Cricket Wireless 2011 Annual Report Download - page 35

are priced to include telecommunications taxes and certain other fees. In the event that federal, state and/or local
municipalities were to significantly increase taxes and regulatory fees on our services, it could have a significant
adverse effect on our margins and financial and operational results.
If We Are Unable to Manage Our Growth, Our Operations Could Be Adversely Impacted.
We have experienced substantial growth in a relatively short period of time, and we expect to continue to
experience growth in the future in our markets. In recent years, we have pursued opportunities to strengthen and
expand our business. These activities have included the broadening of our portfolio of products and services,
including through the introduction of “all-inclusive” service plans and our Muve Music service. We have also
pursued activities to strengthen and expand the available network service area for Cricket products and services,
which have included enhancing network coverage and capacity in our existing markets, entering into agreements
to provide Cricket customers with nationwide voice and data roaming services as well as a wholesale agreement
which we use to offer Cricket services in nationwide retailers outside of our current network footprint. In
addition, we currently plan to deploy LTE network technology across approximately two-thirds of our current
network footprint over the next two to three years. We have also pursued activities to continue to strengthen our
growing retail presence in our existing markets and expand our distribution nationwide. In 2011, we significantly
expanded our nationwide sales presence by offering Cricket products and services in thousands of additional
nationwide retail locations, and we expect to continue expanding our distribution in the future.
The management of our growth requires, among other things, continued development of our financial
controls, budgeting and forecasting processes and information management systems, stringent control of costs,
diligent management of our network infrastructure and its growth, increased spending associated with marketing
activities and the acquisition of new customers, the ability to attract and retain qualified management personnel
and the training of new personnel. Furthermore, the implementation of new or expanded systems or platforms to
accommodate our growth, and the transition to such systems or platforms from our existing infrastructure, could
result in unpredictable technological or other difficulties. Failure to successfully manage our expected growth
and development, to effectively manage our markets, to enhance our processes and management systems or to
timely and adequately resolve any such difficulties could have a material adverse effect on our business, financial
condition and results of operations.
In addition, the growth in our markets, the integration of newly-acquired markets or businesses, the
introduction of new device offerings such as the “smartphones” and the continued expansion of our distribution
nationwide require continued management and control of our device inventories. From time to time, we have
experienced inventory shortages, most notably with certain of our strongest-selling devices, and these shortages
have had the effect of limiting customer activity. We have implemented a new inventory management system
and have undertaken other efforts to address inventory forecasting. In addition, we are currently considering
expanding the role of a current vendor to assist us with device forecasting, fulfillment and related tasks.
However, there can be no assurance that we will not experience inventory shortages in the future. Any failure to
effectively manage and control our device inventories could adversely affect our ability to gain new customers
and have a material adverse effect on our business, financial condition and results of operations.
We Have Made Significant Investments, and May Continue to Invest, in Ventures That We Do Not
Control.
We own an 85% non-controlling membership interest in Savary Island. Savary Island is a “very small
business” designated entity under FCC regulations, which holds wireless spectrum in the upper Midwest portion
of the U.S. and which leases a portion of that spectrum to us. Our participation in Savary Island is structured as a
non-controlling membership interest in accordance with FCC rules and regulations. We have agreements with
our venture partner in Savary Island that are intended to allow us to participate to a limited extent in the
development of the business through the venture. However, these agreements do not provide us with control over
the business strategy, financial goals, build-out plans or other operational aspects of the venture, and may be
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