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Sprint Nextel's CEO Discusses Q2 2011 Results - Earnings Call Transcript

The carrying value of Sprint's investment in Clearwire as of June 30, 2011, was approximately $2.1 billion. Clearwire's stock price is subject to significant volatility, and currently their estimated value based on their quoted first share value is below Sprint's per share carrying value. Although we have determined that the excess of our book value over the estimated fair value of our investment is the result of a temporary decline, there is significant risk that the estimated value of our investment in Clearwire does not improve. And accordingly, we could face significant non-cash charges up to the full amount of our net carrying value. Similar to the first quarter, we recognize the capitalized interest of approximately $100 million related to certain previously unutilized spectrum licenses, which we intend to deploy as part of Network Vision. We continue to expect full year capitalized interest related to these spectrum licenses to be approximately $400 million.

As we discussed on our last earnings call, the successful testing and deployment of Network Vision is expected to result in accelerated depreciation expense, primarily associated with iDEN-related assets due to changes in our estimates of the remaining useful life of certain long-lived assets, and the expected timing of asset retirement obligations. As of June 30, 2011, the remaining net carrying value of iDEN-related assets was approximately $4 billion, with a composite estimate useful life of 4.5 years, resulting in depreciation expense of approximately $800 million annually.

Successful completion of Network Vision earlier than the end of 2015 would result in an acceleration of these depreciation costs. Assuming the completion of successful testing of push-to-talk and finalization of a migration plan for push-to-talk customers, accelerated depreciation could begin in late 2011 or early 2012.

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