
Note 15.	Related-Party Transactions

Clearwire Related-Party Transactions

Sprint's relationship with Clearwire, which is now a wholly-owned subsidiary, includes agreements by which we resell wireless data services utilizing Clearwire's 4G network. In addition, Clearwire subscribers utilize the third generation (3G) Sprint network which provides dual-mode service to subscribers in those areas where access to Clearwire's 4G network is not available.

Immediately prior to the Clearwire Acquisition, Sprint Communications held approximately 50.1% of non-controlling voting interest and a 6.0% non-controlling economic interest in Clearwire Corporation as well as a 44.1% non-controlling economic interest in Clearwire Communications LLC for which the carrying value totaled $325 million. Prior to the close of the Clearwire Acquisition, we applied equity method accounting to the investment in Clearwire.

Equity in losses from Clearwire were $23 million and $280 million for the Predecessor 9-day and 100-day periods ended July 9, 2013, respectively. The equity in losses from our investment in Clearwire consisted of our share of Clearwire's net loss and other adjustments, if any, such as non-cash impairment of our investment, gains or losses associated with the dilution of our ownership interest resulting from Clearwire's equity issuances, derivative losses associated with the change in fair value of the embedded derivative included in exchangeable notes between Clearwire and Sprint, and other items recognized by Clearwire Corporation that did not affect our economic interest. Sprint's equity in losses for the Predecessor 9-day and 100-day periods ended July 9, 2013, include a $65 million derivative loss associated with the change in fair value of the embedded derivative. Subsequent to the Clearwire Acquisition, Clearwire is consolidated as a wholly-owned subsidiary of Sprint. Cost of services and products included in our consolidated statements of comprehensive income (loss) related to our agreement to purchase 4G services from Clearwire totaled $11 million and $106 million for the Predecessor 9-day and 100-day periods ended July 9, 2013, respectively.

Summarized financial information for Clearwire for the 9-day and 100-day periods ended July 9, 2013, which preceded the Clearwire Acquisition, is as follows:



	9 Days Ended July 9,			100 Days Ended July 9,
	2013			2013
	(in millions)
Revenues	$	31		$	348
Operating expenses	(62		)	(663		)
Operating loss	$	(31	)	$	(315	)
Net loss from continuing operations before non-controlling interests	$	(31	)	$	(447	)

SoftBank Related-Party Transactions

In addition to agreements arising out of or relating to the SoftBank Merger, Sprint has entered into various other arrangements with SoftBank or its controlled affiliates (SoftBank Parties) or with third parties to which SoftBank Parties are also parties, including for international wireless roaming, wireless and wireline call termination, real estate, device and accessory purchasing, and other services.

Specifically, we have arrangements with Brightstar US, Inc. (Brightstar), an affiliate controlled by SoftBank, whereby Brightstar provides supply chain and inventory management services to us in our indirect channels and whereby Sprint may sell new and used handsets and new accessories to them for their own purposes. The supply chain and inventory management agreement contemplates that Brightstar will purchase inventory from the OEMs to sell directly to our indirect dealers. As compensation for these services, we remit per unit fees to Brightstar for each device sold to dealers or retailers in our indirect channels. Until Brightstar successfully negotiates contracts with, and procures credit from, our existing original equipment manufacturers (OEMs), they will purchase handset and accessory inventory from us in order to fulfill orders within our indirect channel. In October 2014, we provided a $1.0 billion credit line to Brightstar to facilitate certain of these arrangements. As a result, we are shifting our concentration of credit risk away from our indirect channel partners to Brightstar. Because Brightstar is a wholly-owned subsidiary of SoftBank, we expect SoftBank will provide the necessary support to ensure that Brightstar will fulfill its obligations to us under these agreements. However, there can be no assurance that SoftBank will provide such support.

Amounts included in our consolidated financial statements associated with these arrangements with Brightstar were as follows:



Consolidated balance sheets:	Successor
	September 30, 2014		March 31, 2014
	(in millions)
Accounts receivable	$	118	$	—
Accounts payable	$	7	$	—



Consolidated statements of comprehensive (loss) income:	Successor ⁽¹⁾
	Three Months Ended September 30,		Six Months Ended September 30,
	2014		2014
	(in millions)
Net operating revenues	$	102	$	119
Cost of services and products	$	78	$	94

_________________


(1)	Amounts for the all other reported periods were immaterial.

Additionally we have arrangements with a wholly-owned subsidiary of Brightstar (Brightstar Subsidiary) to procure devices and accessories on our behalf with certain third-party vendors under existing purchase arrangements Sprint has with those vendors as well as new vendor purchase arrangements entered into by the Brightstar Subsidiary. The procurement services include placing orders, processing invoices, receiving payments from us, making payments to our suppliers on our behalf and reselling devices to us. As compensation, under the device arrangement we pay a portion of certain costs that Brightstar Subsidiary incurs plus a profit percentage. Under the accessory arrangement, we pay a percentage mark-up on the cost of accessory purchases. During the Successor three and six-month periods ended September 30, 2014, we procured, through the Brightstar Subsidiary, approximately $1.3 billion and $2.7 billion, respectively, of device and accessory inventory, which was sold in direct and indirect channels for which we paid immaterial fees to the Brightstar Subsidiary.

Amounts included in our consolidated balance sheets associated with these arrangements with the Brightstar Subsidiary were as follows:



	Successor
	September 30, 2014		March 31, 2014
	(in millions)
Device and accessory inventory	$	704	$	266
Accounts payable	$	418	$	205