Sprint - Nextel 2015 Annual Report Download - page 44

Table of Contents
additions of connected devices totaling 304,000 and 133,000 , respectively. Net additions were primarily attributable to growth in connected device subscribers as
compared to net losses in the Predecessor three-month period 2013 from the Lifeline programs offered by our MVNO's selling prepaid services affected by new
federal regulations, similar to the impact on our Assurance Wireless brand in RetailPrepaidabove.
TransactionsSubscribers
As part of the acquisition of assets from U.S. Cellular, which closed in May 2013, we acquired 352,000 postpaid subscribers and 59,000 prepaid
subscribers. As part of the Clearwire Acquisition in July 2013, we acquired 788,000 postpaid subscribers (exclusive of Sprint platform wholesale subscribers
acquired through our MVNO relationship with Clearwire that were transferred to postpaid subscribers within Transactions), 721,000 prepaid subscribers, and
93,000 wholesale subscribers. As of March 31, 2016, we have no remaining transaction subscribers primarily due to the shutdown of the WiMAX network. For the
Successor year ended March 31, 2016 , we had net postpaid subscriber losses of 368,000 , net prepaid subscriber losses of 361,000 and net wholesale subscriber
losses of 275,000 . For the Successor year ended March 31, 2015 , we had net postpaid subscriber losses of 218,000 , net prepaid subscriber losses of 189,000 and
net wholesale subscriber additions of 75,000 . For the Successor three-month transition period ended March 31, 2014 , we had net postpaid subscriber losses of
102,000 , net prepaid subscriber losses of 51,000 and net wholesale subscriber additions of 69,000 , of which approximately 3,000 postpaid subscribers were
recaptured on the Sprint platform. For the remainder of the Combined year ended December 31, 2013 , we had net postpaid subscriber losses of 481,000 , net
prepaid subscriber losses of 179,000 and net wholesale subscriber additions of 38,000 , of which approximately 106,000 and 8,000 postpaid and prepaid
subscribers, respectively, were recaptured on the Sprint platform.
Cost of Services
Cost of services consists primarily of:
• costs to operate and maintain our networks, including direct switch and cell site costs, such as rent, utilities, maintenance, labor costs associated
with network employees, and spectrum frequency leasing costs;
• fixed and variable interconnection costs, the fixed component of which consists of monthly flat-rate fees for facilities leased from local exchange
carriers and other providers based on the number of cell sites and switches in service in a particular period and the related equipment installed at
each site, and the variable component of which generally consists of per-minute use fees charged by wireline providers for calls terminating on
their networks, which fluctuate in relation to the level and duration of those terminating calls;
• long distance costs paid to the Wireline segment;
• costs to service and repair devices;
• regulatory fees;
• roaming fees paid to other carriers; and
• fixed and variable costs relating to payments to third parties for the subscriber use of their proprietary data applications, such as messaging, music
and cloud services and connected vehicle fees.
SuccessorYearEndedMarch31,2016andSuccessorYearEndedMarch31,2015
Cost of services increased $124 million , or 2% , for the Successor year ended March 31, 2016 compared to the Successor year ended March 31, 2015
primarily due to increased service and repair costs as a result of higher costs per unit of new and used devices. These increases were partially offset by decreases in
roaming costs primarily due to lower rates.
SuccessorYearEndedMarch31,2015andSuccessorYearEndedDecember31,2013
Cost of services increased $3.6 billion , or 83% , for the Successor year ended March 31, 2015 compared to the year ended December 31, 2013 . The
increase was primarily due to comparing results for a full twelve-month period ending March 31, 2015 to the shortened Post-merger period and increases as a result
of the Clearwire Acquisition. These increases were offset by decreases in roaming and other network costs such as rent, utilities, backhaul and labor as a result of
declining costs associated with improvements in the quality of our network and the shut-down of the Nextel platform in June 2013, which resulted in an overall
decrease in cost of services when comparing the Successor year ended March 31, 2015 to the Combined year ended December 31, 2013.
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