Sprint - Nextel 2005 Annual Report Download - page 37

If we are unable to meet our future capital needs relating to investment in our networks and other obligations,
it may be necessary for us to curtail, delay or abandon our business growth plans. If we incur significant
additional indebtedness to fund our plans, it could cause a decline in our credit rating and could increase our
borrowing costs or limit our ability to raise additional capital.
We have substantial indebtedness, and we will require capital to satisfy our debt service requirements and other
obligations, such as the obligation to (i) purchase the shares of Nextel Partners common stock that we do not
already own, (ii) pay debt that we will assume in connection with the acquisition of Nextel Partners, and (iii) pay
debt that we have assumed in connection with the acquisitions of PCS Affiliates. We also will require additional
capital to make the capital expenditures necessary to implement our business plans or support future growth of
our wireless business. Continued declines in the ability of our Long Distance segment to generate cash from its
operations requires us to increase cash generated from our other segments. A decrease in our ability to generate
cash from operations, or to obtain funds from other sources, may require us to seek additional financing to
expand our businesses and meet our other obligations or divert cash used for capital expenditures, which could
detract from operations and limit our ability to increase, or cause a decline in, revenues and net income. In
addition, any future acquisitions may be made with additional borrowings. We may not be able to arrange
additional financing to fund our requirements on terms acceptable to us. Our ability to arrange additional
financing will depend on, among other factors, our financial performance, general economic conditions and
prevailing market conditions. Many of these factors are beyond our control. Failure to obtain suitable financing
when needed could, among other things, result in the inability to continue to expand our businesses and meet
competitive challenges. If we incur significant additional indebtedness, or if we do not continue to generate
sufficient cash from our operations, our credit rating could be adversely affected. As a result, our future
borrowing costs would likely increase and our access to capital could be adversely affected.
We have entered into outsourcing agreements related to certain business operations. Any difficulties
experienced in these arrangements could result in additional expense, loss of customers and revenue,
interruption of our services or a delay in the roll-out of new technology.
We have entered into outsourcing agreements for the development and maintenance of certain software systems
necessary for the operation of our business. We have also entered into agreements with third parties to provide
customer service and related support to our wireless subscribers and outsourced many aspects of our customer
care and billing functions to third parties. We also have entered into an agreement whereby a third party has
leased or operates a significant number of our communications towers, and we sublease space on these towers.
As a result, we must rely on third parties to perform certain of our operations and, in certain circumstances,
interface with our customers. If these third parties are unable to perform to our requirements, we would have to
pursue alternative strategies to provide these services and that could result in delays, interruptions, additional
expenses and loss of customers.
The intellectual property rights utilized by us and our suppliers and service providers may infringe on
intellectual property rights owned by others.
Some of our products and services use intellectual property that we own. We also purchase products from
suppliers, including handset device suppliers, and outsource services to service providers, including billing and
customer care functions, that incorporate or utilize intellectual property. We and some of our suppliers and
service providers have received, or may receive in the future, assertions and claims from third parties that the
products or software utilized by us or our suppliers and service providers infringe on the patents or other
intellectual property rights of these third parties. These claims could require us or an infringing supplier or
service provider to cease certain activities or to cease selling the relevant products and services. Such claims and
assertions also could subject us to costly litigation and significant liabilities for damages or royalty payments, or
require us to cease certain activities or to cease selling certain products and services.
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