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, 1997
                          -----------------------------------------

                                       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 required to file such reports),  and (2) has been subject to such
filing requirements 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 1, 1998 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

                          1997 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.........17

                                     PART II
Item  5.          Market for the Registrant's Common Stock and Related 
                    Stockholder Matters.......................................17
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 subsidiaries,  including  WirelessCo,  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 Delaware  limited  partnership
formed by 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.  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  is  a  leading  provider  of  wireless  communications
products and services in the United States. The Company is the largest broadband
wireless personal communications services

<PAGE>


("PCS")  company  in the United  States in terms of total  license  coverage  of
population  equivalents.  The term  population  equivalents  ("Pops")  means the
Donnelley  Marketing  Service  estimate of the December 31, 1995,  population of
geographic areas in the United States. The Company was the successful bidder for
29 PCS licenses in the Federal Communications Commission's ("FCC") A Block and B
Block PCS auction which  concluded in March 1995.  The Company owns PCS licenses
which  include the 29 previously  mentioned  licenses plus a PCS license for the
Omaha  MTA  which  was  contributed  on  February  6,  1997.  The  Company's  30
wholly-owned  markets cover 152 million Pops and include,  among others, the New
York, San Francisco,  Detroit,  Dallas/Fort  Worth and  Boston/Providence  Major
Trading Areas ("MTAs"). 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 (excluding certain United
States territories).

        The Company  commenced  initial  commercial PCS  operations  late in the
fourth quarter of 1996, and emerged from the development  stage during the third
quarter of 1997.  As of February 15, 1998,  the Company has launched  service in
118 metropolitan markets.

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) and Sprint PCSSM brand
names,    trademarks   of   Sprint   Communications    Company   L.P.   ("Sprint
Communications").

        As of January 1, 1998,  Holdings  and  MinorCo  owned  99.75% and 0.25%,
respectively,  of the partnership  interests in American PCS, L.P. ("APC"). APC,
through  subsidiaries,  owns a PCS  license  for and  operates a  broadband  GSM
(global system for mobile communications ) in the Washington D.C./Baltimore MTA,
and is in the  process of  building a code  division  multiple  access  ("CDMA")
overlay for its existing GSM PCS system.  Construction on APC's CDMA network was
substantially  complete in December 1997 and the network became  operational for
traveling  purposes in January  1998.  APC expects to launch CDMA  services on a
commercial basis before the end of the first quarter of 1998. APC has affiliated
with the Company and is marketing its products and services under the Sprint and
Sprint PCS brand names.

        Holdings   also  owns  a  49%  limited   partnership   interest  in  Cox
Communications PCS, L.P. ("Cox PCS"), a limited partnership that indirectly owns
a PCS license for the Los Angeles-San Diego MTA covering 21.5 million Pops. Cox,
which previously owned this license, contributed the license to Cox PCS on March
31, 1997, and is managing  partner of Cox PCS. The Company signed an affiliation
agreement  with Cox PCS on December 31, 1996.  On February 3, 1998,  Cox Pioneer
Partnership ("CPP") notified Holdings that CPP was exercising its put rights and
would  transfer  10.2% of the  interest in Cox PCS to  Holdings,  subject to FCC
approval, which will give Holdings controlling interest.

        SprintCom,  Inc.  ("SprintCom"),  a  wholly-owned  subsidiary of Sprint,
participated  in the FCC's D and E Block  auction  which ended January 14, 1997,
and was awarded licenses for 139 of 493 BTAs, covering  approximately 70 million
Pops, all of which are geographic  areas not covered by the Company's  owned PCS
licenses or licenses  owned by APC, Cox PCS or  PhillieCo,  L.P.  ("PhillieCo"),
discussed below. SprintCom intends to market products and services as Sprint PCS
when it offers commercial services.  In accordance with the Amended and Restated
Agreement of Limited  Partnership  of MajorCo,  L.P.  (renamed  Sprint  Spectrum
Holding Company, L.P. ) dated January 31, 1996 (the

<PAGE>


"Holdings 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 a final  agreement  has not yet been
reached.  In the interim,  the Company has been providing  buildout  services in
certain BTA markets  where  SprintCom  was  awarded  PCS  licenses  and is being
reimbursed  by  SprintCom  for  such   services,   which  include   engineering,
management, purchasing, accounting, and other related services.

        The Company  also  provides  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.  PhillieCo
markets its products and services as Sprint PCS. Although the Company expects to
affiliate with  PhillieCo,  there is no  affiliation  agreement at this time and
there can be no assurance that such an agreement will be reached.

Network Buildout

        The initial  buildout of the Company's  network involved 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
designed and constructed the Sprint Spectrum network based on regional marketing
and  product  requirements  to  meet  the  Company's  targets  for  consistency,
uniformity and reliability.

        During 1997,  the  Company's  (along with its  affiliates)  emphasis and
focus shifted from an initial network  buildout  process to network  operations.
The Company and its affiliates have more than one million customers.

        Rollout  methodology.  The Company's  principal objective is to maximize
the quality of coverage (i.e.,  sound quality and in-building  penetration)  and
depth of coverage (i.e.,  network  availability  when a customer wants to make a
call),  and the  Company  continues  to strive to meet  that  objective.  Sprint
Spectrum offers commercial service in 30 MTAs covering 118 metropolitan markets.
The Company is evaluating  further  coverage  expansion  within its markets 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.

        Sprint  Spectrum is managing  the buildout of  SprintCom's  BTA licensed
areas,  resulting in further  expansion in the areas of coverage.  Additionally,
the Company is actively  seeking  companies  desiring  an  affiliation  with the
Sprint Spectrum network as another method of expanding the coverage areas.

        RF design.  The RF design 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. The Pops
covered as a result of the  network  construction  during  1996 and 1997 is 81.5
million or 54% of Sprint Spectrum's  licensed Pops.  Twenty-eight  markets (85%)
already exceed the FCC's 5-year Pop coverage requirements.

        Property  acquisition.  The Company hired property acquisition firms for
each  MTA  to  assist  with  acquisition,  zoning,  permitting  and  appropriate
surveying.   The  Company  minimized  property   acquisition   activity  through
utilization  of the Parents'  assets,  where  possible.  The cell site selection
process required

<PAGE>


the lease or acquisition of approximately  5,300 sites in 30 MTAs, many of which
have required the Company to obtain zoning variances or other local governmental
or  third-party  approvals or permits.  As of December 31, 1997, the Company had
signed  leases or options  for 5,171  sites.  There are  currently  4,715  sites
completed and in service.

        Microwave relocation. Sprint Spectrum relocated existing 2GHz commercial
microwave service users as required in order to clear its spectrum.  The Company
contracted with national vendors to assist in the microwave  relocation process.
As the Company  expands its coverage area through  affiliation  agreements  with
other  carriers  or other  methods,  additional  microwave  paths may need to be
relocated.  As prescribed by the FCC cost sharing  rules,  the Company  actively
pursues the recovery of spectrum clearing costs from competing service providers
operating in the Company's markets.

        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
Communications as its  interexchange  carrier and the agreement for such service
is covered under the Holdings Partnership Agreement.

        Roaming.  Subject  to  entering  into  contracts  with  analog  cellular
providers and other CDMA PCS providers ("Roaming Partners"), the Company is able
to offer  automatic  roaming  (the  ability to make and  receive  calls  without
providing separate billing information) to its own customers and to customers of
its Roaming Partners who are traveling in or through the Company's service area.
Additionally,  the FCC  requires  that the  Company  permit  customers  of other
wireless  service  providers  having handsets  capable of transmitting  over the
Company's  network to manually roam (the ability to make and receive calls after
providing separate billing  information to the serving carrier) on the Company's
network.  Customers  typically pay higher rates while  roaming  outside of their
home market.

        The Company has entered into  roaming  agreements  with  various  analog
cellular providers throughout the United States and Canada. As a result,  Sprint
Spectrum  customers who have dual-mode  handsets  capable of  transmitting  over
cellular  frequencies  have the  ability to roam  automatically  in areas  where
Sprint  Spectrum  service  is  not  available.   Additionally  the  Company  has
negotiated roaming arrangements with other CDMA PCS carriers who provide service
in geographic areas not currently covered by the CDMA network of Sprint Spectrum
and its affiliates.

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

Capitalization and Financing Risks; Partner Deadlock

        The  buildout of Sprint  Spectrum's  PCS network and the  marketing  and
distribution  of its products and services will continue to require  substantial
capital,  and the Company  currently has limited  sources of revenue to meet its
capital requirements.  To date the Company has relied on capital  contributions,
advances from Holdings, third party debt and public debt.

        The Company's  business plan will require  additional  capital financing
prior to the end of 1998.  Sources of  funding  for  Sprint  Spectrum's  capital
requirements may include additional vendor financing,

<PAGE>


public  offerings  or  private  placements  of equity  and/or  debt  securities,
commercial  bank  loans  and/or  capital  contributions  from  Holdings  or  the
Partners.  However,  there can be no assurance that any additional financing can
be  obtained  on a timely  basis,  on terms  acceptable  to the  Company and its
Partners and within the  limitations  contained in the agreements  governing the
Company's existing public and third-party debt.

        Additionally,  the proposed budget for 1998 has not yet been approved by
the Holdings' partnership board, although the board has authorized management to
operate the Company in  accordance  with such budget.  The Partners may mutually
agree to make additional capital  contributions.  However,  the Partners have no
such  obligation  in the  absence  of an  approved  budget,  and there can be no
assurance the Partners will reach such an agreement or approve the 1998 proposed
budget. In addition,  the failure by the Partners to approve a business plan may
impair the  ability  of the  Company to obtain  required  financing.  Failure to
obtain any such additional financing or capital  contributions from the Partners
could  result in the  delay or  abandonment  of the  Company's  development  and
expansion plans and expenditures, the failure to meet regulatory requirements or
other potential adverse consequences.

        Furthermore,  the fact that the proposed budget for fiscal year 1998 has
not  been  approved  by the  Holdings  partnership  board  has  resulted  in the
occurrence of a "Deadlock Event" under the Holdings Partnership  Agreement as of
January  1,  1998.  Under  the  Holdings  Partnership  Agreement,  if one of the
Partners refers the budget issue to the chief executive  officers of the Parents
for  resolution   pursuant  to  specified   procedures  and  the  issue  remains
unresolved,  buy/sell  provisions  would be  triggered  which may  result in the
purchase by one or more of the Partners of the  interest of the other  Partners,
or, in certain  circumstances,  the liquidation of Holdings and it subsidiaries.
Discussions among the Partners about  restructuring their interests in Holdings,
in lieu of triggering such buy/sell procedures,  are ongoing. However, there can
be no assurance  these  discussions  will result in a change to the  partnership
structure or will avert the triggering of the resolution and buy/sell procedures
referred to above or a liquidation of Holdings.


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 (the "1934 Act"), as amended
by the  Telecommunications  Act of 1996 (the "1996 Act",  and together  with the
1934 Act, the "Communications Act"). 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.

        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.

        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

<PAGE>


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.  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  prohibits a single  entity from having a combined  attributable
interest (20% or greater interest in any license) in broadband PCS, cellular and
specialized  mobile  radio  ("SMR")  licenses  totaling  more than 45 MHz in any
geographic area.

        Pioneer's  preference program.  Holdings owns a controlling  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 March 1996
ruled that the  Pioneer's  Preference  licensees  must begin making  installment
payments on their licenses.  Cox PCS (as successor licensee to 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 District of Columbia  Circuit Court of Appeals  vacated an FCC order
denying a Pioneer's  Preference  license for  QualComm,  Inc.  ("QualComm")  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.  On September
18, 1997, the FCC dismissed all Pioneer's Preference requests, including that of
QualComm.  QualComm has asked the FCC to reconsider  its decision.  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  restricted
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

<PAGE>


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.  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 eliminated the existing  restrictions  on the
number of alien  officers and directors of FCC licensee  companies and companies
controlling FCC licensees.

        On March 13, 1997, the Company filed with the FCC a petition  requesting
a declaratory  ruling that the Company may indirectly  hold common carrier radio
licenses  so long as the levels of foreign  equity and voting  interest  in each
Parent of an FCC  licensee  are no greater  than the amount  permitted  for such
Parent individually as the parent of an FCC licensee.  The Company alternatively
asked that the FCC declare that a multiplier  may be used to calculate the level
of foreign voting interest in the Company.  Pursuant to a 1996 FCC decision, and
as an  affiliate  of Sprint  Corporation,  the  Company is  permitted  to have a
foreign ownership level of up to 35%.

        Effective  February 9, 1998, the FCC adopted an order  establishing  new
rules and policies  implementing  U.S.  commitments to allow up to 100% indirect
foreign  ownership  of common  carrier  licensees,  pursuant to a  multi-lateral
agreement negotiated under the auspices of the World Trade Organization.

        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
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.

        Interconnection.  Section 332 of the  Communications  Act grants the FCC
authority to order  interconnection  between  Commercial  Mobile  Radio  Service
("CMRS")  Providers and any other common carrier.  Section 332 further  preempts
the authority of any state public service commission over the rates and entry of
CMRS  providers  in  the  market  place.  Based  upon  these  provisions  of the
Communications  Act, the Eighth Circuit Court of Appeals  recently  affirmed the
authority of the FCC to issue rules of special concern to CMRS  providers.  This
Eighth Circuit ruling  specifically upheld several important rules issued by the
FCC following the enactment of the 1996 Act. Namely, the FCC ordered local

<PAGE>


exchange carriers to provide  reciprocal  compensation to CMRS providers for the
termination of traffic. Moreover, the FCC found that CMRS carriers could use the
interconnection  rates of the landline companies as proxies for their own rates,
at least  until such time as the CMRS  carrier  conducted  its own cost study to
determine its own termination rate.

        Using these new rules,  Sprint  Spectrum has negotiated  interconnection
agreements  with all of the major  regional Bell  operating  companies,  GTE and
several  smaller  independent  local exchange  carriers.  These  agreements have
lowered  Sprint  Spectrum's  rates  for  interconnection  and  created  revenues
resulting from termination charges on the Company's network.  Sprint Spectrum is
continuing to negotiate  agreements with the independent local exchange carriers
and is investigating additional ways to benefit from the FCC's regulations.

        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 concluded
its initial  round of licensing of currently  allocated  broadband PCS spectrum.
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 has extended an existing rule to require broadband PCS and other
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 is currently evaluating potential
technical  solutions to provide enhanced 911 capabilities and is working with an
outside vendor to eliminate the need for local exchange  telephone  companies to
replace their  infrastructure  in order to accommodate  the CMRS  providers.  If
cost-effective solutions are not identified and implemented by the FCC scheduled
implementation  date, the Company,  as well as other service  providers that are
also subject to the regulation, may be subject to penalties imposed by the FCC.

        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.

         Communications  Assistance  for  Law  Enforcement  Act  ("CALEA").  The
Communications  Assistance to Law Enforcement  Act,  enacted in 1994 to preserve
electronic  surveillance  capabilities  authorized  by  Federal  and state  law,
requires  telecommunications  carriers to meet certain "capability requirements"
by  October  25,  1998.  Toward  the end of  1997,  telecommunications  industry
standard setting  organizations  agreed to a joint standard to implement CALEA's
capability  requirements.  CALEA  provides  that  a  telecommunications  carrier
meeting industry CALEA standards shall have safe harbor for

<PAGE>


purposes of compliance  with CALEA.  Although  Sprint  Spectrum is able to offer
traditional  electronic  surveillance  capabilities to law  enforcement,  Sprint
Spectrum  will not be able to meet the  requirements  of the joint  standard  by
October 25, 1998. In any event,  the United  States  Department of Justice (DOJ)
has objected that the industry  joint standard is not sufficient to meet CALEA's
capability  requirements  and has requested the inclusion of a so-called  "punch
list" of additional electronic surveillance capabilities.  DOJ has threatened to
seek court  enforcement  actions  against  carriers not  complying  with CALEA's
capability  requirements,  including  the  so-called  "punch list" items.  In an
enforcement  action, a court may impose a civil penalty of up to $10,000 per day
for each day in violation after the issuance of an order to comply or after such
future date as the court may specify for compliance, although in determining the
amount of a civil  penalty,  the  court is  required  to  consider  the  nature,
circumstances,  and extent of the violation;  the violator's ability to pay; the
violator's  good faith efforts to comply in a timely  manner;  any effect on the
violator's  ability to continue to do business;  the degree of culpability;  the
length of any delay in undertaking  efforts to comply; and such other matters as
justice may require.

        Other federal regulations. Wireless systems must comply with certain FCC
and Federal Aviation  Administration  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. The 1996 Act mandated that the
FCC and the states  establish  a  "universal  service"  program  to ensure  that
affordable,  quality telecommunications services are available to all Americans.
Although the Company is challenging in federal court the authority of the states
to collect universal service  contributions from CMRS providers,  at present the
Company is required to contribute to the federal  universal  service  program as
well as existing  state  programs.  The FCC has  determined  that the  Company's
"contribution"  to the  federal  universal  service  program  will be a variable
percentage of "end-user  telecommunications  revenues." Although many states are
likely  to  adopt a  similar  assessment  methodology,  the  states  are free to
calculate  telecommunications  service provider contributions in any manner they
choose as long as the process is not  inconsistent  with the FCC's rules. At the
present  time it is not  possible to predict the extent of the  Company's  total
federal and state universal service assessments.

        Partitioning.  The FCC has  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.


<PAGE>


        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
theFCC   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,  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  distribution channels 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. Currently the
Company  uses  a  variety  of  distribution   channels,   including  third-party
retailers,  Company-owned  retail stores,  direct sales force and telemarketing.
One of the Company's third party retailers,  RadioShack, accounted for more than
10% of the Company's operating revenues in 1997.

        The  Company  has  also  entered  into a  sales  agency  agreement  with
Sprint/United  Management  Company  ("Sprint/United").  The  Company  intends to
continue 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 Parents' regular
contacts  with their  customers,  including  bill inserts and  customer  service
contacts,  the Company  expects to build market  share of its wireless  services
efficiently.


Trademarks

        The Company does not currently own any patents or registered trademarks,
though  it  has  applied  for  various  patents  and   registration  of  certain
trademarks.  Sprint and Sprint PCS are trademarks of Sprint  Communications  and
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  the  trademark  license  agreement  (i) upon the
occurrence  of a  Liquidating  Event (as  defined  in the  Holdings  Partnership
Agreement),  (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

<PAGE>


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  has
introduced 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 paging,
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
device 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 time division multiple access ("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 was  commercially
deployed  in the  United  States in 1996.  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.



<PAGE>



Equipment Vendors

        The Company selected Lucent  Technologies  Inc.  ("Lucent") and Northern
Telecom  Inc.  ("Nortel"),  two  of  the  leading  telecommunications  equipment
manufacturers,  to construct  its 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 obtained  financing from Nortel and Lucent to fund the purchase of their
respective  equipment and certain  payments  associated with 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 six  agreements  for the purchase of
handsets.  There  are  currently  at least 22  companies  who plan to make  CDMA
handsets. The Company also has secured a supply of dual-mode, dual-band handsets
from several vendors which became available in production  quantities during the
latter part of 1997.  These  handsets  operate in the Company's PCS  frequencies
when they are within the  Company's  network  coverage  area and utilize  analog
networks when outside of the  Company's  digital  network  coverage  areas.  The
Company also expects to source  handsets from other  vendors  during 1998 and is
currently negotiating purchase and supply agreements on a preliminary basis with
such other vendors.


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 is 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 also faces  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 begun
offering  short  messaging,  data services and  interconnected  voice  telephony
services on a limited basis. Several ESMR licensees have merged into one company
and plan to build and  operate  digital  mobile  networks  in most major  United
States markets.

<PAGE>



          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.  Several of these  companies  have begun to
launch  their  satellites  for  this  service.   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.

          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 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  wireline
communications  services over their cable systems. In addition,  the Company may
face competition 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 basis of
services and  features,  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 Mobile,  Southwestern  Bell Mobile Systems,
GTE Mobilnet, Inc. and U.S.
Cellular Corp.

          The cost to the Company of PCS  handsets is not  currently  comparable
with the cost to analog operators of analog cellular handsets. While the Company
believes that its PCS handsets are  competitively  priced as compared to digital
cellular handsets of comparable size, weight and features,

<PAGE>


cellular operators may frequently  subsidize the sale of analog handset units at
prices  below those with which the Company  can  compete  through the  Company's
handset subsidies.

Employee Relations

        As of December  31,  1997,  the  Company  employed  approximately  7,100
personnel,  including employees dedicated to PhillieCo and SprintCom activities.
None of the Company's  employees are  represented  by a labor union.  Management
believes that the Company's employee relations are good.


Reorganization

         Subsequent to December 31, 1997 in an effort to enhance  efficiency and
reduce costs, the Company reorganized and restructured  certain operations under
which certain field offices will be  consolidated.  Costs  associated  with this
reorganization are expected to be recorded in the first quarter of 1998 and will
consist   primarily  of  severance  pay,  the  write-off  of  certain  leasehold
improvements and termination payments under lease agreements.


Item 2.  Properties

        As of December  31, 1997,  the Company  occupied  approximately  542,000
square feet of leased space in metropolitan Kansas City,  Missouri.  The Company
occupies  101,000  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 110 retail  stores
(approximately  334,000  square  feet) and  expects to lease  additional  retail
space.

        As of December 31, 1997, the Company leased 32 Field Operations  offices
(approximately  367,000  square  feet  in the  aggregate)  and  35  MTA  offices
(approximately  483,000 square feet). The Company intends to close approximately
30 of such offices in connection with certain restructuring  activities in 1998.
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 47 switch
sites and has  entered  into  leases or  options  to lease a total of 5,171 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

<PAGE>


aggregate,  will not have a material  adverse effect on the Company's  financial
condition or results of operations or cash flows.


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, 1997, the Company did not have common equity.


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.



<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 as of December 31, 1997 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 listed, is as of December 31, 1997.

       Name                  Age                     Positions

Andrew Sukawaty..........     42      Chief Executive Officer and President of 
                                        Sprint Spectrum; President of FinCo
Arthur A. Kurtze.........     53      Chief Operating Officer of Sprint Spectrum
Bernard A. Bianchino.....     49      Chief Business Development Officer of 
                                        Sprint Spectrum
Robert M. Neumeister, Jr.     48      Chief Financial Officer of Sprint 
                                        Spectrum; Vice President and Treasurer 
                                        of FinCo
F. Edward Mattix.........     44      Chief Public Relations Officer of Sprint 
                                        Spectrum
Charles E. Levine........     44      Chief Marketing Officer of Sprint Spectrum
Joseph M. Gensheimer.....     46      General Counsel and Secretary of Sprint
                                        Spectrum; Secretary of FinCo
William T. Esrey.........     57      Holdings Partnership Board Representative
Gary D. Forsee...........     47      Holdings Partnership Board 
                                        Representative(1)
Gerald W. Gaines.........     41      Holdings Partnership Board Representative
Arthur B. Krause.........     56      Holdings Partnership Board 
                                        Representative (2)
James O. Robbins.........     55      Holdings Partnership Board Representative
Lawrence S. Smith........     50      Holdings Partnership Board Representative


-------------------
(1)  Thomas E. Weigman was appointed to the Holdings  Partnership Board on March
     4, 1998. He replaced Mr. Forsee as a Sprint-appointed  representative.  See
     biographies below.
(2)  Ronald T. LeMay was appointed to the Holdings  Partnership Board on January
     12, 1998. He replaced Mr. Krause as a Sprint-appointed representative.  See
     biographies below.


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.

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

<PAGE>


of strategic  planning and corporate development for Centel Corp.

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.

Robert M. Neumeister, Jr., Chief Financial Officer

       Robert M. Neumeister,  Jr. was named Chief Financial Officer of the Com-
pany 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.

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
Relations  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.

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.

William T. Esrey, Representative

       William T. Esrey  was appointed  as a representative  on 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  Lif  Assurance  Society of America,  General Mills, Inc.,  PanEnergy 
Corporation and Everen Capital  Corporation.   Mr. Esrey currently serves on the
compensation committee of each of PanEnergy Corporation  and Everen Capital Cor-
poration.


<PAGE>


Gary D. Forsee, Representative

        Gary D. Forsee served as a representative  on the Partnership Board from
March 1995 until  September 1996 and was  re-appointed  in July 1997 until March
1998.  He was the  President--Long  Distance  Division of Sprint from March 1995
until February 1998. Prior to such appointment,  Mr. Forsee served for more than
five  years in  other  capacities  at  Sprint,  including  President  and  Chief
Operating  Officer--Government  Systems Division,  President--Business  Services
Group and Chief of Staff--Long  Distance Division.  In February 1998, Mr. Forsee
was  appointed  President  and Chief  Executive  Officer of Global  One, a joint
venture between Sprint, France Telecom and Deutsche Telekom AG.

Gerald W. Gaines, Representative

       Gerald W. Gaines was appointed as a representative on 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.  Mr. Gaines is a 
director of Teleport Communications Group Inc.

Arthur B. Krause, Representative

        Arthur B. Krause served as a  representative  on the  Partnership  Board
from March 1995 until January 1998. 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.

Ronald T. LeMay, Representative

        Ronald T. LeMay served as a representative on the Partnership Board from
September  1996 until July 1997 and was  re-appointed  in  January  1998.  He is
President and Chief Operating  Officer of Sprint. 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,  when he resumed  his  position as  President  and Chief
Operating Officer of Sprint. From July 1997 until October 1997, Mr. LeMay served
as Chief Executive Officer of Waste Management  Systems.  He serves on the Board
of Directors of Sprint and is a director of Yellow Corporation.

James O. Robbins, Representative

       James O. Robbins was appointed as a representative on 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 
Senior  Vice President,  Operations  of Cox.  Mr.  Robbins is a  director  of 
Telewest  Plc, Teleport Communications Group Inc. and Cox.


<PAGE>


Lawrence S. Smith, Representative

       Lawrence S. Smith  was  appointed  as a  representative  on the  Partner-
ship Board in March 1995.  He has been  Executive   Vice   President  of Comcast
since December 1995.   Prior to that time, Mr. Smith served as Senior Vice Pres-
ident of Comcast for more than five years.  Mr. Smith is the Principal  Account-
ing Officer of Comcast.   Mr.  Smith is a  Director of Comcast UK Cable Partners
Limited.

Thomas E. Weigman, Representative

        Thomas E. Weigman was appointed as a  representative  on the Partnership
Board on March 4, 1998. He is the President of Sprint's Consumer Services Group,
a position which he has held since 1995. Prior to such appointment,  Mr. Weigman
served as the President of Sprint's  Multimedia and Strategic Services Group and
Chief Marketing Officer for Sprint.

Committees of the Partnership Board; Compensation; Committee Interlocks

         Messrs.  Krause and Smith have been  appointed  by Sprint and  Comcast,
respectively, to serve on the Audit Committee. Messrs. LeMay and Smith have been
appointed  by Sprint and  Comcast,  respectively,  to serve on the  Compensation
Committee.  TCI and Cox have not yet named  their  representatives  on the Audit
Committee or the Compensation 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.




<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,  1996,  and 1997 by those
persons who served as the Chief  Executive  Officer during the fiscal year ended
December 31, 1997, and the other four most highly compensated executive officers
of the Company,  determined as of the end of the fiscal year ended  December 31,
1997 (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>

                                            Summary Compensation Table


                                                  Annual Compensation                        Long Term Compensation
                                        ----------------------------------------- ---- ------------------------------------
                                                                                           Securities
                                                                                           Underlying             LTIP
Name and Principal Position   Year      Salary(1)       Bonus(2)         Other            Options/SARs        Payouts($)(3)
                                                                                             (#)(3)
---------------------------- ------- -- -----------    -----------     ----------      -------------------    -------------
<S>                          <C>    <C>             <C>            <C>                          <C>        <C>

Andrew Sukawaty...........   1997    $    426,630   $    325,780   $     124,665  (4)                -     $             -
   Chief Executive Officer   1996         146,552        325,000          63,620  (5)                -                   -

Arthur A. Kurtze..........   1997         318,209        167,370           2,584                     -                   -
   Chief Operating Officer   1996         295,692        202,723               -                     -                   -
                             1995         171,320        107,500               -                11,000              69,890

Joseph M. Gensheimer......   1997         313,200        123,800           2,905                     -                   -
   General Counsel           1996         302,990        106,000         172,459  (6)                -                   -
                             1995          78,161         31,150         233,381  (7)                -                   -

Robert M. Neumeister, Jr..   1997         287,098        148,560           7,064                     -                   -
   Chief Financial Officer   1996         277,529        119,400          13,439  (5)                -                   -
                             1995          79,023         35,950          34,822  (8)                -                   -

Charles E. Levine.........   1997         277,219        142,560          38,520  (9)                -                   -
   Chief Marketing Officer                                                                           -                   -
                                                                                                     -                   -
</TABLE>


------------------
(1)  Includes  all amounts  earned for the  respective  years,  even if deferred
     under the Company's Executive Deferred Compensation Plan.
(2)  Includes  an  estimate  of the  short-term  incentive  compensation  target
     established for each officer.  
(3)  Mr. Kurtze was employed by Sprint  immediately  prior to his  employment by
     the Company, and as a former employee, he participated 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.
(4)  Of the $124,665 shown as other compensation,  $92,823 represents relocation
     expenses paid on behalf of Mr. Sukawaty.
(5)  Represents  relocation  expenses  paid on behalf of  Messrs.  Sukawaty  and
     Neumeister.
(6)  Includes  relocation  expenses of $22,459 paid on behalf of Mr.  Gensheimer
     and $150,000  represents  foregone  incentive  compensation from his former
     employer.
(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 $38,520 paid, $22,050 represents relocation expenses paid on behalf
     of Mr. Levine.



<PAGE>



Long-Term Incentive Plan Awards

        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
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   received  100%  of  the
pre-established  targets  for the period from July 1, 1995 to June 30, 1996 (the
"Introductory  Term").  Participants  elected  a  payout  of the  amount  due or
converted 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.  Participants  had  until  March  15,  1997 to make  payout or
conversion  elections.  Appreciation  units for the 1996 Long-Term Plan vest 25%
per year commencing on the second anniversary of the date of grant. Appreciation
units  for the 1997  Long-Term  Plan vest 25% per year  commencing  on the first
anniversary  of the date of the grant and will be granted upon the final results
of an independent valuation of the Company as of June 30, 1997.

        The following table summarizes appreciation units granted under the 1996
Long-term Incentive Compensation Plan to the Named Executives. The amounts shown
are the potential  realizable values on these units based on assumed  annualized
rates of appreciation in the value of the appreciation units of five percent and
ten  percent  over the term of the  units,  as set forth in the  Securities  and
Exchange Commission ("SEC") rules.
<TABLE>

                                                         Unit Grants in Last Fiscal Year


                                        
                                         Percent
                                        of total                                         
                                          units                                            Potential Realizable Value at Assumed
                                         granted                                             Annual Rates of Unit Appreciation
                            Number          to      Exercise     Market                             for Term (2)
                              of        employees       or      Price at                ----------------------------------------
                            units       in fiscal      base      Date of   Expiration
                          granted(1)      year        price       Grant       Date          0%            5%            10%
-------------------------------------  -----------   --------  ----------  -----------  ------------  ------------  ------------
<S>                        <C>             <C>    <C>           <C>        <C>         <C>

Andrew Sukawaty......      135,519         12.9%    $   24.00   $ 30.00    6/30/2006        (3)           (3)       $ 7,293,633

Arthur A. Kurtze.....       51,384          4.9%        24.00     30.00    6/30/2006    $  308,304    $1,279,462      2,765,487

Joseph M. Gensheimer.       28,168          2.7%        24.00     30.00    6/30/2006       169,008       701,383      1,516,002

Robert M. Neumeister,       46,618          4.4%        24.00     30.00    6/30/2006       279,708     1,160,788      2,508,981
  Jr.................

Charles E. Levine....       19,307          1.83%       24.00     30.00    6/30/2006       115,842       480,744      1,039,103

</TABLE>

-------------

(1)  The number of units  granted  for Mr.  Sukawaty  covers  the grant  periods
     through 1999.  The number of units  granted for the other Named  Executives
     covers the grant periods through 1998.
(2)  The dollar amounts in these columns are the result of  calculations  at the
     five  percent and ten percent  rates set by the SEC and are not intended to
     forecast future appreciation of the units.
(3)  The Company has entered into an agreement with Mr.  Sukawaty under which he
     is guaranteed a minimum rate of return of eight percent.  Thus, the minimum
     potential  realized  value  exceeds  both the zero percent and five percent
     rates set by the SEC.


<PAGE>



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.

        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
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
employees,  which qualifies  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.  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 the first 6% that the employee

<PAGE>


elects to  contribute.  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 are 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.  The profit  sharing  contribution  by the Company  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

        The  Company  has  entered  into  employment   agreements  with  Messrs.
Sukawaty,  Gensheimer  and  Levine.  The  agreements  provide  for  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  participates,  (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
dedicates his time and efforts  principally to a wireless  business  anywhere in
the United States.



<PAGE>


Item 12.  Security Ownership of Certain Beneficial Owners and Management

The  following  table sets forth,  as of February  15,  1998,  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 Services4..............    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.............................    Limited Partnership       1%
   4900 Main Street-Twelfth Floor
   Kansas City, Missouri 64112 MinorCo, L.P.
   Sprint Enterprises, L.P.(1)..............    Partnership              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 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
     99.0%  of its  partnership  as a  general  partner  and  1.0% 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
     Services, 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,  1997,  Holdings,  the sole  general  partner of Sprint
     Spectrum,  owned a  greater  than  99.0%  partnership  interest  in  Sprint
     Spectrum,  and  MinorCo,  the sole  limited  partner,  owned a  partnership
     interest  equal less than 1.0%.  The interests held by each of Holdings and
     MinorCo fluctuate based on the amount of equity  contributed 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 to Sprint Spectrum.


<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 8.2 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 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 transactions 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.  Under the agreement,  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,  and the
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.

        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

<PAGE>


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.

        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"
hand-off 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 uses Sprint as its  interexchange  carrier and the agreement
for such service is covered under the Holdings Partnership Agreement.

        The  Company  entered  into  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, , etc.)
for the  Company.  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 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  $10,500,000,  $11,900,000  and $2,646,000 for 1997,
1996 and 1995, respectively.

        In October  1997,  the Company  entered  into a six-month  sales  agency
agreement  pursuant  to  which  Sprint/United  will  be  selling  the  Company's
equipment and services to  Sprint/United's  customer  base in some markets.  The
Company anticipates entering into a longer term agreement with Sprint/United for
more of its markets prior to expiration of the initial term. However,  there can
be no assurance that the parties will be able to reach such an agreement.

        The Company anticipates entering into additional sales agency agreements
with some of its  Partners  for the sale of Sprint PCS  equipment  and  services
directly to customer bases of the Partners and their affiliates,  as well as for
referrals  of  customers  to Sprint  Spectrum.  Certain  of these  sales  agency
agreements  contemplate  that the  Company  will be a sales  agent  for sales of
certain  products  and services of the  Partners or their  affiliates.  However,
there  can be no  assurance  that  the  parties  will be able to  reach  such an
agreement.

        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.

<PAGE>



        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
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.  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  non-wireless  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 provision 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.

<PAGE>



     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 Form S-1 Registration  Statement,
                  Registration No. 333-06609, filed on June 21, 1996).

         3.2      Amended  and  Restated  Agreement  of Limited  Partnership  of
                  MajorCo, 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    Services,    and   Cox   Telephony    Partnership
                  (incorporated by reference to Form S-1 Registration Statement,
                  Registration No. 333-06609, filed on June 21, 1996).

         3.3      Agreement of Limited Partnership of MajorCo Sub, 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
                  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
                  Form 10-Q, filed on November 12, 1996).

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

         4.2      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
                  Form 10-Q, filed on November 12, 1996).

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

         10.1     PCS Software License and Purchase Agreement dated October 8, 
                  1996 between Sprint Spectrum Equipment Company, L.P. and Lu-
                  cent Technologies Inc.(incorporated by reference to Form 10-Q,
                  filed on May 13, 1997).

         10.2     Amendment No. 1 dated as of February 25, 1997,  to the Amended
                  and  Restated  Procurement  Services   Contract  dated  as  of
                  October  9, 1996,  between Sprint  Spectrum  Equipment 
                  Company, L.P.  and Lucen  Technologies Inc.  (incorporated  by
                  reference to Form 10-Q, filed on May 13, 1997).

         10.3     Amendment No. 2 dated as of January 29, 1997, to the Procure-
                  ment and Services Contract dated as of January 31, 1996, be-
                  tween Sprint Spectrum Equipment Company, L.P. and Northern 
                  Telecom Inc. incorporated by reference to Form 10-Q filed 
                  on May 13, 1997).

         10.4     Employment  Agreement  dated January 21, 1997,  between Sprint
                  Spectrum L.P. and Charles E. Levine (incorporated by reference
                  to Form 10-Q, filed on May 13, 1997).

         10.5     Amendment No. 1 dated as of May 29, 1997, to the Credit Agree-
                  ment, dated as of October 2, 1996, among Sprint Spectrum L.P.,
                  Lucent Technologies Inc., the several banks and other

<PAGE>


                  financial  institutions  and   entities  from  time  to  time 
                  parties to the Credit  Agreement and Lucent Technologies Inc.,
                  as agent for the Lenders  (incorporated by reference to 
                  Form 10-Q, filed on August 13, 1997).

         10.6     First  Amendment  dated as of April 30,  1997,  to the  Credit
                  Agreement  dated as of October 2, 1996,  among Sprint Spectrum
                  L.P.,  Northern  Telecom  Inc.,  the  several  banks and other
                  financial  institutions and entities from time to time parties
                  to the Credit  Agreement and Bank of America NT & SA, as agent
                  for the Lenders (incorporated by reference to Form 10-Q, filed
                  on August 13, 1997).

         10.7     Sprint  Spectrum L.P. 1996  Long-Term  Incentive  Compensation
                  Plan (incorporated by reference to Form 10-Q, filed on October
                  31, 1997).

         10.8     Sprint  Spectrum L.P. 1997  Long-Term  Incentive  Compensation
                  Plan (incorporated by reference to Form 10-Q, filed on October
                  31, 1997).

         10.9     First  Amendment  dated as of December  15, 1997 to the 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.

         10.10    Second  Amendment  dated as of December 15, 1997 to the Credit
                  Agreement  dated as of October 2, 1996,  among Sprint Spectrum
                  L.P.,  Lucent  Technologies  Inc., the several banks and other
                  financial  institutions and entities from time to time parties
                  to the Credit Agreement and The Chase Manhattan Bank, as agent
                  for the Lenders.

         10.11    Second  Amendment  dated as of November 20, 1997 to the Credit
                  Agreement  dated as of October 2, 1996,  among Sprint Spectrum
                  L.P.,  Northern  Telecom  Inc.,  the  several  banks and other
                  financial  institutions and entities from time to time parties
                  to the Credit  Agreement and Bank of America NT & SA, as agent
                  for the Lenders.

         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,
    1997.


<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 17, 1998

KNOW ALL MEN BY THESE  PRESENTS,  that each individual  whose signature  appears
below hereby appoints Andrew Sukawaty,  Robert M. Neumeister,  Jr. and Joseph M.
Gensheimer, and each of them individually,  his true and lawful agent, proxy and
attorney-in-fact,  with full power of substitution and  resubstitution,  for him
and in his name, place and stead, in any and all capacities, to (i) act on, sign
and file with the Securities  and Exchange  Commission any and all amendments to
this Form 10-K, with all schedules and exhibits  thereto,  (ii) act on, sign and
file with the  Securities  and Exchange  Commission any and all exhibits to this
Form 10-K or any  amendments  hereto and (iii) take any and all action which may
be necessary or appropriate in connection therewith,  granting unto such agents,
proxies and  attorneys-in-fact,  and each of them  individually,  full power and
authority  to do  and  perform  each  and  every  act  and  thing  necessary  or
appropriate  to be done,  as fully for all intents  and  purposes as he might or
could do in person,  hereby  approving,  ratifying and  confirming all that such
agents,  proxies  and  attorneys-in-fact,  any of  them  or any of his or  their
substitute or substitutes may lawfully do or cause to be done by virtue thereof.

      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 17th day of March, 1998.


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


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


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

<PAGE>



                               /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/ 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


                               /s/ Gerald W. Gaines
                               Gerald W. Gaines
                               Sprint Spectrum Holding Company Partnership 
                                 Board Representative



<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 17, 1998


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 17th day of March, 1998.



                               /s/  Andrew Sukawaty
                               Andrew Sukawaty
                               President and Director


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



<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'.............................       F-11
     Consolidated Balance Sheets.................................       F-12
     Consolidated Statements of Operations.......................       F-13
     Consolidated Statements of Changes in Partners' Capital.....       F-14
     Consolidated Statements of Cash Flows.......................       F-15
     Notes to Consolidated Financial Statements..................       F-16

Schedule II                                                             F-30


Sprint Spectrum Finance Corporation
Management's Discussion and Analysis of Financial Condition 
    and Results of Operations....................................       F-31

Financial Statements
     Report of Independent Auditors' ............................       F-32
     Balance Sheets..............................................       F-33
     Statements of Operations....................................       F-34
     Statements of Changes in Stockholder's Equity...............       F-35
     Statement of Cash Flows.....................................       F-36
     Notes to Financial Statements...............................       F-37








<PAGE>


                                                 SPRINT SPECTRUM L.P.

                                                SELECTED FINANCIAL DATA

<TABLE>                                                                
                                                                                                                     For the
                                                                                                                   Period from     
                                                                                                                  October 24,
                                                                   For the Years Ended                           1994 (date of
                                                                       December 31,                              inception) to
                                                -----------------------------------------------------------      December 31,
                                                      1997                 1996                 1995                 1994
                                                -----------------   -------------------   -----------------    -----------------

                                                                      (In Thousands)
    Results of Operations
<S>                                             <C>                  <C>                  <C>                  <C>         
      Net operating revenues...............     $     235,502        $        4,175       $         -          $          -
      Operating loss (1)...................         1,298,742               355,873               64,520                3,332

    Financial Position
      Total assets (2).....................         5,930,917             3,898,766            2,244,343              123,875
      Long-term debt (including current
         maturities).......................         3,112,919               691,241                 -                     -
      Construction obligations.............           705,280               714,934                 -                     -
      Other noncurrent liabilities.........            48,975                11,356                 -                     -



</TABLE>





     (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.
     (2) The total assets of Sprint  Spectrum as of December 31, 1995 include an
         investment in APC of $85,546 and a note receivable from APC of $655.



<PAGE>


                              SPRINT SPECTRUM L.P.
                     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 FinCo,
WirelessCo,  RealtyCo, and EquipmentCo. As of July 1, 1996, Holdings transferred
substantially all operating assets and liabilities to the Company. The Company's
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 establishment of a market for new digital personal  communications
          services  ("PCS");  
        - the introduction of competitive  service plans and pricing and other 
          effects of vigorous competition in the markets in which the Company 
          currently operates or intends to market its services;
        - the impact of  technological  change  which may  diminish the value of
          existing  equipment  which  may,  in turn, result in the need to incur
          additional costs to upgrade previously sold communications equipment;
        - 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 impact of changes brought about by  possible  restructuring  of  
          partners'  ownership  interests;  
        - 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;
        - the effects of  unanticipated  delays  resulting  from zoning or other
          disputes with municipalities; and unexpected results in litigation.

General

The  Company is an  enterprise  that was formed to  establish a  nationwide  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  covering  1.7  million  Pops.  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)   and  Sprint  PCS(SM) brand  names,  trademarks  of  Sprint
Communications Company L.P. ("Sprint Communications").



<PAGE>


Affiliations and Network Coverage

The  following is a detail of affiliates in which the Partners have an ownership
interest and to which the Company provides management services.

APC - As of  January  1,  1998,  Holdings  and  MinorCo  own  99.75%  and 0.25%,
respectively,  of the partnership  interests in American PCS, L.P. ("APC"). APC,
through  subsidiaries,  owns a PCS  license  for and  operates a  broadband  GSM
(global  system  for  mobile   communications)  PCS  system  in  the  Washington
D.C./Baltimore  MTA, and is in the process of building a code division  multiple
access ("CDMA")  overlay for its existing GSM PCS system.  Construction of APC's
CDMA network was substantially complete in December 1997, and the network became
operational  for traveling  purposes in January 1998. APC expects to launch CDMA
services on a commercial  basis before the end of the first quarter of 1998. APC
has affiliated with the Company and is marketing its products and services under
the Sprint brand name.

Cox  Communications  PCS,  L.P.  ("Cox PCS") - Holdings  also owns a 49% limited
partnership  interest in Cox PCS, a limited  partnership that owns a PCS license
for the Los  Angeles-San  Diego MTA  covering  21.5  million  Pops.  Cox,  which
previously  owned this license,  contributed the license to Cox PCS on March 31,
1997,  and is managing  partner of Cox PCS.  The Company  signed an  affiliation
agreement  with Cox PCS on December 31, 1996.  On February 3, 1998,  Cox Pioneer
Partnership ("CPP") notified Holdings that CPP was exercising its put rights and
would  transfer  10.2% of the  interest in Cox PCS to  Holdings,  subject to FCC
approval, which will give Holdings controlling interest.

SprintCom,  Inc. ("SprintCom")  -SprintCom, a wholly-owned subsidiary of Sprint,
participated  in the FCC's D and E Block  auction  which ended January 14, 1997,
and was awarded licenses for 139 of 493 BTAs, covering  approximately 70 million
Pops, all of which are geographic  areas not covered by the Company's  owned PCS
licenses or licenses  owned by APC, Cox PCS or  PhillieCo,  L.P.  ("PhillieCo"),
discussed  below.  In  accordance  with the Amended and  Restated  Agreement  of
Limited  Partnership of MajorCo,  L.P. (renamed Sprint Spectrum Holding Company,
L.P. ) dated  January 31, 1996,  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 a final  agreement has not yet been reached.  In
the interim, Sprint Spectrum has been providing buildout services in certain BTA
markets  where  SprintCom was awarded PCS licenses and is being  reimbursed  for
such services, which include engineering,  management,  purchasing,  accounting,
and other  related  services.  SprintCom  intends  to market  its  products  and
services as Sprint PCS.

PhillieCo - The Company also provides 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.  PhillieCo
markets its products and services as Sprint PCS. Although the Company expects to
affiliate with  PhillieCo,  there is no  affiliation  agreement at this time and
there can be no assurance that such an agreement will be reached.

Roaming - The Company has entered into roaming  agreements  with various  analog
cellular providers  throughout the United States and Canada.  Additionally,  the
Company has  negotiated  roaming  arrangements  with other CDMA PCS carriers who
provide service in geographic areas not currently covered by the CDMA network of
Sprint Spectrum and its affiliates.  As a result, Sprint Spectrum customers with
dual-mode   handsets  capable  of  transmitting   over  cellular  and  CDMA  PCS
frequencies  have  the  ability  to roam  automatically  in areas  where  Sprint
Spectrum service is not available and where there are roaming agreements.

<PAGE>



Emergence From Development Stage and Continuing Risk Factors

Prior to the third  quarter of 1997,  the Company  reported its  operations as a
development stage enterprise. During the development stage, the Company incurred
expenditures in conjunction  with PCS license  acquisitions,  initial design and
construction  of the PCS network,  engineering,  marketing,  administrative  and
other  start-up  expenses.  The Company has now commenced  service in all of the
MTAs in which it owns a license  and  expects to  continue  to incur  additional
construction   costs  as  it  expands   coverage  in  existing   license  areas.
Additionally,  the Company  will  require  substantial  working  capital to fund
initial operating activities, including the up-front customer acquisition costs.
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,  generating  operating revenues,  and attaining  profitable
levels of market demand for the Company's products and services.

Year 2000 Issue

The Year 2000 issue addresses the  capabilities of computer  software,  hardware
and firmware to correctly  process and exchange  dates between the 20th and 21st
centuries.  The issue  results  primarily  from coding in computer  programs and
chips  which uses a two digit date field  rather than a four digit date field to
define the applicable year. Any of the Company's computer software,  hardware or
firmware  that  contains or depends  upon a date  processing  function  may, for
example, incorrectly recognize a date entry of "00" as the year 1900 rather than
the year 2000 and  create a variety  of  potential  miscalculations.  This could
result in a system failure or disruptions of operations,  including  among other
things a temporary inability to process transactions, send invoices or engage in
similar normal business activities.

The Company has made a preliminary  assessment of its critical internal business
systems and believes the risk of non-compliance and resultant system failures to
be low. The Year 2000 issue may also affect the systems and  applications of the
Company's  customers and vendors.  The Company is contacting others with whom it
conducts  business to receive the  appropriate  warranties and  assurances  that
those third parties are or will be Year 2000 compliant.  The anticipated cost to
update  non-compliant  systems resides primarily with third-party  vendors.  The
Company is currently undertaking a more exhaustive evaluation of its systems and
is planning for the specific implementation of vendor software and testing to be
completed by mid-year 1999. The total cost of  modifications  and conversions is
not known at this  time;  however,  it is not  expected  to be  material  to the
Company's financial  position,  results of operations or cash flows and is being
expensed as incurred.

Asian Situation

The Asian situation  addresses the impact that the financial upheaval in certain
Asian  countries  may have on the Company's  operations.  The Company has made a
preliminary  assessment  of the  impact and has  determined  that there is not a
direct effect on its ability to obtain  handsets and other network  equipment in
sufficient quantities to meet customer needs. However, the Company is aware that
certain  manufacturers of component parts used in the handsets and other network
equipment may be adversely affected by the financial situation in Asia, although
the Company is unable to assess the likelihood of such adverse  effect.  If such
component  manufacturers  are unable to produce the necessary  components,  such
disruption in supply could have a material  adverse  impact on the operations of
the Company.



<PAGE>


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  continue to 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 year 2000  (based on the  Company's  current  plans for its network
buildout in its current license areas) will total  approximately $12 billion (of
which  approximately  $6.9 billion had been  expended as of December 31,  1997).
Costs  associated with the network  buildout  include  switches,  base stations,
towers,  antennae,  radio  frequency  engineering,  cell site  construction  and
microwave  relocation.  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,  unforeseen delays, cost
overruns, unanticipated expenses, regulatory changes, engineering design changes
and other technological risks.

The  Company  currently  has  limited  sources of  revenue  to meet its  capital
requirements and has relied upon capital contributions,  advances from Holdings,
third party debt and public debt. The Holdings  Partnership  Agreement  provides
for planned aggregate equity capital contributions of approximately $4.2 billion
by the Partners ("Total  Mandatory  Contributions"),  of which $1 billion is not
required to be invested in the Company.  Total Mandatory  Contributions  include
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 schedules to be set forth
in approved  annual  budgets.  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.  Throughout 1997, the Partners continued to make
such  capital  contributions  by mutual  agreement in the absence of an approved
budget for 1997. However, the Partners have no such obligation in the absence of
an approved  budget,  and there can be no assurance the Partners will reach such
an  agreement  or approve  the 1998  proposed  budget.  With  regard to the $1.0
billion  portion of the $4.2 billion not required to be invested in the Company,
Holdings  has  used  approximately  $0.7  million  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  remaining
commitments will be available to the Company.

Furthermore, the fact that the proposed budget for fiscal year 1998 has not been
approved by the Holdings  partnership  board has resulted in the occurrence of a
"Deadlock Event" under the Holdings Partnership Agreement as of January 1, 1998.
Under the Holdings  Partnership  Agreement,  if one of the  Partners  refers the
budget  issue to the chief  executive  officers of the  Parents  for  resolution
pursuant to specified  procedures  and the issue  remains  unresolved,  buy/sell
provisions would be triggered which may result in the purchase by one or more of
the   Partners  of  the  interest  of  the  other   Partners,   or,  in  certain
circumstances,  the  liquidation  of Holdings and it  subsidiaries.  Discussions
among the Partners about restructuring  their interests in Holdings,  in lieu of
triggering  such  buy/sell  procedures,  are ongoing.  However,  there can be no
assurance these discussions will result in a change to the partnership structure
or will avert the triggering of the resolution and buy/sell  procedures referred
to above or a liquidation of Holdings.

The  Amended  and  Restated   Capital   Contribution   Agreement  (the  "Amended
Agreement") was executed effective October 2, 1996, between Sprint Spectrum L.P.
and the Partners.  As of December 31, 1997,  approximately $3.3 billion had been
contributed to the Company under the Amended Agreement.

In October  1996 and as amended in December  1997,  the Company  entered  into a
credit  agreement with The Chase Manhattan Bank, as  administrative  agent for a
group of lenders, for a $2.0 billion senior secured credit

<PAGE>


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. As of December 31, 1997, $300 million under the term
loan and $605 million under the revolving credit facility had been borrowed with
$1.1 billion remaining  available.  There were no borrowings under the revolving
credit commitment at December 31, 1996.

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. As amended
in April and December 1997, the Nortel facility  provides $1.3 billion in senior
secured  loans.  The  Lucent  facility,  as amended  in May and  November  1997,
provides $1.8 billion in senior secured loans  (together the "Vendor  Financing"
and together with the Bank Facility,  the "Secured  Financing").  The Company is
using  the  proceeds  from the  Vendor  Financing  to fund the  purchase  of the
equipment and software manufactured by the vendors as well as a substantial part
of the construction  and ancillary  equipment (e.g.,  towers,  antennae,  cable)
required to construct the Company's PCS network.  These  facilities serve as the
primary  financing  mechanism  for the buildout of the network.  The Company has
borrowed $1.6 billion under such  facilities at December 31, 1997, of which $300
million was syndicated to Sprint.

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.

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

In August 1996,  Sprint  Spectrum  L.P. 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 L.P. will
be responsible  for payment of the Notes.  On August 15, 2001,  Sprint  Spectrum
L.P. 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) were used to fund
capital  expenditures,  including the buildout of the nationwide PCS network, to
fund  working  capital  requirements,  to fund  operating  losses  and for other
partnership purposes. Sprint purchased, and continues to

<PAGE>


hold,  approximately  $183  million  principal  amount at maturity of the Senior
Discount Notes.  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.

The Company's  business plan will require  additional capital financing prior to
the end of  1998.  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  its  Partners  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,  the failure to meet  regulatory  requirements  or other potential
adverse consequences.

For the year ended  December 31, 1997,  the Company used cash of $916 million in
operating  activities,  which  consisted of the  operating  loss of $1.4 billion
offset by  depreciation  and  amortization  of $354  million and a net change in
working capital of $138 million.  As discussed  above,  the Company has required
(and  expects to continue to require)  significant  working  capital to fund the
operations  supporting  the network  buildout and service  launch.  Cash used in
investing  activities totaled $2.1 billion,  consisting of capital  expenditures
and microwave  relocation  costs, also discussed above. Cash flow from financing
activities  totaled  $3  billion  during  1997,  and  included  partner  capital
contributions of $664 million, net proceeds from term loans and vendor financing
of $1.8 billion,  and net borrowings  under a revolving  credit facility of $605
million  after  deduction  of  long-term  debt  issuance  costs.  The  Company's
available financing sources are described more fully above.

For the year 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  $1.7  billion,
consisting  of  capital  expenditures  and  microwave  relocation  costs of $1.5
billion and advances to APC of $172 million.

For the year ended December 31, 1995,  Sprint  Spectrum used cash of $17 million
in operating  activities,  which consisted of the operating loss of $110 million
offset by an increase in  accounts  payable and accrued  expenses of $46 million
and the equity in the loss of APC.  Cash used in  investing  activities  totaled
$2.2 billion, consisting mainly of the purchase of PCS licenses.

Results of Operations

For the Year Ended December 31, 1997

Operating Revenues/Margin

The Company emerged from the development stage in the third quarter of 1997. The
majority of the  revenue  was  generated  in the third and fourth  quarters  and
includes the sales of handsets and accessory  equipment  through Sprint Spectrum
channels  (including  Sprint  PCS retail  stores,  telemarketing,  and  business
channels) and to third party vendors.  The negative  margin results  principally
from the  Company's  subsidy of  handsets.  The  Company  expects to recover the
initial subsidy loss through future service revenues. Cost of

<PAGE>


revenues  consists  principally of handset and accessory costs,  interconnection
costs and switch and cell site expenses, including site rental and utilities.

Average  revenue  per  subscriber  for 1997  was  approximately  $64,  excluding
PhillieCo,  APC and Cox PCS.  This  average is expected to decline in the future
(consistent with industry  projections) due to increased  competition  resulting
from  additional  wireless  service  providers  entering  the  market,  existing
cellular  providers  and  anticipated  reductions  in per-unit  operating  costs
resulting from volume increases.

Selling, General and Administrative Expenses

The Company's  selling,  general and  administrative  expenses for the year were
$689.2 million compared to $312.7 million for 1996.  Selling expenses  increased
$160.6  million  due to costs  incurred  during the initial  commercial  service
launch in various  markets and to costs incurred in  conjunction  with local and
national advertising for existing markets. Such costs include participation with
Sprint in an 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.
The Company  expects  selling  expenses will continue to increase in 1998 as the
Company expands its sales and marketing activities.

General and administrative  expenses increased $216.0 million due principally to
increases  in salary  and  related  benefits,  computer  equipment  and  related
expenses and professional and consulting fees.  Salaries and benefits,  computer
equipment  and  related  expenses  increased  due  to an  increase  in  employee
headcount.  These  additional  employees  were added  during 1997 to support the
continued growth of the Company.  Professional and consulting fees increased due
to the use of  consultants  and  other  experts  to assist  with the  continuing
development and enhancement of the Company's sophisticated  information systems,
continued  rollout  and  tailoring  of  employee  training,  and  various  other
projects.

Depreciation and Amortization

Depreciation  and  amortization  expense for 1997 was $304.0 million compared to
$11.3 million for 1996. This increase  occurred as network equipment in launched
markets  has been  placed  in  service  and  amortization  of PCS  licenses  and
microwave relocation costs in those same markets commenced.

Other Income/Expense

Interest income decreased from $8.3 million for the year ended December 31, 1996
to $4.0  million  for the year ended  December  31,  1997 as the  average  daily
invested  cash  balance  decreased  during the  comparative  periods  due to the
receipt in the prior year of partner equity  contributions in advance of capital
and operational requirements.

Interest  expense  increased to $117.7  million for the year ended  December 31,
1997,  compared  to  $0.5  million  for  1996.  The  balance  of  the  Company's
construction accounts eligible for interest  capitalization  declined during the
year as markets launched commercial service and equipment was placed in service.
Additionally, interest expense continues to increase as borrowings increase.

Equity in loss of  unconsolidated  partnership  for the year ended  December 31,
1996  represents  the Company's  share of the losses in APC before the ownership
interest was  transferred to Holdings on August 31, 1996.  The Company  retained
the  rights  and  obligations  under the  affiliation  agreement  with  APC.  In
addition,  the Company  participates  in an affiliation  agreement with Cox PCS.
Fees earned under these agreements of

<PAGE>


$5.3 million and $1.6 million,  respectively,  for the years ended  December 31,
1997 and 1996 are included in other income.


For the Year Ended December 31, 1996

Sprint Spectrum  incurred a loss of $439 million for the year ended December 31,
1996,  which  included  equity  in APC  loss  of $92  million.  Certain  network
equipment  had been  placed in service  and  amortization  of PCS  licenses  and
microwave relocation costs in the launched markets commenced.

The Company commenced initial commercial operations for its PCS services late in
the fourth  quarter of 1996 and, as a result,  had generated  minimal  operating
revenues.  The  negative  gross profit  resulted  primarily  from the  Company's
subsidy of handsets.  Cost of revenues consisted  principally of switch and cell
site expenses,  including site rental,  utilities and access charges. Such costs
were 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
included  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
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 had 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.

<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") as of December 31, 1997 and 1996, and
the related consolidated statements of operations,  changes in partners' capital
and cash flows for the three years in the period ended  December  31, 1997.  Our
audits also included the  financial  statement  schedule  listed in the Index at
Item 14 (a)(2).  These financial statements and financial statement schedule are
the  responsibility of the Partnership's  management.  Our  responsibility is to
express an opinion on these  consolidated  financial  statements  and  financial
statement schedule based on our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards. Those standards require that we plan and perform the audits 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
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

In our opinion,  such consolidated  financial  statements present fairly, in all
material respects,  the consolidated  financial position of Sprint Spectrum L.P.
and  subsidiaries  at  December  31,  1997 and 1996,  and the  results  of their
operations  and their cash flows for the three years then ended,  in  conformity
with  generally  accepted  accounting  principles.  Also,  in our opinion,  such
financial  statement  schedule,   when  considered  in  relation  to  the  basic
consolidated  financial  statements  taken as a whole,  presents  fairly  in all
material respects the information set forth therein.

The Partnership was in the  development  stage at December 31, 1996;  during the
year  ended  December  31,  1997,  the  Partnership  completed  its  development
activities and commenced its planned principal operations.



Deloitte & Touche
Kansas City, Missouri

February 3, 1998







<PAGE>


<TABLE>

                                                   
                                           SPRINT SPECTRUM L.P. AND SUBSIDIARIES
                                                CONSOLIDATED BALANCE SHEETS
                                                      (In Thousands)

                                                                                
                                                                                December 31,             December 31,    
                                                                                   1997                     1996
------------------------------------------------------------------------    ---------------------   ---------------------

                                ASSETS

CURRENT ASSETS:
<S>                                                                         <C>                     <C>               
   Cash and cash equivalents.........................................       $           36,821      $           49,988
   Accounts receivable, net..........................................                   96,318                   3,310
   Receivable from affiliates........................................                  105,156                  14,021
   Inventory.........................................................                   96,907                  72,414
   Prepaid expenses and other assets.................................                   25,353                  14,260
                                                                            ---------------------   ----------------------
                                                                            
     Total current assets............................................                  360,555                 153,993

INVESTMENT IN PCS LICENSES, net......................................                2,085,836               2,122,908

PROPERTY, PLANT AND EQUIPMENT, net...................................                3,132,664               1,408,680

MICROWAVE RELOCATION COSTS, net......................................                  250,397                 135,802

OTHER ASSETS, net....................................................                  101,465                  77,383

                                                                            =====================    =====================
TOTAL ASSETS.........................................................       $        5,930,917       $       3,898,766
                                                                            =====================    =====================

                   LIABILITIES AND PARTNERS' CAPITAL

CURRENT LIABILITIES:
   Accounts payable..................................................       $          305,524       $         196,146
   Payable to affiliate..............................................                    1,190                   5,626
   Accrued interest..................................................                   45,851                  12,027
   Accrued expenses..................................................                  227,890                  47,173
   Current maturities of long-term debt..............................                   11,380                   5,049
                                                                            ---------------------    ---------------------
     Total current liabilities.......................................                  591,835                 266,021

CONSTRUCTION OBLIGATIONS.............................................                  705,280                 714,934

LONG-TERM DEBT.......................................................                3,101,539                 686,192

OTHER NONCURRENT LIABILITIES.........................................                   48,975                  11,356

COMMITMENTS AND CONTINGENCIES

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

PARTNERS' CAPITAL AND ACCUMULATED DEFICIT:
   Partners' capital.................................................                3,437,565               2,767,564
   Accumulated deficit ..............................................               (1,959,277)               (552,301)
                                                                            ---------------------    ---------------------
                                                                            
     Total partners' capital.........................................                1,478,288               2,215,263

                                                                            =====================    =====================
TOTAL LIABILITIES AND PARTNERS' CAPITAL..............................       $        5,930,917       $       3,898,766
                                                                            =====================    =====================

See notes to consolidated financial statements.
</TABLE>


<PAGE>


<TABLE>

                                           SPRINT SPECTRUM L.P. AND SUBSIDIARIES
                                           CONSOLIDATED STATEMENTS OF OPERATIONS
                                                       (In Thousands)


                                                                For the Year Ended December 31,
                                                 --------------------------------------------------------------

                                                        1997                  1996                  1995
                                                 ------------------    ------------------    ------------------

<S>                                              <C>                   <C>                   <C>         
OPERATING REVENUES.......................        $        235,502      $          4,175      $          -

OPERATING EXPENSES:
  Cost of revenues.......................                 540,986                36,076                 -
  Selling, general and administrative....                 689,247               312,697               64,309
  Depreciation and amortization..........                 304,011                11,275                  211
                                                 ------------------    ------------------    ------------------

     Total operating expenses............               1,534,244               360,048               64,520
                                                 ------------------    ------------------    ------------------

LOSS FROM OPERATIONS.....................              (1,298,742)             (355,873)             (64,520)

OTHER INCOME (EXPENSE):
  Interest income........................                   3,994                 8,337                  260
  Interest expense.......................                (117,700)                 (549)                   -
  Other income...........................                   5,472                 1,804                   38
  Equity in loss of unconsolidated
     partnership........................                        -               (92,284)             (46,206)
                                                                                                     
                                                 ------------------    ------------------    ------------------

     Total other income (expense)........                (108,234)              (82,692)             (45,908)
                                                 ------------------    ------------------    ------------------

NET LOSS.................................        $     (1,406,976)     $       (438,565)     $      (110,428)
                                                 ==================    ==================    ==================

See notes to consolidated financial statements.
</TABLE>


<PAGE>


<TABLE>

                                         SPRINT SPECTRUM L.P. AND SUBSIDIARIES
                                CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
                                                    (In Thousands)

                                                             Partners'               Accumulated
                                                              Capital                  Deficit                  Total
                                                         -------------------     --------------------     -------------------

<S>                                                     <C>                     <C>                       <C>               
BALANCE, January 1, 1995.......................          $       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

Contributions of capital.......................                  670,001                    -                    670,001

Net loss.......................................                     -                 (1,406,976)             (1,406,976)
                                                         -------------------     --------------------     -------------------

BALANCE, December 31, 1997.....................          $     3,437,565         $    (1,959,277)         $    1,478,288
                                                         ===================     ====================     ===================

See notes to consolidated financial statements.
</TABLE>


<PAGE>

<TABLE>

                                         SPRINT SPECTRUM L.P. AND SUBSIDIARIES
                                         CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                     (In Thousands)

                                                                                Year Ended December 31,
                                                           -----------------------------------------------------------------
                                                                  1997                   1996                   1995
                                                           --------------------   -------------------    -------------------

CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                        <C>                    <C>                    <C>              
  Net loss..............................................   $      (1,406,976)     $        (438,565)     $       (110,428)
  Adjustments to reconcile net loss to net cash
     provided by
   (used in) operating activities:
     Equity in loss of unconsolidated partnership.......                 -                   92,284                46,206
     Depreciation and amortization......................             304,541                 11,275                   242
     Amortization of debt discount and issuance costs...              48,130                 14,008                   -
     Changes in assets and liabilities:
       Receivables......................................            (187,630)               (16,991)                 (340)
       Inventory........................................             (24,493)               (72,414)                  -
       Prepaid expenses and other assets................              (6,550)               (21,608)                 (178)
       Accounts payable and accrued expenses............             319,482                211,555                45,672
       Other noncurrent liabilities.....................              37,619                  9,500                 1,856
                                                           --------------------   -------------------    -------------------
          Net cash used in operating activities.........            (915,877)              (210,956)              (16,970)

CASH FLOWS FROM INVESTING ACTIVITIES:
  Capital expenditures..................................          (1,980,080)            (1,386,346)              (31,763)
  Proceeds on sale of equipment.........................                 -                      -                      37
  Microwave relocation costs, net.......................            (116,253)              (135,828)                  -
  Purchase of PCS licenses..............................                 -                      -              (2,006,156)
  Investment in unconsolidated partnership..............                 -                      -                (131,752)
  Loan to unconsolidated partnership....................                 -                 (172,000)                 (655)
                                                           --------------------   -------------------    -------------------
          Net cash used in investing activities.........          (2,096,333)            (1,694,174)           (2,170,289)

CASH FLOWS FROM FINANCING ACTIVITIES:
  Net borrowings under revolving line of credit.........             605,000                    -                     -
  Proceeds from issuance of long-term debt..............           1,762,914                674,201                   -
  Change in construction obligations....................              (9,654)               714,934
  Payments on long-term debt............................              (2,990)                   (24)                  -
  Debt issuance costs...................................             (20,000)               (71,791)                  -
  Limited partner interest in consolidated subsidiary...                 -                      -                   5,000
  Borrowings from affiliates............................                 -                      -                   5,000
  Partner capital contributions.........................             663,773                669,509             2,173,368
  Dividends paid........................................                 -                  (32,834)                  -
                                                           --------------------   -------------------    -------------------
          Net cash provided by financing activities.....           2,999,043              1,953,995             2,183,368

                                                           --------------------   -------------------    -------------------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS........             (13,167)                48,865                (3,891)

CASH AND CASH EQUIVALENTS, Beginning of Period..........              49,988                  1,123                 5,014

                                                           ====================   ===================    ===================
CASH AND CASH EQUIVALENTS, End of Period................   $          36,821      $          49,988      $          1,123
                                                           ====================   ===================    ===================

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
     Interest paid, net of amount capitalized...........   $          33,041      $             323      $            -

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

  - A PCS license  covering the Omaha MTA and valued at $6,229 was  contributed
    to the  Company by Cox  Communications  during the year ended  December  31,
    1997.

  - Accrued  interest of $51,673  related to vendor  financing was converted to
    long-term debt during the year ended December 31, 1997.

See notes to consolidated financial statements.
</TABLE>


<PAGE>



                                               

                      SPRINT SPECTRUM L.P. AND SUBSIDIARIES
                   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., Comcast Telephony Services and Cox Telephony
Partnership  (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, 1997 and 1996:

     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
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. (the  "Partnership  Agreement")  dated as of
January 31, 1996 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
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.

<PAGE>



Partner Capital  Commitments - The Holdings  partnership  agreement provides for
planned capital contributions by the Partners ("Total Mandatory  Contributions")
of  $4.2  billion,  which  includes  agreed  upon  values  attributable  to  the
contributions  of certain  additional  personal  communications  service ("PCS")
licenses by a Partner.  The Total Mandatory  Contributions amount is required to
be contributed in accordance with capital contribution schedules to be set forth
in approved  annual  budgets.  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 fiscal 1998 has not yet
been approved by the partnership  board, which has resulted in the occurrence of
a Deadlock  Event (as defined)  under the Holdings  partnership  agreement as of
January 1, 1998. If the 1998 proposed budget is not approved through  resolution
procedures set forth in the Holdings  partnership  agreement,  certain specified
buy/sell  procedures may be triggered which may result in a restructuring of the
partners' interest in the Company or, in limited  circumstances,  liquidation of
the Company.  As of December 31, 1997,  approximately  $4.0 billion of the Total
Mandatory Contributions had been contributed by the Partners to Holdings and its
affiliated   partnerships,   of  which   approximately  $3.3  billion  had  been
contributed to Sprint Spectrum L.P.

Emergence from  Development  Stage Company - Prior to the third quarter of 1997,
the Company  reported its  operations as a  development  stage  enterprise.  The
Company has commenced service in all of the MTAs in which it owns a license.  As
a result,  the Company is no longer  considered a development  stage enterprise,
and the balance  sheets and  statements of  operations  and of cash flows are no
longer presented in development stage format.

Management  believes that the Company will incur  additional  losses in 1998 and
require  additional   financial  resources  to  support  the  current  level  of
operations  and the remaining  network  buildout for the year ended December 31,
1998.  Management  believes  the Company has the ability to obtain the  required
levels of financing  through  additional  financing  arrangements  or additional
equity funding from the Partners.


2.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation - The assets, liabilities,  results of operations and cash
flows of  entities in which the Company  has a  controlling  interest  have been
consolidated.  All significant  intercompany accounts and transactions have been
eliminated.

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 those
net assets, and assigned  agreements related to the wireless operations to which
it was a party to Sprint Spectrum L.P., EquipmentCo and RealtyCo.

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.  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.

<PAGE>


Information with respect to the financial  position and results of operations of
the separate operations pooled herein is as follows (in thousands):
<TABLE>

                                                               Sprint
                                                             Spectrum L.P.        Holdings          Combined
       <S>                                                   <C>                <C>              <C>         
       Total Assets, 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 is a registered trademark of Sprint  Communications
Company L.P. ("Sprint Communications") and Sprint and Sprint PCS are licensed to
the Company on a royalty-free  basis pursuant to a trademark  license  agreement
between the Company and Sprint Communications.

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 delivered to a customer or an unaffiliated agent.

Cost of  Equipment - The Company  uses  multiple  distribution  channels for its
inventory,  including  third-party  retailers,  Company-owned retail stores, its
direct sales force and  telemarketing.  Cost of equipment varies by distribution
channel and includes the cost of multiple models of handsets,  related accessory
equipment and warehousing and shipping expenses.

Cash and Cash Equivalents - The Company considers all highly liquid  instruments
with  original  maturities of three months or less to be cash  equivalents.  The
Company  maintains cash and cash equivalents in financial  institutions with the
highest credit ratings.

Accounts  Receivable - Accounts  receivable are net of an allowance for doubtful
accounts of  approximately  $9.0  million and $0.2 million at December 31, 1997,
and 1996, respectively.

Inventory - Inventory consists of wireless  communication  equipment  (primarily
handsets).  Inventory  is stated at the lower of cost (on a first in,  first-out
basis) or replacement  value. Any 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
or  fair  value  at the  date of  acquisition.  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 relieved 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 - 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

<PAGE>


years,  and  generally  grants  renewals if the licensee  has complied  with its
license  obligations.  The Company believes it will be able to secure renewal of
the PCS licenses  held by its  subsidiaries.  PCS licenses  are  amortized  over
estimated  useful  lives  of  40  years  once  placed  in  service.  Accumulated
amortization  for PCS  licenses  totaled  approximately  $45.0  million and $1.7
million  as  of  December  31,  1997,  and  1996,  respectively.  There  was  no
amortization in 1995.

Microwave Relocation Costs - The Company has also incurred costs associated with
microwave  relocation  in  the  construction  of  the  PCS  network.   Microwave
relocation  costs are  amortized  over  estimated  useful lives of 40 years once
placed in service.  Accumulated  amortization  for  microwave  relocation  costs
totaled  approximately  $5.2  million  as of  December  31,  1997.  There was no
amortization in 1996 or 1995.

Intangible  Assets - 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  (including  the PCS  licenses)  incurred  during  the period of
construction  are capitalized.  The total interest  capitalized in 1997 and 1996
was approximately $97.4 million and $30.5 million,  respectively.  There were no
amounts capitalized in 1995.

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. Accumulated amortization for the years ended December 31, 1997,
and 1996 was approximately $13.3 million and $1.9 million,  respectively.  There
was no amortization in 1995.

Operating  Leases - Rent expense is recognized on the  straight-line  basis over
the life of the  lease  agreement,  including  renewal  periods.  Lease  expense
recognized in excess of cash expended is included in non-current  liabilities in
the consolidated balance sheet.

Major Customer - The Company markets its products through multiple  distribution
channels,  including Company-owned retail stores and third-party retail outlets.
The Company's  subscribers are disbursed  throughout the United States. Sales to
one  third-party  retail  customer  represented  approximately  21%  and  88% of
operating  revenues in the  consolidated  statements of operations for the years
ended December 31, 1997 and 1996,  respectively.  The Company reviews the credit
history of retailers  prior to extending  credit and  maintains  allowances  for
potential credit losses.  The Company believes that its risk from  concentration
of credit is limited.

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, 1997 and 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

<PAGE>


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 1996 and
1995  consolidated  financial  statements  to conform  to the 1997  consolidated
financial statement presentation.

3.       PROPERTY, PLANT AND EQUIPMENT

Property,  plant and equipment consist of the following at December 31, 1997 and
1996 (in thousands):


<TABLE>
                                                                   1997                1996
                                                                   ----                ----

<S>                                                         <C>                <C>           
Land                                                        $       1,444      $          905
Buildings and leasehold improvements                              612,208              86,467
Fixtures and office furniture                                     137,180              68,210
Network equipment                                               2,137,760             255,691
Telecommunications plant - construction work in progress          495,826           1,006,990
                                                            --------------      --------------
                                                                3,384,418           1,418,263
Less accumulated depreciation                                    (251,754)             (9,583)
                                                            --------------      --------------

                                                            $   3,132,664       $   1,408,680
                                                            ==============      ==============
</TABLE>

Depreciation  expense on property,  plant and equipment was approximately $242.1
million,  $9.6 million,  and $0.2 million for the years ended December 31, 1997,
1996 and 1995, respectively.


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")  held a 51%  interest  in APC and was the
managing  general  partner.  The  investment  in APC was 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,
which provides for the  reimbursement of certain  allocable costs and payment of
affiliation fees. 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  between the  Company and APC II prior to  amendment
specifies that losses were allocated based on capital  contributions and certain
other factors. Under the equity method, the Company

<PAGE>


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.

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  $10.1
million.  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 $0.1 million for the period ended August 31, 1996 and $0.2 million
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, 1997 and 1996 is summarized
as follows (in thousands):

<TABLE>
                                                                            1997              1996
                                                                       ---------------    --------------

       <S>                                                            <C>                <C>           
       11% Senior Notes due in 2006                                   $     250,000      $    250,000
       121/2% Senior Discount Notes due in 2006, net of
         unamortized discount of $177,720 and $214,501 at
         December 31, 1997 and 1996, respectively                           322,280           285,499
       Credit facility - term loan                                          300,000           150,000
       Credit facility - revolving credit                                   605,000                 -
       Vendor financing                                                   1,612,914                 -
       Note payable to affiliate due in 1998                                  5,000             5,000
       Other                                                                 17,725               742
                                                                       ---------------    --------------

       Total debt                                                         3,112,919           691,241
       Less current maturities                                               11,380             5,049
                                                                       ---------------    --------------

       Long-term debt                                                 $   3,101,539      $    686,192
                                                                       ===============    ==============
</TABLE>

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

<PAGE>


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 Notes      Senior Discount 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 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  Notes and Senior  Discount
Notes  would  remain  outstanding   immediately  after  giving  effect  to  such
redemption.  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.  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.

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.  In December 1997,  certain terms relating to
the financial and operating  conditions  were amended.  As of December 31, 1997,
$605 million had been drawn at a weighted average  interest rate of 8.42%,  with
$1.1 billion remaining  available.  There were no borrowings under the revolving
credit  commitment  as of December 31, 1996.  Commitment  fees for the revolving
portion of the agreement are payable quarterly based on average unused revolving
commitments.  In February  1998,  the Company had  borrowed an  additional  $225
million under the revolving credit agreement.

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.

<PAGE>



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.

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,
1997 and 1996,  the weighted  average  interest rate on the term loans was 8.39%
and 8.19%, respectively.

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  agreements  (discussed  below) 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(R) 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.

Vendor  Financing - As of October 2, 1996,  the Company  entered into  financing
agreements with Northern Telecom Inc.  ("Nortel") and Lucent  Technologies  Inc.
("Lucent",  and together with Nortel,  the "Vendors") 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.  Additionally,  the commitments allow for the
conversion of accrued  interest into additional  principal.  Such conversions do
not reduce the availability under the commitments. Interest accruing on the debt
outstanding  at December 31, 1997, can be converted  into  additional  principal
through   February  8,  1999  and  March  30,  1999,   for  Lucent  and  Nortel,
respectively.

On April 30, 1997 and November  20, 1997 , the Company  amended the terms of its
financing agreement with Nortel. The amendments provide for a syndication of the
financing  commitment  between  Nortel,  several  banks and other  vendors  (the
"Nortel  Lenders"),  and the  modification  of certain  operating  and financial
covenants.  The commitment  provides  financing in two phases.  During the first
phase,  the Nortel  Lenders  will finance up to $800  million.  Under the second
phase, the Nortel Lenders will finance up to an additional $500 million upon the
achievement of certain  operating and financial  conditions,  as amended.  As of
December 31, 1997, $630 million,  including  converted accrued interest of $18.6
million,  had been  borrowed at a weighted  average  interest rate of 8.98% with
$189 million remaining available under the first phase. In addition, the Company
paid $20 million in origination  fees upon the initial  drawdown under the first
phase and will be obligated to pay  additional  origination  fees on the date of
the initial  drawdown loan under the second phase. In February 1998, the Company
borrowed an additional  $47.0 million under the Nortel  facility.  There were no
borrowings under the Nortel agreement at December 31, 1996.


<PAGE>


On May 29, 1997 and  December  15,  1997,  the Company  amended the terms of its
financing agreement with Lucent. The amendments provide for a syndication of the
financing  commitment  between  Lucent,  Sprint and other banks and vendors (the
"Lucent  Lenders"),  and the  modification  of certain  operating  and financial
covenants.  The Lucent  Lenders  have  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.
As of December 31, 1997,  the Company had borrowed  approximately  $983 million,
including converted accrued interest of $33.1 million, under the Lucent facility
at a  weighted  average  interest  rate of 8.94%,  with $850  million  remaining
available.  In February 1998, the Company borrowed an additional  $104.1 million
under the Lucent  facility.  There were no borrowings under the Lucent agreement
at December 31, 1996.

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

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

Note payable to affiliate - As of December 31, 1997 and 1996,  the Company had a
note  payable  of $5  million,  bearing  interest  at 6.5% and  payable  on July
31,1998, due to an affiliated entity, NewTelco, L.P.



<PAGE>


Fair  Value - The  estimated  fair  value  of the  Company's  long-term  debt at
December 31, 1997 and 1996 is as follows (in thousands):

<TABLE>
                                                         1997                                      1996
                                         --------------------------------------    -------------------------------------

                                             Carrying            Estimated            Carrying            Estimated
                                              Amount             Fair Value            Amount             Fair Value
                                         -----------------    -----------------    ----------------    -----------------

<S>                                     <C>                   <C>                  <C>                 <C>             
11% Senior Notes                         $     250,000        $     280,650        $     250,000       $     270,625
12 1/2% Senior Discount Notes                  322,280              389,300              285,499             337,950
Credit facility - term loan                    300,000              300,000              150,000             151,343
Credit facility - revolver                     605,000              605,000                  -                   -
Vendor facility - Lucent                       983,299              983,299                  -                   -
Vendor facility - Nortel                       629,615              629,615                  -                   -
</TABLE>


At December 31, 1997,  scheduled maturities of long-term debt during each of the
next five years are as follows (in thousands):

                            1998                          $     11,380
                            1999                                 7,025
                            2000                                 3,809
                            2001                               353,751
                            2002                               542,518


6.   COMMITMENTS AND CONTINGENCIES

Operating  Leases - Minimum rental  commitments as of December 31, 1997, for all
noncancelable  operating leases,  consisting  principally of leases for cell and
switch  sites and  office  space,  for the next five  years are as  follows  (in
thousands):
                            1998                          $     120,911
                            1999                                117,116
                            2000                                 92,510
                            2001                                 54,127
                            2002                                 15,891

Gross rental expense for cell and switch sites  aggregated  approximately  $80.6
million  and $13.1  million  for the years  ended  December  31,  1997 and 1996,
respectively.  Gross rental expense for office space approximated $33.2 million,
$11.4 million,  and $0.7 million for the years ended December 31, 1997, 1996 and
1995, respectively.  Certain cell and switch site leases contain renewal options
(generally for terms of 5 years) 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 ) and Nortel 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

<PAGE>


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 1997
and 1996,  the  Company  purchased  $332.7  million  and $85  million  under the
agreement,  respectively.  The total  purchase  commitment  must be satisfied by
April 30, 1998.

In September,  1996, the Company  entered into another  three-year  purchase and
supply  agreement  with a second  vendor for the  purchase of handsets and other
equipment  totaling more than $600 million,  with  purchases  that  commenced in
April  1997.  During  1997,  the  Company  purchased  $147.6  million  under the
agreement. The total purchase commitment must be satisfied by April 2000.

Service  Agreements - 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.

The Company has also entered into an agreement with a vendor to provide  prepaid
calling  services.  Monthly  rates per minute of use are based on  overall  call
volume. If the average minutes of use are less than monthly specified  minimums,
the Company is obligated to pay the difference  between the average minutes used
at the applicable  rates and the monthly  minimum.  Monthly  minimums range from
$40,000 to $50,000 during the initial term. Certain  installation and setup fees
for processing  and database  centers are also included in the agreement and are
dependent upon a need for such centers. The agreement extends through July 1999,
with successive  one-year term renewals,  unless terminated by the Company.  The
Company may terminate the agreement  prior to the expiration  date, but would be
subject to specified termination penalties.

In January 1997, the Company  entered into a four and one-half year contract for
consulting services. Under the terms of the agreement,  consulting services will
be provided at specified  hourly rates for a minimum number of hours.  The total
commitment is approximately $125 million over the term of the agreement.

Litigation - The Company is involved in various legal proceedings  incidental to
the conduct of its business.  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.


7.  EMPLOYEE BENEFITS

Employees  performing  services for the Company were employed by Sprint  through
December  31,  1995.  Amounts  paid to Sprint  relating  to pension  expense and
employer contributions to the Sprint Corporation 401(k) plan for these employees
approximated $0.3 million in 1995.

<PAGE>


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
$20.0 million,  $12.3 million, and $3.5 million for the years ended December 31,
1997, 1996 and 1995, respectively.

Long-Term  Compensation  Obligation  - The Company has two  long-term  incentive
plans, the 1996 Plan and the 1997 Plan.  Employees  meeting certain  eligibility
requirements are considered to be participants in each plan. Participants in the
1996 Plan will receive 100% of the  pre-established  targets for the period from
July 1, 1995 to June 30, 1996 (the  "Introductory  Term").  Participants  in the
1996 Plan elected  either a payout of the amount due or converted 50% or 100% of
the award to appreciation units. Unless converted to appreciation units, payment
for the Introductory  Term of the 1996 Plan will be made in the third quarter of
1998.  Under the 1996 plan,  appreciation  units vest 25% per year commencing on
the  second  anniversary  of the date of grant  and  expire  after a term of ten
years.  The 1997 Plan  appreciation  units vest 25% per year  commencing  on the
first  anniversary of the date of the grant and also expire after ten years. For
the years ended December 31, 1997, 1996, and 1995, $18.1 million,  $9.5 million,
and $1.9 million,  respectively, has been expensed under both plans. At December
31, 1997 a total of  approximately  103 million units have been  authorized  for
grant for both plans.  The  Company has applied APB Opinion No. 25,  "Accounting
for Stock Issued to  Employees"  for 1997 and 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 qualifies
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 $4.9 million and $1.1
million in 1997 and 1996, respectively.

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  Savings Plan.  Vesting  occurs once a participant  completes five
years of service.  For the years ended December 31, 1997 and 1996, expense under
the  profit   sharing  plan   approximated   $2.5  million  and  $0.7   million,
respectively.

Deferred  Compensation Plan for Executives - Effective January 1997, the Company
established a  non-qualified  deferred  compensation  plan which permits certain
eligible  executives to defer a portion of their  compensation.  The plan allows
the participants to defer up to 80% of their base salary and up to 100% of their
annual short-term incentive compensation.  The deferred amounts earn interest at
the  prime  rate.  Payments  will  be  made  to  participants  upon  retirement,
disability,  death or the expiration of the deferral  election under the payment
method selected by the participant.

<PAGE>


8.       RELATED PARTY TRANSACTIONS

Business  Services - The Company  reimburses  Sprint for certain  accounting and
data processing  services,  for participation in certain advertising  contracts,
for  certain  cash  payments  made by Sprint 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  $10.5  million,  $11.9
million and $2.6  million are  included in selling,  general and  administrative
expense in the consolidated statement of operations for 1997, and 1996 and 1995,
respectively.  In addition to the  miscellaneous  services  agreement  described
above,  the Company  has  entered  into  agreements  with  Sprint for  invoicing
services,  operator services, long distance and switching equipment. The Company
is also using  Sprint  Communications  as its  interexchange  carrier,  with the
agreement for such services  covered under the Holdings  partnership  agreement.
Charges for the volume of services  provided  are similar to those that would be
incurred with an unrelated third-party vendor.

APC - The Company has an  affiliation  agreement with APC which provides for the
reimbursement  of certain  allocable costs and payment of affiliation  fees. For
the year ended  December  31, 1997,  the  reimbursement  of  allocable  costs of
approximately  $14.0 million is included in selling,  general and administrative
expenses. There were no reimbursements recognized in 1996 or 1995. Additionally,
affiliation  fees are  recognized  based on a percentage  of APC's net revenues.
During the year ended  December 31, 1997,  affiliation  fees of $4.2 million are
included in other income.

PhillieCo,  L.P. - The Company  provides  various  services to  PhillieCo,  L.P.
("PhillieCo"),  a limited  partnership  organized by and among  subsidiaries  of
Sprint,  TCI and Cox.  PhillieCo  owns a PCS license for the  Philadelphia  MTA.
During the year ended December 31, 1997, costs for services incurred during 1996
and 1997 of $36.3  million were  allocated to  PhillieCo,  and are included as a
reduction of selling,  general and  administrative  expenses in the accompanying
consolidated  statements  of  operations.  Additionally,  affiliation  fees  are
recognized  based on a percentage of PhillieCo's  net revenues.  During the year
ended December 31, 1997,  affiliation fees of $0.3 million are included in other
income in the accompanying consolidated statements of operations.  The allocated
costs and  affiliate  fees of $36.6  million are  included in  receivables  from
affiliates at December 31, 1997 and were paid during January 1998. There were no
such costs at December 31, 1996.

SprintCom,   Inc.  -  The  Company   provides   services  to   SprintCom,   Inc.
("SprintCom"),  a  wholly-owned  subsidiary of Sprint.  The Company is currently
providing  services  to build out the  network  infrastructure  in  certain  BTA
markets where SprintCom was awarded licenses. Such services include engineering,
management,  purchasing,  accounting  and other related  services.  For the year
ended  December 31,  1997,  costs for  services  provided of $29.1  million were
allocated to SprintCom,  and are included as a reduction of selling, general and
administrative   expenses  in  the  accompanying   consolidated   statements  of
operations.  Of the total  allocated  costs,  approximately  $14.0  million  are
included in receivable  from affiliates at December 31, 1997. No such costs were
incurred in 1996.

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 years ended
December 31, 1997 and 1996,  allocable  costs of  approximately  $20 million and
$7.3  million,   respectively,   are  netted   against   selling,   general  and
administrative   expense  in  the   accompanying   consolidated   statements  of
operations. Of these total allocated costs,  approximately $1.6 million and $7.3
million were included in receivables from affiliates in the consolidated balance
sheets. In addition, the Company purchases certain

<PAGE>


equipment,  such as handsets,  on behalf of Cox PCS. Receivables from affiliates
for handsets  and related  equipment  were  approximately  $31.2  million and $6
million at December 31, 1997 and 1996, respectively.

Paging Services - In 1996, the Company  commenced  paging  services  pursuant to
agreements with Paging Network Equipment Company and Sprint Communications.  For
the years ended  December  31,  1997 and 1996,  Sprint  Communications  received
agency fees of approximately $10.6 million and $4.9 million, respectively.


9.    QUARTERLY FINANCIAL DATA (Unaudited)
<TABLE>
Summarized quarterly financial data for 1997 and  1996 is as follows (in thousands):


                       1997                          First             Second             Third             Fourth
                       ----                        ---------         ----------         ---------         ----------

<S>                                              <C>                <C>               <C>                <C>         
       Operating revenues...................     $      9,467       $     25,386      $     72,534       $    128,115
       Operating expenses...................          200,281            303,098           455,236            575,629
       Net loss.............................          188,884            287,664           420,914            509,514


                       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

</TABLE>


10.   SUBSEQUENT EVENT

Subsequent  to December 31, 1997,  the Company  reorganized  certain  operations
under which certain field offices will be  consolidated.  Costs  associated with
this reorganization are expected to be recorded in the first quarter of 1998 and
will  consist  primarily of severance  pay, the  write-off of certain  leasehold
improvements and termination payments under lease agreements.


<PAGE>


<TABLE>
                                                                                                            SCHEDULE II

                                         SPRINT SPECTRUM L.P. AND SUBSIDIARIES
                                           VALUATION AND QUALIFYING ACCOUNTS
                                     Years Ended December 31, 1997, 1996 and 1995
                                                     (In Thousands)


                                                                           Additions
                                                                 ------------------------------

                                                Balance at        Charged to       Charged to                          
                                                 Beginning        Costs and          Other            Other             Balance at
                    Description                   of Year          Expense          Accounts        Deductions         End of Year
-------- ----------------------------------     ------------     -------------    -------------    -------------       ------------

Receivables

<S>                                             <C>              <C>               <C>              <C>                 <C>       
1997     Allowance for doubtful accounts        $      202        $    11,277      $     -          $    (2,447)  (1)   $    9,032
                                                                                        
1996     Allowance for doubtful accounts               -                  202            -                -                    202

1995     Allowance for doubtful accounts               -                  -              -                -                    -


(1)      Net recoveries of accounts written off


</TABLE>


<PAGE>


                                               
                       SPRINT SPECTRUM FINANCE CORPORATION
               (A Wholly-Owned Subsidiary of Sprint Spectrum L.P.)
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

General

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.

<PAGE>



                                              


INDEPENDENT AUDITORS' REPORT


Partners 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,  1997 and  1996,  and the  related  statements  of  operations,  changes  in
stockholder's  equity and cash flows for the year ended  December  31,  1997 and
period  from May 21,  1996 (date of  inception)  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 audits 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
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

In our  opinion,  such  financial  statements  present  fairly,  in all material
respects,  the financial  position of Sprint  Spectrum  Finance  Corporation  at
December 31, 1997 and 1996, and the results of its operations and its cash flows
for the year then ended  December 31, 1997 and period from May 21, 1996 (date of
inception)  to  December  31,  1996,  in  conformity  with  generally   accepted
accounting principles.



Deloitte & Touche
Kansas City, Missouri


February 3, 1998





<PAGE>



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

<TABLE>


                                                                               December 31,          December 31,
                                                                                   1997                  1996
      ------------------------------------------------------------------ --- ----------------- --- -----------------

                                   ASSETS

<S>                                                                          <C>                   <C>           
      Receivable from parent.........................................        $         -           $          100

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

                    LIABILITIES AND STOCKHOLDER'S EQUITY

      Payable to parent..............................................        $       1,497         $           -

      STOCKHOLDER'S EQUITY:
        Common stock, $1.00 par value; 1,000 shares authorized; 100
           shares issued and outstanding.............................                  100                    100
        Accumulated deficit..........................................               (1,597)                    -
                                                                             -----------------     -----------------
             Total stockholders' equity..............................               (1,497)                   100

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


See notes to financial statements.
</TABLE>

<PAGE>

<TABLE>

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



                                                                                                 Period from
                                                                                                May 21, 1996
                                                                   Year Ended                (date of inception)
                                                                  December 31,                 to December 31,
                                                                      1997                          1996
                                                             -----------------------       ------------------------

<S>                                                          <C>                           <C>             
Operating Revenues................................           $                 -           $              -

Operating Expenses................................                          1,597                         -
                                                             -----------------------       ------------------------

Net Loss..........................................           $             (1,597)                        -
                                                             =======================       ========================


See notes to financial statements.
</TABLE>

<PAGE>

<TABLE>

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





                                                                          Common Stock                    Accumulated
                                                              -------------------------------------
                                                                  Shares               Dollars              Deficit
                                                              ----------------     ----------------     -----------------

<S>                                                                     <C>        <C>                  <C>         
      BALANCE, May 21, 1996.............................                100        $         100        $          -
                                                              ================     ================     =================

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

      Net loss..........................................                 -                    -              (1,597)
                                                              ----------------     ----------------     -----------------

      BALANCE, December 31, 1997........................                100        $          100       $    (1,597)
                                                              ================     ================     =================

See notes to financial statements.
</TABLE>


<PAGE>

<TABLE>

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



                                                                                                               From
                                                                                                        date of inception
                                                                         For the year ended               to December 31,
                                                                           December 31, 1997                   1996
                                                                      --------------------------    ---------------------------

     CASH FLOWS FROM OPERATING ACTIVITIES:
       Adjustments to reconcile net loss to net cash used in
       operating activities:
<S>                                                                   <C>                           <C>                 
          Net loss...............................................     $               (1,597)       $                  -
          Changes in assets and liabilities:                                             -
             Receivable from parent..............................                        100                          (100)
             Payable to parent...................................                      1,497
                                                                      --------------------------    ---------------------------
               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.
</TABLE>


<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. FinCo pays a  management  fee to the  Partnership  based on
actual expenses paid by the Partnership on behalf of FinCo.

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


<PAGE>


In addition,  prior to August 15, 1999,  the Issuers may redeem up to 35% of the
originally  issued principal amount of the Notes 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  Notes and Senior  Discount
Notes  would  remain  outstanding   immediately  after  giving  effect  to  such
redemption.  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.  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.

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.

3.   INCOME TAXES

FinCo has net operating loss carryforwards totaling $1,597 at December 31, 1997,
which expire in 2012. A valuation  allowance was provided against the future tax
benefit of the net  operating  loss  carryforward  as it is more likely than not
that the net operating loss carryforward  will expire before it is realized,  as
FinCo has no sources of revenue,  and is not  expected  to generate  any taxable
income.