Sprint - Nextel 2010 Annual Report Download - page 19

Concerns about health risks associated with wireless equipment may reduce the demand for our services.
Portable communications devices have been alleged to pose health risks, including cancer, due to radio frequency
emissions from these devices. Purported class actions and other lawsuits have been filed against numerous wireless carriers,
including us, seeking not only damages but also remedies that could increase our cost of doing business. We cannot be sure of
the outcome of those cases or that our business and financial condition will not be adversely affected by litigation of this nature
or public perception about health risks. The actual or perceived risk of mobile communications devices could adversely affect
us through a reduction in subscribers, reduced network usage per subscriber or reduced financing available to the mobile
communications industry. Further research and studies are ongoing, and we cannot guarantee that additional studies will not
demonstrate a link between radio frequency emissions and health concerns.
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, 2010.
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 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. See also "Current economic conditions, our
recent financial performance and our debt ratings could negatively impact our access to the capital markets resulting in less
growth than planned or failure to satisfy financial covenants under our existing debt agreements. Moreover, Clearwire may be
considered a subsidiary under certain agreements relating to our indebtedness."
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 currently rely on Clearwire to build, launch and operate a viable 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 offer a competitive cost structure and its ability to obtain
additional financing in the amounts and at terms that enable it to continue to build a 4G network in a timely manner. Clearwire's
delay in its network build and deployment or operation of their 4G network may negatively affect our ability to generate future
revenues, cash flows or overall profitability from 4G services. See “Failure to complete development, testing and deployment
of new technology that supports new services could affect our ability to compete in the industry. The deployment of new
technology and new service offerings could result in network degradation or the loss of subscribers. In addition, the technology
we use, including WiMAX, may place us at a competitive disadvantage.”
We are currently engaged in an arbitration with Clearwire relating to the pricing of service on Clearwire's 4G network
for dual-mode wireless handsets used by Sprint customers, pursuant to our MVNO agreement with Clearwire. We do not expect
the resolution of this matter will have a material adverse effect on our consolidated financial position, results of operations or
operating cash flow; however, ultimate resolution of this matter could affect the pricing and competitiveness of our 4G
services.
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