Sprint - Nextel 2013 Annual Report Download - page 19

Table of Contents
Consolidation and competition in the wholesale market for wireline services, as well as consolidation of our roaming partners and access providers used
for wireless services, could adversely affect our revenues and profitability.
Our Wireline segment competes with AT&T, Verizon Communications, CenturyLink, Level 3 Communications Inc., other major local incumbent
operating companies, and cable operators, as well as a host of smaller competitors. Some of these companies have high
- capacity, IP - based fiber - optic networks
capable of supporting large amounts of voice and data traffic. Some of these companies claim certain cost structure advantages that, among other factors, may
allow them to offer services at lower prices than we can. In addition, consolidation by these companies could lead to fewer companies controlling access to more
cell sites, enabling them to control usage and rates, which could negatively affect our revenues and profitability.
We provide wholesale services under long
- term contracts to cable television operators, which enable these operators to provide consumer and
business digital telephone services. These contracts may not be renewed as they expire. Increased competition and the significant increase in capacity resulting
from new technologies and networks may drive already low prices down further. AT&T and Verizon Communications continue to be our two largest competitors
in the domestic long distance communications market. We and other long distance carriers depend heavily on local access facilities obtained from incumbent
local exchange carriers (ILECs) to serve our long distance subscribers, and payments to ILECs for these facilities are a significant cost of service for our Wireline
segment. The long distance operations of AT&T and Verizon Communications have cost and operational advantages with respect to these access facilities
because those carriers serve significant geographic areas, including many large urban areas, as the ILECs.
In addition, our Wireless segment could be adversely affected by changes in rates and access fees that result from consolidation of our roaming
partners and access providers, which could adversely affect our revenues and profitability.
The blurring of the traditional dividing lines among long distance, local, wireless, video and Internet services contributes to increased competition.
The traditional dividing lines among long distance, local, wireless, video and Internet services are increasingly becoming blurred. In addition, the
dividing lines between voice and data services are also becoming blurred. Through mergers, joint ventures and various service expansion strategies, major
providers are striving to provide integrated services in many of the markets we serve. This trend is also reflected in changes in the regulatory environment that
have encouraged competition and the offering of integrated services. We expect competition to continue to intensify as a result of the entrance of new
competitors or the expansion of services offered by existing competitors, and the rapid development of new technologies, products and services. We cannot
predict which of many possible future technologies, products, or services will be important to maintain our competitive position or what expenditures we will be
required to make in order to develop and provide these technologies, products or services. To the extent we do not keep pace with technological advances or
fail to timely respond to changes in the competitive environment affecting our industry, we could lose market share or experience a decline in revenue, cash
flows and net income. As a result of the financial strength and benefits of scale enjoyed by some of our competitors, they may be able to offer services at lower
prices than we can, thereby adversely affecting our revenues, growth and profitability.
If we are unable to improve our results of operations, we face the possibility of charges for impairments of long
- lived assets.
We review our long
- lived assets for impairment whenever changes in circumstances indicate that the carrying amount may not be recoverable. If we
continue to have operational challenges, including obtaining and retaining subscribers, our future cash flows may not be sufficient to recover the carrying value
of our long
- lived assets, and we could record asset impairments that are material to our results of operations and financial condition. If we continue to have
challenges retaining subscribers and as we modernize our network, management may conclude, in future periods, that certain equipment assets will never be
either deployed or redeployed, in which case cash and/or non
- cash charges that could be material to our consolidated financial statements would be recognized.
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