Related-Party Transactions

Clearwire Related-Party Transactions

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 $482 million and $202 million for the Predecessor 190-day period ended July 9, 2013 and Predecessor unaudited three-month period ended March 31, 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 190-day period 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. In connection with the acquisition, Sprint recorded a pre-tax gain of approximately $2.9 billion to "Gain on previously-held equity interests" in its Predecessor consolidated statements of operations immediately preceding the Clearwire Acquisition resulting from the difference between the estimated fair value of the interests owned prior to the acquisition ($5.00 per share offer price less an estimated control premium of approximately $0.60) and the carrying value of approximately $325 million for those previously-held equity interests.

Cost of services included in our consolidated statements of operations related to our agreement to purchase 4G services from Clearwire totaled $207 million and $101 million for the Predecessor 190-day period ended July 9, 2013 and Predecessor unaudited three-month period ended March 31, 2013, respectively.

Summarized financial information for Clearwire for the 190-day period ended July 9, 2013, which preceded the Clearwire Acquisition, is as follows:



	190 Days Ended July 9,
	2013
	(in millions)
Revenues	$	666
Operating expenses	(1,285		)
Operating loss	$	(619	)
Net loss from continuing operations before non-controlling interests	$	(1,102	)
Net loss from discontinued operations before non-controlling interests	$	—

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, logistical management and other services.

Brightstar

We have arrangements with Brightstar, whereby Brightstar provides supply chain and inventory management services to us in our indirect channels and whereby Sprint may sell new and used devices and new accessories to Brightstar for its own purposes. We have provided a $1.0 billion credit line to Brightstar to facilitate certain of these arrangements. As a result, we shifted our concentration of credit risk away from our indirect channel partners to Brightstar. As Brightstar is a 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, we have no assurance that SoftBank will provide such support.

The supply chain and inventory management arrangement included, among other things, that Brightstar would 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. During the years ended March 31, 2016 and 2015, we incurred fees under these arrangements totaling $102 million and $66 million, respectively. We may also purchase new and used devices and accessories from Brightstar to be sold in our direct channels or to be used to fulfill service and repair needs.

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



	March 31,
Consolidated balance sheets:	2016		2015
	(in millions)
Accounts receivable	$	197	$	430
Accounts payable	$	96	$	96



	March 31,
Consolidated statements of operations:	2016		2015
	(in millions)
Equipment revenues ⁽¹⁾	$	1,731	$	1,818
Cost of products ⁽¹⁾	$	1,743	$	1,887

_________________


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

Handset Sale-Leaseback Tranche 1

In November, 2015, Sprint entered into a Handset Sale-Leaseback Tranche 1 transaction with MLS, a company formed by a group of equity investors, including SoftBank to sell and lease-back certain devices, which are currently being leased by our customers, for total proceeds of $1.1 billion (see Note 4. Funding Sources and Note 13. Commitments and Contingencies).

All other transactions under agreements with SoftBank Parties, in the aggregate, were immaterial through the period ended March 31, 2016.