What changed in this filing

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Item 1. Financial Statements

2023-10-25 compared with 2023-07-27 · 244 added, 166 removed, 664 unchanged (38% of the section changed)

2 unchanged sentences

Condensed Consolidated Balance Sheets

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

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

2023 December 31,

47 unchanged sentences

T-Mobile US, Inc.

Condensed Consolidated Statements of Comprehensive Income (Loss)

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

Condensed Consolidated Statements of Comprehensive Income

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

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

19 unchanged sentences

Total other expense, net ( 749 ) ( 830 ) ( 2,430 ) ( 2,577 )

Income (loss) before income taxes 2,938 ( 163 ) 5,509 768

Income before income taxes 2,847 451 8,356 1,219

Income tax (expense) benefit ( 705 ) 57 ( 2,053 ) ( 106 )

Net income (loss) $ 2,221 $ ( 108 ) $ 4,161 $ 605

Net income $ 2,142 $ 508 $ 6,303 $ 1,113

Other comprehensive income, net of tax

Reclassification of loss from cash flow hedges, net of tax effect of $ 15 , $ 13 , $ 42 and $ 39

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

41 39 121 113

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

— ( 7 ) 9 ( 11 )

Amortization of actuarial gain, net of tax effect of $( 11 ), $ 0 , $( 11 ) and $ 0

( 33 ) — ( 33 ) —

Other comprehensive income 8 32 97 102

Total comprehensive income (loss) $ 2,268 $ ( 74 ) $ 4,250 $ 675

Earnings (loss) per share

Total comprehensive income $ 2,150 $ 540 $ 6,400 $ 1,215

Earnings per share

Basic $ 1.83 $ 0.40 $ 5.28 $ 0.89

7 unchanged sentences

Condensed Consolidated Statements of Cash Flows

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

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

(in millions) 2023 2022 2023 2022

Operating activities

Net income (loss) $ 2,221 $ ( 108 ) $ 4,161 $ 605

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

Net income $ 2,142 $ 508 $ 6,303 $ 1,113

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

Depreciation and amortization 3,187 3,313 9,500 10,389

32 unchanged sentences

Other, net ( 24 ) ( 35 ) ( 113 ) ( 97 )

Net cash used in financing activities ( 784 ) ( 1,744 ) ( 3,057 ) ( 3,880 )

Net cash (used in) provided by financing activities ( 5,510 ) 1,927 ( 8,567 ) ( 1,953 )

Change in cash and cash equivalents, including restricted cash and cash held for sale ( 1,609 ) 3,763 525 286

8 unchanged sentences

(Accumulated Deficit) Total Stockholders' Equity

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 June 30, 2023 1,180,398,748 81,090,539 $ ( 11,392 ) $ 74,161 $ ( 957 ) $ 3,938 $ 65,750

Net income — — — — — 2,142 2,142

Dividends declared ($ 0.65 per share)

— — — — — ( 745 ) ( 745 )

Other comprehensive income — — — — 8 — 8

Stock-based compensation — — — 169 — — 169

Stock issued for employee stock purchase plan 708,049 — — 84 — — 84

Issuance of vested restricted stock units 231,246 — — — — — —

2 unchanged sentences

Other, net 31,142 ( 7,641 ) 2 — — — 2

Balance as of June 30, 2023 1,180,398,748 81,090,539 $ ( 11,392 ) $ 74,161 $ ( 957 ) $ 3,938 $ 65,750

Balance as of September 30, 2023 1,161,979,708 100,396,057 $ ( 14,092 ) $ 74,404 $ ( 949 ) $ 5,335 $ 64,698

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

Net income — — — — — 6,303 6,303

Dividends declared ($ 0.65 per share)

— — — — — ( 745 ) ( 745 )

Other comprehensive income — — — — 97 — 97

5 unchanged sentences

Other, net 135,342 18,671 ( 3 ) 11 — — 8

Balance as of June 30, 2023 1,180,398,748 81,090,539 $ ( 11,392 ) $ 74,161 $ ( 957 ) $ 3,938 $ 65,750

Balance as of September 30, 2023 1,161,979,708 100,396,057 $ ( 14,092 ) $ 74,404 $ ( 949 ) $ 5,335 $ 64,698

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

3 unchanged sentences

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

Net loss — — — — — ( 108 ) ( 108 )

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

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

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

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 )

Other, net 32,582 ( 5,968 ) — 1 — — 1

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

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

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

5 unchanged sentences

Shares withheld related to net share settlement of stock awards and stock options ( 1,772,442 ) — — ( 225 ) — — ( 225 )

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

Other, net 95,704 21,113 ( 3 ) 13 — — 10

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

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.

10 unchanged sentences

Revenue from Contracts with Customers

Repurchases of Common Stock

Earnings ( Loss) Per Share

S tock holder Return Prog r am s

Earnings Per Share

Commitments and Contingencies

17 unchanged sentences

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 agreed to acquire the U.S.

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 wholly owned subsidiary of Cogent Communications Holdings, Inc., entered into a Membership Interest Purchase Agreement (the “Wireline Sale Agreement”), pursuant to which the Buyer agreed to acquire the U.S.

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

2 unchanged sentences

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

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

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

On September 6, 2023, our Board of Directors authorized a stockholder return program of up to $ 19.0 billion that will run through December 31, 2024 (the “2023-2024 Stockholder Return Program”).

The 2023-2024 Stockholder Return Program is expected to consist of additional repurchases of shares of our common stock and the payment of cash dividends.

The amount available under the 2023-2024 Stockholder Return Program for share repurchases will be reduced by the amount of any cash dividends declared by us.

Dividends declared are included as a reduction to Retained earnings on our Condensed Consolidated Balance Sheets.

We recognize a liability for dividends declared but for which cash has not been paid in Other current liabilities on our Condensed Consolidated Balance Sheets.

Dividend cash payments to stockholders will be included in Net cash (used in) provided by financing activities on our Condensed Consolidated Statements of Cash Flows.

See Note 10 - Stockholder Return Programs for more information about our 2023-2024 Stockholder Return Program.

Index for Notes to the Condensed Consolidated Financial Statements

Accounting Pronouncements Adopted During the Current Year

4 unchanged sentences

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

This standard did not have a material impact on our condensed consolidated financial statements as of and for the three and six months ended June 30, 2023.

Index for Notes to the Condensed Consolidated Financial Statements

This standard did not have a material impact on our condensed consolidated financial statements as of and for the three and nine months ended September 30, 2023.

Note 2 – Business Combination

1 unchanged sentence

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.

Our estimate of the upfront payment is subject to Ka’ena Corporation’s underlying business performance and the timing of transaction close, and has been updated to $ 1.2 billion, 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 the first quarter of 2024.

Note 3 – Receivables and Related Allowance for Credit Losses

14 unchanged sentences

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

Index for Notes to the Condensed Consolidated Financial Statements

EIP Receivables Portfolio Segment

3 unchanged sentences

To determine a customer’s credit profile and assist in determining their credit class, we use a proprietary credit scoring model that measures the credit quality of a customer 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 9.3 % and 8.0 % as of June 30, 2023, and December 31, 2022, respectively.

Index for Notes to the Condensed Consolidated Financial Statements

EIP receivables had a combined weighted-average effective interest rate of 9.9 % and 8.0 % as of September 30, 2023, and December 31, 2022, respectively.

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

(in millions) June 30,

(in millions) September 30,

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 June 30, 2023:

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, 2023:

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

Unamortized Imputed Discounts

(in millions) Prime Subprime Prime Subprime Prime Subprime Prime Subprime Grand total

(in millions) Prime Subprime Prime Subprime Prime Subprime Prime Subprime Total

Current - 30 days past due $ 2,419 $ 1,355 $ 1,305 $ 896 $ 368 $ 175 $ 4,092 $ 2,426 $ 6,518

7 unchanged sentences

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

The following table presents write-offs of our EIP receivables by year of origination for the six months ended June 30, 2023:

Index for Notes to the Condensed Consolidated Financial Statements

The following table presents write-offs of our EIP receivables by year of origination for the nine months ended September 30, 2023:

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

Write-offs $ 84 $ 243 $ 54 $ 381

Index for Notes to the Condensed Consolidated Financial Statements

Activity for the six months ended June 30, 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:

June 30, 2023 June 30, 2022

Activity for the nine months ended September 30, 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:

September 30, 2023 September 30, 2022

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

6 unchanged sentences

Off-Balance-Sheet Credit Exposures

We do not have material off-balance-sheet credit exposures as of June 30, 2023.

We do not have material off-balance-sheet credit exposures as of September 30, 2023.

In connection with the sales of certain service accounts receivable and EIP receivables 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.

6 unchanged sentences

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 June 30, 2023, and December 31, 2022, the EIP sale arrangement provided funding of $ 1.3 billion.

As of both September 30, 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”).

1 unchanged sentence

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) June 30,

(in millions) September 30,

2023 December 31,

1 unchanged sentence

Other assets 114 136

Index for Notes to the Condensed Consolidated Financial Statements

Sales of Service Accounts Receivable

2 unchanged sentences

On February 28, 2023, we extended the scheduled expiration date of the service receivable sale arrangement to February 27, 2024.

As of both June 30, 2023, and December 31, 2022, the service receivable sale arrangement provided funding of $ 775 million.

Index for Notes to the Condensed Consolidated Financial Statements

As of both September 30, 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”).

1 unchanged sentence

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

(in millions) June 30,

(in millions) September 30,

2023 December 31,

3 unchanged sentences

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) June 30,

(in millions) September 30,

2023 December 31,

8 unchanged sentences

Net cash proceeds funded by reinvested collections 1,697 1,754

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

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 June 30, 2023, and December 31, 2022, our deferred purchase price related to the sales of service accounts receivable 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 $ 51 million and $ 61 million for the three months ended June 30, 2023 and 2022, respectively, and $ 89 million and $ 108 million for the six months ended June 30, 2023 and 2022, respectively, in Selling, general and administrative expenses on our Condensed Consolidated Statements of Comprehensive Income (Loss).

As of September 30, 2023, and December 31, 2022, our deferred purchase price related to the sales of service accounts receivable and EIP receivables was $ 690 million and $ 692 million, respectively.

We recognized losses from sales of receivables, including changes in fair value of the deferred purchase price, of $ 46 million and $ 60 million for the three months ended September 30, 2023 and 2022, respectively, and $ 135 million and $ 168 million for the nine months ended September 30, 2023 and 2022, respectively, in Selling, general and administrative expenses on our Condensed Consolidated Statements of Comprehensive Income.

Continuing Involvement

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As the receivables are sold on a revolving basis, the customer payment collections on sold receivables may be reinvested in new receivable sales.

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

Index for Notes to the Condensed Consolidated Financial Statements

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

Note 5 – Spectrum License Transactions

The following table summarizes our spectrum license activity for the six months ended June 30, 2023:

The following table summarizes our spectrum license activity for the nine months ended September 30, 2023:

(in millions) 2023

1 unchanged sentence

Spectrum license acquisitions 85

Spectrum licenses transferred to held for sale ( 2 )

Costs to clear spectrum (1)

Spectrum licenses, end of period $ 96,689

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 and six months ended June 30, 2023.

(1) As of September 30, 2023, $ 767 million is included in Other current liabilities on our Condensed Consolidated Balance Sheets related to accrued spectrum clearing costs.

Spectrum Transactions

2 unchanged sentences

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 June 30, 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 June 30, 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;

The aggregate cash payments made to the FCC are included in Other assets on our Condensed Consolidated Balance Sheets as of September 30, 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, and the FCC Chairwoman has stated that it is subject to the restoration of auction authority to the FCC by Congress.

As of September 30, 2023, the activities that are necessary to get the 3.45 GHz and 2.5 GHz spectrum, acquired pursuant to FCC Auctions 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.

During the three months ended September 30, 2023, we began capitalizing interest on the costs of our C-band spectrum licenses, acquired pursuant to FCC Auction 107, as we have begun development activities necessary to prepare the spectrum for its intended use.

License Purchase Agreements

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The closing of the sale of spectrum under the DISH License Purchase Agreement remains subject to FCC approval.

The application for FCC approval was required under the agreement to be submitted by the parties no later than June 1, 2023.

As of July 27, 2023, DISH has failed to take the actions necessary to file the application as required under the DISH License Purchase Agreement;

however, at the request of the Department of Justice, we have agreed not to take action to terminate the DISH License Purchase Agreement until on or about August 11, 2023.

We believe the additional time is also prudent to allow the parties to determine whether an alternative arrangement is feasible, and we continue to discuss options with DISH about possible alternatives to the sale of the spectrum on the terms set forth in the DISH License Purchase Agreement.

If the FCC filing is made before the agreement is terminated and the FCC subsequently approves the transaction, the parties will be required to close the agreement within five days of receiving such FCC approval.

In the event we terminate the DISH License Purchase Agreement due to DISH’s breach or DISH later 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 as our sole remedy;

provided, however that if the transaction has not closed by April 1, 2024, other than due to the breach by a party of its terms, both parties will have the right to terminate the License Purchase Agreement and in such event no termination fee would be payable to us.

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.

Subsequent to September 30, 2023, on October 15, 2023, we and DISH entered into an amendment (the “LPA Amendment”) to the DISH License Purchase Agreement pursuant to which, among other things, the parties agreed that (1) DISH will pay us a $ 100 million non-refundable extension fee (in lieu of the approximately $ 72 million termination fee that had previously been agreed to), (2) the closing for the purchase of the spectrum licenses by DISH will occur no later than April 1, 2024, (3) if DISH has not purchased the spectrum licenses by such date for any reason (including failure to receive the required FCC approval prior to such date), then the DISH License Purchase Agreement will automatically terminate, and we will retain the $ 100 million extension fee, (4) if DISH does purchase the spectrum by April 1, 2024, the $ 100 million extension fee will be credited against the $ 3.6 billion purchase price, and (5) permits us to commence auction of the spectrum prior to April 1, 2024 at our discretion (and subject to DISH’s purchase right).

The LPA Amendment was approved by the Court and became effective on October 23, 2023.

If DISH does not, by April 1, 2024, purchase the 800 MHz spectrum licenses, we are required, unless otherwise approved under the 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.

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

Channel 51 License Co LLC and LB License Co, LLC

On August 8, 2022, we, Channel 51 License Co LLC and LB License Co, LLC (together with Channel 51 License Co LLC, the

Index for Notes to the Condensed Consolidated Financial Statements

“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 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 late 2023 and that the second closing (on the deferred licenses) will occur in 2024.

Channel 51 License Co LLC and LB License Co, LLC

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

The licenses will be acquired without any associated networks and 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 being deferred in order to potentially expedite the regulatory approval process for the remainder of the licenses.

Subsequently, on August 25, 2023, we and the Sellers entered into Amendments No.

1 to the Amended and Restated License Purchase Agreements, which deferred the closings of certain additional licenses in Chicago and Dallas into the second closing tranche.

Together, the licenses with closings deferred into the second closing tranche represent $ 1.1 billion of the aggregate $ 3.5 billion cash consideration.

The licenses being acquired by us, and the total consideration being paid for the licenses, remains the same under the original License Purchase Agreements and subsequent amendments.

We anticipate that the first closing will occur no earlier than the first half of 2024 and that the second closing (on the deferred licenses) will occur in late 2024 or early 2025.

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.

Comcast Corporation

On September 12, 2023, we entered into a License Purchase Agreement with Comcast Corporation and its affiliate, Comcast OTR1, LLC (together with Comcast Corporation, “Comcast”), pursuant to which we will acquire spectrum in the 600 MHz band from Comcast in exchange for total cash consideration of between $ 1.2 billion and $ 3.3 billion, subject to an application for FCC approval.

The licenses will be acquired without any associated networks.

We anticipate the closing will occur in the first half of 2028.

The final purchase price will be determined, in the aggregate and on a per license basis, based on the set of licenses subject to the License Purchase Agreement at the time the parties make required transfer filings with the FCC.

Prior to the time of such filings, Comcast has the right to remove any or all of a certain specified subset of the licenses, totaling $ 2.1 billion (the “Optional Sale Licenses”), from the License Purchase Agreement.

The removal of any Optional Sale Licenses would reduce the final purchase price by the assigned value of each such license, from the maximum purchase price of $ 3.3 billion.

The licenses are subject to an exclusive leasing arrangement between us and Comcast entered into contemporaneously with the License Purchase Agreement.

If Comcast elects to remove an Optional Sale License from the License Purchase Agreement, the associated lease for such Optional Sale License will terminate, but no sooner than two years from the date of the License Purchase Agreement (with us having a minimum period of time after any such termination to cease transmitting on such license’s associated spectrum).

Note 6 – Fair Value Measurements

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We do not use derivatives for trading or speculative purposes.

Index for Notes to the Condensed Consolidated Financial Statements

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.

1 unchanged sentence

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 June 30, 2023, or December 31, 2022.

We did not have any significant derivative instruments outstanding as of September 30, 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 $ 1.2 billion and $ 1.3 billion are presented in Accumulated other comprehensive loss on our Condensed Consolidated Balance Sheets as of June 30, 2023, and December 31, 2022, respectively.

For the three months ended June 30, 2023 and 2022, $ 55 million and $ 50 million, respectively, and for the six months ended June 30, 2023 and 2022, $ 108 million and $ 100 million, respectively, were amortized from Accumulated other comprehensive loss into Interest expense, net, on our Condensed Consolidated Statements of Comprehensive Income (Loss).

We expect to amortize $ 227 million of the Accumulated other comprehensive loss associated with the derivatives into Interest expense, net, over the 12 months ending June 30, 2024.

Aggregate changes in the fair value of the interest rate lock derivatives, net of tax and amortization, of $ 1.2 billion and $ 1.3 billion are presented in Accumulated other comprehensive loss on our Condensed Consolidated Balance Sheets as of September 30, 2023, and December 31, 2022, respectively.

For the three months ended September 30, 2023 and 2022, $ 55 million and $ 51 million, respectively, and for the nine months ended September 30, 2023 and 2022, $ 163 million and $ 151 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 $ 232 million of the Accumulated other comprehensive loss associated with the derivatives into Interest expense, net, over the 12 months ending September 30, 2024.

Deferred Purchase Price Assets

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

Index for Notes to the Condensed Consolidated Financial Statements

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 June 30, 2023, and December 31, 2022, respectively.

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 $ 690 million and $ 692 million as of September 30, 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.

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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 and ABS Notes.

The fair value estimates were based on information available as of June 30, 2023, and December 31, 2022.

The fair value estimates were based on information available as of September 30, 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:

(in millions) Level within the Fair Value Hierarchy June 30, 2023 December 31, 2022

(in millions) Level within the Fair Value Hierarchy September 30, 2023 December 31, 2022

Carrying Amount Fair Value Carrying Amount (1)

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Note 7 – Debt

The following table sets forth the debt balances and activity as of, and for the six months ended, June 30, 2023 :

The following table sets forth the debt balances and activity as of, and for the nine months ended, September 30, 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 $ — $ ( 4,250 ) $ ( 578 ) $ 3,236 $ ( 135 ) $ 3,437

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Total debt $ 71,960 $ 8,446 $ ( 4,250 ) $ ( 578 ) $ — $ ( 280 ) $ 75,298

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

(1) Issuances and borrowings, note redemptions 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 4.0 % and 3.8 % on weighted-average debt outstanding of $ 76.4 billion and $ 71.4 billion for the three months ended June 30, 2023 and 2022, respectively, and 4.0 % and 3.9 % on weighted-average debt outstanding of $ 74.9 billion and $ 72.6 billion for the six months ended June 30, 2023 and 2022, respectively.

Our effective interest rate, excluding the impact of derivatives and capitalized interest, was approximately 4.0 % and 3.8 % on weighted-average debt outstanding of $ 77.2 billion and $ 71.6 billion for the three months ended September 30, 2023 and 2022, respectively, and 4.0 % and 3.9 % on weighted-average debt outstanding of $ 75.5 billion and $ 72.4 billion for the nine months ended September 30, 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 to third parties and short-term and long-term debt to affiliates, net of unamortized premiums, discounts, debt issuance costs and consent fees.

Index for Notes to the Condensed Consolidated Financial Statements

Issuances and Borrowings

During the six months ended June 30, 2023, we issued the following Senior Notes:

During the nine months ended September 30, 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

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1,250 ( 16 ) 1,234 May 11, 2023

5.750 % Senior Notes due 2034

1,000 ( 6 ) 994 September 14, 2023

6.000 % Senior Notes due 2054

1,000 ( 10 ) 990 September 14, 2023

Total of Senior Notes issued $ 8,500 $ ( 54 ) $ 8,446

Note Repayments

During the six months ended June 30, 2023, we made the following repayments:

Index for Notes to the Condensed Consolidated Financial Statements

Note Redemptions and Repayments

During the nine months ended September 30, 2023, we made the following redemption and repayments:

(in millions) Principal Amount Repayment Date

7.875 % Senior Notes due 2023

$ 4,250 September 15, 2023

Total Redemptions $ 4,250

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

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Asset-backed Notes

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

Our ABS Notes are secured by $ 983 million of gross EIP receivables and future collections on such receivables.

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

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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) September 30,

2023 December 31,

(in millions)

Equipment installment plan receivables, net $ 767 $ 652

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Long-term debt 747 746

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

Index for Notes to the Condensed Consolidated Financial Statements

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

Restricted Cash

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Commercial Paper

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.

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 supplements our other available external financing arrangements, and proceeds are expected to be used for general corporate purposes.

As of September 30, 2023, there was no outstanding balance under this program.

Index for Notes to the Condensed Consolidated Financial Statements

Note 8 – Tower Obligations

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

By assessing whether control had transferred, we concluded that transfer of control criteria, as discussed in the revenue

Index for Notes to the Condensed Consolidated Financial Statements

standard, were not met.

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

Accordingly, we recorded this arrangement as a financing whereby we recorded debt, a financial obligation, and the Master Lease Sites tower assets remained on our Condensed Consolidated Balance Sheets.

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The tower assets are reported in Property and equipment, net on our Condensed Consolidated Balance Sheets and are depreciated to their estimated residual values over the expected useful life of the towers, which is 20 years.

Index for Notes to the Condensed Consolidated Financial Statements

Leaseback Arrangement

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

(in millions) June 30,

(in millions) September 30,

2023 December 31,

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Other long-term liabilities 554 554

Future minimum payments related to the tower obligations are approximately $ 410 million for the 12-month period ending June 30, 2024, $ 792 million in total for both of the 12-month periods ending June 30, 2025 and 2026, $ 798 million in total for both of the 12-month periods ending June 30, 2027 and 2028, and $ 4.3 billion in total thereafter.

Future minimum payments related to the tower obligations are approximately $ 432 million for the 12-month period ending September 30, 2024, $ 780 million in total for both of the 12-month periods ending September 30, 2025 and 2026, $ 804 million in total for both of the 12-month periods ending September 30, 2027 and 2028, and $ 4.2 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 $ 245 million in our Operating lease liabilities as of June 30, 2023.

Under the arrangement, we remain primarily liable for ground lease payments on approximately 900 sites and have included lease liabilities of $ 244 million in our Operating lease liabilities as of September 30, 2023.

Note 9 – Revenue from Contracts with Customers

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

Index for Notes to the Condensed Consolidated Financial Statements

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

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

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

(in millions) 2023 2022 2023 2022

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We operate as a single operating segment.

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

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.

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

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

Contract Balances

The contract asset and contract liability balances from contracts with customers as of June 30, 2023, and December 31, 2022, were as follows:

The contract asset and contract liability balances from contracts with customers as of September 30, 2023, and December 31, 2022, were as follows:

(in millions) Contract

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Balance as of December 31, 2022 $ 534 $ 748

Balance as of June 30, 2023 665 789

Balance as of September 30, 2023 617 814

Change $ 83 $ 66

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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 $ 490 million and $ 356 million as of June 30, 2023, and December 31, 2022, respectively, was included in Other current assets on our Condensed Consolidated Balance Sheets.

The current portion of our contract assets of approximately $ 490 million and $ 356 million as of September 30, 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 six months ended June 30, 2023 and 2022 include the following:

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

Revenues for the three and nine months ended September 30, 2023 and 2022 include the following:

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

(in millions) 2023 2022 2023 2022

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Remaining Performance Obligations

As of June 30, 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.

As of September 30, 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 $ 1.5 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 June 30, 2023, the aggregate amount of the contractual minimum consideration for wholesale, roaming and service contracts is $ 1.2 billion, $ 1.8 billion and $ 4.1 billion for 2023, 2024, and 2025 and beyond, respectively.

As of September 30, 2023, the aggregate amount of the contractual minimum consideration for wholesale, roaming and service contracts is $ 395 million, $ 2.0 billion and $ 4.2 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 $ 2.0 billion and $ 1.9 billion as of June 30, 2023, and December 31, 2022, 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 $ 2.1 billion and $ 1.9 billion as of September 30, 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 (Loss) were $ 444 million and $ 358 million for the three months ended June 30, 2023 and 2022, respectively, and $ 866 million and $ 682 million for the six months ended June 30, 2023 and 2022, respectively.

Amortization of deferred contract costs included in Selling, general and administrative expenses on our Condensed Consolidated Statements of Comprehensive Income were $ 468 million and $ 375 million for the three months ended September 30, 2023 and 2022, respectively, and $ 1.3 billion and $ 1.1 billion for the nine months ended September 30, 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 six months ended June 30, 2023 and 2022.

Note 10 – Repurchases of Common Stock

There were no impairment losses recognized on deferred contract cost assets for the three and nine months ended September 30, 2023 and 2022.

Index for Notes to the Condensed Consolidated Financial Statements

Note 10 – Stockholder Return Programs

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 (the “2022 Stock Repurchase Program”).

During the three months ended June 30, 2023, we repurchased 25,183,838 shares of our common stock at an average price per share of $ 140.00 for a total purchase price of $ 3.5 billion, and during the six months ended June 30, 2023, we repurchased 58,147,778 shares of our common stock at an average price per share of $ 142.59 for a total purchase price of $ 8.3 billion, all of which were purchased under the 2022 Stock Repurchase Program.

All shares purchased during the six months ended June 30, 2023, were purchased at market price.

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 3,961,852 shares of our common stock at an average price per share of $ 139.43 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 .

During the three months ended September 30, 2023, we repurchased 19,313,159 shares of our common stock at an average price per share of $ 138.48 for a total purchase price of $ 2.7 billion, and during the nine months ended September 30, 2023, we repurchased 77,460,937 shares of our common stock at an average price per share of $ 141.57 for a total purchase price of $ 11.0 billion, all of which were purchased under the 2022 Stock Repurchase Program.

All shares purchased during the nine months ended September 30, 2023, were purchased at market price.

2023-2024 Stockholder Return Program

On September 6, 2023, our Board of Directors authorized our 2023-2024 Stockholder Return Program of up to $ 19.0 billion that will run through December 31, 2024.

The 2023-2024 Stockholder Return Program is expected to consist of additional repurchases of shares of our common stock and the payment of cash dividends.

The amount available under the 2023-2024 Stockholder Return Program for share repurchases will be reduced by the amount of any cash dividends declared by us.

Under the 2023-2024 Stockholder Return Program, share repurchases can be made from time to time using a variety of methods, which may include open market purchases, Rule 10b5-1 plans, accelerated share repurchases, privately negotiated transactions or otherwise, all in accordance with the rules of the Securities and Exchange Commission and other applicable legal requirements.

The specific timing and amount of any share repurchases, and the specific timing and amount of any dividend payments, under the 2023-2024 Stockholder Return Program will depend on prevailing share prices, general economic and market conditions, Company performance, and other considerations.

In addition, the specific timing and amount of any dividend payments are subject to being declared on future dates by our Board of Directors in its sole discretion.

The 2023-2024 Stockholder Return Program does not obligate us to acquire any particular amount of common stock or to declare and pay any particular amount of dividends, and the 2023-2024 Stockholder Return Program may be suspended or discontinued at any time at our discretion.

On September 25, 2023, our Board of Directors declared a cash dividend of $ 0.65 per share on our issued and outstanding common stock, which is payable on December 15, 2023, to stockholders of record as of the close of business on December 1, 2023.

As of September 30, 2023, $ 745 million for dividends payable is presented within Other current liabilities on our Condensed Consolidated Balance Sheets, of which $ 393 million is payable to DT.

During the three and nine months ended September 30, 2023, we did not repurchase any shares of our common stock under the 2023-2024 Stockholder Return Program.

As of September 30, 2023, we had up to $ 18.3 billion remaining under the 2023-2024 Stockholder Return Program.

Subsequent to September 30, 2023, from October 1, 2023, through October 20, 2023, we repurchased 5,515,568 shares of our common stock at an average price per share of $ 139.76 for a total purchase price of $ 771 million.

As of October 20, 2023, we had up to $ 17.5 billion remaining under the 2023-2024 Stockholder Return Program.

Note 11 – Wireline

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Under the terms of the Wireline Sale Agreement, the parties agreed to a $ 1 purchase price in consideration for the Purchased Interests, subject to customary adjustments, as well as payments to the Buyer pursuant to an IP transit services agreement totaling $ 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 Buyer paid the Company $ 61 million at Closing.

The Closing of the Wireline Transaction did not have a significant impact on the Loss (gain) on disposal group held for sale on our Condensed Consolidated Statements of Comprehensive Income (Loss).

The Buyer paid the

Index for Notes to the Condensed Consolidated Financial Statements

Company $ 61 million at Closing.

The Closing of the Wireline Transaction did not have a significant impact on the Loss (gain) on disposal group held for sale on our Condensed Consolidated Statements of Comprehensive Income.

The present value of the $ 700 million liability for fees payable for IP transit services was recognized and treated as part of the consideration exchanged with the Buyer to complete the disposal transaction, as there is a remote likelihood we will use any more than a de minimis amount of the services under the IP transit services agreement.

Therefore, we concluded the cash payment obligations under the IP transit services agreement were part of the consideration paid to the Buyer to facilitate the sale of the Wireline Business, and therefore, included in measuring the fair value less costs to sell of the Wireline Business disposal group.

As of June 30, 2023, $ 308 million and $ 295 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 in accordance with the expected timing of the related payments.

As of June 30, 2023, $ 40 million and $ 31 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 in accordance with the expected timing of the related payments.

Index for Notes to the Condensed Consolidated Financial Statements

During the six months ended June 30, 2023, we recognized a pre-tax gain of $ 25 million, which is included within Loss (gain) on disposal group held for sale on our Condensed Consolidated Statements of Comprehensive Income (Loss).

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

As of September 30, 2023, $ 246 million and $ 275 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 in accordance with the expected timing of the related payments.

As of September 30, 2023, $ 30 million and $ 31 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 in accordance with the expected timing of the related payments.

We recognized a pre-tax gain of $ 25 million during the nine months ended September 30, 2023, and a pre-tax loss of $ 1.1 billion during the three and nine months ended September 30, 2022, which are included within Loss (gain) on disposal group held for sale on our Condensed Consolidated Statements of Comprehensive Income.

There was no gain or loss on disposal group held for sale for the three months ended September 30, 2023.

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 the Wireline Business did not qualify for reporting as a discontinued operation.

2022 Wireline Impairment

During the three months ended June 30, 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.

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

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

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

Note 12 – Earnings (Loss) Per Share

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

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

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.

The results of this assessment indicated that certain Wireline long-lived assets were impaired, and as a result, we recorded noncash 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 was related to Wireline Property and equipment, $ 212 million was related to Operating lease right-of-use assets and $ 7 million was related to Other intangible assets.

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

There was no impairment expense recognized for the three and nine months ended September 30, 2023.

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,

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

Net income (loss) $ 2,221 $ ( 108 ) $ 4,161 $ 605

Net income $ 2,142 $ 508 $ 6,303 $ 1,113

Weighted-average shares outstanding – basic 1,171,336,373 1,253,873,429 1,194,497,722 1,252,783,140

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Weighted-average shares outstanding – diluted 1,174,390,472 1,259,210,271 1,198,290,141 1,258,061,478

Earnings (loss) per share – basic $ 1.86 $ ( 0.09 ) $ 3.45 $ 0.48

Earnings (loss) per share – diluted $ 1.86 $ ( 0.09 ) $ 3.44 $ 0.48

Earnings per share – basic $ 1.83 $ 0.40 $ 5.28 $ 0.89

Earnings per share – diluted $ 1.82 $ 0.40 $ 5.26 $ 0.88

Potentially dilutive securities:

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48,751,557 48,751,557 48,751,557 48,751,557

(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 June 30, 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 June 30, 2023 and 2022.

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

(1) Represents the weighted-average SoftBank Specified Shares Amount that is 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 (the “Letter Agreement”).

Index for Notes to the Condensed Consolidated Financial Statements

As of September 30, 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 September 30, 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.

The issuance of the SoftBank Specified Shares Amount is contingent on the trailing 45 -trading-day volume-weighted average price per share of T-Mobile common stock on the NASDAQ Global Select Market being equal to or greater than $ 150.00 (the “Threshold Price”), at any time during the period commencing on April 1, 2022, and ending on December 31, 2025 (the “Measurement Period”).

In accordance with the terms of the Letter Agreement, the Threshold Price is subject to downward adjustment by the per share amount of any cash dividends or other cash distributions declared or paid on our common stock during the Measurement Period.

As of September 30, 2023, the Threshold Price is $ 149.35 and will automatically further adjust upon the declaration of any future cash dividends as provided in the Letter Agreement.

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 $ 4.2 billion for the 12-month period ending June 30, 2024, $ 4.7 billion in total for both of the 12-month periods ending June 30, 2025 and 2026, $ 2.8 billion in total for both of the 12-month periods ending June 30, 2027 and 2028, and $ 2.5 billion in total thereafter.

These amounts are not reflective of our entire anticipated purchases

Index for Notes to the Condensed Consolidated Financial Statements

under the related agreements but are determined based on the non-cancelable quantities or termination amounts to which we are contractually obligated.

Our purchase commitments are approximately $ 4.7 billion for the 12-month period ending September 30, 2024, $ 4.3 billion in total for both of the 12-month periods ending September 30, 2025 and 2026, $ 2.7 billion in total for both of the 12-month periods ending September 30, 2027 and 2028, and $ 2.3 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.

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

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

The agreement remains subject to regulatory approval, and the estimated purchase price is excluded from our reported purchase commitments above.

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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.

Our spectrum lease and service credit commitments, including renewal periods, are approximately $ 310 million for the 12-month period ending June 30, 2024, $ 595 million in total for both of the 12-month periods ending June 30, 2025 and 2026, $ 658 million in total for both of the 12-month periods ending June 30, 2027 and 2028, and $ 4.5 billion in total thereafter.

Our spectrum lease and service credit commitments, including renewal periods, are approximately $ 303 million for the 12-month period ending September 30, 2024, $ 602 million in total for both of the 12-month periods ending September 30, 2025 and 2026, $ 666 million in total for both of the 12-month periods ending September 30, 2027 and 2028, and $ 4.4 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 licenses will be acquired without any associated networks but are currently being utilized by us through exclusive leasing arrangements with the Sellers.

The licenses 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 being deferred in order to potentially expedite the regulatory approval process for the remainder of the licenses.

Subsequently, on August 25, 2023, we and the Sellers entered into Amendments No.

1 to the Amended and Restated License Purchase Agreements, which deferred the closings of certain additional licenses in Chicago and Dallas into the second closing

Index for Notes to the Condensed Consolidated Financial Statements

Together, the licenses with closings deferred into the second closing tranche represent approximately $ 1.1 billion of the aggregate $ 3.5 billion cash consideration.

The agreements remain subject to regulatory approval and are excluded from our reported purchase commitments above.

See Note 5 – Spectrum License Transactions for additional details.

On September 12, 2023, we entered into a License Purchase Agreement with Comcast pursuant to which we will acquire spectrum in the 600 MHz band from Comcast in exchange for total cash consideration of between $ 1.2 billion and $ 3.3 billion, subject to an application for FCC approval.

The licenses are subject to an exclusive leasing arrangement between us and Comcast entered into contemporaneously with the License Purchase Agreement.

The agreement remains subject to regulatory approval and is excluded from our reported purchase commitments above.

See Note 5 – Spectrum License Transactions for additional details.

Merger Commitments

In connection with the regulatory proceedings and approvals of the Merger pursuant to a Business Combination Agreement with Sprint and the other parties named therein (as amended, the “Business Combination Agreement”) and the other transactions contemplated by the Business Combination Agreement (collectively, the “Transactions”) we have commitments and other obligations to various state and federal agencies and certain nongovernmental organizations, including pursuant to the Consent Decree agreed to by us, DT, Sprint, SoftBank and DISH and entered by the U.S.

District Court for the District of Columbia, and the FCC’s memorandum opinion and order approving our applications for approval of the Merger.

These commitments and obligations include, among other things, extensive 5G network build-out commitments, obligations to deliver high-speed wireless services to the vast majority of Americans, including Americans residing in rural areas, and the marketing of an in-home broadband product where spectrum capacity is available.

Other commitments relate to national security, pricing, service, employment and support of diversity initiatives.

Many of the commitments specify time frames for compliance and reporting.

Failure to fulfill our obligations and commitments in a timely manner could result in substantial fines, penalties, or other legal and administrative actions.

Contingencies and Litigation

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As such, our view of these matters is subject to inherent uncertainties and may change in the future.

Index for Notes to the Condensed Consolidated Financial Statements

On February 28, 2020, we received a Notice of Apparent Liability for Forfeiture and Admonishment from the FCC, which proposed a penalty against us for allegedly violating section 222 of the Communications Act and the FCC’s regulations governing the privacy of customer information.

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

We maintained the accrual as of June 30, 2023, and that accrual was included in Accounts payable and accrued liabilities on our Condensed Consolidated Balance Sheets.

We maintained the accrual as of September 30, 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.

Index for Notes to the Condensed Consolidated Financial Statements

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

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We note that pursuant to Amendment No.

2, dated as of February 20, 2020, to the Business Combination Agreement, dated as of April 29, 2018, by and among the Company, Sprint and the other parties named therein (as amended, the “Business Combination Agreement”), SoftBank agreed to indemnify us against certain specified matters and losses, including those relating to the Lifeline matters described above.

2, dated as of February 20, 2020, to the Business Combination Agreement, dated as of April 29, 2018, by and among the Company, Sprint and the other parties named therein, SoftBank agreed to indemnify us against certain specified matters and losses, including those relating to the Lifeline matters described above.

Resolution of these matters could require us to make additional reimbursements and pay additional fines and penalties, which we do not expect to have a significant impact on our financial results.

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We previously paid $ 35 million for claims administration purposes.

We expect the remaining portion of the $ 350 million settlement payment to fund claims to be made by August 29, 2023, unless settlement is delayed by potential appeals.

On July 31, 2023, a class member filed an appeal to the final approval order challenging the Court’s award of attorneys’ fees to class counsel.

We expect the remaining portion of the $ 350 million settlement payment to fund claims to be made once that appeal is resolved.

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

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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.

Index for Notes to the Condensed Consolidated Financial Statements

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, which is included as a reduction to Selling, general and administrative expenses on our Condensed Consolidated Statements of Comprehensive Income (Loss).

During each of the nine months ended September 30, 2023 and 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.

The ultimate resolution of the class action depends on the number of plaintiffs who opt-out of the proposed settlement and whether the proposed settlement will be appealed.

Index for Notes to the Condensed Consolidated Financial Statements

In addition, in September 2022, a purported Company shareholder filed a derivative action in the Delaware Chancery Court under the caption Harper v.

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Note 14 – Restructuring Costs

Merger Restructuring Initiatives

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

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(in millions) Three Months Ended

June 30, 2023 Six Months Ended

June 30, 2023 Incurred to Date

September 30, 2023 Nine Months Ended

September 30, 2023 Incurred to Date

Contract termination costs $ 7 $ 31 $ 454

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Total restructuring plan expenses $ 59 $ 257 $ 2,728

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 (Loss).

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 $ 97 million and $ 747 million for the three months ended June 30, 2023 and 2022, respectively, and $ 236 million and $ 1.2 billion for the six months ended June 30, 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 (Loss).

Incremental expenses associated with accelerating amortization of the right-of-use assets on lease contracts were $ 67 million and $ 384 million for the three months ended September 30, 2023 and 2022, respectively, and $ 303 million and $ 1.6 billion for the nine months ended September 30, 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:

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

September 30,

Contract termination costs $ 190 $ 31 $ ( 199 ) $ — $ 22

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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.

2023 Workforce Reduction

In August 2023, we began implementing an initiative to reduce the size of our workforce by approximately 5,000 positions, just under 7 % of our total employee base, primarily in corporate and back-office functions, and some technology roles.

We recorded a pre-tax charge of $ 471 million during the three months ended September 30, 2023, related to the workforce reduction, which is 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 workforce reduction initiative, including expenses incurred and cash payments, are as follows:

(in millions) December 31,

2022 Expenses Incurred Cash Payments Other (1)

September 30,

Severance costs $ — $ 471 $ ( 18 ) $ 14 $ 467

(1) Other primarily consists of previously expensed vacation accruals expected to be paid out as a component of severance.

The liabilities accrued in connection with our workforce reduction activities are presented in Accounts payable and accrued liabilities on our Condensed Consolidated Balance Sheets.

Substantially all costs associated with our workforce reduction activities were recorded during the three months ended September 30, 2023, with substantially all related cash outflows extending through mid-2024.

Index for Notes to the Condensed Consolidated Financial Statements

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) June 30,

(in millions) September 30,

2023 December 31,

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Accounts payable and accrued liabilities $ 9,665 $ 12,275

Book overdrafts included in accounts payable were $ 436 million and $ 720 million as of June 30, 2023, and December 31, 2022, respectively.

Index for Notes to the Condensed Consolidated Financial Statements

Book overdrafts included in accounts payable were $ 713 million and $ 720 million as of September 30, 2023, and December 31, 2022, respectively.

Supplemental Condensed Consolidated Statements of Cash Flows Information

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

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

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

(in millions) 2023 2022 2023 2022

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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) June 30,

(in millions) September 30,

2023 December 31,

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Note 16 – Subsequent Events

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

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.

Subsequent to September 30, 2023, on October 15, 2023, we and DISH entered into the LPA Amendment to the DISH License Purchase Agreement.

See Note 5 - Spectrum License Transactions for additional information.

See Note 10 - Stockholder Return Programs for additional information regarding the 2023-2024 Stockholder Return Program.

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