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SPRINT NEXTEL CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Note 7. Intangible Assets
Indefinite-Lived Intangibles
December 31,
2007
Goodwill
Impairment,
Adjustments
& Other
December 31,
2008
Net
Additions
December 31,
2009
(in millions)
FCC licenses(1) ............. $20,707 $(1,796) $18,911 $591 $19,502
Trademarks ................ 416 (7) 409 — 409
Goodwill(2) ................ 978 (978) — 373 373
$22,101 $(2,781) $19,320 $964 $20,284
(1) During 2008, we contributed $2.5 billion of FCC licenses to Clearwire and acquired $1.0 billion of FCC
licenses in our normal course of business, including our requirements under the Report and Order. In
addition, we reduced FCC licenses by $265 million due to the reversal of unrecognized tax benefits. See
note 11 for additional information.
(2) During 2009, we recognized goodwill of $373 million associated with the acquisitions of VMU and iPCS
(see Note 3).
We hold FCC licenses authorizing the use of radio frequency spectrum to deploy our wireless services:
1.9 GHz licenses utilized in the CDMA network, and 800 megahertz (MHz) and 900 MHz licenses utilized in the
iDEN network. We also hold 1.9 GHz and other FCC licenses that are not currently being utilized. As long as the
Company acts within the requirements and constraints of the regulatory authorities, the renewal and extension of
these licenses is reasonably certain at minimal cost. We are not aware of any technology being developed that
would render this spectrum obsolete and have concluded that these licenses are indefinite-lived intangible assets.
Our Sprint and Boost Mobile trademarks have been identified as indefinite-lived intangible assets.
Goodwill
Goodwill represents the excess of consideration paid over the estimated fair value of net tangible and
identifiable intangible assets acquired in business combinations. During the fourth quarter 2009, we acquired
VMU and iPCS (see Note 3) and, based on our preliminary purchase price allocation, recorded $373 million of
goodwill.
Goodwill Recoverability Assessment
The carrying value of Sprint’s goodwill is included in the Wireless segment which represents our
wireless reporting unit. We estimate the fair value of the wireless reporting unit using discounted expected future
cash flows, supported by the results of market approach valuation models. If the fair value of the wireless
reporting unit exceeds its net book value, goodwill is not impaired, and no further testing is necessary. If the net
book value of our wireless reporting unit exceeds its estimated fair value, we estimate the fair value of goodwill
to determine the amount of impairment loss, if any.
The determination of the estimated fair value of the wireless reporting unit and other assets and
liabilities within the wireless reporting unit requires significant estimates and assumptions. These estimates and
assumptions primarily include, but are not limited to, discount rate, terminal growth rate, operating income
before depreciation and amortization (OIBDA) and capital expenditure forecasts. Due to the inherent uncertainty
involved in making those estimates, actual results could differ from those estimates. We evaluate the merits of
each significant assumption, both individually and in the aggregate, used to determine the fair value of the
wireless reporting unit, as well as the fair values of the corresponding assets and liabilities within the wireless
reporting unit, for reasonableness.
F-20