Sprint - Nextel 2007 Annual Report Download - page 110

SPRINT NEXTEL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
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. FCC 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.
In fourth quarter 2007, we also tested other indefinite lived intangibles for impairment by comparing the
asset’s respective net book value to estimates of fair value, determined using the direct value method, and
concluded that no impairment was necessary for these assets. Our FCC licenses are combined as a single unit of
accounting following the unit of accounting guidance as prescribed by EITF Issue No. 02-7, Unit of Accounting
for Testing Impairment of Indefinite-Lived Intangible Assets, except for our FCC licenses in the 2.5 GHz band,
which are tested separately as a single unit of accounting.
Definite Lived Intangibles
December 31, 2007 December 31, 2006
Useful Lives
Gross
Carrying
Value
Accumulated
Amortization
Net
Carrying
Value
Gross
Carrying
Value
Accumulated
Amortization
Net
Carrying
Value
(in millions)
Customer relationships .... 2to5years $12,246 $(8,043) $4,203 $12,224 $(4,968) $7,256
Trademarks ............. 10years 900 (215) 685 900 (125) 775
Reacquired rights ........ 9to14years 1,268 (184) 1,084 1,203 (82) 1,121
Other .................. 5to16years 87 (21) 66 79 (13) 66
$14,501 $(8,463) $6,038 $14,406 $(5,188) $9,218
2008 2009 2010 2011 2012
(in millions)
Estimated amortization expense ................................ $2,442 $1,559 $735 $249 $201
Definite lived intangible assets consist primarily of customer relationships that are amortized over two to
five years using the sum of the years’ digits method, which we believe best reflects the estimated pattern in
which the economic benefits will be consumed. Other definite lived intangible assets primarily include certain
rights under affiliation agreements that we reacquired in connection with the acquisitions of the PCS Affiliates
and Nextel Partners, which are being amortized over the remaining terms of those affiliation agreements on a
straight-line basis, and the Nextel and Direct Connect®trade names, which are being amortized over ten years
from the date of the Sprint-Nextel merger on a straight-line basis. The weighted average amortization period for
the acquired definite lived intangibles is eight years for 2007 and seven years for 2006. See note 2 for
information regarding the increases in the gross carrying value of definite lived intangible assets.
Spectrum Reconfiguration Obligations
As discussed in note 13, costs incurred pursuant to the Report and Order that relate to the spectrum and
infrastructure, when expended, are accounted for either as property, plant and equipment or as additions to the
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