Segment Information

6 Months Ended

Jun. 30, 2012

Segment Reporting [Abstract]

Segment Information

Note 15. Segments

Sprint operates two reportable segments: Wireless and Wireline.

• Wireless primarily includes retail, wholesale, and affiliate revenue from a wide array of wireless voice and data transmission services and equipment revenue from the sale of wireless devices and accessories in the U.S., Puerto Rico and the U.S. Virgin Islands.

• Wireline primarily includes revenue from domestic and international wireline voice and data communication services, including services to the cable multiple systems operators that resell our local and long distance services and use our back office systems and network assets in support of their telephone services provided over cable facilities primarily to residential end-use subscribers.

We define segment earnings as wireless or wireline operating (loss) income before other segment expenses such as depreciation, amortization, severance, exit costs, goodwill impairments, asset impairments, and other items, if any, solely and directly attributable to the segment representing items of a non-recurring or unusual nature. Expenses and income items excluded from segment earnings are managed at the corporate level. Transactions between segments are generally accounted for based on estimated market rates, which we believe approximate fair value. The Company generally re-establishes these rates at the beginning of each fiscal year. Over the past several years, there has been an industry-wide trend of lower rates due to increased competition from other wireline and wireless communications companies as well as cable and Internet service providers.

Segment financial information is as follows:

Statement of Operations Information	Wireless			Wireline			Corporate, Other and Eliminations			Consolidated
	(in millions)
Three Months Ended June 30, 2012
Net operating revenues	$	8,067		$	774		$	2		$	8,843
Inter-segment revenues(1)	—			221			(221		)	—
Total segment operating expenses	(6,768		)	(846		)	222			(7,392		)
Segment earnings	$	1,299		$	149		$	3		1,451
Less:
Depreciation and amortization										(1,896		)
Other, net(2)										(184		)
Operating loss										(629		)
Interest expense										(321		)
Equity in losses of unconsolidated investments and other, net							$	(398	)	(398		)
Loss before income taxes										$	(1,348	)
Statement of Operations Information	Wireless			Wireline			Corporate, Other and Eliminations			Consolidated
	(in millions)
Three Months Ended June 30, 2011
Net operating revenues	$	7,452		$	857		$	2		$	8,311
Inter-segment revenues(1)	—			233			(233		)	—
Total segment operating expenses	(6,350		)	(880		)	233			(6,997		)
Segment earnings	$	1,102		$	210		$	2		1,314
Less:
Depreciation and amortization										(1,235		)
Other, net										—
Operating income										79
Interest expense										(239		)
Equity in losses of unconsolidated investments and other, net							$	(588	)	(588		)
Loss before income taxes										$	(748	)

Statement of Operations Information	Wireless			Wireline			Corporate, Other and Eliminations			Consolidated
	(in millions)
Six Months Ended June 30, 2012
Net operating revenues	$	16,017		$	1,555		$	5		$	17,577
Inter-segment revenues(1)	—			438			(438		)	—
Total segment operating expenses	(13,666		)	(1,683		)	436			(14,913		)
Segment earnings	$	2,351		$	310		$	3		2,664
Less:
Depreciation and amortization										(3,562		)
Other, net(2)										14
Operating loss										(884		)
Interest expense										(619		)
Equity in losses of unconsolidated investments and other, net							$	(671	)	(671		)
Loss before income taxes										$	(2,174	)
Statement of Operations Information	Wireless			Wireline			Corporate, Other and Eliminations			Consolidated
	(in millions)
Six Months Ended June 30, 2011
Net operating revenues	$	14,865		$	1,755		$	4		$	16,624
Inter-segment revenues(1)	—			455			(455		)	—
Total segment operating expenses	(12,480		)	(1,772		)	456			(13,796		)
Segment earnings	$	2,385		$	438		$	5		2,828
Less:
Depreciation and amortization										(2,490		)
Other, net										—
Operating income										338
Interest expense										(488		)
Equity in losses of unconsolidated investments and other, net							$	(1,000	)	(1,000		)
Loss before income taxes										$	(1,150	)
Other Information	Wireless			Wireline			Corporate and Other			Consolidated
	(in millions)
Capital expenditures for the six months ended June 30, 2012	$	1,464		$	120		$	127		$	1,711
Capital expenditures for the six months ended June 30, 2011	$	1,187		$	99		$	117		$	1,403

 _________________

(1) Inter-segment revenues consist primarily of wireline services provided to the Wireless segment for resale to or use by wireless subscribers.

(2) Other, net for the three-month period endedJune 30, 2012 consists of $184 million of lease exit costs associated with the taking certain Nextel platform sites off-air in 2012 (see Note 9). Other, net for the six-month period endedJune 30, 2012 consists of net operating income of $236 million associated with the termination of the spectrum hosting arrangement with LightSquared (see Note 11), a gain of $29 million on spectrum swap transactions, and a benefit of $17 million resulting from favorable developments relating to access cost disputes associated with prior periods, partially offset by $184 million of lease exit costs and $84 million of asset impairment charges.

Operating Revenues by Service and Products	Wireless		Wireline		Corporate, Other and Eliminations(1)			Consolidated
	(in millions)
Three Months Ended June 30, 2012
Wireless services	$	7,190	$	—	$	—		$	7,190
Wireless equipment	753		—		—			753
Voice	—		426		(130		)	296
Data	—		99		(43		)	56
Internet	—		449		(48		)	401
Other	124		21		2			147
Total net operating revenues	$	8,067	$	995	$	(219	)	$	8,843
	Wireless		Wireline		Corporate, Other and Eliminations(1)			Consolidated
	(in millions)
Three Months Ended June 30, 2011
Wireless services	$	6,708	$	—	$	—		$	6,708
Wireless equipment	690		—		—			690
Voice	—		480		(156		)	324
Data	—		117		(43		)	74
Internet	—		475		(35		)	440
Other	54		18		3			75
Total net operating revenues	$	7,452	$	1,090	$	(231	)	$	8,311
	Wireless		Wireline		Corporate, Other and Eliminations(1)			Consolidated
	(in millions)
Six Months Ended June 30, 2012
Wireless services	$	14,302	$	—	$	—		$	14,302
Wireless equipment	1,488		—		—			1,488
Voice	—		843		(257		)	586
Data	—		207		(87		)	120
Internet	—		902		(94		)	808
Other	227		41		5			273
Total net operating revenues	$	16,017	$	1,993	$	(433	)	$	17,577
	Wireless		Wireline		Corporate, Other and Eliminations(1)			Consolidated
	(in millions)
Six Months Ended June 30, 2011
Wireless services	$	13,357	$	—	$	—		$	13,357
Wireless equipment	1,385		—		—			1,385
Voice	—		966		(309		)	657
Data	—		233		(80		)	153
Internet	—		972		(67		)	905
Other	123		39		5			167
Total net operating revenues	$	14,865	$	2,210	$	(451	)	$	16,624

_______________

(1) Revenues eliminated in consolidation consist primarily of wireline services provided to the Wireless segment for resale to or use by wireless subscribers.