Sprint Release 1st Quarter Results 2005

[Barry]

* First quarter net wireless additions include 518,000 from direct, 621,000 from wholesale and 166,000 from Sprint PCS Affiliates. At the end of the period, Wireless was serving a total of 26.0 million subscribers, consisting of 18.3 million direct, 4.3 million wholesale and 3.4 million Sprint PCS Affiliates. Over the past four quarters, Wireless added more than 4.6 million subscribers, increasing the base by 22%.
* In the first quarter, direct gross additions were 1.86 million, a 3% year-over-year increase.
* Net operating revenues were up 13% year-over-year. Service revenues also increased 13%.
* First quarter Adjusted Operating Income* was $457 million, an increase of 63% compared to $281 million in the year-ago period. In the 2004 fourth quarter, Adjusted Operating Income* was $417 million.
* Adjusted EBITDA* in the first quarter was $1.1 billion, a 19% improvement from $925 million a year ago.
* ARPU* was $61 in the first quarter and the year-ago period compared to $62 in the 2004 fourth quarter. During the quarter, average customer usage was a little more than 16 hours per month.
* Churn was 2.5% this quarter compared to 2.9% reported a year ago and 2.7% in the fourth quarter of 2004.

In the quarter, the Sprint PCS Fair and FlexibleSM plans achieved increasing take rates and favorable feedback from subscribers. These plans represented the majority of Sprint's direct gross adds in the quarter.

Wireless completed the transition of the Qwest subscriber base to the Sprint network in the quarter as approximately 200,000 subscribers migrated from backlog status at the beginning of the period to activated status.

Increased subscriber retention in the quarter was predominately due to improvements in voluntary sources of churn. In the quarter, Sprint introduced industry-first wireless data service level agreements for business subscribers, in-store repair in retail stores and remote software updates to wireless handsets.

At the end of the period, there were 8.0 million data subscribers, including more than 6.7 million Sprint PCS VisionSM subscribers. For the full quarter, data revenues contributed $6.00 to ARPU.

Wireless continued to enhance network coverage and increase capacity to meet growing demand while also investing for the future as it builds out the EV-DO network.

Total first quarter operating expenses increased 8% compared to the year-ago period. Costs of services and products were up 5%, principally driven by higher traffic volumes generated by a growing subscriber base. Selling, general and administrative costs were up 22% due to an expanded direct retail presence, increased customer acquisitions and higher marketing expenses. Sequentially, total operating expenses were flat.

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