Cricket Wireless 2012 Annual Report Download - page 32

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 a net loss of $187.3 million, $317.7 million and $785.1 million for the years ended
December 31, 2012, 2011 and 2010, 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 enhancement of our distribution channels, and on customer acceptance of our Cricket product and
service offerings. If we fail to attract and retain 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.
Our Strategic Plans Require that We Retain and Grow Our Current Customer Base; Our Failure to Do So
Would Negatively Affect Our Business Plans and Financial Outlook.
We have recently experienced quarterly net customer losses that decreased our total number of customers,
including in the second, third and fourth quarters of 2012. In addition, our growth has varied substantially in the
past. We believe that this uneven growth generally has reflected competition in the wireless telecommunications
market, promotional activity, seasonal trends in customer activity and varying national economic conditions. Our
current business plans assume that we will increase our customer base over time, providing us with increased
economies of scale. Our ability to continue to grow our customer base and to achieve increased customer
penetration levels in our markets is subject to a number of risks, including, among other things, increased
competition, our inability to manage or increase our network capacity or service offerings to meet increasing
customer demand, promotional or retention activities that do not perform as expected, device quality and
selection issues, inventory shortages, device pricing, unfavorable economic conditions (which may have a
disproportionate negative impact on portions of our customer base), our inability to successfully enhance our
distribution channels, billing or other system or service disruptions, adverse changes in the legislative and
regulatory environment and other factors that may limit our ability to grow our customer base. If we continue to
lose customers or are unable to attract and retain a growing customer base, that failure could have a material
adverse effect on our business, financial condition and results of operations.
The Operation of Our Business Requires a Significant Amount of Cash. Our Ability to Generate Cash
Depends on Many Factors Beyond Our Control.
Our business requires that we generate a significant amount of cash flow from operations to fund ongoing
liquidity requirements, including payments on our indebtedness. Our ability to generate cash flow from
operations is subject to our operational performance and to general economic, financial, competitive, legislative,
regulatory and other factors that are beyond our control. We cannot assure you that our business will generate
sufficient cash flow from operations to fund our ongoing liquidity needs. If cash flow from operations is
insufficient, we may be required to take actions, such as delaying or reducing capital expenditures, attempting to
restructure or refinance our indebtedness prior to maturity, reducing operating expenses, selling assets or seeking
additional capital. Any or all of these actions may be insufficient to allow us to fund our liquidity needs. Further,
we may be unable to take any of these actions on commercially reasonable terms or at all.
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, VoIP service providers, traditional landline service providers, cable companies and mobile
satellite service providers.
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