Metro PCS 2009 Annual Report Download - page 137

MetroPCS Communications, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2009, 2008 and 2007
F-23
Purchase Obligations
The Company has entered into purchase agreements with network infrastructure and equipment providers with
initial terms through the earlier to occur of September 2013 or the date which the Company has purchased a
minimum number of certain products under the agreements. These agreements may be renewed at the Company’s
option on an annual basis. If the Company fails to meet its commitments under the terms of the agreements, it may
have to pay certain liquidated damages, which would be material to the Company.
In October 2009, the Company amended an existing network services agreement which included a per-calendar-
year minimum purchase volume commitment through December 31, 2012 for certain DAS nodes and related
construction, transport and maintenance services. These non-cancelable purchase orders include a lease
commitment for a term of 15 years from the acceptance date, as well as non-recurring variable fees related to
construction. The counterparty to this agreement is a related party (See Note 19).
The following table provides aggregate information about the commitments under the Company’s purchase
obligations as of December 31, 2009 (in thousands):
For the Year Ending December 31,
2010.................................................................................................................................................................. $ 183,705
2011.................................................................................................................................................................. 47,145
2012.................................................................................................................................................................. 24,744
2013.................................................................................................................................................................. 10,395
2014.................................................................................................................................................................. 9,258
AWS Licenses Acquired in Auction 66
Spectrum allocated for AWS currently is utilized by a variety of categories of commercial and governmental
users. To foster the orderly clearing of the spectrum, the FCC adopted a transition and cost sharing plan pursuant to
which incumbent non-governmental users could be reimbursed for relocating out of the band and the costs of
relocation would be shared by AWS licensees benefiting from the relocation. The FCC has established a plan where
the AWS licensee and the incumbent non-governmental user are to negotiate voluntarily for three years and then, if
no agreement has been reached, the incumbent licensee is subject to mandatory relocation where the AWS licensee
can force the incumbent non-governmental licensee to relocate at the AWS licensee’s expense. Certain spectrum
allocated for AWS also currently is utilized by governmental users. The FCC rules provide that a portion of the
money raised in Auction 66 was to be used to reimburse the relocation costs of governmental users from the AWS
band. However, not all governmental users are obligated to relocate and some such users may delay relocation for
some time. For the years ended December 31, 2009 and 2008, the Company incurred approximately $2.2 million
and $6.4 million in microwave relocation costs, respectively.
Litigation
The Company is involved in litigation from time to time, including litigation regarding intellectual property
claims that the Company considers to be in the normal course of business. Other than the matter listed below, the
Company is not currently party to any pending legal proceedings that it believes would, individually or in the
aggregate, have a material adverse effect on the Company’s financial condition, results of operations or liquidity.
The Company and certain current officers and a director (collectively the “defendants”) have been named as
defendants in a punative securities class action lawsuit filed on December 15, 2009 in the United States District
Court for the Northern District of Texas, Civil Action No. 3:09-CV-2392. Plaintiff, Ervant Zeronian, alleges that
the defendants violated Section 10(b) of the Exchange Act and Rule 10b-5, and Section 20(a) of the Exchange Act.
The complaint alleges that the defendants made false and misleading statements about the Company’s business,
prospects and operations. The putative claims are based upon statements made in press releases, earnings calls and
the like during the period from February 26, 2009 through November 4, 2009. The lawsuit seeks, among other relief,
a determination that the alleged claims may be asserted on a class-wide basis, unspecified compensatory damages,
attorney’s fees, other expenses, and costs. Defendants have not yet been served with the complaint.