FCC Approves Sprint/Nextel Merger

[Barry]

The FCC approved Sprint Corp.'s pending acquisition of Nextel Communications, which will boost Sprint as the industry's third-largest operator with more than 40 million subscribers. According to Sprint, the FCC approval completes all required regulatory approvals for the acquisition, and the carriers expect to close the deal shortly.

In approving the transaction, which was originally announced last December, the FCC did not require either carrier to divest any spectrum, network assets or customers. The government agency noted that there will continue to be "several other carriers with the ability to add subscribers and act as effective competitive constraints on the behavior of the merged entity."

The approval included the change of control of all licenses and authorizations held directly and indirectly by Nextel to Sprint, including SMR licenses in the 800 MHz and 900 MHz bands and licenses in the 1.9 GHz band that are part of Nextel's rebanding efforts.

The FCC also approved the transfer of control of all BRS licenses in the 2.1 GHz and 2.5 GHz bands and the leases of Education Broadcast Service spectrum in the 2.5 GHz band. Several EBS groups had lobbied the FCC to force the merged entity to divest the EBS spectrum. Sprint Nextel will now control spectrum in the 2.5 GHz band covering nearly 80 percent of the country.

Sprint Nextel has said it is looking at launching advanced wireless broadband services using the 2.5 GHz spectrum and recently initiated network trials using several wireless broadband standards.

The FCC added that it will require Sprint Nextel to fulfill a voluntary commitment to meet certain milestones for offering service in the 2.5 GHz band-including plans to cover at least 15 million potential customers with service within four years and another 15 million pops within six years-"unless circumstances beyond its control prevent the merged entity from reaching those milestones."

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[Barry]

Sprint and Nextel announced that they have completed their merger transaction, forming Sprint Nextel Corporation. Sprint Nextel common stock will begin trading on the New York Stock Exchange Monday, Aug. 15, 2005, under the symbol "S."

Each outstanding share of Nextel common stock will be converted into a combination of Sprint Nextel common stock and cash with a value equal to 1.3 shares of Sprint Nextel common stock. The amount of stock and cash consideration will be computed in accordance with the adjustments set forth in the Sprint Nextel merger agreement and will be based on, among other things, the actual number of shares of Sprint and Nextel stock outstanding immediately before the completion of the merger. The preliminary calculations of the stock exchange ratio, cash ratio and per share cash merger consideration for Nextel common stock are expected to be announced prior to market open Monday, Aug. 15, 2005.

With more than 44 million wireless subscribers, Sprint Nextel serves a balanced mix of consumer, business and government customers, and produces the highest average revenue per user in the industry. On a "pro forma" basis, Sprint Nextel reported revenues of $40.8 billion for the year ending December 31, 2004.

Sprint Nextel, along with its affiliates and partners, operates networks that cover approximately 268 million people. With its extensive network, spectrum assets and technology migration path, Sprint Nextel is well positioned to lead the industry. Sprint Nextel has approximately 80,000 employees with its corporate headquarters in Reston, Va., and its operational headquarters in Overland Park, Kan.

Seamless Transition
Customers using CDMA and iDEN products and services will continue to enjoy the benefits of their current phones, service plans and features. Customers with questions or looking for more information should log on to www.sprint.com for answers about the combined company. Sprint Nextel will soon start communicating with customers through advertising and direct communications channels. As announced earlier this summer, Sprint Nextel will go-to-market using the Sprint brand name, with the Nextel name continuing as a key product brand.

A highly experienced management team leads the combined company. Gary Forsee is the president and chief executive officer of Sprint Nextel. Tim Donahue is executive chairman of the combined company. Together they have a proven track record of leadership and nearly six decades of industry experience. Len Lauer serves as chief operating officer of Sprint Nextel and Paul Saleh serves as chief financial officer of Sprint Nextel.

Local Telecommunications Business

Sprint Nextel has begun the process of separating the operations of Sprint's local telecommunications business, including consumer, business and wholesale operations, and will seek regulatory approvals to spin off the local telecommunications business to Sprint Nextel shareholders in a tax-free transaction, which is expected to be completed in 2006.

The local telecommunications business, led by Daniel Hesse, chief executive officer – designate, will have its own management team and board of directors, consisting of an equal number of designees from Sprint and Nextel. The local telecommunications business, which has approximately 7.5 million local access lines in 18 states and as of June 30, 2005 had revenues of more than $6 billion during the prior 12 months, will be the largest independent local telecommunications company in the United States. It will have commercial operating relationships with Sprint Nextel for mobile and long-distance network services, and will receive certain transitional services, including corporate support functions. Its corporate headquarters will be in the Kansas City metropolitan area. Completion of the spin-off is subject to certain conditions, including regulatory approvals. Following completion of the spin-off, the common stock of the local telecommunications business is expected to be listed on the New York Stock Exchange.

About Sprint Nextel
Sprint Nextel offers a comprehensive range of wireless and wireline communications services to consumer, business and government customers. Sprint Nextel is widely recognized for developing, engineering and deploying innovative technologies, including two robust wireless networks offering industry leading mobile data services; instant national and international push-to-talk capabilities; and an award-winning and global Tier 1 Internet backbone.

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[Mod]

Just days ahead of beginning a new marketing campaign, Sprint Nextel Corp. said it planned to acquire a pair of network affiliates-IWO Holdings Inc. and Gulf Coast Wireless Ltd. Partnership-for more than $700 million. The deals will add more than 330,000 direct customers to Sprint Nextel's operations and stop pending litigation between Gulf Coast Wireless and Sprint Nextel.

Sprint Nextel said it acquired IWO Holdings for $427 million, including the assumption of $208 million in debt. IWO Holdings' shareholders will receive $42.50 per share in cash, with the deal expected to close during the fourth quarter. IWO Holdings' stock was trading up more than 16 percent early Tuesday at $41.50 per share, representing a market capitalization of $207.5 million.

Sprint Nextel noted the transaction value represents 10.8 times earnings before interest, taxes, depreciation and amortization adjusted for the impact of special items for the 12 months ending June 30 and 8.5 times 2006 adjusted EBITDA.

IWO Holdings, which was spun off from fellow affiliate US Unwired Inc. earlier this year following IWO Holdings' reorganization filing, serves more than 237,000 subscribers and covers about 4.8 million potential customers in portions of New York, New Hampshire, Vermont, Massachusetts and Pennsylvania.

Sprint Nextel said it was acquiring privately held Gulf Coast Wireless for $287.5 million, including the assumption of debt. Gulf Coast currently serves 95,000 direct customers in southern Louisiana and Mississippi, with the deal expected to close during the fourth quarter.

Sprint Nextel added that the transaction value represents 9.2 times EBITDA for the 12 months ending June 30 and 8.1 times 2006 EBITDA.

As part of the agreement, Gulf Coast Wireless and Sprint Nextel said they will seek an immediate stay of litigation that was pending in the U.S. District Court in Middle District of Louisiana. The litigation originally was filed by Gulf Coast Wireless in July. The lawsuit claimed Sprint Corp.'s acquisition of Nextel Communications Inc. violated terms of its affiliate agreement.

Sprint Nextel acquired US Unwired Inc. earlier this month for $1.3 billion following similar violation claims. Analysts noted the US Unwired transaction represented 14.2 times 2005 EBITDA and 10.9 times 2006 EBITDA results.

Sprint Nextel also has announced agreements with affiliates iPCS Inc. and its subsidiaries Horizon Personal Communications Inc. and Bright Personal Communications Services L.L.C., giving the companies until Jan. 1 to work out potential modifications to their affiliate agreements. Sprint Nextel affiliate AirGate PCS Inc., which was acquired earlier this year by Sprint Nextel's largest affiliate Alamosa Holdings Inc., filed a similar complaint against Sprint Nextel earlier this month.
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