Sprint - Nextel 2014 Annual Report Download - page 124

Table of Contents
Index to Consolidated Financial Statements
SPRINT CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
F-41
Completion of the 800 MHz band reconfiguration was initially required by June 26, 2008 and public safety
reconfiguration is nearly complete across the country with the exception of Washington State and the four states that share a
common border with Mexico. The FCC continues to grant the remaining 800 MHz public safety licensees additional time to
complete their band reconfigurations which, in turn, delays our access to our 800 MHz replacement channels in these areas.
In the areas where band reconfiguration is complete, Sprint has received its replacement spectrum in the 800 MHz band and
Sprint is deploying 3G CDMA and 4G LTE on this spectrum in combination with its spectrum in the 1.9 GHz and 2.5 GHz
bands.
Future Minimum Commitments
As of March 31, 2015, the minimum estimated amounts due under operating leases, spectrum leases and service
credits, and purchase orders and other commitments were as follows:
Future Minimum Commitments Total Fiscal Year 2015 Fiscal Year 2016 Fiscal Year 2017 Fiscal Year 2018 Fiscal Year 2019 Fiscal Year 2020 and thereafter
(in millions)
Operating leases $ 15,381 $ 2,122 $ 2,078 $ 2,015 $ 1,964 $ 1,857 $ 5,345
Spectrum leases and service credits 6,725 194 204 212 214 218 5,683
Purchase orders and other commitments 15,004 8,861 2,614 1,147 914 460 1,008
Total $ 37,110 $ 11,177 $ 4,896 $ 3,374 $ 3,092 $ 2,535 $ 12,036
Operating Leases
We lease various equipment, office facilities, retail outlets and kiosks, switching facilities and cell sites under
operating leases. The non-cancelable portion of these leases generally ranges from monthly up to 15 years. These leases, with
few exceptions, provide for automatic renewal options and escalations that are either fixed or based on the consumer price
index. Any rent abatements, along with rent escalations, are included in the computation of rent expense calculated on a
straight-line basis over the lease term. Our lease term for most leases includes the initial non-cancelable term plus at least one
renewal period, if the non-cancelable term is less than ten years, as the exercise of the related renewal option or options is
reasonably assured. Our cell site leases generally provide for an initial non-cancelable term of five to twelve years with up to
5 renewal options for five years each.
During 2011 and 2012, we renegotiated cell site leases in connection with the modernization of our network and
the shutdown of the Nextel platform. Our rental commitments for operating leases, including lease renewals that are
reasonably assured, consisted mainly of leases for cell and switch sites, real estate, information technology and network
equipment and office space. Total rental expense was $2.6 billion, $653 million and $1.3 billion for the Successor year ended
March 31, 2015, the three-month transition period ended March 31, 2014 and year ended December 31, 2013, respectively,
and $1.0 billion, $483 million and $2.0 billion for the Predecessor 191-day period ended July 10, 2013, unaudited three-
month period ended March 31, 2013 and year ended December 31, 2012, respectively.
Spectrum Leases and Service Credits
Certain of the spectrum leases provide for minimum lease payments, additional charges, renewal options and
escalation clauses. Leased spectrum agreements generally have terms of up to 30 years. We expect that all renewal periods in
our spectrum leases will be renewed by us.
We also have commitments to provide services to certain lessors, and to reimburse lessors for certain capital
equipment and third-party service expenditures over the term of the lease. We accrue a monthly obligation for the services
and equipment based on the total estimated available service credits divided by the term of the lease. The obligation is
reduced by services provided and as actual invoices are presented and paid to the lessors. During the period ended March 31,
2015, we satisfied $9 million related to these commitments. The maximum remaining commitment at March 31, 2015 was
$90 million and is expected to be incurred over the term of the related lease agreements, which generally range from 15 to 30
years.