Cricket Wireless 2011 Annual Report Download - page 57

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following information should be read in conjunction with the audited consolidated financial statements
and notes thereto included in “Item 8. Financial Statements and Supplementary Data” of this report.
Overview
Company Overview
We are a wireless communications carrier that offers digital wireless services in the U.S. under the
“Cricket” brand. Our Cricket service offerings provide customers with unlimited nationwide wireless services for
a flat rate without requiring a fixed-term contract or a credit check.
Cricket service is offered by Cricket, a wholly-owned subsidiary of Leap. Cricket service is also offered in
South Texas by our joint venture STX Operations, which Cricket controls through a 75.75% controlling
membership interest in its parent company STX Wireless. In addition, Cricket owns an 85% non-controlling
membership interest in Savary Island, which holds wireless spectrum in the upper Midwest portion of the U.S.
and which leases a portion of that spectrum to us.
As of December 31, 2011, Cricket service was offered in 47 states and the District of Columbia across an
extended area covering approximately 289 million POPs. On December 31, 2011, we had approximately 5.9
million customers, and we and Savary Island owned wireless licenses covering an aggregate of approximately
181.5 million POPs (adjusted to eliminate duplication from overlapping licenses). The combined network
footprint in our operating markets covered approximately 95.3 million POPs as of December 31, 2011. The
licenses we own provide 20 MHz of coverage and the opportunity to offer enhanced data services in almost all
markets in which we currently operate.
In addition to our Cricket network footprint, we have entered into roaming relationships with other wireless
carriers that enable us to offer Cricket customers nationwide voice and data roaming services over our extended
service area. We have also entered into a wholesale agreement which we use to offer Cricket services in
nationwide retailers outside of our current network footprint. These arrangements enable us to offer enhanced
Cricket products and services, 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 mass-market retail locations, and we expect to
continue expanding our distribution in the future. We generally expect that margins we generate from customers
we acquire outside of our Cricket network footprint will be similar to those realized by carriers operating without
their own wireless facilities, which are generally lower than those we generate from customers we acquire within
our Cricket network footprint.
The foundation of our business is to provide unlimited, nationwide wireless services and to design and
market our products and services to appeal to customers seeking increased value. None of our services require
customers to enter into long-term commitments or pass a credit check. Our primary service is Cricket Wireless,
which offers customers unlimited nationwide voice and data services for a flat monthly rate. Our most popular
Cricket Wireless service plans bundle unlimited local and U.S. long distance and unlimited text messaging, with
mobile web, 411 services, navigation, data backup and other features. We also offer Cricket PAYGo, a
pay-as-you-go unlimited prepaid wireless service designed for customers who prefer the flexibility and control
offered by traditional prepaid services. In early 2011, we successfully launched Muve Music, an unlimited music
download service designed specifically for mobile handsets, which is now available in all of our markets. The
service plans we currently offer are “all-inclusive,” with telecommunication taxes and certain fees included
within the service plan price. In addition to our Cricket Wireless voice and data services, we offer Cricket
Broadband, our unlimited mobile broadband service, which allows customers to access the internet through their
computers for “all-inclusive” flat monthly rates that vary depending upon the targeted amount of data that a
customer expects to use during the month. As a result of strong customer adoption of our smartphones and other
new handsets and devices, we have deemphasized our Cricket Broadband service and have experienced a
substantial reduction in the number of customers subscribing to this service.
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