Cricket Wireless 2012 Annual Report Download - page 38

The restrictions in our Credit Agreement and the indentures governing Cricket’s secured and unsecured
senior notes could limit our ability to make borrowings, obtain debt financing, repurchase stock, refinance or pay
principal or interest on our outstanding indebtedness, complete acquisitions for cash or debt or react to changes in
our operating environment. Any credit agreement or indenture that we may enter into in the future may have
similar or more onerous restrictions.
Our Credit Agreement also provides for an event of default upon the occurrence of a change of control,
which includes the acquisition of beneficial ownership of 35% or more of Leap’s equity securities (other than a
transaction where immediately after such transaction Leap will be a wholly owned subsidiary of a person of
which no person or group is the beneficial owner of 35% or more of such person’s voting stock), a sale of all or
substantially all of the assets of Leap and its restricted subsidiaries and a change in a majority of the members of
Leap’s board of directors that is not approved by the board. In addition, under the indentures governing our
secured and unsecured senior notes and convertible senior notes, if certain “change of control” events occur, each
holder of notes may require us to repurchase all of such holder’s notes at a purchase price equal to 101% of the
principal amount of secured or unsecured senior notes, or 100% of the principal amount of convertible senior
notes, plus accrued and unpaid interest.
If we default under our Credit Agreement or any of the indentures governing our secured or unsecured
senior notes or convertible senior notes because of a covenant breach or otherwise, all outstanding amounts
thereunder could become immediately due and payable. We cannot assure you that we would be able to obtain a
waiver should any default occur. Any acceleration of amounts due would have a material adverse effect on our
liquidity and financial condition, and we cannot assure you that we would have sufficient funds to repay all of the
outstanding amounts under our Credit Agreement or the indentures governing our secured and unsecured senior
notes and convertible senior notes.
If Customer Usage of Our Services Exceeds Our Expectations, Our Costs of Providing Service Could
Increase, Which Could Have a Material Adverse Effect on Our Operating Expenses.
Because we offer unlimited voice, data, mobile broadband and music download services for a flat monthly
rate, our customers’ average usage of these services per month is significant. We provide these services through
our own Cricket network footprint and through roaming and wholesale agreements that we entered into with
other carriers.
If customers exceed expected usage for our voice, data, mobile broadband or music download services, we
could face capacity problems and our costs of providing the services could increase. Although we own less
spectrum in many of our markets than our competitors, we seek to design our network to accommodate our
expected high rates of usage for our services, and we continue to assess and seek to implement technological
improvements to increase the efficiency of our wireless spectrum. We currently manage our network and users of
our smartphones and Cricket Broadband service by limiting throughput speeds if usage exceeds certain
thresholds. However, if future wireless use by Cricket customers increases faster than we anticipate and exceeds
the then-available capacity of our network, service quality may suffer. In addition, our roaming or wholesale
costs may be higher than we anticipate. Depending on the extent of customers’ future use of our network and the
roaming and wholesale services we provide, we may be forced to raise the price or alter the service offerings of
our wireless or mobile broadband services, further limit data quantities or speeds, otherwise limit the number of
new customers for certain services, acquire additional spectrum or incur substantial additional capital
expenditures to enhance network capacity or quality.
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
24