Segment Information

6 Months Ended

Jun. 30, 2013

Segment Reporting [Abstract]

Segment Information

Note 14. Segments

Sprint operates two reportable segments: Wireless and Wireline.

• Wireless primarily includes retail, wholesale, and affiliate revenue from a wide array of wireless voice and data transmission services and equipment revenue from the sale of wireless devices and accessories in the U.S., Puerto Rico and the U.S. Virgin Islands.

• Wireline primarily includes revenue from domestic and international wireline voice and data communication services, including services to the cable multiple systems operators that resell our local and long distance services and use our back office systems and network assets in support of their telephone services provided over cable facilities primarily to residential end-use subscribers.

We define segment earnings as wireless or wireline operating (loss) income before other segment expenses such as depreciation, amortization, severance, exit costs, goodwill impairments, asset impairments, and other items, if any, solely and directly attributable to the segment representing items of a non-recurring or unusual nature. Expense and income items excluded from segment earnings are managed at the corporate level. Transactions between segments are generally accounted for based on market rates, which we believe approximate fair value. The Company generally re-establishes these rates at the beginning of each fiscal year. Over the past several years, there has been an industry-wide trend of lower rates due to increased competition from other wireline and wireless communications companies as well as cable and Internet service providers.

Segment financial information is as follows:

Statement of Operations Information	Wireless			Wireline			Corporate, Other and Eliminations			Consolidated
	(in millions)
Three Months Ended June 30, 2013
Net operating revenues	$	8,178		$	695		$	4		$	8,877
Inter-segment revenues(1)	—			215			(215		)	—
Total segment operating expenses	(6,884		)	(781		)	212			(7,453		)
Segment earnings	$	1,294		$	129		$	1		1,424
Less:
Depreciation and amortization										(1,632		)
Other, net(2)										(666		)
Operating loss										(874		)
Interest expense										(428		)
Equity in losses of unconsolidated investments and other, net							$	(240	)	(240		)
Loss before income taxes										$	(1,542	)
Statement of Operations Information	Wireless			Wireline			Corporate, Other and Eliminations			Consolidated
	(in millions)
Three Months Ended June 30, 2012
Net operating revenues	$	8,067		$	774		$	2		$	8,843
Inter-segment revenues(1)	—			221			(221		)	—
Total segment operating expenses	(6,768		)	(846		)	222			(7,392		)
Segment earnings	$	1,299		$	149		$	3		1,451
Less:
Depreciation and amortization										(1,896		)
Other, net(2)										(184		)
Operating loss										(629		)
Interest expense										(321		)
Equity in losses of unconsolidated investments and other, net							$	(398	)	(398		)
Loss before income taxes										$	(1,348	)

Statement of Operations Information	Wireless			Wireline			Corporate, Other and Eliminations			Consolidated
	(in millions)
Six Months Ended June 30, 2013
Net operating revenues	$	16,267		$	1,397		$	6		$	17,670
Inter-segment revenues(1)	—			406			(406		)	—
Total segment operating expenses	(13,578		)	(1,546		)	402			(14,722		)
Segment earnings	$	2,689		$	257		$	2		2,948
Less:
Depreciation and amortization										(3,124		)
Other, net(2)										(669		)
Operating loss										(845		)
Interest expense										(860		)
Equity in losses of unconsolidated investments and other, net							$	(442	)	(442		)
Loss before income taxes										$	(2,147	)
Statement of Operations Information	Wireless			Wireline			Corporate, Other and Eliminations			Consolidated
	(in millions)
Six Months Ended June 30, 2012
Net operating revenues	$	16,017		$	1,555		$	5		$	17,577
Inter-segment revenues(1)	—			438			(438		)	—
Total segment operating expenses	(13,666		)	(1,683		)	436			(14,913		)
Segment earnings	$	2,351		$	310		$	3		2,664
Less:
Depreciation and amortization										(3,562		)
Other, net(2)										14
Operating loss										(884		)
Interest expense										(619		)
Equity in losses of unconsolidated investments and other, net							$	(671	)	(671		)
Loss before income taxes										$	(2,174	)
Other Information	Wireless			Wireline			Corporate and Other			Consolidated
	(in millions)
Capital expenditures for the six months ended June 30, 2013	$	2,673		$	164		$	115		$	2,952
Capital expenditures for the six months ended June 30, 2012	$	1,464		$	120		$	127		$	1,711

 _________________

(1) Inter-segment revenues consist primarily of wireline services provided to the Wireless segment for resale to or use by wireless subscribers.

(2) Other, net for the three-month period endedJune 30, 2013 consists of severance and exit costs of $632 million primarily related to lease exit costs associated with the shut-down of the Nextel platform and other costs related to backhaul access contracts which will have no future economic benefit, and $34 million of business combination fees paid to unrelated parties necessary for the transactions with SoftBank and Clearwire. Other, net for the six-month period endedJune 30, 2013, consists of severance and exit costs of $657 million and $34 million of business combination fees paid to unrelated parties necessary for the transactions with SoftBank and Clearwire (included in our corporate segment and classified in our consolidated statements of comprehensive loss as selling, general and administrative expenses), partially offset by $22 million of favorable developments in connection with an E911 regulatory tax-related contingency. Other, net for the three-month period endedJune 30, 2012 consists of $184 million of lease exit costs associated with the taking of certain Nextel platform sites off-air in 2012. Other, net for the six-month period endedJune 30, 2012 consists of net operating income of $236 million associated with the termination of the spectrum hosting arrangement with LightSquared, a gain of $29 million on spectrum swap transactions, and a benefit of $17 million resulting from favorable developments relating to access cost disputes associated with prior periods, partially offset by $184 million of lease exit costs and $84 million of asset impairment charges.

Operating Revenues by Service and Products	Wireless		Wireline		Corporate, Other and Eliminations(1)			Consolidated
	(in millions)
Three Months Ended June 30, 2013
Wireless services	$	7,227	$	—	$	—		$	7,227
Wireless equipment	820		—		—			820
Voice	—		377		(122		)	255
Data	—		87		(44		)	43
Internet	—		432		(48		)	384
Other	131		14		3			148
Total net operating revenues	$	8,178	$	910	$	(211	)	$	8,877
	Wireless		Wireline		Corporate, Other and Eliminations(1)			Consolidated
	(in millions)
Three Months Ended June 30, 2012
Wireless services	$	7,190	$	—	$	—		$	7,190
Wireless equipment	753		—		—			753
Voice	—		426		(130		)	296
Data	—		99		(43		)	56
Internet	—		449		(48		)	401
Other	124		21		2			147
Total net operating revenues	$	8,067	$	995	$	(219	)	$	8,843
	Wireless		Wireline		Corporate, Other and Eliminations(1)			Consolidated
	(in millions)
Six Months Ended June 30, 2013
Wireless services	$	14,370	$	—	$	—		$	14,370
Wireless equipment	1,633		—		—			1,633
Voice	—		729		(221		)	508
Data	—		181		(90		)	91
Internet	—		866		(95		)	771
Other	264		27		6			297
Total net operating revenues	$	16,267	$	1,803	$	(400	)	$	17,670
	Wireless		Wireline		Corporate, Other and Eliminations(1)			Consolidated
	(in millions)
Six Months Ended June 30, 2012
Wireless services	$	14,302	$	—	$	—		$	14,302
Wireless equipment	1,488		—		—			1,488
Voice	—		843		(257		)	586
Data	—		207		(87		)	120
Internet	—		902		(94		)	808
Other	227		41		5			273
Total net operating revenues	$	16,017	$	1,993	$	(433	)	$	17,577

_______________

(1) Revenues eliminated in consolidation consist primarily of wireline services provided to the Wireless segment for resale to or use by wireless subscribers.