Sprint - Nextel 2012 Annual Report Download - page 20

Table of Contents
failure of the SoftBank Merger to be completed or for any other matter, regardless of the actual amount of Sprint's damages.
The SoftBank Merger and the Clearwire Acquisition are subject to the receipt of consents and clearances from domestic and foreign regulatory
authorities that may impose measures to protect national security and classified projects or other conditions that, if not obtained, could prevent
completion of the SoftBank Merger or the Clearwire Acquisition.
While the Antitrust Division of the Department of Justice and the Federal Trade Commission granted early termination of the waiting period
under the Hart - Scott - Rodino Act on December 6, 2012, with respect to the SoftBank Merger, before the SoftBank Merger or the Clearwire Acquisition
may be completed, applicable waiting periods must expire or terminate under all other applicable antirust and competition laws, and various approvals
or consents must be obtained from other regulatory entities. In deciding whether to grant antitrust or regulatory clearances, the relevant governmental
entities will consider the effect of the SoftBank Merger and the Clearwire Acquisition on competition within their relevant jurisdiction. Due to the
substantial foreign ownership of New Sprint shares following the SoftBank Merger, each of the FCC, Defense Security Service and Committee on
Foreign Investment in the United States may take measures and impose conditions to protect national security and classified projects. There can be no
assurance that regulators will not impose conditions, terms, obligations or restrictions, or that such conditions, terms, obligations or restrictions will
not have the effect of delaying completion of the SoftBank Merger or the Clearwire Acquisition. In addition, Sprint cannot provide assurance that any
such conditions, terms, obligations or restrictions will not result in the delay or abandonment of the SoftBank Merger or the Clearwire Acquisition.
The SoftBank Merger will result in an ownership change for Sprint under Section 382 of the Internal Revenue Code (Code), potentially limiting
Sprint's use of net operating loss carryforwards, referred to as NOLs, tax credits and other tax attributes to offset future taxable income or tax
liabilities.
Sprint has substantial NOLs, tax credits and other tax attributes for U.S. federal and state income tax purposes. The utilization of Sprint's
NOLs, tax credits and other tax attributes following the SoftBank Merger depends on the timing and amount of taxable income earned by Sprint in the
future, which Sprint is not able to predict. Moreover, the SoftBank Merger will result in an ownership change for Sprint under Section 382 of the Code,
potentially limiting the use of Sprint's NOLs to offset future taxable income for both U.S. federal and state income tax purposes. Section 383 of the
Code applies a similar limitation to capital loss and certain tax credit carryforwards of a corporation which experiences such an ownership change.
These limitations may affect the timing of when these NOLs, tax credits and other tax attributes may be used which, in turn, may impact the timing and
amount of cash taxes payable by Sprint. These tax attributes are generally subject to expiration at various times in the future to the extent that they
have not previously been applied to offset the taxable income or tax liabilities of Sprint.
Competition and technological changes in the market for wireless services could negatively affect Sprint's average revenue per subscriber,
subscriber churn, operating costs and its ability to attract new subscribers, resulting in adverse effects on Sprint's revenues, future cash flows,
growth and profitability.
Sprint competes with a number of other wireless service providers in each of the markets in which Sprint provides wireless services, and
Sprint expects competition may increase if additional spectrum is made available for commercial wireless services and as new technologies are
developed and launched. As smartphone penetration increases, Sprint continues to expect an increased usage of data on Sprint's network.
Competition in pricing and service and product offerings may also adversely impact subscriber retention and Sprint's ability to attract new subscribers,
with adverse effects on Sprint's results of operations. A decline in the average revenue per subscriber coupled with a decline in the number of
subscribers would negatively impact Sprint's revenues, future cash flows, growth and overall profitability, which, in turn, could impact Sprint's ability
to meet Sprint's financial obligations.
The wireless communications industry is experiencing significant technological change, including improvements in the capacity and quality
of digital technology and the deployment of unlicensed spectrum devices. This change causes uncertainty about future subscriber demand for Sprint's
wireless services and the prices that Sprint will be able to charge for these services. Spending by Sprint's competitors on new wireless services and
network improvements could enable its competitors to obtain a competitive advantage with new technologies or enhancements that Sprint does not
offer. Rapid change in technology may lead to the development of wireless
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