Note 10 — Equity Method Investments and Related-Party Transactions

Eutelsat strategic partnering arrangement

In March 2017, the Company acquired a 49% interest in Euro Broadband Infrastructure Sàrl (Euro Infrastructure Co.) for $139.5 million as part of the consummation of the Company’s strategic partnering arrangement with Eutelsat S.A. (together with its affiliates, Eutelsat). The Company’s investment in Euro Infrastructure Co. is accounted for under the equity method and the total investment, including basis difference allocated to tangible assets, identifiable intangible assets, deferred income taxes and goodwill, is classified as a single line item, as an investment in unconsolidated affiliate, on the Company’s condensed consolidated balance sheets. Because the underlying net assets in Euro Infrastructure Co. and the related excess carrying value of investment over the proportionate share of net assets are denominated in Euros, foreign currency translation gains or losses impact the recorded value of the Company’s investment. Therefore the Company recorded foreign currency translation gains, net of tax, of approximately $5.7 million and $7.7 million for the three and six months ended September 30, 2017, respectively, in accumulated other comprehensive income (loss). The Company records its proportionate share of the results of Euro Infrastructure Co., and any related basis difference amortization expense, within equity in income (losses) of unconsolidated affiliate, net, one quarter in arrears. Accordingly, the Company included its share of the results of Euro Infrastructure Co. for the three months ended June 30, 2017 in its condensed consolidated financial statements for the three months ended September 30, 2017, and its share of the results of Euro Infrastructure Co. from the date of the Company’s investment in Euro Infrastructure Co. on March 3, 2017 through June 30, 2017 in its condensed consolidated financial statements for the six months ended September 30, 2017. The Company’s investment in Euro Infrastructure Co. is presented at cost of investment plus its accumulated proportional share of income or loss, including amortization of the difference in the historical basis of the Company’s contribution, less any distributions it has received.

The difference between the Company’s carrying value of its investment in Euro Infrastructure Co. and its proportionate share of the net assets of Euro Infrastructure Co. as of September 30, 2017 and March 31, 2017 is summarized as follows:


	As of September 30, 2017			As of March 31, 2017
	(In thousands)
Carrying value of investment in Euro Infrastructure Co.	$	153,973		$	141,894
Less: proportionate share of net assets of Euro Infrastructure Co.		138,313			127,393

Excess carrying value of investment over proportionate share of net assets	$	15,660		$	14,501

The excess carrying value has been primarily assigned to:
Goodwill	$	22,537		$	20,791
Identifiable intangible assets		13,815			12,379
Tangible assets		(22,411	)		(20,241	)
Deferred income taxes		1,719			1,572

	$ 15,660			$ 14,501

The identifiable intangible assets have useful lives of up to 11 years and a weighted average useful life of approximately ten years, and tangible assets have useful lives of up to 11 years and a weighted average useful life of approximately 11 years. The preliminary allocation is subject to revision as a more detailed analysis is completed and additional information on the assets and liabilities of Euro Infrastructure Co. as of the closing date becomes available. Any change in the net assets of Euro Infrastructure Co. will change the amount of the purchase price allocable to goodwill. Goodwill is not deductible for tax purposes.

The Company’s share of income on its investment in Euro Infrastructure Co. was $0.7 million and $0.2 million for the three and six months ended September 30, 2017, respectively, (consisting of the Company’s share of equity in Euro Infrastructure Co.’s income, including amortization of the difference in the historical basis of the Company’s contribution). The Company did not hold any investment in Euro Infrastructure Co. in the prior year period.

Since acquiring its interest in Euro Infrastructure Co., the Company has recorded in retained earnings an insignificant amount of undistributed cumulative earnings in equity interests, net of tax, as of September 30, 2017.

Related-party transactions

Transactions with the equity method investee are considered related-party transactions. The following tables set forth the material related-party transactions entered into between Euro Infrastructure Co. and its subsidiaries, on the one hand, and the Company and its subsidiaries, on the other hand, in the ordinary course of business for the time periods presented:

Three Months Ended

Six Months Ended

September 30, 2017

September 30, 2016

September 30, 2017

September 30, 2016

(In thousands)

Revenue

2,177

5,628

Expense

1,757

3,588

Cash received

2,278

4,349

Cash paid

1,989

4,009


	As of September 30, 2017		As of March 31, 2017
	(In thousands)
Accounts receivable	$	1,910	$	*	*
Collections in excess of revenues and deferred revenues		2,971		*	*

*	Euro Infrastructure Co. and its subsidiaries were not related parties in the prior year period.

**	Amount was insignificant.