Clearwire Communications LLC Annual Financial Reporting Package March 31, 2015 CLEARWIRE COMMUNICATIONS LLC AND SUBSIDIARIES Table of Contents Page PART I Item 1. Business 2 Item 1A. Risk Factors 5 Item 2. Properties 6 Item 3. Legal Proceedings 6 PART II Item 6. Selected Financial Data 7 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 7 Item 7A. Quantitative and Qualitative Disclosures about Market Risk 16 Item 8. Financial Statements and Supplementary Data 17 Item 9. Changes In and Disagreements With Accountants on Accounting and Financial Disclosure 43 Item 9B. Other Information 43 PART III Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Member Matters 44 Item 13. Certain Relationships and Related Transactions, and Director Independence 44 PART IV Item 15. Exhibits and Financial Statement Schedules 46 CLEARWIRE COMMUNICATIONS LLC AND SUBSIDIARIES (Continued) PART I Explanatory Note This annual financial reporting package, including the "Management's Discussion and Analysis of Financial Condition and Results of Operations," contains "forward-looking statements" that represent our beliefs, projections and predictions about future events. These statements are necessarily subjective and involve known and unknown risks, uncertainties and other important factors that could cause our actual results, performance or achievements, or industry results, to differ materially from any future results, performance or achievement described in or implied by such statements. Actual results may differ materially from the expected results described in our forward-looking statements, including with respect to the correct measurement and identification of factors affecting our business or the extent of their likely impact, the accuracy and completeness of publicly available information relating to the factors upon which our business strategy is based, or the success of our business. You should review carefully the section entitled "Risk Factors" for a discussion of these and other risks that relate to our business. Except as otherwise noted, references to "we", "us", "our", the "Company" and "Clearwire" refer to Clearwire Communications LLC and its subsidiaries. Item 1. Business Overview On December 17, 2012, Clearwire Corporation entered into an Agreement and Plan of Merger with Sprint Nextel Corporation (as amended, the Merger Agreement) pursuant to which Sprint Nextel Corporation agreed to acquire all of the outstanding shares of Clearwire Corporation Class A and Class B common stock not currently owned by Sprint Nextel Corporation, SoftBank Corp., or their affiliates. The merger (Sprint Acquisition), closed on July 9, 2013 (the Acquisition Date) and as of that date we became an indirect wholly-owned subsidiary of Sprint Communications, Inc., formerly known as Sprint Nextel Corporation (Sprint) and an indirect wholly-owned subsidiary of Sprint Corporation. At the closing, the outstanding shares of Clearwire Corporation common stock were converted automatically into the right to receive $5.00 per share in cash, without interest (Merger Consideration). As a result of the Sprint Acquisition and the resulting change in ownership and control, the acquisition method of accounting was applied by Sprint and pushed-down to us resulting in a new basis of presentation based on the estimated fair values of our assets and liabilities for the successor period beginning as of the day following the consummation of the merger. The estimated fair values were based on management's judgment after evaluating several factors, including a valuation assessment. In addition, in order to align with SoftBank Corp.’s reporting schedule, we changed our fiscal year end from December 31 to March 31, effective March 31, 2014. As a result, references herein to any fiscal year refer to the twelve-month period ending March 31 unless otherwise specifically noted. We operate next generation mobile broadband networks that provide high-speed mobile Internet and residential Internet access services in communities throughout the country. Our fourth generation (4G) mobile broadband networks operate on the Worldwide Interoperability of Microwave Access technology 802.16e standard (WiMAX) and Time Division Duplex Long Term Evolution (TDD-LTE) technology. As of the date of the Sprint Acquisition, we had deployed WiMAX technology. In addition, we have been overlaying certain existing mobile WiMAX sites with TDD-LTE technology and expanding 4G LTE on our 2.5 gigahertz (GHz) spectrum to certain sites. Sprint plans to cease using WiMAX technology by the end of 2015 and also identified redundant sites that they expect to decommission and terminate the underlying leases. As of March 31, 2015, we offered our services primarily through Sprint. Sprint accounts for substantially all of our wholesale sales to date, and offers services in each of our 4G markets. Due to the merger with Sprint, we discontinued new sales of our services and devices through our retail channel. However, we continue to receive revenues and service customers who existed prior to the merger. As an indirect wholly-owned subsidiary of Sprint, they are directing all decision making concerning the network integration, sales and marketing plans. The consolidated financial statements distinguish between the predecessor period for periods prior to the Sprint Acquisition (Predecessor) and the successor period (Successor) for the period following the consummation of the acquisition. As a result of the valuation of assets acquired and liabilities assumed at fair value at the time of the Sprint Acquisition, the financial statements for the Successor period are presented on a measurement basis different than the Predecessor period and are, therefore, not comparable. 2 CLEARWIRE COMMUNICATIONS LLC AND SUBSIDIARIES (Continued) Our Networks Overview Our 4G mobile broadband network is a telecommunications system designed to support fixed, portable and mobile service offerings over a single network architecture. This telecommunications system consists of three primary elements, including the radio access network (RAN), the network core, and the backhaul network which interconnects them. Technology Our mobile WiMAX, Pre-4G and LTE networks are all wireless internet protocol (IP)-based, Ethernet platforms that are also built around orthogonal frequency-division multiplexing (OFDM) and TDD, both of which allow us to address two challenges that face wireless carriers, namely non-line of sight (NLOS), performance and frequency utilization. Our Pre-4G network relies on Expedience, a proprietary technology, which supports delivery of any IP-compatible broadband applications, including high-speed Internet access and fixed voice over internet protocol (VoIP) telephony services. OFDM allows subdivision of bandwidth into multiple frequency sub-carriers so that data can be divided and transmitted separately to ensure a higher reliability of packet data reception at the receiving end. This characteristic of OFDM enables a 4G network to more efficiently serve subscribers in urban and suburban settings compared to existing third generation (3G) technologies. Unlike Frequency Division Duplex, which requires paired spectrum with guard bands, TDD only requires a single channel for downlink and uplink, making it more flexible for use in various global spectrum allocations. It also ensures complete channel reciprocity for better support of closed loop advanced antenna technologies like Multiple-In Multiple-Out and beamforming. Additionally, TDD allows a service provider to maximize spectrum utilization by allocating up and down link resources appropriate to the traffic pattern over a given market. Radio Access Network Components Our RAN covers the “last mile” and connects our subscribers with our tower sites. Our RAN is comprised of base station transceivers and end user devices used by our subscribers. One of the end user devices is the customer premise equipment (CPE). The CPE is a NLOS wireless modem that connects to any IP-based device, such as a computer or a Wi-Fi router, using a standard Ethernet connection. It is simple to install and requires no service provider configuration or support and no software download or installation, a subscriber only needs to connect the CPE to an external power source and to their computer. The base station allows for 360-degree coverage by employing multiple transceivers and antennas on a single tower to maximize subscriber density and spectral efficiency. Our base stations generally are located on existing communications towers, but can also be placed on rooftops of buildings and other elevated locations. We generally lease our tower locations from third parties. Backhaul Network Our backhaul network is responsible for transmitting data and voice traffic between our tower sites and the network core. Operators have previously relied primarily upon wireline backhaul networks to handle this traffic. However, in most of our markets, whether the networks utilize Pre-4G, mobile WiMAX or LTE technology, we rely primarily upon microwave backhaul. Our microwave backhaul network wirelessly transmits data traffic from one location to another, such as from our tower locations to our network core. Network Core The network core routes the data traffic from our backhaul network to the Internet or, for voice services that we resell, the public switched telephone network. The primary functions of the mobile 4G core include: • authenticating and authorizing