Sprint - Nextel 2010 Annual Report Download - page 17

If we are unable to continue to improve our results of operations, we face the possibility of additional charges for
impairments of long-lived or indefinite-lived assets. Further, our future operating results will be impacted by our share of
Clearwire's net loss or net income, which during this period of their network build-out will likely negatively affect our
results of operations. The carrying value of our investment in Clearwire may be subject to impairment.
We review our wireless and wireline long-lived assets for impairment when changes in circumstances indicate that
the book amount may not be recoverable. If we are unable to continue to improve our results of operations and cash flows, a
review could lead to a material impairment in our consolidated financial statements. In addition, if we continue to have
challenges retaining subscribers and as we continue to assess the impact of rebanding the iDEN network, management may
conclude in future periods that certain CDMA and iDEN assets will never be either deployed or redeployed, in which case cash
and non-cash charges that could be material to our consolidated financial statements would be recognized.
We account for our investment in Clearwire using the equity method of accounting and, as a result, we record our
share of Clearwire's net income or net loss, which could adversely affect our consolidated results of operations. Clearwire
disclosed it would be required to raise additional capital in the near term in order to continue its current operations, and that as
of September 30, 2010, there was substantial doubt about its ability to continue as a going concern. In December 2010,
Clearwire successfully raised $1.4 billion in debt financing. As a result of this action, as of December 31, 2010, Clearwire no
longer reported substantial doubt about its ability to continue as a going concern. Clearwire's ability, however, to raise sufficient
additional capital in the long-term on acceptable terms, or at all, remains uncertain. Clearwire's inability to obtain sufficient
additional funding to continue its current operations may have an adverse effect on its estimated fair value based, in part, on its
publicly quoted stock price. A decline in the value of Clearwire may require Sprint to evaluate the decline in relation to Sprint's
carrying value of its investment in Clearwire. A conclusion by Sprint that a decline in the value of Clearwire is other than
temporary could result in a material impairment in our consolidated financial statements.
If Motorola is unable or unwilling to provide us with equipment and devices in support of our iDEN-based services, as well
as improvements, our operations will be adversely affected.
Motorola is our sole source for all of the devices we offer under the Nextel brand, except BlackBerry devices.
Although our handset supply agreement with Motorola is structured to provide competitively-priced devices, the cost of iDEN
devices is generally higher than devices that do not incorporate a similar multi-function capability. This difference may make it
more difficult or costly for us to offer devices at prices that are attractive to potential subscribers. In addition, the higher cost of
iDEN devices requires us to absorb a larger part of the cost of offering devices to new and existing subscribers, which may
reduce our growth and profitability. Also, we must rely on Motorola to develop devices capable of supporting the features and
services we offer to subscribers of services on our iDEN network and to provide maintenance and support for our iDEN-based
infrastructure. A decision by Motorola to discontinue, or the inability of either company to continue manufacturing, maintaining
or supporting our iDEN-based infrastructure and devices could have a material adverse effect on us. Further, our ability to
complete the spectrum reconfiguration plan in connection with the FCC's Report and Order is dependent, in part, on Motorola.
We have entered into agreements with unrelated parties for certain business operations. Any difficulties experienced in these
arrangements could result in additional expense, loss of subscribers and revenue, interruption of our services or a delay in
the roll-out of new technology.
We have entered into agreements with unrelated parties for the day-to-day execution of services, provisioning and
maintenance for our CDMA, iDEN and wireline networks, for the implementation of Network Vision, and for the development
and maintenance of certain software systems necessary for the operation of our business. We also have agreements with
unrelated parties to provide customer service and related support to our wireless subscribers and outsourced aspects of our
wireline network and back office functions to unrelated parties. In addition, we have sublease agreements with unrelated parties
for space on communications towers. As a result, we must rely on unrelated parties to perform certain of our operations and, in
certain circumstances, interface with our subscribers. If these unrelated parties were unable to perform to our requirements, we
would have to pursue alternative strategies to provide these services and that could result in delays, interruptions, additional
expenses and loss of subscribers.
The products and services utilized by us and our suppliers and service providers may infringe on intellectual property rights
owned by others.
Some of our products and services use intellectual property that we own. We also purchase products from suppliers,
including device suppliers, and outsource services to service providers, including billing and customer care functions, that
incorporate or utilize intellectual property. We and some of our suppliers and service providers have received, and may receive
in the future, assertions and claims from third parties that the products or software utilized by us or our suppliers and service
providers infringe on the patents or other intellectual property rights of these third parties. These claims could require us or an
infringing supplier or service provider to cease certain activities or to cease selling the relevant products and services. These
claims and assertions also could subject us to costly litigation and significant liabilities for damages or royalty payments, or
require us to cease certain activities or to cease selling certain products and services.
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