Company Sprint Nextel Corporation

Company Sprint Nextel Corporation You will write a 2 – 3 page paper, single spaced, one inch margins, 12-pt font, with double space between paragraphs. Your paper should comment on the financial statements for your company as they relate to the information presented in chapters 12 – 17 of your textbook, including the notes to the financial statements. Do not consider information from chapters 18 – 25 in your paper. •At a minimum, use the following headings to organize your paper: ?Introduction ?Balance Sheet ?Income Statement ?Statement of Cash Flows ?Conclusion ?References ?Exhibits •You will also be required to include the Income Statement, Balance Sheet and Cash Flow Statement as an attachment to your report under the Exhibits heading (you can cut and paste directly from the 10-K report). •Avoid academic dishonesty. Write your paper, read it, and edit. Use your own words, and don’t steal from another student or the internet. •APA style is required for in-text citations and the reference list. Purdue University’s Online Writing Lab has a good website that summarizes APA citations that you can consult. •Ask questions if any of the requirements are unclear. T able of Contents 40 Successor Y ear Ended December 31, 2013 and Pr edecessor Y ear Ended December 31, 2012 Postpaid ARPU for the year ended December 31, 2013 compared to the Predecessor period in 2012 increased primarily due to higher monthly recurring revenues, including the $10 premium data add-on char ges for all smartphones and device protection fees, combined with other fee increases and a reduction in the number of subscribers eligible for certain plan discounts due to policy changes and fewer customer care credits. The increase in postpaid ARPU was partially of fset by lower variable usage-based revenues due to the popularity of unlimited plan options, combined with a lower revenue per subscriber carried by subscribers acquired in the Clearwire and U.S. Cellular acquisitions and growth in sales of tablets, which also carry a lower revenue per subscriber . Prepaid ARPU for the Successor year ended December 31, 2013 compared to the Predecessor year ended December 31, 2012 declined primarily as a result of the impact of purchase price accounting to eliminate deferred revenues, partially of fset by the impact of a higher revenue per subscriber carried by subscribers acquired in the Clearwire Acquisition. Combined Y ear Ended December 31, 2013 and Pr edecessor Y ear Ended December 31, 2012 In addition to the explanations above, prepaid ARPU for the Combined year ended December 31, 2013 compared to the Predecessor year ended December 31, 2012 declined primarily as a result of a decrease in ARPU for our Assurance W ireless brand due to a lower number of active Assurance subscribers as a percentage of the average number of Assurance subscribers, primarily as a result of the recertification process. This decrease was partially of fset by an increase in ARPU for primarily the V ir gin prepaid brands as subscribers are choosing higher priced plans due to the increased availability of smartphones. ARPU as it relates to our Assurance W ireless brand was also impacted as a result of the recertification process because those subscribers no longer had a revenue impact after December 31, 2012, but continued to be included in the prepaid subscriber based until deactivation in the quarter ended June 30, 2013. T able of Contents 42 Supplemental data - connected devices End of period subscribers (in thousands) (3) Retail postpaid 791 809 817 813 824 798 834 922 968 988 1,039 1,180 1,320 Wholesale and affiliates 2,217 2,361 2,542 2,670 2,803 3,057 3,298 3,578 3,882 4,192 4,635 5,175 5,832 Total 3,008 3,170 3,359 3,483 3,627 3,855 4,132 4,500 4,850 5,180 5,674 6,355 7,152 _______________________ (1) A subscriber is defined as an individual line of service associated with each device activated by a customer . Subscribers that transfer fr om their original service category classification to another platform, or another service line within the same platform, ar e r eflected as a net loss to the original service category and a net addition to their new service category . Ther e is no net effect for such subscriber changes to the total wir eless net additions (losses) or end of period subscribers. (2) W e acquir ed appr oximately 352,000 postpaid subscribers and 59,000 pr epaid subscribers thr ough the acquisition of assets fr om U.S. Cellular when the transaction closed on May 17, 2013. W e acquir ed appr oximately 788,000 postpaid subscribers (excluding 29,000 Sprint wholesale subscribers transferr ed to T ransactions postpaid subscribers that wer e originally r ecognized as part of our Clearwir e MVNO arrangement), 721,000 pr epaid subscribers, and 93,000 wholesale subscribers as a r esult of the Clearwir e Acquisition when the transaction closed on July 9, 2013. (3) Subscribers thr ough some of our MVNO r elationships have inactivity either in voice usage or primarily as a r esult of the natur e of the device, wher e activity only occurs when data r etrieval is initiated by the end-user and may occur infr equently . Although we continue to pr ovide these subscribers access to our network thr ough our MVNO r elationships, appr oximately 1,788,000 subscribers at Mar ch 31, 2015 thr ough these MVNO r elationships have been inactive for at least six months, with no associated r evenue during the six-month period ended Mar ch 31, 2015 . (4) End of period connected devices ar e included in total r etail postpaid or wholesale and affiliates end of period subscriber totals for all periods pr esented. The following table shows (a) our average rates of monthly postpaid and prepaid subscriber churn and (b) our recapture of Nextel platform subscribers that deactivated but remained as subscribers on the Sprint platform as of the end of each quarterly period beginning with the quarter ended March 31, 2012. March 31, 2012 June 30, 2012 Sept 30, 2012 Dec 31, 2012 March 31, 2013 June 30, 2013 Sept 30, 2013 Dec 31, 2013 March 31, 2014 June 30, 2014 Sept 30, 2014 Dec 31, 2014 March 31, 2015 Monthly subscriber churn rate (1) Sprint platform: Postpaid 2.00 (1) Churn is calculated by dividing net subscriber deactivations for the quarter by the sum of the average number of subscribers for each month in the quarter . For postpaid accounts comprising multiple subscribers, such as family plans and enterprise accounts, net deactivations ar e defined as deactivations in excess of subscriber activations in a particular account within 30 days. Postpaid and Pr epaid churn consist of both voluntary churn, wher e the subscriber makes his or her own determination to cease being a subscriber , and involuntary churn, wher e the subscriber's service is terminated due to a lack of payment or other r easons. (2) Subscriber churn r elated to the acquisition of assets fr om U.S. Cellular and the Clearwir e Acquisition. (3) Repr esents the r ecaptur e rate defined as the Nextel platform postpaid or pr epaid subscribers, as applicable, that switched fr om the Nextel platform but activated service on the Sprint platform during each period over the total Nextel platform subscriber deactivations in the period for postpaid and pr epaid, r espectively . (4) Repr esents the Nextel platform postpaid and pr epaid subscribers, as applicable, that switched fr om the Nextel platform during each period but r emained with the Company as subscribers on the Sprint platform. Subscribers that deactivated service on the Nextel platform and activated service on the Sprint platform ar e included in the Sprint platform net additions for the applicable period. T able of Contents 43 The following table shows our postpaid and prepaid ARPU as of the end of each quarterly period beginning with the quarter ended March 31, 2012. Predecessor Successor Combined (2) Successor March 31, 2012 June 30, 2012 Sept 30, 2012 Dec 31, 2012 March 31, 2013 June 30, 2013 10 Days Ended July 10, 2013 Sept 30, 2013 Sept 30, 2013 Dec 31, 2013 March 31, 2014 June 30, 2014 Sept 30, 2014 Dec 31, 2014 March 31, 2015 ARPU Sprint platform: Postpaid (1) Subscriber ARPU r elated to the acquisition of assets fr om U.S. Cellular and the Clearwir e Acquisition. (2) Combined ARPU for the quarterly period ending September 30, 2013 aggr egates service r evenue fr om the Pr edecessor 10-day period ended July 10, 2013 and the Successor thr ee-month period ended September 30, 2013 divided by the sum of the monthly average subscribers during the thr ee months ended September 30, 2013. T able of Contents 44 Subscriber Results Sprint Platform Subscribers Retail Postpaid — During the Successor year ended March 31, 2015 , net postpaid subscriber losses were 212,000 as compared to net losses of 96,000 in the Combined year ended December 31, 2013 and net additions of 1,516,000 in the Predecessor year ended December 31, 2012 , inclusive of 1,334,000 , 564,000 and 76,000 net additions of tablets, respectively , which generally have a significantly lower ARPU as compared to other wireless subscribers.  During the Successor three- month transition period ended March 31, 2014, net postpaid subscriber losses were 231,000 as compared to net additions of 12,000 in the Predecessor three-month period ended March 31, 2013, inclusive of 516,000 and 16,000 net additions of tablet devices, respectively . The primary driver for the net losses in the Successor year ended March 31, 2015 , the Successor three- month transition period ended March 31, 2014 and the Combined year ended December 31, 2013 was an increase in churn, primarily due to increased competition and network-related churn impacted by our network modernization program. Other wireless carriers continue various aggressive marketing ef forts, including price reductions, to incent subscribers to switch carriers. As a result, we believe these ef forts are also negatively impacting churn, which has a negative ef fect on earnings. The change to net losses in the Combined year ended December 31, 2013 from net additions in the Predecessor year ended December 31, 2012 was also impacted by the absence of Nextel platform recaptures in the second half of 2013 as the shutdown of that network was completed on June 30, 2013. Nextel platform and U. S. Cellular recaptures in the Combined year ended December 31, 2013 totaled 734,000. Retail Prepaid — During the Successor year ended March 31, 2015 , we added 449,000 net prepaid subscribers as compared to adding 488,000 and 2,305,000 net prepaid subscribers in the years ended December 31, 2013 (Combined) and December 31, 2012 (Predecessor), respectively . Net additions in the Successor year ended March 31, 2015 is primarily due to subscriber growth in our Boost brand as a result of new promotions in our indirect channels, partially of fset by subscriber losses in the V ir gin Mobile prepaid brands primarily due to continued competition. During the Successor three-month transition period ended March 31, 2014, we lost 364,000 net prepaid subscribers as compared to adding 568,000 in the Predecessor three-month period ended March 31, 2013, primarily due to the timing and impact of churn related to the annual recertification of Assurance W ireless subscribers occurring earlier in calendar year 2014 compared to calendar year 2013, combined with a decline in gross subscriber additions across all prepaid brands. In combination with the significant impact of reduced subscriber additions due to the Assurance W ireless recertification, our decline in net additions in the Combined year ended December 31, 2013 compared to the Predecessor year ended December 31, 2012 was also due to continued competitive pressures in 2012 resulting in promotional of ferings that drove increased net additions. Also contributing to the decline in net additions in the Combined year ended December 31, 2013 was the absence of Nextel platform recaptures in the second half of calendar year 2013 as the shutdown of that network was completed. Approximately 168,000 prepaid subscriber additions deactivated service on the Nextel platform in the Successor year ended December 31, 2013 as compared to 620,000 in the Predecessor year ended December 31, 2012. The federal Lifeline program under which Assurance W ireless operates requires applicants to meet certain eligibility requirements and existing subscribers must recertify as to those requirements annually . New regulations in calendar year 2012, which impact all Lifeline carriers, impose stricter rules on the subscriber eligibility requirements and recertification. These new regulations also required a one-time recertification of the entire June 1, 2012 subscriber base by December 31, 2012. Accounts of subscribers who failed to respond by December 31, 2012 were suspended and made subject to our prepaid churn rules as described below (or 365 days in a limited number of states). However , subscribers could re- apply prior to being deactivated and also had the ability to receive by-the-minute service at their own expense. W e deactivated the accounts of approximately 1.2 million subscribers in the quarter ended June 30, 2013 primarily related to the recertification process. Prepaid subscribers are generally deactivated between 60 and 150 days from the later of the date of initial activation or replenishment; however , prior to account deactivation, tar geted retention programs can be of fered to qualifying subscribers to maintain ongoing service by providing up to an additional 150 days to make a replenishment. Subscribers tar geted through these retention of fers are not included in the calculation of churn until their retention of fer expires without a replenishment to their account. As a result, end of period prepaid subscribers include subscribers engaged in these retention programs, however , the number of these subscribers as a percentage of our total prepaid subscriber base has remained consistent over the past four quarters. Assurance W ireless and Clearwire subscribers are excluded from these tar geted retention programs. Wholesale and Af filiate Subscribers — Wholesale and af filiate subscribers represent customers that are served on our networks through companies that resell our wireless services to their subscribers, customers residing in af filiate territories