Cricket Wireless 2011 Annual Report Download - page 29

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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 $317.7 million, $785.1 million and $238.0 million for the years ended
December 31, 2011, 2010 and 2009, 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. 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 launch of network services in new markets 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, and a net decrease in our total
customers of 103,140 in the second quarter of 2011. 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 Significant 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.
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, any restriction on our ability to offer customers the latest and most popular
devices as a result of exclusive dealings between device manufacturers and our larger competitors could put us at
a significant competitive disadvantage and make it more difficult for us to attract and retain customers. In
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