Sprint Nextel retires $985 million of debt in third quarter

By Jennifer Lanning Drey

Portland, Ore., Nov. 7 - Sprint Nextel Corp. retired $985 million of debt during the third quarter and ended the period with $4.1 billion of cash and cash equivalents, the wireless communications provider reported Friday.

The debt reduction consisted of repayments of $485 million in principal of affiliate debt due 2012 and $500 million from the company's revolving credit facility.

Speaking during the company's third-quarter earnings conference call, chief executive officer Dan Hesse said the repayments were made possible by $1.1 billion of free cash flow generated during the quarter.

"Cash has been a focus throughout the year and we maintained disciplined spending in all aspects of our operations," he said.

In addition to cash and debt reduction, Sprint's considers cost control a key financial focus, he added. For the quarter, capital spending was $485 million, down from $646 million in the second quarter.

$1.3 billion revolver availability

As of Friday, Sprint had $1.3 billion of available borrowing capacity under its revolving credit facility after amending the facility to a $4.5 billion facility from the prior $6.0 billion, chief financial officer Robert Brust reported during the call.

"We felt it was prudent to take external speculation about our ability to meet our covenants off the table. This allows us to stay focused on improving operations," Hesse said regarding the amendments.

The company had total debt of $22.64 billion at the end of the quarter, with its next upcoming maturity being $600 million in May 2009.

"To reiterate our good financial position, we currently have cash on hand that exceeds our maturities, including the remaining balance of our revolving credit facility, through 2010," Brust said.

Also during the third quarter, Sprint incurred a $694 million financing obligation related to the close of its tower transaction.

No impact from economy

Hesse said outside of contraction in the enterprise sector related to companies downsizing, Sprint has seen little impact from the weak economy, although the company is closely monitoring business.

Sprint reported third-quarter net operating revenues of $8.8 billion, down from $10.0 billion the same period in 2007. The net loss was $326 million, compared to net income of $64 million in the prior period.

"We would expect wireless communications to demonstrate greater resiliency than many other industries as many people view wireless as a staple today versus what would have been seen as a luxury eight to 10 years ago," he said.

Sprint Nextel is an Overland Park, Kan., wireless communications provider.

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