Sprint and Nextel to Combine in Merger of Equals

Sprint (www.sprint.com) and Nextel Communications, Inc. (www.nextel.com) announced that their boards of directors have unanimously approved a definitive agreement for a merger of equals.

The combination will create America's premier communications company -- a leading wireless carrier augmented by a global IP network that will offer consumer, business and government customers compelling new broadband wireless and integrated communications services.

Sprint and Nextel currently have a combined total equity value of approximately $70 billion and serve more than 35 million wireless subscribers on their networks and 5 million additional subscribers through affiliates and partners.

The new company will have a balanced mix of consumer, business and government customers, as well as a strong spectrum position. Sprint Nextel will be well positioned in the fastest-growing areas of the telecommunications industry, including mobile data and push-to-talk services, where Sprint and Nextel are innovators in technology.

Sprint Nextel is expected to have the highest average revenue per user (ARPU) in the wireless industry and to be positioned to lead the industry in sustainable revenue growth.

Sprint and Nextel are being valued equally in the merger and their shareholders will each own approximately 50 percent of the new company after the merger.

Existing Sprint shares will remain outstanding and each Nextel common share will be converted into new company shares and a small per share amount of cash, with a total value equal to 1.3 shares of Sprint Nextel common stock. The exact stock/cash allocation will be determined at closing of the merger in order to facilitate the spin-off of the local telecommunications business on a tax-free basis.

A highly experienced management team will lead the new company. Gary D. Forsee, currently chairman and chief executive officer of Sprint, will become president and chief executive officer of Sprint Nextel. Timothy M. Donahue, currently president and chief executive officer of Nextel, will become chairman of the new company.

The Sprint Nextel Board will consist of 12 directors, six from each company, including two co-lead independent directors, one from Sprint and one from Nextel.

Sprint Nextel will have its executive headquarters in Reston, Va., and its operational headquarters in Overland Park, Kan. The new company's common stock will be listed on the New York Stock Exchange.
"This merger positions Sprint Nextel for greater success than either company could have achieved alone," said Gary Forsee.

"The combination of Sprint and Nextel builds strength on strength. It will be a dynamic next-generation communications company, the provider of choice for businesses, government and consumers, and the only U.S. primarily wireless investment opportunity. Nextel is recognized as a leader in profitability, customer loyalty, revenue per customer, push to talk and marketing to businesses and government."

"We are confident that Sprint Nextel will generate efficiencies that will benefit customers, shareholders and employees. The new company will capitalize on its leadership position in key growth areas, unmatched asset mix, clear technology migration path, brand strength, innovative products and services and talented employees," said Tim Donahue.

The combined Sprint Nextel is expected to deliver operating cost and capital investment synergies with an estimated net present value of more than $12 billion.

In addition to scale efficiencies, customers and shareholders are expected to benefit from revenue synergies derived from extending the scope of existing and future services to a larger customer base.

Sprint Nextel will have a clear technology migration path and valuable and extensive network and spectrum assets.

The merger may also trigger certain share purchase rights in Nextel's agreement with Nextel Partners Inc., a provider of digital wireless communications services under the Nextel brand name in mid-sized and tertiary U.S. metropolitan areas. Nextel owns about 32 percent of Nextel Partners outstanding stock.

The local telecommunications business will have its own management team and board of directors, consisting of an equal number of designees from Sprint and Nextel. The local telecommunications business, which has 7.7 million local access lines in 18 states and had revenues of more than $6 billion over the past four quarters, will be the largest independent local telephone company in the United States.