Metro PCS 2007 Annual Report Download - page 45

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The value of our licenses may drop in the future as a result of volatility in the marketplace and the sale of
additional spectrum by the FCC.
The market value of FCC licenses has been subject to significant volatility in the past and the FCC has and may
continue to auction additional substantial amounts of spectrum. The impact of these future auctions on license
values is uncertain. There can be no assurance of the market value of our FCC licenses or that the market value of
our FCC licenses will not be volatile in the future. If the value of our licenses were to decline significantly, we could
be forced to record non-cash impairment charges which could impact our ability to borrow additional funds. A
significant impairment loss could have a material adverse effect on our operating income and on the carrying value
of our licenses on our balance sheet.
We are currently subject to the FCC’s anti-collusion rule, and may in the future become subject to the FCC’s
anti-collusion rule, in connection with other FCC auctions which may preclude us from engaging in certain
activities.
Whenever we submit an application to participate in an auction of spectrum held by the FCC we become subject
to the FCC’ s anti-collusion rule. We have submitted an application to participate in the 700 MHz auction designated
as Auction 73 and were found by the FCC to be qualified to bid in the auction. As a result, applicable FCC rules
place certain restrictions on business communications with other applicants. For example, the FCC has indicated
that discussions with other carriers regarding roaming agreements, the partitioning of markets or the disaggregation
of spectrum, or the acquisition of licenses or licensees, may implicate the anti-collusion rule if both parties to the
discussions are competing applicants in the auction and, in the course of the discussions, the parties exchange
information pertaining to or affecting their bids, bidding strategy or the post-auction market structure. These anti-
collusion restrictions may affect the normal conduct of our business by inhibiting discussions and the conclusion of
beneficial transactions with other carriers from the time applications are due until after the conclusion of the auction,
which time period could be substantial. Failure to comply with the anti-collusion rule may subject us, among other
things, to fines and forfeitures and possible loss of any licenses in which we were the high bidder.
If we are unable to manage our planned growth effectively, our costs could increase and our level of service
could be adversely affected.
We have experienced rapid growth and development in a relatively short period of time and expect to continue to
experience substantial growth in the future. Previously, we failed to adequately implement financial controls and
management systems. We publicly acknowledged deficiencies in our financial reporting as early as August 2004,
and have made changes in our controls and systems that are designed to address these deficiencies. Our expected
growth will also require stringent control of costs, diligent management of our network infrastructure and our
growth, increased capital requirements, increased costs associated with marketing activities, the ability to attract and
retain qualified management, technical and sales personnel and the training and management of new personnel, and
the design and implementation of financial and management controls. Our growth will challenge the capacity and
abilities of existing employees and future employees at all levels of our business and the controls and systems we
have implemented. Failure to successfully manage our expected growth and development could have a material
adverse effect on our business, increase our costs and adversely affect our level of service.
A significant portion of our revenue is derived from geographic areas susceptible to natural and other disasters.
Our markets in California, Texas and Florida contribute a substantial amount of revenue, operating cash flows,
and net income to our operations. These same states, however, have a history of natural disasters which may
adversely affect our operations in those states. In addition, the major metropolitan areas in which we operate, or plan
to operate, could be the target of terrorist attacks. These events may cause our networks to cease operating for a
substantial period of time while we reconstruct them and our competitors may be less affected by such natural
disasters or terrorist attacks. If our networks cease operating for any substantial period of time, we may lose revenue
and customers, and may have difficulty attracting new customers in the future, which could materially adversely
affect our operations. Although we have business interruption insurance which we believe is adequate, we cannot
provide any assurance that the insurance will cover all losses we may experience as a result of a natural disaster or
terrorist attack, that the insurance carrier will be solvent or that the insurance carrier will pay all claims made by us.