Cricket Wireless 2012 Annual Report Download - page 62

were no longer recoverable, and as such, recorded an impairment charge of $13.6 million during the fourth
quarter of 2012, reducing the carrying value of those capitalized amounts to zero. Refer to Note 10 to the
consolidated financial statements included in “Item 8. Financial Statements and Supplementary Data” for further
discussion of the impairment charge. There were no other events or circumstances that occurred during the year
ended December 31, 2012 that indicated the carrying value of any long-lived assets may not be recoverable.
There were no events or circumstances that occurred during the year ended December 31, 2011 that
indicated the carrying value of any long-lived assets may not be recoverable.
In August 2010, we entered into a wholesale agreement, which we use to offer Cricket services in
nationwide retailers outside of our current network footprint. This agreement has enabled us to strengthen our
retail presence in our existing markets and expand our distribution nationwide, and provided us greater flexibility
with respect to our network expansion plans. As a result, after entering into this wholesale agreement, we
determined to spend an increased portion of our planned capital expenditures on the deployment of next-
generation LTE technology and to defer our previously planned network expansion activities. As a result of these
developments, costs for certain network, design, site acquisition and capitalized interest relating to the expansion
of our network that had been previously accumulated in construction-in-progress were determined to be impaired
and we recorded an impairment charge of $46.5 million during the third quarter of 2010.
Impairment of Indefinite-Lived Intangible Assets
We assess potential impairments to our indefinite-lived intangible assets, including wireless licenses and
goodwill, on an annual basis or when there is evidence that events or changes in circumstances indicate an
impairment condition may exist. In addition on a quarterly basis, we evaluate the triggering event criteria
outlined in the authoritative guidance for intangible assets to determine whether events or changes in
circumstances indicate that an impairment condition may exist. Our annual impairment test is conducted each
year during the third quarter.
Wireless Licenses
We hold PCS, AWS and 700MHz wireless licenses granted by the FCC that are specific to a particular
geographic area on spectrum that has been allocated by the FCC for such services. Wireless licenses are initially
recorded at cost and are not amortized. Although FCC licenses are issued with a stated term (ten years in the case
of PCS and 700MHz licenses and fifteen years in the case of AWS licenses), wireless licenses are considered to
be indefinite-lived intangible assets because we expect to provide wireless service using the relevant licenses for
the foreseeable future. PCS, AWS and 700MHz licenses are routinely renewed for either no or a nominal fee and
we have determined that no legal, regulatory, contractual, competitive, economic or other factors currently exist
that limit the useful lives of our wireless licenses. On a quarterly basis, we evaluate the remaining useful lives of
our indefinite-lived wireless licenses to determine whether events and circumstances, such as legal, regulatory,
contractual, competitive, economic or other factors, continue to support an indefinite useful life. If a wireless
license is subsequently determined to have a finite useful life, we would first test the wireless license for
impairment and the wireless license would then be amortized prospectively over its estimated remaining useful
life. As of December 31, 2012 and 2011, the carrying value of our wireless licenses (excluding assets held for
sale) was $1.9 billion and $1.8 billion, respectively. Wireless licenses to be disposed of by sale are carried at the
lower of their carrying value or fair value less costs to sell. As of December 31, 2012, wireless licenses with a
carrying value of $136.2 million were classified as assets held for sale, as more fully described in “-Liquidity and
Capital Resources,” below.
For purposes of testing impairment, our wireless licenses in our operating markets are combined into a
single unit of account because we believe that utilizing these wireless licenses as a group represents the highest
and best use of the assets, and the value of the wireless licenses would not be significantly impacted by a sale of
one or a portion of the wireless licenses, among other factors. Our non-operating licenses are tested for
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