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To: Clarksterh who wrote (120454)	6/15/2002 1:36:16 PM
From: Wyätt Gwyön	Read Replies (3) \| Respond to of 152472

While it is true that PCS' debt is about twice the size of AWE's no, PCS has about $17BILLION in debt (i understated it before by saying $14BILLION), compared to around $3BILLION in net debt at AWE. as Barron's noted back in February: "Sprint PCS has a similar enterprise value to AT&T Wireless. But the latter has a stronger capital structure, with just $3 billion of net debt, compared with Sprint PCS's $17 billion. In addition, Sprint PCS has a controversial growth strategy geared toward customers with weak credit." it is also true that when total non-current liabilities are compared the results are much closer all that means is that Sprint has a ton of debt (Barron's said $2BILLION this year) it has to roll out real soon...just after it's rating has been slashed once again. trying to issue new debt in that type of environment is not desirable... briefing gave the following summary following FON's downgrade, which includes comments on PCS: Moody's downgraded the senior unsecured long-term ratings of Sprint to Baa3 from Baa2, reflecting the agency's view that: 1) Sprint will not generate material free cash flow as a percentage of total debt until 2004; 2) Sprint PCS, while growing, will continue to require heavy capital spending; 3) the co's long distance segment is struggling to turn around in a difficult competitive environment; and 4) liquidity remains a possible concern until the co successfully completes a new bank facility. Much more important than liabilities is cash flow and cash available. what really matters is how things go when they try to roll out BILLIONs in debt even as the common is tanking. this is where EBITDA can be misleading because if their interest cost goes up, free cash flow goes down. bond investors have already been burnt badly by the likes of Global Crossing. PCS has just had its rating whacked. meanwhile the dollar is starting to slide against the world's other currencies. so why should bond investors settle for easy terms? when you look at forward free cash flow, you will need to consider what future interest payments will be in light of the likelihood for higher interest rates on rollover debt.