Discontinued Operations

3 Months Ended

Mar. 31, 2017

Discontinued Operations and Disposal Groups [Abstract]

Discontinued Operations

Discontinued Operations

Sale of Nextel Mexico. On April 30, 2015, we, together with our wholly-owned subsidiary NIU Holdings LLC, completed the sale of our Mexican operations to New Cingular Wireless, an indirect subsidiary of AT&T. The transaction was structured as a sale of all of the outstanding stock of the parent company of Comunicaciones Nextel de Mexico, S.A. de C.V., or Nextel Mexico, for a purchase price of $1.875 billion, including $187.5 million deposited in escrow to satisfy potential indemnification claims. As of March 31, 2017, $163.5 million remained in escrow. On April 27, 2017, New Cingular Wireless notified the escrow agent of potential tax indemnity claims totaling $117.9 million. On May 5, 2017, the remaining $45.6 million held in escrow was released to us. While we are required to continue to indemnify New Cingular Wireless for any valid claims that arise in the future, New Cingular Wireless may not make any additional claims against the escrow account.

The potential tax indemnity claims submitted by New Cingular Wireless purport to relate to various ongoing tax audits by the Mexican tax authorities for the years 2010 through 2014. Of the total potential tax claims, $12.9 million relates to actual assessments that Nextel Mexico has received. The remaining amounts relate to unassessed matters. New Cingular Wireless' claims include $38.6 million related to the audit of Nextel Mexico’s income tax return for 2010. On May 9, 2017, we reached an agreement with the Mexican tax authorities, subject to internal approvals and final written agreement, to settle certain deductions in question and close this audit for $5.6 million. Assuming that this agreement is finalized, we intend to use existing federal tax credits to settle the amount due and expect that the $38.6 million of tax claims against the escrow account related to this audit will be released to us.

We are also in discussions with the Mexican tax authorities in an effort to settle certain deductions related to other years in order to accelerate the release of the remaining amount in escrow. Of the remaining $79.3 million of potential tax claims, $53.8 million relates to the years 2011 and 2012, and $25.5 million relates to the years 2013 and 2014. We believe that the audits related to the years 2011 and 2012 are nearing completion, and we are vigorously defending our tax deductions and calculations related to those years. We have not yet received any formal communication about disputed matters from the Mexican tax authorities related to the years 2013 and 2014, and we have informed New Cingular Wireless that we believe the associated amounts do not represent valid claims against our funds held in escrow. We have not accrued any liabilities related to any of the years under audit as we do not currently believe the amounts are probable of loss.

There can be no assurance as to the outcome of the foregoing tax audits or indemnity claims.

In connection with the sale of Nextel Mexico, as well as the sale of Nextel Argentina, Nextel Chile and Nextel Peru, which occurred in 2015, 2014 and 2013, respectively, we have reported the results of these operating companies as discontinued operations. Unless otherwise noted, amounts included in these notes to our condensed consolidated financial statements exclude amounts attributable to discontinued operations.