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Risks Related to our Investment in Clearwire
We are a majority shareholder of Clearwire, a term we use to refer to the consolidated entity of Clearwire
Corporation and its subsidiary Clearwire Communications LLC. Under this section, we have included certain
important risk factors with respect to our investment in Clearwire. For more discussion of Clearwire and the
risks affecting Clearwire, you should refer to Clearwire’s annual report on Form 10-K for the year ended
December 31, 2009.
Our investment in Clearwire exposes us to risks because we do not control the board, determine the strategies,
manage operations or control management, including decisions relating to the build-out and operation of a
national 4G network, and the value of our investment in Clearwire or our financial performance may be
adversely affected by decisions made by Clearwire or other large investors in Clearwire that are adverse to our
interests.
Although we have the ability to nominate seven of Clearwire’s 13 directors, at least one of our nominees
must be an independent director. Thus, we do not control the board, and we do not manage the operations of
Clearwire or control management. Clearwire has a group of investors that have been provided with representation
on Clearwire’s board of directors. These investors may have interests that diverge from ours or Clearwire’s.
Differences in views among the large investors could result in delayed decisions by Clearwire’s board of
directors or failure to agree on major issues. Any differences in our views or problems with respect to the
operation of Clearwire could have a material adverse effect on the value of our investment in Clearwire or our
business, financial condition, results of operations or cash flows.
In addition, the corporate opportunity provisions in Clearwire’s restated certificate of incorporation
provide that unless a director is an employee of Clearwire, the person does not have a duty to present to
Clearwire a corporate opportunity of which the director becomes aware, except where the corporate opportunity
is expressly offered to the director in his or her capacity as a director of Clearwire. This could enable certain
Clearwire shareholders to benefit from opportunities that may otherwise be available to Clearwire, which could
adversely affect Clearwire’s business and our investment in Clearwire.
Clearwire’s restated certificate of incorporation also expressly provides that certain shareholders and
their affiliates may, and have no duty not to, engage in any businesses that are similar to or competitive with
those of Clearwire, do business with Clearwire’s competitors, subscribers and suppliers, and employ Clearwire’s
employees or officers. These shareholders or their affiliates may deploy competing wireless broadband networks
or purchase broadband services from other providers. Any such actions could have a material adverse effect on
Clearwire’s business, financial condition, results of operations or prospects and the value of our investment in
Clearwire.
Moreover, we are dependent on Clearwire to quickly build, launch and operate a viable, national 4G
network. Our intention is to integrate these 4G services with our products and services in a manner that preserves
our time to market advantage. Clearwire’s success could be affected by, among other things, its ability to get
additional financing in the amounts and at terms that enable it to continue to build a national 4G network in a
timely manner. Should Clearwire be unable to obtain appropriate financing, it may be unable to build and operate
a viable 4G network in a manner that sustains its time to market advantage, or at all. If Clearwire is delayed or
unsuccessful in the development or operation of a 4G network, our future revenues, cash flows, growth and
overall profitability could be negatively affected.
We may be unable to sell some or all of our investment in Clearwire quickly or at all.
Clearwire has a limited trading history for its publicly traded Class A common stock. In addition, the
daily trading volume of Clearwire’s Class A common stock is lower than the number of shares of Class A
common stock we would hold if we exchanged all of our Clearwire Class B common stock and interests. If we
should decide to sell some or all of our equity securities of Clearwire, there may not be purchasers available for
any or all of our stock, or we may be forced to sell at a price that is below the then current trading price or over a
significant period of time. We are also subject to certain restrictions with respect to the sale of our equity
securities of Clearwire.
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