Segment Information

9 Months Ended

Sep. 30, 2012

Segment Reporting [Abstract]

Segment Information

Note 14. 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 September 30, 2012
Net operating revenues	$	8,042		$	717		$	4		$	8,763
Inter-segment revenues(1)	—			222			(222		)	—
Total segment operating expenses	(6,924		)	(781		)	221			(7,484		)
Segment earnings	$	1,118		$	158		$	3		1,279
Less:
Depreciation and amortization										(1,488		)
Other, net(2)										(22		)
Operating loss										(231		)
Interest expense										(377		)
Equity in losses of unconsolidated investments and other, net							$	(112	)	(112		)
Loss before income taxes										$	(720	)
Statement of Operations Information	Wireless			Wireline			Corporate, Other and Eliminations			Consolidated
	(in millions)
Three Months Ended September 30, 2011
Net operating revenues	$	7,516		$	816		$	1		$	8,333
Inter-segment revenues(1)	—			246			(246		)	—
Total segment operating expenses	(6,302		)	(878		)	249			(6,931		)
Segment earnings	$	1,214		$	184		$	4		1,402
Less:
Depreciation and amortization										(1,194		)
Other, net										—
Operating income										208
Interest expense										(236		)
Equity in losses of unconsolidated investments and other, net							$	(261	)	(261		)
Loss before income taxes										$	(289	)

Statement of Operations Information	Wireless			Wireline			Corporate, Other and Eliminations			Consolidated
	(in millions)
Nine Months Ended September 30, 2012
Net operating revenues	$	24,059		$	2,272		$	9		$	26,340
Inter-segment revenues(1)	—			660			(660		)	—
Total segment operating expenses	(20,590		)	(2,464		)	657			(22,397		)
Segment earnings	$	3,469		$	468		$	6		3,943
Less:
Depreciation and amortization										(5,050		)
Other, net(2)										(8		)
Operating loss										(1,115		)
Interest expense										(996		)
Equity in losses of unconsolidated investments and other, net							$	(783	)	(783		)
Loss before income taxes										$	(2,894	)
Statement of Operations Information	Wireless			Wireline			Corporate, Other and Eliminations			Consolidated
	(in millions)
Nine Months Ended September 30, 2011
Net operating revenues	$	22,381		$	2,571		$	5		$	24,957
Inter-segment revenues(1)	—			701			(701		)	—
Total segment operating expenses	(18,782		)	(2,650		)	705			(20,727		)
Segment earnings	$	3,599		$	622		$	9		4,230
Less:
Depreciation and amortization										(3,684		)
Other, net										—
Operating income										546
Interest expense										(724		)
Equity in losses of unconsolidated investments and other, net							$	(1,261	)	(1,261		)
Loss before income taxes										$	(1,439	)
Other Information	Wireless			Wireline			Corporate and Other			Consolidated
	(in millions)
Capital expenditures for the nine months ended September 30, 2012	$	2,413		$	186		$	185		$	2,784
Capital expenditures for the nine months ended September 30, 2011	$	1,899		$	135		$	187		$	2,221

 _________________

(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 endedSeptember 30, 2012 consists of $22 million of lease exit costs associated with taking certain Nextel platform sites off-air in 2012 (see Note 9). Other, net for the nine-month period endedSeptember 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 $206 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 September 30, 2012
Wireless services	$	7,171	$	—	$	—		$	7,171
Wireless equipment	750		—		—			750
Voice	—		399		(131		)	268
Data	—		95		(45		)	50
Internet	—		428		(47		)	381
Other	121		17		5			143
Total net operating revenues	$	8,042	$	939	$	(218	)	$	8,763
	Wireless		Wireline		Corporate, Other and Eliminations(1)			Consolidated
	(in millions)
Three Months Ended September 30, 2011
Wireless services	$	6,836	$	—	$	—		$	6,836
Wireless equipment	616		—		—			616
Voice	—		474		(166		)	308
Data	—		124		(41		)	83
Internet	—		447		(39		)	408
Other	64		17		1			82
Total net operating revenues	$	7,516	$	1,062	$	(245	)	$	8,333
	Wireless		Wireline		Corporate, Other and Eliminations(1)			Consolidated
	(in millions)
Nine Months Ended September 30, 2012
Wireless services	$	21,473	$	—	$	—		$	21,473
Wireless equipment	2,238		—		—			2,238
Voice	—		1,242		(388		)	854
Data	—		302		(132		)	170
Internet	—		1,330		(141		)	1,189
Other	348		58		10			416
Total net operating revenues	$	24,059	$	2,932	$	(651	)	$	26,340
	Wireless		Wireline		Corporate, Other and Eliminations(1)			Consolidated
	(in millions)
Nine Months Ended September 30, 2011
Wireless services	$	20,193	$	—	$	—		$	20,193
Wireless equipment	2,001		—		—			2,001
Voice	—		1,440		(475		)	965
Data	—		357		(121		)	236
Internet	—		1,419		(106		)	1,313
Other	187		56		6			249
Total net operating revenues	$	22,381	$	3,272	$	(696	)	$	24,957

_______________

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