Cricket Wireless 2010 Annual Report Download - page 26

Item 1A. Risk Factors
Risks Related to Our Business and Industry
We Have Experienced Net Losses, and We May Not Be Profitable in the Future.
We experienced net losses of $785.1 million, $238.0 million and $143.4 million for the years ended
December 31, 2010, 2009 and 2008, respectively. We may not generate profits in the future on a consistent
basis or at all. Our strategic objectives depend on our ability to successfully and cost-effectively operate our
markets, on our ability to forecast and respond appropriately to changes in the competitive and economic
environment, on the successful expansion of our distribution channels, and on customer acceptance of our
Cricket product and service offerings. We have experienced and expect to continue to experience increased
expenses in connection with our launch of significant new business expansion efforts, including activities to
broaden our portfolio of products and services, to strengthen and expand our distribution channels and to enhance
our network quality and capacity in our existing markets. If we fail to attract additional customers for our Cricket
products and services and fail to achieve consistent profitability in the future, that failure could have a material
adverse effect on our financial condition.
We May Not Be Successful in Increasing Our Customer Base Which Would Negatively Affect Our
Business Plans and Financial Outlook.
Our growth on a quarter-by-quarter basis has varied substantially in the past. We believe that this uneven
growth generally reflects seasonal trends in customer activity, promotional activity, competition in the wireless
telecommunications market, our pace of new market launches and varying national economic conditions. Our
current business plans assume that we will continue to increase our customer base over time, providing us with
increased economies of scale. However, we experienced net decreases in our total customers of 111,718 and
199,949 in the second and third quarters of 2010, respectively. Our ability to continue to grow our customer base and
to achieve the customer penetration levels we currently believe are possible in our markets is subject to a number of
risks, including, among other things, increased competition from existing or new competitors,
higher-than-anticipated churn, our inability to manage or increase our network capacity to meet increasing
customer demand, unfavorable economic conditions (which may have a disproportionate negative impact on
portions of our customer base), our inability to successfully expand our distribution channels, changes in the
demographics of our markets, adverse changes in the legislative and regulatory environment and other factors that
may limit our ability to grow our customer base. If we are unable to attract and retain a growing customer base, our
current business plans and financial outlook may be harmed.
We Face Increasing Competition Which Could Have a Material Adverse Effect on Demand for Cricket
Service.
The wireless telecommunications industry is very competitive. In general, we compete with national facilities-
based wireless providers and their prepaid affiliates or brands, local and regional carriers, non-facilities-based
MVNOs, voice-over-internet-protocol service providers, traditional landline service providers, cable companies
and mobile satellite service providers. The competitive pressures of the wireless telecommunications industry have
continued to increase and have caused a number of our competitors to offer competitively priced unlimited prepaid
and postpaid service offerings. These service offerings present additional strong competition in markets in which
our offerings overlap.
Many of our competitors have greater name and brand recognition, larger spectrum holdings, larger footprints,
access to greater amounts of capital, greater technical, sales, marketing and distribution resources and established
relationships with a larger base of current and potential customers. These advantages may allow our competitors to
provide service offerings with more extensive features and options than those we currently provide, offer the latest
and most popular devices through exclusive vendor arrangements, market to broader customer segments and offer
service over larger geographic areas than we can, offer bundled service offerings which include landline phone,
television and internet services that we are not able to duplicate, and purchase equipment, supplies, devices and
services at lower prices than we can. As device selection and pricing become increasingly important to customers,
our inability to offer customers the latest and most popular devices as a result of exclusive dealings between device
20