Sprint's Fall - Big Unforeseen Consequences; Impact on Wireless Industry; Takeover Possibilities; Fixing It

Published by: Boschulte Schnee Group LLC

Published: Mar. 15, 2008 - 170 Pages

Table of Contents

CHAPTER 1 -- SUMMARY OF CONCLUSIONS

Overview - Sprint's Strategy Dilemma

Sprint's Immediate Issues

The Wireless Industry's Big Two Facing Challenges

A. Where Sprint Is Today

B. Assessing State of Sprint's Plans

Basic Business Additional Steps

C. Seizing Opportunities Against the Big Two

A New Direction for Sprint

Valuation Potential -- If Fixed Timing

D. Takeover Opportunity

E. WiMAX - What To Do

Unforseen Consequences of Sprint's Fall

CHAPTER 2: DETERIORATION SINCE THE NEXTEL MERGER

New CEO: New Era?

How Sprint Created The Mess

Sprint - Pre-Nextel Merger

Nextel - Pre-Merger

Nextel - The Pre-Merger Outstanding Issues

The Merger - Motivations and Positioning

Evaluating The Merger

Sprint Subscriber Growth - Since Merger

Record Since Merger - Wireless Earnings

CHAPTER 3: COMPARISON TO THE BIG TWO

Comparison to Verizon and AT&T Subscriber Growth

Comparison To Verizon and AT&T Earnings

Other Subscriber Metrics - ARPU, Churn

Data Revenue Growth

Plant and Capex Growth

Comparison to Verizon and AT&T Plant and Capex Growth

Metrics Comparing Sprint, Verizon, AT&T Recent Performance and Growth Rates

Comparison To Verizon and AT&T: Product And Service Offerings

Handhelds

Services

CHAPTER 4: PINPOINTING AND FIXING THE PROBLEM

The CDMA And iDEN Core Business Of Sprint

Business Integration

Rebanding And Network Integration

End Game For iDEN (Nextel) Base

Integration Issues - Where Sprint Is Today

New Growth Strategy - QChat Plus ("Push To

Growth Strategy - The New "Push To" Market

Distribution And Marketing

Future of Nextel Connect Distribution

Customer Service, Back Office

Network Integration - iDEN/CDMA

Network Integration - Competition

CHAPTER 5: FIXING THE CORE BUSINESS - METRICS

Subscriber Growth

Pricing (ARPU), Customer Acquisition and Retention Costs, Churn, Capex

Margin Improvement

Cash Flow Outlook

CHAPTER 6: WIMAX - EVALUATING SPRINT'S POSITION

Overview of WiMAX Alternatives

Keeping WiMAX - The Issues

Background: Wireless Industry - Important Considerations

WiMAX - Status

Sprint's Resources For Doing WiMAX

Spectrum

Technology Experience

National Network Experience

National Marketing Scope

Is Keeping WiMAX Compatible With Fixing the Core Business?

WiMAX - Resources Required

Risks

CHAPTER 7: WIMAX - SPRINT'S OPTIONS

Develop WiMAX Internally - How To Develop Compatibility With Core

Spin-off to Shareholders

Likely Value Creation - Complete Spin-off

Spinco Management And Control

Spinco Financing

Keep Spectrum Drop WiMAX Plans

Sell WiMAX Operation

Merge WiMAX Operation (including New Entity)

Value Creation Analysis: WiMAX in the U.S. - Next Five Years

Evaluation of Sprint's WiMAX Alternatives

Conclusions Regarding WiMAX Alternatives

CHAPTER 8: TAKEOVER POTENTIAL

The Case For A Takeover Of Sprint

Management Team

Value of the Core Business

Potential Takeover Candidates - Industry Companies

Potential Takeover Candidates - Financial Parties

Projections of Core Results And Valuation

Projections of WiMAX Results and Valuation

Combining Core And WiMAX Projections

Valuation of Sprint Wireless Assets

Long Distance Operations

Future of Boost Mobile - Value of Prepaid, Low End Strategy

Competitive Comparisons to Boost

Conclusions On Boost

Charts, Diagrams Figures and Tables

Chart 1-1. Sprint - Gross Adds by Category and Quarter, 6/06-12/07

Table 1-1. Sprint - Gross Adds by Category and Quarter 6/06-12/07

Table 1-2. US Mobile Subscriber Growth 2000-07

Table 1-3. Verizon, AT&T, Sprint Individual Plans

Table 1-4. Mobile Data/Content Use, By Category 1/07

Table 1-5. Sprint, Verizon, AT&T - Data Revenue 2006-07

Table 1-6. Wireless Only Households (HHs)

Table 1-7. Major Wireless Challenges & Likely Impacts

Table 1-8. Summary Forecast 2008-2010

Chart 1-2 Sprint Strategies vs. Big Two: Past, Present, Future

Table 1-9. Sprint: Faster vs. Slower Recovery Scenario

Table 1-10. WiMAX Results - Positive Scenario - Year Five

Table 2-1. Sprint - Pre-Nextel Merger, 1H 2005

Table 2-2. Sprint Wireless 1H 2005 vs. 1H 2004

Table 2-3. Nextel Pre-Merger, 1H 2005 vs. 1H 2004

Table 2-4. Nextel Pre-Merger Key Issues and Solutions

Table 2-5. Sprint - Nextel Comparison

Table 2-6. Unique to Sprint - Management Challenges Not Faced by Cingular (AT&T) or Verizon

Table 2-7. Sprint Nextel 2.5GHz Spectrum Holdings

Table2-8. Sprint Subscriber Growth Q3 '05 - Q3 '07

Table 2-9. Sprint Subscriber Base Growth 3Q '05 vs. 3Q '07 & 4Q '07

Table 2-10. Sprint Pro Forma Financial Results Q3 '05 - Q3 '07

Table 2-11. Sprint Growth Q3 '05 - Q3 '07

Table 2-12. Sprint Margin Analysis Q3 '05 - Q3 '07

Table 3-1. Sprint, Verizon Wireless, AT&T Mobility Subscriber Growth 2005-9/07

Table 3-2. Sprint, Verizon Wireless, AT&T Mobility Subscriber % Growth 2005-9/07

Table 3-3. Sprint, Verizon Wireless, AT&T Mobility P&L 2005-9/07

Table 3-4. Sprint, Verizon Wireless, AT&T Mobility Growth Rates 2006 vs. 2005 9 Mos. 2007 vs. 9 Mos. 2006

Table 3-5. Sprint, Verizon Wireless, AT&T Mobility Margin Analysis 2005-9/07

Table 3-6. Sprint, Verizon WL, AT&T Mob. - ARPU and Churn 2006 9 Mos. '07

Table 3-7. Sprint, Verizon WL, AT&T Mob. - Data Revenue 2006 9 Mos. '07

Table 3-8. Sprint - Company-wide - PPE, Capex, Depreciation Data 2005-9/07

Table 3-9. Sprint, Verizon WL, AT&T Mob. - PPE, Capex, Depreciation Data 2005- 9/07

Table 3-10. Sprint, Verizon WL, AT&T Mob. - Revenue, Operating Income, OIBDA as a % of Net Plant, 2005- 9 Mos. '07

Table 3-11. Sprint, Verizon WL, AT&T Mob. - Revenue, Operating Income, OIBDA Growth (Year-to-Year Period) and as a % of Capex, 2006 - 9 Mos. '07

Table 3-12. Categories of Products and Services

Table 3-13. Sprint, Verizon, AT&T Handhelds, By Price

Chart 3-1. Sprint Singly Everything Plan

Table 3-14. Sprint Individual Plans

Table 3-15. Verizon, AT&T, Sprint Individual Plans

Table 3-16. Sprint Family Plans

Table 3-17. Verizon, AT&T, Sprint Family Plans

Table 3-18. Sprint Boost Prepaid Plans

Table 3-19. Verizon, AT&T, Sprint Prepaid Plans

Table 3-20. Sprint Boost Mobile - Phones Offered

Table 3-21. Sprint Data Plans

Table 3-22 Sprint Messaging Plans

Table 3-23. Verizon PDA and Smartphone Plans - Email and Messaging

Table 3-24. AT&T Data/Messaging Plans

Table 3-25. Sprint Power Vision Packs

Table 3-26. Sprint Content/Media Services

Table 3-27. Verizon V Cast Plans

Table 3-28. AT&T Content/Media Offerings

Table 3-29. Verizon Business Plans

Table 3-30. AT&T Business Data Plans

Table 4-1. Rebanding (Nextel Deal With FCC)

Figure 4-1. Push-to-Talk (PTT) Technology Alternatives - Genre A - 2005-2008

Figure 4-2. Push-to-Talk (PTT) Technology Alternatives - Genre B - 2005-2008

Table 4-2. Genre (B) - PTT Products and Status

Table 4-3. iDEN Replacement Technology What/When/Who Chart

Table 4-4. Sprint Distribution Channel Assessments

Table 4-5. Sprint Status of Unified Billing Project

Table 5-1. U.S. Mobile Subscriber Growth 2000-07

Table 5-2. Sprint Free Cash Flow - Consolidated

Table 5-3. Sprint Wireless Preliminary Projection 2006-2010

Table 5-4. Sprint Wireless Optimistic Preliminary Projection 2006-2010

Diagram 6-1. Sprint - WiMAX Alternatives

Table 6-1. Sprint 2008 - WiMAX Developments

Table 6-2. Sprint Nextel 2.5GHz Spectrum Holdings

Table 6-3. Sprint 2.5GHz Spectrum Breakdown

Table 6-4. 4G Technology Alternatives Considered By Sprint

Table 6-5. Sprint WiMAX Ecosystem

Table 6-6. Sprint WiMAX Capex Estimates

Table 6-7. Sprint WiMAX Capex Breakdown

Table 6-8. Sprint WiMAX 2007-08 Buildout Elements

Figure 6-1. Sprint-Clearwire Proposed Geographic Split (Sprint in White)

Table 6-9. WiMAX Risks and Evaluation

Figure 7-1. Sprint Slide On WiMAX Growth Strategy (8/07)

Diagram 7-1. Sprint WiMAX-CDMA Business/Network Progression

Table 7-1. Clearwire Valuations and Operating Data

Table 7-2. Spinco Valuation Parameters

Table 7-3. Management Issues, Sprint/Spinco

Table 7-4. Sprint & Nextel 2.5 GHz Holdings

Table 7-5. 2.5 GHz Spectrum Pricing 2000-2006

Table 7-6. Recent Spectrum Sales/Transactions

Table 7-7. Pricing of Sprint Spectrum On a Sale

Table 7-8. Sprint Sale of WiMAX

Table 7-9. 4G Technology Alternatives

Table 7-10. WiMAX Results - Comparison of Two Models - Year Five

Table 7-11. WiMAX Alternatives: Outlook and Risks

Table 7-12. WiMAX Alternatives Potential Returns to Shareholders

Table 7-13. Sprint - Keeping WiMAX vs. Spin-off: 5-Year Outlook

Chart 8-1. Sprint Top Management Team

Table 8-1. Sprint Current Valuation of Core Business

Table 8-2. Google - Telecom Initiatives

Table 8-3. Sprint Wireless Preliminary Projection 2006-2010

Table 8-4. Sprint Estimated (2010) Compared to VZ, T and AT

Table 8-5. Sprint Core Valuation Assumptions - 2010

Table 8-6. WiMAX Projected Results, Years 3-5

Table 8-7. Projected Valuation of Sprint 2012 - Favorable & Unfavorable Cases

Table 8-8. Sprint - Summary Estimated Wireless Asset Values 3/08

Table 8-9. Sprint - Breakdown of Summary Estimated Wireless Asset Values 3/08

Table 8-10. Sprint LD Operations 2005-9/30/07

Table 8-11. Sprint LD Compared to Level 3, Qwest and Global Crossing - Summary Results

Table 8-12. Sprint LD - Comparison to Level 3, Metrics

Table 8-13. Boost Compared To Other Prepaid Carriers

Abstract

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