What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-10-23 compared with 2024-07-31 · 263 added, 239 removed, 472 unchanged (52% of the section changed)

21 unchanged sentences

• our inability to manage the ongoing arrangements entered into in connection with the Prepaid Transaction, and known or unknown liabilities arising in connection therewith;

• the timing and effects of any future acquisition, divestiture, investment, or merger involving us, including our inability to obtain any required regulatory approval necessary to consummate any such transactions;

• the timing and effects of any future acquisition, divestiture, investment, joint venture or merger involving us, including our inability to obtain any required regulatory approval necessary to consummate any such transactions or to achieve the expected benefits of such transactions;

• any disruption or failure of our third parties (including key suppliers) to provide products or services for the operation of our business;

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

Our MD&A is provided as a supplement to, and should be read together with, our unaudited condensed consolidated financial statements as of and for the three and six months ended June 30, 2024, included in Part I, Item 1 of this Form 10-Q, and audited consolidated financial statements, included in Part II, Item 8 of our Annual Report on Form 10-K for the year ended December 31, 2023.

Our MD&A is provided as a supplement to, and should be read together with, our unaudited condensed consolidated financial statements as of and for the three and nine months ended September 30, 2024, included in Part I, Item 1 of this Form 10-Q, and audited consolidated financial statements, included in Part II, Item 8 of our Annual Report on Form 10-K for the year ended December 31, 2023.

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

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Net cash payments for Merger-related costs, including payments related to our restructuring plan, are included in Net cash provided by operating activities on our Condensed Consolidated Statements of Cash Flows.

During the three months ended June 30, 2024, we recognized a gain for the $100 million extension fee previously paid by DISH associated with the DISH License Purchase Agreement as a reduction to Selling, general and administrative expenses on our Condensed Consolidated Statements of Comprehensive Income.

During the nine months ended September 30, 2024, we recognized a gain for the $100 million extension fee previously paid by DISH associated with the DISH License Purchase Agreement as a reduction to Selling, general and administrative expenses on our Condensed Consolidated Statements of Comprehensive Income.

The gain was presented as a reduction in Merger-related costs and excluded from our calculations of Adjusted EBITDA and Core Adjusted EBITDA.

See Note 6 – Goodwill, Spectrum License Transactions and Other Intangible Assets of the Notes to the Condensed Consolidated Financial Statements for more information.

As of June 30, 2024, we have incurred substantially all restructuring and integration costs associated with the Sprint Merger and, accordingly, no longer separately disclose Merger-related costs.

The cash payments for the Merger-related costs incurred extend beyond 2024.

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

Merger-related costs are presented below:

(in millions) Three Months Ended

June 30, Change Six Months Ended

June 30, Change

September 30, Change Nine Months Ended

September 30, Change

2024 2023 $ % 2024 2023 $ %

1 unchanged sentence

Cost of services, exclusive of depreciation and amortization $ — $ 120 $ (120) (100) % $ 180 $ 506 $ (326) (64) %

Cost of equipment sales, exclusive of depreciation and amortization — — — NM — (9) 9 (100) %

Cost of equipment sales, exclusive of depreciation and amortization — (3) 3 (100) % — (12) 12 (100) %

Selling, general and administrative — 35 (35) (100) % (59) 292 (351) (120) %

Total Merger-related (gain) costs, net $ (9) $ 276 $ (285) (103) % $ 121 $ 634 $ (513) (81) %

Total Merger-related costs $ — $ 152 $ (152) (100) % $ 121 $ 786 $ (665) (85) %

Net cash payments for Merger-related costs $ 124 $ 345 $ (221) (64) % $ 658 $ 1,557 $ (899) (58) %

NM- Not meaningful

As of June 30, 2024, we have incurred all restructuring and integration costs associated with the Sprint Merger, with the cash payments 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.

Lumos Joint Venture

On April 24, 2024, we entered into a merger agreement with a fund operated by EQT, Infrastructure VI fund (“Fund VI”), for the joint acquisition by us and Fund VI of Lumos, a fiber-to-the-home platform (“Lumos”), from EQT’s predecessor fund, EQT Infrastructure III.

The Lumos joint acquisition is expected to close in late 2024 or early 2025, subject to customary closing conditions and regulatory approvals.

Joint Ventures

On April 24, 2024, we entered into a merger agreement with a fund operated by EQT, Infrastructure VI fund (“Fund VI”), for the joint acquisition by us and Fund VI of Lumos (“Lumos”), a fiber-to-the-home platform, from EQT’s predecessor fund, EQT Infrastructure III.

The Lumos joint acquisition is expected to close in early 2025, subject to customary closing conditions and regulatory approvals.

At closing, we expect to invest approximately $950 million in the joint venture to acquire a 50% equity interest and all existing Lumos fiber customers.

The funds invested by us will be used to fund future fiber builds.

In addition, pursuant to the merger agreement, we expect to make an additional capital contribution of approximately $500 million in 2027 or 2028.

The joint venture will focus on market identification and selection, network engineering and design, network deployment, and customer installation, with us owning customer relationships and selling fiber service under the T-Mobile brand.

Upon closing of the transaction, we expect to account for the Lumos joint venture under the equity method of accounting and recognize service revenues for the acquired Lumos fiber customers and wholesale costs paid to the joint venture for network access reflected in Cost of services on our Condensed Consolidated Statements of Comprehensive Income.

In addition, pursuant to the merger agreement, we expect to make an additional capital contribution of approximately $500 million in 2027 or 2028 for the existing business plan.

On July 18, 2024, we entered into a definitive agreement with KKR & Co.

(“KKR”) to establish a joint venture to acquire Metronet Holdings, LLC and certain of its affiliates (collectively, “Metronet”), a fiber-to-the-home platform.

This arrangement is expected to close in 2025, subject to customary closing conditions and regulatory approvals.

At closing, we expect to invest approximately $4.9 billion in the joint venture to acquire a 50% equity interest and all existing residential fiber customers, as well as funding the joint venture.

We do not anticipate making further capital contributions following the closing for the existing business plan.

The joint ventures will focus on market identification and selection, build plans, network engineering and design, network deployment, and customer installation, with us owning customer relationships and selling fiber service under the T-Mobile brand.

Upon closing of the transactions, we expect to account for the Lumos and Metronet joint ventures under the equity method of accounting and recognize service revenues for the acquired Lumos and Metronet fiber customers and wholesale costs paid to the joint ventures for network access within Cost of services on our Condensed Consolidated Statements of Comprehensive Income.

Acquisition of Ka’ena Corporation

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Prior to the Ka’ena Acquisition, Ka’ena was a wholesale partner of the Company for which we recognized service revenues within Wholesale and other service revenues.

Upon the closing of the Ka’ena Acquisition, this relationship was effectively terminated, and the Company acquired Ka’ena’s prepaid customer relationships and will recognize service revenues associated with these customers within Prepaid revenues and operating expenses primarily within Selling, general and administrative expenses on our Condensed Consolidated Statements of Comprehensive Income subsequent to the Acquisition Date.

Upon the closing of the Ka’ena Acquisition, this relationship was effectively terminated, and the Company acquired Ka’ena’s prepaid customer relationships and began to recognize service revenues associated with these customers within Prepaid revenues and operating expenses primarily within Selling, general and administrative expenses on our Condensed Consolidated Statements of Comprehensive Income subsequent to the Acquisition Date.

For more information regarding the Ka’ena Acquisition, see Note 2 – Business Combinations of the Notes to the Condensed Consolidated Financial Statements.

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We expect this transaction will yield approximately $1.0 billion in total annual run rate cost synergies, including operating expense and capital expenditure synergies, upon integration, with total cost to achieve the integration currently estimated at between $2.2 billion to $2.6 billion.

For more information regarding our acquisition of UScellular Wireless Assets, see Note 2 – Business Combinations of the Notes to the Condensed Consolidated Financial Statements.

Metronet Joint Venture

Subsequent to June 30, 2024, on July 18, 2024, we entered into a definitive agreement with KKR & Co.

(“KKR”) to establish a joint venture to acquire Metronet Holdings, LLC and certain of its affiliates (collectively, “Metronet”), a fiber-to-the-home platform.

This arrangement is expected to close in 2025, subject to customary closing conditions and regulatory approvals.

At closing, we expect to invest approximately $4.9 billion in the joint venture to acquire a 50% equity interest and all existing residential fiber customers, as well as funding the joint venture.

We do not anticipate making further capital contributions following the closing.

The joint venture will focus on build plans, network engineering and design, network deployment, and customer installation, with us owning customer relationships and selling fiber service under the T-Mobile brand.

Upon the closing of the transaction, we expect to account for the Metronet joint venture under the equity method of accounting and recognize service revenues for the acquired Metronet fiber customers and wholesale costs paid to the joint venture for network access reflected in Cost of services on our Condensed Consolidated Statements of Comprehensive Income.

For more information regarding our acquisition of UScellular’s wireless operations, see Note 2 – Business Combinations of the Notes to the Condensed Consolidated Financial Statements.

Results of Operations

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Three Months Ended

June 30, Change Six Months Ended

June 30, Change

September 30, Change Nine Months Ended

September 30, Change

(in millions) 2024 2023 $ % 2024 2023 $ %

10 unchanged sentences

Selling, general and administrative 5,186 5,334 (148) (3) % 15,466 16,031 (565) (4) %

Loss (gain) on disposal group held for sale — 17 (17) (100) % — (25) 25 (100) %

Gain on disposal group held for sale — — — NM — (25) 25 (100) %

Depreciation and amortization 3,151 3,187 (36) (1) % 9,770 9,500 270 3 %

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Interest expense, net (836) (790) (46) 6 % (2,570) (2,486) (84) 3 %

Other (expense) income, net (8) 6 (14) (233) % 12 15 (3) (20) %

Other income, net 7 41 (34) (83) % 19 56 (37) (66) %

Total other expense, net (829) (749) (80) 11 % (2,551) (2,430) (121) 5 %

5 unchanged sentences

Net cash used in investing activities (3,307) (1,393) (1,914) 137 % (6,772) (4,608) (2,164) 47 %

Net cash used in financing activities (4,134) (784) (3,350) 427 % (5,800) (3,057) (2,743) 90 %

Net cash provided by (used in) financing activities 507 (5,510) 6,017 (109) % (5,293) (8,567) 3,274 (38) %

Non-GAAP Financial Measures

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Adjusted Free Cash Flow 5,162 4,003 1,159 29 % 12,948 9,281 3,667 40 %

The following discussion and analysis is for the three and six months ended June 30, 2024, compared to the same period in 2023, unless otherwise stated.

Total revenues increased $576 million, or 3%, for the three months ended and increased $538 million, or 1%, for the six months ended June 30, 2024.

NM - Not meaningful

The following discussion and analysis is for the three and nine months ended September 30, 2024, compared to the same periods in 2023, unless otherwise stated.

Total revenues increased $910 million, or 5%, for the three months ended and increased $1.4 billion, or 2%, for the nine months ended September 30, 2024.

The components of these changes are discussed below.

Postpaid revenues increased $829 million, or 7%, for the three months ended and increased $1.6 billion, or 7%, for the six months ended June 30, 2024, primarily from:

Postpaid revenues increased $1.0 billion, or 8%, for the three months ended and increased $2.6 billion, or 7%, for the nine months ended September 30, 2024.

The increase for the three months ended September 30, 2024, was primarily from:

• Higher postpaid ARPA.

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

• Higher average postpaid accounts.

The increase for the nine months ended September 30, 2024, was primarily from:

• Higher average postpaid accounts;

• Higher postpaid ARPA.

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

Prepaid revenues increased $148 million, or 6%, for the three months ended and increased $134 million, or 3%, for the six months ended June 30, 2024, primarily from:

Prepaid revenues increased $243 million, or 10%, for the three months ended and increased $377 million, or 5%, for the nine months ended September 30, 2024, primarily from:

• Higher average prepaid customers, primarily from the prepaid customers acquired through the Ka’ena Acquisition;

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

Wholesale and other service revenues decreased $286 million, or 23%, for the three months ended and decreased $491 million, or 20%, for the six months ended June 30, 2024.

The decrease for the three months ended June 30, 2024, was primarily from:

• Lower MVNO revenues, primarily due to DISH servicing more of its Boost customers with their standalone network, the impact from the Ka’ena Acquisition and the migration of legacy TracFone customers off of the T-Mobile network, partially offset by growth in other MVNO partners;

Wholesale and other service revenues decreased $452 million, or 39%, for the three months ended and decreased $943 million, or 26%, for the nine months ended September 30, 2024.

The decrease for the three months ended September 30, 2024, was primarily from:

• Lower MVNO revenues, including the impact from the Ka’ena Acquisition, and lower DISH and TracFone MVNO revenue;

• Lower Affordable Connectivity Program and Lifeline revenues.

The decrease for the six months ended June 30, 2024, was primarily from:

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

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

The decrease for the nine months ended September 30, 2024, was primarily from:

• Lower MVNO revenues, including the impact from the Ka’ena Acquisition, and lower DISH and TracFone MVNO revenue;

• Lower Affordable Connectivity Program and Lifeline revenues;

Equipment revenues decreased $63 million, or 2%, for the three months ended and decreased $531 million, or 8%, for the six months ended June 30, 2024.

The decrease for the three months ended June 30, 2024, was primarily from:

• A decrease of $140 million in device sales revenue, excluding purchased leased devices, primarily from:

• A net decrease in the total number of devices sold, driven by lower Assurance Wireless, prepaid and postpaid upgrade units, partially offset by higher postpaid gross addition related devices;

partially offset by

• Slightly higher average revenue per device sold, net of promotions, primarily driven by an increase in the high-end phone mix;

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

Equipment revenues increased $131 million, or 4%, for the three months ended and decreased $400 million, or 4%, for the nine months ended September 30, 2024.

The increase for the three months ended September 30, 2024, was primarily from:

• An increase of $92 million in device sales revenue, excluding purchased leased devices, primarily from:

• Higher average revenue per device sold, net of promotions, primarily driven by an increase in the high-end phone mix;

partially offset by

• A net decrease in the total number of devices sold, driven by lower Assurance Wireless and prepaid devices, partially offset by higher postpaid devices;

• An increase of $63 million in liquidation revenue, primarily due to a higher number of in-house liquidated devices, including the impact from the transition of certain device recovery programs from external sources to in-house processing.

The decrease for the six months ended June 30, 2024, was primarily from:

The decrease for the nine months ended September 30, 2024, was primarily from:

• A decrease of $552 million in device sales revenue, excluding purchased leased devices, primarily from:

• A net decrease in the total number of devices sold, driven by lower Assurance Wireless, prepaid and postpaid upgrade units, partially offset by higher postpaid gross addition related devices;

partially offset by

• Slightly higher average revenue per device sold, net of promotions, primarily driven by an increase in the high-end phone mix;

• A net decrease in the total number of devices sold, driven by lower prepaid and Assurance Wireless devices, partially offset by higher postpaid devices;

partially offset by

• Higher average revenue per device sold, net of promotions, primarily driven by an increase in the high-end phone mix;

• A decrease of $187 million in lease revenues, primarily due to a lower number of customer devices under lease as a result of the continued strategic shift in device financing from leasing to EIP;

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• An increase of $412 million in liquidation revenue, primarily due to a higher number of in-house liquidated devices, including the impact from the transition of certain device recovery programs from external sources to in-house processing.

Other revenues decreased $52 million, or 18%, for the three months ended and decreased $172 million, or 26%, for the six months ended June 30, 2024, primarily from the transition of certain device recovery programs from external sources to in-house processing, resulting in a change in presentation from Other revenues to Equipment revenues.

Total operating expenses decreased $261 million, or 2%, for the three months ended and decreased $900 million, or 3%, for the six months ended June 30, 2024.

Other revenues decreased $32 million, or 12%, for the three months ended and decreased $204 million, or 22%, for the nine months ended September 30, 2024, primarily from the transition of certain device recovery programs from external sources to in-house processing, resulting in a change in presentation from Other revenues to Equipment revenues.

Total operating expenses decreased $290 million, or 2%, for the three months ended and decreased $1.2 billion, or 3%, for the nine months ended September 30, 2024.

The components of this change are discussed below.

Cost of services , exclusive of depreciation and amortization, decreased $252 million, or 9%, for the three months ended and decreased $625 million, or 10%, for the six months ended June 30, 2024.

The decrease for the three months ended June 30, 2024, was primarily from:

• A decrease of $105 million in Merger-related costs related to network decommissioning and integration;

• Lower employee costs, primarily due to reduced headcount;

Cost of services , exclusive of depreciation and amortization, decreased $164 million, or 6%, for the three months ended and decreased $789 million, or 9%, for the nine months ended September 30, 2024.

The decrease for the three months ended September 30, 2024, was primarily from:

• $140 million of severance and related costs associated with the August 2023 workforce reduction recognized in the prior year;

• $120 million in Merger-related costs related to network decommissioning and integration recognized in the prior year;

• Higher Merger synergies;

The decrease for the six months ended June 30, 2024, was primarily from:

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

partially offset by

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

The decrease for the nine months ended September 30, 2024, was primarily from:

• A decrease of $326 million in Merger-related costs related to network decommissioning and integration;

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

• Lower employee costs, primarily due to reduced headcount;

• $140 million of severance and related costs associated with the August 2023 workforce reduction recognized in the prior year;

• Higher Merger synergies;

Cost of equipment sales , exclusive of depreciation and amortization, was flat for the three months ended and decreased $189 million, or 2%, for the six months ended June 30, 2024.

Offsetting impacts for the three months ended June 30, 2024, primarily included:

partially offset by

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

Cost of equipment sales , exclusive of depreciation and amortization, increased $58 million, or 1%, for the three months ended and decreased $131 million, or 1%, for the nine months ended September 30, 2024.

The slight increase for the three months ended September 30, 2024, was primarily from:

• An increase of $50 million in liquidation costs, primarily due to a higher number of in-house liquidated devices, including the impact from the transition of certain device recovery programs from external sources to in-house processing;

mostly offset by

• A decrease of $39 million in device cost of equipment sales, excluding purchased leased devices, primarily from:

• A net decrease in the total number of devices sold, driven by lower Assurance Wireless, prepaid and postpaid upgrade units, partially offset by higher postpaid gross addition related devices;

partially offset by

• Higher average cost per device sold, primarily driven by a shift in the high-end phone mix.

The decrease for the six months ended June 30, 2024, was primarily from:

• A net decrease in the total number of devices sold, driven by lower Assurance Wireless and prepaid devices, partially offset by higher postpaid devices;

mostly offset by

• Higher average cost per device sold, primarily driven by an increase in the high-end phone mix.

The slight decrease for the nine months ended September 30, 2024, was primarily from:

• A decrease of $394 million in device cost of equipment sales, excluding purchased leased devices, primarily from:

• A net decrease in the total number of devices sold, driven by lower Assurance Wireless, prepaid and postpaid upgrade units, partially offset by higher postpaid gross addition related devices;

partially offset by

• Higher average cost per device sold, primarily driven by a shift in the high-end phone mix;

• A net decrease in the total number of devices sold, driven by lower prepaid and Assurance Wireless devices, partially offset by higher postpaid devices;

partially offset by

• Higher average cost per device sold, primarily driven by an increase in the high-end phone mix;

mostly offset by

• An increase of $305 million in liquidation costs, primarily due to a higher number of in-house liquidated devices, including the impact from the transition of certain device recovery programs from external sources to in-house processing.

Selling, general and administrative expenses decreased $130 million, or 2%, for the three months ended and decreased $417 million, or 4%, for the six months ended June 30, 2024.

The decrease for the three months ended June 30, 2024, was primarily from:

• A decrease of $180 million in Merger-related costs, including the $100 million gain recognized in the current period for the extension fee previously paid by DISH associated with the DISH License Purchase Agreement;

Selling, general and administrative expenses decreased $148 million, or 3%, for the three months ended and decreased $565 million, or 4%, for the nine months ended September 30, 2024.

The decrease for the three months ended September 30, 2024, was primarily from:

• $331 million of severance and related costs associated with the August 2023 workforce reduction recognized in the prior year;

• Higher Merger synergies;

1 unchanged sentence

• Higher costs as a result of the Ka’ena Acquisition.

The decrease for the six months ended June 30, 2024, was primarily from:

• A decrease of $316 million in Merger-related costs, including the $100 million gain recognized in the current period for the extension fee previously paid by DISH associated with the DISH License Purchase Agreement;

• Lower employee costs, primarily due to reduced headcount;

The decrease for the nine months ended September 30, 2024, was primarily from:

• A decrease of $351 million in Merger-related costs, including the $100 million gain recognized during the nine months ended September 30, 2024, for the extension fee previously paid by DISH associated with the DISH License Purchase Agreement;

• $331 million of severance and related costs associated with the August 2023 workforce reduction recognized in the prior year;

• Higher Merger synergies;

partially offset by

• Higher legal expenses, including the settlement associated with the FCC Notices of Apparent Liability (See Note 13 – Commitments and Contingencies of the Notes to the Condensed Consolidated Financial Statements);

• Higher costs as a result of the Ka’ena Acquisition;

Loss (gain) on disposal group held for sale was a loss of $17 million for the three months ended June 30, 2023, and a gain of $25 million for the six months ended June 30, 2023, related to the sale of the Wireline Business on May 1, 2023.

There was no gain or loss on disposal group held for sale for the three and six months ended June 30, 2024.

Depreciation and amortization increased $138 million, or 4%, for the three months ended and increased $306 million, or 5%, for the six months ended June 30, 2024, primarily from higher depreciation expense from the acceleration of certain technology assets as we continue to modernize our network, technology systems and platforms.

Operating income , the components of which are discussed above, increased $837 million, or 22%, for the three months ended and increased $1.4 billion, or 20%, for the six months ended June 30, 2024.

Interest expense, net was relatively flat.

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

Income before income taxes , the components of which are discussed above, was $3.8 billion and $2.9 billion for the three months ended June 30, 2024 and 2023, respectively, and $6.9 billion and $5.5 billion for the six months ended June 30, 2024 and 2023, respectively.

Income tax expense increased $126 million, or 18%, for the three months ended and increased $259 million, or 19%, for the six months ended June 30, 2024, primarily from:

Gain on disposal group held for sale was $25 million for the nine months ended September 30, 2023, related to the sale of the Wireline Business on May 1, 2023.

There was no gain or loss on disposal group held for sale for the three and nine months ended September 30, 2024, and the three months ended September 30, 2023.

Depreciation and amortization decreased slightly for the three months ended and increased $270 million, or 3%, for the nine months ended September 30, 2024.

The increase for the nine months ended September 30, 2024, was primarily from higher depreciation expense from the acceleration of certain technology assets in the first half of 2024 as we continue to modernize our network, technology systems and platforms and from the continued build-out of our nationwide 5G network.

Operating income , the components of which are discussed above, increased $1.2 billion, or 33%, for the three months ended and increased $2.6 billion, or 24%, for the nine months ended September 30, 2024.

Interest expense, net increased slightly.

Other income, net was insignificant for both periods.

Income before income taxes , the components of which are discussed above, was $4.0 billion and $2.8 billion for the three months ended September 30, 2024 and 2023, respectively, and $10.9 billion and $8.4 billion for the nine months ended September 30, 2024 and 2023, respectively.

Income tax expense increased $203 million, or 29%, for the three months ended and increased $462 million, or 23%, for the nine months ended September 30, 2024.

The increase for the three months ended September 30, 2024, was primarily from:

• Higher income before income taxes;

partially offset by

• Net tax benefits recognized from a remeasurement of deferred tax assets and liabilities in certain state jurisdictions.

Our effective tax rate was 22.9% and 24.8% for the three months ended September 30, 2024 and 2023, respectively.

The increase for the nine months ended September 30, 2024, was primarily from:

• Higher income before income taxes;

partially offset by

• An increase in tax benefits from adjustments to certain tax reserves;

Our effective tax rate was 22.4% and 24.4% for the three months ended June 30, 2024 and 2023, respectively, and 23.3% and 24.5% for the six months ended June 30, 2024 and 2023, respectively.

Net income , the components of which are discussed above, was $2.9 billion and $2.2 billion for the three months ended June 30, 2024 and 2023, respectively, and $5.3 billion and $4.2 billion for the six months ended June 30, 2024 and 2023, respectively.

Net income included a Merger-related gain, net of Merger-related costs and tax, of $6 million for the three months ended June 30, 2024, and Merger-related costs, net of Merger-related gain and tax, of $91 million for the six months ended June 30, 2024, compared to Merger-related costs, net of tax, of $207 million and $475 million for the three and six months ended June 30, 2023, respectively.

• Net tax benefits recognized from a remeasurement of deferred tax assets and liabilities in certain state jurisdictions.

Our effective tax rate was 23.1% and 24.6% for the nine months ended September 30, 2024 and 2023, respectively.

Net income , the components of which are discussed above, was $3.1 billion and $2.1 billion for the three months ended September 30, 2024 and 2023, respectively, and $8.4 billion and $6.3 billion for the nine months ended September 30, 2024 and 2023, respectively.

Net income included:

• Merger-related costs, net of Merger-related gain and tax, of $91 million for the nine months ended September 30, 2024, compared to Merger-related costs, net of tax, of $114 million and $589 million for the three and nine months ended September 30, 2023, respectively.

There were no Merger-related costs for the three months ended September 30, 2024.

• Severance and related costs associated with the August 2023 workforce reduction of $353 million, net of tax, for the three and nine months ended September 30, 2023.

Guarantor Financial Information

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is presented in the table below:

(in millions) June 30, 2024 December 31, 2023

(in millions) September 30, 2024 December 31, 2023

Current assets $ 21,097 $ 17,601

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Due to related parties 2,059 1,576

(1) The decrease in Noncurrent liabilities and Due to non-guarantors was primarily driven by the impact of certain intercompany settlements during the six months ended June 30, 2024.

(1) The decrease in Noncurrent liabilities and Due to non-guarantors was primarily driven by the impact of certain intercompany settlements during the nine months ended September 30, 2024.

The summarized results of operations information for the consolidated obligor group of debt issued by T-Mobile USA, Inc.

is presented in the table below:

(in millions) Six Months Ended

June 30, 2024 Year Ended

(in millions) Nine Months Ended

September 30, 2024 Year Ended

December 31, 2023

6 unchanged sentences

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

(in millions) June 30, 2024 December 31, 2023

(in millions) September 30, 2024 December 31, 2023

Current assets $ 15,683 $ 11,193

6 unchanged sentences

Due to related parties 2,059 1,576

(1) The decrease in Noncurrent liabilities and Due to non-guarantors was primarily driven by the impact of certain intercompany settlements during the six months ended June 30, 2024.

(1) The decrease in Noncurrent liabilities and Due to non-guarantors was primarily driven by the impact of certain intercompany settlements during the nine months ended September 30, 2024.

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

(in millions) Six Months Ended

June 30, 2024 Year Ended

(in millions) Nine Months Ended

September 30, 2024 Year Ended

December 31, 2023

4 unchanged sentences

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

(in millions) June 30, 2024 December 31, 2023

(in millions) September 30, 2024 December 31, 2023

Current assets $ 15,683 $ 11,193

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Due to related parties 2,059 1,576

(1) The decrease in Noncurrent liabilities and Due to non-guarantors was primarily driven by the impact of certain intercompany settlements during the six months ended June 30, 2024.

(1) The decrease in Noncurrent liabilities and Due to non-guarantors was primarily driven by the impact of certain intercompany settlements during the nine months ended September 30, 2024.

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

(in millions) Six Months Ended

June 30, 2024 Year Ended

(in millions) Nine Months Ended

September 30, 2024 Year Ended

December 31, 2023

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

As of June 30, Change

As of September 30, Change

(in thousands) 2024 2023 # %

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Three Months Ended

June 30, Change Six Months Ended

June 30, Change

September 30, Change Nine Months Ended

September 30, Change

(in thousands) 2024 2023 # % 2024 2023 # %

Postpaid net account additions 315 386 (71) (18) % 834 972 (138) (14) %

Postpaid net account additions increased slightly for the three months ended and decreased 67,000, or 11%, for the six months ended June 30, 2024.

The slight increase for the three months ended June 30, 2024, was primarily from:

• Higher gross additions;

mostly offset by

• Higher deactivations and fewer High Speed Internet only additions due to the sunsetting of promotional pricing, as well as a higher mix of High Speed Internet customers from existing accounts.

The decrease for the six months ended June 30, 2024, was primarily from:

• Higher deactivations and fewer High Speed Internet only additions due to the sunsetting of promotional pricing, as well as a higher mix of High Speed Internet customers from existing accounts;

partially offset by

• Higher gross additions.

Postpaid net account additions decreased 71,000, or 18%, for the three months ended and decreased 138,000, or 14%, for the nine months ended September 30, 2024, primarily from fewer High Speed Internet only additions, including from the impact of sunsetting certain promotional pricing in 2024.

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

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The following table sets forth the number of ending customers:

As of June 30, Change

As of September 30, Change

(in thousands) 2024 2023 # %

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High Speed Internet customers included in Postpaid other customers were 4,992,000 and 3,302,000 as of June 30, 2024 and 2023, respectively.

High Speed Internet customers included in Prepaid customers were 595,000 and 376,000 as of June 30, 2024 and 2023, respectively.

High Speed Internet customers included in Postpaid other customers were 5,377,000 and 3,807,000 as of September 30, 2024 and 2023, respectively.

High Speed Internet customers included in Prepaid customers were 625,000 and 428,000 as of September 30, 2024 and 2023, respectively.

Net Customer Additions

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Three Months Ended

June 30, Change Six Months Ended

June 30, Change

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September 30, Change

(in thousands) 2024 2023 # % 2024 2023 # %

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Total net customer additions decreased 168,000, or 10%, for the three months ended and decreased 315,000, or 10% for the six months ended June 30, 2024.

The decrease for the three months ended June 30, 2024, was primarily from:

• Lower postpaid other net customer additions, primarily due to

• Deactivations of lower ARPU mobile internet devices in the educational sector that were originally activated during the Pandemic and no longer needed;

• Lower net additions from High Speed Internet, primarily driven by increased deactivations from a growing customer base, partially offset by a lower churn rate;

• Lower net additions from wearables;

partially offset by

• Higher net additions from other connected devices;

Total net customer additions increased 294,000, or 23%, for the three months ended and was relatively flat for the nine months ended September 30, 2024.

The increase for the three months ended September 30, 2024, was primarily from:

• Higher postpaid other net customer additions, primarily due to

• Higher prior year deactivations of lower ARPU mobile internet devices in the educational sector that were activated during the Pandemic and no longer needed;

partially offset by

• Higher prepaid net customer additions, primarily due to higher gross additions following the Ka’ena Acquisition and lower churn, partially offset by continued moderation of prepaid industry growth;

• Higher postpaid phone net customer additions, primarily due to higher gross additions, partially offset by increased deactivations from a growing base and slightly higher churn.

• High Speed Internet net customer additions included in postpaid other net customer additions were 358,000 and 447,000 for the three months ended June 30, 2024 and 2023, respectively.

High Speed Internet net customer additions included in prepaid net customer additions were 48,000 and 62,000 for the three months ended June 30, 2024 and 2023, respectively.

The decrease for the six months ended June 30, 2024, was primarily from:

• Lower postpaid other net customer additions, primarily due to

• Lower net additions from High Speed Internet, primarily driven by increased deactivations from a growing customer base, partially offset by a lower churn rate;

• Lower net additions from wearables;

• Lower net additions from High Speed Internet, primarily due to lower gross additions driven by sunsetting of promotional pricing and increased deactivations from a growing customer base, partially offset by a lower churn rate;

• Higher postpaid phone net customer additions, primarily due to higher prepaid to postpaid migrations, lower churn and higher gross additions, partially offset by increased deactivations from a growing customer base;

partially offset by

• Lower prepaid net customer additions, primarily driven by continued moderation of prepaid industry growth, higher prepaid to postpaid migrations and lower net additions from High Speed Internet, partially offset by higher net additions following the Ka’ena Acquisition.

• High Speed Internet net customer additions included in postpaid other net customer additions were 385,000 and 505,000 for the three months ended September 30, 2024 and 2023, respectively.

High Speed Internet net customer additions included in prepaid net customer additions were 30,000 and 52,000 for the three months ended September 30, 2024 and 2023, respectively.

The slight decrease for the nine months ended September 30, 2024, was primarily from:

• Lower prepaid net customer additions, primarily driven by continued moderation of prepaid industry growth, lower net additions from High Speed Internet and higher prepaid to postpaid migrations, partially offset by higher net additions following the Ka’ena Acquisition;

• Slightly higher postpaid other net customer additions, primarily due to

• Higher net additions from mobile internet devices, primarily due to higher prior year deactivations of lower ARPU mobile internet devices in the educational sector that were activated during the Pandemic and no longer needed;

• Higher net additions from other connected devices;

• Lower prepaid net customer additions, primarily driven by continued moderation of prepaid industry growth and lower net additions from High Speed Internet, partially offset by higher gross additions following the Ka’ena Acquisition and lower churn;

partially offset by

• Slightly higher postpaid phone net customer additions, primarily due to higher gross additions, mostly offset by increased deactivations from a growing base.

• High Speed Internet net customer additions included in postpaid other net customer additions were 704,000 and 892,000 for the six months ended June 30, 2024 and 2023, respectively.

High Speed Internet net customer additions included in prepaid net customer additions were 107,000 and 140,000 for the six months ended June 30, 2024 and 2023, respectively.

mostly offset by

• Lower net additions from wearables;

• Lower net additions from High Speed Internet, primarily driven by increased deactivations from a growing customer base and lower gross additions driven by sunsetting of promotional pricing, partially offset by a lower churn rate;

• Slightly higher postpaid phone net customer additions, primarily due to higher gross additions and higher prepaid to postpaid migrations, mostly offset by increased deactivations from a growing customer base.

• High Speed Internet net customer additions included in postpaid other net customer additions were 1,089,000 and 1,397,000 for the nine months ended September 30, 2024 and 2023, respectively.

High Speed Internet net customer additions included in prepaid net customer additions were 137,000 and 192,000 for the nine months ended September 30, 2024 and 2023, respectively.

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

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Three Months Ended

June 30, Change Six Months Ended

June 30, Change

September 30, Change Nine Months Ended

September 30, Change

2024 2023 2024 2023

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Prepaid churn 2.78 % 2.81 % -3 bps 2.69 % 2.73 % -4 bps

Postpaid phone churn increased 3 basis points for the three months ended June 30, 2024, primarily due to rate plan optimizations.

Postpaid phone churn was flat for the six months ended June 30, 2024, impacted by:

• Improved customer retention driven by value and network leadership;

• Rate plan optimizations.

Prepaid churn decreased 8 basis points for the three months ended and decreased 5 basis points for the six months ended June 30, 2024, primarily driven by the inclusion of prepaid customers associated with the Ka’ena Acquisition with lower churn.

Postpaid phone churn decreased slightly for the three months ended September 30, 2024, and was relatively flat for the nine months ended September 30, 2024.

Prepaid churn decreased 3 basis points for the three months ended September 30, 2024, primarily due to promotional activity.

Prepaid churn decreased 4 basis points for the nine months ended September 30, 2024, primarily driven by the inclusion of prepaid customers associated with the Ka’ena Acquisition with lower churn.

Postpaid Average Revenue Per Account

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(in dollars) Three Months Ended

June 30, Change Six Months Ended

June 30, Change

September 30, Change Nine Months Ended

September 30, Change

2024 2023 $ % 2024 2023 $ %

Postpaid ARPA $ 145.60 $ 139.83 $ 5.77 4 % $ 143.02 $ 138.94 $ 4.08 3 %

Postpaid ARPA increased $3.60, or 3%, for the three months ended and increased $3.22, or 2%, for the six months ended June 30, 2024, primarily from:

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

Postpaid ARPA increased $5.77, or 4%, for the three months ended and increased $4.08, or 3%, for the nine months ended September 30, 2024, primarily from:

• Higher premium services, primarily high-end rate plans, net of contra-revenues for content included in such plans, and discounts for specific affinity groups, such as 55+, military and first responders;

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

• The impact from rate plan optimizations;

partially offset by

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Average Revenue per User (“ARPU”) represents the average monthly service revenue earned per customer.

ARPU is calculated as service revenues for the specified period divided by the average number of customers during the period, further divided by

the number of months in the period.

ARPU is calculated as service revenues for the specified period divided by the average number of customers during the period, further divided by the number of months in the period.

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

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(in dollars) Three Months Ended

June 30, Change Six Months Ended

June 30, Change

September 30, Change Nine Months Ended

September 30, Change

2024 2023 $ % 2024 2023 $ %

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Postpaid Phone ARPU

Postpaid phone ARPU was flat for the three months ended and six months ended June 30, 2024, primarily from:

Postpaid phone ARPU increased $0.86, or 2%, for the three months ended and increased $0.42, or 1%, for the nine months ended September 30, 2024, primarily from:

• The impact from rate plan optimizations;

partially offset by

• Increased promotional activity;

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

Prepaid ARPU decreased $2.04, or 5%, for the three months ended and decreased $1.46, or 4%, for the six months ended June 30, 2024, primarily from the inclusion of lower ARPU prepaid customers associated with the Ka’ena Acquisition.

Prepaid ARPU decreased $2.37, or 6%, for the three months ended and decreased $1.78, or 5%, for the nine months ended September 30, 2024, primarily from the inclusion of lower ARPU prepaid customers associated with the Ka’ena Acquisition.

Adjusted EBITDA and Core Adjusted EBITDA

Adjusted EBITDA represents earnings before Interest expense, net of Interest income, Income tax expense, Depreciation and amortization, stock-based compensation and certain expenses, gains and losses, which are not reflective of our ongoing operating performance (“Special Items”).

Special Items include Merger-related (gain) costs, net, loss (gain) on disposal groups held for sale, certain legal-related recoveries and expenses, restructuring costs not directly attributable to the Merger (including severance), and other non-core gains and losses.

Special Items include Merger-related costs, loss (gain) on disposal groups held for sale, certain legal-related recoveries and expenses, restructuring costs not directly attributable to the Merger (including severance), and other non-core gains and losses.

Core Adjusted EBITDA represents Adjusted EBITDA less device lease revenues.

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Three Months Ended

June 30, Change Six Months Ended

June 30, Change

September 30, Change Nine Months Ended

September 30, Change

(in millions, except percentages) 2024 2023 $ % 2024 2023 $ %

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Interest expense, net 836 790 46 6 % 2,570 2,486 84 3 %

Other expense (income), net 8 (6) 14 (233) % (12) (15) 3 (20) %

Other income, net (7) (41) 34 (83) % (19) (56) 37 (66) %

Income tax expense 908 705 203 29 % 2,515 2,053 462 23 %

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143 152 (9) (6) % 430 480 (50) (10) %

Merger-related (gain) costs, net (2)

Merger-related costs (2)

— 152 (152) (100) % 121 786 (665) (85) %

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1 — 1 NM 16 (43) 59 (137) %

Loss (gain) on disposal group held for sale — 17 (17) (100) % — (25) 25 (100) %

Gain on disposal group held for sale — — — NM — (25) 25 (100) %

Other, net (4)

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

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

(2) Merger-related (gain) costs, net, for the three and six months ended June 30, 2024, includes the $100 million gain recognized for the extension fee previously paid by DISH associated with the DISH License Purchase Agreement.

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

(2) Merger-related costs, for the nine months ended September 30, 2024, includes the $100 million gain recognized for the extension fee previously paid by DISH associated with the DISH License Purchase Agreement.

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

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

Other, net, for the three and nine months ended September 30, 2023, includes $471 million of severance and related costs associated with the August 2023 workforce reduction.

NM - Not meaningful

Core Adjusted EBITDA increased $691 million, or 9%, for the three months ended and increased $1.3 billion, or 9%, for the six months ended June 30, 2024.

Core Adjusted EBITDA increased $675 million, or 9%, for the three months ended and increased $1.9 billion, or 9%, for the nine months ended September 30, 2024.

The components comprising Core Adjusted EBITDA are discussed further above.

The increase for the three months ended June 30, 2024, was primarily from:

The increase for the three months ended September 30, 2024, was primarily from:

• Higher Total service revenues;

• Lower Cost of services, excluding Special Items.

The increase for the six months ended June 30, 2024, was primarily from:

• Higher Equipment revenues, excluding lease revenues;

partially offset by

• Higher Selling, general and administrative expenses, excluding Special Items.

The increase for the nine months ended September 30, 2024, was primarily from:

• Higher Total service revenues;

• Lower Cost of services, excluding Special Items;

• Lower Cost of equipment sales, excluding Special Items;

partially offset by

• Lower Equipment revenues, excluding lease revenues.

• Lower Other revenues.

Adjusted EBITDA increased $648 million, or 9%, for the three months ended and increased $1.1 billion, or 8%, for the six months ended June 30, 2024, primarily due to the fluctuations in Core Adjusted EBITDA, discussed above, partially offset by lower lease revenues, which decreased $43 million for the three months ended and decreased $155 million for the six months ended June 30, 2024.

Adjusted EBITDA increased $643 million, or 8%, for the three months ended and increased $1.7 billion, or 8%, for the nine months ended September 30, 2024, primarily due to the fluctuations in Core Adjusted EBITDA, discussed above, partially offset by lower lease revenues, which decreased $32 million for the three months ended and decreased $187 million for the nine months ended September 30, 2024.

Liquidity and Capital Resources

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Three Months Ended

June 30, Change Six Months Ended

June 30, Change

September 30, Change Nine Months Ended

September 30, Change

(in millions) 2024 2023 $ % 2024 2023 $ %

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Net cash used in investing activities (3,307) (1,393) (1,914) 137 % (6,772) (4,608) (2,164) 47 %

Net cash used in financing activities (4,134) (784) (3,350) 427 % (5,800) (3,057) (2,743) 90 %

Net cash provided by (used in) financing activities 507 (5,510) 6,017 (109) % (5,293) (8,567) 3,274 (38) %

Operating Activities

Net cash provided by operating activities increased $1.2 billion, or 27%, for the three months ended and increased $2.2 billion, or 26%, for the six months ended June 30, 2024.

The increase for the three months ended June 30, 2024, was primarily from:

• A $954 million increase in Net income, adjusted for non-cash income and expense;

• A $212 million decrease in net cash outflows from changes in working capital, primarily due to lower use of cash from Accounts payable and accrued liabilities, Accounts receivable and Other current and long-term liabilities, partially offset by higher use of cash from Other current and long-term assets and Inventory.

• Net cash provided by operating activities includes the impact of $241 million and $728 million in net payments for Merger-related costs for the three months ended June 30, 2024 and 2023, respectively.

The increase for the six months ended June 30, 2024, was primarily from:

• A $1.7 billion increase in Net income, adjusted for non-cash income and expense;

• A $531 million decrease in net cash outflows from changes in working capital, primarily due to lower use of cash from Accounts receivable, partially offset by higher use of cash from Other current and long-term assets and Operating lease right-of-use assets.

• Net cash provided by operating activities includes the impact of $534 million and $1.2 billion in net payments for Merger-related costs for the six months ended June 30, 2024 and 2023, respectively.

Net cash provided by operating activities increased $845 million, or 16%, for the three months ended and increased $3.0 billion, or 22%, for the nine months ended September 30, 2024.

The increase for the three months ended September 30, 2024, was primarily from:

• A $1.2 billion increase in Net income, adjusted for non-cash income and expenses;

partially offset by

• A $308 million increase in net cash outflows from changes in working capital, primarily due to higher use of cash from Accounts payable and accrued liabilities, Equipment installment plan receivables, Inventory and Short- and long-term operating lease liabilities, partially offset by lower use of cash from Accounts receivable, Other current and long-term liabilities and Other current and long-term assets.

• Net cash provided by operating activities includes the impact of $124 million and $345 million in net payments for Merger-related costs for the three months ended September 30, 2024 and 2023, respectively.

The increase for the nine months ended September 30, 2024, was primarily from:

• A $2.8 billion increase in Net income, adjusted for non-cash income and expenses;

• A $223 million decrease in net cash outflows from changes in working capital, primarily due to lower use of cash from Accounts receivable and Other current and long-term liabilities, partially offset by higher use of cash from Other current and long-term assets, Accounts payable and accrued liabilities, Inventory, Operating lease right-of-use assets and Equipment installment plan receivables.

• Net cash provided by operating activities includes the impact of $658 million and $1.6 billion in net payments for Merger-related costs for the nine months ended September 30, 2024 and 2023, respectively.

Investing Activities

Net cash used in investing activities increased $191 million, or 13%, for the three months ended and increased $250 million, or 8%, for the six months ended June 30, 2024.

The use of cash for the three months ended June 30, 2024, was primarily from:

Net cash used in investing activities increased $1.9 billion, or 137%, for the three months ended and increased $2.2 billion, or 47%, for the nine months ended September 30, 2024.

The use of cash for the three months ended September 30, 2024, was primarily from:

• $2.4 billion in Purchases of spectrum licenses and other intangible assets, including deposits, primarily for the first tranche of 600 MHz licenses purchased from Channel 51 License Co LLC and LB License Co, LLC (see Note 6 – Goodwill, Spectrum License Transactions and Other Intangible Assets of the Notes to the Condensed Consolidated Financial Statements) ;

• $2.0 billion in Purchases of property and equipment, including capitalized interest, from the continued build-out of our nationwide 5G network ;

• $390 million of cash consideration, net of cash acquired, related to the Ka’ena Acquisition;

• $156 million in Purchases of spectrum licenses and other intangible assets, including deposits ;

partially offset by

• $984 million in Proceeds related to beneficial interests in securitization transactions.

The use of cash for the six months ended June 30, 2024, was primarily from:

The use of cash for the nine months ended September 30, 2024, was primarily from:

• $6.6 billion in Purchases of property and equipment, including capitalized interest, from the continued build-out of our nationwide 5G network;

• $2.6 billion in Purchases of spectrum licenses and other intangible assets, including deposits, primarily for the first tranche of 600 MHz licenses purchased from Channel 51 License Co LLC and LB License Co, LLC (see Note 6 – Goodwill, Spectrum License Transactions and Other Intangible Assets of the Notes to the Condensed Consolidated Financial Statements);

• $390 million of cash consideration, net of cash acquired, related to the Ka’ena Acquisition;

• $217 million in Purchases of spectrum licenses and other intangible assets, including deposits ;

partially offset by

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Financing Activities

Net cash used in financing activities increased $3.4 billion, or 427%, for the three months ended and increased $2.7 billion, or 90%, for the six months ended June 30, 2024.

The use of cash for the three months ended June 30, 2024, was primarily from:

• $2.7 billion in Repayments of long-term debt;

• $2.4 billion in Repurchases of common stock;

Net cash provided by financing activities increased $6.0 billion from a net use of cash for the three months ended September 30, 2023, to a net source of cash for the three months ended September 30, 2024.

Net cash used in financing activities decreased $3.3 billion, or 38%, for the nine months ended September 30, 2024.

The source of cash for the three months ended September 30, 2024, was primarily from:

• $2.5 billion in Proceeds from issuance of long-term debt;

partially offset by

• $758 million in Dividends on common stock;

• $560 million in Repurchases of common stock;

• $347 million in Repayments of financing lease obligations;

partially offset by

• $2.1 billion in Proceeds from issuance of long-term debt.

The use of cash for the six months ended June 30, 2024, was primarily from:

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

The use of cash for the nine months ended September 30, 2024, was primarily from:

• $6.5 billion in Repurchases of common stock;

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• $2.3 billion in Dividends on common stock ;

• $678 million in Repayments of financing lease obligations;

• $1.0 billion in Repayments of financing lease obligations;

• $244 million in Tax withholdings on share-based awards;

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Cash and Cash Equivalents

As of June 30, 2024, our Cash and cash equivalents were $6.4 billion compared to $5.1 billion at December 31, 2023.

As of September 30, 2024, our Cash and cash equivalents were $9.8 billion compared to $5.1 billion at December 31, 2023.

Adjusted Free Cash Flow

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

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

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

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

Three Months Ended

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(in millions, except percentages) 2024 2023 $ % 2024 2023 $ %

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Adjusted Free Cash Flow margin (Adjusted Free Cash Flow divided by Service revenues) 31 % 25 % 600 bps 26 % 20 % 600 bps

Adjusted Free Cash Flow increased $1.6 billion, or 54%, for the three months ended and increased $2.5 billion, or 48%, for the six months ended June 30, 2024, primarily from:

Adjusted Free Cash Flow increased $1.2 billion, or 29%, for the three months ended and increased $3.7 billion, or 40%, for the nine months ended September 30, 2024, primarily from:

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

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

• Adjusted Free Cash Flow includes the impact of $241 million and $728 million for the three months ended June 30, 2024 and 2023, respectively, and $534 million and $1.2 billion for the six months ended June 30, 2024 and 2023, respectively, in net payments for Merger-related costs.

During the six months ended June 30, 2024 and 2023, there were no significant net cash proceeds from securitization.

• Adjusted Free Cash Flow includes the impact of $124 million and $345 million for the three months ended September 30, 2024 and 2023, respectively, and $658 million and $1.6 billion for the nine months ended September 30, 2024 and 2023, respectively, in net payments for Merger-related costs.

During the nine months ended September 30, 2024 and 2023, there were no significant net cash proceeds from securitization.

Subsequent to September 30, 2024, on October 22, 2024, we executed an amendment to the EIP Sale Arrangement and an amendment to the Service Receivable Sale Arrangement (together, the “Pledge Amendments”).

Following the effective date of the Pledge Amendments of November 1, 2024, all cash proceeds associated with the sale of such receivables, a portion of which is currently recognized as Proceeds related to beneficial interests in securitization transactions within Net cash used in investing activities on our Condensed Consolidated Statements of Cash Flows, will be recognized as operating cash flows.

The Pledge Amendments will not have a net impact on Adjusted Free Cash Flow.

See Note 5 – Sales of Certain Receivables of the Notes to the Condensed Consolidated Financial Statements for additional information.

Borrowing Capacity

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

As of June 30, 2024, there was no outstanding balance under the Revolving Credit Facility.

As of September 30, 2024, there was no outstanding balance under the Revolving Credit Facility.

We maintain 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 June 30, 2024, there was no outstanding balance under this program.

As of September 30, 2024, there was no outstanding balance under this program.

Debt Financing

As of June 30, 2024, our total debt and financing lease liabilities were $80.0 billion, excluding our tower obligations, of which $71.7 billion was classified as long-term debt and $1.1 billion was classified as long-term financing lease liabilities.

During the six months ended June 30, 2024, we issued long-term debt for net proceeds of $5.6 billion and repaid short-term debt with an aggregate principal amount of $2.9 billion.

As of September 30, 2024, our total debt and financing lease liabilities were $82.3 billion, excluding our tower obligations, of which $74.0 billion was classified as long-term debt and $1.2 billion was classified as long-term financing lease liabilities.

During the nine months ended September 30, 2024, we issued long-term debt for net proceeds of $8.1 billion and repaid short-term debt with an aggregate principal amount of $3.2 billion.

Subsequent to September 30, 2024, on October 9, 2024, we issued $500 million of 4.250% Class A Senior ABS Notes to third parties in a private placement transaction for net proceeds of approximately $498 million.

These ABS Notes are secured by $668 million of gross EIP receivables and future collections on such receivables.

The expected maturities of these ABS notes are $136 million due 2026 and $364 million due 2027.

Subsequent to September 30, 2024, on October 11, 2024, we delivered notice of redemption on $1.5 billion aggregate principal amount of our 7.625% Senior Notes due 2025.

We will redeem the notes at par on November 15, 2024.

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

License Purchase Agreements

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.

On March 30, 2023, we and

the Sellers entered into Amended and Restated License Purchase Agreements, pursuant to which we and the Sellers agreed to bifurcate the transaction into two tranches of licenses, with the closings on the acquisitions of certain licenses in Chicago, Dallas and New Orleans being deferred in order to potentially expedite the regulatory approval process for the remainder of the licenses.

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 (together with Channel 51 License Co LLC, the “Sellers”) in exchange for total cash consideration of $3.5 billion.

On March 30, 2023, we and the Sellers entered into Amended and Restated License Purchase Agreements, pursuant to which we and the Sellers agreed to bifurcate the transaction into two tranches of licenses, with the closings on the acquisitions of certain licenses in Chicago, Dallas and New Orleans being deferred in order to potentially expedite the regulatory approval process for the remainder of the licenses.

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

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The FCC approved the purchase of the first tranche on December 29, 2023.

The first tranche closed on June 24, 2024, with the associated payment of $2.4 billion due on August 5, 2024.

We anticipate that the second closing (on the deferred licenses) will occur in late 2024 or early 2025.

The first tranche closed on June 24, 2024, and the associated payment of $2.4 billion was made on August 5, 2024.

Subsequent to September 30, 2024, on October 22, 2024, the FCC approved the purchase of the Dallas licenses included in the second tranche.

We expect the closing on the Dallas licenses and the associated payment of $541 million to occur in December 2024.

We anticipate that the closing on the remaining deferred licenses in the second tranche will occur in 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.

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

On September 10, 2024, we entered into a license purchase agreement with N77 License Co LLC (“Buyer”), pursuant to which Buyer has the option to purchase all or a portion of our remaining 3.45 GHz spectrum licenses in exchange for a range of cash consideration, with the specific licenses sold to be determined based upon the amount of committed financing raised by Buyer.

As of September 30, 2024, and December 31, 2023, the licenses subject to the license purchase agreement were held at cost of $2.7 billion in Spectrum licenses on our Condensed Consolidated Balance Sheets.

We maintain the right to terminate the license purchase agreement no later than February 7, 2025, after our receipt of written notice of committed financing as of December 9, 2024, if Buyer’s committed financing is less than a certain target level of cash consideration.

If we do not terminate the license purchase agreement, the transaction is subject to FCC approval.

Acquisition of Ka’ena Corporation

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On April 24, 2024, we entered into a merger agreement with Fund VI for the joint acquisition by us and Fund VI of Lumos from EQT’s predecessor fund, EQT Infrastructure III.

The Lumos joint acquisition is expected to close in late 2024 or early 2025, subject to customary closing conditions and regulatory approvals.

The Lumos joint acquisition is expected to close in early 2025, subject to customary closing conditions and regulatory approvals.

At closing, we expect to invest approximately $950 million in the joint venture to acquire a 50% equity interest and all existing Lumos fiber customers.

The funds invested by us will be used to fund future fiber builds.

In addition, pursuant to the merger agreement, we expect to make an additional capital contribution of approximately $500 million in 2027 or 2028.

In addition, pursuant to the merger agreement, we expect to make an additional capital contribution of approximately $500 million in 2027 or 2028 for the existing business plan.

For more information regarding the Lumos joint venture, see Note 3 – Joint Ventures of the Notes to the Condensed Consolidated Financial Statements.

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Following the closing of the transaction, UScellular will retain ownership of its other spectrum, as well as its towers.

Subject to the closing of the transaction, we will enter into a 15-year master license agreement to lease space on at least 2,100 towers being retained.

Additionally, we will extend our tenancy term on approximately 600 towers where we are already leasing space from UScellular for 15 years post-closing.

Subject to the closing of the transaction, we will enter into a 15-year master license agreement to lease space on at least 2,100 towers being retained and to extend our tenancy term on approximately 600 towers where we are already leasing space from UScellular for 15 years post-closing.

We estimate the incremental future minimum lease payments associated with the master license agreement will be $1.4 billion over 15 years post-closing.

Metronet Joint Venture

Subsequent to June 30, 2024, on July 18, 2024, we entered into a definitive agreement with KKR to establish a joint venture to acquire Metronet.

On July 18, 2024, we entered into a definitive agreement with KKR to establish a joint venture to acquire Metronet.

This arrangement is expected to close in 2025, subject to customary closing conditions and regulatory approvals.

At closing, we expect to invest approximately $4.9 billion in the joint venture to acquire a 50% equity interest and all existing residential fiber customers, as well as funding the joint venture.

We do not anticipate making further capital contributions following the closing.

We do not anticipate making further capital contributions following the closing for the existing business plan.

For more information regarding the Metronet joint venture, see Note 3 – Joint Ventures of the Notes to the Condensed Consolidated Financial Statements.

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

As of June 30, 2024, we derecognized net receivables of $2.3 billion upon sale through these arrangements.

As of September 30, 2024, we derecognized net receivables of $2.3 billion upon sale through these arrangements.

For more information regarding these off-balance sheet arrangements, see Note 5 – Sales of Certain Receivables of the Notes to the Condensed Consolidated Financial Statements.

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

We were in compliance with all restrictive debt covenants as of June 30, 2024.

We were in compliance with all restrictive debt covenants as of September 30, 2024.

Financing Lease Facilities

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

As of June 30, 2024, we have entered into $9.3 billion of financing leases under these financing lease facilities, of which $309 million and $567 million was executed during the three and six months ended June 30, 2024, respectively.

As of September 30, 2024, we have entered into $9.7 billion of financing leases under these financing lease facilities, of which $402 million and $969 million was executed during the three and nine months ended September 30, 2024, respectively.

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

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We expect a reduction in capital expenditures related to these efforts in 2024 compared to 2023 given the substantial deployment of the 5G network completed in the preceding years.

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

Future capital expenditure requirements will include the deployment of our acquired C-band licenses.

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

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

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

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

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

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

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

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 was paid on March 14, 2024, to stockholders of record as of the close of business on March 1, 2024.

On March 15, 2024, our Board of Directors declared a cash dividend of $0.65 per share on our issued and outstanding shares of common stock, which was paid on June 13, 2024, to stockholders of record as of the close of business on May 31, 2024.

On June 13, 2024, our Board of Directors declared a cash dividend of $0.65 per share on our issued and outstanding common stock, which will be paid on September 12, 2024, to stockholders of record as of the close of business on August 30, 2024.

During the three and six months ended June 30, 2024, we paid an aggregate of $759 million and $1.5 billion, respectively, in cash dividends to our stockholders, which was presented within Net cash used in financing activities on our Condensed Consolidated Statements of Cash Flows.

As of June 30, 2024, $758 million for dividends payable is presented within Other current liabilities on our Condensed Consolidated Balance Sheets.

During the three months ended June 30, 2024, we repurchased 13,979,843 shares of our common stock at an average price per share of $162.85 for a total purchase price of $2.3 billion, and during the six months ended June 30, 2024, we repurchased 35,913,633 shares of common stock at an average price per share of $162.75 for a total purchase price of $5.8 billion, under the 2023-2024 Stockholder Return Program.

As of June 30, 2024, we had up to $8.7 billion remaining under the 2023-2024 Stockholder Return Program for repurchases of shares and quarterly dividends through December 31, 2024.

The next quarterly cash dividend will be paid on September 12, 2024.

On March 15, 2024, our Board of Directors declared a cash dividend of $0.65 per share on our issued and outstanding common stock, which was paid on June 13, 2024, to stockholders of record as of the close of business on May 31, 2024.

On June 13, 2024, our Board of Directors declared a cash dividend of $0.65 per share on our issued and outstanding common stock, which was paid on September 12, 2024, to stockholders of record as of the close of business on August 30, 2024.

On September 18, 2024, our Board of Directors declared a cash dividend of $0.88 per share on our issued and outstanding common stock, which will be paid on December 12, 2024, to stockholders of record as of the close of business on November 27, 2024.

During the three and nine months ended September 30, 2024, we paid an aggregate of $758 million and $2.3 billion, respectively, in cash dividends to our stockholders, which was presented within Net cash provided by (used in) financing activities on our Condensed Consolidated Statements of Cash Flows.

As of September 30, 2024, $1.0 billion for dividends payable is presented within Other current liabilities on our Condensed Consolidated Balance Sheets.

During the three months ended September 30, 2024, we repurchased 3,179,707 shares of our common stock at an average price per share of $202.45 for a total purchase price of $644 million, and during the nine months ended September 30, 2024, we repurchased 39,093,340 shares of common stock at an average price per share of $165.98 for a total purchase price of $6.5 billion, under the 2023-2024 Stockholder Return Program.

As of September 30, 2024, we had up to $7.3 billion remaining under the 2023-2024 Stockholder Return Program for repurchases of shares and quarterly dividends through December 31, 2024.

Subsequent to September 30, 2024, from October 1, 2024, through October 18, 2024, we repurchased 4,186,019 shares of our common stock at an average price per share of $212.88 for a total purchase price of $891 million.

As of October 18, 2024, we had up to $6.4 billion remaining under the 2023-2024 Stockholder Return Program for repurchases of shares and quarterly dividends through December 31, 2024.

For additional information regarding the 2023-2024 Stockholder Return Program, see Note 11 – Stockholder Return Program of the Notes to the Condensed Consolidated Financial Statements.

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

As of July 26, 2024, DT and SoftBank held, directly or indirectly, approximately 50.4% and 7.3%, respectively, of the outstanding T-Mobile common stock, with the remaining approximately 42.3% of the outstanding T-Mobile common stock held by other stockholders.

As a result of the Proxy, Lock-Up and ROFR Agreement, dated April 1, 2020, by and between DT and SoftBank, DT has voting control, as of July 26, 2024, over approximately 57.4% of the outstanding T-Mobile common stock.

As of October 18, 2024, DT and SoftBank held, directly or indirectly, approximately 50.7% and 7.4%, respectively, of the outstanding T-Mobile common stock, with the remaining approximately 41.9% of the outstanding T-Mobile common stock held by other stockholders.

As a result of the Proxy, Lock-Up and ROFR Agreement, dated April 1, 2020, by and between DT and SoftBank, DT has voting control, as of October 18, 2024, over approximately 57.8% of the outstanding T-Mobile common stock.

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

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

As of the date of this report, we are not aware of any activity, transaction or dealing by us or any of our affiliates for the three months ended June 30, 2024, that requires disclosure in this report under Section 13(r) of the Exchange Act, except as set forth below with respect to affiliates that we do not control and that are our affiliates solely due to their common control with either DT or SoftBank.

As of the date of this report, we are not aware of any activity, transaction or dealing by us or any of our affiliates for the three months ended September 30, 2024, that requires disclosure in this report under Section 13(r) of the Exchange Act, except as set forth below with respect to affiliates that we do not control and that are our affiliates solely due to their common control with either DT or SoftBank.

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

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

In addition, during the three months ended June 30, 2024, DT, through certain of its non-U.S.

In addition, during the three months ended September 30, 2024, DT, through certain of its non-U.S.

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

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

For the three months ended June 30, 2024, gross revenues of all DT affiliates generated by roaming and interconnection traffic and telecommunications services with the Iranian parties identified herein were less than $0.1 million, and the estimated net profits were less than $0.1 million.

For the three months ended September 30, 2024, gross revenues of all DT affiliates generated by roaming and interconnection traffic and telecommunications services with the Iranian parties identified herein were less than $0.1 million, and the estimated net profits were less than $0.1 million.

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

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

Gross revenues and net profits recorded from these activities for the three months ended June 30, 2024, were less than $0.1 million.

Gross revenues and net profits recorded from these activities for the three months ended September 30, 2024, were less than $0.1 million.

We understand that DT intends to continue these activities.

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

During the three months ended June 30, 2024, SoftBank had no gross revenues from such services, and no net profit was generated.

During the three months ended September 30, 2024, SoftBank had no gross revenues from such services, and no net profit was generated.

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

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

During the three months ended June 30, 2024, SoftBank estimates that gross revenues and net profit generated by such services were both under $0.1 million.

During the three months ended September 30, 2024, SoftBank estimates that gross revenues and net profit generated by such services were both under $0.1 million.

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

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

SoftBank estimates that gross revenues and net profit generated by such services during the three months ended June 30, 2024, were both under $0.1 million.

SoftBank estimates that gross revenues and net profit generated by such services during the three months ended September 30, 2024, were both under $0.1 million.

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

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis