Sprint Posts Q2 Results, Eyes Going It Alone

STOCKHOLM (07/20/2000) - Sprint Corp. executives in a teleconference call Thursday detailing the company's second-quarter results reiterated that they are optimistic about Sprint's future as an independent telecommunications operator.

Although acknowledging that Sprint will face challenges in the aftermath of the failed merger with WorldCom Inc., Arthur Krause, Sprint's executive vice president and chief financial officer, pointed out that the company has all the necessary pieces, including both fixed-line and wireless services, to take advantage of the high-growth in the telecommunications market.

"I can tell you we feel very good about our odds," Krause said.

The planned US$120 billion merger between Sprint and WorldCom was officially called off on July 13 in the face of opposition from government regulators in both the U.S. and the European Union. [See "Sprint, WorldCom Call Off Merger Definitively," July 13.]During the conference call with media and analysts, Krause and other Sprint executives avoided any mention of rumors surrounding other prospective merger partners, such as Deutsche Telekom AG, that reportedly may be interested in acquiring Sprint.

Sprint's performance in the second quarter, meanwhile, showed that the company had not been idly waiting approval for the WorldCom merger but had continued to execute its business plans, Krause said.

Consolidated net operating revenue for the quarter ended June 30 totaled US$5.8 billion, a 19 percent rise over the $4.9 billion Sprint posted for the corresponding period a year ago, with increasing data traffic cited as a main growth driver across both fixed-line and wireless services.

Westwood, Kansas-based Sprint's operations are divided into the FON and PCS Groups, which are listed separately on the New York Stock Exchange.

The FON Group, which includes Sprint's core international as well as domestic long-distance and local fixed-line operations, reported second-quarter net income of $365 million on revenue of $4.4 billion, as compared to $386 million and $4.2 billion, respectively, for the corresponding period a year ago.

Earnings per diluted common share reached 41 cents, including a 12 cent per share charge related to costs associated with the failed WorldCom merger, as compared to 44 cents in last year's second quarter. The per share earnings compare to the 49 cents per share consensus estimate from twelve brokerages polled by First Call/Thomson Financial.

Sprint's PCS Group, which consists of the company's wireless operations, reported a net loss of $456 million, or 46 cents per common share, on revenue of $1.46 billion, as compared to $555 million, 61 cents and $736 million, respectively, in the corresponding quarter last year.

The earnings per share figure excluded a 2 cent per share charge related to the failed merger. Nevertheless, PCS Group's per-share loss was narrower the 49 cent per share consensus loss estimate by the 19 analysts polled by First Call/Thomson Financial.

Sprint PCS now boasts more than 500,000 wireless data users among its total of 7.4 million subscribers, and the company is seeing a rapid increase in the number of business users for its wireless Web services, said Ron LeMay, chief operating officer of Sprint Corp. and president of Sprint PCS.

LeMay also noted that the PCS Group had succeeded in achieving a positive cash flow in its operations one quarter earlier than scheduled, turning a loss of $338 million a year ago into a gain of $11 million in this year's second quarter.

In late morning trading on Thursday, Sprint PCS shares were trading at $64.19, up .5 percent on the day, while FON shares had dropped more than 4 percent to $43.19.

Sprint, in Westwood, Kansas, can be reached at +1-913-624-3000, or via the Web at http://www.sprint.com/.

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