UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K

[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
    ACT OF 1934

For the fiscal year ended              December 31, 1996
                          ----------------------------------------------

                                       OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
    ACT OF 1934

For the transition period from                to

                                        333-06609-01
Commission file number                  333-06609-02
                       -------------------------------------------------
                              SPRINT SPECTRUM L.P.
                       SPRINT SPECTRUM FINANCE CORPORATION
             (Exact name of registrant as specified in its charter)

                  DELAWARE                               48-1165245
                  DELAWARE                               43-1746537
---------------------------------------------     ----------------------
(State or other jurisdiction of                       (IRS Employer
 incorporation or organization)                    Identification Nos.)

   4900 Main Street, Kansas City, Missouri                64112
---------------------------------------------     ----------------------
  (Address of principal executive offices)              (Zip Code)

Registrant's telephone number, including area code      (816) 559-1000
                                                    ----------------------------

Securities registered pursuant to Section 12(b) of the Act:  None

Securities registered pursuant to Section 12(g) of the Act:  None

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter  period that the registrant was re-
quired to file such reports), and  (2) has been subject to such  filing require-
ments for the past 90 days.       Yes        X              No
                                       ------------           --------------
Indicate by a check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation  S-K is not contained  herein,  and will not be contained,  to the
best of registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]

As of March 14, 1997 the Sprint  Spectrum  Finance  Corporation had Common Stock
outstanding of 100 shares.

Documents Incorporated by Reference:  None



<PAGE>



                              SPRINT SPECTRUM L.P.
                       SPRINT SPECTRUM FINANCE CORPORATION

                          1996 FORM 10-K ANNUAL REPORT

                                Table of Contents

                                                                            Page
                                     PART I

Item  1.          Business...................................................  3
Item  2.          Properties................................................. 16
Item  3.          Legal Proceedings.......................................... 16
Item  4.          Submission of Matters to a Vote of Security Holders........ 16

                                     PART II

Item  5.          Market for the Registrant's Common Stock and Related
                    Stockholder Matters...................................... 16
Item  6.          Selected Financial Data.................................... 17
Item  7.          Management's Discussion and Analysis of Financial Condition
                    and Results of Operations................................ 17
Item  8.          Financial Statements and Supplementary Data................ 17
Item  9.          Changes in and Disagreements with Accountants on Accounting
                    and Financial Disclosures................................ 17

                                    PART III

Item 10.          Directors and Executive Officers of the Registrants........ 18
Item 11.          Executive Compensation..................................... 22
Item 12.          Security Ownership of Certain Beneficial Owners and
                    Management............................................... 26
Item 13.          Certain Relationships and Related Transactions............. 27

                                     PART IV

Item 14.          Exhibits, Financial Statement Schedule and Reports on
                    Form 8-K................................................. 29






<PAGE>




                              Sprint Spectrum L.P.
                       Sprint Spectrum Finance Corporation

                       Securities and Exchange Commission
                           Annual Report on Form 10-K

Part I

Item 1.  Business


Business of Sprint Spectrum L.P.

        Sprint Spectrum L.P. is a Delaware  limited  partnership that was formed
on March 28, 1995.   The terms  "Sprint  Spectrum" and  the  "Company"  refer to
Sprint Spectrum L.P. and its direct and indirect  subsidiaries, including  Wire-
lessCo, L.P., Sprint Spectrum Equipment  Company,  L.P., Sprint Spectrum Realty
Company, L.P. and Sprint Spectrum Finance Corporation.

        The  general  partner  of Sprint  Spectrum  is Sprint  Spectrum  Holding
Company,   L.P.   ("Holdings"),   and  the  limited  partner  is  MinorCo,  L.P.
("MinorCo").  Each of Holdings  and MinorCo is a limited  partnership  formed by
Sprint  Enterprises,  L.P., which has a 40% partnership  interest,  TCI Spectrum
Holdings,  Inc. (formerly known as TCI Telephony Services,  Inc., a successor to
TCI  Network  Services),  which  has a 30%  partnership  interest,  and  Comcast
Telephony  Services  and Cox  Telephony  Partnership,  each of  which  has a 15%
partnership  interest.  Sprint Enterprises,  L.P., TCI Spectrum Holdings,  Inc.,
Comcast  Telephony  Services  and Cox  Telephony  Partnership  are  collectively
referred  to as the  "Partners".  Each  Partner is both a general  partner and a
limited  partner of both Holdings and MinorCo,  holding 99% of its interest as a
general  partner and 1% of its  interest as a limited  partner.  Holdings  has a
greater than 99% general partnership  interest in the Company.  The Partners are
subsidiaries    of,     respectively,     Sprint     Corporation     ("Sprint"),
Tele-Communications,  Inc.  ("TCI"),  Comcast  Corporation  ("Comcast")  and Cox
Communications,  Inc.  ("Cox",  and together with Sprint,  TCI and Comcast,  the
"Parents").  TCI,  Comcast  and Cox are  collectively  referred to as the "Cable
Parents".

Business of Sprint Spectrum Finance Corporation

        Sprint Spectrum Finance Corporation  ("FinCo"),  a Delaware corporation,
was formed on May 21, 1996 and is a wholly-owned  subsidiary of Sprint  Spectrum
L.P. FinCo has nominal assets, does not conduct any operations and was formed to
be a co-obligor of the securities issued by the Company.  Certain  institutional
investors  who  might  otherwise  be  limited  in their  ability  to  invest  in
securities  issued by  partnerships  by reasons of the legal  investment laws in
their states of organization or their charter  documents,  may be able to invest
in the  Company's  securities  because  FinCo is a  co-obligor.  Accordingly,  a
discussion  of the results of  operations,  liquidity  and capital  resources of
FinCo  are not  presented.  See  FinCo's  notes to  financial  statements  for a
discussion  of the  securities  with  respect  to  which  FinCo  is  serving  as
co-obligor.

General

        Sprint  Spectrum  intends  to  become a  leading  provider  of  wireless
communications  products and services in the United  States.  The Company is the
largest broadband wireless   personal  communications services ("PCS" company in

                                       3
<PAGE>

the United States in terms of total license coverage of population  equivalents.
The term population  equivalents  ("Pops") means the  Donnelley  Marketing  Ser-
vice  estimate  of the  December  31,  1995, population  of  geographic  areas
in the  United  States.  The  Company  was the successful bidder for 29 PCS li-
censes in the Federal Communication  Commission's ("FCC") A Block and B Block
PCS  auction  which  concluded  in March  1995.  The Company's 29  wholly-owned
markets cover 150.3 million Pops and include,  among others,   the  New  York,
San  Francisco,   Detroit,   Dallas/Fort   Worth  and Boston/Providence  Major
Trading Areas  ("MTAs").  Additionally,  on February 6, 1997,  Cox  contributed
to the Company a PCS license for the Omaha MTA that Cox purchased in the broad-
band PCS auction in March 1995. The Company, together with other PCS licensees
that have affiliated,  or are expected to affiliate with the Company,  will have
licenses  to provide  service to the entire  United  States population (exclud-
ing certain United States territories).

        The Company is in the  development  stage and has minimal  revenues from
operations.  Sprint Spectrum commenced initial commercial PCS operations late in
the fourth  quarter of 1996.  As of March 14,  1997,  the Company  has  launched
service in Fresno, California; Spokane, Washington; Portland, Oregon; Milwaukee,
Wisconsin;  Albany and Syracuse, New York; Pittsburgh,  Pennsylvania;  Salt Lake
City,  Utah;  Oklahoma  City and Tulsa,  Oklahoma;  Little Rock,  Arkansas;  Des
Moines,  Iowa  City and  Cedar  Rapids,  Iowa;  the Rio  Grande  Valley in Texas
(including  Brownsville,  Harlingen  and  McAllen);  Louisville,  Kentucky;  and
Wichita, Kansas.

Affiliations

        To increase its network Pop coverage,  the Company has  affiliated,  and
expects to continue to affiliate with,  other PCS providers,  including those in
which  Holdings or  affiliates  of its  Parents  have an  interest.  Pursuant to
affiliation agreements, each affiliated PCS service provider will be included in
the  Company's  national  network  and  will  use the  Sprint(R)  (a  registered
trademark of Sprint Communications Company, L.P.) brand name. In return for this
right, the affiliated PCS provider agrees to offer certain  products  designated
by Sprint Spectrum,  to adhere to certain technical standards for the affiliated
PCS provider's network and to share in certain costs, such as advertising,  that
benefit both the affiliated PCS provider and Sprint Spectrum. The affiliated PCS
provider pays a fee for the services and reimburses  Sprint Spectrum for certain
direct costs attributable to the affiliate.  The affiliation  agreements between
Sprint Spectrum and other PCS providers are not presently  subject to regulation
by the FCC.

        Holdings owns a 49% limited  partnership  interest in American PCS, L.P.
("APC"),  a limited  partnership  that owns a PCS license  for,  and  operates a
broadband PCS system in, the Washington  D.C./Baltimore  MTA. APC has affiliated
with Sprint Spectrum and is marketing its products and services under the Sprint
brand name.  APC launched its PCS service in November  1995 and was the nation's
first  commercially  operational  PCS system.  On December  31,  1996,  Holdings
acquired a 49% limited  partnership  interest in Cox  Communications  PCS,  L.P.
("Cox  PCS"),  a  partnership  that was formed to hold a PCS license for the Los
Angeles/San  Diego MTA covering 21.5 million Pops. Cox which currently owns this
license,  will contribute the license to Cox PCS (pending FCC approval) and will
manage and control Cox PCS. The Company signed an affiliation agreement with Cox
PCS concurrently  with the execution of the Cox PCS partnership  agreement.  Cox
PCS launched service in San Diego, California on December 27, 1996.

        The Company also expects to affiliate with and provide various  services
to PhillieCo,  L.P. ("PhillieCo"),  a limited partnership organized by and among
subsidiaries of Sprint, TCI and Cox that owns a PCS license for the Philadelphia
MTA covering  9.1 million  Pops.  The Company  also  expects to  affiliate  with
SprintCom, Inc. ("SprintCom"), an affiliate of Sprint, which participated in the

                                       4
<PAGE>


FCC's D and E Block  auction  which  ended  January  14,  1997,  and was awarded
licenses for 139 of 493 Basic Trading Areas  ("BTAs")  covering 70 million Pops,
all of which  are  geographic  areas  not  covered  by the  Company's  owned PCS
licenses or licenses  owned by PhillieCo,  APC or Cox PCS. The Company is in the
process of  negotiating  an  agreement  with  SprintCom to build out the network
infrastructure  in certain BTA markets where SprintCom was awarded PCS licenses.
In accordance  with an agreement among the Partners and the Amended and Restated
Agreement of Limited  Partnership  of MajorCo,  L.P.  (renamed  Sprint  Spectrum
Holding  Company , L.P.) dated January 31, 1996 (the  "Partnership  Agreement"),
SprintCom  is  required  to offer to enter into an  affiliation  agreement  with
Holdings with respect to such BTA licenses pursuant to which SprintCom's systems
in such areas would be included in the Company's national PCS network,  although
no assurance  can be given that  SprintCom and Holdings will enter into any such
affiliation agreement.

Network Buildout

        The  buildout  of  the  Company's   network   involves  systems  design,
acquisition  of  cell  sites,  equipment  procurement,  relocation  of  existing
microwave   users,   interconnection   with  other   communications   providers,
construction of cell sites,  installation  of switches,  and  implementation  of
advanced  management  information  and  billing  systems.  A team  comprised  of
engineering   and  operations   employees  and   independent   contractors   and
consultants,  is designing and constructing the Sprint Spectrum network based on
the regional  marketing and product  requirements to meet the Company's  targets
for consistency, uniformity and reliability.

        Rollout  methodology.  The Company's  principal objective is to maximize
population coverage levels within targeted  demographic  segments and geographic
areas.  Sprint PCS began offering  commercial service late in the fourth quarter
of 1996 in portions of 8 of 31 MTAs,  with service  expected in certain areas of
most markets  during the summer of 1997.  Thereafter,  the Company will evaluate
further coverage  expansion on a  market-by-market  basis. In developing its PCS
network  requirements,  Sprint  Spectrum  will  consider,  among  other  things,
population and traffic  density,  FCC coverage  requirements  and the ability to
cluster groups of markets.

        RF  design.  The RF  design  for  coverage  of 57%  of the  Pops  in the
Company-owned  license areas in the aggregate  has been  approved.  This process
includes cell site design,  frequency planning and network optimization for each
of Sprint Spectrum's  markets.  RF engineering also allocates voice channels and
assigns  frequencies  to cell  sites  taking  into  consideration  both  PCS and
microwave interference issues.

        Property  acquisition.  The Company  employs  Engineering and Operations
directors to manage the buildout process and subsequently to have responsibility
for operating the network. Property acquisition managers are located within each
MTA and are responsible for identifying and obtaining the required  property for
buildout of the PCS network.

        The Company has hired property  acquisition firms for each MTA to assist
with acquisition,  zoning,  permitting and appropriate surveying. The Company is
attempting to minimize property  acquisition activity through utilization of the
Parents'  assets  and  cable  infrastructure,  where  possible.  The  cell  site
selection process requires the lease or acquisition of approximately 5,300 sites
in 31 MTAs prior to completion  of the initial  phase of the  buildout,  many of
which have  required  the  Company to obtain  zoning  variances  or other  local
governmental  or  third-party  approvals or permits.   As of March 14, 1997, the

                                       5
<PAGE>


Company had signed leases or options for 4,702 sites,  of which 519 were pending
zoning. There are currently 2,084 sites either under construction or completed.

        Microwave  relocation.  Sprint  Spectrum  must  relocate  existing  2GHz
commercial  microwave  service  users  within  its MTAs in  order  to clear  its
spectrum.  The Company has  contracted  with  national  vendors to assist in the
microwave relocation process.  Recently,  the FCC adopted a microwave relocation
cost-sharing  plan that limits  permissible  relocation  costs and  outlines new
procedures  for the sharing of relocation  costs where the relocation of private
microwave facilities benefits multiple broadband PCS licenses.

        Approximately  1,400  co-channel and  adjacent-channel  microwave  paths
which may affect Sprint Spectrum's  rollout need to be relocated by the Company,
of which  approximately  500 were required for service  launch.  As of March 14,
1997, 919 relocation  agreements were under  negotiation,  1,067  agreements had
been  reached and 590 paths had been  relocated.  The  Company has entered  into
various  cost-sharing  arrangements  that provide for sharing among affected PCS
license holders of expenses associated with microwave relocation.

        Interconnection.  Sprint  Spectrum's  network is connected to the Public
Switched  Telephone  Network.  Such  interconnection  is required to  facilitate
originating  and terminating  traffic between the Company's  facilities and both
the incumbent local exchange and long distance carriers. The Company uses Sprint
as its interexchange carrier and the agreement for such service is covered under
the Holdings Partnership Agreement.

        Roaming.  Subject to entering  into  arrangements  with analog  cellular
providers,  wireless service  providers are able to offer service to subscribers
from other systems who are traveling in or through their service area. Customers
typically pay higher rates while "roaming" outside of their home market. Roaming
is made  possible in today's  analog  cellular  environment  by virtue of common
frequency and signaling  technology.  PCS and analog cellular systems operate on
different frequencies and with different signaling technologies.

        Within its own network, the Company plans to offer "traveling" plans for
subscribers  who use the  Company's  network  outside  of  their  home  markets.
Features  and  services  will operate  identically  across all of the  Company's
markets. As a result, travelers will be encouraged to access the network anytime
and anywhere.

        In areas where CDMA-based PCS service is not available,  the Company may
offer a roaming option on the traditional  analog cellular system via dual-mode,
dual-band  handsets  capable of  transmitting  over  cellular  frequencies.  The
Company  may also offer a roaming  option  over other  CDMA-based  PCS  systems.
Access to cellular coverage is dependent on availability of dual-mode, dual-band
handsets which the Company believes will become available late in the first half
of 1997. The Company has not entered into any such  agreements with any cellular
providers  nor can there be any  assurance  that the Company will enter into any
agreements.

Regulation

        The FCC regulates the licensing,  construction,  operation,  acquisition
and interconnection  arrangements of wireless  telecommunications systems in the
United  States  under  the  Communications  Act  of  1934,  as  amended  by  the
Telecommunications Act of 1996 (the "Communications Act").

                                       6
<PAGE>


        Pursuant to the Communications  Act, the FCC has promulgated,  and is in
the process of promulgating,  a series of rules, regulations and policies to (i)
grant or deny  licenses  for PCS  frequencies,  (ii)  grant or deny PCS  license
renewals, (iii) rule on assignments and/or transfers of control of PCS licenses,
(iv) govern the interconnection of PCS networks with other wireless and wireline
carriers,  (v) establish access and universal service funding  provisions,  (vi)
impose fines and forfeitures for violations of any of the FCC's rules, and (vii)
regulate the technical standards of PCS networks.

        Recent events: The  Telecommunications Act of 1996. On February 8, 1996,
Congress enacted the  Telecommunications  Act of 1996 (the "1996 Act"). The 1996
Act is  supposed to create a  procompetitive,  deregulatory  national  policy to
accelerate competitive development of telecommunications  offerings,  expand the
availability  of  telecommunications  services to all segments of the public and
streamline regulation of the telecommunications  industry by removing regulatory
burdens.  The FCC, state public utility commissions ("PUCs") and a federal-state
joint board are charged  with  implementing  the 1996 Act. On February 12, 1996,
the FCC released its  tentative  schedule for  implementation  of the 1996 Act's
mandates,  many of which  will be  implemented  within  six to 18  months.  Some
specific  provisions  of the  1996  Act  are  expected  to  affect  PCS  service
providers.

        PCS licensing.  The FCC established service areas for PCS throughout the
United States and its possessions  and  territories  based upon the Rand McNally
market  definition  of 51 MTAs  and 493  smaller  BTAs.  At  least  two BTAs are
contained within each MTA.

        The FCC has allocated 120 MHz of radio  spectrum in the 1850 to 1990 MHz
band,  divided into six separate  spectrum  blocks,  for licensed  broadband PCS
services.  The A and B Blocks are 30 MHz each and are  allocated to the 51 MTAs.
The FCC sponsored  auctions for the A and B Blocks that ended in March 1995, and
the FCC granted the A and B Block licenses in June 1995. Aggregate bids in the A
and B Block  auctions  totaled  $7.72 billion  representing  an average price of
$15.29 per Pop. The  remaining  blocks,  C (30 MHz), D (10MHz),  E (10MHz) and F
(10MHz),  are  allocated to the 493 BTAs.  The C Block  auction  ended on May 6,
1996,  and the D, E and F Block  auctions  ended  January 14, 1997.  Neither the
Company, nor Holdings participated in the C, D, E or F Block auctions.  However,
as stated above, SprintCom was awarded PCS licenses for 139 of 493 BTAs in the D
and E Block auctions.

        A PCS license has been  awarded for each block in every MTA or BTA for a
total of more than 2,000 licenses. The licenses in each block collectively cover
the United States and its territories.  Therefore,  any one location may have up
to six PCS  service  providers  who own a license  to serve  that  location,  in
addition to the two incumbent cellular license holders. It is expected that some
or all of the PCS license holders who offer  services,  as well as the incumbent
cellular license holders, will be in competition with the Company.

        The FCC revised its rules regarding spectrum aggregation limits that may
affect PCS  licensees.  The FCC now  prohibits  a single  entity  from  having a
combined  attributable  interest  (20% or greater  interest  in any  license) in
broadband  PCS,  cellular  and SMR  licenses  totaling  more  than 45 MHz in any
geographic area.

        Pioneer's  preference  program.  Holdings has a  non-controlling  equity
interest in APC,  one of three  recipients  of an FCC  broadband  PCS  Pioneer's
Preference license  ("Pioneer's  Preference") which effectively reduces the cost
of a license by awarding it outside of the auction process.  Holdings also has a
non-controlling  interest  in Cox PCS,  which holds a  broadband  PCS  Pioneer's
Preference license awarded to Cox. Following several parties' unsuccessful legal
challenges  in the United  States  Court of Appeals for the District of Columbia
Circuit to the FCC's awards of Pioneer's Preferences, the FCC in

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<PAGE>


        March 1996  ruled that the  Pioneer's  Preference  licensees  must begin
making  installment   payments  on  their  licenses.   Cox  and  APC  must  pay,
respectively, approximately $252 million, plus interest, for the Los Angeles-San
Diego   MTA  and   approximately   $102   million,   plus   interest,   for  the
Washington-Baltimore  MTA over a five-year  period.  The Company is not directly
obligated  to  make  any  payments  to the FCC  with  respect  to the  Pioneer's
Preference licenses held by APC or Cox PCS.

        The District of Columbia  Circuit Court of Appeals  recently  vacated an
FCC order  denying  a  Pioneer's  Preference  license  for  Qualcomm,  Inc.  and
instructed  the FCC to further  consider  its  decision.  Qualcomm  had sought a
Pioneer's  Preference  license for southern Florida,  specifically a region that
included Miami and surrounding  communities.  WirelessCo,  L.P., a subsidiary of
the Company,  holds the A Block Miami-Ft.  Lauderdale MTA license.  It is highly
improbable  that  the FCC  would  revisit  its  award  of PCS  licenses  for the
Miami-Ft. Lauderdale MTA, but such a result cannot be guaranteed.

        Transfers   and   assignments   of  PCS   licenses.   Pursuant   to  the
Communications  Act,  the FCC must give  prior  approval  to the  assignment  or
transfer  of control of a PCS  license.  In  addition,  the FCC has  established
transfer disclosure  requirements that require licensees that assign or transfer
control  of a PCS  license  within  the  first  three  years to file  associated
contracts for sale, option agreements,  management agreements or other documents
disclosing the total  consideration  that the applicant  would receive in return
for the transfer or assignment of the license.  Non-controlling  interests in an
entity that holds a PCS license or PCS networks  generally may be bought or sold
without prior FCC approval.

        Foreign ownership restrictions. The Communications Act restricts foreign
investment  in and  ownership  of  certain  FCC radio  licenses,  including  PCS
licensees.   Non-United  States  citizens  or  their  representatives,   foreign
governments or their  representatives,  or corporations organized under the laws
of a foreign  country may not own more than 20% of a common carrier PCS licensee
directly or more than 25% of the parent of a common carrier PCS licensee.  If it
would serve the public interest,  the FCC has the authority to permit the parent
of the licensee to exceed the 25% limit. However, the FCC lacks the authority to
permit a licensee  itself to exceed the 20% limit on  foreign  ownership.  If an
entity  fails to comply with the  foreign  ownership  requirements,  the FCC may
order the entity to divest alien  ownership to bring the entity into  compliance
with the Communications  Act. Other potential  sanctions include fines, a denial
of renewal or revocation of the license.  The  Communications Act eliminates the
existing  restrictions  on the number of alien  officers  and  directors  of FCC
licensee companies and companies controlling FCC licensees.

        Conditions  on PCS  licenses.  All PCS  licenses are granted for 10-year
terms conditioned upon timely  compliance with the FCC's buildout  requirements.
Pursuant to the FCC's buildout requirements,  all 30 MHz broadband PCS licensees
must construct  facilities that offer coverage to one-third of the population of
their service area(s) within five years of their initial license grant(s) and to
two-thirds of the  population  within 10 years.  Licensees that fail to meet the
buildout  requirements may be subject to license forfeiture.  The FCC intends to
conduct random audits to ensure that licensees are in compliance  with the FCC's
holding period and attribution  rules.  Rule violations  could result in license
revocations, forfeitures or fines.

        PCS license  renewal.  PCS  licensees  can renew their  licenses  for an
additional  10 years.  PCS renewal  applications  are not  subject to  auctions.
However,  under the FCC's rules,  third parties may oppose renewal  applications
and/or file competing  applications.  If one or more competing  applications are
filed, a renewal  application will be subject to a comparative  renewal hearing.
The FCC's rules afford PCS renewal  applicants  involved in comparative  renewal
hearings  with a  "renewal  expectancy."  The  renewal  expectancy  is the  most
important comparative  factor in a comparative renewal hearing and is applicable

                                       8
<PAGE>


     if the PCS renewal applicant has: (i) provided "substantial" service during
its license term; and (ii) substantially  complied with all applicable FCC rules
and  policies  as  well  as the  Communications  Act.  The  FCC's  rules  define
"substantial"  service as service  that is sound,  favorable  and  substantially
above the level of mediocre service that might minimally warrant renewal.

        FCC relocation  requirements.  The spectrum allocated by the FCC for PCS
services is now occupied by existing  microwave  facilities.  PCS licensees must
relocate such incumbent microwave  facilities  operating on the same frequencies
to avoid  interference  problems.  The FCC's rules  require the PCS  licensee to
provide the microwave licensee with comparable  facilities at the PCS licensee's
own expense and to ensure the  facilities  are "equal to or superior to existing
facilities." In order to encourage parties to negotiate  relocation  agreements,
the FCC's rules require,  for existing A and B Block licensees other than public
safety agencies, a two-year voluntary  negotiation period followed by a one-year
mandatory  negotiation  period if voluntary  negotiations fail. The FCC recently
reduced  the  voluntary  negotiation  period to one year for C, D, E and F Block
licensees.   Separate  negotiation  periods  are  applicable  to  public  safety
agencies,  which are  entities  dedicating  a majority  of their  communications
systems for police,  fire or emergency  medical  services  operations  involving
safety of life and property.  The FCC's rules require public safety  agencies to
undertake  a  three-year  voluntary  negotiation  period  followed by a two-year
mandatory negotiation period, if necessary.  If an agreement is not reached, the
incumbent  microwave  licensee may be involuntarily  relocated provided that the
PCS  licensee  pays for  comparable  facilities.  The FCC  recently  revised its
microwave relocation rules to clarify permissible  relocation costs that must be
assumed by PCS  licensees  during the  mandatory  period  and to  implement  new
procedures  for the sharing of relocation  costs where the relocation of private
microwave  facilities  benefits  multiple  broadband  PCS  licensees.  Incumbent
microwave   carriers  that   voluntarily   relocate  their  own  facilities  may
participate in the cost-sharing plan.

        Interconnection.  Under the 1996 Act both the FCC and statePUCs regulate
the terms of interconnection  between broadband PCS networks and the networks of
local exchange carriers. On August 8, 1996, the FCC issued interconnection rules
that  generally  required  symmetrical  reciprocal  rates for the  transport and
termination  of local  telecommunications  traffic  between a PCS  network and a
local  exchange  carrier's  network,  i.e. the PCS  provider and local  exchange
carrier  pay each other the same rate for  transporting  and  terminating  local
traffic  that  originates  on the  other's  network  (the  "FCC  Interconnection
Rules").  Implementation  of the pricing and various other provisions of the FCC
Interconnection  Rules was  stayed by the  Eighth  Circuit  Court of  Appeals on
October 15, 1996, with part of the stay lifted for wireless carriers on November
1, 1996.  Interconnection  agreements negotiated between PCS providers and local
exchange   carriers   under  the   provisions  of  the  1996  Act  and  the  FCC
Interconnection Rules are subject to state PUC approval. The FCC Interconnection
Rules were challenged by several local exchange carriers as contrary to the 1996
Act, and those  challenges were  consolidated in a proceeding  before the Eighth
Circuit Court of Appeals.

        Pending  resolution  of the current FCC and  related  court  proceedings
concerning   interconnection,   the  Company   is,  in  any  case,   negotiating
interconnection  agreements  within its service areas. It is expected that those
agreements will contain more favorable terms and conditions including price than
has historically been available to wireless carriers,  but this result cannot be
guaranteed. The exact scope of this benefit cannot be known at this time.

        Expanded   interconnection   obligations.   Under  the  1996  Act,   all
telecommunications  carriers,  likely  including  broadband PCS providers,  must
interconnect  with other carriers.  The 1996 Act also imposes a detailed list of
"interconnect"  obligations  upon LECs  including  resale,  number  portability,
dialing parity, access to rights-of-way and reciprocal compensation.

                                       9
<PAGE>



        Other  FCC  requirements.  In June  1996,  the FCC  adopted  rules  that
prohibit  broadband PCS providers from  unreasonably  restricting or disallowing
resale of their  services  or  unreasonably  discriminating  against  resellers.
Resale  obligations  will  automatically  expire  five  years  after the FCC has
concluded  its initial round of licensing of currently  allocated  broadband PCS
spectrum. The FCC concluded its initial licensing round in January 1997. The FCC
is also  considering  whether  wireless  providers  should be  required to offer
unbundled  communications  capacity to resellers who intend to operate their own
switching facilities.

        The FCC recently  extended an existing rule to require broadband PCS and
other  Commercial  Mobile Radio Service  ("CMRS")  providers to provide "manual"
roaming service that allows customers of one wireless provider to obtain service
while roaming in another wireless  provider's  service area. Such customers must
first establish a service  relationship  with the host system,  by, for example,
supplying a valid credit card number to the host system. In addition, the FCC is
considering  whether  broadband PCS and other CMRS providers  should be required
also to offer "automatic" roaming agreements on a  nondiscriminatory  basis that
would  allow  customers  to roam by simply  turning on their  handsets in a host
market.

        The FCC recently  adopted  rules  permitting  broadband PCS networks and
other CMRS  providers to provide  wireless  local loop and other fixed  services
that would  directly  compete with the wireline  services of LECs. In June 1996,
the FCC  adopted  rules  requiring  broadband  PCS and other CMRS  providers  to
implement  enhanced  emergency  911  capabilities  within  18  months  after the
effective date of the FCC's rules.

        The  Company  may  use  common  carrier  point-to-point   microwave  and
traditional  landline facilities to connect cell sites and to link them to their
respective  main  switching  offices.  The  FCC  will  license  these  microwave
facilities   separately  and  regulate  the  technical  parameters  and  service
requirements of these facilities.

        Other federal regulations. Wireless systems must comply with certain FCC
and  FAA  regulations  regarding  the  siting,   lighting  and  construction  of
transmitter  towers  and  antennaes.  In  addition,  certain  FCC  environmental
regulations  may  cause  certain  cell  site  locations  to  become  subject  to
regulation under the National Environmental Policy Act.

        Review  of  universal  service  requirements.   Although  the  1996  Act
contemplates   that   wireless   providers   will   "make   an   equitable   and
non-discriminatory  contribution"  to support  the cost of  providing  universal
service, the FCC is authorized to exempt carriers if their contribution would be
de minimis.

        Public utility "telecommunications"  services. The 1996 Act modifies the
Public Utilities  Holding Company Act of 1935 to permit public utilities subject
to that Act to engage in the  provision of  telecommunications  and  information
services.

        BOC  entry  into  in-region  interLATA  services.   Before  engaging  in
in-region  interLATA  services,  the 1996 Act requires Bell Operating  Companies
("BOCs")  to provide  access  and  interconnection  to one or more  unaffiliated
competing providers of telephone exchange service. BOCs must offer the following
interconnection  services on a  non-discriminatory  basis:  interconnection  and
unbundled access;  access to poles,  ducts,  conduits and rights-of-way owned or
controlled by BOCs; unbundled local loops; unbundled local transport;  unbundled
local switching;  access to emergency 911,  directory assistance,  operator call

                                      10
<PAGE>


completion  and  white  pages;   access  to  telephone  numbers,  databases  and
signaling for call routing and  completion;  number  portability;  local dialing
parity; reciprocal compensation; and resale.

        The 1996 Act permits BOCs immediately to provide "incidental"  interLATA
services  including the provision of CMRS.  The FCC has concluded  that existing
accounting safeguards will apply to BOC provision of long distance services over
their CMRS (including PCS) networks.

        BOC commercial mobile joint marketing.  Under the 1996 Act, BOCs and any
other company may jointly market and sell commercial mobile services,  including
cellular and PCS,  together with telephone  exchange  service,  exchange access,
intraLATA  telecommunications service, interLATA  telecommunications service and
information  services. A BOC, however, may not jointly market telephone exchange
service and any long distance service until certain conditions have been met.

        Partitioning. The FCC recently modified its rules to allow broadband PCS
licensees to partition their market areas and/or to disaggregate  their assigned
spectrum  and to  transfer  partial  market  areas or  spectrum  assignments  to
eligible third parties. The Rural Telecommunications Group has sought a judicial
stay and review of the  decision,  arguing that only rural  telephone  companies
should be eligible to partition PCS licenses.

        Wireless  facilities  siting.  Under the 1996 Act, states and localities
cannot  regulate the placement of wireless  facilities  so as to "prohibit"  the
provision  of wireless  services or to  "discriminate"  among  providers of such
services.  In addition,  so long as a wireless  system  complies  with the FCC's
rules,  the 1996 Act prohibits  states and localities  from using  environmental
effects as a basis to regulate  the  placement,  construction  or  operation  of
wireless facilities.  The FCC is considering numerous requests for preemption of
local actions affecting wireless facilities siting.

        Equal access. Under the 1996 Act, wireless providers are not required to
provide equal access to common carriers for toll services.  However,  the FCC is
authorized  to  require  unblocked  access to toll  carriers  subject to certain
conditions.

        Deregulation.  The 1996 Act requires the FCC to forebear  from  applying
any  statutory  or  regulatory   provision  if  it  is  not  necessary  to  keep
telecommunications   rates  and  terms  reasonable  or  to  protect   customers.
Correspondingly,  a state may not apply a statutory or regulatory provision that
the  FCC  decides  not  to  apply.   In  addition,   the  FCC  must  review  its
telecommunications  regulations  every  two  years  to  determine  if any can be
eliminated  or  modified  as no longer  in the  public  interest  as a result of
increased competition.

Marketing and Distribution

           The Company's current marketing  strategy is to differentiate  itself
through its  state-of-the-art  network,  use of the  established  and  respected
Sprint brand name,  customer-care  systems,  diverse  distribution  channels and
sales and  packaging  arrangements  with the Parents.  The Company will build on
Sprint's strong national identity,  using regional and local marketing to tailor
programs  to  the  demands  of  individual  markets.   The  Company  has  formed
segmentation and distribution  strategies targeted at both consumer and business
markets.

        The  Company  uses  multiple  methods  of  distribution  in  each of its
markets; and will continue to review and implement new distribution  channels in
the future as it determines the most effective combination of options.  Current-

                                       11
<PAGE>


ly the Company  uses  third-party   national  and regional  retail  distribution
channels, Company-owned retail stores, direct sales force and telemarketing. The
Company also intends to cross-market  the Company's  wireless  services with the
long distance,  local  telephone and cable-based  entertainment  services of the
Parents in order to increase  customer  acquisition and retention.  By using the
Cable Parents' regular contacts with their customers, including bill inserts and
customer  service  contacts,  the Company  intends to build  market share of its
wireless services  efficiently.  The Company also expects to be able to build on
Sprint's  distribution  capabilities,  through  Sprint's long distance and local
telephone divisions.

Trademarks

        The Company does not currently own any trademarks or patents,  though it
has  applied for various  trademarks  and  patents.  Sprint(R)  is a  registered
trademark of Sprint Communications  Company, L.P. ("Sprint  Communications") and
Sprint(R) and Sprint PCS(R) are licensed to the Company on a royalty-free  basis
pursuant to a trademark license agreement between Sprint  Communications and the
Company.  Sprint  Communications  may  terminate  this  agreement  (i)  upon the
dissolution  and  winding up of the  Company,  (ii) upon the  bankruptcy  of the
Company, (iii) upon the failure of the Company to perform in accordance with the
material  terms of the  agreement  or for a breach  of its  representations  and
warranties  or (iv) if the  Company  challenges  Sprint's  rights to the  Sprint
trademark and the  associated  logo. The Company may terminate the agreement (i)
if  Sprint  Communications  abandons  or  fails to  support  its  trademark  and
associated  logo,  (ii) upon the bankruptcy of Sprint  Communications,  (iii) if
Sprint  Communications  takes action that conflicts with the Company's rights to
use the trademark and associated logo or (iv) if Sprint Communications  breaches
its  covenant  to  license  the  trademark  and  associated  logo to  additional
licensees  in  accordance  with the terms of the  agreement.  Subject to certain
conditions,  each of the Company and Sprint  Communications  may  terminate  the
agreement if a controlled  affiliate of Sprint ceases to own any equity interest
in Holdings. Within thirty days of termination, or in certain circumstances on a
specified  termination  date,  the  Company's  rights to use the  trademark  and
associated logo will cease.

        Pursuant  to  certain  of its third  party  supplier  contracts,  Sprint
Spectrum has certain rights to use third party supplier trademarks in connection
with the buildout, marketing, and operation of its network.

Products and Services

        With its all-digital  national  wireless  network,  the Company plans to
introduce a wide array of services  and  features  that are  designed to enhance
utility,  provide consumers greater capabilities in call management and increase
usage for both outgoing and incoming calls.

        Outgoing Calls.   Features that  encourage  customers  to  make outgoing
calls include:  improved call quality, advanced handsets,  national consistency
and customer-driven local calling areas.

        Incoming Calls.   Features that encourage customers to receive calls in-
clude:   caller ID,  message management, including voicemail and integrated pag-
ing, and improved battery technology.

        The Company  believes that the market for wireless  communications  will
shift over time from  today's  traditional  voice  mobility  applications  which
supplement  customers'  wireline  service to an  environment  in which  wireless
begins to expand into the wireline market,  both as a primary communications de-

                                      12
<PAGE>


vice  and as  a  means  of  providing  advanced   functionality.   The   Company
intends to develop products,  services and features which will serve to increase
network  utilization  above  historical  cellular  usage  while   simultaneously
containing costs.

Technology

        Wireless digital signal transmission is accomplished  through the use of
various  frequency  management  technologies,  or  "protocols."  The FCC has not
mandated a  universal  digital  protocol  for PCS  systems.  Currently,  various
vendors have proposed three principle competing,  incompatible protocols for use
in PCS systems: CDMA, GSM and TDMA (IS-136).

        The GSM  protocol is an  updated,  up-banded  version of the  TDMA-based
protocol  now in use in Europe.  TDMA  (IS-136) is an  up-banded  version of the
TDMA-based  digital  cellular  protocol  now used by cellular  operators  in the
United States.  CDMA is a first-generation  technology that is just beginning to
be  commercially  deployed in the United States.  The Company  believes that the
CDMA protocol will be the most widely adopted PCS protocol in the United States.

        The  Company  has  selected  CDMA  technology   rather  than  the  other
technologies  because it believes it will have  increased  subscriber  capacity,
higher quality of  transmission  and lower  infrastructure  and ongoing  support
costs.  The  Company  believes  that  CDMA  provides  the  following   benefits:
performance, cost effectiveness, functionality, security and capacity.

Equipment Vendors

        Sprint Spectrum has selected  Lucent  Technologies  Inc.  ("Lucent") and
Northern  Telecom  Inc.  ("Nortel"),   two  of  the  leading  telecommunications
equipment  manufacturers,  to construct  the wireless  network  because of their
extensive  experience in wireless  technology and their willingness to guarantee
delivery  in  accordance  with  specifications  developed  by  the  Company.  In
addition,  the Company has obtained from Nortel and Lucent financing to fund the
purchase of their  respective  equipment and the  construction of their assigned
portions of the network.  To mitigate against a substantial portion of the risks
of completion delay and performance of the network and to ensure the Company has
received competitive terms and conditions,  the procurement agreements with each
of Lucent and Nortel include,  among other things,  deferred payment  schedules,
liquidated  damages  provisions,  extended  warranty  periods and "most  favored
customer" status.

        Sprint  Spectrum  has entered  into two  agreements  for the purchase of
handsets.  The first agreement is a three-year purchase and supply agreement for
CDMA handsets with Qualcomm Personal Electronics,  which is a partnership formed
by QUALCOMM Incorporated  ("Qualcomm") and Sony Electronics Inc. Pursuant to the
agreement, Qualcomm will manufacture CDMA handsets for the Company. In addition,
Qualcomm will provide  training for the Company's  sales personnel and will work
with the Company to develop new  products  for the  Company's  PCS  network.  In
addition,  the Company entered into an agreement with Samsung  Electronics  Co.,
Ltd.  ("Samsung")  for an initial  term of three  years.  Under this  agreement,
Samsung will  manufacture CDMA handsets for the Company.  Additionally,  Samsung
will  provide  training  for the  Company's  sales  personnel.  The Company also
expects to source  handsets  from other  vendors in  mid-1997  and is  currently
negotiating  purchase and supply  agreements  on a  preliminary  basis with such
other vendors.

                                       13

<PAGE>


Competition

          General.  The  wireless  telecommunications  industry is  experiencing
significant  technological  changes,  as  evidenced  by the  increasing  pace of
improvements in the capacity and quality of digital  technology,  shorter cycles
for new  products  and  enhancements  and  changes in consumer  preferences  and
expectations.  Accordingly,  the Company  expects  competition  in the  wireless
telecommunications  business  to be  dynamic  and  intense  as a  result  of the
entrance of new competitors and the  development of new  technologies,  products
and services.

          Each of the  markets in which the company  competes  will be served by
other two-way wireless service  providers,  including cellular and PCS operators
and  resellers.  Many of these  competitors  have been operating for a number of
years,  currently  serve a substantial  subscriber  base and have  significantly
greater  financial and technical  resources than those available to the Company.
Certain of the  Company's  competitors  are  operating,  or planning to operate,
through joint ventures and affiliation arrangements, wireless telecommunications
systems that encompass most of the United States.

          The  Company  will  also  face   competition  from  other  current  or
developing  technologies,  such as paging,  Enhanced  Specialized  Mobile  Radio
("ESMR") and satellite networks. In addition, as a result of advances in digital
technology,  ESMR  operators  have  begun to design and  deploy  digital  mobile
networks that increase the channel  capacity of ESMR systems to a level that may
be competitive with that of cellular systems. A limited number of ESMR operators
have recently begun offering short messaging,  data services and  interconnected
voice  telephony  services  on a limited  basis.  Several  ESMR  licensees  have
recently  merged into one company and plan to build and operate  digital  mobile
networks in most major United States markets.

          Several  entities have received,  and several others are seeking,  FCC
authorization  to construct  and operate  global  satellite  networks to provide
domestic and international mobile communications services from geostationary and
low earth orbit ("LEO") satellites.  While geostationary orbiting satellites are
subject  to   transmission   delays  inherent  in  high  earth  orbit  satellite
communications,  a mobile satellite system could reduce transmission delays with
LEO  satellites  and could  augment or replace  communications  with segments of
land-based wireless systems. Based on current technologies,  however,  satellite
transmission  services are not expected to be  competitively  priced relative to
the  Company's  product  offering  in its  markets.  Sprint has an interest in a
satellite-based mobile telecommunications business entity.

          Continuing   technological  advances  in  telecommunications  and  FCC
policies that encourage the development of new spectrum-based  technologies make
it impossible to predict the extent of future  competition.  The FCC has adopted
rules that provide preferences, including discounted licenses, to companies that
develop  new  spectrum-based  communications  technologies  without  bidding  in
FCC-sanctioned  auctions. Such a preference may encourage the development of new
technologies  that compete  with  cellular  and PCS  service.  In addition,  the
Omnibus Budget  Reconciliation  Act of 1993 (the "Budget Act")  requires,  among
other things,  the  allocation to commercial  use of a portion of 200 MHz of the
spectrum currently reserved for government use. It is possible that some portion
of the  spectrum  that is  reallocated  will be used to create  new  land-mobile
services or to expand existing land-mobile services.

          The Company expects to compete with other communications  technologies
that now exist, such as conventional mobile telephone service,  ESMR systems and
paging  services and with cellular and PCS  resellers.  In the future,  cellular
service and PCS will also compete more directly with  traditional communications

                                       14
<PAGE>


services over  their  cable  systems. In  addition, the  Company may face compe-
tition from technologies that may be introduced in the future.

          The  Company  anticipates  that  market  prices for  two-way  wireless
services generally will decline in the future based upon increased  competition.
The Company competes to attract and retain customers principally on the bases of
services  and  features,  its  customer  service,  the size and  location of its
service areas and pricing.  The Company's  ability to compete  successfully also
depends,  in  part,  on  its  ability  to  anticipate  and  respond  to  various
competitive  factors affecting the industry,  including new services that may be
introduced,  changes  in  consumer  preferences,  demographic  trends,  economic
conditions and discount pricing strategies by competitors, which could adversely
affect the Company's operating margins.

          The Company's  PCS business  will directly  compete with several other
PCS  providers in each of its PCS markets,  including  AT&T  Wireless  Services,
Inc., BellSouth  Telecommunications,  Inc., Omnipoint Corporation,  Pacific Bell
Mobile Services,  Inc., PCS PrimeCo L.P. and Western Wireless  Corporation.  The
Company also expects that existing analog wireless service  providers in the PCS
markets,  some of which  have  been  operational  for a number of years and have
significantly  greater financial and technical resources than those available to
the  Company,  will  upgrade  their  systems to provide  comparable  services in
competition with its PCS system.  These cellular  competitors  include AirTouch,
AT&T  Wireless  Services,  Inc.,  BellSouth  Mobility,  Inc.,  Ameritech  Mobile
Communications,  Inc.,  Bell  Atlantic  NYNEX Mobile,  Southwestern  Bell Mobile
Systems, GTE Mobilnet, Inc. and U.S. Cellular Corp.

          Handsets  used for  CDMA-based  PCS systems will not be  automatically
compatible with cellular systems, and vice versa. The Company expects dual-mode,
dual-band telephones to be commercially available late in the first half of 1997
(although  sufficient  quantities may not be  commercially  available  until the
first quarter of 1998). Once such handsets are available, if the Company decides
to  offer  roaming  services  and is  able to  secure  contracts  with  cellular
providers,  subscribers  may be  able to roam by  using  the  existing  cellular
wireless system in other markets.  Until then, this lack of interoperability may
impede  the  company's  ability  to  attract  current  cellular  subscribers  or
potential  new  wireless  communication  subscribers  that desire the ability to
access different service providers in the same market.

          Initially,  the  cost  to the  Company  of  PCS  handsets  may  not be
competitive with the cost to analog operators of analog cellular handsets. While
the Company  believes  that its PCS  handsets  will be  competitively  priced as
compared to digital cellular  handsets of comparable size,  weight and features,
cellular  operators may  subsidize  the sale of digital  handset units at prices
below those with which the Company can  compete  through the  Company's  handset
subsidies.

Employee Relations

        At March 14, 1997, the Company employed  approximately  4,500 personnel.
None of the Company's  employees are  represented  by a labor union.  Management
believes that the Company's employee relations are good. The Company is engaging
independent   contractors   to  perform  a  variety  of   functions,   including
construction and maintenance of the Company's network,  information  technology,
advertising, accounting and data processing.


                                       15

<PAGE>


Item 2.  Properties

        As of December  31, 1996,  the Company  occupied  approximately  360,000
square feet of leased headquarters space in metropolitan Kansas City,  Missouri.
The Company  plans to increase its leased  headquarters  space to  approximately
500,000  square  feet by the end of the  third  quarter  of  1997.  The  Company
occupies  73,000  square feet,  consisting  of both owned and leased  space,  in
Lenexa, Kansas for use by network monitoring personnel.

        The Company  leases a 150,000  square foot facility in Ft. Worth,  Texas
for its  customer  care  center.  The Company  has also leased 61 retail  stores
(approximately  198,000  square  feet) and  expects to lease  additional  retail
space.

        As of  December  31,  1996,  the Company  currently  has leased 32 Field
Operations offices  (approximately  367,000 square feet in the aggregate) and 35
MTA offices  (approximately  500,000 square feet).  The Company expects to lease
additional  facilities for Field  Operations and MTA sites.  The Company is also
leasing  space for base  station  towers and switch sites as it  constructs  its
nationwide network.  The Company has leased or purchased 39 switch sites and has
entered into leases or options to lease a total of 4,481 cell sites.


Item 3.  Legal Proceedings

        The Company is involved in various legal  proceedings  incidental to the
conduct of its  business.  Since the  enactment of the 1996 Act, the Company has
been involved in various legal  proceedings  in various  states  concerning  the
imposition  of moratoria on the  processing  or approval of permits for wireless
telecommunication  towers,  the denial of  applications  for  permits  and other
issues arising in connection  with tower siting.  There can be no assurance that
such  litigation,  and similar  actions taken by others seeking to block actions
necessary for the construction of the Company's network in other locations, will
not, in the aggregate,  have a material  effect on the Company.  While it is not
possible to determine the ultimate disposition of each of these proceedings, the
Company believes that the outcome of such  proceedings,  individually and in the
aggregate,  will not have a material  adverse effect on the Company's  financial
condition or results of operations.


Item 4.  Submission of Matters to a Vote of Security Holders

        None.


Part II

Item 5.  Market for Registrant's Common Equity and Related Stockholder Matters

        At December 31, 1996, the Company did not have common equity.

                                       16

<PAGE>


Item 6.  Selected Financial Data

        For  information  required by Item 6, refer to the  "Selected  Financial
Data" section of the Financial Statements and Financial Statement Schedule filed
as part of this report.


Item 7.  Management's Discussion and Analysis of Financial Condition and Results
         of Operations

        For  information   required  by  Item  7,  refer  to  the  "Management's
Discussion  and  Analysis of  Financial  Condition  and  Results of  Operations"
section of the Financial  Statements and Financial  Statement  Schedule filed as
part of this report.

Item 8.  Financial Statements and Supplementary Data

        For information required by Item 8, refer to the Company's "Consolidated
Financial  Statements"  and  the  "Quarterly  Financial  Data"  section  of  the
Financial  Statements and FinCo's  "Financial  Statements" filed as part of this
report.

Item 9.  Changes in and Disagreements With  Accountants on Accounting and Finan-
         cial Disclosure

        None.

                                       17

<PAGE>


Item 10.  Directors and Executive Officers of the Registrants

     The executive  officers of the registrants and their  respective  positions
with  Sprint  Spectrum  and  FinCo  are  set  forth  below.  In  addition,   the
representatives of the Partnership Board of Holdings are set forth below. Sprint
Spectrum  does not have a  partnership  board but is managed by  Holdings in its
capacity as general  partner.  The Board of  Directors  of FinCo is comprised of
Andrew Sukawaty, Robert M. Neumeister, Jr. and Joseph M. Gensheimer. The ages of
the individuals set forth below are as of December 31, 1996.

        Name               Age                    Positions

Andrew Sukawaty............ 41      Chief Executive Officer and President of
                                      Sprint Spectrum; President of FinCo (1)
Arthur A. Kurtze........... 52      Chief Operating Officer of Sprint Spectrum
Bernard A. Bianchino....... 48      Chief Business Development Officer of Sprint
                                      Spectrum
Robert M. Neumeister, Jr... 47      Chief Financial Officer of Sprint Spectrum;
                                      Vice President and Treasurer of FinCo
F. Edward Mattix........... 43      Chief Public Relations Officer of Sprint
                                      Spectrum
Charles E. Levine.......... 43      Chief Marketing Officer of Sprint Spectrum
Joseph M. Gensheimer....... 45      General Counsel and Secretary of Sprint
                                      Spectrum; Secretary of FinCo
Ronald T. LeMay............ 51      Representative on, and Chairman of, the
                                      Holdings Partnership Board (2)
William T. Esrey........... 56      Holdings Partnership Board Representative
Gerald W. Gaines........... 40      Holdings Partnership Board Representative
Arthur B. Krause........... 55      Holdings Partnership Board Representative
James O. Robbins........... 53      Holdings Partnership Board Representative
Lawrence S. Smith.......... 49      Holdings Partnership Board Representative


-------------------
(1)  Mr. Sukawaty began serving as Chief Executive  Officer and President of the
     Company and President of FinCo effective September 2, 1996.
(2)  Mr. LeMay served as Chief  Executive Officer  and President of Sprint Spec-
     trum  and President  of  FinCo  until  September, 1996 at which time he was
     succeeded by Mr. Sukawaty.


Andrew Sukawaty, Chief Executive Officer and President

        Andrew Sukawaty was appointed  Chief Executive  Officer and President of
Sprint  Spectrum and President of FinCo  effective  September 2, 1996.  Prior to
joining the  Company,  Mr.  Sukawaty  was Chief  Executive  Officer of NTL,  the
British diversified  broadcast  transmission and communications  company,  since
1994.  From 1989 to 1994, he was Chief Operating  Officer of Mercury  One-2-One,
the British  company  which started the world's first PCS service in the U.K. in
1993. Prior to joining Mercury  One-2-One,  Mr. Sukawaty held numerous positions
for US  WEST,  Inc.,  including:  Chief  Operating  Officer  of US WEST  Paging,
President of Coastel, a cellular  communications company, and Vice President and
branch manager for US WEST.

                                       18

<PAGE>


Arthur A. Kurtze, Chief Operating Officer

        Arthur A. Kurtze was appointed Chief Operating Officer of the Company in
June  1995.   Prior  to  joining  the  Company,   Mr.  Kurtze  was  Senior  Vice
President--Operations  for Sprint's Local Telecommunications  Division. Prior to
joining  Sprint in March 1993, Mr. Kurtze was Executive Vice President in charge
of strategic  planning and  corporate  development  for Centel Corp.  Mr. Kurtze
joined  Centel in 1972 and served in various  positions  there,  including  Vice
President of Centel Communications Co., Vice President--Staff of Centel Business
Systems, Vice President--Market  Planning for Centel Corp., Group Vice President
of  Centel  Cable  Television  Co.  and  Senior  Vice   President--Planning  and
Technology.

Bernard A. Bianchino, Chief Business Development Officer

        Bernard A. Bianchino was appointed Chief Business Development Officer of
the Company in September 1995. Most recently,  Mr.  Bianchino was Executive Vice
President,  General  Counsel  and  External  Affairs  for  Qwest  Communications
Corporation. He served as Vice President--Law,  General Business for Sprint from
1992 to 1994 and as General  Attorney;  Vice  President  and  Associate  General
Counsel for US Sprint  Communications  Company  from 1986 to 1992.  From 1978 to
1986, Mr.  Bianchino was counsel to a number of affiliates of Exxon  Corporation
in its Enterprises  Group,  including  Reliance  Comm/Tec (now RELTEC) and Exxon
Office  Systems.  Prior to joining  Exxon,  he was an  attorney  with the United
States Department of Energy.

Robert M. Neumeister, Jr., Chief Financial Officer

        Robert M.  Neumeister,  Jr.  was named  Chief  Financial  Officer of the
Company in September  1995 and Treasurer of FinCo in May 1996.  Prior to joining
the Company,  Mr.  Neumeister  served in various  capacities at Northern Telecom
Ltd.,  which he joined in 1978.  In June  1991,  Mr.  Neumeister  was named Vice
President of Finance and Information Services for Northern  Telecom--Canada.  He
continued  with Northern  Telecom as Senior Vice  President and Chief  Financial
Officer   of   Motorola   Nortel   Communications   Co.,   Vice   President   of
Finance--Americas,   Vice   President--Broadband   Networks,   Customer  Network
Solutions and Vice President of Finance.

F. Edward Mattix, Chief Public Relations Officer

        F. Edward Mattix was named Chief Public Relations Officer of the Company
in April 1996.  Prior to joining the Company, he was Vice President--Public Rel-
ations for US WEST Communications, Inc.  Mr. Mattix served in various management
level positions  relating  to  public  relations or  governmental  affairs since
joining US WEST, Inc. in 1976.

Charles E. Levine, Chief Marketing Officer

        Charles  E.  Levine  was  appointed  Chief  Marketing  Officer of Sprint
Spectrum  effective  January 27, 1997. Prior to joining the Company,  Mr. Levine
was  President of Octel Link and Senior Vice  President of Octel  Services  from
1994 to 1996. From 1993 to 1994, he was President and Chief Executive Officer of
CAD Forms Technology.  Prior to joining CAD Forms  Technology,  Mr., Levine held
numerous positions with the AT&T Corporation from 1986 to 1993, including:  Team
Leader,  Project  Peabody,  Small Business Market Team; Vice President,  General
Business Systems, Products and New Services; Vice President,  Consumer Products,
Product Management; Director, Consumer Products, Product Management.  Mr. Levine

                                       19
<PAGE>


has also served in management positions for the General Electric Corporation and
the Procter & Gamble Company.

Joseph M. Gensheimer, General Counsel and Secretary

        Joseph M. Gensheimer was named General Counsel of the Company in October
1995 and Secretary of FinCo in May 1996. Mr.  Gensheimer is responsible  for all
legal and  regulatory  functions.  Prior to joining the  Company,  he was Senior
Counsel for IBM's mainframe and supercomputer divisions. Prior to joining IBM in
1988,  he  was  General   Counsel  and   Secretary  of  RealCom   Communications
Corporation,  a  telecommunications  services provider.  From 1982 and 1984, Mr.
Gensheimer  was Senior  Attorney and Assistant  Secretary  for GTE  Corporation.
Prior to joining  GTE,  he was an  associate  at Morgan,  Lewis & Bockius and an
attorney for the United States Department of Justice.

Ronald T. LeMay, Representative

        Ronald T. LeMay was  appointed as a  representative  to the  Partnership
Board in September 1996 and is President and Chief Operating  Officer of Sprint.
He began his telephony career with  Southwestern Bell Telephone Company in 1972.
In 1983, Mr. LeMay was appointed Regional Vice President of External Affairs for
AT&T  Communications  in Kansas  City and in  February  1985,  he was named Vice
President and  Comptroller  for AT&T  Communications  where he served until July
1985 when he joined United  Telephone  System,  Inc. (a Sprint  company) as Vice
President and General Counsel. In 1986 Mr. LeMay became Senior Vice President of
Operations for United  Telephone  System.  He became Executive Vice President of
Corporate  Affairs for Sprint in 1987 and Executive  Vice President of Staff for
the Long Distance  Division in November  1988.  In October  1989,  Mr. LeMay was
appointed  President and Chief Operating Officer for the Long Distance Division,
a position he held until assuming  responsibility for the Company in March 1995.
Mr. LeMay served as President  and Chief  Executive  Officer of Sprint  Spectrum
until  September  1996. Mr. LeMay is the Vice Chairman of the Board of Directors
of Sprint  and a  director  of the  Mercantile  Bank of Kansas  City and  Yellow
Corporation.

William T. Esrey, Representative

        William T. Esrey was appointed  as a  representative of  the Partnership
Board in March 1995.   He has  been the  Chairman  of  Sprint since 1990 and its
Chief  Executive Officer since 1985.   Mr. Esrey  is  also a director of Sprint,
Equitable Life Assurance Society of America, General Mills, Inc., PanEnergy Cor-
poration and Everen Capital Corporation.  Mr. Esrey currently serves on the com-
pensation committee of each of PanEnergy Corporation and Everen Capital Corpora-
tion.

Gerald W. Gaines, Representative

        Gerald W. Gaines was appointed  as  a  representative of the Partnership
Board in March 1995.  He has been  the  President of TCI Spectrum Holdings, Inc.
and Senior Vice President  of TCI  Communications, Inc.  since 1994.   Prior  to
joining TCI Communications, Mr. Gaines founded GCG, Inc., a management services
firm advising the  telecommunications industry.   From 1986 to 1991,  Mr. Gaines
served as a senior-level executive of US WEST, Inc. as President and  Chief Exe-
cutive Officer for  US WEST service link.   Mr. Gaines is a director of Teleport
Communications Group Inc.

                                       20

<PAGE>


Arthur B. Krause, Representative

        Arthur B. Krause was appointed as a  representative  of the  Partnership
Board in March 1995. He is the  Executive  Vice  President  and Chief  Financial
Officer  of  Sprint,  positions  which he has  held  since  1988.  Prior to such
appointment,  Mr.  Krause  served  in other  management  capacities  at  Sprint,
including President of United Telephone-Eastern Group.

James O. Robbins, Representative

        James O. Robbins  was appointed  as a representative  of the Partnership
Board in March 1995.  He has served  as President  of Cox since  September 1985,
and as Chief Executive Officer since May 1994.   Mr. Robbins joined  Cox in Sep-
tember 1983 and has served as Vice President, Cox Cable New York City and as Se-
nior Vice President, Operations of Cox.  Prior to joining Cox, Mr. Robbins held
management and executive positions with  Viacom Communications, Inc. and  Conti-
nental Cablevision.  Mr. Robbins is a director of Telewest Plc, Teleport Commun-
ications Group Inc. and Cox.

Lawrence S. Smith, Representative

        Lawrence S. Smith  was appointed as a representative of the  Partnership
Board in March 1995.  He has been Executive Vice  President of Comcast since De-
cember 1995.   Prior to that time,  Mr. Smith served as Senior Vice President of
Comcast for more than five years.  Mr. Smith is the Principal Accounting Officer
of Comcast.  Mr. Smith is a Director of Comcast UK Cable Partners Limited.

Committees of the Partnership Board; Compensation; Committee Interlocks

         Except for the Audit Committee, there are no standing committees of the
Partnership  Board.  Messrs.  Krause and Smith have been appointed by Sprint and
Comcast, respectively, to serve on the Audit Committee. TCI and Cox have not yet
named their representatives on the Audit Committee.  Representatives  receive no
compensation  for serving on the  Partnership  Board or any  committee  thereof.
There  are  no  compensation  committee  interlocks  between  Holdings  and  any
affiliated entity.


                                       21

<PAGE>


Item 11.  Executive Compensation

Summary  Compensation  of Executive  Officers.  The following table reflects the
cash  and  non-cash  compensation  paid  by  the  Company  for  services  in all
capacities  for the years ended December 31, 1995 and December 31, 1996 by those
persons who served as the Chief  Executive  Officer during the fiscal year ended
December 31, 1996, and the other four most highly compensated executive officers
of the Company,  determined as of the end of the fiscal year ended  December 31,
1996 (the  "Named  Executives").  The  amounts set forth below are only for that
portion of the respective  years that the Named  Executives were employed by the
Company.
<TABLE>
<CAPTION>

                           Summary Compensation Table


                                        Annual Compensation               Long Term Compensation
                                  ----------------------------------  ------------------------------

                                                                      Securities
Name and Principal                                                    Underlying           LTIP
  Position                   Year  Salary     Bonus (3)     Other     Options/SARs     Payouts($)(4)
---------------------------- ---- --------   -----------  ----------  -------------   --------------
<S>                              <C>         <C>         <C>          <C>           <C>

Andrew Sukawaty (1).......   1996 $ 146,552   $ 325,000   $  63,620(5)      -        $     -
   Chief Executive
    Officer

Ronald T. LeMay(2) .......   1996   525,002     287,000       11,500        -          315,615
   Chief Executive           1995   408,333     313,250          -      132,017        398,676
    Officer

Arthur A. Kurtze..........   1996   295,692     204,294          -          -              -
   Chief Operating           1995   171,320     107,500          -       11,000          69,890
    Officer

Joseph M. Gensheimer......   1996   302,990     107,875      172,459(6)     -              -
   General Counsel           1995    78,161      31,150      233,381(7)     -              -

Robert M. Neumeister, Jr..   1996   277,529     141,000       13,439(5)     -              -
   Chief Financial           1995    79,023      35,950       34,822(8)     -              -
    Officer

Bernard Bianchino.........   1996   214,081      92,725       47,416(5)     -              -
   Chief Business            1995    58,741      68,300       17,718(9)     -              -
    Development
    Officer

</TABLE>

------------------
(1)  Mr. Sukawaty began serving as Chief Executive  Officer and President of the
     Company and President of FinCo effective September 2, 1996.
(2)  Mr. LeMay served as Chief Executive Officer and President and President of
     FinCo until September 1996.
(3)  Includes an estimate of the short-term incentive compensation target
     established for each officer.
(4)  Messrs. LeMay and Kurtze were employed by Sprint  immediately prior to
     their employment by the Company , and as former  employees,  they partici-
     pated in certain long-term incentive plans at Sprint not available to the
     other executives listed in this  table.  The  Company  reimbursed  Sprint
     for a portion of the amounts shown.
(5)  Represents relocation expenses paid on behalf of Messrs. Sukawaty, Neumei-
     ster and Bianchino.
(6)  Includes relocation expenses of $22,459 paid on behalf of Mr. Gensheimer
     and $150,000 represents foregone incentive compensation from his former em-
     ployer.
(7)  Of the $233,381 shown as other compensation,  $83,287 represents relocation
     expenses paid on behalf of Mr. Gensheimer and $150,000  represents foregone
     incentive compensation from his former employer
(8)  Of the $34,822 shown as other compensation, $31,818 represents relocation
     expenses paid on behalf of Mr. Neumeister.
(9)  Of the $17,178 shown as other compensation, $16,684 represents relocation
     expenses paid on behalf of Mr. Bianchino.


Long-Term Incentive Plan Summary

        The  Partnership  Board has adopted a Long-Term  Incentive  Compensation
Plan  (the  "Long-Term  Plan").  The  Long-Term  Plan  is  administered  by  the
Partnership Board,  which is authorized to interpret  Long-Term Plan provisions,
determine membership, approve incentive targets and payouts and otherwise manage

                                       22
<PAGE>


the Long-Term Plan. The Long-Term Plan has no specified termination date and may
be amended or terminated without constraint.

        Employees meeting certain eligibility  requirements are considered to be
participants  in the  Long-Term  Plan.  Participants  will  receive  100% of the
pre-established  targets  for the period from July 1, 1995 to June 30, 1996 (the
"Introductory  Term").  Participants  may  elect a payout of the  amount  due or
convert 50% or 100% of the award to  appreciation  units.  Unless  converted  to
appreciation units,  payment for the Introductory Term will be made in the third
quarter of 1998.  Appreciation  units vest 25% per year commencing on the second
anniversary of the date of grant.  Participants had until March 15, 1997 to make
payout or conversion elections.

Short-Term Incentive Plan Summary

        The Partnership  Board has adopted a Short-Term  Incentive  Compensation
Plan  (the  "Short-Term  Plan").  The  Short-Term  Plan is  administered  by the
Partnership Board, which is authorized to interpret  Short-Term Plan provisions,
determine membership, approve incentive targets and payouts and otherwise manage
the Short-Term  Plan. The Short-Term Plan has no specified  termination date and
may be amended or terminated without constraint.

        The Partnership  Board selects eligible  employees to participate in the
Short-Term Plan. Eligibility is limited to employees within exempt salary bands.
Participation  in the  Short-Term  Plan  precludes  participation  in any  other
short-term compensation plans.

        Payouts are granted based on pre-set targeted opportunities. Performance
periods  are one year  long and  incentive  targets  ("Incentive  Targets")  are
approved by the  Partnership  Board for each  performance  period.  An Incentive
Target  is  established  for  each  position  based  on  the  Company's  overall
compensation strategy.  Incentive Targets contain Company and personal objective
components,   which  are  approved  by  the  Chief  Executive  Officer  and  the
Partnership Board. Maximum earnings for the Company objectives are determined by
the Board for each performance  period.  Participants may earn a maximum of 120%
of the  incentive  opportunity  allocated to the personal  objective  component.
However,  a minimum level of performance  may be required to generate payout for
the personal objective component.

        Payouts for employees  selected to participate  in the  Short-Term  Plan
after the start of a performance  period are prorated as are certain payouts for
Short-Term Plan participants  whose employment with the Company terminates prior
to the end of a performance period. Payouts for Short-Term Plan participants who
change positions during a performance  period will be prorated  according to the
opportunities  applicable to the positions which were held.  Notwithstanding the
above,  employees may not begin  participation in the Short-Term Plan within two
calendar months prior to the completion of a performance period.

        The 1996  Incentive  Targets  were based on,  among  other  things,  the
following  factors (i) markets  launched by November 1, 1996,  (ii) markets that
were  launched or were  positioned  to launch during the period from November 1,
1996  through  February  15,  1997,  (iii)  population  coverage  by the markets
launched and (iv) expense control.

        Participation  in the Short-Term Plan is terminated upon the transfer to
a  nonparticipating  position in the Company,  employment  by a Partner,  death,
disability  or  separation  from  the  Company  for  lack  of  work.  Terminated
participants  are  eligible  for a prorated  payment  based upon the time served
under the Plan.  If  a participant is terminated for  any but the aforementioned

                                       23
<PAGE>


reasons,  that  participant's  Short-Term  Plan  payment  is  deemed  forfeited.
Participants  who  complete a  performance  period will be eligible to receive a
Short-Term Plan payment regardless of the reason for termination.

Savings Plan

        The Company maintains a savings program (the "Savings Plan") for certain
of its  employees,  which is intended  to qualify  under  Section  401(k) of the
Internal  Revenue  Code  of  1986,  as  amended  (the  "Code").  Most  permanent
full-time, and certain part-time,  employees are eligible to become participants
in the plan. Participants make contributions to a basic before tax account and a
supplemental  before tax account.  The maximum  contribution for any participant
for any  year is 16% of  such  participant's  compensation  subject  to  maximum
amounts set by federal  taxation  law and  certain  additional  limitations  for
Highly  Compensated  Individuals  (as  defined in the  Savings  Plan).  For each
eligible  employee  who elects to  participate  in the Savings  Plan and makes a
contribution  to the basic  before tax  account,  the  Company  makes a matching
contribution  equal to 50% of the amount of the basic before tax contribution of
each participant up to 6% of such employee's contribution.  Contributions to the
Savings Plan are invested, at the participant's direction, in several designated
investment  funds.  Distributions  from the Savings Plan  generally will be made
only upon retirement or other termination of employment,  unless deferred by the
participants.

Profit Sharing Plan (Retirement Component)

        Employees  become  eligible to  participate  in the Profit  Sharing Plan
after completing 12 consecutive months of service.  The Company's profit sharing
contribution will be based on eligible  compensation (as defined by the plan). A
combination of age and years of service will  determine the amount  contributed,
which will range from two to ten  percent of eligible  compensation.  It will be
deposited into individual  accounts of the  Company-sponsored  401(k) plan. Such
accounts will be established  for employees who do not participate in the 401(k)
plan. For employees  that do  participate  in the 401(k) plan, the  contribution
will be subject to the applicable 401(k)  investment  percentage  criteria.  The
contribution  vests after  completion of five years of service;  once vested the
plan is considered portable.

Employment Agreements

        Holdings has entered into employment  agreements with Messrs.  Sukawaty,
Gensheimer and Levine.  The agreements  provide for an annual base salaries,  as
well as short-term and long-term incentive opportunities.

        The  agreements  provide that Sprint  Spectrum may  terminate  the named
officers'  employment  for any reason at any time,  provided,  however,  that if
termination  is  other  than  for  cause,  total  disability  or  the  voluntary
resignation  of such officers,  Sprint  Spectrum will be required to pay special
compensation which includes,  among other things, (i) bi-weekly compensation for
a period  of 18  months  (the  "Severance  Period"),  (ii)  subject  to  certain
conditions, a bonus under any short-term compensation plan maintained during the
Severance Period,  (iii) a prorated award under any long-term  incentive plan in
which the officer  participate,  (iv),  life,  medical and  retirement  benefits
throughout the Severance Period and (v) outplacement counseling.

        Pursuant  to the  terms of these  employment  agreements,  each of these
officers have agreed that, for 18 months following termination of employment for
any reason, he will not accept any position where,  within any 90-day period, he

                                       24
<PAGE>


dedicates his time and efforts  principally to a wireless  business  anywhere in
the United States.

        In addition,  Mr. Gensheimer's  employment agreement includes provisions
for  additional  payments.  He  received  a payment of  $150,000  in 1995 and an
additional  $150,000 in 1996 on the first anniversary of his employment with the
Company for foregone  stock options and 1995 incentive  compensation  related to
his previous employer.

        Sprint Spectrum  expects to enter into employment  agreements,  on terms
substantially  similar to those  contained in the  employment  agreements,  with
Messrs. Kurtze, Bianchino and Neumeister.

                                       25
<PAGE>


Item 12.  Security Ownership of Certain Beneficial Owners and Management

The following table sets forth, as of March 14, 1997, the ownership of Holdings,
MinorCo, L.P., Sprint Spectrum L.P. and FinCo. For a more detailed discussion of
certain  ownership  interests,  see  "Business" and "Certain  Relationships  and
Related Transactions."
                                                                     Percentage
Name and Address of Beneficial Owner           Type of Interest       Interest
Sprint Spectrum Holding Company, L.P.
   Sprint Enterprises, L.P(1).................  Partnership(2)           40%
   2330 Shawnee Mission Parkway
   Westwood, Kansas 66205
   TCI Spectrum Holdings, Inc.(3).............  Partnership(2)           30%
   5619 DTC Parkway
   Englewood, Colorado 80111
   Comcast Telephony Services(4)..............  Partnership(2)           15%
   1500 Market Street
   Philadelphia, Pennsylvania 19102-2148
   Cox Telephony Partnership(5)...............  Partnership(2)           15%
   1400 Lake Hearn Drive
   Atlanta, Georgia 30319-1464
Sprint Spectrum L.P.
   Sprint Spectrum Holding Company, L.P(6)....  General Partnership      99%
   4900 Main Street-Twelfth Floor
   Kansas City, Missouri 64112
   MinorCo, L.P.(6)...........................  Limited Partnership       1%
   4900 Main Street-Twelfth Floor
   Kansas City, Missouri 64112 MinorCo, L.P.
   Sprint Enterprises, L.P.(1)................  Partnership(2)           40%
   2330 Shawnee Mission Parkway
   Westwood, Kansas 66205
   TCI Spectrum Holdings, Inc.(3).............  Partnership(2)           30%
   5619 DTC Parkway
   Englewood, Colorado 80111
   Comcast Telephony Services(4)..............  Partnership(2)           15%
   1500 Market Street
   Philadelphia, Pennsylvania  19102-2148
   Cox Telephony Services(5)................... Partnership(2)           15%
   1400 Lake Hearn Drive
   Atlanta, Georgia 30319-1464
Sprint Spectrum Finance Corporation
  Sprint Spectrum L.P.........................  Common Stock             100%
  4900 Main Street- Twelfth Floor
  Kansas City, Missouri 64112

-----------
(1)  An indirect wholly-owned subsidiary of Sprint Corporation.  The general
     partner of Sprint Enterprises, L.P. is US Telecom, Inc., a subsidiary of
     Sprint Corporation.  The limited partners of Sprint Enterprises, L.P. are
     UCOM, Inc., UST PhoneCo, Inc.and UC PhoneCo, Inc., each a subsidiary of
     Sprint Corporation
(2)  Each Partner is both a general partner and a limited partner and holds a
     99% of its partnership interest as a general partner and 1% as a limited
     partner.
(3)  A subsidiary of Tele-Communications, Inc.  Interest was originally held by
     TCI Network Services and subsequently transferred to TCI Telephony Ser-
     vices, Inc. which changed its name to TCI Spectrum Holdings, Inc.
(4)  Comcast Telephony Services is a general partnership.  The general partners
     are COM Telephony Services, Inc. and Comcast Telephony Services, Inc.
(5)  Cox Telephony Partnership is a general partnership.  The general partners
     are Cox Communications Wireless, Inc. and Cox Telephony Partners, Inc.
(6)  As of December 31, 1996, Holdings, the sole general partner of Sprint
     Spectrum, owned a greater than 99.0% partnership interest in Sprint Spec-
     trum, and MinorCo, the sole limited partner, owned a partnership interest
     equal to less than 1.0%.  The interests held by each of Holdings and Minor-
     co fluctuate based on the amount of equity contributions by Holdings to
     Sprint Spectrum because MinorCo's limited partnership interest is equal to
     the ratio of $5.0 million (its investment in Sprint Spectrum) to the total
     contributed equity in Sprint Spectrum.

                                       26
<PAGE>


Item 13.  Certain Relationships and Related Transactions

        The general  partner of the Company is  Holdings,  which holds a greater
than 99%  general  partnership  interest.  There are four  general  partners  of
Holdings,  Sprint Enterprises,  L.P., which has a 40% partnership interest,  TCI
Spectrum  Holdings,  Inc.  which has a 30%  partnership  interest,  and  Comcast
Telephony  Services  and Cox  Telephony  Partnership,  each of  which  has a 15%
partnership  interest.  Each of the  Partners is a  subsidiary  of Sprint,  TCI,
Comcast and Cox,  respectively.  Sprint is a leading  provider  of domestic  and
international long distance and local exchange telecommunications  services. TCI
is one of the largest cable  television  operators in the United States in terms
of numbers of basic subscribers  served.  Comcast is engaged in the development,
management and operation of cable and cellular telephone  communications systems
and the production and distribution of cable programming.  Comcast also provides
cellular  telephone   communications  services  in  markets  with  an  aggregate
population  of over 7.9 million,  including the Comcast  Service Area.  Cox is a
fully integrated,  diversified media and broadband  communications  company with
operations  and  investments in U.S. cable  televisions  systems,  international
cable television systems, programming and telecommunications and technology.

        The Company and Holdings expect to have extensive relationships with the
Partners and their affiliates,  including the Parents,  but the nature and terms
of such  relationships  have not yet been determined.  The Holdings  Partnership
Agreement sets forth guidelines for business dealings between the Company and/or
Holdings and the  Partners  and their  affiliates,  including  the Parents.  The
Holdings Partnership Agreement permits Holdings and its subsidiaries,  including
the Company,  to enter into  transactions with the Partners and their affiliates
in the normal course of their respective businesses; provided, however, that (i)
any contract, agreement,  relationship or transaction between Holdings or any of
its subsidiaries and any person in which any of the Partners or their affiliates
has a  direct  or  indirect  material  interest  must be  approved  (after  full
disclosure by the  interested  Partner(s) of all material facts relating to such
matter) by the Partnership Board, with the Partnership Board  representatives of
the interested  Partner(s) abstaining from deliberations and voting and (ii) the
Partnership  Board has determined  that the price and terms of such  transaction
are fair to Holdings and its subsidiaries,  including the Company,  and that the
price  and  terms of such  transaction  are no less  favorable  than  comparable
transactions involving non-affiliates. Subject to certain conditions, including,
without   limitation,   unanimous  approval  of  appropriate   procedures,   the
Partnership  Board  may  elect  from  time to time to  provide  rights  of first
opportunity to various Partners or their affiliates.  In addition,  the Holdings
Partnership Agreement contains other provisions relating to transactions between
Holdings and its subsidiaries,  including the Company,  on the one hand, and the
Partners  and their  affiliates,  on the other  hand.  No  procedures  have been
adopted by the Company to determine the fairness of related  party  transactions
and no determination  has been made by the Company as to whether such procedures
will be adopted.  The Company  believes  that it will be able to  determine  the
fairness  of  related  party   transactions  on  a  case-by-case  basis  through
consultation with its independent advisors, market surveys and other third party
means of verification.

        The Company  entered into an agreement with Sprint to sell the Company's
paging  services.  Sprint serves as the Company's agent for selling  traditional
paging  services and markets these services  through direct mail,  direct sales,
employee programs,  advertising and promotions. The foregoing agreement does not
affect the Company's  ability to offer paging services as part of its integrated
wireless service package.

        Sprint entered into a three year agreement to become an official sponsor
to the NFL through 1998.  The Company  elected to  participate in the agreement,
and is allocated $5 million per year of the total contract cost.

                                       27
<PAGE>



        The Company has entered into a five year  contract  with Sprint  whereby
Sprint will provide invoicing  services,  including  printing customer invoices,
placing the invoices and any other  informational  or  promotional  inserts into
envelopes,  and mailing the  invoices to the  Company's  customers.  The Company
agreed to pay for the initial  development  of the systems and an ongoing charge
per invoice  handled.  The  per-invoice  charge  decreases as volumes  increase.
Additional  fees may be  required  if a  specified  minimum  number of  invoices
handled is not achieved by April 1997.

        Sprint was selected as the Company's  operator  services  vendor and was
awarded a three year contract.  Services will include "0" call processing,  busy
line   verification,   and  initial  set-up  of  software   control  tables  for
confirmation of local calling areas. The Company is charged on a per call record
basis for  services  provided.  Additional  charges may be required if specified
monthly call volumes are not realized.

        The Company has also  entered  into a three year  agreement  with Sprint
whereby Sprint will provide asynchronous transfer mode (ATM) switching equipment
to enable "soft"  hand-offs,  resulting in fewer dropped calls.  When cell sites
are connected to different switches, ATM switching provides for a "soft" handoff
when the mobile  customer's  handset  establishes  a connection  with a new cell
before  disconnecting with the current cell. Monthly charges are usage based and
will not increase  during the term of the agreement;  however,  such fees may be
reduced to any lower  rate  provided  to any other  customer  for such  services
during the term of the agreement.

        The Company is  negotiating  a  miscellaneous  services  agreement  with
Sprint/United Management Company ("Sprint/United"),  an affiliate of Sprint, for
Sprint/United to provide various administrative services (e.g., payroll, travel,
etc.) for the Company and Holdings is in the process of negotiating an agreement
with SprintCom, an affiliate of Sprint, for the Company to build out the network
infrastructure  in certain BTA markets where  SprintCom was awarded PCS licenses
in the FCC's D and E Block auctions. At this time, the Company reimburses Sprint
for certain  accounting  and data  processing  services,  for  participation  in
certain  advertising  contracts,  for  certain  cash  payments  made  by  Sprint
Corporation  on behalf of the Company and other  management  and  administrative
services.  The costs of such services are allocated  based on direct usage.  The
aggregate amount of such expenses was  approximately  $11,900,000 and $2,646,000
for 1996 and 1995, respectively.  No reimbursement was made through December 31,
1994.

        On June 21, 1996,  the Company  entered  into an agreement  with Cox PCS
pursuant to which the Company is obligated to sell to Cox PCS a fixed percentage
of the CDMA PCS  subscriber  equipment  purchased by the Company  from  QUALCOMM
Personal Electronics. Although Cox PCS is not a party to the Purchase and Supply
Agreement among the Company, QUALCOMM Personal Electronics and the various other
parties  thereto,  the  Company  has  agreed  to sell the  CDMA  PCS  subscriber
equipment to Cox PCS at cost.

        Subject  to  certain  exceptions,  the  Holdings  Partnership  Agreement
restricts any Partner and its controlled  affiliates from bidding on,  acquiring
or, directly or indirectly, owning, managing, operating, joining, controlling or
financing, or participating in the management,  operation,  control or financing
of,  or being  connected  as a  principal,  agent,  representative,  consultant,
beneficial owner of an interest in any person,  or entity, or otherwise with, or
use or permit its name to be used in connection  with, any business that engages
in the bidding for or acquisition of any wireless business license or engages in
any Wireless Business or provides,  offers, promotes or brands services that are
within  Holdings'  core  business.  Unless  approved by a unanimous  vote of the
Partners  and  subject  to  certain  provisions,  (i) as a result  of  Comcast's
ownership  of  a  PCS  license  for  the  Philadelphia  MTA,  Holdings  and  its
subsidiaries (including the Company) are prohibited from engaging in any of the

                                       28
<PAGE>


activities listed in the preceding sentence,  including bidding for or acquiring
any PCS license,  in Philadelphia  and (ii) no Partner or controlling  affiliate
may bid in a PCS auction for any wireless business  license,  and at no time may
any  Partner bid for or acquire a wireless  business if such bid or  acquisition
would violate or cause the Partnership or other Partners to violate any rules of
the FCC.

        The Holdings Partnership  Agreement provides that the marketing channels
of the  Company  will  include  each  of  the  Partners  and  certain  of  their
affiliates.  Each of the  Partners  will be  non-exclusive  sales agents for the
Company's  services,  and the Company  will be a  non-exclusive  sales agent for
those services  Sprint and the Cable Parents make  available to the Company.  No
agency agreements  formalizing the specific terms of these arrangements  between
the Company and the Partners  have been  signed.  Any  commissions  payable as a
result of the sales agency relationships  between and among, the Company and the
Partners  are  required  to be no less  favorable  to the agent  than  those for
comparable  agency  arrangements  with  third  parties  irrespective  of volume.
Subject to certain exceptions,  the Company's services will be offered, promoted
and packaged  solely under the Sprint  trademark and the logo used in connection
therewith. Nothing in the Holdings Partnership Agreement,  however, precludes or
prohibits  the  Partners  and  their  affiliates  from  marketing,   selling  or
distributing their own products and services.

        The Holdings  Partnership  Agreement  provides that each Partner and its
controlled  affiliates  and  Holdings,  as a whole will cause  their  respective
agents  to  keep  secret  and  maintain  in  confidence  all   confidential  and
proprietary  information and data of Holdings, the Partners and such affiliates.
Subject to such  confidentiality  restrictions,  Holdings,  and its subsidiaries
will  grant each  Partner  and its  controlled  affiliates  access to  technical
information of Holdings and its subsidiaries.

        Pursuant to the Holdings Partnership Agreement,  each Partner has agreed
to provide  certain  services to the Company in connection with the operation of
the  network,   including  antenna  sites  and/or  strand  mounting  of  RF  and
transmission   equipment,   transmission   facilities  between  cell  sites  and
designated switching locations and provision of primary power, standby power and
maintenance.  The  provisions of any such services by Comcast within a specified
service area is not required.


Part IV

Item 14.  Exhibits, Financial Statement Schedule, and Reports on Form 8-K

(a)  1.  See "Index to Financial Statements" set forth on page F-1.

     2.   See "Index to Financial Statements" set forth on page F-1.

     3.   The following Exhibits are part of this report:

         EXHIBITS

         3.1    Certificate of Limited Partnership of Sprint Spectrum L.P. (in-
                corporated by reference to Registrant's Form S-1 Registration
                Statement, Registration No. 333-00609, filed June 21, 1996).

         3.2    Agreement of Limited Partnership of MajorCoSub, L.P. (renamed
                Sprint Spectrum L.P.) dated as of March 28, 1995, among MajorCo,
                L.P. and MinorCo, L.P. (incorporated by reference to Regi-

                                       29
<PAGE>


                strant's Form S-1 Registration Statement, Registration No.
                333-00609, filed June 21, 1996).

         3.3    Amended and Restated Agreement of Limited Partnership of Major-
                Co, L.P. (renamed Sprint Spectrum Holding Company, L.P.) dated
                January 31, 1996, among Sprint Spectrum, L.P. (renamed Sprint
                Enterprises, L.P.), TCI Network Services, Comcast Telephony Ser-
                vices and Cox Telephony Partnership (incorporated by reference
                to Registrant's Form S-1 Registration Statement, Registration
                No. 333-06609, filed on June 21, 1996).

         4.1    Senior Note  Indenture,  dated August 23, 1996,  between  Sprint
                Spectrum L. P., Sprint  Spectrum  Finance  Corporation,  and The
                Bank of New York,  as  Trustee  (incorporated  by  reference  to
                Registrant's Form 10-Q filed November 12, 1996).

         4.2    Form of Senior Note (included in Exhibit 4.1).

         4.3    Senior  Discount Note Indenture  dated August 23, 1996,  between
                Sprint Spectrum L.P., Sprint Spectrum Finance  Corporation,  and
                The Bank of New York, as Trustee  (incorporated  by reference to
                Registrant's Form 10-Q filed November 12, 1996).

         4.4    Form of Senior Discount Note (included in Exhibit 4.3).

         10.1   Procurement and Services Contract, dated as of January 31, 1996,
                between MajorCo, L.P. and Northern Telecom Inc. (incorporated by
                reference to Form S-1 Registration Statement, Registration No.
                333-06609, filed on July 30, 1996).

         10.2   Assignment, Assumption and Amendment No. 1, dated as of June 26,
                1996, to Procurement and Services Contract, dated as of January
                31, 1996, between MajorCo, L.P. and Northern Telecom, Inc. (in-
                corporated by reference to Form S-1 Registration Statement, Reg-
                istration No. 333-06609, filed on July 30, 1996).

         10.3   Procurement and Services Contract, dated as of January 31, 1996,
                between MajorCo, L.P. and AT&T Corp. (incorporated by reference
                to Form S-1 Registration Statement, Registration No. 333-06609,
                filed on July 30, 1996).

         10.4   Assignment, Assumption and Amendment No. 1, dated as of June 21,
                1996, to Procurement and Services Agreement, dated as of January
                31, 1996, between MajorCo, L.P. and AT&T Corp. (incorporated by
                reference to Form S-1 Registration Statement, Registration No.
                333-06609, filed on July 30, 1996).

         10.5   Amendment No. 2 to the Lucent Technologies/Sprint Spectrum Pro-
                curement and Services Contract, dated as of July 15, 1996 be-
                tween Sprint Spectrum Equipment Company, L.P. and Lucent Tech-
                nologies, Inc. (incorporated by reference to Registrant's Form
                10-Q filed November 12, 1996).

         10.6   Amended and Restated Procurement and Services Contract, dated as
                of October 9, 1996 between Sprint  Spectrum  Equipment  Company,
                L.P. and Lucent Technologies Inc. The omitted portions indicated
                by brackets have been  separately  filed with the Securities and
                Exchange  Commission  pursuant  to a  request  for  confidential
                treatment  under  Rule 24-b of the  Securities  Exchange  Act of
                1934, as amended.

                                       30
<PAGE>



         10.7   Amended and Restated Sprint Trademark License Agreement, dated
                as of January 31, 1996, between Sprint Communications Company,
                L.P. and MajorCo, L.P. (incorporated by reference to Regi-
                strant's Form S-1 Registration Statement, Registration No.
                333-06609, filed on July 30, 1996).

         10.8   First Amendment to Amended and Restated Trademark License Agree-
                ment, dated as of September 26, 1996, between Sprint Communica-
                tions Company, L.P. and Sprint Spectrum Holding Company, L.P.
                (incorporated by reference to Registrant's Form 10-Q filed Nov-
                ember 12, 1996).

         10.9   Assignment and Acceptance  Agreement  (regarding the Amended and
                Restated  Trademark License  Agreement,  as amended) dated as of
                September 30, 1996 between Sprint Spectrum Holding Company, L.P.
                and  Sprint   Spectrum  L.P.   (incorporated   by  reference  to
                Registrant's Form 10-Q filed November 12, 1996).

         10.10  Amended and Restated Assignment and Assumption Agreement
                (Leases), dated as of July 1, 1996, between Sprint Spectrum
                Holding Company, L.P., Sprint Spectrum L.P. and Sprint Spectrum
                Realty Company, L.P. (incorporated by reference to Registrant's
                Form 10-Q filed November 12, 1996).

         10.11  Property Use Agreement, dated as of July 1, 1996, between Sprint
                Spectrum Realty Company, L.P. and Sprint Spectrum L.P. (in-
                corporated by reference to Registrant's Form S-1 Registration
                Statement, Registration No. 333-06609, filed on July 30, 1996).

         10.12  Assignment and Assumption, dated as of July 1, 1996, between
                Sprint Spectrum Holding Company, L.P., Sprint Spectrum L.P. and
                Sprint Spectrum Equipment Company, L.P. (incorporated by refer-
                ence to Registrant's Form S-1 Registration Statement, Registra-
                tion No. 333-06609, filed on July 30, 1996).

         10.13  Equipment Lease Agreement, dated as of July 1, 1996, between
                Sprint Spectrum Equipment Company, L.P. and Sprint Spectrum L.P.
                (incorporated by reference to Registrant's Form S-1 Registration
                Statement, Registration No. 333-06609, filed on July 30, 1996).

         10.14  Employment Agreement, dated as of July 29, 1996, between Sprint
                Spectrum Holding  Company, L.P. and Andrew Sukawaty (incorpor-
                ated by reference to Registrant's Form S-1 Registration State-
                ment, Registration No. 333-06609, filed on August 12, 1996).

         10.15  Employment Agreement, dated as of September 29, 1995, between
                MajorCo, L.P. and Joseph M. Gensheimer (incorporated by refer-
                ence to Registrant's Form S-1 Registration Statement, Registra-
                tion No. 333-06609, filed on July 30, 1996).

         10.16  Registration Rights Agreement, dated as of August 23, 1996 among
                Sprint Spectrum L.P.,  Sprint Spectrum  Finance  Corporation and
                Sprint  Corporation  (incorporated  by reference to Registrant's
                Form 10-Q filed November 12, 1996).

         10.17  Amended and Restated Capital Contribution Agreement dated as of
                October 2, 1996, among Sprint Corporation, Tele-Communications,
                Inc., Comcast Corporation, Cox Communications, Inc. and Sprint

                                       31
<PAGE>


                Spectrum L.P. (incorporated by reference to Registrant's Form
                10-Q filed November 12, 1996).

         10.18  Paging Sales Agency Agreement, dated as if January 17, 1996, be-
                tween MajorCo, L.P. and Sprint Communications Company, L.P. (in-
                corporated by reference to Registrant's Form S-1 Registration
                Statement, Registration No. 333-06609, filed on July 30, 1996).

         10.19  Second Amended and Restated Limited Partnership Agreement dated
                as of January 9, 1995 among American Personal Communications,
                Inc., WirelessCo, L.P. and The Washington Post Company (in-
                corporated by reference to Registrant's Form S-1 Registration
                Statement, Registration No. 333-06609, filed on July 30, 1996).

         10.20  WirelessCo Affiliation Agreement, dated as of January 9, 1995
                between American PCS, L.P., and WirelessCo, L.P. (incorporated
                by reference to Registrant's Form S-1 Registration Statement,
                Registration No. 333-06609, filed on July 30, 1996).

         10.21  Letter Agreement, dated as of August 31, 1996, between American
                PCS, L.P., American Personal Communications Inc., WirelessCo,
                L.P., Sprint Spectrum L.P. and Sprint Spectrum Holding Company,
                L.P. (incorporated by reference to Registrant's Form 10-Q, filed
                on September 26, 1996).

         10.22  Purchase and Supply Agreement dated as of June 21, 1996, between
                Sprint Spectrum L.P.,  QUALCOMM Personal  Electronics,  QUALCOMM
                Incorporated  and  Sony   Electronics   Inc.   (incorporated  by
                reference  to  Registrant's  Form  S-1  Registration  Statement,
                Registration No. 333-06609, filed on August 12, 1996).

         10.23  Amendment  No. 1, dated as of October 24, 1996,  to the Purchase
                and Supply  Agreement dated as of June 21, 1996,  between Sprint
                Spectrum   L.P.,   QUALCOMM   Personal   Electronics,   QUALCOMM
                Incorporated  and Sony  Electronics  Inc.  The omitted  portions
                indicated  by  brackets  have  been  separately  filed  with the
                Securities  and  Exchange  Commission  pursuant to a request for
                confidential   treatment  under  Rule  24-b  of  the  Securities
                Exchange Act of 1934, as amended.

         10.24  Customer Account and Billing System Agreement, dated as of
                February 26, 1996, between Sprint Spectrum L.P. and Cincinnati
                Bell Information Systems Inc. (incorporated by reference to Reg-
                istrant's Form S-1 Registration Statement, Registration No.
                333-06609, filed on July 30, 1996).

         10.25  Subscriber Unit Equipment Purchase and Supply Agreement, dated
                as of September 17, 1996, between Sprint Spectrum L.P. and Sam-
                sung Electronics Co., Ltd. (incorporated by reference to Regi-
                strant's Form 10-Q filed November 12, 1996).

         10.26  Letter agreement dated as of September 17, 1996 from Sprint
                Spectrum L.P. to Samsung Electronics Co., Ltd. and Samsung Elec-
                tronics Co., Ltd./Samsung Telecommunications America, Inc. (in-
                corporated by reference to Registrant's Form 10-Q filed November
                12, 1996).

         10.27  Master Agreement, dated as of September 1996, between Sprint
                Communications Company, L.P., Sprint Spectrum L.P., Sprint Uni-
                ted Management Company and Tandy Corporation, a Delaware corp-

                                       32
<PAGE>


                oration  acting by and  through its  RadioShack  division
                (incorporated  by  reference  to  Registrant's  Form 10-Q  filed
                November 12, 1996).

         10.28  Credit  Agreement,  dated as of October 2, 1996,  between Sprint
                Spectrum  L.P.  and Northern  Telecom Inc. The omitted  portions
                indicated  by  brackets  have  been  separately  filed  with the
                Securities  and  Exchange  Commission  pursuant to a request for
                confidential   treatment  under  Rule  24-b  of  the  Securities
                Exchange Act of 1934, as amended.

         10.29  Credit  Agreement,  dated as of October 2, 1996,  between Sprint
                Spectrum L.P. and Lucent  Technologies Inc. The omitted portions
                indicated  by  brackets  have  been  separately  filed  with the
                Securities  and  Exchange  Commission  pursuant to a request for
                confidential   treatment  under  Rule  24-b  of  the  Securities
                Exchange Act of 1934, as amended.

         10.30  Credit  Agreement,  dated as of October 2,  1996,  among  Sprint
                Spectrum   L.P.,   the   several   banks  and  other   financial
                institutions  and  entities  from  time to time  parties  to the
                Credit Agreement and The Chase Manhattan Bank, as administrative
                agent  for  the  lenders.  The  omitted  portions  indicated  by
                brackets  have been  separately  filed with the  Securities  and
                Exchange  Commission  pursuant  to a  request  for  confidential
                treatment  under  Rule 24-b of the  Securities  Exchange  Act of
                1934, as amended.

         10.31  Trust Agreement, dated as of October 2, 1996 among Sprint Spec-
                trum L.P., First Union National Bank and Kenneth D. Benton.

         10.32  Pledge Agreement, dated as of October 2,1996, made by Sprint
                Spectrum L.P. and MinorCo, L.P. in favor
                of the Trustees under the Trust Agreement.

         10.33  Borrower Security Agreement, dated as of October 2. 1996, made
                by Sprint Spectrum L.P. and MinorCo, L.P. in favor of the
                Trustees under the Trust Agreement.

         10.34  Subsidiary Security Agreement, dated as of October 2, 1996, made
                by Sprint Spectrum L.P. and MinorCo, L.P. in favor of the
                Trustees under the Trust Agreement.

         10.35  Guarantee, dated as of October 2, 1996, by WirelessCo, L.P. in
                 favor of the Trustees under the Trust Agreement.

         10.36  Guarantee, dated as of October 2, 1996, by Sprint Spectrum
                Equipment Company, L.P. in favor of the Trustees under the Trust
                Agreement.

         10.37  Guarantee, dated as of October 2, 1996, by Sprint Spectrum Real-
                ty Company, L.P. in favor of the Trustees under the Trust Agree-
                ment.

         12     Statements re: computation of ratios

         21     Subsidiaries of Registrant

         27     Financial Data Schedule

(b) No reports on Form 8-K were filed during the fiscal year ended  December 31,
    1996.

                                       33
<PAGE>


                                   SIGNATURES

      Pursuant  to the  requirements  of Section  13 or 15(d) of the  Securities
Exchange Act of 1934,  the registrant has caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

                                               SPRINT SPECTRUM L.P.
                                               (Registrant)



                                               By   /s/  Andrew Sukawaty
                                               Andrew Sukawaty
                                               President and Chief Executive
                                                Officer


Date:  March 31, 1997

      Pursuant to the requirements of the Securities  Exchange Act of 1934, this
report  has  been  signed  below  by the  following  persons  on  behalf  of the
registrant and in the capacities indicated on the 31st day of March, 1997.


                                               /s/  Andrew Sukawaty
                                               Andrew Sukawaty
                                               President and Chief Executive
                                                Officer


                                               /s/  Robert M. Neumeister, Jr.
                                               Robert M. Neumeister, Jr.
                                               Chief Financial Officer


                                               /s/  Arthur A. Kurtze
                                               Arthur A. Kurtze
                                               Chief Operating Officer


                                               /s/  Bernard A. Bianchino
                                               Bernard A. Bianchino
                                               Chief Business Development
                                                Officer


                                               /s/  Charles E. Levine
                                               Charles E. Levine
                                               Chief Marketing Officer



                                       34
<PAGE>


                                               /s/  Joseph M. Gensheimer
                                               Joseph M. Gensheimer
                                               General Counsel


                                               /s/  John W. Meyer
                                               John W. Meyer
                                               Vice President and Controller
                                                Principal Accounting Officer


                                               /s/  Ronald T. LeMay
                                               Ronald T. LeMay
                                               Chairman of Sprint Spectrum
                                                Holding Company Partnership
                                                Board


                                               /s/  William T. Esrey
                                               William T. Esrey
                                               Sprint Spectrum Holding Company
                                                Partnership Board Representative


                                               /s/  Arthur B. Krause
                                               Arthur B. Krause
                                               Sprint Spectrum Holding Company
                                                Partnership Board Representative


                                               /s/  James O. Robbins
                                               James O. Robbins
                                               Sprint Spectrum Holding Company
                                                Partnership Board Representative


                                               /s/  Lawrence S. Smith
                                               Lawrence S. Smith
                                               Sprint Spectrum Holding Company
                                                Partnership Board Representative


                                       35
<PAGE>


                                   SIGNATURES

      Pursuant  to the  requirements  of Section  13 or 15(d) of the  Securities
Exchange Act of 1934,  the registrant has caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.


                                               SPRINT SPECTRUM
                                               FINANCE CORPORATION
                                               (Registrant)



                                               /s/  Andrew Sukawaty
                                               Andrew Sukawaty
                                               President



Date:  March  31, 1997


Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following  persons on behalf of the  registrant and
in the capacities indicated on the 31st day of March, 1997.



                                               /s/  Andrew Sukawaty
                                               Andrew Sukawaty
                                               President


                                               /s/  Robert M. Neumeister, Jr.
                                               Robert M. Neumeister, Jr.
                                               Vice President and Treasurer


                                               /s/  Joseph M. Gensheimer
                                               Joseph M. Gensheimer
                                               Secretary


                                       36
<PAGE>




                              SPRINT SPECTRUM L.P.
                       SPRINT SPECTRUM FINANCE CORPORATION
         INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE



                                                                         Page
                                                                       Reference
                                                                     -----------

Sprint Spectrum L.P.

Selected Financial Data....................................................  F-2

Management's Discussion and Analysis of Financial Condition and Results of
     Operations............................................................  F-3

Consolidated Financial Statements
     Report of Independent Auditors' - Deloitte & Touche LLP................ F-8
     Report of Independent Auditors' - Price Waterhouse LLP................. F-9
     Consolidated Balance Sheets........................................... F-10
     Consolidated Statements of Operations................................. F-11
     Consolidated Statements of Changes in Partners' Capital............... F-12
     Consolidated Statements of Cash Flows................................. F-13
     Notes to Consolidated Financial Statements............................ F-14

Financial Statement Schedule:
     Certain  financial  statement  schedules  are omitted  because the required
     information is not present, or because the information required is included
     in the consolidated financial statements and notes thereto.

Sprint Spectrum Finance Corporation
Financial Statements
     Report of Independent Auditors' - Deloitte & Touche LLP............... F-26
     Balance Sheets........................................................ F-27
     Statement of Operations............................................... F-28
     Statements of Changes in Stockholder's Equity......................... F-29
     Statement of Cash Flows............................................... F-30
     Notes to Financial Statements......................................... F-31


                                      F-1





<PAGE>


                              SPRINT SPECTRUM L.P.

                             SELECTED FINANCIAL DATA

                                                                   For the
                                                                 Period from
                                                                  October 24,
                                                                 1994 (date of
                                    For the Years Ended          inception) to
                                        December 31,              December 31,
                                 -----------------------------------------------
                                      1996          1995             1994
                                 ------------- -------------- ------------------

                                               (In Thousands)
Results of Operations
   Net operating revenues........  $     4,175   $       -       $     -
   Operating loss (1)............       355,873        64,520        3,332

Financial Position
   Total assets..................     3,898,766     2,244,343      123,875
   Long-term compensation
     obligation..................        11,356           -            -
   Long-term debt................       691,241           -            -
   Construction obligations......       714,934           -            -



(1)      Effective  August 31, 1996, the Company  transferred  its investment in
         APC to Holdings . Sprint  Spectrum's  operating loss for the year ended
         December  31,  1996  includes  approximately  $92  million of equity in
         losses of APC through  August 31, 1996. The operating loss for the year
         ended December 31, 1995 includes approximately $46 million of equity in
         losses of APC.

                                      F-2

<PAGE>



                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

        The following discussion and analysis should be read in conjunction with
Sprint Spectrum L.P.'s consolidated  financial statements and notes thereto. The
term "Company"  refers to Sprint Spectrum L.P. and its  subsidiaries,  including
Sprint Spectrum Finance Corporation ("FinCo"),  WirelessCo, L.P. ("WirelessCo"),
Sprint Spectrum Realty Company,  L.P. ("RealtyCo") and Sprint Spectrum Equipment
Company,  L.P.  ("EquipmentCo").  As  of  July  1,  1996,  Holdings  transferred
substantially  all operating  assets and liabilities to the Company.  The Sprint
Spectrum  financial  information as presented  includes the pooled operations of
Holdings through June 30, 1996.

        The  Company   includes   certain   estimates,   projections  and  other
forward-looking  statements  in its  reports  as  well  as in  presentations  to
analysts and others and in other material  disseminated to the public. There can
be no assurances of future  performance and actual results may differ materially
from those in the forward-looking  statements.  Factors which could cause actual
results  to  differ  materially  from  estimates  or  projections  contained  in
forward-looking statements include:

      -   the  effects  of  vigorous  competition  in the  markets  in which the
          Company will  operate;
      -   the cost of entering new markets  necessary to provide  services;
      -   the impact of any  unusual  items  resulting  from ongoing evaluations
          of the Company's business strategies;
      -   the effects of unanticipated  delays or problems with the development
          of technologies and systems used by the Company;
      -   requirements imposed on the Company and its competitors by the Federal
          Communications  Commission  ("FCC")  and state  regulatory commissions
          under the Telecommunications Act of 1996;
      -   the  possibility  of one or more of the  markets in which the  Company
          will compete being  impacted by  variations in political,  economic or
          other factors over which the Company has no control; and
      -   unexpected results in litigation.

General

        The Company is a development  stage enterprise formed for the purpose of
establishing  a nationwide  personal  communications  service  ("PCS")  wireless
telecommunications  network.  The Company  acquired  PCS licenses in the FCC's A
Block and B Block PCS auction, which concluded in March 1995, to provide service
to 29 major trading areas ("MTAs")  covering  150.3 million Pops.  Additionally,
Cox  contributed to the Company,  effective  February 6, 1997, a PCS license for
the Omaha MTA.  The  Company  has also  affiliated  and  expects to  continue to
affiliate with other PCS providers.  Pursuant to  affiliation  agreements,  each
affiliated PCS service  provider will use the Sprint(R) (a registered  trademark
of Sprint Communications  Company, L.P.) brand name. Holdings owns a 49% limited
partnership  interest in American  PCS, L.P.  ("APC"),  which owns a PCS license
for, and operates a broadband  GSM PCS system in the  Washington  D.C./Baltimore
MTA.  APC has  affiliated  with the Company and is  marketing  its  products and
services  under the  Sprint(R)  brand  name.  Holdings  also owns a 49%  limited
partnership  interest in Cox Communication  PCS, L.P. ("Cox PCS"), a partnership
that owns a PCS license for the Los Angeles-San  Diego MTA covering 21.5 million
Pops.  Cox,  which  currently  owns this license,  has agreed to contribute  the
license to Cox PCS  and will manage and control Cox PCS.   The Company signed an
affiliation agreement with Cox PCS on December 31, 1996.

                                      F-3

<PAGE>



        The Company also expects to provide  various  services to  PhillieCo,  a
limited  partnership  organized by and among subsidiaries of Sprint, TCI and Cox
that owns a PCS license for the  Philadelphia  MTA covering 9.1 million Pops. In
addition,  SprintCom participated in the FCC's D and E Block auction which ended
on January 14, 1997, and was awarded  licenses for 139 of 493 BTAs, all of which
are areas not covered by the Company's  owned PCS licenses or licenses  owned by
APC, Cox PCS and PhillieCo.  In accordance  with an agreement among the Partners
and the Partnership  Agreement,  SprintCom is required to offer to enter into an
affiliation agreement with Holdings with respect to such BTA licenses pursuant
to which  SprintCom's  systems in such areas would be  included in the Company's
national PCS  network,  although no assurance  can be given that  SprintCom  and
Holdings  will enter into any such  affiliation  agreement.  Holdings  is in the
process of  negotiating  an  agreement  with  SprintCom to build out the network
infrastructure in certain BTA markets where SprintCom was awarded PCS licenses.

        To date, the Company has incurred  expenditures in conjunction  with PCS
license  acquisitions,  initial  design  and  construction  of the PCS  network,
engineering,  marketing, administrative and other start up related expenses. The
Company commenced initial commercial operations for its PCS services late in the
fourth  quarter  of 1996  and,  as a result,  has  generated  minimal  operating
revenues.  The  Company  intends to  initiate  service in  portions of most MTAs
during the summer of 1997.  Pop coverage at the end of the initial launch period
(approximately  the end of the  second  quarter  of 1997) is  expected  to reach
approximately  57% of the  Pops  in all of  the  Company's  license  areas  with
coverage in the individual  license areas ranging from 19% to 90%. The timing of
launch in individual markets will be determined by various factors,  principally
zoning and microwave relocation factors,  equipment delivery schedules and local
market and competitive considerations. The Company intends to continue to expand
its  coverage in its PCS markets in its existing  license  areas based on actual
market  experience,  customer demand,  and reductions in the cost of technology.
The  extent to which the  Company  is able to  generate  operating  revenue  and
earnings is dependent  on a number of business  factors,  including  maintaining
existing financing to complete network  construction and fund initial operations
and  operating  losses,  successfully  deploying  the PCS network and  attaining
profitable levels of market demand for the Company's products and services.

Liquidity and Capital Resources

        The  buildout  of the  Company's  PCS  network  and  the  marketing  and
distribution of the Company's PCS products and services will require substantial
capital. The Company currently estimates that its capital requirements  (capital
expenditures,  the cost of its existing licenses,  working capital, debt service
requirements  and  anticipated  operating  losses) for the period from inception
through the end of 1998 (based on the  Company's  current  plans for its network
buildout in its current license areas) will total approximately $8.9 billion (of
which  approximately  $3.4 billion had been  expended as of December 31,  1996).
After 1998,  the  Company  will also  require  additional  capital for  coverage
expansion,  volume-driven  network  capacity and other capital  expenditures for
existing  license  areas,   working  capital,   debt  service  requirements  and
anticipated further operating losses. Costs associated with the network buildout
include switches, base stations,  towers, antennae, radio frequency engineering,
cell site  construction  and microwave  relocation.  Management  estimates  that
capital expenditures  associated with the buildout will total approximately $3.8
billion through 1997,  including $1.6 billion expended  through 1996.  Estimated
capital  expenditures  have  increased  due to  changes in the nature of certain
network elements,  actual construction experience to date and additional network
capacity requirements.  Actual amounts of the funds required may vary materially
from these  estimates  and  additional  funds  would be required in the event of
significant  departures from the current  business plan,  operating  losses that
exceed  current  estimates,  unforeseen  delays,  cost  overruns,  unanticipated
expenses, regulatory changes, engineering design changes and other technological
risks.

                                      F-4
<PAGE>



        The Company currently has minimal sources of revenue to meet its capital
requirements  and has  relied  upon  capital  contributions  and  advances  from
Holdings and third party debt and public debt.  Holdings also  requires  capital
for its  affiliate  investments  and other  partnership  purposes.  The Holdings
partnership agreement provides for a planned capital amount to be contributed by
the Partners ("Total Mandatory Contributions"), which represents the sum of $4.2
billion,  which includes agreed upon values attributable to the contributions of
certain additional PCS licenses by a Partner. The Total Mandatory  Contributions
amount is required to be  contributed  in accordance  with capital  contribution
schedule to be set forth in approved annual budgets if requested by the Holdings
partnership  board (or by the Chief  Executive  Officer of Holdings  pursuant to
authority to be granted in each annual budget or such other  authority as may be
delegated to the Chief Executive Officer by the Holdings partnership board). The
partnership  board of Holdings may request capital  contributions  to be made in
the  absence of an  approved  budget or more  quickly  than  provided  for in an
approved budget, but always subject to the Total Mandatory  Contributions limit.
The proposed budget for 1997 has not yet been approved by the partnership board.
The  Amended  and  Restated   Capital   Contribution   Agreement  (the  "Amended
Agreement")  was  executed  effective  October 2, 1996.  The  Amended  Agreement
recognizes  that through  December 31, 1995,  approximately  $2.2 billion of the
Total Mandatory  Contributions had been contributed to Sprint Spectrum L.P., and
designates that $1.0 billion of the balance of the Total Mandatory Contributions
shall be  contributed  to Sprint  Spectrum  L.P. As of December 31,  1996,  $2.6
billion had been contributed to Sprint Spectrum. The Company's business plan and
the financial covenants and other terms of the Secured Financing (defined below)
will require such additional equity financing prior to the end of 1998, absent a
new financing source.  The $1.0 billion portion of the $4.2 billion not required
to be  invested  in the  Company  may be used by  Holdings  to  fund  its  other
affiliate commitments and make other wireless  investments.  Amounts budgeted by
the Partners in future years will determine the extent to which the  commitments
will actually be utilized.

        In October 1996,  the Company  entered into a credit  agreement with The
Chase  Manhattan  Bank,  as  administrative  agent for a group of  lenders,  and
various  lenders for a $2.0 billion senior  secured  credit  facility (the "Bank
Facility").  The proceeds of the Bank Facility are to be used to finance working
capital needs,  subscriber  acquisition  costs,  capital  expenditures and other
general  purposes of the Company.  The Bank Facility  consists of a $300 million
term loan commitment and a revolving credit  commitment of $1.7 billion.  Of the
$300 million term facility,  $150 million was drawn down  subsequent to closing,
and the remaining  $150 million was drawn down in January,  1997. As of December
31, 1996,  $450 million was available  under the revolving  facility,  and there
were no borrowings  under such  facility.  Availability  under the Bank Facility
will increase subject to the Company meeting certain performance criteria.

        Also in October 1996, the Company entered into credit  agreements for up
to an aggregate of $3.1 billion of senior  secured  multiple  drawdown term loan
facilities from two of its network infrastructure  equipment vendors. Nortel has
agreed to provide up to $1.3  billion in senior  secured  loans,  and Lucent has
agreed to  provide up to $1.8  billion in senior  secured  loans  (together  the
"Vendor   Financing"  and  together  with  the  Bank   Facility,   the  "Secured
Financing").  Both  Nortel and Lucent  have staged  commitments  regarding  when
financing  must be made  available.  The Company will use the proceeds  from the
Vendor Financing to fund the purchase of the equipment and software manufactured
by the vendors as well as  substantially  all of the  construction and ancillary
equipment (e.g.,  towers,  antennae,  cable) required to construct the Company's
PCS network.  These facilities will serve as the primary financing mechanism for
the buildout of the network.

        Borrowings  under the Secured  Financing  are  secured by the  Company's
interest in WirelessCo,  RealtyCo and EquipmentCo and certain other personal and
real property (the "Shared  Lien").  The Shared Lien equally and ratably secures
the Bank Facility and the Vendor Financing. The credit facility is jointly

                                      F-5
<PAGE>


and  severally  guaranteed  by  WirelessCo,  RealtyCo  and  EquipmentCo  and  is
non-recourse to the Partners and the Parents.

        In August 1996, the  Company  and FinCo  issued $250  million  aggregate
principal  amount of the 11% Senior Notes and $500 million  aggregate  principal
amount at maturity of 12 1/2% Senior Discount Notes (together, the "Notes"). The
Senior  Discount  Notes were issued at a discount to their  aggregate  principal
amount at maturity and generated  proceeds of approximately  $273 million.  Cash
interest  on the  Senior  Notes  will  accrue  at a rate of 11% per annum and is
payable  semi-annually in arrears on each February 15 and August 15,  commencing
February 15,  1997.  Cash  interest  will not accrue or be payable on the Senior
Discount Notes prior to August 15, 2001. Thereafter, cash interest on the Senior
Discount  Notes  will  accrue at a rate of 12 1/2% per annum and will be payable
semi-annually in arrears on each February 15 and August 15, commencing  February
15, 2002.  FinCo was formed  solely to be a co-obligor  of the Notes.  FinCo has
only nominal assets and no operations or revenues,  and Sprint  Spectrum will be
responsible  for payment of the Notes.  On August 15, 2001,  the Company will be
required to redeem an amount  equal to $384.772 per $1,000  principal  amount at
maturity  of each  Senior  Discount  Note  then  outstanding  ($192  million  in
aggregate  principal  amount at maturity,  assuming  all of the Senior  Discount
Notes  remain  outstanding  at such date).  The proceeds of  approximately  $509
million  from the  issuance  of the Notes (net of  approximately  $14 million of
underwriting discounts, commissions, and offering expenses) will be used to fund
capital  expenditures,  including the buildout of the nationwide PCS network, to
fund  working  capital  as  required,  to fund  operating  losses  and for other
partnership  purposes.  Sprint purchased,  and continues to hold,  approximately
$183 million principal amount at maturity of the Senior Discount Notes.

        Sources of funding for the Company's further financing  requirements may
include  additional vendor financing,  public offerings or private placements of
equity   and/or  debt   securities,   commercial   bank  loans  and/or   capital
contributions from Holdings or the Partners.  There can be no assurance that any
additional  financing can be obtained on a timely basis and on terms  acceptable
to the Company and within  limitations  contained in the Notes,  the  agreements
governing the Secured Financing and any new financing  arrangements.  Failure to
obtain  any such  financing  could  result  in the delay or  abandonment  of the
Company's  development  and expansion  plans and  expenditures or the failure to
meet regulatory requirements. It also could impair the Company's ability to meet
its debt service  requirements  and could have a material  adverse effect on its
business.

        For the year period ended December 31, 1996,  Sprint  Spectrum used cash
of $211 million in operating  activities,  which consisted of the operating loss
of $439 million and the  increase in  inventory  of $72  million.  The uses were
offset,  in part,  by the equity in the loss of APC through  August 31, 1996 and
increased payables and other accruals. Cash used in investing activities totaled
$979 million,  consisting of capital expenditures and microwave relocation costs
of $807 million and advances to APC of $172 million.

Results of Operations

For the Year Ended December 31, 1996

        Sprint  Spectrum  incurred  a loss of $439  million  for the year  ended
December  31,  1996,  which  includes  equity in the loss of APC of $92  million
through August 31, 1996.

        The Company commenced initial commercial operations for its PCS services
late in the  fourth  quarter of 1996 and,  as a result,  has  generated  minimal
operating revenues.  The negative gross profit from equipment sales results from
the Company's subsidy of handsets. Cost of services consists principally of

                                      F-6
<PAGE>


switch and cell site  expenses,  including  site  rental,  utilities  and access
charges.  Such costs are  incurred  prior to service  launch  during the network
buildout and testing phases.

        Selling  expenses  increased from $0.1 million for the year December 31,
1995 to $38.3 million for the year ended December 31, 1996 due to costs incurred
in preparation of and during the initial commercial  service launch.  Such costs
include  participation  with  Sprint  in the NFL  sponsorship,  development  and
production  expenses  associated  with  advertisements  in various  media (i.e.,
television,  radio,  print), and the development of printed brochures to promote
the Company's products and services.

        General and administrative expenses increased from $64.2 million for the
year ended  December 31, 1995 to $274.4  million for the year ended December 31,
1996  (314%)  due  principally  to  increases  in salary and  related  benefits,
computer  equipment and related  expenses and  professional and consulting fees.
Salaries and benefits and computer  equipment and related expenses increased due
to an increase in employee headcount. Professional and consulting fees increased
due to the use of consultants  and other experts to assist with the  development
of the Company's sophisticated  information systems (including systems to handle
customer care,  billing,  network  management  and financial and  administrative
services),  development and rollout of training programs for the Company's sales
force,  and  various  other  projects  associated  with the  development  of the
corporate infrastructure.

        Depreciation  and amortization  expense  increased from $0.2 million for
the year ended  December 31, 1995 to $11.3  million for the year ended  December
31,  1996  as  certain  network   equipment  has  been  placed  in  service  and
amortization  of PCS licenses  and  microwave  relocation  costs in the launched
markets commenced .

           Effective  August  31,  1996,  the  Company's  interest  in APC,  the
existing loans to APC, and obligations to provide additional funding to APC were
transferred  to  Holdings  pursuant  to an  amendment  to  the  APC  partnership
agreement.  The Company retained the rights and obligations under an affiliation
agreement  with APC. The  consolidated  financial  statements for the year ended
December  31,  1996,  reflect  the losses  allocated  to the  Company  until the
transfer to Holdings.


For the Year Ended December 31, 1995

        Sprint  Spectrum  incurred  a loss of $110  million  for the year  ended
December 31, 1995,  which included equity in APC loss of $46 million.  There was
no  amortization  of  licenses  during  the period as PCS  service  had not been
launched commercially.


From the Date of Inception to December 31, 1994

        Sprint  Spectrum  incurred a loss of $3.3  million  for the period  from
October 24, 1994 (date of inception)  through December 31, 1994, which consisted
largely of general and  administrative  expenses.  There was no  amortization of
licenses during the period as PCS service had not been launched commercially.

                                      F-7

<PAGE>




INDEPENDENT AUDITORS' REPORT


Partners of Sprint Spectrum L.P.
Kansas City, Missouri

We have audited the accompanying  consolidated balance sheets of Sprint Spectrum
L.P. and subsidiaries (the "Partnership"),  development stage enterprises, as of
December  31,  1996  and  1995,  and  the  related  consolidated  statements  of
operations,  changes  in  partners'  capital  and cash flows for each of the two
years in the period ended  December  31,  1996,  for the period from October 24,
1994 (date of inception) to December 31, 1994 and for the cumulative period from
October  24, 1994 (date of  inception)  to December  31,  1996.  Our audits also
included the financial statement schedules listed in the Index at Item 14(a)(2).
These consolidated  financial  statements and financial  statement schedules are
the  responsibility of the Partnership's  management.  Our  responsibility is to
express an opinion on these  consolidated  financial  statements  and  financial
statement  schedules  based on our audits.  We did not audit the 1996  financial
statements  of American PCS,  L.P.  ("APC") an  investment of the  Partnership's
which was accounted for by use of the equity method. The Partnership's  share of
APC's  net  loss  was  $92,284,000  (See  note 4 to the  consolidated  financial
statements)  which  is  included  in  the  accompanying  consolidated  financial
statements. The financial statements of APC were audited by other auditors whose
report has been  furnished to us, and our opinion,  insofar as it relates to the
amounts included for APC, is based solely on the report of such other auditors.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable  assurance about whether the  consolidated  financial  statements are
free of material  misstatement.  An audit includes  examining,  on a test basis,
evidence  supporting the amounts and disclosures in the  consolidated  financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
consolidated  financial  statement  presentation.  We  believe  that our  audits
provide a reasonable basis for our opinion.

In our  opinion,  based on our  audits and the  report of other  auditors,  such
consolidated  financial statements present fairly, in all material respects, the
consolidated  financial  position of Sprint  Spectrum L.P. and  subsidiaries  at
December 31, 1996 and 1995,  and the results of their  operations and their cash
flows for the years then ended and for the period from October 24, 1994 (date of
inception) to December 31, 1994 and for the  cumulative  period from October 24,
1994 (date of  inception) to December 31, 1996,  in  conformity  with  generally
accepted accounting  principles.  Also, in our opinion, such financial statement
schedules,  when  considered  in  relation to the basic  consolidated  financial
statements  taken  as a whole,  present  fairly  in all  material  respects  the
information set forth therein.

As discussed in Note 1 to the consolidated financial statements, Sprint Spectrum
L.P. and its subsidiaries are in the development stage as of December 31, 1996.




DELOITTE & TOUCHE LLP
Kansas City, Missouri
March 14, 1997

                                      F-8
<PAGE>








REPORT OF INDEPENDENT ACCOUNTANTS

In our opinion, the balance sheet and the related statements of loss, of changes
in partners'  capital and cash flows (not presented  separately  herein) present
fairly, in all material  respects,  the financial position of American PCS, L.P.
at December 31, 1996,  and the results of its  operations and its cash flows for
the  year  then  ended,  in  conformity  with  generally   accepted   accounting
principles.   These  financial   statements  are  the   responsibility   of  the
Partnership's  management;  our responsibility is to express an opinion on these
financial  statements in accordance with generally  accepted auditing  standards
which require that we plan and perform the audit to obtain reasonable  assurance
about whether the financial  statements  are free of material  misstatement.  An
audit include examining,  on a test basis,  evidence  supporting the amounts and
disclosures in the financial  statements,  assessing the  accounting  principles
used and  significant  estimates made by management,  and evaluating the overall
financial  statement  presentation.   We  believe  that  our  audit  provides  a
reasonable basis for the opinion expressed above.



PRICE WATERHOUSE LLP

Washington, D.C.
March 7, 1997

                                      F-9

<PAGE>

<TABLE>
<CAPTION>

                                         SPRINT SPECTRUM L.P. AND SUBSIDIARIES
                                                   (As Reorganized)
                                           (A Development Stage Enterprise)
                                              CONSOLIDATED BALANCE SHEETS
                                                    (In Thousands)

                                                                             December 31,     December 31,
                                                                                1996              1995
------------------------------------------------------------------------------------------------------------
<S>                                                                        <C>               <C>
                                 ASSETS

CURRENT ASSETS:
   Cash and cash equivalents.........................................       $     49,988      $      1,123
   Accounts receivable, net..........................................              3,310               -
   Receivable from affiliates........................................             14,021               340
   Inventory.........................................................             72,414               -
   Prepaid expenses and other assets.................................             14,260               188
   Note receivable--unconsolidated partnership........................               -                 655
                                                                             -------------     -------------
     Total current assets............................................            153,993             1,651

INVESTMENT IN PCS LICENSES, net......................................          2,122,908         2,124,594

INVESTMENT IN UNCONSOLIDATED PARTNERSHIP.............................                -              85,546

PROPERTY, PLANT AND EQUIPMENT, net...................................          1,408,680            31,897

MICROWAVE RELOCATION COSTS, net......................................            135,802               -

OTHER ASSETS, net....................................................             77,383               -

                                                                             -------------     -------------
TOTAL ASSETS.........................................................       $  3,898,766      $  2,244,343
                                                                             =============     =============

                   LIABILITIES AND PARTNERS' CAPITAL

CURRENT LIABILITIES:
   Accounts payable..................................................       $    196,146      $     39,905
   Payable to affiliates.............................................              5,626             7,598
   Accrued advertising...............................................             13,936                 -
   Accrued expenses..................................................             45,264             1,914
   Current maturities of long-term debt..............................              5,049                 -
                                                                             -------------     -------------
     Total current liabilities.......................................            266,021            49,417

LONG-TERM COMPENSATION OBLIGATION....................................             11,356             1,856

CONSTRUCTION OBLIGATIONS.............................................            714,934               -

NOTE PAYABLE--AFFILIATE...............................................               -               5,000

LONG-TERM DEBT.......................................................            686,192               -

COMMITMENTS AND CONTINGENCIES

LIMITED PARTNER INTEREST IN CONSOLIDATED
   SUBSIDIARY........................................................              5,000             5,000

PARTNERS' CAPITAL AND ACCUMULATED DEFICIT:
   Partners' capital.................................................          2,767,564         2,296,806
   Deficit accumulated during the development stage..................           (552,301)         (113,736)
                                                                             -------------     -------------
     Total partners' capital.........................................          2,215,263         2,183,070
                                                                             -------------     -------------
TOTAL LIABILITIES AND PARTNERS' CAPITAL..............................       $  3,898,766      $  2,244,343
                                                                             =============     =============
See notes to consolidated financial statements
                                                               F-10
</TABLE>

<PAGE>

<TABLE>
<CAPTION>


                                         SPRINT SPECTRUM L.P. AND SUBSIDIARIES
                                                   (As Reorganized)
                                           (A Development Stage Enterprise)
                                         CONSOLIDATED STATEMENTS OF OPERATIONS
                                                     (In Thousands)

                                                                                                    Cumulative
                                                                              Period from           Period from
                                                                              October 24,            October 24,
                                                                              1994(date of          1994(date of
                                            Year Ended       Year Ended        inception)            inception)
                                           December 31,     December 31,     to December 31,       to December 31,
                                              1996             1995              1994                   1996
                                           ------------    -------------    -----------------     ----------------
<S>                                        <C>            <C>              <C>                   <C>
OPERATING REVENUES:
   Service.............................    $       33     $       -         $           -         $          33
   Equipment............................        4,142             -                     -                 4,142
                                           ------------    -------------    -----------------     ----------------
     Total operating revenues...........        4,175             -                     -                 4,175

OPERATING EXPENSES:
   Cost of service.....................        21,928             -                     -                21,928
   Cost of equipment...................        14,148             -                     -                14,148
   Selling.............................        38,345             145                   -                38,490
   General and administrative..........       274,352          64,164                3,294              341,810
   Depreciation and amortization.......        11,275             211                   38               11,524
                                           ------------    ------------    -----------------     ----------------
     Total operating expenses...........      360,048          64,520                3,332               427,900
                                           ------------    ------------    -----------------     ----------------
LOSS FROM OPERATIONS...................      (355,873)        (64,520)              (3,332)             (423,725)

OTHER INCOME (EXPENSE):
   Interest income.....................         8,337             260                   24                 8,621
   Interest expense....................          (549)            -                     -                   (549)
   Other income........................         1,804              38                   -                  1,842
   Equity in loss of unconsolidated
     partnership.......................       (92,284)        (46,206)                  -               (138,490)
                                           ------------    ------------   -----------------     -----------------
     Total other income (expense)......       (82,692)        (45,908)                 24               (128,576)
                                           ------------    ------------    -----------------     ----------------
NET LOSS...............................    $ (438,565)    $  (110,428)     $       (3,308)       $      (552,301)
                                           ============    ============    =================     ================


See notes to consolidated financial statements
                                                               F-11

</TABLE>

<PAGE>

<TABLE>
<CAPTION>


                                         SPRINT SPECTRUM L.P. AND SUBSIDIARIES
                                                   (As Reorganized)
                                           (A Development Stage Enterprise)
                                CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
                                                    (In Thousands)

                                                   Partners'       Accumulated
                                                    Capital          Deficit           Total
                                                  -------------    -------------   ------------
<S>                                               <C>              <C>              <C>

BALANCE, October 24, 1994......................   $        -       $      -        $        -

Contributions of capital.......................       123,438             -             123,438

Net loss.......................................           -            (3,308)           (3,308)
                                                  -------------    -------------    ------------

BALANCE, December 31, 1994.....................       123,438          (3,308)          120,130

Contributions of capital.......................     2,173,368             -           2,173,368

Net loss.......................................           -          (110,428)         (110,428)
                                                  -------------    -------------   -------------

BALANCE, December 31, 1995.....................     2,296,806        (113,736)        2,183,070

Contributions of capital.......................       669,509             -             669,509

Net loss.......................................           -          (438,565)         (438,565)

Transfer of investment in unconsolidated
  partnership to Holdings......................      (165,917)            -            (165,917)

Dividend to Holdings...........................       (32,834)            -             (32,834)
                                                  -------------  ---------------    ------------

BALANCE, December 31, 1996......................  $ 2,767,564    $  (552 ,301)      $ 2,215,263
                                                  =============  ===============    ============

See notes to consolidated financial statements
                                                               F-12

</TABLE>


<PAGE>

<TABLE>
<CAPTION>


                                         SPRINT SPECTRUM L.P. AND SUBSIDIARIES
                                                   (As Reorganized)
                                            (A Development Stage Enterprise)
                                         CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                     (In Thousands)

                                                                                                              Cumulative
                                                                                               Period           Period
                                                                                           from October 24,  from October 24,
                                                                                           1994 (date of     1994 (date of
                                                             Year Ended December 31,       inception) to     inception) to
                                                       ----------------------------------    December 31,      December 31,
                                                           1996              1995               1994              1996
                                                       ----------------------------------------------------------------------
<S>                                                    <C>               <C>              <C>                <C>

CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss.......................................      $  (438,565)      $ (110,428)       $    (3,308)       $   (552,301)
  Adjustments to reconcile net loss to net cash
  provided by  (used in) operating activities:
    Equity in loss of unconsolidated partnership            92,284           46,206                 -              138,490
    Depreciation and amortization...............            11,275              211                 38              11,524
    Amortization of debt discount and issuance              14,008               -                  -               14,008
     costs.......................................
    Loss on disposal of non-network equipment...               -                  31                -                   31
    Changes in assets and liabilities:
      Receivables..............................           (16,991)             (340)                -              (17,331)
      Inventory................................           (72,414)              -                   -              (72,414)
      Prepaid expenses and other assets........           (21,608)             (178)               (10)            (21,796)
      Accounts payable and accrued expenses....           211,555            45,672              3,745             260,972
      Long-term compensation obligation........             9,500             1,856                 -               11,356
                                                       --------------   ---------------    --------------     ---------------
         Net cash provided by (used in)                  (210,956)          (16,970)               465            (227,461)
           operating activities.................

CASH FLOWS FROM INVESTING ACTIVITIES:
  Capital expenditures..........................         (683,886)          (31,763)              (451)           (716,100)
  Proceeds on sale of equipment.................               -                 37                 -                   37
  Microwave relocation costs....................         (123,354)              -                   -             (123,354)
  Purchase of PCS licenses......................               -         (2,006,156)          (118,438)         (2,124,594)
  Investment in unconsolidated partnership......               -           (131,752)                -             (131,752)
  Loan to unconsolidated partnership............         (172,000)            (655)                 -             (172,655)
                                                       --------------   ---------------    --------------     ---------------
         Net cash used in investing activities..         (979,240)       (2,170,289)          (118,889)         (3,268,418)

CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from issuance of long-term debt......           674,201               -                  -              674,201
  Payments on long-term debt....................               (24)              -                  -                  (24)
  Debt issuance costs...........................           (71,791)              -                  -              (71,791)
  Limited partner interest in consolidated                      -              5,000                -                5,000
   subsidiary....................................
  Borrowings from affiliates....................                -              5,000                -                5,000
  Partner capital contributions.................           669,509         2,173,368           123,438           2,966,315
  Dividends paid................................           (32,834)              -                  -              (32,834)
         Net cash provided by financing                --------------   ---------------    --------------     ---------------
           activities............................         1,239,061        2,183,368            123,438           3,545,867

INCREASE (DECREASE) IN CASH AND                        --------------   ---------------    --------------     ---------------
    CASH EQUIVALENTS..............................          48,865            (3,891)            5,014              49,988

CASH AND CASH EQUIVALENTS, Beginning of Period..             1,123             5,014                -                  -

                                                       ==============   ===============   ===============   =================
CASH AND CASH EQUIVALENTS, End of Period........       $    49,988       $     1,123  $          5,014      $       49,988
                                                       ==============   ===============   ===============   =================

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
  Interest paid, net of amount capitalized...          $       323      $             -  $          -       $          323

NON-CASH INVESTING ACTIVITIES:
- The equity interest in an unconsolidated
  partnership of $165,917 was transferred to
  Sprint Spectrum Holding Company on August
  31, 1996.

- Capital  expenditures and microwave  relocation
  costs of $807,241 for the year  ended  December
  31,  1996 are net of  construction  obligations
  of $714,934.

See notes to consolidated financial statements

                                                                 F-13
</TABLE>

<PAGE>




                      SPRINT SPECTRUM L.P. AND SUBSIDIARIES
                                (As Reorganized)
                        (A Development Stage Enterprise)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1.    ORGANIZATION

Sprint Spectrum L.P. (the "Company") is a limited partnership formed in Delaware
on March 28, 1995, by Sprint Spectrum  Holding  Company,  L.P.  ("Holdings") and
MinorCo, L.P. ("MinorCo") both of which were formed by Sprint Enterprises, L.P.,
TCI Spectrum Holdings, Inc. (formerly known as TCI Telephony Services,  Inc., as
successor  to TCI  Network  Services),  Cox  Telephony  Partnership  and Comcast
Telephony Services (together the "Partners"). The Company was formed pursuant to
a reorganization of the operations of an existing partnership,  WirelessCo, L.P.
("WirelessCo")  which transferred certain operating  functions to Holdings.  The
Partners are subsidiaries of Sprint Corporation ("Sprint"), Tele-Communications,
Inc.  ("TCI"),  Comcast  Corporation  ("Comcast") and Cox  Communications,  Inc.
("Cox", and together with Sprint, TCI and Comcast, the "Parents"), respectively.
The Company and certain other affiliated  partnerships  offer services as Sprint
PCS.

The  Partners  of the  Company  have the  following  ownership  interests  as of
December 31, 1996 and 1995:

  Sprint Spectrum Holding Company, L.P. (general partner).......greater than 99%
  MinorCo, L.P. (limited partner)...................................less than 1%

The Company is consolidated with its subsidiaries,  WirelessCo,  Sprint Spectrum
Equipment Company,  L.P.  ("EquipmentCo"),  Sprint Spectrum Realty Company, L.P.
("RealtyCo") and Sprint Spectrum Finance Corporation ("FinCo"). On May 15, 1996,
EquipmentCo  and  RealtyCo  were  organized  for  the  purpose  of  holding  PCS
network-related  real estate interests and assets.  On May 20, 1996,  FinCo, was
also formed to be a co-obligor of the debt obligations discussed in Note 5.

Partnership   Agreement  -  The  Amended  and  Restated   Agreement  of  Limited
Partnership  of  Sprint  Spectrum  L.P.   (formerly  MajorCo  Sub,  L.P.),  (the
"Partnership Agreement"), dated as of March 28, 1995, among Holdings and MinorCo
provides that the purpose of the Company is to engage in wireless communications
services.   The   Partnership   Agreement   provides  for  the   governance  and
administration  of  partnership  business,  allocation  of  profits  and  losses
(including  provisions for special and curative  allocations),  tax allocations,
transactions  with  partners,  disposition  of  partnership  interests and other
matters.

The Partnership  Agreement  generally provides for the allocation of profits and
losses  first to the  general  partner  (Holdings)  and  secondly to the limited
partner  (MinorCo),  after giving effect to special  allocations.  After special
allocations, profits are allocated first to the general partner to the extent of
cumulative net losses  previously  allocated.  Secondly,  the limited partner is
allocated  profits to the extent of cumulative net losses  previously  allocated
and then up to the cumulative Preferred Return, as defined in the agreement. The
general partner is allocated all remaining profits. Losses are allocated,  after
considering  special  allocations,  to the  general  partner  until its  capital
account is zero and secondly to the limited partner to the extent of its capital
account balance.
Any remaining losses are allocated to the general partner.

The limited partner interest of MinorCo in WirelessCo is reflected as a minority
interest.  Pursuant to the Amended and Restated Agreement of Limited Partnership
of WirelessCo ("WirelessCo Agreement"), MinorCo has not been allocated any

                                      F-14
<PAGE>


losses  incurred by WirelessCo.  The WirelessCo  Agreement  stipulates  that all
losses are to be allocated to Sprint Spectrum L.P., the general  partner,  until
the general partner's capital account is depleted.

Partner Capital Commitments - The Holdings partnership  agreement provides for a
planned  capital  amount to be  contributed  by the Partners  ("Total  Mandatory
Contributions"), which represents the sum of $4.2 billion, which includes agreed
upon  values  attributable  to  the  contributions  of  certain  additional  PCS
licenses. The Total Mandatory Contributions amount is required to be contributed
in accordance  with capital  contribution  schedules to be set forth in approved
annual budgets if requested by the Holdings  partnership  board (or by the Chief
Executive Officer of Holdings pursuant to authority to be granted in each annual
budget or such  other  authority  as may be  delegated  to the  Chief  Executive
Officer by the Holding partnership board). The partnership board of Holdings may
request capital contributions to be made in the absence of an approved budget or
more quickly than provided for in an approved budget,  but always subject to the
Total Mandatory  Contributions  limit.  The proposed budget for 1997 has not yet
been  approved  by the  partnership  board.  The Amended  and  Restated  Capital
Contribution  Agreement (the "Amended Agreement") was executed effective October
2, 1996, between the Parents and the Company.  The Amended Agreement  recognizes
that  through  December  31,  1995,  approximately  $2.2  billion of the planned
capital amount to be contributed by the Partners had been  contributed to Sprint
Spectrum  L.P.,  and  designates  that $1.0  billion of the balance of the Total
Mandatory Contributions shall be contributed to Sprint Spectrum L.P. At December
31, 1996,  approximately  $2.6 billion of the total capital  commitment had been
contributed to the Company and  approximately  $0.4 billion had been contributed
to APC.

Development  Stage Company - The Company and its  subsidiaries  are  development
stage  enterprises.  The success of the Company's  development is dependent on a
number of business  factors,  including  securing  financing to complete network
construction and fund initial operations, successfully deploying the PCS network
and  attaining  profitable  levels of market  demand for  Company  products  and
services.


2.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis  of  Presentation  - Prior to July 1,  1996,  substantially  all  wireless
operations of the Company and subsidiaries  and Holdings and  subsidiaries  were
conducted at Holdings and  substantially  all operating  assets and liabilities,
with the  exception  of the  interest in an  unconsolidated  subsidiary  and the
ownership interest in PCS licenses,  were held at Holdings.  As of July 1, 1996,
Holdings  transferred these net assets,  and assigned  agreements related to the
wireless operations to which it was a party to Sprint Spectrum L.P., EquipmentCo
and RealtyCo (the "Reorganization").

For purposes of these consolidated financial statements, these transactions have
been treated as transactions between entities under common control and accounted
for in a manner  similar  to a  pooling  of  interest  ("As  Reorganized").  The
Company, as used in these financial  statements,  includes the pooled operations
of Holdings through June 30, 1996.

Accordingly,  for  periods  prior  to  July  1,  1996,  Sprint  Spectrum  L.P.'s
historical  financial  statements have been restated to reflect those operations
of Holdings that were transferred on July 1, 1996 on a pooled basis. Information
with respect to the financial position and results of operations of the separate
operations pooled herein is as follows (in thousands):

                                      F-15
<PAGE>

<TABLE>
<CAPTION>


                                                               Sprint
                                                             Spectrum L.P.        Holdings          Combined
     Total Assets
<S>                                                         <C>                 <C>              <C>
       December 31, 1995..................................   $  2,211,918       $  2,244,343     $  2,244,343
       June 30, 1996......................................      2,268,805          2,561,328        2,561,328

     Partners' Capital & Accumulated Deficit
       December 31, 1995....................................    2,201,704          2,178,069        2,183,070
       June 30, 1996......................................      2,258,426          2,469,529        2,472,384

     Net Loss
       December 31, 1995..................................        (49,531)          (110,429)        (110,428)
       June 30, 1996......................................        (81,278)          (158,195)        (158,195)

</TABLE>

Trademark   Agreement  -  Sprint(R)   is  a   registered   trademark  of  Sprint
Communications  Company,  L.P. and is licensed to the Company on a  royalty-free
basis pursuant to a trademark license agreement between the Company and Sprint.

Revenue  Recognition  - Operating  revenues for PCS services are  recognized  as
service is rendered.  Operating  revenues for equipment  sales are recognized at
the time the equipment is sold to a customer or an unaffiliated agent.

Cash and Cash Equivalents - The Company considers all highly liquid  instruments
with original  maturities of three months or less to be cash equivalents.  Under
the Company's cash management  system,  checks issued but not presented to banks
frequently result in overdraft balances for accounting purposes and are included
in Accounts payable in the consolidated balance sheets.

Accounts  Receivable - Accounts  receivable are net of an allowance for doubtful
accounts of  approximately  $202,000 at December  31,  1996.  No  allowance  was
recorded for the year ended December 31, 1995.

Inventory - Inventory consists of wireless  communication  equipment  (primarily
handsets).  Inventory is stated at the lower of cost or replacement  cost. Gains
and losses on the sales of handsets are recognized at the time of sale.

Property,  Plant and  Equipment - Property,  plant and  equipment  are stated at
cost.  Construction  work in progress  represents  costs  incurred to design and
construct the PCS network.  Repair and maintenance  costs are charged to expense
as incurred.  When network equipment is retired,  or otherwise  disposed of, its
book  value,  net of  salvage,  is charged  to  accumulated  depreciation.  When
non-network  equipment is sold,  retired or abandoned,  the cost and accumulated
depreciation  are removed from the accounts and any gain or loss is  recognized.
Property,  plant and equipment are depreciated  using the  straight-line  method
based on estimated useful lives of the assets. Depreciable lives range from 3 to
20 years.

Investment  in PCS Licenses and Other  Intangibles  - During 1994 and 1995,  the
Federal  Communications  Commission  ("FCC")  auctioned PCS licenses in specific
geographic  service areas. The FCC grants licenses for terms of up to ten years,
and  generally  grants  renewals if the licensee  has complied  with its license
obligations.  The  Company  believes  it has  and  will  continue  to  meet  all
requirements  necessary to secure  renewal of its PCS licenses.  The Company has
also incurred costs associated with microwave  relocation in the construction of
the PCS network.  Amortization  of PCS licenses and microwave  relocation  costs

                                      F-16
<PAGE>


will commence as each service area becomes  operational,  over estimated  useful
lives  of  40  years.  Amortization  expense  for  PCS  licenses  and  microwave
relocation  costs of  approximately  $1,711,000 is included in Depreciation  and
amortization  expense in the  consolidated  statement of operations for the year
ended December 31, 1996. No amortization expense was recorded in 1995, or in the
period from October 24, 1994 (date of inception) to December 31, 1994.  Interest
expense  capitalized  pertaining to the acquisition of the PCS licenses has been
included in Property, plant and equipment.

The ongoing value and remaining useful life of intangible  assets are subject to
periodic  evaluation.  The Company  currently expects the carrying amounts to be
fully recoverable. Impairments of intangibles and long-lived assets are assessed
based on an undiscounted cash flow methodology.

Capitalized  Interest -  Interest  costs  associated  with the  construction  of
capital assets incurred during the period of construction are  capitalized.  The
total capitalized in 1996 was approximately  $30,461,000.  There were no amounts
capitalized in 1995 or 1994.

Debt  Issuance  Costs -  Included  in Other  assets  are costs  associated  with
obtaining  financing.  Such costs are  capitalized  and  amortized  to  interest
expense  over the term of the  related  debt  instruments  using  the  effective
interest method.  Amortization  expense for the year ended December 31, 1996 was
approximately $1,944,000.

Major Customer - The Company markets its products through multiple  distribution
channels,  including Company-owned retail stores and third-party retail outlets.
Sales to one third-party  retail customer  exceeded 10% of Equipment  revenue in
the consolidated statement of operations for the year ended December 31, 1996.

Income  Taxes - The Company has not  provided  for federal or state income taxes
since such taxes are the responsibility of the individual Partners.

Financial Instruments - The carrying value of the Company's short-term financial
instruments, including cash and cash equivalents, receivables from customers and
affiliates and accounts payable  approximates  fair value. The fair value of the
Company's long-term debt is based on quoted market prices for the same issues or
current  rates  offered to the Company for similar  debt.  A summary of the fair
value of the Company's  long-term  debt at December 31, 1996 is included in Note
5.

Use of Estimates - The  preparation of financial  statements in conformity  with
generally accepted  accounting  principles requires management to make estimates
and assumptions  that affect the reported  amounts of assets and liabilities and
disclosure of  contingent  assets and  liabilities  at the date of the financial
statements  and reported  amounts of revenues and expenses  during the reporting
period. Actual results could differ from those estimates.

Reclassifications  -  Certain  reclassifications  have been made to the 1995 and
1994  financial   statements  to  conform  with  the  1996  financial  statement
presentation.

                                      F-17

<PAGE>


3.   PROPERTY, PLANT AND EQUIPMENT

Property,  plant and equipment consist of the following at December 31, 1996 and
1995 (in thousands):


                                                1996            1995
                                                ----            ----

Land                                      $         905     $      -
Buildings and leasehold improvements             86,467            -
Office furniture and fixtures                    68,210          2,902
Network equipment                               255,691            -
Telecommunications plant - construction
  work in progress                            1,006,990         29,200
                                          --------------    -------------
                                              1,418,263         32,102
Less accumulated depreciation                    (9,583)          (205)
                                          --------------    -------------

                                          $   1,408,680     $   31,897
                                          ==============    =============


4.     INVESTMENT IN UNCONSOLIDATED PARTNERSHIP

American  PCS,L.P.  - On January 9, 1995,  the  Company  acquired a 49%  limited
partnership   interest  in  American  PCS,  L.P.   ("APC").   American  Personal
Communications  II,  L.P.  ("APC  II")  holds a 51%  interest  in APC and is the
general  managing  partner.  The  investment  in APC is accounted  for under the
equity method. Concurrently with the execution of the partnership agreement, the
Company  entered into an  affiliation  agreement with APC which provides for the
reimbursement  of  certain  allocable  costs  and  payment  of  affiliate  fees.
Effective August 31, 1996, the Company's  interest in APC, the existing loans to
APC, and obligations to provide  additional  funding to APC were  transferred to
Holdings  pursuant to an amendment  to the  Partnership  agreement.  The Company
retained the rights and obligations  under the  affiliation  agreement with APC.
Summarized financial information is as follows (in thousands):

                                    August 31, 1996       December 31, 1995
                                   ------------------    --------------------
     Total assets............          $ 292,069             $ 237,326
     Total liabilities.......            341,576               171,180
     Total revenues..........             40,921                 5,153
     Net loss................            123,601                51,551

The partnership  agreement,  prior to amendment,  between the Company and APC II
specifies that losses are allocated based on capital  contributions  and certain
other factors.  Under the equity method,  the Company recognized the majority of
the  partnership  losses  in its  financial  statements  until the  transfer  to
Holdings based on its capital  contributions  and the underlying  commitments to
provide initial funding.

In January 1997, Holdings and APC II amended the APC partnership  agreement with
respect to the  allocation  of  profits  and  losses.  For  financial  reporting
purposes,  profits and losses are to be allocated in proportion to Holdings' and
APC II's  respective  partnership  interests,  except for costs related to stock
appreciation  rights and interest expense  attributable to FCC interest payments
which  shall be  allocated  entirely  to APC II.  The change in  methodology  of
allocating  profits  and  losses  was made  effective  to  January  1,  1996 and
retroactively  applied.  The retroactive  adjustment for the year ended December
31, 1996 was recognized by Holdings.

                                      F-18
<PAGE>



The  unamortized  excess of the  Company's  investment  over its  equity  in the
underlying  net  assets  of APC at the  date of  acquisition  was  approximately
$10,139,000. The excess investment amount has been eliminated as a result of the
recognition of the Company's  equity in APC's losses.  Amortization  included in
equity in loss of unconsolidated  partnership prior to such elimination  totaled
approximately $128,000 for the period ended August 31, 1996 and $240,000 for the
year ended December 31, 1995.


5.   LONG-TERM DEBT AND BORROWING ARRANGEMENTS

The  long-term  debt of the Company as of December  31,  1996 is  summarized  as
follows (in thousands):

    11% Senior Notes due in 2006                        $    250,000
    12 1/2% Senior Discount Notes due in 2006, net of
       unamortized discount of $214,501                      285,499
    Credit facility - term loan                              150,000
    Note payable to affiliate due in 1997                      5,000
    Other                                                        742
                                                        ---------------

    Total debt                                               691,241
    Less current maturities                                    5,049
                                                        ---------------

    Long-term debt                                      $    686,192
                                                        ===============


Senior Notes and Senior  Discount Notes - In August 1996,  Sprint  Spectrum L.P.
and Sprint Spectrum Finance  Corporation  (together,  the "Issuers") issued $250
million  aggregate  principal  amount of 11% Senior  Notes due 2006 ("the Senior
Notes"),  and $500  million  aggregate  principal  amount at maturity of 12 1/2%
Senior Discount Notes due 2006 (the "Senior  Discount Notes" and,  together with
the Senior  Notes,  the  "Notes").  The Senior  Discount  Notes were issued at a
discount to their aggregate  principal amount at maturity and generated proceeds
of approximately $273 million.  Cash interest on the Senior Notes will accrue at
a rate of 11% per annum and is payable semi-annually in arrears on each February
15 and August 15, commencing February 15, 1997. Cash interest will not accrue or
be payable on the Senior  Discount  Notes prior to August 15, 2001.  Thereafter,
cash interest on the Senior  Discount Notes will accrue at a rate of 12 1/2% per
annum and will be  payable  semi-annually  in arrears  on each  February  15 and
August 15, commencing February 15, 2002.

On August 15,  2001,  the Issuers  will be required to redeem an amount equal to
$384.772 per $1,000  principal  amount at maturity of each Senior  Discount Note
then  outstanding  ($192  million in  aggregate  principal  amount at  maturity,
assuming all of the Senior Discount Notes remain outstanding at such date).

The Notes are  redeemable at the option of the Issuers,  in whole or in part, at
any time on or after August 15, 2001 at the  redemption  prices set forth below,
respectively,  plus accrued and unpaid interest, if any, to the redemption date,
if  redeemed  during  the 12 month  period  beginning  on August 15 of the years
indicated below:

                                      F-19
<PAGE>




                                                        Senior Discount
                                       Senior Notes           Notes
             Year                    Redemption Price   Redemption Price
           --------
             2001                        105.500%           110.000%
             2002                        103.667%           106.500%
             2003                        101.833%           103.250%
             2004 and thereafter         100.000%           100.000%
           ---------

In addition,  prior to August 15, 1999,  the Issuers may redeem up to 35% of the
originally  issued  principal  amount of the Notes.  The redemption price of the
Senior Notes is equal to 111.0% of the  principal  amount of the Senior Notes so
redeemed,  plus accrued and unpaid interest, if any, to the redemption date with
the net proceeds of one or more public equity offerings,  provided that at least
65% of the  originally  issued  principal  amount of Senior  Notes would  remain
outstanding  immediately after giving effect to such redemption.  The redemption
price of the Senior  Discount  Notes is equal to 112.5% of the accreted value at
the  redemption  date of the Senior  Discount  Notes so  redeemed,  with the net
proceeds of one or more public equity  offerings,  provided that at least 65% of
the originally  issued principal amount at maturity of the Senior Discount Notes
would remain outstanding immediately after giving effect to such redemption.

The  Notes  contain  certain  restrictive  covenants,   including  (among  other
requirements) limitations on additional indebtedness,  limitations on restricted
payments,  limitations on liens,  and limitations on dividends and other payment
restrictions affecting restricted subsidiaries.

Bank Credit  Facility - The Company  entered  into an  agreement  with The Chase
Manhattan  Bank  ("Chase") as agent for a group of lenders for a $2 billion bank
credit  facility  dated October 2, 1996. The proceeds of this facility are to be
used to finance working capital needs,  subscriber  acquisition  costs,  capital
expenditures and other general Company purposes.

The facility  consists of a revolving  credit  commitment  of $1.7 billion and a
$300  million  term loan  commitment,  $150  million  of which  was  drawn  down
subsequent  to closing and $150  million of which was to be drawn within 90 days
after closing. The amount available under the revolving credit facility was $450
million on December  31,  1996.  There were no  borrowings  under the  revolving
credit facility as of December 31, 1996. The availability will be increased upon
the achievement of certain financial and operating  conditions as defined in the
agreement.  Commitment  fees for the  revolving  portion  of the  agreement  are
payable quarterly based on average unused revolving commitments.

The revolving  credit  commitment  expires July 13, 2005.  Availability  will be
reduced in  quarterly  installments  ranging  from $75  million to $175  million
commencing  January 2002.  Further  reductions  may be required after January 1,
2000,  to the  extent  that the  Company  meets  certain  financial  conditions.
Subsequent  to December 31, 1996,  the Company  borrowed  $200 million under the
revolving credit facility.

The term loans are due in sixteen consecutive quarterly  installments  beginning
January  2002 in aggregate  principal  amounts of $125,000 for each of the first
fifteen payments with the remaining  aggregate  outstanding  principal amount of
the term loans due as the last installment.

                                      F-20
<PAGE>



Interest  on  the  term  loans  and/or  the  revolving  credit  loans  is at the
applicable  LIBOR rate plus 2.5%  ("Eurodollar  Loans"),  or the  greater of the
prime  rate or 0.5% plus the  Federal  Funds  effective  rate,  plus 1.5%  ("ABR
Loans"), at the Company's option. The interest rate may be adjusted downward for
improvements  in the bond rating and/or leverage  ratios.  Interest on ABR Loans
and Eurodollar Loans with interest period terms in excess of 3 months is payable
quarterly.  Interest on Eurodollar Loans with interest period terms of less than
3 months is payable on the last day of the interest  period.  As of December 31,
1996, the interest rate on the first $150 million term loan was 8.19%.

Borrowings under the Bank Credit Facility are secured by the Company's interests
in  WirelessCo,  RealtyCo and  EquipmentCo  and certain other  personal and real
property (the "Shared  Lien").  The Shared Lien equally and ratably  secures the
Bank  Credit  Facility,   the  Vendor  Financing  (Note  6)  and  certain  other
indebtedness  of the  Company.  The credit  facility  is jointly  and  severally
guaranteed by WirelessCo,  RealtyCo and  EquipmentCo  and is non-recourse to the
Parents and the Partners.

The Bank Credit Facility  agreement and the Vendor Financing  agreements contain
certain restrictive  financial and operating  covenants,  including (among other
requirements)  maximum  debt ratios  (including  debt to total  capitalization),
limitations on capital expenditures,  limitations on additional indebtedness and
limitations  on  dividends  and other  payment  restrictions  affecting  certain
restricted subsidiaries.  The loss of the right to use the Sprint trademark, the
termination or non-renewal of any FCC license that reduces  population  coverage
below specified  limits, or changes in controlling  interest in the Company,  as
defined, among other provisions, constitute events of default.

Note  payable to  affiliate - As of December  31,  1996,  the Company had a note
payable of $5 million,  bearing  interest at 6.5% and payable on July 31,  1997,
due to an affiliated entity, NewTelco, L.P.

The estimated fair value of the Company's long-term debt at December 31, 1996 is
as follows (in thousands):

                                       Carrying         Estimated
                                        Amount          Fair Value
                                      ------------    --------------
    11% Senior Notes                  $   250,000     $   270,625
    12 1/2% Senior Discount Notes         285,499         337,950
    Credit facility - term loan           150,000         151,343

At December 31, 1996,  scheduled maturities of long-term debt during each of the
next five years are as follows (in thousands):

                 1997                 $     5,049
                 1998                          54
                 1999                          60
                 2000                          66
                 2001                     192,459



                                      F-21
<PAGE>


6.   COMMITMENTS AND CONTINGENCIES

Operating  Leases - Minimum rental  commitments as of December 31, 1996, for all
noncancelable  operating leases,  consisting  principally of leases for cell and
switch sites and office space, are as follows (in thousands):

                 1997                 $    68,616
                 1998                      61,186
                 1999                      57,407
                 2000                      38,356
                 2001                      13,468

Gross  rental  expense  for  cell  and  switch  sites  aggregated  approximately
$13,097,000  for the year ended  December  31, 1996.  Gross  rental  expense for
office space approximated $11,432,000, $687,000 and $105,000 for the years ended
December 31, 1996 and December  31,  1995,  and for the period  October 24, 1994
(date of inception) to December 31, 1994,  respectively.  Certain leases contain
renewal  options that may be exercised  from time to time and are excluded  from
the above amounts.

Procurement   Contracts  -  On  January  31,  1996,  the  Company  entered  into
procurement  and services  contracts with AT&T Corp.  (subsequently  assigned to
Lucent Technologies,  Inc.,  "Lucent") and Northern Telecom,  Inc. ("Nortel" and
together with Lucent,  the "Vendors") for the engineering and  construction of a
PCS  network.  Each  contract  provides  for an  initial  term of ten years with
renewals for additional  one-year periods.  The Vendors must achieve substantial
completion of the PCS network within an established time frame and in accordance
with criteria  specified in the procurement  contracts.  Pricing for the initial
equipment,  software  and  engineering  services  has  been  established  in the
procurement contracts. The procurement contracts provide for payment terms based
on delivery dates,  substantial completion dates, and final acceptance dates. In
the  event  of delay  in the  completion  of the PCS  network,  the  procurement
contracts  provide for certain amounts to be paid to the Company by the Vendors.
The minimum  commitments  for the initial term are $0.8 billion and $1.0 billion
from Lucent and Nortel, respectively, which include, but are not limited to, all
equipment required for the establishment and installation of the PCS network.

Handset  Purchase  Agreements  - In  June,  1996,  the  Company  entered  into a
three-year  purchase  and supply  agreement  with a vendor for the  purchase  of
handsets and other equipment totaling  approximately $500 million.  During 1996,
the  Company  purchased  $85 million  under the  agreement.  The total  purchase
commitment must be satisfied by April 30, 1998.

In September,  1996, the Company entered into a second  three-year  purchase and
supply agreement for the purchase of handsets and other equipment  totaling more
than $600  million.  Purchases  under the second  agreement  will commence on or
after April 1, 1997, and the total purchase  commitment must be satisfied during
the three-year period after the initial handset purchase.

Vendor  Financing - As of October 2, 1996,  the Company  entered into  financing
agreements  with Nortel and Lucent for multiple  drawdown  term loan  facilities
totaling  $1.3  billion and $1.8  billion,  respectively.  The  proceeds of such
facilities are to be used to finance the purchase of goods and services provided
by the Vendors.

Nortel has committed to provide financing in two phases. During the first phase,
Nortel  will  finance up to $800  million.  Once the full $800  million has been
utilized and the  Company obtains additional equity commitments and/or subordin-

                                     F-22
<PAGE>


ated  unsecured  loans of at least $400 million and achieves  certain  operating
conditions,  Nortel will finance up to an additional  $500  million.  The amount
available  under the Nortel  facility was $1.3 billion on December 31, 1996.  In
addition,  the Company will be obligated to pay origination  fees on the date of
the  initial  draw down loan  under the first  and  second  phases.  The  Nortel
agreement  terminates on the earliest of (a) the date the availability under the
commitments  is reduced to zero, (b) December 31, 2000, or (c) March 31, 1997 if
no borrowings under the agreements have been drawn.

Lucent has committed to financing up to $1.5 billion through  December 31, 1997,
and up to an aggregate of $1.8 billion  thereafter.  The Company pays a facility
fee on the  daily  amount of loans  outstanding  under  the  agreement,  payable
quarterly. The Lucent agreement terminates June 30, 2001. Subsequent to December
31, 1996,  the Company  borrowed  approximately  $274  million  under the Lucent
facility.

Certain  amounts  included under  Construction  Obligations on the  consolidated
balance sheet may be financed under the Vendor Financing agreements.

The  principal  amounts  of the loans  drawn  under  both the  Nortel and Lucent
agreements are due in twenty consecutive quarterly  installments,  commencing on
the date which is thirty-nine months after the last day of such "Borrowing Year"
(defined in the agreements as any one of the five  consecutive  12-month periods
following the date of the initial  drawdown of the loan).  The aggregate  amount
due each year is equal to percentages  ranging from 10% to 30% multiplied by the
total principal amount of loans during each Borrowing Year.

The agreements provide two borrowing rate options. During the first phase of the
Nortel  agreement and  throughout  the term of the Lucent  agreement "ABR Loans"
bear  interest at the  greater of the prime rate or 0.5% plus the Federal  Funds
effective  rate,  plus  2%.  "Eurodollar  Loans"  bear  interest  at the  London
interbank  (LIBOR)  rate  (any  one of the  30-,  60- or  90-day  rates,  at the
discretion  of the  Company),  plus 3%.  During the  second  phase of the Nortel
agreement, ABR Loans bear interest at the greater of the prime rate or 0.5% plus
the Federal Funds effective rate, plus 1.5%; and Eurodollar  loans bear interest
at the LIBOR rate plus 2.5%.  Interest  from the date of each loan  through  one
year after the last day of the Borrowing  Year is added to the principal  amount
of each loan. Thereafter, interest is payable quarterly.

Borrowings  under the Vendor  Financing are secured by the Shared Lien (Note 5).
The Vendor Financing is jointly and severally guaranteed by WirelessCo, RealtyCo
and EquipmentCo and is non-recourse to the Parents and the Partners.

Service  Agreement - The Company has entered into an agreement  with a vendor to
provide PCS call record and retention services. Monthly rates per subscriber are
variable based on overall  subscriber  volume.  If subscriber fees are less than
specified  annual  minimum  charges,  the Company  will be  obligated to pay the
difference  between the amounts paid for processing fees and the annual minimum.
Annual minimums range from $20 million to $60 million through 2001.

The agreement  extends through  December 31, 2001, with two automatic,  two-year
renewal periods, unless terminated by the Company. The company may terminate the
agreement  prior to the  expiration  date,  but would be  subject  to  specified
termination penalties.

                                      F-23


<PAGE>


7.   EMPLOYEE BENEFITS

Employees   performing   services  for  the  Company  were  employed  by  Sprint
Corporation  through  December  31,  1995.  Amounts  paid to Sprint  Corporation
relating to pension expense and employer contributions to the Sprint Corporation
401(k) plan for these  employees  approximated  $323,000 in 1995. No expense was
incurred through December 31, 1994.

The Company  maintains  short-term and long-term  incentive  plans. All salaried
employees are eligible for the short-term  incentive plan  commencing at date of
hire.   Short-term   incentive   compensation  is  based  on  incentive  targets
established  for each  position  based  on the  Company's  overall  compensation
strategy.  Targets  contain both an objective  Company  component and a personal
objective component.  Charges to operations for the short-term plan approximated
$12,332,000  and  $3,491,000  for the years  ended  December  31, 1996 and 1995,
respectively. No expense was incurred through December 31, 1994.

Long-term  Compensation Plan - Effective July 1, 1996, a long-term  compensation
plan  was  adopted.  Employees  meeting  certain  eligibility  requirements  are
considered to be participants in the plan. Participants will receive 100% of the
pre-established  targets  for the period from July 1, 1995 to June 30, 1996 (the
"Introductory  Term").  Participants  may  elect a payout of the  amount  due or
convert 50% or 100% of the award to  appreciation  units.  Unless  converted  to
appreciation units,  payment for the Introductory Term will be made in the third
quarter of 1998.  Appreciation  units vest 25% per year commencing on the second
anniversary of the date of grant. Participants have until March 15, 1997 to make
payout or conversion elections.  For the years ended December 31, 1996 and 1995,
$9.5 million and $1.9 million,  respectively,  has been  expensed.  The ultimate
liability will be based on actual payout vs. conversion  elections and the final
results of an  independent  valuation  of the Company as of June 30,  1997.  The
Company  has  applied  APB  Opinion  No.  25,  "Accounting  for Stock  Issued to
Employees" for 1996. No significant  difference  would have resulted if SFAS No.
123, "Accounting for Stock-Based Compensation" had been applied.

Savings Plan - Effective  January,  1996, the Company  established a savings and
retirement program (the "Savings Plan") for certain employees, which is intended
to qualify under Section  401(k) of the Internal  Revenue Code.  Most  permanent
full-time, and certain part-time,  employees are eligible to become participants
in the plan after one year of service or upon reaching age 35,  whichever occurs
first.  Participants  make  contributions  to a basic  before  tax  account  and
supplemental  before tax account.  The maximum  contribution for any participant
for any  year is 16% of  such  participant's  compensation.  For  each  eligible
employee who elects to  participate in the Savings Plan and makes a contribution
to the basic before tax account, the Company makes a matching contribution.  The
matching  contributions  equal  50%  of  the  amount  of the  basic  before  tax
contribution of each  participant up to the first 6% that the employee elects to
contribute.  Contributions to the Savings Plan are invested, at the participants
discretion,  in several  designated  investment  funds.  Distributions  from the
Savings Plan generally will be made only upon retirement or other termination of
employment,  unless deferred by the participant.  Expense under the Savings Plan
approximated $1,125,000 in 1996.

Profit  Sharing  (Retirement)  Plan  -  Effective  January,  1996,  the  Company
established a profit sharing plan for its  employees.  Employees are eligible to
participate  in the plan after  completing  one year of service.  Profit sharing
contributions  are based on the  compensation,  age, and years of service of the
employee. Profit sharing contributions are deposited into individual accounts of
the Company's  401(k) plan.  Vesting  occurs once a participant  completes  five
years of service. For the year ended December 31, 1996, expense under the profit
sharing plan approximated $726,000.

                                      F-24
<PAGE>



8.   RELATED PARTY TRANSACTIONS

Business  Services - The  Company  reimburses  Sprint  Corporation  for  certain
accounting  and  data  processing   services,   for   participation  in  certain
advertising  contracts,  for certain cash payments made by Sprint Corporation on
behalf of the Company and other  management  services.  The Company is allocated
the  costs of such  services  based  on  direct  usage.  Allocated  expenses  of
approximately $11,900,000 and $2,646,000 are included in Selling and General and
administrative  expense in the consolidated statement of operations for 1996 and
1995, respectively. No reimbursement was made through December 31, 1994.

Cox  Communications  PCS, L.P. - On December 31, 1996,  Holdings  acquired a 49%
limited partner interest in Cox Communications PCS, L.P. ("Cox PCS"). Concurrent
with the execution of this  partnership  agreement,  the Company entered into an
affiliation  agreement  with Cox PCS which  provides  for the  reimbursement  of
certain  allocable  costs and  payment  of  affiliate  fees.  For the year ended
December 31, 1996,  allocable costs of approximately  $7,339,000 are included in
the  related  operating  expense  captions  in  the  accompanying   consolidated
statement of operations and in receivables  from affiliates in the  consolidated
balance sheet. In addition,  the Company  purchases certain  equipment,  such as
handsets,  on behalf of Cox PCS.  Receivables  from  affiliates for handsets and
related equipment were approximately $6 million at December 31, 1996.

Paging Services - In 1996, the Company  commenced  paging  services  pursuant to
agreements  with  Paging  Network  Equipment  Company   ("PageNet")  and  Sprint
Communications  Company,  L.P.  ("Sprint  Communications").  For the year  ended
December 31, 1996, Sprint  Communications  received agency fees of approximately
$4.9 million.

9.    Quarterly Financial Data (Unaudited)

Summarized  quarterly  financial  data  for  1996  and  1995 is as  follows  (in
thousands):

                       1996            First    Second      Third      Fourth
                       ----            -----    ------      -----      ------

  Operating revenues..............  $     -    $    -     $    -      $  4,175
  Operating expenses..............     30,978    46,897     87,135     195,038
  Net loss........................     67,425    90,770     94,487     185,883


                       1995
                       ----
  Operating revenues..............  $     -    $    -     $    -      $    -
  Operating expenses..............      3,655     4,589     11,844      46,463
  Net loss........................      6,789     9,718     19,488      74,433



                                      F-25



<PAGE>







INDEPENDENT AUDITORS' REPORT


Board of Directors of Sprint Spectrum Finance Corporation
Kansas City, Missouri

We have  audited the  accompanying  balance  sheets of Sprint  Spectrum  Finance
Corporation (a wholly-owned  subsidiary of Sprint Spectrum L.P.), as of December
31,  1996 and May 21, 1996 (date of  inception)  and the  related  statement  of
operations,  stockholder's  equity and cash flows for the period from  inception
(May 21,  1996)  to  December  31,  1996.  These  financial  statements  are the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these financial statements based on our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable  assurance about whether the  consolidated  financial  statements are
free of material  misstatement.  An audit includes  examining,  on a test basis,
evidence  supporting the amounts and disclosures in the  consolidated  financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
consolidated  financial  statement  presentation.  We  believe  that our  audits
provide a reasonable basis for our opinion.

In our opinion,  such balance sheets presents fairly, in all material  respects,
the financial position of Sprint Spectrum Finance Corporation as of December 31,
1996 and May 21, 1996 and the results of its  operations  and its cash flows for
the period from inception (May 21, 1996) to December 31, 1996 in conformity with
generally accepted accounting principles.



DELOITTE & TOUCHE LLP
Kansas City, Missouri
March 14, 1997


                                      F-26

<PAGE>




                       SPRINT SPECTRUM FINANCE CORPORATION
               (A wholly-owned subsidiary of Sprint Spectrum L.P.)
                                 BALANCE SHEETS



                                     December 31,      May 21,
                                        1996             1996
--------------------------------------------------   -------------
                                                     (Inception)
                         ASSETS

Receivable from parent.............  $     100       $     100
                                     -------------   -------------

TOTAL ASSETS.......................  $     100       $     100
                                     =============   =============

                   STOCKHOLDER'S EQUITY

Common stock, $1.00 par value; 1,000
  shares authorized; 100 shares
  issued and outstanding...........  $     100       $     100
                                     -------------   -------------

TOTAL STOCKHOLDER'S EQUITY.........  $     100       $     100
                                     =============   =============

See notes to financial statements

                                      F-27

<PAGE>


                       SPRINT SPECTRUM FINANCE CORPORATION
               (A wholly-owned subsidiary of Sprint Spectrum L.P.)
                             STATEMENT OF OPERATIONS



                                              Period from
                                              May 21, 1996
                                          (date of inception)
                                            to December 31,
                                                 1996
                                          --------------------
Operating Revenues....................    $         -

Operating Expenses....................              -
                                          --------------------

Net Income............................    $         -
                                          ====================


See notes to financial statements

                                      F-28
<PAGE>


                       SPRINT SPECTRUM FINANCE CORPORATION
               (A wholly-owned subsidiary of Sprint Spectrum L.P.)
                  STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY




                                                 Common Stock
                                     ------------------------------------
                                         Shares              Dollars
                                     ---------------    -----------------

BALANCE, May 21, 1996..............        100           $     100
                                     ===============    =================

BALANCE, December 31, 1996.........        100           $     100
                                     ===============    =================


See notes to financial statements

                                      F-29
<PAGE>


                       SPRINT SPECTRUM FINANCE CORPORATION
               (A wholly-owned subsidiary of Sprint Spectrum L.P.)
                             STATEMENT OF CASH FLOWS



                                                                   From date
                                                                  of inception
                                                                 to December 31,
                                                                      1996
                                                                 ---------------

CASH FLOWS FROM OPERATING ACTIVITIES:
  Adjustments to reconcile net income to
  net cash used in operating activities:
    Net income.................................................    $       -
    Changes in assets and liabilities:
      Receivables..............................................          (100)
         Net cash used in operating                              ---------------
         Net cash used in operating activities.................          (100)

CASH FLOWS FROM FINANCING ACTIVITIES:
  Issuance of common stock.....................................           100
                                                                 ---------------
         Net cash provided by financing activities.............           100

                                                                 ---------------
INCREASE (DECREASE IN CASH AND CASH EQUIVALENTS................            -

CASH AND CASH EQUIVALENTS, Beginning of Period.................            -

                                                                 ---------------
CASH AND CASH EQUIVALENTS, End of Period.......................    $       -
                                                                 ===============

See notes to financial statements

                                      F-30

<PAGE>




                       SPRINT SPECTRUM FINANCE CORPORATION
               (A wholly-owned subsidiary of Sprint Spectrum L.P.)
                          NOTES TO FINANCIAL STATEMENTS


1.    ORGANIZATION

        Sprint Spectrum Finance Corporation  ("FinCo"),  a Delaware corporation,
was formed on May 21, 1996 and is a wholly-owned  subsidiary of Sprint  Spectrum
L.P.  (the  "Partnership").  FinCo  was  formed to be a  co-obligor  of the debt
obligations discussed in Note 2.

        The  Partnership  contributed  $100 to FinCo on May 21, 1996 in exchange
for 100 shares of common stock.


2.   SENIOR NOTES AND SENIOR DISCOUNT NOTES

        In August 1996,  the  Partnership  and FinCo  (together,  the "Issuers")
issued $250 million aggregate principal amount of 11% Senior Notes due 2006 (the
"Senior Notes"),  and $500 million aggregate  principal amount at maturity of 12
1/2% Senior Discount Notes due 2006 (the "Senior  Discount Notes" and,  together
with the Senior Notes, the "Notes").  The Senior Discount Notes were issued at a
discount to their aggregate  principal amount at maturity and generated proceeds
of approximately $273 million.  Cash interest on the Senior Notes will accrue at
a rate of 11% per annum and is payable semi-annually in arrears on each February
15 and August 15, commencing February 15, 1997. Cash interest will not accrue or
be payable on the Senior  Discount  Notes prior to August 15, 2001.  Thereafter,
cash interest on the Senior  Discount Notes will accrue at a rate of 12 1/2% per
annum and will be  payable  semi-annually  in arrears  on each  February  15 and
August 15, commencing February 15, 2002.

On August 15,  2001,  the Issuers  will be required to redeem an amount equal to
$384.772 per $1,000  principal  amount at maturity of each Senior  Discount Note
then  outstanding  ($192  million in  aggregate  principal  amount at  maturity,
assuming all of the Senior Discount Notes remain outstanding at such date).

The Notes are  redeemable at the option of the Issuers,  in whole or in part, at
any time on or after August 15, 2001 at the  redemption  prices set forth below,
respectively,  plus accrued and unpaid interest, if any, to the redemption date,
if  redeemed  during  the 12 month  period  beginning  on August 15 of the years
indicated below:


                                                         Senior Discount
                                        Senior Notes           Notes
             Year                     Redemption Price   Redemption Price
           --------                   ----------------  -----------------
             2001                         105.500%           110.000%
             2002                         103.667%           106.500%
             2003                         101.833%           103.250%
             2004 and thereafter          100.000%           100.000%


In addition,  prior to August 15, 1999,  the Issuers may redeem up to 35% of the
originally  issued  principal  amount of the Notes.  The redemption price of the
Senior Notes is equal to 111.0% of the principal amount

                                      F-31
<PAGE>


of the Senior Notes so redeemed,  plus accrued and unpaid  interest,  if any, to
the  redemption  date  with  the  net  proceeds  of one or  more  public  equity
offerings,  provided that at least 65% of the originally issued principal amount
of Senior Notes would remain outstanding immediately after giving effect to such
redemption. The redemption price of the Senior Discount Notes is equal to 112.5%
of the accreted  value at the  redemption  date of the Senior  Discount Notes so
redeemed, with the net proceeds of one or more public equity offerings, provided
that at least 65% of the originally  issued  principal amount at maturity of the
Senior Discount Notes would remain  outstanding  immediately after giving effect
to such redemption.

The  Notes  contain  certain  restrictive  covenants,   including  (among  other
requirements) limitations on additional indebtedness,  limitations on restricted
payments,  limitations on liens,  and limitations on dividends and other payment
restrictions affecting restricted subsidiaries.

                                      F-32

<PAGE>