Metro PCS 2007 Annual Report Download - page 122

MetroPCS Communications, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2007, 2006 and 2005
F-23
The interest rate on the outstanding debt under the Senior Secured Credit Facility is variable. The rate as of
December 31, 2007 was 7.329%. On November 21, 2006, Wireless entered into a three-year interest rate protection
agreement to manage the Company’ s interest rate risk exposure and fulfill a requirement of the Senior Secured
Credit Facility. The agreement covers a notional amount of $1.0 billion and effectively converts this portion of
Wireless’ variable rate debt to fixed-rate debt (See Note 5). On February 20, 2007, Wireless entered into an
amendment to the Senior Secured Credit Facility. Under the amendment, the margin on the base rate used to
determine the Senior Secured Credit Facility interest rate was reduced to 2.25% from 2.50%.
Restructuring
On November 3, 2006, in connection with the closing of the Initial Notes, the entry into the Senior Secured Credit
Facility and the repayment of all amounts outstanding under the credit agreements, the secured bridge credit facility
and the unsecured bridge credit facility, the Company consummated a restructuring transaction. As a result of the
restructuring transaction, Wireless became a wholly-owned direct subsidiary of MetroPCS, Inc. (formerly
MetroPCS V, Inc.), which is a wholly-owned direct subsidiary of MetroPCS. MetroPCS and MetroPCS, Inc., along
with each of Wireless’ wholly-owned subsidiaries (which excludes Royal Street), guarantee the 9¼% Senior Notes
and the obligations under the Senior Secured Credit Facility. MetroPCS, Inc. pledged the capital stock of Wireless
as security for the obligations under the Senior Secured Credit Facility. All of the Company’ s FCC licenses and the
Company’ s interest in Royal Street are held by Wireless and its wholly-owned subsidiaries.
9. Concentrations:
The Company purchases a substantial portion of its wireless infrastructure equipment and handset equipment
from only a few major suppliers. Further, the Company generally relies on one key vendor in each of the following
areas: network infrastructure equipment, billing services, customer care, handset logistics and long distance services.
Loss of any of these suppliers could adversely affect operations temporarily until a comparable substitute could be
found. Verisign, the Company’ s existing billing system provider, has publicly announced that it plans to leave the
telecommunications services business, including the billing services business. The Company is in the process of
identifying and negotiating a new billing service agreement with another nationally recognized third-party vendor.
Local and long distance telephone and other companies provide certain communication services to the Company.
Disruption of these services could adversely affect operations in the short term until an alternative
telecommunication provider was found.
Concentrations of credit risk with respect to trade accounts receivable are limited due to the diversity of the
Company’ s indirect retailer base.
10. Commitments and Contingencies:
The Company has entered into non-cancelable operating lease agreements to lease facilities, certain equipment
and sites for towers and antennas required for the operation of its wireless networks. Future minimum rental
payments required for all non-cancelable operating leases at December 31, 2007 are as follows (in thousands):
For the Year Ending December 31,
2008................................................................................................................................................................... $ 126,330
2009................................................................................................................................................................... 128,918
2010................................................................................................................................................................... 131,374
2011................................................................................................................................................................... 127,442
2012................................................................................................................................................................... 113,899
Thereafter .......................................................................................................................................................... 417,197
Total .................................................................................................................................................................. $ 1,045,160
Total rent expense for the years ended December 31, 2007, 2006 and 2005 was $125.1 million, $85.5 million and
$51.6 million, respectively.