REG - AT & T Inc. - 3Q16 10-Q <Origin Href="QuoteRef">T.N</Origin> - Part 2
17/11/2016 17:40
- Part 2: For the preceding part double click ID:nRSQ5061Pa
services.
The International segment provides entertainment services in Latin America and wireless services in Mexico. Video
entertainment services are provided to primarily residential customers using satellite technology. We utilize our regional
and national wireless networks in Mexico to provide consumer and business customers with wireless data and voice
communication services. Our international subsidiaries conduct business in their local currency, and operating results are
converted to U.S. dollars using official exchange rates.
In reconciling items to consolidated operating income and income before income taxes, Corporate and Other includes: (1)
operations that are not considered reportable segments and that are no longer integral to our operations or which we no
longer actively market, and (2) impacts of corporate-wide decisions for which the individual operating segments are not
being evaluated, including interest costs and expected return on plan assets for our pension and postretirement benefit
plans.
Certain operating items are not allocated to our business segments, and those include:
· Acquisition-related items which consist of (1) operations and support items associated with the merger and integration of acquired businesses and (2) the noncash amortization of intangible assets acquired in acquisitions.
· Certain significant items which consist of (1) noncash actuarial gains and losses from pension and other postretirement benefits, (2) employee separation charges associated with voluntary and/or strategic offers, (3) losses resulting from abandonment or impairment of assets and (4) other items for which the segments are not being evaluated.
Interest expense and other income (expense) - net, are managed only on a total company basis and are, accordingly,
reflected only in consolidated results.
Our operating assets are utilized by multiple segments and consist of our wireless and wired networks as well as an
international satellite fleet. We manage our assets to provide for the most efficient, effective and integrated service to
our customers, not by operating segment, and, therefore, asset information and capital expenditures by segment are not
presented. Depreciation is allocated based on network usage or asset utilization by segment.
10
AT&T INC.
SEPTEMBER 30, 2016
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued
Dollars in millions except per share amounts
For the three months ended September 30, 2016
Revenue Operationsand SupportExpenses EBITDA DepreciationandAmortization OperatingIncome (Loss) Equity in NetIncome (Loss) ofAffiliates SegmentContribution
Business Solutions $ 17,767 $ 10,925 $ 6,842 $ 2,539 $ 4,303 $ - $ 4,303
Entertainment Group 12,720 9,728 2,992 1,504 1,488 - 1,488
Consumer Mobility 8,267 4,751 3,516 944 2,572 - 2,572
International 1,879 1,640 239 293 (54 ) 1 (53 )
Segment Total 40,633 27,044 13,589 5,280 8,309 $ 1 $ 8,310
Corporate and Other 270 270 - 17 (17 )
Acquisition-related items - 290 (290 ) 1,282 (1,572 )
Certain significant items (13 ) 299 (312 ) - (312 )
AT&T Inc. $ 40,890 $ 27,903 $ 12,987 $ 6,579 $ 6,408
For the nine months ended September 30, 2016
Revenue Operationsand SupportExpenses EBITDA DepreciationandAmortization OperatingIncome (Loss) Equity in NetIncome (Loss)ofAffiliates SegmentContribution
Business Solutions $ 52,955 $ 32,584 $ 20,371 $ 7,568 $ 12,803 $ - $ 12,803
Entertainment Group 38,089 28,875 9,214 4,481 4,733 1 4,734
Consumer Mobility 24,781 14,343 10,438 2,798 7,640 - 7,640
International 5,374 4,951 423 868 (445 ) 24 (421 )
Segment Total 121,199 80,753 40,446 15,715 24,731 $ 25 $ 24,756
Corporate and Other 759 940 (181 ) 54 (235 )
Acquisition-related items - 818 (818 ) 3,949 (4,767 )
Certain significant items (13 ) (383 ) 370 - 370
AT&T Inc. $ 121,945 $ 82,128 $ 39,817 $ 19,718 $ 20,099
11
AT&T INC.
SEPTEMBER 30, 2016
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued
Dollars in millions except per share amounts
For the three months ended September 30, 2015
Revenue Operationsand SupportExpenses EBITDA DepreciationandAmortization OperatingIncome (Loss) Equity in NetIncome (Loss) ofAffiliates SegmentContribution
Business Solutions $ 17,692 $ 10,921 $ 6,771 $ 2,474 $ 4,297 $ - $ 4,297
Entertainment Group 10,858 8,450 2,408 1,389 1,019 2 1,021
Consumer Mobility 8,784 5,065 3,719 976 2,743 - 2,743
International 1,526 1,384 142 225 (83 ) (4 ) (87 )
Segment Total 38,860 25,820 13,040 5,064 7,976 $ (2 ) $ 7,974
Corporate and Other 316 315 1 3 (2 )
Acquisition-related items (85 ) 611 (696 ) 1,198 (1,894 )
Certain significant items - 157 (157 ) - (157 )
AT&T Inc. $ 39,091 $ 26,903 $ 12,188 $ 6,265 $ 5,923
For the nine months ended September 30, 2015
Revenue Operationsand SupportExpenses EBITDA DepreciationandAmortization OperatingIncome (Loss) Equity in NetIncome (Loss)ofAffiliates SegmentContribution
Business Solutions $ 52,913 $ 32,966 $ 19,947 $ 7,276 $ 12,671 $ - $ 12,671
Entertainment Group 22,300 18,222 4,078 3,519 559 (16 ) 543
Consumer Mobility 26,317 15,808 10,509 2,912 7,597 - 7,597
International 2,253 2,131 122 346 (224 ) (4 ) (228 )
Segment Total 103,783 69,127 34,656 14,053 20,603 $ (20 ) $ 20,583
Corporate and Other 984 785 199 47 152
Acquisition-related items (85 ) 1,604 (1,689 ) 1,439 (3,128 )
Certain significant items - 374 (374 ) - (374 )
AT&T Inc. $ 104,682 $ 71,890 $ 32,792 $ 15,539 $ 17,253
12
AT&T INC.
SEPTEMBER 30, 2016
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued
Dollars in millions except per share amounts
The following table is a reconciliation of Segment Contribution to "Income Before Income Taxes" reported on our consolidated statements of income.
Third Quarter Nine-Month Period
2016 2015 2016 2015
Business Solutions $ 4,303 $ 4,297 $ 12,803 $ 12,671
Entertainment Group 1,488 1,021 4,734 543
Consumer Mobility 2,572 2,743 7,640 7,597
International (53 ) (87 ) (421 ) (228 )
Segment Contribution 8,310 7,974 24,756 20,583
Reconciling Items:
Corporate and Other (17 ) (2 ) (235 ) 152
Merger and integration items (290 ) (696 ) (818 ) (1,689 )
Amortization of intangibles acquired (1,282 ) (1,198 ) (3,949 ) (1,439 )
Employee separation charges (260 ) (122 ) (314 ) (339 )
Gain (loss) on wireless spectrum transactions (22 ) - 714 -
Other (30 ) (35 ) (30 ) (35 )
Segment equity in net (income) loss of affiliates (1 ) 2 (25 ) 20
AT&T Operating Income 6,408 5,923 20,099 17,253
Interest expense 1,224 1,146 3,689 2,977
Equity in net income of affiliates 16 15 57 48
Other income (expense) - net (7 ) (57 ) 154 61
Income Before Income Taxes $ 5,193 $ 4,735 $ 16,621 $ 14,385
NOTE 5. PENSION AND POSTRETIREMENT BENEFITS
Substantially all of our employees are covered by one of our noncontributory pension plans. We also provide certain
medical, dental, life insurance and death benefits to certain retired employees under various plans and accrue actuarially
determined postretirement benefit costs. Our objective in funding these plans, in combination with the standards of the
Employee Retirement Income Security Act of 1974, as amended (ERISA), is to accumulate assets sufficient to provide benefits
described in the plans to employees upon their retirement.
In 2013, we made a voluntary contribution of a preferred equity interest in AT&T Mobility II LLC, the primary holding
company for our domestic wireless business, to the trust used to pay pension benefits under our qualified pension plans.
The preferred equity interest had a value of $8,630 at September 30, 2016. The trust is entitled to receive cumulative cash
distributions of $560 per annum, which are distributed quarterly in equal amounts and accounted for as contributions. We
distributed $420 to the trust during the nine months ended September 30, 2016. So long as we make the distributions, we
will have no limitations on our ability to declare a dividend or repurchase shares. This preferred equity interest is a
plan asset under ERISA and is recognized as such in the plan's separate financial statements. However, because the
preferred equity interest is not unconditionally transferable to an unrelated party, it is not reflected in plan assets in
our consolidated financial statements and instead has been eliminated in consolidation. We also agreed to make a cash
contribution to the trust of $175 no later than the due dates of our federal income tax return for 2015 and 2016. Both such
contributions, totaling $350, were made in September 2016.
We recognize actuarial gains and losses on pension and postretirement plan assets in our operating results at our annual
measurement date of December 31, unless earlier remeasurements are required. The following table details pension and
postretirement benefit costs included in operating expenses in the accompanying consolidated statements of income. A
portion of these expenses is capitalized as part of internal construction projects, providing a small reduction in the net
expense recorded. Service costs and prior service credits are reported in our segment results while interest costs and
expected return on plan assets are included within Corporate and Other (see Note 4).
13
AT&T INC.
SEPTEMBER 30, 2016
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued
Dollars in millions except per share amounts
Three months ended Nine months ended
September 30, September 30,
2016 2015 2016 2015
Pension cost:
Service cost - benefits earned during the period $ 278 $ 305 $ 834 $ 904
Interest cost on projected benefit obligation 495 477 1,485 1,424
Expected return on assets (778 ) (832 ) (2,336 ) (2,484 )
Amortization of prior service credit (26 ) (25 ) (77 ) (77 )
Net pension (credit) cost $ (31 ) $ (75 ) $ (94 ) $ (233 )
Postretirement cost:
Service cost - benefits earned during the period $ 48 $ 55 $ 144 $ 166
Interest cost on accumulated postretirement benefit obligation 243 242 729 725
Expected return on assets (88 ) (105 ) (266 ) (315 )
Amortization of prior service credit (320 ) (320 ) (958 ) (959 )
Net postretirement (credit) cost $ (117 ) $ (128 ) $ (351 ) $ (383 )
Combined net pension and postretirement (credit) cost $ (148 ) $ (203 ) $ (445 ) $ (616 )
The decrease in the combined net pension and postretirement credit of $55 in the third quarter and $171 for the first nine
months of 2016 is primarily due to a lower expected return on assets resulting from a decrease in the value in the plan
assets.
We also provide senior- and middle-management employees with nonqualified, unfunded supplemental retirement and savings
plans. For the third quarter ended 2016 and 2015, net supplemental pension benefits costs not included in the table above
were $23 and $22. For the first nine months of 2016 and 2015, net supplemental pension benefit costs were $70 and $63.
NOTE 6. FAIR VALUE MEASUREMENTS AND DISCLOSURE
The Fair Value Measurement and Disclosure framework provides a three-tiered fair value hierarchy that gives highest
priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the
lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are described
below:
Level 1 Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets that we have the ability to access.
Level 2 Inputs to the valuation methodology include:
· Quoted prices for similar assets and liabilities in active markets.
· Quoted prices for identical or similar assets or liabilities in inactive markets.
· Inputs other than quoted market prices that are observable for the asset or liability.
· Inputs that are derived principally from or corroborated by observable market data by correlation or other means.
Level 3 Inputs to the valuation methodology are unobservable and significant to the fair value measurement.
· Fair value is often based on developed models in which there are few, if any, external observations.
The fair value measurements level of an asset or liability within the fair value hierarchy is based on the lowest level of
any input that is significant to the fair value measurement. Our valuation techniques maximize the use of observable inputs
and minimize the use of unobservable inputs.
14
AT&T INC.
SEPTEMBER 30, 2016
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued
Dollars in millions except per share amounts
The valuation methodologies described above may produce a fair value calculation that may not be indicative of future net
realizable value or reflective of future fair values. We believe our valuation methods are appropriate and consistent with
other market participants. The use of different methodologies or assumptions to determine the fair value of certain
financial instruments could result in a different fair value measurement at the reporting date. There have been no changes
in the methodologies used since December 31, 2015.
Long-Term Debt and Other Financial Instruments
The carrying amounts and estimated fair values of our long-term debt, including current maturities, and other financial
instruments, are summarized as follows:
September 30, 2016 December 31, 2015
Carrying Fair Carrying Fair
Amount Value Amount Value
Notes and debentures1 $ 123,962 $ 137,894 $ 124,847 $ 128,993
Bank borrowings 4 4 4 4
Investment securities 2,622 2,622 2,704 2,704
1 Includes credit agreement borrowings.
The carrying amount of debt with an original maturity of less than one year approximates market value. The fair value
measurements used for notes and debentures are considered Level 2 and are determined using various methods, including
quoted prices for identical or similar securities in both active and inactive markets.
Following is the fair value leveling for available-for-sale securities and derivatives as of September 30, 2016 and
December 31, 2015:
September 30, 2016
Level 1 Level 2 Level 3 Total
Available-for-Sale Securities
Domestic equities $ 1,171 $ - $ - $ 1,171
International equities 571 - - 571
Fixed income bonds - 611 - 611
Asset Derivatives1
Interest rate swaps - 145 - 145
Cross-currency swaps - 151 - 151
Liability Derivatives1
Cross-currency swaps - (3,260 ) - (3,260 )
1 Derivatives designated as hedging instruments are reflected as "Other assets," "Other noncurrent liabilities" and, for a portion of interest rate swaps, "Other current assets" in our consolidated balance sheets.
15
AT&T INC.
SEPTEMBER 30, 2016
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued
Dollars in millions except per share amounts
December 31, 2015
Level 1 Level 2 Level 3 Total
Available-for-Sale Securities
Domestic equities $ 1,132 $ - $ - $ 1,132
International equities 569 - - 569
Fixed income bonds - 680 - 680
Asset Derivatives1
Interest rate swaps - 136 - 136
Cross-currency swaps - 556 - 556
Foreign exchange contracts - 3 - 3
Liability Derivatives1
Cross-currency swaps - (3,466 ) - (3,466 )
1 Derivatives designated as hedging instruments are reflected as "Other assets," "Other noncurrent liabilities" and, for a portion of interest rate swaps, "Other current assets" in our consolidated balance sheets.
Investment Securities
Our investment securities include equities, fixed income bonds and other securities. A substantial portion of the fair
values of our available-for-sale securities was estimated based on quoted market prices. Investments in securities not
traded on a national securities exchange are valued using pricing models, quoted prices of securities with similar
characteristics or discounted cash flows. Realized gains and losses on securities are included in "Other income (expense) -
net" in the consolidated statements of income using the specific identification method. Unrealized gains and losses, net of
tax, on available-for-sale securities are recorded in accumulated OCI. Unrealized losses that are considered other than
temporary are recorded in "Other income (expense) - net" with the corresponding reduction to the carrying basis of the
investment. Fixed income investments of $87 have maturities of less than one year, $277 within one to three years, $65
within three to five years and $182 for five or more years.
Our cash equivalents (money market securities), short-term investments (certificate and time deposits) and nonrefundable
customer deposits are recorded at amortized cost, and the respective carrying amounts approximate fair values. Short-term
investments and nonrefundable customer deposits are recorded in "Other current assets" and our investment securities are
recorded in "Other Assets" on the consolidated balance sheets.
Derivative Financial Instruments
We enter into derivative transactions to manage certain market risks, primarily interest rate risk and foreign currency
exchange risk. This includes the use of interest rate swaps, interest rate locks, foreign exchange forward contracts and
combined interest rate foreign exchange contracts (cross-currency swaps). We do not use derivatives for trading or
speculative purposes. We record derivatives on our consolidated balance sheets at fair value that is derived from
observable market data, including yield curves and foreign exchange rates (all of our derivatives are Level 2). Cash flows
associated with derivative instruments are presented in the same category on the consolidated statements of cash flows as
the item being hedged.
Fair Value Hedging We designate our fixed-to-floating interest rate swaps as fair value hedges. The purpose of these swaps
is to manage interest rate risk by managing our mix of fixed-rate and floating-rate debt. These swaps involve the receipt
of fixed-rate amounts for floating interest rate payments over the life of the swaps without exchange of the underlying
principal amount. Accrued and realized gains or losses from interest rate swaps impact interest expense in the consolidated
statements of income. Unrealized gains on interest rate swaps are recorded at fair market value as assets, and unrealized
losses on interest rate swaps are recorded at fair market value as liabilities. Changes in the fair values of the interest
rate swaps are exactly offset by changes in the fair value of the underlying debt. Gains or losses realized upon early
termination of our fair value hedges are recognized in interest expense. In the nine months ended September 30, 2016 and
September 30, 2015, no ineffectiveness was measured on interest rate swaps designated as fair value hedges.
16
AT&T INC.
SEPTEMBER 30, 2016
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued
Dollars in millions except per share amounts
Cash Flow Hedging We designate our cross-currency swaps as cash flow hedges. We have entered into multiple cross-currency
swaps to hedge our exposure to variability in expected future cash flows that are attributable to foreign currency risk
generated from the issuance of our Euro, British pound sterling, Canadian dollar and Swiss franc denominated debt. These
agreements include initial and final exchanges of principal from fixed foreign currency denominations to fixed U.S. dollar
denominated amounts, to be exchanged at a specified rate that is usually determined by the market spot rate upon issuance.
They also include an interest rate swap of a fixed or floating foreign currency-denominated rate to a fixed U.S. dollar
denominated interest rate.
Unrealized gains on derivatives designated as cash flow hedges are recorded at fair value as assets, and unrealized losses
on derivatives designated as cash flow hedges are recorded at fair value as liabilities. For derivative instruments
designated as cash flow hedges, the effective portion is reported as a component of accumulated OCI until reclassified into
interest expense in the same period the hedged transaction affects earnings. The gain or loss on the ineffective portion is
recognized as "Other income (expense) - net" in the consolidated statements of income in each period. We evaluate the
effectiveness of our cross-currency swaps each quarter. In the nine months ended September 30, 2016 and September 30, 2015,
no ineffectiveness was measured on cross-currency swaps designated as cash flow hedges.
Periodically, we enter into and designate interest rate locks to partially hedge the risk of changes in interest payments
attributable to increases in the benchmark interest rate during the period leading up to the probable issuance of
fixed-rate debt. We designate our interest rate locks as cash flow hedges. Gains and losses when we settle our interest
rate locks are amortized into income over the life of the related debt, except where a material amount is deemed to be
ineffective, which would be immediately reclassified to "Other income (expense) - net" in the consolidated statements of
income. Over the next 12 months, we expect to reclassify $59 from accumulated OCI to interest expense due to the
amortization of net losses on historical interest rate locks.
We hedge a portion of the exchange risk involved in anticipation of highly probable foreign currency-denominated
transactions. In anticipation of these transactions, we often enter into foreign exchange contracts to provide currency at
a fixed rate. Gains and losses at the time we settle or take delivery on our designated foreign exchange contracts are
amortized into income in the same period the hedged transaction affects earnings, except where an amount is deemed to be
ineffective, which would be immediately reclassified to "Other income (expense) - net" in the consolidated statements of
income. In the nine months ended September 30, 2016 and September 30, 2015, no ineffectiveness was measured on foreign
exchange contracts designated as cash flow hedges.
Collateral and Credit-Risk Contingency We have entered into agreements with our derivative counterparties establishing
collateral thresholds based on respective credit ratings and netting agreements. At September 30, 2016, we had posted
collateral of $2,369 (a deposit asset) and held collateral of $8 (a receipt liability). Under the agreements, if AT&T's
credit rating had been downgraded one rating level by Fitch Ratings, before the final collateral exchange in September, we
would have been required to post additional collateral of $162. If DIRECTV Holdings LLC's credit rating had been downgraded
below BBB- (S&P), we would owe an additional $278. At December 31, 2015, we had posted collateral of $2,343 (a deposit
asset) and held collateral of $124 (a receipt liability). We do not offset the fair value of collateral, whether the right
to reclaim cash collateral (a receivable) or the obligation to return cash collateral (a payable) exists, against the fair
value of the derivative instruments.
Following are the notional amounts of our outstanding derivative positions:
September 30, December 31,
2016 2015
Interest rate swaps $ 7,050 $ 7,050
Cross-currency swaps 29,642 29,642
Foreign exchange contracts - 100
Total $ 36,692 $ 36,792
17
AT&T INC.
SEPTEMBER 30, 2016
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued
Dollars in millions except per share amounts
Following are the related hedged items affecting our financial position and performance:
Effect of Derivatives on the Consolidated Statements of Income
Fair Value Hedging Relationships Three months ended Nine months ended
September 30, September 30,
2016 2015 2016 2015
Interest rate swaps (Interest expense):
Gain (Loss) on interest rate swaps $ (54 ) $ 54 $ 17 $ 65
Gain (Loss) on long-term debt 54 (54 ) (17 ) (65 )
In addition, the net swap settlements that accrued and settled in the quarter ended September 30 were offset against
interest expense.
Three months ended Nine months ended
September 30, September 30,
Cash Flow Hedging Relationships 2016 2015 2016 2015
Cross-currency swaps:
Gain (Loss) recognized in accumulated OCI $ 686 $ (678 ) $ 282 $ (1,008 )
Interest rate locks:
Gain (Loss) recognized in accumulated OCI - - - (361 )
Interest income (expense) reclassified from accumulated OCI into income (15 ) (17 ) (44 ) (43 )
NOTE 7. ACQUISITIONS, DISPOSITIONS AND OTHER ADJUSTMENTS
Acquisitions
DIRECTV In July 2015, we completed our acquisition of DIRECTV, a leading provider of digital television entertainment
services in both the United States and Latin America. For accounting purposes, the transaction was valued at $47,409. Our
operating results include the results of DIRECTV following the acquisition date.
The fair values of the assets acquired and liabilities assumed were determined using the income, cost and market
approaches. The fair value measurements were primarily based on significant inputs that are not observable in the market
and are considered Level 3 under the Fair Value Measurement and Disclosure framework, other than long-term debt assumed in
the acquisition (see Note 6). The income approach was primarily used to value the intangible assets, consisting of acquired
customer relationships, orbital slots and trade names. The income approach estimates fair value for an asset based on the
present value of cash flows projected to be generated by the asset. Projected cash flows are discounted at a required rate
of return that reflects the relative risk of achieving the cash flows and the time value of money. The cost approach, which
estimates value by determining the current cost of replacing an asset with another of equivalent economic utility, was used
primarily for property, plant and equipment. The cost to replace a given asset reflects the estimated reproduction or
replacement cost for the property, less an allowance for loss in value due to depreciation.
Goodwill was calculated as the difference between the acquisition date fair value of the consideration transferred and the
fair value of the net assets acquired, and represents the future economic benefits that we expect to achieve as a result of
the acquisition.
18
AT&T INC.
SEPTEMBER 30, 2016
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued
Dollars in millions except per share amounts
The following table summarizes the fair values of the DIRECTV assets acquired and liabilities assumed and related deferred income taxes that existed as of the acquisition date.
Assets acquired
Cash $ 4,797
Accounts receivable 2,038
All other current assets 1,534
Property, plant and equipment 9,320
Intangible assets not subject to amortization
Orbital slots 11,946
Trade name 1,371
Intangible assets subject to amortization
Customer lists and relationships 19,508
Trade name 2,915
Other 445
Investments and other assets 2,375
Goodwill 34,619
Total assets acquired 90,868
Liabilities assumed
Current liabilities, excluding current portion of long-term debt 5,645
Long-term debt 20,585
Other noncurrent liabilities 16,875
Total liabilities assumed 43,105
Net assets acquired 47,763
Noncontrolling interest (354 )
Aggregate value of consideration paid $ 47,409
Purchased goodwill is not expected to be deductible for tax purposes. The goodwill was allocated to our Entertainment Group
and International segments.
Nextel Mexico In April 2015, we completed our acquisition of the subsidiaries of NII Holdings Inc., operating its wireless
business in Mexico, for $1,875, including approximately $427 of net debt and other adjustments. The subsidiaries offered
service under the name Nextel Mexico.
The purchase price allocation of assets acquired was: $376 in licenses, $1,167 in property, plant and equipment, $128 in
customer lists and $193 of goodwill. The goodwill was allocated to our International segment.
GSF Telecom In January 2015, we acquired Mexican wireless company GSF Telecom Holdings, S.A.P.I. de C.V. (GSF Telecom) for
$2,500, including net debt of approximately $700. GSF Telecom offered service under both the Iusacell and Unefon brand
names in Mexico.
The purchase price allocation of assets acquired was: $735 in licenses, $658 in property, plant and equipment, $378 in
customer lists, $26 in trade names and $956 of goodwill. The goodwill was allocated to our International segment.
AWS-3 Auction In January 2015, we submitted winning bids of $18,189 in the Advanced Wireless Service (AWS)-3 Auction (FCC
Auction 97), a portion of which represented spectrum clearing and First Responder Network Authority funding. We provided
the Federal Communications Commission (FCC) an initial down payment of $921 in October 2014 and paid the remaining
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