Sprint - Nextel 2014 Annual Report Download - page 40

Table of Contents
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as well as a decline in average postpaid and prepaid subscribers, which resulted in an overall decrease in retail service
revenue when comparing the Successor year ended March 31, 2015 to the Combined year ended December 31, 2013.
Wholesale, affiliate and other revenues increased $527 million, or 198%, for the Successor year ended March 31,
2015 compared to the year ended December 31, 2013 primarily due to comparing a full twelve-month period to a shortened
Post-merger period. In addition, wholesale, affiliate and other revenues increased as a result of interest revenue associated
with installment billing on handsets and an increase in revenues resulting from acquisitions in 2013. Approximately 53% of
our total wholesale and affiliate subscribers represent connected devices. These devices generate revenue from usage which
varies depending on the solution being utilized. Average revenue per connected device is generally significantly lower than
revenue from other wholesale and affiliate subscribers; however, the cost to service these subscribers is also lower resulting
in a higher gross margin as a percent of revenue.
Successor Three-Month Transition Period Ended March 31, 2014 and Predecessor Three-Month Period Ended
March 31, 2013
Retail service revenue slightly decreased $47 million, or 1%, for the Successor three-month transition period
ended March 31, 2014 compared to the same Predecessor period in 2013. The decrease was driven by the loss of postpaid and
prepaid subscribers due to the shut-down of the Nextel platform on June 30, 2013, partially offset by the postpaid and prepaid
revenues resulting from the acquisitions in 2013.
Wholesale, affiliate and other revenues increased $26 million, or 20%, for the Successor three-month transition
period ended March 31, 2014 compared to the same Predecessor period in 2013 primarily due to an increase in revenues
resulting from acquisitions in 2013. Approximately 45% of our wholesale and affiliate subscribers represent connected
devices. These devices generate revenue from usage which varies depending on the solution being utilized. Average revenue
per connected device is generally significantly lower than revenue from other wholesale and affiliate subscribers; however,
the cost to service these subscribers is also lower resulting in a higher gross margin as a percent of revenue.
Successor Year Ended December 31, 2013 and Predecessor Year Ended December 31, 2012
Retail service revenue decreased $15.0 billion, or 53%, for the year ended December 31, 2013 compared to the
Predecessor year ended December 31, 2012, primarily due to comparing operating results for the shortened Post-merger
period to the 2012 Predecessor period consisting of a full calendar year. In addition, there was a decline of 1.6% in average
retail subscribers in the 2013 Successor period as compared to the 2012 Predecessor period primarily resulting from the shut-
down of the Nextel platform on June 30, 2013. This decrease was partially offset by a higher average revenue per retail
subscriber in 2013 as compared to 2012 primarily due to the $10 premium data add-on charge for smartphones, combined
with increased postpaid and prepaid revenues resulting from acquisitions in 2013.
Wholesale, affiliate and other revenues decreased $217 million, or 45%, for the year ended December 31, 2013
compared to the Predecessor year ended December 31, 2012, primarily due to comparing operating results for the shortened
Post-merger period to the 2012 Predecessor period consisting of a full calendar year. The decrease was partially offset by an
increase in revenues resulting from acquisitions in 2013, combined with growth in our MVNO's reselling postpaid services
and connected devices. At December 31, 2013, approximately 43% of our wholesale and affiliate subscribers represented
connected devices. These devices generate revenue from usage which varies depending on the solution being utilized.
Average revenue per connected device is generally significantly lower than revenue from other wholesale and affiliate
subscribers; however, the cost to service these subscribers is also lower resulting in a higher gross margin as a percent of
revenue.
Combined Year Ended December 31, 2013 and Predecessor Year Ended December 31, 2012
In addition to the explanations above, retail service revenue for the Combined year ended December 31, 2013
compared to the Predecessor year ended December 31, 2012 increased $94 million primarily from the consolidation of
Clearwire and subscriber growth mainly in our Virgin prepaid brand as prepaid subscribers are choosing higher rate plans as a
result of the increased availability of smartphones. In addition, Sprint platform postpaid service revenue increased due to our
$10 premium data add-on charge required for all smartphones combined with a reduction in the number of subscribers
eligible for certain plan discounts due to policy changes and fewer customer care credits.
In addition to the explanations above, wholesale, affiliate and other revenue for the Combined year ended
December 31, 2013 compared to the same Predecessor year ended December 31, 2012 increased due to slight growth in the
reselling of prepaid services by MVNO's and affiliates.