T-Mobile US, Inc. 10-K

Item 8. Financial Statements and Supplementary Data Report of Independent Registered Public Accounting Firm To the Board of Directors and Stockholders of T-Mobile US, Inc. Opinions on the Financial Statements and Internal Control over Financial Reporting We have audited the accompanying consolidated balance sheets of T-Mobile US, Inc. and subsidiaries (the “Company”) as of December 31, 2023 and 2022, the related consolidated statements of comprehensive income, stockholders' equity, and cash flows, for each of the two years in the period ended December 31, 2023, and the related notes (collectively referred to as the “consolidated financial statements”). We also have audited the Company’s internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO. Basis for Opinions The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the Management’s Annual Report on Internal Control over Financial Reporting included in Item 9A. Our responsibility is to express an opinion on the Company’s consolidated financial statements and an opinion on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects. Our audit of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures to respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions. Definition and Limitations of Internal Control over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. 52 Index for Notes to the Consolidated Financial Statements Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current-period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Revenues – Refer to Notes 1 and 10 to the consolidated financial statements Critical Audit Matter Description The Company generates revenues from providing wireless communications services and selling devices and accessories to customers. The processing and recording of service revenues related to monthly wireless services billings is highly automated and is based on contractual terms with customers. Equipment revenues related to device and accessory sales are typically recognized at a point in time when control of the device or accessory is transferred to the customer or dealer. The Company’s service and equipment revenues consist of a significant volume of low-dollar transactions accumulated from multiple systems and databases. Given the large volume of low-dollar service and equipment revenue transactions which are initiated, accumulated, and recorded in multiple systems and databases, auditing service and equipment revenues was complex and challenging due to the extent of audit effort required and the need for professionals with expertise in information technology (IT) to identify, evaluate, and test the Company’s systems, databases, automated controls, and system interface controls. How the Critical Audit Matter Was Addressed in the Audit Our audit procedures related to the Company’s service and equipment revenue transactions included the following, among others: • With the assistance of our IT specialists, we: ◦ Identified the relevant systems and databases used to process service and equipment revenue transactions and tested the relevant IT controls over each of those systems and databases. ◦ Performed testing of automated business controls and system interface controls within service and equipment revenues. • We tested internal controls in the revenue accounting processes, including those in place to (a) establish revenue recognition accounting policies for promotional offers, (b) record revenue and the related promotional offers in accordance with the established accounting policies and (c) reconcile the various systems to the Company’s general ledger. • We created data visualizations to evaluate recorded service and equipment revenue and trends in the related subscriber data. • For a selection of wholesale service revenue and equipment revenue transactions, we compared the amounts recognized to contractual agreements or other source documents and tested the mathematical accuracy of the recorded revenue. • We developed an expectation of postpaid and prepaid service revenue amounts using historical service revenue and subscriber information and compared it to the recorded amount. • We tested the accuracy and completeness of the subscriber information used in our audit procedures by selecting a sample of the subscriber information and for those selections agreeing the selected subscriber information to supporting documentation. /s/ Deloitte & Touche LLP Seattle, Washington February 2, 2024 We have served as the Company’s auditor since 2022. 53 Index for Notes to the Consolidated Financial Statements Report of Independent Registered Public Accounting Firm To the Board of Directors and Stockholders of T-Mobile US, Inc. Opinion on the Financial Statements We have audited the consolidated statements of comprehensive income, of stockholders’ equity and of cash flows of T-Mobile US, Inc. and its subsidiaries (the “Company”) for the year ended December 31, 2021, including the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the results of operations and cash flows of the Company for the year ended December 31, 2021 in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit of these consolidated financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audit provides a reasonable basis for our opinion. /s/ PricewaterhouseCoopers LLP Seattle, Washington February 11, 2022 We served as the Company’s auditor from 2001 to 2022. 54 Index for Notes to the Consolidated Financial Statements T-Mobile US, Inc. Consolidated Balance Sheets (in millions, except share and per share amounts) December 31, 2023 December 31, 2022 Assets Current assets Cash and cash equivalents $ 5,135 $ 4,507 Accounts receivable, net of allowance for credit losses of $ 161 and $ 167 4,692 4,445 Equipment installment plan receivables, net of allowance for credit losses and imputed discount of $ 623 and $ 667 4,456 5,123 Inventory 1,678 1,884 Prepaid expenses 702 673 Other current assets 2,352 2,435 Total current assets 19,015 19,067 Property and equipment, net 40,432 42,086 Operating lease right-of-use assets 27,135 28,715 Financing lease right-of-use assets 3,270 3,257 Goodwill 12,234 12,234 Spectrum licenses 96,707 95,798 Other intangible assets, net 2,618 3,508 Equipment installment plan receivables due after one year, net of allowance for credit losses and imputed discount of $ 150 and $ 144 2,042 2,546 Other assets 4,229 4,127 Total assets $ 207,682 $ 211,338 Liabilities and Stockholders' Equity Current liabilities Accounts payable and accrued liabilities $ 10,373 $ 12,275 Short-term debt 3,619 5,164 Deferred revenue 825 780 Short-term operating lease liabilities 3,555 3,512 Short-term financing lease liabilities 1,260 1,161 Other current liabilities 1,296 1,850 Total current liabilities 20,928 24,742 Long-term debt 69,903 65,301 Long-term debt to affiliates 1,496 1,495 Tower obligations 3,777 3,934 Deferred tax liabilities 13,458 10,884 Operating lease liabilities 28,240 29,855 Financing lease liabilities 1,236 1,370 Other long-term liabilities 3,929 4,101 Total long-term liabilities 122,039 116,940 Commitments and contingencies (Note 17) Stockholders' equity Common stock, par value $ 0.00001 per share, 2,000,000,000 shares authorized; 1,262,904,154 and 1,256,876,527 shares issued, 1,195,807,331 and 1,233,960,078 shares outstanding — — Additional paid-in capital 67,705 73,941 Treasury stock, at cost, 67,096,823 and 22,916,449 shares ( 9,373 ) ( 3,016 ) Accumulated other comprehensive loss ( 964 ) ( 1,046 ) Retained earnings (accumulated deficit) 7,347 ( 223 ) Total stockholders' equity 64,715 69,656 Total liabilities and stockholders' equity $ 207,682 $ 211,338 The accompanying notes are an integral part of these consolidated financial statements. 55 Index for Notes to the Consolidated Financial Statements T-Mobile US, Inc. Consolidated Statements of Comprehensive Income Year Ended December 31, (in millions, except share and per share amounts) 2023 2022 2021 Revenues Postpaid revenues $ 48,692 $ 45,919 $ 42,562 Prepaid revenues 9,767 9,857 9,733 Wholesale and other service revenues 4,782 5,547 6,074 Total service revenues 63,241 61,323 58,369 Equipment revenues 14,138 17,130 20,727 Other revenues 1,179 1,118 1,022 Total revenues 78,558 79,571 80,118 Operating expenses Cost of services, exclusive of depreciation and amortization shown separately below 11,655 14,666 13,934 Cost of equipment sales, exclusive of depreciation and amortization shown separately below 18,533 21,540 22,671 Selling, general and administrative 21,311 21,607 20,238 Impairment expense — 477 — (Gain) loss on disposal group held for sale ( 25 ) 1,087 — Depreciation and amortization 12,818 13,651 16,383 Total operating expenses 64,292 73,028 73,226 Operating income 14,266 6,543 6,892 Other expense, net Interest expense, net ( 3,335 ) ( 3,364 ) ( 3,342 ) Other income (expense), net 68 ( 33 ) ( 199 ) Total other expense, net ( 3,267 ) ( 3,397 ) ( 3,541 ) Income before income taxes 10,999 3,146 3,351 Income tax expense ( 2,682 ) ( 556 ) ( 327 ) Net income $ 8,317 $ 2,590 $ 3,024 Net income $ 8,317 $ 2,590 $ 3,024 Other comprehensive income, net of tax Reclassification of loss from cash flow hedges, net of tax effect of $ 56 , $ 52 and $ 49 163 151 140 Unrealized gain (loss) on foreign currency translation adjustment, net of tax effect of $ 0 , $( 1 ) and $ 0 9 ( 9 ) ( 4 ) Actuarial (loss) gain, net of amortization, on pension and other postretirement benefits, net of tax effect of $( 31 ), $ 61 and $ 28 ( 90 ) 177 80 Other comprehensive income 82 319 216 Total comprehensive income $ 8,399 $ 2,909 $ 3,240 Earnings per share Basic $ 7.02 $ 2.07 $ 2.42 Diluted $ 6.93 $ 2.06 $ 2.41 Weighted-average shares outstanding Basic 1,185,121,562 1,249,763,934 1,247,154,988 Diluted 1,200,286,264 1,255,376,769 1,254,769,926 The accompanying notes are an integral part of these consolidated financial statements. 56 Index for Notes to the Consolidated Financial Statements T-Mobile US, Inc. Consolidated Statements of Cash Flows Year Ended December 31, (in millions) 2023 2022 2021 Operating activities Net income $ 8,317 $ 2,590 $ 3,024 Adjustments to reconcile net income to net cash provided by operating activities Depreciation and amortization 12,818 13,651 16,383 Stock-based compensation expense 667 595 540 Deferred income tax expense 2,600 492 197 Bad debt expense 898 1,026 452 Losses from sales of receivables 165 214 15 Losses on redemption of debt — — 184 Impairment expense — 477 — Loss on remeasurement of disposal group held for sale 9 377 — Changes in operating assets and liabilities Accounts receivable ( 5,038 ) ( 5,158 ) ( 3,225 ) Equipment installment plan receivables 170 ( 1,184 ) ( 3,141 ) Inventory 197 744 201 Operating lease right-of-use assets 3,721 5,227 4,964 Other current and long-term assets ( 358 ) ( 754 ) ( 573 ) Accounts payable and accrued liabilities ( 1,126 ) 558 549 Short- and long-term operating lease liabilities ( 3,785 ) ( 2,947 ) ( 5,358 ) Other current and long-term liabilities ( 839 ) 459 ( 531 ) Other, net 143 414 236 Net cash provided by operating activities 18,559 16,781 13,917 Investing activities Purchases of property and equipment, including capitalized interest of $( 104 ), $( 61 ) and $( 210 ) ( 9,801 ) ( 13,970 ) ( 12,326 ) Purchases of spectrum licenses and other intangible assets, including deposits ( 1,010 ) ( 3,331 ) ( 9,366 ) Proceeds from sales of tower sites 12 9 40 Proceeds related to beneficial interests in securitization transactions 4,816 4,836 4,131 Acquisition of companies, net of cash and restricted cash acquired — ( 52 ) ( 1,916 ) Other, net 154 149 51 Net cash used in investing activities ( 5,829 ) ( 12,359 ) ( 19,386 ) Financing activities Proceeds from issuance of long-term debt 8,446 3,714 14,727 Repayments of financing lease obligations ( 1,227 ) ( 1,239 ) ( 1,111 ) Repayments of short-term debt for purchases of inventory, property and equipment and other financial liabilities — — ( 184 ) Repayments of long-term debt ( 5,051 ) ( 5,556 ) ( 11,100 ) Repurchases of common stock ( 13,074 ) ( 3,000 ) — Dividends on common stock ( 747 ) — — Tax withholdings on share-based awards ( 297 ) ( 243 ) ( 316 ) Cash payments for debt prepayment or debt extinguishment costs — — ( 116 ) Other, net ( 147 ) ( 127 ) ( 191 ) Net cash (used in) provided by financing activities ( 12,097 ) ( 6,451 ) 1,709 Change in cash and cash equivalents, including restricted cash and cash held for sale 633 ( 2,029 ) ( 3,760 ) Cash and cash equivalents, including restricted cash and cash held for sale Beginning of period 4,674 6,703 10,463 End of period $ 5,307 $ 4,674 $ 6,703 The accompanying notes are an integral part of these consolidated financial statements. 57 Index for Notes to the Consolidated Financial Statements T-Mobile US, Inc. Consolidated Statement of Stockholders’ Equity (in millions, except share and per share amounts) Common Stock Outstanding Treasury Shares Outstanding Treasury Shares at Cost Par Value and Additional Paid-in Capital Accumulated Other Comprehensive Loss (Accumulated Deficit) Retained Earnings Total Stockholders' Equity Balance as of December 31, 2020 1,241,805,706 1,539,878 $ ( 11 ) $ 72,772 $ ( 1,581 ) $ ( 5,836 ) $ 65,344 Net income — — — — — 3,024 3,024 Other comprehensive income — — — — 216 — 216 Stock-based compensation — — — 606 — — 606 Stock issued for employee stock purchase plan 2,189,542 — — 225 — — 225 Issuance of vested restricted stock units 7,509,039 — — — — — — Shares withheld related to net share settlement of stock awards and stock options ( 2,511,512 ) — — ( 316 ) — — ( 316 ) Other, net 220,906 ( 2,410 ) ( 2 ) 5 — — 3 Balance as of December 31, 2021 1,249,213,681 1,537,468 ( 13 ) 73,292 ( 1,365 ) ( 2,812 ) 69,102 Net income — — — — — 2,590 2,590 Other comprehensive income — — — — 319 — 319 Stock-based compensation — — — 656 — — 656 Stock issued for employee stock purchase plan 2,079,086 — — 227 — — 227 Issuance of vested restricted stock units 5,796,891 — — — — — — Shares withheld related to net share settlement of stock awards and stock options ( 1,900,710 ) — — ( 243 ) — — ( 243 ) Repurchases of common stock ( 21,361,409 ) 21,361,409 ( 3,000 ) — — — ( 3,000 ) Other, net 132,539 17,572 ( 3 ) 9 — ( 1 ) 5 Balance as of December 31, 2022 1,233,960,078 22,916,449 ( 3,016 ) 73,941 ( 1,046 ) ( 223 ) 69,656 Net income — — — — — 8,317 8,317 Dividends declared ($ 0.65 per share) — — — — — ( 747 ) ( 747 ) Other comprehensive income — — — — 82 — 82 Stock-based compensation — — — 687 — — 687 Stock issued for employee stock purchase plan 1,771,475 — — 210 — — 210 Issuance of vested restricted stock units 6,074,565 — — — — — — Shares withheld related to net share settlement of stock awards and stock options ( 2,027,800 ) — — ( 297 ) — — ( 297 ) Repurchases of common stock ( 92,925,044 ) 92,925,044 ( 13,255 ) — — — ( 13,255 ) SoftBank contingent shares settlement (1) 48,751,557 ( 48,751,557 ) 6,901 ( 6,849 ) — — 52 Other, net 202,500 6,887 ( 3 ) 13 — — 10 Balance as of December 31, 2023 1,195,807,331 67,096,823 $ ( 9,373 ) $ 67,705 $ ( 964 ) $ 7,347 $ 64,715 (1) Represents the issuance of the SoftBank Specified Shares pursuant to the Letter Agreement. See Note 15 – Earnings Per Share of the Notes to the Consolidated Financial Statements for more information. The accompanying notes are an integral part of these consolidated financial statements. 58 Index for Notes to the Consolidated Financial Statements T-Mobile US, Inc. Index for Notes to the Consolidated Financial Statements Note 1 Summary of Significant Accounting Policies 60 Note 2 Business Combinations 71 Note 3 Receivables and Related Allowance for Credit Losses 73 Note 4 Sales of Certain Receivables 75 Note 5 Property and Equipment 78 Note 6 Goodwill, Spectrum License Transactions and Other Intangibles Assets 79 Note 7 Fair Value Measurements 82 Note 8 Debt 84 Note 9 Tower Obligations 88 Note 10 Revenue from Contracts with Customers 90 Note 11 Employee Compensation and Benefit Plans 91 Note 12 Income Taxes 93 Note 13 Stockholder Return Programs 95 Note 14 Wireline 96 Note 15 Earnings Per Share 98 Note 16 Leases 98 Note 17 Commitments and Contingencies 100 Note 18 Restructuring Costs 103 Note 19 Additional Financial Information 105 Note 20 Subsequent Events 106 59 Index for Notes to the Consolidated Financial Statements T-Mobile US, Inc. Notes to the Consolidated Financial Statements Note 1 – Summary of Significant Accounting Policies Description of Business T-Mobile US, Inc. (“T-Mobile,” “we,” “our,” “us” or the “Company”), together with its consolidated subsidiaries, is a leading provider of mobile communications services, including voice, messaging and data, under its flagship brands, T-Mobile and Metro™ by T-Mobile (“Metro by T-Mobile”), in the United States, Puerto Rico and the U.S. Virgin Islands. Substantially all of our revenues were earned in, and substantially all of our long-lived assets are located in, the U.S., Puerto Rico and the U.S. Virgin Islands. We provide mobile communications services primarily using our 4G Long Term Evolution (“LTE”) network and our 5G technology network. We also offer a wide selection of wireless devices, including handsets, tablets and other mobile communication devices, and accessories for sale, as well as financing through equipment installment plans (“EIP”). We also provide reinsurance for device insurance policies and extended warranty contracts offered to our mobile communications customers. In addition to our wireless communications services, we offer High Speed Internet utilizing our nationwide 5G network. Basis of Presentation The accompanying consolidated financial statements include the balances and results of operations of T-Mobile and our consolidated subsidiaries. We consolidate majority-owned subsidiaries over which we exercise control, as well as variable interest entities (“VIEs”) for which we are deemed to be the primary beneficiary and VIEs, which cannot be deconsolidated, such as those related to Tower obligations. Intercompany transactions and balances have been eliminated in consolidation. We operate as a single operating segment. The preparation of financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires our management to make estimates and assumptions which affect our consolidated financial statements and accompanying notes. Estimates are based on historical experience, where applicable, and other assumptions which our management believes are reasonable under the circumstances, including, but not limited to, the valuation of assets acquired and liabilities assumed through acquisitions and the potential impacts arising from macroeconomic trends. These estimates are inherently subject to judgment and actual results could differ from those estimates. On September 6, 2022, Sprint Communications LLC, a Kansas limited liability company and wholly owned subsidiary of the Company (“Sprint Communications”), Sprint LLC, a Delaware limited liability company and wholly owned subsidiary of the Company (“Sprint”), and Cogent Infrastructure, Inc., a Delaware corporation (the “Buyer”) and a wholly owned subsidiary of Cogent Communications Holdings, Inc., entered into a Membership Interest Purchase Agreement (the “Wireline Sale Agreement”), pursuant to which the Buyer agreed to acquire the U.S. long-haul fiber network and operations (including the non-U.S. extensions thereof) of Sprint Communications and its subsidiaries (the “Wireline Business”). Such transactions contemplated by the Wireline Sale Agreement are collectively referred to as the “Wireline Transaction.” On May 1, 2023, the Buyer and the Company completed the Wireline Transaction (the “Closing”). The assets and liabilities of the Wireline Business disposal group were classified as held for sale and presented within Other current assets and Other current liabilities on our Consolidated Balance Sheets as of December 31, 2022. The fair value of the Wireline Business disposal group, less costs to sell, was reassessed during each reporting period it remained classified as held for sale, and any remeasurement to the lower of carrying amount or fair value less costs to sell was reported as an adjustment included within (Gain) loss on disposal group held for sale on our Consolidated Statements of Comprehensive Income. Unless otherwise specified, the amounts and information presented as of December 31, 2022 in the Notes to the Consolidated Financial Statements include assets and liabilities that were classified as held for sale. Cash and Cash Equivalents Cash equivalents consist of highly liquid money market funds and U.S. Treasury securities with remaining maturities of three months or less at the date of purchase. 60 Index for Notes to the Consolidated Financial Statements Receivables and Related Allowance for Credit Losses Accounts Receivable Accounts receivable balances are predominantly comprised of amounts currently due from customers (e.g., for wireless communications services and monthly device lease payments), device insurance administrators, wholesale partners, other carriers and third-party retail channels. Accounts receivable are presented on our Consolidated Balance Sheets at their amortized cost basis (i.e., the receivables’ unpaid principal balance (“UPB”) as adjusted for any written-off amounts relating to impairment), net of the allowance for credit losses. We have an arrangement to sell certain of our customer service accounts receivable on a revolving basis, which are treated as sales of financial assets. See Note 4 – Sales of Certain Receivables for further information. Equipment Installment Plan Receivables We offer certain customers the option to pay for their devices and other purchases in installments, generally over a period of 24 months using an EIP. EIP receivables are presented on our Consolidated Balance Sheets at their amortized cost basis (i.e., the receivables’ UPB as adjusted for any written-off amounts due to impairment and unamortized discounts), net of the allowance for credit losses. At the time of an installment sale, we impute a discount for interest if the term exceeds 12 months as there is no stated rate of interest on the receivables. The receivables are recorded at their present value, which is determined by discounting expected future cash payments at the imputed interest rate. This adjustment results in a discount or reduction in the transaction price of the contract with a customer, which is allocated to the performance obligations of the arrangement such as Service and Equipment revenues on our Consolidated Statements of Comprehensive Income. The imputed discount rate reflects a current market interest rate and includes a component for estimated credit risk underlying the EIP receivable, reflecting the estimated credit worthiness of the customer. The imputed discount on receivables is amortized over the financed installment term using the effective interest method and recognized as Other revenues on our Consolidated Statements of Comprehensive Income. The current portion of the EIP receivables is included in Equipment installment plan receivables, net and the long-term portion of the EIP receivables is included in Equipment installment plan receivables due after one year, net on our Consolidated Balance Sheets. We have an arrangement to sell certain EIP receivables on a revolving basis, which are treated as sales of financial assets. See Note 4 – Sales of Certain Receivables for further information. Additionally, certain of our EIP receivables included on our Consolidated Balance Sheets secure our asset-backed notes (“ABS Notes”). See Note 8 – Debt for further information. Allowance for Credit Losses We maintain an allowance for credit losses by applying an expected credit loss model. Each period, management assesses the appropriateness of the level of allowance for credit losses by considering credit risk inherent within each portfolio segment as of period end. Each portfolio segment is comprised of pools of receivables that are evaluated collectively based on similar risk characteristics. Our allowance levels consider estimated credit risk over the contractual life of the receivables and are influenced by receivable volumes, receivable delinquency status, historical loss experience and other conditions that affect loss expectations, such as changes in credit and collections policies and forecasts of macroeconomic conditions. While we attribute portions of the allowance to our respective accounts receivable and EIP portfolio segments, the entire allowance is available to credit losses related to the total receivable portfolio. We consider a receivable past due and delinquent when a customer has not paid us by the contractually specified payment due date. Account balances are written off against the allowance for credit losses if collection efforts are unsuccessful and the receivable balance is deemed uncollectible (customer default), based on factors such as customer credit ratings as well as the length of time the amounts are past due. If there is a deterioration of our customers’ financial condition or if future actual default rates on receivables in general differ from those currently anticipated, we will adjust our allowance for credit losses accordingly. Inventories Inventories consist primarily of wireless devices and accessories, which are valued at the lower of cost or net realizable value. Cost is determined using standard cost, which approximates average cost. Shipping and handling costs paid to wireless device and accessories vendors as well as costs to refurbish used devices are included in the standard cost of inventory. Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable costs of disposal and 61 Index for Notes to the Consolidated Financial Statements transportation. We record inventory write-downs to net realizable value for obsolete and slow-moving items based on inventory turnover trends and historical experience. Deferred Purchase Price Assets In connection with the sales of certain service and EIP accounts receivable pursuant to the sale arrangements, we have deferred purchase price assets measured at fair value that are based on a discounted cash flow model using unobservable Level 3 inputs, including estimated customer default rates and credit worthiness. See Note 4 – Sales of Certain Receivables for further information. Long-Lived Assets Long-lived assets include assets that do not have indefinite lives, such as property and equipment and certain intangible assets. Property and Equipment Property and equipment consists of buildings and equipment, wireless communications systems, leasehold improvements, capitalized software, leased wireless devices and construction in progress. Buildings and equipment include certain network server equipment. Wireless communications systems include assets to operate our wireless network and information technology data centers, including tower assets, leasehold improvements and asset retirement costs. Leasehold improvements include asset improvements other than those related to the wireless network. Property and equipment are recorded at cost less accumulated depreciation and impairments, if any, in Property and equipment, net on our Consolidated Balance Sheets. We generally depreciate property and equipment over the period the property and equipment provide economic benefit using the straight-line method. Depreciable life studies are performed periodically to confirm the appropriateness of depreciable lives for certain categories of property and equipment. These studies take into account actual usage, physical wear and tear, replacement history and assumptions about technology evolution. When these factors indicate the useful life of an asset is different from the previous assessment, the remaining book value is depreciated prospectively over the adjusted remaining estimated useful life. Leasehold improvements are depreciated over the shorter of their estimated useful lives or the related lease term. Costs of major replacements and improvements are capitalized. Repair and maintenance expenditures which do not enhance or extend the asset’s useful life are charged to operating expenses as incurred. Construction costs, labor and overhead incurred in the expansion or enhancement of our wireless network are capitalized. Capitalization commences with pre-construction period administrative and technical activities, which include obtaining zoning approvals and building permits, and ceases at the point at which the asset is ready for its intended use. We capitalize interest associated with the acquisition or construction of certain property and equipment. Capitalized interest is reported as a reduction in interest expense and depreciated over the useful life of the related asset. We record an asset retirement obligation for the estimated fair value of legal obligations associated with the retirement of tangible long-lived assets and a corresponding increase in the carrying amount of the related asset in the period in which the obligation is incurred. In periods subsequent to initial measurement, we recognize changes in the liability resulting from the passage of time and revisions to either the timing or the amount of the original estimate. Over time, the liability is accreted to its present value and the capitalized cost is depreciated over the estimated useful life of the asset. Our obligations relate primarily to certain legal obligations to remediate leased property on which our network infrastructure and administrative assets are located. We capitalize certain costs incurred in connection with developing or acquiring internal use software. Capitalization of software costs commences once the final selection of the specific software solution has been made and management authorizes and commits to funding the software project and ceases once the project is ready for its intended use. Capitalized software costs are included in Property and equipment, net on our Consolidated Balance Sheets and are amortized on a straight-line basis over the estimated useful life of the asset. Costs incurred during the preliminary project stage, as well as maintenance and training costs, are expensed as incurred. Device Leases Our leasing programs (“Leasing Programs”), which include JUMP! On Demand and the Sprint Flex Lease Program, allow customers to lease a device (handset or tablet) generally over an initial period of 18 months and upgrade the device with a new device when eligibility requirements are met. We depreciate leased devices to their estimated residual value, on a group basis, 62 Index for Notes to the Consolidated Financial Statements using the straight-line method over the estimated useful life of the device. The estimated useful life reflects the period for which we estimate the group of leased devices will provide utility to us, which may be longer than the initial lease term based on customer options in the Sprint Flex Lease Program to renew the lease on a month-to-month basis after the initial lease term concludes. In determining the estimated useful life, we consider the lease term (e.g., 18 months and month-to-month renewal options for the Sprint Flex Lease Program), trade-in activity and write-offs for lost and stolen devices. Lost and stolen devices are incorporated into the estimates of depreciation expense and recognized as an adjustment to accumulated depreciation when the loss event occurs. Revenues associated with the leased devices, net of lease incentives, are generally recognized on a straight-line basis over the lease term. In 2021, we discontinued offering the Sprint Flex Lease Program and shifted customer device financing to EIP plans. For arrangements in which we are the lessor of devices, we separate lease and non-lease components. Upon device upgrade or at lease end, customers in the JUMP! On Demand Lease Program must return or purchase their device, and customers in the Sprint Flex Lease Program have the option to return or purchase their device or to renew their lease on a month-to-month basis. The purchase price of the device is established at lease commencement and is based on the type of device leased and any down payment made. The Leasing Programs do not contain any residual value guarantees or variable lease payments, and there are no restrictions or covenants imposed by these leases. Returned devices, including those received upon device upgrade, are transferred from Property and equipment, net to Inventory on our Consolidated Balance Sheets and are valued at the lower of cost or net realizable value, with any write-down recognized as Cost of equipment sales on our Consolidated Statements of Comprehensive Income. Other Intangible Assets Intangible assets that do not have indefinite useful lives are amortized over their estimated useful lives. We have lease agreements (the “Agreements”) with various educational and non-profit institutions that provide us with the right to use Federal Communications Commission (“FCC”) spectrum licenses (known as “Educational Broadband Services” or “EBS” spectrum) in the 2.5 GHz band. The 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. A majority of the Agreements include a right of first refusal to acquire, lease or otherwise use the license at the end of the automatic renewal periods. Leased FCC spectrum licenses are recorded as executory contracts, and contractual lease payments are recognized on a straight-line basis over the remaining term of the arrangement, including renewals, and are presented in Costs of services on our Consolidated Statements of Comprehensive Income. Customer relationships are amortized using the sum-of-the-years digits method. The remaining finite-lived intangible assets are amortized using the straight-line method. Impairment We assess potential impairments to our long-lived assets when events or changes in circumstances indicate the carrying amount of the asset may not be recoverable. If any indicators of impairment are present, we test recoverability. The carrying value of a long-lived asset or asset group is not recoverable if the carrying value exceeds the sum of the estimated undiscounted future cash flows expected to be generated from the use and eventual disposition of the asset or asset group. If the estimated undiscounted future cash flows do not exceed the asset or asset group’s carrying amount, then an impairment loss is recorded, measured as the amount by which the carrying amount of a long-lived asset or asset group exceeds its estimated fair value. Business Combinations Assets acquired and liabilities assumed as part of a business combination are generally recorded at their fair value at the date of acquisition. The excess of purchase price over the fair value of assets acquired and liabilities assumed is recorded as goodwill. Determining fair value of identifiable assets, particularly intangibles, and liabilities acquired requires management to make estimates, which are based on all available information and in some cases assumptions with respect to the timing and amount of future revenues and expenses associated with an asset or liability. See Note 2 – Business Combinations for further discussion of the acquisition of the wireless telecommunications assets (the “Wireless Assets”) of Shenandoah Personal Communications Company LLC (“Shentel”) used to provide Sprint PCS’s wireless mobility communications network products in certain parts of Maryland, North Carolina, Virginia, West Virginia Kentucky, Ohio and Pennsylvania. 63 Index for Notes to the Consolidated Financial Statements Goodwill and Indefinite-Lived Intangible Assets Goodwill Goodwill consists of the excess of the purchase price over the fair value of identifiable net assets acquired in a business combination and is assigned to our one reporting unit: wireless. Spectrum Licenses Spectrum licenses are carried at costs incurred to acquire the spectrum licenses and the costs to prepare the spectrum licenses for their intended use, such as costs to clear acquired spectrum licenses. The FCC issues spectrum licenses which provide us with the exclusive right to utilize designated radio frequency spectrum within specific geographic service areas to provide wireless communications services. Spectrum licenses are issued for a fixed period of time, typically up to 15 years; however, the FCC has granted license renewals routinely and at a nominal cost. The spectrum licenses acquired expire at various dates and we believe we will be able to meet all requirements necessary to secure renewal of our spectrum licenses at a nominal cost. Moreover, we determined that there are currently no legal, regulatory, contractual, competitive, economic or other factors that limit the useful lives of our spectrum licenses. The utility of radio frequency spectrum does not diminish while activated on our network nor does it otherwise deteriorate over time. Therefore, we determined the spectrum licenses should be treated as indefinite-lived intangible assets. At times, we enter into agreements to sell or exchange spectrum licenses. Upon entering into the arrangement, if the transaction has been deemed to have commercial substance and the spectrum licenses meet the held for sale criteria, the licenses are classified as held for sale at their carrying value, as adjusted for any impairment recognized, included in Other current assets on our Consolidated Balance Sheets until approval and completion of the exchange or sale. Upon closing of the transaction, spectrum licenses acquired as part of an exchange of nonmonetary assets are recorded at fair value and the difference between the fair value of the spectrum licenses obtained, carrying value of the spectrum licenses transferred and cash paid, if any, is recognized as a gain or loss on disposal of spectrum licenses included in Selling, general and administrative expense on our Consolidated Statements of Comprehensive Income. Our fair value estimates of spectrum licenses are based on information for which there is little or no observable market data. If the transaction lacks commercial substance or the fair value is not measurable, the acquired spectrum licenses are recorded at our carrying value of the spectrum assets transferred or exchanged. The spectrum licenses we hold plus the spectrum leases enhance the overall value of our spectrum licenses as the collective value is higher than the value of individual bands of spectrum within a specific geography. This value is derived from the ability to provide wireless service to customers across large geographic areas and maintain the same or similar wireless connectivity quality. This enhanced value from combining owned and leased spectrum licenses is referred to as an aggregation premium. The aggregation premium is a component of the overall fair value of our owned FCC spectrum licenses. Impairment We assess the carrying value of our goodwill and other indefinite-lived intangible assets, such as our spectrum license portfolio, for potential impairment annually as of December 31 or more frequently, if events or changes in circumstances indicate such assets might be impaired. We test goodwill on a reporting unit basis by comparing the estimated fair value of the reporting unit to its book value. If the fair value exceeds the book value, then no impairment is measured. As of December 31, 2023, we have identified one reporting unit: wireless. The wireless reporting unit consists of all the assets and liabilities of T-Mobile US, Inc. When assessing goodwill for impairment we may elect to first perform a qualitative assessment to determine if the quantitative impairment test is necessary. If we do not perform a qualitative assessment, or if the qualitative assessment indicates it is more likely than not that the fair value of a reporting unit is less than its carrying amount, we perform a quantitative test. We recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized would not exceed the total amount of goodwill allocated to that reporting unit. In 2023, we employed a qualitative approach to assess the wireless reporting unit. The fair value of the wireless reporting unit is determined using a market approach, which is based on market capitalization. We recognize that market capitalization is subject to volatility and will monitor changes in market capitalization to determine whether declines, if any, necessitate an interim impairment review. In the event market capitalization does decline below its book value, we will consider the length, severity and reasons for the decline when assessing whether potential impairment exists, including considering whether a control premium should be added 64 Index for Notes to the Consolidated Financial Statements to the market capitalization. We believe short-term fluctuations in share price may not necessarily reflect the underlying aggregate fair value. No events or change in circumstances have occurred that indicate the fair value of the wireless reporting unit may be below its carrying amount at December 31, 2023. We test our spectrum licenses for impairment on an aggregate basis, consistent with our management of the overall business at a national level. We may elect to first perform a qualitative assessment to determine whether it is more likely than not that the fair value of an intangible asset is less than its carrying value. If we do not perform the qualitative assessment, or if the qualitative assessment indicates it is more likely than not that the fair value of the intangible asset is less than its carrying amount, we calculate the estimated fair value of the intangible asset. If the estimated fair value of the spectrum licenses is lower than their carrying amount, an impairment loss is recognized for the difference. In 2023, we employed the qualitative method. We estimate fair value of spectrum licenses using the Greenfield methodology. The Greenfield methodology values the spectrum licenses by calculating the cash flow generating potential of a hypothetical start-up company that goes into business with no assets except for the asset to be valued (in this case, spectrum licenses) and makes investments required to build an operation comparable to current use. The value of the spectrum licenses can be considered as equal to the present value of the cash flows of this hypothetical start-up company. We base the assumptions underlying the Greenfield methodology on a combination of market participant data and our historical results, trends and business plans. Future cash flows in the Greenfield methodology are based on estimates and assumptions of market participant revenues, EBITDA margin, network build-out period and a long-term growth rate for a market participant. The cash flows are discounted using a weighted-average cost of capital. No events or change in circumstances have occurred that indicate the fair value of the Spectrum licenses may be below their carrying amount at December 31, 2023. The valuation approaches utilized to estimate fair value for the purposes of the impairment tests of goodwill and spectrum licenses require the use of assumptions and estimates, which involve a degree of uncertainty. If actual results or future expectations are not consistent with the assumptions used in our estimate of fair value, it may result in the recording of significant impairment charges on goodwill or spectrum licenses. The most significant assumptions within the valuation models are the discount rate based on the weighted-average cost of capital, revenues, EBITDA margins, capital expenditures and long-term growth rate. For more information regarding our impairment assessments of indefinite-lived intangible assets, see Note 6 – Goodwill, Spectrum License Transactions and Other Intangible Assets . Fair Value Measurements We carry certain assets and liabilities at fair value. Fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The three-tier hierarchy for inputs used in measuring fair value, which prioritizes the inputs based on the observability as of the measurement date, is as follows: Level 1 Quoted prices in active markets for identical assets or liabilities; Level 2 Observable inputs other than the quoted prices in active markets for identical assets and liabilities; and Level 3 Unobservable inputs for which there is little or no market data, which require us to develop assumptions of what market participants would use in pricing the asset or liability. Assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the placement of assets and liabilities being measured within the fair value hierarchy. The carrying values of Cash and cash equivalents, Accounts receivable and Accounts payable and accrued liabilities approximate fair value due to the short-term maturities of these instruments. The carrying values of EIP receivables approximate fair value as the receivables are recorded at their present value using an imputed interest rate. With the exception of certain long-term fixed-rate debt, there were no financial instruments with a carrying value materially different from their fair value. See Note 7 – Fair Value Measurements for a comparison of the carrying values and fair values of our short-term and long-term debt. 65 Index for Notes to the Consolidated Financial Statements Derivative Financial Instruments Derivative financial instruments are recognized as either assets or liabilities and are measured at fair value. We do not use derivatives for trading or speculative purposes. For derivative instruments designated as cash flow hedges associated with forecasted debt issuances, changes in fair value are reported as a component of Accumulated other comprehensive loss until reclassified into Interest expense, net in the same period the hedged transaction affects earnings. Unrealized gains on derivatives designated in qualifying cash flow hedge relationships are recorded at fair value as assets, and unrealized losses are recorded at fair value as liabilities. We did not have any significant derivative instruments outstanding as of December 31, 2023 or 2022. Revenue Recognition We primarily generate our revenue from providing wireless communications services and selling or leasing devices and accessories to customers. Our contracts with customers may involve more than one performance obligation, which include wireless services, wireless devices or a combination thereof, and we allocate the transaction price between each performance obligation based on its relative standalone selling price. Wireless Communications Services Revenue We generate our wireless communications services revenues from providing access to, and usage of, our wireless communications network. Service revenues also include revenues earned for providing premium services to customers, such as device insurance services. Service contracts are billed monthly either in advance or arrears, or are prepaid. Generally, service revenue is recognized as we satisfy our performance obligation to transfer service to our customers. We typically satisfy our stand-ready performance obligations, including unlimited wireless services, evenly over the contract term. For usage-based and prepaid wireless services, we satisfy our performance obligations when services are rendered. The enforceable duration of our contracts with customers is typically one month . However, promotional EIP bill credits offered to a customer on an equipment sale that are paid over time and are contingent on the customer maintaining a service contract may result in an extended service contract based on whether a substantive penalty is deemed to exist. Revenue is recorded net of costs paid to another party for performance obligations where we arrange for the other party to transfer goods or services to the customer (i.e., when we are acting as an agent). For example, performance obligations relating to services provided by third-party content providers where we neither control a right to the content provider’s service nor control the underlying service itself are presented net because we are acting as an agent. Consideration payable to a customer is treated as a reduction of the total transaction price, unless the payment is in exchange for a distinct good or service, such as certain commissions paid to dealers, in which case the payment is treated as a purchase of that distinct good or service. Federal Universal Service Fund (“USF”) and state USF fees are assessed by various governmental authorities in connection with the services we provide to our customers and are included in Cost of services. When we separately bill and collect these regulatory fees from customers, they are recorded gross in Total service revenues on our Consolidated Statements of Comprehensive Income. For the years ended December 31, 2023, 2022 and 2021, we recorded approximately $ 317 million, $ 185 million and $ 216 million, respectively, of USF fees on a gross basis. We have made an accounting policy election to exclude from the measurement of the transaction price all taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction and collected by us from a customer (e.g., sales, use, value added, and some excise taxes). Equipment Revenues We generate equipment revenues from the sale or lease of mobile communication devices and accessories. Equipment revenues related to device and accessory sales are typically recognized at a point in time when control of the device or accessory is transferred to the customer or dealer. We have elected to account for shipping and handling activities that occur after control of the related good transfers as fulfillment activities instead of assessing such activities as performance obligations. We estimate variable consideration (e.g., device returns or certain payments to indirect dealers) primarily based on historical experience. 66 Index for Notes to the Consolidated Financial Statements Equipment sales not probable of collection are generally recorded as payments are received. Our assessment of collectibility considers contract terms such as down payments that reduce our exposure to credit risk. We offer certain customers the option to pay for devices and accessories in installments using an EIP. Generally, we recognize as a reduction of the total transaction price the effects of a financing component in contracts where customers purchase their devices and accessories on an EIP with a term of more than one year, including those financing components that are not considered to be significant to the contract. However, we have elected the practical expedient of not recognizing the effects of a significant financing component for contracts where we expect, at contract inception, that the period between the transfer of a performance obligation to a customer and the customer’s payment for that performance obligation will be one year or less. Our Leasing Programs allow customers to lease a device over a period of up to 18 months and upgrade the device with a new device when eligibility requirements are met. To date, substantially all of our leased wireless devices are accounted for as operating leases and estimated contract consideration is allocated between lease and non-lease elements (such as service and equipment performance obligations) based on the relative standalone selling price of each performance obligation in the contract. Lease revenues are recorded as equipment revenues and recognized as earned on a straight-line basis over the lease term. Lease revenues on contracts not probable of collection are limited to the amount of payments received. See “Property and Equipment” above for further information. Imputed Interest on EIP Receivables For EIP greater than 12 months, we record the effects of financing on all EIP receivables regardless of whether or not the financing is considered to be significant. The imputation of interest results in a discount of the EIP receivable, thereby adjusting the transaction price of the contract with the customer, which is then allocated to the performance obligations of the arrangement. For transactions where we recognize a significant financing component, judgment is required to determine the discount rate. For EIP sales, the discount rate used to adjust the transaction price primarily reflects current market interest rates and the estimated credit risk of the customer. Customer credit behavior is inherently uncertain. See “Receivables and Allowance for Credit Losses” above, for additional discussion on how we assess credit risk. For receivables associated with an end service customer in which the sale of the device was not directly to the end customer (sell-in model or devices sourced directly from OEM), the effect of imputing interest is recognized as a reduction to service revenue over the service contract period. In these transactions, the provision of wireless communications services is the only performance obligation as the device sale was recognized when transferred to the dealer. Contract Balances Generally, our devices and service plans are available at standard prices, which are maintained on price lists and published on our website and/or within our retail stores. For contracts that involve more than one product or service that are identified as separate performance obligations, the transaction price is allocated to the performance obligations based on their relative standalone selling prices. The standalone selling price is the price at which we would sell the good or service separately to a customer and is most commonly evidenced by the price at which we sell that good or service separately in similar circumstances and to similar customers. A contract asset is recorded when revenue is recognized in advance of our right to receive consideration (i.e., we must perform additional services in order to receive consideration). Amounts are recorded as receivables when our right to consideration is unconditional. When consideration is received, or we have an unconditional right to consideration in advance of delivery of goods or services, a contract liability is recorded. The transaction price can include non-refundable upfront fees, which are allocated to the identifiable performance obligations. Contract assets are included in Other current assets and Other assets and contract liabilities are included in Deferred revenue on our Consolidated Balance Sheets. See Note 10 – Revenue from Contracts with Customers for further information. Contract Modifications Our service contracts allow customers to frequently modify their contracts without incurring penalties, in many cases. For contract modifications, we evaluate the change in scope or price of the contract to determine if the modification should be 67 Index for Notes to the Consolidated Financial Statements treated as a separate contract, as if there is a termination of the existing contract and creation of a new contract, or if the modification should be considered a change associated with the existing contract. We typically do not have significant impacts from contract modifications. Contract Costs We incur certain incremental costs to obtain a contract that we expect to recover, such as sales commissions. We record an asset when these incremental costs to obtain a contract are incurred and amortize them on a systematic basis that is consistent with the transfer to the customer of the goods or services to which the asset relates. We capitalize postpaid sales commissions for service activation as costs to acquire a contract and amortize them on a straight-line basis over the estimated period of benefit, currently 24 months. For capitalized contract costs, determining the amortization period over which such costs are recognized as well as assessing the indicators of impairment may require judgment. Prepaid commissions are expensed as incurred as their estimated period of benefit does not extend beyond 12 months. Commissions paid upon device upgrade are not capitalized if the remaining customer contract is less than one year. Incremental costs to obtain equipment contracts (e.g., commissions paid on device and accessory sales) are recognized when the equipment is transferred to the customer. See Note 10 – Revenue from Contracts with Customers for further information. Leases Cell Site, Retail Store and Office Facility Leases We are a lessee for non-cancelable operating and financing leases for cell sites, switch sites, retail stores, network equipment and office facilities. We recognize a right-of-use asset and lease liability for operating leases based on the net present value of future minimum lease payments. The right-of-use asset for an operating lease is based on the lease liability. Lease expense is recognized on a straight-line basis over the non-cancelable lease term and renewal periods that are considered reasonably certain. In addition, we have financing leases for certain network equipment. We recognize a right-of-use asset and lease liability for financing leases based on the net present value of future minimum lease payments. The right-of-use asset for a finance lease is based on the lease liability. Expense for our financing leases is comprised of the amortization expense associated with the right-of-use asset and interest expense recognized based on the effective interest method. We include options to extend or terminate a lease when we are reasonably certain that we will exercise that option. We consider several factors in assessing whether renewal periods are reasonably certain of being exercised, including the continued maturation of our nationwide network, technological advances within the telecommunications industry and the availability of alternative sites. We have generally concluded we are not reasonably certain to exercise the options to extend or terminate our leases. Therefore, as of the lease commencement date, our lease terms generally do not include these options. In determining the discount rate used to measure the right-of-use asset and lease liability, we use rates implicit in the lease, or if not readily available, we use our incremental borrowing rate. Our incremental borrowing rate is based on an estimated secured rate comprised of a risk-free rate plus a credit spread as secured by our assets. Determining a credit spread as secured by our assets may require judgment. Certain of our lease agreements include rental payments based on changes in the consumer price index (“CPI”). Lease liabilities are not remeasured as a result of changes in the CPI; instead, changes in the CPI are treated as variable lease payments and are excluded from the measurement of the right-of-use asset and lease liability. These payments are recognized in the period in which the related obligation is incurred. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. Generally, we elected the practical expedient to not separate lease and non-lease components in arrangements. For arrangements in which we are the lessor of wireless handset devices, we did not elect this practical expedient. We did not elect the short-term lease recognition exemption; as such, leases with terms shorter than 12 months are included as a right-of-use asset and lease liability. Rental revenues and expenses associated with co-location tower sites are presented on a net basis under Topic 842. See Note 16 – Leases for further information. 68 Index for Notes to the Consolidated Financial Statements Cell Tower Monetization Transactions In 2012, we entered into a prepaid master lease arrangement in which we as the lessor provided the rights to utilize tower sites and we leased back space on certain of those towers. Prior to the Merger, Sprint entered into a similar lease-out and leaseback arrangement that we assumed in the Merger. These arrangements are treated as failed sale leasebacks in which the proceeds received are reported as a financing obligation. The principal payments on the tower obligations are included in Other, net within Net cash provided by (used in) financing activities on our Consolidated Statements of Cash Flows. Our historical tower site asset costs are reported in Property and equipment, net on our Consolidated Balance Sheets and are depreciated. See Note 9 – Tower Obligations for further information. Sprint Retirement Pension Plan We provide the Sprint Retirement Pension Plan (the “Pension Plan”), which is a defined benefit pension plan providing post-retirement benefits to certain employees. As of December 31, 2005, the Pension Plan was amended to freeze benefit plan accruals for participants. The investments in the Pension Plan are measured at fair value on a recurring basis each quarter using quoted market prices or the net asset value per share as a practical expedient. The projected benefit obligations associated with the Pension Plan are determined based on actuarial models utilizing mortality tables and discount rates applied to the expected benefit term. See Note 11 – Employee Compensation and Benefit Plans for further information on the Pension Plan. Advertising Expense We expense the cost of advertising and other promotional expenditures to market our services and products as incurred. For the years ended December 31, 2023, 2022 and 2021, advertising expenses included in Selling, general and administrative expense on our Consolidated Statements of Comprehensive Income were $ 2.5 billion, $ 2.3 billion and $ 2.2 billion, respectively. Income Taxes Deferred tax assets and liabilities are recognized based on temporary differences between the consolidated financial statements and tax bases of assets and liabilities using enacted tax rates expected to be in effect when these differences are realized. A valuation allowance is recorded when it is more likely than not that some portion or all of a deferred tax asset will not be realized. The ultimate realization of a deferred tax asset depends on the ability to generate sufficient taxable income of the appropriate character and in the appropriate taxing jurisdictions within the carryforward periods available. We account for uncertainty in income taxes recognized on our consolidated financial statements in accordance with the accounting guidance for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. We assess whether it is more likely than not that a tax position will be sustained upon examination based on the technical merits of the position and adjust the unrecognized tax benefits in light of changes in facts and circumstances, such as changes in tax law, interactions with taxing authorities and developments in case law. Other Comprehensive Income Other comprehensive income primarily consists of adjustments, net of tax, related to reclassification of loss from cash flow hedges and pension and other postretirement benefits. This is reported in Accumulated other comprehensive loss as a separate component of stockholders’ equity until realized in earnings. Stock-Based Compensation Stock-based compensation expense for stock awards, which include restricted stock units (“RSUs”) and performance-based restricted stock units (“PRSUs”), is measured at fair value on the grant date and recognized as expense, net of expected forfeitures, over the related service period. The fair value of stock awards is based on the closing price of our common stock on the date of grant, adjusted for expected dividend yield. RSUs are recognized as expense using the straight-line method. PRSUs are recognized as expense following a graded vesting schedule with their performance reassessed and updated on a quarterly basis, or more frequently as changes in facts and circumstances warrant. 69 Index for Notes to the Consolidated Financial Statements Stockholder Return Programs On September 8, 2022, our Board of Directors authorized a stock repurchase program for up to $ 14.0 billion of our common stock through September 30, 2023 (the “2022 Stock Repurchase Program”), which was utilized as of September 30, 2023. On September 6, 2023, our Board of Directors authorized a stockholder return program of up to $ 19.0 billion that will run through December 31, 2024 (the “2023-2024 Stockholder Return Program”). The 2023-2024 Stockholder Return Program consists of additional repurchases of shares of our common stock and the payment of cash dividends. The amount available under the 2023-2024 Stockholder Return Program for share repurchases will be reduced by the amount of any cash dividends declared by us. The cost of repurchased shares, including equity reacquisition costs, is included in Treasury stock on our Consolidated Balance Sheets. We accrue the cost of repurchased shares and exclude such shares from the calculation of basic and diluted earnings per share, as of the trade date. We recognize a liability for share repurchases which have not settled and for which cash has not been paid in Other current liabilities on our Consolidated Balance Sheets. Cash payments to reacquire our shares, including equity reacquisition costs, are included in Repurchases of common stock on our Consolidated Statements of Cash Flows. Dividends declared are included as a reduction to Retained earnings on our Consolidated Balance Sheets. We recognize a liability for dividends declared but for which cash has not been paid in Other current liabilities on our Consolidated Balance Sheets. Dividend cash payments to stockholders are included in Net cash provided by (used in) financing activities on our Consolidated Statements of Cash Flows. See Note 13 - Stockholder Return Programs for more information about our 2022 Stock Repurchase Program and 2023-2024 Stockholder Return Program. Earnings Per Share Basic earnings per share is computed by dividing Net income attributable to common stockholders by the weighted-average number of common shares outstanding for the period. Diluted earnings per share is computed by giving effect to all potentially dilutive common shares outstanding during the period. Potentially dilutive common shares consist of outstanding stock options, RSUs and PRSUs, calculated using the treasury stock method. See Note 15 – Earnings Per Share for further information. Variable Interest Entities VIEs are entities that lack sufficient equity to permit the entity to finance its activities without additional subordinated financial support from other parties, have equity investors that do not have the ability to make significant decisions relating to the entity's operations through voting rights, do not have the obligation to absorb the expected losses or do not have the right to receive the residual returns of the entity. The most common type of VIE is a special purpose entity (“SPE”). SPEs are commonly used in securitization transactions in order to isolate certain assets and distribute the cash flows from those assets to investors. SPEs are generally structured to insulate investors from claims on the SPEs’ assets by creditors of other entities, including the creditors of the seller of the assets, these SPEs are commonly referred to as being bankruptcy remote. The primary beneficiary is required to consolidate the assets and liabilities of the VIE. The primary beneficiary is the party which has both the power to direct the activities of an entity that most significantly impact the VIE's economic performance, and through its interests in the VIE, the obligation to absorb losses or the right to receive benefits from the VIE which could potentially be significant to the VIE. In assessing which party is the primary beneficiary, all the facts and circumstances are considered, including each party’s role in establishing the VIE and its ongoing rights and responsibilities. This assessment includes, first, identifying the activities that most significantly impact the VIE’s economic performance; and second, identifying which party, if any, has power over those activities. In general, the parties that make the most significant decisions affecting the VIE (such as asset managers and servicers) or have the right to unilaterally remove those decision-makers are deemed to have the power to direct the activities of a VIE. We consolidate VIEs when we are deemed to be the primary beneficiary or when the VIE cannot be deconsolidated. See Note 4 – Sales of Certain Receivables , Note 8 – Debt and Note 9 – Tower Obligations for further information. 70 Index for Notes to the Consolidated Financial Statements Device Purchases Cash Flow Presentation We classify all device purchases, whether acquired for sale or lease, as operating cash outflows as our predominant strategy is to sell devices to customers rather than lease them. See Note 19 – Additional Financial Information for disclosures of Leased devices transferred from inventory to property and equipment and Returned leased devices transferred from property and equipment to inventory. Accounting Pronouncements Adopted During the Current Year Troubled Debt Restructurings and Vintage Disclosures In March 2022, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2022-02, “Financial Instruments—Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures.” The standard eliminates the accounting guidance within ASC 310-40 for troubled debt restructurings by creditors while enhancing disclosure requirements for certain loan refinancings and restructurings by creditors when a borrower is experiencing financial difficulty. Additionally, for public business entities, the standard requires disclosure of current-period gross write-offs by year of origination for financing receivables and net investments in leases within the scope of ASC 326-20. As of January 1, 2023, we have adopted this standard, and it was applied prospectively after this date. This standard did not have a material impact on our consolidated financial statements as of and for the year ended December 31, 2023. Accounting Pronouncements Not Yet Adopted Segment Reporting Disclosures In November 2023, the FASB issued ASU 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures.” The standard improves reportable segment disclosure requirements for public business entities primarily through enhanced disclosures about significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”) and included within each reported measure of segment profit (referred to as the “significant expense principle”). The standard will become effective for us for our fiscal year 2024 annual financial statements and interim financial statements thereafter and will be applied retrospectively for all prior periods presented in the financial statements, with early adoption permitted. We plan to adopt the standard when it becomes effective for us beginning in our fiscal year 2024 annual financial statements, and we are currently evaluating the impact this guidance will have on the disclosures included in the Notes to the Consolidated Financial Statements. Income Tax Disclosures In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures.” The standard enhances income tax disclosure requirements for all entities by requiring specified categories and greater disaggregation within the rate reconciliation table, disclosure of income taxes paid by jurisdiction, and providing clarification on uncertain tax positions and related financial statement impacts. The standard will be effective for us for our fiscal year 2025 annual financial statements with early adoption permitted. We plan to adopt the standard when it becomes effective for us beginning in our fiscal year 2025 annual financial statements, and we expect the adoption of the standard will impact certain of our income tax disclosures. Note 2 – Business Combinations Shenandoah Personal Communications Company Affiliate Relationship Sprint PCS (specifically Sprint Spectrum L.P.) was party to a variety of publicly filed agreements with Shentel, pursuant to which Shentel was the exclusive provider of Sprint PCS’s wireless mobility communications network products in certain parts of Maryland, North Carolina, Virginia, West Virginia, Kentucky, Ohio and Pennsylvania. Pursuant to one such agreement, the Sprint PCS Management Agreement, dated November 5, 1999 (as amended, supplemented and modified from time to time, the “Management Agreement”), Sprint PCS was granted an option to purchase Shentel’s Wireless Assets used to provide services pursuant to the Management Agreement. On August 26, 2020, Sprint, now our indirect subsidiary, on behalf of and as the direct or indirect owner of Sprint PCS, exercised its option by delivering a binding notice of exercise to Shentel. 71 Index for Notes to the Consolidated Financial Statements On May 28, 2021, T-Mobile USA, Inc., a Delaware corporation and our direct wholly owned subsidiary, entered into an Asset Purchase Agreement (the “Purchase Agreement”) with Shentel, for the acquisition of the Wireless Assets for an aggregate purchase price of approximately $ 1.9 billion in cash, subject to certain adjustments prescribed by the Management Agreement and such additional adjustments agreed by the parties. Closing of Shentel Wireless Assets Acquisition On July 1, 2021, upon the completion of certain customary conditions, including the receipt of certain regulatory approvals, we closed on the acquisition of the Wireless Assets pursuant to the Purchase Agreement, and as a result, T-Mobile became the legal owner of the Wireless Assets. Through this transaction, we reacquired the exclusive rights to deliver Sprint’s wireless network services in Shentel’s former affiliate territory and simplified our operations. Concurrently, and as agreed to through the Purchase Agreement, T-Mobile and Shentel entered into certain separate transactions, including the effective settlement of the pre-existing arrangements between T-Mobile and Shentel under the Management Agreement. In exchange, T-Mobile transferred cash of approximately $ 2.0 billion, approximately $ 1.9 billion of which was determined to be consideration transferred for the Wireless Assets and the remainder of which was determined to relate to separate transactions, primarily associated with the effective settlement of pre-existing arrangements between T-Mobile and Shentel. Accordingly, these separate transactions are not included in the calculation of the consideration transferred in exchange for the Wireless Assets, and the settlement of pre-existing arrangements between T-Mobile and Shentel did not result in material gains or losses. Prior to the acquisition of the Wireless Assets, revenues generated from our affiliate relationship with Shentel were presented as Wholesale and other service revenues. Upon the close of the transaction, revenues generated from postpaid customers within the reacquired territory are presented as Postpaid revenues on our Consolidated Statements of Comprehensive Income. The financial results of the Wireless Assets since the closing through December 31, 2021, were not material to our Consolidated Statements of Comprehensive Income, nor were they material to our prior period consolidated results on a pro forma basis. Fair Value of Assets Acquired and Liabilities Assumed We accounted for the acquisition of the Wireless Assets as a business combination. The identifiable assets acquired and liabilities assumed were recorded at their fair values as of the acquisition date and consolidated with those of T-Mobile. Assigning fair market values to the assets acquired and liabilities assumed at the date of an acquisition requires the use of significant judgment regarding estimates and assumptions. For the fair values of the assets acquired and liabilities assumed, we used the cost, income and market approaches, including market participant assumptions. The following table summarizes the fair values for each major class of assets acquired and liabilities assumed at the acquisition date. We retained the services of certified valuation specialists to assist with assigning values to certain acquired assets and assumed liabilities. (in millions) July 1, 2021 Inventory $ 2 Property and equipment 136 Operating lease right-of-use assets 308 Goodwill 1,035 Other intangible assets 770 Other assets 7 Total assets acquired 2,258 Short-term operating lease liabilities 73 Operating lease liabilities 264 Other long-term liabilities 35 Total liabilities assumed 372 Total consideration transferred $ 1,886 Intangible Assets and Liabilities Goodwill with an assigned value of $ 1.0 billion, substantially all of which is deductible for tax purposes, represents the anticipated cost savings from the operations of the combined company resulting from the planned integration of network infrastructure and facilities, the assembled workforce hired concurrently with the acquisition of Wireless Assets, and the 72 Index for Notes to the Consolidated Financial Statements intangible assets that do not qualify for separate recognition. All of the goodwill acquired is allocated to the wireless reporting unit. Other intangible assets include $ 770 million of reacquired rights to provide services in Shentel’s former affiliate territory, which is being amortized on a straight-line basis over a useful life of approximately nine years in line with the remaining term of the Management Agreement upon the acquisition of the Wireless Assets, which represents the period of expected economic benefits associated with the reacquisition of such rights. This fair value measurement is based on significant inputs not observable in the market, and therefore, represents a Level 3 measurement as defined in ASC 820. The key assumptions in applying the income approach include forecasted subscriber growth rates, revenue over an estimated period of time, the discount rate, estimated capital expenditures, estimated income taxes and the long-term growth rate, as well as forecasted earnings before interest, taxes, depreciation and amortization (“EBITDA”) margins. Acquisition of Ka’ena Corporation On March 9, 2023, we entered into a Merger and Unit Purchase Agreement (the “Merger and 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” and the “Ka’ena Acquisition”), 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. Note 3 – Receivables and Related Allowance for Credit Losses We maintain an allowance for credit losses by applying an expected credit loss model. Each period, management assesses the appropriateness of the level of allowance for credit losses by considering credit risk inherent within each portfolio segment as of the end of the period. We consider a receivable past due when a customer has not paid us by the contractually specified payment due date. Account balances are written off against the allowance for credit losses if collection efforts are unsuccessful and the receivable balance is deemed uncollectible (customer default), based on factors such as customer credit ratings as well as the length of time the amounts are past due. Our portfolio of receivables is comprised of two portfolio segments: accounts receivable and EIP receivables. Accounts Receivable Portfolio Segment Accounts receivable balances are predominately comprised of amounts currently due from customers (e.g., for wireless communications services), device insurance administrators, wholesale partners, other carriers and third-party retail channels. We estimate credit losses associated with our accounts receivable portfolio segment using an expected credit loss model, which utilizes an aging schedule methodology based on historical information and adjusted for asset-specific considerations, current economic conditions and reasonable and supportable forecasts. Our approach considers a number of factors, including our overall historical credit losses and payment experience, as well as current collection trends such as write-off frequency and severity. We also consider other qualitative factors such as current and forecasted macroeconomic conditions. We consider the need to adjust our estimate of credit losses for reasonable and supportable forecasts of future macroeconomic conditions. To do so, we monitor external forecasts of changes in real U.S. gross domestic product and forecasts of consumer credit behavior for comparable credit exposures. 73 Index for Notes to the Consolidated Financial Statements EIP Receivables Portfolio Segment Based upon customer credit profiles at the time of customer origination, as well as subsequent credit performance, we classify the EIP receivables segment into two customer classes of “Prime” and “Subprime.” Prime customer receivables are those with lower credit risk and Subprime customer receivables are those with higher credit risk. Customers may be required to make a down payment on their equipment purchases if their assessed credit risk exceeds established underwriting thresholds. In addition, certain customers within the Subprime category may be required to pay a deposit. To determine a customer’s credit profile and assist in determining their credit class, we use a proprietary credit scoring model that measures the credit quality of a customer leveraging several factors, such as credit bureau information and consumer credit risk scores, as well as service and device plan characteristics. As of December 31, 2023, we enhanced our proprietary credit scoring model to more fully reflect current payment performance in the assigned credit score by enabling migration between the Prime and Subprime credit class categories, which aligns with our expected credit loss model methodology. The impact of this change was a net migration of approximately 12 % of the EIP receivables from Subprime to the Prime credit class category. As our credit loss model already captured current payment performance, this change did not have a significant impact on our estimated expected credit losses. EIP receivables had a combined weighted-average effective interest rate of 10.6 % and 8.0 % as of December 31, 2023, and 2022, respectively. The following table summarizes the EIP receivables, including imputed discounts and related allowance for credit losses: (in millions) December 31, 2023 December 31, 2022 EIP receivables, gross $ 7,271 $ 8,480 Unamortized imputed discount ( 505 ) ( 483 ) EIP receivables, net of unamortized imputed discount 6,766 7,997 Allowance for credit losses ( 268 ) ( 328 ) EIP receivables, net of allowance for credit losses and imputed discount $ 6,498 $ 7,669 Classified on our consolidated balance sheets as: Equipment installment plan receivables, net of allowance for credit losses and imputed discount $ 4,456 $ 5,123 Equipment installment plan receivables due after one year, net of allowance for credit losses and imputed discount 2,042 2,546 EIP receivables, net of allowance for credit losses and imputed discount $ 6,498 $ 7,669 Many of our loss estimation techniques rely on delinquency-based models; therefore, delinquency is an important indicator of credit quality in the establishment of our allowance for credit losses for EIP receivables. We manage our EIP receivables portfolio segment using delinquency and customer credit class as key credit quality indicators. The following table presents the amortized cost of our EIP receivables by delinquency status, customer credit class and year of origination as of December 31, 2023: Originated in 2023 Originated in 2022 Originated prior to 2022 Total EIP Receivables, Net of Unamortized Imputed Discount (in millions) Prime Subprime Prime Subprime Prime Subprime Prime Subprime Total Current - 30 days past due $ 3,925 $ 987 $ 1,129 $ 304 $ 253 $ 40 $ 5,307 $ 1,331 $ 6,638 31 - 60 days past due 13 23 7 7 1 1 21 31 52 61 - 90 days past due 9 16 6 5 1 1 16 22 38 More than 90 days past due 8 13 6 7 2 2 16 22 38 EIP receivables, net of unamortized imputed discount $ 3,955 $ 1,039 $ 1,148 $ 323 $ 257 $ 44 $ 5,360 $ 1,406 $ 6,766 We estimate credit losses on our EIP receivables segment by applying an expected credit loss model, which relies on historical loss data adjusted for current conditions to calculate default probabilities or an estimate for the frequency of customer default. Our assessment of default probabilities or frequency includes receivables delinquency status, historical loss experience, how 74 Index for Notes to the Consolidated Financial Statements long the receivables have been outstanding and customer credit ratings, as well as customer tenure. We multiply these estimated default probabilities by our estimated loss given default, which is the estimated amount of default or the severity of loss. As we do for our accounts receivable portfolio segment, we consider the need to adjust our estimate of credit losses on EIP receivables for reasonable and supportable forecasts of economic conditions through monitoring external forecasts and periodic internal statistical analyses. The following table presents write-offs of our EIP receivables by year of origination for the year ended December 31, 2023: (in millions) Originated in 2023 Originated in 2022 Originated prior to 2022 Total Write-offs Write-offs $ 174 $ 284 $ 60 $ 518 Activity for the years ended December 31, 2023, 2022 and 2021, in the allowance for credit losses and unamortized imputed discount balances for the accounts receivable and EIP receivables segments were as follows: December 31, 2023 December 31, 2022 December 31, 2021 (in millions) Accounts Receivable Allowance EIP Receivables Allowance Total Accounts Receivable Allowance EIP Receivables Allowance Total Accounts Receivable Allowance EIP Receivables Allowance Total Allowance for credit losses and imputed discount, beginning of period $ 167 $ 811 $ 978 $ 146 $ 630 $ 776 $ 194 $ 605 $ 799 Bad debt expense 440 458 898 433 593 1,026 231 221 452 Write-offs ( 446 ) ( 518 ) ( 964 ) ( 412 ) ( 518 ) ( 930 ) ( 279 ) ( 248 ) ( 527 ) Change in imputed discount on short-term and long-term EIP receivables N/A 220 220 N/A 262 262 N/A 187 187 Impact on the imputed discount from sales of EIP receivables N/A ( 198 ) ( 198 ) N/A ( 156 ) ( 156 ) N/A ( 135 ) ( 135 ) Allowance for credit losses and imputed discount, end of period $ 161 $ 773 $ 934 $ 167 $ 811 $ 978 $ 146 $ 630 $ 776 Off-Balance-Sheet Credit Exposures We do not have material off-balance-sheet credit exposures as of December 31, 2023. In connection with the sales of certain service accounts receivable and EIP receivables pursuant to the sale arrangements, we have deferred purchase price assets included on our Consolidated Balance Sheets measured at fair value that are based on a discounted cash flow model using Level 3 inputs, including customer default rates and credit worthiness, dilutions and recoveries. See Note 4 – Sales of Certain Receivables for further information. Note 4 – Sales of Certain Receivables We regularly enter into transactions to sell certain service accounts receivable and EIP receivables. The transactions, including our continuing involvement with the sold receivables and the respective impacts to our consolidated financial statements, are described below. Sales of EIP Receivables Overview of the Transaction In 2015, we entered into an arrangement to sell certain EIP receivables on a revolving basis (the “EIP sale arrangement”). The maximum funding commitment of the sale arrangement is $ 1.3 billion. On November 14, 2023, we extended the scheduled expiration date of the EIP sale arrangement to November 18, 2024. As of both December 31, 2023 and 2022, the EIP sale arrangement provided funding of $ 1.3 billion. Sales of EIP receivables occur daily and are settled on a monthly basis. 75 Index for Notes to the Consolidated Financial Statements In connection with this EIP sale arrangement, we formed a wholly owned subsidiary, which qualifies as a bankruptcy remote entity (the “EIP BRE”). Pursuant to the EIP sale arrangement, selected receivables are transferred to the EIP BRE. The EIP BRE then sells the receivables to a non-consolidated and unaffiliated third-party entity over which we do not exercise any level of control, nor does the third-party entity qualify as a VIE. Variable Interest Entity We determined that the EIP BRE is a VIE as its equity investment at risk lacks the obligation to absorb a certain portion of its expected losses. We have a variable interest in the EIP BRE and have determined that we are the primary beneficiary based on our ability to direct the activities which most significantly impact the EIP BRE’s economic performance. Those activities include selecting which receivables are transferred into the EIP BRE and sold in the EIP sale arrangement and funding of the EIP BRE. Additionally, our equity interest in the EIP BRE obligates us to absorb losses and gives us the right to receive benefits from the EIP BRE that could potentially be significant to the EIP BRE. Accordingly, we include the balances and results of operations of the EIP BRE on our consolidated financial statements. The following table summarizes the carrying amounts and classification of assets, which consist primarily of the deferred purchase price, included on our Consolidated Balance Sheets with respect to the EIP BRE: (in millions) December 31, 2023 December 31, 2022 Other current assets $ 348 $ 344 Other assets 103 136 In addition, the EIP BRE is a separate legal entity with its own separate creditors who will be entitled, prior to any liquidation of the EIP BRE, to be satisfied prior to any value in the EIP BRE becoming available to us. Accordingly, the assets of the EIP BRE may not be used to settle our general obligations and creditors of the EIP BRE have limited recourse to our general credit. Sales of Service Accounts Receivable Overview of the Transaction In 2014, we entered into an arrangement to sell certain service accounts receivable on a revolving basis (the “service receivable sale arrangement”). The maximum funding commitment of the service receivable sale arrangement is $ 950 million and the facility expires in February 2024. As of both December 31, 2023 and 2022, the service receivable sale arrangement provided funding of $ 775 million. Sales of receivables occur daily and are settled on a monthly basis. The receivables consist of service charges currently due from customers and are short-term in nature. In connection with the service receivable sale arrangement, we formed a wholly owned subsidiary, which qualifies as a bankruptcy remote entity, to sell service accounts receivable (the “Service BRE”). Pursuant to the amended service receivable sale arrangement, selected receivables are transferred to the Service BRE. The Service BRE then sells the receivables to a non-consolidated and unaffiliated third-party entity over which we do not exercise any level of control and which does not qualify as a VIE. Variable Interest Entity We determined that the Service BRE is a VIE, as its equity investment at risk lacks the obligation to absorb a certain portion of expected losses. We have a variable interest in the Service BRE and have determined that we are the primary beneficiary based on our ability to direct the activities that most significantly impact the Service BRE’s economic performance. Those activities include selecting which receivables are transferred into the Service BRE and sold in the service receivable sale arrangement and funding the Service BRE. Additionally, our equity interest in the Service BRE obligates us to absorb losses and gives us the right to receive benefits from the Service BRE that could potentially be significant to the Service BRE. Accordingly, we include the balances and results of operations of the Service BRE on our consolidated financial statements. 76 Index for Notes to the Consolidated Financial Statements The following table summarizes the carrying amounts and classification of assets, which consist primarily of the deferred purchase price, and liabilities included on our Consolidated Balance Sheets with respect to the Service BRE: (in millions) December 31, 2023 December 31, 2022 Other current assets $ 209 $ 214 Other current liabilities 373 389 In addition, the Service BRE is a separate legal entity with its own separate creditors who will be entitled, prior to any liquidation of the Service BRE, to be satisfied prior to any value in the Service BRE becoming available to us. Accordingly, the assets of the Service BRE may not be used to settle our general obligations, and creditors of the Service BRE have limited recourse to our general credit. Sales of Receivables The transfers of service accounts receivable and EIP receivables to the non-consolidated entities are accounted for as sales of financial assets. Once identified for sale, the receivable is recorded at the lower of cost or fair value. Upon sale, we derecognize the net carrying amount of the receivables. We recognize the cash proceeds received upon sale in Net cash provided by operating activities on our Consolidated Statements of Cash Flows. We recognize proceeds net of the deferred purchase price, consisting of a receivable from the purchasers that entitles us to certain collections on the receivables. We recognize the collection of the deferred purchase price in Net cash used in investing activities on our Consolidated Statements of Cash Flows as Proceeds related to beneficial interests in securitization transactions. The deferred purchase price represents a financial asset that is primarily tied to the creditworthiness of the customers and which can be settled in such a way that we may not recover substantially all of our recorded investment, due to default by the customers on the underlying receivables. At inception, we elected to measure the deferred purchase price at fair value with changes in fair value included in Selling, general and administrative expense on our Consolidated Statements of Comprehensive Income. The fair value of the deferred purchase price is determined based on a discounted cash flow model which uses primarily Level 3 inputs, including customer default rates. As of December 31, 2023 and 2022, our deferred purchase price related to the sales of service receivables and EIP receivables was $ 658 million and $ 692 million, respectively. The following table summarizes the impact of the sales of certain service receivables and EIP receivables on our Consolidated Balance Sheets: (in millions) December 31, 2023 December 31, 2022 Derecognized net service accounts receivable and EIP receivables $ 2,388 $ 2,410 Other current assets 557 558 of which, deferred purchase price 555 556 Other long-term assets 103 136 of which, deferred purchase price 103 136 Other current liabilities 373 389 Net cash proceeds since inception 1,583 1,697 Of which: Change in net cash proceeds during the year-to-date period ( 114 ) ( 57 ) Net cash proceeds funded by reinvested collections 1,697 1,754 We recognized losses from sales of receivables, including changes in fair value of the deferred purchase price, of $ 165 million, $ 214 million and $ 15 million for the years ended December 31, 2023, 2022 and 2021, respectively, in Selling, general and administrative expense on our Consolidated Statements of Comprehensive Income. As of both December 31, 2023 and 2022, the total principal balance of outstanding transferred service receivables and EIP receivables was $ 1.0 billion. Continuing Involvement Pursuant to the sale arrangements described above, we have continuing involvement with the service accounts receivable and EIP receivables we sell as we service the receivables, are required to repurchase certain receivables, including ineligible 77 Index for Notes to the Consolidated Financial Statements receivables, aged receivables and receivables where a write-off is imminent, and may be responsible for absorbing credit losses through reduced collections on our deferred purchase price assets. We continue to service the customers and their related receivables, including facilitating customer payment collection, in exchange for a monthly servicing fee. As the receivables are sold on a revolving basis, the customer payment collections on sold receivables may be reinvested in new receivable sales. At the direction of the purchasers of the sold receivables, we apply the same policies and procedures while servicing the sold receivables as we apply to our owned receivables, and we continue to maintain normal relationships with our customers. Note 5 – Property and Equipment The components of property and equipment, excluding amounts transferred to held for sale, were as follows: (in millions) Useful Lives December 31, 2023 December 31, 2022 Land $ 72 $ 109 Buildings and equipment Up to 30 years 4,465 4,659 Wireless communications systems Up to 20 years 65,628 61,738 Leasehold improvements Up to 10 years 2,489 2,326 Capitalized software Up to 10 years 22,573 20,342 Leased wireless devices Up to 16 months 400 1,415 Construction in progress N/A 3,286 4,599 Accumulated depreciation and amortization ( 58,481 ) ( 53,102 ) Property and equipment, net $ 40,432 $ 42,086 Total depreciation expense relating to property and equipment and financing lease right-of-use assets was $ 12.0 billion, $ 12.7 billion and $ 15.2 billion for the years ended December 31, 2023, 2022 and 2021, respectively. These amounts include depreciation expense related to leased wireless devices of $ 170 million, $ 1.1 billion and $ 3.1 billion for the years ended December 31, 2023, 2022 and 2021, respectively. We capitalize interest associated with the acquisition or construction of certain property and equipment and spectrum intangible assets. We recognized capitalized interest of $ 104 million, $ 61 million and $ 210 million for the years ended December 31, 2023, 2022 and 2021, respectively. Asset retirement obligations are primarily for certain legal obligations to remediate leased property on which our network infrastructure and administrative assets are located. Activity in our asset retirement obligations was as follows: (in millions) Year Ended December 31, 2023 Year Ended December 31, 2022 Asset retirement obligations, beginning of year $ 1,852 $ 1,899 Liabilities incurred 28 10 Liabilities settled ( 399 ) ( 379 ) Accretion expense 71 65 Changes in estimated cash flows 164 292 Transfers to held for sale — ( 35 ) Asset retirement obligations, end of period $ 1,716 $ 1,852 Classified on the consolidated balance sheets as: Other current liabilities $ 133 $ 267 Other long-term liabilities 1,583 1,585 The corresponding assets, net of accumulated depreciation and excluding amounts transferred to held for sale, related to asset retirement obligations were $ 462 million and $ 546 million as of December 31, 2023 and 2022, respectively. Wireline Impairment Previously, the operation of the legacy Sprint CDMA and LTE wireless networks was supported by the legacy Sprint Wireline network. During the second quarter of 2022, we retired the legacy Sprint CDMA network and began the orderly shut-down of the LTE network. We determined that the retirement of the legacy Sprint CDMA and LTE wireless networks triggered the need to assess the Wireline long-lived assets for impairment, as these assets no longer supported our wireless network and the 78 Index for Notes to the Consolidated Financial Statements associated customers and cash flows in a significant manner. The results of this assessment indicated that certain Wireline long-lived assets were impaired. See Note 14 – Wireline for further information. Note 6 – Goodwill, Spectrum License Transactions and Other Intangible Assets Goodwill The changes in the carrying amount of goodwill for the years ended December 31, 2023 and 2022, are as follows: (in millions) Goodwill Balance as of December 31, 2021, net of accumulated impairment losses of $ 10,984 $ 12,188 Goodwill from acquisitions in 2022 46 Balance as of December 31, 2022 12,234 Balance as of December 31, 2023 $ 12,234 Accumulated impairment losses at December 31, 2023 $ ( 10,984 ) Goodwill Impairment Assessment Certain non-financial assets, including goodwill and indefinite-lived intangible assets such as Spectrum licenses, are not required to be measured at fair value on a recurring basis and are reported at carrying value. However, these assets are required to be assessed for impairment when events or circumstances indicate that carrying value may not be recoverable, and at least annually for goodwill and indefinite-lived intangible assets. The nonrecurring measurements of the fair value of these assets, for which observable market information may be limited, are classified within Level 3 of the fair value hierarchy. In the event an impairment is required, the asset is adjusted to its estimated fair value using market-based assumptions, to the extent they are available, as well as other assumptions that may require significant judgment. For our annual assessment of the wireless reporting unit, we employed a qualitative approach. The fair value of the wireless reporting unit was estimated using a market approach, which is based on market capitalization. In addition to performing an assessment under the market approach we also considered any events or change in circumstances that occurred, noting no indication that the fair value of the wireless reporting unit may be below its carrying amount at December 31, 2023. Intangible Assets Identifiable Intangible Assets Acquired in the Shentel Acquisition We reacquired certain rights under the Management Agreement in connection with the acquisition of the Wireless Assets that provided us the ability to fully do business in Shentel’s former affiliate territories. We recognized an intangible asset for these reacquired rights at its fair value of $ 770 million as of July 1, 2021. The reacquired rights intangible asset is being amortized on a straight-line basis over a useful life of approximately nine years in line with the remaining term of the Management Agreement upon the acquisition of the Wireless Assets. Spectrum Licenses The following table summarizes our spectrum license activity for the years ended December 31, 2023, 2022 and 2021: (in millions) 2023 2022 2021 Spectrum licenses, beginning of year $ 95,798 $ 92,606 $ 82,828 Spectrum license acquisitions 103 3,152 9,545 Spectrum licenses transferred to held for sale ( 2 ) ( 64 ) ( 28 ) Costs to clear spectrum 808 104 261 Spectrum licenses, end of year $ 96,707 $ 95,798 $ 92,606 Spectrum Transactions 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. 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. 79 Index for Notes to the Consolidated Financial Statements In September 2022, the FCC announced that we were the winning bidder of 7,156 licenses in Auction 108 (2.5 GHz spectrum) for an aggregate price of $ 304 million. At inception of Auction 108 in June 2022, we deposited $ 65 million. We paid the FCC the remaining $ 239 million for the licenses won in the auction in September 2022. The aggregate cash payments made to the FCC are included in Other assets on our Consolidated Balance Sheets as of December 31, 2023, and will remain there until the corresponding licenses are received. The timing of when the licenses will be issued will be determined by the FCC after all post-auction procedures have been completed, 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, the Auction 108 licenses are expected to be issued in the first quarter of 2024. As of December 31, 2023, the activities that are necessary to get the 3.45 GHz and 2.5 GHz spectrum acquired pursuant to FCC Auctions 110 and 108, respectively, ready for its intended use have not begun; as such, capitalization of the interest associated with the costs of deploying these spectrum licenses has not begun. During the year ended December 31, 2023, we capitalized interest on the costs of our C-band spectrum licenses, acquired pursuant to FCC Auction 107, during the period that development activities occurred. License Purchase Agreements DISH Network Corporation On July 1, 2020, we and DISH Network Corporation (“DISH”) entered into a License Purchase Agreement (the “DISH License Purchase Agreement”) pursuant to which DISH agreed to purchase certain 800 MHz spectrum licenses for a total of approximately $ 3.6 billion. The closing of the sale of spectrum under the DISH License Purchase Agreement remains subject to FCC approval. On October 15, 2023, we and DISH entered into an amendment (the “LPA Amendment”) to the DISH License Purchase Agreement pursuant to which, among other things, the parties agreed that (1) DISH will pay us a $ 100 million non-refundable extension fee (in lieu of the approximately $ 72 million termination fee that had previously been agreed to), (2) the closing for the purchase of the spectrum licenses by DISH will occur no later than April 1, 2024, (3) if DISH has not purchased the spectrum licenses by such date for any reason (including failure to receive the required FCC approval prior to such date), then the DISH License Purchase Agreement will automatically terminate, and we will retain the $ 100 million extension fee, (4) if DISH does purchase the spectrum by April 1, 2024, the $ 100 million extension fee will be credited against the $ 3.6 billion purchase price, and (5) we are permitted to commence auction of the spectrum prior to April 1, 2024 at our discretion (and subject to DISH’s purchase right). The LPA Amendment was approved by the Court and became effective on October 23, 2023. On October 25, 2023, we received a payment of $ 100 million from DISH for the extension fee and recorded a corresponding liability within Other current liabilities on our Consolidated Balance Sheets. If DISH does not, by April 1, 2024, purchase the 800 MHz spectrum licenses, we are required, unless otherwise approved by the U.S. Department of Justice under the final judgment agreed to by us, Deutsche Telekom AG (“DT”), Sprint, SoftBank Group Corp. (“SoftBank”) and DISH with the U.S. District Court for the District of Columbia, which was approved by the Court on April 1, 2020, to offer the licenses for sale through an auction. If the specified minimum price of $ 3.6 billion is not met in the auction, we would be relieved of the obligation to sell the licenses. Channel 51 License Co LLC and LB License Co, LLC On August 8, 2022, we, Channel 51 License Co LLC and LB License Co, LLC (together with Channel 51 License Co LLC, the “Sellers”) entered into License Purchase Agreements pursuant to which we will acquire spectrum in the 600 MHz band from the Sellers in exchange for total cash consideration of $ 3.5 billion. The licenses will be acquired without any associated networks and are currently being utilized by us through exclusive leasing arrangements with the Sellers. On March 30, 2023, we and the Sellers entered into Amended and Restated License Purchase Agreements pursuant to which we and the Sellers agreed to separate the transaction into two tranches of licenses, with the closings on the acquisitions of certain licenses in Chicago, Dallas and New Orleans being deferred in order to potentially expedite the regulatory approval process for the remainder of the licenses. Subsequently, on August 25, 2023, we and the Sellers entered into Amendments No. 1 to the Amended and Restated License Purchase Agreements, which deferred the closings of certain additional licenses in Chicago and Dallas into the second closing tranche. Together, the licenses with closings deferred into the second closing tranche represent $ 1.1 billion of the aggregate $ 3.5 billion cash consideration. The licenses being acquired by us, and the total consideration being paid for the licenses, remains the same under the original License Purchase Agreements and subsequent amendments. 80 Index for Notes to the Consolidated Financial Statements 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. Comcast Corporation On September 12, 2023, we entered into a License Purchase Agreement with Comcast Corporation and its affiliate, Comcast OTR1, LLC (together with Comcast Corporation, “Comcast”), pursuant to which we will acquire spectrum in the 600 MHz band from Comcast in exchange for total cash consideration of between $ 1.2 billion and $ 3.3 billion, subject to an application for FCC approval. The licenses will be acquired without any associated networks. We anticipate the closing will occur in the first half of 2028. The final purchase price will be determined, in the aggregate and on a per license basis, based on the set of licenses subject to the License Purchase Agreement at the time the parties make required transfer filings with the FCC. Prior to the time of such filings, Comcast has the right to remove any or all of a certain specified subset of the licenses, totaling $ 2.1 billion (the “Optional Sale Licenses”), from the License Purchase Agreement. The removal of any Optional Sale Licenses would reduce the final purchase price by the assigned value of each such license, from the maximum purchase price of $ 3.3 billion. The licenses are subject to an exclusive leasing arrangement between us and Comcast entered into contemporaneously with the License Purchase Agreement. If Comcast elects to remove an Optional Sale License from the License Purchase Agreement, the associated lease for such Optional Sale License will terminate, but no sooner than two years from the date of the License Purchase Agreement (with us having a minimum period of time after any such termination to cease transmitting on such license’s associated spectrum). Impairment Assessment For our assessment of Spectrum license impairment, we employed a qualitative approach. No events or change in circumstances have occurred that indicate the fair value of the Spectrum licenses may be below its carrying amount at December 31, 2023. Other Intangible Assets The components of Other intangible assets were as follows: Useful Lives December 31, 2023 December 31, 2022 (in millions) Gross Amount Accumulated Amortization Net Amount Gross Amount Accumulated Amortization Net Amount Customer relationships Up to 8 years $ 4,883 $ ( 3,451 ) $ 1,432 $ 4,883 $ ( 2,732 ) $ 2,151 Reacquired rights Up to 9 years 770 ( 231 ) 539 770 ( 139 ) 631 Tradenames and patents Up to 19 years 208 ( 134 ) 74 196 ( 117 ) 79 Favorable spectrum leases Up to 27 years 686 ( 148 ) 538 705 ( 113 ) 592 Other Up to 10 years 353 ( 318 ) 35 353 ( 298 ) 55 Other intangible assets $ 6,900 $ ( 4,282 ) $ 2,618 $ 6,907 $ ( 3,399 ) $ 3,508 Amortization expense for intangible assets subject to amortization was $ 888 million, $ 1.2 billion and $ 1.3 billion for the years ended December 31, 2023, 2022 and 2021, respectively. 81 Index for Notes to the Consolidated Financial Statements The estimated aggregate future amortization expense for intangible assets subject to amortization is summarized below: (in millions) Estimated Future Amortization Twelve Months Ending December 31, 2024 $ 722 2025 570 2026 417 2027 290 2028 171 Thereafter 448 Total $ 2,618 Substantially all of the estimated future amortization expense is associated with intangible assets acquired in the Merger and through our acquisitions of affiliates. Note 7 – Fair Value Measurements The carrying values of Cash and cash equivalents, Accounts receivable and Accounts payable and accrued liabilities approximate fair value due to the short-term maturities of these instruments. The carrying values of EIP receivables approximate fair value as the receivables are recorded at their present value using an imputed interest rate. Derivative Financial Instruments Periodically, we use derivatives to manage exposure to market risk, such as interest rate risk. We designate certain derivatives as hedging instruments in a qualifying hedge accounting relationship to help minimize significant, unplanned fluctuations in cash flows or fair values caused by designated market risks, such as interest rate volatility. We do not use derivatives for trading or speculative purposes. Cash flows associated with qualifying hedge derivative instruments are presented in the same category on our Consolidated Statements of Cash Flows as the item being hedged. For fair value hedges, the change in the fair value of the derivative instruments is recognized in earnings through the same income statement line item as the change in the fair value of the hedged item. For cash flow hedges, the change in the fair value of the derivative instruments is reported in Other comprehensive income and recognized in earnings when the hedged item is recognized in earnings, again, through the same income statement line item. We did not have any significant derivative instruments outstanding as of December 31, 2023 and 2022. Interest Rate Lock Derivatives In April 2020, we terminated our interest rate lock derivatives entered into in October 2018. Aggregate changes in the fair value of the interest rate lock derivatives, net of tax and amortization, of $ 1.1 billion and $ 1.3 billion are presented in Accumulated other comprehensive loss on our Consolidated Balance Sheets as of December 31, 2023 and 2022, respectively. For the years ended December 31, 2023, 2022 and 2021, $ 219 million, $ 203 million and $ 189 million, respectively, were amortized from Accumulated other comprehensive loss into Interest expense, net, on our Consolidated Statements of Comprehensive Income. We expect to amortize $ 236 million of the Accumulated other comprehensive loss associated with the derivatives into Interest expense, net, over the 12 months ending December 31, 2024. Deferred Purchase Price Assets In connection with the sales of certain service and EIP accounts receivable pursuant to the sale arrangements, we have deferred purchase price assets measured at fair value that are based on a discounted cash flow model using unobservable Level 3 inputs, including customer default rates. See Note 4 – Sales of Certain Receivables for further information. 82 Index for Notes to the Consolidated Financial Statements The carrying amounts of our deferred purchase price assets, which are measured at fair value on a recurring basis and are included on our Consolidated Balance Sheets, were $ 658 million and $ 692 million as of December 31, 2023 and 2022, respectively. Debt The fair value of our Senior Notes and spectrum-backed Senior Secured Notes to third parties was determined based on quoted market prices in active markets, and therefore were classified as Level 1 within the fair value hierarchy. The fair value of our Senior Notes to affiliates was determined based on a discounted cash flow approach using market interest rates of instruments with similar terms and maturities and an estimate for our standalone credit risk. Accordingly, our Senior Notes to affiliates were classified as Level 2 within the fair value hierarchy. The fair value of our asset-backed notes (“ABS Notes”) was primarily based on quoted prices in inactive markets for identical instruments and observable changes in market interest rates, both of which are Level 2 inputs. Accordingly, our ABS Notes were classified as Level 2 within the fair value hierarchy. Although we have determined the estimated fair values using available market information and commonly accepted valuation methodologies, judgment was required in interpreting market data to develop fair value estimates for the Senior Notes to affiliates and ABS Notes. The fair value estimates were based on information available as of December 31, 2023, and 2022. As such, our estimates are not necessarily indicative of the amount we could realize in a current market exchange. The carrying amounts and fair values of our short-term and long-term debt included on our Consolidated Balance Sheets were as follows: (in millions) Level within the Fair Value Hierarchy December 31, 2023 December 31, 2022 Carrying Amount Fair Value Carrying Amount (1) Fair Value (1) Liabilities: Senior Notes to third parties 1 $ 70,493 $ 65,962 $ 66,582 $ 59,011 Senior Notes to affiliates 2 1,496 1,499 1,495 1,460 Senior Secured Notes to third parties 1 2,281 2,207 3,117 2,984 ABS Notes to third parties 2 748 748 746 744 (1) Excludes $ 20 million as of December 31, 2022, in other financial liabilities as the carrying values approximate fair value, primarily due to the short-term maturities of these instruments. 83 Index for Notes to the Consolidated Financial Statements Note 8 – Debt Debt was as follows: (in millions) December 31, 2023 December 31, 2022 7.875 % Senior Notes due 2023 $ — $ 4,250 7.125 % Senior Notes due 2024 2,500 2,500 3.500 % Senior Notes due 2025 3,000 3,000 4.738 % Series 2018-1 A-1 Notes due 2025 656 1,181 7.625 % Senior Notes due 2025 1,500 1,500 1.500 % Senior Notes due 2026 1,000 1,000 2.250 % Senior Notes due 2026 1,800 1,800 2.625 % Senior Notes due 2026 1,200 1,200 7.625 % Senior Notes due 2026 1,500 1,500 3.750 % Senior Notes due 2027 4,000 4,000 5.375 % Senior Notes due 2027 500 500 2.050 % Senior Notes due 2028 1,750 1,750 4.750 % Senior Notes due 2028 1,500 1,500 4.750 % Senior Notes to affiliates due 2028 1,500 1,500 4.800 % Senior Notes due 2028 900 — 4.910 % Class A Senior ABS Notes due 2028 750 750 4.950 % Senior Notes due 2028 1,000 — 5.152 % Series 2018-1 A-2 Notes due 2028 1,562 1,838 6.875 % Senior Notes due 2028 2,475 2,475 2.400 % Senior Notes due 2029 500 500 2.625 % Senior Notes due 2029 1,000 1,000 3.375 % Senior Notes due 2029 2,350 2,350 3.875 % Senior Notes due 2030 7,000 7,000 2.250 % Senior Notes due 2031 1,000 1,000 2.550 % Senior Notes due 2031 2,500 2,500 2.875 % Senior Notes due 2031 1,000 1,000 3.500 % Senior Notes due 2031 2,450 2,450 2.700 % Senior Notes due 2032 1,000 1,000 8.750 % Senior Notes due 2032 2,000 2,000 5.050 % Senior Notes due 2033 2,600 — 5.200 % Senior Notes due 2033 1,250 1,250 5.750 % Senior Notes due 2034 1,000 — 4.375 % Senior Notes due 2040 2,000 2,000 3.000 % Senior Notes due 2041 2,500 2,500 4.500 % Senior Notes due 2050 3,000 3,000 3.300 % Senior Notes due 2051 3,000 3,000 3.400 % Senior Notes due 2052 2,800 2,800 5.650 % Senior Notes due 2053 1,750 1,000 5.750 % Senior Notes due 2054 1,250 — 6.000 % Senior Notes due 2054 1,000 — 3.600 % Senior Notes due 2060 1,700 1,700 5.800 % Senior Notes due 2062 750 750 Other debt — 20 Unamortized premium on debt to third parties 1,011 1,335 Unamortized discount on debt to third parties ( 223 ) ( 199 ) Debt issuance costs and consent fees ( 263 ) ( 240 ) Total debt 75,018 71,960 Less: Current portion of Senior Notes to affiliates — — Less: Current portion of Senior Notes and other debt to third parties 3,619 5,164 Total long-term debt $ 71,399 $ 66,796 Classified on the consolidated balance sheets as: Long-term debt $ 69,903 $ 65,301 Long-term debt to affiliates 1,496 1,495 Total long-term debt $ 71,399 $ 66,796 84 Index for Notes to the Consolidated Financial Statements Our effective interest rate, excluding the impact of derivatives and capitalized interest, was approximately 4.0 % and 3.9 % on weighted-average debt outstanding of $ 75.4 billion and $ 72.5 billion for the years ended December 31, 2023 and 2022, respectively. The weighted-average debt outstanding was calculated by applying an average of the monthly ending balances of total short-term and long-term debt and short-term and long-term debt to affiliates, net of unamortized premiums, discounts, debt issuance costs and consent fees. Senior Notes The Senior Notes are guaranteed on a senior unsecured basis by the Company and certain of our consolidated subsidiaries. They are redeemable at our discretion, in whole or in part, at any time. The redemption price is calculated by reference to date on which such notes are redeemed and generally includes a premium that steps down gradually as the Senior Notes approach their par call date, on or after which they are redeemable at par. The amount of time by which the par call date precedes the maturity date of the respective series of Senior Notes varies from one to three years . Issuances and Borrowings During the year ended December 31, 2023, we issued the following Senior Notes: (in millions) Principal Issuances Premiums/Discounts and Issuance Costs Net Proceeds from Issuance of Long-Term Debt Issue Date 4.950 % Senior Notes due 2028 $ 1,000 $ ( 6 ) $ 994 February 9, 2023 5.050 % Senior Notes due 2033 1,250 ( 9 ) 1,241 February 9, 2023 5.650 % Senior Notes due 2053 750 26 776 February 9, 2023 4.800 % Senior Notes due 2028 900 ( 5 ) 895 May 11, 2023 5.050 % Senior Notes due 2033 1,350 ( 28 ) 1,322 May 11, 2023 5.750 % Senior Notes due 2054 1,250 ( 16 ) 1,234 May 11, 2023 5.750 % Senior Notes due 2034 1,000 ( 6 ) 994 September 14, 2023 6.000 % Senior Notes due 2054 1,000 ( 10 ) 990 September 14, 2023 Total of Senior Notes issued $ 8,500 $ ( 54 ) $ 8,446 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. We intend to use the net proceeds of $ 3.0 billion for general corporate purposes, which may include among other things, share repurchases, any dividends declared by our Board of Directors and refinancing of existing indebtedness on an ongoing basis. Credit Facilities On October 17, 2022, we entered into an Amended and Restated Credit Agreement (the “October 2022 Credit Agreement”) with certain financial institutions named therein. The October 2022 Credit Agreement amends and restates in its entirety the Credit Agreement originally dated April 1, 2020, and provides for a $ 7.5 billion revolving credit facility, including a letter of credit sub-facility of up to $ 1.5 billion, and a swingline loan sub-facility of up to $ 500 million. Commitments under the October 2022 Credit Agreement will mature on October 17, 2027, except as otherwise extended or replaced. Borrowings under the October 2022 Credit Agreement will bear interest based upon the applicable benchmark rate, depending on the type of loan and, in some cases, at our election, plus a margin that is determined by reference to the credit rating of T-Mobile USA’s senior unsecured long-term debt. The October 2022 Credit Agreement contains customary representations, warranties and covenants, including a financial maintenance covenant of 4.5 x with respect to T-Mobile USA, Inc.’s Leverage Ratio (as defined therein) commencing with the period ended December 31, 2022. As of December 31, 2023 and 2022, we did not have an outstanding balance under this facility. 85 Index for Notes to the Consolidated Financial Statements Note Redemption and Repayments During the year ended December 31, 2023, we made the following note redemption and repayments: (in millions) Principal Amount Redemption or Repayment Date 7.875 % Senior Notes due 2023 $ 4,250 September 15, 2023 Total Redemptions $ 4,250 4.738 % Secured Series 2018-1 A-1 Notes due 2025 $ 525 Various 5.152 % Series 2018-1 A-2 Notes due 2028 276 Various Total Repayments $ 801 Asset-backed Notes On October 12, 2022, we issued $ 750 million of 4.910 % Class A Senior ABS Notes to third-party investors in a private placement transaction. Our ABS Notes are secured by $ 982 million of gross EIP receivables and future collections on such receivables. The ABS Notes issued and the assets securing this debt are included on our Consolidated Balance Sheets. In connection with issuing the ABS Notes, we formed a wholly owned subsidiary, which qualifies as a bankruptcy remote entity (the “ABS BRE”), and a trust (the “ABS Trust” and together with the ABS BRE, the “ABS Entities”), in which the ABS BRE holds a residual interest. The ABS BRE’s residual interest in the ABS Trust represents the rights to all funds not needed to make required payments on the ABS Notes and other related payments and expenses. Under the terms of the ABS Notes, our wholly owned subsidiary, T-Mobile Financial LLC (“FinCo”), and certain of our other wholly owned subsidiaries (collectively, the “Originators”) transfer EIP receivables to the ABS BRE, which in turn transfers such receivables to the ABS Trust, which issued the ABS Notes. The Class A senior ABS Notes have an expected weighted average life of approximately 2.5 years. Under the terms of the transaction, there is a two-year revolving period during which we may transfer additional receivables to the ABS Entities as collections on the receivables are received. The EIP receivables transferred to the ABS Entities and related assets, consisting primarily of restricted cash, will only be available for payment of the ABS Notes and expenses related thereto, payments to the Originators in respect of additional transfers of device payment plan agreement receivables, and other obligations arising from our ABS Notes transactions, and will not be available to pay our other obligations until the associated ABS Notes and related obligations are satisfied. The third-party investors in the Class A senior ABS Notes have legal recourse only to the assets of the ABS Trust securing the ABS Notes and do not have any recourse to T-Mobile with respect to the payment of principal and interest. The receivables transferred to the ABS Trust will only be available for payment of the ABS Notes and other obligations arising from the transaction and will not be available to pay any obligations or claims of T-Mobile’s creditors. Under a parent support agreement, T-Mobile has agreed to guarantee the performance of the obligations of FinCo, which will continue to service the receivables, and the other T-Mobile entities participating in the transaction. However, T-Mobile does not guarantee any principal or interest on the ABS Notes or any payments on the underlying EIP receivables. The ABS Notes became redeemable, in whole but not in part, in November 2023. If redeemed on or after November 20, 2024, or if the aggregate principal balance of the transferred EIP receivables is equal to or less than 10% of the aggregate principal balance of the EIP receivables transferred upon issuance of the ABS Notes, we can redeem the ABS Notes without incurring a Make-Whole Payment; otherwise, a Make-Whole Payment applies. Cash collections on the EIP receivables are required at certain specified times to be placed into segregated accounts. Deposits to the segregated accounts are considered restricted cash and are included in Other current assets on our Consolidated Balance Sheets. The expected maturities of our ABS Notes are as follows: Expected Maturities (in millions) 2024 2025 4.910 % Class A Senior ABS Notes due 2028 $ 198 $ 552 86 Index for Notes to the Consolidated Financial Statements Variable Interest Entities The ABS Entities meet the definition of a VIE for which we have determined that we are the primary beneficiary as we have the power to direct the activities of the ABS Entities that most significantly impact their performance. Those activities include selecting which receivables are transferred into the ABS Entities, servicing such receivables, and funding of the ABS Entities. Additionally, our equity interest and residual interest in the ABS BRE and the ABS Trust, respectively, obligate us to absorb losses and gives us the right to receive benefits from the ABS Entities that could potentially be significant to the ABS Entities. Accordingly, we include the balances and results of operations of the ABS Entities in our consolidated financial statements. The following table summarizes the carrying amounts and classification of assets and liabilities included in our Consolidated Balance Sheets with respect to the ABS Entities: (in millions) December 31, 2023 December 31, 2022 Assets Equipment installment plan receivables, net $ 739 $ 652 Equipment installment plan receivables due after one year, net 168 281 Other current assets 101 73 Liabilities Accounts payable and accrued liabilities 1 1 Short-term debt 198 — Long-term debt 550 746 See Note 3 – Receivables and Related Allowance for Credit Losses for additional information on the EIP receivables used to secure the ABS Notes. Spectrum Financing On April 1, 2020, in connection with the closing of the Merger, we assumed Sprint’s spectrum-backed notes, which are collateralized by the acquired, directly held and third-party leased Spectrum licenses (collectively, the “Spectrum Portfolio”) transferred to wholly owned bankruptcy-remote special purpose entities (collectively, the “Spectrum Financing SPEs”). As of December 31, 2023 and 2022, the total outstanding obligations under these Notes was $ 2.2 billion and $ 3.0 billion, respectively. In October 2016, certain subsidiaries of Sprint Communications, Inc. transferred the Spectrum Portfolio to the Spectrum Financing SPEs, which was used as collateral to raise an initial $ 3.5 billion in senior secured notes (the “2016 Spectrum-Backed Notes”) bearing interest at 3.360 % per annum under a $ 7.0 billion securitization program. The 2016 Spectrum-Backed Notes were repayable over a five-year term, with interest-only payments over the first four quarters and amortizing quarterly principal payments thereafter commencing December 2017 through September 2021. We fully repaid the 2016 Spectrum-Backed Notes in 2021. In March 2018, Sprint issued approximately $ 3.9 billion in aggregate principal amount of senior secured notes (the “2018 Spectrum-Backed Notes” and together with the 2016 Spectrum-Backed Notes, the “Spectrum-Backed Notes”) under the existing $ 7.0 billion securitization program, consisting of two series of senior secured notes. The first series of notes totaled $ 2.1 billion in aggregate principal amount, bears interest at 4.738 % per annum, and has quarterly interest-only payments until June 2021, with additional quarterly principal payments commencing in June 2021 through March 2025. As of December 31, 2023, $ 525 million of the aggregate principal amount was classified as Short-term debt on our Consolidated Balance Sheets. The second series of notes totaled approximately $ 1.8 billion in aggregate principal amount, bears interest at 5.152 % per annum, and has quarterly interest-only payments until June 2023, with additional quarterly principal payments commencing in June 2023 through March 2028. As of December 31, 2023, $ 368 million of the aggregate principal amount was classified as Short-term debt on our Consolidated Balance Sheets. The Spectrum Portfolio, which also serves as collateral for the Spectrum-Backed Notes, remains substantially identical to the original portfolio from October 2016. Simultaneously with the October 2016 offering, Sprint Communications, Inc. entered into a long-term lease with the Spectrum Financing SPEs for the ongoing use of the Spectrum Portfolio. Sprint Communications, Inc. is required to make monthly lease payments to the Spectrum Financing SPEs in an aggregate amount that is market-based relative to the spectrum usage rights as of the closing date and equal to $ 165 million per month. The lease payments, which are guaranteed by T-Mobile subsidiaries subsequent to the Merger, are sufficient to service all outstanding series of the 2016 Spectrum-Backed Notes and the lease also 87 Index for Notes to the Consolidated Financial Statements constitutes collateral for the senior secured notes. Because the Spectrum Financing SPEs are wholly owned T-Mobile subsidiaries subsequent to the Merger, these entities are consolidated and all intercompany activity has been eliminated. Each Spectrum Financing SPE is a separate legal entity with its own separate creditors who will be entitled, prior to and upon the liquidation of the respective Spectrum Financing SPE, to be satisfied out of the Spectrum Financing SPE’s assets prior to any assets of such Spectrum Financing SPE becoming available to T-Mobile. Accordingly, the assets of each Spectrum Financing SPE are not available to satisfy the debts and other obligations owed to other creditors of T-Mobile until the obligations of such Spectrum Financing SPE under the Spectrum-Backed Notes are paid in full. Certain provisions of the Spectrum Financing facility require us to maintain specified cash collateral balances. Amounts associated with these balances are considered to be restricted cash. Restricted Cash Certain provisions of our debt agreements require us to maintain specified cash collateral balances. Amounts associated with these balances are considered to be restricted cash. Commercial Paper 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. Standby Letters of Credit For the purposes of securing our obligations to provide device insurance services and for the purposes of securing our general purpose obligations, we maintain an agreement for standby letters of credit with certain financial institutions. Our outstanding standby letters of credit were $ 238 million and $ 352 million as of December 31, 2023 and 2022, respectively. Note 9 – Tower Obligations Existing CCI Tower Lease Arrangements In 2012, we conveyed to Crown Castle International Corp. (“CCI”) the exclusive right to manage and operate approximately 6,200 tower sites (“CCI Lease Sites”) via a master prepaid lease with site lease terms ranging from 23 to 37 years. CCI has fixed-price purchase options for the CCI Lease Sites totaling approximately $ 2.0 billion, exercisable annually on a per-tranche basis at the end of the lease term during the period from December 31, 2035, through December 31, 2049. If CCI exercises its purchase option for any tranche, it must purchase all the towers in the tranche. We lease back a portion of the space at certain tower sites. Assets and liabilities associated with the operation of the tower sites were transferred to special purpose entities (“SPEs”). Assets included ground lease agreements or deeds for the land on which the towers are situated, the towers themselves and existing subleasing agreements with other mobile network operator tenants that lease space at the tower sites. Liabilities included the obligation to pay ground lease rentals, property taxes and other executory costs. We determined the SPEs containing the CCI Lease Sites (“Lease Site SPEs”) are VIEs as they lack sufficient equity to finance their activities. We have a variable interest in the Lease Site SPEs but are not the primary beneficiary as we lack the power to direct the activities that most significantly impact the Lease Site SPEs’ economic performance. These activities include managing tenants and underlying ground leases, performing repair and maintenance on the towers, the obligation to absorb expected losses and the right to receive the expected future residual returns from the purchase option to acquire the CCI Lease Sites. As we determined that we are not the primary beneficiary and do not have a controlling financial interest in the Lease Site SPEs, the Lease Site SPEs are not included on our consolidated financial statements. However, we also considered if this arrangement resulted in the sale of the CCI Lease Sites for which we would derecognize the tower assets. By assessing whether control had transferred, we concluded that transfer of control criteria, as discussed in the revenue standard, were not met. Accordingly, we recorded this arrangement as a financing whereby we recorded debt, a financial obligation, and the CCI Lease Sites tower assets remained on our Consolidated Balance Sheets. We recorded long-term financial obligations in the amount of the net proceeds received and recognize interest on the tower obligations. The tower 88 Index for Notes to the Consolidated Financial Statements obligations are increased by interest expense and amortized through contractual leaseback payments made by us to CCI and through net cash flows generated and retained by CCI from the operation of the tower sites. Acquired CCI Tower Lease Arrangements Prior to the Merger, Sprint entered into a lease-out and leaseback arrangement with Global Signal Inc., a third party that was subsequently acquired by CCI, that conveyed to CCI the exclusive right to manage and operate approximately 6,400 tower sites (“Master Lease Sites”) via a master prepaid lease. These agreements were assumed upon the close of the Merger, at which point the remaining term of the lease-out was approximately 17 years with no renewal options. CCI has a fixed price purchase option for all (but not less than all) of the leased or subleased sites for approximately $ 2.3 billion, exercisable one year prior to the expiration of the agreement and ending 120 days prior to the expiration of the agreement. We lease back a portion of the space at certain tower sites. We considered if this arrangement resulted in the sale of the Master Lease Sites for which we would derecognize the tower assets. By assessing whether control had transferred, we concluded that transfer of control criteria, as discussed in the revenue standard, were not met. Accordingly, we recorded this arrangement as a financing whereby we recorded debt, a financial obligation, and the Master Lease Sites tower assets remained on our Consolidated Balance Sheets. We recognize interest expense on the tower obligations. The tower obligations are increased by the interest expense and amortized through contractual leaseback payments made by us to CCI. The tower assets are reported in Property and equipment, net on our Consolidated Balance Sheets and are depreciated to their estimated residual values over the expected useful life of the towers, which is 20 years. Leaseback Arrangement On January 3, 2022, we entered into an agreement (the “Crown Agreement”) with CCI. The Crown Agreement extends the current term of the leasebacks by up to 12 years and modifies the leaseback payments for both the Existing CCI Tower Lease Arrangement and the Acquired CCI Tower Lease Arrangement. As a result of the Crown Agreement, there was an increase in our financing obligation as of the effective date of the Crown Agreement of approximately $ 1.2 billion, with a corresponding decrease to Other long-term liabilities associated with unfavorable contract terms. The modification resulted in a revised interest rate under the effective interest method for the tower obligations: 11.6 % for the Existing CCI Tower Lease Arrangement and 5.3 % for the Acquired CCI Tower Lease Arrangement. There were no changes made to either of our master prepaid leases with CCI. The following table summarizes the balances associated with both of the tower arrangements on our Consolidated Balance Sheets: (in millions) December 31, 2023 December 31, 2022 Property and equipment, net $ 2,220 $ 2,379 Tower obligations 3,777 3,934 Other long-term liabilities 554 554 Future minimum payments related to the tower obligations are approximately $ 435 million for the 12-month period ending December 31, 2024, $ 769 million in total for both of the 12-month periods ending December 31, 2025 and 2026, $ 810 million in total for both of the 12-month periods ending December 31, 2027 and 2028, and $ 4.1 billion in total thereafter. We are contingently liable for future ground lease payments through the remaining term of the CCI Lease Sites and the Master Lease Sites. These contingent obligations are not included in Operating lease liabilities as any amount due is contractually owed by CCI based on the subleasing arrangement. Under the arrangement, we remain primarily liable for ground lease payments on approximately 900 sites and have included lease liabilities of $ 241 million in our Operating lease liabilities as of December 31, 2023. 89 Index for Notes to the Consolidated Financial Statements Note 10 – Revenue from Contracts with Customers Disaggregation of Revenue We provide wireless communications services to three primary categories of customers: • Postpaid customers generally include customers who are qualified to pay after receiving wireless communications services utilizing phones, High Speed Internet, mobile internet devices (including tablets and hotspots), wearables, DIGITS and other connected devices, including SyncUP and IoT; • Prepaid customers generally include customers who pay for wireless communications services in advance; and • Wholesale customers include Machine-to-Machine and Mobile Virtual Network Operator customers that operate on our network but are managed by wholesale partners. Postpaid service revenues, including postpaid phone revenues and postpaid other revenues, were as follows: Year Ended December 31, (in millions) 2023 2022 2021 Postpaid service revenues Postpaid phone revenues $ 43,449 $ 41,711 $ 39,154 Postpaid other revenues 5,243 4,208 3,408 Total postpaid service revenues $ 48,692 $ 45,919 $ 42,562 We operate as a single operating segment. The balances presented in each revenue line item on our Consolidated Statements of Comprehensive Income represent categories of revenue from contracts with customers disaggregated by type of product and service. Postpaid and prepaid service revenues also include revenues earned for providing premium services to customers, such as device insurance services. Revenue generated from the lease of mobile communication devices is included in Equipment revenues on our Consolidated Statements of Comprehensive Income. Contract Balances The contract asset and contract liability balances from contracts with customers as of December 31, 2023, and 2022, were as follows: (in millions) Contract Assets Contract Liabilities Balance as of December 31, 2022 $ 534 $ 748 Balance as of December 31, 2023 607 812 Change $ 73 $ 64 Contract assets primarily represent revenue recognized for equipment sales with promotional bill credits offered to customers that are paid over time and are contingent on the customer maintaining a service contract. Contract asset balances increased primarily due to an increase in promotions with an extended service contract, partially offset by billings on existing contracts and impairment, which is recognized as bad debt expense. The current portion of our contract assets of approximately $ 495 million and $ 356 million as of December 31, 2023, and 2022, respectively, was included in Other current assets on our Consolidated Balance Sheets. Contract liabilities are recorded when fees are collected, or we have an unconditional right to consideration (a receivable) in advance of delivery of goods or services. Changes in contract liabilities are primarily related to the activity of prepaid customers. Contract liabilities are primarily included in Deferred revenue on our Consolidated Balance Sheets. Revenues for the years ended December 31, 2023, 2022 and 2021 include the following: Year Ended December 31, (in millions) 2023 2022 2021 Amounts included in the beginning of year contract liability balance $ 747 $ 760 $ 767 90 Index for Notes to the Consolidated Financial Statements Remaining Performance Obligations As of December 31, 2023, the aggregate amount of transaction price allocated to remaining service performance obligations for postpaid contracts with subsidized devices and promotional bill credits that result in an extended service contract is $ 1.5 billion. We expect to recognize revenue as the service is provided on these postpaid contracts over an extended contract term of 24 months from the time of origination. Information about remaining performance obligations that are part of a contract that has an original expected duration of one year or less has been excluded from the above, which primarily consists of monthly service contracts. Certain of our wholesale, roaming and service contracts include variable consideration based on usage and performance. This variable consideration has been excluded from the disclosure of remaining performance obligations. As of December 31, 2023, the aggregate amount of the contractual minimum consideration for wholesale, roaming and service contracts is $ 1.9 billion, $ 1.6 billion and $ 2.7 billion for 2024, 2025, and 2026 and beyond, respectively. These contracts have a remaining duration ranging from less than one year to eight years . Contract Costs The balance of deferred incremental costs to obtain contracts with customers was $ 2.1 billion and $ 1.9 billion as of December 31, 2023, and December 31, 2022, respectively, and is included in Other assets on our Consolidated Balance Sheets. Deferred contract costs incurred to obtain postpaid service contracts are amortized over a period of 24 months. The amortization period is monitored to reflect any significant change in assumptions. Amortization of deferred contract costs included in Selling, general and administrative expense on our Consolidated Statements of Comprehensive Income were $ 1.8 billion, $ 1.5 billion and $ 1.1 billion for the years ended December 31, 2023, 2022 and 2021, respectively. The deferred contract cost asset is assessed for impairment on a periodic basis. There were no impairment losses recognized on deferred contract cost assets for the years ended December 31, 2023, 2022 and 2021. Note 11 – Employee Compensation and Benefit Plans In June 2023, the stockholders of the Company approved the T-Mobile US, Inc. 2023 Incentive Award Plan (the “2023 Plan”) which replaced the 2013 Omnibus Incentive Plan and the Sprint Corporation Amended and Restated 2015 Omnibus Incentive Plan that T-Mobile assumed in connection with the closing of the Merger (collectively, with the 2023 Plan, the “Incentive Plans”). Under the 2023 Plan, we are authorized to issue up to 33 million shares of our common stock and can grant stock options, stock appreciation rights, restricted stock, RSUs and PRSUs to eligible employees, consultants, advisors and non-employee directors. As of December 31, 2023, there were approximately 33 million shares of common stock available for future grants under the 2023 Plan. We grant RSUs to eligible employees, key executives and certain non-employee directors and PRSUs to eligible key executives. RSUs entitle the grantee to receive shares of our common stock upon vesting (with vesting generally occurring annually over a three-year service period), subject to continued service through the applicable vesting date. PRSUs entitle the holder to receive shares of our common stock at the end of a performance period of generally up to three years if the applicable performance goals are achieved and generally subject to continued service through the applicable performance period. The number of shares ultimately received by the holder of PRSUs is dependent on our business performance against the specified performance goal(s) over a pre-established performance period. We also maintain an employee stock purchase plan (“ESPP”), under which eligible employees can purchase our common stock at a discounted price. Stock-based compensation expense and related income tax benefits were as follows: As of and for the Year Ended December 31, (in millions, except shares, per share and contractual life amounts) 2023 2022 2021 Stock-based compensation expense $ 667 $ 596 $ 540 Income tax benefit related to stock-based compensation $ 130 $ 114 $ 100 Weighted-average fair value per stock award granted $ 143.09 $ 126.89 $ 116.11 Unrecognized compensation expense $ 637 $ 635 $ 625 Weighted-average period to be recognized (years) 1.8 1.8 1.8 Fair value of stock awards vested $ 889 $ 743 $ 944 91 Index for Notes to the Consolidated Financial Statements Stock Awards The following activity occurred under the Incentive Plans during the year ended December 31, 2023: Time-Based Restricted Stock Units (in millions, except shares, per share and contractual life amounts) Number of Units or Awards Weighted-Average Grant Date Fair Value Weighted-Average Remaining Contractual Term (Years) Aggregate Intrinsic Value Nonvested, December 31, 2022 8,373,059 $ 121.09 0.9 $ 1,172 Granted 5,288,829 145.73 Vested ( 4,760,872 ) 118.99 Forfeited ( 1,145,073 ) 138.10 Nonvested, December 31, 2023 7,755,943 136.67 0.9 1,244 Performance-Based Restricted Stock Units (in millions, except shares, per share and contractual life amounts) Number of Units or Awards Weighted-Average Grant Date Fair Value Weighted-Average Remaining Contractual Term (Years) Aggregate Intrinsic Value Nonvested, December 31, 2022 1,360,783 $ 124.09 0.8 $ 191 Granted 232,094 157.61 Performance award achievement adjustments (1) 579,306 113.20 Vested ( 1,384,895 ) 114.57 Forfeited ( 14,639 ) 159.06 Other adjustments ( 82,843 ) 118.00 Nonvested, December 31, 2023 689,806 145.32 1.0 111 (1) Represents PRSUs granted prior to 2023 for which the performance achievement period was completed in 2023, resulting in incremental unit awards. These PRSU awards are also included in the amount vested in 2023. PRSUs included in the table above are shown at target. Share payout can range from 0 % to 200 % based on different performance outcomes. Weighted-average grant date fair value of RSU and PRSU awards assumed through acquisition is based on the fair value on the date assumed. Payment of the underlying shares in connection with the vesting of RSU and PRSU awards generally triggers a tax obligation for the employee, which is required to be remitted to the relevant tax authorities. With respect to RSUs and PRSUs settled in shares, we have agreed to withhold shares of common stock otherwise issuable under the RSU and PRSU awards to cover certain of these tax obligations, with the net shares issued to the employee accounted for as outstanding common stock. We withheld 2,027,800 , 1,900,710 and 2,511,512 shares of common stock to cover tax obligations associated with the payment of shares upon vesting of stock awards and remitted cash of $ 297 million, $ 243 million and $ 316 million to the appropriate tax authorities for the years ended December 31, 2023, 2022 and 2021, respectively. Employee Stock Purchase Plan Our ESPP allows eligible employees to contribute up to 15 % of their eligible earnings toward the semi-annual purchase of our shares of common stock at a discounted price, subject to an annual maximum dollar amount. Employees can purchase stock at a 15 % discount applied to the closing stock price on the first or last day of the six-month offering period, whichever price is lower. The number of shares issued under our ESPP was 1,771,475 , 2,079,086 and 2,189,542 for the years ended December 31, 2023, 2022 and 2021, respectively. In June 2023, the stockholders of the Company approved an amendment to our ESPP plan, increasing the share reserve to 14,000,000 . As of December 31, 2023, the number of securities remaining available for future sale and issuance under the ESPP was 13,291,951 . Pension and Other Postretirement Benefits Plans The objective for the investment portfolio of the Pension Plan is to achieve a long-term nominal rate of return, net of fees, that exceeds the Pension Plan's long-term expected rate of return on investments for funding purposes. To meet this objective, our investment strategy is governed by an asset allocation policy, whereby a targeted allocation percentage is assigned to each asset 92 Index for Notes to the Consolidated Financial Statements class as follows: 48 % to equities; 35 % to fixed income investments; and 17 % to real estate, infrastructure and private assets. Actual allocations are allowed to deviate from target allocation percentages within a range for each asset class as defined in the investment policy. The long-term expected rate of return on plan assets was 7 % and 5 % for the years ended December 31, 2023 and 2022, respectively, while the actual rate of return on plan assets was 11 % and ( 14 )% for the years ended December 31, 2023 and 2022, respectively. The long-term expected rate of return on investments for funding purposes is 7 % for the year ended December 31, 2024. The components of net benefit recognized for the Pension Plan were as follows: Year Ended December 31, (in millions) 2023 2022 Interest on projected benefit obligations $ 86 $ 65 Amortization of actuarial gain ( 59 ) — Expected return on pension plan assets ( 97 ) ( 71 ) Net pension benefit $ ( 70 ) $ ( 6 ) The net benefit associated with the Pension Plan is included in Other income (expense), net on our Consolidated Statements of Comprehensive Income. Investments of the Pension Plan are measured at fair value on a recurring basis, which is determined using quoted market prices or estimated fair values. As of both December 31, 2023 and 2022, 17 % of the investment portfolio was valued at quoted prices in active markets for identical assets, 79 % was valued using quoted prices for similar assets in active or inactive markets, or other observable inputs, and 4 % was valued using unobservable inputs that are supported by little or no market activity, the majority of which used the net asset value per share (or its equivalent) as a practical expedient to measure the fair value. The fair values of our Pension Plan assets and certain other postretirement benefit plan assets in aggregate were $ 1.3 billion and $ 1.2 billion as of December 31, 2023 and 2022, respectively. Certain investments, as a practical expedient, are reported at estimated fair value, utilizing net asset values of $ 10 million as of December 31, 2023, which are part of our Plan assets. Our accumulated benefit obligations in aggregate were $ 1.6 billion as of both December 31, 2023 and 2022. As a result, the plans were underfunded by approximately $ 350 million and $ 342 million as of December 31, 2023 and 2022, respectively, and were recorded in Other long-term liabilities on our Consolidated Balance Sheets. In determining our pension obligation for the years ended December 31, 2023, and 2022, we used a weighted-average discount rate of 5 % and 6 %, respectively. During the years ended December 31, 2023 and 2022, we made contributions of $ 32 million and $ 37 million, respectively, to the benefit plans. We expect to make contributions to the Plan of $ 52 million through the year ending December 31, 2024. Future benefits expected to be paid are approximately $ 104 million for the 12-month period ending December 31, 2024, $ 215 million in total for both of the 12-month periods ending December 31, 2025 and 2026, $ 223 million in total for both of the 12-month periods ending December 31, 2027 and 2028, and $ 571 million in total thereafter. Employee Retirement Savings Plan We sponsor retirement savings plans for the majority of our employees under Section 401(k) of the Internal Revenue Code and similar plans. The plans allow employees to contribute a portion of their pre-tax and post-tax income in accordance with specified guidelines. The plans provide that we match a percentage of employee contributions up to certain limits. Employer matching contributions were $ 171 million, $ 175 million and $ 190 million for the years ended December 31, 2023, 2022 and 2021, respectively. Note 12 – Income Taxes Our sources of Income (loss) before income taxes were as follows: Year Ended December 31, (in millions) 2023 2022 2021 U.S. income $ 10,943 $ 3,116 $ 3,401 Foreign income (loss) 56 30 ( 50 ) Income before income taxes $ 10,999 $ 3,146 $ 3,351 93 Index for Notes to the Consolidated Financial Statements Income tax expense is summarized as follows: Year Ended December 31, (in millions) 2023 2022 2021 Current tax (expense) benefit Federal $ ( 42 ) $ 22 $ ( 22 ) State ( 28 ) ( 64 ) ( 89 ) Foreign ( 12 ) ( 22 ) ( 19 ) Total current tax expense ( 82 ) ( 64 ) ( 130 ) Deferred tax (expense) benefit Federal ( 2,150 ) ( 628 ) ( 541 ) State ( 417 ) 77 327 Foreign ( 33 ) 59 17 Total deferred tax expense ( 2,600 ) ( 492 ) ( 197 ) Total income tax expense $ ( 2,682 ) $ ( 556 ) $ ( 327 ) The reconciliation between the U.S. federal statutory income tax rate and our effective income tax rate is as follows: Year Ended December 31, 2023 2022 2021 Federal statutory income tax rate 21.0 % 21.0 % 21.0 % State taxes, net of federal benefit 4.2 4.5 4.5 Effect of law and rate changes ( 0.1 ) ( 5.3 ) ( 1.7 ) Change in valuation allowance ( 0.2 ) ( 0.8 ) ( 10.7 ) Foreign taxes 0.4 0.7 0.1 Permanent differences ( 0.1 ) ( 0.2 ) 0.3 Federal tax credits ( 0.8 ) ( 2.4 ) ( 2.5 ) Equity-based compensation ( 0.4 ) ( 1.2 ) ( 2.6 ) Non-deductible compensation 0.5 1.2 1.5 Other, net ( 0.1 ) 0.2 ( 0.1 ) Effective income tax rate 24.4 % 17.7 % 9.8 % Significant components of deferred income tax assets and liabilities, tax effected, are as follows: (in millions) December 31, 2023 December 31, 2022 Deferred tax assets Loss carryforwards $ 6,227 $ 6,641 Lease liabilities 8,355 8,837 Reserves and accruals 1,177 1,526 Federal and state tax credits 426 373 Other 4,033 4,349 Deferred tax assets, gross 20,218 21,726 Valuation allowance ( 306 ) ( 375 ) Deferred tax assets, net 19,912 21,351 Deferred tax liabilities Spectrum licenses 19,006 18,341 Property and equipment 6,142 5,147 Lease right-of-use assets 7,043 7,461 Other intangible assets 350 519 Other 829 767 Total deferred tax liabilities 33,370 32,235 Net deferred tax liabilities $ 13,458 $ 10,884 Classified on the consolidated balance sheets as: Deferred tax liabilities $ 13,458 $ 10,884 94 Index for Notes to the Consolidated Financial Statements As of December 31, 2023, we have tax effected federal net operating loss (“NOL”) carryforwards of $ 5.0 billion, state NOL carryforwards of $ 1.8 billion and foreign NOL carryforwards of $ 22 million, expiring through 2043. Federal and certain state NOLs of $ 4.9 billion generated in and after 2018 do not expire. As of December 31, 2023, our tax effected federal and state NOL carryforwards for financial reporting purposes were approximately $ 199 million and $ 636 million, respectively, less than our NOL carryforwards for federal and state income tax purposes, due to unrecognized tax benefits of the same amount. There were no differences in our foreign NOL carryforwards for financial reporting purposes and our NOL carryforwards for foreign income tax purposes as of December 31, 2023. The unrecognized tax benefit amounts exclude offsetting tax effects of $ 168 million in other jurisdictions. As of December 31, 2023, we have research and development, corporate alternative minimum tax, foreign tax and other general business credit carryforwards with a combined value of $ 803 million for federal income tax purposes, an immaterial amount of which begins to expire in 2031. As of December 31, 2023, 2022 and 2021, our valuation allowance was $ 306 million, $ 375 million and $ 435 million, respectively. The change from December 31, 2022 to December 31, 2023 primarily related to a reduction in the valuation allowance against deferred tax assets in certain state jurisdictions resulting from expiration of the related state tax attributes. The change from December 31, 2021 to December 31, 2022 primarily related to a reduction in the valuation allowance against deferred tax assets in certain foreign jurisdictions resulting from legal entity reorganizations. We file income tax returns in the U.S. federal jurisdiction and in various state and foreign jurisdictions. We are currently under examination by the IRS and various states. Management does not believe the resolution of any of the audits will result in a material change to our financial condition, results of operations or cash flows. The IRS has concluded its audits of our federal tax returns through the 2009 tax year; however, NOL and other carryforwards for certain audited periods remain open for examination. U.S. federal, state and foreign examination for years prior to 2004 are generally closed. A reconciliation of the beginning and ending amount of unrecognized tax benefits were as follows: Year Ended December 31, (in millions) 2023 2022 2021 Unrecognized tax benefits, beginning of year $ 1,254 $ 1,217 $ 1,159 Gross increases to tax positions in prior periods 19 31 73 Gross decreases to tax positions in prior periods ( 39 ) ( 65 ) ( 123 ) Gross increases to current period tax positions 256 77 72 Gross increases due to current period business acquisitions — — 36 Gross decreases due to settlements with taxing authorities — ( 3 ) — Gross decreases due to statute of limitations lapse ( 13 ) ( 3 ) — Unrecognized tax benefits, end of year $ 1,477 $ 1,254 $ 1,217 As of December 31, 2023, 2022 and 2021, we had $ 1.3 billion, $ 962 million and $ 932 million, respectively, in unrecognized tax benefits that, if recognized, would affect our annual effective tax rate. Penalties and interest on income tax assessments are included in Selling, general and administrative and Interest expense, respectively, on our Consolidated Statements of Comprehensive Income. The accrued interest and penalties associated with unrecognized tax benefits are insignificant. It is possible that the amount of unrecognized tax benefits related to our uncertain tax positions may change within the next 12 months. Note 13 – Stockholder Return Programs 2022 Stock Repurchase Program On September 8, 2022, our Board of Directors authorized our 2022 Stock Repurchase Program for up to $ 14.0 billion of our common stock through September 30, 2023. During the nine months ended September 30, 2023, we repurchased 77,460,937 shares of our common stock at an average price per share of $ 141.57 for a total purchase price of $ 11.0 billion under the 2022 Stock Repurchase Program. All shares purchased during the nine months ended September 30, 2023, were purchased at market price. 2023-2024 Stockholder Return Program On September 6, 2023, our Board of Directors authorized our 2023-2024 Stockholder Return Program of up to $ 19.0 billion that will run from October 1, 2023, through December 31, 2024. The 2023-2024 Stockholder Return Program consists of 95 Index for Notes to the Consolidated Financial Statements additional repurchases of shares of our common stock and the payment of cash dividends. The amount available under the 2023-2024 Stockholder Return Program for share repurchases will be reduced by the amount of any cash dividends declared by us. Under the 2023-2024 Stockholder Return Program, share repurchases can be made from time to time using a variety of methods, which may include open market purchases, Rule 10b5-1 plans, accelerated share repurchases, privately negotiated transactions or otherwise, all in accordance with the rules of the Securities and Exchange Commission and other applicable legal requirements. The specific timing and amount of any share repurchases, and the specific timing and amount of any dividend payments, under the 2023-2024 Stockholder Return Program will depend on prevailing share prices, general economic and market conditions, Company performance, and other considerations. In addition, the specific timing and amount of any dividend payments are subject to being declared on future dates by our Board of Directors in its sole discretion. The 2023-2024 Stockholder Return Program does not obligate us to acquire any particular amount of common stock or to declare and pay any particular amount of dividends, and the 2023-2024 Stockholder Return Program may be suspended or discontinued at any time at our discretion. On September 25, 2023, our Board of Directors declared a cash dividend of $ 0.65 per share on our issued and outstanding common stock, which was paid on December 15, 2023, to stockholders of record as of the close of business on December 1, 2023. During the year ended December 31, 2023, we paid an aggregate of $ 747 million in cash dividends to our stockholders, which was presented within Net cash provided by (used in) financing activities on our Consolidated Statements of Cash Flows, of which $ 393 million was paid to DT. 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. All shares repurchased during the three months ended December 31, 2023, were purchased at market price. As of December 31, 2023, we had up to $ 16.0 billion remaining under the 2023-2024 Stockholder Return Program. 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. Note 14 – Wireline Sale of the Wireline Business On September 6, 2022, two of our wholly owned subsidiaries, Sprint Communications and Sprint LLC, and Cogent Infrastructure, Inc., entered into the Wireline Sale Agreement, pursuant to which the Buyer agreed to acquire the Wireline Business. The Wireline Sale Agreement provided that, upon the terms and conditions set forth therein, the Buyer agreed to purchase all of the issued and outstanding membership interests (the “Purchased Interests”) of a Delaware limited liability company that holds certain assets and liabilities relating to the Wireline Business. On May 1, 2023, pursuant to the Wireline Sale Agreement, upon the terms and subject to the conditions thereof, we completed the Wireline Transaction. Under the terms of the Wireline Sale Agreement, the parties agreed to a $ 1 purchase price in consideration for the Purchased Interests, subject to customary adjustments, as well as payments to the Buyer pursuant to an IP transit services agreement totaling $ 700 million, consisting of (i) $ 350 million in equal monthly installments during the first year after the Closing and (ii) $ 350 million in equal monthly installments over the subsequent 42 months. The Buyer paid the Company $ 61 million at Closing. The Closing of the Wireline Transaction did not have a significant impact on the (Gain) loss on disposal group held for sale on our Consolidated Statements of Comprehensive Income. The present value of the $ 700 million liability for fees payable for IP transit services was recognized and treated as part of the consideration exchanged with the Buyer to complete the disposal transaction, as there is a remote likelihood we will use any more than a de minimis amount of the services under the IP transit services agreement. Therefore, we concluded the cash payment obligations under the IP transit services agreement were part of the consideration paid to the Buyer to facilitate the sale of the Wireline Business, and therefore, included in measuring the fair value less costs to sell of the Wireline Business disposal 96 Index for Notes to the Consolidated Financial Statements group. As of December 31, 2023, $ 183 million and $ 255 million of this liability, including accrued interest, is presented within Other current liabilities and Other long-term liabilities, respectively, on our Consolidated Balance Sheets in accordance with the expected timing of the related payments. We recognized a pre-tax gain of $ 25 million during the year ended December 31, 2023, and a pre-tax loss of $ 1.1 billion during the year ended December 31, 2022, which are included within (Gain) loss on disposal group held for sale on our Consolidated Statements of Comprehensive Income. We do not consider the sale of the Wireline Business to be a strategic shift that will have a major effect on the Company’s operations and financial results, and therefore it does not qualify for reporting as a discontinued operation. Other Wireline Asset Sales Separate from the Wireline Transaction, we recognized a gain on disposal of $ 121 million during the year ended December 31, 2022, all of which relates to the sale of certain IP addresses held by the Wireline Business to other third parties during the three months ended September 30, 2022. The gain on disposal is included as a reduction to Selling, general and administrative expense on our Consolidated Statements of Comprehensive Income. Wireline Impairment Prior to the closing of the Wireline Transaction, we provided wireline communication services to domestic and international customers via the legacy Sprint Wireline U.S. long-haul fiber network (including non-U.S. extensions thereof). The legacy Sprint Wireline network was primarily comprised of owned property and equipment, including land, buildings, communication systems and data processing equipment, fiber optic cable and operating lease right-of-use assets. Previously, the operation of the legacy Sprint CDMA and LTE wireless networks was supported by the legacy Sprint Wireline network. During the second quarter of 2022, we retired the legacy Sprint CDMA network and began the orderly shut-down of the LTE network. We assess long-lived assets for impairment when events or circumstances indicate that they might be impaired. During the second quarter of 2022, we determined that the retirement of the legacy Sprint CDMA and LTE wireless networks triggered the need to assess the Wireline long-lived assets for impairment, as these assets no longer supported our wireless network and the associated customers and cash flows in a significant manner. In evaluating whether the Wireline long-lived assets were impaired, we estimated the fair value of these assets using a combination of the cost, income and market approaches, including market participant assumptions. The fair value measurement of the Wireline assets was estimated using significant inputs not observable in the market (Level 3). The results of this assessment indicated that certain Wireline long-lived assets were impaired, and as a result, we recorded non-cash impairment expense of $ 477 million during the year ended December 31, 2022, all of which relates to the impairment recognized during the three months ended June 30, 2022, of which $ 258 million is related to Wireline Property and equipment, $ 212 million is related to Operating lease right-of-use assets and $ 7 million is related to Other intangible assets. In measuring and allocating the impairment expense to individual Wireline long-lived assets, we did not impair the long-lived assets below their individual fair values. The expense is included within Impairment Expense on our Consolidated Statements of Comprehensive Income. There was no impairment expense recognized for the year ended December 31, 2023. 97 Index for Notes to the Consolidated Financial Statements Note 15 – Earnings Per Share The computation of basic and diluted earnings per share was as follows: Year Ended December 31, (in millions, except shares and per share amounts) 2023 2022 2021 Net income $ 8,317 $ 2,590 $ 3,024 Weighted-average shares outstanding – basic 1,185,121,562 1,249,763,934 1,247,154,988 Effect of dilutive securities: Outstanding stock options, unvested stock awards and SoftBank contingent consideration (2) 15,164,702 5,612,835 7,614,938 Weighted-average shares outstanding – diluted 1,200,286,264 1,255,376,769 1,254,769,926 Earnings per share – basic $ 7.02 $ 2.07 $ 2.42 Earnings per share – diluted $ 6.93 $ 2.06 $ 2.41 Potentially dilutive securities: Outstanding stock options and unvested stock awards 148,537 16,616 139,619 SoftBank contingent consideration (1) — 48,751,557 48,751,557 (1) Represents the weighted-average number of shares (“SoftBank Specified Shares”) that were contingently issuable from the Merger date of April 1, 2020, pursuant to a letter agreement dated February 20, 2020, between T-Mobile, SoftBank and DT (the “ Letter Agreement”). (2) During 2023, the SoftBank Specified Shares were issued and included in our calculations of basic and diluted weighted-average shares outstanding as further described below. As of December 31, 2023, we had authorized 100 million shares of preferred stock, with a par value of $ 0.00001 per share. There was no preferred stock outstanding as of December 31, 2023 and 2022. Potentially dilutive securities were not included in the computation of diluted earnings per share if to do so would have been anti-dilutive. The SoftBank Specified Shares of 48,751,557 shares of T-Mobile common stock was determined to be contingent consideration for the Merger and was not dilutive until the defined volume-weighted average price per share was reached. The issuance of the SoftBank Specified Shares was contingent on the trailing 45 -trading day volume-weighted average (“VWAP”) per share of T-Mobile common stock on the NASDAQ Global Select Market being equal to or greater than $ 150.00 (the “Threshold Price”), at any time during the period commencing on April 1, 2022, and ending on December 31, 2025 (the “Measurement Period”). In accordance with the terms of the Letter Agreement, the Threshold Price was subject to downward adjustment by the per share amount of any cash dividends or other cash distributions declared or paid on our common stock during the Measurement Period. As of the close of trading on December 22, 2023, the 45 -trading day VWAP exceeded $ 149.35 , the then-current Threshold Price, and the Company delivered the SoftBank Specified Shares to SoftBank in accordance with the Letter Agreement on December 28, 2023, by reissuing Company treasury shares. Upon reissuance of treasury shares, the Company recorded a reclassification from Treasury shares to Additional paid-in capital of $ 6.9 billion calculated based on the cost of treasury shares reissued. The SoftBank Specified Shares issued are included in the calculation of basic and diluted weighted-average shares outstanding from the date the contingency associated with the issuance of the SoftBank Specified Shares was resolved and the beginning of the Company’s fourth quarter of 2023, respectively. Note 16 – Leases Lessee We are a lessee for non-cancelable operating and financing leases for cell sites, switch sites, retail stores, network equipment and office facilities with contractual terms that generally extend through 2035. The majority of cell site leases have a non-cancelable term of five to 15 years with several renewal options that can extend the lease term for five to 50 years. In addition, we have financing leases for network equipment that generally have a non-cancelable lease term of three to five years . The financing leases do not have renewal options and contain a bargain purchase option at the end of the lease. 98 Index for Notes to the Consolidated Financial Statements The components of lease expense were as follows: Year Ended December 31, (in millions) 2023 2022 2021 Operating lease expense $ 4,987 $ 6,514 $ 5,921 Financing lease expense: Amortization of right-of-use assets 684 733 738 Interest on lease liabilities 79 68 69 Total financing lease expense 763 801 807 Variable lease expense 411 484 429 Total lease expense $ 6,161 $ 7,799 $ 7,157 Information relating to the lease term and discount rate is as follows: Year Ended December 31, 2023 2022 2021 Weighted-Average Remaining Lease Term (Years) Operating leases 9 10 9 Financing leases 2 2 3 Weighted-Average Discount Rate Operating leases 4.3 % 4.1 % 3.6 % Financing leases 4.6 % 3.2 % 2.5 % Maturities of lease liabilities as of December 31, 2023, were as follows: (in millions) Operating Leases Finance Leases Twelve Months Ending December 31, 2024 $ 4,829 $ 1,324 2025 4,380 836 2026 4,048 392 2027 3,733 35 2028 3,410 14 Thereafter 18,634 3 Total lease payments 39,034 2,604 Less: imputed interest 7,239 108 Total $ 31,795 $ 2,496 Interest payments for financing leases were $ 79 million, $ 68 million and $ 69 million for the years ended December 31, 2023, 2022 and 2021, respectively. As of December 31, 2023, we have additional operating leases for commercial properties that have not yet commenced with future lease payments of approximately $ 70 million. As of December 31, 2023, we were contingently liable for future ground lease payments related to certain tower obligations. These contingent obligations are not included in the above table as the amounts owed are contractually owed by CCI based on the subleasing arrangement. See Note 9 – Tower Obligations for further information. Lessor The components of leased wireless devices under our Leasing Programs were as follows: (in millions) Average Remaining Useful Life December 31, 2023 December 31, 2022 Leased wireless devices, gross 8 months $ 400 $ 1,415 Accumulated depreciation ( 285 ) ( 1,146 ) Leased wireless devices, net $ 115 $ 269 99 Index for Notes to the Consolidated Financial Statements Future minimum payments expected to be received over the lease term related to leased wireless devices, which exclude optional residual buy-out amounts at the end of the lease term, are summarized below: (in millions) Expected Payments Twelve Months Ending December 31, 2024 $ 50 2025 6 Total $ 56 Wireline Impairment During the second quarter of 2022, we determined that the retirement of the legacy Sprint CDMA and LTE wireless networks triggered the need to separately assess the Wireline long-lived asset group for impairment and the results of this assessment indicated that certain Wireline Operating lease right-of-use assets were impaired. See Note 14 - Wireline for further information. Note 17 – Commitments and Contingencies Purchase Commitments We have commitments for non-dedicated transportation lines with varying expiration terms that generally extend through 2038. In addition, we have commitments to purchase wireless devices, network services, equipment, software, marketing sponsorship agreements and other items in the ordinary course of business, with various terms through 2043. Our purchase commitments are approximately $ 4.5 billion for the 12-month period ending December 31, 2024, $ 5.0 billion in total for both of the 12-month periods ending December 31, 2025 and 2026, $ 2.6 billion in total for both of the 12-month periods ending December 31, 2027 and 2028, and $ 2.3 billion in total thereafter. These amounts are not reflective of our entire anticipated purchases under the related agreements but are determined based on the non-cancelable quantities or termination amounts to which we are contractually obligated. On March 9, 2023, we entered into 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. 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 agreement remains subject to regulatory approval, and the estimated purchase price is excluded from our reported purchase commitments above. See Note 2 – Business Combinations for additional details. Spectrum We lease spectrum from various parties. These leases include service obligations to the lessors. Certain spectrum leases provide for minimum lease payments, additional charges, renewal options and escalation clauses. Leased spectrum agreements have varying expiration terms that generally extend through 2050. We expect that all renewal periods in our spectrum leases will be exercised by us. Certain spectrum leases also include purchase options and right-of-first refusal clauses in which we are provided the opportunity to exercise our purchase option if the lessor receives a purchase offer from a third party. The purchase of the leased spectrum is at our option and therefore the option price is not included in the commitments below. Our spectrum lease and service credit commitments, including renewal periods, are approximately $ 303 million for the 12-month period ending December 31, 2024, $ 612 million in total for both of the 12-month periods ending December 31, 2025 and 2026, $ 682 million in total for both of the 12-month periods ending December 31, 2027 and 2028, and $ 4.3 billion in total thereafter. On August 8, 2022, we entered into License Purchase Agreements to acquire spectrum in the 600 MHz band from Channel 51 License Co LLC and LB License Co, LLC in exchange for total cash consideration of $ 3.5 billion. The licenses are currently being utilized by us through exclusive leasing arrangements with the Sellers. On March 30, 2023, we and the Sellers entered into Amended and Restated License Purchase Agreements pursuant to which we and the Sellers agreed to separate the transaction into two tranches of licenses, with the closings on the acquisitions of certain licenses in Chicago, Dallas and New Orleans being deferred in order to potentially expedite the regulatory approval process for the remainder of the licenses. Subsequently, on August 25, 2023, we and the Sellers entered into Amendments No. 1 to the Amended and Restated License Purchase Agreements, which deferred the closings of certain additional licenses in Chicago and Dallas into the second closing 100 Index for Notes to the Consolidated Financial Statements 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, totaling $ 2.4 billion, on December 29, 2023, and we expect the closing of the first tranche to occur in the second quarter of 2024. The closing of the second tranche remains subject to regulatory approval. The agreement is excluded from our reported purchase commitments above. See Note 6 – Goodwill, Spectrum License Transactions and Other Intangible Assets for additional details. On September 12, 2023, we entered into a License Purchase Agreement with Comcast pursuant to which we will acquire spectrum in the 600 MHz band from Comcast in exchange for total cash consideration of between $ 1.2 billion and $ 3.3 billion, subject to an application for FCC approval. The licenses are subject to an exclusive leasing arrangement between us and Comcast entered into contemporaneously with the License Purchase Agreement. The agreement remains subject to regulatory approval and is excluded from our reported purchase commitments above. See Note 6 – Goodwill, Spectrum License Transactions and Other Intangible Assets for additional details. Merger Commitments In connection with the regulatory proceedings and approvals of the Merger pursuant to the Business Combination Agreement with Sprint and the other parties named therein (as amended, the “Business Combination Agreement”) and the other transactions contemplated by the Business Combination Agreement (collectively, the “Transactions”), we have commitments and other obligations to various state and federal agencies and certain nongovernmental organizations, including pursuant to the Consent Decree agreed to by us, DT, Sprint, SoftBank and DISH and entered by the U.S. District Court for the District of Columbia, and the FCC’s memorandum opinion and order approving our applications for approval of the Merger. These commitments and obligations include, among other things, extensive 5G network build-out commitments, obligations to deliver high-speed wireless services to the vast majority of Americans, including Americans residing in rural areas, and the marketing of an in-home broadband product where spectrum capacity is available. Other commitments relate to national security, pricing, service, employment and support of diversity initiatives. Many of the commitments specify time frames for compliance and reporting. Failure to fulfill our obligations and commitments in a timely manner could result in substantial fines, penalties, or other legal and administrative actions. Contingencies and Litigation Litigation and Regulatory Matters We are involved in various lawsuits and disputes, claims, government agency investigations and enforcement actions, and other proceedings (“Litigation and Regulatory Matters”) that arise in the ordinary course of business, which include claims of patent infringement (most of which are asserted by non-practicing entities primarily seeking monetary damages), class actions, and proceedings to enforce FCC or other government agency rules and regulations. Those Litigation and Regulatory Matters are at various stages, and some of them may proceed to trial, arbitration, hearing, or other adjudication that could result in fines, penalties, or awards of monetary or injunctive relief in the coming 12 months if they are not otherwise resolved. We have established an accrual with respect to certain of these matters, where appropriate. The accruals are reflected on our consolidated financial statements, but they are not considered to be, individually or in the aggregate, material. An accrual is established when we believe it is both probable that a loss has been incurred and an amount can be reasonably estimated. For other matters, where we have not determined that a loss is probable or because the amount of loss cannot be reasonably estimated, we have not recorded an accrual due to various factors typical in contested proceedings, including, but not limited to, uncertainty concerning legal theories and their resolution by courts or regulators, uncertain damage theories and demands, and a less than fully developed factual record. For Litigation and Regulatory Matters that may result in a contingent gain, we recognize such gains on our consolidated financial statements when the gain is realized or realizable. We recognize legal costs expected to be incurred in connection with Litigation and Regulatory Matters as they are incurred. Except as otherwise specified below, we do not expect that the ultimate resolution of these Litigation and Regulatory Matters, individually or in the aggregate, will have a material adverse effect on our financial position, but we note that an unfavorable outcome of some or all of the specific matters identified below or other matters that we are or may become involved in could have a material adverse impact on results of operations or cash flows for a particular period. This assessment is based on our current understanding of relevant facts and circumstances. As such, our view of these matters is subject to inherent uncertainties and may change in the future. On February 28, 2020, we received a Notice of Apparent Liability for Forfeiture and Admonishment from the FCC, which proposed a penalty against us for allegedly violating section 222 of the Communications Act and the FCC’s regulations governing the privacy of customer information. In the first quarter of 2020, we recorded an accrual for an estimated payment amount. We maintained the accrual as of December 31, 2023, and that accrual was included in Accounts payable and accrued liabilities on our Consolidated Balance Sheets. 101 Index for Notes to the Consolidated Financial Statements On April 1, 2020, in connection with the closing of the Merger, we assumed the contingencies and litigation matters of Sprint. Those matters include a wide variety of disputes, claims, government agency investigations and enforcement actions, and other proceedings. These matters include, among other things, certain ongoing FCC and state government agency investigations into Sprint’s Lifeline program. In September 2019, Sprint notified the FCC that it had claimed monthly subsidies for serving subscribers even though these subscribers may not have met usage requirements under Sprint's usage policy for the Lifeline program, due to an inadvertent coding issue in the system used to identify qualifying subscriber usage that occurred in July 2017 while the system was being updated. Sprint has made a number of payments to reimburse the federal government and certain states for excess subsidy payments. We note that pursuant to Amendment No. 2, dated as of February 20, 2020, to the Business Combination Agreement, dated as of April 29, 2018, by and among the Company, Sprint and the other parties named therein, SoftBank agreed to indemnify us against certain specified matters and losses, including those relating to the Lifeline matters described above. Resolution of these matters could require us to make additional reimbursements and pay additional fines and penalties, which we do not expect to have a significant impact on our financial results. We expect that any additional liabilities related to these indemnified matters would be indemnified and reimbursed by SoftBank. On June 1, 2021, a putative shareholder class action and derivative lawsuit was filed in the Delaware Court of Chancery, Dinkevich v. Deutsche Telekom AG, et al. , Case No. C.A. No. 2021-0479, against DT, SoftBank and certain of our current and former officers and directors, asserting breach of fiduciary duty claims relating to the repricing amendment to the Business Combination Agreement, and to SoftBank’s monetization of its T-Mobile shares. We are also named as a nominal defendant in the case. We are unable to predict the potential outcome of these claims. On August 12, 2021, we became aware of a cybersecurity issue involving unauthorized access to T-Mobile’s systems (the “August 2021 cyberattack”). We immediately began an investigation and engaged cybersecurity experts to assist with the assessment of the incident and to help determine what data was impacted. Our investigation uncovered that the perpetrator had illegally gained access to certain areas of our systems on or about March 18, 2021, but only gained access to and took data of current, former, and prospective customers beginning on or about August 3, 2021. With the assistance of our outside cybersecurity experts, we located and closed the unauthorized access to our systems and identified current, former and prospective customers whose information was impacted and notified them, consistent with state and federal requirements. We also undertook a number of other measures to demonstrate our continued support and commitment to data privacy and protection. We also coordinated with law enforcement. Our forensic investigation is complete, and we believe we have a full view of the data compromised. As a result of the August 2021 cyberattack, we have become subject to numerous lawsuits, including mass arbitration claims and multiple class action lawsuits that have been filed in numerous jurisdictions seeking, among other things, unspecified monetary damages, costs and attorneys’ fees arising out of the August 2021 cyberattack. In December 2021, the Judicial Panel on Multidistrict Litigation consolidated the federal class action lawsuits in the U.S. District Court for the Western District of Missouri under the caption In re: T-Mobile Customer Data Security Breach Litigation , Case No. 21-md-3019-BCW. On July 22, 2022, we entered into an agreement to settle the lawsuit. On June 29, 2023, the Court issued an order granting final approval of the settlement, which is subject to potential appeals. Under the terms of the settlement, we would pay an aggregate of $ 350 million to fund claims submitted by class members, the legal fees of plaintiffs’ counsel and the costs of administering the settlement. We also committed to an aggregate incremental spend of $ 150 million for data security and related technology in 2022 and 2023. We previously paid $ 35 million for claims administration purposes. On July 31, 2023, a class member filed an appeal to the final approval order challenging the Court’s award of attorneys’ fees to class counsel. We expect the remaining portion of the $ 350 million settlement payment to fund claims to be made once that appeal is resolved. We anticipate that, upon exhaustion of any appeals, the settlement will provide a full release of all claims arising out of the August 2021 cyberattack by class members who do not opt out, against all defendants, including us, our subsidiaries and affiliates, and our directors and officers. The settlement contains no admission of liability, wrongdoing or responsibility by any of the defendants. We have the right to terminate the settlement agreement under certain conditions. We anticipate that this settlement of the class action, along with other settlements of separate consumer claims that have been previously completed or are currently pending, will resolve substantially all of the claims brought to date by our current, former and prospective customers who were impacted by the 2021 cyberattack. In connection with the proposed class action settlement and the separate settlements, we recorded a total pre-tax charge of approximately $ 400 million in the second quarter of 2022. During the years ended December 31, 2023 and 2022, we recognized $ 50 million and $ 100 million, respectively, in reimbursements from insurance carriers for costs incurred related to the August 2021 cyberattack, which is included as a reduction to Selling, general and administrative expense on our Consolidated Statements of Comprehensive Income. The ultimate resolution of the class action depends on the number of plaintiffs who opt-out of the proposed settlement and whether the proposed settlement will be appealed. 102 Index for Notes to the Consolidated Financial Statements In addition, in September 2022, a purported Company shareholder filed a derivative action in the Delaware Chancery Court under the caption Harper v. Sievert et al., Case No. 2022-0819-SG, against our current directors and certain of our former directors, alleging claims for breach of fiduciary duty relating to the Company’s cybersecurity practices. We are also named as a nominal defendant in the lawsuit. We are unable at this time to predict the potential outcome of this lawsuit or whether we may be subject to further private litigation. We have also received inquiries from various government agencies, law enforcement and other governmental authorities related to the August 2021 cyberattack, which could result in substantial fines or penalties. We are cooperating fully with these agencies and regulators and working with them to resolve these matters. While we hope to resolve them in the near term, we cannot predict the timing or outcome of any of these matters, or whether we may be subject to further regulatory inquiries, investigations, or enforcement actions. In light of the inherent uncertainties involved in such matters and based on the information currently available to us, in addition to the previously recorded pre-tax charge of approximately $ 400 million noted above, we believe it is reasonably possible that we could incur additional losses associated with these proceedings and inquiries, and we will continue to evaluate information as it becomes known and will record an estimate for losses at the time or times when it is both probable that a loss has been incurred and the amount of the loss is reasonably estimable. Ongoing legal and other costs related to these proceedings and inquiries, as well as any potential future actions, may be substantial, and losses associated with any adverse judgments, settlements, penalties or other resolutions of such proceedings and inquiries could be material to our business, reputation, financial condition, cash flows and operating results. On June 17, 2022, plaintiffs filed a putative antitrust class action complaint in the Northern District of Illinois, Dale et al. v. Deutsche Telekom AG, et al. , Case No. 1:22-cv-03189, against DT, T-Mobile, and SoftBank, alleging that the Merger violated the antitrust laws and harmed competition in the U.S. retail cell service market. Plaintiffs seek injunctive relief and trebled monetary damages on behalf of a purported class of AT&T and Verizon customers who plaintiffs allege paid artificially inflated prices due to the Merger. We are vigorously defending this lawsuit, but we are unable to predict the potential outcome. On January 5, 2023, we identified that a bad actor was obtaining data through a single Application Programming Interface (“API”) without authorization. Based on our investigation, the impacted API is only able to provide a limited set of customer account data, including name, billing address, email, phone number, date of birth, T-Mobile account number and information such as the number of lines on the account and plan features. The result from our investigation indicates that the bad actor(s) obtained data from this API for approximately 37 million current postpaid and prepaid customer accounts, though many of these accounts did not include the full data set. We believe that the bad actor first retrieved data through the impacted API starting on or around November 25, 2022. We have notified individuals whose information was impacted consistent with state and federal requirements. In connection with the January 2023 cyberattack, we became subject to consumer class actions and regulatory inquires, to which we will continue to respond in due course and may incur significant expenses. However, we cannot predict the timing or outcome of any of these potential matters, or whether we may be subject to additional legal proceedings, claims, regulatory inquiries, investigations, or enforcement actions. In addition, we are unable to predict the full impact of this incident on customer behavior in the future, including whether a change in our customers’ behavior could negatively impact our results of operations on an ongoing basis, although we presently do not expect that it will have a material effect on our operations. Note 18 – Restructuring Costs Merger Restructuring Initiatives Upon close of the Merger in April 2020, we began implementing restructuring initiatives to realize cost efficiencies and reduce redundancies. The major activities associated with the Merger restructuring initiatives included contract termination costs associated with the rationalization of retail stores, distribution channels, duplicative network and backhaul services and other agreements, severance costs associated with the integration of redundant processes and functions and the decommissioning of certain small cell sites and distributed antenna systems to achieve Merger synergies in network costs. 103 Index for Notes to the Consolidated Financial Statements The following table summarizes the expenses incurred in connection with our Merger restructuring initiatives: (in millions) Year Ended December 31, 2021 Year Ended December 31, 2022 Year Ended December 31, 2023 Incurred to Date Contract termination costs $ 14 $ 231 $ 45 $ 468 Severance costs 17 169 3 574 Network decommissioning 184 796 289 1,766 Total restructuring plan expenses $ 215 $ 1,196 $ 337 $ 2,808 The expenses associated with our Merger restructuring initiatives are included in Cost of services and Selling, general and administrative expenses on our Consolidated Statements of Comprehensive Income. Our Merger restructuring initiatives also included the acceleration or termination of certain of our operating and financing leases for cell sites, switch sites, retail stores, network equipment and office facilities. Incremental expenses associated with terminated leases and leases for which we have recognized accelerated lease expense were $ 390 million, $ 1.7 billion and $ 873 million for the years ended December 31, 2023, 2022 and 2021, respectively, and are included in Costs of services and Selling, general and administrative expenses on our Consolidated Statements of Comprehensive Income. The changes in the liabilities associated with our Merger restructuring initiatives, including expenses incurred and cash payments, are as follows: (in millions) December 31, 2022 Expenses Incurred Cash Payments Adjustments for Non-Cash Items (1) December 31, 2023 Contract termination costs $ 190 $ 45 $ ( 217 ) $ — $ 18 Severance costs — 3 ( 6 ) 3 — Network decommissioning 280 289 ( 449 ) ( 26 ) 94 Total $ 470 $ 337 $ ( 672 ) $ ( 23 ) $ 112 (1) Non-cash items primarily consist of the write-off of assets within Network decommissioning. The liabilities accrued in connection with our Merger restructuring initiatives are presented in Accounts payable and accrued liabilities on our Consolidated Balance Sheets. 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 Note 16 – Leases for more details on the expected amount and timing of our lease payments. 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. We recorded a pre-tax charge of $ 462 million during the year ended December 31, 2023, related to the workforce reduction, which is included in Cost of services and Selling, general and administrative expenses on our Consolidated Statements of Comprehensive Income. The changes in the liabilities associated with our workforce reduction initiative, including expenses incurred and cash payments, are as follows: (in millions) December 31, 2022 Expenses Incurred Cash Payments Other (1) December 31, 2023 Severance costs $ — $ 462 $ ( 281 ) $ 14 $ 195 (1) Other primarily consists of previously expensed vacation accruals expected to be paid out as a component of severance. The liabilities accrued in connection with our workforce reduction activities are presented in Accounts payable and accrued liabilities on our Consolidated Balance Sheets. Substantially all costs associated with our workforce reduction activities were recorded during the year ended December 31, 2023, with substantially all related cash outflows extending through mid-2024. 104 Index for Notes to the Consolidated Financial Statements Note 19 – Additional Financial Information Accounts Payable and Accrued Liabilities Accounts payable and accrued liabilities, excluding amounts classified as held for sale, are summarized as follows: (in millions) December 31, 2023 December 31, 2022 Accounts payable $ 5,573 $ 7,213 Payroll and related benefits 1,142 1,236 Property and other taxes, including payroll 1,704 1,657 Accrued interest 818 731 Commissions and contract termination costs 317 523 Toll and interconnect 161 227 Other 658 688 Accounts payable and accrued liabilities $ 10,373 $ 12,275 Book overdrafts included in accounts payable were $ 740 million and $ 720 million as of December 31, 2023, and 2022, respectively. Related Party Transactions We have related party transactions associated with DT, SoftBank or their respective affiliates in the ordinary course of business, including intercompany servicing and licensing. The following table summarizes the impact of significant transactions with DT or its affiliates included in Operating expenses in the Consolidated Statements of Comprehensive Income: Year Ended December 31, (in millions) 2023 2022 2021 Fees incurred for use of the T-Mobile brand $ 80 $ 80 $ 80 International long distance agreement 20 25 37 We have an agreement with DT for the reimbursement of certain administrative expenses, which were $ 4 million for the years ended December 31, 2023, and 2022 and $ 5 million for the year ended December 31, 2021. During the year ended December 31, 2023, we paid an aggregate of $ 747 million in cash dividends to our stockholders, of which $ 393 million was paid to DT. See Note 13 - Stockholder Return Program s for further information. Supplemental Consolidated Statements of Cash Flows Information The following table summarizes T-Mobile’s supplemental cash flow information: Year Ended December 31, (in millions) 2023 2022 2021 Interest payments, net of amounts capitalized $ 3,546 $ 3,485 $ 3,723 Operating lease payments 5,062 4,205 6,248 Income tax payments 149 76 167 Non-cash investing and financing activities Non-cash beneficial interest obtained in exchange for securitized receivables $ 3,990 $ 4,192 $ 4,237 Change in accounts payable and accrued liabilities for purchases of property and equipment ( 860 ) 133 366 Leased devices transferred from inventory to property and equipment 129 336 1,198 Returned leased devices transferred from property and equipment to inventory ( 114 ) ( 396 ) ( 1,437 ) Increase in Tower obligations from contract modification — 1,158 — Operating lease right-of-use assets obtained in exchange for lease obligations 2,141 7,462 3,773 Financing lease right-of-use assets obtained in exchange for lease obligations 1,224 1,256 1,261 105 Index for Notes to the Consolidated Financial Statements Cash and cash equivalents, including restricted cash and cash held for sale Cash and cash equivalents, including restricted cash and cash held for sale, presented on our Consolidated Statements of Cash Flows were included on our Consolidated Balance Sheets as follows: (in millions) December 31, 2023 December 31, 2022 Cash and cash equivalents $ 5,135 $ 4,507 Cash and cash equivalents held for sale (included in Other current assets) — 27 Restricted cash (included in Other current assets) 101 73 Restricted cash (included in Other assets) 71 67 Cash and cash equivalents, including restricted cash and cash held for sale $ 5,307 $ 4,674 Note 20 – Subsequent Events 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. See Note 8 - Debt for additional information. 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. See Note 13 - Stockholder Return Programs for additional information regarding the 2023-2024 Stockholder Return Program. 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. See Note 13 - Stockholder Return Programs for additional information regarding the 2023-2024 Stockholder Return Program. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None.