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Fitch Maintains Sprint Nextel on Rating Watch Positive



  Fitch Maintains Sprint Nextel on Rating Watch Positive

Business Wire

CHICAGO -- December 18, 2012

Fitch Ratings maintains the following ratings for Sprint Nextel Corporation
(Sprint Nextel) and its subsidiaries on Rating Watch Positive:

Sprint Nextel

--Issuer Default Rating (IDR) 'B+';

--Senior unsecured credit facility 'BB/RR2';

--Junior guaranteed unsecured notes 'BB/RR2';

--Senior unsecured notes 'B+/RR4'.

Sprint Capital Corporation

--IDR 'B+';

--Senior unsecured notes 'B+/RR4'.

Nextel Communications Inc. (Nextel)

--IDR 'B+'.

Fitch has maintained the Rating Watch Positive after Sprint Nextel entered
into a definitive agreement to acquire the approximate 50% stake in Clearwire
Corp. it currently does not own for $2.2 billion. Sprint Nextel will also
provide a loan of up to $800 million in interim financing in the form of
exchangeable notes, which will be exchangeable under certain conditions for
Clearwire class B common stock. Under the financing agreement, Sprint has
agreed to purchase $80 million of exchangeable notes per month for up to 10
months beginning in January 2013. The transaction will require regulatory
approval and a majority of non-Sprint owned Clearwire shares. The Clearwire
acquisition, which is contingent on the Softbank transaction finalizing, is
expected to close mid-2013 at approximately the same time as Softbank.

Fitch believes Clearwire's spectrum assets are integral to Sprint Nextel's
long-term LTE plans by solving the need for high capacity spectrum in its
urban cores. This strengthens Sprint's competitive position and ability to
differentiate unlimited wireless broadband offerings from its national peers.
As such, Fitch views this strategically as a positive event since the
acquisition would give Sprint Nextel complete control of Clearwire's spectrum
and allow Sprint to fully integrate Clearwire assets into its network. Thus
the transaction eliminates future equity contributions, reduces inefficient
operating expenses and facilitates the execution of its strategic plans.

From a credit profile perspective, pro forma leverage would increase to over
5x. Given the increase in leverage, the prospects for a ratings upgrade to
'BB-' once the two acquisitions close have potentially diminished. Sprint's
execution on stated network objectives and whether the company can demonstrate
further operational and financial improvements in the coming quarters despite
the increased competitive intensity has elevated importance. Material
uncertainty also still exists with Sprint's post-transaction capital structure
plans and uses for Softbank's capital infusion which will be a key factor in
the final rating decision.

Uncertainty exists whether non-Sprint Clearwire shareholders will approve the
transaction. Fitch believes Clearwire's stand-alone prospects were bleak due
to its constrained liquidity, limited access to new capital and inability to
attract major new customers. Over time, as consolidation has removed potential
wholesale partners and operators have become more efficient with spectrum
assets through acquisition and swaps, the industry has obviated the need for a
wholesale operator. Clearwire's lack of additional strategic agreements with
other operators, limited market access and substantial funding gap left the
company heavily reliant on Sprint Nextel for further funding.

Absent Clearwire shareholder approval, a financial restructuring of Clearwire
is quite possible. This would have significant implications and risks for
Clearwire's stakeholders with an uncertain outcome. In addition, a financial
restructuring would introduce material uncertainty with Sprint's longer-term
network and spectrum plans. Clearwire was expected to begin supplying Sprint
with hotspot capacity for its LTE network beginning in mid-2013.

Fitch now views Sprint Nextel's liquidity as strong despite the significant
cash requirements expected through at least 2013. In addition to the expected
$8 billion from Softbank, Sprint Nextel's liquidity position is supported by
$6.3 billion of cash and $1.2 billion borrowing capacity under its $2.2
billion revolving credit agreement at the end of the third quarter 2012. Fitch
expects Sprint Nextel will consider parameters for a new facility in early
2013 given the October 2013 maturity. Approximately $423 million is also
available through May 31, 2013 under the first tranche of the secured
equipment credit facility. The incremental Softbank investment has afforded
Sprint Nextel considerable financial flexibility to address refinancing
requirements and strategic investments which the company has demonstrated in
the past two months.

Sprint has significantly improved its maturity profile as a result of debt
issuances in the past year and reduced refinancing risk in the midst of a
capital intensive period. In mid-2011, Sprint had $8 billion in debt
maturities during the next four years, including $2.3 billion in 2012, $1.8
billion in 2013, and $1.4 billion in 2014. For the third quarter 2012, pro
forma for the November $2.3 billion debt issuance, Sprint has approximately $1
billion in debt maturities during the next three years including $317 million
in 2013, $198 million in 2014 and $500 million in 2015.

WHAT COULD TRIGGER A RATING ACTION

Negative: The ratings are on a Rating Watch Positive. As a result, Fitch's
sensitivities do not currently anticipate developments with a material
likelihood, individually or collectively, of leading to a rating downgrade.

Positive: The ratings are on a Rating Watch Positive. Future developments that
may, individually or collectively lead to positive rating action include:

--Completion of Softbank merger and expected uses for the $8 billion cash
injection.

--Plans for post-close capital structure.

--The degree of operational, strategic, and legal linkage between Softbank and
Sprint Nextel.

--Trends associated with operating performance for postpaid subscribers,
churn, and ARPU.

--Sprint Nextel's continued progress with network modernization plans
including cost improvements and LTE network deployment.

Additional information is available at 'www.fitchratings.com'. The ratings
above were solicited by, or on behalf of, the issuer, and therefore, Fitch has
been compensated for the provision of the ratings.

Applicable Criteria and Related Research:

--'Corporate Rating Methodology' (Aug. 8, 2012);

--'Rating Global Telecom Companies: Sector Credit Factors' (Aug. 9, 2012).

Applicable Criteria and Related Research:

Corporate Rating Methodology

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=684460

Rating Telecom Companies

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=682323

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS.
PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK:
HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING
DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S
PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND
METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF
CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL,
COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM
THE 'CODE OF CONDUCT' SECTION OF THIS SITE.

Contact:

Fitch Ratings
Primary Analyst
Bill Densmore, +1-312-368-3125
Senior Director
Fitch, Inc.
70 W. Madison Street
Chicago, IL 60602
or
Secondary Analyst
David Peterson, +1-312-368-3177
Senior Director
or
Committee Chairperson
Mark Oline, +1-312-368-2073
or
Media Relations
Brian Bertsch, New York, +1 212-908-0549
brian.bertsch@fitchratings.com
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