PRINCIPAL CLIENTS

9 Months Ended

Sep. 30, 2011

PRINCIPAL CLIENTS

PRINCIPAL CLIENTS

5.  PRINCIPAL CLIENTS

The following table represents revenue concentration of our principal clients.

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2011		2010		2011		2010
AT&T Services, Inc. and AT&T Mobility, LLC, subsidiaries of AT&T Inc. (“AT&T”)	54.4	%	66.2	%	61.1	%	67.2	%
T-Mobile USA, Inc., a subsidiary of Deutsche Telekom	21.4	%	18.3	%	18.2	%	17.8	%

The loss of a principal client, a material reduction in the amount of business we receive from a principal client, renegotiation of price by a principal client, or the loss, delay or termination of a principal client’s product launch or service offering would adversely affect our business, revenue and operating results. We may not be able to retain our principal clients or, if we were to lose any of our principal clients, we may not be able to timely replace the revenue generated by the lost clients. Loss of a principal client could result from many factors, including consolidation or economic downturns in our clients’ industries, as discussed further below.

Our work for AT&T is covered by several contracts for a variety of different lines of AT&T business.  Some of these contracts expire in 2012 and others in 2014.  The initial term of our master services agreement covering all AT&T work expired in January 2010, was extended to July 1, 2011 and was further extended to July 1, 2012.  During the third quarter of 2011, we entered into an agreement (the “SOW”) with AT&T for certain services we provide to AT&T with regard to their wireless consumer customers.  The SOW is effective as of August 1, 2011 with a term of three years through August 1, 2014 but may be terminated by AT&T upon 60 days written notice.  The SOW is pursuant to our current master services agreement with AT&T and covered approximately 50% of our revenue in the third quarter of 2011.  This master services agreement was under renegotiation but the negotiations were postponed at the request of AT&T and our current MSA was extended as noted above.

During the first quarter of 2011, AT&T announced its entry into a stock purchase agreement with Deutsche Telekom under which AT&T agreed to acquire from Deutsche Telekom all of the issued and outstanding shares of its subsidiary, T-Mobile USA, Inc (“T-Mobile”).  The closing of the transaction is subject to certain conditions, including approval by the Federal Communications Commission and the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Act of 1976, as amended.  On August 31, 2011, the United States Department of Justice announced that it had filed a complaint in the United States Federal Court for the District of Columbia, to block the merger.  Earlier on August 27, 2011, the Federal Communications Commission (“FCC”) had reset its 180 day review clock after receiving additional information from AT&T and T-Mobile with respect to the merger.  This review period will expire on April 25, 2012.  An additional information request was made by the FCC on October 27, 2011.  We can therefore not predict the outcome of the merger review process.

On July 28, 2011, we entered into a new master services agreement (the “MSA”) with T-Mobile which covers all services that we provide to T-Mobile.   The MSA replaces the previous master services agreement dated October 1, 2007 and has an initial term of five years but may be terminated by T-Mobile upon 90 days written notice.  The agreement is effective July 1, 2011 with an initial term of five years and will automatically renew for additional one-year periods thereafter.