Cricket Wireless 2012 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 Wireless Operations, LLC, or STX Operations, which Cricket controls
through a 75.75% membership interest in its parent company STX Wireless, LLC, or STX Wireless. For more
information regarding this venture, see “— Liquidity and Capital Resources — Capital Expenditures, Significant
Acquisitions and Other Transactions” below.
As of December 31, 2012, Cricket service was offered in 48 states and the District of Columbia across an
extended area covering approximately 292 million POPs. As of December 31, 2012, we had approximately
5.3 million customers, and we owned wireless licenses covering an aggregate of approximately 136.7 million
POPs (adjusted to eliminate duplication from overlapping licenses). The combined network footprint in our
operating markets covered approximately 96.2 million POPs as of December 31, 2012. The licenses we own
provide an average of 23 MHz of coverage in our operating markets.
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 an extended
service area. We recently entered into an agreement with a national carrier for 4G LTE roaming services. In
addition, we have also entered into a wholesale agreement, which we use to offer Cricket services in nationwide
retailers outside of our current network footprint, and we recently amended that agreement to enable our
customers to receive 4G LTE services. These arrangements have enabled us to offer enhanced Cricket products
and services, strengthen our retail presence in our existing markets and expand our distribution nationwide. Since
originally introducing products in nationwide retailers in September 2011, we have determined to focus our
efforts on those retailers that we believe provide the most attractive opportunities for our business. As a result,
we expect to reduce our total presence in the nationwide retail channel from approximately 13,000 locations at
June 30, 2012 to approximately 5,000 locations by early 2013.
The foundation of our business is to provide unlimited, nationwide wireless services, and we 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. The service plans we currently offer are
“all-inclusive,” with telecommunication taxes and certain fees included within the service plan price.
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. The evolving competitive landscape negatively impacted our financial and operating
results in 2012, including in the second, third and fourth quarters of 2012 when we experienced net customer
losses. Our ability to remain competitive will depend, in part, on our ability to anticipate and respond to various
competitive factors and to keep our costs low. During the third quarter of 2012, we increased pricing on our
devices in an effort to better manage our device subsidy and promote the addition of longer-tenured customers,
although such changes have also had the effect of decreasing gross customer additions. We also introduced new
pricing plans for our service offerings, which included new features such as visual voicemail on certain
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