Cricket Wireless 2011 Annual Report Download - page 32

the wireless telecommunications industry and other factors, have also adversely affected the trading prices of
equity securities of many U.S. companies, including Leap, which could significantly limit our ability to raise
additional capital through the issuance of common stock, preferred stock or other equity securities. Any of these
risks could impair our ability to fund our operations or limit our ability to expand our business, which could have
a material adverse effect on our business, financial condition and results of operations.
If We Experience Low or Negative Rates of Customer Acquisition or High Rates of Customer Turnover,
Our Ability to Become Profitable Will Decrease.
Our rates of customer acquisition and turnover are affected by a number of competitive factors in addition to
the macro-economic factors described above, including the size of our service areas, network performance and
reliability issues, our device and service offerings, customer perceptions of our services, customer care quality
and wireless number portability. Managing these factors and customers’ expectations is essential in attracting and
retaining customers. Although we have implemented programs to attract new customers and address customer
turnover, we cannot assure you that these programs or our strategies to address customer acquisition and turnover
will be successful. A high rate of customer turnover or low or negative rate of new customer acquisition would
reduce revenues and increase the total marketing expenditures required to attract the minimum number of
customers required to sustain our business plan which, in turn, could have a material adverse effect on our
business, financial condition and results of operations.
We May Be Unable to Obtain or Maintain the Roaming and Wholesale Services We Need From Other
Carriers to Remain Competitive.
Many of our competitors have regional or national networks which enable them to offer automatic roaming
services to their subscribers at a lower cost than we can offer. The networks we operate do not, by themselves,
provide national coverage and we must pay fees to other carriers who provide roaming and wholesale services to
us. We currently rely on roaming agreements with several carriers for the majority of our roaming services and
generally on one key carrier for 3G data roaming services. We have also entered into a wholesale agreement
which we use to offer Cricket services in nationwide retailers outside of our current network footprint. Most of
our roaming agreements cover voice but not data services and some of these agreements may be terminated on
relatively short notice. In addition, we believe that the rates charged to us by some of these carriers are higher
than the rates they charge to certain other roaming partners. We do not currently have 4G data agreements with
any carriers that are currently providing these services.
The FCC has adopted rules requiring commercial mobile radio service providers to provide automatic
roaming for voice and SMS text messaging services on just, reasonable and non-discriminatory terms. The FCC
has also adopted rules generally requiring carriers to offer data roaming services. These orders, however, do not
provide or mandate any specific mechanism for determining the reasonableness of roaming rates for voice, SMS
text messaging or data services and require that roaming complaints be resolved on a case-by-case basis, based
on a non-exclusive list of factors that can be taken into account in determining the reasonableness of particular
conduct or rates. In addition, the FCC’s data roaming order is not final and is subject to further reconsideration
by the FCC and an appeal in federal court. Verizon Wireless has challenged the FCC’s data roaming order and
rules in the United States Court of Appeals for the District of Columbia Circuit and requested that the rules be
vacated, and the order is also subject to a petition for reconsideration at the FCC. In light of the current FCC
rules, orders and proceedings, if we were unexpectedly to lose the benefit of one or more key roaming or
wholesale agreements, we may be unable to obtain similar replacement agreements and as a result may be unable
to continue providing nationwide voice and 3G data roaming services for our customers or may be unable to
provide such services on a cost-effective basis. In addition, we may be unable to obtain cost-effective roaming
arrangements for 4G data roaming services. Our inability to obtain new or replacement roaming services on a
cost-effective basis may limit our ability to compete effectively for wireless customers, which may increase our
churn and decrease our revenues, which in turn could materially adversely affect our business, financial
condition and results of operations.
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