What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-07-27 compared with 2023-04-27 · 288 added, 163 removed, 420 unchanged (52% of the section changed)

34 unchanged sentences

• our exclusive forum provision as provided in our Fifth Amended and Restated Certificate of Incorporation (the “Certificate of Incorporation”);

• interests of DT, our controlling stockholder, that may differ from the interests of other stockholders;

• interests of DT, our controlling stockholder, which may differ from the interests of other stockholders;

• future sales of our common stock by DT and SoftBank and our inability to attract additional equity financing outside the United States due to foreign ownership limitations by the FCC;

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• Information that allows assessment of the likelihood that past performance is indicative of future performance.

Our MD&A is provided as a supplement to, and should be read together with, our unaudited condensed consolidated financial statements as of and for the three months ended March 31, 2023, included in Part I, Item 1 of this Form 10-Q, and audited consolidated financial statements, included in Part II, Item 8 of our Annual Report on Form 10-K for the year ended December 31, 2022.

Our MD&A is provided as a supplement to, and should be read together with, our unaudited condensed consolidated financial statements as of and for the three and six months ended June 30, 2023, included in Part I, Item 1 of this Form 10-Q, and audited consolidated financial statements, included in Part II, Item 8 of our Annual Report on Form 10-K for the year ended December 31, 2022.

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

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Merger-related costs are presented below:

(in millions) Three Months Ended March 31, Change

(in millions) Three Months Ended

June 30, Change Six Months Ended

June 30, Change

2023 2022 $ % 2023 2022 $ %

10 unchanged sentences

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

The major activities associated with the restructuring initiatives to date include:

The major activities associated with the Merger restructuring initiatives to date include:

• Contract termination costs associated with rationalization of retail stores, distribution channels, duplicative network and backhaul services and other agreements;

1 unchanged sentence

• The decommissioning of certain small cell sites and distributed antenna systems to achieve Merger synergies in network costs.

For more information regarding our restructuring activities, see Note 14 – Restructuring Costs of the Notes to the Condensed Consolidated Financial Statements.

For more information regarding our Merger restructuring activities, see Note 14 – Restructuring Costs of the Notes to the Condensed Consolidated Financial Statements.

Anticipated Merger Synergies

As a result of our ongoing restructuring and integration activities, we expect to realize Merger synergies by eliminating redundancies within our combined network as well as other business processes and operations (see “Restructuring” above).

For full-year 2023, we expect Merger synergies from Selling, general and administrative expense reductions of $2.6 billion to $2.7 billion, Cost of service expense reductions of $3.1 billion to $3.2 billion and avoided network expenses of approximately $1.6 billion.

On September 6, 2022, we entered into the Wireline Sale Agreement to sell the Wireline Business for a total purchase price of $1.

In addition, at the consummation of the Wireline Transaction, we will enter into an agreement for IP transit services for $700 million.

Subject to the satisfaction or waiver of certain conditions and the other terms and conditions of the Wireline Sale Agreement, the Wireline Transaction is expected to close in the beginning of May 2023.

As a result of the Wireline Sale Agreement and related anticipated Wireline Transaction, we concluded that the Wireline Business met the held for sale criteria upon entering into the Wireline Sale Agreement.

As such, the assets and liabilities of the Wireline Business disposal group are classified as held for sale and presented within Other current assets and Other current liabilities on our Condensed Consolidated Balance Sheets as of March 31, 2023, and December 31, 2022.

The fair value of the Wireline Business disposal group, less costs to sell, will be reassessed during each subsequent 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 to the gain or loss on disposal group held for sale.

As a result of our ongoing restructuring and integration activities, we have realized Merger synergies by eliminating redundancies within our combined network as well as other business processes and operations (see “Restructuring” above).

For full-year 2023, we expect Merger synergies from Selling, general and administrative expense reductions of approximately $2.7 billion, Cost of service expense reductions of approximately $3.2 billion and avoided network expenses of approximately $1.6 billion.

On September 6, 2022, we entered into the Wireline Sale Agreement to sell the Wireline Business for a total purchase price of $1 and the payments totaling $700 million under the IP transit services agreement.

On May 1, 2023, pursuant to the Wireline Sale Agreement, upon the terms and subject to the conditions thereof, we completed the Wireline Transaction.

For more information regarding the Wireline Sale Agreement, see Note 11 – Wireline of the Notes to the Condensed Consolidated Financial Statements.

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

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.

During the six months ended June 30, 2023, we recognized $50 million in reimbursements from insurance carriers for costs incurred related to the August 2021 cyberattack.

We are pursuing additional reimbursements from insurance carriers for costs incurred related to the August 2021 cyberattack.

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We have notified individuals whose information was impacted consistent with state and federal requirements.

We will respond to litigation and regulatory inquiries in connection with this incident and may incur significant expenses.

We will continue to respond to litigation and regulatory inquiries in connection with this incident 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 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.

Additionally, following the August 2021 cyberattack, we commenced a substantial multi-year investment working with leading external cybersecurity experts to enhance our cybersecurity capabilities and transform our approach to cybersecurity.

In response to the recent cyberattacks and increasing cybersecurity threats, we have significantly increased our focus on enhancing our cybersecurity practices with a substantial multi-year investment.

In the second quarter of 2023, we have hired

new security leadership, and implemented significant technology improvements to our cybersecurity controls.

Those improvements include additional authentication measures and internal systems limitations and restrictions.

In addition, we have enhanced our cybersecurity awareness program, including rolling out new training for all employees.

While we have made progress to date, we plan to continue to make substantial investments to strengthen our cybersecurity program in future periods.

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

Three Months Ended March 31, Change

Three Months Ended

June 30, Change Six Months Ended

June 30, Change

(in millions) 2023 2022 $ % 2023 2022 $ %

10 unchanged sentences

Selling, general and administrative 5,272 5,856 (584) (10) % 10,697 10,912 (215) (2) %

Gain on disposal group held for sale (42) — (42) NM

Impairment expense — 477 (477) (100) % — 477 (477) (100) %

Loss (gain) on disposal group held for sale 17 — 17 NM (25) — (25) NM

Depreciation and amortization 3,110 3,491 (381) (11) % 6,313 7,076 (763) (11) %

5 unchanged sentences

Total other expense, net (855) (872) 17 (2) % (1,681) (1,747) 66 (4) %

Income before income taxes 2,571 931 1,640 176 %

Income tax expense (631) (218) (413) 189 %

Net income $ 1,940 $ 713 $ 1,227 172 %

Income (loss) before income taxes 2,938 (163) 3,101 NM 5,509 768 4,741 617 %

Income tax (expense) benefit (717) 55 (772) NM (1,348) (163) (1,185) 727 %

Net income (loss) $ 2,221 $ (108) $ 2,329 NM $ 4,161 $ 605 $ 3,556 588 %

Statement of Cash Flows Data

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NM - Not Meaningful

The following discussion and analysis is for the three months ended March 31, 2023, compared to the same period in 2022 unless otherwise stated.

Total revenues decreased $488 million, or 2%.

The following discussion and analysis is for the three and six months ended June 30, 2023, compared to the same period in 2022 unless otherwise stated.

Total revenues decreased $505 million, or 3%, for the three months ended and decreased $993 million, or 2%, for the six months ended June 30, 2023.

The components of these changes are discussed below.

Postpaid revenues increased $661 million, or 6%, primarily from:

Postpaid revenues increased $625 million, or 5%, for the three months ended and increased $1.3 billion, or 6%, for the six months ended June 30, 2023, primarily from:

• Higher average postpaid accounts;

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

Prepaid revenues decreased $38 million, or 2%, primarily from:

Prepaid revenues decreased slightly for the three and six months ended June 30, 2023, primarily from:

• Lower prepaid ARPU.

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• Higher average prepaid customers.

Wholesale and other service revenues decreased $205 million, or 14%, primarily from lower Lifeline and MVNO revenues.

Equipment revenues decreased $975 million, or 21%, primarily from:

Wholesale and other service revenues decreased $178 million, or 13%, for the three months ended and decreased $383 million, or 13%, for the six months ended June 30, 2023, primarily from:

• Lower MVNO revenues;

• Lower Wireline revenues due to the sale of the Wireline Business on May 1, 2023.

See Note 11 – Wireline of the Notes to the Condensed Consolidated Financial Statements for additional information.

Equipment revenues decreased $961 million, or 23%, for the three months ended and decreased $1.9 billion, or 22%, for the six months ended June 30, 2023.

The decrease for the three months ended June 30, 2023, was primarily from:

• A decrease of $429 million in device sales revenue, excluding purchased leased devices, primarily from:

• A decrease in the number of devices sold primarily driven by higher postpaid upgrades in the prior year period related to facilitating the migration of Sprint customers to the T-Mobile network;

• An increase in contra-revenue primarily driven by higher imputed interest rates on EIP, which is recognized in Other revenues over the device financing term;

• A decrease in the number of devices sold, primarily driven by higher postpaid upgrades in the prior year period related to facilitating the migration of Sprint customers to the T-Mobile network, as well as longer device lifecycles, and lower prepaid sales;

partially offset by

• Higher average revenue per device sold, primarily driven by higher promotions in the prior year period, which included promotions for Sprint customers to facilitate the migration to the T-Mobile network;

• A decrease of $317 million in lease revenues and a decrease of $46 million in customer purchases of leased devices primarily due to a lower number of customer devices under lease as a result of the continued strategic shift in device financing from leasing to EIP.

The decrease for the six months ended June 30, 2023, was primarily from:

• A decrease of $814 million in device sales revenue, excluding purchased leased devices, primarily from:

partially offset by

• A decrease of $340 million in lease revenues and a decrease of $87 million in customer purchases of leased devices primarily due to a lower number of customer devices under lease as a result of the continued strategic shift from device financing from leasing to EIP.

Other revenues increased $69 million, or 23%, primarily from:

• Higher revenue from our device recovery program;

• A decrease of $657 million in lease revenues and a decrease of $133 million in customer purchases of leased devices primarily due to a lower number of customer devices under lease as a result of the continued strategic shift in device financing from leasing to EIP.

Other revenues increased $34 million, or 13%, for the three months ended and increased $103 million, or 19%, for the six months ended June 30, 2023.

The increase for the three months ended June 30, 2023, was primarily from higher interest income driven by higher imputed interest rates on EIP, which is recognized over the device financing term.

The increase for the six months ended June 30, 2023, was primarily from:

• Higher interest income driven by higher imputed interest rates on EIP, which is recognized over the device financing term;

Total operating expenses decreased $2.1 billion, or 11%.

• Higher revenue from our device recovery program.

Total operating expenses decreased $3.6 billion, or 19%, for the three months ended and decreased $5.7 billion, or 15%, for the six months ended June 30, 2023.

The components of this change are discussed below.

Cost of services , exclusive of depreciation and amortization, decreased $666 million, or 18%, primarily from:

• Higher realized Merger synergies;

Cost of services , exclusive of depreciation and amortization, decreased $1.1 billion, or 28%, for the three months ended and decreased $1.8 billion, or 23%, for the six months ended June 30, 2023.

The decrease for the three months ended June 30, 2023, was primarily from:

• A decrease of $783 million in Merger-related costs related to network decommissioning and integration as the majority of our decommissioning efforts were completed in 2022;

• Higher realized Merger synergies;

• Lower costs due to the sale of the Wireline Business on May 1, 2023.

See Note 11 - Wireline of the Notes to the Condensed Consolidated Financial Statements for additional information;

partially offset by

• Higher site costs related to the continued build-out of our nationwide 5G network.

Cost of equipment sales , exclusive of depreciation and amortization, decreased $1.4 billion, or 23%, primarily from:

The decrease for the six months ended June 30, 2023, was primarily from:

• A decrease of $1.2 billion in Merger-related costs related to network decommissioning and integration as the majority of our decommissioning efforts were completed in 2022;

• Higher realized Merger synergies;

• Lower costs due to the sale of the Wireline Business on May 1, 2023.

See Note 11 - Wireline of the Notes to the Condensed Consolidated Financial Statements for additional information;

partially offset by

• Higher site costs related to the continued build-out of our nationwide 5G network.

Cost of equipment sales , exclusive of depreciation and amortization, decreased $1.0 billion, or 20%, for the three months ended and decreased $2.4 billion, or 22%, for the six months ended June 30, 2023.

The decrease for the three months ended June 30, 2023, was primarily from:

• A decrease of $917 million in device cost of equipment sales, excluding purchased leased devices, primarily from:

• Cost of equipment sales for the three months ended June 30, 2022, included $459 million of Merger-related costs, compared to no Merger-related costs for the three months ended June 30, 2023.

The decrease for the six months ended June 30, 2023, was primarily from:

• A decrease of $2.1 billion in device cost of equipment sales, excluding purchased leased devices, primarily from:

• A decrease in the number of devices sold primarily driven by higher postpaid upgrades in the prior year period related to facilitating the migration of Sprint customers to the T-Mobile network;

• Lower average cost per device sold driven by a decrease in the high-end phone mix.

• Cost of equipment sales for the three months ended March 31, 2023, included $9 million of Merger-related recoveries, compared to $751 million of Merger-related costs for the three months ended March 31, 2022.

Selling, general and administrative expenses increased $369 million, or 7%, primarily from:

• Higher severance and restructuring expenses;

• Higher Merger-related costs due to legal settlement gains recognized during the three months ended March 31, 2022, partially offset by lower integration expenses;

• Cost of equipment sales for the six months ended June 30, 2023, included $9 million of Merger-related recoveries, compared to $1.2 billion of Merger-related costs for the six months ended June 30, 2022.

Selling, general and administrative expenses decreased $584 million, or 10%, for the three months ended and decreased $215 million, or 2%, for the six months ended June 30, 2023.

The decrease for the three months ended June 30, 2023, was primarily from:

• Lower legal-related expenses, primarily driven by the settlement of certain litigation associated with the August 2021 cyberattack of $400 million during the three months ended June 30, 2022;

• Lower Merger-related costs and higher realized Merger synergies;

• Lower severance and restructuring expenses;

• Lower bad debt expense;

partially offset by

• Higher realized Merger synergies.

• Selling, general and administrative expenses for the three months ended March 31, 2023, included $159 million of Merger-related costs, primarily related to integration and restructuring expenses, compared to $55 million of Merger-related costs for the three months ended March 31, 2022, which were partially offset by legal settlement gains.

Gain on disposal group held for sale was $42 million for the three months ended March 31, 2023.

• Higher advertising expense;

• Higher commission amortization expense.

• Selling, general and administrative expenses for the three months ended June 30, 2023, included $98 million of Merger-related costs, which were net of legal settlement gains of $65 million, compared to $248 million of Merger-related costs for the three months ended June 30, 2022.

The decrease for the six months ended June 30, 2023, was primarily from:

• Lower legal-related expenses, primarily driven by the settlement of certain litigation associated with the August 2021 cyberattack of $400 million during the six months ended June 30, 2022;

• Lower bad debt expense;

partially offset by

• Higher commission amortization expense;

• Higher advertising expense.

• Selling, general and administrative expenses for the six months ended June 30, 2023, included $257 million of Merger-related costs, which were net of legal settlement gains of $65 million, compared to $303 million of Merger-related costs for the six months ended June 30, 2022, which were net of legal settlement gains of $220 million.

Impairment expense was $477 million for the three and six months ended June 30, 2022, due to the non-cash impairment of certain Wireline Property and equipment, Operating lease right-of-use assets and Other intangible assets.

There was no impairment expense for the three and six months ended June 30, 2023.

Loss (gain) on disposal group held for sale was a loss of $17 million for the three months ended June 30, 2023, and a gain of $25 million for the six months ended June 30, 2023.

See Note 11 - Wireline of the Notes to the Condensed Consolidated Financial Statements for additional information.

There was no gain or loss on disposal group held for sale for the three months ended March 31, 2022.

Depreciation and amortization decreased $382 million, or 11%, primarily from:

There was no gain or loss on disposal group held for sale for the three and six months ended June 30, 2022.

Depreciation and amortization decreased $381 million, or 11%, for the three months ended and decreased $763 million, or 11%, for the six months ended June 30, 2023.

The decrease for the three and six months ended June 30, 2023, was primarily from:

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

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

Operating income , the components of which are discussed above, increased $1.6 billion, or 88%.

Interest expense, net was relatively flat.

Other income (expense), net was relatively flat.

Income before income taxes , the components of which are discussed above, was $2.6 billion and $931 million for the three months ended March 31, 2023 and 2022, respectively.

Income tax expense increased $413 million, or 189%, primarily from higher income before income taxes.

Our effective tax rate was 24.5% and 23.3% for the three months ended March 31, 2023 and 2022, respectively.

Net income , the components of which are discussed above, was $1.9 billion and $713 million for the three months ended March 31, 2023 and 2022, respectively.

Net income included Merger-related costs, net of tax, of $268 million for the three months ended March 31, 2023, compared to $1.1 billion for the three months ended March 31, 2022.

Operating income , the components of which are discussed above, increased $3.1 billion, or 435%, for the three months ended and increased $4.7 billion, or 186%, for the six months ended June 30, 2023.

Interest expense, net was relatively flat and was impacted by the following:

• Higher interest expense, primarily due to higher average debt outstanding and a higher average effective interest rate;

• Higher interest income, primarily due to higher average interest rates on short-term cash equivalents.

Other income (expense), net was insignificant for all periods.

Income (loss) before income taxes , the components of which are discussed above, was income of $2.9 billion and a loss of $163 million for the three months ended June 30, 2023 and 2022, respectively, and was income of $5.5 billion and $768 million for the six months ended June 30, 2023 and 2022, respectively.

Income tax expense increased $772 million for the three months ended and increased $1.2 billion for the six months ended June 30, 2023, primarily from higher income before income taxes.

Our effective tax rate was 24.4% and 33.6% for the three months ended June 30, 2023 and 2022, respectively, and 24.5% and 21.2% for the six months ended June 30, 2023 and 2022, respectively.

Net income (loss) , the components of which are discussed above, was income of $2.2 billion and a loss of $108 million for the three months ended June 30, 2023 and 2022, respectively, and was income of $4.2 billion and $605 million for the six months ended June 30, 2023 and 2022, respectively.

Net income (loss) included:

• Merger-related costs, net of tax, of $207 million and $475 million for the three and six months ended June 30, 2023, respectively, compared to $1.3 billion and $2.3 billion for the three and six months ended June 30, 2022, respectively.

• Impairment expense of $358 million for the three and six months ended June 30, 2022, compared to no impairment expense for the three and six months ended June 30, 2023.

• Legal-related expenses, net, including the impact of the settlement of certain litigation associated with the August 2021 cyberattack, of $300 million for the three and six months ended June 30, 2022, compared to Legal-related recoveries, net, of $32 million for the six months ended June 30, 2023.

Guarantor Financial Information

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is presented in the table below:

(in millions) March 31, 2023 December 31, 2022

(in millions) June 30, 2023 December 31, 2022

Current assets $ 18,819 $ 17,661

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is presented in the table below:

(in millions) Three Months Ended

March 31, 2023 Year Ended

(in millions) Six Months Ended

June 30, 2023 Year Ended

December 31, 2022

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

(in millions) March 31, 2023 December 31, 2022

(in millions) June 30, 2023 December 31, 2022

Current assets $ 17,767 $ 9,319

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The summarized results of operations information for the consolidated obligor group of debt issued by Sprint is presented in the table below:

(in millions) Three Months Ended

March 31, 2023 Year Ended

(in millions) Six Months Ended

June 30, 2023 Year Ended

December 31, 2022

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

(in millions) March 31, 2023 December 31, 2022

(in millions) June 30, 2023 December 31, 2022

Current assets $ 17,767 $ 9,320

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

(in millions) Three Months Ended

March 31, 2023 Year Ended

(in millions) Six Months Ended

June 30, 2023 Year Ended

December 31, 2022

11 unchanged sentences

A postpaid account is generally defined as a billing account number that generates revenue.

Postpaid accounts generally consist of customers that are qualified for postpaid service utilizing phones, High Speed Internet, tablets, wearables, DIGITS or other connected devices, where they generally pay after receiving service.

Postpaid accounts generally consist of customers that are qualified for postpaid service utilizing phones, High Speed Internet, mobile internet devices, including tablets and hotspots, wearables, DIGITS or other connected devices, including SyncUP and IoT, where they generally pay after receiving service.

The following table sets forth the number of ending postpaid accounts:

As of March 31, Change

As of June 30, Change

(in thousands) 2023 2022 # %

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29,112 27,818 1,294 5 %

(1) Customers impacted by the decommissioning of the legacy Sprint CDMA and LTE and T-Mobile UMTS networks have been excluded from our postpaid account base resulting in the removal of 57,000 postpaid accounts in the first quarter of 2022.

Postpaid Net Account Additions

The following table sets forth the number of postpaid net account additions:

Three Months Ended March 31, Change

Three Months Ended

June 30, Change Six Months Ended

June 30, Change

(in thousands) 2023 2022 # % 2023 2022 # %

Postpaid net account additions 299 380 (81) (21) % 586 728 (142) (20) %

Postpaid net account additions decreased 61,000, or 18%, primarily from:

• Continued normalization of industry growth toward pre-pandemic levels;

partially offset by

• Capturing above our market share of new customer relationships driven by our differentiated growth strategy in new and under-penetrated markets, including continued growth in High Speed Internet.

Postpaid net account additions decreased 81,000, or 21%, for the three months ended and decreased 142,000, or 20%, for the six months ended June 30, 2023, primarily from:

• Continued moderation of industry growth;

• Fewer High Speed Internet only net account additions.

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

Customers are qualified either for postpaid service utilizing phones, High Speed Internet, tablets, wearables, DIGITS or other connected devices, where they generally pay after receiving service, or prepaid service, where they generally pay in advance of receiving service.

Customers are qualified either for postpaid service utilizing phones, High Speed Internet, mobile internet devices, including tablets and hotspots, wearables, DIGITS or other connected devices, including SyncUP and IoT, where they generally pay after receiving service, or prepaid service, where they generally pay in advance of receiving service.

The following table sets forth the number of ending customers:

As of March 31, Change

As of June 30, Change

(in thousands) 2023 2022 # %

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Prepaid customers (1)

21,516 21,236 280 1 %

Total customers 116,602 110,023 6,579 6 %

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— (1,878) 1,878 (100) %

(1) Customers impacted by the decommissioning of the legacy Sprint CDMA and LTE and T-Mobile UMTS networks have been excluded from our customer base resulting in the removal of 212,000 postpaid phone customers and 349,000 postpaid other customers in the first quarter of 2022.

(1) The total base adjustment in the second quarter of 2022 was a reduction of 1,320,000 total customers.

Customers impacted by the decommissioning of the legacy Sprint CDMA and LTE and T-Mobile UMTS networks have been excluded from our customer base resulting in the removal of 212,000 postpaid phone customers and 349,000 postpaid other customers in the first quarter of 2022 and 284,000 postpaid phone customers, 946,000 postpaid other customers and 28,000 prepaid customers in the second quarter of 2022.

In connection with our acquisition of companies, we included a base adjustment in the first quarter of 2022 to increase postpaid phone customers by 17,000 and reduce postpaid other customers by 14,000.

High Speed Internet customers included in Postpaid other customers were 2,855,000 and 975,000 as of March 31, 2023 and 2022, respectively.

High Speed Internet customers included in Prepaid customers were 314,000 and 9,000 as of March 31, 2023 and 2022, respectively.

Certain customers now serviced through reseller contracts were removed from our reported postpaid customer base resulting in the removal of 42,000 postpaid phone customers and 20,000 postpaid other customers in the second quarter of 2022.

High Speed Internet customers included in Postpaid other customers were 3,302,000 and 1,472,000 as of June 30, 2023 and 2022, respectively.

High Speed Internet customers included in Prepaid customers were 376,000 and 72,000 as of June 30, 2023 and 2022, respectively.

Net Customer Additions

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

Three Months Ended March 31, Change

Three Months Ended

June 30, Change Six Months Ended

June 30, Change

(in thousands) 2023 2022 # % 2023 2022 # %

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Adjustments to customers — (1,320) 1,320 (100) % — (1,878) 1,878 (100) %

Total net customer additions decreased 61,000, or 4%, primarily from:

• Lower postpaid phone net customer additions, primarily due to lower gross additions driven by continued normalization of industry growth toward pre-pandemic levels and fewer migrations from prepaid, partially offset by lower churn;

• Lower prepaid net customer additions, primarily due to continued normalization of industry growth toward pre-pandemic levels, partially offset by growth in High Speed Internet and fewer migrations to postpaid;

Total net customer additions decreased 117,000, or 6%, for the three months ended and decreased 178,000, or 6%, for the six months ended June 30, 2023.

The decrease for the three months ended June 30, 2023, was primarily from:

• Lower postpaid other net customer additions, primarily due to

• Lower net additions from mobile internet devices;

• Lower High Speed Internet net customer additions, primarily due to increased deactivations from a growing customer base, mostly offset by continued growth in gross additions driven by increasing customer demand;

• Lower prepaid net customer additions, primarily due to continued moderation of industry growth and continued industry migration of prepaid to postpaid;

partially offset by

• Higher postpaid other net customer additions, primarily due to growth in High Speed Internet, partially offset by lower net additions from mobile internet devices.

• High Speed Internet net customer additions included in postpaid other net customer additions were 445,000 and 329,000 for the three months ended March 31, 2023 and 2022, respectively.

High Speed Internet net customer additions included in prepaid net customer additions were 78,000 and 9,000 for the three months ended March 31, 2023 and 2022, respectively.

• Higher postpaid phone net customer additions, primarily due to higher gross additions and lower churn.

• High Speed Internet net customer additions included in postpaid other net customer additions were 447,000 and 497,000 for the three months ended June 30, 2023 and 2022, respectively.

High Speed Internet net customer additions included in prepaid net customer additions were 62,000 and 63,000 for the three months ended June 30, 2023 and 2022, respectively.

The decrease for the six months ended June 30, 2023, was primarily from:

• Lower postpaid other net customer additions, primarily due to

• Lower net additions from mobile internet devices;

partially offset by

• Higher High Speed Internet net customer additions, primarily due to continued growth in gross additions driven by increasing customer demand, partially offset by increased deactivations from a growing customer base;

• Lower prepaid net customer additions, primarily due to continued moderation of industry growth and continued industry migration of prepaid to postpaid, partially offset by growth in High Speed Internet.

• High Speed Internet net customer additions included in postpaid other net customer additions were 892,000 and 826,000 for the six months ended June 30, 2023 and 2022, respectively.

High Speed Internet net customer additions included in prepaid net customer additions were 140,000 and 72,000 for the six months ended June 30, 2023 and 2022, respectively.

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

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The following table sets forth the churn:

Three Months Ended March 31, Change

Postpaid phone churn 0.89 % 0.93 % (4) bps

Prepaid churn 2.76 % 2.67 % 9 bps

Postpaid phone churn decreased 4 basis points, primarily from reduced Sprint churn as we progress through the integration process.

Prepaid churn increased 9 basis points, primarily due to more normalized payment performance relative to muted pandemic levels.

Three Months Ended

June 30, Change Six Months Ended

June 30, Change

2023 2022 2023 2022

Postpaid phone churn 0.77 % 0.80 % -3 bps 0.83 % 0.86 % -3 bps

Prepaid churn 2.62 % 2.58 % 4 bps 2.69 % 2.62 % 7 bps

Postpaid phone churn decreased 3 basis points for the three months ended and decreased 3 basis points for the six months ended June 30, 2023, primarily from improved customer retention driven by a differentiated value proposition and network experience.

Prepaid churn increased 4 basis points for the three months ended and increased 7 basis points for the six months ended June 30, 2023, primarily from continued industry migration of prepaid to postpaid.

Postpaid Average Revenue Per Account

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We believe postpaid ARPA provides management, investors and analysts with useful information to assess and evaluate our postpaid service revenue realization and assist in forecasting our future postpaid service revenues on a per account basis.

We consider postpaid ARPA to be indicative of our revenue growth potential given the increase in the average number of postpaid phone customers per account and increases in postpaid other customers, including High Speed Internet, tablets, wearables, DIGITS or other connected devices.

We consider postpaid ARPA to be indicative of our revenue growth potential given the increase in the average number of postpaid phone customers per account and increases in postpaid other customers, including High Speed Internet, mobile internet devices, including tablets and hotspots, wearables, DIGITS or other connected devices, including SyncUP and IoT.

The following table sets forth our operating measure ARPA:

(in dollars) Three Months Ended March 31, Change

(in dollars) Three Months Ended

June 30, Change Six Months Ended

June 30, Change

2023 2022 $ % 2023 2022 $ %

Postpaid ARPA $ 138.94 $ 137.92 $ 1.02 1 % $ 138.49 $ 137.23 $ 1.26 1 %

Postpaid ARPA increased $1.51, or 1%, primarily from:

Postpaid ARPA increased $1.02, or 1%, for the three months ended and increased $1.26, or 1%, for the six months ended June 30, 2023.

The increase for the three months ended June 30, 2023, was primarily from:

• An increase in customers per account, including continued adoption of High Speed Internet;

• Higher premium services, primarily high-end rate plans;

• An increase in customers per account, including continued adoption of High Speed Internet from existing accounts;

• Higher non-recurring charges relative to muted pandemic levels;

partially offset by

• Increased promotional activity;

• An increase in High Speed Internet only accounts;

• Increased promotional activity, including autopay adoption;

• Growth in rate plans for specific customer cohorts, such as Business, Military and First Responder.

The increase for the six months ended June 30, 2023, was primarily from:

• Higher premium services, primarily high-end rate plans;

• An increase in customers per account, including continued adoption of High Speed Internet;

partially offset by

• Increased promotional activity;

• An increase in High Speed Internet only accounts;

• Growth in rate plans for specific customer cohorts, such as Business, Military and First Responder.

Average Revenue Per User

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We believe ARPU provides management, investors and analysts with useful information to assess and evaluate our service revenue per customer and assist in forecasting our future service revenues generated from our customer base.

Postpaid phone ARPU excludes postpaid other customers and related revenues, which include High Speed Internet, tablets, wearables, DIGITS and other connected devices.

Postpaid phone ARPU excludes postpaid other customers and related revenues, which include High Speed Internet, mobile internet devices, including tablets and hotspots, wearables, DIGITS and other connected devices, including SyncUP and IoT.

The following table sets forth our operating measure ARPU:

(in dollars) Three Months Ended March 31, Change

(in dollars) Three Months Ended

June 30, Change Six Months Ended

June 30, Change

2023 2022 $ % 2023 2022 $ %

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Postpaid Phone ARPU

Postpaid phone ARPU was relatively flat, primarily due to:

Postpaid phone ARPU was relatively flat for the three and six months ended June 30, 2023.

The slight decrease for the three months ended June 30, 2023, was primarily from:

• Increased promotional activity;

• Growth in rate plans for specific customer cohorts, such as Business, Military and First Responder;

mostly offset by

• Higher premium services, primarily high-end rate plans.

• Higher non-recurring charges relative to muted pandemic levels;

The slight increase for the six months ended June 30, 2023, was primarily from:

• Higher premium services, primarily high-end rate plans;

mostly offset by

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• Growth in rate plans for specific customer cohorts, such as Business, Military and First Responder.

Prepaid ARPU decreased $1.21, or 3%, primarily due to:

Prepaid ARPU decreased $0.73, or 2%, for the three months ended and decreased $0.97, or 2%, for the six months ended June 30, 2023, primarily from:

• Dilution from promotional rate plan mix;

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Adjusted EBITDA, Adjusted EBITDA margin, Core Adjusted EBITDA and Core Adjusted EBITDA margin have limitations as analytical tools and should not be considered in isolation or as substitutes for income from operations, net income or any other measure of financial performance reported in accordance with GAAP.

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

Three Months Ended March 31, Change

(in millions) 2023 2022 $ %

Net income $ 1,940 $ 713 $ 1,227 172 %

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

Three Months Ended

June 30, Change Six Months Ended

June 30, Change

(in millions, except percentages) 2023 2022 $ % 2023 2022 $ %

Net income (loss) $ 2,221 $ (108) $ 2,329 NM $ 4,161 $ 605 $ 3,556 588 %

Interest expense, net 861 851 10 1 % 1,696 1,715 (19) (1) %

Other (income) expense, net (6) 21 (27) (129) % (15) 32 (47) (147) %

Income tax expense 631 218 413 189 %

Income tax expense (benefit) 717 (55) 772 NM 1,348 163 1,185 727 %

Operating income 3,793 709 3,084 435 % 7,190 2,515 4,675 186 %

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Merger-related costs 276 1,668 (1,392) (83) % 634 3,081 (2,447) (79) %

Legal-related recoveries, net (2)

(43) — (43) NM

Gain on disposal group held for sale (42) — (42) NM

Impairment expense — 477 (477) (100) % — 477 (477) (100) %

Legal-related expenses (recoveries), net (2)

— 400 (400) (100) % (43) 400 (443) (111) %

Loss (gain) on disposal group held for sale 17 — 17 NM (25) — (25) NM

Other, net (3)

153 10 143 NM

54 110 (56) (51) % 207 120 87 73 %

Adjusted EBITDA 7,405 7,004 401 6 % 14,604 13,954 650 5 %

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$ 7,336 $ 6,618 $ 718 11 % $ 14,388 $ 13,081 $ 1,307 10 %

Net income margin (Net income divided by Service revenues) 12 % 5 % 700 bps

Adjusted EBITDA margin (Adjusted EBITDA divided by Service revenues) 46 % 46 % — bps

Net income (loss) margin (Net income (loss) divided by Service revenues) 14 % (1) % 1,500 bps 13 % 2 % 1,100 bps

Adjusted EBITDA margin (Adjusted EBITDA divided by Service revenues) 47 % 46 % 100 bps 47 % 46 % 100 bps

Core Adjusted EBITDA margin (Core Adjusted EBITDA divided by Service revenues)

45 % 43 % 200 bps

47 % 43 % 400 bps 46 % 43 % 300 bps

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

Additionally, certain stock-based compensation expenses associated with the Transactions have been included in Merger-related costs.

(2) Legal-related recoveries, net, consists of the settlement of certain litigation associated with the August 2021 cyberattack and is presented net of insurance recoveries.

(2) Legal-related expenses (recoveries), net, consists of the settlement of certain litigation associated with the August 2021 cyberattack and is presented net of insurance recoveries.

(3) Other, net, primarily consists of certain severance, restructuring and other expenses and income not directly attributable to the Merger which are not reflective of T-Mobile’s core business activities (“special items”), and are, therefore, excluded from Adjusted EBITDA and Core Adjusted EBITDA.

NM - Not meaningful

Core Adjusted EBITDA increased $589 million, or 9%, for the three months ended March 31, 2023.

Core Adjusted EBITDA increased $718 million, or 11%, for the three months ended and increased $1.3 billion, or 10%, for the six months ended June 30, 2023.

The components comprising Core Adjusted EBITDA are discussed further above.

The increase was primarily due to:

The increase for the three months ended June 30, 2023, was primarily from:

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

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• Lower Equipment revenues, excluding lease revenues.

• Higher Selling, general and administrative expenses, excluding Merger-related costs and other special items.

Adjusted EBITDA increased $249 million, or 4%, for the three months ended March 31, 2023, primarily due to the fluctuations in Core Adjusted EBITDA, discussed above, partially offset by lower lease revenues, which decreased $340 million for the three months ended March 31, 2023.

The increase for the six months ended June 30, 2023, was primarily from:

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

• Higher Total service revenues;

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

partially offset by

• Lower Equipment revenues, excluding lease revenues;

• Higher Selling, general and administrative expenses, excluding Merger-related costs, Legal-related expenses and other special items.

Adjusted EBITDA increased $401 million, or 6%, for the three months ended and increased $650 million, or 5%, for the six months ended June 30, 2023, primarily due to the fluctuations in Core Adjusted EBITDA, discussed above, partially offset by lower lease revenues, which decreased $317 million for the three months ended and decreased $657 million for the six months ended June 30, 2023.

Liquidity and Capital Resources

Our principal sources of liquidity are our cash and cash equivalents and cash generated from operations, proceeds from issuance of debt, financing leases, the sale of certain receivables and the Revolving Credit Facility (as defined below).

Our principal sources of liquidity are our cash and cash equivalents and cash generated from operations, proceeds from issuance of debt, financing leases, the sale of certain receivables, the Revolving Credit Facility (as defined below) and, beginning in July 2023, an unsecured short-term commercial paper program.

Further, the incurrence of additional indebtedness may inhibit our ability to incur new debt in the future to finance our business strategy under the terms governing our existing and future indebtedness.

The following is a condensed schedule of our cash flows:

Three Months Ended March 31, Change

Three Months Ended

June 30, Change Six Months Ended

June 30, Change

(in millions) 2023 2022 $ % 2023 2022 $ %

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Operating Activities

Net cash provided by operating activities increased $206 million, or 5%, primarily from:

Net cash provided by operating activities increased $146 million, or 3%, for the three months ended and increased $352 million, or 4%, for the six months ended June 30, 2023.

The increase for the three months ended June 30, 2023, was primarily from:

• A $2.1 billion increase in Net income, adjusted for non-cash income and expense;

partially offset by

• A $1.1 billion increase in net cash outflows from changes in working capital, primarily due to higher use of cash from Accounts payable and accrued liabilities, Operating lease right-of-use assets, Accounts receivable and Short- and long-term operating lease liabilities, partially offset by lower use of cash from Equipment installment plan receivables and Inventory.

• Net cash provided by operating activities includes the impact of $484 million and $893 million in net payments for Merger-related costs for the three months ended March 31, 2023 and 2022, respectively.

• A $1.9 billion increase in net cash outflows from changes in working capital, primarily due to higher use of cash from Accounts payable and accrued liabilities, Operating lease right-of-use assets, Other current and long-term liabilities, Short- and long-term operating lease liabilities and Inventory, partially offset by lower use of cash from Other current and long-term assets and Equipment installment plan receivables.

• Net cash provided by operating activities includes the impact of $728 million and $907 million in net payments for Merger-related costs for the three months ended June 30, 2023 and 2022, respectively.

The increase for the six months ended June 30, 2023, was primarily from:

• A $3.3 billion increase in Net income, adjusted for non-cash income and expense;

partially offset by

• A $3.0 billion increase in net cash outflows from changes in working capital, primarily due to higher use of cash from Accounts payable and accrued liabilities, Operating lease right-of-use assets, Other current and long-term liabilities, Short- and long-term operating lease liabilities and Accounts receivable, partially offset by lower use of cash from Equipment installment plan receivables, Other current and long-term assets and Inventory.

• Net cash provided by operating activities includes the impact of $1.2 billion and $1.8 billion in net payments for Merger-related costs for the six months ended June 30, 2023 and 2022, respectively.

Investing Activities

Net cash used in investing activities decreased $3.4 billion, or 66%.

The use of cash was primarily from:

Net cash used in investing activities decreased $1.1 billion, or 42%, for the three months ended and decreased $4.4 billion, or 58%, for the six months ended June 30, 2023.

The use of cash for the three months ended June 30, 2023, was primarily from:

• $2.8 billion in Purchases of property and equipment, including capitalized interest, from the accelerated build-out of our nationwide 5G network;

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• $1.3 billion in Proceeds related to beneficial interests in securitization transactions.

The use of cash for the six months ended June 30, 2023, was primarily from:

• $5.8 billion in Purchases of property and equipment, including capitalized interest, from the accelerated build-out of our nationwide 5G network;

partially offset by

• $2.7 billion in Proceeds related to beneficial interests in securitization transactions.

Financing Activities

Net cash used in financing activities was $2.3 billion for the three months ended March 31, 2023.

The use of cash was primarily from:

Net cash used in financing activities decreased $960 million, or 55%, for the three months ended and decreased $823 million, or 21%, for the six months ended June 30, 2023.

The use of cash for the three months ended June 30, 2023, was primarily from:

• $3.6 billion in Repurchases of common stock;

• $304 million in Repayments of financing lease obligations;

• $187 million in Tax withholdings on share-based awards;

• $223 million in Repayments of long-term debt;

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• $3.5 billion in Proceeds from issuance of long-term debt.

The use of cash for the six months ended June 30, 2023, was primarily from:

• $8.2 billion in Repurchases of common stock;

• $610 million in Repayments of financing lease obligations;

• $354 million in Repayments of long-term debt;

• $257 million in Tax withholdings on share-based awards;

partially offset by

• $6.5 billion in Proceeds from issuance of long-term debt.

Cash and Cash Equivalents

As of March 31, 2023, and December 31, 2022, our Cash and cash equivalents were $4.5 billion.

As of June 30, 2023, our Cash and cash equivalents were $6.6 billion compared to $4.5 billion at December 31, 2022.

Adjusted Free Cash Flow

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The table below provides a reconciliation of Adjusted Free Cash Flow to Net cash provided by operating activities, which we consider to be the most directly comparable GAAP financial measure:

Three Months Ended March 31, Change

(in millions) 2023 2022 $ %

Three Months Ended

June 30, Change Six Months Ended

June 30, Change

(in millions, except percentages) 2023 2022 $ % 2023 2022 $ %

Net cash provided by operating activities $ 4,355 $ 4,209 $ 146 3 % $ 8,406 $ 8,054 $ 352 4 %

Cash purchases of property and equipment, including capitalized interest (2,789) (3,572) 783 (22) % (5,790) (6,953) 1,163 (17) %

Proceeds from sales of tower sites 6 — 6 NM

Proceeds from sales of tower sites 2 — 2 NM 8 — 8 NM

Proceeds related to beneficial interests in securitization transactions 1,309 1,121 188 17 % 2,654 2,306 348 15 %

Adjusted Free Cash Flow $ 2,877 $ 1,758 $ 1,119 64 % $ 5,278 $ 3,407 $ 1,871 55 %

Net cash provided by operating activities margin (Net cash provided by operating activities divided by Service revenues) 26 % 25 % 100 bps

Adjusted Free Cash Flow margin (Adjusted Free Cash Flow divided by Service revenues) 15 % 11 % 400 bps

Net cash provided by operating activities margin (Net cash provided by operating activities divided by Service revenues) 28 % 27 % 100 bps 27 % 26 % 100 bps

Adjusted Free Cash Flow margin (Adjusted Free Cash Flow divided by Service revenues) 18 % 11 % 700 bps 17 % 11 % 600 bps

NM - Not Meaningful

Adjusted Free Cash Flow increased $752 million, or 46%.

The increase was primarily impacted by the following:

Adjusted Free Cash Flow increased $1.1 billion, or 64%, for the three months ended and increased $1.9 billion, or 55%, for the six months ended June 30, 2023.

The increase for the three months ended June 30, 2023, was primarily impacted by the following:

• Lower Cash purchases of property and equipment, including capitalized interest, driven by increased capital efficiencies from accelerated investments in our nationwide 5G network in 2022;

• Higher Proceeds related to beneficial interests in securitization transactions, which were offset in Net cash provided by operating activities;

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

• Adjusted Free Cash Flow includes the impact of $728 million and $907 million in net payments for Merger-related costs for the three months ended June 30, 2023 and 2022, respectively.

The increase for the six months ended June 30, 2023, was primarily impacted by the following:

• Lower Cash purchases of property and equipment, including capitalized interest, driven by increased capital efficiencies from accelerated investments in our nationwide 5G network in 2022;

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

• Higher Proceeds related to beneficial interests in securitization transactions, which were offset in Net cash provided by operating activities.

• Adjusted Free Cash Flow includes the impact of $484 million and $893 million in net payments for Merger-related costs for the three months ended March 31, 2023 and 2022, respectively.

During the three months ended March 31, 2023 and 2022, there were no significant net cash proceeds from securitization.

• Adjusted Free Cash Flow includes the impact of $1.2 billion and $1.8 billion in net payments for Merger-related costs for the six months ended June 30, 2023 and 2022, respectively.

During the six months ended June 30, 2023 and 2022, there were no significant net cash proceeds from securitization.

Borrowing Capacity

We maintain a revolving credit facility (the “Revolving Credit Facility”) with an aggregate commitment amount of $7.5 billion.

As of March 31, 2023, there was no outstanding balance under the Revolving Credit Facility.

As of June 30, 2023, there was no outstanding balance under the Revolving Credit Facility.

Subsequent to June 30, 2023, on July 25, 2023, we established an unsecured short-term commercial paper program with the ability to borrow up to $2.0 billion from time to time.

This program will supplement our other available external financing arrangements and proceeds are expected to be used for general corporate purposes.

As of July 27, 2023, we have not issued any amount under this program.

Debt Financing

As of March 31, 2023, our total debt and financing lease liabilities were $77.2 billion, excluding our tower obligations, of which $69.5 billion was classified as long-term debt and $1.3 billion was classified as long-term financing lease liabilities.

During the three months ended March 31, 2023, we issued long-term debt for net proceeds of $3.0 billion and repaid short-term debt with an aggregate principal amount of $131 million.

As of June 30, 2023, our total debt and financing lease liabilities were $80.3 billion, excluding our tower obligations, of which $70.1 billion was classified as long-term debt and $1.3 billion was classified as long-term financing lease liabilities.

During the six months ended June 30, 2023, we issued long-term debt for net proceeds of $6.5 billion and repaid short-term debt with an aggregate principal amount of $354 million.

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

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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 bifurcate 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.

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.

We anticipate that the first closing will occur in 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 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.

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

As of March 31, 2023, we derecognized net receivables of $2.4 billion upon sale through these arrangements.

As of June 30, 2023, we derecognized net receivables of $2.4 billion upon sale through these arrangements.

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

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The indentures, supplemental indentures and credit agreements governing our long-term debt to affiliates and third parties, excluding financing leases, contain covenants that, among other things, limit the ability of the Issuers or borrowers and the Guarantor Subsidiaries to incur more debt, create liens or other encumbrances, and merge, consolidate or sell, or otherwise dispose of, substantially all of their assets.

We were in compliance with all restrictive debt covenants as of March 31, 2023.

We were in compliance with all restrictive debt covenants as of June 30, 2023.

Financing Lease Facilities

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

As of March 31, 2023, we have committed to $7.8 billion of financing leases under these financing lease facilities, of which $238 million was executed during the three months ended March 31, 2023.

We expect to enter into up to an additional $1.2 billion in financing lease commitments during the year ending December 31, 2023.

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

As of June 30, 2023, we have entered into $8.1 billion of financing leases under these financing lease facilities, of which $314 million and $552 million was executed during the three and six months ended June 30, 2023, respectively.

We expect to enter into up to a total of $1.2 billion in financing lease commitments during the year ending December 31, 2023.

Capital Expenditures

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Stockholder Returns

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

We have never declared or paid any cash dividends on our common stock.

However, we continue to evaluate alternatives for returning value to stockholders, and we could elect to declare dividends in the future.

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.

During the three months ended March 31, 2023, we repurchased shares of our common stock for a total purchase price of $4.8 billion, all of which were purchased under the 2022 Stock Repurchase Program.

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 additional shares of our common stock 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.

During the three and six months ended June 30, 2023, we repurchased shares of our common stock for a total purchase price of $3.5 billion and $8.3 billion, respectively, all of which were purchased under the 2022 Stock Repurchase Program.

As of June 30, 2023, we had up to $2.7 billion remaining under the 2022 Stock Repurchase Program.

Subsequent to June 30, 2023, from July 1, 2023, through July 21, 2023, we repurchased additional shares of our common stock for a total purchase price of $552 million.

As of July 21, 2023, we had up to $2.2 billion remaining under the 2022 Stock Repurchase Program.

For additional information regarding the 2022 Stock Repurchase Program, see Note 10 – Repurchases of Common Stock of the Notes to the Condensed Consolidated Financial Statements.

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We have related party transactions associated with DT or its affiliates in the ordinary course of business, including intercompany servicing and licensing.

As of April 21, 2023, DT held, directly or indirectly, approximately 50.4% of the outstanding T-Mobile common stock, with the remaining approximately 49.6% of the outstanding T-Mobile common stock held by SoftBank and other stockholders.

As a result of the Proxy, Lock-Up and ROFR Agreement, dated April 1, 2020, by and between DT and SoftBank and the Proxy, Lock-Up and ROFR Agreement, dated June 22, 2020, by and among DT, Claure Mobile LLC, and Marcelo Claure, DT has voting control, as of April 21, 2023, over approximately 54.2% of the outstanding T-Mobile common stock.

As of July 21, 2023, DT held, directly or indirectly, approximately 51.4% of the outstanding T-Mobile common stock, with the remaining approximately 48.6% of the outstanding T-Mobile common stock held by SoftBank and other stockholders.

As a result of the Proxy, Lock-Up and ROFR Agreement, dated April 1, 2020, by and between DT and SoftBank and the Proxy, Lock-Up and ROFR Agreement, dated June 22, 2020, by and among DT, Claure Mobile LLC, and Marcelo Claure, DT has voting control, as of July 21, 2023, over approximately 55.2% of the outstanding T-Mobile common stock.

Disclosure of Iranian Activities under Section 13(r) of the Exchange Act

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

As of the date of this report, we are not aware of any activity, transaction or dealing by us or any of our affiliates for the three months ended March 31, 2023, that requires disclosure in this report under Section 13(r) of the Exchange Act, except as set forth below with respect to affiliates that we do not control and that are our affiliates solely due to their common control with either DT or SoftBank.

As of the date of this report, we are not aware of any activity, transaction or dealing by us or any of our affiliates for the three months ended June 30, 2023, that requires disclosure in this report under Section 13(r) of the Exchange Act, except as set forth below with respect to affiliates that we do not control and that are our affiliates solely due to their common control with either DT or SoftBank.

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

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Telecommunication Kish Company, Mobile Telecommunication Company of Iran, and Telecommunication Infrastructure Company of Iran.

In addition, during the three months ended March 31, 2023, DT, through certain of its non-U.S.

subsidiaries,

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

In addition, during the three months ended June 30, 2023, DT, through certain of its non-U.S.

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

Department of Treasury’s Office of Foreign Assets Control:

Bank Melli, Europäisch-Iranische Handelsbank, CPG Engineering & Commercial Services GmbH and Golgohar Trade and Technology GmbH.

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

For the three months ended March 31, 2023, gross revenues of all DT affiliates generated by roaming and interconnection traffic and telecommunications services with the Iranian parties identified herein were less than $0.1 million, and the estimated net profits were less than $0.1 million.

Bank Melli, Europäisch-Iranische Handelsbank, CPG Engineering & Commercial Services GmbH, Golgohar Trade and Technology GmbH and International Trade and Industrial Technology ITRITEC GmbH.

With respect to the first four of these customers, the services have been terminated or are in the process of being terminated.

DT is currently evaluating the relationship its non-U.S.

subsidiary has with International Trade and Technology ITRITEC GmbH.

For the three months ended June 30, 2023, gross revenues of all DT affiliates generated by roaming and interconnection traffic and telecommunications services with the Iranian parties identified herein were less than $0.1 million, and the estimated net profits were less than $0.1 million.

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

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

Gross revenues and net profits recorded from these activities for the three months ended March 31, 2023, were less than $0.1 million.

Gross revenues and net profits recorded from these activities for the three months ended June 30, 2023, were less than $0.1 million.

We understand that DT intends to continue these activities.

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

During the three months ended March 31, 2023, SoftBank had no gross revenues from such services and no net profit was generated.

During the three months ended June 30, 2023, SoftBank had no gross revenues from such services and no net profit was generated.

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

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

During the three months ended March 31, 2023, SoftBank estimates that gross revenues and net profit generated by such services were both under $0.1 million.

During the three months ended June 30, 2023, SoftBank estimates that gross revenues and net profit generated by such services were both under $0.1 million.

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

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

SoftBank estimates that gross revenue and net profit generated by such services during the three months ended March 31, 2023, were both under $0.1 million.

SoftBank estimates that gross revenue and net profit generated by such services during the three months ended June 30, 2023, were both under $0.1 million.

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

7 unchanged sentences

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis