Creating America s Premier Communications Company. December 15, 2004

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Transcription:

Creating America s Premier Communications Company December 15 2004

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Tim Donahue Gary Forsee President and CEO Nextel Chairman and CEO Sprint

Building Strength on Strength Merger accelerates and expands growth prospects Assets and service capabilities align with industry growth Benefit from complementary operational strengths compatible corporate cultures and strong management teams Realize substantial synergies and accelerate cash flow growth Capitalize on best practices and systems from each company Significant value in largest independent local telecommunications company 4

Transaction Summary Structure 71 billion stock-for-stock merger of equals Consideration Sprint and Nextel equally valued Sprint shares will be Sprint Nextel shares Nextel shareholders receive value equivalent to 1.3 shares of Sprint Nextel Required Approvals Shareholders FCC DO state PUC s Timeline Expected closing second half 2005 After closing tax-free spin off of LEC to Sprint Nextel shareholders 5

Broad Scale and Scope Sprint Nextel Sprint Nextel Sprint Local Subscribers (M) 20.1¹ 15.3 35.4 7.7 (lines) LTM Revenue (B) 27 13 34 6 LTM OBDA (B) 8.1 5.0 10.2 2.9 Last 12 Months Revenue Mix (LTM) Local 22 LD/Data Wireless 27 51 Wireless 51 Wreless 100 Wireless 78 LD/Data 22 Local 100 1 ncludes 17.3mm direct customers and 2.8mm wholesale customers 6

High Growth Profile LTM Revenue Growth LTM OBDA Growth 15 13 20 16 10 15 10 5 0 (5) (10) Sprint Nextel 3 Wireless 1 1 (1) ALLTEL Verizon BellSouth SBC Note: Revenue and OBDA numbers are for the 12 months ending 9/30/04 and exclude Sprint s Local Exchange Carrier business. BellSouth numbers are pro forma for sale of Latin America business. BellSouth and SBC numbers assume proportionate consolidation of wireless assets. Cingular numbers are pro forma for AWE acquisition. Verizon numbers assume proportionate consolidation of wireless assets. 5 0 (5) (10) (15) Sprint Nextel 3 (7) (5) (11) ALLTEL Verizon BellSouth SBC 7

Proven Management Team President & Chief Executive Officer Gary Forsee Chief Operating Officer Len Lauer Chief Financial Officer Paul Saleh Local Staff Functions Office of the Chairman Chief Technology Officer Barry West Co-Chief Transition Officers Steve Nielsen/Rick Orchard Chairman Tim Donahue Chief Strategy Officer Tom Kelly General Counsel Regulatory & Public Affairs Robust experience spanning all facets of communications 12 member board with equal representation Two lead independent directors Executive headquarters - Reston VA Operational headquarters - Overland Park KS 8

Armed For Success High-value customer base Unmatched product and service capabilities Clear vision for technology evolution 12 Billion NPV of achievable synergies Substantial financial strength Strong management team 9

High-Value Products Brands and Distribution Channels Products & Services High capacity CDMA High performance PTT - Direct Connect Distinctive Handsets Sprint PCS Vision Full Range of Enhanced Wireless & Wireline Products Target Markets & Brands Enterprise & Government Small and Medium Business Consumer and Youth Distribution Channels Dedicated Direct Sales Force Alliance Partners National/local retailers and agents Resellers MVNOs Cable Operators Tele/Web sales 1500 Company Stores Serving The Full Range of Communications Users 10

Unmatched Services ndustry-leading product and service portfolio Extensive network assets and expertise to deliver bundled and integrated services Enviable spectrum position Unprecedented opportunity for true P-based broadband wireless services 11

Technology Opportunities Quality Faster time to market for sites CapEx for capacity and features Leverage wireline reliability Coverage mproved from combined cell sites Expand 3G network Develop 800 MHz CDMA Nationwide LD and global P network Technology Leadership Cost mproved capacity costs for CDMA Purchasing scale Facilities and interconnection nnovative Products Best voice / PTT service Best mobile data services Best data applications 12

Network Technology Evolution iden nvest in iden network until voice traffic can be supported on CDMA network Maintain iden for Push-to-Talk centric customers nteroperability gateway and potential dual-mode handsets CDMA Voice Rapid coverage enhancement through use of Nextel sites and spectrum CDMA EVDO Broadband (3G) Complete Phase 1 EVDO deployment Complete 100 overlay of EVDO Rev. A and introduce Broadband services Launch PTT service on EVDO Rev. A 2005 2006 2007 2008 13

Revenue & Subscribers mproved customer retention Up-sell Long Distance Rate plan migration effect 12B Billion in NPV Rev & Subs Network Ops SG&A Unify back office Sales and distribution efficiency Achieve G&A scale Network Operations Site opex savings Access and transport Resource efficiencies SG&A CapEx CapEx Long term voice and data capacity savings Site co-location savings Systems and applications development 14

ntegration Costs New corporate brands Sprint Nextel Sprint s local operations Back office integration Facility and contract termination Employee retention Severance Managed by Co-Chief Transition Officers 15

Expected Synergies 2006 2007 2008 ( in billions) 2006 2007 2008 OBDA Synergies 0.6 0.7 1.0 1.2 1.1 1.3 CapEx Synergies 0.6 0.8 (0.2) (0.3) 0.7 0.9 Total Synergies 1.2 1.5 0.8 0.9 1.8 2.2 ntegration Costs (1.0) (1.3) (0.2) (0.5) 0 12B NPV in Synergies Net of ntegration Costs 16

Financial Strength and Flexibility Combined entity to maintain investment grade characteristics Cash and equivalents of 5.7 billion Net debt to LTM OBDA of 1.6X Solid financial profile Strong free cash flow generation Ample access to liquidity Bank commitments of more than 20 billion Note: Pro forma financials as of 9/30/04. 17

Sprint s Local Operations An ndustry Pacesetter Nation s largest independent local telephone company 9 7.7 Access Lines ndustry-leading provider of bundled service offerings Territory concentrated in high growth geographies millions of lines 6 3 3.0 2.3 2.3 Financial leverage and dividend policy aligned with financial prospects 0 Sprint ALLTEL CenturyTel Citizens Source: Company filings and company press releases as of 9/30/04 18

America s Premier Communications Company High-value customer base Unmatched product and service capabilities Clear vision for technology evolution 12 Billion NPV of highly achievable synergies Substantial financial strength Strong management team 19

Creating America s Premier Communications Company December 15 2004