Sprint - Nextel 2012 Annual Report Download - page 27

Table of Contents
including a limit of one subsidized service per household. More stringent eligibility and certification requirements will make it more difficult for all
Lifeline service providers to sign up and retain Lifeline subscribers. The growth in the Lifeline program has caused some regulators and legislators to
question the structure of the current program and the FCC is continuing to review the growth of the program. Changes in the Lifeline program as a
result of the ongoing FCC proceeding or other legislation has and would continue to negatively impact growth in the Assurance Wireless and
wholesale subscriber base and/or the profitability of the Assurance Wireless and wholesale business overall.
If Sprint's business partners and subscribers fail to meet their contractual obligations it could negatively affect Sprint's results of operations.
The current economic environment has made it difficult for businesses and consumers to obtain credit, which could cause Sprint's
suppliers, distributors and subscribers to have problems meeting their contractual obligations with Sprint. If Sprint's suppliers are unable to fulfill its
orders or meet their contractual obligations with Sprint, Sprint may not have the services or devices available to meet the needs of its current and
future subscribers, which could cause it to lose current and potential subscribers to other carriers. In addition, if Sprint's distributors are unable to stay
in business, it could lose distribution points, which could negatively affect Sprint's business and results of operations. If Sprint's subscribers are
unable to pay their bills or potential subscribers feel they are unable to take on additional financial obligations, they may be forced to forgo Sprint's
services, which could negatively affect Sprint's results of operations.
Sprint's reputation and business may be harmed and it may be subject to legal claims if there is loss, disclosure or misappropriation of or access
to Sprint's subscribers' or Sprint's own information or other breaches of Sprint's information security.
Sprint makes extensive use of online services and centralized data processing, including through third
- party service providers. The secure
maintenance and transmission of customer information is an important element of Sprint's operations. Sprint's information technology and other
systems that maintain and transmit customer information, or those of service providers, may be compromised by a malicious third
- party penetration of
Sprint's network security, or that of a third
- party service provider, or impacted by advertent or inadvertent actions or inactions by Sprint's employees,
or those of a third - party service provider. As a result, Sprint's subscribers' information may be lost, disclosed, accessed or taken without the
subscribers' consent.
In addition, Sprint and third - party service providers process and maintain its proprietary business information and data related to its
business
- to - business customers or suppliers. Sprint's information technology and other systems that maintain and transmit this information, or those
of service providers, may also be compromised by a malicious third - party penetration of Sprint's network security or that of a third - party service
provider, or impacted by intentional or inadvertent actions or inactions by Sprint's employees or those of a third
- party service provider. As a result,
Sprint's business information, or subscriber or supplier data may be lost, disclosed, accessed or taken without consent.
Any major compromise of our data or network security, failure to prevent or mitigate the loss of our services or any customer information
and delays in detecting any such compromise or loss could disrupt our operations, damage our reputation and subscribers' willingness to purchase
our service and subject us to additional costs and liabilities, including litigation, which could be material.
Any potential future acquisitions, strategic investments or mergers may subject us to significant risks, any of which may harm our business.
Our long
- term strategy may include identifying and acquiring, investing in or merging with suitable candidates on acceptable terms. In
particular, over time, we may acquire, make investments in, or merge with companies that complement our business. Acquisitions would involve a
number of risks and present financial, managerial and operational challenges, including:
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diversion of management attention from running our existing business;
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possible material weaknesses in internal control over financial reporting;
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increased expenses including legal, administrative and compensation expenses related to newly hired employees;