sprint nextel quarterly presentations 2005 2nd

Investor UpdateSecond Quarter 200527 July 2005

© 2005 Sprint. All Rights Reserved. Sprint and the diamond logo design are trademarks of Sprint Communications Company L.P. All other trademarks are the property of their respective owners.

Second Quarter 2005 Investor Update 2

Cautionary Statement Regarding Forward-Looking InformationThe information highlighted in this presentation includes selected financial information and should be read in conjunction with our consolidated financial statements and notes and the Cautionary Statements Regarding Forward-Looking Information included in our press release dated July 27, 2005, which is posted on Sprint’s website at <<http://www.sprint.com/sprint/ir/fn/>>, as well as our financial statements and notes, the trends and risk factors affecting us and other information provided in our annual, quarterly and current reports, proxy statement, and other filings made with the Securities and Exchange Commission under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934.

This presentation includes "forward-looking statements" within the meaning of securities laws. The statements in this presentation regarding the business outlook and expected performance as well as other statements that are not historical facts are forward-looking statements. The words "estimate," "project," "forecast," "intend," "expect," "believe," "target," "providing guidance" and similar expressions identify forward-looking statements, which are estimates and projections reflecting management's judgments 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. In addition, forward-looking statements include statements related to information about the combined company, including expected synergies resulting from the merger of Sprint and Nextel, combined operating and financial data, future technology plans and whether and when the transactions contemplated by the merger agreement will be consummated. Forward-looking statements speak only as of the date indicated. Sprint is not obligated to publicly release any revisions to forward-looking statements to reflect events after the date of any news release or unforeseen events. With respect to these forward-looking statements, Sprint has made assumptions regarding, among other things, customer and network usage, customer growth and retention, pricing, costs to acquire customers and to provide services, the timing of various events and the economic environment.

This presentation contains certain non-GAAP financial measures as well as reconciliations to the most directly comparable GAAP financial measures. Because Sprint 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 does not provide reconciliations to its forward-looking measures. Definitions of these non-GAAP financial measures are available in the July 27, 2005, Second Quarter 2005 Investor Update located at <http://www.sprint.com/sprint/ir/>.


Reconciliation of Non-GAAP Liquidity MeasuresQuarter-to-date June 30, 2005

Long Other &Consolidated Wireless Local Distance Eliminations

Operating income (loss) 1,196$ 625$ 469$ 136$ (34)$ Special items (1) 60 19 1 13 27 Adjusted operating income (loss)* 1,256 644 470 149 (7) Depreciation and amortization 1,036 645 278 114 (1) Adjusted EBITDA* 2,292 1,289$ 748$ 263$ (8)$ Adjust for special items (60) Other operating activities, net (2) 1,280 Cash provided by operating activities-GAAP 3,512 Capital expenditures (997) Dividends paid (186) Proceeds from sales of assets 208 Other investing activities, net (3) Free Cash Flow* 2,534 Decrease in debt, net (40) Investments in debt securities, net (5) Proceeds from common stock issued 48 Other financing activities, net 11 Change in cash and equivalents - GAAP 2,548$

Quarter-to-date June 30, 2004Long Other &

Consolidated Wireless Local Distance Eliminations

Operating income (loss) 718$ 418$ 445$ (139)$ (6)$ Special items (1) 82 7 2 73 - Adjusted operating income (loss)* 800 425 447 (66) (6) Depreciation and amortization 1,232 640 271 321 - Adjusted EBITDA* 2,032 1,065$ 718$ 255$ (6)$ Adjust for special items (82) Other operating activities, net (2) (54) Cash provided by operating activities-GAAP 1,896 Capital expenditures (993) Dividends paid (180) Other investing activities, net (32) Free Cash Flow* 691 Decrease in debt, net (1,090) Proceeds from common stock issued 12 Investments in debt securities, net 25 Other financing activities, net (8) Change in cash and equivalents - GAAP (370)$

(1) See accompanying Notes to Consolidated Financial Statements.

(2) Other operating activities, net includes the change in w orking capital, change in deferred income taxes, miscellaneous operating activities and non-operating items in net income.


Adjusted Earnings Per Share Reconciliation

Quarter-to-Date Year-to-DatePeriods Ended June 30, 2005 2004 2005 2004

Earnings Applicable to Common Stock 599$ 229$ 1,069$ 452$ Earnings allocated to participating securities - 6 - 6 Preferred stock dividends paid 1 1 3 3 GAAP Net income 600 236 1,072 461

Special items (net of taxes) (1)

Restructuring and asset impairments 20 58 20 77 Merger and integration expense 17 - 17 - MCI settlement - (9) - (9) Premium on early retirement of debt - 18 - 18

Adjusted Net Income 637$ 303$ 1,109$ 547$

GAAP diluted earnings per share 0.40$ 0.16$ 0.71$ 0.31$ Special items 0.02 0.05 0.02 0.06

Adjusted Earnings Per Share (2) 0.42$ 0.21$ 0.74$ 0.37$

(1) See accompanying Notes to Consolidated Financial Statements.

(2) Earnings per share data may not add due to rounding.


Record Consolidated Financial Results2Q05 1Q05 2Q04

Net Operating Revenues $7.11B $6.94B 3% $6.87B 4%

Adjusted Operating Income $1.26B $1.04B 21% $800M 57%

Adjusted EBITDA $2.29B $2.07B 11% $2.03B 13%

Adjusted EPS $0.42 $0.31 35% $0.21 100%

Capital Expenditures $997M $659M 51% $993M -

Free Cash Flow $2.53B $532M NM $691M NM


$0

$5

$10

$15

$20

2Q04 4Q04 2Q05

Debt Cash on Hand Net Debt

Substantial Improvements in Financial Strength

� Year-to-date Free Cash

Flow of $3.1 billion

� Net Debt reduced by

38% since 2Q04

� Interest expense down

11% y-o-y

� Net Debt below 1.2x

trailing 12-mos

Adjusted EBITDA

(Bill

ions

)

Sprint Corp


Improving Business Mix

� Expanding wireless contribution

� Strong growth in wireline data products

52% 55% 56%

27% 24% 24%

22% 21% 20%

0%

25%

50%

75%

100%

2Q04 1Q05 2Q05

Wireless LD Local

52% 53% 56%

13% 12% 11%

35% 35% 33%

0%

25%

50%

75%

100%

2Q04 1Q05 2Q05

Wireless LD Local

Revenue Contribution Adjusted EBITDA Contribution

Results exclude North Supply & before eliminations


Improve Margins

Profitable Growth

Progress on Financial Priorities

� Key partnerships

� Strategic products and investments

� Drive productivity

� Leverage expense initiatives

� Detailed synergy plans

Execute 2005 Plan� Focus on day-to-day operations

� Deliver the numbers

� Seamless merger / spin


Previous Guidance New Guidance

Revenue

Consolidated Up Low Single Digits Up 3% to 4%

Wireless Up Low Double Digit Up Low Double DigitLocal Down Very Low Single Digit Down Very Low Single DigitLong Distance Down Low Double Digit Down High Single Digit

Adjusted EBITDA

Consolidated $8.5B to $8.7B $8.7B to $8.9B

Wireless $4.8B to $5.0B $4.8B to $5.0BLocal $2.85B Approximately $2.9BLong Distance Upper Half of $800M to $950M Approximately $1B

Sprint Capex $4.0 - $4.2B $4.0 - $4.2B

Updated 2005 Guidance

� Guidance excludes merger costs, US Unwired

� Merger costs expected to be significant in 2H05


Wireless 2Q05 Highlights

� Strong financial and operational results

� Margin expansion driven by increased revenues and solid cost management

� Improved customer retention

� Industry leading wireless data results and launch of EV-DO HSD network


Wireless Financial Results

2Q05 1Q05 2Q04

Net Operating Revenues $4.04B $3.87B 4% $3.61B 12%

Adjusted Operating Income $644M $457M 41% $425M 52%

Adjusted EBITDA $1.29B $1.10B 17% $1.07B 21%

Adjusted EBITDA as a percent of Service Revenue*

35.2% 31.1% +410 bps 33.0% +220 bps

Adjusted EBITDA less CAPEX $611M $683M -11% $404M 51%

* Service revenue includes direct, wholesale, affiliate and other


Wireless Operating Performance

2Q05 1Q05 2Q04

Total Subscribers on Network 26.6M 26.0M 2% 22.2M 20%

Total Net Subscriber Additions 588K 1.31M -55% 897K -34%

Churn 2.2% 2.5% -30 bps 2.3% -10 bps

ARPU $62 $61 2% $62 -

Costs of Services and Products $1.84B $1.83B 1% $1.73B 6%

Selling, General & Admin $910M $935M -3% $811M 12%


Wireless Data Leadership

� Wireless Data ARPU

nearly $6.50

� Highest data

contribution in industry

� EV-DO being

aggressively deployed 6%

8%

10%

2Q04 4Q04 2Q05

Data % of Reported ARPU


Long Distance 2Q05 Highlights

� Good performance driven by solid execution

� Progress on solution selling

� Revenue stability due to volume increases and

more stable pricing

$750

$1,000

$1,250

$1,500

$1,750

$2,000

1Q05 2Q05$200

$225

$250

$275

$300

1Q05 2Q05

Revenue Adjusted EBITDA

+1%

Flat

(Mill

ions

)

(Mill

ions

)


Long Distance Financial Results2Q05 1Q05 2Q04

Net Operating Revenues $1.72B $1.72B - $1.87B -8%

Business Voice $892M $882M 1% $947M -6%

Consumer Voice $162M $183M -12% $217M -25%

Data $420M $412M 2% $438M -4%

Internet $178M $178M - $214M -17%

Adjusted Operating Income (Loss) $149M $143M 4% ($66M) NA

Adjusted EBITDA $263M $260M 1% $255M 3%

Adjusted EBITDA less Capex $193M $195M -1% $191M 1%


Cost Management Yielding Results

� 1H05 benefited from aggressive cost actions

� CSP impacted by volume increases

� Access initiatives paying dividends

� SGA down 9% sequentially and 35% y-o-y

� Sales rep employee productivity increases


$800

$1,000

$1,200

$1,400

$1,600

2Q04 1Q05 2Q05

($M

illio

ns

$660

$685

$710

$735

$760

2Q04 1Q05 2Q05

40%

45%

50%

55%

60%

Adjusted EBITDA Adjusted EBITDA Margin

Local 2Q05 Highlights

� Strong 2nd quarter

� Solid revenue, profit

and cash results

� Adjusted EBITDA

margin of 51%

� Executed while

planning local spin-off

Revenue

Adjusted EBITDA

(Mill

ions

)


Local Financial Results

2Q05 1Q05 2Q04

Net Operating Revenue $1.48B $1.50B -1% $1.51B -2%

Adjusted Operating Income $470M $446M 5% $447M 5%

Adjusted EBITDA $748M $723M 3% $718M 4%

Adj EBITDA less CAPEX $547M $567M -4% $471M 16%

Access Lines 7.53M 7.64M -1.4% 7.78M -3.2%

Access MOU 7.00B 7.55B -7% 7.85B -11%

LD MOU 1.28B 1.33B -3% 1.10B 16%


Strong Data Revenue Growth

DSL

� 590K lines in service

� DSL penetration

increased to 11% of

capable lines

� ARPU of $43

� $300M annualized

revenue stream

Special Access

� Increased sales to

wireless carriers

� 2% sequential increase

� 10% y-o-y increase

� $450M annualized

revenue stream

16% of total revenues, up 260 bps y-o-y


Bundle Strategy Gaining Traction

� Penetration of one or more

strategic products increased

to 71%

� Strong increases in LD and

DSL penetration

� Strength in wireline /

wireless bundles, video

��

��

52%

54%

56%

58%

60%

62%

2Q04 2Q05

0%

4%

8%

12%

2Q04 2Q05


Local Spin-Off Update

� Transition teams making significant progress

� Finalized business model

� Commercial arrangements for LD & wireless near final

� Significant work on the new brand

� Preparing state regulatory applications

� Management announcements underway


Sprint Nextel Merger Process In Final Stages

� Regulatory approval

� Set expectations

� Execute the plan

� Communicate our

progress

� Deliver the results

� Brand announced

� Shareholder approvals

� Management team

� Significant work on expected synergies

� Planning for launch

� IRS ruling on spin

Accomplishments Pending


Q&A

� Gary Forsee, Chairman and CEO

� Len Lauer, President and COO

� Bob Dellinger, Executive Vice President and CFO

� Mike Fuller, President Local

� Kurt Fawkes, Vice President Investor Relations

sprint nextel quarterly presentations 2005 2nd

Economy & Finance

forwardlooking statements

forwardlooking information

cautionary statements

forwardlooking measures

combined operating

investing activities

net income

adjusted operating income