Related-Party Transactions

Sprint has entered into various arrangements with SoftBank, its controlled affiliates or with third parties to which SoftBank or its controlled affiliates 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 US, Inc. (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 to Brightstar for its own purposes. To facilitate certain of these arrangements, we have extended a $700 million credit line to Brightstar to assist with the purchasing and distribution of devices and accessories. 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 arrangements. However, we have no assurance that SoftBank will provide such support.

The supply chain and inventory management arrangement provides, among other things, that Brightstar may purchase inventory from the original equipment manufacturers (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 three and nine-month periods ended December 31, 2017 and 2016, we incurred fees under these arrangements totaling $25 million and $71 million, and $15 million and $43 million, respectively. Additionally, we have an arrangement with Brightstar whereby they perform certain of our reverse logistics including device buyback, trade-in technology and related services.

During the quarter ended September 30, 2017, we entered into an arrangement with Brightstar whereby accessories previously procured by us and sold to customers in our direct channels will now be procured and consigned to us from Brightstar. Amounts billed from the sale of accessory inventory are remitted to Brightstar. In exchange for our efforts to sell accessory inventory owned by Brightstar, we will receive a fixed fee from Brightstar for each device activated in our direct channels. For the three and nine-month periods ended December 31, 2017, Sprint earned fees under these arrangements of approximately $71 million and $100 million, respectively, which are recognized as other revenue within "Service revenues" in the consolidated statements of comprehensive income (loss).

Amounts included in our consolidated financial statements associated with these supply chain and inventory management arrangements with Brightstar were as follows:



Consolidated balance sheets:	December 31, 2017		March 31, 2017
	(in millions)
Accounts receivable	$	253	$	367
Accounts payable	$	119	$	160



Consolidated statements of comprehensive income (loss):	Three Months Ended December 31,				Nine Months Ended December 31,
	2017		2016		2017		2016
	(in millions)
Service revenues	$	71	$	—	$	100	$	—
Equipment revenues	$	639	$	480	$	1,432	$	1,107
Cost of products	$	657	$	403	$	1,465	$	1,021
Selling, general and administrative	$	13	$	9	$	39	$	26

In addition to the amounts associated with the supply chain and inventory management arrangements discussed above, Sprint earned fees from a Brightstar subsidiary for billing and collecting payments from subscribers under certain insurance programs of approximately $10 million and $27 million, and $23 million and $77 million in the three and nine-month periods ended December 31, 2017 and 2016, respectively, which are recognized as "Service revenues" in the consolidated statements of comprehensive income (loss).

SoftBank

In November 2015 and April 2016, Sprint entered into Handset Sale-Leaseback Tranche 1 and Tranche 2, respectively, with MLS, a company formed by a group of equity investors, including SoftBank, to sell and leaseback certain devices, which are currently being leased by our customers, for total cash proceeds of approximately $2.2 billion. SoftBank's initial equity investment in MLS totaled $79 million. Brightstar provided reverse logistics and remarketing services to MLS with respect to the devices.

In December 2016, Tranche 1 was terminated and the associated devices were repurchased by Sprint from MLS. With the cash proceeds, MLS repurchased the equity units from its investors including SoftBank. In October 2017, Sprint terminated Tranche 2 pursuant to its terms and repaid all outstanding amounts.

In April 2016, Sprint sold and leased back certain network equipment to Network LeaseCo. The network equipment acquired by Network LeaseCo, which is consolidated by us, was used as collateral to raise approximately $2.2 billion in borrowings from external investors, including $250 million from SoftBank. Principal and interest payments on the borrowings from the external investors were repaid in staggered, unequal payments through January 2018. During the nine-month period ended December 31, 2017, we made principal repayments totaling $1.4 billion, resulting in a total principal amount of $454 million outstanding as of December 31, 2017, which was fully repaid in January 2018.

All other transactions under agreements with SoftBank or its controlled affiliates, in the aggregate, were immaterial through the period ended December 31, 2017.