Clearwire 2010 Annual Report Download - page 57

of Senior Secured Notes, completed an offering of $500 million 12% second-priority secured notes, and completed
offerings of aggregate $729.2 million 8.25% exchangeable notes, which we refer to as the Exchangeable Notes. The
proceeds from these notes issuances and various vendor financing initiatives will allow us to focus on improving the
operating performance of our business while seeking to raise additional capital.
In 2011, we plan to focus on improving the operating performance of our business and we do not expect to
materially expand the coverage of our 4G mobile broadband network absent additional funding. We currently
believe that the actions we are taking will cause our current business to generate positive cash flows over the next
few years without the need for additional capital. We expect to do this by increasing the operating efficiencies
related to our retail subscribers and continuing to grow our wholesale subscriber base. The success of our current
plans will depend to a large extent on whether we succeed in growing our wholesale subscriber base and generating
the revenue levels we currently expect for that portion of our business. However, our current plans are based on a
number of assumptions about our future performance, which may prove to be inaccurate. These assumptions
include, among other things, a favorable resolution of the current wholesale pricing disputes with Sprint, continued
increases in sales of our services by Sprint and our other Initial Wholesale Partners, our ability to cause the services
we offer over our 4G mobile broadband network to remain competitive with service offerings from our competitors,
and our ability to reduce our operating expenses and capital expenditures. If any of the assumptions underlying our
plans prove to be incorrect and, as a result, our business fails to perform as we expect, we may require substantial
additional capital in the near and long-term to be able to continue to operate.
For the year ended December 31, 2010, substantially all of our wholesale subscribers and revenues came from
Sprint with whom we are currently engaged in arbitration proceedings and related negotiations to resolve issues
related to wholesale pricing under our commercial agreements with them. See “Legal Proceedings.” Although we
currently anticipate that we and Sprint will resolve the pricing disputes in the near term, if we are unable to reach a
satisfactory resolution of our current negotiations with them, or if Sprint fails to resell our services in the manner
and amounts we expect, it could adversely affect our business prospects and results and we could be required to
revise our current business plans. See “Risk Factors — We are currently involved in pricing disputes with Sprint
relating to 4G usage by Sprint under our commercial agreements, and if the disputes are not resolved favorably to
us, it could materially and adversely affect our business prospects, and results of operations and financial condition,
and/or require us to revise our current business plans.” To execute our current plans, we must also successfully
reduce our expenses by implementing various cost savings initiatives. Our actions have already included workforce
reductions in 2010, which are expected to reduce labor and other costs by approximately $60.0 million annually.
Furthermore, we intend to materially decrease our retail subscriber acquisition costs by focusing our sales efforts on
lower cost channels such as indirect dealers and online sales, to reduce the amount we spend on marketing our retail
services, to delay the launch of new devices, including smartphones and to outsource our customer care operations.
We believe these initiatives will likely result in slower growth in our retail subscriber base in 2011 compared to prior
periods as we pace our retail growth in an effort to maximize our financial resources.
We are also actively pursuing a number of alternatives for raising additional capital. Any additional capital
may be used to cover any cash needs that may arise if the assumptions underlying our current plans prove to be
inaccurate and to continue the development of our 4G mobile broadband network. Any additional capital available
for network development will likely be used, among other things, to augment our network coverage and capacity in
our existing markets, to expand the coverage of our 4G mobile broadband network to new markets, and to introduce
new products or services into our retail business. Additionally, we may use a portion of any additional capital we
raise to deploy alternative technologies to mobile WiMAX, such as LTE, on our networks either together with, or in
place of, mobile WiMAX if we determine it is necessary to cause the 4G mobile broadband services we offer to
remain competitive or to expand the number and types of devices that may be used to access our services.
Business Segments
Operating segments are defined as components of an enterprise about which separate financial information is
available that is evaluated regularly by the chief operating decision maker, which we refer to as the CODM, in
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CLEARWIRE CORPORATION AND SUBSIDIARIES — (Continued)