What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2023-02-14 compared with 2022-02-11 · 680 added, 659 removed, 1491 unchanged (47% of the section changed)

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Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheets of T-Mobile US, Inc.

and its subsidiaries (the “Company”) as of December 31, 2021 and 2020, and the related consolidated statements of comprehensive income, of stockholders’ equity and of cash flows for each of the three years in the period ended December 31, 2021, including the related notes (collectively referred to as the “consolidated financial statements”).

We have audited the accompanying consolidated balance sheet of T-Mobile US, Inc.

and subsidiaries (the "Company") as of December 31, 2022, the related consolidated statements of comprehensive income, stockholders' equity, and cash flows, for the year ended December 31, 2022, and the related notes (collectively referred to as the "consolidated financial statements").

We also have audited the Company’s internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2021 in conformity with accounting principles generally accepted in the United States of America.

Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

Change in Accounting Principle

As discussed in Note 1 to the consolidated financial statements, the Company changed the manner in which it accounts for leases in 2019.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2022, and the results of its operations and its cash flows for the year ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America.

Also, in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.

Basis for Opinions

The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Annual Report on Internal Control over Financial Reporting appearing under Item 9A.

Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits.

The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the Management’s Annual Report on Internal Control over Financial Reporting included in Item 9A.

Our responsibility is to express an opinion on the Company’s consolidated financial statements and an opinion on the Company’s internal control over financial reporting based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

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Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Our audit of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures to respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.

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A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(ii) provide reasonable assurance that transactions are recorded as necessary to permit

A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Index for Notes to the Consolidated Financial Statements

preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Critical Audit Matters

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Revenue Recognition - Equipment revenues

As described in Note 1 to the consolidated financial statements, the Company’s revenue includes equipment revenues of $20,727 million for the year ended December 31, 2021, which are generated from the sale or lease of mobile communication devices and accessories.

For performance obligations related to equipment contracts, the Company typically transfers control at a point in time when the device or accessory is delivered to, and accepted by, the customer or dealer.

Management estimates variable consideration (e.g., device returns or certain payments to indirect dealers) primarily based on historical experience.

Promotional equipment installment plan bill credits offered to a customer on an equipment sale that are paid over time and are contingent on the customer maintaining a service contract may result in an extended service contract based on whether a substantive penalty is deemed to exist.

Lease revenues are recorded as equipment revenues and recognized as earned on a straight-line basis over the lease term.

The principal considerations for our determination that performing procedures relating to revenue recognition of equipment revenues is a critical audit matter are the significant auditor effort in performing procedures and evaluating audit evidence related to the accuracy and existence of equipment revenues recognized.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included testing the effectiveness of controls relating to the revenue recognition process, including controls over the accuracy and existence of equipment revenues recognized.

These procedures also included, among others, testing the accuracy and existence of revenue recognized on a test basis by (i) obtaining and inspecting, where applicable, invoices, customer contracts, shipping documents, and cash receipts from customers, and (ii) evaluating reductions to revenues and accruals for promotional bill credits based upon the terms and conditions of the arrangements.

/s/ PricewaterhouseCoopers LLP

Revenues – Refer to Notes 1 and 10 to the consolidated financial statements

Critical Audit Matter Description

The Company generates revenues from providing wireless communications services and selling devices and accessories to customers.

The processing and recording of wireless communications services revenues related to monthly wireless services billings is highly automated and is based on contractual terms with customers.

Equipment revenues related to device and accessory sales are typically recognized at a point in time when control of the device or accessory is transferred to the customer or dealer.

The Company’s wireless service and equipment revenues consist of a significant volume of low-dollar transactions accumulated from multiple systems and databases.

Given the large volume of low-dollar wireless communications services and equipment revenue transactions which are initiated, accumulated, and recorded in multiple systems and databases, auditing revenues was complex and challenging due to the extent of audit effort required and the need for professionals with expertise in information technology (IT) to identify, evaluate, and test the Company’s systems, databases, automated controls, and system interface controls.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the Company’s revenue transactions included the following, among others:

• With the assistance of our IT specialists, we:

• Identified the relevant systems and databases used to process revenue transactions and tested the relevant IT controls over each of those systems and databases.

• Performed testing of automated business controls and system interface controls within wireless communications services and equipment revenues.

• We tested internal controls in the revenue accounting processes, including those in place to (a) establish revenue recognition accounting policies for promotional offers, (b) record revenue and the related promotional offers in accordance with the established accounting policies and (c) reconcile the various systems to the Company’s general ledger.

• We created data visualizations to evaluate recorded revenue and trends in the related subscriber data.

• For a selection of equipment revenue transactions, we compared the amounts recognized to contractual agreements or other source documents and tested the mathematical accuracy of the recorded revenue.

• We developed an expectation of postpaid and prepaid service revenue amounts using historical service revenue and subscriber information and compared it to the recorded amount.

• We tested the accuracy and completeness of the subscriber information used in our audit procedures by selecting a sample of the subscriber information and for those selections agreeing the selected subscriber information to supporting documentation.

/s/ Deloitte & Touche LLP

Seattle, Washington

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Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of T-Mobile US, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheet of T-Mobile US, Inc.

and its subsidiaries (the “Company”) as of December 31, 2021, and the related consolidated statements of comprehensive income, of stockholders’ equity and of cash flows for each of the two years in the period ended December 31, 2021, including the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2021 in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits of these consolidated financial statements in accordance with the standards of the PCAOB.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

We believe that our audits provide a reasonable basis for our opinion.

/s/ PricewaterhouseCoopers LLP

Seattle, Washington

February 11, 2022

We served as the Company’s auditor from 2001 to 2022.

Index for Notes to the Consolidated Financial Statements

T-Mobile US, Inc.

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Equipment installment plan receivables, net of allowance for credit losses and imputed discount of $ 667 and $ 494

Accounts receivable from affiliates 27 22

Inventory 1,884 2,567

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Accounts payable and accrued liabilities $ 12,275 $ 11,405

Payables to affiliates 103 157

Short-term debt 5,164 3,378

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Prepaid revenues 9,857 9,733 9,421

Wholesale revenues 3,751 2,590 1,279

Other service revenues 2,323 2,078 1,005

Wholesale and other service revenues 5,547 6,074 4,668

Total service revenues 61,323 58,369 50,395

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Impairment expense 477 — 418

Loss on disposal group held for sale 1,087 — —

Depreciation and amortization 13,651 16,383 14,151

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Operating income 6,543 6,892 6,636

Other income (expense)

Interest expense ( 3,189 ) ( 2,483 ) ( 727 )

Interest expense to affiliates ( 173 ) ( 247 ) ( 408 )

Interest income 20 29 24

Other expense, net

Interest expense, net ( 3,364 ) ( 3,342 ) ( 2,701 )

Other expense, net ( 33 ) ( 199 ) ( 405 )

Total other expense, net ( 3,397 ) ( 3,541 ) ( 3,106 )

Income from continuing operations before income taxes 3,351 3,530 4,603

Income before income taxes 3,146 3,351 3,530

Income tax expense ( 556 ) ( 327 ) ( 786 )

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Other comprehensive income (loss), net of tax

Unrealized gain (loss) on cash flow hedges, net of tax effect of $ 49 , $( 250 ) and $( 187 )

Reclassification of loss (unrealized loss) from cash flow hedges, net of tax effect of $ 52 , $ 49 and $( 250 )

151 140 ( 723 )

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

( 9 ) ( 4 ) 4

Net unrecognized gain on pension and other postretirement benefits, net of tax effect of $ 61 , $ 28 and $ 2

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Impairment expense 477 — 418

Loss on remeasurement of disposal group held for sale 377 — —

Changes in operating assets and liabilities

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Payments of consent fees related to long-term debt — — ( 109 )

Proceeds from borrowing on revolving credit facility — — 2,340

Repayments of revolving credit facility — — ( 2,340 )

Repayments of financing lease obligations ( 1,239 ) ( 1,111 ) ( 1,021 )

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Other, net ( 127 ) ( 191 ) 103

Net cash provided by (used in) financing activities 1,709 13,010 ( 2,374 )

Change in cash and cash equivalents, including restricted cash ( 3,760 ) 8,935 325

Cash and cash equivalents, including restricted cash

Net cash (used in) provided by financing activities ( 6,451 ) 1,709 13,010

Change in cash and cash equivalents, including restricted cash and cash held for sale ( 2,029 ) ( 3,760 ) 8,935

Cash and cash equivalents, including restricted cash and cash held for sale

Beginning of period 6,703 10,463 1,528

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Consolidated Statement of Stockholders’ Equity

(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

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

Balance as of December 31, 2019 856,905,400 1,513,215 $ ( 8 ) $ 38,498 $ ( 868 ) $ ( 8,833 ) $ 28,789

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Stock-based compensation — — — 750 — — 750

Exercise of stock options 85,083 — 1 — — 1

Stock issued for employee stock purchase plan 2,144,036 — — 148 — — 148

Issuance of vested restricted stock units 13,263,434 — — — — — —

Issuance of restricted stock awards ( 24,682 ) — — — — —

Shares withheld related to net share settlement of stock awards and stock options ( 4,441,107 ) — — ( 439 ) — — ( 439 )

Transfers with NQDC plan ( 18,363 ) ( 2 ) 2 — — —

Shares issued in secondary offering (1)

198,314,426 ( 198,314,426 ) — 19,766 — — 19,766

Shares repurchased from SoftBank (2)

( 198,314,426 ) 198,314,426 — ( 19,536 ) — — ( 19,536 )

Merger consideration 373,396,310 — — 33,533 — — 33,533

Prior year Retained Earnings (3)

— — — — — ( 67 ) ( 67 )

Other, net 537,633 26,663 ( 3 ) 52 — — 49

Balance as of December 31, 2020 1,241,805,706 1,539,878 ( 11 ) 72,772 ( 1,581 ) ( 5,836 ) 65,344

Net income — — — — — 3,024 3,024

Other comprehensive loss — — — ( 713 ) — ( 713 )

Executive put option ( 342,000 ) — 1 — — 1

Other comprehensive income — — — — 216 — 216

Stock-based compensation — — — 606 — — 606

Exercise of stock options 906,295 — 48 — — 48

Stock issued for employee stock purchase plan 2,189,542 — — 225 — — 225

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Shares withheld related to net share settlement of stock awards and stock options ( 2,511,512 ) — — ( 316 ) — — ( 316 )

Transfers with NQDC plan ( 26,662 ) ( 3 ) 3 — — —

Shares issued in secondary offering (2)

198,314,426 — 19,766 — — 19,766

Shares repurchased from SoftBank (3)

( 198,314,426 ) — ( 19,536 ) — — ( 19,536 )

Merger consideration 373,396,310 — 33,533 — — 33,533

Prior year Retained Earnings (1)

— — — — ( 67 ) ( 67 )

Other, net 220,906 ( 2,410 ) ( 2 ) 5 — — 3

Balance as of December 31, 2021 1,249,213,681 1,537,468 ( 13 ) 73,292 ( 1,365 ) ( 2,812 ) 69,102

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Stock-based compensation — — — 656 — — 656

Exercise of stock options 218,495 — 10 — — 10

Stock issued for employee stock purchase plan 2,079,086 — — 227 — — 227

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Shares withheld related to net share settlement of stock awards and stock options ( 1,900,710 ) — — ( 243 ) — — ( 243 )

Remeasurement of uncertain tax positions — — ( 7 ) — — ( 7 )

Transfers with NQDC plan 2,411 ( 2 ) 2 — — —

Repurchases of common stock ( 21,361,409 ) 21,361,409 ( 3,000 ) — — — ( 3,000 )

Other, net 132,539 17,572 ( 3 ) 9 — ( 1 ) 5

Balance as of December 31, 2022 1,233,960,078 22,916,449 $ ( 3,016 ) $ 73,941 $ ( 1,046 ) $ ( 223 ) $ 69,656

(1) Prior year Retained Earnings represents the impact of the adoption of new accounting standards on beginning Accumulated Deficit and Accumulated Other Comprehensive Loss.

(1) Shares issued includes 5.0 million shares purchased by Marcelo Claure.

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This amount, net of tax, was treated as a reduction of the purchase price of the shares acquired from SoftBank and was recorded as Additional Paid-in Capital.

(3) Prior year Retained Earnings represents the impact of the adoption of new accounting standards on beginning Accumulated Deficit and Accumulated Other Comprehensive Loss.

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

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Property and Equipment

Goodwill, Spectrum License Transactions and Other Intangible Assets

Goodwill, Spectrum License Transaction s and Other Intangibles Assets

Fair Value Measurements

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SoftBank Equity Transaction

Repurchases of Common Stock

Earnings Per Share

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We also offer a wide selection of wireless devices, including handsets, tablets and other mobile communication devices, and accessories for sale, as well as financing through equipment installment plans (“EIP”) and leasing through JUMP!

Additionally, we provide reinsurance for device insurance policies and extended warranty contracts offered to our mobile communications customers.

We also provide reinsurance for device insurance policies and extended warranty contracts offered to our mobile communications customers.

In addition to our wireless communications services, we offer fast and reliable High Speed Internet utilizing our nationwide 5G network.

Basis of Presentation

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generally accepted accounting principles (“GAAP”) requires our management to make estimates and assumptions which affect our consolidated financial statements and accompanying notes.

Estimates are based on historical experience, where applicable, and other assumptions which our management believes are reasonable under the circumstances, including, but not limited to, the valuation of assets acquired and liabilities assumed through the Merger with Sprint and through our acquisitions of affiliates and the potential impacts arising from the COVID-19 pandemic (the “Pandemic”).

Estimates are based on historical experience, where applicable, and other assumptions which our management believes are reasonable under the circumstances, including, but not limited to, the valuation of assets acquired and liabilities assumed through our merger (the “Merger”) with Sprint Corporation (“Sprint”) and through our acquisitions of affiliates and the potential impacts arising from macroeconomic trends.

These estimates are inherently subject to judgment and actual results could differ from those estimates.

On September 6, 2022, Sprint Communications LLC, a Kansas limited liability company and wholly owned subsidiary of the Company (“Sprint Communications”), Sprint LLC, a Delaware limited liability company and wholly owned subsidiary of the Company, and Cogent Infrastructure, Inc., a Delaware corporation (the “Buyer”) and a wholly owned subsidiary of Cogent Communications Holdings, Inc., entered into a Membership Interest Purchase Agreement (the “Wireline Sale Agreement”), pursuant to which the Buyer will acquire the U.S.

long-haul fiber network and operations (including the non-U.S.

extensions thereof) of Sprint Communications and its subsidiaries (the “Wireline Business”).

Such transactions contemplated by the Wireline Sale Agreement are collectively referred to as the “Wireline Transaction.”

The assets and liabilities of the Wireline Business disposal group are classified as held for sale and presented within Other current assets and Other current liabilities on our Consolidated Balance Sheets as of December 31, 2022.

The fair value of the Wireline Business disposal group, less costs to sell, will be reassessed during each reporting period it remains classified as held for sale, and any remeasurement to the lower of carrying amount or fair value less costs to sell will be reported as an adjustment included within Loss on disposal group held for sale on our Consolidated Statements of Comprehensive Income.

Unless otherwise specified, the amounts and information presented in the Notes to the Consolidated Financial Statements include assets and liabilities that have been reclassified as held for sale as of December 31, 2022.

Business Combinations

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Determining fair value of identifiable assets, particularly intangibles, and liabilities acquired requires management to make estimates, which are based on all available information and in some cases assumptions with respect to the timing and amount of future revenues and expenses associated with an asset or liability.

See Note 2 – Business Combinatio ns for further discussion of the Merger between T-Mobile and Sprint and the acquisition of the wireless telecommunications assets (the “Wireless Assets”) of Shenandoah Personal Communications Company LLC (“Shentel”) 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.

Index for Notes to the Consolidated Financial Statements

communications network products in certain parts of Maryland, North Carolina, Virginia, West Virginia Kentucky, Ohio and Pennsylvania.

Cash and Cash Equivalents

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Accounts Receivable

Accounts receivable balances are predominantly composed of amounts currently due from customers (e.g., for wireless services and monthly device lease payments), device insurance administrators, wholesale partners, other carriers and third-party retail channels.

Accounts receivable are presented on our Consolidated Balance Sheets at the amortized cost basis (i.e., the receivables’ unpaid principal balance (“UPB”) as adjusted for any write-offs), net of the allowance for credit losses.

We have an arrangement to sell certain of our customer service accounts receivable on a revolving basis, which are treated as sales of

Index for Notes to the Consolidated Financial Statements

financial assets.

Accounts receivable balances are predominantly comprised of amounts currently due from customers (e.g., for wireless communications services and monthly device lease payments), device insurance administrators, wholesale partners, other carriers and third-party retail channels.

Accounts receivable are presented on our Consolidated Balance Sheets at their amortized cost basis (i.e., the receivables’ unpaid principal balance (“UPB”) as adjusted for any written-off amounts relating to impairment), net of the allowance for credit losses.

We have an arrangement to sell certain of our customer service accounts receivable on a revolving basis, which are treated as sales of financial assets.

Equipment Installment Plan Receivables

We offer certain customers the option to pay for their devices and other purchases in installments, generally over a period of 24 months using an EIP.

EIP receivables are presented on our Consolidated Balance Sheets at the amortized cost basis (i.e., the receivables’ UPB as adjusted for any write-offs and unamortized discounts), net of the allowance for credit losses.

EIP receivables are presented on our Consolidated Balance Sheets at their amortized cost basis (i.e., the receivables’ UPB as adjusted for any written-off amounts due to impairment and unamortized discounts), net of the allowance for credit losses.

At the time of an installment sale, we impute a discount for interest if the term exceeds 12 months as there is no stated rate of interest on the receivables.

The receivables are recorded at their present value, which is determined by discounting expected future cash payments at the imputed interest rate.

This adjustment results in a discount or reduction in transaction price which is allocated to the performance obligations and reduces Service revenues and Equipment revenues on our Consolidated Statements of Comprehensive Income.

This adjustment results in a discount or reduction in the transaction price of the contract with a customer, which is allocated to the performance obligations of the arrangement such as Service and Equipment revenues on our Consolidated Statements of Comprehensive Income.

The imputed discount rate reflects a current market interest rate and is predominately comprised of the estimated credit risk underlying the EIP receivable, reflecting the estimated credit worthiness of the customer.

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We have an arrangement to sell certain EIP receivables on a revolving basis, which are treated as sales of financial assets.

See Note 4 – Sales of Certain Receivables for further information.

Additionally, certain of our EIP receivables included on our Consolidated Balance Sheets secure our asset-backed notes (“ABS Notes”).

See Note 8 – Debt for further information.

Allowance for Credit Losses

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Each period, management assesses the appropriateness of the level of allowance for credit losses by considering credit risk inherent within each portfolio segment as of period end.

Each portfolio segment is composed of pools of receivables that are evaluated collectively based on similar risk characteristics.

Our allowance levels consider estimated credit risk over the contractual life of the receivables and are influenced by receivable volumes, receivable delinquency status, historical loss experience and other conditions that affect loss expectations, such as changes in credit and collections policies and forecasts of macro-economic conditions.

Each portfolio segment is comprised of pools of receivables that are evaluated collectively based on similar risk characteristics.

While we attribute portions of the allowance to our respective accounts receivable and EIP portfolio segments, the entire allowance is available to credit losses related to the total receivable portfolio.

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If there is a deterioration of our customers’ financial condition or if future actual default rates on receivables in general

differ from those currently anticipated, we will adjust our allowance for credit losses accordingly, which may materially affect our financial results in the period the adjustments are made.

differ from those currently anticipated, we will adjust our allowance for credit losses accordingly.

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Inventories consist primarily of wireless devices and accessories, which are valued at the lower of cost or net realizable value.

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See Note 4 – Sales of Certain Receivables for further information.

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Long-Lived Assets

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The carrying value of a long-lived asset or asset group is not recoverable if the carrying value exceeds the sum of the estimated undiscounted future cash flows expected to be generated from the use and eventual disposition of the asset or asset group.

If the estimated undiscounted future cash flows do not exceed the asset or asset group’s carrying amount, then an impairment loss is recorded, measured as the amount by which the carrying amount of a long-lived asset or asset group exceeds its fair value.

During the second quarter of 2022, we determined that the retirement of the legacy Sprint CDMA and LTE wireless networks triggered the need to separately assess the Wireline long-lived asset group for impairment and the results of this assessment indicated that certain Wireline long-lived assets were impaired.

See Note 16 - Wireline for further information.

Property and Equipment

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Buildings and equipment include certain network server equipment.

Wireless communications systems include assets to operate our wireless network and information technology data centers, including tower assets and leasehold improvements and assets related to the liability for the retirement of long-lived assets.

Wireless communications systems include assets to operate our wireless network and information technology data centers, including tower assets, leasehold improvements and asset retirement costs.

Leasehold improvements include asset improvements other than those related to the wireless network.

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Capitalized interest is reported as a reduction in interest expense and depreciated over the useful life of the related assets.

We record an asset retirement obligation for the estimated fair value of legal obligations associated with the retirement of tangible long-lived assets and a corresponding increase in the carrying amount of the related asset in the period in which the obligation is incurred.

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obligation is incurred.

In periods subsequent to initial measurement, we recognize changes in the liability resulting from the passage of time and revisions to either the timing or the amount of the original estimate.

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Beginning in 2021, we discontinued offering the Sprint Flex lease program and are shifting customer device financing to EIP plans.

Index for Notes to the Consolidated Financial Statements

Our leasing programs (“Leasing Programs”), which include JUMP!

On Demand and the Sprint Flex Lease Program, allow customers to lease a device (handset or tablet) generally over a period of 18 months and upgrade the device with a new device when eligibility requirements are met.

On Demand and the Sprint Flex Lease Program, allow customers to lease a device (handset or tablet) generally over an initial period of 18 months and upgrade the device with a new device when eligibility requirements are met.

We depreciate leased devices to their estimated residual value, on a group basis, using the straight-line method over the estimated useful life of the device.

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Intangible assets that do not have indefinite useful lives are amortized over their estimated useful lives.

Through the Merger, we acquired lease agreements (the “Agreements”) with various educational and non-profit institutions that provide us with the right to use Federal Communications Commission (“FCC”) spectrum licenses (Educational Broadband Services or “EBS spectrum”) in the 2.5 GHz band.

In addition to the Agreements with educational institutions and private owners who hold the licenses, we also acquired direct ownership of spectrum licenses previously acquired by Sprint through government auctions or other acquisitions.

The Agreements with educational and certain non-profit institutions are typically for terms of five to 10 years with automatic renewal provisions, bringing the total term of the Agreements up to 30 years.

A majority of the Agreements include a right of first refusal to acquire, lease or otherwise use the license at the end of the automatic renewal periods.

Index for Notes to the Consolidated Financial Statements

Leased FCC spectrum licenses are recorded as executory contracts whereby, as a result of business combination accounting, an intangible asset or liability is recorded reflecting the extent to which contractual terms are favorable or unfavorable to current market rates.

These intangible assets or liabilities are amortized over the estimated remaining useful life of the lease agreements.

Contractual lease payments are recognized on a straight-line basis over the remaining term of the arrangement, including renewals, and are presented in Costs of services on our Consolidated Statements of Comprehensive Income.

Customer lists and the Sprint trade name are amortized using the sum-of-the-years digits method over the period in which the asset is expected to contribute to future cash flows.

Reacquired rights are amortized on a straight-line basis over the remaining term of the Management Agreement (as defined in Note 2), which represents the period of expected economic benefit.

Reacquired rights are amortized on a straight-line basis over the remaining term of the Management Agreement (as defined in Note 2 – Business Combinations ), which represents the period of expected economic benefit.

The remaining finite-lived intangible assets are amortized using the straight-line method.

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Spectrum licenses are carried at costs incurred to acquire the spectrum licenses and the costs to prepare the spectrum licenses for their intended use, such as costs to clear acquired spectrum licenses.

The Federal Communications Commission (“FCC”) issues spectrum licenses which provide us with the exclusive right to utilize designated radio frequency spectrum within specific geographic service areas to provide wireless communications services.

The FCC issues spectrum licenses which provide us with the exclusive right to utilize designated radio frequency spectrum within specific geographic service areas to provide wireless communications services.

Spectrum licenses are issued for a fixed period of time, typically up to 15 years;

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Moreover, we determined that there are currently no legal, regulatory, contractual, competitive, economic or other factors that limit the useful lives of our spectrum licenses.

The utility of radio frequency spectrum does not diminish while activated on our network nor does it otherwise deteriorate over time.

Therefore, we determined the spectrum licenses should be treated as indefinite-lived intangible assets.

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The licenses are transferred at their carrying value, as adjusted for any impairment recognized, to assets held for sale, which is included in Other current assets on our Consolidated Balance Sheets until approval and completion of the exchange or sale.

Upon closing of the transaction, spectrum licenses acquired as part of an exchange of nonmonetary assets are recorded at fair value and the difference between the fair value of the spectrum licenses obtained, carrying value of the spectrum licenses transferred and cash paid, if any, is recognized as a gain or loss on disposal of spectrum licenses included in Selling, general and administrative expenses on our

Index for Notes to the Consolidated Financial Statements

Consolidated Statements of Comprehensive Income.

Our fair value estimates of spectrum licenses are based on information for which there is little or no observable market data.

If the transaction lacks commercial substance or the fair value is not measurable, the acquired spectrum licenses are recorded at our carrying value of the spectrum assets transferred or exchanged.

Spectrum Leases

Through the Merger, we acquired lease agreements (the “Agreements”) with various educational and non-profit institutions that provide us with the right to use FCC spectrum licenses (Educational Broadband Services or “EBS spectrum”) in the 2.5 GHz band.

The Agreements with educational and certain non-profit institutions are typically for five to 10 years with automatic renewal provisions, bringing the total term of the agreement up to 30 years.

A majority of the Agreements include a right of first refusal to acquire, lease or otherwise use the license at the end of the automatic renewal periods.

These intangible assets or liabilities are amortized over the estimated remaining useful life of the lease agreements.

The Agreements enhance the overall value of our spectrum licenses as the collective value is higher than the value of individual bands of spectrum within a specific geography.

The spectrum licenses we hold plus the spectrum leases enhance the overall value of our spectrum licenses as the collective value is higher than the value of individual bands of spectrum within a specific geography.

This value is derived from the ability to provide wireless service to customers across large geographic areas and maintain the same or similar wireless connectivity quality.

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We assess the carrying value of our goodwill and other indefinite-lived intangible assets, such as our spectrum license portfolio, for potential impairment annually as of December 31 or more frequently, if events or changes in circumstances indicate such assets might be impaired.

We test goodwill on a reporting unit basis by comparing the estimated fair value of the reporting unit to its book value.

If the fair value exceeds the book value, then no impairment is measured.

As of December 31, 2022, we have identified one reporting

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unit for which discrete financial information is available and results are regularly reviewed by management:

The wireless reporting unit consists of all the assets and liabilities of T-Mobile US, Inc.

When assessing goodwill for impairment we may elect to first perform a qualitative assessment to determine if the quantitative impairment test is necessary.

If we do not perform a qualitative assessment, or if the qualitative assessment indicates it is more likely than not that the fair value of a reporting unit is less than its carrying amount, we perform a quantitative test.

We recognize an impairment charge for the amount by which the carrying amount exceeds the wireless reporting unit’s fair value;

however, the loss recognized would not exceed the total amount of goodwill recognized in the reporting unit.

We recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value;

however, the loss recognized would not exceed the total amount of goodwill allocated to that reporting unit.

In 2022, we employed a qualitative approach to assess the wireless reporting unit.

The fair value of the wireless reporting unit is determined using a market approach, which is based on market capitalization.

We recognize market capitalization is subject to volatility and will monitor changes in market capitalization to determine whether declines, if any, necessitate an interim impairment review.

In the event market capitalization does decline below its book value, we will consider the length, severity and reasons for the decline when assessing whether potential impairment exists, including considering whether a control premium should be added to the market capitalization.

We believe short-term fluctuations in share price may not necessarily reflect the underlying aggregate fair value.

No events or change in circumstances have occurred that indicate the fair value of the wireless reporting unit may be below its carrying amount at December 31, 2022.

We test our spectrum licenses for impairment on an aggregate basis, consistent with our management of the overall business at a national level.

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If the estimated fair value of the spectrum licenses is lower than their carrying amount, an impairment loss is recognized for the difference.

We estimate fair value using the Greenfield methodology, which is an income approach based on discounted cash flows associated with the intangible asset, to estimate the price at which an orderly transaction to sell the asset would take place between market participants at the measurement date under current market conditions.

Restricted Cash

Certain provisions of our debt agreements require us to maintain specified cash collateral balances.

Amounts associated with these balances are considered to be restricted cash and are included in Other assets on our Consolidated Balance Sheets.

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In 2022, we employed the qualitative method.

We estimate fair value of spectrum licenses using the Greenfield methodology.

The Greenfield methodology values the spectrum licenses by calculating the cash flow generating potential of a hypothetical start-up company that goes into business with no assets except for the asset to be valued (in this case, spectrum licenses) and makes investments required to build an operation comparable to current use.

The value of the spectrum licenses can be considered as equal to the present value of the cash flows of this hypothetical start-up company.

We base the assumptions underlying the Greenfield methodology on a combination of market participant data and our historical results, trends and business plans.

Future cash flows in the Greenfield methodology are based on estimates and assumptions of market participant revenues, EBITDA margin, network build-out period and a long-term growth rate for a market participant.

The cash flows are discounted using a weighted-average cost of capital.

No events or change in circumstances have occurred that indicate the fair value of the Spectrum licenses may be below their carrying amount at December 31, 2022.

The valuation approaches utilized to estimate fair value for the purposes of the impairment tests of goodwill and spectrum licenses require the use of assumptions and estimates, which involve a degree of uncertainty.

If actual results or future expectations are not consistent with the assumptions used in our estimate of fair value, it may result in the recording of significant impairment charges on goodwill or spectrum licenses.

The most significant assumptions within the valuation models are the discount rate, revenues, EBITDA margins, capital expenditures and long-term growth rate.

For more information regarding our impairment assessments, see Note 1 – Summary of Significant Accounting Policies and Note 6 – Goodwill, Spectrum License Transactions and Other Intangible Assets of the Notes to the Consolidated Financial Statements.

Fair Value Measurements

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Level 3 Unobservable inputs for which there is little or no market data, which require us to develop assumptions of what market participants would use in pricing the asset or liability.

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Assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

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We do not use derivatives for trading or speculative purposes.

For derivative instruments designated as cash flow hedges associated with forecasted debt issuances, changes in fair value are reported as a component of Accumulated other comprehensive loss until reclassified into Interest expense in the same period the hedged transaction affects earnings.

For derivative instruments designated as cash flow hedges associated with forecasted debt issuances, changes in fair value are reported as a component of Accumulated other comprehensive loss until reclassified into Interest expense, net in the same period the hedged transaction affects earnings.

Unrealized gains on derivatives designated in qualifying cash flow hedge relationships are recorded at fair value as assets, and unrealized losses are recorded at fair value as liabilities.

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

Revenue Recognition

We primarily generate our revenue from providing wireless services and selling or leasing devices and accessories to customers.

Our contracts with customers may involve multiple performance obligations, which include wireless services, wireless devices or a combination thereof, and we allocate the transaction price between each performance obligation based on its relative standalone selling price.

Significant Judgments

The most significant judgments affecting the amount and timing of revenue from contracts with our customers include the following items:

• Promotional EIP bill credits offered to a customer on an equipment sale that are paid over time and are contingent on the customer maintaining a service contract may result in an extended service contract based on whether a substantive penalty is deemed to exist.

• The identification of distinct performance obligations within our service plans may require significant judgment.

• Revenue is recorded net of costs paid to another party for performance obligations where we arrange for the other party to transfer goods or services to the customer (i.e., when we are acting as an agent).

For example, performance obligations relating to services provided by third-party content providers where we neither control a right to the content provider’s service nor control the underlying service itself are presented net because we are acting as an agent.

The determination of whether we control the underlying service or right to the service prior to our transfer to the customer requires, at times, significant judgment.

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• Our products are generally sold with a right of return, which is accounted for as variable consideration when estimating the amount of revenue to recognize.

Device return levels are estimated based on the expected value method as there are a large number of contracts with similar characteristics and the outcome of each contract is independent of the others.

Historical return rate experience is a significant input to our expected value methodology.

• Sales of equipment to indirect dealers who have been identified as our customer (referred to as the sell-in model) often include credits subsequently paid to the dealer as a reimbursement for any discount promotions offered to the end consumer.

These credits (payments to a customer, the dealer) are accounted for as variable consideration when estimating the amount of revenue to recognize from the sales of equipment to indirect dealers and are estimated based on historical experience and other factors, such as expected promotional activity.

• The determination of the standalone selling price for contracts that involve more than one performance obligation may require significant judgment, such as when the selling price of a good or service is not readily observable.

Wireless Services Revenue

We generate our wireless services revenues from providing access to, and usage of, our wireless communications network.

We primarily generate our revenue from providing wireless communications services and selling or leasing devices and accessories to customers.

Our contracts with customers may involve more than one performance obligation, which include wireless services, wireless devices or a combination thereof, and we allocate the transaction price between each performance obligation based on its relative standalone selling price.

Wireless Communications Services Revenue

We generate our wireless communications services revenues from providing access to, and usage of, our wireless communications network.

Service revenues also include revenues earned for providing premium services to customers, such as device insurance services.

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For usage-based and prepaid wireless services, we satisfy our performance obligations when services are rendered.

The enforceable duration of our contracts with customers is typically one month .

However, promotional EIP bill credits offered to a customer on an equipment sale that are paid over time and are contingent on the customer maintaining a service contract may result in an extended service contract based on whether a substantive penalty is deemed to exist.

Revenue is recorded net of costs paid to another party for performance obligations where we arrange for the other party to transfer goods or services to the customer (i.e., when we are acting as an agent).

Consideration payable to a customer is treated as a reduction of the total transaction price, unless the payment is in exchange for a distinct good or service, such as certain commissions paid to dealers, in which case the payment is treated as a purchase of that distinct good or service.

Federal Universal Service Fund (“USF”) and other fees are assessed by various governmental authorities in connection with the services we provide to our customers and are included in Cost of services.

Federal Universal Service Fund (“USF”) and state USF are assessed by various governmental authorities in connection with the services we provide to our customers and are included in Cost of services.

When we separately bill and collect these regulatory fees from customers, they are recorded gross in Total service revenues on our Consolidated Statements of Comprehensive Income.

For the years ended December 31, 2022, 2021 and 2020, we recorded approximately $ 185 million, $ 216 million and $ 267 million, respectively, of USF fees on a gross basis.

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We have made an accounting policy election to exclude from the measurement of the transaction price all taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction and collected by us from a customer (e.g., sales, use, value added, and some excise taxes).

Wireline Revenue

Performance obligations related to our Wireline customers include the provision of domestic and international data communications services, generally to complement wireless services.

Performance obligations related to our Wireline customers include the provision of domestic and international data communications services.

Wireline revenues are included in Other service revenues on our Consolidated Statements of Comprehensive Income.

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We generate equipment revenues from the sale or lease of mobile communication devices and accessories.

For performance obligations related to equipment contracts, we typically transfer control at a point in time when the device or accessory is delivered to, and accepted by, the customer or dealer.

Equipment revenues related to device and accessory sales are typically recognized at a point in time when control of the device or accessory is transferred to the customer or dealer.

We have elected to account for shipping and handling activities that occur after control of the related good transfers as fulfillment activities instead of assessing such activities as performance obligations.

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Generally, we recognize as a reduction of the total transaction price the effects of a financing component in contracts where customers purchase their devices and accessories on an EIP with a term of more than one year, including those financing components that are not considered to be significant to the contract.

However, we have elected the practical expedient to not recognize the effects of a significant financing component for contracts where we expect, at contract inception, that the period between the transfer of a performance obligation to a customer and the customer’s payment for that performance obligation will be one year or less.

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However, we have elected the practical expedient of not recognizing the effects of a significant financing component for contracts where we expect, at contract inception, that the period between the transfer of a performance obligation to a customer and the customer’s payment for that performance obligation will be one year or less.

Our Leasing Programs allow customers to lease a device over a period of up to 18 months and upgrade the device with a new device when eligibility requirements are met.

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For receivables associated with an end service customer in which the sale of the device was not directly to the end customer (sell-in model or devices sourced directly from OEM), the effect of imputing interest is recognized as a reduction to service revenue over the service contract period.

In these transactions, the provision of wireless services is the only performance obligation as the device sale was recognized when transferred to the dealer.

Our policies for imputed interest on EIP receivables are applied to receivables originated for Sprint and Boost (up to the sale of the Prepaid Business to DISH on July 1, 2020) customers subsequent to Merger close.

In these transactions, the provision of wireless communications services is the only performance obligation as the device sale was recognized when transferred to the dealer.

Contract Balances

Generally, our devices and service plans are available at standard prices, which are maintained on price lists and published on our website and/or within our retail stores.

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For contracts that involve more than one product or service that are identified as separate performance obligations, the transaction price is allocated to the performance obligations based on their relative standalone selling prices.

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Contract assets are included in Other current assets and Other assets and contract liabilities are included in Deferred revenue on our Consolidated Balance Sheets.

See N ote 10 – Revenue from Contracts with Customers for further information.

See Note 10 – Revenue from Contracts with Customers for further information.

Contract Modifications

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We typically do not have significant impacts from contract modifications.

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Contract Costs

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We record an asset when these incremental costs to obtain a contract are incurred and amortize them on a systematic basis that is consistent with the transfer to the customer of the goods or services to which the asset relates.

We capitalize postpaid sales commissions for service activation as costs to acquire a contract and amortize them over the estimated period of benefit, currently 24 months.

For capitalized contract costs, determining the amortization period over which such costs are recognized as well as assessing the indicators of impairment may require significant judgment.

We capitalize postpaid sales commissions for service activation as costs to acquire a contract and amortize them on a straight-line basis over the estimated period of benefit, currently 24 months.

For capitalized contract costs, determining the amortization period over which such costs are recognized as well as assessing the indicators of impairment may require judgment.

Prepaid commissions are expensed as incurred as their estimated period of benefit does not extend beyond 12 months.

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Commissions paid when the customer has a lease are treated as initial direct costs and recognized over the lease term.

Our policies for the capitalization and amortization of costs to acquire a contract are applied to the Sprint, Boost (up to the sale of the Prepaid Business to Dish on July 1, 2020) and Assurance Wireless brands subsequent to the Merger close.

Incremental costs to obtain equipment contracts (e.g., commissions paid on device and accessory sales) are recognized when the equipment is transferred to the customer.

See Note 10 – Revenue from Contracts with Customers for further information.

Brightstar Distribution

We had arrangements with Brightstar US, Inc.

(“Brightstar”), a subsidiary of SoftBank, whereby Brightstar provided supply chain and inventory management services to us in our indirect channels.

T-Mobile sold devices through Brightstar to T-Mobile indirect channels who then sold the device to an end customer.

The supply chain and inventory management arrangement included, among other things, that Brightstar may purchase inventory from the original equipment manufacturers to sell through to our indirect channels.

As compensation for these services, we remitted per unit fees to Brightstar for each device sold to these indirect dealers.

Devices sold from T-Mobile to Brightstar do not meet the criteria for a sale.

Devices transferred from T-Mobile to Brightstar remain in inventory until control is transferred upon the sale of the device to the end customer, and in some circumstances to the indirect dealer.

For customers who choose to lease a device previously sold to the indirect dealer, T-Mobile will repurchase the device from the indirect dealer and originate a lease directly with the end customer.

Repurchase activity from the indirect dealer is estimated and treated as a right of return, reducing equipment revenue at the time of sale to the indirect dealer.

Upon lease to the end customer, T-Mobile recognizes lease revenue over the associated lease term in Equipment revenues on our Consolidated Statements of Comprehensive Income.

By December 31, 2020, we had terminated or restructured most of our arrangements with Brightstar, except for reverse logistics and trade-in services.

Leases (effective January 1, 2019)

Cell Site, Retail Store and Office Facility Leases

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The right-of-use asset for a finance lease is based on the lease liability.

Lease expense for our financing leases is comprised of the amortization of the right-of-use asset and interest expense recognized based on the effective interest method.

We consider several factors in assessing whether renewal periods are reasonably certain of being exercised, including the continued maturation of our nationwide network, technological advances within the telecommunications industry and the

Index for Notes to the Consolidated Financial Statements

availability of alternative sites.

Expense for our financing leases is comprised of the amortization expense associated with the right-of-use asset and interest expense recognized based on the effective interest method.

We have concluded we are not reasonably certain to exercise the options to extend or terminate our leases.

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We include options to extend or terminate a lease when we are reasonably certain that we will exercise that option.

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In determining the discount rate used to measure the right-of-use asset and lease liability, we use rates implicit in the lease, or if not readily available, we use our incremental borrowing rate.

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Generally, we elected the practical expedient to not separate lease and non-lease components in arrangements where we are the lessee.

For arrangements in which we are the lessor of wireless devices, we did not elect this practical expedient.

For arrangements in which we are the lessor of wireless handset devices, we did not elect this practical expedient.

We did not elect the short-term lease recognition exemption;

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Sprint Retirement Pension Plan

Through the Merger, we acquired the assets and assumed the liabilities associated with the Sprint Retirement Pension Plan (the “Pension Plan”), which is a defined benefit pension plan providing postretirement benefits to certain employees.

As of December 31, 2005, the Pension Plan was amended to freeze benefit plan accruals for participants.

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Deferred tax assets and liabilities are recognized based on temporary differences between the consolidated financial statements and tax bases of assets and liabilities using enacted tax rates expected to be in effect when these differences are realized.

A valuation allowance is recorded when it is more likely than not that some portion or all of a deferred tax asset will not be

Index for Notes to the Consolidated Financial Statements

A valuation allowance is recorded when it is more likely than not that some portion or all of a deferred tax asset will not be realized.

The ultimate realization of a deferred tax asset depends on the ability to generate sufficient taxable income of the appropriate character and in the appropriate taxing jurisdictions within the carryforward periods available.

We account for uncertainty in income taxes recognized on our consolidated financial statements in accordance with the accounting guidance for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return.

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a tax return.

We assess whether it is more likely than not that a tax position will be sustained upon examination based on the technical merits of the position and adjust the unrecognized tax benefits in light of changes in facts and circumstances, such as changes in tax law, interactions with taxing authorities and developments in case law.

Other Comprehensive Income (Loss)

Other comprehensive income (loss) consists of adjustments, net of tax, related to unrealized gains (losses) on cash flow hedges, available-for-sale securities, foreign currency translation and pension and other postretirement benefits.

Other comprehensive income (loss) consists of adjustments, net of tax, related to reclassification of loss from cash flow hedges, foreign currency translation and pension and other postretirement benefits.

This is reported in Accumulated other comprehensive loss as a separate component of stockholders’ equity until realized in earnings.

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PRSUs are recognized as expense following a graded vesting schedule with their performance re-assessed and updated on a quarterly basis, or more frequently as changes in facts and circumstances warrant.

Share Repurchases

On September 8, 2022, our Board of Directors authorized a stock repurchase program for up to $ 14.0 billion of our common stock through September 30, 2023 (the “2022 Stock Repurchase Program”).

The cost of repurchased shares, including equity reacquisition costs, is included in Treasury stock on our Consolidated Balance Sheets.

We accrue the cost of repurchased shares, and exclude such shares from the calculation of basic and diluted earnings per share, as of the trade date.

We recognize a liability for share repurchases which have not settled and for which cash has not been paid in Other current liabilities on our Consolidated Balance Sheets.

Cash payments to reacquire our shares, including equity reacquisition costs, are included in Repurchases of common stock on our Consolidated Statements of Cash Flows.

See Note 15 - Repurchases of Common Stock for more information about our 2022 Stock Repurchase Program.

Earnings Per Share

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We consolidate VIEs when we are deemed to be the primary beneficiary or when the VIE cannot be deconsolidated.

See Note 4 – Sales of Certain Receivables and Note 9 – Tower Obligations for further information.

See Note 4 – Sales of Certain Receivables , Note 8 – Debt and Note 9 – Tower Obligations for further information.

In assessing which party is the primary beneficiary, all the facts and circumstances are considered, including each party’s role in establishing the VIE and its ongoing rights and responsibilities.

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and second, identifying which party, if any, has power over those activities.

In general, the parties that make the most significant decisions affecting the VIE (such as asset managers and servicers) or have the right to unilaterally remove those decision-makers are deemed to have the power to direct the activities of a VIE.

In general, the parties that make the most significant decisions affecting the VIE (such as asset managers and

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servicers) or have the right to unilaterally remove those decision-makers are deemed to have the power to direct the activities of a VIE.

Device Purchases Cash Flow Presentation

We classify all device purchases, whether acquired for sale or lease, as operating cash outflows as our predominant strategy is to sell devices to customers rather than lease them.

See Note 19 – Additional Financial Informatio n for disclosures of Leased

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devices transferred from inventory to property and equipment and Returned leased devices transferred from property and equipment to inventory.

See Note 21 – Additional Financial Information for disclosures of Leased devices transferred from inventory to property and equipment and Returned leased devices transferred from property and equipment to inventory.

Accounting Pronouncements Adopted During the Current Year

Management’s Discussion and Analysis, Selected Financial Data and Supplementary Information Amendments

On January 11, 2021, the SEC adopted amendments to eliminate the requirement for Selected Financial Data, streamline the requirement to disclose Supplementary Financial Information and amend Management’s Discussion & Analysis of Financial Condition and Results of Operations (“MD&A”).

These amendments are intended to eliminate duplicative disclosures and modernize and enhance MD&A for the benefit of investors, while simplifying compliance efforts for registrants.

The amendments became effective for us, and we adopted the amendments in February 2021, which included making certain updates to our Management’s Discussion and Analysis and removing Selected Financial Data and Supplementary Information within our Form 10-K for the year ended December 31, 2021.

Accounting Pronouncements Not Yet Adopted

Reference Rate Reform

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Facilitation of the Effects of Reference Rate Reform on Financial Reporting,” and has since modified the standard with ASU 2021-01, “Reference Rate Reform (Topic 848):

Scope” (together, the “reference rate reform standard”).

Scope” and ASU 2022-06, “Reference Rate Reform (Topic 848):

Deferral of the Sunset Date of Topic 848” (together, the “reference rate reform standard”).

The reference rate reform standard provides temporary optional expedients and allows for certain exceptions to applying existing GAAP for contract modifications and hedging relationships, subject to meeting certain criteria, that reference LIBOR or another reference rate expected to be discontinued as a result of reference rate reform.

The reference rate reform standard is available for adoption through December 31, 2024, and the optional expedients for contract modifications must be elected for all arrangements within a given Accounting Standards Codification (“ASC”) Topic or Industry Subtopic.

We expect to elect the optional expedients for eligible contract modifications accounted for under a given ASC Topic as they occur through December 31, 2022.

The application of these expedients is not expected to have a material impact on our consolidated financial statements.

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 consolidated financial statements for the year ended December 31, 2022, and the impact of applying the election to future eligible contract modifications that occur through December 31, 2024, is also not expected to be material.

Contract Assets and Contract Liabilities Acquired in a Business Combination

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Accounting for Contract Assets and Contract Liabilities from Contracts with Customers.” The standard amends ASC 805 such that contract assets and contract liabilities acquired in a business combination are added to the list of exceptions to the recognition and measurement principles such that they are recognized and measured in accordance with ASC 606.

The standard will become effective for us beginning January 1, 2023 and should be applied prospectively to all business combinations occurring after the date of adoption.

As of January 1, 2022, we have elected to adopt this standard, and it will be applied prospectively to all business combinations occurring after this date.

Accounting Pronouncements Not Yet Adopted

Troubled Debt Restructurings and Vintage Disclosures

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 creditors when a borrower is experiencing financial difficulty.

Additionally, for public business entities, the standard requires disclosure of current-period gross write-offs by year of origination for financing receivables and net investments in leases within the scope of ASC 326-20.

The standard will become effective for us beginning January 1, 2023, and will be applied prospectively, with an option for modified retrospective application for provisions related to recognition and measurement of troubled debt restructurings.

Early adoption is permitted for us at any time.

We are currently evaluating the impact this guidance will have on our Consolidated Financial Statements and the timing of adoption.

Other recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the American Institute of Certified Public Accountants, and the U.S.

Securities and Exchange Commission did not have, or are not expected to have, a significant impact on our present or future Consolidated Financial Statements.

We plan to adopt the standard when it becomes effective for us beginning January 1, 2023.

We expect the adoption of the standard to impact our disclosure of current period write-offs for certain receivables, but do not expect other updates in the standard to have a material impact on our consolidated financial statements.

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Immediately following the closing of the Merger and the surrender of the SoftBank Specified Shares Amount, pursuant to the Letter Agreement described above, DT and SoftBank held, directly or indirectly, approximately 43.6 % and 24.7 %, respectively, of the outstanding T-Mobile common stock, with the remaining approximately 31.7 % of the outstanding T-Mobile common stock held by other stockholders.

See Note 14 – S o ftBank Equity Tra nsaction for ownership details as of December 31, 2021.

See Note 14 – SoftBank Equity Transaction for ownership details as of December 31, 2022.

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The contingent consideration that could be delivered to SoftBank is classified within equity and is not subject to remeasurement.

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Fair Value of Assets Acquired and Liabilities Assumed

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For the fair values of the assets acquired and liabilities assumed, we used the cost, income and market approaches, including market participant assumptions.

Index for Notes to the Consolidated Financial Statements

The following table summarizes the fair values for each major class of assets acquired and liabilities assumed at the acquisition date.

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All of the goodwill acquired is allocated to the wireless reporting unit.

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Other intangible assets include $ 4.9 billion of customer relationships with a weighted-average useful life of eight years and tradenames of $ 207 million with a useful life of two years .

Leased spectrum arrangements that have favorable (asset) and unfavorable (liability) terms compared to current market rates were assigned fair values of $ 745 million and $ 125 million, respectively, with 18 -year and 19 -year weighted-average useful lives, respectively.

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The fair value of Spectrum licenses of $ 45.4 billion was estimated using the income approach, specifically a Greenfield model.

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The liability is presented in Accounts payable and accrued liabilities, and the indemnification asset is presented in Other current assets within our acquired assets and liabilities at the acquisition date.

In November 2020, we entered into a consent decree with the Federal Communications Commission (“FCC”) to resolve certain Lifeline matters, which resulted in a payment of $ 200 million by SoftBank.

In November 2020, we entered into a consent decree with the FCC to resolve certain Lifeline matters, which resulted in a payment of $ 200 million by SoftBank.

Final resolution of these matters could require making additional reimbursements and paying additional fines and penalties, which we do not expect to have a significant impact on our financial results.

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As of the date of the Merger, the amount of the valuation allowance reserve and uncertain tax benefit reserves was $ 851 million and $ 660 million, respectively.

Transaction Costs

We recognized transaction costs of $ 28 million, $ 201 million and $ 106 million for the years ended December 31, 2021, 2020 and 2019, respectively.

These costs were associated with legal and professional services and were recognized as Selling, general and administrative expenses on our Consolidated Statements of Comprehensive Income.

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Pro Forma Information

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• Permanent financing issued and debt redemptions occurring in connection with the closing of the Merger are assumed to have occurred on January 1, 2019, and historical interest expense associated with repaid borrowings is removed;

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• Tangible and intangible assets are assumed to be recorded at their estimated fair values as of January 1, 2019 and are depreciated or amortized over their estimated useful lives;

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For the periods subsequent to the Merger close date, the acquired Sprint subsidiaries contributed total revenues and operating income of $ 20.5 billion and $ 1.3 billion, respectively, for the year ended December 31, 2020, that were included on our Consolidated Statements of Comprehensive Income.

In connection with the entry into the Business Combination Agreement, T-Mobile USA, Inc.

(“T-Mobile USA”) entered into a commitment letter, dated as of April 29, 2018 (as amended and restated on May 15, 2018 and on September 6, 2019, the “Commitment Letter”).

On April 1, 2020, in connection with the closing of the Merger, we drew down on our $ 19.0 billion New Secured Bridge Loan Facility and our $ 4.0 billion New Secured Term Loan Facility (each as defined below).

We used the net proceeds from the drawdown of the secured facilities to refinance certain existing debt of us, Sprint and our and Sprint’s respective subsidiaries and for post-closing general corporate purposes of the combined company.

In connection with the financing provided for in the Commitment Letter, we incurred certain fees payable to the financial institutions.

On April 1, 2020, in connection with the closing of the Merger, we paid $ 355 million in Commitment Letter fees to certain financial institutions.

In connection with the entry into the Business Combination Agreement, DT and T-Mobile USA entered into a Financing Matters Agreement, dated as of April 29, 2018 (the “Financing Matters Agreement”), pursuant to which DT agreed, among other things, to consent to, subject to certain conditions, amendments to certain existing debt owed to DT, in connection with

Index for Notes to the Consolidated Financial Statements

On April 1, 2020, in connection with the closing of the Merger, we made a payment for requisite consents to DT of $ 13 million.

On May 18, 2018, under the terms and conditions described in the Consent Solicitation Statement dated as of May 14, 2018 (the “Consent Solicitation Statement”), we obtained consents necessary to effect amendments to certain existing debt of us and our subsidiaries.

On April 1, 2020, in connection with the closing of the Merger, we made payments for requisite consents to third-party note holders of $ 95 million.

Regulatory Matters

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Concurrently, and as agreed to through the Purchase Agreement, T-Mobile and Shentel entered into certain separate transactions, including the effective settlement of the pre-existing arrangements between T-Mobile and Shentel under the Management Agreement.

Index for Notes to the Consolidated Financial Statements

In exchange, T-Mobile transferred cash of approximately $ 2.0 billion, approximately $ 1.9 billion of which was determined to be consideration transferred for the Wireless Assets and the remainder of which was determined to relate to separate transactions, primarily associated with the effective settlement of pre-existing arrangements between T-Mobile and Shentel.

Accordingly, these separate transactions are not included in the calculation of the consideration transferred in exchange for the Wireless Assets, and the settlement of pre-existing arrangements between T-Mobile and Shentel did not result in material gains or losses.

Index for Notes to the Consolidated Financial Statements

Prior to the acquisition of the Wireless Assets, revenues generated from our affiliate relationship with Shentel were presented as Other service revenues.

Prior to the acquisition of the Wireless Assets, revenues generated from our affiliate relationship with Shentel were presented as Wholesale and other service revenues.

Upon the close of the transaction, revenues generated from postpaid customers within the reacquired territory are presented as Postpaid revenues on our Consolidated Statements of Comprehensive Income.

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All of the goodwill acquired is allocated to the wireless reporting unit.

Other intangible assets include $ 770 million of reacquired rights to provide services in Shentel’s former affiliate territory which is being amortized on a straight-line basis over a useful life of approximately nine years in line with the remaining term of the Management Agreement upon the acquisition of the Wireless Assets, which represents the period of expected economic benefits associated with the re-acquisition of such rights.

This fair value measurement is based on significant inputs not observable in the market, and therefore, represents a Level 3 measurement as defined in ASC 820.

The key assumptions in applying the income approach include forecasted subscriber growth rates, revenue over an estimated period of time, the discount rate, estimated capital expenditures, estimated income taxes and the long-term growth rate, as well as forecasted earnings before interest, taxes, depreciation and amortization (“EBITDA”) margins.

Index for Notes to the Consolidated Financial Statements

Note 3 – Receivables and Related Allowance for Credit Losses

We maintain an allowance for credit losses by applying an expected credit loss model.

Each period, management assesses the appropriateness of the level of allowance for credit losses by considering credit risk inherent within each portfolio segment as of the end of the period.

We consider a receivable past due when a customer has not paid us by the contractually specified payment due date.

Account balances are written off against the allowance for credit losses if collection efforts are unsuccessful and the receivable balance is deemed uncollectible (customer default), based on factors such as customer credit ratings as well as the length of time the amounts are past due.

Our portfolio of receivables is comprised of two portfolio segments:

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Accounts Receivable Portfolio Segment

Accounts receivable balances are predominately composed of amounts currently due from customers (e.g., for wireless services and monthly device lease payments), device insurance administrators, wholesale partners, other carriers and third-party retail channels.

Index for Notes to the Consolidated Financial Statements

Accounts receivable balances are predominately comprised of amounts currently due from customers (e.g., for wireless communications services and monthly device lease payments), device insurance administrators, wholesale partners, non-consolidated affiliates, other carriers and third-party retail channels.

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, timely 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, including the expected economic impacts of the Pandemic.

We consider the need to adjust our estimate of credit losses for reasonable and supportable forecasts of future economic conditions.

To do so, we monitor professional forecasts of changes in real U.S.

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 current and forecasted macroeconomic conditions.

We consider the need to adjust our estimate of credit losses for reasonable and supportable forecasts of future macroeconomic conditions.

To do so, we monitor external forecasts of changes in real U.S.

gross domestic product and forecasts of consumer credit behavior for comparable credit exposures.

We also periodically evaluate other economic indicators such as unemployment rates to assess their level of correlation with our historical credit loss statistics.

We also periodically evaluate other macroeconomic indicators such as unemployment rates to assess their level of correlation with our historical credit loss statistics.

EIP Receivables Portfolio Segment

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In addition, certain customers within the Subprime category may be required to pay a deposit.

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.

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 leveraging several factors, such as credit bureau information and consumer credit risk scores, as well as service and device plan characteristics.

Installment receivables acquired in the Merger are included in EIP receivables.

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EIP receivables had a combined weighted-average effective interest rate of 8.0 % and 5.6 % as of December 31, 2022, and 2021, respectively.

Index for Notes to the Consolidated Financial Statements

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

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EIP receivables, net of allowance for credit losses and imputed discount $ 7,669 $ 7,577

Classified on the consolidated balance sheets as:

Classified on our consolidated balance sheets as:

Equipment installment plan receivables, net of allowance for credit losses and imputed discount $ 5,123 $ 4,748

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

The following table presents the

Index for Notes to the Consolidated Financial Statements

amortized cost of our EIP receivables by delinquency status, customer credit class and year of origination as of December 31, 2021:

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

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

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EIP receivables, net of unamortized imputed discount $ 3,317 $ 2,431 $ 1,306 $ 771 $ 124 $ 48 $ 4,747 $ 3,250 $ 7,997

We estimate credit losses on our EIP receivables segment applying an expected credit loss model, which relies on historical loss data adjusted for current conditions to calculate default probabilities or an estimate for the frequency of customer default.

Our assessment of default probabilities includes receivables delinquency status, historical loss experience, how long the receivables have been outstanding, customer credit ratings as well as customer tenure.

We estimate credit losses on our EIP receivables segment by applying an expected credit loss model, which relies on historical loss data adjusted for current conditions to calculate default probabilities or an estimate for the frequency of customer default.

Our assessment of default probabilities or frequency includes receivables delinquency status, historical loss experience, how long the receivables have been outstanding and customer credit ratings, as well as customer tenure.

We multiply these estimated default probabilities by our estimated loss given default, which is the estimated amount or severity of the default loss after adjusting for estimated recoveries.

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 professional forecasts and periodic internal statistical analyses, including the expected economic impacts of the Pandemic.

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.

Index for Notes to the Consolidated Financial Statements

Activity for the years ended December 31, 2022, 2021 and 2020, in the allowance for credit losses and unamortized imputed discount balances for the accounts receivable and EIP receivables segments were as follows:

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Allowance for credit losses and imputed discount, end of period $ 167 $ 811 $ 978 $ 146 $ 630 $ 776 $ 194 $ 605 $ 799

Credit loss activity increased during 2022, as activity normalized relative to muted Pandemic levels in 2021 and other macroeconomic trends contributed to adverse scenarios and presented additional uncertainty due to, for example, the potential effects associated with higher inflation, rising interest rates and changes in the Federal Reserve’s monetary policy, as well as geopolitical risks, including the war in Ukraine.

Off-Balance-Sheet Credit Exposures

We do not have material, unmitigated off-balance-sheet credit exposures as of December 31, 2021.

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

See Note 4 – Sales of Certain Receivables for further information.

Index for Notes to the Consolidated Financial Statements

Note 4 – Sales of Certain Receivables

We have entered into transactions to sell certain service accounts receivable and EIP receivables.

We regularly enter into transactions to sell certain service accounts receivable and EIP receivables.

The transactions, including our continuing involvement with the sold receivables and the respective impacts to our consolidated financial statements, are described below.

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In 2015, we entered into an arrangement to sell certain EIP receivables on a revolving basis (the “EIP sale arrangement”).

The maximum funding commitment of the sale arrangement is $ 1.3 billion.

The maximum funding commitment of the EIP sale arrangement is $ 1.3 billion.

On November 2, 2022, we extended the scheduled expiration date of the EIP sale arrangement to November 18, 2023.

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

Pursuant to the EIP sale arrangement, our wholly-owned subsidiary transfers selected receivables to the EIP BRE.

The EIP BRE then sells the receivables to a non-consolidated and unaffiliated third-party entity over which we do not exercise any level of control, nor does the third-party entity qualify as a VIE.

Pursuant to the EIP sale arrangement, selected receivables are transferred to the EIP BRE.

The EIP BRE then sells the receivables to a non-consolidated and unaffiliated third-party entity over which we do not exercise any level

Index for Notes to the Consolidated Financial Statements

of control, nor does the third-party entity qualify as a VIE.

Variable Interest Entity

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Accordingly, we include the balances and results of operations of the EIP BRE on our consolidated financial statements.

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

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

(in millions) December 31,

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Other assets 136 125

Other long-term liabilities — 4

In addition, the EIP BRE is a separate legal entity with its own separate creditors who will be entitled, prior to any liquidation of the EIP BRE, to be satisfied prior to any value in the EIP BRE becoming available to us.

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In 2014, we entered into an arrangement to sell certain service accounts receivable on a revolving basis (the “service receivable sale arrangement”).

The maximum funding commitment of the service receivable sale arrangement is $ 950 million and the facility expires in March 2022.

As of December 31, 2021 and 2020, the service receivable sale arrangement provided funding of $ 775 million and $ 772 million, respectively.

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

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

Sales of receivables occur daily and are settled on a monthly basis.

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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”).

In March 2021, we amended the sale arrangement to conform its structure to the EIP sale arrangement (the “March 2021 Amendment”).

This involved, among other things, removal of an unaffiliated special purpose entity that we did not consolidate under the original structure and changes in

Index for Notes to the Consolidated Financial Statements

contractual counterparties.

While the amendment simplified the structure of the arrangement by making it more efficient, it did not impact the maximum funding commitment under, or the level of funding provided by, the facility.

Pursuant to the amended service receivable sale arrangement, our wholly-owned subsidiary transfers selected receivables to the Service BRE.

The Service BRE then sells the receivables to a non-consolidated and unaffiliated third-party entity over which we do not exercise any level of control and which does not qualify as a VIE.

Pursuant to the service receivable sale arrangement, selected receivables are transferred to the Service BRE.

The Service BRE then sells the receivables to a non-consolidated and unaffiliated third party entity over which we do not exercise any level of control, nor does the third party qualify as a VIE.

Variable Interest Entity

Prior to the March 2021 Amendment, the Service BRE did not qualify as a VIE, but due to the significant level of control we exercised over the entity, it was consolidated.

The March 2021 Amendment to the service receivable sale arrangement triggered a VIE reassessment, and we determined that the Service BRE now qualifies as a VIE.

Prior to the March 2021 amendment of the service receivable sale arrangement, the Service BRE did not qualify as a VIE, but due to the significant level of control we exercised over the entity, it was consolidated.

In March 2021, the amendment to the service receivable sale arrangement triggered a VIE reassessment, and we determined that the Service BRE now qualifies as a VIE.

We have a variable interest in the Service BRE and have determined that we are the primary beneficiary based on our ability to direct the activities that most significantly impact the Service BRE’s economic performance.

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Accordingly, we include the balances and results of operations of the Service BRE on our consolidated financial statements.

Index for Notes to the Consolidated Financial Statements

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As of December 31, 2022 and 2021, our deferred purchase price related to the sales of service receivables and EIP receivables was $ 692 million and $ 779 million, respectively.

Index for Notes to the Consolidated Financial Statements

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

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

(in millions) December 31,

2022 December 31,

Derecognized net service receivables and EIP receivables $ 2,492 $ 2,528

Derecognized net service accounts receivable and EIP receivables $ 2,410 $ 2,492

Other current assets 558 655

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Other current liabilities 389 348

Other long-term liabilities — 4

Net cash proceeds since inception 1,697 1,754

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

As of December 31, 2021 and 2020, the total principal balance of outstanding transferred service receivables and EIP receivables were $ 1.0 billion and $ 1.2 billion, respectively.

We recognized losses from sales of receivables, including adjustments to the receivables’ fair values and changes in fair value of the deferred purchase price, of $ 15 million, $ 36 million and $ 130 million for the years ended December 31, 2021 2020 and 2019, respectively, in Selling, general and administrative expense on our Consolidated Statements of Comprehensive Income.

We recognized losses from sales of receivables, including changes in fair value of the deferred purchase price, of $ 214 million, $ 15 million and $ 36 million for the years ended December 31, 2022, 2021 and 2020, respectively, in Selling, general and administrative expense on our Consolidated Statements of Comprehensive Income.

As of both December 31, 2022 and 2021, the total principal balance of outstanding transferred service receivables and EIP receivables was $ 1.0 billion.

Index for Notes to the Consolidated Financial Statements

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 accounts receivable 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.

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Note 5 – Property and Equipment

The components of property and equipment were as follows:

The components of property and equipment, excluding amounts transferred to held for sale, were as follows:

(in millions) Useful Lives December 31,

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Total depreciation expense relating to property and equipment and financing lease right-of-use assets was $ 12.7 billion, $ 15.2 billion and $ 13.1 billion for the years ended December 31, 2022, 2021 and 2020, respectively.

These amounts include depreciation expense related to leased wireless devices of $ 3.1 billion for each of the years ended December 31, 2021 and 2020 and $ 543 million for the year ended December 31, 2019.

These amounts include depreciation expense related to leased wireless devices of $ 1.1 billion for the year ended December 31, 2022 and $ 3.1 billion for each of the years ended December 31, 2021 and 2020.

We capitalize interest associated with the acquisition or construction of certain property and equipment and spectrum intangible assets.

We recognized capitalized interest of $ 61 million, $ 210 million and $ 440 million for the years ended December 31, 2022, 2021 and 2020, respectively.

Index for Notes to the Consolidated Financial Statements

Asset retirement obligations are primarily for certain legal obligations to remediate leased property on which our network infrastructure and administrative assets are located.

Activity in our asset retirement obligations was as follows:

(in millions) Year Ended December 31, 2021 Year Ended December 31, 2020

(in millions) Year Ended

December 31, 2022 Year Ended

December 31, 2021

Asset retirement obligations, beginning of year $ 1,899 $ 1,817

Fair value of liabilities acquired through Merger — 1,110

Liabilities incurred 10 54

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Changes in estimated cash flows 292 139

Transfers to held for sale ( 35 ) —

Asset retirement obligations, end of period $ 1,852 $ 1,899

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Other long-term liabilities 1,585 1,683

The corresponding assets, net of accumulated depreciation, related to asset retirement obligations were $ 613 million and $ 912 million as of December 31, 2021 and 2020, respectively.

The corresponding assets, net of accumulated depreciation and excluding amounts transferred to held for sale, related to asset retirement obligations were $ 546 million and $ 613 million as of December 31, 2022 and 2021, respectively.

Index for Notes to the Consolidated Financial Statements

Postpaid Billing System Impairment

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In order to facilitate customer migration from the Sprint legacy billing platform, our postpaid billing system replacement plan and associated development will no longer serve our future needs.

As a result, we recorded a non-cash impairment $ 200 million related to capitalized software development costs for the year ended December 31, 2020, all of which relates to the impairment recognized during the three months ended June 30, 2020.

As a result, we recorded a non-cash impairment of $ 200 million related to capitalized software development costs for the year ended December 31, 2020.

The expense is included in Impairment expense on our Consolidated Statements of Comprehensive Income.

There were no impairments recognized for the years ended 2021 and 2019.

Wireline Impairment

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 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.

The results of this assessment indicated that certain Wireline long-lived assets were impaired.

See Note 16 - Wireline for further information.

Note 6 – Goodwill, Spectrum License Transactions and Other Intangible Assets

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(in millions) Goodwill

Historical goodwill, net of accumulated impairment losses of $ 10,766

Goodwill from acquisition in 2020 9,405

Layer3 goodwill impairment ( 218 )

Balance as of December 31, 2020, net of accumulated impairment losses of $ 10,984

Purchase price adjustments of goodwill in 2021 22

Goodwill from acquisitions in 2021 1,049

Balance as of December 31, 2021 12,188

Purchase price adjustment of goodwill from acquisitions in 2020 22

Goodwill from acquisitions in 2022 46

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Accumulated impairment losses at December 31, 2022 $ ( 10,984 )

On April 1, 2020, we completed our Merger with Sprint, which was accounted for as a business combination resulting in $ 9.4 billion in goodwill.

The acquired goodwill was allocated to the wireless reporting unit and will be tested for impairment at this level.

See Note 2 – Business Combinatio ns for further information.

On July 1, 2021, we completed our acquisition of the Wireless Assets from Shentel, which was accounted for as a business combination resulting in $ 1.0 billion in goodwill.

The acquired goodwill was allocated to the wireless reporting unit and will be tested for impairment at this level.

See Note 2 – Business Combinations for further information.

Index for Notes to the Consolidated Financial Statements

Goodwill Impairment Assessment

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In the event an impairment is required, the asset is adjusted to its estimated fair value using market-based assumptions, to the extent they are available, as well as other assumptions that may require significant judgement.

For our assessment of the wireless reporting unit, we employed a qualitative approach.

The fair value of the wireless reporting unit is estimated using a market approach, which is based on market capitalization.

We recognize market capitalization is subject to volatility and will monitor changes in market capitalization to determine whether declines, if any, necessitate an interim impairment review.

We believe short-term fluctuations in share price may not necessarily reflect the underlying aggregate fair value.

No events or change in circumstances have occurred that indicate the fair value of the wireless reporting unit may be below its carrying amount at December 31, 2021.

In the year ending December 31, 2020, we recognized a goodwill impairment of $ 218 million for the Layer3 reporting unit.

For our annual assessment of the wireless reporting unit, we employed a qualitative approach.

The fair value of the wireless reporting unit was estimated using a market approach, which is based on market capitalization.

In addition to performing an assessment under the market approach we also considered any events or change in circumstances that occurred, noting no indication that the fair value of the wireless reporting unit may be below its carrying amount at December 31, 2022.

In the year ended December 31, 2020, we recognized a goodwill impairment of $ 218 million for the Layer3 reporting unit.

The impairment was the result of our enhanced in-home broadband opportunity following the Merger, along with the acquisition of certain content rights, which has created a strategic shift in our TVision TM services offering.

The expense is included in Impairment expense on our Consolidated Statements of Comprehensive Income.

There were no goodwill impairments recognized for the years ended December 31, 2021 and 2019.

Index for Notes to the Consolidated Financial Statements

Intangible Assets

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As these contracts pertain to intangible assets, they are excluded from the lease accounting guidance (ASC 842) and are accounted for as service contracts in which the expense is recognized on a straight-line basis over the lease term.

Favorable spectrum leases of $ 745 million were recorded as an intangible asset as a result of purchase accounting and will be amortized on a straight-line basis over the associated remaining lease term.

Favorable spectrum leases of $ 745 million were recorded as an intangible asset as a result of purchase accounting and are being amortized on a straight-line basis over the associated remaining lease term.

Additionally, we recognized unfavorable spectrum lease liabilities of $ 125 million, which are also amortized over their respective remaining lease terms and are included in Other liabilities on our Consolidated Balance Sheets.

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Other intangible assets are amortized over the remaining period that the asset is expected to provide a benefit to us.

Index for Notes to the Consolidated Financial Statements

Identifiable Intangible Assets Acquired in the Shentel Acquisition

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In March 2021, the FCC announced that we were the winning bidder of 142 licenses in Auction 107 (C-band spectrum) for an aggregate purchase price of $ 9.3 billion, excluding relocation costs.

At the inception of Auction 107 in October 2020, we deposited $ 438 million.

Upon conclusion of Auction 107 in March 2021, we paid the FCC the remaining $ 8.9 billion for the licenses won in the auction.

On July 23, 2021, the FCC issued to us the licenses won in Auction 107.

We expect to incur an additional $ 767 million in fixed relocation costs, which will be paid through 2024.

Index for Notes to the Consolidated Financial Statements

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.

At inception of Auction 110 in September 2021, we deposited $ 100 million.

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

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

The licenses are included in Spectrum licenses on our Consolidated Balance Sheets as of December 31, 2022.

In September 2022, the FCC announced that we were the winning bidder of 7,156 licenses in Auction 108 (2.5 GHz spectrum) for an aggregate price of $ 304 million.

At inception of Auction 108 in June 2022, we deposited $ 65 million.

We paid the FCC the remaining $ 239 million for the licenses won in the auction in September 2022.

The aggregate cash payments made to the FCC are included in Other assets on our Consolidated Balance Sheets as of December 31, 2022, 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.

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, on our Consolidated Statements of Cash Flows for the year ended December 31, 2022.

We expect to incur an additional $ 1.0 billion in relocation costs which will be paid through 2024.

As of December 31, 2021, the activities that are necessary to get the C-band spectrum ready for its intended use have not begun, as such, capitalization of the interest associated with the costs of acquiring the C-band spectrum has not begun.

Subsequent to December 31, 2021, 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.

At inception of Auction 110 in September 2021, we deposited $ 100 million.

We paid the FCC the remaining $ 2.8 billion for the licenses won in the auction in the first quarter of 2022.

As of December 31, 2022, the activities that are necessary to get the C-band, mid-band and 2.5 GHz spectrum ready for its intended use have not begun;

as such, capitalization of the interest associated with the costs of acquiring these spectrum licenses has not begun.

License Purchase Agreements

DISH Network Corporation

On July 1, 2020, we and DISH Network Corporation (“DISH”) entered into a license purchase agreement (the “DISH 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 DISH 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 are required, unless otherwise approved under the Consent Decree, 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.

Channel 51 License Co LLC and LB License Co, LLC

On August 8, 2022, we, Channel 51 License Co LLC and LB License Co, LLC (together with Channel 51 License Co LLC, the “Sellers”) entered into License Purchase Agreements pursuant to which we will acquire spectrum in the 600 MHz band from the Sellers in exchange for total cash consideration of $ 3.5 billion.

The licenses will be acquired without any associated networks, but are currently being utilized through exclusive leasing arrangements with the Sellers.

The parties have agreed that closing will occur within 180 days after the receipt of required regulatory approvals, and payment of the $ 3.5 billion purchase price will occur no later than 40 days after the date of such closing.

We anticipate the transactions will close in mid- to late-2023.

Impairment Assessment

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No events or change in circumstances have occurred that indicate the fair value of the Spectrum licenses may be below its carrying amount at December 31, 2022.

Index for Notes to the Consolidated Financial Statements

Other Intangible Assets

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Other intangible assets $ 6,907 $ ( 3,399 ) $ 3,508 $ 6,925 $ ( 2,192 ) $ 4,733

Index for Notes to the Consolidated Financial Statements

Amortization expense for intangible assets subject to amortization was $ 1.3 billion, $ 1.2 billion and $ 82 million for the years ended December 31, 2021, 2020 and 2019, respectively.

The gross amount and accumulated amortization of certain customer relationships, tradenames and patents that became fully amortized and retired during the year are excluded from the table above.

The estimated aggregate future amortization expense for intangible assets subject to amortization are summarized below:

Amortization expense for intangible assets subject to amortization was $ 1.2 billion, $ 1.3 billion and $ 1.2 billion for the years ended December 31, 2022, 2021 and 2020, respectively.

The estimated aggregate future amortization expense for intangible assets subject to amortization is summarized below:

(in millions) Estimated Future Amortization

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Note 7 – Fair Value Measurements

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

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

Periodically, we use derivatives to manage exposure to market risk, such as interest rate risk.

We designate certain derivatives as hedging instruments in a qualifying hedge accounting relationship (cash flow hedge) to help minimize significant, unplanned fluctuations in cash flows caused by interest rate volatility.

We designate certain derivatives as hedging instruments in a qualifying hedge accounting relationship to help minimize significant, unplanned fluctuations in cash flows or fair values caused by designated market risks, such as interest rate volatility.

We do not use derivatives for trading or speculative purposes.

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

For fair value hedges, the change in the fair value of the derivative instruments is recognized in earnings through the same income statement line item as the change in the fair value of the hedged item.

For cash flow hedges, the change in the fair value of the derivative instruments is reported in Other comprehensive income (loss) and recognized in earnings when the hedged item is recognized in earnings, again, through the same income statement line item.

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

Index for Notes to the Consolidated Financial Statements

Interest Rate Lock Derivatives

In October 2018, we entered into interest rate lock derivatives with notional amounts of $ 9.6 billion.

In November 2019, we extended the mandatory termination date on our interest rate lock derivatives to June 3, 2020.

For the three months ended March 31, 2020, we made net collateral transfers to certain of our derivative counterparties totaling $ 580 million, which included variation margin transfers to (or from) such derivative counterparties based on daily market movements.

No amounts were transferred to the derivative counterparties subsequent to March 31, 2020.

These collateral transfers are included in Net cash related to derivative contracts under collateral exchange arrangements within Net cash used in investing activities on our Consolidated Statements of Cash Flows.

We recorded interest rate lock derivatives on our Consolidated Balance Sheets at fair value that was derived primarily from observable market data, including yield curves.

Interest rate lock derivatives were classified as Level 2 in the fair value hierarchy.

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

During the three months ended March 31, 2020, we made net collateral transfers to certain of our derivative counterparties totaling $ 580 million, which are included in Net cash related to derivative contracts under collateral exchange arrangements within Net cash used in investing activities on our Consolidated Statements of Cash Flows.

Between April 2 and April 6, 2020, in connection with the issuance of an aggregate of $ 19.0 billion of Senior Secured Notes, we terminated our interest rate lock derivatives.

At the time of termination, the interest rate lock derivatives were a liability of $ 2.3 billion, of which $ 1.2 billion was cash-collateralized.

The cash flows associated with the settlement of interest rate lock derivatives are presented on a gross basis on our Consolidated Statements of Cash Flows, with the total cash payments to settle the swaps of $ 2.3 billion presented in changes in Other current and long-term liabilities within Net cash provided by operating activities and the return of cash collateral of $ 1.2 billion presented as an inflow in Net cash related to derivative contracts under collateral exchange arrangements within Net cash used in investing activities for the year ended December 31, 2020.

Aggregate changes in the fair value of the interest rate lock derivatives, net of tax and amortization, of $ 1.3 billion and $ 1.5 billion are presented in Accumulated other comprehensive loss on our Consolidated Balance Sheets as of December 31, 2022 and 2021, respectively.

Between April 2 and April 6, 2020, in connection with the issuance of an aggregate of $ 19.0 billion of Senior Secured Notes bearing interest rates ranging from 3.500 % to 4.500 % and maturing in 2025 through 2050, we terminated our interest rate lock derivatives.

At the time of termination in the second quarter of 2020, the interest rate lock derivatives were a liability of $ 2.3 billion, of which $ 1.2 billion was cash-collateralized.

Index for Notes to the Consolidated Financial Statements

the return of cash collateral of $ 1.2 billion presented as an inflow in Net cash related to derivative contracts under collateral exchange arrangements within Net cash used in investing activities for the year ended December 31, 2020.

Upon the issuance of debt to which the hedged interest rate risk related, we began amortizing the Accumulated other comprehensive loss related to the derivatives into Interest expense in a manner consistent with how the hedged interest payments affect earnings.

For the years ended December 31, 2021 and 2020, $ 189 million and $ 128 million, respectively, were amortized from Accumulated other comprehensive loss into Interest expense in the Consolidated Statements of Comprehensive Income.

No amounts were amortized into Interest expense for the year ended December 31, 2019.

We expect to amortize $ 203 million of the Accumulated other comprehensive loss associated with the derivatives into Interest expense over the 12 months ended December 31, 2022.

For the years ended December 31, 2022, 2021 and 2020, $ 203 million, $ 189 million and $ 128 million, respectively, were amortized from Accumulated other comprehensive loss into Interest expense, net, on our Consolidated Statements of Comprehensive Income.

We expect to amortize $ 219 million of the Accumulated other comprehensive loss associated with the derivatives into Interest expense, net, over the 12 months ending December 31, 2023.

Deferred Purchase Price Assets

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

The fair value of our Senior 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.

The fair value of our Senior Notes to affiliates was determined based on a discounted cash flow approach using market interest rates of instruments with similar terms and maturities and an estimate for our standalone credit risk.

Accordingly, our Senior Notes to affiliates were classified as Level 2 within the fair value hierarchy.

The fair value of our ABS Notes was determined based on quoted prices in inactive markets for identical instruments and observable changes in market interest rates, both of which are Level 2 inputs, as well as projected changes in cash collections on the underlying pool of receivables securing the ABS Notes, which is a Level 3 input.

Due to the overcollateralization of the ABS Notes, projected changes in cash collections, such as changes resulting from customer default rates, on the pool of receivables securing such notes do not significantly affect the fair value estimate of the ABS Notes and therefore such notes were classified as Level 2 within the fair value hierarchy.

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.

1 unchanged sentence

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

Index for Notes to the Consolidated Financial Statements

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

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Senior Notes to third parties (2)

1 $ 66,582 $ 59,011 $ 30,309 $ 32,093

Senior Notes to affiliates 2 1,495 1,460 3,739 3,844

Senior Secured Notes to third parties (2)

(1) Excludes $ 47 million and $ 240 million as of December 31, 2021 and 2020, respectively, in vendor financing arrangements and other debt as the carrying values approximate fair value primarily due to the short-term maturities of these instruments.

1 3,117 2,984 40,098 42,393

ABS Notes to third parties 2 746 744 — —

(1) Excludes $ 20 million and $ 47 million as of December 31, 2022, and 2021, respectively, in other financial liabilities as the carrying values approximate fair value primarily due to the short-term maturities of these instruments.

(2) Following the achievement of an investment grade issuer rating from each of the three main credit rating agencies and entry into an amendment to our Credit Agreement, the Senior Secured Notes (which exclude, for the avoidance of doubt, the Spectrum-Backed Notes), are no longer secured and have been reclassified to Senior Notes to third parties as of September 30, 2022, within the table above.

See Note 8 – Debt for additional information.

Index for Notes to the Consolidated Financial Statements

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2022 December 31,

3.360 % Series 2016-1 A-1 Notes due 2021

7.250 % Senior Notes due 2021

11.500 % Senior Notes due 2021

4.000 % Senior Notes to affiliates due 2022

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3.500 % Senior Notes due 2025

7.125 % Senior Notes due 2024

3.500 % Senior Secured Notes due 2025

4.738 % Series 2018-1 A-1 Notes due 2025

1 unchanged sentence

1.500 % Senior Notes due 2026

1.500 % Senior Secured Notes due 2026

2.250 % Senior Notes due 2026

2 unchanged sentences

3.750 % Senior Notes due 2027

4.500 % Senior Notes to affiliates due 2026

5.375 % Senior Notes due 2027

3.750 % Senior Secured Notes due 2027

2.050 % Senior Notes due 2028

2.050 % Senior Secured Notes due 2028

4.750 % Senior Notes due 2028

4.750 % Senior Notes to affiliates due 2028

4.910 % Class A Senior ABS Notes due 2028

5.152 % Series 2018-1 A-2 Notes due 2028

6.875 % Senior Notes due 2028

2.400 % Senior Secured Notes due 2029

2.400 % Senior Notes due 2029

2.625 % Senior Notes due 2029

3.875 % Senior Secured Notes due 2030

2.250 % Senior Secured Notes due 2031

2.550 % Senior Secured Notes due 2031

3.375 % Senior Notes due 2029

3.875 % Senior Notes due 2030

2.700 % Senior Secured Notes due 2032

2.250 % Senior Notes due 2031

4.375 % Senior Secured Notes due 2040

3.000 % Senior Secured Notes due 2041

4.500 % Senior Secured Notes due 2050

3.300 % Senior Secured Notes due 2051

3.400 % Senior Secured Notes due 2052

3.600 % Senior Secured Notes due 2060

2.550 % Senior Notes due 2031

2.875 % Senior Notes due 2031

3.500 % Senior Notes due 2031

2.700 % Senior Notes due 2032

8.750 % Senior Notes due 2032

5.200 % Senior Notes due 2033

4.375 % Senior Notes due 2040

3.000 % Senior Notes due 2041

4.500 % Senior Notes due 2050

3.300 % Senior Notes due 2051

3.400 % Senior Notes due 2052

5.650 % Senior Notes due 2053

3.600 % Senior Notes due 2060

5.800 % Senior Notes due 2062

Other debt 20 47

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Total long-term debt $ 66,796 $ 68,570

Index for Notes to the Consolidated Financial Statements

Our effective interest rate, excluding the impact of derivatives and capitalized interest, was approximately 3.9 % and 4.1 % for the years ended December 31, 2022 and 2021, respectively, on weighted-average debt outstanding of $ 72.5 billion and $ 74.0 billion for the years ended December 31, 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.

The weighted-average debt outstanding was

Index for Notes to the Consolidated Financial Statements

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.

Senior Secured Notes

Following the achievement of an investment grade issuer rating from each of the three main credit rating agencies, on August 22, 2022, we entered into an amendment (“Credit Agreement Amendment”) to our Credit Agreement, dated April 1, 2020 to release the liens securing the obligations under the Credit Agreement.

Upon effectiveness of the Credit Agreement Amendment, the liens securing the Senior Secured Notes were also automatically released, and our obligations under the Senior Secured Notes (thereafter, together with our other senior unsecured notes, “Senior Notes”), which for the avoidance of doubt exclude the Spectrum-Backed Notes, are no longer secured.

The Senior Notes are guaranteed on a senior unsecured basis by the Company and certain of our consolidated subsidiaries.

They are redeemable at our discretion, in whole or in part, at any time.

The redemption price is calculated by reference to date on which such notes are redeemed and generally includes a premium that steps down gradually as the Senior Notes approach their par call date, on or after which they are redeemable at par.

The amount of time by which the par call date precedes the maturity date of the respective series of Senior Notes varies from one to three years .

Issuances and Borrowings

During the year ended December 31, 2021, we issued the following Senior Notes and Senior Secured Notes:

During the year ended December 31, 2022, we issued the following Senior Notes and ABS Notes:

(in millions) Principal Issuances Premiums/Discounts and Issuance Costs Net Proceeds from Issuance of Long-Term Debt Issue Date

5.200 % Senior Notes due 2033

$ 1,000 $ ( 7 ) $ 993 January 14, 2021

2.625 % Senior Notes due 2029

1,000 ( 7 ) 993 January 14, 2021

2.875 % Senior Notes due 2031

1,000 ( 6 ) 994 January 14, 2021

2.625 % Senior Notes due 2026

1,200 ( 7 ) 1,193 March 23, 2021

3.375 % Senior Notes due 2029

1,250 ( 7 ) 1,243 March 23, 2021

3.500 % Senior Notes due 2031

1,350 ( 8 ) 1,342 March 23, 2021

2.250 % Senior Notes due 2026

800 ( 2 ) 798 May 13, 2021

$ 1,250 $ ( 8 ) $ 1,242 September 15, 2022

5.650 % Senior Notes due 2053

1,100 6 1,106 May 13, 2021

1,000 ( 11 ) 989 September 15, 2022

5.800 % Senior Notes due 2062

1,100 6 1,106 May 13, 2021

750 ( 12 ) 738 September 15, 2022

Total of Senior Notes issued $ 3,000 $ ( 31 ) $ 2,969

3.400 % Senior Secured Notes due 2052

$ 1,300 $ ( 11 ) $ 1,289 August 13, 2021

3.600 % Senior Secured Notes due 2060

700 1 701 August 13, 2021

2.400 % Senior Secured Notes due 2029

500 ( 2 ) 498 December 6, 2021

2.700 % Senior Secured Notes due 2032

1,000 ( 8 ) 992 December 6, 2021

3.400 % Senior Secured Notes due 2052

1,500 ( 21 ) 1,479 December 6, 2021

Total of Senior Secured Notes issued $ 5,000 $ ( 41 ) $ 4,959

4.910 % Class A Senior ABS Notes due 2028

750 ( 4 ) 746 October 12, 2022

Total of ABS Notes issued $ 750 $ ( 4 ) $ 746

On September 15, 2022, T-Mobile USA and certain of its affiliates, as guarantors, issued an aggregate of $ 3.0 billion of Senior Notes bearing interest from 5.200 % to 5.800 % and maturing in 2033 to 2062, and used the net proceeds of $ 3.0 billion for general corporate purposes, including among other things, share repurchases and refinancing of existing indebtedness on an ongoing basis.

Subsequent to December 31, 2022, on February 9, 2023, we issued $ 1.0 billion of 4.950 % Senior Notes due 2028, $ 1.3 billion of 5.050 % Senior Notes due 2033 and $ 750 million of 5.650 % Senior Notes due 2053.

We intend to use the net proceeds of $ 3.0 billion for general corporate purposes, which may include among other things, share repurchases and refinancing of existing indebtedness on an ongoing basis.

Credit Facilities

T-Mobile USA and certain of its affiliates, as guarantors, have a credit agreement (the “Credit Agreement”) with certain financial institutions named therein that provides for, among other things, a $ 5.5 billion revolving credit facility (“Revolving Credit Facility”).

Borrowings under the Revolving Credit Facility will bear interest at a rate equal to a per annum rate of LIBOR plus a margin of 1.25 % with the margin subject to a reduction to 1.00 % if T-Mobile’s Total First Lien Net Leverage Ratio (as defined in the Credit Agreement) is less than or equal to 0.75 to 1.00.

The commitments under the Revolving Credit Facility mature on April 1, 2025.

The Credit Agreement contains customary representations, warranties and covenants, including a financial maintenance covenant of 3.3 x with respect to T-Mobile’s Total First Lien Net Leverage Ratio commencing with the period ending September 30, 2020.

On October 17, 2022, we entered into an Amended and Restated Credit Agreement (the “October 2022 Credit Agreement”) with certain financial institutions named therein.

The October 2022 Credit Agreement amends and restates in its entirety the Credit Agreement originally dated April 1, 2020, and provides for a $ 7.5 billion revolving credit facility, including a letter of credit sub-facility of up to $ 1.5 billion, and a swingline loan sub-facility of up to $ 500 million.

Commitments under the October 2022 Credit Agreement will mature on October 17, 2027, except as otherwise extended or replaced.

Borrowings under the October 2022 Credit Agreement will bear interest based upon the applicable benchmark rate, depending on the type of loan and, in some cases, at our election, plus a margin that is determined by reference to the credit rating of T-Mobile USA’s senior unsecured long-term debt.

The October 2022 Credit Agreement contains customary representations, warranties and covenants, including a financial maintenance covenant of 4.5 x with respect to T-Mobile USA, Inc.’s Leverage Ratio (as defined therein) commencing with the period ended December 31, 2022.

As of December 31, 2022, we did not have an outstanding balance under this facility.

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

On January 14, 2021, we issued an aggregate of $ 3.0 billion of Senior Notes.

A portion of the senior secured term loan commitment was reduced by an amount equal to the aggregate gross proceeds of the Senior Notes, which reduced the commitment to $ 2.0 billion.

On March 23, 2021, we issued an aggregate of $ 3.8 billion of Senior Notes.

The senior secured term loan commitment was terminated upon the issuance of the $ 3.8 billion of Senior Notes.

Senior Secured Notes

On August 13, 2021, T-Mobile USA and certain of its affiliates, as guarantors, issued an aggregate $ 2.0 billion of Senior Secured Notes bearing interest at 3.400 % and 3.600 %, respectively, and maturing in 2052 and 2060, respectively.

We used the net proceeds of $ 2.0 billion, together with cash on hand, to redeem our 4.500 % Senior Notes due 2026 held by DT and our 4.500 % Senior Notes due 2026 held by public investors.

Index for Notes to the Consolidated Financial Statements

On December 6, 2021, T-Mobile USA and certain of its affiliates, as guarantors, issued an aggregate of $ 3.0 billion of Senior Secured Notes bearing interest rates ranging from 2.400 % to 3.400 % and maturing in 2029 through 2052, and used the net proceeds of such issuances for general corporate purposes, which may include among other things, financing acquisitions of additional spectrum and refinancing existing indebtedness on an ongoing basis.

The Senior Secured Notes issued in 2021 have not been registered under the Securities Act of 1933, as amended (the “Securities Act”), and may not be offered or sold in the United States or to, or for the account or benefit of, U.S.

persons except in accordance with an applicable exemption from the registration requirements thereof.

Accordingly, the Senior Secured Notes were offered and sold only (1) to persons reasonably believed to be “qualified institutional buyers” under Rule 144A under the Securities Act and (2) outside the United States to non-U.S.

persons in reliance upon Regulation S under the Securities Act.

The Senior Secured Notes are secured by a first priority security interest, subject to permitted liens, in substantially all of our present and future assets, other than certain excluded assets.

They are redeemable at our discretion, in whole or in part, at any time.

If redeemed prior to their contractually specified par call date, the redemption price is subject to a make-whole premium calculated by reference to then-current U.S.

Treasury rates plus a fixed spread;

if redeemed on or after their respective par call date, the make-whole premium does not apply.

The amount of time by which the par call date precedes the maturity date of the respective series of Senior Secured Notes varies from one to six months .

We have entered into Registration Rights Agreements that are in effect through the maturity of the applicable Senior Secured Notes issued in 2021.

These agreements call for us to use commercially reasonable efforts to file a registration statement and have it declared effective within a particular time period and to maintain the effectiveness of the registration statement for a certain period of time.

If a default occurs, we will pay additional interest up to a maximum increase of 0.50 % per annum.

We have not accrued any obligations associated with the Registration Rights Agreements as compliance with the agreements is considered probable.

In 2021, we exchanged the Senior Secured Notes issued in 2020, which were not registered under the Securities Act, for substantially identical Senior Secured Notes that were registered under the Securities Act.

On January 14, 2021, T-Mobile USA and certain of its affiliates, as guarantors, issued an aggregate of $ 3.0 billion of Senior Notes bearing interest ranging from 2.250 % to 2.875 % and maturing in 2026 through 2031, and used the net proceeds of $ 3.0 billion for general corporate purposes, including among other things, the acquisition of additional spectrum and the refinancing of existing indebtedness subsequent to issuance.

On March 23, 2021, T-Mobile USA and certain of its affiliates, as guarantors, issued an aggregate of $ 3.8 billion of Senior Notes bearing interest ranging from 2.625 % to 3.500 % and maturing in 2026 through 2031, and used the net proceeds of $ 3.8 billion to acquire spectrum licenses pursuant to the Federal Communications Commission’s C-Band spectrum Auction 107, with the remainder used, together with cash on hand, to redeem T-Mobile USA’s 6.500 % Senior Notes due 2026.

On May 13, 2021, T-Mobile USA and certain of its affiliates, as guarantors, issued an aggregate of $ 3.0 billion of Senior Notes bearing interest ranging from 2.250 % to 3.500 % and maturing in 2026 through 2031, and used the net proceeds of $ 3.0 billion to redeem our 6.000 % Senior Notes due 2023, 6.000 % Senior Notes due 2024, and 5.125 % Senior Notes due 2025 with the remainder used to refinance existing indebtedness subsequent to issuance.

The Senior Notes issued in May 2021 have not been registered under the Securities Act and may not be offered or sold in the United States or to, or for the account or benefit of, U.S.

persons except in accordance with an applicable exception from the registration requirements thereof.

Accordingly, the Senior Notes issued in May 2021 were offered and sold only (1) to persons reasonably believed to be “qualified institutional buyers” under Rule 144A under the Securities Act and (2) outside the United States to non-U.S.

persons in reliance upon Regulation S under the Securities Act.

The Senior Notes are guaranteed on a senior unsecured basis by the Company and certain of our consolidated subsidiaries.

They are redeemable at our discretion, in whole or in part, at any time.

If redeemed prior to their contractually specified applicable premium end date, the redemption price is subject to a premium calculated by reference to then-current U.S.

Treasury rates plus a fixed spread;

if redeemed on or after their respective applicable premium end date, they are redeemable at a contractually specified fixed premium that steps down gradually as the Senior Notes approach their par call date, on or after which they are redeemable at par.

The amount of time by which the par call date precedes the maturity date of the respective series of Senior Notes varies from one to three years .

Index for Notes to the Consolidated Financial Statements

We have entered into a Registration Rights Agreement that is in effect through the maturity of the Senior Notes issued in May 2021.

This agreement calls for us to use commercially reasonable efforts to file a registration statement and have it declared effective within a particular time period and to maintain the effectiveness of the registration statement for a certain period of time.

If a default occurs, we will pay additional interest up to a maximum increase of 0.50 % per annum.

We have not accrued any obligations associated with the Registration Rights Agreement as compliance with the agreements is considered probable.

In connection with the Merger, we assumed the following indebtedness of Sprint:

(in millions) Fair value as of April 1, 2020 Principal Outstanding as of December 31, 2021 Carrying Value as of December 31, 2021

7.250 % Senior Notes due 2021

$ 2,324 $ — $ —

7.875 % Senior Notes due 2023

4,682 4,250 4,472

7.125 % Senior Notes due 2024

2,746 2,500 2,650

7.625 % Senior Notes due 2025

1,677 1,500 1,618

7.625 % Senior Notes due 2026

1,701 1,500 1,648

3.360 % Senior Secured Series 2016-1 A-1 Notes due 2021 (1)

4.738 % Senior Secured Series 2018-1 A-1 Notes due 2025 (1)

2,153 1,706 1,735

5.152 % Senior Secured Series 2018-1 A-2 Notes due 2028 (1)

1,960 1,838 1,936

7.000 % Senior Notes due 2020

11.500 % Senior Notes due 2021

6.000 % Senior Notes due 2022

2,372 2,280 2,312

6.875 % Senior Notes due 2028

2,834 2,475 2,772

8.750 % Senior Notes due 2032

2,649 2,000 2,577

Accounts receivable facility 2,310 — —

Other debt 464 — —

Total Debt Assumed $ 31,797 $ 20,049 $ 21,720

(1) In connection with the closing of the Merger, we assumed Sprint’s spectrum-backed notes, which are collateralized by the acquired directly held and third-party leased Spectrum licenses.

See “Spectrum Financing” section below for further information.

Index for Notes to the Consolidated Financial Statements

Note Redemptions and Repayments

During the year ended December 31, 2022, we made the following note redemptions and repayments:

(in millions) Principal Amount Write-off of Issuance Cost and Consent Fees (1)

Redemption Premium (2)

Redemption Date Redemption Price

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

4.000 % Senior Notes due 2022

$ 500 March 16, 2022 100.000 %

6.000 % Senior Notes due 2023

1,300 10 — May 23, 2021 100.000 %

6.000 % Senior Notes due 2024

1,000 9 — May 23, 2021 100.000 %

5.125 % Senior Notes due 2025

500 3 6 May 23, 2021 101.281 %

4.500 % Senior Notes due 2026

1,000 5 23 August 23, 2021 102.250 %

7.250 % Senior Notes due 2021

2,250 — — September 15, 2021 N/A

4.000 % Senior Notes to affiliates due 2022

1,000 March 16, 2022 100.000 %

5.375 % Senior Notes to affiliates due 2022

1,250 April 15, 2022 N/A

6.000 % Senior Notes due 2022

2,280 November 15, 2022 N/A

Total Senior Notes to third parties redeemed $ 9,050 $ 63 $ 94

4.500 % Senior Notes to affiliates due 2026

$ 1,000 $ 4 $ 22 August 23, 2021 102.250 %

Total Senior Notes to affiliates redeemed $ 1,000 $ 4 $ 22

3.360 % Secured Series 2016-1 A-1 Notes due 2021

$ 656 $ — $ — August 20, 2021 N/A

Total Redemptions $ 5,030

4.738 % Secured Series 2018-1 A-1 Notes due 2025

1 unchanged sentence

Other debt 1 Various N/A

Total spectrum financing and other debt repayments $ 1,234 $ — $ —

(1) Write-off of issuance costs and consent fees are included in Other expense, net on our Consolidated Statements of Comprehensive Income.

Write-off of issuance costs and consent fees are included in Loss on redemption of debt within Net cash provided by operating activities on our Consolidated Statements of Cash Flows.

(2) The redemption premium is the excess paid over the principal amount.

Redemption premiums are included in Other expense, net on our Consolidated Statements of Comprehensive Income and in Net cash used in financing activities on our Consolidated Statements of Cash Flows.

Our losses on extinguishment of debt were $ 184 million, $ 371 million, and $ 19 million for the years ended December 31, 2021, 2020 and 2019, respectively, and are included in Other expense, net on our Consolidated Statements of Comprehensive Income.

Total Repayments $ 526

Our losses on extinguishment of debt were $ 184 million and $ 371 million for the years ended December 31, 2021 and 2020, respectively, and are included in Other expense, net on our Consolidated Statements of Comprehensive Income.

There was no loss on extinguishment of debt for the year ended December 31, 2022.

Asset-backed Notes

On October 12, 2022, we issued $ 750 million of 4.910 % Class A Senior ABS Notes to third-party investors in a private placement transaction.

Our ABS Notes are secured by $ 1.0 billion of gross EIP receivables and future collections on such receivables.

In connection with issuing the ABS Notes, we formed a wholly owned subsidiary, which qualifies as a bankruptcy remote entity (the “ABS BRE”), and a trust (the “ABS Trust” and together with the ABS BRE, the “ABS Entities”), in which the ABS BRE holds a residual interest.

The ABS BRE’s residual interest in the ABS Trust represents the rights to all funds not needed to make required payments on the ABS Notes and other related payments and expenses.

Under the terms of the ABS Notes, our wholly owned subsidiary, T-Mobile Financial LLC (“FinCo”), and certain of our other wholly owned subsidiaries (collectively, the “Originators”) transfer EIP receivables to the ABS BRE, which in turn transfers such receivables to the ABS Trust, which issued the ABS Notes.

The Class A senior ABS Notes have an expected weighted average life of approximately 2.5 years.

Under the terms of the transaction, there is a two-year revolving period during which we may transfer additional receivables to the ABS Entities as collections on the receivables are received.

The EIP receivables transferred to the ABS Entities and related assets, consisting primarily of restricted cash, will only be available for payment of the ABS Notes and expenses related thereto, payments to the Originators in respect of additional transfers of device payment plan agreement receivables, and other obligations arising from our ABS Notes transactions, and will not be available to pay our other obligations until the associated ABS Notes and related obligations are satisfied.

The third-party investors in the Class A senior ABS Notes have legal recourse only to the assets of the ABS Trust securing the ABS Notes and do not have any recourse to T-Mobile with respect to the payment of principal and interest.

The receivables transferred to the ABS Trust will only be available for payment of the ABS Notes and other obligations arising from the transaction and will not be available to pay any obligations or claims of T-Mobile’s creditors.

Under a parent support agreement, T-Mobile has agreed to guarantee the performance of the obligations of FinCo, which will continue to service the receivables, and the other T-Mobile entities participating in the transaction.

However, T-Mobile does not guarantee any principal or interest on the ABS Notes or any payments on the underlying EIP receivables.

The ABS Notes are redeemable, in whole but not in part, on or after the payment date in November 2023.

If redeemed on or after the payment date in November 2024, or if the aggregate principal balance of the transferred EIP receivables is equal to or less than 10% of the aggregate principal balance of the EIP receivables transferred upon issuance of the ABS Notes, we can redeem the ABS Notes without incurring a Make-Whole Payment;

otherwise, a Make-Whole Payment applies.

Cash collections on the EIP receivables are required at certain specified times to be placed into segregated accounts.

Deposits to the segregated accounts are considered restricted cash and are included in Other current assets on our Consolidated Balance Sheets.

Index for Notes to the Consolidated Financial Statements

Net proceeds of $ 746 million from our ABS Notes are reflected in Proceeds from issuance of long-term debt on our Consolidated Statements of Cash Flows in the year ended December 31, 2022.

The ABS Notes issued and the assets securing this debt are included on our Consolidated Balance Sheets.

The expected maturities of our ABS Notes are as follows:

Expected Maturities

(in millions) 2024 2025

4.910 % Class A Senior ABS Notes due 2028

Variable Interest Entities

The ABS Entities meet the definition of a VIE for which we have determined that we are the primary beneficiary as we have the power to direct the activities of the ABS Entities that most significantly impact their performance.

Those activities include selecting which receivables are transferred into the ABS Entities, servicing such receivables, and funding of the ABS Entities.

Additionally, our equity interest and residual interest in the ABS BRE and the ABS Trust, respectively, obligate us to absorb losses and gives us the right to receive benefits from the ABS Entities that could potentially be significant to the ABS Entities.

Accordingly, we include the balances and results of operations of the ABS Entities in our consolidated financial statements.

The following table summarizes the carrying amounts and classification of assets and liabilities included in our Consolidated Balance Sheets with respect to the ABS Entities:

(in millions)

Equipment installment plan receivables, net $ 652

Equipment installment plan receivables due after one year, net 281

Other current assets 73

Accounts payable and accrued liabilities 1

Long-term debt 746

See Note 3 – Receivable and Related Allowance for Credit Losses for additional information on the EIP receivables used to secure the ABS Notes.

Spectrum Financing

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In March 2018, Sprint issued approximately $ 3.9 billion in aggregate principal amount of senior secured notes (the “2018 Spectrum-Backed Notes” and together with the 2016 Spectrum-Backed Notes, the “Spectrum-Backed Notes”) under the existing $ 7.0 billion securitization program, consisting of two series of senior secured notes.

The first series of notes totaled $ 2.1 billion in aggregate principal amount, bears interest at 4.738 % per annum, and has quarterly interest-only payments until June 2021, and amortizing quarterly principal amounts thereafter commencing in June 2021 through March 2025.

The first series of notes totaled $ 2.1 billion in aggregate principal amount, bears interest at 4.738 % per annum, and has quarterly interest-only payments until June 2021, with additional quarterly principal payments commencing in June 2021 through March 2025.

As of December 31, 2022, $ 525 million of the aggregate principal amount was classified as Short-term debt on our Consolidated Balance Sheets.

The second series of notes totaled approximately $ 1.8 billion in aggregate principal amount, bears interest at 5.152 % per annum, and has quarterly interest-only payments until June 2023, and amortizing quarterly principal amounts

As of December 31, 2022, $ 276 million of the aggregate principal amount was classified as

Index for Notes to the Consolidated Financial Statements

thereafter commencing in June 2023 through March 2028.

Short-term debt on our Consolidated Balance Sheets.

The Spectrum Portfolio, which also serves as collateral for the Spectrum-Backed Notes, remains substantially identical to the original portfolio from October 2016.

Simultaneously with the October 2016 offering, Sprint Communications, Inc.

entered a long-term lease with the Spectrum Financing SPEs for the ongoing use of the Spectrum Portfolio.

entered into a long-term lease with the Spectrum Financing SPEs for the ongoing use of the Spectrum Portfolio.

Sprint Communications, Inc.

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Each Spectrum Financing SPE is a separate legal entity with its own separate creditors who will be entitled, prior to and upon the liquidation of the respective Spectrum Financing SPE, to be satisfied out of the Spectrum Financing SPE’s assets prior to any assets of such Spectrum Financing SPE becoming available to T-Mobile.

Accordingly, the assets of each Spectrum Financing SPE are not available to satisfy the debts and other obligations owed to other creditors of T-Mobile until the obligations of such Spectrum Financing SPE under the spectrum-backed senior secured notes are paid in full.

Certain provisions of the Spectrum Financing facility require us to maintain specified cash collateral balances.

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If CCI exercises its purchase option for any tranche, it must purchase all the towers in the tranche.

We lease back a portion of the space at certain tower sites for an initial term of 10 years, followed by optional renewals at customary terms.

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

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

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These activities include managing tenants and underlying ground leases, performing repair and maintenance on the towers, the obligation to absorb expected losses and the right to receive the expected future residual returns from the purchase option to acquire the CCI Lease Sites.

As we determined that we are not the primary beneficiary and do not have a controlling financial interest in the Lease Site SPEs, the Lease Site SPEs are not included in our consolidated financial statements.

However, we also considered if this arrangement resulted in the sale of the CCI Lease Sites for which we would de-recognize the tower assets.

As we determined that we are not the primary beneficiary and do not have a controlling financial interest in the Lease Site SPEs, the Lease Site SPEs are not included on our consolidated financial statements.

However, we also considered if this arrangement resulted in the sale of the CCI Lease Sites for which we would derecognize the tower assets.

By assessing whether control had transferred, we concluded that transfer of control criteria, as discussed in the revenue standard, were not met.

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term financial obligations in the amount of the net proceeds received and recognize interest on the tower obligations at a rate of approximately 8 % using the effective interest method.

The tower obligations are increased by interest expense and amortized through contractual leaseback payments made by us to CCI and through net cash flows generated and retained by CCI from operation of the tower sites.

term financial obligations in the amount of the net proceeds received and recognize interest on the tower obligations.

Acquired CCI Tower Lease Arrangements

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CCI has a fixed price purchase option for all (but not less than all) of the leased or subleased sites for approximately $ 2.3 billion, exercisable one year prior to the expiration of the agreement and ending 120 days prior to the expiration of the agreement.

We lease back a portion of the space at certain tower sites for an initial term of 10 years, followed by optional renewals at customary terms.

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

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

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

By assessing whether control had transferred, we concluded that transfer of control criteria, as discussed in the revenue standard, were not met.

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As of the closing date of the Merger, we recognized Property and equipment with a fair value of $ 2.8 billion and tower obligations related to amounts owed to CCI under the leaseback of $ 1.1 billion.

Additionally, we recognized $ 1.7 billion in Other long-term liabilities associated with contract terms that are unfavorable to current market rates, which includes unfavorable terms associated with the fixed-price purchase option in 2037.

We recognize interest expense on the tower obligations at a rate of approximately 6 % using the effective interest method.

The tower obligations are increased by interest expense and amortized through contractual leaseback payments made by us to CCI.

Additionally, we recognized $ 1.7 billion in Other long-term liabilities associated with contract terms that are unfavorable to current market rates, which include unfavorable terms associated with the fixed-price purchase option in 2037.

We recognize interest expense on the tower obligations.

The tower obligations are increased by the interest expense and amortized through contractual leaseback payments made by us to CCI.

The tower assets are reported in Property and equipment, net on our Consolidated Balance Sheets and are depreciated to their estimated residual values over the expected useful life of the towers, which is 20 years.

Leaseback Arrangement

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 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 Crown Agreement of approximately $ 1.2 billion, with a corresponding decrease to Other long-term liabilities associated with unfavorable contract terms.

The modification resulted in a revised interest rate under the effective interest method for the tower obligations:

11.6 % for the Existing CCI Tower Lease Arrangement and 5.3 % for the Acquired CCI Tower Lease Arrangement.

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

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

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Other long-term liabilities 554 1,712

Future minimum payments related to the tower obligations are approximately $ 415 million for the year ending December 31, 2022, $ 630 million in total for the years ending December 31, 2023 and 2024, $ 626 million in total for the years ending December 31, 2025 and 2026, and $ 329 million in total for the years thereafter.

Future minimum payments related to the tower obligations are approximately $ 424 million for the 12-month period ending December 31, 2023, $ 816 million in total for both of the 12-month periods ending December 31, 2024 and 2025, $ 788 million in total for both of the 12-month periods ending December 31, 2026 and 2027, and $ 4.5 billion in total thereafter.

We are contingently liable for future ground lease payments through the remaining term of the CCI Lease Sites and the Master Lease Sites.

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Under the arrangement, we remain primarily liable for ground lease payments on approximately 900 sites and have included lease liabilities of $ 246 million in our Operating lease liabilities as of December 31, 2022.

Subsequent to December 31, 2021, on January 3, 2022, we entered into the Crown Agreement with CCI.

The Crown Agreement modifies the leaseback portion of both the Existing CCI Tower Lease Arrangement and Acquired CCI Tower Lease Arrangement detailed above.

As a result of the Crown Agreement, we expect an increase in the financing obligation as of the effective date of the agreement of approximately $ 1.2 billion, with a corresponding decrease to Other long-term liabilities due to a decrease in unfavorable lease terms.

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

Index for Notes to the Consolidated Financial Statements

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We provide wireless communications services to three primary categories of customers:

• Postpaid customers generally include customers who are qualified to pay after receiving wireless communications services utilizing phones, High Speed Internet, wearables, DIGITS or other connected devices which includes tablets and SyncUP products;

• Postpaid customers generally include customers who are qualified to pay after receiving wireless communications services utilizing phones, High Speed Internet, tablets, wearables, DIGITS or other connected devices;

• Prepaid customers generally include customers who pay for wireless communications services in advance;

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The balances presented in each revenue line item on our 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.

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

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

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Equipment revenues from the lease of mobile communication devices $ 1,430 $ 3,348 $ 4,181

We provide wireline communication services to domestic and international customers.

Wireline service revenues were $ 739 million and $ 626 million for the years ended December 31, 2021 and 2020, respectively.

Wireline service revenues are presented in Other service revenues on our Consolidated Statements of Comprehensive Income.

Contract Balances

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Contract assets primarily represent revenue recognized for equipment sales with promotional bill credits offered to customers that are paid over time and are contingent on the customer maintaining a service contract.

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.

Contract asset balances increased primarily due to an increase in promotions with an extended service contract, partially offset by billings on existing contracts and impairment, which is recognized as bad debt expense.

The current portion of our contract assets of approximately $ 356 million and $ 219 million as of December 31, 2022, and 2021, respectively, was included in Other current assets on our Consolidated Balance Sheets.

Index for Notes to the Consolidated Financial Statements

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.

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

Index for Notes to the Consolidated Financial Statements

Revenues for the years ended December 31, 2022, 2021 and 2020, include the following:

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Remaining Performance Obligations

As of December 31, 2021, 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 $ 898 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 December 31, 2021, the aggregate amount of transaction price allocated to remaining service and lease performance obligations associated with device operating leases was $ 95 million and $ 58 million, respectively.

We expect to recognize this revenue as service is provided over the device lease contract term of 18 months.

As of December 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 $ 1.4 billion.

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 December 31, 2021, the aggregate amount of the contractual minimum consideration for wholesale, roaming and service contracts is $ 1.2 billion, $ 707 million and $ 685 million for 2022, 2023, and 2024 and beyond, respectively.

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

As of December 31, 2022, the aggregate amount of the contractual minimum consideration for wholesale, roaming and service contracts is $ 2.3 billion, $ 1.9 billion and $ 3.4 billion for 2023, 2024, and 2025 and beyond, respectively.

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

Contract Costs

The total balance of deferred incremental costs to obtain contracts with customers was $ 1.5 billion and $ 1.1 billion as of December 31, 2021 and December 31, 2020, respectively, and is included in Other assets on our Consolidated Balance Sheets.

The balance of deferred incremental costs to obtain contracts with customers was $ 1.9 billion and $ 1.5 billion as of December 31, 2022, and December 31, 2021, respectively, and is included in Other assets on our 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 Consolidated Statements of Comprehensive Income and were $ 1.1 billion and $ 865 million for the years ended December 31, 2021 and 2020, respectively.

Amortization of deferred contract costs included in Selling, general and administrative expenses on our Consolidated Statements of Comprehensive Income were $ 1.5 billion, $ 1.1 billion and $ 865 million for the years ended December 31, 2022, 2021 and 2020, respectively.

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

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As of December 31, 2022, there were approximately 15 million shares of common stock available for future grants under our Incentive Plans.

We grant RSUs to eligible employees, key executives and certain non-employee directors and performance-based restricted stock units (“PRSUs”) to eligible key executives.

We grant RSUs to eligible employees, key executives and certain non-employee directors and PRSUs to eligible key executives.

RSUs entitle the grantee to receive shares of our common stock upon vesting (with vesting generally occurring annually over a three-year service period), subject to continued service through the applicable vesting date.

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Any accrued but unpaid dividend equivalents with respect to any such award of time-based RSUs or performance-based RSUs were assumed by T-Mobile at the Effective Time and became an obligation with respect to the applicable award of RSUs in respect of shares of T-Mobile common stock.

On April 22, 2020, we filed a Form S-8 to register a total of 25,304,224 shares of common stock, representing those covered by the Sprint Corporation 1997 Long-Term Stock Incentive Program, the Sprint Corporation 2007 Omnibus Incentive Plan (the “Sprint 2007 Plan”) and the Sprint Corporation Amended and Restated 2015 Omnibus Incentive Plan (the “2015 Plan”) that T-Mobile assumed in connection with the closing of the Merger.

On April 22, 2020, we filed a Registration Statement on Form S-8 to register a total of 25,304,224 shares of common stock, representing those covered by the Sprint Corporation 1997 Long-Term Stock Incentive Program, the Sprint Corporation 2007 Omnibus Incentive Plan (the “Sprint 2007 Plan”) and the Sprint Corporation Amended and Restated 2015 Omnibus Incentive Plan (the “2015 Plan”) that T-Mobile assumed in connection with the closing of the Merger.

This included 7,043,843 shares of T-Mobile common stock issuable upon exercise or settlement of the Assumed Awards held by current directors, officers, employees and consultants of T-Mobile or its subsidiaries who were directors, officers, employees and consultants of Sprint or its subsidiaries immediately prior to the Effective Time, as well as (i) 12,420,945 shares of T-Mobile common stock that remain available for issuance under the 2015 Plan and (ii) 5,839,436 additional shares of T-Mobile common stock subject to awards granted under the 2015 Plan that may become available for issuance under the 2015 Plan if any awards under the 2015 Plan are forfeited, lapse unexercised or are settled in cash.

The following activity occurred under the Incentive Plans during the year ended December 31, 2022:

Time-Based Restricted Stock Units and Restricted Stock Awards

Time-Based Restricted Stock Units

(in millions, except shares, per share and contractual life amounts) Number of Units or Awards Weighted-Average Grant Date Fair Value Weighted-Average Remaining Contractual Term (Years) Aggregate Intrinsic Value

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Index for Notes to the Consolidated Financial Statements

Performance-Based Restricted Stock Units and Restricted Stock Awards

Performance-Based Restricted Stock Units

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Performance award achievement adjustments (1)

576,866 64.44

Vested ( 831,163 ) 94.79

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However, an additional 5,000,000 shares of our common stock were automatically added to the ESPP share reserve as of each of January 1, 2020 and January 1, 2021.

No additional shares of our common stock were automatically added as of January 1, 2022 and 2023.

Stock Options

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Stock options exercised under the Stock Option Plans generated proceeds of approximately $ 7 million, $ 10 million and $ 48 million for the years ended December 31, 2022, 2021 and 2020, respectively.

The grant-date fair value of share-based incentive compensation awards attributable to post-combination services including

restricted stock units and stock options, from the Merger was approximately $ 163 million.

The grant-date fair value of share-based incentive compensation awards attributable to post-combination services including restricted stock units and stock options, from the Merger was approximately $ 163 million.

Pension and Other Postretirement Benefits Plans

Upon the completion of our Merger with Sprint, we acquired the assets and assumed the liabilities associated with the Sprint Retirement Pension Plan (the “Pension Plan”) as well as other postretirement employee benefit plans.

Upon the completion of our Merger with Sprint, we acquired the assets and assumed the liabilities associated with the Pension Plan as well as other postretirement employee benefit plans.

As of December 31, 2005, the Pension Plan was amended to freeze benefit plan accruals for the participants.

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Investments of the Pension Plan are measured at fair value on a recurring basis, which is determined using quoted market prices or estimated fair values.

As of December 31, 2021, 14 % of the investment portfolio was valued at quoted prices in active markets for identical assets, 81 % was valued using quoted prices for similar assets in active or inactive markets, or other observable inputs, and 5 % was valued using unobservable inputs that are supported by little or no market activity, the majority of which used the net asset value per share (or its equivalent) as a practical expedient to measure the fair value.

As of December 31, 2022, 17 % of the investment portfolio was valued at quoted prices in active markets for identical assets, 79 % was valued using quoted prices for similar assets in active or inactive markets, or other observable inputs, and 4 % was valued using unobservable inputs that are supported by little or no market activity.

The fair values of our Pension Plan assets and certain other postretirement benefit plan assets in aggregate were $ 1.5 billion and $ 1.4 billion and our accumulated benefit obligations in aggregate were $ 2.2 billion and $ 2.3 billion as of December 31, 2021 and 2020, respectively.

As a result, the plans were underfunded by approximately $ 633 million and $ 828 million as of

The fair values of our Pension Plan assets and certain other postretirement benefit plan assets in aggregate were $ 1.2 billion and $ 1.5 billion as of December 31, 2022 and 2021, respectively.

Certain investments, as a practical expedient, are reported at estimated fair value, utilizing net asset values of $ 24 million as of December 31, 2022 which are part of our Plan assets.

Our accumulated benefit obligations in aggregate were $ 1.6 billion and $ 2.2 billion as of December 31, 2022 and 2021,

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December 31, 2021 and 2020, respectively, and were recorded in Other long-term liabilities on our Consolidated Balance Sheets.

In determining our pension obligation for both the years ended December 31, 2021, and 2020, we used a weighted-average discount rate of 3 %.

respectively.

As a result, the plans were underfunded by approximately $ 342 million and $ 633 million as of December 31, 2022 and 2021, respectively, and were recorded in Other long-term liabilities on our Consolidated Balance Sheets.

In determining our pension obligation for the years ended December 31, 2022, and 2021, we used a weighted-average discount rate of 6 % and 3 %, respectively.

During the years ended December 31, 2022 and 2021, we made contributions of $ 37 million and $ 83 million, respectively, to the benefit plans.

We expect to make contributions to the Plan of $ 32 million through the year ending December 31, 2023.

Future benefits expected to be paid are approximately $ 100 million for the year ending December 31, 2022, $ 206 million in total for the years ending December 31, 2023 and 2024, $ 215 million in total for the years ending December 31, 2025 and 2026, and $ 562 million in total for the years ending December 31, 2027 through December 31, 2031.

Future benefits expected to be paid are approximately $ 101 million for the year ending December 31, 2023, $ 210 million in total for the years ending December 31, 2024 and 2025, $ 219 million in total for the years ending December 31, 2026 and 2027, and $ 567 million in total thereafter.

Employee Retirement Savings Plan

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The close of the Prepaid Transaction did not have a significant impact on our Consolidated Statements of Comprehensive Income.

The assets of the Prepaid Business included EIP receivables originated pursuant to financed equipment purchases by customers of the Prepaid Business.

At the time of the Prepaid Transaction, DISH did not hold certain licenses required to purchase or originate such contracts.

In order to transfer the economics of the contracts to DISH without transferring ownership of them, the parties entered into a Participation Agreement under which we agreed to transfer a 100 % participation interest in the contracts to DISH.

Under the terms of the agreement, DISH retains all cash flows collected on these assets and there is no recourse against us for any credit losses on such loans.

The proceeds received from DISH in exchange for this participation interest was a component of total consideration received for the Prepaid Transaction.

We will temporarily continue to originate equipment installment contracts on DISH’s behalf under the same terms in exchange for an amount equal to the initial outstanding principal balance of the originated contracts, again without recourse against us for any credit losses.

Of the total $ 1.4 billion of proceeds received under the Prepaid Transaction, approximately $ 162 million was allocated to the EIP receivables to which we transferred DISH a 100 % participation interest.

We accounted for this portion of the proceeds as a secured borrowing and present it in Other, net, within Net cash provided by (used in) financing activities on our Consolidated Statements of Cash Flows accordingly.

The remaining $ 1.2 billion was allocated to the divested net assets of the Prepaid Business.

The net cash received for the Prepaid Business is presented in Proceeds from the divestiture of prepaid business within Net cash used in investing activities on our Consolidated Statements of Cash Flows.

The results of the Prepaid Business include revenues and expenses directly attributable to the operations disposed.

Corporate and administrative expenses, including Interest expense, not directly attributable to the operations were not allocated to the Prepaid Business.

Corporate and administrative expenses, including Interest expense, net, not directly attributable to the operations were not allocated to the Prepaid Business.

The results of the Prepaid Business from April 1, 2020, through December 31, 2020, are presented in Income from discontinued operations, net of tax on our Consolidated Statements of Comprehensive Income.

There was no income from discontinued operations for the years ended December 31, 2022 or 2021.

Index for Notes to the Consolidated Financial Statements

The components of discontinued operations from the Merger close date of April 1, 2020, through December 31, 2020, were as follows:

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Income from discontinued operations $ 320

Index for Notes to the Consolidated Financial Statements

Net cash provided by operating activities from the Prepaid Business included in the Consolidated Statements of Cash Flows for the year ended December 31, 2020, were $ 611 million, all of which relates to the operations of the Prepaid Business during the three months ended June 30, 2020.

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Continuing Involvement

Upon the closing of the Prepaid Transaction, we and DISH entered into (i) a License Purchase Agreement pursuant to which (a) 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 certain additional closing conditions, following an application for FCC approval to be filed three years following the closing of the Merger and (b) we will have the option to lease back from DISH, as needed, a portion of the spectrum sold for an additional two years following the closing of the spectrum sale transaction, (ii) a Transition Services Agreement providing for our provisioning of transition services to DISH in connection with the Prepaid Business for a period of up to three years following the closing of the Prepaid Transaction, (iii) a Master Network Services Agreement providing for the provisioning of network services to customers of the Prepaid Business for a period of up to seven years following the closing of the Prepaid Transaction, and (iv) an Option to Acquire Tower and Retail Assets, offering DISH the option to acquire certain decommissioned towers and retail locations from us, subject to obtaining all necessary third-party consents, for a period of up to five years following the closing of the Prepaid Transaction.

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’s sole liability is to pay us a fee of approximately $ 72 million.

Upon the closing of the Prepaid Transaction, we and DISH entered into (i) a DISH License Purchase Agreement pursuant to which (a) 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 certain additional closing conditions, following an application for FCC approval to be filed three years following the closing of the Merger and (b) we will have the option to lease back from DISH, as needed, a portion of the spectrum sold for an additional two years following the closing of the spectrum sale transaction, (ii) a Transition Services Agreement providing for our provisioning of transition services to DISH in connection with the Prepaid Business for a period of up to three years following the closing of the Prepaid Transaction, (iii) a Master Network Services Agreement providing for the provisioning of network services to customers of the Prepaid Business for a period of up to seven years following the closing of the Prepaid Transaction, and (iv) an Option to Acquire Tower and Retail Assets, offering DISH the option to acquire certain decommissioned towers and retail locations from us, subject to obtaining all necessary third-party consents, for a period of up to five years following the closing of the Prepaid Transaction.

In the event DISH breaches the DISH License Purchase Agreement or fails to deliver the purchase price following the satisfaction or waiver of all closing conditions, DISH’s sole liability is to pay us a fee of approximately $ 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 was not met in the auction, we would retain the licenses.

As the sale of 800 MHz spectrum licenses is not expected to close within one year, the criteria for presentation as an asset held for sale is not met.

As it is not probable that the sale of 800 MHz spectrum licenses will close within one year, the criteria for presentation as an asset held for sale is not met.

Cash flows associated with the Master Network Services Agreement and Transition Services Agreement are included in Net cash provided by operating activities on our Consolidated Statements of Cash Flows.

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income $ 3,116 $ 3,401 $ 3,493

Foreign (loss) income ( 50 ) 37 46

Income from continuing operations before income taxes $ 3,351 $ 3,530 $ 4,603

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Foreign income (loss) 30 ( 50 ) 37

Income before income taxes $ 3,146 $ 3,351 $ 3,530

Income tax expense is summarized as follows:

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Total income tax expense $ ( 556 ) $ ( 327 ) $ ( 786 )

Index for Notes to the Consolidated Financial Statements

The reconciliation between the U.S.

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Change in valuation allowance ( 0.8 ) ( 10.7 ) ( 2.6 )

Foreign taxes, net of federal benefit 0.1 0.3 0.3

Foreign taxes 0.7 0.1 0.3

Permanent differences ( 0.2 ) 0.3 0.4

Federal tax credits, net of reserves ( 2.5 ) ( 0.9 ) ( 0.8 )

Federal tax credits ( 2.4 ) ( 2.5 ) ( 0.9 )

Equity-based compensation ( 1.2 ) ( 2.6 ) ( 2.5 )

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Lease liabilities 8,837 7,717

Property and equipment — 90

Reserves and accruals 1,526 1,280

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Deferred tax liabilities $ 10,884 $ 10,216

Index for Notes to the Consolidated Financial Statements

As of December 31, 2022, we have tax effected federal net operating loss (“NOL”) carryforwards of $ 5.6 billion, state NOL carryforwards of $ 1.6 billion and foreign NOL carryforwards of $ 31 million, expiring through 2042.

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As of December 31, 2022, 2021 and 2020, our valuation allowance was $ 375 million, $ 435 million and $ 878 million, respectively.

The change from December 31, 2020 to December 31, 2021 primarily related to a reduction in the valuation allowance against deferred tax assets in certain state jurisdictions resulting from legal entity reorganizations of legacy Sprint entities.

The change from December 31, 2019 to December 31, 2020 primarily related to $ 851 million of deferred tax assets acquired via the Merger for which a valuation allowance was deemed necessary, partially offset by a reduction in the valuation allowance against deferred tax assets in federal and certain other jurisdictions associated with additional tax attribute utilization and expiration.

The change from December 31, 2021 to December 31, 2022 primarily related to a reduction in the valuation allowance against deferred tax assets in certain foreign jurisdictions resulting from legal entity reorganizations.

The change from December 31, 2020 to December 31, 2021 primarily related to a reduction in the valuation allowance against deferred tax

Index for Notes to the Consolidated Financial Statements

assets in certain state jurisdictions resulting from legal entity reorganizations of legacy Sprint entities.

It is possible that our valuation allowance may change within the next 12 months.

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Gross decreases due to settlements with taxing authorities ( 3 ) — ( 2 )

Gross decreases due to statute of limitations lapse ( 3 ) — —

Unrecognized tax benefits, end of year $ 1,254 $ 1,217 $ 1,159

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The accrued interest and penalties associated with unrecognized tax benefits are insignificant.

It is possible that the amount of unrecognized tax benefits related to our uncertain tax positions may change within the next 12 months.

Note 14 – SoftBank Equity Transaction

On June 22, 2020, we entered into a Master Framework Agreement (the “Master Framework Agreement”) by and among the Company, SoftBank, SoftBank Group Capital Ltd, a wholly owned subsidiary of SoftBank (“SBGC”), Delaware Project 4 L.L.C., a wholly owned subsidiary of SoftBank, Delaware Project 6 L.L.C., a wholly owned subsidiary of SoftBank, Claure Mobile LLC (“CM LLC”), DT, and T-Mobile Agent LLC, a wholly owned subsidiary of the Company.

The Master Framework Agreement and related transactions were entered into to facilitate SoftBank’s monetization of a portion of our common stock held by SoftBank (the “SoftBank Monetization”).

In connection with the Master Framework Agreement, DT waived the restriction on the transfer under its Proxy, Lock-Up and ROFR Agreement, dated April 1, 2020, with SoftBank (the “SoftBank Proxy Agreement”) with respect to approximately 198 million shares of our common stock held by SoftBank (the “Released Shares”).

Upon the close of the Public Equity Offering (as defined below), we received a payment from SoftBank for $ 304 million for our role in facilitating the SoftBank Monetization.

The payment received from SoftBank, net of tax, of $ 230 million was recorded as Additional paid-in capital on our Consolidated Balance Sheets and is presented as a

Index for Notes to the Consolidated Financial Statements

reduction of Repurchases of common stock in Net cash provided by (used in) financing activities on our Consolidated Statements of Cash Flows .

Under the terms of the Master Framework Agreement and the agreements contemplated thereby, SBGC sold the Released Shares to us, and we participated in the following transactions:

Public Equity Offering

On June 26, 2020, we completed a registered public offering of approximately 154.1 million shares of our common stock ( the “Public Equity Offering”) at a price of $ 103.00 per share.

The net proceeds of the Public Equity Offering were used to repurchase an equal number of issued and outstanding shares of our common stock from SBGC, pursuant to a Share Repurchase Agreement, dated as of June 22, 2020 (the “Share Repurchase Agreement”), between us and SBGC.

Mandatory Exchangeable Offering

Concurrent with the Public Equity Offering, we sold approximately 19.4 million shares of our common stock to a third-party trust.

The net proceeds from the sale of shares to the trust were used to repurchase an equal number of issued and outstanding shares of our common stock from SBGC.

The trust issued mandatory exchangeable trust securities, which entitle holders to receive quarterly distributions from the trust and a final mandatory exchange price to be settled on June 1, 2023 (“Mandatory Exchangeable Offering”).

The trust was required to use a portion of the net proceeds from the Mandatory Exchangeable Offering to purchase U.S.

Treasury securities, to fund quarterly distributions on the mandatory exchangeable trust securities, and the holders of the mandatory exchangeable trust securities will be entitled to a final mandatory exchange amount on June 1, 2023 that will depend on the daily volume-weighted average price of shares of our common stock.

The sale of shares through the Public Equity Offering and to the trust occurred simultaneously with the purchase of shares from SBGC.

These simultaneous transactions did not result in a net change to our treasury shares or shares of common stock outstanding.

As these transactions occurred with separate counterparties, the exchange of shares and cash are recorded on a gross basis on our Consolidated Statement of Stockholders’ Equity and Consolidated Statements of Cash Flows, respectively.

The shares sold are presented in Shares issued in secondary offering and the shares purchased from SBGC are presented in Shares repurchased from SoftBank on our Consolidated Statement of Stockholders’ Equity.

The cash received from the sale of shares is presented in Issuance of common stock and the cash paid to purchase shares from SoftBank are presented in Repurchases of common stock within Net cash provided by (used in) financing activities on our Consolidated Statements of Cash Flows.

The Company is not affiliated with the trust, will not retain any proceeds from the offering of the trust securities, and will have no ongoing interest, economic or otherwise, in the trust securities.

Rights Offering

The Master Framework Agreement provides for the issuance of registered, transferable subscription rights (the “Rights Offering”) resulting in the sale of 19,750,000 shares of our common stock to our stockholders (other than SoftBank, DT and Marcelo Claure and their respective affiliates, who agreed to waive their ability to exercise or transfer such rights).

The subscription rights provided the stockholders the option to purchase one share of common stock for every 20 shares of common stock owned, at the same price per share as the common stock sold in the Public Equity Offering of $ 103.00 per share.

The Rights Offering exercise period expired on July 27, 2020.

On August 3, 2020, the Rights Offering closed, resulting in the sale of 19,750,000 shares of our common stock.

The net proceeds from the Rights Offering were used to purchase an equal number of shares from SBGC pursuant to the Share Repurchase Agreement.

Marcelo Claure

The Master Framework Agreement provided for the purchase of 5.0 million shares of our common stock by Marcelo Claure, a member of our board of directors, from us at the same price per share as the common stock sold in the Public Equity Offering of $ 103.00 per share.

Index for Notes to the Consolidated Financial Statements

Following receipt of the necessary regulatory approvals on July 16, 2020, the sale of shares to Marcelo Claure occurred simultaneously with our purchase of an equivalent number of shares from SBGC at the same price per share pursuant to the Share Repurchase Agreement.

DT Call Option

In exchange for DT consenting to the transfer of the Released Shares and as provided for in the Master Framework Agreement, DT received direct and indirect call options over up to approximately 101.5 million shares of our common stock held by SBGC.

The arrangement provided DT with a fixed-price call option to purchase up to approximately 44.9 million shares at a price of $ 101.46 per share indirectly from SBGC through a back-to-back arrangement where (i) DT could purchase such shares from us (the “DT Fixed-Price Call Option”) and (ii) we would fulfill our obligations under the DT Fixed-Price Call Option by simultaneously purchasing the same number of shares on the same economic terms from SBGC (the “T-Mobile Fixed-Price Call Option”).

In addition, DT has a floating-price call option to purchase up to approximately 56.6 million shares from SBGC directly.

The DT Fixed-Price Call Option and the T-Mobile Fixed-Price Call Option represented free-standing derivatives and were recorded at fair value and marked-to-market each period.

As the mark-to-market valuations of the T-Mobile Fixed-Price Call Option and the DT Fixed-Price Call Option moved in equal and offsetting directions, there was no net impact on our Consolidated Statements of Comprehensive Income.

On October 6, 2020, we assigned our rights under the T-Mobile Fixed-Price Call Option to DT and DT terminated its right to purchase shares from us under the DT Fixed-Price Call Option, resulting in derecognition of the related derivative asset and liability in equal and offsetting amounts of $ 1.0 billion such that there was no net impact to our Consolidated Statements of Comprehensive Income.

Under the terms of the Master Framework Agreement and the agreements contemplated thereby, SBGC sold the Released Shares to us and we entered into several transactions to sell an equivalent number of our common shares (the “SoftBank Monetization”).

In 2020, we settled our involvement with all such transactions with no net impact to our Consolidated Statements of Comprehensive Income and we received a payment from SoftBank for $ 304 million for our role in facilitating the SoftBank Monetization.

The payment received from SoftBank, net of tax, of $ 230 million was recorded as Additional paid-in capital on our Consolidated Balance Sheets and is presented as a reduction of Repurchases of common stock in Net cash (used in) provided by financing activities on our Consolidated Statements of Cash Flows .

Ownership Following the SoftBank Monetization

The SoftBank Proxy Agreement remains in effect with respect to the remaining shares of our common stock held by SoftBank.

In addition, on June 22, 2020, DT, CM LLC, and Marcelo Claure entered into a Proxy, Lock-Up and ROFR Agreement (the “Claure Proxy Agreement,” together with the SoftBank Proxy Agreement, the “Proxy Agreements”), pursuant to which any shares of our common stock acquired after June 22, 2020 by Mr.

The SoftBank Proxy Agreement remains in effect with respect to the remaining shares of our common stock held by SoftBank and any SoftBank Specified Shares Amount that may be issued to SoftBank.

In addition, on June 22, 2020, DT, CM LLC, and Marcelo Claure, a member of our board of directors, entered into a Proxy, Lock-Up and ROFR Agreement (the “Claure Proxy Agreement,” together with the SoftBank Proxy Agreement, the “Proxy Agreements”), pursuant to which any shares of our common stock acquired after June 22, 2020 by Mr.

Claure or CM LLC, an entity controlled by Mr.

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Claure’s role as a director or officer of the Company, will be voted in the manner as directed by DT.

Index for Notes to the Consolidated Financial Statements

As of December 31, 2022, DT and SoftBank held, directly or indirectly, approximately 49.0 % and 3.2 %, respectively, of the outstanding T-Mobile common stock, with the remaining approximately 47.8 % of the outstanding T-Mobile common stock held by other stockholders.

Accordingly, as a result of the Proxy Agreements, DT has voting control as of December 31, 2022 over approximately 52.7 % of the outstanding T-Mobile common stock.

Note 15 – Repurchases of Common Stock

2022 Stock Repurchase Program

On September 8, 2022, our Board of Directors authorized our 2022 Stock Repurchase Program for up to $ 14.0 billion of our common stock through September 30, 2023.

Under the 2022 Stock Repurchase Program, repurchases can be made from time to time using a variety of methods, which may include open market purchases, 10b5-1 plans, privately negotiated transactions or other methods.

The specific timing, price and size of repurchases will depend on prevailing stock prices, general economic and market conditions, and other considerations.

The 2022 Stock Repurchase Program does not obligate us to acquire any particular amount of common stock, and the 2022 Stock Repurchase Program may be suspended or discontinued at any time at our discretion.

Repurchased shares will be held as Treasury stock on our Consolidated Balance Sheets.

During the year ended December 31, 2022, we repurchased 21,361,409 shares of our common stock at an average price per share of $ 140.44 for a total purchase price of $ 3.0 billion, all of which were purchased under the 2022 Stock Repurchase Program.

All shares purchased during the year ended December 31, 2022, were purchased at market price.

As of December 31, 2022, we had up to $ 11.0 billion remaining under the 2022 Stock Repurchase Program.

Subsequent to December 31, 2022, from January 1, 2023 through February 10, 2023, we repurchased 14,676,718 shares of our common stock at an average price per share of $ 145.70 for a total purchase price of $ 2.1 billion.

As of February 10, 2023, we had up to $ 8.9 billion remaining under the 2022 Stock Repurchase Program .

Note 16 – Wireline

Sale of the Wireline Business

On September 6, 2022, two of our wholly owned subsidiaries, Sprint Communications and Sprint LLC, and Cogent Infrastructure, Inc., entered into the Wireline Sale Agreement, pursuant to which the Buyer will acquire the Wireline Business.

The Wireline Sale Agreement provides that, upon the terms and conditions set forth therein, the Buyer will purchase all of the issued and outstanding membership interests (the “Purchased Interests”) of a Delaware limited liability company that holds certain assets and liabilities relating to the Wireline Business.

The parties have agreed to a $ 1 purchase price in consideration for the Purchased Interests, subject to customary adjustments set forth in the Wireline Sale Agreement.

In addition, at the consummation of the Wireline Transaction (the “Closing”), a T-Mobile affiliate will enter into a commercial agreement for IP transit services, pursuant to which T-Mobile will pay to the Buyer an aggregate of $ 700 million, consisting of (i) $ 350 million in equal monthly installments during the first year after the Closing and (ii) $ 350 million in equal monthly installments over the subsequent 42 months.

The Closing is subject to customary closing conditions, including the receipt of certain required regulatory approvals and consents.

Subject to the satisfaction or waiver of certain conditions and other terms and conditions of the Wireline Sale Agreement, the Wireline Transaction is expected to close mid-year 2023.

As a result of the Wireline Sale Agreement and related anticipated Wireline Transaction, we concluded that the Wireline Business met the held for sale criteria upon entering into the Wireline Sale Agreement.

As such, the assets and liabilities of the Wireline Business disposal group are classified as held for sale and presented within Other current assets and Other current liabilities on our Consolidated Balance Sheets as of December 31, 2022.

Index for Notes to the Consolidated Financial Statements

The components of assets and liabilities held for sale presented within Other current assets and Other current liabilities, respectively, on our Consolidated Balance Sheets as of December 31, 2022, were as follows:

(in millions) December 31,

Cash and cash equivalents $ 27

Accounts receivable, net 34

Prepaid expenses 2

Other current assets 3

Property and equipment, net 505

Operating lease right-of-use assets 125

Other intangible assets, net 7

Other assets 8

Remeasurement of disposal group held for sale to fair value less remaining costs to sell (1)

Assets held for sale $ 334

Accounts payable and accrued liabilities $ 63

Deferred revenue 4

Short-term operating lease liabilities 60

Operating lease liabilities 250

Other long-term liabilities 38

Liabilities held for sale 415

Liabilities held for sale, net $ ( 81 )

(1) Excludes amounts related to the establishment of liabilities for contractual and other payments associated with the Wireline Transaction, including the $ 700 million of fees payable for IP transit services discounted to present value and other payments to the Buyer anticipated in connection with the Wireline Transaction.

In connection with the expected sale of the Wireline Business and classification of related assets and liabilities as held for sale, we recognized a pre-tax loss of $ 1.1 billion during the year ended December 31, 2022, which is included within Loss on disposal group held for sale on our Consolidated Statements of Comprehensive Income.

The components of the Loss on disposal group held for sale on our Consolidated Statements of Comprehensive Income for the year ended December 31, 2022, were as follows:

(in millions) Year Ended

December 31, 2022

Write-down of Wireline Business net assets $ 305

Accrual of total estimated costs to sell 76

Recognition of liability for IP transit services agreement (1)

Recognition of other obligations to Buyer to be paid at or after Closing 65

Loss on disposal group held for sale $ 1,087

(1) We will continue to recognize accretion expense through the expiration of the agreement which will be included in Interest expense, net separate from the Loss on disposal group held for sale on our Consolidated Statements of Comprehensive Income.

The present value of the liability for fees payable for IP transit services has been recognized as a component of Loss on disposal group held for sale as we have not currently identified any path to utilize such services in our continuing operations and have committed to execute the agreement as a closing condition for the Wireline Transaction.

We will continue to evaluate potential uses on an ongoing basis over the life of the agreement.

Approximately $ 117 million and $ 531 million of this liability, including accrued interest, is presented within Other current liabilities and Other long-term liabilities, respectively, on our Consolidated Balance Sheets as of December 31, 2022, in accordance with the expected timing of the related payments.

Approximately $ 30 million and $ 35 million for contractual and other payments associated with the Wireline Transaction are presented within Other current liabilities and Other long-term liabilities, respectively, on our Consolidated Balance Sheets as of December 31, 2022, in accordance with the expected timing of the related payments.

We do not consider the sale of the Wireline Business to be a strategic shift that will have a major effect on the Company’s operations and financial results, and therefore it does not qualify for reporting as a discontinued operation.

Index for Notes to the Consolidated Financial Statements

Other Wireline Asset Sales

Separate from the Wireline Transaction, we recognized a gain on disposal of $ 121 million during the year ended December 31, 2022, all of which relates to the sale of certain IP addresses held by the Wireline Business to other third parties during the three months ended September 30, 2022.

The gain on disposal is included as a reduction to Selling, general and administrative expenses on our Consolidated Statements of Comprehensive Income.

Wireline Impairment

We provide wireline communication services to domestic and international customers via the legacy Sprint Wireline U.S.

long-haul fiber network (including non-U.S.

extensions thereof) 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.

During the second quarter of 2022, 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 were 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 year ended December 31, 2022, all of which relates to the impairment recognized during the three 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.

The expense is included within Impairment expense on our Consolidated Statements of Comprehensive Income.

Index for Notes to the Consolidated Financial Statements

Note 17 – Earnings Per Share

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48,751,557 48,751,557 36,630,268

(1) Represents the weighted-average SoftBank Specified Shares that are contingently issuable from the acquisition date of April 1, 2020.

(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 DT.

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

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Additionally, we lease dark fiber through non-cancelable operating leases with contractual terms that generally extend through 2040.

The majority of cell site leases have a non-cancelable term of five to 15 years with several renewal options that can extend the lease term from five to 35 years.

In addition, we have financing leases for network equipment that generally have a non-cancelable lease term of two to five years .

The majority of cell site leases have a non-cancelable term of five to 15 years with several renewal options that can extend the lease term for five to 50 years.

In addition, we have financing leases for network equipment that generally have a non-cancelable lease term of three to five years .

The financing leases do not have renewal options and contain a bargain purchase option at the end of the lease.

On September 15, 2021, we modified the terms of one of our master lease agreements, which resulted in a $ 1.0 billion advance rent payment.

Our operating lease liabilities were reduced as a result of this prepayment.

Subsequent to December 31, 2021, on January 3, 2022, we entered into the Crown Agreement with CCI that modified the terms of our leased towers from CCI.

The Crown Agreement modifies the monthly rental payment we will pay for sites currently leased by us, extends the non-cancellable lease term for the majority of our sites through December 2033 and will allow us the flexibility to facilitate our network integration and decommissioning activities through new site builds and termination of duplicate tower locations.

The initial non-cancellable term is through December 31, 2033, followed by optional renewals.

As a result of this modification, we will remeasure the associated right-of use assets and lease liabilities with an expected increase of

On January 3, 2022, we entered into the Crown Agreement with CCI that modified the terms of our leased towers from CCI.

The Crown Agreement modifies the monthly rental payments we will pay for sites currently leased by us, extends the non-cancellable lease term for the majority of our sites through December 2033 and will allow us the flexibility to facilitate our network integration and decommissioning activities through new site builds and termination of duplicate tower locations.

The initial non-cancellable term is through December 31, 2033, followed by three optional five-year renewals.

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 Consolidated Financial Statements

between $ 4.8 billion to $ 5.4 billion to each on the effective date of the modification, with a corresponding gross increase to both deferred tax liabilities and assets of between $ 1.2 billion to $ 1.4 billion.

The components of lease expense were as follows:

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As of December 31, 2022, we were contingently liable for future ground lease payments related to certain tower obligations.

These contingent obligations are not included in the above table as the amounts owed are contractually owed by Crown Castle International Corp.

based on the subleasing arrangement.

These contingent obligations are not included in the above table as the amounts owed are contractually owed by CCI based on the subleasing arrangement.

See Note 9 – Tower Obligations for further information.

Index for Notes to the Consolidated Financial Statements

The components of leased wireless devices under our Leasing Programs were as follows:

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For equipment revenues from the lease of mobile communication devices, see Note 10 – Revenue from Contracts with Customers .

Index for Notes to the Consolidated Financial Statements

Future minimum payments expected to be received over the lease term related to leased wireless devices, which exclude optional residual buy-out amounts at the end of the lease term, are summarized below:

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Twelve Months Ending December 31,

Wireline Impairment

See Note 16 - Wireline for further information.

Note 19 – 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 $ 4.7 billion for the twelve-month period ending December 31, 2022, $ 5.6 billion in total for the twelve-month periods ending December 31, 2023 and 2024, $ 2.1 billion in total for the twelve-month periods ending December 31, 2025 and 2026, and $ 1.6 billion in total thereafter.

Our purchase commitments are approximately $ 4.5 billion for the 12-month period ending December 31, 2023, $ 4.9 billion in total for both of the 12-month periods ending December 31, 2024 and 2025, $ 2.8 billion in total for both of the 12-month periods ending December 31, 2026 and 2027, and $ 2.8 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.

Subsequent to December 31, 2021, on January 3, 2022, we entered into the Crown Agreement with CCI that will enable us to lease towers from CCI through December 2033, followed by optional renewals.

The Crown Agreement amends the pricing for our non-dedicated transportation lines, which includes lit fiber backhaul and small cell circuits.

We have committed to an annual volume commitment to execute and deliver 35,000 small cell contracts, including upgrades to existing locations, over the next five years.

The minimum commitment for small cells is $ 1.8 billion through 2039.

Spectrum Leases

In connection with the Merger, we assumed certain spectrum lease contracts from Sprint that include service obligations to the lessors.

Certain of the spectrum leases provide for minimum lease payments, additional charges, renewal options and escalation clauses.

We lease spectrum from various parties.

These leases include service obligations to the lessors.

Certain spectrum leases provide for minimum lease payments, additional charges, renewal options and escalation clauses.

Leased spectrum agreements have varying expiration terms that generally extend through 2050.

We expect that all renewal periods in our spectrum leases will be exercised by us.

Our spectrum lease and service credit commitments, including renewal periods, are approximately $ 350 million for the twelve-month period ending December 31, 2022, $ 611 million in total for the twelve-month periods ending December 31, 2023 and 2024, $ 591 million in total for the twelve-month periods ending December 31, 2025 and 2026 and $ 4.7 billion in total thereafter.

We accrue a monthly obligation for the services and equipment based on the total estimated available service credits divided by the term of the lease.

The obligation is reduced by services provided and as actual invoices are presented and paid to the lessors.

The maximum remaining service commitment on December 31, 2021 was $ 85 million and is expected to be incurred over the term of the related lease agreements, which generally range from 15 to 30 years.

Index for Notes to the Consolidated Financial Statements

Merger Commitments

In connection with the regulatory proceedings and approvals of the Transactions, we have commitments and other obligations to various state and federal agencies and certain nongovernmental organizations, including pursuant to the Consent Decree agreed to by us, DT, Sprint, SoftBank and DISH Network Corporation (“DISH”) and entered by the U.S.

District Court for the District of Columbia, and the FCC’s memorandum opinion and order approving our applications for approval of the Merger.

These commitments and obligations include, among other things, extensive 5G network build-out commitments, obligations to deliver high-speed wireless services to the vast majority of Americans, including Americans residing in rural areas, and the marketing of an in-home broadband product where spectrum capacity is available.

Other commitments relate to national security, pricing, service, employment and support of diversity initiatives.

Many of the commitments specify time frames for compliance.

Failure to fulfill our obligations and commitments in a timely manner could result in substantial fines, penalties, or other legal and administrative actions.

We expect that our monetary commitments associated with these matters are approximately $ 11 million for the twelve-month period ending December 31, 2022, $ 12 million in total for the twelve-month periods ending December 31, 2023 and 2024.

We do not expect any amounts after December 31, 2024.

These amounts do not represent our entire anticipated costs to achieve specified network coverage and performance requirements, employment targets or commitments to provide access to affordable rate plans, but represent only those amounts for which we are required to make a specified payment in connection with our commitments or settlements.

Certain spectrum leases also include purchase options and right-of-first refusal clauses in which we are provided the opportunity to exercise our purchase option if the lessor receives a purchase offer from a third party.

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

Our spectrum lease and service credit commitments, including renewal periods, are approximately $ 315 million for the 12-month period ending December 31, 2023, $ 587 million in total for both of the 12-month periods ending December 31, 2024 and 2025, $ 634 million in total for both of the 12-month periods ending December 31, 2026 and 2027, and $ 4.6 billion in total thereafter.

On August 8, 2022, we entered into License Purchase Agreements to acquire spectrum in the 600 MHz band from Channel 51

License Co LLC and LB License Co, LLC in exchange for total cash consideration of $ 3.5 billion.

The agreements remain subject to regulatory approval and are excluded from our reported commitments above.

See Note 6 – Go odwill, Spectrum License Transactions and Other In ta n gible Assets for additional details.

Contingencies and Litigation

Litigation and Regulatory Matters

We are involved in various lawsuits and disputes, claims, government agency investigations and enforcement actions, and other proceedings (“Litigation and Regulatory Matters”) that arise in the ordinary course of business, which include claims of patent infringement (most of which are asserted by non-practicing entities primarily seeking monetary damages), class actions, and proceedings to enforce FCC rules and regulations.

Those Litigation and Regulatory Matters are at various stages, and some of them may proceed to trial, arbitration, hearing, or other adjudication that could result in fines, penalties, or awards of monetary or injunctive relief in the coming 12 months if they are not otherwise resolved.

We have established an accrual with respect to certain of these matters, where appropriate.

The accruals are reflected in the consolidated financial statements but they are not considered to be, individually or in the aggregate, material.

The accruals are reflected on our consolidated

Index for Notes to the Consolidated Financial Statements

financial statements, but they are not considered to be, individually or in the aggregate, material.

An accrual is established when we believe it is both probable that a loss has been incurred and an amount can be reasonably estimated.

For other matters, where we have not determined that a loss is probable or because the amount of loss cannot be reasonably estimated, we have not recorded an accrual due to various factors typical in contested proceedings, including, but not limited to, uncertainty concerning legal theories and their resolution by courts or regulators, uncertain damage theories and demands, and a less than fully developed factual record.

For Litigation and Regulatory Matters that may result in a contingent gain, we recognize such gains in the consolidated financial statements when the gain is realized or realizable.

For Litigation and Regulatory Matters that may result in a contingent gain, we recognize such gains on our consolidated financial statements when the gain is realized or realizable.

We recognize legal costs expected to be incurred in connection with Litigation and Regulatory Matters as they are incurred.

Except as otherwise specified below, we do not expect that the ultimate resolution of these Litigation and Regulatory Matters, individually or in the aggregate, will have a material adverse effect on our financial position, but we note that an unfavorable outcome of some or all of the specific matters identified below could have a material adverse impact on results of operations or cash flows for a particular period.

Except as otherwise specified below, we do not expect that the ultimate resolution of these Litigation and Regulatory Matters, individually or in the aggregate, will have a material adverse effect on our financial position, but we note that an unfavorable outcome of some or all of the specific matters identified below or other matters that we are or may become involved in could have a material adverse impact on results of operations or cash flows for a particular period.

This assessment is based on our current understanding of relevant facts and circumstances.

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In September 2019, Sprint notified the FCC that it had claimed monthly subsidies for serving subscribers even though these subscribers may not have met usage requirements under Sprint's usage policy for the Lifeline program, due to an inadvertent coding issue in the system used to identify qualifying subscriber usage that occurred in July 2017 while the system was being updated.

Sprint has made a number of payments to reimburse the federal government and

Index for Notes to the Consolidated Financial Statements

certain states for excess subsidy payments.

Sprint has made a number of payments to reimburse the federal government and certain states for excess subsidy payments.

We note that pursuant to Amendment No.

2 to the Business Combination Agreement, SoftBank agreed to indemnify us against certain specified matters and losses, including those relating to the Lifeline matters described above.

2, dated as of February 20, 2020, to the Business Combination Agreement, SoftBank agreed to indemnify us against certain specified matters and losses, including those relating to the Lifeline matters described above.

Resolution of these matters could require making additional reimbursements and paying additional fines and penalties, which we do not expect to have a significant impact on our financial results.

We expect that any additional liabilities related to these indemnified matters would be indemnified and reimbursed by SoftBank.

See Note 2 – Business Combinations for further information.

On June 1, 2021, a putative shareholder class action and derivative lawsuit was filed in the Delaware Court of Chancery, Dinkevich v.

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We are unable to predict the potential outcome of these claims.

We intend to vigorously defend this lawsuit.

In October 2020, we notified 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 has Boost Mobile customers who use the legacy Sprint CDMA network, has 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 (the “CPUC”)’s April 2020 decision concerning the T-Mobile-Sprint 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 sunset 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 sunset.

On February 2, 2022, the CPUC Administrative Law Judge presiding over DISH's Petition for Modification released a proposed decision that would deny the Petition for Modification.

That proposed decision may be heard by the CPUC as soon as its March 17, 2022 business meeting.

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

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

In October 2020, we notified Mobile Virtual Network Operators (“MVNOs”) using the legacy Sprint CDMA network that we planned to retire 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 retiring 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 had been completed, although certain of the CPUC proceedings remain in process.

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

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

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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 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.

Index for Notes to the Consolidated Financial Statements

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.

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.

The court conducted a final approval hearing on January 20, 2023, and we await a ruling from the court.

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 class action settlement and the separate settlements, we recorded a total pre-tax charge of approximately $ 400 million during the three months ended June 30, 2022.

The expense is included within Selling, general and administrative expenses on our Consolidated Statements of Comprehensive Income.

During the year ended December 31, 2022, we recognized $ 100 million in reimbursements from insurance carriers for costs incurred related to the August 2021 cyberattack, which is included as a reduction to Selling, general and administrative expenses on our Consolidated Statements of Comprehensive 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, in September 2022, a purported Company shareholder filed a derivative action in the Delaware Chancery Court under the caption Harper v.

Sievert et al., Case No.

2022-0819-SG, against our current directors and certain of our former directors, alleging claims for breach of fiduciary duty relating to the Company’s cybersecurity practices.

We are also named as a nominal defendant in the lawsuit.

We are unable to predict at this time the potential outcome of any of these claims 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 Annual 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

We are unable at this time to predict the potential outcome of this lawsuit or whether we may be subject to further private litigation.

We have also 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 2022, we received $ 333 million in gross settlements of certain patent litigation assumed in the Merger.

We recognized these settlements, net of legal fees, as a reduction to Selling, general and administrative expenses on our Consolidated Statements of Comprehensive Income during the year ended December 31, 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 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.

On January 5, 2023, we identified that a bad actor was obtaining data through a single API without authorization.

Based on our investigation to date, the impacted API is only able to provide a limited set of customer account data, including name, billing address, email, phone number, date of birth, T-Mobile account number and information such as the number of lines on the account and plan features.

The result from our investigation to date indicates that the bad actor(s) obtained data from this API

Index for Notes to the Consolidated Financial Statements

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.

for approximately 37 million current postpaid and prepaid customer accounts, though many of these accounts did not include the full data set.

We believe that the bad actor first retrieved data through the impacted API starting on or around November 25, 2022.

We continue to investigate the incident and have notified individuals whose information was impacted consistent with state and federal requirements.

In connection with the January 2023 cyberattack, we have received notices of consumer class actions and regulatory inquires, to which we will respond to in due course and may incur significant expenses.

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

In addition, we are unable to predict the full impact of this incident 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, although we presently do not expect that it will have a material effect on our operations.

Note 20 – 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:

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) Year Ended

December 31, 2020 Year Ended December 31, 2021 Incurred to Date

December 31, 2021 Year Ended

December 31, 2022 Incurred to Date

Contract termination costs $ 14 $ 231 $ 423

2 unchanged sentences

Total restructuring plan expenses $ 215 $ 1,196 $ 2,471

The expenses associated with the restructuring initiatives are included in Costs of services and Selling, general and administrative on our 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 $ 873 million and $ 153 million for the years ended December 31, 2021 and 2020, respectively, and are included in Costs of services and Selling, general and administrative on our Consolidated Statements of Comprehensive Income.

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

(in millions) December 31,

2020 Expenses Incurred Cash Payments Adjustments for Non-Cash Items (1)

The expenses associated with our Merger restructuring initiatives are included in Costs of services and Selling, general and administrative on our Consolidated Statements of Comprehensive 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 $ 1.7 billion, $ 873 million and $ 153 million for the years ended December 31, 2022, 2021 and 2020, respectively, and are included in Costs of services and Selling, general and administrative on our Consolidated Statements of Comprehensive Income.

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

(in millions) December 31, 2021 Expenses Incurred Cash Payments Adjustments for Non-Cash Items (1)

December 31, 2022

Contract termination costs $ 14 $ 231 $ ( 55 ) $ — $ 190

2 unchanged sentences

Total $ 86 $ 1,196 $ ( 542 ) $ ( 270 ) $ 470

(1) Non-cash items consist of non-cash stock-based compensation included within Severance costs and 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 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.

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.

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

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

Our Merger restructuring activities are expected to occur over the next year with substantially all costs incurred by the end of fiscal year 2023, with the related cash outflows extending beyond 2023.

We continue to evaluate 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 Consolidated Financial Statements

1 unchanged sentence

Accounts Payable and Accrued Liabilities

Accounts payable and accrued liabilities are summarized as follows:

Accounts payable and accrued liabilities, excluding amounts classified as held for sale, are summarized as follows:

(in millions) December 31,

4 unchanged sentences

Accrued interest 731 710

Commissions 348 399

Commissions and contract termination costs 523 348

Toll and interconnect 227 248

Advertising 59 135

Other 688 427

Accounts payable and accrued liabilities $ 12,275 $ 11,405

Book overdrafts included in accounts payable and accrued liabilities were $ 378 million and $ 628 million as of December 31, 2021 and 2020, respectively.

Book overdrafts included in accounts payable were $ 720 million and $ 378 million as of December 31, 2022, and 2021, respectively.

Related Party Transactions

We have related party transactions associated with DT or its affiliates in the ordinary course of business, which are included in the Consolidated Financial Statements.

On August 23, 2021, we redeemed $ 1.0 billion aggregate principal amount of our 4.500 % Senior Notes to affiliates due 2026.

During the year ended December 31, 2022, we redeemed $ 2.3 billion aggregate principal amount of our 4.000 % and 5.375 % Senior Notes to affiliates due 2022.

See Note 8 - Debt for further information.

2 unchanged sentences

(in millions) 2022 2021 2020

Discount related to roaming expenses $ ( 2 ) $ ( 5 ) $ ( 9 )

Fees incurred for use of the T-Mobile brand $ 80 $ 80 $ 83

International long distance agreement 25 37 47

We have an agreement with DT in which we receive reimbursement of certain administrative expenses, which was $ 5 million, $ 6 million and $ 11 million for the years ended December 31, 2021, 2020 and 2019, respectively.

Amounts due from and to DT related to these agreements are included in Accounts receivable from affiliates and Payables to affiliates, respectively, in the Consolidated Balance Sheets.

Index for Notes to the Consolidated Financial Statements

We have an agreement with DT for the reimbursement of certain administrative expenses, which were $ 4 million, $ 5 million and $ 6 million for the years ended December 31, 2022, 2021 and 2020, respectively.

Supplemental Consolidated Statements of Cash Flows Information

11 unchanged sentences

Returned leased devices transferred from property and equipment to inventory ( 396 ) ( 1,437 ) ( 1,460 )

Short-term debt assumed for financing of property and equipment — 38 800

Increase in Tower obligations from contract modification 1,158 — —

Operating lease right-of-use assets obtained in exchange for lease obligations 7,462 3,773 14,129

Financing lease right-of-use assets obtained in exchange for lease obligations 1,256 1,261 1,273

Index for Notes to the Consolidated Financial Statements

Cash and cash equivalents, including restricted cash and cash held for sale

Cash and cash equivalents, including restricted cash and cash held for sale, presented on our Consolidated Statements of Cash Flows were included on our Consolidated Balance Sheets as follows:

(in millions) December 31,

2022 December 31,

Cash and cash equivalents $ 4,507 $ 6,631

Cash and cash equivalents held for sale (included in Other current assets) 27 —

Restricted cash (included in Other current assets) 73 —

Restricted cash (included in Other assets) 67 72

Cash and cash equivalents, including restricted cash and cash held for sale $ 4,674 $ 6,703

Note 22 – Subsequent Events

Subsequent to December 31, 2021, on January 3, 2022, we entered into an agreement with CCI to amend terms related to our tower leases, Tower obligations and non-dedicated transportation lines.

See Note 9 - Tower Obligations , Note 16 – Leases and N ote 17 – Commitments an d Contingenci es for further information.

Subsequent to December 31, 2021, on January 6, 2022, the FCC announced that we were the winning bidder of 199 licenses in Auction 110 (mid-band spectrum).

See Note 6 - Goodwill, Spectrum License Transactions and Other Intangible Assets for further information.

Subsequent to December 31, 2022, on January 5, 2023, we identified that a bad actor was obtaining data through a single API without authorization.

See Note 19 – Commitments and Contingencies for additional information.

See Note 8 – Debt for additional information.

Subsequent to December 31, 2022, from January 1, 2023, through February 10, 2023, we repurchased 14,676,718 shares of our common stock at an average price per share of $ 145.70 for a total purchase price of $ 2.1 billion.

See Note 15 – Repurchases of Common Stock for additional information.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

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-K

Item 8. Financial Statements and Supplementary Data