The Sprint FON Group (NYSE: FON) is comprised of Sprint’s Global Markets segment, Local Telecommunications Division and product distribution and directory publishing businesses.

The Sprint PCS Group (NYSE: PCS) consists of Sprint’s wireless PCS operations.

Sprint today announced record second quarter consolidated revenues of $6.42 billion, an increase of 10 percent from $5.82 billion a year ago. During the quarter, the PCS Group reported exceptional operating cash flows (EBITDA) performance and strong customer growth, while reducing churn, increasing average revenue per customer and maintaining good cost control. The FON Group’s earnings exceeded expectations due to solid performance in local operations and lower-than-expected losses in the Global Markets segment. In addition, the FON Group continued to increase bundled sales of wireless and wireline offerings and expanded its broadband initiative, opening new domestic Internet centers and deploying additional international capabilities in Europe and Asia. The PCS Group reported a loss per share from recurring operations of 26 cents compared to the 33 cent mean analyst estimate for the quarter and 46 cents a year ago. Second quarter diluted earnings per share for the FON Group’s recurring operations were 33 cents compared to the 28 cent mean analyst estimate for the quarter and 50 cents a year ago.

Sprint continues to build a strong foundation for future growth in both our wireless and wireline businesses, said William T. Esrey, chairman and chief executive officer.

Even in the face of a sluggish economy and heightened competition, I’m very optimistic about our future in the higher-growth areas of wireless, data and broadband services.

The PCS Group reported EBITDA of $491 million in the quarter, $480 million above the same period a year ago excluding nonrecurring items. Excluding $78 million of quarterly goodwill and intangibles amortization from the 1998 recapitalization of the PCS Group, operating income was a positive $21 million for the quarter — the first quarter that the PCS Group has achieved this milestone.

The Sprint PCS group added more than 1 million customers in the second quarter including 843,000 direct customers and 220,000 affiliate customers.

The PCS Group’s total customer base, including resale and affiliate customers, increased to 12.8 million, up 60 percent from second quarter 2000. The company, including affiliates, operates the nation’s largest 100 percent digital, 100 percent PCS wireless network, which now covers a population of nearly 239 million people or more than 80 percent of the U.S. population based on newly released 2000 U.S. Census data.

Revenues increased 53 percent to $2.26 billion in the second quarter from $1.48 billion during the same quarter a year ago.

Monthly average revenue per user (ARPU) for the quarter was $61. In the quarter, we began reporting contract cancellation fees on a net basis, reducing reported ARPU by about $2 in the quarter. Had we restated prior periods’ measures, second quarter 2001 ARPU would have been $62, compared to $59 in both the last and year ago quarters. Previous reporting would have shown that ARPU was $63, compared to $60 last quarter and $59 a year ago.

Average monthly operating cash cost per user (CCPU) for the quarter was $32. Again, reporting contract cancellation fees on a net basis reduced reported CCPU by about $2 in the quarter. Had we restated prior periods’ measures, second quarter 2001 CCPU would have been $33 in both the 2001 second and first quarters, compared to $35 a year ago. Previous reporting would have shown CCPU was $34, consistent with last quarter’s $34 and better than $35 a year ago.

The average cost to acquire a customer was approximately $340 in the quarter compared to $350 during the same period last year.

Sprint PCS increased its business customer base by 62 percent compared to the second quarter 2000. Continuing to fuel this strong growth was the Sprint PCS Wireless Web for Business, a full suite of wireless products and services offering wireless access to enterprise content and applications via Internet-ready Sprint PCS phones. At the end of the quarter, Sprint PCS reported more than 17,000 centrally managed business customers nationwide.

Capital expenditures were $1.06 billion for the quarter, reflecting continued network capacity expansion and development of new service capabilities.

Sprint PCS has delivered stellar financial results, achieved strong subscriber gains and continued to deliver excellent clarity, coverage, connectivity and value for customers, Esrey said.

Esrey added that Sprint PCS is ideally positioned to be the U.S. wireless industry leader in deployment of high-speed, third-generation (3G) services. Unlike its wireless competitors, Sprint PCS believes it has adequate spectrum for a seamless transition to 3G, and offers the most cost-efficient path to the faster services, attributable to CDMA technology in 100 percent of its network.

Sprint expects to provide its customers with high-speed 3G data rates that will change the way people traditionally use wireless services, Esrey said. With 3G, customers with Sprint phones and other devices are expected to be able to take advantage of advanced mobile applications such as e-mail attachments, downloadable photos and streaming audio and video.

During the quarter, the PCS Group reached major milestones in its aggressive plans to bring high-speed 3G services to customers nationwide. Sprint announced separate multi-year deals with Lucent Technologies and Nortel Networks for deployment of enhanced wireless network equipment and professional services.

Also in the quarter, Sprint and Lucent completed the fastest-ever 3G over-the-air data call for a U.S. mobile wireless carrier, at speeds of up to 2.4 mbps.

Additionally in the second quarter, Sprint PCS was named #1 in Customer Services by Smart Money magazine. Also, Sprint announced nationwide availability of voice-enabled web services through Sprint PCS Voice Command. The services allow Sprint PCS customers to listen and respond to e-mail and access news, stocks, traffic reports and other services just by pressing *TALK and speaking into any Sprint PCS Phone.

SOURCE: COMPANY PRESS RELEASE