Cricket Wireless 2010 Annual Report Download - page 38

Generally, there are multiple sources for the types of products and services we purchase or use. However, we
rely on one key vendor for billing services, a limited number of vendors for device logistics, a limited number of
vendors for voice and data communications transport services and a limited number of vendors for payment
processing services. In December 2008 we entered into a long-term, exclusive services agreement with Convergys
Corporation for the implementation and ongoing management of a new billing system, which we expect will be
completed in 2011. Because of the costs and time lags that can be associated with transitioning from one supplier or
service provider to another, our business could be substantially disrupted if we were required to replace the products
or services of one or more major suppliers or service providers with products or services from another source,
especially if the replacement became necessary on short notice. Any such disruption could have a material adverse
effect on our business, results of operations and financial condition.
System Failures, Security Breaches, Business Disruptions and Unauthorized Use or Interference with
Our Network or Other Systems Could Result in Higher Churn, Reduced Revenue and Increased Costs,
and Could Harm Our Reputation.
Our technical infrastructure (including our network infrastructure and ancillary functions supporting our
network such as service activation, billing and customer care) is vulnerable to damage or interruption from
technology failures, power surges or outages, natural disasters, fires, human error, terrorism, intentional
wrongdoing or similar events. Unanticipated problems at our facilities or with our technical infrastructure,
system or equipment failures, hardware or software failures or defects, computer viruses or hacker attacks
could affect the quality of our services and cause network service interruptions. Unauthorized access to or use
of customer or account information, including credit card or other personal data, could result in harm to our
customers and legal actions against us, and could damage our reputation. In addition, earthquakes, floods,
hurricanes, fires and other unforeseen natural disasters or events could materially disrupt our business
operations or the provision of Cricket service in one or more markets. For example, during the third quarter of
2008, our customer acquisitions, cost of service and revenues in certain markets were adversely affected by
Hurricane Ike and related weather systems. Costs we incur to restore, repair or replace our network or technical
infrastructure, as well as costs associated with detecting, monitoring or reducing the incidence of unauthorized use,
may be substantial and increase our cost of providing service. Any failure in or interruption of systems that we or
third parties maintain to support ancillary functions, such as billing, point of sale, inventory management, customer
care and financial reporting, could materially impact our ability to timely and accurately record, process and report
information important to our business. If any of the above events were to occur, we could experience higher churn,
reduced revenues and increased costs, any of which could harm our reputation and have a material adverse effect on
our business, financial condition or results of operations.
We Have Been Upgrading a Number of Significant Business Systems, Including Our Customer Billing
System, and Any Unanticipated Difficulties, Delays or Interruptions with the Transition Could
Negatively Impact Our Business.
During the past year, we upgraded a number of our significant, internal business systems, including
implementing a new inventory management system and new point-of-sale system. In addition, we expect to
transition to a new customer billing system during 2011.
We cannot assure you that we will not experience difficulties, errors, delays or disruptions while we implement
and transition to these new systems. At times during the transition of our billing system, we will be limited in our
ability to modify our current product and service offerings or to offer new products and services. In addition, the
transition of this system may not progress according to our current schedule and could suffer cost overruns.
Significant unexpected difficulties in transitioning our billing or other systems could materially impact our ability to
timely and accurately record, process and report information that is important to our business. If any of the above
events were to occur, we could experience higher churn, reduced revenues and increased costs or could suffer a
material weaknesses in our internal control over financial reporting, any of which could harm our reputation and
have a material adverse effect on our business, financial condition or results of operations.
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