Notes to Consolidated Financial Statements

NOTE 4

WIRELESS LICENSES, GOODWILL AND OTHER INTANGIBLE ASSETS

Wireless Licenses

Changes in the carrying amount of wireless licenses are as follows:

(dollars in millions)

 

Balance as of December 31, 2006

$

50,959

 

Wireless licenses acquired

 

170

 

Capitalized interest on wireless licenses

 

203

 

Other, net

 

(536

)

Balance as of December 31, 2007

$

50,796

 

Wireless licenses acquired

 

10,626

 

Capitalized interest on wireless licenses

 

557

 

Other, net

 

(5

)

Balance as of December 31, 2008

$

61,974

 

As of December 31, 2008 and 2007, $12.4 billion and $3.0 billion, respectively, of wireless licenses were not in service.

During 2007, Other, net primarily included the impact of adopting FIN 48 (see Note 1) of $535 million.

On March 20, 2008, the FCC announced the results of Auction 73 of wireless spectrum licenses in the 700 MHz band. We were the successful bidder for twenty-five 12 MHz licenses in the A-Block frequency, seventy-seven 12 MHz licenses in the B-Block frequency and seven 22 MHz licenses (nationwide with the exception of Alaska) in the C-Block frequency, with an aggregate bid price of $9,363 million. We have made all required payments to the FCC for these licenses. The FCC granted us these licenses on November 26, 2008.

Goodwill

Changes in the carrying amount of goodwill are as follows:

(dollars in millions)

 

Domestic
Wireless

 

Wireline

 

Total

 

Balance at December 31, 2006

$

345

 

$

5,310

 

$

5,655

 

Acquisitions

 

 

 

343

 

 

343

 

Reclassifications and adjustments

 

 

 

(753

)

 

(753

)

Balance at December 31, 2007

$

345

 

$

4,900

 

$

5,245

 

Acquisitions

 

954

 

 

 

 

954

 

Reclassifications and adjustments

 

(2

)

 

(162

)

 

(164

)

Balance at December 31, 2008

$

1,297

 

$

4,738

 

$

6,035

 

Reclassifications and adjustments to goodwill include the impact of adopting FIN 48 (see Note 1) of $100 million as of January 1, 2007, as well as to reflect revised estimated tax bases of acquired assets and liabilities during 2008 and 2007.

Other Intangible Assets

The following table displays the details of other intangible assets:

(dollars in millions)

 

At December 31, 2008

 

At December 31, 2007

 

 

Gross
Amount

 

Accumulated
Amortization

 

Net
Amount

 

Gross
Amount

 

Accumulated
Amortization

 

Net
Amount

 

Finite-lived intangible assets:

Customer lists (3 to 10 years)

$

1,415

 

$

595

 

$

820

 

$

1,307

 

$

459

 

$

848

 

Non-network internal-use software

(2 to 7 years)

 

8,099

 

 

4,102

 

 

3,997

 

 

8,116

 

 

4,147

 

 

3,969

 

Other (1 to 25 years)

 

465

 

 

83

 

 

382

 

 

215

 

 

44

 

 

171

 

Total

$

9,979

 

$

4,780

 

$

5,199

 

$

9,638

 

$

4,650

 

$

4,988

 

Customer lists and Other at December 31, 2008 include $198 million related to the Rural Cellular acquisition. Amortization expense was $1,383 million, $1,341 million, and $1,423 million for the years ended December 31, 2008, 2007 and 2006, respectively and is estimated to be $1,430 million in 2009, $1,139 million in 2010, $934 million in 2011, $713 million in 2012 and $552 million in 2013.

During 2008, we entered into an agreement to acquire a non-exclusive license (the IP License) to a portfolio of intellectual property owned by an entity formed for the purpose of acquiring and licensing intellectual property. We paid an initial fee of $100 million for the IP License, which is included in Other intangible assets and is being amortized over the expected useful lives of the licensed intellectual property. In addition, we executed a subscription agreement (with a capital commitment of $250 million, of which approximately $214 million is remaining to be funded at December 31, 2008, as required through 2012) to become a member in a limited liability company (the LLC) formed by the same entity for the purpose of acquiring and licensing additional intellectual property. In connection with this investment, we will receive non-exclusive license rights to certain intellectual property acquired by the LLC for an annual license fee.