What changed in this filing

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Item 1. Financial Statements

2022-07-29 compared with 2022-05-06 · 204 added, 147 removed, 559 unchanged (39% of the section changed)

2 unchanged sentences

Condensed Consolidated Balance Sheets

(in millions, except share and per share amounts) March 31,

(in millions, except share and per share amounts) June 30,

2022 December 31,

48 unchanged sentences

T-Mobile US, Inc.

Condensed Consolidated Statements of Comprehensive Income

Three Months Ended March 31,

Condensed Consolidated Statements of Comprehensive (Loss) Income

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

(in millions, except share and per share amounts) 2022 2021 2022 2021

10 unchanged sentences

Selling, general and administrative 5,856 4,823 10,912 9,628

Impairment expense 477 — 477 —

Depreciation and amortization 3,491 4,077 7,076 8,366

1 unchanged sentence

Operating income 709 2,106 2,515 4,245

Other expense

Other expense, net

Interest expense, net ( 851 ) ( 850 ) ( 1,715 ) ( 1,685 )

1 unchanged sentence

Total other expense, net ( 872 ) ( 851 ) ( 1,747 ) ( 1,811 )

Income before income taxes 931 1,179

Income tax expense ( 218 ) ( 246 )

Net income $ 713 $ 933

Other comprehensive income (loss), net of tax

Unrealized gain on cash flow hedges, net of tax effect of $ 13 and $ 12

(Loss) income before income taxes ( 163 ) 1,255 768 2,434

Income tax benefit (expense) 55 ( 277 ) ( 163 ) ( 523 )

Net (loss) income $ ( 108 ) $ 978 $ 605 $ 1,911

Other comprehensive income, net of tax

Reclassification of loss from cash flow hedges, net of tax effect of $ 13 , $ 12 , $ 26 , and $ 24

Unrealized (loss) gain on foreign currency translation adjustment, net of tax effect of $( 1 ), $ 0 , $( 1 ), and $ 0

( 3 ) 1 ( 4 ) 3

Other comprehensive income 34 35 70 71

Total comprehensive income $ 749 $ 969

Earnings per share

Total comprehensive (loss) income $ ( 74 ) $ 1,013 $ 675 $ 1,982

(Loss) earnings per share

Basic $ ( 0.09 ) $ 0.78 $ 0.48 $ 1.53

7 unchanged sentences

Condensed Consolidated Statements of Cash Flows

Three Months Ended March 31,

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

(in millions) 2022 2021 2022 2021

Operating activities

Net income $ 713 $ 933

Adjustments to reconcile net income to net cash provided by operating activities

Net (loss) income $ ( 108 ) $ 978 $ 605 $ 1,911

Adjustments to reconcile net (loss) income to net cash provided by operating activities

Depreciation and amortization 3,491 4,077 7,076 8,366

Stock-based compensation expense 154 134 295 272

Deferred income tax expense 185 211

Deferred income tax (benefit) expense ( 76 ) 226 109 437

Bad debt expense 311 72 521 154

1 unchanged sentence

Losses on redemption of debt — 28 — 129

Impairment expense 477 — 477 —

Changes in operating assets and liabilities

13 unchanged sentences

Purchases of spectrum licenses and other intangible assets, including deposits ( 116 ) ( 8 ) ( 2,959 ) ( 8,930 )

Proceeds from sales of tower sites — 31 — 31

Proceeds related to beneficial interests in securitization transactions 1,121 1,137 2,306 2,028

20 unchanged sentences

(in millions, except shares) Common Stock Outstanding Treasury Shares at Cost Par Value and Additional Paid-in Capital Accumulated Other Comprehensive Loss Accumulated Deficit Total Stockholders' Equity

Balance as of March 31, 2022 1,253,352,700 $ ( 16 ) $ 73,420 $ ( 1,329 ) $ ( 2,099 ) $ 69,976

Net loss — — — — ( 108 ) ( 108 )

Other comprehensive income — — — 34 — 34

Stock-based compensation — — 168 — — 168

Exercise of stock options 40,556 — 2 — — 2

Issuance of vested restricted stock units 950,742 — — — — —

Shares withheld related to net share settlement of stock awards and stock options ( 334,561 ) — ( 43 ) — — ( 43 )

Remeasurement of uncertain tax positions — — 5 — — 5

Transfers with NQDC plan 635 — — — — —

Balance as of June 30, 2022 1,254,010,072 $ ( 16 ) $ 73,552 $ ( 1,295 ) $ ( 2,207 ) $ 70,034

Balance as of December 31, 2021 1,249,213,681 $ ( 13 ) $ 73,292 $ ( 1,365 ) $ ( 2,812 ) $ 69,102

6 unchanged sentences

Shares withheld related to net share settlement of stock awards and stock options ( 1,704,867 ) — ( 215 ) — — ( 215 )

Remeasurement of uncertain tax positions — — 5 — — 5

Transfers with NQDC plan ( 27,081 ) ( 3 ) 3 — — —

Balance as of June 30, 2022 1,254,010,072 $ ( 16 ) $ 73,552 $ ( 1,295 ) $ ( 2,207 ) $ 70,034

The accompanying notes are an integral part of these condensed consolidated financial statements.

Index for Notes to the Condensed Consolidated Financial Statements

T-Mobile US, Inc.

Condensed Consolidated Statement of Stockholders’ Equity

Balance as of March 31, 2021 1,246,773,175 $ ( 14 ) $ 72,839 $ ( 1,545 ) $ ( 4,903 ) $ 66,377

Net income — — — — 978 978

Other comprehensive income — — — 35 — 35

Stock-based compensation — — 150 — — 150

Exercise of stock options 100,238 — 6 — — 6

Issuance of vested restricted stock units 1,603,258 — — — — —

Shares withheld related to net share settlement of stock awards and stock options ( 559,630 ) — ( 76 ) — — ( 76 )

Transfers with NQDC plan 3,495 — — — — —

Balance as of June 30, 2021 1,247,920,536 $ ( 14 ) $ 72,919 $ ( 1,510 ) $ ( 3,925 ) $ 67,470

Balance as of December 31, 2020 1,241,805,706 $ ( 11 ) $ 72,772 $ ( 1,581 ) $ ( 5,836 ) $ 65,344

7 unchanged sentences

Transfers with NQDC plan ( 17,943 ) ( 3 ) 3 — — —

Balance as of March 31, 2021 1,246,773,175 $ ( 14 ) $ 72,839 $ ( 1,545 ) $ ( 4,903 ) $ 66,377

Balance as of June 30, 2021 1,247,920,536 $ ( 14 ) $ 72,919 $ ( 1,510 ) $ ( 3,925 ) $ 67,470

The accompanying notes are an integral part of these condensed consolidated financial statements.

9 unchanged sentences

Revenue from Contracts with Customers

Earnings Per Share

(Loss) E arnings Per Share

Commitments and Contingencies

25 unchanged sentences

As of January 1, 2022, we have elected to apply the practical expedients provided by the reference rate reform standard for all ASC Topics and Industry Subtopics related to eligible contract modifications as they occur.

This election did not have a material impact on our condensed consolidated financial statements for the three months ended March 31, 2022, and the impact of applying the election to future eligible contract modifications that occur through December 31, 2022 is also not expected to be material .

This election did not have a material impact on our condensed consolidated financial statements for the three and six months ended June 30, 2022, and the impact of applying the election to future eligible contract modifications that occur through December 31, 2022, is also not expected to be material .

Contract Assets and Contract Liabilities Acquired in a Business Combination

5 unchanged sentences

In March 2022, the FASB issued ASU 2022-02, “Financial Instruments—Credit Losses (Topic 326):

Troubled Debt Restructurings and Vintage Disclosures.” The standard eliminates the accounting guidance within ASC 310-40 for troubled debt restructurings by creditors while enhancing disclosure requirements for certain loan refinancings and restructurings by

Index for Notes to the Condensed Consolidated Financial Statements

14 unchanged sentences

We estimate credit losses associated with our accounts receivable portfolio segment using an expected credit loss model, which utilizes an aging schedule methodology based on historical information and adjusted for asset-specific considerations, current economic conditions and reasonable and supportable forecasts.

Our approach considers a number of factors, including our overall historical credit losses, net of recoveries, and timely payment experience, as well as current collection trends such as write-off frequency and severity.

Our approach considers a number of factors, including our overall historical credit losses, net of recoveries, and payment experience, as well as current collection trends such as write-off frequency and severity.

We also consider other qualitative factors such as macro-economic conditions.

8 unchanged sentences

To determine a customer’s credit profile and assist in determining their credit class, we use a proprietary credit scoring model that measures the credit quality of a customer using several factors, such as credit bureau information, consumer credit risk scores and service and device plan characteristics.

EIP receivables had a combined weighted-average effective interest rate of 5.7 % and 5.6 % as of March 31, 2022 and December 31, 2021, respectively.

EIP receivables had a combined weighted-average effective interest rate of 6.1 % and 5.6 % as of June 30, 2022, and December 31, 2021, respectively.

Index for Notes to the Condensed Consolidated Financial Statements

The following table summarizes the EIP receivables, including imputed discounts and related allowance for credit losses:

(in millions) March 31,

(in millions) June 30,

2022 December 31,

11 unchanged sentences

We manage our EIP receivables portfolio segment using delinquency and customer credit class as key credit quality indicators.

The following table presents the amortized cost of our EIP receivables by delinquency status, customer credit class and year of origination as of March 31, 2022:

The following table presents the amortized cost of our EIP receivables by delinquency status, customer credit class and year of origination as of June 30, 2022:

Originated in 2022 Originated in 2021 Originated prior to 2021 Total EIP Receivables, net of

10 unchanged sentences

As we do for our accounts receivable portfolio segment, we consider the need to adjust our estimate of credit losses on EIP receivables for reasonable and supportable forecasts of economic conditions through monitoring external forecasts and periodic internal statistical analyses.

Activity for the three months ended March 31, 2022 and 2021, in the allowance for credit losses and unamortized imputed discount balances for the accounts receivable and EIP receivables segments were as follows:

March 31, 2022 March 31, 2021

Index for Notes to the Condensed Consolidated Financial Statements

Activity for the six months ended June 30, 2022 and 2021, in the allowance for credit losses and unamortized imputed discount balances for the accounts receivable and EIP receivables segments were as follows:

June 30, 2022 June 30, 2021

(in millions) Accounts Receivable Allowance EIP Receivables Allowance Total Accounts Receivable Allowance EIP Receivables Allowance Total

5 unchanged sentences

Allowance for credit losses and imputed discount, end of period $ 177 $ 722 $ 899 $ 123 $ 597 $ 720

Index for Notes to the Condensed Consolidated Financial Statements

Off-Balance-Sheet Credit Exposures

We do not have material, unmitigated off-balance-sheet credit exposures as of March 31, 2022.

We do not have material, unmitigated off-balance-sheet credit exposures as of June 30, 2022.

In connection with the sales of certain service and EIP accounts receivable pursuant to the sale arrangements, we have deferred purchase price assets included on our Condensed Consolidated Balance Sheets measured at fair value that are based on a discounted cash flow model using Level 3 inputs, including customer default rates and credit worthiness, dilutions and recoveries.

4 unchanged sentences

Sales of EIP Receivables

As of both March 31, 2022 and December 31, 2021, the EIP sale arrangement provided funding of $ 1.3 billion.

As of both June 30, 2022, and December 31, 2021, the EIP sale arrangement provided funding of $ 1.3 billion.

In connection with this EIP sale arrangement, we formed a wholly owned subsidiary, which qualifies as a bankruptcy remote entity (the “EIP BRE”).

1 unchanged sentence

The following table summarizes the carrying amounts and classification of assets, which consist primarily of the deferred purchase price, and liabilities included on our Condensed Consolidated Balance Sheets with respect to the EIP BRE:

(in millions) March 31,

(in millions) June 30,

2022 December 31,

1 unchanged sentence

Other assets 110 125

Other long-term liabilities 2 —

Sales of Service Accounts Receivable

The maximum funding commitment of the service receivable sale arrangement is $ 950 million and the facility expires in February 2023.

As of both March 31, 2022 and December 31, 2021, the service receivable sale arrangement provided funding of $ 775 million.

As of both June 30, 2022, and December 31, 2021, the service receivable sale arrangement provided funding of $ 775 million.

In connection with the service receivable sale arrangement, we formed a wholly owned subsidiary, which qualifies as a bankruptcy remote entity, to sell service accounts receivable (the “Service BRE”).

We consolidate the Service BRE under the VIE model.

Index for Notes to the Condensed Consolidated Financial Statements

(in millions) March 31,

(in millions) June 30,

2022 December 31,

1 unchanged sentence

Other current liabilities 494 348

Index for Notes to the Condensed Consolidated Financial Statements

Sales of Receivables

The following table summarizes the impact of the sale of certain service receivables and EIP receivables on our Condensed Consolidated Balance Sheets:

(in millions) March 31,

(in millions) June 30,

2022 December 31,

5 unchanged sentences

Other current liabilities 494 348

Other long-term liabilities 2 —

Net cash proceeds since inception 1,741 1,754

1 unchanged sentence

Net cash proceeds funded by reinvested collections 1,754 1,715

At inception, we elected to measure the deferred purchase price at fair value with changes in fair value included in Selling, general and administrative expense on our Condensed Consolidated Statements of Comprehensive Income.

The fair value of the deferred purchase price is determined based on a discounted cash flow model which uses primarily Level 3 inputs, including customer default rates.

As of March 31, 2022 and December 31, 2021, our deferred purchase price related to the sales of service receivables and EIP receivables was $ 719 million and $ 779 million, respectively.

We recognized a loss from sales of receivables, including changes in fair value of the deferred purchase price, of $ 46 million and a gain of $ 18 million for the three months ended March 31, 2022 and 2021, respectively, in Selling, general and administrative expense on our Condensed Consolidated Statements of Comprehensive Income.

As of June 30, 2022, and December 31, 2021, our deferred purchase price related to the sales of service receivables and EIP receivables was $ 704 million and $ 779 million, respectively.

We recognized a loss from sales of receivables, including changes in fair value of the deferred purchase price, of $ 61 million and a gain of $ 12 million for the three months ended June 30, 2022 and 2021, respectively, and a loss of $ 108 million and a gain of $ 30 million for the six months ended June 30, 2022 and 2021, respectively, in Selling, general and administrative expense on our Condensed Consolidated Statements of Comprehensive (Loss) Income.

Continuing Involvement

Pursuant to the sale arrangements described above, we have continuing involvement with the service receivables and EIP receivables we sell as we service the receivables, are required to repurchase certain receivables, including ineligible receivables, aged receivables and receivables where write-off is imminent, and may be responsible for absorbing credit losses through reduced collections on our deferred purchase price assets.

Pursuant to the sale arrangements described above, we have continuing involvement with the service receivables and EIP receivables we sell as we service the receivables, are required to repurchase certain receivables, including ineligible receivables, aged receivables and receivables where a write-off is imminent, and may be responsible for absorbing credit losses through reduced collections on our deferred purchase price assets.

We continue to service the customers and their related receivables, including facilitating customer payment collection, in exchange for a monthly servicing fee.

1 unchanged sentence

At the direction of the purchasers of the sold receivables, we apply the same policies and procedures while servicing the sold receivables as we apply to our owned receivables, and we continue to maintain normal relationships with our customers.

Index for Notes to the Condensed Consolidated Financial Statements

Note 4 – Spectrum License Transactions

The following table summarizes our spectrum license activity for the three months ended March 31, 2022:

The following table summarizes our spectrum license activity for the six months ended June 30, 2022:

(in millions) 2022

2 unchanged sentences

Spectrum licenses, end of period $ 95,632

Spectrum Transactions

In January 2022, the FCC announced that we were the winning bidder of 199 licenses in Auction 110 (mid-band spectrum) for an aggregate purchase price of $ 2.9 billion.

1 unchanged sentence

We paid the FCC the remaining $ 2.8 billion for the licenses won in the auction in February 2022.

The aggregate cash payments made to the FCC are included in Other assets as of March 31, 2022 in our Condensed Consolidated Balance Sheets, and will remain there until the corresponding licenses are received.

The timing of when the licenses will be issued will be determined by the FCC after all post-auction procedures have been completed, which we expect to occur in mid-2022.

Cash payments to acquire spectrum licenses and payments for costs to clear spectrum are included in Purchases of spectrum licenses and other intangible assets, including deposits in our Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2022.

Index for Notes to the Condensed Consolidated Financial Statements

On May 4, 2022, the FCC issued us the licenses won in Auction 110.

The licenses are included in Spectrum licenses in our Condensed Consolidated Balance Sheets as of June 30, 2022.

Cash payments to acquire spectrum licenses and payments for costs to clear spectrum are included in Purchases of spectrum licenses and other intangible assets, including deposits, in our Condensed Consolidated Statements of Cash Flows.

DISH License Purchase Agreement

On July 1, 2020, we and DISH Network Corporation (“DISH”) entered into a license purchase agreement (the “License Purchase Agreement”) pursuant to which DISH has the option to purchase certain 800 MHz spectrum licenses for a total of approximately $ 3.6 billion in a transaction to be completed, subject to an application for FCC approval, by July 1, 2023, or within five days of FCC approval, whichever date is later.

In the event DISH breaches the License Purchase Agreement or fails to deliver the purchase price following the satisfaction or waiver of all closing conditions, DISH is liable to pay us a fee of $ 72 million.

Additionally, if DISH does not exercise the option to purchase the 800 MHz spectrum licenses, we have an obligation to offer the licenses for sale through an auction.

If the specified minimum price of $ 3.6 billion is not met in the auction, we would be relieved of the obligation to sell the licenses.

Note 5 – Fair Value Measurements

The carrying values of Cash and cash equivalents, Accounts receivable and Accounts payable and accrued liabilities approximate fair value due to the short-term maturities of these instruments.

The carrying values of EIP receivables approximate fair value as the receivables are recorded at their present value using an imputed interest rate.

Derivative Financial Instruments

3 unchanged sentences

Cash flows associated with qualifying hedge derivative instruments are presented in the same category on the Condensed Consolidated Statements of Cash Flows as the item being hedged.

We did not have any significant derivative instruments outstanding as of March 31, 2022 and December 31, 2021.

We did not have any significant derivative instruments outstanding as of June 30, 2022, and December 31, 2021.

Interest Rate Lock Derivatives

In April 2020, we terminated our interest rate lock derivatives entered into in October 2018.

Aggregate changes in the fair value of the interest rate lock derivatives, net of tax and amortization, of $ 1.4 billion and $ 1.5 billion are presented in Accumulated other comprehensive loss on our Condensed Consolidated Balance Sheets as of March 31, 2022 and December 31, 2021, respectively.

For the three months ended March 31, 2022 and 2021, $ 50 million and $ 46 million, respectively, were amortized from Accumulated other comprehensive loss into Interest expense, net in the Condensed Consolidated Statements of Comprehensive Income.

We expect to amortize $ 207 million of the Accumulated other comprehensive loss associated with the derivatives into Interest expense, net over the 12 months ended March 31, 2023.

Aggregate changes in the fair value of the interest rate lock derivatives, net of tax and amortization, of $ 1.4 billion and $ 1.5 billion are presented in Accumulated other comprehensive loss on our Condensed Consolidated Balance Sheets as of June 30, 2022, and December 31, 2021, respectively.

For the three months ended June 30, 2022 and 2021, $ 50 million and $ 47 million, respectively, and for the six months ended June 30, 2022 and 2021, $ 100 million and $ 93 million, respectively, were amortized from Accumulated other comprehensive loss into Interest expense, net, in the Condensed Consolidated Statements of Comprehensive (Loss) Income.

We expect to amortize $ 211 million of the Accumulated other comprehensive loss associated with the derivatives into Interest expense, net, over the 12 months ending June 30, 2023.

Index for Notes to the Condensed Consolidated Financial Statements

Deferred Purchase Price Assets

1 unchanged sentence

See Note 3 – Sales of Certain Receivables for further information.

The carrying amounts of our deferred purchase price assets, which are measured at fair value on a recurring basis and are included on our Condensed Consolidated Balance Sheets, were $ 719 million and $ 779 million as of March 31, 2022 and December 31, 2021, respectively.

Fair value was equal to the carrying amount at March 31, 2022 and December 31, 2021.

The carrying amounts of our deferred purchase price assets, which are measured at fair value on a recurring basis and are included on our Condensed Consolidated Balance Sheets, were $ 704 million and $ 779 million as of June 30, 2022, and December 31, 2021, respectively.

Fair value was equal to the carrying amount at June 30, 2022, and December 31, 2021.

The fair value of our Senior Notes and Senior Secured Notes to third parties was determined based on quoted market prices in active markets, and therefore were classified as Level 1 within the fair value hierarchy.

2 unchanged sentences

Although we have determined the estimated fair values using available market information and commonly accepted valuation methodologies, considerable judgment was required in interpreting market data to develop fair value estimates for the Senior Notes to affiliates.

The fair value estimates were based on information available as of March 31, 2022 and December 31, 2021.

The fair value estimates were based on information available as of June 30, 2022, and December 31, 2021.

As such, our estimates are not necessarily indicative of the amount we could realize in a current market exchange.

Index for Notes to the Condensed Consolidated Financial Statements

The carrying amounts and fair values of our short-term and long-term debt included on our Condensed Consolidated Balance Sheets were as follows:

Level within the Fair Value Hierarchy March 31, 2022 December 31, 2021

Level within the Fair Value Hierarchy June 30, 2022 December 31, 2021

(in millions) Carrying Amount (1)

5 unchanged sentences

Senior Secured Notes to third parties 1 39,830 35,066 40,098 42,393

(1) Excludes $ 42 million and $ 47 million as of March 31, 2022 and December 31, 2021, respectively, in other financial liabilities as the carrying values approximate fair value primarily due to the short-term maturities of these instruments.

(1) Excludes $ 35 million and $ 47 million as of June 30, 2022, and December 31, 2021, respectively, in other financial liabilities as the carrying values approximate fair value primarily due to the short-term maturities of these instruments.

Note 6 – Debt

The following table sets forth the debt balances and activity as of, and for the three months ended, March 31, 2022 :

The following table sets forth the debt balances and activity as of and for the six months ended June 30, 2022 :

(in millions) December 31,

9 unchanged sentences

(2) Other includes the amortization of premiums, discounts, debt issuance costs and consent fees.

Our effective interest rate, excluding the impact of derivatives and capitalized interest, was approximately 3.9 % and 4.3 % for the three months ended March 31, 2022 and 2021, respectively, on weighted-average debt outstanding of $ 73.7 billion for both the three months ended March 31, 2022 and 2021.

Our effective interest rate, excluding the impact of derivatives and capitalized interest, was approximately 3.8 % and 4.1 % for the three months ended June 30, 2022 and 2021, respectively, and 3.9 % and 4.2 % for the six months ended June 30, 2022 and 2021, respectively, on weighted-average debt outstanding of $ 71.4 billion and $ 75.5 billion for the three months ended June 30, 2022 and 2021, respectively, and on weighted-average debt outstanding of $ 72.6 billion and $ 74.5 billion for the six months ended June 30, 2022 and 2021, respectively.

The weighted-average debt outstanding was calculated by applying an average of the monthly ending balances of total short-term and long-term debt and short-term and long-term debt to affiliates, net of unamortized premiums, discounts, debt issuance costs and consent fees.

Index for Notes to the Condensed Consolidated Financial Statements

Note Redemptions and Repayments

During the three months ended March 31, 2022, we made the following note redemptions and repayments:

During the six months ended June 30, 2022, we made the following note redemptions and repayments:

(in millions) Principal Amount Redemption or Repayment Date Redemption Price

3 unchanged sentences

1,000 March 16, 2022 100.000 %

5.375 % Senior Notes to affiliates due 2022

1,250 April 15, 2022 N/A

Total Redemptions $ 2,750

3 unchanged sentences

Total Repayments $ 264

Subsequent to March 31, 2022, on April 15, 2022, we repaid at maturity $ 1.25 billion of our 5.375 % Senior Notes to affiliates due 2022.

Note 7 – Tower Obligations

5 unchanged sentences

We lease back a portion of the space at certain tower sites.

Index for Notes to the Condensed Consolidated Financial Statements

Assets and liabilities associated with the operation of the tower sites were transferred to special purpose entities (“SPEs”).

15 unchanged sentences

We lease back a portion of the space at certain tower sites.

Index for Notes to the Condensed Consolidated Financial Statements

We considered if this arrangement resulted in the sale of the Master Lease Sites for which we would de-recognize the tower assets.

8 unchanged sentences

On January 3, 2022, we entered into an agreement (the “Crown Agreement”) with CCI.

The Crown Agreement extends the current term of the leasebacks by up to twelve years and modifies the leaseback payments for both the Existing CCI Tower Lease Arrangement and the Acquired CCI Tower Lease Arrangement.

The Crown Agreement extends the current term of the leasebacks by up to 12 years and modifies the leaseback payments for both the Existing CCI Tower Lease Arrangement and the Acquired CCI Tower Lease Arrangement.

As a result of the Crown Agreement, there was an increase in our financing obligation as of the effective date of the agreement of approximately $ 1.2 billion, with a corresponding decrease to Other long-term liabilities associated with unfavorable contract terms.

2 unchanged sentences

There were no changes made to either of our master prepaid leases with CCI.

Index for Notes to the Condensed Consolidated Financial Statements

The following table summarizes the balances associated with both of the tower arrangements on our Condensed Consolidated Balance Sheets:

(in millions) March 31,

(in millions) June 30,

2022 December 31,

2 unchanged sentences

Other long-term liabilities 554 1,712

Future minimum payments related to the tower obligations are approximately $ 415 million for the 12-month period ending March 31, 2023, $ 848 million in total for the 12-month periods ending March 31, 2024 and 2025, $ 774 million in total for the 12-month periods ending March 31, 2026 and 2027, and $ 4.8 billion in total thereafter.

Future minimum payments related to the tower obligations are approximately $ 418 million for the 12-month period ending June 30, 2023, $ 837 million in total for both of the 12-month periods ending June 30, 2024 and 2025, $ 778 million in total for both of the 12-month periods ending June 30, 2026 and 2027, and $ 4.7 billion in total thereafter.

Note 8 – Revenue from Contracts with Customers

4 unchanged sentences

• Wholesale customers include Machine-to-Machine and Mobile Virtual Network Operator customers that operate on our network but are managed by wholesale partners.

Index for Notes to the Condensed Consolidated Financial Statements

Postpaid service revenues, including postpaid phone revenues and postpaid other revenues, were as follows:

Three Months Ended March 31,

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

(in millions) 2022 2021 2022 2021

4 unchanged sentences

We operate as a single operating segment.

The balances presented in each revenue line item on our Condensed Consolidated Statements of Comprehensive Income represent categories of revenue from contracts with customers disaggregated by type of product and service.

Service revenues also include revenues earned for providing premium services to customers, such as device insurance services and customer-based, third-party services.

Revenue generated from the lease of mobile communication devices is included in Equipment revenues on our Condensed Consolidated Statements of Comprehensive Income.

The balances presented in each revenue line item on our Condensed Consolidated Statements of Comprehensive (Loss) Income represent categories of revenue from contracts with customers disaggregated by type of product and service.

Postpaid and prepaid service revenues also include revenues earned for providing premium services to customers, such as device insurance services and customer-based, third-party services.

Revenue generated from the lease of mobile communication devices is included in Equipment revenues on our Condensed Consolidated Statements of Comprehensive (Loss) Income.

Equipment revenues from the lease of mobile communication devices were as follows:

Three Months Ended March 31,

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

(in millions) 2022 2021 2022 2021

1 unchanged sentence

We provide wireline communication services to domestic and international customers.

Wireline service revenues were $ 146 million and $ 197 million for the three months ended March 31, 2022 and 2021, respectively.

Wireline service revenues are presented in Wholesale and other service revenues on our Condensed Consolidated Statements of Comprehensive Income.

Index for Notes to the Condensed Consolidated Financial Statements

Wireline service revenues were $ 143 million and $ 187 million for the three months ended June 30, 2022 and 2021, respectively, and $ 289 million and $ 384 million for the six months ended June 30, 2022 and 2021, respectively.

Wireline service revenues are presented in Wholesale and other service revenues on our Condensed Consolidated Statements of Comprehensive (Loss) Income.

Contract Balances

The contract asset and contract liability balances from contracts with customers as of March 31, 2022 and December 31, 2021, were as follows:

The contract asset and contract liability balances from contracts with customers as of June 30, 2022, and December 31, 2021, were as follows:

(in millions) Contract

1 unchanged sentence

Balance as of December 31, 2021 $ 286 $ 763

Balance as of March 31, 2022 275 768

Balance as of June 30, 2022 294 756

Change $ 8 $ ( 7 )

1 unchanged sentence

The change in the contract asset balance includes customer activity related to new promotions, offset by billings on existing contracts and impairment which is recognized as bad debt expense.

The current portion of our Contract assets of approximately $ 210 million and $ 219 million as of March 31, 2022 and December 31, 2021, respectively, was included in Other current assets on our Condensed Consolidated Balance Sheets.

The current portion of our contract assets of approximately $ 227 million and $ 219 million as of June 30, 2022, and December 31, 2021, respectively, was included in Other current assets on our Condensed Consolidated Balance Sheets.

Contract liabilities are recorded when fees are collected, or we have an unconditional right to consideration (a receivable) in advance of delivery of goods or services.

1 unchanged sentence

Contract liabilities are primarily included in Deferred revenue on our Condensed Consolidated Balance Sheets.

Revenues for the three months ended March 31, 2022 and 2021 include the following:

Three Months Ended March 31,

Revenues for the three and six months ended June 30, 2022 and 2021, include the following:

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

(in millions) 2022 2021 2022 2021

Amounts included in the beginning of year contract liability balance $ 31 $ 41 $ 685 $ 724

Index for Notes to the Condensed Consolidated Financial Statements

Remaining Performance Obligations

As of March 31, 2022, the aggregate amount of transaction price allocated to remaining service performance obligations for postpaid contracts with subsidized devices and promotional bill credits that result in an extended service contract is $ 798 million.

We expect to recognize revenue as the service is provided on these postpaid contracts over an extended contract term of 24 months at the time of origination.

As of June 30, 2022, the aggregate amount of transaction price allocated to remaining service performance obligations for postpaid contracts with subsidized devices and promotional bill credits that result in an extended service contract is $ 700 million.

We expect to recognize revenue as the service is provided on these postpaid contracts over an extended contract term of 24 months from the time of origination.

Information about remaining performance obligations that are part of a contract that has an original expected duration of one year or less has been excluded from the above, which primarily consists of monthly service contracts.

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This variable consideration has been excluded from the disclosure of remaining performance obligations.

As of March 31, 2022, the aggregate amount of the contractual minimum consideration for wholesale, roaming and service contracts is $ 936 million, $ 1.0 billion and $ 2.7 billion for 2022, 2023, and 2024 and beyond, respectively.

As of June 30, 2022, the aggregate amount of the contractual minimum consideration for wholesale, roaming and service contracts is $ 1.1 billion, $ 2.3 billion and $ 4.7 billion for 2022, 2023, and 2024 and beyond, respectively.

These contracts have a remaining duration ranging from less than one year to eight years .

Contract Costs

The balance of deferred incremental costs to obtain contracts with customers was $ 1.6 billion and $ 1.5 billion as of March 31, 2022 and December 31, 2021, respectively, and is included in Other assets on our Condensed Consolidated Balance Sheets.

The balance of deferred incremental costs to obtain contracts with customers was $ 1.7 billion and $ 1.5 billion as of June 30, 2022, and December 31, 2021, respectively, and is included in Other assets on our Condensed Consolidated Balance Sheets.

Deferred contract costs incurred to obtain postpaid service contracts are amortized over a period of 24 months.

The amortization period is monitored to reflect any significant change in assumptions.

Amortization of deferred contract costs is included in Selling, general and administrative expenses on our Condensed Consolidated Statements of Comprehensive Income and were $ 324 million and $ 248 million for the three months ended March 31, 2022 and 2021, respectively.

Amortization of deferred contract costs included in Selling, general and administrative expenses on our Condensed Consolidated Statements of Comprehensive (Loss) Income were $ 358 million and $ 264 million for the three months ended June 30, 2022 and 2021, respectively, and $ 682 million and $ 512 million for the six months ended June 30, 2022 and 2021, respectively.

The deferred contract cost asset is assessed for impairment on a periodic basis.

There were no impairment losses recognized on deferred contract cost assets for the three months ended March 31, 2022 and 2021.

Index for Notes to the Condensed Consolidated Financial Statements

Note 9 – Earnings Per Share

The computation of basic and diluted earnings per share was as follows:

Three Months Ended March 31,

There were no impairment losses recognized on deferred contract cost assets for the three and six months ended June 30, 2022 and 2021.

Note 9 – (Loss) Earnings Per Share

The computation of basic and diluted (loss) earnings per share was as follows:

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

(in millions, except shares and per share amounts) 2022 2021 2022 2021

Net income $ 713 $ 933

Net (loss) income $ ( 108 ) $ 978 $ 605 $ 1,911

Weighted-average shares outstanding – basic 1,253,932,986 1,247,563,331 1,252,228,959 1,245,552,847

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Weighted-average shares outstanding – diluted 1,253,932,986 1,253,718,122 1,256,873,827 1,254,264,464

Earnings per share – basic $ 0.57 $ 0.75

Earnings per share – diluted $ 0.57 $ 0.74

(Loss) earnings per share – basic $ ( 0.09 ) $ 0.78 $ 0.48 $ 1.53

(Loss) earnings per share – diluted ( 0.09 ) 0.78 0.48 1.52

Potentially dilutive securities:

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(1) Represents the weighted-average SoftBank Specified Shares that are contingently issuable from the acquisition date of April 1, 2020, pursuant to a letter agreement dated February 20, 2020, between T-Mobile, SoftBank and Deutsche Telekom AG (“DT”).

As of March 31, 2022, we had authorized 100 million shares of preferred stock, with a par value of $ 0.00001 per share.

There was no preferred stock outstanding as of March 31, 2022 and 2021.

Potentially dilutive securities were not included in the computation of diluted earnings per share if to do so would have been anti-dilutive.

As of June 30, 2022, we had authorized 100 million shares of preferred stock, with a par value of $ 0.00001 per share.

There was no preferred stock outstanding as of June 30, 2022 and 2021.

Potentially dilutive securities were not included in the computation of diluted (loss) earnings per share if to do so would have been anti-dilutive.

The SoftBank Specified Shares Amount of 48,751,557 shares of T-Mobile common stock was determined to be contingent consideration for the Merger and is not dilutive until the defined volume-weighted average price per share is reached.

Index for Notes to the Condensed Consolidated Financial Statements

Note 10 – Leases

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As a result of this modification, we remeasured the associated right-of use assets and lease liabilities resulting in an increase of $ 5.3 billion to each on the effective date of the modification, with a corresponding gross increase to both deferred tax liabilities and assets of $ 1.3 billion.

Index for Notes to the Condensed Consolidated Financial Statements

The components of lease expense were as follows:

Three Months Ended March 31,

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

(in millions) 2022 2021 2022 2021

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Total lease expense $ 2,317 $ 1,814 $ 4,392 $ 3,493

As of March 31, 2022, the weighted-average remaining lease term and discount rate for operating leases were 10 years and 3.9 %, respectively.

Maturities of lease liabilities as of March 31, 2022, were as follows:

As of June 30, 2022, the weighted-average remaining lease term and discount rate for operating leases were 10 years and 3.9 %, respectively.

Maturities of lease liabilities as of June 30, 2022, were as follows:

(in millions) Operating Leases Finance Leases

Twelve Months Ending March 31,

Twelve Months Ending June 30,

2023 $ 4,437 $ 1,259

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Total $ 34,264 $ 2,817

Interest payments for financing leases were $ 15 million and $ 19 million for the three months ended March 31, 2022 and 2021, respectively.

As of March 31, 2022, we have additional operating leases for commercial properties that have not yet commenced with future lease payments of approximately $ 85 million.

Interest payments for financing leases were $ 16 million and $ 17 million for the three months ended June 30, 2022 and 2021, respectively, and $ 31 million and $ 36 million for the six months ended June 30, 2022 and 2021, respectively.

As of June 30, 2022, we have additional operating leases for commercial properties that have not yet commenced with future lease payments of approximately $ 214 million.

Index for Notes to the Condensed Consolidated Financial Statements

Note 11 – Commitments and Contingencies

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In addition, we have commitments to purchase wireless devices, network services, equipment, software, marketing sponsorship agreements and other items in the ordinary course of business, with various terms through 2043.

Our purchase commitments are approximately $ 4.4 billion for the twelve-month period ending March 31, 2023, $ 5.5 billion in total for each of the twelve-month periods ending March 31, 2024 and 2025, $ 2.4 billion in total for each of the twelve-month periods ending March 31, 2026 and 2027 and $ 3.1 billion in total thereafter.

Our purchase commitments are approximately $ 4.4 billion for the 12-month period ending June 30, 2023, $ 5.3 billion in total for both of the 12-month periods ending June 30, 2024 and 2025, $ 2.5 billion in total for both of the 12-month periods ending June 30, 2026 and 2027, and $ 2.9 billion in total thereafter.

These amounts are not reflective of our entire anticipated purchases under the related agreements but are determined based on the non-cancelable quantities or termination amounts to which we are contractually obligated.

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The purchase of the leased spectrum is at our option and therefore the option price is not included in the commitments below.

Index for Notes to the Condensed Consolidated Financial Statements

Our spectrum lease and service credit commitments, including renewal periods, are approximately $ 345 million for the twelve-month period ending March 31, 2023, $ 627 million in total for each of the twelve-month periods ending March 31, 2024 and 2025, $ 623 million in total for each of the twelve-month periods ending March 31, 2026 and 2027 and $ 4.9 billion in total thereafter.

Our spectrum lease and service credit commitments, including renewal periods, are approximately $ 330 million for the 12-month period ending June 30, 2023, $ 599 million in total for both of the 12-month periods ending June 30, 2024 and 2025, $ 615 million in total for both of the 12-month periods ending June 30, 2026 and 2027, and $ 4.7 billion in total thereafter.

Contingencies and Litigation

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In the first quarter of 2020, we recorded an accrual for an estimated payment amount.

We maintained the accrual as of March 31, 2022, and that accrual was included in Accounts payable and accrued liabilities on our Condensed Consolidated Balance Sheets.

We maintained the accrual as of June 30, 2022, and that accrual was included in Accounts payable and accrued liabilities on our Condensed Consolidated Balance Sheets.

On April 1, 2020, in connection with the closing of the Merger, we assumed the contingencies and litigation matters of Sprint.

Index for Notes to the Condensed Consolidated Financial Statements

Those matters include a wide variety of disputes, claims, government agency investigations and enforcement actions, and other proceedings.

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We intend to vigorously defend this lawsuit.

In October 2020, we notified Mobile Virtual Network Operators (“MVNOs”) using the legacy Sprint CDMA network that we

Index for Notes to the Condensed Consolidated Financial Statements

planned to sunset that network on December 31, 2021.

In response to that notice, DISH Network Corporation (“DISH”), which has Boost Mobile customers who use the legacy Sprint CDMA network, made several efforts to prevent us from sunsetting the CDMA network until mid-2023, including by urging the U.S.

Department of Justice to move for a finding of contempt under the April 1, 2020 Final Judgment entered by the U.S.

District Court for the District of Columbia, and by pursuing a Petition for Modification and related proceedings pursuant to the California Public Utilities Commission’s (the “CPUC”) April 2020 decision concerning the Merger.

We disagree with the merits of DISH’s positions and have opposed them.

On October 22, 2021, we announced that we would delay the full decommissioning of the legacy Sprint CDMA network for three months, until March 31, 2022, to, among other things, help ensure that DISH and other MVNOs fulfill their contractual responsibilities and transition customers off the legacy Sprint CDMA network before the decommissioning.

In March 2022, the CPUC denied DISH’s Petition for Modification.

We cannot predict the outcome of the other proceedings described above, but we intend to vigorously oppose any efforts to further delay the sunset of the legacy Sprint CDMA network.

The orderly decommissioning of the legacy Sprint CDMA network began as planned on March 31, 2022, and is expected to be completed during the second fiscal quarter of 2022, and we will continue to help ensure that DISH and other MVNOs fulfill their contractual responsibilities and transition customers off the legacy Sprint CDMA network before the decommissioning.

In October 2020, we notified Mobile Virtual Network Operators (“MVNOs”) using the legacy Sprint CDMA network that we planned to sunset that network on December 31, 2021.

In response to that notice, DISH, which had Boost Mobile customers who used the legacy Sprint CDMA network, made several efforts to prevent us from sunsetting the CDMA network until mid-2023, including pursuing a Petition for Modification and related proceedings pursuant to the California Public Utilities Commission’s (the “CPUC”) April 2020 decision concerning the Merger.

As of June 30, 2022, the orderly decommissioning of the legacy Sprint CDMA network has been completed.

With the exception of the CPUC proceedings, all other proceedings described above have been successfully resolved.

On August 12, 2021, we became aware of a potential cybersecurity issue involving unauthorized access to T-Mobile’s systems (the “August 2021 cyberattack”).

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Our forensic investigation is complete, and we believe we have a full view of the data compromised.

As a result of the August 2021 cyberattack, we have become subject to numerous lawsuits, including mass arbitration claims and multiple class action lawsuits, that have been filed in numerous jurisdictions seeking unspecified monetary damages, costs and attorneys’ fees arising out of the August 2021 cyberattack.

As a result of the August 2021 cyberattack, we have become subject to numerous lawsuits, including mass arbitration claims and multiple class action lawsuits that have been filed in numerous jurisdictions seeking, among other things, unspecified monetary damages, costs and attorneys’ fees arising out of the August 2021 cyberattack.

In December 2021, the Judicial Panel on Multidistrict Litigation consolidated the federal class action lawsuits in the U.S.

District Court for the Western District of Missouri.

In addition, in November 2021, a purported Company shareholder filed a derivative action in the U.S.

District Court for the Western District of Washington, Litwin v.

Sievert et al., No.

2:21-cv-01599, against our current directors, alleging several claims concerning the Company’s cybersecurity practices.

In April 2022, the Litwin case was voluntarily dismissed without prejudice.

We are unable to predict at this time the potential outcome of any of the other claims described above or whether we may be subject to further private litigation.

We intend to vigorously defend all of these lawsuits.

In addition, the Company has received inquiries from various government agencies, law enforcement and other governmental authorities related to the August 2021 cyberattack, which could result in fines or penalties.

We are responding to these inquiries and cooperating fully with regulators.

However, we cannot predict the timing or outcome of any of these inquiries, or whether we may be subject to further regulatory 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.

Ongoing legal and other costs related to these proceedings and inquiries, as well as any potential future proceedings and inquiries, may be substantial, and losses associated with any adverse judgments, settlements, penalties or other resolutions of such proceedings and inquiries could be material to our business, reputation, financial condition, cash flows and operating results.

In March 2022, we received $ 220 million in settlement of certain patent litigation.

We recognized the settlement, net of legal fees, as a reduction to Selling, general and administrative expenses on our Condensed Consolidated Statements of Comprehensive Income.

District Court for the Western District of Missouri under the caption In re:

T-Mobile Customer Data Security Breach Litigation , Case No.

21-md-3019-BCW.

On July 22, 2022, we entered into an agreement to settle the lawsuit.

On July 26, 2022, we received preliminary approval of the proposed settlement, which remains subject to final court approval.

Final court approval of the terms of the settlement is expected as early as January 2023 but could be delayed by appeals or other proceedings.

If approved by the court, under the terms of the proposed settlement, we would pay an aggregate of $ 350 million to fund claims submitted by class members, the legal fees of plaintiffs’ counsel and the costs of administering the settlement.

We would also commit to an aggregate incremental spend of $ 150 million for data security and related technology in 2022 and 2023.

We anticipate that, upon court approval, the settlement will provide a full release of all claims arising out of the August 2021 cyberattack by class members, who do not opt out, against all defendants, including us, our subsidiaries and affiliates, and our directors and officers.

The settlement contains no admission of liability, wrongdoing or responsibility by any of the defendants.

We have the right to terminate the settlement agreement under certain conditions.

If approved by the court, we anticipate that this settlement of the class action, along with other settlements of separate consumer claims that have been previously completed or are currently pending, will resolve substantially all of the claims brought to date by our current, former and prospective customers who were impacted by the 2021 cyberattack.

In connection with the proposed

Index for Notes to the Condensed Consolidated Financial Statements

class action settlement and the separate settlements, we recorded a total pre-tax charge of approximately $ 400 million for the three and six months ended June 30, 2022, in Selling, general and administrative expenses on our Condensed Consolidated Statements of Comprehensive (Loss) Income.

The ultimate resolution of the class action depends on whether we will be able to obtain court approval of the proposed settlement, the number of plaintiffs who opt-out of the proposed settlement and whether the proposed settlement will be appealed.

In addition, we have received inquiries from various government agencies, law enforcement and other governmental authorities related to the August 2021 cyberattack, which could result in substantial fines or penalties.

We are responding to these inquiries and cooperating fully with these agencies and regulators.

However, we cannot predict the timing or outcome of any of these matters, or whether we may be subject to further regulatory inquiries, investigations, or enforcement actions.

In light of the inherent uncertainties involved in such matters and based on the information currently available to us, we believe it is reasonably possible that we could incur additional losses associated with these proceedings and inquiries, and we 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.

Ongoing legal and other costs related to these proceedings and inquiries, as well as any potential future actions, may be substantial, and losses associated with any adverse judgments, settlements, penalties or other resolutions of such proceedings and inquiries could be material to our business, reputation, financial condition, cash flows and operating results.

In March 2022, we received $ 220 million in settlement of certain patent litigation.

We recognized the settlement, net of legal fees, as a reduction to Selling, general and administrative expenses on our Condensed Consolidated Statements of Comprehensive (Loss) Income during the six months ended June 30, 2022.

On June 17, 2022, plaintiffs filed a putative antitrust class action complaint in the Northern District of Illinois, Dale et al.

Deutsche Telekom AG, et al.

1:22-cv-03189, against DT, T-Mobile, and Softbank, alleging that the T-Mobile and Sprint merger violated the antitrust laws and harmed competition in the U.S.

retail cell service market.

Plaintiffs seek injunctive relief and trebled monetary damages on behalf of a purported class of AT&T and Verizon customers who plaintiffs allege paid artificially inflated prices due to the merger.

We intend to vigorously defend this lawsuit, but we are unable to predict the potential outcome.

Note 12 – Restructuring Costs

Upon close of the Merger, we began implementing restructuring initiatives to realize cost efficiencies and reduce redundancies.

The major activities associated with the restructuring initiatives to date include contract termination costs associated with the rationalization of retail stores, distribution channels, duplicative network and backhaul services and other agreements, severance costs associated with the integration of redundant processes and functions and the decommissioning of certain small cell sites and distributed antenna systems to achieve synergies in network costs.

The following table summarizes the expenses incurred in connection with our restructuring initiatives:

(in millions) Three Months Ended March 31, 2022 Incurred to Date

The major activities associated with the Merger restructuring initiatives to date include contract termination costs associated with the rationalization of retail stores, distribution channels, duplicative network and backhaul services and other agreements, severance costs associated with the integration of redundant processes and functions and the decommissioning of certain small cell sites and distributed antenna systems to achieve Merger synergies in network costs.

The following table summarizes the expenses incurred in connection with our Merger restructuring initiatives:

(in millions) Three Months Ended June 30, 2022 Six Months Ended June 30, 2022 Incurred to Date

Contract termination costs $ 56 $ 56 $ 248

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Total restructuring plan expenses $ 276 $ 413 $ 1,688

The expenses associated with the restructuring initiatives are included in Costs of services and Selling, general and administrative on our Condensed Consolidated Statements of Comprehensive Income.

Our restructuring initiatives also include the acceleration or termination of certain of our operating and financing leases for cell sites, switch sites, retail stores, network equipment and office facilities.

Incremental expenses associated with accelerating amortization of the right-of-use assets on lease contracts were $ 464 million and $ 123 million for the three months ended March 31, 2022 and 2021, respectively, and are included in Costs of services and Selling, general and administrative on our Condensed Consolidated Statements of Comprehensive Income.

The changes in the liabilities associated with our restructuring initiatives, including expenses incurred and cash payments, are as follows:

The expenses associated with our Merger restructuring initiatives are included in Costs of services and Selling, general and administrative on our Condensed Consolidated Statements of Comprehensive (Loss) Income.

Our Merger restructuring initiatives also include the acceleration or termination of certain of our operating and financing leases for cell sites, switch sites, retail stores, network equipment and office facilities.

Incremental expenses associated with accelerating amortization of the right-of-use assets on lease contracts were $ 747 million and $ 261 million for the three months ended June 30, 2022 and 2021, respectively, and $ 1.2 billion and $ 384 million for the six months ended June 30, 2022 and 2021, respectively, and are included in Costs of services and Selling, general and administrative on our Condensed Consolidated Statements of Comprehensive (Loss) Income.

Index for Notes to the Condensed Consolidated Financial Statements

The changes in the liabilities associated with our Merger restructuring initiatives, including expenses incurred and cash payments, are as follows:

(in millions) December 31,

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(1) Non-cash items consist of the write-off of assets within Network decommissioning.

The liabilities accrued in connection with our restructuring initiatives are presented in Accounts payable and accrued liabilities on our Condensed Consolidated Balance Sheets.

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

The liabilities accrued in connection with our Merger restructuring initiatives are presented in Accounts payable and accrued liabilities on our Condensed Consolidated Balance Sheets.

Our Merger restructuring activities are expected to occur over the next two 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.

Index for Notes to the Condensed Consolidated Financial Statements

Note 13 – Additional Financial Information

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Accounts payable and accrued liabilities are summarized as follows:

(in millions) March 31,

(in millions) June 30,

2022 December 31,

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Toll and interconnect 243 248

Advertising 11 59

Other 840 427

Accounts payable and accrued liabilities $ 11,182 $ 11,405

Book overdrafts included in accounts payable were $ 405 million and $ 378 million as of March 31, 2022 and December 31, 2021, respectively.

Book overdrafts included in accounts payable were $ 273 million and $ 378 million as of June 30, 2022, and December 31, 2021, respectively.

Index for Notes to the Condensed Consolidated Financial Statements

Supplemental Condensed Consolidated Statements of Cash Flows Information

The following table summarizes T-Mobile’s supplemental cash flow information:

Three Months Ended March 31,

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

(in millions) 2022 2021 2022 2021

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Financing lease right-of-use assets obtained in exchange for lease obligations 551 377 849 486

Wireline Impairment

We provide wireline communication services to domestic and international customers via the legacy Sprint Wireline network acquired through the Merger.

The legacy Sprint Wireline network is primarily comprised of owned property and equipment, including land, buildings, communication systems and data processing equipment, fiber optic cable and operating lease right-of-use assets.

Previously, the operation of the legacy Sprint CDMA and LTE wireless networks was supported by the legacy Sprint Wireline network.

During the second quarter of 2022, we retired the legacy Sprint CDMA network and began the orderly shut-down of the LTE network.

We assess long-lived assets for impairment when events or circumstances indicate that they might be impaired.

We determined that the retirement of the legacy Sprint CDMA and LTE wireless networks triggered the need to assess the Wireline long-lived assets for impairment, as these assets no longer support our wireless network and the associated customers and cash flows in a significant manner.

In evaluating whether the Wireline long-lived assets are impaired, we estimated the fair value of these assets using a combination of the cost, income and market approaches, including market participant assumptions.

The fair value measurement of the Wireline assets was estimated using significant inputs not observable in the market (Level 3).

The results of this assessment indicated that certain Wireline long-lived assets were impaired, and as a result, we recorded non-cash impairment expense of $ 477 million during the three and six months ended June 30, 2022, of which $ 258 million is related to Wireline Property and equipment, $ 212 million is related to Operating lease right-of-use assets and $ 7 million is related to Other intangible assets.

In measuring and allocating the impairment expense to individual Wireline long-lived assets, we did not impair the long-lived assets below their individual fair values.

After recording the impairment expense, the carrying amount of the Wireline long-lived assets recorded in our Condensed Consolidated Balance Sheet is $ 675 million as of June 30, 2022.

The expense is included within Impairment expense in our Condensed Consolidated Statements of Comprehensive (Loss) Income.

There was no impairment expense recognized for the three and six months ended June 30, 2021.

Note 14 – Subsequent Events

Subsequent to March 31, 2022, on April 15, 2022, we repaid at maturity $ 1.25 billion of our 5.375 % Senior Notes to affiliates due 2022.

Subsequent to June 30, 2022, on July 22, 2022, we entered into an agreement to settle a consolidated class action lawsuit asserting claims related to the August 2021 cyberattack.

In connection with the proposed class action settlement and certain separate settlements, we recorded a total pre-tax charge of approximately $ 400 million for the three and six months ended June 30, 2022, in Selling, general and administrative expenses on our Condensed Consolidated Statements of Comprehensive (Loss) Income.

See N ote 11 – Commitments and Contingencies for additional information.

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 1. Financial Statements