Related-Party Transactions

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 arrangements 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 and new accessories 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 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 may 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, 2018, 2017, and 2016 we incurred fees under these arrangements totaling $93 million, $64 million, and $102 million, respectively, which are recognized in "Cost of equipment sales" and "Selling, general and administrative" expenses in the consolidated statements of operations. Selling, general and administrative expenses include additional costs not included in the above amounts as they are not material. 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. During the year ended March 31, 2018, Sprint earned fees under these arrangements of $154 million, which are recognized as other revenue within "Service revenue" in the consolidated statements of operations.

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



	March 31,
Consolidated balance sheets:	2018		2017
	(in millions)
Accounts receivable	$	188	$	367
Accounts payable	$	88	$	160



	Year Ended March 31,
Consolidated statements of operations:	2018		2017		2016
	(in millions)
Equipment sales	$	1,922	$	1,682	$	1,731
Cost of equipment sales	$	1,986	$	1,600	$	1,743

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 $38 million, $100 million, and $103 million from a Brightstar subsidiary, in the years ended March 31, 2018, 2017, and 2016, respectively, which are recognized as "Service revenue" in the consolidated statements of operations.

SoftBank

In November 2015 and April 2016, Sprint entered into Tranche 1 and Tranche 2, respectively, 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 cash proceeds of approximately $2.2 billion. SoftBank's initial equity investment in MLS totaled $79 million. Brightstar provides 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 year ended March 31, 2018 we made principal repayments totaling $1.9 billion, resulting in the financing obligation being fully repaid (see Note 7. Long-Term Debt, Financing and Capital Lease Obligations).

All other transactions under agreements with SoftBank Parties, in the aggregate, were immaterial through the period ended March 31, 2018.