Correction: Fitch Affs Sprint Debt; Changes Outlook to Neg.

Business Editors

(In a press release issued Jan. 10, 2001, Sprint Capital Corp. was inadvertently omitted from the rating action of the release. The corrected press release follows.)

CHICAGO--(BUSINESS WIRE)--Jan. 12, 2001

Fitch has affirmed its 'BBB+' rating on the senior unsecured debt of Sprint Corporation (Sprint) and Sprint Capital Corp. and changed the Rating Outlook from Stable to Negative.

A key consideration in this action is that Sprint is expected to need $5 billion in external financing to fund its business plan for 2001 -- $3 billion in PCS equity and $2 billion in FON debt. Sprint's ability to raise capital in the equity markets will be affected by many factors such as PCS stock price, timing of other wireless company equity issuance, and general equity market conditions. An inability for the company to place this equity may lead to higher debt levels unless an alternative equity-like substitute can be found for this funding source. In addition, the expansion of the company's ION rollout has a material near-term negative impact on EBITDA, albeit that this is not unusual for most new service rollouts. The rating also recognizes that ION represents an important long-term growth vehicle and a strategic means to ensure the company's competitive position in the future.

The rating continues to reflect the company's strong and stable local telephone operations and their material protection from competitive pressures due to their predominantly rural nature. Long-distance operations have limited consumer and wholesale exposure, where pricing pressure is the greatest. The company expects its fast growing business data segment can offset any erosion from the consumer and wholesale business.

Sprint PCS is expected to be a strong source of EBITDA growth in 2001 and beyond. Sprint PCS achieved positive EBITDA during the second and third quarters of 2000. Over the last two years, Sprint has increased average revenue per user while reducing the cost of acquiring customers and operating its network. By developing a very strong competitive position in the wireless industry and effectively managing costs, Sprint PCS should materially contribute to consolidated EBITDA. The company has estimated Sprint PCS' EBITDA contribution will be approximately $1.6 billion for 2001. By leveraging its existing core assets and widely recognized brand name, Sprint will use value-added bundles across long-distance, local, PCS and broadband to produce additional revenue opportunities and reduce churn to its competitors.

Resolution of the rating outlook can be achieved with the successful equity funding for a portion of its capital needs and continued EBITDA growth of its operations. Fitch will continue to closely monitor this situation to resolve the outlook status.