Property, Plant and Equipment

9 Months Ended

Dec. 31, 2019

Property, Plant and Equipment [Abstract]

Property, plant and equipment consists primarily of network equipment, leased devices and other long-lived assets used to provide service to our subscribers. Non-cash accruals included in property, plant and equipment (excluding leased devices) totaled $1.0 billion as of December 31, 2019 and 2018.

The following table presents the components of property, plant and equipment and the related accumulated depreciation:



	December 31, 2019			March 31, 2019
	(in millions)
Land	$	105		$	246
Network equipment, site costs and related software	25,373			24,967
Buildings and improvements	444			856
Leased devices, non-network internal use software, office equipment and other	12,269			12,627
Construction in progress	2,628			3,044
Less: accumulated depreciation	(19,992		)	(20,539		)
Property, plant and equipment, net	$	20,827		$	21,201

Network equipment, site costs and related software includes switching equipment, cell site towers, site development costs, radio frequency equipment, network software, digital fiber optic cable, transport facilities and transmission-related equipment. Also included within this component are finance lease ROU assets, which primarily consist of prepayments of site rental costs for ODC site leases with an immaterial remaining lease obligation. Buildings and improvements principally consist of owned general office facilities, retail stores and leasehold improvements. Leased devices, non-network internal use software, office equipment and other primarily consists of leased devices, furniture, information technology systems, and equipment and vehicles. Construction in progress, which is not depreciated until placed in service, primarily includes materials, transmission and related equipment, labor, engineering, site development costs, interest and other costs relating to the construction and development of our network.

Sprint offers a leasing program to its customers whereby qualified subscribers can lease a device for a contractual period of time. At the end of the lease term, the subscriber has the option to return the device, continue leasing the device, or purchase the device. As of December 31, 2019, substantially all of our device leases were classified as operating leases. Purchases of leased devices are reported as cash outflows for "Capital expenditures - leased devices" in the consolidated statements of cash flows. The devices are then depreciated using the straight-line method to their estimated residual value generally over the term of the lease.

The following table presents leased devices and the related accumulated depreciation:



	December 31, 2019			March 31, 2019
	(in millions)
Leased devices	$	10,591		$	10,972
Less: accumulated depreciation	(3,843		)	(4,360		)
Leased devices, net	$	6,748		$	6,612

During the nine-month periods ended December 31, 2019 and 2018, we had non-cash transfers of returned leased devices from property, plant and equipment to device and accessory inventory at the lower of net book value or their estimated fair value of $888 million and $645 million, respectively. Non-cash accruals included in leased devices totaled $175 million and $264 million as of December 31, 2019 and 2018, respectively.

During the three- and nine-month periods ended December 31, 2019 and 2018, we recorded $227 million, $692 million, $299 million and $642 million, respectively, of loss on disposal of property, plant and equipment, net of recoveries. Net losses that resulted from the write-off of leased devices were primarily associated with lease cancellations prior to the scheduled customer lease terms where customers did not return the devices to us. Such losses were the primary driver of the loss on disposal of property, plant and equipment, net of recoveries, and were $201 million, $666 million, $182 million and $457 million for the three- and nine-month periods ended December 31, 2019 and 2018, respectively, and are included in "Cost of equipment rentals" in our consolidated statements of comprehensive (loss) income. Additionally, during the nine-month period ended December 31, 2019, we recorded $26 million of losses primarily related to network assets that are no longer recoverable as a result of changes in our network plans, which are included in "Other, net" in our consolidated statements of comprehensive (loss) income. During the three- and nine-month periods ended December 31, 2018, we recorded $117 million and $185 million, respectively, of losses primarily related to cell site construction costs and other network costs that are no longer recoverable as a result of changes in our network plans, which are included in "Other, net" in our consolidated statements of comprehensive (loss) income.

On June 27, 2019, the Company entered into a sale and leaseback agreement for our Overland Park, Kansas campus. The Company determined that the asset should be classified as held-for-sale as of June 30, 2019 and measured at the lower of its carrying amount or fair value less cost to sell resulting in the recognition of a non-cash impairment of approximately $207 million included in "Other, net" within the consolidated statements of comprehensive (loss) income. On July 9, 2019, the sale closed resulting in the derecognition of the campus assets and the leaseback began.