Cricket Wireless 2010 Annual Report Download - page 91

Other 2010 Acquisitions and Agreements
On January 8, 2010, we contributed certain non-operating wireless licenses in West Texas with a carrying value
of approximately $2.4 million to a regional wireless service provider in exchange for a 6.6% ownership interest in
the company.
On March 30, 2010, we acquired an additional 23.9% membership interest in LCW Wireless from CSM
following CSM’s exercise of its option to sell its interest in LCW Wireless to us for $21.0 million, which increased
our non-controlling membership interest in LCW Wireless to 94.6%. On August 25, 2010, we acquired the
remaining 5.4% of the membership interests in LCW Wireless following the exercise by WLPCS of its option to sell
its entire controlling membership interest in LCW Wireless to us for $3.2 million and the exercise by us of our
option to acquire all of the membership interests held by employees of LCW Wireless. As a result of the acquisition,
LCW Wireless and its subsidiaries became wholly-owned subsidiaries of Cricket.
On December 14, 2010, we and a subsidiary of AT&T, Inc., or AT&T, completed the sale by AT&T to us of a
wireless license for an additional 10 MHz of spectrum in Corpus Christi, Texas for $4.0 million, and the sale by us to
AT&T of wireless licenses for an additional 10 MHz of spectrum covering portions of North Carolina, Kentucky,
New York and Colorado for an aggregate of $4.0 million. We have recorded a loss on the sale transaction of
$0.2 million for the year ended December 31, 2010. Immediately following the closing of the acquisition of the
Corpus Christi, Texas spectrum, we sold the spectrum to STX Wireless for $4.0 million.
Wholesale Agreement
On August 2, 2010, we entered into a wholesale agreement with an affiliate of Sprint Nextel which permits us
to offer Cricket wireless services outside our current wireless footprint using Sprint’s network.
The initial term of the wholesale agreement is until December 31, 2015, and the agreement renews for
successive one-year periods unless either party provides 180-day advance notice to the other. Under the agreement,
we will pay Sprint a specified amount per month for each subscriber activated on its network, subject to periodic
market-based adjustments. We have agreed to provide Sprint with a minimum of $300 million of aggregate revenue
over the initial five-year term of the agreement (against which we can credit up to $100 million of service revenue
under other existing commercial arrangements between the companies), with a minimum of $25 million of revenue
to be provided in 2011, a minimum of $75 million of revenue to be provided in each of 2012, 2013 and 2014, and a
minimum of $50 million of revenue to be provided in 2015. Any revenue provided by us in a given year above the
minimum revenue commitment for that particular year will be credited to the next succeeding year.
In the event Leap is involved in a change-of-control transaction with another facilities-based wireless carrier
with annual revenues of at least $500 million in the fiscal year preceding the date of the change of control agreement
(other than MetroPCS), either Sprint or us (or our successor in interest) may terminate the agreement within 60 days
following the closing of such a transaction. In connection with any such termination, we (or our successor in
interest) would be required to pay to Sprint a specified percentage of the remaining aggregate minimum revenue
commitment, with the percentage to be paid depending on the year in which the change of control agreement was
entered into, beginning at 40% for any such agreement entered into in or before 2011, 30% for any such agreement
entered into in 2012, 20% for any such agreement entered into in 2013 and 10% for any such agreement entered into
in 2014 or 2015.
In the event that Leap is involved in a change-of-control transaction with MetroPCS during the term of the
wholesale agreement, then the agreement would continue in full force and effect, subject to certain revisions,
including, without limitation, an increase to the total minimum revenue commitment to $350 million, taking into
account any revenue contributed by us prior to the date thereof.
In the event Sprint is involved in a change-of-control transaction, the agreement would bind Sprint’s
successor-in-interest.
Device Purchase Agreements
During the second and third quarters of 2010 we entered into agreements with various suppliers for the
purchase of wireless devices. These agreements require us to purchase specified quantities of devices based on
minimum commitment levels through July 2012. The total aggregate commitments outstanding under these
agreements were approximately $218.1 million as of December 31, 2010.
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