Sprint - Nextel 2015 Annual Report Download - page 15

Table of Contents
Item 1A. Risk Factors
In addition to the other information contained in this annual report on 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 profitable wireless subscribers, our financial performance will be impaired.
Our success is based on our ability to retain current subscribers and attract new subscribers. If we are unable to attract and retain profitable wireless
subscribers, our financial performance will be impaired, and we could fail to meet our financial obligations. From 2008 through March 31, 2016 , we have
experienced an aggregate net decrease of approximately 11.8 million subscribers in our total retail postpaid subscriber base (excluding the impact of our
acquisitions).
Our ability to retain our existing subscribers, to compete successfully for new subscribers, and reduce our churn rate depends on, among other things:
• our ability to anticipate and respond to various competitive factors, including our successful execution of marketing and sales strategies; the
acceptance of our value proposition; service delivery and customer care activities, including new account set up and billing; and execution under
credit and collection policies;
• actual or perceived quality and coverage of our network;
• public perception about our brands;
• our ability to anticipate, develop, and deploy new or enhanced technologies, products, and services that are attractive to existing or potential
subscribers;
• our ability to continue to access spectrum and acquire additional spectrum capacity; and
• our ability to maintain our current mobile virtual network operator (MVNO) relationships and to enter into new MVNO arrangements .
Our ability to retain subscribers may be negatively affected by industry trends related to subscriber contracts. Recently, we have seen aggressive
customer acquisition efforts by our competitors. For example, most service providers are offering wireless service plans without any long-term commitment.
Furthermore, some service providers are reimbursing contract termination fees, including paying off the outstanding balance on devices, incurred by new
customers in connection with such customers terminating service with their current wireless service providers. Our competitors’ aggressive customer contract
terms, such as those described above, 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, price, and service mix.
We expect to continue to incur expenses such as the reimbursement of subscriber termination fees, and other subscriber acquisition and retention
expenses, to attract and retain subscribers, but there can be no assurance that our efforts will generate new subscribers or result in a lower churn rate. Subscriber
losses and a high churn rate could adversely affect our business, financial condition, and results of operations because they result in lost revenues and cash flow.
Moreover, we and our competitors continue to seek a greater proportion of new subscribers from each other’s existing subscriber bases rather than from
first-time purchasers. To the extent we cannot compete effectively for new subscribers or if we attract more subscribers that are not creditworthy, our revenues and
results of operations could be adversely affected.
The success of our network improvements will depend on the timing, extent, and cost of implementation; access to spectrum; the performance of third-parties
and related parties; upgrade requirements; and the availability and reliability of the various technologies required to provide such modernization.
We must continually invest in our wireless network, including expanding our network capacity and coverage through macro sites and small cells, in
order to improve our wireless services and remain competitive. The development and deployment of new technologies and services requires us to anticipate the
changing demands of our customers and to respond accordingly, which we may not be able to do in a timely or efficient manner.
Improvements in our service depend on many factors, including our ability to predict and adapt to future changes in technologies, changes in consumer
demands, changes in pricing and service offerings by our competitors, and continued access to and deployment of adequate spectrum, including any leased
spectrum. If we are unable to access spectrum to increase capacity or to deploy the services subscribers desire on a timely basis or at acceptable costs while
maintaining network quality levels, our ability to attract and retain subscribers could be adversely affected, which would negatively impact our operating results.
13