Sprint - Nextel 2012 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 financial performance 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. Beginning in 2008 through 2012, we experienced net decreases in our total retail postpaid subscriber
base of approximately
9.7 million subscribers (excluding the impact of our 2009 acquisitions).
Our ability to retain our existing subscribers and to compete successfully for new subscribers and reduce our rate of churn depends on,
among other things:
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 12 to 24 months. Equipment cost in excess of the revenue
generated from equipment sales is referred to in the industry as equipment net subsidy and is generally recognized when title of the device passes to
the dealer or end
- user subscriber. The cost of multi - functional devices, such as smartphones, including the iPhone® , has increased significantly in
recent years as a result of enhanced capabilities and functionality. At the same time, wireless service providers continue to compete on the basis of
price, including the price of devices offered to subscribers, which has resulted in increased equipment net subsidy. We have entered into a purchase
commitment with Apple that increases the average equipment net subsidy for postpaid devices resulting in a reduction to consolidated results from
13
Item 1A.
Risk Factors
•
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 offerings on our multi - mode network, such as Sprint Direct Connect and LTE;
•
actual or perceived quality and coverage of our networks, including Clearwire's 4G WiMAX network;
•
Clearwire's ability to successfully obtain additional financing for the continued operation and build - out of its 4G networks;
•
our ability to access additional spectrum;
•
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;
•
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;
•
our ability to anticipate and develop new or enhanced technologies, products and services that are attractive to existing or potential
subscribers;
•
public perception about our brands; and
•
our ability to maintain our current MVNOs, including Clearwire, and to enter into new arrangements with MVNOs.