Sprint - Nextel 2006 Annual Report Download - page 108

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Note 7. Intangible Assets
Indefinite Lived Intangibles
December 31,
2005
Adjustments Resulting from
Nextel Partners and the
2006 PCS Affiliate Acquisitions
Final Adjustments Resulting From
the Sprint-Nextel Merger,
2005 PCS Affiliate Acquisitions
and Other
December 31,
2006
(in millions)
Goodwill ....... $21,288 $ 9,788 $(172) $30,904
FCC licenses .... 18,023 1,031 465 19,519
Trademarks ..... 416 — — 416
$39,727 $10,819 $ 293 $50,839
We have identified FCC licenses and our Sprint and Boost Mobile trademarks as indefinite lived intangible
assets, in addition to our goodwill, after considering the expected use of the assets, the regulatory and
economic environment within which they are being used, and the effects of obsolescence on their use. The
Sprint and Boost Mobile trademarks are highly respected brands with positive connotations. We have no legal,
regulatory or contractual limitations associated with our trademarks. We cultivate and protect the use of our
brands.
We hold several kinds of FCC licenses to deploy our services: 1.9 GHz PCS licenses utilized in our CDMA
network, 800 MHz and 900 MHz licenses utilized in our iDEN network, and 2.5 GHz licenses that we use for
first generation wireless Internet access services. We also hold 2.5 GHz, 1.9 GHz and other FCC licenses that
we currently do not utilize in our networks or operations. As long as we act within the requirements and
constraints of the regulatory authorities, the renewal and extension of our licenses is reasonably certain at
minimal cost. Spectrum licenses authorize wireless carriers to use radio frequency spectrum. That spectrum is
a renewable, reusable resource that does not deplete or exhaust over time. We are not aware of any technology
being developed that would render spectrum obsolete. Currently, there are no changes in the competitive or
legislative environments that would put in question the future need for spectrum licenses.
During the fourth quarter 2006, we performed our annual goodwill and other indefinite lived intangible asset
analyses as described in note 1. The result of these analyses was that our indefinite lived intangible assets
were not impaired. As permitted by FASB guidance, our goodwill analysis included an estimate of a control
premium with respect to the minority interest traded value of our common shares and an estimate of the value
of our long distance business, as well as other assumptions. As of December 31, 2006, we have not identified
any indicators of impairment with respect to our goodwill or other indefinite lived intangible assets. However,
if our share price were to experience a sustained, significant decline as compared to the share price as of
December 31, 2006 or if any other indicator of impairment exists, such as a decline in expected cash flows,
we may be required to perform the second step of the goodwill impairment test, which could cause us to
recognize a non-cash impairment charge that could be material to our consolidated financial statements.
F-31
SPRINT NEXTEL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)