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Item 7. Management’s Discussion and Analysis

2024-02-02 compared with 2023-02-14 · 261 added, 320 removed, 419 unchanged (58% of the section changed)

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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 audited consolidated financial statements as of December 31, 2022 and 2021, and for each of the three years in the period ended December 31, 2022, included in Part I I , Item 8 of this Form 10-K.

Our MD&A is provided as a supplement to, and should be read together with, our audited consolidated financial statements as of December 31, 2023 and 2022, and for each of the three years in the period ended December 31, 2023, included in Part II, Item 8 of this Form 10-K.

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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As a result, Sprint and its subsidiaries became wholly owned consolidated subsidiaries of T-Mobile.

The Merger has altered the size and scope of our operations, impacting our assets, liabilities, obligations, capital requirements and performance measures.

As a combined company, we have been able to enhance the breadth and depth of our nationwide 5G network, accelerate innovation, increase competition in the U.S.

wireless and broadband industries and achieve significant synergies and cost reductions by eliminating redundancies within the combined network as well as other business processes and operations.

For more information regarding our Business Combination Agreement, see Note 2 – Business Combinations of the Notes to the Consolidated Financial Statements.

Contingent Consideration

As previously reported, on February 20, 2020, T-Mobile, SoftBank and DT entered into a letter agreement (the “Letter Agreement”) concurrently with an amendment to the Business Combination Agreement.

The Letter Agreement required SoftBank to cause its applicable affiliates to surrender to T-Mobile, for no additional consideration, 48,751,557 shares of T-Mobile’s common stock immediately following the effective time of the Merger.

The Letter Agreement also required T-Mobile to issue to SoftBank an equivalent number of shares (the “SoftBank Specified Shares”), for no additional consideration, if the trailing 45-trading day volume-weighted average price per share (“VWAP”) of T-Mobile’s common stock on NASDAQ was equal to or greater than $150.00, as adjusted in accordance with the Letter Agreement (the “Threshold Price”), at any time during the period from April 1, 2022, through December 31, 2025 (the “Measurement Period”).

As of the close of trading on December 22, 2023, the 45-trading day VWAP exceeded $149.35, the then-current Threshold Price.

On December 28, 2023, T-Mobile issued the SoftBank Specified Shares to SoftBank in accordance with the Letter Agreement.

Merger-Related Costs

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Cost of services, exclusive of depreciation and amortization $ 652 $ 2,670 $ 1,015 $ (2,018) (76) % $ 1,655 163 %

Cost of equipment sales, exclusive of depreciation and amortization 1,524 1,018 6 506 50 % 1,012 NM

Cost of equipment sales, exclusive of depreciation and amortization (12) 1,524 1,018 (1,536) (101) % 506 50 %

Selling, general and administrative 394 775 1,074 (381) (49) % (299) (28) %

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Net cash payments for Merger-related costs $ 1,973 $ 3,364 $ 2,170 $ (1,391) (41) % $ 1,194 55 %

NM - Not Meaningful

We expect to incur substantially all of the remaining projected Merger-related costs of approximately $1.0 billion, excluding capital expenditures, by the end of 2023, with the cash expenditure for the Merger-related costs extending beyond 2023.

We are evaluating additional restructuring initiatives which are dependent on consultations and negotiation with certain counterparties and the expected impact on our business operations, which could affect the amount or timing of the restructuring costs and related payments.

We expect our principal sources of funding to be sufficient to meet our liquidity requirements and anticipated payments associated with the restructuring initiatives.

We expect to incur all of the remaining restructuring and integration costs associated with the Merger by the first half of 2024, with the cash expenditure for the Merger-related costs extending beyond 2024.

Cash payments extending beyond 2024 primarily relate to operating and financing leases for which we have recognized accelerated lease expense.

See the “ Contractual Ob ligations ” section of this MD&A for more details on the expected amount and timing of lease payments.

Network Integration

As of December 31, 2022, we have decommissioned substantially all Sprint macro sites targeted for shut down.

To achieve Merger synergies in network costs, we performed rationalization activities to identify duplicative networks, backhaul services and other agreements, in addition to decommissioning certain small cell sites and distributed antenna systems.

Our integration and decommissioning initiatives also included the acceleration or termination of certain of our operating and financing leases for cell sites, switch sites and network equipment.

To achieve Merger synergies in network costs, we continue to perform rationalization activities to identify duplicative networks, backhaul services and other agreements, in addition to decommissioning certain small cell sites and distributed antenna systems.

As of December 31, 2022, we had decommissioned substantially all Sprint macro sites targeted for shut down, resulting in a significant decrease in network decommissioning costs in 2023, and we expect to incur all of the remaining restructuring costs by the first half of 2024, with the related cash outflows extending beyond the first half of 2024.

To allow for the realization of these synergies associated with network integration, we retired certain legacy networks, including the legacy Sprint CDMA network in the second quarter and the legacy Sprint LTE network in the third quarter of 2022.

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Upon the close of the Merger, 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 restructuring initiatives included:

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

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For more information regarding our restructuring activities, see Note 18 – Restructuring Costs of the Notes to the 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 (see “Network Integration” above) 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 $2.5 billion to $2.7 billion, Cost of service expense reductions of $3.1 billion to $3.2 billion and avoided network expenses of $1.6 billion.

2023 Workforce Reduction

In August 2023, we implemented 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.

For more information regarding our restructuring activities, see Note 18 – Restructuring Costs of the Notes to the Consolidated Financial Statements.

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

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

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

As a result of these actions 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 non-cash impairment expense of $477 million related to Wireline Property and equipment, Operating lease right-of-use assets and Other intangible assets for the year ended December 31, 2022, all of which relates to the impairment recognized during the three months ended June 30, 2022.

We continue to provide Wireline services to existing Wireline customers as of December 31, 2022.

For more information regarding this non-cash impairment, see Note 14 – Wireline of the Notes to the Consolidated Financial Statements.

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 mid-year 2023.

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

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

In connection with the expected sale of the Wireline Business and classification of related assets and liabilities as held for sale, we recognized a pre-tax loss of $1.1 billion during the year ended December 31, 2022, which is included within Loss on disposal group held for sale on our Consolidated Statements of Comprehensive Income.

The 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 Loss on disposal group held for sale.

We also committed to make payments totaling $700 million under an IP transit services agreement, consisting of (i) $350 million in equal monthly installments during the first year after the closing of the Wireline Transaction and (ii) $350 million in equal monthly installments over the subsequent 42 months (the transactions as contemplated by the Wireline Sale Agreement and the IP transit services agreement are collectively referred to as the “Wireline Transaction”).

Prior to the closing of the Wireline Transaction, we recognized a pre-tax loss of $1.1 billion during the year ended December 31, 2022, which is included within (Gain) loss on disposal group held for sale on our Consolidated Statements of Comprehensive Income.

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 14 – Wireline of the Notes to the Consolidated Financial Statements.

Recent Cyberattacks

In August 2021, we were subject to a criminal cyberattack involving unauthorized access to T-Mobile’s systems.

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 19 – Commitments and Contingencies of the Notes to the Consolidated Financial Statements.

In connection with the proposed class action settlement and the separate settlements reached with a number of consumers, we recorded a total pre-tax charge of approximately $400 million during the three months ended June 30, 2022.

We expect to continue to incur additional expenses in future periods, including costs to remediate the attack, resolve inquiries by various government authorities, provide additional customer support and enhance customer protection, only some of which may be covered and reimbursable by insurance.

In addition to the committed aggregate incremental spend of $150 million for data security and related technology in 2022 and 2023 under the proposed settlement agreement, we intend to allocate substantial additional resources towards cybersecurity initiatives over the next several years.

During the year ended December 31, 2022, we recognized $100 million in reimbursements from insurance carriers for costs incurred related to the August 2021 cyberattack.

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

In January 2023, we disclosed that a bad actor was obtaining data through a single Application Programming Interface (“API”) without authorization.

Based on our investigation to date, the impacted API is only able to provide a limited set of customer account data, including name, billing address, email, phone number, date of birth, T-Mobile account number and information such as the number of lines on the account and plan features.

The result from our investigation to date indicates that the bad actor(s) obtained data from this API for approximately 37 million current postpaid and prepaid customer accounts, though many of these accounts did not include the full data set.

We believe that the bad actor first retrieved data through the impacted API starting on or around November 25, 2022.

We continue to investigate the incident and have notified individuals whose information was impacted consistent with state and federal requirements.

We will 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.

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

Acquisition of Ka’ena Corporation

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 (collectively, “Ka’ena”), 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 purchase price is variable dependent upon specified performance indicators of Ka’ena during certain periods before and after closing and consists of an upfront payment at closing of the transaction, subject to certain agreed-upon working capital and other adjustments, and a variable earnout payable 24 months after closing of the transaction.

Our estimate of the upfront payment is subject to Ka’ena’s underlying business performance and the timing of transaction close, and has been updated to $1.2 billion, before working capital and other 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.

Ka’ena is currently one of our wholesale partners, offering wireless telecommunications services to customers leveraging our network.

Upon closing of the transaction, we expect to recognize customers of Ka’ena as prepaid customers and we expect to see an increase in Prepaid revenues, partially offset by a decrease in Wholesale and other service revenues.

Revenue Trends

In 2023, we expect Service revenues to continue to grow, primarily due to continued postpaid account and customer growth as well as Postpaid Average Revenue per Account (“postpaid ARPA”) growth driven by the execution of our strategy to continuously deepen our account relationships, including growth in High Speed Internet.

We expect the increase in postpaid service revenues to be partially offset by a decrease in Wholesale and other service revenues, primarily driven by the sale of the Wireline business, which is expected to close mid-2023, the migration by Verizon of legacy TracFone customers off of the T-Mobile network and as DISH services more of its Boost customers with their standalone network.

We also expect lower lease revenues as a result of the continued strategic shift in device financing from leasing to EIP.

In 2024, we expect Postpaid service revenues to continue to grow, primarily due to continued postpaid account and customer growth as well as Postpaid Average Revenue per Account (“postpaid ARPA”) growth driven by the execution of our strategy to continuously deepen our account relationships, including growth in High Speed Internet.

We also expect an increase in Prepaid revenues, partially offset by a decrease in Wholesale and other service revenues, upon the closing of our previously announced acquisition of Ka’ena.

In addition, Wholesale and other service revenues are expected to continue to decline due to the migration by Verizon of legacy TracFone customers off of the T-Mobile network and as DISH services more of its Boost customers with their standalone network.

Operating Expense Trends

In 2023, we expect Total operating expenses to decrease, primarily due to continued synergy realization benefiting Cost of services and Selling, general and administrative expense as well as a significant decrease in Merger-related costs from $5.0 billion in 2022 to approximately $1.0 billion expected in 2023 as the majority of our integration activities have been completed.

We further expect a decrease in operating expenses, primarily Cost of services, associated with serving Wireline customers driven by the sale of the Wireline business which is expected to close mid-2023.

The trend of decreasing depreciation on leased devices is expected to continue as a result of the continued strategic shift in device financing from leasing to EIP.

In 2024, we expect Total operating expenses to increase, primarily driven by higher Depreciation and amortization from assets placed into service associated with the accelerated build-out of our nationwide 5G network and the acceleration of certain technology assets as we continue to modernize our network and technology systems and platforms, as well as higher Cost of equipment sales, driven by higher expected unit sales from a growing customer base.

We expect these increases to be partially offset by the full year synergy realization from the Merger benefiting Cost of services and Selling, general and administrative expense as well as a significant decrease in Merger-related costs, as substantially all of our restructuring and integration activities have been completed.

We also expect benefits to Cost of services and Selling, general and administrative expense from reduced personnel-related expenses as a result of the 2023 workforce reduction.

Macroeconomic Trends

Macroeconomic trends may result in adverse impacts on our business, and we continue to monitor these potential impacts, including potential economic recession, changes in the Federal Reserve’s monetary policy, as well as geopolitical risks, including the war in Ukraine.

Such scenarios and uncertainties may affect, among others, expected credit loss activity as well as certain fair value estimates.

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We continue to monitor the impact of these trends on the payment performance of our customers.

Inflation Reduction Act

On August 16, 2022, President Biden signed the Inflation Reduction Act of 2022 (“IRA”) into law.

The IRA includes several changes to existing tax law, including a minimum tax on adjusted financial statement income of applicable corporations and an excise tax on certain corporate stock buybacks.

The tax provisions included in the IRA are generally effective beginning January 1, 2023, and had no significant impact to the 2022 consolidated financial statements.

Management does not expect the IRA to have a significant impact on our operating results or cash flows in 2023, and we continue to review the IRA tax provisions to assess impacts to our future consolidated financial statements.

Results of Operations

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

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

(Gain) loss on disposal group held for sale (25) 1,087 — (1,112) (102) % 1,087 NM

Depreciation and amortization 12,818 13,651 16,383 (833) (6) % (2,732) (17) %

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Interest expense, net (3,335) (3,364) (3,342) 29 (1) % (22) 1 %

Other expense, net (33) (199) (405) 166 (83) % 206 (51) %

Other income (expense), net 68 (33) (199) 101 (306) % 166 (83) %

Total other expense, net (3,267) (3,397) (3,541) 130 (4) % 144 (4) %

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Income tax expense (2,682) (556) (327) (2,126) 382 % (229) 70 %

Income from continuing operations 2,590 3,024 2,744 (434) (14) % 280 10 %

Income from discontinued operations, net of tax — — 320 — NM (320) (100) %

Net income $ 8,317 $ 2,590 $ 3,024 $ 5,727 221 % $ (434) (14) %

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Core Adjusted EBITDA 29,116 26,391 23,576 2,725 10 % 2,815 12 %

Free Cash Flow 7,656 5,646 3,001 2,010 36 % 2,645 88 %

Adjusted Free Cash Flow 13,586 7,656 5,646 5,930 77 % 2,010 36 %

NM - Not Meaningful

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For a discussion and analysis of the year ended December 31, 2022, compared to the same period in 2021, please refer to Management’s Discussion and Analysis of Financial Condition and Results of Operations included in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on February 14, 2023.

Total revenues decreased $547 million, or 1%.

Total revenues decreased $1.0 billion, or 1%.

The components of these changes are discussed below.

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

Prepaid revenues increased $124 million, or 1%, primarily from higher average prepaid customers.

Prepaid revenues decreased slightly, primarily from:

• Lower prepaid ARPU.

See “Prepaid ARPU” in the “ Performance Measures ” section of this MD&A;

mostly offset by

• Higher average prepaid customers.

Wholesale and other service revenues decreased $765 million, or 14%, primarily from:

• Lower advertising, MVNO and Wireline revenues;

partially offset by

• Higher Lifeline revenues.

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

See Note 14 - Wireline of the Notes to the Consolidated Financial Statements for additional information;

• Lower MVNO revenues, primarily due to the migration of legacy TracFone customers off of the T-Mobile network and as DISH services more of its Boost customers with their standalone network, partially offset by growth in other MVNO partners.

Equipment revenues decreased $3.0 billion, or 17%, primarily from:

• A decrease of $1.5 billion 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 and longer device lifecycles, as well as lower prepaid and Assurance Wireless device sales;

partially offset by

• Slightly higher average revenue per device sold, primarily driven by an increase in the high-end phone mix, including from the impact of a decrease in sales of low-end Assurance Wireless devices, and 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 $1.1 billion in lease revenues and a decrease of $228 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;

• A decrease of $787 million in device sales revenue, excluding purchased leased devices, primarily from:

• A decrease in the number of devices sold primarily driven by lower prepaid sales, partially offset by higher upgrade volume for Sprint customers to facilitate their migration to the T-Mobile network;

• Slightly lower average revenue per device sold, primarily driven by higher promotions, which included promotions for Sprint customers to facilitate their migration to the T-Mobile network;

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

• A decrease of $286 million in accessory revenue, primarily due to a decrease in the number of associated devices sold.

Other revenues increased $61 million, or 5%, primarily from:

• Higher interest income driven by higher imputed interest rates on EIPs which is recognized over the device financing term.

Total operating expenses decreased $198 million.

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

Total operating expenses decreased $8.7 billion, or 12%.

The components of this change are discussed below.

Cost of services , exclusive of depreciation and amortization, increased $732 million, or 5%, primarily from:

• An increase of $1.7 billion in Merger-related costs related to network decommissioning and integration costs;

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

partially offset by

Cost of services , exclusive of depreciation and amortization, decreased $3.0 billion, or 21%, primarily from:

• A decrease of $2.0 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;

Cost of equipment sales , exclusive of depreciation and amortization, decreased $1.1 billion, or 5%, primarily from:

• A decrease of $964 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;

• A decrease of $503 million in device cost of equipment sales, excluding purchased leased devices, primarily from:

partially offset by

• Slightly higher average cost per device sold due to an increase in the high-end device mix;

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

See Note 14 – Wireline of the Notes to the Consolidated Financial Statements for additional information;

partially offset by

• Higher device insurance claims and warranty fulfillment expense.

• Cost of equipment sales for the year ended December 31, 2022, included $1.5 billion of Merger-related costs, primarily to facilitate the migration of Sprint customers to the T-Mobile network, compared to $1.0 billion for the year ended December 31, 2021.

Selling, general and administrative expenses increased $1.4 billion, or 7%, primarily from:

• An increase of $773 million in bad debt expense and losses from sales of receivables, driven by higher receivable balances, as well as normalization relative to muted Pandemic levels in 2021 and estimated potential future macroeconomic impacts;

• Higher legal-related expenses, net of recoveries, including $400 million recognized in June 2022 for the settlement of certain litigation associated with the August 2021 cyberattack, partially offset by $100 million in reimbursements from insurance carriers received in 2022 associated with the August 2021 cyberattack;

• Higher costs related to outsourced functions;

• $141 million of severance and related costs associated with the August 2023 workforce reduction;

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

Cost of equipment sales , exclusive of depreciation and amortization, decreased $3.0 billion, or 14%, primarily from:

• A decrease of $2.7 billion in device cost of equipment sales, excluding purchased leased devices, primarily from:

partially offset by

• Higher realized Merger synergies and lower Merger-related costs;

• Gains from the sale of certain IP addresses held by the Wireline Business.

• Selling, general and administrative expenses for the year ended December 31, 2022, included $775 million of Merger-related costs, primarily related to integration, restructuring and legal-related expenses, partially offset by $333 million received in gross settlements for certain patent litigation assumed in the Merger, compared to $1.1 billion of Merger-related costs for the year ended December 31, 2021.

• Slightly higher average cost per device sold driven by an increase in the high-end phone mix, including from the impact of a decrease in sales of low-end Assurance Wireless devices;

• A decrease of $132 million in accessory costs, primarily due to a decrease in the number of associated devices sold.

• Cost of equipment sales for the year ended December 31, 2023, included $12 million of Merger-related recoveries, compared to $1.5 billion of Merger-related costs for the year ended December 31, 2022.

Selling, general and administrative expense decreased slightly, primarily from:

• A decrease of $381 million in Merger-related costs and higher realized Merger synergies;

• Lower legal-related expenses, including from the impact of $400 million recognized in June 2022 associated with the settlement of certain litigation resulting from the August 2021 cyberattack;

• Lower costs related to outsourced functions;

• A decrease of $177 million in bad debt expense and losses from sales of receivables;

mostly offset by

• $321 million of severance and related costs associated with the August 2023 workforce reduction;

• Higher commission amortization expense;

• Higher advertising expense;

• Gains from the sale of certain IP addresses held by the Wireline Business of $121 million recognized during the year ended December 31, 2022.

• Selling, general and administrative expense for the year ended December 31, 2023, included $394 million of Merger-related costs, which were net of legal settlement gains of $134 million, compared to $775 million of Merger-related costs for the year ended December 31, 2022, which were net of legal settlement gains of $333 million.

Impairment expense was $477 million for the year ended December 31, 2022, due to the non-cash impairment of certain Wireline Property and equipment, Operating lease right-of-use assets and Other intangible assets.

See Note 16 - Wireline of the Notes to the Consolidated Financial Statements for additional information.

There was no impairment expense for the year ended December 31, 2023.

Loss on disposal group held for sale was $1.1 billion for the year ended December 31, 2022, due to the agreement for the sale of the Wireline Business.

See Note 14 – Wireline of the Notes to the Consolidated Financial Statements for additional information.

There was no loss on disposal group held for sale for the year ended December 31, 2021.

Depreciation and amortization decreased $2.7 billion, or 17%, primarily from:

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

• Certain 4G-related network assets becoming fully depreciated, including assets impacted by the decommissioning of the legacy Sprint CDMA and LTE networks;

• Lower amortization expense on certain intangible assets acquired in the Merger;

(Gain) loss on disposal group held for sale was a gain of $25 million for the year ended December 31, 2023, and a loss of $1.1 billion for the year ended December 31, 2022.

See Note 14 – Wireline of the Notes to the Consolidated Financial Statements for additional information.

Depreciation and amortization decreased $833 million, or 6%, primarily from:

• A decrease of $959 million in depreciation expense on leased devices, resulting from a lower number of total customer devices under lease;

• Certain 4G-related network assets becoming fully depreciated, including assets impacted by the decommissioning of the legacy Sprint CDMA and LTE networks in 2022;

partially offset by

• 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, decreased $349 million, or 5%.

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

• Lower average debt outstanding and a lower average effective interest rate due to the retirement of higher interest rate debt and the issuance of a lower gross principal amount of lower interest rate debt;

• Lower capitalized interest related to the deployment of our 600 MHz spectrum.

Other expense, net decreased $166 million, or 83%, primarily from losses on the extinguishment of debt in 2021.

• Higher depreciation expense, excluding leased devices, from the continued build-out of our nationwide 5G network and increased in-service internally developed and purchased software.

Operating income , the components of which are discussed above, increased $7.7 billion, or 118%.

Interest expense, net decreased slightly, primarily from:

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

• Higher capitalized interest, primarily driven by deployment activities associated with our C-band spectrum licenses;

mostly offset by

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

Other income (expense), net changed $101 million, from net expense of $33 million for the year ended December 31, 2022, to net income of $68 million for the year ended December 31, 2023, primarily from:

• Amortization of actuarial gains related to our Pension Plan;

• Gains on certain investments.

Income before income taxes , the components of which are discussed above, was $11.0 billion and $3.1 billion for the years ended December 31, 2023 and 2022, respectively.

Income tax expense increased $229 million, or 70%, primarily from:

• Tax benefits recognized in the year ended December 31, 2021, associated with legal entity reorganization related to historical Sprint entities, including a reduction in the valuation allowance against deferred tax assets in certain state jurisdictions, that did not impact 2022;

partially offset by

• Tax benefits recognized in 2022 associated with internal restructuring.

Income tax expense increased $2.1 billion, primarily from:

• Higher income before income taxes;

• Tax benefits recognized during the year ended December 31, 2022, associated with certain entity restructuring, that did not impact 2023.

Our effective tax rate was 24.4% and 17.7% for the years ended December 31, 2023 and 2022, respectively.

Net income , the components of which are discussed above, was $8.3 billion and $2.6 billion for the years ended December 31, 2023 and 2022, respectively.

Net income for the year ended December 31, 2022, included the following:

• Merger-related costs, net of tax, of $3.7 billion for the year ended December 31, 2022, compared to $2.3 billion for the year ended December 31, 2021.

• Loss on disposal group held for sale of $815 million, net of tax, for the year ended December 31, 2022, compared to no loss on disposal group held for sale for the year ended December 31, 2021.

Net income included:

• Merger-related costs, net of tax, of $775 million for the year ended December 31, 2023, compared to $3.7 billion for the year ended December 31, 2022.

• Gain on disposal group held for sale of $19 million, net of tax, for the year ended December 31, 2023, compared to a loss on disposal group held for sale of $815 million, net of tax, for the year ended December 31, 2022.

• Impairment expense of $358 million, net of tax, for the year ended December 31, 2022, compared to no impairment expense for the year ended December 31, 2023.

• Certain legal-related expenses, net of recoveries, including from the impact of the settlement of certain litigation associated with the August 2021 cyberattack, of $293 million, net of tax, for the year ended December 31, 2022.

• Severance and related costs associated with the August 2023 workforce reduction of $347 million, net of tax, for the year ended December 31, 2023.

• Legal-related recoveries, net, associated with the settlement of certain litigation resulting from the August 2021 cyberattack, of $32 million for the year ended December 31, 2023, compared to $293 million in Legal-related expenses, net, for the year ended December 31, 2022.

Guarantor Financial Information

In connection with our Merger with Sprint, we assumed certain registered debt to third parties issued by Sprint, Sprint Communications LLC, formerly known as Sprint Communications, Inc.

(“Sprint Communications”) and Sprint Capital Corporation (collectively, the “Sprint Issuers”).

As of December 31, 2022, all the registered debt to third parties issued by Sprint Communications had matured and Sprint Communications no longer has any such debt outstanding.

Pursuant to the applicable indentures and supplemental indentures, the Senior Notes to affiliates and third parties issued by T-Mobile USA, Inc.

and the Sprint Issuers (collectively, the “Issuers”) are fully and unconditionally guaranteed, jointly and severally, on a senior unsecured basis by T-Mobile (“Parent”) and certain of Parent’s 100% owned subsidiaries (“Guarantor Subsidiaries”).

Pursuant to the applicable indentures and supplemental indentures, the Senior Notes to affiliates and third parties issued by T-Mobile USA, Inc., Sprint and Sprint Capital Corporation (collectively, the “Issuers”) are fully and unconditionally guaranteed, jointly and severally, on a senior unsecured basis by T-Mobile (“Parent”) and certain of Parent’s 100% owned subsidiaries (“Guarantor Subsidiaries”).

The guarantees of the Guarantor Subsidiaries are subject to release in limited circumstances only upon the occurrence of certain customary conditions.

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is presented in the table below:

(in millions) Year Ended

December 31, 2023 Year Ended

December 31, 2022

(in millions)

Total revenues $ 75,934 $ 77,054

Operating income 10,707 2,985

Net (loss) income (572) 402

Net income (loss) 4,766 (572)

Revenue from non-guarantors 2,393 2,427

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Due to non-guarantors 41,805 3,930

Due from non-guarantors — 1,787

Due to related parties 1,576 1,571

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

(in millions) Year Ended

December 31, 2023 Year Ended

December 31, 2022

(in millions)

Total revenues $ 19 $ 7

Operating loss (3,197) (3,479)

Net income (loss) (1)

Net (loss) income (1)

(7,629) 2,471

Other income, net, from non-guarantors 525 1,706

(1) Net income for the year ended December 31, 2022, includes tax benefits recognized associated with internal restructuring.

Other (expense) income, net, (to) from non-guarantors (2,005) 525

(1) Net income for the year ended December 31, 2022, includes tax benefits recognized associated with certain entity restructuring.

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

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Noncurrent liabilities 106,881 66,516

Due to non-guarantors 32,706 —

Due from non-guarantors — 5,066

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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) Year Ended

December 31, 2023 Year Ended

December 31, 2022

(in millions)

Total revenues $ 19 $ 7

Operating loss (3,197) (3,479)

Net income (loss) (1)

Net (loss) income (1)

(7,491) 2,604

Other income, net, from non-guarantors 941 2,076

(1) Net income for the year ended December 31, 2022, includes tax benefits recognized associated with internal restructuring.

Other (expense) income, net, (to) from non-guarantors (1,489) 941

(1) Net income for the year ended December 31, 2022, includes tax benefits recognized associated with certain entity restructuring.

Performance Measures

In managing our business and assessing financial performance, we supplement the information provided by our consolidated financial statements with other operating or statistical data and non-GAAP financial measures.

These operating and financial measures are utilized by our management to evaluate our operating performance and, in certain cases, our ability to meet

liquidity requirements.

These operating and financial measures are utilized by our management to evaluate our operating performance and, in certain cases, our ability to meet liquidity requirements.

Although companies in the wireless industry may not define each of these measures in precisely the same way, we believe that these measures facilitate comparisons with other companies in the wireless industry on key operating and financial measures.

Total Postpaid Accounts

Postpaid Accounts

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 modems, mobile internet devices (including tablets and hotspots), wearables, DIGITS and 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 December 31, 2023 Versus 2022 2022 Versus 2021

(in thousands) 2023 2022 2021 # Change % Change # Change % Change

Total postpaid customer accounts (1) (2) (3)

Postpaid accounts (1) (2)

29,797 28,526 27,216 1,271 4 % 1,310 5 %

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In the third quarter of 2021, we acquired 270,000 postpaid accounts through our acquisition of the Wireless Assets of Shentel.

(3) Includes accounts acquired in connection with the Merger and certain account base adjustments.

See Sprint Merger Account Base Adjustments table below.

Total postpaid customer accounts increased 1,310,000, or 5%, primarily due to the Company’s differentiated growth strategy in new and under-penetrated markets, including continued growth in High Speed Internet.

Sprint Merger Account Base Adjustments

Certain adjustments were made to align the account reporting policies of T-Mobile and Sprint.

The adjustments made to the reported T-Mobile and Sprint ending account base as of March 31, 2020 are presented below:

(in thousands) Postpaid Accounts

Reconciliation to beginning accounts

T-Mobile accounts as reported, end of period March 31, 2020 15,244

Sprint accounts, end of period March 31, 2020 11,246

Total combined accounts, end of period March 31, 2020 26,490

Reseller reclassification to wholesale accounts (1)

EIP reclassification from postpaid to prepaid (2)

Rate plan threshold (3)

Collection policy alignment (4)

Miscellaneous adjustments (5)

Total Adjustments (1,105)

Adjusted beginning accounts as of April 1, 2020 25,385

(1) In connection with the closing of the Merger, we refined our definition of wholesale accounts resulting in the reclassification of certain postpaid and prepaid reseller accounts to wholesale accounts.

(2) Prepaid accounts with a customer with a device installment billing plan historically included as Sprint postpaid accounts have been reclassified to prepaid accounts to align with T-Mobile policy.

(3) Accounts with customers who have rate plans with monthly recurring charges that are considered insignificant have been excluded from our reported accounts.

(4) Certain Sprint accounts subject to collection activity for an extended period of time have been excluded from our reported accounts to align with T-Mobile policy.

(5) Miscellaneous insignificant adjustments to align with T-Mobile policy.

Postpaid Net Account Additions

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Postpaid net account additions 1,271 1,436 1,188 (165) (11) % 248 21 %

Postpaid net account additions increased 248,000, or 21%, primarily due to continued growth resulting from the Company’s differentiated growth strategy in new and under-penetrated markets, including continued growth in High Speed Internet.

Postpaid net account additions decreased 165,000, or 11%, primarily from:

• Continued moderation of industry growth;

• Higher postpaid account deactivations from a growing customer base;

• 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 modems, mobile internet devices (including tablets and hotspots), wearables, DIGITS and 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:

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Total customers 119,700 113,598 108,719 6,102 5 % 4,879 4 %

Acquired customers, net of base adjustments (1) (2) (3)

Adjustments to customers (1) (2)

170 (1,878) 818 2,048 (109) % (2,696) (330) %

(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 and 284,000 postpaid phone customers, 946,000 postpaid other customers and 28,000 prepaid customers in the second quarter of 2022.

In the fourth quarter of 2023, we recognized an additional base adjustment to increase postpaid phone customers by 20,000 and increase postpaid other customers by 150,000 due to fewer customers than expected whose service was deactivated as a result of the network shut-downs.

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.

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In the third quarter of 2021, we acquired 716,000 postpaid phone customers and 90,000 postpaid other customers through our acquisition of the Wireless Assets from Shentel.

(3) Includes customers acquired in connection with the Merger and certain customer base adjustments.

See Sprint Merger Customer Base Adjustments and Net Customer Additions tables below.

Total customers increased 4,879,000, or 4%, primarily from:

• Higher postpaid phone customers, primarily due to growth in new customer account relationships;

• Higher postpaid other customers, primarily due to growth in other connected devices, including growth in High Speed Internet and wearable products;

• Higher prepaid customers, primarily due to the continued success of our prepaid business due to promotional activity and rate plan offers, including the introduction of our prepaid High Speed Internet offering, partially offset by lower prepaid industry demand associated with continued industry shift to postpaid plans.

Total customers included High Speed Internet customers of 2,646,000 and 646,000 as of December 31, 2022 and 2021, respectively.

Sprint Merger Customer Base Adjustments

Certain adjustments were made to align the customer reporting policies of T-Mobile and Sprint.

The adjustments made to the reported T-Mobile and Sprint ending customer base as of March 31, 2020, are presented below:

(in thousands) Postpaid phone customers Postpaid other customers Total postpaid customers Prepaid customers Total customers

Reconciliation to beginning customers

T-Mobile customers as reported, end of period March 31, 2020 40,797 7,014 47,811 20,732 68,543

Sprint customers as reported, end of period March 31, 2020 25,916 8,428 34,344 8,256 42,600

Total combined customers, end of period March 31, 2020 66,713 15,442 82,155 28,988 111,143

Reseller reclassification to wholesale customers (1)

(199) (2,872) (3,071) — (3,071)

EIP reclassification from postpaid to prepaid (2)

(963) — (963) 963 —

Divested prepaid customers (3)

— — — (9,207) (9,207)

Rate plan threshold (4)

(182) (918) (1,100) — (1,100)

Customers with non-phone devices (5)

(226) 226 — — —

Collection policy alignment (6)

(150) (46) (196) — (196)

Miscellaneous adjustments (7)

(141) (43) (184) (302) (486)

Total Adjustments (1,861) (3,653) (5,514) (8,546) (14,060)

Adjusted beginning customers as of April 1, 2020 64,852 11,789 76,641 20,442 97,083

(1) In connection with the closing of the Merger, we refined our definition of wholesale customers, resulting in the reclassification of certain postpaid and prepaid reseller customers to wholesale customers.

Starting with the three months ended March 31, 2020, we discontinued reporting wholesale customers to focus on postpaid and prepaid customers and wholesale revenues, which we consider more relevant than the number of wholesale customers given the expansion of M2M and IoT products.

(2) Prepaid customers with a device installment billing plan historically included as Sprint postpaid customers have been reclassified to prepaid customers to align with T-Mobile policy.

(3) Customers associated with the Sprint wireless prepaid and Boost Mobile brands that were divested on July 1, 2020, have been excluded from our reported customers.

(4) Customers who have rate plans with monthly recurring charges which are considered insignificant have been excluded from our reported customers.

(5) Customers with postpaid phone rate plans without a phone (e.g., non-phone devices) have been reclassified from postpaid phone to postpaid other customers to align with T-Mobile policy.

(6) Certain Sprint customers subject to collection activity for an extended period of time have been excluded from our reported customers to align with T-Mobile policy.

(7) Miscellaneous insignificant adjustments to align with T-Mobile policy.

High Speed Internet customers included in Postpaid other customers were 4,288,000 and 2,410,000 as of December 31, 2023 and 2022, respectively.

High Speed Internet customers included in Prepaid customers were 488,000 and 236,000 as of December 31, 2023 and 2022, respectively.

Net Customer Additions

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Prepaid customers 282 338 342 (56) (17) % (4) (1) %

Total customers 6,757 5,837 5,631 920 16 % 206 4 %

Total net customer additions 5,932 6,757 5,837 (825) (12) % 920 16 %

Adjustments to customers 170 (1,878) 818 2,048 (109) % (2,696) (330) %

Total net customer additions increased 920,000, or 16%, primarily from:

• Higher postpaid other net customer additions, primarily due to an increase in postpaid High Speed Internet net customer additions and other connected devices, partially offset by lower net additions from mobile internet devices;

• Higher postpaid phone net customer additions, primarily due to lower churn, partially offset by lower gross additions driven by industry switching activity normalizing closer to pre-Pandemic levels;

Total net customer additions decreased 825,000, or 12%, primarily from:

• Lower postpaid other net customer additions, primarily due to

• Deactivations from mobile internet devices in the educational sector that were originally activated during the Pandemic and no longer needed, including from the impact of the expiration of the Emergency Connectivity Fund Program;

• Lower net additions from wearables;

partially offset by

• Lower prepaid net customer additions associated with the continued industry shift to postpaid plans, partially offset by the introduction of our prepaid High Speed Internet offering and lower churn.

• Higher net additions from other connected devices;

• 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 1,878,000 and 1,764,000 for the years ended December 31, 2023 and 2022, respectively.

High Speed Internet net customer additions included in prepaid net customer additions were 236,000 for the year ended December 31, 2022.

Our prepaid High Speed Internet launch was in the first quarter of 2022.

Therefore, there were no prepaid High Speed Internet net customer additions for the year ended December 31, 2021.

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.

The number of customers whose service was disconnected is presented net of customers that subsequently had their service restored within a certain period of time and excludes customers who received service for less than a certain minimum period of time.

High Speed Internet net customer additions included in prepaid net customer additions were 252,000 and 236,000 for the years ended December 31, 2023 and 2022, respectively.

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

The number of customers whose service was deactivated is presented net of customers that subsequently had their service restored within a certain period of time and excludes customers who received service for less than a certain minimum period of time.

We believe that churn provides management, investors and analysts with useful information to evaluate customer retention and loyalty.

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Prepaid churn 2.76 % 2.77 % 2.83 % -1 bps -6 bps

Postpaid phone churn decreased 10 basis points, primarily from:

• Reduced Sprint churn as we progress through the integration process;

partially offset by

• More normalized payment performance relative to muted Pandemic levels in 2021.

Prepaid churn decreased 6 basis points, primarily from:

• Promotional activity;

partially offset by

• More normalized payment performance relative to muted Pandemic levels in 2021.

Postpaid phone churn decreased 1 basis point, primarily from improved customer retention driven by a differentiated value proposition and network experience.

Prepaid churn decreased 1 basis point, primarily from improved customer retention, partially offset by the continued industry migration of prepaid to postpaid.

Postpaid Average Revenue Per Account

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Postpaid ARPA is calculated as Postpaid revenues for the specified period divided by the average number of postpaid accounts during the period, further divided by the number of months in the period.

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 believe postpaid ARPA provides management, investors and analysts with useful information to assess and evaluate our postpaid service revenue realization and assists 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, 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 ARPA:

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Postpaid ARPA $ 139.27 $ 137.43 $ 134.03 $ 1.84 1 % $ 3.40 3 %

Postpaid ARPA increased $3.40, or 3%, primarily from:

• Higher premium services, including Magenta Max;

• Higher non-recurring charges relative to muted Pandemic levels in 2021;

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

Postpaid ARPA increased slightly, primarily from:

• Higher premium services, primarily high-end rate plans, net of contra-revenue for content included in such plans, and discounts for specific affinity groups, such as 55+, Military and First Responder;

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

partially offset by

• An increase in High Speed Internet only accounts and increased promotional activity, including growth in rate plans for specific customer cohorts such as Business, Military, and First Responder.

• Increased promotional activity;

• An increase in High Speed Internet only accounts.

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:

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Postpaid Phone ARPU

Postpaid phone ARPU increased $1.03, or 2%, primarily due to:

• Higher premium services, including Magenta Max;

• Higher non-recurring charges relative to muted Pandemic levels in 2021;

partially offset by

• Increased promotional activity, including growth in rate plans for specific customer cohorts such as Business, Military, and First Responder.

Prepaid ARPU was essentially flat, primarily from:

Postpaid phone ARPU was relatively flat, primarily from:

• Increased promotional activity;

• Higher premium services;

• Higher non-recurring charges.

• Growth in business with lower ARPU given larger account sizes.

Prepaid ARPU decreased $0.84, or 2%, primarily from dilution from promotional rate plan mix.

Adjusted EBITDA and Core Adjusted EBITDA

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We use Adjusted EBITDA and Core Adjusted EBITDA as benchmarks to evaluate our operating performance in comparison to our competitors.

operating performance and trends by excluding the impact of interest expense from financing, non-cash depreciation and amortization from capital investments, stock-based compensation, Merger-related costs, including network decommissioning costs, impairment expense, losses on disposal groups held for sale and certain legal-related recoveries and expenses, as well as other special income and expenses which are not reflective of our core business activities.

Management believes analysts and investors use Adjusted EBITDA and Core Adjusted EBITDA as supplemental measures to evaluate overall operating performance and to facilitate comparisons with other wireless communications services companies because they are indicative of our ongoing operating performance and trends by excluding the impact of interest expense from financing, non-cash depreciation and amortization from capital investments, stock-based compensation, Merger-related costs, including network decommissioning costs, impairment expense, loss and gain on disposal groups held for sale and certain legal-related recoveries and expenses, as well as other special income and expenses, including severance and related costs associated with the August 2023 workforce reduction, which are not reflective of our core business activities.

Management believes analysts and investors use Core Adjusted EBITDA because it normalizes for the transition in the Company’s device financing strategy, by excluding the impact of device lease revenues from Adjusted EBITDA, to align with the exclusion of the related depreciation expense on leased devices from Adjusted EBITDA.

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Year Ended December 31, 2023 Versus 2022 2022 Versus 2021

(in millions) 2022 2021 2020 $ Change % Change $ Change % Change

(in millions, except percentages) 2023 2022 2021 $ Change % Change $ Change % Change

Net income $ 8,317 $ 2,590 $ 3,024 $ 5,727 221 % $ (434) (14) %

Income from discontinued operations, net of tax — — (320) — NM 320 (100) %

Income from continuing operations 2,590 3,024 2,744 (434) (14) % 280 10 %

Interest expense, net 3,335 3,364 3,342 (29) (1) % 22 1 %

Other expense, net 33 199 405 (166) (83) % (206) (51) %

Other (income) expense, net (68) 33 199 (101) (306) % (166) (83) %

Income tax expense 2,682 556 327 2,126 382 % 229 70 %

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Depreciation and amortization 12,818 13,651 16,383 (833) (6) % (2,732) (17) %

Operating income from discontinued operations (1)

— — 432 — NM (432) (100) %

Stock-based compensation (1)

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Merger-related costs 1,034 4,969 3,107 (3,935) (79) % 1,862 60 %

COVID-19-related costs — — 458 — NM (458) (100) %

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

Legal-related expenses, net (3)

391 — — 391 NM — NM

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

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

(42) 391 — (433) (111) % 391 NM

(Gain) loss on disposal group held for sale (25) 1,087 — (1,112) (102) % 1,087 NM

Other, net (3)

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46 % 43 % 40 % 300 bps 300 bps

(1) Following the Prepaid Transaction starting on July 1, 2020, we provide MVNO services to DISH.

We have included the operating income from April 1, 2020 through June 30, 2020, in our determination of Adjusted EBITDA to reflect contributions of the Prepaid Business that were replaced by the MVNO Agreement beginning on July 1, 2020 in order to enable management, analysts and investors to better assess ongoing operating performance and trends.

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

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

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

(4) Other, net, primarily consists of certain severance, restructuring and other expenses and income, including gains from the sale of IP addresses, 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.

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

Other, net, for the year ended December 31, 2023, includes $462 million of severance and related costs associated with the August 2023 workforce reduction.

NM - Not meaningful

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The components comprising Core Adjusted EBITDA are discussed further above.

The increase was primarily due to:

The increase was primarily from:

• Higher Total service revenues;

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

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

• Lower Cost of services, excluding Merger-related costs and other special items, such as severance and related costs associated with the August 2023 workforce reduction;

partially offset by

• Lower Equipment revenues, excluding lease revenues.

• Higher Selling, general and administrative expenses, excluding Merger-related costs, certain legal-related expenses, net of recoveries, and other special items, such as gains from the sale of IP addresses.

Adjusted EBITDA increased $897 million, or 3%, for the year ended December 31, 2022, primarily due to the fluctuations in Core Adjusted EBITDA, discussed above, partially offset by lower lease revenues, which decreased $1.9 billion for the year ended December 31, 2022.

Adjusted EBITDA increased $1.6 billion, or 6%, for the year ended December 31, 2023, primarily due to the fluctuations in Core Adjusted EBITDA, discussed above, partially offset by lower lease revenues, which decreased $1.1 billion for the year ended December 31, 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).

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.

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:

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Net cash provided by operating activities increased $1.8 billion, or 11%, primarily from:

• A $4.1 billion decrease in net cash outflows from changes in working capital, primarily due to lower use of cash from Short- and long-term operating lease liabilities, including the impact of a $1.0 billion advance rent payment related to the modification of one of our master lease agreements during the year ended December 31, 2021, EIP receivables, Other current and long-term liabilities and Inventories, partially offset by higher use of cash from Accounts receivable;

• A $5.8 billion increase in Net income, adjusted for non-cash income and expense;

partially offset by

• A $1.2 billion decrease in Net income, adjusted for non-cash income and expense.

• A $4.0 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 Inventory, partially offset by lower use of cash from Equipment installment plan receivables and Other current and long-term assets.

• Net cash provided by operating activities includes the impact of $2.0 billion and $3.4 billion in net payments for Merger-related costs for the years ended December 31, 2023 and 2022, respectively.

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The use of cash was primarily from:

• $14.0 billion in Purchases of property and equipment, including capitalized interest, from the accelerated build-out of our nationwide 5G network, including from network integration related to the Merger;

• $3.3 billion in Purchases of spectrum licenses and other intangible assets, including deposits, primarily due to $2.8 billion paid for spectrum licenses won at the conclusion of Auction 110 in February 2022 and $304 million paid in total for spectrum licenses won at the conclusion of Auction 108 in September 2022;

• $9.8 billion in Purchases of property and equipment, including capitalized interest, from the accelerated build-out of our nationwide 5G network;

• $1.0 billion in Purchases of spectrum licenses and other intangible assets, primarily from relocation costs associated with our C-band spectrum licenses acquired in Auction 107;

partially offset by

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Financing Activities

Net cash used in financing activities was $6.5 billion for the year ended December 31, 2022, compared to net cash provided by financing activities of $1.7 billion for the year ended December 31, 2021.

Net cash used in financing activities increased $5.6 billion, or 88%.

The use of cash was primarily from:

• $5.6 billion in Repayments of long-term debt;

• $13.1 billion in Repurchases of common stock;

• $5.1 billion in Repayments of long-term debt;

• $1.2 billion in Repayments of financing lease obligations;

• $747 million in Dividends on common stock ;

• $297 million in Tax withholdings on share-based awards;

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As of December 31, 2023, our Cash and cash equivalents were $5.1 billion compared to $4.5 billion at December 31, 2022.

Free Cash Flow

Free Cash Flow represents Net cash provided by operating activities less cash payments for Purchases of property and equipment, including Proceeds from sales of tower sites and Proceeds related to beneficial interests in securitization transactions and less Cash payments for debt prepayment or debt extinguishment costs.

Free Cash Flow is a non-GAAP financial measure utilized by management, investors and analysts of our financial information to evaluate cash available to pay debt, repurchase shares and provide further investment in the business.

In 2022 and 2021, we received proceeds from the sale of tower sites of $9 million and $40 million, respectively, which are included in Proceeds from sales of tower sites within Net cash used in investing activities on our Consolidated Statements of Cash Flows.

As these proceeds were from the sale of fixed assets and are used by management to assess cash available for capital expenditures during the year, we determined the proceeds are relevant for the calculation of Free Cash Flow and included them in the table below.

Other proceeds from the sale of fixed assets for the periods presented are not significant.

We have presented the impact of the sales in the table below, which reconciles Free Cash Flow and Free Cash Flow, excluding gross payments for the settlement of interest rate swaps, to Net cash provided by operating activities, which we consider to be the most directly comparable GAAP financial measure.

Adjusted Free Cash Flow

Adjusted Free Cash Flow represents Net cash provided by operating activities less cash payments for Purchases of property and equipment, plus Proceeds from sales of tower sites and Proceeds related to beneficial interests in securitization transactions and less Cash payments for debt prepayment or debt extinguishment costs.

Adjusted Free Cash Flow is a non-GAAP financial measure utilized by management, investors and analysts of our financial information to evaluate cash available to pay debt, repurchase shares, pay dividends and provide further investment in the business.

Starting in the first quarter of 2023, we renamed Free Cash Flow to Adjusted Free Cash Flow.

This change in name did not result in any change to the definition or calculation of this non-GAAP financial measure.

Adjusted Free Cash Flow margin is calculated as Adjusted Free Cash Flow divided by Service Revenues.

Adjusted Free Cash Flow margin is utilized by management, investors, and analysts to evaluate the Company’s ability to convert service revenue efficiently into cash available to pay debt, repurchase shares, pay dividends and provide further investment in the business.

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:

Year Ended December 31, 2023 Versus 2022 2022 Versus 2021

(in millions) 2022 2021 2020 $ Change % Change $ Change % Change

(in millions, except percentages) 2023 2022 2021 $ Change % Change $ Change % Change

Net cash provided by operating activities $ 18,559 $ 16,781 $ 13,917 $ 1,778 11 % $ 2,864 21 %

Cash purchases of property and equipment, including capitalized interest (9,801) (13,970) (12,326) 4,169 (30) % (1,644) 13 %

Proceeds from sales of tower sites 9 40 — (31) (78) % 40 NM

Proceeds from sales of tower sites 12 9 40 3 33 % (31) (78) %

Proceeds related to beneficial interests in securitization transactions 4,816 4,836 4,131 (20) — % 705 17 %

Cash payments for debt prepayment or debt extinguishment costs — — (116) — — % 116 (100) %

Free Cash Flow $ 7,656 $ 5,646 $ 658 $ 2,010 36 % $ 4,988 758 %

Gross cash paid for the settlement of interest rate swaps — — 2,343 — NM (2,343) (100) %

Free Cash Flow, excluding gross payments for the settlement of interest rate swaps $ 7,656 $ 5,646 $ 3,001 $ 2,010 36 % $ 2,645 88 %

NM - Not Meaningful

Free Cash Flow increased $2.0 billion, or 36%.

The increase was primarily impacted by the following:

Adjusted Free Cash Flow $ 13,586 $ 7,656 $ 5,646 $ 5,930 77 % $ 2,010 36 %

Net cash provided by operating activities margin (Net cash provided by operating activities divided by Service revenues) 29 % 27 % 24 % 200 bps 300 bps

Adjusted Free Cash Flow margin (Adjusted Free Cash Flow divided by Service revenues) 21 % 12 % 10 % 900 bps 200 bps

Adjusted Free Cash Flow increased $5.9 billion, or 77%, primarily impacted by the following:

• 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;

partially offset by

• Higher Cash purchases of property and equipment, including capitalized interest.

• Free Cash Flow includes $3.4 billion and $2.2 billion in net payments for Merger-related costs for the years ended December 31, 2022 and 2021, respectively.

• 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.

• Adjusted Free Cash Flow includes the impact of $2.0 billion and $3.4 billion in net payments for Merger-related costs for the years ended December 31, 2023 and 2022, respectively.

During the years ended December 31, 2023 and 2022, there were no significant net cash proceeds from securitization.

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

See Note 8 - Debt of the Notes to the Consolidated Financial Statements for more information regarding the Revolving Credit Facility.

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 December 31, 2023, there was no outstanding balance under this program.

For more information regarding our Revolving Credit Facility and commercial paper program, see Note 8 - Debt of the Notes to the Consolidated Financial Statements.

Debt Financing

As of December 31, 2023, our total debt and financing lease liabilities were $77.5 billion, excluding our tower obligations, of which $71.4 billion was classified as long-term debt and $1.2 billion was classified as long-term financing lease liabilities.

During the year ended December 31, 2022, we issued long-term debt for net proceeds of $3.7 billion and repaid short- and long-term debt with an aggregate principal amount of $5.6 billion.

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

During the year ended December 31, 2023, we issued long-term debt for net proceeds of $8.4 billion and redeemed and repaid short-term debt with an aggregate principal amount of $5.1 billion.

Subsequent to December 31, 2023, on January 12, 2024, we issued $1.0 billion of 4.850% Senior Notes due 2029, $1.3 billion of 5.150% Senior Notes due 2034 and $750 million of 5.500% Senior Notes due 2055.

For more information regarding our debt financing transactions, see Note 8 - Debt of the Notes to the Consolidated Financial Statements.

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

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

In January 2022, the FCC announced that we were the winning bidder of 199 licenses in Auction 110 (3.45 GHz spectrum) for an aggregate purchase price of $2.9 billion.

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

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

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

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

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

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

Our receipt of these licenses was still awaiting FCC final approval of the auction results as of December 31, 2022.

The timing of when the licenses will be issued will be determined by the FCC after all post-auction procedures have been completed, which has been delayed due to the suspension of auction authority to the FCC by Congress.

In December 2023, Congress passed the 5G Spectrum Authority Licensing Enforcement (SALE) Act, which gives the FCC temporary authority to grant licenses from previous auctions.

As a result, we expect the Auction 108 licenses to be issued in the first quarter of 2024.

For more information regarding our spectrum licenses, see Note 6 – Goodwill, Spectrum License Transactions and Other Intangible Assets of the Notes to the Consolidated Financial Statements.

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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 closing of this purchase was still awaiting FCC final approval as of December 31, 2022.

For more information regarding our License Purchase Agreements, see Note 6 – Goodwill, Spectrum License Trans actions and Other Intangible Assets of the Notes to the Consolidated Financial Statements.

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 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, whereby we 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 approximately $1.1 billion of the aggregate $3.5 billion cash consideration.

The FCC approved the purchase of the first tranche on December 29, 2023, and we expect the closing of the first tranche to occur in the second quarter of 2024.

We anticipate 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.

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.

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

For more information regarding our License Purchase Agreements, see Note 6 – Goodwill, Spectrum License Transactions and Other Intangible Assets of the Notes to the Consolidated Financial Statements.

Acquisition of Ka’ena Corporation

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 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 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.

Off-Balance Sheet Arrangements

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Future Sources and Uses of Liquidity

We may seek additional sources of liquidity, including through the issuance of additional debt, to continue to opportunistically acquire spectrum licenses or other long-lived assets in private party transactions, repurchase shares, or for the refinancing of existing long-term debt on an opportunistic basis.

Excluding liquidity that could be needed for spectrum acquisitions, other long-lived assets or for any potential stockholder returns, we expect our principal sources of funding to be sufficient to meet our anticipated liquidity needs for business operations for the next 12 months as well as our longer-term liquidity needs.

Our intended use of any such funds is for general corporate purposes, including for capital expenditures, spectrum purchases, opportunistic investments and acquisitions, redemption of debt, tower obligations, share repurchases and the execution of our integration plan.

We determine future liquidity requirements for operations, capital expenditures and share repurchases based in large part upon projected financial and operating performance, and opportunities to acquire additional spectrum or repurchase shares.

We may seek additional sources of liquidity, including through the issuance of additional debt, to continue to opportunistically acquire spectrum licenses or other long-lived assets in private party transactions, repurchase shares, pay dividends or for the refinancing of existing long-term debt on an opportunistic basis.

Excluding liquidity that could be needed for acquisitions of businesses, spectrum and other long-lived assets or for any potential stockholder returns, we expect our principal sources of funding to be sufficient to meet our anticipated liquidity needs for business operations for the next 12 months as well as our longer-term liquidity needs.

Our intended use of any such funds is for general corporate purposes, including for capital expenditures, spectrum purchases, opportunistic investments and acquisitions, redemption of debt, tower obligations, workforce restructuring, share repurchases, and dividend payments.

We determine future liquidity requirements for operations, capital expenditures, share repurchases and dividend payments based in large part upon projected financial and operating performance, and opportunities to acquire additional spectrum or repurchase shares.

We regularly review and update these projections for changes in current and projected financial and operating results, general economic conditions, the competitive landscape and other factors.

We have incurred, and will incur, substantial expenses to comply with the Government Commitments, and we are also expected to incur substantial restructuring expenses in connection with integrating and coordinating T-Mobile’s and Sprint’s businesses, operations, policies and procedures.

See “Restructuring” in this MD&A.

While we have assumed that a certain level of Merger-related expenses will be incurred, factors beyond our control, including required consultation and negotiation with certain counterparties, could affect the total amount or the timing of these expenses.

These expenses could exceed the costs historically borne by us and adversely affect our financial condition and results of operations.

There are a number of additional risks and uncertainties, including those due to the impact of the Pandemic, that could cause our financial and operating results and capital requirements to differ materially from our projections, which could cause future liquidity to differ materially from our assessment.

We have incurred, and will incur, substantial expenses to comply with the Government Commitments, and we also expect to incur all of the remaining restructuring and integration costs associated with the Merger by the first half of 2024, with the cash expenditures for the Merger-related costs extending beyond 2024.

There are a number of additional risks and uncertainties that could cause our financial and operating results and capital requirements to differ materially from our projections, which could cause future liquidity to differ materially from our assessment.

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.

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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 December 31, 2022, we have committed to $7.5 billion of financing leases under these financing lease facilities, of which $1.2 billion was executed during the year ended December 31, 2022.

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 December 31, 2023, we have entered into $8.7 billion of financing leases under these financing lease facilities, of which $1.2 billion was executed during the year ended December 31, 2023.

We expect to enter into up to a total of $1.2 billion in financing lease commitments during the year ending December 31, 2024.

Capital Expenditures

Our liquidity requirements have been driven primarily by capital expenditures for spectrum licenses, the construction, expansion and upgrading of our network infrastructure and the integration of the networks, spectrum, technology, personnel and customer base of T-Mobile and Sprint.

Property and equipment capital expenditures primarily relate to the integration of our network and spectrum licenses, including acquired Sprint PCS and 2.5 GHz spectrum licenses, as we build out our nationwide 5G network.

We expect a reduction in capital expenditures related to these efforts following 2022.

We expect a reduction in capital expenditures related to these efforts in 2024 compared to 2023.

Future capital expenditure requirements will include the deployment of our recently acquired C-band and 3.45 GHz spectrum licenses.

For more information regarding our spectrum licenses, see Note 6 – Goodwill, Spectrum License Transactions and Other Intan gible As s ets of the Notes to the Consolidated Financial Statements.

For more information regarding our spectrum licenses, see Note 6 - Goodwill, Spectrum License Transactions and Other Intangible Assets of the Notes to the Consolidated Financial Statements.

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.

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 year ended December 31, 2022, we repurchased shares of our common stock for a total purchase price of $3.0 billion, all of which were purchased under the 2022 Stock Repurchase Program and occurred during the period from September 8, 2022, through December 31, 2022.

As of December 31, 2022, we had up to $11.0 billion remaining under the 2022 Stock Repurchase Program.

Subsequent to December 31, 2022, from January 1, 2023, through February 10, 2023, we repurchased additional shares of our common stock for a total purchase price of $2.1 billion.

As of February 10, 2023, we had up to $8.9 billion remaining under the 2022 Stock Repurchase Program.

For additional information regarding the 2022 Stock Repurchase Program, see Note 15 – Repurchases of Common Stock of the Notes to the Consolidated Financial Statements.

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, which was utilized as of September 30, 2023.

During the nine months ended September 30, 2023, we repurchased shares of our common stock for a total purchase price of $11.0 billion, all of which were purchased under the 2022 Stock Repurchase Program.

On September 6, 2023, our Board of Directors authorized our 2023-2024 Stockholder Return Program for up to $19.0 billion that will run from October 1, 2023, through December 31, 2024.

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

During the year ended December 31, 2023, we repurchased 15,464,107 shares of our common stock at an average price per share of $144.95 for a total purchase price of $2.2 billion under the 2023-2024 Stockholder Return Program, all of which were repurchased during the three months ended December 31, 2023.

As of December 31, 2023, we had up to $16.0 billion remaining under the 2023-2024 Stockholder Return Program.

On September 25, 2023, our Board of Directors declared a cash dividend of $0.65 per share on our issued and outstanding shares of common stock, which was paid in the fourth quarter of 2023.

We intend to declare and pay approximately $3.0 billion in total additional dividends in 2024, with payments occurring each quarter during the year, beginning with the dividend declared in the first quarter of 2024.

The dividend amount paid per share is expected to grow by around 10% annually with the first increase expected in the fourth quarter of 2024;

however, the declaration and payment of all dividends is subject to the discretion of our Board of Directors and will depend on financial and legal requirements and other considerations.

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

Subsequent to December 31, 2023, on January 24, 2024, our Board of Directors declared a cash dividend of $0.65 per share on our issued and outstanding common stock, which is payable on March 14, 2024, to stockholders of record as of the close of business on March 1, 2024.

Subsequent to December 31, 2023, from January 1, 2024, through January 31, 2024, we repurchased 9,024,185 shares of our common stock at an average price per share of $162.98 for a total purchase price of $1.5 billion.

As of January 31, 2024, we had up to $14.5 billion remaining under the 2023-2024 Stockholder Return Program, less the amount to be paid pursuant to the dividends declared in the first quarter of 2024.

For additional information regarding the 2022 Stock Repurchase Program and the 2023-2024 Stockholder Return Program, see Note 13 – Stockholder Return Programs of the Notes to the Consolidated Financial Statements.

Contractual Obligations

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303 612 682 4,334 5,931

IP transit services liability 183 200 83 — 466

Total contractual obligations $ 18,315 $ 33,116 $ 30,070 $ 96,267 $ 177,768

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

The agreements remain subject to regulatory approval and the purchase price of $3.5 billion is excluded from our reported purchase obligations above.

(5) Spectrum lease agreements are typically for five to 10 years with automatic renewal provisions, bringing the total term of the agreements up to 30 years.

The FCC approved the purchase of the first tranche, totaling $2.4 billion, on December 29, 2023.

The closing of the second tranche remains subject to regulatory approval.

Additionally, on September 12, 2023, we entered into a License Purchase Agreement to acquire spectrum in the 600 MHz band from Comcast in exchange for total cash consideration of between $1.2 billion and $3.3 billion.

The agreement remains subject to an application for FCC approval.

Total consideration for these License Purchase Agreements is excluded from our reported purchase obligations above.

(5) On March 9, 2023, we entered into the Merger and Purchase Agreement for the acquisition of 100% of the outstanding equity of Ka’ena, 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 agreement remains subject to regulatory approval, and the estimated purchase price is excluded from our reported purchase commitments above.

See Note 2 – Business Combinations of the Notes to the Consolidated Financial Statements for further information.

(6) Spectrum lease agreements are typically for terms of five to 10 years with automatic renewal provisions, bringing the total term of the agreements up to 30 years.

Certain commitments and obligations are included in the table based on the year of required payment or an estimate of the year of payment.

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Related Party Transactions

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

As of February 10, 2023, DT and SoftBank held, directly or indirectly, approximately 49.6% and 3.3%, respectively, of the outstanding T-Mobile common stock, with the remaining approximately 47.1% of the outstanding T-Mobile common stock held by 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 February 10, 2023, over approximately 53.3% of the outstanding T-Mobile common stock.

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

As of January 31, 2024, DT and SoftBank held, directly or indirectly, approximately 50.7% and 7.8%, respectively, of the outstanding T-Mobile common stock, with the remaining approximately 41.5% of the outstanding T-Mobile common stock held by other stockholders.

As a result of the Proxy, Lock-Up and ROFR Agreement, dated April 1, 2020, by and between DT and SoftBank, DT has voting control, as of January 31, 2024, over approximately 58.1% of the outstanding T-Mobile common stock.

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

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subsidiaries, is party to roaming and interconnect agreements with the following mobile and fixed line telecommunication providers in Iran, some of which are or may be government-controlled entities:

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

Irancell Telecommunications Services Company, Telecommunication Kish Company, Mobile Telecommunication Company of Iran, and Telecommunication Infrastructure Company of Iran.

In addition, during the year ended December 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.

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.

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

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

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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 year ended, were less than $0.1 million.

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

We understand that DT intends to continue these activities.

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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 year ended December 31, 2022, were both under $0.1 million.

SoftBank estimates that gross revenues and net profit generated by such services during the year ended December 31, 2023, were both under $0.1 million.

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

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

What changed 10-K

Item 7. Management’s Discussion and Analysis