Sprint Nextel Details Strategies to Expand on Mobility and Data Leadership; Company Provides Long-Term Financial Outlook
Wireless dominant revenue mix expected to drive strong growth
Cash flows expected to substantially exceed investment needs
Editor’s note: Today’s presentations, beginning at 8 a.m. EST, can be accessed through the Internet or via teleconference. Details on participation are available at www.sprint.com/investors. Call in numbers for the live teleconference are 866-297-0891 (domestic) and 706-679-8981 (local/international). Additionally, an audio replay will be available 2 hours after the call is completed. Replay numbers are 800-842-1687 (domestic), 706-645-9291 (international), and the conference code is 4342171.
RESTON, Va. — 03/07/2006, At its annual meeting with securities analysts today, Sprint Nextel Corp. (NYSE: S) will discuss its strategies and operational plans designed to add to its leadership position in the key growth areas of mobility and data services. The company will also discuss financial targets.
“Sprint Nextel’s repositioning is nearly complete as we prepare to launch EMBARQ™ as its own independent company. Our resulting asset mix will be aimed at the ’sweet spots’ in telecommunications - mobility and data services – positioning us to develop our leadership position in a fast-changing industry,” said Sprint Nextel CEO Gary Forsee.
“With an estimated 85 percent of our post-spin revenues and nearly 94 percent of our adjusted OIBDA to be derived from wireless this year, we are clearly in a unique position among our peers. Since the merger, Sprint Nextel has delivered the highest revenue growth rates of any large-cap U.S. company in the telecom industry and we intend to retain that leadership in the months and years ahead,” Forsee said.
“We have a vast array of competitive differentiators, including a leading product portfolio, compelling applications and services, unique branding and distribution strategies, a valuable customer mix and spectrum position, and advanced wireless and global IP networks. In addition, we believe our cable joint venture will provide a significant new avenue for customer growth and a substantial time-to-market lead in the race to provide bundled service offerings. Taken together, we are better positioned than any company to take advantage of what we see as a huge opportunity ahead for mobility and data services,” Forsee said.
The company reiterated its financial targets for fiscal year 2006. These targets include contributions from its Wireless and Long Distance segments, and 11 months of results from Alamosa and Enterprise Communications, but do not include results for its Local segment or Nextel Partners.
- 2006 full year consolidated revenues are expected to be $41 billion or more. This target assumes high single digit to low double digit organic growth in Wireless and a mid-to-high single digit revenue decline for Long Distance.
- The full year target for Adjusted OIBDA* is approximately $13 billion. Wireless service margins are expected to increase by approximately 200 basis points and Long Distance margins are expected to be in the low teens.
- Capital spending in 2006 is expected to be approximately $6.3 billion inclusive of $600 million of 800 MHz re-banding capital.
- Total re-banding costs for 2006 are expected to be $1.4 billion, which includes $600 million of re-banding capital and $800 million of other costs that primarily will be recorded as spectrum assets.
Sprint Nextel today also announced the following longer-term goals which reflect the assumed completion of the Nextel Partners acquisition in the second quarter of 2006 and exclude any contributions from the local telecommunications operations prior to its expected second quarter distribution to shareholders:
- Revenues are targeted to grow above the industry’s rate of growth over the next three years.
- Annual adjusted OIBDA is expected to grow at a double-digit rate during this same time period.
- Sprint Nextel also announced that from 2006 through 2008 it expects cumulative adjusted OIBDA to exceed cumulative capital spending requirements, including its re-banding obligations of an estimated $2.8 billion, by $23 billion or more.
Sprint Nextel continues to expect to achieve $14.5 billion of net present value synergies resulting from its merger and the company continues to target a 40% or better Adjusted OIBDA Service Margin* by 2008. Additionally, the company has announced that it expects to continue to pay nominal quarterly cash common stock dividends following the planned second quarter separation of the local communications operations. The board of Sprint Nextel has not determined the level of this dividend. In the future, the board also may consider additional cash distributions in the form of share buybacks or special dividends, subject to tax restrictions related to the separation. No plans for such distributions have been made at this time.
Sprint Nextel provides financial measures generated using generally accepted accounting principles (GAAP) and using adjustments to 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 non-GAAP measures are not measurements under accounting principles generally accepted in the United States. These measurements should be considered in addition to, but not as a substitute for, the information contained in our financial statements 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 release include the following:
Adjusted OIBDA is defined as operating income plus depreciation, amortization and special items. Adjusted OIBDA Service Margin is the ratio of Adjusted OIBDA to net operating revenues less equipment revenues. Although we have used substantively similar measures in the past, which we called “Adjusted EBITDA,” we now use the term Adjusted OIBDA and Adjusted OIBDA Service Margin to describe the measure we use as it more clearly reflects the elements of the measure. These non-GAAP measures should be used in addition to, but not as a substitute for, the analysis provided in the statement of operations. We believe that Adjusted OIBDA and Adjusted OIBDA Service 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 generally accepted accounting principles, these expenses primarily represent non-cash current period allocation of costs associated with long-lived assets acquired or constructed in prior periods. Adjusted OIBDA and Adjusted OIBDA Service 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.
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, 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 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 environment.
Future performance cannot be ensured. Actual results may differ materially from those in the forward-looking statements. Some factors that could cause actual results to differ include:
* the uncertainties related to the benefits of the Sprint-Nextel merger, including anticipated synergies and cost savings and the timing thereof;
* the uncertainties related to and the impact of the contemplated spin-off of Sprint Nextel’s local communications operations;
* the effects of vigorous competition and the overall demand for Sprint Nextel’s service offerings in the markets in which Sprint Nextel operates and the impact of new, emerging and competing services technologies on its business;
* the costs and business risks associated with providing new services and entering new markets;
* the impact of any adverse change in the ratings afforded Sprint Nextel’s debt securities by ratings agencies;
* the ability of Sprint Nextel’s Wireless segment to continue to grow and improve profitability;
* the ability of Sprint Nextel’s Local and Long Distance segments to achieve expected revenues;
* the effects of mergers and consolidations in the communications industry and unexpected announcements or developments from others in the telecommunications industry;
* the uncertainties related to Sprint Nextel’s investments in networks, systems, and other businesses;
* the uncertainties related to the implementation of Sprint Nextel’s business strategies,
unexpected results of litigation pending or filed against Sprint Nextel;
* a no significant adverse change in Motorola, Inc.’s ability or willingness to provide handsets and related equipment and software applications or to develop new technologies or features for Sprint Nextel’s iDEN network;
* the network performance, including any performance issues resulting from the reconfiguration of the 800 Megahertz band of the iDEN network that is contemplated by the Federal Communications Commission’s Report and Order, released in August 2004 and supplemented thereafter;
* the costs of compliance with regulatory mandates, particularly requirements related to the Federal Communications Commission’s Report and Order and deployment of enhanced 911 services on the iDEN network;
* equipment failure, natural disasters, terrorist acts, or other breaches of network or information technology security;
* inability of third parties to perform to Sprint Nextel’s requirements under agreements related to Sprint Nextel’s business operations;
* one or more of the markets in which Sprint Nextel competes being impacted by changes in political or other factors such as monetary policy, legal and regulatory changes or other external factors over which Sprint Nextel has no control; and
* other risks referenced from time to time in Sprint Nextel’s filings with the Securities and Exchange Commission (SEC), including its Form 10-K for the year ended December 31, 2004, as amended, and its quarterly reports on Form 10-Q for the subsequent quarterly periods.
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. Sprint Nextel provides a detailed discussion of risk factors in periodic SEC filings, including its 2004 Form 10-K as amended, and will provide a similar discussion in its 2005 Form 10-K that is expected to be filed in March 2006. You are encouraged to review these filings.
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 walkie-talkie capabilities; and an award-winning and global Tier 1 Internet backbone. For more information, visit www.sprint.com/mr.
- Contact Information
- James Fisher
- Media Contact
- Sprint Nextel
- Contact via E-mail
This news content was configured by WebWire editorial staff. Linking is permitted.
News Release Distribution and Press Release Distribution Services Provided by WebWire.