Sprint Falls Back on PCS Side of the Business

With the long distance business still retrenching from the fixed wireless
space, Sprint on Tuesday announced that its wireless business anticipates
good results for 2002 with revenue projections showing an increase of more
than 30 percent to approximately $13 billion and positive cash flow in a
range of $3.0 to $3.1 billion.

“Our 3G rollout will extend our advantage within that industry,” Sprint
President Charles Levine told investors gathered at an annual meeting held
in its headquarters in Overland Park, Kansas.

This year, revenues are expected to grow more than 50 percent to
approximately $9.7 to $9.8 billion. In the fourth quarter revenues are
expected to be $2.7 to $2.8 billion which would be more than 40 percent
above the year-ago period. Revenue growth is expected to continue to be
driven by strong gains in the customer base and strong average customer
revenue. Monthly average revenue per customer is targeted to continue to be
at the $60 plus level in 2002.

Full year 2001 EBITDA is expected to be around $1.6 billion. In 2000
EBITDA was approximately break-even. Growth in EBITDA in the coming year is
expected to be driven by a growing customer base. PCS Group also has set a
goal of achieving a 10 percent reduction in the average monthly cash cost to
support a customer for 2002.

“I truly believe that the best is yet to come for the PCS Group,” said
William T. Esrey, Sprint’s chairman and chief executive officer. “Our PCS
operation has been the fastest-growing wireless carrier for more than three
years. We have aggressive, but we believe attainable, growth and
profitability objectives in 2002.”

While Sprint cautioned that fourth quarter wireless industry results
are traditionally highly dependent on consumer buying
patterns during the holiday season, the upbeat remarks nonetheless were a
stark contrast to Sprint’s Oct. 17 announcement to
exit
its fixed wireless Multichannel Multipoint Distribution Services
(MMDS) service known as the Integrated On-Demand Network (ION) in an effort
to reduce operating costs to business units in its FON Group tracking stock. Sprint said it would have to lay off about 6,000
employees and 1,500 contractor positions as a result of the termination of
ION.

Still, Sprint said it remains committed to wireless data services despite
the failures of its MMDS venture. “Data services will be an increasingly
important component of the wireless industry and our network was built with
data services in mind. While we are in the very early stages of building
this customer base, our PCS operation already has more than two million
wireless data users. We expect this growth will accelerate as we move to
higher data speeds with the introduction of third-generation wireless
technology in 2002,” Esrey said in his prepared remarks.

Meanwhile, the company continues to rely upon its FON business. Today,
the company announced that online auction pioneer eBay signed an agreement
with Sprint to use its Sprint E|Solutions Internet Center services to expand
eBay’s Web hosting facilities. The move allows eBay to have a back-up system
geographically located outside the San Francisco Bay Area, ensuring
continued site availability and improved disaster recovery.

Separately, Sprint also announced it has signed a multi-year contract
with Metromedia Fiber Network to lease metropolitan area fiber in in Boston,
Chicago, Dallas, Houston, Los Angeles, Newark, New York, Philadelphia,
Seattle and Washington, D.C. While Sprint will initially use MFN’s
metropolitan fiber-optic infrastructure in these 10 major cities, the
company will have the opportunity to expand into other markets by leasing
dark fiber from MFN under terms in this agreement. Sprint expects to begin
using MFN networks in initial markets in the second quarter of 2002 and in
all 10 cities by the end of 2002.

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