Best ever fourth quarter and annual postpaid churn results

Twelfth consecutive quarter of improvement in Customer Care Satisfaction and First Call Resolution

Sequential and year-over-year total quarterly net operating revenue growth

Free Cash Flow* of $913 million in the fourth quarter and $2.5 billion for 2010

Net operating revenues

Adjusted OIBDA*

Adjusted OIBDA margin*

Operating loss

Net loss ⁽¹⁾

Diluted loss per common share ⁽¹⁾

Capital Expenditures ⁽²⁾

Free Cash Flow*

Consolidated net operating revenues of $8.3 billion for the quarter were 6 percent higher than in the fourth quarter of 2009 and almost 2 percent higher than in the third quarter of 2010. The quarterly year-over-year improvement was primarily due to increases from fourth quarter 2009 acquisitions of Virgin Mobile and iPCS, higher equipment revenues, and prepaid Boost service revenues partially offset by lower postpaid wireless service revenues and wireline revenues. The quarterly sequential improvement was primarily due to higher equipment and wireless service revenues partially offset by lower wireline revenues.

Adjusted OIBDA* was $1.3 billion for the quarter, compared to $1.4 billion for the fourth quarter of 2009 and $1.3 billion for the third quarter of 2010. The quarterly year-over-year decline in Adjusted OIBDA* was primarily due to higher subsidy costs from the increased volume of handset sales and associated sales expenses resulting from higher retail subscriber gross additions. For the sequential quarter comparison, Adjusted OIBDA* remained relatively flat as improvements in wireless service revenue and seasonally lower cost of service offset higher subsidy and selling costs resulting from continued improvement in retail subscriber gross additions.

Capital expenditures were $608 million in the quarter, compared to $554 million in the fourth quarter of 2009 and $462 million in the third quarter of 2010. Wireless capital expenditures were $473 million in the fourth quarter of 2010, compared to $427 million in the fourth quarter of 2009 and $341 million in the third quarter of 2010. During the quarter, the company invested primarily in coverage and data capacity to maintain a competitive position in mobile broadband and overall network quality. Wireline capital expenditures were $67 million in the fourth quarter of 2010, compared to $62 million in the fourth quarter of 2009 and $59 million in the third quarter of 2010.

Free Cash Flow* was $913 million for the quarter, compared to $666 million for the fourth quarter of 2009 and $384 million for the third quarter of 2010. The quarterly year-over-year improvement was primarily due to favorable working capital changes, which include one-time federal tax stimulus refunds of approximately $153 million. Sequential quarterly Free Cash Flow* improved primarily as a result of favorable working capital changes including one-time federal tax stimulus refunds and lower interest payments as compared to the third quarter.

Net operating revenues

Adjusted OIBDA*

Adjusted OIBDA margin*

Capital Expenditures ⁽²⁾

The company served 49.9 million customers at the end of the fourth quarter of 2010. This includes 33.1 million postpaid subscribers (27.07 million via the Sprint brand on CDMA, 5.67 million on iDEN, and 374,000 PowerSource users who utilize both networks), 12.3 million prepaid subscribers (8.53 million on CDMA and 3.74 million on iDEN) and approximately 4.5 million wholesale and affiliate subscribers, all of whom utilize our CDMA network.

For the quarter, Sprint added a total of approximately 1.1 million net wireless customers including net additions of approximately 704,000 retail subscribers and net additions of 393,000 wholesale and affiliate subscribers.

Sprint added 58,000 net postpaid subscribers during the quarter, the first quarter with postpaid net additions since the second quarter of 2007. The company improved net postpaid subscriber additions by 562,000 compared to fourth quarter of 2009 and 165,000 compared to third quarter of 2010.

The CDMA network added approximately 453,000 postpaid customers during the quarter, which includes net losses of 66,000 PowerSource customers. Excluding PowerSource customer losses, the Sprint brand added 519,000 postpaid wireless subscribers. The iDEN network lost 395,000 postpaid customers in the quarter.

The company added a net 646,000 prepaid subscribers during the quarter, which includes net additions of 1.4 million prepaid CDMA customers, offset by net losses of 768,000 prepaid iDEN customers.

The credit quality of Sprint’s end-of-period postpaid customers remained strong year-over-year and sequentially at approximately 84 percent prime.

Postpaid churn for the quarter was 1.86 percent, compared to 2.11 percent for the year-ago period and 1.93 percent for the third quarter of 2010. The quarterly year-over-year improvement in postpaid churn is primarily due to progress in brand health, handset offerings and overall customer perception. Sequentially, postpaid churn also benefited from historical fourth quarter seasonality.

Approximately 10 percent of postpaid customers upgraded their handsets during the fourth quarter, reflecting strong demand for Sprint’s handset portfolio and continued strength in contract renewals.

Prepaid churn for the fourth quarter of 2010 was 4.93 percent, compared to 5.56 percent for the year-ago period and 5.32 percent for the third quarter of 2010. The year-over-year and sequential improvements in prepaid churn were primarily a result of the predominance of Boost Monthly Unlimited subscribers on CDMA and Assurance Wireless^SM customers, who on average have lower churn than that of Virgin Mobile customers.

Retail wireless service revenues of $6.5 billion for the quarter increased by almost 4 percent compared to the fourth quarter of 2009 and increased by more than 1 percent compared to the third quarter of 2010. The quarterly year-over-year improvement is primarily due to an increased number of prepaid subscribers as a result of the success of the Boost Monthly Unlimited offering, additional market launches of Assurance Wireless^SM and re-launch of the Virgin Mobile brand, partially offset by net losses of postpaid subscribers since the fourth quarter 2009. Acquisitions completed in the latter part of the fourth quarter of 2009 also contributed to the year-over-year improvement. Quarterly sequential retail wireless service revenues increased primarily as a result of growth in prepaid.

Wireless postpaid ARPU remained flat for each of the quarterly year-over-year and sequential periods at approximately $55. For the quarter year-over-year, higher monthly recurring revenues as a result of the greater popularity of fixed-rate bundle plans and premium data add-on charges offset lower overage, casual data and text revenues. Quarterly sequential growth in premium data add-on revenue and lower care credits offset seasonally lower overage and roaming revenues.

Prepaid ARPU for the quarter was approximately $28, compared to $31 in the year-ago period and $28 in the third quarter of 2010. The quarterly year-over-year decline is due to the increased number of Assurance Wireless^SM customers and the inclusion of Virgin Mobile customers who have lower ARPU than that of Boost Mobile customers.

Wholesale, affiliate and other revenues were down $40 million, compared to the year-ago period, and increased slightly sequentially. Service revenues in wholesale, affiliate and other revenues declined year-over-year as revenues from Virgin Mobile and iPCS, Inc. are now included in wireless retail revenues following the acquisitions in the fourth quarter of 2009. The quarterly year-over-year decline is partially offset by growth of wholesale revenues from prepaid MVNOs and wholesale revenues from our 3G MVNO relationship with Clearwire.

Total wireless operating expenses were $7.6 billion in the fourth quarter, compared to $7.5 billion in the year-ago period and in the third quarter of 2010, respectively.

Wireless equipment subsidy in the fourth quarter was almost $1.2 billion (equipment revenue of $830 million, less cost of products of $2.01 billion), compared to approximately $960 million in the year-ago period and almost $1.1 billion in the third quarter of 2010. The quarterly year-over-year increase in subsidy is primarily associated with postpaid gross additions and upgrades and prepaid gross additions. Within postpaid the increase in subsidy is due to a greater mix of smartphones, which on average carry a higher subsidy rate per handset. Within prepaid the increase in the number of handsets sold is a result of the acquisition of Virgin Mobile and subsequent brand launches associated with the company’s prepaid multi-brand strategy. Quarterly sequential subsidy increased primarily as a result of continued improvement in retail subscriber gross additions.

Wireless SG&A expenses increased over 1 percent year-over-year and increased approximately 5 percent sequentially. Quarterly year-over-year SG&A expenses increased primarily due to increased gross additions and upgrades, partially offset by improvement in general and administrative expenses. Quarterly sequential SG&A increased as a result of increased sales and marketing spend driven by higher retail gross additions and upgrades and higher media spend.

Adjusted OIBDA* of approximately $1.0 billion in the fourth quarter of 2010 compares to $1.2 billion in the fourth quarter of 2009 and $1.1 billion in the third quarter of 2010. The quarterly year-over-year decline in Adjusted OIBDA* was primarily due to higher subsidy and sales expenses, partially offset by higher prepaid service revenues. Quarterly sequential Adjusted OIBDA* declined primarily as a result of higher subsidy costs, higher sales and marketing expenses, partially offset by increased retail service revenues and lower cost of service.

Net operating revenues

Adjusted OIBDA*

Adjusted OIBDA margin*

Capital Expenditures ⁽²⁾

Wireline revenues of $1.2 billion for the quarter declined 7 percent year-over-year as a result of reduced voice volume and rate and lower data revenues. Quarterly sequential wireline revenues were almost 2 percent lower primarily due to reductions in voice volume.

Total operating expenses were $1.1 billion in the fourth quarter of 2010. Total operating expenses declined almost 11 percent year-over-year due to continued decline of voice volume, and improvement in SG&A expenses. Quarterly sequential operating expenses declined approximately 1 percent as a result of lower cost of service.

Wireline Adjusted OIBDA* was $267 million for the quarter, compared to $259 million in the fourth quarter of 2009 and $271 million reported for the third quarter of 2010. Wireline Adjusted OIBDA* improved quarterly year-over-year as a result of continued focus on cost reductions to offset revenue declines.

our ability to attract and retain subscribers;

the ability of our competitors to offer products and services at lower prices due to lower cost structures;

the effects of vigorous competition on a highly penetrated market, including the impact of competition on the price we are able to charge subscribers for services and equipment we provide and our ability to attract new subscribers and retain existing subscribers; the overall demand for our service offerings, including the impact of decisions of new or existing subscribers between our postpaid and prepaid services offerings and between our two network platforms; and the impact of new, emerging and competing technologies on our business;

the ability to generate sufficient cash flow to fully implement our network modernization plan to improve and enhance our networks and service offerings, implement our business strategies and provide competitive new technologies;

the effective implementation of our network modernization plan, including timing, technologies, and costs;

changes in available technology and the effects of such changes, including product substitutions and deployment costs;

our ability to obtain additional financing on terms acceptable to us, or at all;

volatility in the trading price of our common stock, current economic conditions and our ability to access capital;

the impact of unrelated parties not meeting our business requirements, including a significant adverse change in the ability or willingness of such parties to provide devices or infrastructure equipment for our CDMA network, or Motorola Mobility, Inc.’s or Motorola Solutions Inc.’s ability or willingness to provide related devices, infrastructure equipment and software applications, or to develop new technologies and devices or features, for our iDEN network;

the costs and business risks associated with providing new services and entering new geographic markets;

the financial performance of Clearwire and its deployment of a 4G network;

the impact of difficulties we may encounter in connection with the continued integration of the business and assets of Virgin Mobile, including the risk that these difficulties may limit our ability to fully integrate the operations of this business;

the effects of mergers and consolidations and new entrants in the communications industry and unexpected announcements or developments from others in the communications industry;

unexpected results of litigation filed against us or our suppliers or vendors;

the impact of adverse network performance;

the costs or potential customer impacts of compliance with regulatory mandates including, but not limited to, compliance with the FCC’s Report and Order to reconfigure the 800 MHz band;

equipment failure, natural disasters, terrorist acts or other breaches of network or information technology security;

one or more of the markets in which we compete being impacted by changes in political, economic or other factors such as monetary policy, legal and regulatory changes or other external factors over which we have no control; and

other risks referenced from time to time in this report and other filings of ours with the Securities and Exchange Commission, including in Part I, Item IA “Risk Factors” of our annual report on Form 10-K for the year ended December 31, 2009, and, when filed, our Form 10-K for the year ended December 31, 2010.

Net Operating Revenues

Net Operating Expenses

Cost of services

Cost of products

Selling, general and administrative

Depreciation

Amortization

Other, net

Total net operating expenses

Operating Loss

Interest expense, net

Equity in losses of unconsolidated investments and other, net ⁽³⁾

Loss before Income Taxes

Income tax benefit (expense) ⁽¹⁾

Net Loss ⁽¹⁾

Basic and Diluted Loss Per Common Share ⁽¹⁾

Weighted Average Common Shares outstanding

Effective Tax Rate ⁽¹⁾

Net Loss ⁽¹⁾

Income tax benefit (expense) ⁽¹⁾

Loss before Income Taxes

Depreciation

Amortization

Interest expense, net

Equity in losses of unconsolidated investments and other, net ⁽³⁾

OIBDA*

Severance and exit costs ⁽⁴⁾

Gains from asset dispositions and exchanges ⁽⁵⁾

Asset impairments and abandonments

Access costs ⁽⁶⁾

Acquisitions ⁽⁷⁾

Adjusted OIBDA*

Capital expenditures ⁽²⁾

Adjusted OIBDA* less Capex

Adjusted OIBDA Margin*

Selected item:

Deferred tax asset valuation allowance ⁽¹⁾

Net Operating Revenues

Retail service revenue

Wholesale, affiliate and other service revenue

Equipment revenue

Total net operating revenues

Net Operating Expenses

Cost of services

Cost of products

Selling, general and administrative

Depreciation

Amortization

Other, net

Total net operating expenses

Operating Loss

NON-GAAP RECONCILIATION

Operating Loss

Severance and exit costs ⁽⁴⁾

Gains from asset dispositions and exchanges ⁽⁵⁾

Asset impairments and abandonments

Acquisitions ⁽⁷⁾

Depreciation

Amortization

Adjusted OIBDA*

Capital expenditures ⁽²⁾

Adjusted OIBDA* less Capex

Adjusted OIBDA Margin*

OPERATING STATISTICS

Retail Postpaid Subscribers

Service revenue (in millions)

ARPU

Churn

Net additions (losses) (in thousands)

End of period subscribers (in thousands) ^(a)

Hours per subscriber

Retail Prepaid Subscribers

Service revenue (in millions)

ARPU

Churn

Net additions (in thousands)

End of period subscribers (in thousands) ^(a),(b)

Hours per subscriber

Wholesale and Affiliate Subscribers

Net additions (losses) (in thousands)

End of period subscribers (in thousands) ^(a),(b)

Total Subscribers

Net additions (losses) (in thousands)

End of period subscribers (in thousands)

Due to the acquisitions of Virgin Mobile USA, Inc. and iPCS, Inc. during the quarter ended December 31, 2009, end of period subscribers reflect the transfer of subscribers from Wholesale and Affiliate to Retail Postpaid and Prepaid prospectively from the date of each acquisition.

End of period subscribers reflect the sale and transfer of 49,000 subscribers which are not included in net additions, in the third quarter 2010, from Retail Prepaid to Wholesale and Affiliate prospectively from the date of sale.

Net Operating Revenues

Voice

Data

Internet

Other

Total net operating revenues

Net Operating Expenses

Costs of services and products

Selling, general and administrative

Depreciation

Other, net

Total net operating expenses

Operating Income

NON-GAAP RECONCILIATION

Operating Income

Severance and exit costs ⁽⁴⁾

Asset impairments and abandonments

Access costs ⁽⁶⁾

Depreciation

Adjusted OIBDA*

Capital expenditures ⁽²⁾