TeleNav 2011 Annual Report Download - page 21

Table of Contents
We operate in a rapidly changing environment that involves numerous uncertainties and risks. The following risks and uncertainties may
have a material and adverse effect on our business, financial condition or results of operations. You should consider these risks and
uncertainties carefully, together with all of the other information included or incorporated by reference in this Form 10-K before you decide
whether to purchase any of our securities. If any of the risks or uncertainties we face were to occur, the trading price of our securities could
decline, and you may lose all or part of your investment.
Risk related to our business
We are substantially dependent on two wireless carrier customers for a large portion of our revenue and if these wireless carrier customers
were to limit or terminate our relationships with them or to offer LBS directly or from other vendors, our revenue and net income would be
adversely affected.
We are substantially dependent on two wireless carrier customers for a large portion of our revenue. In fiscal 2009, 2010 and 2011, Sprint
represented 61%, 55% and 42% of our revenue, respectively. Effective September 1, 2010, we amended our agreement with Sprint to, among
other things, extend the term 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). Sprint may terminate our
agreement for any reason, beginning June 30, 2012, by providing notice at least 30 business days prior to termination. Our amended agreement
with Sprint will result in declines in ARPU compared to the quarters prior to implementation of the amendment due to increasing numbers of
Sprint bundle subscribers with access to our services and fixed revenue from Sprint for bundled basic navigation services. Although we are
entitled to receive more revenue from enterprise LBS, mobile commerce and premium navigation services than we previously were, we may not
be able to realize these benefits in the near term or at all. Our failure to renew or renegotiate this agreement on or after June 30, 2012 on
favorable terms or at all, a termination of our agreement by Sprint or our failure to otherwise maintain our relationship with Sprint would
substantially reduce our revenue and significantly harm our business, operating results and financial condition.
In connection with our amended agreement with Sprint, we and Sprint have agreed to transition Sprint Navigation branded services to
TeleNav branded navigation services. The branding transition may not increase end user recognition of our brand and may result in confusion
that results in reduced or more limited adoption of our services by Sprint’s subscribers.
In March 2008, Sprint began offering the Simply Everything plans which currently include our LBS. As a result, we have experienced a
significant increase in end users and benefitted from increased marketing exposure since the Simply Everything plans’ introduction. If Sprint
reduces its expenditures for marketing our LBS, changes its Simply Everything plans to eliminate our services, prices our LBS at a level that
makes them less attractive or offers and promotes competing LBS, in lieu of, or to a greater degree than, our LBS, our revenue would be
materially reduced and our business, operating results and financial condition would be materially and adversely affected.
In fiscal 2009, 2010 and 2011, AT&T represented 29%, 34% and 37% of our total revenue, respectively. AT&T is not required to offer our
LBS. As amended in January 2011, our agreement with AT&T expires in March 2013 and during the term of our agreement, we are the
exclusive provider of white label GPS navigation services to AT&T. If AT&T were to terminate its agreement with us or fail to renew or
renegotiate the agreement on favorable terms when it expires, we would lose a substantial portion of our revenue and our business operating
results and financial condition could be harmed. Furthermore, our failure to otherwise maintain our relationship with AT&T would substantially
harm our business.
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ITEM 1A.
RISK FACTORS