What changed in this filing

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Item 1. Financial Statements

2023-04-27 compared with 2022-10-27 · 241 added, 376 removed, 561 unchanged (52% of the section changed)

2 unchanged sentences

Condensed Consolidated Balance Sheets

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

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

2023 December 31,

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Short-term debt 5,215 5,164

Short-term debt to affiliates — 2,245

Deferred revenue 804 780

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Additional paid-in capital 74,043 73,941

Treasury stock, at cost, 6,450,896 and 1,537,468 shares issued

Treasury stock, at cost, 55,910,664 and 22,916,449 shares

( 7,831 ) ( 3,016 )

Accumulated other comprehensive loss ( 1,004 ) ( 1,046 )

Accumulated deficit ( 1,699 ) ( 2,812 )

Retained earnings (accumulated deficit) 1,717 ( 223 )

Total stockholders' equity 66,925 69,656

4 unchanged sentences

Condensed Consolidated Statements of Comprehensive Income

Three Months Ended September 30, Nine Months Ended September 30,

Three Months Ended March 31,

(in millions, except share and per share amounts) 2023 2022

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Selling, general and administrative 5,425 5,056

Impairment expense — — 477 —

Loss on disposal group held for sale 1,071 — 1,071 —

Gain on disposal group held for sale ( 42 ) —

Depreciation and amortization 3,203 3,585

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Interest expense, net ( 835 ) ( 864 )

Other expense, net ( 3 ) ( 60 ) ( 35 ) ( 186 )

Other income (expense), net 9 ( 11 )

Total other expense, net ( 826 ) ( 875 )

Income before income taxes 2,571 931

Income tax benefit (expense) 57 3 ( 106 ) ( 520 )

Income tax expense ( 631 ) ( 218 )

Net income $ 1,940 $ 713

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Reclassification of loss from cash flow hedges, net of tax effect of $ 14 and $ 13

39 35 113 103

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

( 7 ) ( 3 ) ( 11 ) —

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

Other comprehensive income 42 36

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Condensed Consolidated Statements of Cash Flows

Three Months Ended September 30, Nine Months Ended September 30,

Three Months Ended March 31,

(in millions) 2023 2022

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Stock-based compensation expense 177 141

Deferred income tax (benefit) expense ( 36 ) ( 27 ) 73 410

Deferred income tax expense 611 185

Bad debt expense 222 210

Losses (gains) from sales of receivables 60 4 168 ( 26 )

Losses on redemption of debt — 55 — 184

Impairment expense — — 477 —

Loss on remeasurement of disposal group held for sale 371 — 371 —

Losses from sales of receivables 38 46

Gain on remeasurement of disposal group held for sale ( 13 ) —

Changes in operating assets and liabilities

1 unchanged sentence

Equipment installment plan receivables 152 ( 535 )

Inventories ( 7 ) 41 384 904

Inventory 129 ( 93 )

Operating lease right-of-use assets 1,008 1,469

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Repayments of financing lease obligations ( 306 ) ( 302 )

Repayments of short-term debt for purchases of inventory, property and equipment and other financial liabilities — ( 76 ) — ( 167 )

Repayments of long-term debt ( 131 ) ( 1,632 )

1 unchanged sentence

Tax withholdings on share-based awards ( 187 ) ( 172 )

Cash payments for debt prepayment or debt extinguishment costs — ( 45 ) — ( 116 )

Other, net ( 43 ) ( 30 )

Net cash provided by (used in) financing activities 1,927 ( 3,060 ) ( 1,953 ) 237

Net cash used in financing activities ( 2,273 ) ( 2,136 )

Change in cash and cash equivalents, including restricted cash and cash held for sale 50 ( 3,383 )

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Condensed Consolidated Statement of Stockholders’ Equity

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

Balance as of June 30, 2022 1,254,010,072 1,564,549 $ ( 16 ) $ 73,552 $ ( 1,295 ) $ ( 2,207 ) $ 70,034

Net income — — — — — 508 508

Other comprehensive income — — — — 32 — 32

Stock-based compensation — — — 165 — — 165

Exercise of stock options 26,614 — — 1 — — 1

Stock issued for employee stock purchase plan 802,361 — — 89 — — 89

Issuance of vested restricted stock units 219,301 — — — — — —

Forfeiture of restricted stock awards ( 42 ) 42 — — — — —

Shares withheld related to net share settlement of stock awards and stock options ( 67,575 ) — — ( 10 ) — — ( 10 )

Repurchases of common stock ( 4,892,315 ) 4,892,315 ( 669 ) — — — ( 669 )

Transfers with NQDC plan 6,010 ( 6,010 ) — — — — —

Balance as of September 30, 2022 1,250,104,426 6,450,896 $ ( 685 ) $ 73,797 $ ( 1,263 ) $ ( 1,699 ) $ 70,150

(Accumulated Deficit) Total Stockholders' Equity

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

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Stock-based compensation — — — 155 — — 155

Exercise of stock options 116,817 — — 5 — — 5

Stock issued for employee stock purchase plan 1,063,426 — — 126 — — 126

Issuance of vested restricted stock units 3,844,801 — — — — — —

Forfeiture of restricted stock awards ( 42 ) 42 — — — — —

Shares withheld related to net share settlement of stock awards and stock options ( 1,263,356 ) — — ( 187 ) — — ( 187 )

Repurchases of common stock ( 32,963,940 ) 32,963,940 ( 4,810 ) — — — ( 4,810 )

Remeasurement of uncertain tax positions — — — 5 — — 5

Transfers with NQDC plan ( 21,071 ) 21,071 ( 3 ) 3 — — —

Balance as of September 30, 2022 1,250,104,426 6,450,896 $ ( 685 ) $ 73,797 $ ( 1,263 ) $ ( 1,699 ) $ 70,150

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

Index for Notes to the Condensed Consolidated Financial Statements

T-Mobile US, Inc.

Condensed Consolidated Statement of Stockholders’ Equity

Balance as of June 30, 2021 1,247,920,536 1,557,821 $ ( 14 ) $ 72,919 $ ( 1,510 ) $ ( 3,925 ) $ 67,470

Net income — — — — — 691 691

Other comprehensive income — — — — 32 — 32

Stock-based compensation — — — 147 — — 147

Exercise of stock options 14,578 — — 1 — — 1

Stock issued for employee stock purchase plan 917,444 — — 100 — — 100

Issuance of vested restricted stock units 256,605 — — — — — —

Shares withheld related to net share settlement of stock awards and stock options ( 92,992 ) — — ( 14 ) — — ( 14 )

Transfers with NQDC plan 18,894 ( 18,894 ) 1 ( 1 ) — — —

Balance as of September 30, 2021 1,249,035,065 1,538,927 $ ( 13 ) $ 73,152 $ ( 1,478 ) $ ( 3,234 ) $ 68,427

Other, net 55,316 30,275 ( 5 ) 8 — — 3

Balance as of March 31, 2023 1,204,696,325 55,910,664 $ ( 7,831 ) $ 74,043 $ ( 1,004 ) $ 1,717 $ 66,925

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

2 unchanged sentences

Stock-based compensation — — — 157 — — 157

Exercise of stock options 195,618 — — 10 — — 10

Stock issued for employee stock purchase plan 1,276,725 — — 138 — — 138

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Shares withheld related to net share settlement of stock awards and stock options ( 1,370,306 ) — — ( 172 ) — — ( 172 )

Transfers with NQDC plan 951 ( 951 ) ( 2 ) 2 — — —

Balance as of September 30, 2021 1,249,035,065 1,538,927 $ ( 13 ) $ 73,152 $ ( 1,478 ) $ ( 3,234 ) $ 68,427

Other, net 21,931 27,715 ( 3 ) 5 — — 2

Balance as of March 31, 2022 1,253,352,700 1,565,183 $ ( 16 ) $ 73,420 $ ( 1,329 ) $ ( 2,099 ) $ 69,976

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

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Summary of Significant Accounting Policies

Business Combination

Receivables and Related Allowance for Credit Losses

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The condensed consolidated financial statements should be read in conjunction with our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2022.

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 “Purchase 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”).

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 Condensed Consolidated Balance Sheets as of September 30, 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 Condensed Consolidated Statements of Comprehensive Income.

Unless otherwise specified, the amounts and information presented in the Notes to the Condensed Consolidated Financial Statements include assets and liabilities that have been reclassified as held for sale as of September 30, 2022.

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 Condensed 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 Condensed Consolidated Balance Sheets.

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

See Note 9 - Repurchases of Common Stock for more information about our 2022 Stock Repurchase Program.

The condensed consolidated financial statements include the balances and results of operations of T-Mobile and our consolidated subsidiaries.

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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 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 Gain on disposal group held for sale on our Condensed Consolidated Statements of Comprehensive Income.

Accounting Pronouncements Adopted During the Current Year

Reference Rate Reform

In March 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-04, “Reference Rate Reform (Topic 848):

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”).

The reference rate reform standard provides temporary optional expedients and allows for certain exceptions

Index for Notes to the Condensed Consolidated Financial Statements

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, 2022, and the optional expedients for contract modifications must be elected for all arrangements within a given Accounting Standards Codification (“ASC”) Topic or Industry Subtopic.

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

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

Contract Assets and Contract Liabilities Acquired in a Business Combination

In October 2021, the FASB issued ASU 2021-08, “Business Combinations (Topic 805):

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.

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):

In March 2022, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“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 of the standard on our future consolidated financial statements.

As of January 1, 2023, we have adopted this standard, and it will be applied prospectively after this date.

Note 2 – Business Combination

On March 9, 2023, we entered into a Merger and Unit Purchase Agreement for the acquisition of 100 % of the outstanding equity of Ka’ena Corporation and its subsidiaries including, among others, Mint Mobile LLC, for a maximum purchase price of

Index for Notes to the Condensed Consolidated Financial Statements

$ 1.35 billion to be paid out 39 % in cash and 61 % in shares of T-Mobile common stock.

The purchase price is variable dependent upon specified performance indicators of Ka’ena Corporation during certain periods before and after closing and consists of an upfront payment at closing of the transaction, subject to certain agreed-upon adjustments, and a variable earnout payable 24 months after closing of the transaction.

The upfront payment is estimated to be approximately $ 950 million, before working capital adjustments.

The acquisition is subject to certain customary closing conditions, including certain regulatory approvals, and is expected to close by the end of 2023.

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 period end.

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.

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Accounts Receivable Portfolio Segment

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

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.

Index for Notes to the Condensed Consolidated Financial Statements

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 economic 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.

EIP receivables had a combined weighted-average effective interest rate of 6.9 % and 5.6 % as of September 30, 2022, and December 31, 2021, respectively.

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.

EIP receivables had a combined weighted-average effective interest rate of 8.8 % and 8.0 % as of March 31, 2023, and December 31, 2022, respectively.

Index for Notes to the Condensed Consolidated Financial Statements

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

(in millions) September 30,

(in millions) March 31,

2023 December 31,

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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 amortized cost of our EIP receivables by delinquency status, customer credit class and year of origination as of September 30, 2022:

The following table presents the amortized cost of our EIP receivables by delinquency status, customer credit class and year of origination as of March 31, 2023:

Originated in 2023 Originated in 2022 Originated prior to 2022 Total EIP Receivables, net of

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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.

Index for Notes to the Condensed Consolidated Financial Statements

Our assessment of default probabilities 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.

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 of default or the severity of 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 forecasts and periodic internal statistical analyses.

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

September 30, 2022 September 30, 2021

The following table presents write-offs of our EIP receivables by year of origination for the three months ended March 31, 2023:

(in millions) Originated in 2023 Originated in 2022 Originated prior to 2022 Total write-offs

Write-offs $ 1 $ 103 $ 36 $ 140

Index for Notes to the Condensed Consolidated Financial Statements

Activity for the three months ended March 31, 2023 and 2022, in the allowance for credit losses and unamortized imputed discount balances for the accounts receivable and EIP receivables segments were as follows:

March 31, 2023 March 31, 2022

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

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Bad debt expense 107 115 222 96 114 210

Write-offs, net of recoveries ( 290 ) ( 375 ) ( 665 ) ( 192 ) ( 164 ) ( 356 )

Write-offs ( 122 ) ( 140 ) ( 262 ) ( 78 ) ( 99 ) ( 177 )

Change in imputed discount on short-term and long-term EIP receivables N/A 54 54 N/A 30 30

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Allowance for credit losses and imputed discount, end of period $ 152 $ 786 $ 938 $ 164 $ 649 $ 813

Credit loss activity has increased during 2022, as activity normalizes relative to muted Pandemic levels and other macroeconomic trends contribute to adverse scenarios and present 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.

Credit loss activity increased during the three months ended March 31, 2023, as activity continued to normalize relative to the three months ended March 31, 2022, which continued to be impacted by the muted pandemic levels in 2021.

Off-Balance-Sheet Credit Exposures

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

We do not have material off-balance-sheet credit exposures as of March 31, 2023.

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

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Sales of EIP Receivables

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

Overview of the Transaction

In 2015, we entered into an arrangement to sell certain EIP receivables on a revolving basis (the “EIP sale arrangement”), which has been revised and extended from time to time.

As of both March 31, 2023, and December 31, 2022, the EIP sale arrangement provided funding of $ 1.3 billion.

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

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

(in millions) September 30,

(in millions) March 31,

2023 December 31,

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Other assets 130 136

Index for Notes to the Condensed Consolidated Financial Statements

Sales of Service Accounts Receivable

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

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

Overview of the Transaction

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

On February 28, 2023, we extended the scheduled expiration date of the service receivable sale

Index for Notes to the Condensed Consolidated Financial Statements

arrangement to February 27, 2024.

As of both March 31, 2023, and December 31, 2022, the service receivable sale arrangement provided funding of $ 775 million.

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

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

(in millions) September 30,

(in millions) March 31,

2023 December 31,

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

(in millions) September 30,

(in millions) March 31,

2023 December 31,

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

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

As of September 30, 2022, and December 31, 2021, our deferred purchase price related to the sales of service receivables and EIP receivables was $ 681 million and $ 779 million, respectively.

We recognized losses from sales of receivables, including changes in fair value of the deferred purchase price, of $ 60 million and $ 4 million for the three months ended September 30, 2022 and 2021, respectively, and a loss of $ 168 million and a gain of $ 26 million for the nine months ended September 30, 2022 and 2021, respectively, in Selling, general and administrative expense on our Condensed Consolidated Statements of Comprehensive Income.

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

As of March 31, 2023, and December 31, 2022, our deferred purchase price related to the sales of service receivables and EIP receivables was $ 710 million and $ 692 million, respectively.

We recognized losses from sales of receivables, including changes in fair value of the deferred purchase price, of $ 38 million and $ 46 million for the three months ended March 31, 2023 and 2022, respectively, in Selling, general and administrative expense on our Condensed Consolidated Statements of Comprehensive Income.

Continuing Involvement

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Note 5 – Spectrum License Transactions

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

The following table summarizes our spectrum license activity for the three months ended March 31, 2023:

(in millions) 2023

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Spectrum license acquisitions 57

Spectrum licenses transferred to held for sale ( 16 )

Costs to clear spectrum 23

Spectrum licenses, end of period $ 95,878

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 Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2023.

Spectrum Transactions

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

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 us the licenses won in Auction 110.

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

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

In September 2022, the Federal Communications Commission (“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 Condensed Consolidated Balance Sheets as of September 30, 2022, and will remain there until the corresponding licenses are received.

The aggregate cash payments made to the FCC are included in Other assets on our Condensed Consolidated Balance Sheets as of March 31, 2023, 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.

As of March 31, 2023, the activities that are necessary to get the C-band, 3.45 GHz and 2.5 GHz spectrum, acquired pursuant to FCC Auctions 107, 110 and 108, ready for its intended use have not begun;

as such, capitalization of the interest associated with the costs of deploying 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 “License Purchase Agreement”) pursuant to which DISH has the option to purchase certain 800 MHz spectrum licenses for a total of approximately $ 3.6 billion in a transaction to be completed, subject to an application for FCC approval, by July 1, 2023, or within five days of FCC approval, whichever date is later.

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

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

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 complaint and proposed final judgment agreed to by us, Deutsche Telekom AG (“DT”), Sprint Corporation, now known as Sprint LLC (“Sprint”), SoftBank Group Corp.

(“SoftBank”) and DISH with the U.S.

District Court for the District of Columbia, which was approved by the Court on April 1, 2020, 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.

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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.

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

On March 30, 2023, we and the Sellers entered into Amended and Restated License Purchase Agreements pursuant to which we and the Sellers agreed to separate the transaction into two tranches of licenses, with the closings on the acquisitions of certain licenses in Chicago, Dallas and New Orleans (together representing $ 492 million of the aggregate $ 3.5 billion cash consideration) being deferred in order to potentially expedite the regulatory approval process for the remainder of the licenses.

The licenses being acquired by us, and the total consideration being paid for the licenses, remains the same.

We anticipate that the first closing will occur in mid- to late-2023 and that the second closing (on the deferred licenses) will occur in 2024.

The parties have agreed that each of the closings will occur within 180 days after the receipt of the applicable required

Index for Notes to the Condensed Consolidated Financial Statements

regulatory approvals, and payment of each portion of the aggregate $ 3.5 billion purchase price will occur no later than 40 days after the date of each respective closing.

Note 6 – Fair Value Measurements

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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 Condensed Consolidated Statements of Cash Flows as the item being hedged.

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

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 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 March 31, 2023, or December 31, 2022.

Interest Rate Lock Derivatives

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

Aggregate changes in the fair value of the interest rate lock derivatives, net of tax and amortization, of $ 1.3 billion and $ 1.5 billion are presented in Accumulated other comprehensive loss on our Condensed Consolidated Balance Sheets as of September 30, 2022, and December 31, 2021, respectively.

For the three months ended September 30, 2022 and 2021, $ 51 million and $ 47 million, respectively, and for the nine months ended September 30, 2022 and 2021, $ 151 million and $ 140 million, respectively, were amortized from Accumulated other comprehensive loss into Interest expense, net, on our Condensed Consolidated Statements of Comprehensive Income.

We expect to amortize $ 215 million of the Accumulated other comprehensive loss associated with the derivatives into Interest expense, net, over the 12 months ending September 30, 2023.

Aggregate changes in the fair value of the interest rate lock derivatives, net of tax and amortization, of $ 1.3 billion are presented in Accumulated other comprehensive loss on our Condensed Consolidated Balance Sheets as of both March 31, 2023, and December 31, 2022.

For the three months ended March 31, 2023 and 2022, $ 53 million and $ 50 million, respectively, were amortized from Accumulated other comprehensive loss into Interest expense, net, on our Condensed Consolidated Statements of Comprehensive Income.

We expect to amortize $ 223 million of the Accumulated other comprehensive loss associated with the derivatives into Interest expense, net, over the 12 months ending March 31, 2024.

Deferred Purchase Price Assets

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

The carrying amounts of our deferred purchase price assets, which are measured at fair value on a recurring basis and are included on our Condensed Consolidated Balance Sheets, were $ 681 million and $ 779 million as of September 30, 2022, and December 31, 2021, respectively.

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

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

The carrying amounts of our deferred purchase price assets, which are measured at fair value on a recurring basis and are included on our Condensed Consolidated Balance Sheets, were $ 710 million and $ 692 million as of March 31, 2023, and December 31, 2022, respectively.

The fair value of our Senior Notes and spectrum-backed 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 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 asset-backed notes (“ABS Notes”) was primarily based on quoted prices in inactive markets for identical instruments and observable changes in market interest rates, both of which are Level 2 inputs.

Accordingly, our ABS Notes were classified as Level 2 within the fair value hierarchy.

Index for Notes to the Condensed Consolidated Financial Statements

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

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

The fair value estimates were based on information available as of March 31, 2023, and December 31, 2022.

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

Index for Notes to the Condensed Consolidated Financial Statements

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

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

(in millions) Carrying Amount (1)

(in millions) Level within the Fair Value Hierarchy March 31, 2023 December 31, 2022

Carrying Amount (1)

Fair Value (1)

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Senior Notes to third parties 1 $ 69,513 $ 63,743 $ 66,582 $ 59,011

1 $ 68,946 $ 59,904 $ 30,309 $ 32,093

Senior Notes to affiliates 2 1,495 1,485 1,495 1,460

Senior Secured Notes to third parties 1 2,979 2,866 3,117 2,984

1 3,255 3,095 40,098 42,393

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

(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, other than our Spectrum-Backed Notes, are no longer secured by any of our present or future assets and have been reclassified to Senior Notes to third parties as of September 30, 2022, within the table above.

See Note 6 – Debt for additional information.

ABS Notes to third parties 2 747 754 746 744

(1) Excludes $ 11 million and $ 20 million as of March 31, 2023, and December 31, 2022, respectively, in other financial liabilities as the carrying values approximate fair value primarily due to the short-term maturities of these instruments.

Note 7 – Debt

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

The following table sets forth the debt balances and activity as of, and for the three months ended, March 31, 2023 :

(in millions) December 31,

2022 Proceeds from Issuances and Borrowings (1)

Note Redemptions (1)

Repayments Reclassifications (1)

September 30,

Short-term debt $ 5,164 $ — $ ( 131 ) $ 224 $ ( 42 ) $ 5,215

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Total debt to third parties 70,465 3,011 ( 131 ) — ( 95 ) 73,250

Short-term debt to affiliates 2,245 — ( 2,250 ) — — 5 —

Long-term debt to affiliates 1,495 — — — — 1,495

Total debt $ 71,960 $ 3,011 $ ( 131 ) $ — $ ( 95 ) $ 74,745

(1) Issuances and borrowings, note redemptions and reclassifications are recorded net of related issuance costs, discounts and premiums.

(1) Issuances and borrowings and reclassifications are recorded net of accrued or paid issuance costs, discounts and premiums.

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

Our effective interest rate, excluding the impact of derivatives and capitalized interest, was approximately 3.8 % and 4.0 % for the three months ended September 30, 2022 and 2021, respectively, and 3.9 % and 4.1 % for the nine months ended September 30, 2022 and 2021, respectively, on weighted-average debt outstanding of $ 71.6 billion and $ 74.5 billion for the three months ended September 30, 2022 and 2021, respectively, and on weighted-average debt outstanding of $ 72.4 billion and $ 74.4 billion for the nine months ended September 30, 2022 and 2021, respectively.

Our effective interest rate, excluding the impact of derivatives and capitalized interest, was approximately 4.0 % and 3.9 % for the three months ended March 31, 2023 and 2022, respectively, on weighted-average debt outstanding of $ 73.4 billion and $ 73.7 billion for the three months ended March 31, 2023 and 2022, 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.

Issuances and Borrowings

During the nine months ended September 30, 2022, we issued the following Senior Notes:

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

During the three months ended March 31, 2023, we issued the following Senior Notes:

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

4.950 % Senior Notes due 2028

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

$ 1,000 $ ( 6 ) $ 994 February 9, 2023

5.050 % Senior Notes due 2033

1,000 ( 11 ) 989 September 15, 2022

1,250 ( 9 ) 1,241 February 9, 2023

5.650 % Senior Notes due 2053

750 ( 12 ) 738 September 15, 2022

750 26 776 February 9, 2023

Total of Senior Notes issued $ 3,000 $ 11 $ 3,011

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.

Upon effectiveness of the Credit Agreement Amendment, the liens securing the Senior Secured Notes were automatically released, and our obligations under the Senior Secured Notes (hereafter, “Senior Notes”), other than our Spectrum-Backed notes, are no longer secured by any of our present or future assets.

Index for Notes to the Condensed Consolidated Financial Statements

Note Redemptions and Repayments

During the nine months ended September 30, 2022, we made the following note redemptions and repayments:

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

4.000 % Senior Notes due 2022

$ 500 March 16, 2022 100.000 %

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

Total Redemptions $ 2,750

Note Repayments

During the three months ended March 31, 2023, we made the following repayments:

(in millions) Principal Amount Repayment Date

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

$ 394 Various N/A

Other debt 1 Various N/A

Total Repayments $ 395

$ 131 Various

Asset-backed Notes

Subsequent to September 30, 2022, on October 12, 2022, we issued $ 750 million of 4.910 % Class A senior asset-backed notes (“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.

We will include the balances and results of operations of the ABS Entities in our consolidated financial statements.

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 third-party investors in the Class A senior ABS Notes have legal recourse only to the assets of the ABS Issuer 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 Issuer 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 to the ABS Issuer.

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

Net proceeds of $ 748 million from our ABS Notes will be reflected in Proceeds from issuance of long-term debt in our Consolidated Statements of Cash Flows in the three months ending December 31, 2022.

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

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

The expected maturities of our ABS Notes are as follows:

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(in millions) 2024 2025

Class A Senior ABS Notes $ 198 $ 552

Credit Facilities

Subsequent to September 30, 2022, on October 17, 2022, T-Mobile USA, Inc., our wholly owned subsidiary, and certain of its affiliates, as guarantors, 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

Index for Notes to the Condensed Consolidated Financial Statements

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.

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 ending December 31, 2022.

4.910 % Class A Senior ABS Notes due 2028

Variable Interest Entities

In connection with issuing the ABS Notes in October 2022, 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 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.

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

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

(in millions)

Equipment installment plan receivables, net $ 720

Equipment installment plan receivables due after one year, net 205

Other current assets 84

Accounts payable and accrued liabilities $ 1

Long-term debt 747

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

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.

See Note 15 - Additional Financial Information for our reconciliation of Cash and cash equivalents, including restricted cash and cash held for sale.

Note 8 – Tower Obligations

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

Index for Notes to the Condensed Consolidated Financial Statements

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

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

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.

Acquired CCI Tower Lease Arrangements

Prior to our merger (the “Merger”) with Sprint Corporation (“Sprint”) in April 2020, Sprint entered into a lease-out and leaseback arrangement with Global Signal Inc., a third party that was subsequently acquired by CCI, that conveyed to CCI the exclusive right to manage and operate approximately 6,400 tower sites (“Master Lease Sites”) via a master prepaid lease.

Prior to our merger (the “Merger”) with Sprint, Sprint entered into a lease-out and leaseback arrangement with Global Signal Inc., a third party that was subsequently acquired by CCI, that conveyed to CCI the exclusive right to manage and operate approximately 6,400 tower sites (“Master Lease Sites”) via a master prepaid lease.

These agreements were assumed upon the close of the Merger, at which point the remaining term of the lease-out was approximately 17 years with no renewal options.

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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.

Index for Notes to the Condensed Consolidated Financial Statements

We recognize interest expense on the tower obligations.

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

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

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:

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

Index for Notes to the Condensed Consolidated Financial Statements

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

(in millions) September 30,

(in millions) March 31,

2023 December 31,

2 unchanged sentences

Other long-term liabilities 554 554

Future minimum payments related to the tower obligations are approximately $ 421 million for the 12-month period ending September 30, 2023, $ 826 million in total for both of the 12-month periods ending September 30, 2024 and 2025, $ 783 million in total for both of the 12-month periods ending September 30, 2026 and 2027, and $ 4.6 billion in total thereafter.

Future minimum payments related to the tower obligations are approximately $ 427 million for the 12-month period ending March 31, 2024, $ 804 million in total for both of the 12-month periods ending March 31, 2025 and 2026, $ 793 million in total for both of the 12-month periods ending March 31, 2027 and 2028, and $ 4.4 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.

These contingent obligations are not included in Operating lease liabilities as any amount due is contractually owed by CCI based on the subleasing arrangement.

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 March 31, 2023.

Note 9 – Revenue from Contracts with Customers

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

Three Months Ended September 30, Nine Months Ended September 30,

Three Months Ended March 31,

(in millions) 2023 2022

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

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

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 Condensed Consolidated Statements of Comprehensive Income.

Index for Notes to the Condensed Consolidated Financial Statements

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

Three Months Ended September 30, Nine Months Ended September 30,

(in millions) 2022 2021 2022 2021

Equipment revenues from the lease of mobile communication devices $ 311 $ 770 $ 1,184 $ 2,725

We provide wireline communication services to domestic and international customers.

Wireline service revenues were $ 144 million and $ 179 million for the three months ended September 30, 2022 and 2021, respectively, and $ 433 million and $ 563 million for the nine months ended September 30, 2022 and 2021, respectively.

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

In September 2022, we entered into an agreement for the sale of the Wireline Business.

See Note 10 – Wireline for additional information.

Contract Balances

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

The contract asset and contract liability balances from contracts with customers as of March 31, 2023, and December 31, 2022, were as follows:

(in millions) Contract

Assets Contract Liabilities

Assets Contract

Balance as of December 31, 2022 $ 534 $ 748

Balance as of September 30, 2022 286 739

Balance as of March 31, 2023 686 778

Change $ 152 $ 30

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.

Contract asset balances were impacted by customer activity related to new promotions, offset by billings on existing contracts and impairment, which is recognized as bad debt expense.

The current portion of our contract assets of approximately $ 222 million and $ 219 million as of September 30, 2022, and December 31, 2021, respectively, was included in Other current assets on our Condensed Consolidated Balance Sheets.

Index for Notes to the Condensed Consolidated Financial Statements

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 $ 466 million and $ 356 million as of March 31, 2023, and December 31, 2022, respectively, was included in Other current assets on our Condensed Consolidated Balance Sheets.

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

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

Revenues for the three and nine months ended September 30, 2022 and 2021, include the following:

Three Months Ended September 30, Nine Months Ended September 30,

Revenues for the three months ended March 31, 2023 and 2022 include the following:

Three Months Ended March 31,

(in millions) 2023 2022

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Remaining Performance Obligations

As of September 30, 2022, the aggregate amount of transaction price allocated to remaining service performance obligations for postpaid contracts with subsidized devices and promotional bill credits that result in an extended service contract is $ 602 million.

As of March 31, 2023, 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 $ 1.8 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.

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

As of September 30, 2022, the aggregate amount of the contractual minimum consideration for wholesale, roaming and service contracts is $ 534 million, $ 2.3 billion and $ 5.1 billion for 2022, 2023, and 2024 and beyond, respectively.

As of March 31, 2023, the aggregate amount of the contractual minimum consideration for wholesale, roaming and service contracts is $ 2.0 billion, $ 1.9 billion and $ 4.0 billion for 2023, 2024, and 2025 and beyond, respectively.

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

Index for Notes to the Condensed Consolidated Financial Statements

Contract Costs

The balance of deferred incremental costs to obtain contracts with customers was $ 1.8 billion and $ 1.5 billion as of September 30, 2022, and December 31, 2021, respectively, and is included in Other assets on our Condensed Consolidated Balance Sheets.

The balance of deferred incremental costs to obtain contracts with customers was $ 2.0 billion and $ 1.9 billion as of March 31, 2023, and December 31, 2022, respectively, and is included in Other assets on our Condensed Consolidated Balance Sheets.

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

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

Amortization of deferred contract costs included in Selling, general and administrative expenses on our Condensed Consolidated Statements of Comprehensive Income were $ 375 million and $ 277 million for the three months ended September 30, 2022 and 2021, respectively, and $ 1.1 billion and $ 789 million for the nine months ended September 30, 2022 and 2021, respectively.

Amortization of deferred contract costs included in Selling, general and administrative expenses on our Condensed Consolidated Statements of Comprehensive Income were $ 422 million and $ 324 million for the three months ended March 31, 2023 and 2022, respectively.

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

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

There were no impairment losses recognized on deferred contract cost assets for the three months ended March 31, 2023 and 2022.

Note 10 – 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, all in accordance with the rules of the Securities and Exchange Commission and other applicable legal requirements.

The specific timing, price and size of repurchases will depend on prevailing stock prices, general economic and market conditions, and other considerations and may include up to $ 3.0 billion of our common stock in 2022.

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 Condensed Consolidated Balance Sheets.

During the three and nine months ended September 30, 2022, we repurchased 4,892,315 shares of our common stock at an average price per share of $ 136.65 for a total purchase price of $ 669 million, all of which were purchased under the 2022 Stock Repurchase program and occurred during the period from September 8, 2022, through September 30, 2022.

As of September 30, 2022, we had up to approximately $ 13.3 billion remaining under the 2022 Stock Repurchase Program, of which up to approximately $ 2.3 billion was available for the remainder of 2022.

Subsequent to September 30, 2022, from October 1, 2022, through October 20, 2022, we repurchased 5,964,813 shares of our common stock at an average price per share of $ 136.57 for a total purchase price of $ 815 million.

As of October 20, 2022, we had up to approximately $ 12.5 billion remaining under the 2022 Stock Repurchase Program, of which up to approximately $ 1.5 billion was available for the remainder of 2022.

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 (the “2022 Stock Repurchase Program”).

During the three months ended March 31, 2023, we repurchased 32,963,940 shares of our common stock at an average price per share of $ 144.57 for a total purchase price of $ 4.8 billion, all of which were purchased under the 2022 Stock Repurchase Program.

All shares purchased during the three months ended March 31, 2023, were purchased at market price.

As of March 31, 2023, we had up to $ 6.2 billion remaining under the 2022 Stock Repurchase Program.

Subsequent to March 31, 2023, from April 1, 2023, through April 21, 2023, we repurchased 5,114,527 shares of our common stock at an average price per share of $ 147.96 for a total purchase price of $ 757 million.

As of April 21, 2023, we had up to $ 5.5 billion remaining under the 2022 Stock Repurchase Program .

Index for Notes to the Condensed Consolidated Financial Statements

Note 11 – 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 Purchase Agreement, pursuant to which the Buyer will acquire the Wireline Business.

The Purchase 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 (such transactions contemplated by the Purchase Agreement are collectively referred to as the “Wireline Transaction”).

The parties have agreed to a $ 1 purchase price in consideration for the Purchased Interests, subject to customary adjustments set forth in the Purchase Agreement.

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 Purchase Agreement, the Wireline Transaction is expected to close in the second half of 2023.

Index for Notes to the Condensed Consolidated Financial Statements

As a result of the Purchase Agreement and related anticipated Wireline Transaction, we concluded that the Wireline Business met the held for sale criteria upon entering into the Purchase 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 Condensed Consolidated Balance Sheets as of September 30, 2022.

The components of assets and liabilities held for sale presented within Other current assets and Other current liabilities, respectively, on our Condensed Consolidated Balance Sheets as of September 30, 2022, were as follows:

(in millions) September 30,

As of March 31, 2023, all required regulatory approvals and consents have been received, and the Wireline Transaction is expected to close in the beginning of May 2023, subject to the satisfaction or waiver of certain conditions and other terms and conditions of the Wireline Sale Agreement.

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.

(in millions) March 31,

Cash and cash equivalents $ 30

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Other assets 7

Remeasurement of disposal group held for sale to fair value less costs to sell (1)

Remeasurement of disposal group held for sale to fair value less remaining costs to sell (1)

Assets held for sale $ 397

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(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 three months ended September 30, 2022, which is included within Loss on disposal group held for sale on our Condensed Consolidated Statements of Comprehensive Income.

The components of the Loss on disposal group held for sale on our Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2022, were as follows:

in millions Three and Nine Months Ended September 30, 2022

Write-down of Wireline Business net assets $ 295

Accrual of 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 59

Loss on disposal group held for sale $ 1,071

(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 Condensed 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 $ 29 million and $ 613 million of this liability, including accrued interest, is presented within Other current liabilities and Other long-term liabilities, respectively, on our Condensed Consolidated Balance Sheets as of September 30, 2022, in accordance with the expected timing of the related payments.

Approximately $ 24 million and $ 35 million for contractual and other payments associated with the Transaction are presented

During the three months ended March 31, 2023, we recognized a pre-tax gain of $ 42 million, which is included within Gain on disposal group held for sale on our Condensed Consolidated Statements of Comprehensive Income.

This gain was primarily due to a decrease in our accrual of estimated costs to sell.

The present value of the liability for fees payable for IP transit services was recognized as a component of Loss on disposal group held for sale in 2022, as we have not currently identified any path to utilize such services in our continuing operations

Index for Notes to the Condensed Consolidated Financial Statements

within Other current liabilities and Other long-term liabilities, respectively, on our Condensed Consolidated Balance Sheets as of September 30, 2022, in accordance with the expected timing of the related payments.

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.

$ 321 million and $ 334 million of this liability, including accrued interest, is presented within Other current liabilities and Other long-term liabilities, respectively, on our Condensed Consolidated Balance Sheets as of March 31, 2023, in accordance with the expected timing of the related payments.

$ 2 million and $ 26 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 Condensed Consolidated Balance Sheets as of March 31, 2023, 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.

Other Wireline Asset Sales

Separate from the Wireline Transaction, we sold certain IP addresses held by the Wireline Business to other third parties during the three months ended September 30, 2022, for which we recognized a gain on disposal of $ 121 million, which is included as a reduction to Selling, general and administrative expenses on our Condensed 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 nine months ended September 30, 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 in our Condensed Consolidated Statements of Comprehensive Income.

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

Note 11 – Income Taxes

Within our Condensed Consolidated Statements of Comprehensive Income, we recorded an Income tax benefit of $ 57 million and $ 3 million for the three months ended September 30, 2022 and 2021, respectively, and Income tax expense of $ 106 million and $ 520 million for the nine months ended September 30, 2022 and 2021, respectively.

The increase in Income tax benefit for the three months ended September 30, 2022, was primarily from tax benefits associated with internal restructuring and lower income before income taxes, partially offset by tax benefits recognized in the three months ended September 30, 2021, associated with legal entity reorganization related to historical Sprint entities, including a reduction in the valuation allowance against deferred tax assets in certain state jurisdictions that did not impact the three months ended September 30, 2022.

The decrease in Income tax expense for the nine months ended September 30, 2022, was primarily from lower income before income taxes and tax benefits associated with internal restructuring, partially offset by tax benefits recognized in the nine months ended September 30, 2021, associated with legal entity reorganization related to historical Sprint entities, including a reduction in the valuation allowance against deferred tax assets in certain state jurisdictions, that did not impact the nine months ended September 30, 2022, and a decrease in excess tax benefits related to the vesting of restricted stock awards.

The effective tax rate was ( 12.4 )% and ( 0.3 )% for the three months ended September 30, 2022 and 2021, respectively, and 8.7 % and 16.7 % for the nine months ended September 30, 2022 and 2021, respectively.

Index for Notes to the Condensed Consolidated Financial Statements

Note 12 – Earnings Per Share

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

Three Months Ended September 30, Nine Months Ended September 30,

Three Months Ended March 31,

(in millions, except shares and per share amounts) 2023 2022

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48,751,557 48,751,557

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

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

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

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

As of March 31, 2023, we had authorized 100 million shares of preferred stock, with a par value of $ 0.00001 per share.

There was no preferred stock outstanding as of March 31, 2023 and 2022.

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

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

Note 13 – Leases

We are a lessee for non-cancelable operating and financing leases for cell sites, switch sites, retail stores, network equipment and office facilities with contractual terms that generally extend through 2035.

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 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 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 Condensed Consolidated Financial Statements

The components of lease expense were as follows:

Three Months Ended September 30, Nine Months Ended September 30,

(in millions) 2022 2021 2022 2021

Operating lease expense $ 1,498 $ 1,546 $ 5,231 $ 4,470

Financing lease expense:

Amortization of right-of-use assets 188 205 567 553

Interest on lease liabilities 18 15 49 51

Total financing lease expense 206 220 616 604

Variable lease expense 114 113 363 298

Total lease expense $ 1,818 $ 1,879 $ 6,210 $ 5,372

As of September 30, 2022, the weighted-average remaining lease term and discount rate for operating leases were 10 years and 4.0 %, respectively.

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

(in millions) Operating Leases Finance Leases

Twelve Months Ending September 30,

2023 $ 4,679 $ 1,286

2024 4,472 999

2025 4,000 544

2026 3,652 54

2027 3,349 23

Thereafter 22,091 14

Total lease payments 42,243 2,920

imputed interest 8,286 91

Total $ 33,957 $ 2,829

Interest payments for financing leases were $ 18 million and $ 15 million for the three months ended September 30, 2022 and 2021, respectively, and $ 49 million and $ 51 million for the nine months ended September 30, 2022 and 2021, respectively.

As of September 30, 2022, we have additional operating leases for commercial properties that have not yet commenced with future lease payments of approximately $ 253 million.

Note 13 – 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 $ 4.8 billion for the 12-month period ending September 30, 2023, $ 5.0 billion in total for both of the 12-month periods ending September 30, 2024 and 2025, $ 2.7 billion in total for both of the 12-month periods ending September 30, 2026 and 2027, and $ 2.9 billion in total thereafter.

Our purchase commitments are approximately $ 4.4 billion for the 12-month period ending March 31, 2024, $ 5.1 billion in total for both of the 12-month periods ending March 31, 2025 and 2026, $ 2.9 billion in total for both of the 12-month periods ending March 31, 2027 and 2028, 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.

The upfront payment is estimated to be approximately $ 950 million, before working capital adjustments.

The agreement remains subject to regulatory approval and the

Index for Notes to the Condensed Consolidated Financial Statements

estimated purchase price is excluded from our reported commitments above.

See Note 2 – Business Combination for additional details.

Spectrum Leases

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

Index for Notes to the Condensed Consolidated Financial Statements

Our spectrum lease and service credit commitments, including renewal periods, are approximately $ 312 million for the 12-month period ending September 30, 2023, $ 585 million in total for both of the 12-month periods ending September 30, 2024 and 2025, $ 616 million in total for both of the 12-month periods ending September 30, 2026 and 2027, and $ 4.6 billion in total thereafter.

In August 2022, we entered into an agreement for the purchase of certain spectrum licenses currently subject to lease agreements.

The agreement remains subject to regulatory approval and the purchase price of $ 3.5 billion is excluded from our reported purchase commitments above.

Our spectrum lease and service credit commitments, including renewal periods, are approximately $ 316 million for the 12-month period ending March 31, 2024, $ 581 million in total for both of the 12-month periods ending March 31, 2025 and 2026, $ 635 million in total for both of the 12-month periods ending March 31, 2027 and 2028, and $ 4.5 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 5 – Spectrum License Transactions for additional details.

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

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

We maintained the accrual as of March 31, 2023, and that accrual was included in Accounts payable and accrued liabilities on our Condensed Consolidated Balance Sheets.

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

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

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

Index for Notes to the Condensed Consolidated Financial Statements

These matters include, among other things, certain ongoing FCC and state government agency investigations into Sprint’s Lifeline program.

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Deutsche Telekom AG, et al.

2021-0479, against DT, SoftBank and certain of our current and former officers and directors, asserting breach of fiduciary duty claims relating to the repricing amendment to the Business

Index for Notes to the Condensed Consolidated Financial Statements

Combination Agreement, and to SoftBank’s monetization of its T-Mobile shares.

2021-0479, against DT, SoftBank and certain of our current and former officers and directors, asserting breach of fiduciary duty claims relating to the repricing amendment to the Business Combination Agreement, and to SoftBank’s monetization of its T-Mobile shares.

We are also named as a nominal defendant in the case.

We are unable to predict the potential outcome of these claims.

We intend to vigorously defend this lawsuit.

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

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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 potential cybersecurity issue involving unauthorized access to T-Mobile’s systems (the “August 2021 cyberattack”).

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

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

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.

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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 Condensed Consolidated Statements of Comprehensive Income.

During the three and nine months ended September 30, 2022, we recognized $ 50 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 Condensed Consolidated Statements of Comprehensive Income.

In connection with the proposed class action settlement and the separate settlements, we recorded a total pre-tax charge of approximately $ 400 million in the second quarter of 2022.

During the three months ended March 31, 2023, we recognized $ 50 million in reimbursements from insurance carriers for costs incurred related to the August 2021 cyberattack, which is included as a reduction to Selling, general

Index for Notes to the Condensed Consolidated Financial Statements

and administrative expenses on our Condensed 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.

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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 intend to vigorously defend this lawsuit.

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.

Index for Notes to the Condensed Consolidated Financial Statements

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.

We are cooperating fully with these agencies and regulators and working with them to resolve these matters.

While we hope to resolve them in the near term, 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, in addition to the previously recorded pre-tax charge of approximately $ 400 million noted above, we believe it is reasonably possible that we could incur additional losses associated with these proceedings and inquiries, and we will continue to evaluate information as it becomes known and will record an estimate for losses at the time or times when it is both probable that a loss has been incurred and the amount of the loss is reasonably estimable.

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

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

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

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

Deutsche Telekom AG, et al.

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

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.

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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 Application Programming Interface (“API”) without authorization.

Based on our investigation, 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 indicates that the bad actor(s) obtained data from this API 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 have notified individuals whose information was impacted consistent with state and federal requirements.

In connection with the January 2023 cyberattack, we became subject to consumer class actions and regulatory inquires, to which we will respond 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 14 – Restructuring Costs

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

Upon close of the Merger in April 2020, we began implementing restructuring initiatives to realize cost efficiencies and reduce redundancies.

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.

Index for Notes to the Condensed Consolidated Financial Statements

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

(in millions) Three Months Ended September 30, 2022 Nine Months Ended September 30, 2022 Incurred to Date

(in millions) Three Months Ended March 31, 2023 Incurred to Date

Contract termination costs $ — $ 423

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Total restructuring plan expenses $ 90 $ 2,561

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

The expenses associated with our Merger restructuring initiatives are included in Costs of services and Selling, general and administrative expenses on our Condensed 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 $ 384 million and $ 265 million for the three months ended September 30, 2022 and 2021, respectively, and $ 1.6 billion and $ 649 million for the nine months ended September 30, 2022 and 2021, respectively, and are included in Costs of services and Selling, general and administrative on our Condensed Consolidated Statements of Comprehensive Income.

Index for Notes to the Condensed Consolidated Financial Statements

Incremental expenses associated with accelerating amortization of the right-of-use assets on lease contracts were $ 139 million and $ 464 million for the three months ended March 31, 2023 and 2022, respectively, and are included in Costs of services and Selling, general and administrative expenses on our Condensed 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)

September 30, 2022

(in millions) December 31,

2022 Expenses Incurred Cash Payments Adjustments for Non-Cash Items (1)

Contract termination costs $ 190 $ — $ ( 8 ) $ — $ 182

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Total $ 470 $ 90 $ ( 101 ) $ ( 7 ) $ 452

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

(1) Non-cash items primarily 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 Condensed 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.

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.

We expect to incur substantially all remaining costs associated with our Merger restructuring activities by the end of this year, with the related cash outflows extending beyond 2023.

Note 15 – Additional Financial Information

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Accounts payable and accrued liabilities, excluding amounts classified as held for sale, are summarized as follows:

(in millions) September 30,

(in millions) March 31,

2023 December 31,

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Accrued interest 797 731

Commissions 340 348

Commissions and contract termination costs 469 523

Toll and interconnect 195 227

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Accounts payable and accrued liabilities $ 11,091 $ 12,275

Book overdrafts included in accounts payable were $ 453 million and $ 378 million as of September 30, 2022, and December 31, 2021, respectively.

Book overdrafts included in accounts payable were $ 556 million and $ 720 million as of March 31, 2023, and December 31, 2022, respectively.

Index for Notes to the Condensed Consolidated Financial Statements

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

Three Months Ended September 30, Nine Months Ended September 30,

Three Months Ended March 31,

(in millions) 2023 2022

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Change in accounts payable and accrued liabilities for purchases of property and equipment ( 329 ) ( 183 )

Leased devices transferred from inventory to property and equipment 67 214 279 1,032

Returned leased devices transferred from property and equipment to inventory ( 65 ) ( 309 ) ( 343 ) ( 1,170 )

Increase in Tower obligations from contract modification — 1,158

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Cash and cash equivalents, including restricted cash and cash held for sale, presented on our Condensed Consolidated Statements of Cash Flows were included on our Condensed Consolidated Balance Sheets as follows:

(in millions) September 30,

(in millions) March 31,

2023 December 31,

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Cash and cash equivalents held for sale (included in Other current assets) 30 27

Restricted cash (included in Other current assets) 85 73

Restricted cash (included in Other assets) 69 67

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Note 16 – Subsequent Events

Subsequent to September 30, 2022, 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.

See Note 6 – Debt for additional information.

Subsequent to September 30, 2022, on October 17, 2022, we entered into an Amended and Restated Credit Agreement.

See Note 6 – Debt for additional information.

See Note 9 – Repurchases of Common Stock for additional information regarding the 2022 Stock Repurchase Program.

See Note 10 – Repurchases of Common Stock for additional information.

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

What changed 10-Q

Item 1. Financial Statements