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Sprint Reports Third Quarter 2013 Results

  Sprint Reports Third Quarter 2013 Results

  *Wireless service revenue of $7.3 billion grew year-over-year for the 13^th
    consecutive quarter

       *Best-ever Sprint platform postpaid service revenue of $5.8 billion
       *Best-ever Sprint platform postpaid ARPU of $64.28

  *Net income of $1.1 billion in predecessor period and net loss of $699
    million for successor period results in combined quarterly net income of
    $383 million

       *Operating Loss of $398 million
       *Adjusted EBITDA* of $1.34 billion, up 5 percent year-over-year

  *Smartphones account for record 92 percent of Sprint platform postpaid
    handset sales
  *Network Vision deployment on track to cover 200 million people with 4G LTE
    by the end of 2013
  *Introduced innovative new pricing programs

       *Unlimited, My Way^SM and My All-In^SM Plans
       *Sprint Unlimited Guarantee^SM
       *Sprint One Up^SM

The company’s third quarter 2013 earnings conference call will be held at 8
a.m. ET today. Participants may dial 800-938-1120 in the U.S. or Canada
(706-634-7849 internationally) and provide the following ID: 72584884 or may
listen via the Internet at www.sprint.com/investors.

Additional information about results can be found in the “Quarterly Investor
Update” posted on our Investor Relations website at www.sprint.com/investors.

Financial results in the enclosed tables for 2013 include a predecessor period
from July 1, 2013, through the closing of the SoftBank transaction on July 10,
2013, and a successor period for the three months ended September 30, 2013. In
order to present financial results in a way that offers investors a more
meaningful calendar period-to-period comparison, we have combined the current
year results of operations for the predecessor and successor periods. In
addition, information provided with respect to forecasts of financial measures
is provided on a combined basis. The enclosed remarks are in reference to the
unaudited combined period unless otherwise noted. For additional information
please reference the section titled Financial Measures.

Business Wire

OVERLAND PARK, Kan. -- October 30, 2013

Sprint Corporation (NYSE:S) today reported third quarter 2013 results
including continued year-over-year growth in wireless service revenue for the
13th consecutive quarter. Quarterly net income was $383 million, operating
loss was $398 million, and Adjusted EBITDA* was $1.34 billion.

“During the third quarter Sprint platform postpaid service revenue and ARPU
once again hit record levels and we continue to make great strides in our 4G
LTE rollout,” said Dan Hesse, Sprint CEO. “We expect our network investments
will bring customers greater speeds and capacity and, when combined with our
unique unlimited for life offers, will improve our competitive positioning.”

Sprint Platform Highlights

The company recorded best-ever Sprint platform postpaid ARPU and service
revenue. Sprint sold nearly 5 million smartphones in the third quarter with
postpaid smartphone sales mix reaching record levels. Sprint sold nearly 1.4
million iPhones^® during the quarter of which 40 percent were to new
customers. For the quarter, the Sprint platform lost 360,000 postpaid
subscribers and gained 84,000 prepaid subscribers and 181,000 wholesale and
affiliate subscribers.

Net Income and Operating Loss Include Transaction-Related Impacts; Adjusted
EBITDA* Improved 5 percent Year-Over-Year

Quarterly net income was $383 million and operating loss for the quarter was
$398 million. Net income and operating loss included pre-tax expenses of $217
million primarily related to the Clearwire and SoftBank transactions including
fees, severance and exit costs. Additionally, net income included a one-time,
non-cash, $1.4 billion gain, net of taxes related to the write-up of Sprint’s
previously held investment in Clearwire.

For the third quarter 2012, net loss was $767 million and operating loss was
$231 million, including pre-tax, accelerated depreciation of $397 million
primarily associated with the Nextel platform shutdown.

Adjusted EBITDA* of $1.34 billion improved 5 percent year-over-year as growth
in Sprint platform service revenue, network savings resulting from the Nextel
platform shutdown and lower net subsidy expense were partially offset by the
loss of Nextel platform revenue and transaction-related dilution including the
impact from purchase price allocations of approximately $125 million and the
inclusion of 100 percent of Clearwire’s net loss.

Network Vision Surpasses 26,000 Sites on Air

Sprint continued to make strong progress on the Network Vision deployment in
the quarter and currently has more than 26,000 Network Vision sites on air
compared to more than 20,000 reported with second quarter results.
Additionally, Sprint began realizing significant cost savings from the
shutdown of the Nextel platform including tower rent, backhaul and utilities.

As part of Network Vision, Sprint has launched 4G LTE in 230 total markets
across the country and expects to provide 200 million people with 4G LTE by
the end of 2013.

Sprint Continues to Lead with Innovative Plans

During the quarter, Sprint also continued its commitment to offer customers
the best value in wireless by launching new Unlimited, My Way and My All-In
plans featuring unlimited talk, text and data while on the Sprint network.
Customers signing up for these plans are also eligible for the new Sprint
Unlimited Guarantee, which offers customers unlimited talk, text and data
while on the Sprint network, for the life of the line of service^i. Finally,
Sprint began offering Sprint One Up, a new upgrade program that gives
customers unlimited talk, text and high speed data while on the Sprint Network
plus the ability to upgrade their smartphone every 12 months^ii.

Sprint’s Leadership Continues to Receive Accolades

Third parties continued to recognize Sprint and its brands in the third
quarter. Sprint was recognized as an “Enterprise Trusted Advisor” within the
new Nemertes Enterprise Trusted Advisor™ program. Boost Mobile once again
received the highest ranking in the J.D. Power 2013 U.S. Wireless Purchase
Experience Non-Contract Study^SM, Volume 2. It was Boost’s second consecutive
highest ranking for Non-Contract Providers and sixth J.D. Power award overall
since 2011. Virgin Mobile was the top rated wireless carrier in the 2013
Temkin Customer Service Ratings.

Sprint also received top honors for its environmental efforts. The company was
the only telecommunications company named to CDP’s S&P 500 Climate Performance
Leadership Index, which highlights companies that demonstrate strategies
committed to improving their impact on the environment. Sprint was also named
to the Dow Jones Sustainability Index (DJSI) North America, which tracks the
corporate sustainability performance of the top 20 percent of the 600 largest
companies by industry in the United States and Canada.

Forecast

The company continues to expect 2013 Adjusted EBITDA* to be between $5.1
billion and $5.3 billion including the dilutive effects of the SoftBank and
Clearwire transactions.

The company continues to expect 2013 capital expenditures of approximately $8
billion.

                                                        
                                                                        
Wireless Operating Statistics (Unaudited)
                                                           
                    Quarter To Date                        Year To Date
                    9/30/13    6/30/13    9/30/12      9/30/13    9/30/12
Net (Losses)
Additions (in
thousands)
Sprint
platform:
Postpaid ^          (360   )     194          410          (154   )     1,115
(3)
Prepaid ^ (4)       84           (486   )     459          166          1,780
Wholesale and    181       (228   )   14          (271   )   1,187  
affiliate
Total Sprint        (95    )     (520   )     883          (259   )     4,082
platform
Nextel
platform:
Postpaid ^          -            (1,060 )     (866   )     (1,632 )     (2,009 )
(3)
Prepaid ^ (4)    -         (255   )   (440   )     (454   )   (1,131 )
Total Nextel        -            (1,315 )     (1,306 )     (2,086 )     (3,140 )
platform
Transactions:
^(a)
Postpaid ^          (175   )     (179   )     -            (354   )     -
(3)
Prepaid ^ (4)       (56    )     (20    )     -            (76    )     -
Wholesale        13        -         -           13        -      
Total               (218   )     (199   )     -            (417   )     -
transactions
                                                                        
Total retail
postpaid net        (535   )     (1,045 )     (456   )     (2,140 )     (894   )
losses
Total retail
prepaid net         28           (761   )     19           (364   )     649
additions
(losses)
Total
wholesale and
affiliate net    194       (228   )   14          (258   )   1,187  
additions
(losses)
Total
Wireless Net     (313   )   (2,034 )   (423   )     (2,762 )   942    
(Losses)
Additions
                                                                        
End of Period
Subscribers
(in
thousands)
Sprint
platform:
Postpaid ^          30,091       30,451       29,844       30,091       29,844
(3)
Prepaid ^ (4)       15,299       15,215       14,608       15,299       14,608
Wholesale and    7,862     7,710     8,405       7,862     8,405  
affiliate
Total Sprint        53,252       53,376       52,857       53,252       52,857
platform
Nextel
platform:
Postpaid ^          -            -            2,276        -            2,276
(3)
Prepaid ^ (4)    -         -         830         -         830    
Total Nextel        -            -            3,106        -            3,106
platform
Transactions:
^(a)
Postpaid ^          815          173          -            815          -
(3)
Prepaid ^ (4)       704          39           -            704          -
Wholesale        106       -         -           106       -      
Total               1,625        212          -            1,625        -
transactions
                                                                        
Total retail
postpaid end        30,906       30,624       32,120       30,906       32,120
of period
subscribers
Total retail
prepaid end         16,003       15,254       15,438       16,003       15,438
of period
subscribers
Total
wholesale and
affiliate end    7,968     7,710     8,405       7,968     8,405  
of period
subscribers
Total End of
Period           54,877    53,588    55,963      54,877    55,963 
Subscribers
                                                                        
Supplemental
Data -
Connected
Devices
End of Period
Subscribers
(in
thousands)
Retail              834          798          817          834          817
postpaid
Wholesale and    3,298     3,057     2,542       3,298     2,542  
affiliate
Total            4,132     3,855     3,359       4,132     3,359  
                                                                        
                                                                        
Churn
Sprint
platform:
Postpaid            1.99   %     1.83   %     1.88   %     1.89   %     1.86   %
Prepaid             3.57   %     5.22   %     2.93   %     3.96   %     3.01   %
Nextel
platform:
Postpaid            -            33.90  %     4.38   %     16.40  %     2.85   %
Prepaid             -            32.13  %     9.39   %     18.58  %     8.37   %
Transactions:
^(a)
Postpaid            6.38   %     26.64  %     -            9.47   %     -
Prepaid             8.84   %     16.72  %     -            9.15   %     -
                                                                        
Total retail
postpaid            2.09   %     2.63   %     2.09   %     2.27   %     1.96   %
churn
Total retail        3.78   %     5.51   %     3.37   %     4.18   %     3.50   %
prepaid churn
                                                                        
Nextel
Platform
Subscriber
Recaptures
Subscribers
(in
thousands)
^(5):
Postpaid            -            364          516          628          1,175
Prepaid             -            101          152          168          432
Rate ^(6):
Postpaid            -            34     %     59     %     38     %     56     %
Prepaid             -            39     %     34     %     37     %     29     %
                                                                               

       We acquired approximately 352,000 postpaid subscribers and 59,000
       prepaid subscribers through the acquisition of assets from U.S.
       Cellular when the transaction closed on May 17, 2013. We acquired
       approximately 788,000 postpaid subscribers, 721,000 prepaid
^(a)  subscribers, 93,000 wholesale subscribers and transferred 29,000 Sprint
       wholesale subscribers that were originally recognized through our
       Clearwire MVNO arrangement to Transactions postpaid subscribers as a
       result of the Clearwire acquisition when the transaction closed on July
       9, 2013.
       

                                                                                                     
Wireless Operating Statistics (Unaudited) (continued)
                
                    Combined ^(1)           Successor               Predecessor
                    Quarter     Year        Quarter     Year        10 Days     191         Quarter     Quarter     Year
                    To        To          To        To          Ended     Days      To        To        To
                    Date        Date        Date        Date                    Ended       Date        Date        Date
                    9/30/13   9/30/13     9/30/13   9/30/13     7/10/13   7/10/13   6/30/13   9/30/12   9/30/12
ARPU ^(b)                    
Sprint
platform:
Postpaid            $ 64.28     $ 64.05     $ 64.24     $ 64.24     $ 64.71     $ 63.98     $ 64.20     $ 63.21     $ 63.05
Prepaid             $ 25.33     $ 26.09     $ 25.14     $ 25.14     $ 26.99     $ 26.49     $ 26.96     $ 26.19     $ 25.78
Nextel
platform:
Postpaid            $ -         $ 35.84     $ -         $ -         $ -         $ 35.84     $ 36.66     $ 38.65     $ 40.11
Prepaid             $ -         $ 32.60     $ -         $ -         $ -         $ 32.60     $ 34.48     $ 34.73     $ 35.96
Transactions:
^(a)
Postpaid            $ 40.00     $ 43.03     $ 37.44     $ 37.44     $ 35.75     $ 56.98     $ 59.87     $ -         $ -
Prepaid             $ 43.20     $ 42.28     $ 40.62     $ 40.62     $ 12.78     $ 18.26     $ 19.17     $ -         $ -
                                                                                                                    
Total retail        $ 63.69     $ 63.24     $ 63.48     $ 63.48     $ 64.55     $ 63.10     $ 63.59     $ 61.18     $ 60.64
postpaid ARPU
Total retail        $ 26.04     $ 26.38     $ 25.86     $ 25.86     $ 26.96     $ 26.57     $ 27.02     $ 26.77     $ 26.73
prepaid ARPU
                                                                                                                    

       We acquired approximately 352,000 postpaid subscribers and 59,000
       prepaid subscribers through the acquisition of assets from U.S.
       Cellular when the transaction closed on May 17, 2013. We acquired
       approximately 788,000 postpaid subscribers, 721,000 prepaid
^(a)  subscribers, 93,000 wholesale subscribers and transferred 29,000 Sprint
       wholesale subscribers that were originally recognized through our
       Clearwire MVNO arrangement to Transactions postpaid subscribers as a
       result of the Clearwire acquisition when the transaction closed on July
       9, 2013.
       
       ARPU is calculated by dividing service revenue by the sum of the
       average number of subscribers in the applicable service category.
       Changes in average monthly service revenue reflect subscribers for
       either the postpaid or prepaid service category who change rate plans,
       the level of voice and data usage, the amount of service credits which
       are offered to subscribers, plus the net effect of average monthly
       revenue generated by new subscribers and deactivating subscribers.
^(b)   Combined ARPU for the quarter to date September 30, 2013 period
       aggregate service revenue of the ten days ended July 10, 2013
       predecessor period and the quarter to date September 30, 2013 successor
       period divided by the sum of the average subscribers during the
       quarter. Combined ARPU for the year to date September 30, 2013 period
       aggregate service revenue of the 191 days ended July 10, 2013
       predecessor period and the year to date September 30, 2013 successor
       period divided by the sum of the average subscribers during the year to
       date period.
       

                                                                                                                                           
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(Millions)
                  Combined ^(1)                  Successor                     Predecessor
                     Quarter         Year            Quarter         Year            10 Days         191 Days        Quarter         Quarter         Year
                     To            To              To            To              Ended         Ended         To            To            To
                     Date            Date            Date            Date                                            Date            Date            Date
                      9/30/13     9/30/13       9/30/13     9/30/13       7/10/13     7/10/13     6/30/13     9/30/12     9/30/12 
                                                                
Net Operating     $ 8,681      $ 26,351     $ 7,749      $ 7,749        $ 932        $ 18,602     $ 8,877      $ 8,763      $ 26,340  
Revenues
Net Operating
Expenses
Cost of                2,756           8,143           2,470           2,470           286             5,673           2,747           2,702           8,277
services
Cost of                2,153           6,744           1,872           1,872           281             4,872           2,298           2,391           6,912
products
Selling,
general and            2,548           7,362           2,259           2,295           289             5,067           2,442           2,391           7,208
administrative
Depreciation
and                    1,524           4,648           1,403           1,403           121             3,245           1,632           1,488           5,050
amortization
Other, net         98          733         103         103           (5      )    630         632         22          8       
Total net
operating          9,079       27,630      8,107       8,143         972         19,487      9,751       8,994       27,455  
expenses
Operating Loss     (398    )    (1,279  )    (358    )    (394    )      (40     )    (885    )    (874    )    (231    )    (1,115  )
Interest               (691    )       (1,551  )       (416    )       (416    )       (275    )       (1,135  )       (428    )       (377    )       (996    )
expense
Equity in
earnings
(losses) of        3,070       2,481       165         18            2,905       2,463       (240    )    (112    )    (783    )
unconsolidated
investments
and other, net
Income (Loss)
before Income          1,981           (349    )       (609    )       (792    )       2,590           443             (1,542  )       (720    )       (2,894  )
Taxes
Income tax         (1,598  )    (1,631  )    (90     )    (30     )      (1,508  )    (1,601  )    (55     )    (47     )    (110    )
expense
Net Income        $ 383        $ (1,980  )   $ (699    )   $ (822    )     $ 1,082      $ (1,158  )   $ (1,597  )   $ (767    )   $ (3,004  )
(Loss)
                                                                                                                                                     
Effective Tax      NM          NM          -14.8   %    -3.8    %      58.2    %    361.4   %    -3.6    %    -6.5    %    -3.8    %
Rate
                                                                                                                                                     
                                                                                                                                                     
NON-GAAP RECONCILIATION - NET INCOME (LOSS) TO ADJUSTED EBITDA* (Unaudited)
(Millions)
                     Combined ^(1)                   Successor                       Predecessor
                     Quarter         Year            Quarter         Year            10 Days         191 Days        Quarter         Quarter         Year
                     To            To              To            To              Ended         Ended           To            To            To
                     Date            Date            Date            Date                                            Date            Date            Date
                      9/30/13     9/30/13       9/30/13     9/30/13       7/10/13     7/10/13       6/30/13     9/30/12     9/30/12 
                                                                                                                                                     
Net Income        $ 383        $ (1,980  )   $ (699    )   $ (822    )     $ 1,082      $ (1,158  )   $ (1,597  )   $ (767    )   $ (3,004  )
(Loss)
Income tax         1,598       1,631       90          30            1,508       1,601       55          47          110     
expense
Income (Loss)
before Income          1,981           (349    )       (609    )       (792    )       2,590           443             (1,542  )       (720    )       (2,894  )
Taxes
Equity in
earnings
(losses) of            (3,070  )       (2,481  )       (165    )       (18     )       (2,905  )       (2,463  )       240             112             783
unconsolidated
investments
and other, net
Interest           691         1,551       416         416           275         1,135       428         377         996     
expense
Operating Loss     (398    )    (1,279  )    (358    )    (394    )      (40     )    (885    )    (874    )    (231    )    (1,115  )
Depreciation
and                1,524       4,648       1,403       1,403         121         3,245       1,632       1,488       5,050   
amortization
EBITDA*            1,126       3,369       1,045       1,009         81          2,360       758         1,257       3,935   
Severance and
exit costs             98              755             103             103             (5      )       652             632             22              206
^(7)
Gains from
asset
dispositions           -               -               -               -               -               -               -               -               (29     )
and exchanges
^ (8)
Asset
impairments
and                    -               -               -               -               -               -               -               -               18
abandonments
^(9)
Spectrum
hosting
contract               -               -               -               -               -               -               -               -               (170    )
termination,
net ^(10)
Access costs ^         -               -               -               -               -               -               -               -               (17     )
(11)
Litigation ^           -               (22     )       -               -               -               (22     )       -               -               -
(12)
Business
combinations       119         153         100         100           19          53          34          -           -       
^(13)
Adjusted          $ 1,343      $ 4,255      $ 1,248      $ 1,212        $ 95         $ 3,043      $ 1,424      $ 1,279      $ 3,943   
EBITDA*
Capital
expenditures       1,841       5,550       1,666       1,666         175         3,884       1,897       1,489       3,447   
^(2)
Adjusted
EBITDA* less      $ (498    )   $ (1,295  )   $ (418    )   $ (454    )     $ (80     )   $ (841    )   $ (473    )   $ (210    )   $ 496     
Capex
                                                                                                                                                     
Adjusted               16.8    %       17.7    %       17.5    %       17.0    %       11.1    %       18.0    %       17.7    %       16.0    %       16.4    %
EBITDA Margin*
                                                                                                                                                     
                                                                                                                                                     
Selected item:
Deferred tax
asset                $ 851           $ 1,737         $ 327           $ 327           $ 524           $ 1,410         $ 621           $ 308           $ 1,210
valuation
allowance
                                                                                                                                                     

                                                                                                                                        
WIRELESS STATEMENTS OF OPERATIONS (Unaudited)
(Millions)
                  Combined ^(1)                 Successor                       Predecessor
                     Quarter         Year            Quarter         Year            10 Days         191 Days        Quarter         Quarter         Year
                     To            To              To            To              Ended         Ended         To            To            To
                     Date            Date            Date            Date                                            Date            Date            Date
                      9/30/13     9/30/13       9/30/13     9/30/13       7/10/13     7/10/13     6/30/13     9/30/12     9/30/12 
Net Operating                     
Revenues
Service
revenue
Sprint
platform:
Postpaid ^(3)        $ 5,835         $ 17,443        $ 5,201         $ 5,201         $ 634           $ 12,242        $ 5,835         $ 5,625         $ 16,573
Prepaid ^(4)           1,160           3,630           1,028           1,028           132             2,602           1,276           1,127           3,207
Wholesale,
affiliate and      131         395         116         116           15          279         131         121         348     
other
Total Sprint       7,126       21,468      6,345       6,345         781         15,123      7,242       6,873       20,128  
platform
Nextel
platform:
Postpaid ^(3)          -               217             -               -               -               217             74              311             1,236
Prepaid ^(4)       -           50          -           -             -           50          17          108         457     
Total Nextel       -           267         -           -             -           267         91          419         1,693   
platform
Transactions:
Postpaid ^(3)          91              115             89              89              2               26              24              -               -
Prepaid ^(4)           82              83              81              81              1               2               1               -               -
Wholesale          8           8           8           8             -           -           -           -           -       
Total              181         206         178         178           3           28          25          -           -       
transactions
                                                                                                                                                     
Equipment          710         2,343       636         636           74          1,707       820         750         2,238   
revenue
Total net
operating          8,017       24,284      7,159       7,159         858         17,125      8,178       8,042       24,059  
revenues
                                                                                                                                                     
Net Operating
Expenses
Cost of                2,327           6,790           2,087           2,087           240             4,703           2,292           2,256           6,824
services
Cost of                2,153           6,744           1,872           1,872           281             4,872           2,298           2,391           6,912
products
Selling,
general and            2,356           6,880           2,100           2,100           256             4,780           2,294           2,277           6,854
administrative
Depreciation
and                    1,448           4,367           1,338           1,338           110             3,029           1,526           1,377           4,737
amortization
Other, net         88          720         93          93            (5      )    627         632         22          25      
Total net
operating          8,372       25,501      7,490       7,490         882         18,011      9,042       8,323       25,352  
expenses
Operating Loss    $ (355    )   $ (1,217  )   $ (331    )   $ (331    )     $ (24     )   $ (886    )   $ (864    )   $ (281    )   $ (1,293  )
                                                                                                                                                     
Supplemental
Revenue Data
Total retail
service              $ 7,168         $ 21,538        $ 6,399         $ 6,399         $ 769           $ 15,139        $ 7,227         $ 7,171         $ 21,473
revenue
Total service        $ 7,307         $ 21,941        $ 6,523         $ 6,523         $ 784           $ 15,418        $ 7,358         $ 7,292         $ 21,821
revenue
                                                                                                                                                     
                                                                                                                                                     
                                                                                                                                                     
WIRELESS NON-GAAP RECONCILIATION (Unaudited)
(Millions)
                     Combined ^(1)                   Successor                       Predecessor
                     Quarter         Year            Quarter         Year            10 Days         191 Days        Quarter         Quarter         Year
                     To            To              To            To              Ended         Ended         To            To            To
                     Date            Date            Date            Date                                            Date            Date            Date
                      9/30/13     9/30/13       9/30/13     9/30/13       7/10/13     7/10/13     6/30/13     9/30/12     9/30/12 
                                                                                                                                                     
Operating Loss       $ (355    )     $ (1,217  )     $ (331    )     $ (331    )     $ (24     )     $ (886    )     $ (864    )     $ (281    )     $ (1,293  )
Severance and
exit costs             88              742             93              93              (5      )       649             632             22              206
^(7)
Gains from
asset
dispositions           -               -               -               -               -               -               -               -               (29     )
and exchanges
^ (8)
Asset
impairments
and                    -               -               -               -               -               -               -               -               18
abandonments
^(9)
Spectrum
hosting
contract               -               -               -               -               -               -               -               -               (170    )
termination,
net ^(10)
Litigation             -               (22     )       -               -               -               (22     )       -               -               -
^(12)
Business
combinations           25              25              25              25              -               -               -               -               -
^(13)
Depreciation
and                1,448       4,367       1,338       1,338         110         3,029       1,526       1,377       4,737   
amortization
Adjusted           1,206       3,895       1,125       1,125         81          2,770       1,294       1,118       3,469   
EBITDA*
Capital
expenditures       1,683       5,117       1,527       1,527         156         3,590       1,728       1,376       3,098   
^(2)
Adjusted
EBITDA* less      $ (477    )   $ (1,222  )   $ (402    )   $ (402    )     $ (75     )   $ (820    )   $ (434    )   $ (258    )   $ 371     
Capex
                                                                                                                                                     
Adjusted               16.5    %       17.8    %       17.2    %       17.2    %       10.3    %       18.0    %       17.6    %       15.3    %       15.9    %
EBITDA Margin*
                                                                                                                                                     

                                                                                                                                        
WIRELINE STATEMENTS OF OPERATIONS (Unaudited)
(Millions)
                  Combined ^(1)                 Successor                       Predecessor
                     Quarter         Year            Quarter         Year            10 Days         191 Days        Quarter         Quarter         Year
                     To            To              To            To              Ended         Ended         To            To            To
                     Date            Date            Date            Date                                            Date            Date            Date
                      9/30/13     9/30/13       9/30/13     9/30/13       7/10/13     7/10/13     6/30/13     9/30/12     9/30/12 
Net Operating                     
Revenues
Voice                $ 375           $ 1,104         $ 333           $ 333           $ 42            $ 771           $ 377           $ 399           $ 1,242
Data                   64              245             57              57              7               188             87              95              302
Internet               420             1,286           373             373             47              913             432             428             1,330
Other              16          43          14          14            2           29          14          17          58      
Total net
operating          875         2,678       777         777           98          1,901       910         939         2,932   
revenues
                                                                                                                                                     
Net Operating
Expenses
Costs of
services and           648             1,978           576             576             72              1,402           669             667             2,113
products
Selling,
general and            95              311             84              84              11              227             112             114             351
administrative
Depreciation           71              274             61              61              10              213             105             106             310
Other, net         10          13          10          10            -           3           -           -           (17     )
Total net
operating          824         2,576       731         731           93          1,845       886         887         2,757   
expenses
Operating         $ 51         $ 102        $ 46         $ 46           $ 5          $ 56         $ 24         $ 52         $ 175     
Income
                                                                                                                                                     
                                                                                                                                                     
WIRELINE NON-GAAP RECONCILIATION (Unaudited)
(Millions)
                     Combined ^(1)                   Successor                       Predecessor
                     Quarter         Year            Quarter         Year            10 Days         191 Days        Quarter         Quarter         Year
                     To            To              To            To              Ended         Ended         To            To            To
                     Date            Date            Date            Date                                            Date            Date            Date
                      9/30/13     9/30/13       9/30/13     9/30/13       7/10/13     7/10/13     6/30/13     9/30/12     9/30/12 
                                                                                                                                                     
Operating            $ 51            $ 102           $ 46            $ 46            $ 5             $ 56            $ 24            $ 52            $ 175
Income
Severance and
exit costs             10              13              10              10              -               3               -               -               -
^(7)
Access costs ^         -               -               -               -               -               -               -               -               (17     )
(11)
Depreciation       71          274         61          61            10          213         105         106         310     
Adjusted           132         389         117         117           15          272         129         158         468     
EBITDA*
Capital
expenditures       84          238         73          73            11          165         93          60          184     
^(2)
Adjusted
EBITDA* less      $ 48         $ 151        $ 44         $ 44           $ 4          $ 107        $ 36         $ 98         $ 284     
Capex
                                                                                                                                                     
Adjusted               15.1    %       14.5    %       15.1    %       15.1    %       15.3    %       14.3    %       14.2    %       16.8    %       16.0    %
EBITDA Margin*
                                                                                                                                                     

<td class="bwpadl0 bwnowrap bwpadr0 bwvert*Story too large*
                                                                                                                                    
CONDENSED CONSOLIDATED CASH FLOW INFORMATION (Unaudited)
(Millions)
                                                                                           Combined ^    Successor       Predecessor
                                                                                                 (1)
                                                                                                 Year            Year            191 Days        Year
                                                                                                 To            To              Ended         To
                                                                                                 Date            Date                            Date
                                                                                                   9/30/13         9/30/13         7/10/13         9/30/12
Operating
Activities
Net loss                                                                                         $ (1,980  )     $ (822    )     $ (1,158  )     $ (3,004  )
Depreciation
and                                                                                                4,648           1,403           3,245           5,050
amortization
Provision for losses on accounts receivable                                                        313             119             194             413
Share-based and long-term incentive compensation expense                                           95              58              37              57
Deferred                                                                                           1,608           22              1,586           142
income taxes
Gain on previously-held equity interests                                                           (2,926  )       -               (2,926  )       -
Equity in losses of unconsolidated investments, net                                                482             -               482             927
Interest expense related to beneficial conversion feature on convertible bond                      247             -               247             -
Contribution
to pension                                                                                         -               -               -               (108    )
plan
Spectrum hosting contract termination, net ^ (10)                                                  -               -               -               (170    )
Other working capital changes, net                                                                 758             30              728             (479    )
Other, net                                                                       126         (110    )      236         (45     )
Net cash provided by operating activities                                                    3,371       700           2,671       2,783   
                                                                                                                                                 
Investing
Activities
Capital
expenditures                                                                                       (5,018  )       (1,878  )       (3,140  )       (2,784  )
^(2)
Expenditures relating to FCC licenses                                                              (156    )       (31     )       (125    )       (152    )
Change in short-term investments, net                                                              888             (336    )       1,224           (534    )
Acquisitions, net of cash acquired                                                                 (18,151 )       (14,112 )       (4,039  )       -
Increase in restricted cash                                                                        (3,050  )       (3,050  )       -               -
Investment in Clearwire (including debt securities)                                                (308    )       -               (308    )       (128    )
Other, net                                                                       3           -             3           13      
Net cash used in investing activities                                                     (25,792 )    (19,407 )      (6,385  )    (3,585  )
                                                                                                                                                 
Financing
Activities
Proceeds from debt and financings                                                                  7,030           6,826           204             3,577
Debt financing costs                                                                               (118    )       (107    )       (11     )       (90     )
Repayments of debt and capital lease obligations                                                   (859    )       (497    )       (362    )       (2,508  )
Proceeds from issuance of common stock and warrants, net                                           18,612          18,552          60              21
Other, net                                                                                      (14     )    (14     )      -           -       
Net cash provided by (used in) financing activities                                             24,651      24,760        (109    )    1,000   
                                                                                                                                                 
Net Increase (Decrease) in Cash and Cash Equivalents                                               2,230           6,053           (3,823  )       198
                                                                                                                                                 
Cash and Cash Equivalents, beginning of period                                                  3,828       5             6,351       5,447   
                                                                                                                                                 
Cash and Cash Equivalents, end of period                                                         $ 6,058         $ 6,058         $ 2,528         $ 5,645
                                                                                                                                                 
                                                                                                                                                 
RECONCILIATION TO CONSOLIDATED FREE CASH FLOW* (NON-GAAP) (Unaudited)
(Millions)
                 Combined ^(1)                 Successor                       Predecessor
                 Quarter         Year            Quarter         Year            10 Days         191 Days        Quarter         Quarter         Year
                 To            To            To            To              Ended         Ended         To            To            To
                 Date            Date            Date            Date                                            Date            Date            Date
                  9/30/13     9/30/13     9/30/13     9/30/13       7/10/13     7/10/13     6/30/13     9/30/12     9/30/12 
                                                                                                                                                 
Net Cash
Provided by      $ 1,190         $ 3,371         $ 694           $ 700           $ 496           $ 2,671         $ 1,235         $ 628           $ 2,783
Operating
Activities
                                                                                                                                                 
Capital
expenditures       (2,066  )       (5,018  )       (1,878  )       (1,878
^(2)

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