Costs associated with U.S. wireless carrier Sprint Nextel's network modernization project and fourth-generation wireless deployment will result in near-term margin compression, higher capital spending, greater and more persistent free operating cash flow deficits, and higher leverage than we had assumed for the previous rating. We are lowering our corporate credit rating on Sprint Nextel to 'B+' from 'BB-', as well as all issue-level ratings. At the same time, we are removing the ratings from CreditWatch Negative. The negative outlook reflects our belief that, despite improving operating trends, including higher ARPU and lower churn, we expect leverage to approach 6x by year-end 2012, which is high for the rating given our current "fair" business risk assessment. (Listen to the related podcast
