Sprint - Nextel 2011 Annual Report Download - page 16

Table of Contents
In addition to the other information contained in this Form 10-K, the following risk factors should be considered carefully in evaluating us. Our business,
financial condition, liquidity or results of operations could be materially adversely affected by any of these risks.
If
we are not able to retain and attract wireless subscribers, our
f
inancial per
f
ormance will be impaired.
We are in the business of selling communications services to subscribers, and our economic success is based on our ability to retain current subscribers and
attract new subscribers. If we are unable to retain and attract wireless subscribers, our financial performance will be impaired, and we could fail to meet our financial
obligations, which could result in several outcomes, including controlling investments by third parties, takeover bids, liquidation of assets or insolvency. Beginning in
2008 through 2011, we experienced decreases in our total retail postpaid subscriber base of approximately 8.6 million subscribers (excluding the impact of our 2009
acquisitions), while our two largest competitors increased their subscribers during that period. In addition, our average postpaid churn rate was 1.86% and 1.95% for the
years ended December 31, 2011 and 2010, respectively, while our two largest competitors had churn rates that were substantially lower. Although we have begun to see a
reduction in our net loss of postpaid subscribers, if this trend does not continue our financial condition, results of operations and liquidity could be materially adversely
affected.
Our ability to retain our existing subscribers and to compete successfully for new subscribers and reduce our rate of churn depends on:
Our recent success in attracting more postpaid subscribers and reducing postpaid churn may also not be sustainable. Our ability to retain subscribers may be
negatively affected by industry trends related to subscriber contracts. For example, we and our competitors no longer require subscribers to renew their contracts when
making changes to their pricing plans. These types of changes could negatively affect our ability to retain subscribers and could lead to an increase in our churn rates if we
are not successful in providing an attractive product and service mix.
Moreover, service providers frequently offer wireless equipment, such as devices, below acquisition cost as a method to retain and attract subscribers that enter
into wireless service agreements for periods usually extending
14
Item 1A. Risk Factors
• our successful execution of marketing and sales strategies, including the acceptance of our value proposition; service delivery and customer care activities,
including new account set up and billing; and our credit and collection policies;
• Clearwire's ability to successfully obtain additional financing for the continued operation and build-out of its 4G networks;
• our ability to access Clearwire's spectrum;
• the successful deployment and completion of our network modernization plan, Network Vision, including a multi-mode network infrastructure, successful
LTE implementation and deployment, and push-to-talk capabilities of comparable quality to our existing Nextel platform push-to-talk capabilities;
• our ability to mitigate churn as we migrate Nextel platform push-to-talk subscribers to other offerings on our Sprint platform, which include future
offerings on our multi-mode network, such as Sprint Direct Connect®;
• actual or perceived quality and coverage of our networks, including Clearwire's 4G network;
• public perception about our brands;
• our ability to anticipate and develop new or enhanced technologies, products and services that are attractive to existing or potential subscribers;
• our ability to access additional spectrum, including through spectrum hosting arrangements;
• our ability to anticipate and respond to various competitive factors affecting the industry, including new technologies, products and services that may be
introduced by our competitors, changes in consumer preferences, demographic trends, economic conditions, and discount pricing and other strategies that
may be implemented by our competitors; and
• our ability to maintain our current MVNOs and to enter into new arrangements with MVNOs.