Clearwire 2010 Annual Report Download - page 33

We also may face challenges in managing and operating our 4G network. These challenges could include
ensuring the availability of subscriber devices that are compatible with our network and managing sales,
advertising, subscriber support, and billing and collection functions of our business while providing reliable
network service that meets our subscribers’ expectations. Our failure in any of these areas could adversely affect
customer satisfaction, increase subscriber churn, increase our costs, decrease our revenues and otherwise have a
material adverse effect on our business, prospects, financial condition and results of operations.
We also outsource some operating functions to third parties. These third parties may experience errors or
disruptions that could adversely impact us and over which we may have limited control. We also face risk from the
integration of new infrastructure platforms and/or new third party providers of such platforms into our existing
businesses. For example, Amdocs Software Systems Limited, which we refer to as Amdocs, provides our customer
care and billing systems for our retail and wholesale subscribers. Any failure by Amdocs to operate our customer
care and billing systems could materially affect our ability to timely and accurately bill our subscribers and record,
process and report information, and as a result, our business, system of internal controls, financial condition or
results of operations could be materially and adversely affected.
We have significant investments in long-lived assets. During 2010, we incurred significant charges
resulting from the abandonment and write-off of certain network equipment and cell site development
costs. If we are unable to improve our results of operations, or are unsuccessful in our efforts to raise
sufficient additional funding necessary to complete network projects-in-process, we face the possibility of
additional charges for abandonments of long-lived assets.
To date, we have invested heavily in building, deploying and augmenting our network. In connection with the
deployment of our network and the substantial completion of our prior build plan, we recorded a substantial loss
resulting from the abandonment of projects that no longer meet management’s strategic network plans. During
2010, due to the uncertainty of the extent and timing of future expansion of the network, we reviewed all network
projects in process. Any projects that no longer fit within management’s strategic network plans were abandoned,
resulting in a charge of approximately $180.0 million for the year. As we continue to revise our build plans in
response to changes in our strategy, funding availability, technology changes and industry trends, additional
projects could be identified for abandonment, for which the associated write-offs could be material.
The interests of the controlling stockholders of Clearwire may conflict with your interests as stockholders.
Sprint, the Investors and Eagle River own a majority of the voting power of Clearwire through ownership of
Class A Common Stock or Class B Common Stock. Sprint, the Investors and Eagle River may have interests that
diverge from those of other holders of Clearwire’s capital stock. Each of Sprint, the Investors and Eagle River are a
party to the Equityholders’ Agreement, which requires, among other things, the approval of:
• 75% of the voting power of all outstanding stock of Clearwire for certain actions, including any merger,
consolidation, share exchange or similar transaction and any issuance of capital stock that would constitute a
change of control of Clearwire or any of its subsidiaries;
• each of Sprint, Intel and the representative for Comcast, Time Warner Cable, Bright House Networks and
Google, who we collectively refer to as the Strategic Investors, as a group, so long as each of Sprint, Intel and
the Strategic Investors, as a group, respectively, owns securities representing at least 5% of the outstanding
voting power of Clearwire, in order to:
• amend the Clearwire’s Amended and Restated Certificate of Incorporation, which we refer to as the
Charter, the bylaws of Clearwire, which we refer to as the Bylaws, or the Amended and Restated
Operating Agreement governing Clearwire Communications, which we refer to as the Operating
Agreement;
• change the size of the Clearwire board of directors;
• liquidate Clearwire or Clearwire Communications or declare bankruptcy of Clearwire or its
subsidiaries;
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