
Note 9.	Long-Term Debt, Financing and Capital Lease Obligations



	Interest Rates			Maturities			March 31, 2013			December 31, 2012
							(in millions)
Notes
Senior notes
Sprint Nextel Corporation	6.00	-	11.50%	2016	-	2022	$	9,280		$	9,280
Sprint Capital Corporation	6.88	-	8.75%	2019	-	2032	6,204			6,204
Guaranteed notes
Sprint Nextel Corporation	7.00	-	9.00%	2018	-	2020	4,000			4,000
Secured notes
iPCS, Inc.	2.42	-	3.55%	2013	-	2014	481			481
Convertible bonds
Sprint Nextel Corporation	1.00%			2019			3,100			3,100
Credit facilities
Bank credit facility	3.31%			2018			—			—
Export Development Canada	4.20%			2015			500			500
Secured equipment credit facility	2.03%			2017			445			296
Financing obligation	9.50%			2030			697			698
Capital lease obligations and other	4.11	-	15.49%	2014	-	2022	70			74
Net discount from beneficial conversion feature on convertible bond							(238		)	(247		)
Net discounts							(39		)	(45		)
							24,500			24,341
Less current portion							(428		)	(379		)
Long-term debt, financing and capital lease obligations							$	24,072		$	23,962

As of March 31, 2013, Sprint Nextel Corporation, the parent corporation, had $16.9 billion in principal amount of debt outstanding, including amounts drawn under the credit facilities. In addition, as of March 31, 2013, $7.1 billion in principal amount of our long-term debt issued by 100% owned subsidiaries was fully and unconditionally guaranteed by the parent. The indentures and financing arrangements governing certain subsidiaries' debt contain provisions that limit cash dividend payments on subsidiary common stock. The transfer of cash in the form of advances from the subsidiaries to the parent corporation generally is not restricted. Cash interest payments, net of amounts capitalized of $15 million and $115 million, totaled $305 million and $179 million during the three-month periods ended March 31, 2013 and 2012, respectively.

Notes

Notes consist of senior notes, guaranteed notes, and convertible bonds, all of which are unsecured, as well as secured notes of iPCS, Inc. (iPCS), which are secured solely with the underlying assets of iPCS. Cash interest on all of the notes is generally payable semi-annually in arrears. As of March 31, 2013, approximately $19.8 billion of the notes were redeemable at the Company's discretion at the then-applicable redemption prices plus accrued interest.

As of March 31, 2013, approximately $11.1 billion of our senior notes and guaranteed notes as well as the outstanding amount under our $3.1 billion convertible bond issuance to New Sprint provide holders with the right to require us to repurchase the notes if a change of control triggering event (as defined in our indentures and supplemental indentures governing applicable notes) occurs, which includes both a change of control and a ratings decline of the applicable notes by each of Moody's Investor Services and Standard & Poor's Rating Services. If we are required to make a change of control offer, we will offer a cash payment equal to 101% of the aggregate principal amount of notes repurchased plus accrued and unpaid interest. A change in control resulting from the SoftBank Merger has been excluded as a triggering event for the $11.1 billion of our senior notes and guaranteed notes which are subject to both a change in control and ratings decline as well as the $3.1 billion convertible bond issuance which is subject only to a change in control.

Credit Facilities

On February 28, 2013, we entered into a new $2.8 billion unsecured bank revolving credit facility that expires in February 2018 with an interest rate equal to the London Interbank Offered Rate (LIBOR) plus a spread that varies depending on the Company’s credit ratings. This new bank credit facility replaced the $2.2 billion revolving credit facility that was due to expire in October 2013. As of March 31, 2013, approximately $925 million in letters of credit were outstanding under our $2.8 billion unsecured revolving bank credit facility, including the letter of credit required by the 2004 FCC Report and Order to reconfigure the 800 MHz band (the "Report and Order").

In addition, certain indentures that govern our outstanding notes also require compliance with various covenants, including covenants that limit the Company's ability to sell all or substantially all of its assets, limit the ability of the Company and its subsidiaries' ability to incur indebtedness, and limit the ability of the Company and its subsidiaries to incur liens, as defined by the terms of the indentures. The Company is currently limited by a restriction of debt incurrence in Sprint Nextel Corporation's 9.25% Senior Notes due in 2022 (2022 Notes) with $200 million in principal amount outstanding. This restriction, however, would be substantially mitigated if the SoftBank Merger occurs, in which case the $3.1 billion convertible bond issued to New Sprint would convert to common stock, or if we exercise any one of several options, including defeasance of the 2022 Notes. As a result of the outstanding letters of credit, which directly reduce the availability of the revolving bank credit facility, as well as the restrictions of debt incurrence, the Company had approximately $1.5 billion of borrowing capacity available under the unsecured revolving bank credit facility as of March 31, 2013. On April 2, 2013, the unsecured revolving bank credit facility was amended to provide additional lender commitments to bring our total revolver capacity to $3.0 billion. The unsecured Export Development Canada (EDC) loan agreement was amended on March 12, 2013, to provide for terms similar to those of the new unsecured revolving bank credit facility, except that under the terms of the EDC loan, repayments of outstanding amounts cannot be re-drawn. As of March 31, 2013, the EDC loan was fully drawn.

As of March 31, 2013, we had fully drawn the first tranche of the secured equipment credit facility totaling $500 million and made a regularly scheduled principal repayment of $55 million. Under the terms of the facility, repayments of outstanding amounts cannot be re-drawn. The second tranche of $500 million is available to draw upon from April 1, 2013 through May 31, 2014, although the use of such funds is limited to equipment-related purchases from Ericsson. The cost of funds under this facility includes a fixed interest rate of 2.03%, and export credit agency premiums and other fees that, in total, equate to an expected effective interest rate of approximately 6% based on assumptions such as timing and amounts of drawdowns. The facility is secured by a lien on the equipment purchased and is fully and unconditionally guaranteed by the parent.

Under the terms of the secured equipment credit facility, if a change of control occurs, we will be required to repay all outstanding balances in the amount of $445 million as of March 31, 2013. Sprint is currently in discussions with the existing lender under this arrangement to obtain waivers for the proposed SoftBank transaction.

Financing, Capital Lease and Other Obligations

We have approximately 3,000 cell sites that we sold and subsequently leased back. Terms extend through 2021, with renewal options for an additional 20 years. These cell sites continue to be reported as part of our property, plant and equipment due to our continued involvement with the property sold and the transaction is accounted for as a financing. Our capital lease and other obligations are primarily for the use of wireless network equipment.

Covenants

As of March 31, 2013, the Company was in compliance with all restrictive and financial covenants associated with its borrowings. A default under any of our borrowings could trigger defaults under our other debt obligations, which in turn could result in the maturities being accelerated. As of March 31, 2013, we own a 50.2% non-controlling voting interest interest in Clearwire. As a result, Clearwire could be, and if the Clearwire Acquisition is consummated, Clearwire would be, considered a subsidiary under certain agreements relating to our indebtedness. Whether Clearwire could be considered a subsidiary under our debt agreements is subject to interpretation. However, Sprint does maintain the right to unilaterally surrender voting securities to reduce its voting security percentage below 50%, which, if exercised would eliminate the potential for Clearwire to be considered a subsidiary of Sprint. Certain actions or defaults by Clearwire would, if viewed as a subsidiary, result in a breach of covenants, including potential cross-default provisions, under certain agreements relating to our indebtedness. We believe the unilateral rights significantly mitigate the possibility of an event that would cross-default against Sprint's debt obligations.

We are currently restricted from paying cash dividends because our ratio of total indebtedness to trailing four quarters earnings before interest, taxes, depreciation and amortization and certain other non-recurring items (adjusted EBITDA), as defined in the credit facilities, exceeds 2.5 to 1.0.