Fitch affirms Sprint Nextel

Fitch Ratings said it affirmed Sprint Nextel Corp.'s issuer default rating at B+, senior credit facility at BB/RR2, junior guaranteed notes at BB/RR2 and senior notes at B+/RR4.

The agency also affirmed the B+ issuer default ratings and B+/RR4 senior note ratings of Sprint Capital Corp. and Nextel Communications Inc.

The outlook is negative.

The agency said the ratings for Sprint reflect the ongoing execution risk both operationally and financially regarding several key initiatives that the company expects will improve cash generation, network performance and longer-term profitability. Risks include achieving expected cost benefits associated with its network modernization, improving its competitive position with its 4G deployment, maintaining postpaid CDMA subscriber trends, improving iPhone dilution rates and retaining its Integrated Digital Enhanced Network subscribers, according to Fitch.

The agency said the ratings have limited flexibility for execution missteps, weakened core operational results, significantly higher cash requirements, Clearwire event risk or lack of expected benefits from the network modernization project, and Fitch expects leverage to peak in the low 5 times range during 2012. The agency said that as a result, it will not remove the negative outlook during 2012.

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