Sprint - Nextel 2006 Annual Report Download - page 25

willingness of third parties to develop new applications in a timely manner. We may not successfully complete
the development and rollout of new technology and related features or services in a timely manner, and they
may not be widely accepted by our customers or may not be profitable, in which case we could not recover
our investment in the technology. Deployment of technology supporting new service offerings may also
adversely affect the performance or reliability of our networks with respect to both the new and existing
services. Any resulting customer dissatisfaction could affect our ability to retain customers and have an
adverse effect on our results of operations and growth prospects.
Our wireless networks provide services utilizing CDMA and iDEN technologies. Wireless subscribers served
by these two technologies represent a smaller portion of global wireless subscribers than the subscribers served
by wireless networks that utilize GSM technology. As a result, our costs with respect to both CDMA and
iDEN network equipment and handsets may continue to be higher than the comparable costs incurred by our
competitors who use GSM technology, which places us at a competitive disadvantage.
The blurring of the traditional dividing lines between long distance, local, wireless, video and Internet
services contribute to increased competition.
The traditional dividing lines between long distance, local, wireless, video and Internet services are
increasingly becoming blurred. Through mergers, joint ventures and various service expansion strategies, major
providers are striving to provide integrated services in many of the markets we serve. This trend is also
reflected in changes in the regulatory environment that have encouraged competition and the offering of
integrated services.
We expect competition to intensify across all of our business segments as a result of the entrance of new
competitors or the expansion of services offered by existing competitors, and the rapid development of new
technologies, products and services. We cannot predict which of many possible future technologies, products,
or services will be important to maintain our competitive position or what expenditures we will be required to
make in order to develop and provide these technologies, products or services. To the extent we do not keep
pace with technological advances or fail to timely respond to changes in the competitive environment affecting
our industry, we could lose market share or experience a decline in revenue, cash flows and net income. As a
result of the financial strength and benefits of scale enjoyed by some of our competitors, they may be able to
offer services at lower prices than we can, thereby adversely affecting our revenues, growth and profitability.
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 likely will require additional capital to make the capital expenditures necessary to implement our business
plans and support future growth of our wireless business and satisfy our debt service requirements. In addition,
we may incur additional debt in the future for a variety of reasons, including future acquisitions. 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 credit rating, financial performance,
general economic conditions and prevailing market conditions. Some of these factors are beyond our control.
Failure to obtain suitable financing when needed could, among other things, result in our 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, which would likely increase our future borrowing costs and could affect our ability to access capital.
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
23