TeleNav 2010 Annual Report Download - page 14

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customers in conjunction with certain of our wireless carrier partners. In connection with sales efforts directed
primarily at enterprises, we work closely with representatives of our wireless carrier partners, often participating
in sales calls and other aspects of the selling process.
Customers
We primarily derive our revenue from our partnerships with wireless carriers who sell our LBS to their
subscribers either as a stand alone service or in a bundle with other data or voice services. End users may also
subscribe to our services directly from our website, but these customers represent a small minority of our end
users. We currently provide our LBS to customers in North America, Asia, Europe and South America.
As of June 30, 2010, we had entered into agreements with 14 wireless carriers to provide our LBS in 29
countries. Our revenue from the United States constituted 97%, 96% and 97% of our total revenue for fiscal
2008, fiscal 2009 and fiscal 2010, respectively.
We receive revenue from our wireless carrier partners in three ways: (1) a monthly subscription fee per end
user, (2) commencing in fiscal 2011, a fixed annual fee for any number of subscribers (up to specified thresholds)
receiving our services as part of bundles with other voice and data services or (3) a revenue sharing arrangement
that may include a minimum fee per end user. Our wireless carrier partners may offer our services on a stand
alone basis or bundled with other voice and data services provided by our wireless carrier partners. In the future,
we may have other revenue models, including fees for certain automotive navigation applications or advertising
supported arrangements.
We are substantially dependent on Sprint and AT&T for our revenue. For fiscal 2008, 2009 and 2010, Sprint
represented 62%, 61% and 55% of our revenue, respectively, and AT&T represented 26%, 29% and 34% of our
revenue, respectively. We expect Sprint and AT&T to represent a significant portion of our revenue for the
foreseeable future.
Effective September 1, 2010, we amended our agreement with Sprint to, among other things, extend the
expiration of our agreement from December 31, 2011 to December 31, 2012. Pursuant to the terms of our
agreement with Sprint, we are Sprint’s preferred supplier of navigation applications until December 31, 2012 and
Sprint is required to use commercially reasonable efforts to feature our navigation services more prominently
than other navigation applications on handsets and to preload certain of our products on handsets. Sprint is
entitled to expand the number of bundles in which our navigation services are offered. For bundled navigation
services, Sprint will pay us a fixed annual fee, regardless of the number of subscribers (up to specified
thresholds). In connection with our amended agreement with Sprint, we and Sprint have agreed to transition
Sprint Navigation branded services to TeleNav branded navigation services. Other than with respect to the fixed
fee arrangement for bundled navigation services, our agreement with Sprint will automatically renew on
January 1, 2013 for successive 12-month periods unless either party provides notice of termination at least 90
days prior to the expiration of the applicable term. Our agreement with Sprint also allows either party to
terminate the agreement if the other party materially breaches its obligations and fails to cure such breach.
Additionally, Sprint may terminate the agreement if we effect a change in control transaction or become
insolvent and, beginning June 30, 2012, Sprint may terminate our agreement for any reason by providing notice
at least 30 business days prior to termination.
Our current agreement with AT&T was effective as of March 19, 2008 and expires on March 19, 2011.
During the term of our agreement with AT&T, we are the exclusive white label provider to AT&T of GPS
enabled navigation services for wireless devices with voice and data capability. AT&T is not required to offer
our LBS. The agreement with AT&T will automatically renew at the end of the initial term for successive one
year periods unless either party provides notice of termination at least 60 days prior to the expiration of the
applicable term. Our agreement with AT&T also allows either party to terminate the agreement if the other party
is insolvent or materially breaches its obligations and fails to cure such breach. We are also required to give
AT&T preferred pricing during the term of our agreement.
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