What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2021-11-02 compared with 2021-08-03 · 325 added, 273 removed, 541 unchanged (53% of the section changed)

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• competition, industry consolidation and changes in the market condition for wireless services;

• data loss or other security breaches;

• data loss or other security breaches, such as the criminal cyberattack we became aware of in August 2021;

• the scarcity and cost of additional wireless spectrum, and regulations relating to spectrum use;

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District Court for the District of Columbia, which was approved by the Court on April 1, 2020, the proposed commitments filed with the Secretary of the Federal Communications Commission (“FCC”), which we announced on May 20, 2019, certain national security commitments and undertakings, and any other commitments or undertakings entered into, including but not limited to, those we have made to certain states and nongovernmental organizations (collectively, the “Government Commitments”), and the challenges in satisfying the Government Commitments in the required time frames and the significant cumulative cost incurred in tracking, monitoring and complying with them;

• our inability to manage the ongoing commercial and transition services arrangements that we entered into with DISH in connection with the Prepaid Transaction, which we completed on July 1, 2020 (collectively, the “Divestiture Transaction”), and known or unknown liabilities arising in connection therewith;

• our inability to manage the ongoing commercial and transition services arrangements that we entered into with DISH in connection with the Prepaid Transaction, which we completed on July 1, 2020, and known or unknown liabilities arising in connection therewith;

• the effects of any future acquisition, investment, or merger involving us;

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• laws and regulations relating to the handling of privacy and data protection;

• unfavorable outcomes of existing or future legal proceedings;

• unfavorable outcomes of existing or future legal proceedings, including these proceedings and inquiries relating to the criminal cyberattack we became aware of in August 2021;

• our offering of regulated financial services products and exposure to a wide variety of state and federal regulations;

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as a stand-alone company prior to April 1, 2020, the date we completed the Merger with Sprint, and on and after April 1, 2020, refer to the combined company as a result of the Merger.

Investors and others should note that we announce material financial and operational information to our investors using our investor relations website, press releases, SEC filings and public conference calls and webcasts.

Investors and others should note that we announce material information to our investors using our investor relations website (https://investor.t-mobile.com), newsroom website (https://t-mobile.com/news), press releases, SEC filings and public conference calls and webcasts.

We intend to also use certain social media accounts as means of disclosing information about us and our services and for complying with our disclosure obligations under Regulation FD (the @TMobileIR Twitter account (https://twitter.com/TMobileIR) and the @MikeSievert Twitter account (https://twitter.com/MikeSievert), which Mr.

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We expect the trends and results of operations of the combined company to be materially different than those of the standalone entities.

Our MD&A is provided as a supplement to, and should be read together with, our unaudited condensed consolidated financial statements for the three and six months ended June 30, 2021, included in Part I, Item 1 of this Form 10-Q and audited consolidated financial statements included in Part II, Item 8 of our Annual Report on Form 10-K for the year ended December 31, 2020.

Our MD&A is provided as a supplement to, and should be read together with, our unaudited condensed consolidated financial statements for the three and nine months ended September 30, 2021, included in Part I, Item 1 of this Form 10-Q and audited consolidated financial statements included in Part II, Item 8 of our Annual Report on Form 10-K for the year ended December 31, 2020.

Except as expressly stated, the financial condition and results of operations discussed throughout our MD&A are those of T-Mobile US, Inc.

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For more information regarding the Merger, see Note 2 – Business Combinations of the Notes to the Condensed Consolidated Financial Statements.

Shentel Wireless Assets Acquisition

On July 1, 2021, we completed the acquisition of Shentel’s wireless telecommunications assets (the “Wireless Assets”) used to provide Sprint PCS’s wireless mobility communications network products in certain parts of Maryland, North Carolina, Virginia, West Virginia, Kentucky, Ohio and Pennsylvania.

As a result, T-Mobile become the legal owner of the Wireless Assets.

This transaction represented an opportunity to reacquire the exclusive rights to deliver Sprint’s wireless network services in Shentel’s former affiliate territory and simplify our operations.

The acquisition of the Wireless Assets has altered the composition of certain assets and liabilities on our balance sheet, including Goodwill and Other intangible assets.

For more information regarding our acquisition of the Wireless Assets, see Note 2 – Business Combinations of the Notes to the Condensed Consolidated Financial Statements.

Merger-Related Costs

Merger-related costs generally include:

• Integration costs to achieve efficiencies in network, retail, information technology and back office operations;

Merger-related costs associated with the Merger and acquisitions of affiliates generally include:

• Integration costs to achieve efficiencies in network, retail, information technology and back office operations, migrate customers to the T-Mobile network and the impact of legal matters assumed as part of the Merger;

• Restructuring costs, including severance, store rationalization and network decommissioning;

• Transaction costs, including legal and professional services related to the completion of the Merger and acquisitions of affiliates.

Transaction and restructuring costs are disclosed in Note 2 – Business Combinations and Note 12 - Restructuring Costs , respectively.

• Transaction costs, including legal and professional services related to the completion of the transactions.

Transaction and restructuring costs are disclosed in Note 2 – Business Combinations and Note 1 4 - Restructuring Costs , respectively, of the Notes to the Condensed Consolidated Financial Statements.

Merger-related costs have been excluded from our calculations of Adjusted EBITDA and Core Adjusted EBITDA, which are non-GAAP financial measures, as we do not consider these costs to be reflective of our ongoing operating performance.

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Cash payments for Merger-related costs, including payments related to our restructuring plan, are included in Net cash provided by operating activities in our Condensed Consolidated Statements of Cash Flows.

Merger-related costs during the three and six months ended June 30, 2021 and 2020, are presented below:

(in millions) Three Months Ended June 30, Change Six Months Ended

June 30, Change

Merger-related costs during the three and nine months ended September 30, 2021 and 2020, are presented below:

(in millions) Three Months Ended

September 30, Change Nine Months Ended

September 30, Change

2021 2020 $ % 2021 2020 $ %

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NM - Not Meaningful

Merger-related costs will be impacted by restructuring and integration activities expected to occur over the next three years as we implement initiatives to realize cost efficiencies from the Merger.

Transaction costs, including legal and professional service

fees related to the completion of the Merger and acquisitions of affiliates, are expected to continue to decrease in periods subsequent to the close of the Merger.

Merger-related costs will be impacted by restructuring and integration activities expected to occur over the next three years, increasing throughout 2021 and 2022, as we implement initiatives to realize cost efficiencies from the Merger.

Transaction costs, including legal and professional service fees related to the completion of the Merger and acquisitions of affiliates, are expected to continue to decrease in periods subsequent to the close of the Merger and acquisitions of affiliates.

Restructuring

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Anticipated Impacts

Our restructuring activities are expected to occur over the next three years with substantially all costs incurred by the end of fiscal year 2023.

Our integration and restructuring activities are expected to occur over the next three years with substantially all costs incurred by the end of fiscal year 2023.

We are evaluating additional restructuring initiatives which are dependent on consultations and negotiation with certain counterparties and the expected impact on our business operations, which could affect the amount or timing of the restructuring costs and related payments.

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For more information regarding our restructuring activities, see Note 1 4 – Restructuring Costs of the Notes to the Condensed Consolidated Financial Statements.

As we previously reported in our Current Reports on Forms 8-K furnished with the Securities and Exchange Commission on August 16, 17, 20 and 27, 2021, we were subject to a criminal cyberattack involving unauthorized access to T-Mobile’s systems.

We became aware of a potential issue on August 12, 2021.

We immediately began a forensic investigation and engaged cybersecurity experts to assist with the assessment of the incident and to help determine what data was impacted.

As we previously reported, we promptly located and closed the unauthorized access to our systems.

Our investigation uncovered that the perpetrator illegally gained access to certain areas of our systems on or about March 18, 2021, but only gained access to and took data of current, former and prospective customers beginning on or about August 3, 2021.

Based on the initial investigation findings, we moved to quickly identify current, former and prospective customers whose information was impacted and notify them, consistent with state and federal requirements.

Simultaneously, we undertook a

number of other measures to demonstrate our continued support and commitment to data privacy and protection and continued to work with our cybersecurity experts to finish our forensic investigation, with the goal to ensure we had a complete understanding of the scope and impact of the unauthorized access.

We also coordinated our efforts with law enforcement.

Our forensic investigation took time, but it is now complete, although our overall investigation into the incident is ongoing.

At this time, we believe we have a full view of the data compromised.

We have no evidence that individual financial account numbers, such as full credit or debit card numbers, were accessed or taken in relation to the cyberattack.

Throughout our forensic investigation of this cyberattack, our top priority has been to support those individuals impacted by the cyberattack.

We sent notifications to our customers and customer accounts whose names, dates of birth, Social Security numbers (“SSNs”)/Tax Identifiers (“Tax IDs”) and driver’s license/identification numbers (“ID Numbers”) were taken, consistent with state and federal requirements, including to approximately 7.8 million current customer accounts and approximately 40.0 million former and prospective customers.

We also notified an additional 1.9 million former and prospective customers who had their names, dates of birth and ID Numbers (but not valid SSNs/Tax IDs) taken.

Out of an abundance of caution during the earliest days of our investigation and to help alleviate consumer concerns and confusion, we rapidly sent notifications to approximately 5.3 million customer accounts who had their names, dates of birth and addresses taken.

These accounts did not have SSNs/Tax IDs or ID Numbers taken.

Later in our investigation, we identified approximately 790,000 additional former and prospective customers who had similar information — names, dates of birth and, in many cases, addresses, but not SSNs/Tax IDs or ID Numbers — taken and sent them notifications consistent with state and federal requirements.

Our investigation also identified approximately 26.0 million additional individuals with the same types of information taken, but for whom individual notifications were not required under state and federal law in light of the types of information taken.

By that point, since our original notifications, we had already launched a broad-reaching communications outreach program through which we kept our customers and the public informed and made information available and accessible on our website to provide support for any individuals who may have been impacted, including information on how they could take steps to protect themselves.

We also took actions to proactively reset the personal identification numbers (“PINs”) for approximately 870,000 current customer accounts whose names and PINs may have been taken.

We previously reported that further data files including phone numbers, International Mobile Equipment Identity (“IMEI”) numbers and International Mobile Subscriber Identity (“IMSI”) numbers were taken;

a significant portion of this data was related to inactive devices.

For a number of additional current Metro customers, these files included names but no other personally identifiable information.

As described above, taking steps to further ensure we are supporting individuals impacted by the cyberattack has been a top priority.

As previously reported, this support has included:

• Offering two years of free identity protection services with McAfee’s ID Theft Protection Service to any person who believes they may be affected;

• Recommending that all eligible customers sign up for free scam-blocking protection through Scam Shield;

• Supporting individuals impacted by the cyberattack with additional best practices and practical security steps such as resetting PINs and passwords;

• Publishing a customer support webpage that includes information and access to these tools at https://www.t-mobile.com/brand/data-breach-2021 1 .

As described above, we take data protection and the protection of our customers very seriously, and we have worked diligently to further enhance security across our platforms throughout this process.

As part of those efforts, and as we have previously reported, we have entered into long-term partnerships with the industry-leading cybersecurity experts at Mandiant, and with consulting firm KPMG LLP, as part of our efforts to ensure that the Company has cybersecurity practices that are among the best in our industry.

We have also created a Cyber Transformation Office reporting directly to our Chief Executive Officer that will be responsible for managing our efforts.

We have incurred certain cyberattack-related expenses which were not material and expect to continue to incur additional expenses in future periods, including costs to investigate and remediate the attack, send notifications to customers and provide additional customer support and enhance customer protection, only some of which may be covered and reimbursable by insurance.

We also intend to commit substantial additional resources towards cybersecurity initiatives over the next several years.

1 The reference to this website is intended to be an inactive textual reference and information on or accessible from such website is not included or incorporated in this report.

It is not possible to precisely measure the amount of lost revenue directly attributable to the cyberattack.

We are unable to predict the full impact of the cyberattack on customer behavior in the future, including whether a change in our customers’ behavior could negatively impact our results of operations on an ongoing basis.

Accordingly, we are not able to predict with any certainty any possible future impact to our revenues or expenses attributable to the cyberattack, which could have a material adverse effect on our future results.

As a result of the attack, we are subject to numerous arbitration demands and lawsuits, including class action lawsuits, and regulatory inquiries as described in Note 13 – Commitments and Contingencies of the Notes to the Condensed Consolidated Financial Statements and Part II, Item 1.

Legal Proceedings, and we could be subject to additional lawsuits and inquiries.

We are cooperating fully with regulators in connection with the inquiries, though we cannot predict the timing or outcome of any of these inquiries.

In light of the inherent uncertainties involved in such matters and based on the information currently available to us, as of the date of this Quarterly Report, we have not recorded any accruals for losses related to the above proceedings and inquiries as any such amounts (or ranges of amounts) are not probable or estimable at this time.

We believe it is reasonably possible that we could incur losses associated with these proceedings and inquiries, and the Company will continue to evaluate information as it becomes known and will record an estimate for losses at the time or times when it is both probable that a loss has been incurred and the amount of the loss is reasonably estimable.

Losses associated with any adverse judgments, settlements, penalties or other resolutions of such proceedings and inquiries, including ongoing costs related thereto, could be material to our business, reputation, financial condition, cash flows and operating results in future periods.

COVID-19 Pandemic

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Set forth below is a summary of our consolidated financial results:

Three Months Ended June 30, Change Six Months Ended

June 30, Change

Three Months Ended

September 30, Change Nine Months Ended

September 30, Change

(in millions) 2021 2020 $ % 2021 2020 $ %

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Selling, general and administrative 5,212 4,876 336 7 % 14,840 14,168 672 5 %

Impairment expense — 418 (418) (100) % — 418 (418) (100) %

Impairment expense — — — NM — 418 (418) (100) %

Depreciation and amortization 4,145 4,150 (5) — % 12,511 9,932 2,579 26 %

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Total other expense, net (896) (905) 9 (1) % (2,707) (2,215) (492) 22 %

Income (loss) from continuing operations before income taxes 1,255 (208) 1,463 (703) % 2,434 1,049 1,385 132 %

Income tax expense (277) (2) (275) NM (523) (308) (215) 70 %

Income (loss) from continuing operations 978 (210) 1,188 (566) % 1,911 741 1,170 158 %

Income from discontinued operations, net of tax — 320 (320) (100) % — 320 (320) (100) %

Income from continuing operations before income taxes 688 1,660 (972) (59) % 3,122 2,709 413 15 %

Income tax benefit (expense) 3 (407) 410 (101) % (520) (715) 195 (27) %

Income from continuing operations 691 1,253 (562) (45) % 2,602 1,994 608 30 %

Income from discontinued operations, net of tax — — — NM — 320 (320) (100) %

Net income $ 691 $ 1,253 $ (562) (45) % $ 2,602 $ 2,314 $ 288 12 %

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The following discussion and analysis is for the three and six months ended June 30, 2021, compared to the same period in 2020 unless otherwise stated.

Total revenues increased $2.3 billion, or 13%, for the three months ended and increased $10.9 billion, or 38%, for the six months ended June 30, 2021.

The following discussion and analysis is for the three and nine months ended September 30, 2021, compared to the same period in 2020 unless otherwise stated.

Total revenues increased $352 million, or 2%, for the three months ended and increased $11.3 billion, or 23%, for the nine months ended September 30, 2021.

The components of these changes are discussed below.

Postpaid revenues increased $533 million, or 5%, for the three months ended and increased $4.9 billion, or 31%, for the six months ended June 30, 2021.

The increase for the three and six months ended June 30, 2021, was primarily from:

Postpaid revenues increased $595 million, or 6%, for the three months ended and increased $5.5 billion, or 21%, for the nine months ended September 30, 2021.

The increase for the three and nine months ended September 30, 2021, was primarily from:

• Higher average postpaid accounts;

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See “Postpaid ARPA” in the “ Performance Measures ” section of this MD&A.

Prepaid revenues increased $116 million, or 5%, for the three months ended and increased $94 million, or 2%, for the six months ended June 30, 2021, primarily from:

Prepaid revenues increased $98 million, or 4%, for the three months ended and increased $192 million, or 3%, for the nine months ended September 30, 2021, primarily from:

• Higher average prepaid customers;

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See “Prepaid ARPU” in the “ Performance Measures ” section of this MD&A.

Wholesale revenues increased $527 million, or 129%, for the three months ended and increased $1.1 billion, or 150%, for the six months ended June 30, 2021, primarily from our Master Network Service Agreement with DISH, which went into effect on July 1, 2020, and the success of our other MVNO relationships.

Other service revenues increased $86 million, or 16%, for the three months ended and increased $466 million, or 57%, for the six months ended June 30, 2021.

The increase for the three months ended June 30, 2021, was primarily from higher advertising, roaming and Lifeline revenues.

The increase for the six months ended June 30, 2021, was primarily from:

Wholesale revenues increased $14 million, or 2%, for the three months ended and increased $1.1 billion, or 67%, for the nine months ended September 30, 2021.

The increase for the nine months ended September 30, 2021, was primarily from:

• Our Master Network Service Agreement with DISH, which went into effect on July 1, 2020;

• The success of our other MVNO relationships.

Other service revenues decreased $124 million, or 20%, for the three months ended and increased $342 million, or 24%, for the nine months ended September 30, 2021.

The decrease for the three months ended September 30, 2021, was primarily from:

• Lower advertising and wireline revenues;

partially offset by

• Higher Lifeline revenues.

The increase for the nine months ended September 30, 2021, was primarily from:

• Higher Lifeline revenues, primarily associated with operations acquired in the Merger;

• Inclusion of wireline operations acquired in the Merger.

• Higher Lifeline revenues, primarily due to operations acquired in the Merger;

• Higher advertising revenues.

Equipment revenues increased $946 million, or 22%, for the three months ended and increased $4.2 billion, or 65%, for the six months ended June 30, 2021.

The increase for the three months ended June 30, 2021, was primarily from:

• An increase of $1.2 billion in device sales revenue, excluding purchased leased devices, primarily from:

• An increase in the number of devices sold due to increased retail store traffic due to closures arising from the Pandemic in the prior period;

• Higher average revenue per device sold due to an increase in the high-end device mix;

• An increase of $150 million in sales of accessories, due to increased retail store traffic due to closures arising from the Pandemic in the prior period;

• An increase of $97 million in liquidation revenues primarily due to a higher volume of returned devices;

Equipment revenues decreased $293 million, or 6%, for the three months ended and increased $3.9 billion, or 34%, for the nine months ended September 30, 2021.

The decrease for the three months ended September 30, 2021, was primarily from:

• A decrease of $580 million in lease revenues due to a lower number of customer devices under lease due to the planned shift in device financing from leasing to EIP;

• A decrease of $117 million in liquidation revenues primarily due to a lower volume of returned devices;

partially offset by

• A decrease of $507 million in lease revenues due to a lower number of customer devices under lease due to the continued planned shift in device financing from leasing to EIP.

The increase for the six months ended June 30, 2021, was primarily from:

• An increase of $397 million in device sales revenue, excluding purchased leased devices, primarily from:

• Higher average revenue per device sold driven by a higher mix of phone versus other devices, partially offset by an increase in promotional activities;

• An increase in the number of devices sold driven by switching activity returning to more normalized levels compared to the muted conditions from the Pandemic in the prior year and the planned shift in device financing from leasing to EIP.

The increase for the nine months ended September 30, 2021, was primarily from:

• An increase of $3.3 billion in device sales revenue, excluding purchased leased devices, primarily from:

• An increase in the number of devices sold due to increased retail store traffic due to closures arising from the Pandemic in the prior period and a larger customer base as a result of the Merger;

• Higher average revenue per device sold due to an increase in the high-end device mix;

• An increase of $369 million in lease revenues due to a higher number of customer devices under lease, primarily from leases acquired in the Merger;

• An increase of $325 million in liquidation revenues primarily due to a higher volume of returned devices;

• An increase in the number of devices sold due to a larger customer base as a result of the Merger, switching activity returning to more normalized levels compared to the muted conditions from the Pandemic in the prior year and the planned shift in device financing from leasing to EIP;

• Higher average revenue per device sold driven by a higher mix of phone versus other devices, partially offset by an increase in promotional activities;

• An increase of $325 million in sales of accessories, due to increased retail store traffic due to closures arising from the Pandemic in the prior period and a larger customer base as a result of the Merger;

• An increase of $227 million in sales of leased devices, primarily due to a larger base of leased devices as a result of the Merger.

Other revenues increased $71 million, or 41%, for the three months ended and increased $142 million, or 44%, for the six months ended June 30, 2021, primarily from:

• Higher interest income on our EIP receivables;

• Higher revenue from our device recovery program.

Operating expenses increased $993 million, or 6%, for the three months ended and increased $9.0 billion, or 34%, for the six months ended June 30, 2021.

• An increase of $208 million in liquidation revenues, primarily due to an increase in the high-end device mix and a higher volume of returned devices;

• An increase of $198 million in purchased leased devices, primarily due to a larger base of leased devices as a result of the Merger;

partially offset by

• A decrease of $212 million in lease revenues due to a lower number of customer devices under lease due to the planned shift in device financing from leasing to EIP.

Other revenues increased $62 million, or 34%, for the three months ended and increased $204 million, or 41%, for the nine months ended September 30, 2021, primarily from higher interest income on our EIP receivables.

Operating expenses increased $1.3 billion, or 8%, for the three months ended and increased $10.4 billion, or 24%, for the nine months ended September 30, 2021.

The components of this change are discussed below.

Cost of services , exclusive of depreciation and amortization, increased $393 million, or 13%, for the three months ended and increased $2.1 billion, or 45%, for the six months ended June 30, 2021.

The increase for the three months ended June 30, 2021, was primarily from:

Cost of services , exclusive of depreciation and amortization, increased $224 million, or 7%, for the three months ended and increased $2.4 billion, or 29%, for the nine months ended September 30, 2021.

The increase for the three months ended September 30, 2021, was primarily from:

• An increase of $200 million in Merger-related costs, including incremental costs associated with network decommissioning and integration;

• An increase in site costs related to network integration and the continued build-out of our nationwide 5G network.

The increase for the six months ended June 30, 2021, was primarily from:

• An increase in expenses associated with leases and backhaul agreements acquired in the Merger and the continued build-out of our nationwide 5G network;

• Higher lease expenses related to a new tower master lease agreement executed in 2020.

The increase for the nine months ended September 30, 2021, was primarily from:

• An increase in expenses associated with leases and backhaul agreements acquired in the Merger and the continued build-out of our nationwide 5G network, including a new tower master lease agreement in 2020;

• An increase of $569 million in Merger-related costs including incremental costs associated with network decommissioning and integration;

• Higher employee-related and benefit-related costs primarily due to increased headcount as a result of the Merger.

Cost of equipment sales , exclusive of depreciation and amortization, increased $1.8 billion, or 49%, for the three months ended and increased $4.4 billion, or 71%, for the six months ended June 30, 2021.

The increase for the three months ended June 30, 2021, was primarily from:

• An increase of $1.7 billion in device cost of equipment sales, excluding purchased leased devices, primarily from:

• An increase in the number of devices sold due to increased retail store traffic due to closures arising from the Pandemic in the prior period;

• Higher average costs per device sold due to an increase in the high-end device mix;

• An increase in cost of accessories, due to increased retail store traffic due to closures arising from the Pandemic in the prior period.

The increase for the six months ended June 30, 2021, was primarily from:

Cost of equipment sales , exclusive of depreciation and amortization, increased $778 million, or 18%, for the three months ended and increased $5.2 billion, or 49%, for the nine months ended September 30, 2021.

The increase for the three months ended September 30, 2021, was primarily from:

• An increase of $973 million in device cost of equipment sales, excluding purchased leased devices, primarily from:

• Higher average costs per device sold due to a higher mix of phone versus other devices;

• An increase in the number of devices sold driven by switching activity returning to more normalized levels relative to the muted conditions from the Pandemic in the prior year and the planned shift in device financing from leasing to EIP;

partially offset by

• A decrease of $127 million in costs related to liquidation due to a lower volume of returned devices.

• Merger-related costs, primarily related to moving Sprint customers to devices that are compatible with the T-Mobile network, were $236 million compared to no Merger-related costs for the three months ended September 30, 2020.

The increase for the nine months ended September 30, 2021, was primarily from:

• An increase of $4.7 billion in device cost of equipment sales, excluding purchased leased devices, primarily from:

• An increase in the number of devices sold due to increased retail store traffic due to closures arising from the Pandemic in the prior period and a larger customer base as a result of the Merger;

• Higher average costs per device sold due to an increase in the high-end device mix;

• An increase of $196 million in costs related to the liquidation of a higher volume of returned devices primarily driven by a larger customer base as a result of the Merger;

• An increase in the number of devices sold due to a larger customer base as a result of the Merger, switching activity returning to more normalized levels relative to the muted conditions from the Pandemic in the prior year and the planned shift in device financing from leasing to EIP;

• Higher average costs per device sold due to a higher mix of phone versus other devices;

• An increase of $183 million in costs related to the liquidation of a higher volume of returned devices;

• An increase of $156 million in cost of accessories, due to increased retail store traffic due to closures arising from the Pandemic in the prior period and a larger customer base as result of the Merger;

• An increase of $100 million in leased device cost of equipment sales, primarily due to a larger base of leased devices as a result of the Merger.

• An increase of $129 million in cost of accessories, due to increased retail store traffic due to closures arising from the Pandemic in the prior period and a larger customer base as a result of the Merger.

Selling, general and administrative expenses decreased $781 million, or 14%, for the three months ended and increased $336 million, or 4%, for the six months ended June 30, 2021.

The decrease for the three months ended June 30, 2021, was primarily from:

• Merger-related costs of $251 million primarily related to integration and restructuring, compared to $758 million of Merger-related costs in the three months ended June 30, 2020;

• Lower bad debt expense;

partially offset by

• Higher employee-related costs due to increased staffing and distribution to support growth initiatives.

• Selling, general and administrative expenses for the three months ended June 30, 2020 included $341 million of supplemental employee payroll, third-party commissions and cleaning-related COVID-19 costs.

There were insignificant COVID-19 costs for the three months ended June 30, 2021.

The increase for the six months ended June 30, 2021, was primarily from:

• Higher advertising, external labor and professional services and lease expense;

• Merger-related costs, primarily related to moving Sprint customers to devices that are compatible with the T-Mobile network, were $340 million compared to no Merger-related costs for the nine months ended September 30, 2020.

Selling, general and administrative expenses increased $336 million, or 7%, for the three months ended and increased $672 million, or 5%, for the nine months ended September 30, 2021.

The increase for the three months ended September 30, 2021, was primarily from:

• Merger-related costs of $440 million primarily related to integration, restructuring and legal-related expenses, compared to $209 million of Merger-related costs for the three months ended September 30, 2020;

• Higher advertising expenses.

The increase for the nine months ended September 30, 2021, was primarily from:

• Higher advertising, external labor and professional services and lease expenses primarily from the Merger;

• Higher employee-related costs due to an increase in the number of employees primarily from the Merger;

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• Lower bad debt expense.

• Merger-related costs of $396 million primarily related to integration and restructuring, compared to $901 million of Merger-related costs in the six months ended June 30, 2020.

• Selling, general and administrative expenses for the six months ended June 30, 2020 included $458 million of supplemental employee payroll, third-party commissions and cleaning-related COVID-19 costs.

There were insignificant COVID-19 costs for the six months ended June 30, 2021.

Depreciation and amortization was essentially flat for the three months ended and increased $2.6 billion, or 45%, for the six months ended June 30, 2021.

Depreciation and amortization was essentially flat for the three months ended June 30, 2021, and was primarily impacted by:

• Higher depreciation expense, excluding leased devices, due to network expansion from the continued build-out of our nationwide 5G network;

mostly offset by

• Selling, general and administrative expenses for the nine months ended September 30, 2020 included $458 million of supplemental employee payroll, third-party commissions and cleaning-related COVID-19 costs.

There were insignificant COVID-19 costs for the nine months ended September 30, 2021.

• Merger-related costs of $836 million primarily related to integration, restructuring and legal-related expenses, compared to $1.1 billion of Merger-related costs for the nine months ended September 30, 2020.

Depreciation and amortization decreased slightly for the three months ended and increased $2.6 billion, or 26%, for the nine months ended September 30, 2021.

The decrease for the three months ended September 30, 2021, was primarily from:

• Lower depreciation expense on leased devices resulting from a lower number of total customer devices under lease;

• Lower amortization of customer relationship intangibles;

• Certain 4G-related network assets becoming fully depreciated.

The increase for the six months ended June 30, 2021, was primarily from:

• Higher depreciation expense, excluding leased devices, due to network expansion from the continued build-out of our

nationwide 5G network;

• Higher depreciation expense, excluding leased devices, from the continued build-out of our nationwide 5G network.

The increase for the nine months ended September 30, 2021, was primarily from:

• Higher depreciation expense, excluding leased devices, from the continued build-out of our nationwide 5G network;

• Higher depreciation expense on leased devices resulting from a larger base of leased devices as a result of the Merger;

• Higher amortization from intangible assets acquired in the Merger;

partially offset by

• Certain 4G-related network assets becoming fully depreciated.

Operating income , the components of which are discussed above, increased $1.3 billion, or 157%, for the three months ended and increased $1.9 billion, or 80%, for the six months ended June 30, 2021.

Interest expense increased $44 million, or 6%, for the three months ended and increased $651 million, or 68%, for the six months ended June 30, 2021, primarily due to higher average debt outstanding, partially offset by lower interest rates.

Interest expense to affiliates decreased $31 million, or 49%, for the three months ended and decreased $84 million, or 52%, for the six months ended June 30, 2021, primarily from the redemption of an aggregate principal amount of $5.25 billion of Senior Notes to affiliates in 2020.

Other expense, net decreased $194 million, or 99%, for the three months ended and decreased $79 million, or 39%, for the six months ended June 30, 2021, primarily from lower losses on the extinguishment of debt.

Income (loss) from continuing operations before income taxes , the components of which are discussed above, was income of $1.3 billion and a loss of $208 million for the three months ended June 30, 2021 and 2020, respectively, and was income of $2.4 billion and $1.0 billion for the six months ended June 30, 2021 and 2020, respectively.

Income tax expense increased $275 million for the three months ended and increased $215 million, or 70%, for the six months ended June 30, 2021.

The increase for the three months ended June 30, 2021, was primarily from:

• Higher income from continuing operations before income taxes;

partially offset by

• A reduction in expenses that were not deductible for tax purposes including our Layer3 goodwill impairment and certain merger-related costs in the prior year.

The effective tax rate was 22.0% and (0.7)% for the three months ended June 30, 2021 and 2020, respectively.

The increase for the six months ended June 30, 2021, was primarily from:

• Higher income from continuing operations before income taxes;

• Higher amortization from intangible assets.

Operating income , the components of which are discussed above, decreased $981 million, or 38%, for the three months ended and increased $905 million, or 18%, for the nine months ended September 30, 2021.

Interest expense increased $15 million, or 2%, for the three months ended and increased $666 million, or 39%, for the nine months ended September 30, 2021.

The increase for the nine months ended September 30, 2021, was primarily from:

• Higher average debt outstanding due to debt assumed in the Merger and the issuance of debt;

• Lower capitalized interest;

partially offset by

• A reduction in expenses that were not deductible for tax purposes including our Layer3 goodwill impairment and certain merger-related costs in the prior year and an increase in excess tax benefits on stock compensation in the current year.

The effective tax rate was 21.5% and 29.4% for the six months ended June 30, 2021 and 2020, respectively.

Income (loss) from continuing operations was income of $978 million and a loss of $210 million for the three months ended June 30, 2021 and 2020, respectively, and was income of $1.9 billion and income of $741 million for the six months ended June 30, 2021 and 2020, respectively.

The increase for the three months ended June 30, 2021, was primarily from:

• Higher Operating income;

• Lower Other expense, net;

• A lower average effective interest rate due to refinancing of existing debt at lower rates.

Interest expense to affiliates increased $14 million, or 32%, for the three months ended and decreased $70 million, or 34%, for the nine months ended September 30, 2021.

The decrease for the nine months ended September 30, 2021, was primarily from:

• Lower average debt outstanding due to the redemption of debt;

partially offset by

• Higher Income tax expense.

The increase for the six months ended June 30, 2021, was primarily from:

• Higher Operating income;

• Lower Other expense, net;

• Lower capitalized interest.

Other expense, net decreased $39 million, or 39%, for the three months ended and decreased $118 million, or 39%, for the nine months ended September 30, 2021, primarily from lower losses on the extinguishment of debt.

Income from continuing operations before income taxes , the components of which are discussed above, was $688 million and $1.7 billion for the three months ended September 30, 2021 and 2020, respectively, and was $3.1 billion and $2.7 billion for the nine months ended September 30, 2021 and 2020, respectively.

Income tax expense decreased $410 million for the three months ended and decreased $195 million, or 27%, for the nine months ended September 30, 2021.

The decrease for the three months ended September 30, 2021, was primarily from:

• Tax benefits associated with legal entity reorganization related to historical Sprint entities, including a reduction in the valuation allowance against deferred tax assets in certain state jurisdictions;

• Lower Income from continuing operations before income taxes.

Our effective tax rate was (0.3)% and 24.5% for the three months ended September 30, 2021 and 2020, respectively.

The decrease for the nine months ended September 30, 2021, was primarily from:

• A reduction in expenses that were not deductible for tax purposes;

partially offset by

• Higher Interest expense;

• Higher Income tax expense.

Income from discontinued operations, net of tax, was $320 million for the three and six months ended June 30, 2020, and consisted of the results of the Prepaid Business that was divested on July 1, 2020.

There were no discontinued operations for the three and six months ended June 30, 2021.

Net income , the components of which are discussed above, increased $868 million, or 789%, for the three months ended and increased $850 million, or 80%, for the six months ended June 30, 2021.

Net income for the three months ended June 30, 2021, included the following:

• Merger-related costs, net of tax, of $453 million for the three months ended June 30, 2021, compared to $635 million for the three months ended June 30, 2020.

• Impairment expense of $366 million, net of tax, for the three months ended June 30, 2020, compared to no impairment expense for the three months ended June 30, 2021.

• The negative impact of supplemental employee payroll, third-party commissions and cleaning-related COVID-19 costs, net of tax, of $253 million for the three months ended June 30, 2020, compared to no impact for the three months ended June 30, 2021.

Net income for the six months ended June 30, 2021, included the following:

• Merger-related costs, net of tax, of $673 million for the six months ended June 30, 2021, compared to $752 million for the six months ended June 30, 2020.

• Impairment expense of $366 million, net of tax, for the six months ended June 30, 2020, compared to no impairment expense for the six months ended June 30, 2021.

• The negative impact of supplemental employee payroll, third-party commissions and cleaning-related COVID-19 costs, net of tax, of $339 million for the six months ended June 30, 2020, compared to no impact for the six months ended June 30, 2021.

• Higher Income from continuing operations before income taxes.

Our effective tax rate was 16.7% and 26.4% for the nine months ended September 30, 2021 and 2020, respectively.

Income from continuing operations was $691 million and $1.3 billion for the three months ended September 30, 2021 and 2020, respectively, and was $2.6 billion and $2.0 billion for the nine months ended September 30, 2021 and 2020, respectively.

The changes in Income from continuing operations were primarily due to the items discussed above.

Income from discontinued operations, net of tax, was $320 million for the nine months ended September 30, 2020, and consisted of the results of the Prepaid Business that was divested on July 1, 2020.

There were no discontinued operations for the three months ended September 30, 2020 and for the three and nine months ended September 30, 2021.

Net income , the components of which are discussed above, decreased $562 million, or 45%, for the three months ended and increased $288 million, or 12%, for the nine months ended September 30, 2021.

Net income for the three months ended September 30, 2021, included the following:

• Merger-related costs, net of tax, of $707 million for the three months ended September 30, 2021, compared to $208 million for the three months ended September 30, 2020.

Net income for the nine months ended September 30, 2021, included the following:

• Merger-related costs, net of tax, of $1.4 billion for the nine months ended September 30, 2021, compared to $960 million for the nine months ended September 30, 2020;

• Impairment expense of $366 million, net of tax, for the nine months ended September 30, 2020, compared to no impairment expense for the nine months ended September 30, 2021;

• The negative impact of supplemental employee payroll, third-party commissions and cleaning-related COVID-19 costs, net of tax, of $339 million for the nine months ended September 30, 2020, compared to an insignificant impact for the nine months ended September 30, 2021.

Guarantor Financial Information

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The guarantees of the Guarantor Subsidiaries are subject to release in limited circumstances only upon the occurrence of certain customary conditions.

debt, pay dividends and make distributions, make certain investments, repurchase stock, create liens or other encumbrances, enter into transactions with affiliates, enter into transactions that restrict dividends or distributions from subsidiaries, and merge, consolidate or sell, or otherwise dispose of, substantially all of their assets.

The indentures, supplemental indentures and credit agreements governing the long-term debt contain covenants that, among other things, limit the ability of the Issuers or borrowers and the Guarantor Subsidiaries to incur more debt, pay dividends and make distributions, make certain investments, repurchase stock, create liens or other encumbrances, enter into transactions with affiliates, enter into transactions that restrict dividends or distributions from subsidiaries, and merge, consolidate or sell, or otherwise dispose of, substantially all of their assets.

Certain provisions of each of the credit agreements, indentures and supplemental indentures relating to the long-term debt restrict the ability of the Issuers or borrowers to loan funds or make payments to Parent.

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is presented in the table below:

(in millions) June 30, 2021 December 31, 2020

(in millions) September 30, 2021 December 31, 2020

Current assets $ 15,673 $ 22,638

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is presented in the table below:

Six Months Ended June 30, 2021

Nine Months Ended September 30, 2021

Year Ended December 31, 2020

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is presented in the table below:

(in millions) June 30, 2021 December 31, 2020

(in millions) September 30, 2021 December 31, 2020

Current assets $ 9,013 $ 2,646

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The summarized results of operations information for the consolidated obligor group of debt issued by Sprint and Sprint Communications, Inc., since the acquisition of Sprint on April 1, 2020, is presented in the table below:

Six Months Ended June 30, 2021 Nine Months Ended December 31, 2020

Nine Months Ended September 30, 2021 Nine Months Ended December 31, 2020

(in millions)

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The summarized balance sheet information for the consolidated obligor group of debt issued by Sprint Capital Corporation is presented in the table below:

(in millions) June 30, 2021 December 31, 2020

(in millions) September 30, 2021 December 31, 2020

Current assets $ 9,013 $ 2,646

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The summarized results of operations information for the consolidated obligor group of debt issued by Sprint Capital Corporation, since the acquisition of Sprint on April 1, 2020, is presented in the table below:

Six Months Ended June 30, 2021 Nine Months Ended December 31, 2020

Nine Months Ended September 30, 2021 Nine Months Ended December 31, 2020

(in millions)

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These operating and financial measures are utilized by our management to evaluate our operating performance and, in certain cases, our ability to meet liquidity requirements.

Although companies in the wireless industry may not define each of these measures in precisely the same way, we believe that these measures facilitate comparisons with other companies in the wireless industry on key operating and financial measures.

The performance measures presented below include the impact of the Merger on a prospective basis from the close date of April 1, 2020.

Historical results prior to April 1, 2020 have not been retroactively adjusted.

Although companies in the wireless industry may not define each of these measures in precisely the same way,

we believe that these measures facilitate comparisons with other companies in the wireless industry on key operating and financial measures.

The performance measures presented below include the impact of the Merger on a prospective basis from the close date of April 1, 2020, and the impact of the acquisition of the Wireless Assets from Shentel on a prospective basis from the close date of July 1, 2021.

Historical results prior to the respective close dates have not been retroactively adjusted.

A customer is generally defined as a SIM number with a unique T-Mobile identifier which is associated with an account that generates revenue.

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The following table sets forth the number of ending customers:

As of June 30, Change

As of September 30, Change

(in thousands) 2021 2020 # %

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Acquired customers, net of base adjustments (2)

12 29,228 (29,216) NM

NM - Not Meaningful

818 29,228 (28,410) (97) %

(1) Includes customers acquired in connection with the Merger and certain customer base adjustments.

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(2) In the first quarter of 2021, we acquired 11,000 postpaid phone customers and 1,000 postpaid other customers through our acquisition of an affiliate.

In the third quarter of 2021, we acquired 716,000 postpaid phone customers and 90,000 postpaid other customers through our acquisition of the Wireless Assets from Shentel.

Total customers increased 6,558,000, or 7%, primarily from:

• Higher postpaid other customers, primarily due to growth in other connected devices, primarily related to public and educational sector customers and wearable products;

• Higher postpaid phone customers, primarily due to the success of new customer segments and rate plans and continued growth in existing and new markets, along with promotional activity and increased retail store traffic due to closures arising from the Pandemic in the prior period;

• Higher postpaid phone customers, primarily due to the continued success of new customer segments and rate plans and continued growth in existing and new markets, along with targeted promotional activity and increased retail store traffic due to closures arising from the Pandemic in the prior period;

• Higher postpaid other customers, primarily due to growth in other connected devices, primarily related to public and educational sector customers and wearable products, and growth in home internet;

• Higher prepaid customers, primarily due to the continued success of our prepaid business due to promotional activity and rate plan offers.

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The following table sets forth the number of net customer additions:

Three Months Ended June 30, Change Six Months Ended

June 30, Change

Three Months Ended

September 30, Change Nine Months Ended

September 30, Change

(in thousands) 2021 2020 # % 2021 2020 # %

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Total customers 1,325 2,035 (710) (35) % 4,038 3,929 109 3 %

Acquired customers, net of base adjustments — 29,228 (29,228) (100) % 12 29,228 (29,216) (100) %

Acquired customers, net of base adjustments 806 — 806 NM 818 29,228 (28,410) (97) %

NM - Not Meaningful

Total net customer additions increased 107,000, or 9%, for the three months ended and increased 819,000, or 43%, for the six months ended June 30, 2021.

The increase for the three months ended June 30, 2021, was primarily from:

• Higher postpaid phone net customer additions, primarily due to increased retail store traffic due to closures arising from the Pandemic in the prior period, as well as increased growth from T-Mobile for Business, partially offset by higher churn;

Total net customer additions decreased 710,000, or 35%, for the three months ended and increased 109,000, or 3%, for the nine months ended September 30, 2021.

The decrease for the three months ended September 30, 2021, was primarily from:

• Lower postpaid other net customer additions, primarily due to elevated gross additions in the prior period related to the public and educational sector resulting from the Pandemic, as well as higher churn in the current period related to post-Pandemic demand levels;

• Lower postpaid phone net customer additions, primarily due to higher churn, mostly offset by higher gross additions driven by switching activity returning to more normalized levels relative to muted conditions from the Pandemic in the prior year and continued growth from T-Mobile for Business;

partially offset by

• Lower postpaid other net customer additions, primarily due to elevated gross additions in the prior period related to the public and educational sector resulting from the Pandemic;

• Lower prepaid net customer additions, primarily driven by higher migrations to postpaid plans, partially offset by lower churn.

The increase for the six months ended June 30, 2021, was primarily from:

• Higher prepaid net customer additions, primarily driven by higher gross additions, partially offset by higher churn and migrations to postpaid plans.

The increase for the nine months ended September 30, 2021, was primarily from:

• Higher postpaid phone net customer additions, primarily due to increased retail store traffic due to closures arising from the Pandemic in the prior period, partially offset by higher churn;

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partially offset by

• Lower postpaid other net customer additions, primarily due to higher disconnect volumes from an increased customer base.

• Lower postpaid other net customer additions, primarily due to elevated gross additions in the prior period related to the public and educational sector resulting from the Pandemic and higher disconnects from an increased customer base.

Churn represents the number of customers whose service was disconnected as a percentage of the average number of customers during the specified period further divided by the number of months in the period.

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The following table sets forth the churn:

Three Months Ended June 30, Change Six Months Ended June 30, Change

Three Months Ended

September 30, Change Nine Months Ended

September 30, Change

2021 2020 2021 2020

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Prepaid churn 2.90 % 2.86 % 4 bps 2.76 % 3.07 % -31 bps

Postpaid phone churn increased 7 basis points for the three months ended and increased 10 basis points for the six months ended June 30, 2021.

The increase for the three months ended June 30, 2021, was primarily from:

• More normal switching activity relative to the muted Pandemic-driven conditions a year ago;

partially offset by

• Better customer payment performance.

The increase for the six months ended June 30, 2021, was primarily from:

• More normal switching activity relative to the muted Pandemic-driven conditions a year ago;

Postpaid phone churn increased 6 basis points for the three months ended and increased 8 basis points for the nine months ended September 30, 2021.

The increase for the three months ended September 30, 2021, was primarily from:

• More normalized switching activity relative to the muted Pandemic-driven conditions a year ago;

• Elevated Sprint churn during the accelerated integration process.

The increase for the nine months ended September 30, 2021, was primarily from:

• Higher churn from customers acquired in the Merger;

partially offset by

• Better customer payment performance.

Prepaid churn decreased 19 basis points for the three months ended and decreased 47 basis points for the six months ended June 30, 2021.

The decrease for the three months ended June 30, 2021, was primarily from:

• Improved quality of recently acquired customers;

• Continued network improvement.

The decrease for the six months ended June 30, 2021, was primarily from:

• The impact of stimulus programs and accelerated tax refund timing;

• Improved quality of recently acquired customers;

• More normalized switching activity relative to the muted Pandemic-driven conditions a year ago.

Prepaid churn increased 4 basis points for the three months ended and decreased 31 basis points for the nine months ended September 30, 2021.

The increase for the three months ended September 30, 2021, was primarily from more normalized switching activity relative to the muted Pandemic-driven conditions a year ago.

The decrease for the nine months ended September 30, 2021, was primarily from:

• Promotional activity;

• Improved quality of recently acquired customers.

Total Postpaid Accounts

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Postpaid accounts are generally comprised of customers that are qualified for postpaid service utilizing phones, home internet, wearables, DIGITS or other connected devices which include tablets and SyncUp products, where they generally pay after receiving service.

As of June 30, 2021 Change

As of September 30, Change

(in thousands) 2021 2020 # %

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See Account Base Adjustments table below.

Total postpaid customer accounts increased 877,000, or 3%, primarily due to the success of new customer segments and rate plans, continued growth in existing and new markets, including our home internet product, along with promotional activity and increased retail store traffic due to closures arising from the Pandemic in the prior period.

(2) In the third quarter of 2021, we acquired 270,000 postpaid accounts through our acquisition of the Wireless Assets of Shentel.

Total postpaid customer accounts increased 1,278,000, or 5%, primarily due to the continued success of new customer segments and rate plans, continued growth in existing and new markets, including our home internet product, along with promotional activity and increased retail store traffic due to closures arising from the Pandemic in the prior period.

Account Base Adjustments

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The following table illustrates the calculation of our operating measure ARPU and reconciles this measure to the related service revenues:

(in millions, except average number of customers and ARPU) Three Months Ended June 30, Change Six Months Ended

June 30, Change

(in millions, except average number of customers and ARPU) Three Months Ended

September 30, Change Nine Months Ended

September 30, Change

2021 2020 $ % 2021 2020 $ %

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Average number of postpaid phone customers (in thousands) and number of months in period 69,033 65,437 3,596 5 % 67,848 56,971 10,877 19 %

Postpaid phone ARPU $ 47.61 $ 47.99 $ (0.38) (1) % $ 47.45 $ 47.15 $ 0.30 1 %

Postpaid phone ARPU $ 48.06 $ 48.55 $ (0.49) (1) % $ 47.66 $ 47.69 $ (0.03) NM

Calculation of Prepaid ARPU

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Prepaid ARPU $ 39.49 $ 38.49 $ 1.00 3 % $ 38.61 $ 38.13 $ 0.48 1 %

NM - Not Meaningful

Postpaid Phone ARPU

Postpaid phone ARPU decreased $0.38, or 1%, for the three months ended and increased $0.30, or 1%, for the six months ended June 30, 2021.

The decrease for the three months ended June 30, 2021, was primarily from:

• Promotional activity, including an increase in customers per account;

• The impact of Sprint rate plan migrations;

Postpaid phone ARPU decreased $0.49, or 1%, for the three months ended and was essentially flat for the nine months ended September 30, 2021.

The decrease for the three months ended September 30, 2021, was primarily from:

• Promotional activity;

• The impact of the transition of Sprint customers to tax-inclusive rate plans;

partially offset by

• Higher premium services, including Magenta Max.

The increase for the six months ended June 30, 2021, was primarily from:

• The net impact of customers acquired in the Merger, which have higher ARPU (net of changes arising from the reduction in base due to policy adjustments and reclassification of certain ARPU components from the acquired customers being moved to other revenue lines);

Postpaid phone ARPU was essentially flat for the nine months ended September 30, 2021, and was primarily impacted by:

• Promotional activity;

• The impact of the transition of Sprint customers to tax-inclusive rate plans;

• Higher premium services, including Magenta Max;

partially offset by

• Promotional activity, including an increase in customers per account.

Prepaid ARPU increased $0.73, or 2%, for the three months ended and increased $0.22, or 1%, for the six months ended June 30, 2021.

The increase for the three months ended June 30, 2021, was primarily from:

• Higher revenues due to improved rate plan mix;

• Higher premium services;

partially offset by

• A reduction in certain non-recurring charges.

The increase for the six months ended June 30, 2021, was primarily from:

• The impacts of certain adjustments to our customer base in April 2020;

Prepaid ARPU increased $1.00, or 3%, for the three months ended and increased $0.48, or 1%, for the nine months ended September 30, 2021, primarily due to:

• Higher premium services;

• Higher revenues due to improved rate plan mix;

partially offset by

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The following table illustrates the calculation of our operating measure ARPA and reconciles this measure to the related service revenues:

(in millions, except average number of accounts, ARPA) Three Months Ended June 30, Change Six Months Ended

June 30, Change

(in millions, except average number of accounts, ARPA) Three Months Ended

September 30, Change Nine Months Ended

September 30, Change

2021 2020 $ % 2021 2020 $ %

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Postpaid ARPA

Postpaid ARPA increased $2.98, or 2%, for the three months ended and increased $3.07, or 2%, for the six months ended June 30, 2021, primarily due to:

• An increase in customers per account;

Postpaid ARPA increased $1.51, or 1%, for the three months ended and increased $2.41, or 2%, for the nine months ended September 30, 2021.

The increase for the three months ended September 30, 2021, was primarily from:

• Higher premium services, including Magenta Max;

• An increase in customers per account;

partially offset by

• Promotional activity;

• The impact of the transition of Sprint customers to tax-inclusive rate plans.

The increase for the nine months ended September 30, 2021, was primarily from:

• An increase in customers per account;

• Higher premium service, including Magenta Max;

partially offset by

• Promotional activity;

• The impact of the transition of Sprint customers to tax-inclusive rate plans.

Adjusted EBITDA and Core Adjusted EBITDA

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We use Adjusted EBITDA and Core Adjusted EBITDA as benchmarks to evaluate our operating performance in comparison to our competitors.

Management believes analysts and investors use Adjusted EBITDA and Core Adjusted EBITDA as supplemental measures to evaluate overall operating performance and facilitate comparisons with other wireless communications services companies because they are indicative of our ongoing operating performance and trends by excluding the impact of interest expense from financing, non-cash depreciation and amortization from capital investments, stock-based compensation, Merger-related costs including network decommissioning costs and incremental costs directly attributable to the Pandemic, as they are not indicative of our ongoing operating performance, as well as certain other nonrecurring income and expenses.

Management believes analysts and investors use Adjusted EBITDA and Core Adjusted EBITDA as supplemental

measures to evaluate overall operating performance and facilitate comparisons with other wireless communications services companies because they are indicative of our ongoing operating performance and trends by excluding the impact of interest expense from financing, non-cash depreciation and amortization from capital investments, stock-based compensation, Merger-related costs including network decommissioning costs and incremental costs directly attributable to the Pandemic, as they are not indicative of our ongoing operating performance, as well as certain other nonrecurring income and expenses.

Management believes analysts and investors use Core Adjusted EBITDA because it normalizes for the transition in the Company’s device financing strategy, by excluding the impact of device lease revenues from Adjusted EBITDA, to align with the exclusion of the related depreciation expense on leased devices from Adjusted EBITDA.

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The following table illustrates the calculation of Adjusted EBITDA and Core Adjusted EBITDA and reconciles Adjusted EBITDA and Core Adjusted EBITDA to Net income, which we consider to be the most directly comparable GAAP financial measure:

Three Months Ended June 30, Change Six Months Ended

June 30, Change

Three Months Ended

September 30, Change Nine Months Ended

September 30, Change

(in millions) 2021 2020 $ % 2021 2020 $ %

Net income $ 691 $ 1,253 $ (562) (45) % $ 2,602 $ 2,314 $ 288 12 %

Income from discontinued operations, net of tax — (320) 320 (100) % — (320) 320 (100) %

Income from discontinued operations, net of tax — — — NM — (320) 320 (100) %

Income from continuing operations 691 1,253 (562) (45) % 2,602 1,994 608 30 %

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Other expense, net 60 99 (39) (39) % 186 304 (118) (39) %

Income tax expense 277 2 275 NM 523 308 215 70 %

Income tax (benefit) expense (3) 407 (410) (101) % 520 715 (195) (27) %

Operating income 1,584 2,565 (981) (38) % 5,829 4,924 905 18 %

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Operating income from discontinued operations (1)

— 432 (432) (100) % — 432 (432) (100) %

— — — NM — 432 (432) (100) %

Stock-based compensation (2)

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Merger-related costs 955 288 667 232 % 1,864 1,229 635 52 %

COVID-19-related costs — 341 (341) (100) % — 458 (458) (100) %

Impairment expense — 418 (418) (100) % — 418 (418) (100) %

COVID-19-related costs — — — NM — 458 (458) (100) %

Impairment expense — — — NM — 418 (418) (100) %

Other, net (3)

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NM - Not Meaningful

(1) Following the Prepaid Transaction starting on July 1, 2020, we provide MVNO services to DISH.

We have included the operating income from April 1, 2020 through June 30, 2020, in our determination of Adjusted EBITDA to reflect contributions of the Prepaid Business that were replaced by the MVNO Agreement beginning on July 1, 2020 in order to enable management, analysts and investors to better assess ongoing operating performance and trends.

(2) Stock-based compensation includes payroll tax impacts and may not agree with stock-based compensation expense in the condensed consolidated financial statements.

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(3) Other, net may not agree with the Condensed Consolidated Statements of Comprehensive Income primarily due to certain non-routine operating activities, such as other special items that would not be expected to reoccur or are not reflective of T-Mobile’s ongoing operating performance, and are, therefore, excluded from Adjusted EBITDA and Core Adjusted EBITDA.

Core Adjusted EBITDA increased $396 million, or 7%, for the three months ended and increased $2.8 billion, or 30%, for the six months ended June 30, 2021.

Core Adjusted EBITDA increased $262 million, or 5%, for the three months ended and increased $3.0 billion, or 20%, for the nine months ended September 30, 2021.

The components comprising Core Adjusted EBITDA are discussed further above.

The increase for the three months ended June 30, 2021 was primarily due to:

• Higher Equipment revenues, excluding Lease revenues;

The increase for the three months ended September 30, 2021 was primarily due to:

• Higher Total service revenues;

• Lower Selling, general and administrative expenses, excluding Merger-related costs and supplemental employee payroll, third-party commissions and cleaning-related COVID-19 costs;

• Higher Equipment revenues, excluding Lease revenues;

partially offset by

• Higher Cost of equipment sales, excluding Merger-related costs.

• Higher Cost of services, excluding Merger-related costs.

The increase for the six months ended June 30, 2021, was primarily due to:

The increase for the nine months ended September 30, 2021, was primarily due to:

• Higher Total service revenues;

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• Higher Cost of equipment sales, excluding Merger-related costs;

• Higher Cost of services expenses, excluding Merger-related costs;

• Higher Cost of services, excluding Merger-related costs;

• Higher Selling, general and administrative expenses, excluding Merger-related costs and supplemental employee payroll, third-party commissions and cleaning-related COVID-19 costs.

Adjusted EBITDA decreased $111 million, or 2%, for the three months ended and increased $3.1 billion, or 29%, for the six months ended June 30, 2021.

Adjusted EBITDA decreased $318 million, or 4%, for the three months ended and increased $2.8 billion, or 16%, for the nine months ended September 30, 2021.

The changes were primarily due to the fluctuations in Core Adjusted EBITDA, discussed above, including changes in Lease revenues.

Lease revenues decreased $507 million for the three months ended and increased $369 million for the six months ended June 30, 2021.

Lease revenues decreased $580 million for the three months ended and $211 million for the nine months ended September 30, 2021.

Liquidity and Capital Resources

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Further, the incurrence of additional indebtedness may inhibit our ability to incur new debt under the terms governing our existing and future indebtedness, which may make it more difficult for us to incur new debt in the future to finance our business strategy.

The following is a condensed schedule of our cash flows for the three and six months ended June 30, 2021 and 2020:

Three Months Ended June 30, Change Six Months Ended

June 30, Change

The following is a condensed schedule of our cash flows for the three and nine months ended September 30, 2021 and 2020:

Three Months Ended

September 30, Change Nine Months Ended

September 30, Change

(in millions) 2021 2020 $ % 2021 2020 $ %

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Net cash used in investing activities (4,152) (1,132) (3,020) 267 % (17,474) (9,068) (8,406) 93 %

Net cash (used in) provided by financing activities (577) 15,628 (16,205) NM 3,297 15,175 (11,878) (78) %

NM - Not meaningful

Net cash (used in) provided by financing activities (3,060) (6,144) 3,084 (50) % 237 9,031 (8,794) (97) %

Operating Activities

Net cash provided by operating activities increased $3.0 billion, or 386%, for the three months ended and increased $5.0 billion, or 211%, for the six months ended June 30, 2021.

The increase for the three months ended June 30, 2021, was primarily from:

• A $2.9 billion decrease in net cash outflows from changes in working capital, primarily due to the one-time impact of $2.3 billion in gross payments for the settlement of interest rate swaps related to Merger financing for the three months ended June 30, 2020, included in the use of cash from Other current and long-term liabilities, as well as lower use of cash from Accounts payable and accrued liabilities and Inventories, partially offset by higher use of cash from Accounts receivable and Equipment installment plan receivables.

• Net cash provided by operating activities includes $190 million and $370 million in payments for Merger-related costs for the three months ended June 30, 2021 and 2020, respectively.

The increase for the six months ended June 30, 2021, was primarily from:

Net cash provided by operating activities increased $705 million, or 25%, for the three months ended and increased $5.8 billion, or 111%, for the nine months ended September 30, 2021.

The increase for the three months ended September 30, 2021, was primarily from:

• A $1.8 billion decrease in net cash outflows from changes in working capital, primarily due to lower use of cash from Accounts receivable, Accounts payable and accrued liabilities and Inventories, partially offset by higher use of cash from operating lease liabilities, including a $1.0 billion advance rent payment related to the modification of one of our master lease agreements;

partially offset by

• A $1.1 billion decrease in Net income, adjusted for non-cash income and expense.

• Net cash provided by operating activities includes $617 million and $379 million in payments for Merger-related costs for the three months ended September 30, 2021 and 2020, respectively.

The increase for the nine months ended September 30, 2021, was primarily from:

• A $4.2 billion decrease in net cash outflows from changes in working capital, primarily due to the one-time impact of $2.3 billion in gross payments for the settlement of interest rate swaps related to Merger financing for the nine months ended September 30, 2020, included in the use of cash from Other current and long-term liabilities, as well as lower use of cash from Inventories, Accounts payable and accrued liabilities and operating lease right-of-use assets, partially offset by higher use of cash from Equipment installment plan receivables and operating lease liabilities, including a $1.0 billion advance rent payment related to the modification of one of our master lease agreements;

• A $1.5 billion increase in Net income, adjusted for non-cash income and expense.

• A $2.5 billion decrease in net cash outflows from changes in working capital, primarily due to the one-time impact of $2.3 billion in gross payments for the settlement of interest rate swaps related to Merger financing for the six months ended June 30, 2020, included in the use of cash from Other current and long-term liabilities, as well as lower use of cash from Inventories and Accounts payable and accrued liabilities, partially offset by higher use of cash from Equipment installment plan receivables and Accounts receivable.

• Net cash provided by operating activities includes $467 million and $531 million in payments for Merger-related costs for the six months ended June 30, 2021 and 2020, respectively.

• Net cash provided by operating activities includes $1.1 billion and $910 million in payments for Merger-related costs for the nine months ended September 30, 2021 and 2020, respectively.

Investing Activities

Net cash used in investing activities decreased $4.3 billion, or 67%, for the three months ended and increased $5.4 billion, or 68%, for the six months ended June 30, 2021.

The use of cash for the three months ended June 30, 2021, was primarily from:

Net cash used in investing activities increased $3.0 billion, or 267%, for the three months ended and increased $8.4 billion, or 93%, for the nine months ended September 30, 2021.

The use of cash for the three months ended September 30, 2021, was primarily from:

• $2.9 billion in Purchases of property and equipment, including capitalized interest, from network integration related to the Merger and the continued build-out of our nationwide 5G network;

• $1.9 billion in Acquisitions of companies, primarily due to our acquisition of the Wireless Assets (as defined in Note 2 – Business Combinations of the Notes to the Condensed Consolidated Financial Statements);

• $407 million in Purchases of spectrum licenses and other intangible assets, including deposits;

partially offset by

• $1.1 billion in Proceeds related to beneficial interests in securitization transactions.

The use of cash for the six months ended June 30, 2021, was primarily from:

• $8.9 billion in Purchases of spectrum licenses and other intangible assets, including deposits, primarily due to $8.9 billion paid for spectrum licenses won at the conclusion of Auction 107 in March 2021;

The use of cash for the nine months ended September 30, 2021, was primarily from:

• $9.4 billion in Purchases of property and equipment, including capitalized interest, from network integration related to the Merger and the continued build-out of our nationwide 5G network;

• $9.3 billion in Purchases of spectrum licenses and other intangible assets, including deposits, primarily due to $8.9 billion paid for spectrum licenses won at the conclusion of Auction 107 in March 2021;

partially offset by

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Financing Activities

Net cash (used in) provided by financing activities decreased $16.2 billion for the three months ended and decreased $11.9 billion for the six months ended June 30, 2021.

The use of cash for the three months ended June 30, 2021, was primarily from:

• $3.2 billion in Repayments of long-term debt driven by the redemption of $1.3 billion aggregate principal amount of our 6.000% Senior Notes due 2023, $1.0 billion aggregate principal amount of our 6.000% Senior Notes due 2024 and $500 million aggregate principal amount of our 5.125% Senior Notes due 2025, and repayments of $219 million aggregate principal amount of our 3.360% Senior Secured Series 2016-1 A-1 Notes due 2021 and $131 million aggregate principal amount of our 4.738% Senior Secured Series 2018-1 A-1 Notes due 2025;

Net cash used in financing activities decreased $3.1 billion for the three months ended and Net cash provided by financing activities decreased $8.8 billion for the nine months ended September 30, 2021.

The use of cash for the three months ended September 30, 2021, was primarily from:

• $4.6 billion in Repayments of long-term debt;

• $266 million in Repayments of financing lease obligations;

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• $2.0 billion in Proceeds from issuance of long-term debt, net of issuance costs.

The source of cash for the six months ended June 30, 2021, was primarily from:

The source of cash for the nine months ended September 30, 2021, was primarily from:

• $11.8 billion in Proceeds from issuance of long-term debt, net of issuance costs;

partially offset by

• $5.4 billion in Repayments of long-term debt driven by the redemption of $2.0 billion aggregate principal amount of our 6.500% Senior Notes due 2026, $1.3 billion aggregate principal amount of our 6.000% Senior Notes due 2023, $1.0 billion aggregate principal amount of our 6.000% Senior Notes due 2024 and $500 million aggregate principal amount of our 5.125% Senior Notes due 2025, and repayments of $438 million aggregate principal amount of our 3.360% Senior Secured Series 2016-1 A-1 Notes due 2021 and $131 million aggregate principal amount of our 4.738% Senior Secured Series 2018-1 A-1 Notes due 2025;

• $10.0 billion in Repayments of long-term debt;

• $822 million in Repayments of financing lease obligations;

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Cash and Cash Equivalents

As of June 30, 2021, our Cash and cash equivalents were $7.8 billion compared to $10.4 billion at December 31, 2020.

As of September 30, 2021, our Cash and cash equivalents were $4.1 billion compared to $10.4 billion at December 31, 2020.

Free Cash Flow

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Free Cash Flow and Free Cash Flow, excluding gross payments for the settlement of interest rate swaps, are non-GAAP financial measures utilized by our management, investors and analysts of our financial information to evaluate cash available to pay debt and provide further investment in the business.

In 2021, we sold tower sites for proceeds of $31 million, which are included in Proceeds from sales of tower sites within Net

cash used in investing activities in our Condensed Consolidated Statements of Cash Flows.

In the second quarter of 2021, we sold tower sites for proceeds of $31 million, which are included in Proceeds from sales of tower sites within Net cash used in investing activities in our Condensed Consolidated Statements of Cash Flows.

As these proceeds were from the sale of fixed assets and are used by management to assess cash available for capital expenditures during the year, we determined the proceeds are relevant for the calculation of Free Cash Flow and included them in the table below.

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We have presented the impact of the sales in the table below, which reconciles Free Cash Flow and Free Cash Flow, excluding gross payments for the settlement of interest rate swaps, to Net cash provided by operating activities, which we consider to be the most directly comparable GAAP financial measure.

Three Months Ended June 30, Change Six Months Ended

June 30, Change

Three Months Ended

September 30, Change Nine Months Ended

September 30, Change

(in millions) 2021 2020 $ % 2021 2020 $ %

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Free Cash Flow 1,559 352 1,207 343 % 4,534 182 4,352 NM

Gross cash paid for the settlement of interest rate swaps — 2,343 (2,343) (100) % — 2,343 (2,343) (100) %

Gross cash paid for the settlement of interest rate swaps — — — NM — 2,343 (2,343) (100) %

Free Cash Flow, excluding gross payments for the settlement of interest rate swaps $ 1,559 $ 352 $ 1,207 343 % $ 4,534 $ 2,525 $ 2,009 80 %

NM - Not Meaningful

Free Cash Flow, excluding gross payments for the settlement of interest rate swaps, increased $230 million, or 16%, for the three months ended and increased $802 million, or 37%, for the six months ended June 30, 2021.

The increase for the three months ended June 30, 2021, was impacted by the following:

Free Cash Flow, excluding gross payments for the settlement of interest rate swaps, increased $1.2 billion, or 343%, for the three months ended and increased $2.0 billion, or 80%, for the nine months ended September 30, 2021.

The increase for the three months ended September 30, 2021, was impacted by the following:

• Higher Net cash provided by operating activities, as described above;

• Lower Cash purchases of property and equipment, including capitalized interest of $46 million and $108 million for the three months ended September 30, 2021 and 2020, respectively;

• Higher Proceeds related to beneficial interests in securitization transactions.

partially offset by

• Higher Cash purchases of property and equipment, including capitalized interest of $57 million and $119 million for the three months ended June 30, 2021 and 2020, respectively, from network integration related to the Merger and the continued build-out of our nationwide 5G network.

• Free Cash Flow includes $190 million and $370 million in payments for Merger-related costs for the three months ended June 30, 2021 and 2020, respectively.

• The calculation of Free Cash Flow, excluding gross payments for the settlement of interest rate swaps, excludes the one-time impact of gross payments for the settlement of interest rate swaps related to Merger financing of $2.3 billion for the three months ended June 30, 2020.

The increase for the six months ended June 30, 2021, was impacted by the following:

• Free Cash Flow includes $617 million and $379 million in payments for Merger-related costs for the three months ended September 30, 2021 and 2020, respectively.

The increase for the nine months ended September 30, 2021, was impacted by the following:

• Higher Net cash provided by operating activities, as described above;

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partially offset by

• Higher Cash purchases of property and equipment, including capitalized interest of $141 million and $231 million for the six months ended June 30, 2021 and 2020, respectively, from network integration related to the Merger and the continued build-out of our nationwide 5G network.

• Free Cash Flow includes $467 million and $531 million in payments for Merger-related costs for the six months ended June 30, 2021 and 2020, respectively.

• Higher Cash purchases of property and equipment, including capitalized interest of $187 million and $339 million for the nine months ended September 30, 2021 and 2020, respectively.

• Free Cash Flow includes $1.1 billion and $910 million in payments for Merger-related costs for the nine months ended September 30, 2021 and 2020, respectively.

Borrowing Capacity

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Under the financing arrangement, we can effectively extend payment terms for invoices payable to certain vendors.

As of June 30, 2021, there were no outstanding balances under such financing arrangement.

As of September 30, 2021, there were no outstanding balances under such financing arrangement.

We also maintain vendor financing arrangements primarily with our main network equipment suppliers.

Under the respective agreements, we can obtain extended financing terms.

During the three and six months ended June 30, 2021, we repaid $36 million and $91 million, respectively, associated with the vendor financing arrangements and other financial liabilities.

During the three and nine months ended September 30, 2021, we repaid $76 million and $167 million, respectively, associated with the vendor financing arrangements and other financial liabilities.

These payments are included in Repayments of short-term debt for purchases of inventory, property and equipment and other financial liabilities, in our Condensed Consolidated Statements of Cash Flows.

As of June 30, 2021 and December 31, 2020, the outstanding balance under the vendor financing arrangements and other financial liabilities was $148 million and $240 million, respectively, of which $77 million and $122 million, respectively, was assumed in connection with the closing of the Merger.

As of June 30, 2021, the outstanding borrowings was $77 million under the vendor financing agreements.

As of September 30, 2021 and December 31, 2020, the outstanding balance under the vendor financing arrangements and other financial liabilities was $69 million and $240 million, respectively, of which $12 million and $122 million, respectively, was assumed in connection with the closing of the Merger.

We maintain a revolving credit facility (the “Revolving Credit Facility”) with an aggregate commitment amount of $5.5 billion.

As of June 30, 2021, there was no outstanding balance under the Revolving Credit Facility.

As of September 30, 2021, there was no outstanding balance under the Revolving Credit Facility.

On October 30, 2020, we entered into a $5.0 billion senior secured term loan commitment with certain financial institutions.

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Debt Financing

As of June 30, 2021, our total debt and financing lease liabilities were $77.7 billion, excluding our tower obligations, of which $68.4 billion was classified as long-term debt and $1.4 billion was classified as long-term financing lease liabilities.

During the six months ended June 30, 2021, we issued long-term debt for net proceeds of $9.8 billion and redeemed and repaid short- and long-term debt with an aggregate principal amount of $5.5 billion.

As of September 30, 2021, our total debt and financing lease liabilities were $75.2 billion, excluding our tower obligations, of which $68.1 billion was classified as long-term debt and $1.6 billion was classified as long-term financing lease liabilities.

During the nine months ended September 30, 2021, we issued long-term debt for net proceeds of $11.8 billion and redeemed and repaid short- and long-term debt with an aggregate principal amount of $10.1 billion.

For more information regarding our debt financing transactions, see Note 7 - Debt of the Notes to the Condensed Consolidated Financial Statements.

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We have arrangements, as amended from time to time, to sell certain EIP accounts receivable and service accounts receivable on a revolving basis as a source of liquidity.

As of June 30, 2021, we derecognized net receivables of $2.5 billion upon sale through these arrangements.

As of September 30, 2021, we derecognized net receivables of $2.5 billion upon sale through these arrangements.

For more information regarding these off-balance sheet arrangements, see Note 4 – Sales of Certain Receivables of the Notes to the Condensed Consolidated Financial Statements.

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Excluding liquidity that could be needed for spectrum acquisitions, or for other assets, we expect our principal sources of funding to be sufficient to meet our anticipated liquidity needs for business operations for the next 12 months as well as our longer-term liquidity needs.

Our intended use of any such funds is for general corporate purposes, including for capital expenditures, spectrum purchases, opportunistic investments and acquisitions, redemption of high yield callable debt, tower obligations, potential shareholder returns and the execution of our integration plan.

Our intended use of any such funds is for general corporate purposes, including for capital expenditures, spectrum purchases, opportunistic investments and acquisitions, redemption of high yield callable debt, tower obligations, potential stockholder returns and the execution of our integration plan.

We determine future liquidity requirements, for both operations and capital expenditures, based in large part upon projected financial and operating performance, and opportunities to acquire additional spectrum.

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However, the Issuers or borrowers are allowed to make certain permitted payments to Parent under the terms of each of the credit agreements, indentures and supplemental indentures relating to the long-term debt to affiliates and third parties.

We were in compliance with all restrictive debt covenants as of June 30, 2021.

We were in compliance with all restrictive debt covenants as of September 30, 2021.

Shentel Wireless Assets Acquisition

Subsequent to June 30, 2021, on July 1, 2021, we closed on the acquisition of the Wireless Assets (as defined in Note 2 - Business Combinations of the Notes to the Condensed Consolidated Financial Statements) for a cash purchase price of approximately $1.9 billion.

On July 1, 2021, we closed on the acquisition of the Wireless Assets (as defined in Note 2 – Business Combinations of the Notes to the Condensed Consolidated Financial Statements) for a cash purchase price of approximately $1.9 billion.

For more information regarding the acquisition of the Wireless Assets, see Note 2 – Business Combinations of the Notes to the Condensed Consolidated Financial Statements.

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We have entered into uncommitted financing lease facilities with certain partners that provide us with the ability to enter into financing leases for network equipment and services.

As of June 30, 2021, we have committed to $5.6 billion of financing leases under these financing lease facilities, of which $362 million and $470 million was executed during the three and six

months ended June 30, 2021, respectively.

As of September 30, 2021, we have committed to $6.2 billion of financing leases under these financing lease facilities, of which $599 million and $1.1 billion was executed during the three and nine months ended September 30, 2021, respectively.

We expect to enter into up to an additional $131 million in financing lease commitments during the year ending December 31, 2021.

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Our liquidity requirements have been driven primarily by capital expenditures for spectrum licenses, the construction, expansion and upgrading of our network infrastructure and the integration of the networks, spectrum, technology, personnel, customer base and business practices of T-Mobile and Sprint.

Property and equipment capital expenditures primarily relate to the integration of our spectrum licenses, including the pending acquisition of C-band licenses won in Auction 107, acquired Sprint 2.5 GHz spectrum licenses and existing 600 MHz spectrum licenses as we build out our nationwide 5G network.

Property and equipment capital expenditures primarily relate to the integration of our network and spectrum licenses, including the acquired C-band licenses won in Auction 107, acquired Sprint 2.5 GHz spectrum licenses and existing 600 MHz spectrum licenses as we build out our nationwide 5G network.

We expect the majority of our remaining capital expenditures related to these efforts to occur in 2021 and 2022, after which we expect a reduction in capital expenditure requirements.

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We have never paid or declared any cash dividends on our common stock, and we do not intend to declare or pay any cash dividends on our common stock in the foreseeable future.

Our credit facilities and the indentures and supplemental indentures governing our long-term debt to affiliates and third parties, excluding financing leases, contain covenants that, among other things, restrict our ability to declare or pay dividends on our common stock.

Related Party Transactions

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affiliates in compliance with applicable law, and whether or not the activities are sanctionable under U.S.

As of the date of this report, we are not aware of any activity, transaction or dealing by us or any of our affiliates for the three months ended June 30, 2021, that requires disclosure in this report under Section 13(r) of the Exchange Act, except as set forth below with respect to affiliates that we do not control and that are our affiliates solely due to their common control with either DT or SoftBank.

As of the date of this report, we are not aware of any activity, transaction or dealing by us or any of our affiliates for the three months ended September 30, 2021, that requires disclosure in this report under Section 13(r) of the Exchange Act, except as set forth below with respect to affiliates that we do not control and that are our affiliates solely due to their common control with either DT or SoftBank.

We have relied upon DT and SoftBank for information regarding their respective activities, transactions and dealings.

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Irancell Telecommunications Services Company, Telecommunication Kish Company, Mobile Telecommunication Company of Iran, and Telecommunication Infrastructure Company of Iran.

In addition, during the three months ended June 30, 2021, DT, through certain of its non-U.S.

In addition, during the three months ended September 30, 2021, DT, through certain of its non-U.S.

subsidiaries, provided basic telecommunications services to two customers in Germany identified on the Specially Designated Nationals and Blocked Persons List maintained by the U.S.

Department of Treasury’s Office of Foreign Assets Control:

Department of Treasury’s

Office of Foreign Assets Control:

Bank Melli and Europäisch-Iranische Handelsbank.

These services have been terminated or are in the process of being terminated.

For the three months ended June 30, 2021, gross revenues of all DT affiliates generated by roaming and interconnection traffic and telecommunications services with the Iranian parties identified herein were less than $0.1 million, and the estimated net profits were less than $0.1 million.

For the three months ended September 30, 2021, gross revenues of all DT affiliates generated by roaming and interconnection traffic and telecommunications services with the Iranian parties identified herein were less than $0.1 million, and the estimated net profits were less than $0.1 million.

In addition, DT, through certain of its non-U.S.

subsidiaries that operate a fixed-line network in their respective European home countries (in particular Germany), provides telecommunications services in the ordinary course of business to the Embassy of Iran in those European countries.

Gross revenues and net profits recorded from these activities for the three months ended June 30, 2021 were less than $0.1 million.

Gross revenues and net profits recorded from these activities for the three months ended September 30, 2021 were less than $0.1 million.

We understand that DT intends to continue these activities.

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subsidiaries, provides roaming services in Iran through Irancell Telecommunications Services Company.

During the three months ended June 30, 2021, SoftBank had no gross revenues from such services and no net profit was generated.

During the three months ended September 30, 2021, SoftBank had no gross revenues from such services and no net profit was generated.

We understand that the SoftBank subsidiary intends to continue such services.

This subsidiary also provides telecommunications services in the ordinary course of business to accounts affiliated with the Embassy of Iran in Japan.

During the three months ended June 30, 2021, SoftBank estimates that gross revenues and net profit generated by such services were both under $0.1 million.

During the three months ended September 30, 2021, SoftBank estimates that gross revenues and net profit generated by such services were both under $0.1 million.

We understand that the SoftBank subsidiary is obligated under contract and intends to continue such services.

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indirect subsidiaries, provides office supplies to the Embassy of Iran in Japan.

SoftBank estimates that gross revenue and net profit generated by such services during the three months ended June 30, 2021, were both under $0.1 million.

SoftBank estimates that gross revenue and net profit generated by such services during the three months ended September 30, 2021, were both under $0.1 million.

We understand that the SoftBank subsidiary intends to continue such activities.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis