US Cellular 2010 Annual Report Download - page 30

decrease in several of the market-participant inputs used to calculate the weighted average cost of
capital (‘‘WACC’’) due to market conditions, primarily the risk free-rate and levered beta.
The results of the licenses impairment test at November 1, 2010 did not result in the recognition of a loss
on impairment. Given that the fair values of the licenses exceed their respective carrying values, the
discount rate would have to increase to a range of 9.9% to 11.1% in order to yield estimated fair values
of licenses in the respective units of accounting that equal their respective carrying values at
November 1, 2010.
Non-operating market licenses (‘‘unbuilt licenses’’)
For purposes of performing impairment testing of unbuilt licenses, U.S. Cellular prepares estimates of fair
value by reference to prices paid in recent auctions and market transactions where available. If such
information is not available, the fair value of the unbuilt licenses is assumed to have changed by the
same percentage, and in the same direction, that the fair value of built licenses measured using the
build-out method changed during the period. There was no impairment loss recognized related to unbuilt
licenses as a result of the November 1, 2010 licenses impairment test.
Carrying Value of Licenses
The carrying value of licenses at November 1, 2010 was as follows:
Unit of accounting(1) Carrying value
(Dollars in millions)
Developed Operating markets (5 units of accounting)
Central Region .......................................... $ 623
Mid-Atlantic Region ....................................... 197
New England Region ...................................... 76
Northwest Region ........................................ 57
New York Region ........................................ —
Non-operating markets (13 units of accounting)
Central (3 states) ......................................... 105
South Central (3 states) .................................... 5
North Central (3 states) .................................... 27
Southwest Central I (3 states) ............................... 8
Southwest Central II (4 states) ............................... 25
Northwest Central I (5 states) ................................ 14
Northwest Central II (5 states) ............................... 160
Mid-Atlantic I (3 states) .................................... 35
Mid-Atlantic II (7 states) .................................... 37
Mississippi Valley (14 states) ................................ 44
Northeast (4 states) ....................................... 24
North Northwest (2 states) .................................. 3
South Northwest (2 states) .................................. 6
Total(2) .............................................. $1,446
(1) U.S. Cellular participated in spectrum auctions indirectly through its interests in Aquinas
Wireless L.P. (‘‘Aquinas Wireless’’), King Street Wireless L.P. (‘‘King Street Wireless’’), Barat
Wireless L.P. (‘‘Barat Wireless’’) and Carroll Wireless L.P. (‘‘Carroll Wireless’’), collectively,
the ‘‘limited partnerships.’’ Each limited partnership participated in and was awarded
spectrum licenses in one of four separate spectrum auctions (FCC Auctions 78, 73, 66 and
58). All of the units of accounting above, except the Northwest Region and the New York
Region, include licenses awarded to the limited partnerships.
(2) Between November 1, 2010 and December 31, 2010, U.S. Cellular acquired additional
licenses in the amount of $6.6 million.
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