Fitch Downgrades Sprint to 'BBB'; Outlook Negative.

CHICAGO -- Fitch Ratings has downgraded the ratings for Sprint Nextel Corporation (Sprint Nextel) and its subsidiaries to 'BBB' from 'BBB+'. Fitch has affirmed the commercial paper rating at 'F2'. (See complete listing of ratings downgraded below.) Approximately $22 billion of debt is affected. The Rating Outlook is Negative.

Fitch's rating action results from Sprint Nextel's revision to its financial guidance for 2007, which materially reduced cash flow prospects and was significantly worse than Fitch's expectations. Additional factors affecting the ratings downgrade include the uncertainty and execution risks surrounding Sprint Nextel's aggressive actions on addressing the numerous operational issues. Fitch remains particularly concerned about the erosion that's occurring in the Nextel operations due to network capacity and quality issues, branding weaknesses and past reliance on subprime subscriber additions that has elevated churn levels, caused sharp ARPU declines and resulted in high iDEN subscriber losses.

Sprint Nextel has taken steps and made progress in resolving some of the operational issues. Fitch expects the company will have substantially addressed the current capacity and quality issues in the iDEN network by the end of the first half in 2007 and postpaid churn on the CDMA and iDEN networks should show meaningful improvement in 2007. The $1.1 billion Sprint Nextel will spend in an attempt to reinvigorate growth in the business quantifies the depth of the problems that Sprint Nextel faces. These trends coupled with the positive momentum generated by Verizon Wireless' strong results and Cingular's improved operational performance, could exacerbate the challenges that Sprint Nextel faces in stabilizing and improving its performance.

Other concerns pressuring the rating include the 4G capital requirements and associated operating losses with its WiMAX strategy, the risks surrounding the second phase of the spectrum rebanding plan, the spending level associated with the $6 billion stock repurchase program, the risks with realizing expected synergy benefits and the potential for a $1.5 billion to $2 billion acquisition of its remaining affiliates.

The Negative Outlook is not indicative that Fitch will downgrade Sprint Nextel further in the near-term without further material guidance revisions. If Sprint Nextel stabilizes operating performance particularly from churn, ARPU and postpaid net additions over the next couple of quarters in 2007 as the company expects, Fitch would revise the Outlook to Stable.

Sprint Nextel's liquidity position is sufficient given its cash position, free cash flow and available draw under its credit facility provided further declines do not occur to its cash flows or the company does not significantly increase spending levels to address its strategic initiatives. Cash at the end of the third quarter was $2.1 billion. During second half of 2006, Sprint Nextel repurchased $1.6 billion shares of its common stock although the pace of the repurchases was curtailed significantly in the fourth quarter. Fitch expects Sprint Nextel to use a balanced approach to vary the amount and timing for share repurchases in 2007 using cash and free cash flow generated from operations to fund the buyback with Sprint Nextel maintaining an appropriate cash position. Accordingly, Fitch does not expect Sprint Nextel to incur additional debt to fund stock repurchases.

Sprint Nextel has a five-year $6.0 billion senior unsecured revolving credit facility maturing in 2010 with a $2.5 billion letter of credit under the facility. In addition, the company had approximately $500 million of commercial paper outstanding at the end of the third quarter. In November 2006, Sprint Nextel issued $2 billion of term debt to refinance the $1.6 billion of debt maturing in January 2007. Since the end of the first quarter of 2006, Sprint Nextel has redeemed in excess of $5.5 billion of debt. With the revised guidance, Fitch now expects leverage of approximately 2.0 times for the end of 2007.

Fitch has downgraded the ratings of Sprint Nextel and its subsidiaries as follows:

Sprint Nextel Corporation (Sprint Nextel)

--Issuer default rating (IDR) to 'BBB' from 'BBB'+;

--Senior unsecured notes to 'BBB' from 'BBB+'.

Sprint Capital Corporation

--Issuer default rating (IDR) to 'BBB' from 'BBB'+;

--Senior unsecured notes to 'BBB' from 'BBB+'.

Nextel Communications Inc. (Nextel)

--Issuer default rating (IDR) to 'BBB' from 'BBB'+;

--Senior unsecured notes to 'BBB' from 'BBB+'.

Ubiquitel Operating Company (Ubiquitel)

--Issuer default rating (IDR) to 'BBB' from 'BBB'+;

--Senior unsecured notes to 'BBB' from 'BBB+'.

Nextel Partners Inc. (Nextel Partners)

--Issuer default rating (IDR) to 'BBB' from 'BBB+';

--Second priority secured notes to 'BBB' from 'BBB+'.

IWO Holdings Inc. (IWO)

--Issuer default rating (IDR) to 'BBB' from 'BBB'+;

--Senior secured notes to 'BBB' from 'BBB+';

US Unwired Inc (US Unwired)

--Issuer default rating (IDR) to 'BBB' from 'BBB'+;

--Second priority secured notes to 'BBB' from 'BBB+'.

Alamosa Delaware Inc. (Alamosa)

--Issuer default rating (IDR) to 'BBB' from 'BBB'+

--Senior unsecured notes to 'BBB' from 'BBB+'.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.