ In Millions $2,000 $1,500 $1,000 $500 $0 1Q11 4Q11 1Q12 G&A Sales & Marketing Excluding incremental costs for directly sourced iphones, Wireless selling expense would have declined 4% year-over-year despite an increase in Sprint Platform gross adds (1) iphone point-of sale discounts (subsidy) for devices directly sold by the manufacturer to indirect dealers, in which Sprint does not take device title, and recorded as sales expense 21

22 Pro Forma Consolidated Adjusted OIBDA* Adjusted OIBDA* improves 44% sequentially to $1.2 Billion $ In Millions 25.0% $1,500 $1,200 $900 $600 $300 Pro Forma Adjusted OIBDA Margin* 20.0% 15.0% 10.0% 5.0% $0 1Q11 2Q11 3Q11 4Q11 1Q12 0.0% Reported Network Vision (estimated) (1) The adjustment to determine pro forma adjusted OIBDA* was the addition of the estimated incremental effect of the net costs of Network Vision. 22

23 Capital Resources Total Liquidity $ In Billions $1.2 $1.1 $0.8 $0.9 $1.0 $7.6 $5.6 $4.0 $4.3 $4.0 1Q11 2Q11 3Q11 4Q11 1Q12 Cash Available Revolver Raised $2 billion in debt market $138 million Free Cash Flow* in 1Q Sprint Liquidity and Note/Loan Maturity Profile Total Liquidity As of Mar. 31, 2012 $ In Billions 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 Note & Loan Maturities Total Liquidity 23

24 2012 Expectations The company expects 2012 Adjusted OIBDA* to be at the high-end of the previous forecast of between $3.7 billion and $3.9 billion Within that Adjusted OIBDA* expectation, we continue to anticipate full year consolidated net service revenue growth of 4 to 6 percent (consolidated revenue less wireless equipment revenue) Continue to expect full year capital expenditures of approximately $6 billion in 2012, excluding capitalized interest 24

25 Q&A 25

26 Non-GAAP Reconciliations - Consolidated (Unaudited) Quarter To Date March 31, December 31, March 31, Net Loss (1) $ (863) $ (1,303) $ (439) Income tax expense (37) (106) (37) Loss before Income Taxes (826) (1,197) (402) Equity in losses of unconsolidated investments and other, net (3) Interest expense Operating (Loss) Income (255) (438) 259 Depreciation and amortization 1,666 1,174 1,255 OIBDA* 1, ,514 Severance and exit costs (4) Gains from asset dispositions and exchanges (5) (29) - - Asset impairments and abandonments (6) Spectrum hosting contract termination, net (7) (170) - - Access costs (8) (17) - - Adjusted OIBDA* 1, ,514 Capital expenditures (2) Adjusted OIBDA* less Capex $ 413 $ (58) $ 959 Adjusted OIBDA Margin* 15.2% 10.8% 19.9% Selected item: Deferred tax asset valuation allowance $ 348 $ 569 $ 196 See accompanying Notes to the Financial Information (Unaudited) in the Press Release 26

27 Non-GAAP Reconciliations - Wireless (Unaudited) (Millions, except Margin Data) Quarter To Date March 31, December 31, March 31, Operating (Loss) Income $ (331) $ (500) $ 140 Severance and exit costs (4) Gains from asset dispositions and exchanges (5) (29) - - Asset impairments and abandonments (6) Spectrum hosting contract termination, net (7) (170) - - Depreciation 1, ,012 Amortization Adjusted OIBDA* 1, ,283 Capital expenditures (2) Adjusted OIBDA* less Capex $ 342 $ (106) $ 834 Adjusted OIBDA Margin* 14.6% 9.5% 19.1% See accompanying Notes to the Financial Information (Unaudited) in the Press Release 27

28 Non-GAAP Reconciliations - Wireline (Unaudited) (Millions, except Margin Data) Quarter To Date March 31, December 31, March 31, Operating Income $ 78 $ 60 $ 119 Severance and exit costs (4) Asset impairments and abandonments (6) Access costs (8) (17) - - Depreciation Adjusted OIBDA* Capital expenditures (2) Adjusted OIBDA* less Capex $ 116 $ 144 $ 175 Adjusted OIBDA Margin* 16.1% 16.9% 20.4% See accompanying Notes to the Financial Information (Unaudited) in the Press Release 28

Sprint Nextel 2Q12 Earnings Conference Call

Sprint Nextel 2Q12 Earnings Conference Call July 26, 2012 1 Cautionary Statement This presentation includes forward-looking statements within the meaning of the securities laws. The words may, could, should,