Metro PCS 2007 Annual Report Download - page 90

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9¼% Senior Notes Due 2014
On November 3, 2006, MetroPCS Wireless, Inc. consummated the sale of $1.0 billion principal amount of its
initial senior notes. On June 6, 2007, MetroPCS Wireless, Inc. consummated the sale of an additional $400 million
principal amount of additional notes. The initial senior notes and the additional notes are referred to together as the
9¼% senior notes. The 9¼% senior notes are unsecured obligations and are guaranteed by MetroPCS
Communications, Inc., MetroPCS, Inc., and all of MetroPCS Wireless, Inc.’ s direct and indirect wholly-owned
domestic restricted subsidiaries, but are not guaranteed by Royal Street Communications or its subsidiaries. Interest
is payable on the initial senior notes on May 1 and November 1 of each year, beginning with May 1, 2007, with
respect to the initial senior notes, and beginning on November 1, 2007 with respect to the additional notes.
MetroPCS Wireless, Inc. may, at its option, redeem some or all of the 9¼% senior notes at any time on or after
November 1, 2010 for the redemption prices set forth in the indenture governing the 9¼% senior notes. In addition,
MetroPCS Wireless, Inc. may also redeem up to 35% of the aggregate principal amount of the 9¼% senior notes
with the net cash proceeds of certain sales of equity securities, including the sale of common stock.
Capital Expenditures and Other Asset Acquisitions and Dispositions
Capital Expenditures. We and Royal Street currently expect to incur capital expenditures in the range of $1.1
billion to $1.3 billion for the year ending December 31, 2008 in our Core and Expansion Markets, which includes
$600 million to $700 million in our Auction 66 markets. In addition, we have committed or expect to commit to
spend in the first half of 2008 an aggregate of between $360 million and $375 million in cash to acquire assets to
support our networks in existing markets or markets we are building, including assets related to the acquisition of,
conversion of, buildout of, and launch of service in, Jacksonville, Florida.
During the year ended December 31, 2007, we and Royal Street incurred $767.7 million in capital expenditures.
These capital expenditures were primarily for the expansion and improvement of our existing network infrastructure
and costs associated with the construction of the Los Angeles metropolitan area, which was launched in September
2007.
During the year ended December 31, 2006, we had $550.7 million in capital expenditures. These capital
expenditures were primarily for the expansion and improvement of our existing network infrastructure and costs
associated with the construction of the Dallas/Ft. Worth, Detroit and Orlando Expansion Markets that we launched
in 2006, as well as the construction of the Los Angeles metropolitan area.
During the year ended December 31, 2005, we had $266.5 million in capital expenditures. These capital
expenditures were primarily for the expansion and improvement of our existing network infrastructure and costs
associated with the construction of the Tampa/Sarasota, Dallas/Ft. Worth and Detroit metropolitan areas.
Other Acquisitions and Dispositions. On May 11, 2005, we completed the sale of a 10 MHz portion of our
30 MHz PCS license in the San Francisco — Oakland — San Jose basic trading area for cash consideration of
$230.0 million. The sale was structured as a like-kind exchange under Section 1031 of the Internal Revenue Code of
1986, as amended, through which our right, title and interest in and to the divested PCS spectrum was exchanged for
the PCS spectrum acquired in Dallas/Ft. Worth, Texas and Detroit, Michigan through a license purchase agreement
for an aggregate purchase price of $230.0 million. The purchase of the PCS spectrum in Dallas/Ft. Worth and
Detroit was accomplished in two steps with the first step of the exchange occurring on February 23, 2005 and the
second step occurring on May 11, 2005 when we consummated the sale of 10 MHz of PCS spectrum for the
San Francisco — Oakland — San Jose basic trading area. The sale of PCS spectrum resulted in a gain on disposal of
asset in the amount of $228.2 million.
On July 7, 2005, we acquired a 10 MHz F-Block PCS license for Grayson and Fannin counties in the basic
trading area of Sherman-Denison, Texas for an aggregate purchase price of $0.9 million.
On August 12, 2005, we closed on the purchase of a 10 MHz F-Block PCS license in the basic trading area of
Bakersfield, California for an aggregate purchase price of $4.0 million.
On December 21, 2005, the FCC granted Royal Street 10 MHz of PCS spectrum in each of the Los Angeles,
California; Orlando, Lakeland-Winter Haven, Jacksonville, Melbourne-Titusville, and Gainesville, Florida basic
trading areas. Royal Street, as the high bidder in Auction 58, had paid approximately $294.0 million to the FCC for
these PCS licenses.