Table of Contents


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

☒          QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 20172022
or
¨
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from    to

Commission File Number: 1-33409
tmuslogo.jpgtmus-20220930_g1.jpg
T-MOBILE US, INC.
(Exact name of registrant as specified in its charter)
DELAWAREDelaware20-0836269
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
12920 SE 38th Street, Bellevue, Washington98006-1350
(Address of principal executive offices)(Zip Code)
(425) 378-4000

12920 SE 38th Street
Bellevue,Washington
(Address of principal executive offices)
98006-1350
(Zip Code)
(425)378-4000
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:

Title of each classTrading SymbolName of each exchange on which registered
Common Stock, par value $0.00001 per shareTMUSThe NASDAQ Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x☒ No ¨☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x☒ No ¨☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer☒Accelerated filer☐
Non-accelerated filer☐Smaller reporting company☐
Emerging growth company☐
Large accelerated filer     x                        Accelerated filer             ¨
Non-accelerated filer     ¨ (Do not check if a smaller reporting company)    Smaller reporting company     ¨
Emerging growth company    ¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).      Yes ¨☐ No x☒
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

ClassShares Outstanding as of October 19, 2017
20, 2022
Common Stock, $0.00001 par value $0.00001 per share1,244,154,134 831,964,098




1

T-Mobile US, Inc.
Form 10-Q
For the Quarter Ended September 30, 20172022


Table of Contents
PART I. FINANCIAL INFORMATION
3
Condensed Consolidated Balance Sheets
3
Condensed Consolidated Statements of Comprehensive Income
4
Condensed Consolidated Statements of Cash Flows
5
Condensed Consolidated Statement of Stockholders’ Equity
6
69
3331
5655
5655
5755
5756
5760
5760
5760
5760
5761
5862
SIGNATURE
59




2
Index for Notes to the Condensed Consolidated Financial Statements
PART I. FINANCIAL INFORMATION

Item 1. Financial Statements


T-Mobile US, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)

(in millions, except share and per share amounts)September 30,
2017		 December 31,
2016		(in millions, except share and per share amounts)September 30,
2022		December 31,
2021
Assets   Assets
Current assets   Current assets
Cash and cash equivalents$739
 $5,500
Cash and cash equivalents$6,888 $6,631 
Accounts receivable, net of allowances of $86 and $1021,734
 1,896
Equipment installment plan receivables, net2,136
 1,930
Accounts receivable from affiliates24
 40
Inventories999
 1,111
Asset purchase deposit—
 2,203
Accounts receivable, net of allowance for credit losses of $161 and $146Accounts receivable, net of allowance for credit losses of $161 and $1464,324 4,194 
Equipment installment plan receivables, net of allowance for credit losses and imputed discount of $624 and $494Equipment installment plan receivables, net of allowance for credit losses and imputed discount of $624 and $4945,048 4,748 
InventoryInventory2,247 2,567 
Prepaid expensesPrepaid expenses711 746 
Other current assets1,817
 1,537
Other current assets2,209 2,005 
Total current assets7,449
 14,217
Total current assets21,427 20,891 
Property and equipment, net21,570
 20,943
Property and equipment, net41,034 39,803 
Operating lease right-of-use assetsOperating lease right-of-use assets29,264 26,959 
Financing lease right-of-use assetsFinancing lease right-of-use assets3,619 3,322 
Goodwill1,683
 1,683
Goodwill12,234 12,188 
Spectrum licenses35,007
 27,014
Spectrum licenses95,767 92,606 
Other intangible assets, net256
 376
Other intangible assets, net3,763 4,733 
Equipment installment plan receivables due after one year, net1,100
 984
Equipment installment plan receivables due after one year, net of allowance for credit losses and imputed discount of $125 and $136Equipment installment plan receivables due after one year, net of allowance for credit losses and imputed discount of $125 and $1362,514 2,829 
Other assets858
 674
Other assets3,877 3,232 
Total assets$67,923
 $65,891
Total assets$213,499 $206,563 
Liabilities and Stockholders' Equity   Liabilities and Stockholders' Equity
Current liabilities   Current liabilities
Accounts payable and accrued liabilities$6,071
 $7,152
Accounts payable and accrued liabilities$11,971 $11,405 
Payables to affiliates288
 125
Short-term debt558
 354
Short-term debt7,398 3,378 
Short-term debt to affiliatesShort-term debt to affiliates— 2,245 
Deferred revenue790
 986
Deferred revenue777 856 
Short-term operating lease liabilitiesShort-term operating lease liabilities3,367 3,425 
Short-term financing lease liabilitiesShort-term financing lease liabilities1,239 1,120 
Other current liabilities396
 405
Other current liabilities1,610 1,070 
Total current liabilities8,103
 9,022
Total current liabilities26,362 23,499 
Long-term debt13,163
 21,832
Long-term debt64,834 67,076 
Long-term debt to affiliates14,586
 5,600
Long-term debt to affiliates1,495 1,494 
Tower obligations2,599
 2,621
Tower obligations3,970 2,806 
Deferred tax liabilities5,535
 4,938
Deferred tax liabilities10,397 10,216 
Deferred rent expense2,693
 2,616
Operating lease liabilitiesOperating lease liabilities30,271 25,818 
Financing lease liabilitiesFinancing lease liabilities1,590 1,455 
Other long-term liabilities967
 1,026
Other long-term liabilities4,430 5,097 
Total long-term liabilities39,543
 38,633
Total long-term liabilities116,987 113,962 
Commitments and contingencies (Note 10)

 

Commitments and contingencies (Note 14)Commitments and contingencies (Note 14)
Stockholders' equity   Stockholders' equity
5.50% Mandatory Convertible Preferred Stock Series A, par value $0.00001 per share, 100,000,000 shares authorized; 20,000,000 and 20,000,000 shares issued and outstanding; $1,000 and $1,000 aggregate liquidation value—
 —
Common Stock, par value $0.00001 per share, 1,000,000,000 shares authorized; 833,418,809 and 827,768,818 shares issued, 831,963,343 and 826,357,331 shares outstanding—
 —
Common Stock, par value $0.00001 per share, 2,000,000,000 shares authorized; 1,256,555,323 and 1,250,751,148 shares issued, 1,250,104,426 and 1,249,213,681 shares outstandingCommon Stock, par value $0.00001 per share, 2,000,000,000 shares authorized; 1,256,555,323 and 1,250,751,148 shares issued, 1,250,104,426 and 1,249,213,681 shares outstanding— — 
Additional paid-in capital39,058
 38,846
Additional paid-in capital73,797 73,292 
Treasury stock, at cost, 1,455,466 and 1,411,487 shares issued(4) (1)
Accumulated other comprehensive income4
 1
Treasury stock, at cost, 6,450,896 and 1,537,468 shares issuedTreasury stock, at cost, 6,450,896 and 1,537,468 shares issued(685)(13)
Accumulated other comprehensive lossAccumulated other comprehensive loss(1,263)(1,365)
Accumulated deficit(18,781) (20,610)Accumulated deficit(1,699)(2,812)
Total stockholders' equity20,277
 18,236
Total stockholders' equity70,150 69,102 
Total liabilities and stockholders' equity$67,923
 $65,891
Total liabilities and stockholders' equity$213,499 $206,563 
The accompanying notes are an integral part of these condensed consolidated financial statements.

3
Index for Notes to the Condensed Consolidated Financial Statements
T-Mobile US, Inc.
Condensed Consolidated Statements of Comprehensive Income
(Unaudited)

Three Months Ended September 30,Nine Months Ended September 30,
(in millions, except share and per share amounts)(in millions, except share and per share amounts)2022202120222021
RevenuesRevenues
Postpaid revenuesPostpaid revenues$11,548 $10,804 $34,194 $31,599 
Prepaid revenuesPrepaid revenues2,484 2,481 7,408 7,259 
Wholesale and other service revenuesWholesale and other service revenues1,329 1,437 4,203 4,548 
Total service revenuesTotal service revenues15,361 14,722 45,805 43,406 
Equipment revenuesEquipment revenues3,855 4,660 12,679 15,221 
Other revenuesOther revenues261 242 814 706 
Total revenuesTotal revenues19,477 19,624 59,298 59,333 
Operating expensesOperating expenses
Cost of services, exclusive of depreciation and amortization shown separately belowCost of services, exclusive of depreciation and amortization shown separately below3,712 3,538 11,499 10,413 
Cost of equipment sales, exclusive of depreciation and amortization shown separately belowCost of equipment sales, exclusive of depreciation and amortization shown separately below4,982 5,145 16,036 15,740 
Selling, general and administrativeSelling, general and administrative5,118 5,212 16,030 14,840 
Impairment expenseImpairment expense— — 477 — 
Loss on disposal group held for saleLoss on disposal group held for sale1,071 — 1,071 — 
Depreciation and amortizationDepreciation and amortization3,313 4,145 10,389 12,511 
Total operating expensesTotal operating expenses18,196 18,040 55,502 53,504 
Operating incomeOperating income1,281 1,584 3,796 5,829 
Other expense, netOther expense, net
Interest expense, netInterest expense, net(827)(836)(2,542)(2,521)
Other expense, netOther expense, net(3)(60)(35)(186)
Total other expense, netTotal other expense, net(830)(896)(2,577)(2,707)
Income before income taxesIncome before income taxes451 688 1,219 3,122 
Income tax benefit (expense)Income tax benefit (expense)57 3 (106)(520)
Net incomeNet income$508 $691 $1,113 $2,602 
Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
(in millions, except share and per share amounts)  (As Adjusted - See Note 1)   (As Adjusted - See Note 1)
Revenues       
Branded postpaid revenues$4,920
 $4,647
 $14,465
 $13,458
Branded prepaid revenues2,376
 2,182
 7,009
 6,326
Wholesale revenues274
 238
 778
 645
Roaming and other service revenues59
 66
 151
 170
Total service revenues7,629
 7,133
 22,403
 20,599
Equipment revenues2,118
 1,948
 6,667
 5,987
Other revenues272
 224
 775
 670
Total revenues10,019
 9,305
 29,845
 27,256
Operating expenses       
Cost of services, exclusive of depreciation and amortization shown separately below1,594
 1,436
 4,520
 4,286
Cost of equipment sales2,617
 2,539
 8,149
 7,532
Selling, general and administrative3,098
 2,898
 8,968
 8,419
Depreciation and amortization1,416
 1,568
 4,499
 4,695
Cost of MetroPCS business combination—
 15
 —
 110
Gains on disposal of spectrum licenses(29) (199) (67) (835)
Total operating expense8,696
 8,257
 26,069
 24,207
Operating income1,323
 1,048
 3,776
 3,049
Other income (expense)       
Interest expense(253) (376) (857) (1,083)
Interest expense to affiliates(167) (76) (398) (248)
Interest income2
 3
 15
 9
Other income (expense), net1
 (1) (89) (6)
Total other expense, net(417) (450) (1,329) (1,328)
Income before income taxes906
 598
 2,447
 1,721
Income tax expense(356) (232) (618) (651)
Net income550
 366
 1,829
 1,070
Net income$508 $691 $1,113 $2,602 
Dividends on preferred stock(13) (13) (41) (41)
Net income attributable to common stockholders$537
 $353
 $1,788
 $1,029
Other comprehensive income, net of taxOther comprehensive income, net of tax
       
Net Income$550
 $366
 $1,829
 $1,070
Other comprehensive income, net of tax       
Unrealized gain on available-for-sale securities, net of tax effect $0, $1, $2 and $11
 2
 3
 2
Reclassification of loss from cash flow hedges, net of tax effect of $13, $12, $39, and $36Reclassification of loss from cash flow hedges, net of tax effect of $13, $12, $39, and $3639 35 113 103 
Unrealized loss on foreign currency translation adjustment, net of tax effect of $0, $0, $(1), and $0Unrealized loss on foreign currency translation adjustment, net of tax effect of $0, $0, $(1), and $0(7)(3)(11)— 
Other comprehensive income1
 2
 3
 2
Other comprehensive income32 32 102 103 
Total comprehensive income$551
 $368
 $1,832
 $1,072
Total comprehensive income$540 $723 $1,215 $2,705 
Earnings per share       Earnings per share
BasicBasic$0.40 $0.55 $0.89 $2.09 
DilutedDiluted$0.40 $0.55 $0.88 $2.07 
Weighted-average shares outstandingWeighted-average shares outstanding
Basic$0.65
 $0.43
 $2.15
 $1.25
Basic1,253,873,429 1,248,189,719 1,252,783,140 1,246,441,464 
Diluted$0.63
 $0.42
 $2.10
 $1.24
Diluted1,259,210,271 1,253,661,245 1,258,061,478 1,254,391,787 
Weighted average shares outstanding       
Basic831,189,779
 822,998,697
 829,974,146
 821,626,675
Diluted871,420,065
 832,257,819
 871,735,511
 831,241,027
The accompanying notes are an integral part of these condensed consolidated financial statements.

4
Index for Notes to the Condensed Consolidated Financial Statements
T-Mobile US, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)

Three Months Ended September 30, Nine Months Ended September 30,Three Months Ended September 30,Nine Months Ended September 30,
(in millions)2017 2016 2017 2016(in millions)2022202120222021
Operating activities       Operating activities
Net income$550
 $366
 $1,829
 $1,070
Net income$508 $691 $1,113 $2,602 
Adjustments to reconcile net income to net cash provided by operating activities
      Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization1,416
 1,568
 4,499
 4,695
Depreciation and amortization3,313 4,145 10,389 12,511 
Stock-based compensation expense82
 59
 221
 171
Stock-based compensation expense150 131 445 403 
Deferred income tax expense347
 219
 595
 623
Deferred income tax (benefit) expenseDeferred income tax (benefit) expense(36)(27)73 410 
Bad debt expense123
 118
 298
 358
Bad debt expense239 105 760 259 
Losses from sales of receivables67
 59
 242
 157
Deferred rent expense21
 32
 61
 97
Gains on disposal of spectrum licenses(29) (199) (67) (835)
Losses (gains) from sales of receivablesLosses (gains) from sales of receivables60 4 168 (26)
Losses on redemption of debtLosses on redemption of debt— 55 — 184 
Impairment expenseImpairment expense— — 477 — 
Loss on remeasurement of disposal group held for saleLoss on remeasurement of disposal group held for sale371 — 371 — 
Changes in operating assets and liabilities       Changes in operating assets and liabilities
Accounts receivable(119) (155) (166) (462)Accounts receivable(1,224)(454)(3,781)(2,197)
Equipment installment plan receivables(154) 104
 (520) 556
Equipment installment plan receivables(77)(530)(801)(1,825)
Inventories113
 301
 (28) (497)Inventories(7)41 384 904 
Deferred purchase price from sales of receivables6
 (16) (12) (199)
Operating lease right-of-use assetsOperating lease right-of-use assets1,113 1,334 4,275 3,730 
Other current and long-term assets(184) (98) (330) 31
Other current and long-term assets(334)(88)(450)(188)
Accounts payable and accrued liabilities(12) (731) (607) (1,568)Accounts payable and accrued liabilities342 111 319 (1,245)
Other current and long term liabilities60
 112
 (84) 326
Short- and long-term operating lease liabilitiesShort- and long-term operating lease liabilities(700)(2,046)(2,218)(4,411)
Other current and long-term liabilitiesOther current and long-term liabilities550 (87)587 (351)
Other, net75
 1
 (27) 10
Other, net123 92 334 157 
Net cash provided by operating activities2,362
 1,740
 5,904
 4,533
Net cash provided by operating activities4,391 3,477 12,445 10,917 
Investing activities       Investing activities
Purchases of property and equipment, including capitalized interest of $29, $17, $111 and $71(1,441) (1,159) (4,316) (3,843)
Purchases of property and equipment, including capitalized interest of $(16), $(46), $(44), and $(187)Purchases of property and equipment, including capitalized interest of $(16), $(46), $(44), and $(187)(3,634)(2,944)(10,587)(9,397)
Purchases of spectrum licenses and other intangible assets, including deposits(15) (705) (5,820) (3,544)Purchases of spectrum licenses and other intangible assets, including deposits(360)(407)(3,319)(9,337)
Sales of short-term investments—
 —
 —
 2,998
Proceeds from sales of tower sitesProceeds from sales of tower sites— — — 31 
Proceeds related to beneficial interests in securitization transactionsProceeds related to beneficial interests in securitization transactions1,308 1,071 3,614 3,099 
Acquisition of companies, net of cash and restricted cash acquiredAcquisition of companies, net of cash and restricted cash acquired— (1,886)(52)(1,916)
Other, net1
 5
 (2) 3
Other, net131 14 138 46 
Net cash used in investing activities(1,455) (1,859) (10,138) (4,386)Net cash used in investing activities(2,555)(4,152)(10,206)(17,474)
Financing activities       Financing activities
Proceeds from issuance of long-term debt500
 —
 10,480
 997
Proceeds from issuance of long-term debt2,972 1,989 2,972 11,758 
Proceeds from borrowing on revolving credit facility1,055
 —
 2,910
 —
Repayments of revolving credit facility(1,735) —
 (2,910) —
Repayments of capital lease obligations(141) (54) (350) (133)
Repayments of short-term debt for purchases of inventory, property and equipment, net(4) —
 (296) (150)
Repayments of financing lease obligationsRepayments of financing lease obligations(311)(266)(901)(822)
Repayments of short-term debt for purchases of inventory, property and equipment and other financial liabilitiesRepayments of short-term debt for purchases of inventory, property and equipment and other financial liabilities— (76)— (167)
Repayments of long-term debt—
 (5) (10,230) (15)Repayments of long-term debt(132)(4,600)(3,145)(9,969)
Repurchases of common stockRepurchases of common stock(557)— (557)— 
Tax withholdings on share-based awards(6) (3) (101) (52)Tax withholdings on share-based awards(10)(14)(225)(308)
Dividends on preferred stock(13) (13) (41) (41)
Cash payments for debt prepayment or debt extinguishment costsCash payments for debt prepayment or debt extinguishment costs— (45)— (116)
Other, net(5) 8
 11
 17
Other, net(35)(48)(97)(139)
Net cash (used in) provided by financing activities(349) (67) (527) 623
Change in cash and cash equivalents558
 (186) (4,761) 770
Cash and cash equivalents       
Net cash provided by (used in) financing activitiesNet cash provided by (used in) financing activities1,927 (3,060)(1,953)237 
Change in cash and cash equivalents, including restricted cash and cash held for saleChange in cash and cash equivalents, including restricted cash and cash held for sale3,763 (3,735)286 (6,320)
Cash and cash equivalents, including restricted cash and cash held for saleCash and cash equivalents, including restricted cash and cash held for sale
Beginning of period181
 5,538
 5,500
 4,582
Beginning of period3,226 7,878 6,703 10,463 
End of period$739
 $5,352
 $739
 $5,352
End of period$6,989 $4,143 $6,989 $4,143 
Supplemental disclosure of cash flow information       
Interest payments, net of amounts capitalized, $0, $0, $79 and $0 of which recorded as debt discount (Note 7)$343
 $478
 $1,565
 $1,292
Income tax payments2
 4
 23
 23
Changes in accounts payable for purchases of property and equipment(141) (79) (458) (307)
Leased devices transferred from inventory to property and equipment262
 234
 775
 1,175
Returned leased devices transferred from property and equipment to inventory(165) (186) (635) (422)
Issuance of short-term debt for financing of property and equipment1
 —
 291
 150
Assets acquired under capital lease obligations138
 384
 735
 679
The accompanying notes are an integral part of these condensed consolidated financial statements.

5
Index for Notes to the Condensed Consolidated Financial Statements
T-Mobile US, Inc.
Condensed Consolidated Statement of Stockholders’ Equity
(Unaudited)

(in millions, except shares)Common Stock OutstandingTreasury Stock OutstandingTreasury Shares at CostPar Value and Additional Paid-in CapitalAccumulated Other Comprehensive LossAccumulated DeficitTotal Stockholders' Equity
Balance as of June 30, 20221,254,010,072 1,564,549 $(16)$73,552 $(1,295)$(2,207)$70,034 
Net income— — — — — 508 508 
Other comprehensive income— — — — 32 — 32 
Stock-based compensation— — — 165 — — 165 
Exercise of stock options26,614 — — 1 — — 1 
Stock issued for employee stock purchase plan802,361 — — 89 — — 89 
Issuance of vested restricted stock units219,301 — — — — — — 
Forfeiture of restricted stock awards(42)42 — — — — — 
Shares withheld related to net share settlement of stock awards and stock options(67,575)— — (10)— — (10)
Repurchases of common stock(4,892,315)4,892,315 (669)— — — (669)
Transfers with NQDC plan6,010 (6,010)— — — — — 
Balance as of September 30, 20221,250,104,426 6,450,896 $(685)$73,797 $(1,263)$(1,699)$70,150 
Balance as of December 31, 20211,249,213,681 1,537,468 $(13)$73,292 $(1,365)$(2,812)$69,102 
Net income— — — — — 1,113 1,113 
Other comprehensive income— — — — 102 — 102 
Stock-based compensation— — — 490 — — 490 
Exercise of stock options116,817 — — 5 — — 5 
Stock issued for employee stock purchase plan2,079,086 — — 227 — — 227 
Issuance of vested restricted stock units5,380,712 — — — — — — 
Forfeiture of restricted stock awards(42)42 — — — — — 
Shares withheld related to net share settlement of stock awards and stock options(1,772,442)— — (225)— — (225)
Repurchases of common stock(4,892,315)4,892,315 (669)— — — (669)
Remeasurement of uncertain tax positions— — — 5 — — 5 
Transfers with NQDC plan(21,071)21,071 (3)3 — — — 
Balance as of September 30, 20221,250,104,426 6,450,896 $(685)$73,797 $(1,263)$(1,699)$70,150 
The accompanying notes are an integral part of these condensed consolidated financial statements.

6
Index for Notes to the Condensed Consolidated Financial Statements
T-Mobile US, Inc.
Condensed Consolidated Statement of Stockholders’ Equity
(Unaudited)

(in millions, except shares)Common Stock OutstandingTreasury Stock OutstandingTreasury Shares at CostPar Value and Additional Paid-in CapitalAccumulated Other Comprehensive LossAccumulated DeficitTotal Stockholders' Equity
Balance as of June 30, 20211,247,920,536 1,557,821 $(14)$72,919 $(1,510)$(3,925)$67,470 
Net income— — — — — 691 691 
Other comprehensive income— — — — 32 — 32 
Stock-based compensation— — — 147 — — 147 
Exercise of stock options14,578 — — 1 — — 1 
Stock issued for employee stock purchase plan917,444 — — 100 — — 100 
Issuance of vested restricted stock units256,605 — — — — — — 
Shares withheld related to net share settlement of stock awards and stock options(92,992)— — (14)— — (14)
Transfers with NQDC plan18,894 (18,894)1 (1)— — — 
Balance as of September 30, 20211,249,035,065 1,538,927 $(13)$73,152 $(1,478)$(3,234)$68,427 
Balance as of December 31, 20201,241,805,706 1,539,878 $(11)$72,772 $(1,581)$(5,836)$65,344 
Net income— — — — — 2,602 2,602 
Other comprehensive income— — — — 103 — 103 
Stock-based compensation— — — 451 — — 451 
Exercise of stock options195,618 — — 10 — — 10 
Stock issued for employee stock purchase plan2,189,697 — — 225 — — 225 
Issuance of vested restricted stock units7,281,702 — — — — — — 
Shares withheld related to net share settlement of stock awards and stock options(2,438,609)— — (308)— — (308)
Transfers with NQDC plan951 (951)(2)2 �� — — 
Balance as of September 30, 20211,249,035,065 1,538,927 $(13)$73,152 $(1,478)$(3,234)$68,427 
The accompanying notes are an integral part of these condensed consolidated financial statements.
7
Index for Notes to the Condensed Consolidated Financial Statements
T-Mobile US, Inc.
Index for Notes to the Condensed Consolidated Financial Statements


9
10
12
14
15
16
18
19
721
1021
1023
11
Note 5
Spectrum License Transactions
14
Note 6
Fair Value Measurements
15
Note 7
Debt
16
Note 8
Income Taxes
18
Note 9
Earnings Per Share
1924
24
2025
28
2129
30



8
T-Mobile US, Inc.
Index for Notes to the Condensed Consolidated Financial Statements
(Unaudited)T-Mobile US, Inc.

Notes to the Condensed Consolidated Financial Statements

Note 1 – Summary of Significant Accounting Policies

Basis of Presentation


The unaudited condensed consolidated financial statements of T-Mobile US, Inc. (“T-Mobile,” “we,” “our,” “us” or the “Company”) include all adjustments of a normal recurring nature necessary for the fair presentation of the results for the interim periods presented. The results for the interim periods are not necessarily indicative of those for the full year. The condensed consolidated financial statements should be read in conjunction with our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2016.2021.


On September 6, 2022, Sprint Communications LLC, a Kansas limited liability company and wholly owned subsidiary of the Company (“Sprint Communications”), Sprint LLC, a Delaware limited liability company and wholly owned subsidiary of the Company, and Cogent Infrastructure, Inc., a Delaware corporation (the “Buyer”) and a wholly owned subsidiary of Cogent Communications Holdings, Inc., entered into a Membership Interest Purchase Agreement (the “Purchase Agreement”), pursuant to which the Buyer will 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”).

The assets and liabilities of the Wireline Business disposal group are classified as held for sale and presented within Other current assets and Other current liabilities on our Condensed Consolidated Balance Sheets as of September 30, 2022. The fair value of the Wireline Business disposal group, less costs to sell, will be reassessed during each reporting period it remains classified as held for sale, and any remeasurement to the lower of carrying amount or fair value less costs to sell will be reported as an adjustment included within Loss on disposal group held for sale on our Condensed Consolidated Statements of Comprehensive Income. Unless otherwise specified, the amounts and information presented in the Notes to the Condensed Consolidated Financial Statements include assets and liabilities that have been reclassified as held for sale as of September 30, 2022.

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”). The cost of repurchased shares, including equity reacquisition costs, is included in Treasury stock on our Condensed 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 Condensed Consolidated Balance Sheets. Cash payments to reacquire our shares, including equity reacquisition costs, are included in Repurchases of common stock on our Condensed Consolidated Statements of Cash Flows. See Note 9 - Repurchases of Common Stock for more information about our 2022 Stock Repurchase Program.

The condensed 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 (“VIE”VIEs”) where we are deemed to be the primary beneficiary and VIEs which cannot be deconsolidated, such as those related to Towerour obligations (Tower obligations are included in VIEs related to the 2012 Tower Transaction. See Note 8 - Tower Obligations included in the Annual Report on Form 10-Kpay for the year ended December 31, 2016).management and operation of certain of our wireless communications tower sites. Intercompany transactions and balances have been eliminated in consolidation.


The preparation of financial statements in conformity with United States (“U.S.”) generally accepted accounting principles (“GAAP”) requires our management to make estimates and assumptions whichthat affect the financial statements and accompanying notes. Estimates are based on historical experience, where applicable, and other assumptions which ourthat management believes are reasonable under the circumstances. These estimatesEstimates are inherently subject to judgment and actual results could differ from those estimates.


Change in Accounting PrinciplePronouncements Adopted During the Current Year


EffectiveReference Rate Reform

In March 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting,” and has since modified the standard with ASU 2021-01, “Reference Rate Reform (Topic 848): Scope” (together, the “reference rate reform standard”). The reference rate reform standard provides temporary optional expedients and allows for certain exceptions
9
Index for Notes to the Condensed Consolidated Financial Statements
to applying existing GAAP for contract modifications and hedging relationships, subject to meeting certain criteria, that reference LIBOR or another reference rate expected to be discontinued as a result of reference rate reform. The reference rate reform standard is available for adoption through December 31, 2022, and the optional expedients for contract modifications must be elected for all arrangements within a given Accounting Standards Codification (“ASC”) Topic or Industry Subtopic. As of January 1, 2017,2022, we have elected to apply the imputed discount on Equipment Installment Plan (“EIP”) receivables, which is amortized overpractical expedients provided by the financed installment term using the effective interest method,reference rate reform standard for all ASC Topics and was previously presented within Interest income in our Condensed Consolidated Statements of Comprehensive Income, is now presented within Other revenues in our Condensed Consolidated Statements of Comprehensive Income. We believe this presentation is preferable because it provides a better representation of amounts earned from our major ongoing operations and aligns with industry practice thereby enhancing comparability. We have applied this change retrospectively and presented the effect on the three and nine months ended September 30, 2017 and 2016, in the tables below:
 Three Months Ended September 30, 2017 Three Months Ended September 30, 2016
(in millions)Unadjusted Change in Accounting Principle As Adjusted As Filed Change in Accounting Principle As Adjusted
Other revenues$198
 $74
 $272
 $165
 $59
 $224
Total revenues9,945
 74
 10,019
 9,246
 59
 9,305
Operating income1,249
 74
 1,323
 989
 59
 1,048
Interest income76
 (74) 2
 62
 (59) 3
Total other expense, net(343) (74) (417) (391) (59) (450)
Net income550
 —
 550
 366
 —
 366

 Nine Months Ended September 30, 2017 Nine Months Ended September 30, 2016
(in millions)Unadjusted Change in Accounting Principle As Adjusted As Filed Change in Accounting Principle As Adjusted
Other revenues$571
 $204
 $775
 $481
 $189
 $670
Total revenues29,641
 204
 29,845
 27,067
 189
 27,256
Operating income3,572
 204
 3,776
 2,860
 189
 3,049
Interest income219
 (204) 15
 198
 (189) 9
Total other expense, net(1,125) (204) (1,329) (1,139) (189) (1,328)
Net income1,829
 —
 1,829
 1,070
 —
 1,070


The change in accounting principleIndustry Subtopics related to eligible contract modifications as they occur. This election did not have ana material impact on basic or diluted earnings per shareour condensed consolidated financial statements for the three and nine months ended September 30, 20172022, and 2016, or Accumulated deficit asthe impact of September 30, 2017 orapplying the election to future eligible contract modifications that occur through December 31, 2016.2022, is also not expected to be material.


Contract Assets and Contract Liabilities Acquired in a Business Combination

In October 2021, the FASB issued ASU 2021-08, “Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers.” The standard amends ASC 805 such that contract assets and contract liabilities acquired in a business combination are added to the list of exceptions to the recognition and measurement principles such that they are recognized and measured in accordance with ASC 606. As of January 1, 2022, we have elected to adopt this standard, and it will be applied prospectively to all business combinations occurring after this date.

Accounting Pronouncements Not Yet Adopted


Troubled Debt Restructurings and Vintage Disclosures

In May 2014,March 2022, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606)” (“ASU 2014-09”), and has since modified the standard with several ASUs. The standard is effective for us, and we will adopt the standard, on January 1, 2018.

The standard requires entities to recognize revenue through the application of a five-step model, which includes: identification of the contract; identification of the performance obligations; determination of the transaction price; allocation of the transaction price to the performance obligations; and recognition of revenue as the entity satisfies the performance obligations.

The guidance permits two methods of adoption, the full retrospective method applying the standard to each prior reporting period presented, or the modified retrospective method with a cumulative effect of initially applying the guidance recognized at the date of initial application. The standard also allows entities to apply certain practical expedients at their discretion. We are adopting the standard using the modified retrospective method with a cumulative catch up adjustment and will provide additional disclosures comparing results to previous GAAP.

We currently anticipate this standard will have a material impact on our consolidated financial statements. While we are continuing to assess all potential impacts of the standard, we currently believe the most significant potential impacts include the following items:

Whether our EIP contracts contain a significant financing component, which is similar to our current practice of imputing interest, and would similarly impact the amount of revenue recognized at the time of an EIP sale and whether or not a portion of the revenue is recognized as interest and included in other revenues, rather than equipment revenues. We currently expect to recognize the financing component in our EIP contracts, including those financing components that are not considered to be significant to the contract. We believe that this application will be consistent with our current practice of imputing interest.
As we currently expense contract acquisition costs, we believe that the requirement to defer incremental contract acquisition costs and recognize them over the term of the initial contract and anticipated renewal contracts to which the costs relate will have a significant impact to our consolidated financial statements. We plan to utilize the practical expedient permitting expensing of costs to obtain a contract when the expected amortization period is one year or less which we expect will typically result in expensing commissions paid to acquire branded prepaid service contracts. Currently, we believe that incremental contract acquisition costs of approximately $450 million to $550 million that were incurred during the nine months ended September 30, 2017, which consists primarily of commissions paid to acquire branded postpaid service contracts, would require capitalization and amortization under the new standard. We expect that deferred contract costs will have an average amortization period of approximately 24 months, subject to being monitored and updated every period to reflect any significant change in assumptions. In addition, the deferred contract cost asset will be assessed for impairment on a periodic basis.
We expect that promotional bill credits offered to customers on equipment sales that are paid over time and are contingent on the customer maintaining a service contract will result in extended service contracts, which impacts the allocation and timing of revenue recognition between service revenue and equipment revenue.
Overall, with the exception of the aforementioned impacts, we do not expect that the new standard will result in a substantive change to the method of allocation of contract revenues between various services and equipment, nor to the timing of when revenues are recognized for most of our service contracts.

We are still in the process of evaluating these impacts, and our initial assessment may change due to changes in the terms and mix of the contractual arrangements we have with customers. New products or offerings, or changes to current offerings may yield significantly different impacts than currently expected.

We are in the process of implementing significant new revenue accounting systems, processes and internal controls over revenue recognition which will assist us in the application of the new standard.

In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842).” The standard requires all lessees to report a right-of-use asset and a lease liability for most leases. The income statement recognition is similar to existing lease accounting and is based on lease classification. The standard requires lessees and lessors to classify most leases using principles similar to existing lease accounting. For lessors, the standard modifies the classification criteria and the accounting for sales-type and

direct financing leases. We are currently evaluating the standard, which will require recognizing and measuring leases at the beginning of the earliest period presented using a modified retrospective approach. We plan to adopt the standard when it becomes effective for us beginning January 1, 2019, and expect the adoption of the standard will result in the recognition of right of use assets and lease liabilities that have not previously been recorded, which will have a material impact on our condensed consolidated financial statements.

We are in the process of implementing significant new lease accounting systems, processes and internal controls over lease recognition which will ultimately assist in the application of the new standard.

In June 2016, the FASB issued ASU 2016-13,2022-02, “Financial Instruments - Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.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 a financial asset (or a groupdisclosure of financial assets) measured at amortized cost basis to be presented atcurrent-period gross write-offs by year of origination for financing receivables and net investments in leases within the net amount expected to be collected. The measurementscope of expected credit losses is based on relevant information about past events, including historical experience, current conditions and reasonable and supportable forecasts that affect the collectibility of the reported amount.ASC 326-20. The standard will become effective for us beginning January 1, 2020,2023, and will require a cumulative-effect adjustmentbe applied prospectively, with an option for modified retrospective application for provisions related to Accumulated deficit asrecognition and measurement of the beginning of the first reporting period in which the guidance is effective (that is, a modified-retrospective approach).troubled debt restructurings. Early adoption is permitted for us as of January 1, 2019.at any time. We are currently evaluating the impact this guidance willof the standard on our future consolidated financial statements.

Note 2 – 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 period end.
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 equipment installment plan (“EIP”) receivables.

Accounts Receivable Portfolio Segment

Accounts receivable balances are predominately comprised of amounts currently due from customers (e.g., for wireless services and monthly device lease payments), device insurance administrators, wholesale partners, non-consolidated affiliates, 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.

10
Index for Notes to the Condensed Consolidated Financial Statements
Our approach considers a number of factors, including our overall historical credit losses, net of recoveries, 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 economic 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. We also periodically evaluate other economic indicators such as unemployment rates to assess their level of correlation with our historical credit loss statistics.

EIP Receivables Portfolio Segment

Based upon customer credit profiles at the time of customer origination, 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 using several factors, such as credit bureau information, consumer credit risk scores and service and device plan characteristics. EIP receivables had a combined weighted-average effective interest rate of 6.9% and 5.6% as of September 30, 2022, and December 31, 2021, respectively.

The following table summarizes the EIP receivables, including imputed discounts and related allowance for credit losses:
(in millions)September 30,
2022		December 31,
2021
EIP receivables, gross$8,311 $8,207 
Unamortized imputed discount(416)(378)
EIP receivables, net of unamortized imputed discount7,895 7,829 
Allowance for credit losses(333)(252)
EIP receivables, net of allowance for credit losses and imputed discount$7,562 $7,577 
Classified on our condensed consolidated balance sheets as:
Equipment installment plan receivables, net of allowance for credit losses and imputed discount$5,048 $4,748 
Equipment installment plan receivables due after one year, net of allowance for credit losses and imputed discount2,514 2,829 
EIP receivables, net of allowance for credit losses and imputed discount$7,562 $7,577 

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 September 30, 2022:
Originated in 2022Originated in 2021Originated prior to 2021Total EIP Receivables, net of
unamortized imputed discounts
(in millions)PrimeSubprimePrimeSubprimePrimeSubprimePrimeSubprimeGrand total
Current - 30 days past due$2,767 $1,893 $1,744 $1,001 $229 $96 $4,740 $2,990 $7,730 
31 - 60 days past due18 28 12 19 2 2 32 49 81 
61 - 90 days past due7 14 6 10 1 1 14 25 39 
More than 90 days past due7 14 6 13 2 3 15 30 45 
EIP receivables, net of unamortized imputed discount$2,799 $1,949 $1,768 $1,043 $234 $102 $4,801 $3,094 $7,895 

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.
11
Index for Notes to the Condensed Consolidated Financial Statements
Our assessment of default probabilities includes receivables delinquency status, historical loss experience, how 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 or severity of the default loss after adjusting for estimated recoveries.

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.

Activity for the nine months ended September 30, 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:
September 30, 2022September 30, 2021
(in millions)Accounts Receivable AllowanceEIP Receivables AllowanceTotalAccounts Receivable AllowanceEIP Receivables AllowanceTotal
Allowance for credit losses and imputed discount, beginning of period$146 $630 $776 $194 $605 $799 
Bad debt expense305 455 760 127 132 259 
Write-offs, net of recoveries(290)(375)(665)(192)(164)(356)
Change in imputed discount on short-term and long-term EIP receivablesN/A146 146 N/A109 109 
Impact on the imputed discount from sales of EIP receivablesN/A(107)(107)N/A(104)(104)
Allowance for credit losses and imputed discount, end of period$161 $749 $910 $129 $578 $707 

Credit loss activity has increased during 2022, as activity normalizes relative to muted Pandemic levels and other macroeconomic trends contribute to adverse scenarios and present additional uncertainty due to, for example, the potential effects associated with higher inflation, rising interest rates and changes in the Federal Reserve’s monetary policy, as well as geopolitical risks, including the war in Ukraine.

Off-Balance-Sheet Credit Exposures

We do not have material, unmitigated off-balance-sheet credit exposures as of September 30, 2022. In connection with the sales of certain service and EIP accounts receivable pursuant to the sale arrangements, we have deferred purchase price assets included on our Condensed Consolidated Balance Sheets measured at fair value that are based on a discounted cash flow model using Level 3 inputs, including customer default rates and credit worthiness, dilutions and recoveries. See Note 3 – Sales of Certain Receivables for further information.

Note 3 – 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 condensed consolidated financial statements, are described below.

Sales of EIP Receivables

As of both September 30, 2022, and December 31, 2021, the timingEIP sale arrangement provided funding of adoption.$1.3 billion.


In August 2016,connection with this EIP sale arrangement, we formed a wholly owned subsidiary, which qualifies as a bankruptcy remote entity (the “EIP BRE”). We consolidate the FASB issued ASU 2016-15, “StatementEIP BRE under the VIE model.

The following table summarizes the carrying amounts and classification of Cash Flows (Topic 230): Classificationassets, which consist primarily of Certain Cash Receipts and Cash Payments.” The standard is intended to reduce current diversity in practice and provides guidance on how certain cash receipts and payments are presented and classified in the statement of cash flows. The standard is effective for us, and we will adopt the standard, on January 1, 2018. The standard will require a retrospective approach. The standard will impact the presentation of cash flows related to beneficial interests in securitization transactions, which is the deferred purchase price, resultingincluded on our Condensed Consolidated Balance Sheets with respect to the EIP BRE:
(in millions)September 30,
2022		December 31,
2021
Other current assets$348 $424 
Other assets118 125 

12
Index for Notes to the Condensed Consolidated Financial Statements
Sales of Service Accounts Receivable

The maximum funding commitment of the service receivable sale arrangement is $950 million and the facility expires in February 2023. As of both September 30, 2022, and December 31, 2021, the service receivable sale arrangement provided funding of $775 million.

In connection with the service receivable sale arrangement, we formed a reclassificationwholly owned subsidiary, which qualifies as a bankruptcy remote entity, to sell service accounts receivable (the “Service BRE”). We consolidate the Service BRE under the VIE model.

The following table summarizes the carrying amounts and classification of assets, which consist primarily of the deferred purchase price, and liabilities included on our Condensed Consolidated Balance Sheets with respect to the Service BRE:
(in millions)September 30,
2022		December 31,
2021
Other current assets$217 $231 
Other current liabilities392 348 

Sales of Receivables

The following table summarizes the impact of the sale of certain service accounts receivable and EIP receivables on our Condensed Consolidated Balance Sheets:
(in millions)September 30,
2022		December 31,
2021
Derecognized net service accounts receivable and EIP receivables$2,411 $2,492 
Other current assets565 655 
of which, deferred purchase price563 654 
Other long-term assets118 125 
of which, deferred purchase price118 125 
Other current liabilities392 348 
Net cash proceeds since inception1,723 1,754 
Of which:
Change in net cash proceeds during the year-to-date period(31)39 
Net cash proceeds funded by reinvested collections1,754 1,715 

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 Condensed Consolidated Statements of Comprehensive Income. The fair value of the deferred purchase price is determined based on a discounted cash inflowsflow model which uses primarily Level 3 inputs, including customer default rates. As of September 30, 2022, and December 31, 2021, our deferred purchase price related to the sales of service receivables and EIP receivables was $681 million and $779 million, respectively.

We recognized losses from Operating activities to Investing activitiessales of approximately $1.0 billionreceivables, including changes in fair value of the deferred purchase price, of $60 million and $4 million for the three months ended September 30, 20172022 and 2016,2021, respectively, and $2.8 billion for the nine months ended September 30, 2017a loss of $168 million and 2016, in our condensed consolidated statementa gain of cash flows. The standard will also impact the presentation of cash payments for debt prepayment or debt extinguishment costs, resulting in a reclassification of cash outflows from Operating activities to Financing activities of $188$26 million for the nine months ended September 30, 2017,2022 and 2021, respectively, in our condensed consolidated statement of cash flows. We had no cash payments for debt prepayment or debt extinguishment costs for the three months ended September 30, 2017.

In October 2016, the FASB issued ASU 2016-16, “Accounting for Income Taxes: Intra-Entity Transfers of Assets Other Than Inventory.” The standard requires that the income tax impact of intra-entity salesSelling, general and transfers of property, except for inventory, be recognized when the transfer occurs. The standard will become effective for us beginning January 1, 2018, and will require any deferred taxes not yet recognized on intra-entity transfers to be recorded to retained earnings under a modified retrospective approach. Early adoption is permitted. We are currently evaluating the standard, but expect that it will not have a material impactadministrative expense on our condensed consolidated financial statements.Condensed Consolidated Statements of Comprehensive Income.


In November 2016,Continuing Involvement

Pursuant to the FASB issued ASU 2016-18, “Statement of Cash Flows (Topic 230): Restricted Cash.” The standard requires entitiessale 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 include in their cashrepurchase certain receivables, including ineligible receivables, aged receivables and cash-equivalent balances in the statement of cash flows those amounts that are deemed toreceivables where a write-off is imminent, and may be restricted cash and restricted cash equivalents. The ASU does not define the terms “restricted cash” and “restricted cash equivalents.” The standard will be effectiveresponsible for us beginning January 1, 2018, and will require a retrospective approach. Early adoption is permitted. We are currently evaluating the standard, but expect that it will not have a material impactabsorbing credit losses through reduced collections on our condensed consolidated financial statements.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.


In January 2017,
13
Index for Notes to the FASB issued ASU 2017-04, “Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment.” The standard eliminates the requirement to measure the implied fair value of goodwill by assigning the fair value of a reporting unit to all assets and liabilities within that unit (“the Step 2 test”) from the goodwill impairment test. Instead, if the carrying amount of a reporting unit exceeds its fair value, an impairment loss is recognized in an amount equal to that excess, limited by the amount of goodwill in that reporting unit. The standard will become effective for us beginning January 1, 2020, and must be applied to any annual or interim goodwill impairment assessments after that date. Early adoption is permitted. We are currently evaluating the standard and timing of adoption, but expect that it will not have a material impact on our condensed consolidated financial statements.Condensed Consolidated Financial Statements


Note 24 – SignificantSpectrum License Transactions


Hurricane Impacts

DuringThe following table summarizes our spectrum license activity for the third quarter of 2017, our operations in Texas, Florida and Puerto Rico experienced losses related to hurricanes. Based on our preliminary assessment, the negative impact to operating income and net income for both the three and nine months ended September 30, 2017, from lost revenue, assets damaged or destroyed and other hurricane related costs incurred was $148 million and $90 million, respectively. As of September 30, 2017, our loss assessment is ongoing and we expect additional expenses to be incurred and customer activity to be impacted in the fourth quarter of 2017, primarily related to our operations in Puerto Rico. We have not recognized any potential insurance recoveries related to those hurricane losses as we continue to assess the damage and work with our insurance carriers.2022:
(in millions)2022
Spectrum licenses, beginning of year$92,606 
Spectrum license acquisitions3,148 
Spectrum licenses transferred to held for sale(16)
Costs to clear spectrum29 
Spectrum licenses, end of period$95,767 


Purchase of Iowa Wireless

On September 18, 2017, we entered into a Unit Purchase Agreement (“UPA”) to acquire the remaining equity in INS Wireless, Inc. (“INS”), a 54% owned unconsolidated subsidiary, for a purchase price of $25 million. We account for our existing investment in INS under the equity method as we have significant influence, but not control. Upon the close of the transaction, which is expected within the next six months, subject to regulatory approvals and customary closing conditions, INS will become a wholly-owned consolidated subsidiary.

Spectrum TransactionsSales of Receivables


During the nine months ended September 30, 2017, we entered into agreements with third parties for the exchange of certain spectrum licenses and were the winning bidder of 1,525 licenses in the 600 MHz spectrum auction. See Note 5 - Spectrum License Transactions for further information.

Debt

During the nine months ended September 30, 2017, we completed significant transactions with both third parties and affiliates related to the issuance, borrowing and redemption of debt. See Note 7 - Debt for further information.

Power Purchase Agreements

During the nine months ended September 30, 2017, we entered into two renewable energy purchase agreements with third parties. These agreements each consist of two components, an energy forward agreement that is net settled based on energy prices and the energy output generated by the facility and a commitment to purchase the energy credits associated with the energy output generated by the facility. See Note 10 – Commitments and Contingencies for further information.

Note 3 – Equipment Installment Plan Receivables

We offer certain retail customers the option to pay for their devices and accessories in installments over a period of up to 24 months using an EIP.

The following table summarizes the EIP receivables:
(in millions)September 30,
2017		 December 31,
2016
EIP receivables, gross$3,599
 $3,230
Unamortized imputed discount(233) (195)
EIP receivables, net of unamortized imputed discount3,366
 3,035
Allowance for credit losses(130) (121)
EIP receivables, net$3,236
 $2,914
    
Classified on the balance sheet as:   
Equipment installment plan receivables, net$2,136
 $1,930
Equipment installment plan receivables due after one year, net1,100
 984
EIP receivables, net$3,236
 $2,914


We use a proprietary credit scoring model that measuresimpact of the credit qualitysale of a customer at the time of application for mobile communicationscertain service using several factors, such as credit bureau information, consumer credit risk scoresaccounts receivable and service plan characteristics. Based upon customer credit profiles, we classify EIP receivables into the credit categories of “Prime” and “Subprime.” Prime customer receivables are those with lower delinquency risk and Subprime customer receivables are those with higher delinquency risk. Subprime customers may be required to make a down payment on their equipment purchases. In addition, certain customers within the Subprime category are required to pay an advance deposit.

EIP receivables for which invoices have not yet been generated for the customer are classified as Unbilled. EIP receivables for which invoices have been generated but which are not past the contractual due date are classified as Billed – Current. EIP receivables for which invoices have been generated and the payment is past the contractual due date are classified as Billed – Past Due.

The balance and aging of the EIP receivables on our Condensed Consolidated Balance Sheets:
(in millions)September 30,
2022		December 31,
2021
Derecognized net service accounts receivable and EIP receivables$2,411 $2,492 
Other current assets565 655 
of which, deferred purchase price563 654 
Other long-term assets118 125 
of which, deferred purchase price118 125 
Other current liabilities392 348 
Net cash proceeds since inception1,723 1,754 
Of which:
Change in net cash proceeds during the year-to-date period(31)39 
Net cash proceeds funded by reinvested collections1,754 1,715 

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 Condensed Consolidated Statements of Comprehensive Income. The fair value of the deferred purchase price is determined based on a gross basis by credit category were as follows:discounted cash flow model which uses primarily Level 3 inputs, including customer default rates. As of September 30, 2022, and December 31, 2021, our deferred purchase price related to the sales of service receivables and EIP receivables was $681 million and $779 million, respectively.

 September 30, 2017 December 31, 2016
(in millions)Prime Subprime Total Prime Subprime Total
Unbilled$1,471
 $1,903
 $3,374
 $1,343
 $1,686
 $3,029
Billed – Current60
 90
 150
 51
 77
 128
Billed – Past Due25
 50
 75
 25
 48
 73
EIP receivables, gross$1,556
 $2,043
 $3,599
 $1,419
 $1,811
 $3,230

ActivityWe recognized losses from sales of receivables, including changes in fair value of the deferred purchase price, of $60 million and $4 million for the three months ended September 30, 2022 and 2021, respectively, and a loss of $168 million and a gain of $26 million for the nine months ended September 30, 20172022 and 2016,2021, respectively, in Selling, general and administrative expense on our Condensed Consolidated Statements of Comprehensive Income.

Continuing Involvement

Pursuant to the unamortized imputed discount and allowance for credit losses balances for the EIP receivables was as follows:
(in millions)September 30,
2017		 September 30,
2016
Imputed discount and allowance for credit losses, beginning of period$316
 $333
Bad debt expense215
 185
Write-offs, net of recoveries(205) (201)
Change in imputed discount on short-term and long-term EIP receivables163
 103
Impacts from sales of EIP receivables(126) (133)
Imputed discount and allowance for credit losses, end of period$363
 $287

The EIP receivables had weighted average effective imputed interest rates of 9.7% and 9.0% as of September 30, 2017 and December 31, 2016, respectively.

Note 4 – Sales of Certain Receivables

Wesale arrangements described above, we have entered into transactions to sell certain service and EIP accounts receivables. The transactions, including our continuing involvement with the soldservice accounts receivable and EIP receivables we sell as we service the receivables, are required to repurchase certain receivables, including ineligible 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 respective impacts to our financial statements,customers and their related receivables, including facilitating customer payment collection, in exchange for a monthly servicing fee. As the receivables are described below.

Sales of Service Receivables

Overview of the Transaction

In 2014, we entered into an arrangement to sell certain service accounts receivablessold on a revolving basis, andthe customer payment collections on sold receivables may be reinvested in November 2016,new receivable sales. At the arrangement was amended to increase the maximum funding commitment to $950 million (the “service receivable sale arrangement”) and extend the scheduled expiration date to March 2018. As of September 30, 2017 and December 31, 2016, the service receivable sale arrangement provided funding of $899 million and $907 million, respectively. 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 receivables (the “Service BRE”). The Service BRE does not qualify as a VIE, and due to the significant level of control we exercise over the entity, it is consolidated. Pursuant to the arrangement, certain of our wholly-owned subsidiaries transfer selected receivables to the Service BRE. The Service BRE then sells the receivables to an unaffiliated entity (the “Service VIE”), which was established to facilitate the sale of beneficial ownership interests in the receivables to certain third parties.


Variable Interest Entity

We determined that the Service VIE qualifies as a VIE as it lacks sufficient equity to finance its activities. We have a variable interest in the Service VIE, but are not the primary beneficiary as we lack the power to direct the activities that most significantly impact the Service VIE’s economic performance. Those activities include committing the Service VIE to legal agreements to purchase or sell assets, selecting which receivables are purchased in the service receivable sale arrangement, determining whether the Service VIE will sell interests in the purchased service receivables to other parties, fundingdirection of the entity and servicing of receivables. We do not hold the power to direct the key decisions underlying these activities. For example, while we act as the servicerpurchasers of the sold receivables, which is considered a significant activity ofwe apply the Service VIE,same policies and procedures while servicing the sold receivables as we are acting as an agent inapply to our capacity as the servicerowned receivables, and the counterpartywe continue to maintain normal relationships with our customers.

13
Index for Notes to the service receivable sale arrangement has the ability to remove us as the servicing agent of the receivables at will with no recourse available to us. As we have determined we are not the primary beneficiary, the results of the Service VIE are not consolidated into our condensed consolidated financial statements.Condensed Consolidated Financial Statements

Note 4 – Spectrum License Transactions

The following table summarizes our spectrum license activity for the carrying amounts and classification of assets, which consists primarily of the deferred purchase price and liabilities included in our Condensed Consolidated Balance Sheets that relate to our variable interest in the Service VIE:
(in millions)September 30,
2017		 December 31,
2016
Other current assets$225
 $207
Accounts payable and accrued liabilities13
 17
Other current liabilities155
 129

Sales of EIP Receivables

Overview of the Transaction

In 2015, we entered into an arrangement to sell certain EIP accounts receivables on a revolving basis and in August 2017, the EIP sale arrangement was amended to reduce the maximum funding commitment to $1.2 billion (the “EIP sale arrangement”) and extend the scheduled expiration date to November 2018. As of bothnine months ended September 30, 2017 and December 31, 2016, the EIP sale arrangement provided funding of $1.2 billion. Sales of EIP receivables occur daily and are settled on a monthly basis. The receivables consist of customer EIP balances, which require monthly customer payments for up to 24 months.2022:
(in millions)2022
Spectrum licenses, beginning of year$92,606 
Spectrum license acquisitions3,148 
Spectrum licenses transferred to held for sale(16)
Costs to clear spectrum29 
Spectrum licenses, end of period$95,767 


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, our wholly-owned subsidiary transfers selected receivables to the EIP BRE. The EIP BRE then sells the receivables to a non-consolidated and unaffiliated third-party entity for which we do not exercise any level of control, nor does the 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 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 determined that we are the primary beneficiary, and include the balances and results of operations of the EIP BRE in our condensed consolidated financial statements.

The following table summarizes the carrying amounts and classification of assets, which consists primarily of the deferred purchase price and liabilities included in our Condensed Consolidated Balance Sheets that relate to the EIP BRE:
(in millions)September 30,
2017		 December 31,
2016
Other current assets$357
 $371
Other assets90
 83
Other long-term liabilities2
 4


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 Receivables


The transfersfollowing table summarizes the impact of the sale of certain service receivablesaccounts 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 net cash proceeds in Net cash provided by operating activities inon our Condensed Consolidated Statements of Cash Flows.Balance Sheets:
(in millions)September 30,
2022		December 31,
2021
Derecognized net service accounts receivable and EIP receivables$2,411 $2,492 
Other current assets565 655 
of which, deferred purchase price563 654 
Other long-term assets118 125 
of which, deferred purchase price118 125 
Other current liabilities392 348 
Net cash proceeds since inception1,723 1,754 
Of which:
Change in net cash proceeds during the year-to-date period(31)39 
Net cash proceeds funded by reinvested collections1,754 1,715 


The proceeds are 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 provided by operating activities as it is dependent on collection of the customer receivables and is not subject to significant interest rate risk. 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 thatAt inception, we may not recover substantially all of our recorded investment, due to default by the customers on the underlying receivables. We elected at inception, to measure the deferred purchase price at fair value with changes in fair value included in Selling, general and administrative expense inon our Condensed 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 unobservableLevel 3 inputs, (Level 3 inputs), including customer default rates. As of September 30, 20172022, and December 31, 2016,2021, our deferred purchase price related to the sales of service receivables and EIP receivables was $671$681 million and $659$779 million, respectively.

The following table summarizes the impacts of the sale of certain service receivables and EIP receivables in our Condensed Consolidated Balance Sheets:
(in millions)September 30,
2017		 December 31,
2016
Derecognized net service receivables and EIP receivables$2,362
 $2,502
Other current assets582
 578
of which, deferred purchase price581
 576
Other long-term assets90
 83
of which, deferred purchase price90
 83
Accounts payable and accrued liabilities13
 17
Other current liabilities155
 129
Other long-term liabilities2
 4
Net cash proceeds since inception1,963
 2,030
Of which:   
Change in net cash proceeds during the year-to-date period(67) 536
Net cash proceeds funded by reinvested collections2,030
 1,494


We recognized losses from sales of receivables, including changes in fair value of $67the deferred purchase price, of $60 million and $59$4 million for the three months ended September 30, 20172022 and 2016,2021, respectively, and $242a loss of $168 million and $157a gain of $26 million for the nine months ended September 30, 20172022 and 2016, respectively. These losses from sales of receivables were recognized2021, respectively, in Selling, general and administrative expense inon our Condensed Consolidated Statements of Comprehensive Income. Losses from sales of receivables include adjustments to the receivables’ fair values and changes in fair value of the deferred purchase price.


Continuing Involvement


Pursuant to the sale arrangements described above, we have continuing involvement with the service receivablesaccounts receivable and EIP receivables we sell as we service the receivables, and are required to repurchase certain receivables, including ineligible receivables, aged receivables and receivables where a write-off is imminent.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. While servicingAt the direction of the purchasers of the sold receivables, we apply the same policies and procedures towhile servicing the sold receivables as we apply to our owned receivables, and we continue to maintain normal relationships with our customers. Pursuant

13
Index for Notes to the EIP sale arrangement, under certain circumstances, we are required to deposit cash or replacement EIP receivables primarily for contracts terminated by customers under our Just Upgrade My Phone (“JUMP!”) Program.Condensed Consolidated Financial Statements

In addition, we have continuing involvement with the sold receivables as we may be responsible for absorbing additional credit losses pursuant to the sale arrangements. Our maximum exposure to loss related to the involvement with the service receivables and EIP receivables sold under the sale arrangements was $1.2 billion as of September 30, 2017. The maximum exposure to loss, which is a required disclosure under GAAP, represents an estimated loss that would be incurred under severe, hypothetical circumstances whereby we would not receive the deferred purchase price portion of the contractual proceeds withheld by the purchasers and would also be required to repurchase the maximum amount of receivables pursuant to the sale arrangements without consideration for any recovery. As we believe the probability of these circumstances occurring is remote, the maximum exposure to loss is not an indication of our expected loss.

Note 54 – Spectrum License Transactions


The following table summarizes our spectrum license activity duringfor the nine months ended September 30, 2017:2022:
(in millions)2022
Spectrum licenses, beginning of year$92,606 
Spectrum license acquisitions3,148 
Spectrum licenses transferred to held for sale(16)
Costs to clear spectrum29 
Spectrum licenses, end of period$95,767 
(in millions)Spectrum Licenses
Balance at December 31, 2016$27,014
Spectrum license acquisitions8,247
Spectrum licenses transferred to held for sale(271)
Costs to clear spectrum17
Balance at September 30, 2017$35,007


Spectrum License ExchangeTransactions


In March 2017, we closed on an agreement with a third party forJanuary 2022, the exchange of certain spectrum licenses. Upon closing of the transaction, we recorded the spectrum licenses received at their estimated fair value of approximately $123 million and recognized a gain of $37 million included in Gains on disposal of spectrum licenses in our Condensed Consolidated Statements of Comprehensive Income.

In September 2017, we closed on an agreement with a third party for the exchange of certain AWS and PCS spectrum licenses. Upon closing of the transaction, we recorded the spectrum licenses received at their estimated fair value of approximately $115 million and recognized a gain of $29 million included in Gains on disposal of spectrum licenses in our Condensed Consolidated Statements of Comprehensive Income.

In September 2017, we entered into an agreement with a third party for the exchange of certain AWS and PCS spectrum licenses. The transaction is expected to close during the first quarter of 2018, subject to regulatory approvals and customary closing conditions. Our spectrum licenses to be transferred as part of the exchange transaction were reclassified as assets held for sale and were included in Other current assets in our Condensed Consolidated Balance Sheetsat their carrying value of $184 million as of September 30, 2017.

Spectrum License Purchase

In September 2017, we entered into a UPA to purchase the remaining equity of INS. We expect to receive the INS spectrum licenses at the close of the transaction within the next 6 months, subject to regulatory approvals and customary closing conditions. See Note 2 - Significant Transactions for further information.

Broadcast Incentive Auction

In April 2017, the Federal Communications Commission (the “FCC”)FCC announced that we were the winning bidder of 1,525199 licenses in the 600 MHz spectrum auctionAuction 110 (mid-band spectrum) for an aggregate purchase price of $8.0$2.9 billion. At inception of the auctionAuction 110 in June 2016,September 2021, we deposited $2.2 billion with the FCC which, based on the outcome of the auction, was sufficient to cover our down payment obligation due in April 2017. In May 2017, we$100 million. We paid the FCC the remaining $5.8$2.8 billion offor the purchase price using cash reserves and by issuing debt to Deutsche Telekom AG (“DT”), our majority stockholder, pursuant to existing purchase commitments. See Note 7 - Debt for further information.licenses won in the auction in February 2022. On May 4, 2022, the FCC issued us the licenses won in Auction 110. The licenses are included in Spectrum licenses on our Condensed Consolidated Balance Sheets as of September 30, 2017,2022.

In September 2022, the FCC announced that we were the winning bidder of 7,156 licenses in Auction 108 (2.5 GHz) 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 Condensed Consolidated Balance Sheets. We began deployment as of theseSeptember 30, 2022, 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.

Cash payments to acquire spectrum licenses and payments for costs to clear spectrum are included in Purchases of spectrum licenses and other intangible assets, including deposits, on our networkCondensed Consolidated Statements of Cash Flows for the three and nine months ended September 30, 2022.

License Purchase Agreements

DISH Network Corporation

On July 1, 2020, we and DISH Network Corporation (“DISH”) entered into a license purchase agreement (the “License Purchase Agreement”) pursuant to which DISH has the option to purchase certain 800 MHz spectrum licenses for a total of approximately $3.6 billion in a transaction to be completed, subject to an application for FCC approval, by July 1, 2023, or within five days of FCC approval, whichever date is later.

In the event DISH breaches the License Purchase Agreement or fails to deliver the purchase price following the satisfaction or waiver of all closing conditions, DISH is liable to pay us a fee of $72 million. Additionally, if DISH does not exercise the option to purchase the 800 MHz spectrum licenses, we have an obligation to offer the licenses for sale through an auction. If the specified minimum price of $3.6 billion is not met in the third quarterauction, we would be relieved of 2017.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, but are currently being utilized through exclusive leasing arrangements with the Sellers.

The parties have agreed that closing will occur within 180 days after the receipt of required regulatory approvals, and payment of the $3.5 billion purchase price will occur no later than 40 days after the date of such closing. We anticipate the transactions will close in mid- to late-2023.

14
Index for Notes to the Condensed Consolidated Financial Statements
Note 65 – Fair Value Measurements


The carrying values of cashCash and cash equivalents, short-term investments, accountsAccounts receivable accounts receivable from affiliates, accountsand Accounts payable and borrowings under our senior secured revolving credit facility with DTaccrued liabilities approximate fair value due to the short-term maturities of these instruments.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The carrying amounts and fair values of our assets and liabilities measured atEIP 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 (cash flow hedge) to help minimize significant, unplanned fluctuations in cash flows caused by 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 a recurring basis includedour Condensed Consolidated Statements of Cash Flows as the item being hedged. We did not have any significant derivative instruments outstanding as of September 30, 2022, and December 31, 2021.

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 $1.3 billion and $1.5 billion are presented in Accumulated other comprehensive loss on our Condensed Consolidated Balance Sheets were as follows:
 Level within the Fair Value Hierarchy September 30, 2017 December 31, 2016
(in millions) Carrying Amount Fair Value Carrying Amount Fair Value
Assets:         
Deferred purchase price assets3 $671
 $671
 $659
 $659
Liabilities:         
Guarantee liabilities3 121
 121
 135
 135

The principal amounts and fair values of our long-term debt included in our Condensed Consolidated Balance Sheets were as follows:
 Level within the Fair Value Hierarchy September 30, 2017 December 31, 2016
(in millions) Principal Amount Fair Value Principal Amount Fair Value
Liabilities:         
Senior Notes to third parties1 $11,850
 $12,605
 $18,600
 $19,584
Senior Notes to affiliates2 7,500
 7,897
 —
 —
Incremental Term Loan Facility to affiliates2 4,000
 4,020
 —
 —
Senior Reset Notes to affiliates2 3,100
 3,290
 5,600
 5,955
Senior Secured Term Loans2 —
 —
 1,980
 2,005

Long-term Debt

The fair value of our Senior Notes to third parties was determined based on quoted market prices in active markets, and therefore was classified as Level 1 within the fair value hierarchy. The fair values of the Senior Notes to affiliates, Incremental Term Loan Facility to affiliates, Senior Reset Notes to affiliates and Senior Secured Term Loans were determined based on a discounted cash flow approach using quoted prices of instruments with similar terms and maturities and an estimate for our standalone credit risk. Accordingly, our Senior Notes to affiliates, Incremental Term Loan Facility to affiliates, Senior Reset Notes to affiliates and Senior Secured Term Loans 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, considerable judgment was required in interpreting market data to develop fair value estimates for the Senior Notes to affiliates, Incremental Term Loan Facility to affiliates, Senior Reset Notes to affiliates and Senior Secured Term Loans to affiliates. The fair value estimates were based on information available as of September 30, 20172022, and December 31, 2016. As such,2021, respectively.

For the three months ended September 30, 2022 and 2021, $51 million and $47 million, respectively, and for the nine months ended September 30, 2022 and 2021, $151 million and $140 million, respectively, were amortized from Accumulated other comprehensive loss into Interest expense, net, on our estimates are not necessarily indicativeCondensed Consolidated Statements of Comprehensive Income. We expect to amortize $215 million of the amount we could realize in a current market exchange.Accumulated other comprehensive loss associated with the derivatives into Interest expense, net, over the 12 months ending September 30, 2023.


Deferred Purchase Price Assets


In connection with the sales of certain service and EIP receivablesaccounts 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 43 – Sales of Certain Receivables for further information.information.


Guarantee LiabilitiesThe carrying amounts of our deferred purchase price assets, which are measured at fair value on a recurring basis and are included on our Condensed Consolidated Balance Sheets, were $681 million and $779 million as of September 30, 2022, and December 31, 2021, respectively. Fair value was equal to the carrying amount at September 30, 2022, and December 31, 2021.


We offer certain device trade-in programs, including JUMP!, which provide eligible customers a specified-price trade-in right to upgrade their device. For customers who are enrolled in a device trade-in program, we defer the portion of equipment revenues which represents the estimatedDebt

The fair value of the specified-price trade-in right guarantee incorporating the expected

probabilityour Senior Notes and timing of the handset upgradeSenior Secured Notes to third parties was determined based on quoted market prices in active markets, and the estimated fair value of the used handset which is returned. Accordingly, our guarantee liabilitiestherefore were classified as Level 31 within the fair value hierarchy. When customers upgrade their device, the difference between the trade-inThe 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 the customer andaffiliates were classified as Level 2 within the fair value ofhierarchy.

Although we have determined the returned device is recorded againstestimated fair values using available market information and commonly accepted valuation methodologies, considerable judgment was required in interpreting market data to develop fair value estimates for the guarantee liabilities. Guarantee liabilities are included in Other current liabilities in our Condensed Consolidated Balance Sheets.

Senior Notes to affiliates. The total estimated remaining gross EIP receivable balances of all enrolled handset upgrade program customers, which are the remaining EIP amounts underlying the JUMP! guarantee, including EIP receivables that have been sold, was $2.2 billionfair value estimates were based on information available as of September 30, 2017. This is2022, and December 31, 2021. As such, our estimates are not an indicationnecessarily indicative of the amount we could realize in a current market exchange.

15
Index for Notes to the Condensed Consolidated Financial Statements
The carrying amounts and fair values of our expected loss exposureshort-term and long-term debt included on our Condensed Consolidated Balance Sheets were as it does not considerfollows:
Level within the Fair Value HierarchySeptember 30, 2022December 31, 2021
(in millions)
Carrying Amount (1)
Fair Value (1)
Carrying Amount (1)
Fair Value (1)
Liabilities:
Senior Notes to third parties (2)
1$68,946 $59,904 $30,309 $32,093 
Senior Notes to affiliates21,495 1,412 3,739 3,844 
Senior Secured Notes to third parties (2)
13,255 3,095 40,098 42,393 
(1)     Excludes $31 million and $47 million as of September 30, 2022, and December 31, 2021, respectively, in other financial liabilities as the expectedcarrying values approximate fair value primarily due to the short-term maturities of these instruments.
(2)     Following the achievement of an investment grade issuer rating from each of the used handsetthree main credit rating agencies and entry into an amendment to our Credit Agreement, the Senior Secured Notes, other than our Spectrum-Backed Notes, are no longer secured by any of our present or future assets and have been reclassified to Senior Notes to third parties as of September 30, 2022, within the probability and timing of the trade-in.

table above. See
Note 76 – Debt for additional information.


Note 6 – Debt

The following table sets forth the debt balances and activity as of and for the nine months ended September 30, 20172022:
(in millions)December 31,
2021
Proceeds from Issuances and Borrowings (1)
Note Redemptions (1)
Repayments
Reclassifications (1)
Other (2)
September 30,
2022
Short-term debt$3,378 $— $(500)$(395)$4,967 $(52)$7,398 
Long-term debt67,076 2,969 — — (4,967)(244)64,834 
Total debt to third parties70,454 2,969 (500)(395)— (296)72,232 
Short-term debt to affiliates2,245 — (2,250)— — 5 — 
Long-term debt to affiliates1,494 — — — — 1 1,495 
Total debt$74,193 $2,969 $(2,750)$(395)$— $(290)$73,727 
(1)Issuances and borrowings, note redemptions and reclassifications are recorded net of related issuance costs, discounts and premiums.
(in millions)December 31,
2016		 
Issuances and Borrowings (1)
 
Note Redemptions (1)
 
Extinguishments (1)
 Repayments 
Other (2)
 September 30,
2017
Short-term debt$354
 $—
 $—
 $(20) $—
 $224
 $558
Long-term debt21,832
 1,495
 (8,365) (1,947) —
 148
 13,163
Total debt to third parties22,186
 1,495
 (8,365) (1,967) —
 372
 13,721
Short-term debt to affiliates—
 2,910
 —
 —
 (2,910) —
 —
Long-term debt to affiliates5,600
 8,985
 —
 —
 —
 1
 14,586
Total debt to affiliates5,600
 11,895
 —
 —
 (2,910) 1
 14,586
Total debt$27,786
 $13,390
 $(8,365) $(1,967) $(2,910) $373
 $28,307
(1)Issuances and borrowings, note redemptions and extinguishments are recorded net of related issuance costs, discounts and premiums. Issuances and borrowings for Short-term debt to affiliates represent net outstanding borrowings on our senior secured revolving credit facility.
(2)Other includes: $299 million of issuances of short-term debt related to vendor financing arrangements, of which $291 million is related to financing of property and equipment. During the nine months ended September 30, 2017, we repaid $296 million under the vendor financing arrangements. As of September 30, 2017, vendor financing arrangements totaled $3 million. Vendor financing arrangements are included in Short-term debt within Total current liabilities in our Condensed Consolidated Balance Sheets. Additional activity in Other includes capital leases and the amortization of discounts and premiums. As of September 30, 2017 and December 31, 2016, capital lease liabilities totaled $1.8 billion and $1.4 billion, respectively.

(2)Other includes the amortization of premiums, discounts, debt issuance costs and consent fees.
Debt
Our effective interest rate, excluding the impact of derivatives and capitalized interest, was approximately 3.8% and 4.0% for the three months ended September 30, 2022 and 2021, respectively, and 3.9% and 4.1% for the nine months ended September 30, 2022 and 2021, respectively, on weighted-average debt outstanding of $71.6 billion and $74.5 billion for the three months ended September 30, 2022 and 2021, respectively, and on weighted-average debt outstanding of $72.4 billion and $74.4 billion for the nine months ended September 30, 2022 and 2021, 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 Third Partiesaffiliates, net of unamortized premiums, discounts, debt issuance costs and consent fees.


Issuances and Borrowings


During the nine months ended September 30, 2022, we issued the following Senior Notes:
(in millions)Principal IssuancesPremiums/Discounts and Issuance CostsNet Proceeds from Issuance of Long-Term DebtIssue Date
5.200% Senior Notes due 2033$1,250 $(8)$1,242 September 15, 2022
5.650% Senior Notes due 20531,000 (11)989 September 15, 2022
5.800% Senior Notes due 2062750 (12)738 September 15, 2022
Total of Senior Notes issued$3,000 $(31)$2,969 

Senior Secured Notes

Following the achievement of an investment grade issuer rating from each of the three main credit rating agencies, on August 22, 2022, we entered into an amendment (“Credit Agreement Amendment”) to our Credit Agreement, dated April 1, 2020. Upon effectiveness of the Credit Agreement Amendment, the liens securing the Senior Secured Notes were automatically released, and our obligations under the Senior Secured Notes (hereafter, “Senior Notes”), other than our Spectrum-Backed notes, are no longer secured by any of our present or future assets.
16
Index for Notes to the Condensed Consolidated Financial Statements

Note Redemptions and Repayments

During the nine months ended September 30, 2017, we issued the following Senior Notes:
(in millions)Principal Issuances Issuance Costs Net Proceeds from Issuance of Long-Term Debt
4.000% Senior Notes due 2022$500
 $2
 $498
5.125% Senior Notes due 2025500
 2
 498
5.375% Senior Notes due 2027500
 1
 499
Total of Senior Notes Issued$1,500
 $5
 $1,495

On March 16, 2017, T-Mobile USA and certain of its affiliates, as guarantors, issued a total of $1.5 billion of public Senior Notes with various interest rates and maturity dates. Issuance costs related to the public debt issuance totaled $5 million for the nine months ended September 30, 2017. We used the net proceeds of $1.495 billion from the transaction to redeem callable high yield debt.


Notes Redemptions

During the nine months ended September 30, 2017,2022, we made the following note redemptions:redemptions and repayments:
(in millions)Principal AmountRedemption or Repayment DateRedemption Price
4.000% Senior Notes due 2022$500 March 16, 2022100.000 %
4.000% Senior Notes to affiliates due 20221,000 March 16, 2022100.000 %
5.375% Senior Notes to affiliates due 20221,250 April 15, 2022N/A
Total Redemptions$2,750 
4.738% Secured Series 2018-1 A-1 Notes due 2025$394 VariousN/A
Other debt1 VariousN/A
Total Repayments$395 
(in millions)Principal Amount 
Write-off of Premiums, Discounts and Issuance Costs (1)
 
Call Penalties (1) (2)
 Redemption
Date		 Redemption Price
6.625% Senior Notes due 2020$1,000
 $(45) $22
 February 10, 2017 102.208%
5.250% Senior Notes due 2018500
 1
 7
 March 4, 2017 101.313%
6.250% Senior Notes due 20211,750
 (71) 55
 April 1, 2017 103.125%
6.464% Senior Notes due 20191,250
 —
 —
 April 28, 2017 100.000%
6.542% Senior Notes due 20201,250
 —
 21
 April 28, 2017 101.636%
6.633% Senior Notes due 20211,250
 —
 41
 April 28, 2017 103.317%
6.731% Senior Notes due 20221,250
 —
 42
 April 28, 2017 103.366%
Total note redemptions$8,250
 $(115) $188
    
(1)Write-off of premiums, discounts, issuance costs and call penalties are included in Other income (expense), net in our Condensed Consolidated Statements of Comprehensive Income. Write-off of premiums, discounts and issuance costs are included in Other, net within Net cash provided by operating activities in our Condensed Consolidated Statements of Cash Flows.
(2)The call penalty is the excess paid over the principal amount. Call penalties are included within Net cash provided by operating activities in our Condensed Consolidated Statements of Cash Flows.


DebtAsset-backed Notes

Subsequent to Affiliates

Issuances and Borrowings

During the nine months ended September 30, 2017,2022, on October 12, 2022, we madeissued $750 million of 4.910% Class A senior asset-backed notes (“ABS Notes”) to third-party investors in a private placement transaction. Our ABS Notes are secured by $1.0 billion of gross EIP receivables and future collections on such receivables.

In connection with issuing the following borrowings: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. We will include the balances and results of operations of the ABS Entities in our consolidated financial statements. 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.

(in millions)Net Proceeds from Issuance of Long-Term Debt Extinguishments 
Write-off of Discounts and Issuance Costs (1)
LIBOR plus 2.00% Senior Secured Term Loan due 2022$2,000
 $—
 $—
LIBOR plus 2.00% Senior Secured Term Loan due 20242,000
 —
 —
LIBOR plus 2.750% Senior Secured Term Loan (2)
—
 (1,980) 13
Total$4,000
 $(1,980) $13
(1)Write-off of discounts and issuance costs are included in Other income (expense), net in our Condensed Consolidated Statements of Comprehensive Income and Other, net within Net cash provided by operating activities in our Condensed Consolidated Statements of Cash Flows.
(2)
Our Senior Secured Term Loan extinguished during the nine months endedSeptember 30, 2017 was Third Party debt.

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 third-party investors in the Class A senior ABS Notes have legal recourse only to the assets of the ABS Issuer 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 Issuer 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.
On January 25, 2017,
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 to the ABS Issuer. However, T-Mobile does not guarantee any principal or interest on the ABS Notes or any payments on the underlying EIP receivables.

Net proceeds of $748 million from our ABS Notes will be reflected in Proceeds from issuance of long-term debt in our Consolidated Statements of Cash Flows in the three months ending December 31, 2022. The ABS Notes issued and the assets securing this debt will be included on our Consolidated Balance Sheets.

The expected maturities of our ABS Notes are as follows:
Expected Maturities
(in millions)20242025
Class A Senior ABS Notes$198 $552 

Credit Facilities

Subsequent to September 30, 2022, on October 17, 2022, T-Mobile USA, Inc. (“T-Mobile USA”), our wholly owned subsidiary, and certain of its affiliates, as guarantors, entered into an agreement to borrow $4.0 billion under a secured term loan facility (“Incremental Term Loan Facility”Amended and Restated Credit Agreement (the “October 2022 Credit Agreement”) with DT, our majority stockholder, to refinance $1.98 billion of outstanding senior secured term loans under its Term Loancertain financial institutions named therein. The October 2022 Credit Agreement amends and restates in its entirety the Credit Agreement originally dated November 9, 2015,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
17
Index for Notes to the Condensed Consolidated Financial Statements
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. The October 2022 Credit Agreement contains customary representations, warranties and covenants, including a financial maintenance covenant of 4.5x with the remaining net proceeds from the transaction used to redeem callable high yield debt. The Incremental Term Loan Facility increased DT’s incremental term loan commitment providedrespect to T-Mobile USA, under that certain First Incremental Facility Amendment dated as ofInc.’s Leverage Ratio (as defined therein) commencing with the period ending December 29, 2016,31, 2022.

Note 7 – 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 $660 million23 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 provided T-Mobile USAliabilities associated with an additional $2.0the 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 condensed 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 Condensed 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 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 operation of the tower sites.

Acquired CCI Tower Lease Arrangements

Prior to our merger (the “Merger”) with Sprint Corporation (“Sprint”) in April 2020, 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, incremental term loan commitment.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 Condensed Consolidated Balance Sheets.

As of the closing date of the Merger, we recognized Property and equipment with a fair value of $2.8 billion and tower obligations related to amounts owed to CCI under the leaseback of $1.1 billion. Additionally, we recognized $1.7 billion in Other long-term liabilities associated with contract terms that are unfavorable to current market rates, which include unfavorable terms associated with the fixed-price purchase option in 2037.

18
Index for Notes to the Condensed Consolidated Financial Statements
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 Condensed 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 31, 2017,3, 2022, we entered into an agreement (the “Crown Agreement”) with CCI. The Crown Agreement extends the loanscurrent 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 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 Incremental Term Loan Facilityeffective 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 drawnno 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 Condensed Consolidated Balance Sheets:
(in millions)September 30,
2022		December 31,
2021
Property and equipment, net$2,421 $2,548 
Tower obligations3,970 2,806 
Other long-term liabilities554 1,712 

Future minimum payments related to the tower obligations are approximately $421 million for the 12-month period ending September 30, 2023, $826 million in two tranches: (i) $2.0total for both of the 12-month periods ending September 30, 2024 and 2025, $783 million in total for both of the 12-month periods ending September 30, 2026 and 2027, and $4.6 billion in total thereafter.

Note 8 – 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, wearables, DIGITS or other connected devices, which bears interest atinclude tablets and SyncUP products;
•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:
Three Months Ended September 30,Nine Months Ended September 30,
(in millions)2022202120222021
Postpaid service revenues
Postpaid phone revenues$10,481 $9,952 $31,119 $29,102 
Postpaid other revenues1,067 852 3,075 2,497 
Total postpaid service revenues$11,548 $10,804 $34,194 $31,599 

We operate as a rate equalsingle operating segment. The balances presented in each revenue line item on our Condensed Consolidated Statements of Comprehensive Income represent categories of revenue from contracts with customers disaggregated by type of product and service. Postpaid and prepaid service revenues also include revenues earned for providing premium services to a per annum ratecustomers, such as device insurance services and customer-based, third-party services. Revenue generated from the lease of LIBOR plus a marginmobile communication devices is included in Equipment revenues on our Condensed Consolidated Statements of 2.00%Comprehensive Income.

19
Index for Notes to the Condensed Consolidated Financial Statements
Equipment revenues from the lease of mobile communication devices were as follows:
Three Months Ended September 30,Nine Months Ended September 30,
(in millions)2022202120222021
Equipment revenues from the lease of mobile communication devices$311 $770 $1,184 $2,725 

We provide wireline communication services to domestic and matures on November 9,international customers. Wireline service revenues were $144 million and $179 million for the three months ended September 30, 2022 and (ii) $2.0 billion of which bears interest at a rate equal to a per annum rate of LIBOR plus a margin of 2.25%2021, respectively, and matures on January 31, 2024. In July 2017, we repriced the $2.0 billion Incremental Term Loan Facility maturing on January 31, 2024, with DT by reducing the interest rate to a per annum rate of LIBOR plus a margin of 2.00%. No issuance fees were incurred related to this debt agreement$433 million and $563 million for the nine months ended September 30, 2017.2022 and 2021, respectively. Wireline service revenues are presented in Wholesale and other service revenues on our Condensed Consolidated Statements of Comprehensive Income. In September 2022, we entered into an agreement for the sale of the Wireline Business. See Note 10 – Wireline for additional information.


On MarchContract Balances

The contract asset and contract liability balances from contracts with customers as of September 30, 2022, and December 31, 2017,2021, were as follows:
(in millions)Contract
Assets		Contract Liabilities
Balance as of December 31, 2021$286 $763 
Balance as of September 30, 2022286 739 
Change$— $(24)

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 Incremental Term Loan Facilitycustomer maintaining a service contract.

Contract asset balances were impacted by customer activity related to new promotions, offset by billings on existing contracts and impairment, which is recognized as bad debt expense. The current portion of our contract assets of approximately $222 million and $219 million as of September 30, 2022, and December 31, 2021, respectively, was amendedincluded in Other current assets on our Condensed Consolidated Balance Sheets.

Contract liabilities are recorded when fees are collected, or we have an unconditional right to waive all interim principal payments. 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 revenueon our Condensed Consolidated Balance Sheets.

Revenues for the three and nine months ended September 30, 2022 and 2021, include the following:
Three Months Ended September 30,Nine Months Ended September 30,
(in millions)2022202120222021
Amounts included in the beginning of year contract liability balance$17 $29 $702 $753 

Remaining Performance Obligations

As of September 30, 2022, 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 $602 million. 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 September 30, 2022, the aggregate amount of the contractual minimum consideration for wholesale, roaming and service contracts is $534 million, $2.3 billion and $5.1 billion for 2022, 2023, and 2024 and beyond, respectively. These contracts have a remaining duration ranging from less than one year to eight years.
20
Index for Notes to the Condensed Consolidated Financial Statements

Contract Costs

The outstanding principal balance will be due at maturity.


Duringof deferred incremental costs to obtain contracts with customers was $1.8 billion and $1.5 billion as of September 30, 2022, and December 31, 2021, respectively, and is included in Other assets on our Condensed Consolidated Balance Sheets. Deferred contract costs incurred to obtain postpaid service contracts are amortized over a period of 24 months. The amortization period is monitored to reflect any significant change in assumptions. Amortization of deferred contract costs included in Selling, general and administrative expenses on our Condensed Consolidated Statements of Comprehensive Income were $375 million and $277 million for the three months ended September 30, 2022 and 2021, respectively, and $1.1 billion and $789 million for the nine months ended September 30, 2017,2022 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 three and nine months ended September 30, 2022 and 2021.

Note 9 – Repurchases of Common Stock

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. Under the 2022 Stock Repurchase Program, repurchases can be made from time to time using a variety of methods, which may include open market purchases, 10b5-1 plans, privately negotiated transactions or other methods, all in accordance with the rules of the Securities and Exchange Commission and other applicable legal requirements. The specific timing, price and size of repurchases will depend on prevailing stock prices, general economic and market conditions, and other considerations and may include up to $3.0 billion of our common stock in 2022. The 2022 Stock Repurchase Program does not obligate us to acquire any particular amount of common stock, and the 2022 Stock Repurchase Program may be suspended or discontinued at any time at our discretion. Repurchased shares will be held as Treasury stock on our Condensed Consolidated Balance Sheets.

During the three and nine months ended September 30, 2022, we repurchased 4,892,315 shares of our common stock at an average price per share of $136.65 for a total purchase price of $669 million, all of which were purchased under the 2022 Stock Repurchase program and occurred during the period from September 8, 2022, through September 30, 2022. As of September 30, 2022, we had up to approximately $13.3 billion remaining under the 2022 Stock Repurchase Program, of which up to approximately $2.3 billion was available for the remainder of 2022.

Subsequent to September 30, 2022, from October 1, 2022, through October 20, 2022, we repurchased 5,964,813 shares of our common stock at an average price per share of $136.57 for a total purchase price of $815 million. As of October 20, 2022, we had up to approximately $12.5 billion remaining under the 2022 Stock Repurchase Program, of which up to approximately $1.5 billion was available for the remainder of 2022.

Note 10 – 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 Purchase Agreement, pursuant to which the Buyer will acquire the Wireline Business. The Purchase Agreement provides that, upon the terms and conditions set forth therein, the Buyer will 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 following SeniorWireline Business (such transactions contemplated by the Purchase Agreement are collectively referred to as the “Wireline Transaction”).

The parties have agreed to a $1 purchase price in consideration for the Purchased Interests, subject to customary adjustments set forth in the Purchase Agreement. In addition, at the consummation of the Wireline Transaction (the “Closing”), a T-Mobile affiliate will enter into a commercial agreement for IP transit services, pursuant to which T-Mobile will pay to the Buyer an aggregate of $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 Closing is subject to customary closing conditions, including the receipt of certain required regulatory approvals and consents. Subject to the satisfaction or waiver of certain conditions and other terms and conditions of the Purchase Agreement, the Wireline Transaction is expected to close in the second half of 2023.
21
Index for Notes to DT:
the Condensed Consolidated Financial Statements
(in millions)Principal Issuances (Redemptions) 
Discounts (1)
 Net Proceeds from Issuance of Long-Term Debt
4.000% Senior Notes due 2022$1,000
 $(23) $977
5.125% Senior Notes due 20251,250
 (28) 1,222
5.375% Senior Notes due 2027 (2)
1,250
 (28) 1,222
6.288% Senior Reset Notes due 2019(1,250) —
 (1,250)
6.366% Senior Reset Notes due 2020(1,250) —
 (1,250)
Total$1,000
 $(79) $921

As a result of the Purchase Agreement and related anticipated Wireline Transaction, we concluded that the Wireline Business met the held for sale criteria upon entering into the Purchase Agreement. As such, the assets and liabilities of the Wireline Business disposal group are classified as held for sale and presented within Other current assets and Other current liabilities on our Condensed Consolidated Balance Sheets as of September 30, 2022.

The components of assets and liabilities held for sale presented within Other current assets and Other current liabilities, respectively, on our Condensed Consolidated Balance Sheets as of September 30, 2022, were as follows:
(in millions)September 30,
2022
Assets
(1)Cash and cash equivalentsDiscounts reduce Proceeds from issuance of long-term debt and are included within Net cash (used in) provided by financing activities in our Condensed Consolidated Statements of Cash Flows.$28 
Accounts receivable, net38 
Prepaid expenses5 
Other current assets4 
(2)Property and equipment, netIn April 2017, we issued503 
Operating lease right-of-use assets120 
Other intangible assets, net7 
Other assets7 
Remeasurement of disposal group held for sale to DT $750 million in aggregate principal amount of the 5.375% Senior Notes due 2027,fair value less costs to sell (1)
(371)
Assets held for sale$341 
Liabilities
Accounts payable and in September 2017, we issued to DT the remaining $500 million in aggregate principal amount of the 5.375% Senior Notes due 2027.accrued liabilities$63 
Deferred revenue4 
Short-term operating lease liabilities60 
Operating lease liabilities259 
Other long-term liabilities40 
Liabilities held for sale426 
Liabilities held for sale, net$(85)

On March 13, 2017, DT agreed(1)     Excludes amounts related to purchase a totalthe establishment of $3.5 billion in aggregate principal amountsliabilities for contractual and other payments associated with the Wireline Transaction, including the $700 million of Senior Notes with various interest ratesfees payable for IP transit services discounted to present value and maturity dates (the “new DT Notes”).

Through net settlement in April 2017, we issuedother payments to DT a total of $3.0 billion in aggregate principal amount of the new DT Notes and redeemed the $2.5 billion in outstanding aggregate principal amount of Senior Reset Notes with various interest rates and maturity dates (the “old DT Notes”).

The redemption prices of the old DT Notes were 103.144% and 103.183%, resulting in a total of $79 million in early redemption fees. These early redemption fees were recorded as discounts on the issuance of the new DT Notes.

In September 2017, we issued to DT $500 million in aggregate principal amount of 5.375% Senior Notes due 2027, which is the final tranche of the new DT Notes. We were not required to pay any underwriting fees or issuance costsBuyer anticipated in connection with the issuanceWireline Transaction.

In connection with the expected sale of the notes.Wireline Business and classification of related assets and liabilities as held for sale, we recognized a pre-tax loss of $1.1 billion during the three months ended September 30, 2022, which is included within Loss on disposal group held for sale on our Condensed Consolidated Statements of Comprehensive Income.


Net proceedsThe components of the Loss on disposal group held for sale on our Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2022, were as follows:
in millionsThree and Nine Months Ended September 30, 2022
Write-down of Wireline Business net assets$295 
Accrual of estimated costs to sell76 
Recognition of liability for IP transit services agreement (1)
641 
Recognition of other obligations to Buyer to be paid at or after Closing59 
Loss on disposal group held for sale$1,071 
(1)     We will continue to recognize accretion expense through the expiration of the agreement which will be included in Interest expense, net separate from the issuanceLoss on disposal group held for sale on our Condensed Consolidated Statements of Comprehensive Income.

The present value of the new DT Notes were $921liability for fees payable for IP transit services has been recognized as a component of Loss on disposal group held for sale as we have not currently identified any path to utilize such services in our continuing operations and have committed to execute the agreement as a closing condition for the Wireline Transaction. We will continue to evaluate potential uses on an ongoing basis over the life of the agreement. Approximately $29 million and $613 million of this liability, including accrued interest, is presented within Other current liabilities and Other long-term liabilities, respectively, on our Condensed Consolidated Balance Sheets as of September 30, 2022, in accordance with the expected timing of the related payments. Approximately $24 million and $35 million for contractual and other payments associated with the Transaction are presented
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within Other current liabilities and Other long-term liabilities, respectively, on our Condensed Consolidated Balance Sheets as of September 30, 2022, in accordance with the expected timing of the related payments.

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 sold certain IP addresses held by the Wireline Business to other third parties during the three months ended September 30, 2022, for which we recognized a gain on disposal of $121 million, which is included as a reduction to Selling, general and administrative expenses on our Condensed Consolidated Statements of Comprehensive Income.

Wireline Impairment

We provide 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) acquired through the Merger. The legacy Sprint Wireline network is 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 support our wireless network and the associated customers and cash flows in Proceeds from issuancea significant manner. In evaluating whether the Wireline long-lived assets were impaired, we estimated the fair value of long-term debtthese 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 nine months ended September 30, 2022, all of which relates to the impairment recognized during the three months ended June 30, 2022, of which $258 million 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 in our Condensed Consolidated Statements of Cash Flows.

On May 9, 2017, we exercised our option under existing purchase agreementsComprehensive Income. There was no impairment expense recognized for the three and issued the following Senior Notes to DT:
(in millions)Principal Issuances Premium Net Proceeds from Issuance of Long-Term Debt
5.300% Senior Notes due 2021$2,000
 $—
 $2,000
6.000% Senior Notes due 20241,350
 40
 1,390
6.000% Senior Notes due 2024650
 24
 674
Total$4,000
 $64
 $4,064

The proceeds were used to fund a portion of the purchase price of spectrum licenses won in the 600 MHz spectrum auction. Net proceeds from these issuances include $64 million in debt premiums. See Note 5 - Spectrum License Transactions for further information.

Revolving Credit Facility

We had no outstanding borrowings under our $1.5 billion senior secured revolving credit facility with DT as ofnine months ended September 30, 2017 and December 31, 2016. Proceeds and borrowings from the revolving credit facility are presented in Proceeds from borrowing on revolving credit facility and Repayments of revolving credit facility within Net cash (used in) provided by financing activities in our Condensed Consolidated Statements of Cash Flows.2021.


Note 811 – Income Taxes


Within our Condensed Consolidated Statements of Comprehensive Income, we recorded an Income tax expensebenefit of $356$57 million and $232$3 million for the three months ended September 30, 20172022 and 2016,2021, respectively, and $618Income tax expense of $106 million and $651$520 million for the nine months ended September 30, 20172022 and 2016,2021, respectively.

The changeincrease in Income tax benefit for the three months ended September 30, 20172022, was primarily from highertax benefits associated with internal restructuring and lower income before income taxes. The change for the nine months ended September

30, 2017 was primarily from a lower effective tax ratetaxes, partially offset by higher income before income taxes. The effective tax rate was 39.3% and 38.8% forbenefits recognized in the three months ended September 30, 2017 and 2016, respectively, and 25.3% and 37.8% for the nine months ended September 30, 2017 and 2016, respectively. The change in the effective income tax rate for the nine months ended September 30, 2017, was primarily due2021, associated with legal entity reorganization related to historical Sprint entities, including a reduction in the valuation allowance against deferred tax assets in certain state jurisdictions that resulted indid not impact the recognition of $270 million in tax benefits in the first quarter of 2017 and the recognition of an additional $19 million in tax benefits through the third quarter of 2017. Total tax benefits related to the reduction in the valuation allowance were $289 million throughthree months ended September 30, 2017. 2022.

The effectivedecrease in Income tax rate was further decreased by the recognition of $62 million of excess tax benefits related to share-based paymentsexpense for the nine months ended September 30, 2017, compared2022, was primarily from lower income before income taxes and tax benefits associated with internal restructuring, partially offset by tax benefits recognized in the nine months ended September 30, 2021, associated with legal entity reorganization related to $24 million forhistorical Sprint entities, including a reduction in the same periodvaluation allowance against deferred tax assets in 2016.

Duringcertain state jurisdictions, that did not impact the first quarter of 2017, due to ongoing analysis of positivenine months ended September 30, 2022, and negative evidencea decrease in excess tax benefits related to the utilizationvesting of restricted stock awards.

The effective tax rate was (12.4)% and (0.3)% for the deferred tax assets, we determined that a portion ofthree months ended September 30, 2022 and 2021, respectively, and 8.7% and 16.7% for the valuation allowance was no longer necessary. Positive evidence supportingnine months ended September 30, 2022 and 2021, respectively.
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Note 912 – Earnings Per Share


The computation of basic and diluted earnings per share was as follows:
Three Months Ended September 30,Nine Months Ended September 30,
(in millions, except shares and per share amounts)2022202120222021
Net income$508 $691 $1,113 $2,602 
Weighted-average shares outstanding – basic1,253,873,429 1,248,189,719 1,252,783,140 1,246,441,464 
Effect of dilutive securities:
Outstanding stock options and unvested stock awards5,336,842 5,471,526 5,278,338 7,950,323 
Weighted-average shares outstanding – diluted1,259,210,271 1,253,661,245 1,258,061,478 1,254,391,787 
Earnings per share – basic$0.40 $0.55 $0.89 $2.09 
Earnings per share – diluted0.40 0.55 0.88 2.07 
Potentially dilutive securities:
Outstanding stock options and unvested stock awards50,004 127,732 79,122 87,968 
SoftBank contingent consideration (1)
48,751,557 48,751,557 48,751,557 48,751,557 
(1)     Represents the weighted-average SoftBank Specified Shares that are contingently issuable from the acquisition date of April 1, 2020, pursuant to a letter agreement dated February 20, 2020, between T-Mobile, SoftBank and Deutsche Telekom AG (“DT”).
 Three Months Ended September 30, Nine Months Ended September 30,
(in millions, except shares and per share amounts)2017 2016 2017 2016
Net income$550
 $366
 $1,829
 $1,070
Less: Dividends on mandatory convertible preferred stock(13) (13) (41) (41)
Net income attributable to common stockholders - basic537
 353
 1,788
 1,029
Add: Dividends related to mandatory convertible preferred stock13
 —
 41
 —
Net income attributable to common stockholders - diluted$550
 $353
 $1,829
 $1,029
        
Weighted average shares outstanding - basic831,189,779
 822,998,697
 829,974,146
 821,626,675
Effect of dilutive securities:       
Outstanding stock options and unvested stock awards7,992,286
 9,259,122
 9,523,365
 9,614,352
Mandatory convertible preferred stock32,238,000
 —
 32,238,000
 —
Weighted average shares outstanding - diluted871,420,065
 832,257,819
 871,735,511
 831,241,027
        
Earnings per share - basic$0.65
 $0.43
 $2.15
 $1.25
Earnings per share - diluted$0.63
 $0.42
 $2.10
 $1.24
        
Potentially dilutive securities:       
Outstanding stock options and unvested stock awards—
 278,675
 4,760
 287,375
Mandatory convertible preferred stock—
 32,238,000
 —
 32,238,000


Unless converted earlier, each shareAs of September 30, 2022, we had authorized 100 million shares of preferred stock, will convert automatically on December 15, 2017 into between 1.6119 (the minimum conversion rate) and 1.9342 (the maximum conversion rate) shares of our common stock, subject to customary anti-dilution adjustments and depending on the applicable marketwith a par value of our common stock. Using the minimum conversion rate, we would issue 32,238,000 shares$0.00001 per share. There was no preferred stock outstanding as of our common stock upon conversion.

September 30, 2022 and 2021. Potentially dilutive securities were not included in the computation of diluted earnings per share if to do so would have been anti-dilutive.



The SoftBank Specified Shares Amount of 48,751,557 shares of T-Mobile common stock was determined to be contingent consideration for the Merger and is not dilutive until the defined volume-weighted average price per share is reached.

Note 13 – 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. Additionally, we lease dark fiber through non-cancelable operating leases with contractual terms that generally extend through 2040. 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.

On January 3, 2022, we entered into the Crown Agreement with CCI that modified the terms of our leased towers from CCI. The Crown Agreement modifies the monthly rental payments we will pay for sites currently leased by us, extends the non-cancellable lease term for the majority of our sites through December 2033 and will allow us the flexibility to facilitate our network integration and decommissioning activities through new site builds and termination of duplicate tower locations. The initial non-cancellable term is through December 31, 2033, followed by three optional five-year renewals. As a result of this modification, we remeasured the associated right-of use assets and lease liabilities resulting in an increase of $5.3 billion to each on the effective date of the modification, with a corresponding gross increase to both deferred tax liabilities and assets of $1.3 billion.

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The components of lease expense were as follows:
Three Months Ended September 30,Nine Months Ended September 30,
(in millions)2022202120222021
Operating lease expense$1,498 $1,546 $5,231 $4,470 
Financing lease expense:
Amortization of right-of-use assets188 205 567 553 
Interest on lease liabilities18 15 49 51 
Total financing lease expense206 220 616 604 
Variable lease expense114 113 363 298 
Total lease expense$1,818 $1,879 $6,210 $5,372 

As of September 30, 2022, the weighted-average remaining lease term and discount rate for operating leases were 10 – Commitmentsyears and Contingencies4.0%, respectively.


CommitmentsMaturities of lease liabilities as of September 30, 2022, were as follows:
(in millions)Operating LeasesFinance Leases
Twelve Months Ending September 30,
2023$4,679 $1,286 
20244,472 999 
20254,000 544 
20263,652 54 
20273,349 23 
Thereafter22,091 14 
Total lease payments42,243 2,920 
Less: imputed interest8,286 91 
Total$33,957 $2,829 


Operating LeasesInterest payments for financing leases were $18 million and Purchase Commitments

During$15 million for the three months ended September 30, 2022 and 2021, respectively, and $49 million and $51 million for the nine months ended September 30, 2017,2022 and 2021, respectively.

As of September 30, 2022, we have additional operating leases for commercial properties that have not yet commenced with future lease payments of approximately $253 million.

Note 14 – 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 $4.8 billion for the 12-month period ending September 30, 2023, $5.0 billion in total for both of the 12-month periods ending September 30, 2024 and 2025, $2.7 billion in total for both of the 12-month periods ending September 30, 2026 and 2027, and $2.9 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.

Spectrum Leases

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.

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Our spectrum lease and service credit commitments, including renewal periods, are approximately $312 million for the 12-month period ending September 30, 2023, $585 million in total for both of the 12-month periods ending September 30, 2024 and 2025, $616 million in total for both of the 12-month periods ending September 30, 2026 and 2027, and $4.6 billion in total thereafter.

In August 2022, we entered into aan agreement for the purchase commitment with a handset Original Equipment Manufacturer, resulting in a material increaseof certain spectrum licenses currently subject to lease agreements. The agreement remains subject to regulatory approval and the future minimum payments forpurchase price of $3.5 billion is excluded from our reported purchase commitments summarized below.above. See Note 4 – Spectrum License Transactions for additional details.


Future minimum payments for non-cancelable operating leases and purchase commitments are as follows:
(in millions)Operating Leases Purchase Commitments
Year ending September 30,   
2018$2,397
 $2,477
20192,153
 1,210
20201,867
 1,015
20211,472
 759
20221,163
 661
Thereafter2,240
 904
Total$11,292
 $7,026

Renewable Energy Purchase Agreements

In January 2017, T-Mobile USA entered into a REPA with Red Dirt Wind Project, LLC. The agreement is based on the expected operation of a wind energy-generating facility located in Oklahoma and will remain in effect until the twelfth anniversary of the facility’s entry into commercial operation. Commercial operation of the facility is expected to occur by the end of 2017. The REPA consists of two components: (1) an energy forward agreement that is net settled based on energy prices and the energy output generated by the facility and (2) a commitment to purchase the renewable energy credits (“RECs”) associated with the energy output generated by the facility. T-Mobile USA will net settle the forward agreement and acquire the RECs monthly by paying, or receiving, an aggregate net payment based on two variables (1) the facility’s energy output, which has an estimated maximum capacity of approximately 160 megawatts and (2) the difference between (a) an initial fixed price, subject to annual escalation, and (b) current local marginal energy prices during the monthly settlement period. We have determined that the REPA does not meet the definition of a derivative because the expected energy output of the facility may not be reliably estimated (the arrangement lacks a notional amount). The REPA does not contain any unconditional purchase obligations because amounts under the agreement are not fixed and determinable. Our participation in the REPA did not require an upfront investment or capital commitment. We do not control the activities that most significantly impact the energy-generating facility nor do we receive specific energy output from it. No amounts were settled under the agreement during the nine months ended September 30, 2017.

In August 2017, T-Mobile USA entered into a REPA with Solomon Forks Wind Project, LLC. The agreement is based on the expected operation of a wind energy-generating facility located in Kansas and will remain in effect until the fifteenth anniversary of the facility’s entry into commercial operation. Commercial operation of the facility is expected to occur by the end of 2018. The REPA consists of two components: (1) an energy forward agreement that is net settled based on energy prices and the energy output generated by the facility and (2) a commitment to purchase the environmental attributes (“EACs”) associated with the energy output generated by the facility. T-Mobile USA will net settle the forward agreement and acquire the EACs monthly by paying, or receiving, an aggregate net payment based on two variables (1) the facility’s energy output, which has an estimated maximum capacity of approximately 160 megawatts and (2) the difference between (a) an initial fixed price, subject to annual escalation, and (b) current local marginal energy prices during the monthly settlement period. We have determined that the REPA does not meet the definition of a derivative because the expected energy output of the facility may not be reliably estimated (the arrangement lacks a notional amount). The REPA does not contain any unconditional purchase obligations because amounts under the agreement are not fixed and determinable. Our participation in the REPA did not require an upfront investment or capital commitment. We do not control the activities that most significantly impact the energy-generating facility nor do we receive specific energy output from it. No amounts were settled under the agreement during the nine months ended September 30, 2017.


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 numerous court actions alleging that we are infringing various patents. Virtually allclaims of the patent infringement cases(most of which are broughtasserted by non-practicing entities primarily seeking monetary damages), class actions, and effectively seek only monetary damages, although they occasionally seek injunctive relief as well. Theproceedings to enforce FCC or other government agency rules and regulations. Those Litigation and Regulatory Matters described above have progressed toare at various stages, and some of them may proceed to trial, arbitration, hearing, or other adjudication that could include an awardresult 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, which isappropriate. The accruals are reflected in theon our condensed consolidated financial statements, but that we dothey are not consider,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:to, uncertainty concerning legal theories and their resolution by courts or regulators;regulators, uncertain damage theories and demands;demands, and a less than fully developed factual record. WhileFor Litigation and Regulatory Matters that may result in a contingent gain, we recognize such gains on our condensed 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 proceedings,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 these proceedingsthe specific matters identified below 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 September 30, 2022, and that accrual was included in Accounts payable and accrued liabilities on our Condensed Consolidated Balance Sheets.
Note 11 – Guarantor Financial Information

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.
Pursuant
We note that pursuant to Amendment No. 2, dated as of February 20, 2020, to the applicable indenturesBusiness Combination Agreement, dated as of April 29, 2018, by and supplemental indentures,among the long-term debtCompany, Sprint and the other parties named therein (as amended, the “Business Combination Agreement”), SoftBank agreed to affiliatesindemnify us against certain specified matters and third parties, excluding Senior Secured Term Loanslosses, including those relating to the Lifeline matters described above. Resolution of these matters could require making additional reimbursements and capital leases, issuedpaying 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 T-Mobile USA (“Issuer”) is fullySoftBank.

On June 1, 2021, a putative shareholder class action and unconditionally guaranteed, jointly and severally, on a senior unsecured basis by T-Mobile (“Parent”)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 Issuer’s 100% owned subsidiaries (“Guarantor Subsidiaries”).repricing amendment to the Business

26
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. We intend to vigorously defend this lawsuit.

In January 2017, T-Mobile USA,October 2020, we notified Mobile Virtual Network Operators (“MVNOs”) using the legacy Sprint CDMA network that we planned to retire that network on December 31, 2021. In response to that notice, DISH, which had Boost Mobile customers who used the legacy Sprint CDMA network, made several efforts to prevent us from retiring the CDMA network until mid-2023, including pursuing a Petition for Modification and related proceedings pursuant to the California Public Utilities Commission’s (the “CPUC”) April 2020 decision concerning the Merger. As of June 30, 2022, the orderly decommissioning of the legacy Sprint CDMA network had been completed, although certain of its affiliates, as guarantors, borrowed $4.0 billion under the Incremental Term Loan FacilityCPUC proceedings remain in process.

On August 12, 2021, we became aware of a potential cybersecurity issue involving unauthorized access to refinance $1.98 billion of outstanding secured term loans under its Term Loan Credit Agreement dated November 9, 2015,T-Mobile’s systems (the “August 2021 cyberattack”). We immediately began an investigation and engaged cybersecurity experts to assist with the remaining net proceeds from the transaction intended to be used to redeem callable high yield debt.

In March 2017, T-Mobile USA and certain of its affiliates, as guarantors, (i) issued $500 million in aggregate principal amount of public 4.000% Senior Notes due 2022, (ii) issued $500 million in aggregate principal amount of public 5.125% Senior Notes due 2025 and (iii) issued $500 million in aggregate principal amount of public 5.375% Senior Notes due 2027.

In April 2017, T-Mobile USA and certain of its affiliates, as guarantors, (i) issued $1.0 billion in aggregate principal amount of 4.000% Senior Notes due 2022, (ii) issued $1.25 billion in aggregate principal amount of 5.125% Senior Notes due 2025 and (iii) issued $750 million in aggregate principal amount of 5.375% Senior Notes due 2027. Additionally, T-Mobile USA and certain of its affiliates, as guarantors, redeemed through net settlement, the $1.25 billion outstanding aggregate principal amountassessment of the 6.288% Senior Reset Notesincident and to affiliates due 2019help 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 $1.25 billion in aggregate principal amounttook 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 6.366% Senior Reset Notes to affiliates due 2020.data compromised.


In May 2017, T-Mobile USA and certain of its affiliates, as guarantors, (i) issued $2.0 billion in aggregate principal amount of 5.300% Senior Notes due 2021, (ii) issued $1.35 billion in aggregate principal amount of 6.000% Senior Notes due 2024 and (iii) issued $650 million in aggregate principal amount of 6.000% Senior Notes due 2024.

In September 2017, T-Mobile USA and certain of its affiliates, as guarantors, issued the remaining $500 million in aggregate principal amount of 5.375% Senior Notes due 2027.

See Note 7 - Debt for further information.

The guaranteesAs a result of the Guarantor Subsidiaries areAugust 2021 cyberattack, we have become subject to releasenumerous lawsuits, including mass arbitration claims and multiple class action lawsuits that have been filed in limited circumstances only upon the occurrence of certain customary conditions. The indentures and credit facilities governing the long-term debt contain covenants that,numerous jurisdictions seeking, among other things, limit the abilityunspecified monetary damages, costs and attorneys’ fees arising out of the Issuer andAugust 2021 cyberattack. In December 2021, the Guarantor Subsidiaries to: incur more debt; pay dividends and make distributions; make certain investments; repurchase stock; create liensJudicial 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 July 26, 2022, we received preliminary approval of the proposed settlement, which remains subject to final court approval. Final court approval of the terms of the settlement is expected as early as January 2023 but could be delayed by appeals or other encumbrances; enter into transactions with affiliates; enter into transactions that restrict dividends or distributions from subsidiaries; and merge, consolidate, or sell, or otherwise dispose of, substantially all of their assets. Certain provisions of each ofproceedings. If approved by the credit facilities, indentures and supplemental indentures relating to the long-term debt restrict the ability of the Issuer to loan funds or make payments to Parent. However, the Issuer

and Guarantor Subsidiaries are allowed to make certain permitted payments to the Parentcourt, under the terms of the indenturesproposed settlement, we would pay an aggregate of $350 million to fund claims submitted by class members, the legal fees of plaintiffs’ counsel and the supplemental indentures.costs of administering the settlement. We would also commit to an aggregate incremental spend of $150 million for data security and related technology in 2022 and 2023. We anticipate that, upon court approval, 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.


Presented belowIf approved by the court, 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 during the three months ended June 30, 2022. The expense is the condensed consolidating financial information asincluded within Selling, general and administrative expenses on our Condensed Consolidated Statements of September 30, 2017 and December 31, 2016, and forComprehensive Income. During the three and nine months ended September 30, 20172022, we recognized $50 million in reimbursements from insurance carriers for costs incurred related to the August 2021 cyberattack, which is included as a reduction to Selling, general and 2016.administrative expenses on our Condensed Consolidated Statements of Comprehensive Income. The ultimate resolution of the class action depends on whether we will be able to obtain court approval of the proposed settlement, the number of plaintiffs who opt-out of the proposed settlement and whether the proposed settlement will be appealed.


Condensed Consolidating Balance Sheet InformationIn 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 intend to vigorously defend this lawsuit.
September 30, 2017
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 responding to these inquiries and cooperating fully with these agencies and regulators. However, 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.
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(in millions)Parent Issuer Guarantor Subsidiaries Non-Guarantor Subsidiaries Consolidating and Eliminating Adjustments Consolidated
Assets           
Current assets           
Cash and cash equivalents$29
 $2
 $678
 $30
 $—
 $739
Accounts receivable, net—
 —
 1,504
 230
 —
 1,734
Equipment installment plan receivables, net—
 —
 2,136
 —
 —
 2,136
Accounts receivable from affiliates—
 6
 24
 —
 (6) 24
Inventories—
 —
 999
 —
 —
 999
Other current assets—
 —
 1,241
 576
 —
 1,817
Total current assets29
 8
 6,582
 836
 (6) 7,449
Property and equipment, net (1)
—
 —
 21,248
 322
 —
 21,570
Goodwill—
 —
 1,683
 —
 —
 1,683
Spectrum licenses—
 —
 35,007
 —
 —
 35,007
Other intangible assets, net—
 —
 256
 —
 —
 256
Investments in subsidiaries, net19,823
 37,943
 —
 —
 (57,766) —
Intercompany receivables and note receivables425
 8,903
 —
 —
 (9,328) —
Equipment installment plan receivables due after one year, net—
 —
 1,100
 —
 —
 1,100
Other assets—
 3
 778
 292
 (215) 858
Total assets$20,277
 $46,857
 $66,654
 $1,450
 $(67,315) $67,923
Liabilities and Stockholders' Equity           
Current liabilities           
Accounts payable and accrued liabilities$—
 $201
 $5,626
 $244
 $—
 $6,071
Payables to affiliates—
 250
 38
 —
 —
 288
Short-term debt—
 3
 555
 —
 —
 558
Short-term debt to affiliates—
 —
 6
 —
 (6) —
Deferred revenue—
 —
 790
 —
 —
 790
Other current liabilities—
 —
 219
 177
 —
 396
Total current liabilities—
 454
 7,234
 421
 (6) 8,103
Long-term debt—
 11,913
 1,250
 —
 —
 13,163
Long-term debt to affiliates—
 14,586
 —
 —
 —
 14,586
Tower obligations (1)
—
 —
 395
 2,204
 —
 2,599
Deferred tax liabilities—
 —
 5,750
 —
 (215) 5,535
Deferred rent expense—
 —
 2,693
 —
 —
 2,693
Negative carrying value of subsidiaries, net—
 —
 596
 —
 (596) —
Intercompany payables and debt—
 —
 9,119
 209
 (9,328) —
Other long-term liabilities—
 81
 884
 2
 —
 967
Total long-term liabilities—
 26,580
 20,687
 2,415
 (10,139) 39,543
Total stockholders' equity (deficit)20,277
 19,823
 38,733
 (1,386) (57,170) 20,277
Total liabilities and stockholders' equity$20,277
 $46,857
 $66,654
 $1,450
 $(67,315) $67,923
(1)Assets and liabilities for Non-Guarantor Subsidiaries are primarily included in VIEs related to the 2012 Tower Transaction. See Note 8 – Tower Obligations included in the Annual Report on Form 10-K for the year ended December 31, 2016.



In light of the inherent uncertainties involved in such matters and based on the information currently available to us, 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.

In March 2022, we received $220 million in settlement of certain patent litigation. We recognized the settlement, net of legal fees, as a reduction to Selling, general and administrative expenses on our Condensed Consolidating Balance Sheet Information
December 31, 2016
(in millions)Parent Issuer Guarantor Subsidiaries Non-Guarantor Subsidiaries Consolidating and Eliminating Adjustments Consolidated
Assets           
Current assets           
Cash and cash equivalents$358
 $2,733
 $2,342
 $67
 $—
 $5,500
Accounts receivable, net—
 —
 1,675
 221
 —
 1,896
Equipment installment plan receivables, net—
 —
 1,930
 —
 —
 1,930
Accounts receivable from affiliates—
 —
 40
 —
 —
 40
Inventories—
 —
 1,111
 —
 —
 1,111
Asset purchase deposit—
 —
 2,203
 —
 —
 2,203
Other current assets—
 —
 972
 565
 —
 1,537
Total current assets358
 2,733
 10,273
 853
 —
 14,217
Property and equipment, net (1)
—
 —
 20,568
 375
 —
 20,943
Goodwill—
 —
 1,683
 —
 —
 1,683
Spectrum licenses—
 —
 27,014
 —
 —
 27,014
Other intangible assets, net—
 —
 376
 —
 —
 376
Investments in subsidiaries, net17,682
 35,095
 —
 —
 (52,777) —
Intercompany receivables and note receivables196
 6,826
 —
 —
 (7,022) —
Equipment installment plan receivables due after one year, net—
 —
 984
 —
 —
 984
Other assets—
 7
 600
 262
 (195) 674
Total assets$18,236
 $44,661
 $61,498
 $1,490
 $(59,994) $65,891
Liabilities and Stockholders' Equity           
Current liabilities           
Accounts payable and accrued liabilities$—
 $423
 $6,474
 $255
 $—
 $7,152
Payables to affiliates—
 79
 46
 —
 —
 125
Short-term debt—
 20
 334
 —
 —
 354
Deferred revenue—
 —
 986
 —
 —
 986
Other current liabilities—
 —
 258
 147
 —
 405
Total current liabilities—
 522
 8,098
 402
 —
 9,022
Long-term debt—
 20,741
 1,091
 —
 —
 21,832
Long-term debt to affiliates—
 5,600
 —
 —
 —
 5,600
Tower obligations (1)
—
 —
 400
 2,221
 —
 2,621
Deferred tax liabilities—
 —
 5,133
 —
 (195) 4,938
Deferred rent expense—
 —
 2,616
 —
 —
 2,616
Negative carrying value of subsidiaries, net—
 —
 568
 —
 (568) —
Intercompany payables and debt—
 —
 6,785
 237
 (7,022) —
Other long-term liabilities—
 116
 906
 4
 —
 1,026
Total long-term liabilities—
 26,457
 17,499
 2,462
 (7,785) 38,633
Total stockholders' equity (deficit)18,236
 17,682
 35,901
 (1,374) (52,209) 18,236
Total liabilities and stockholders' equity$18,236
 $44,661
 $61,498
 $1,490
 $(59,994) $65,891
(1)Assets and liabilities for Non-Guarantor Subsidiaries are primarily included in VIEs related to the 2012 Tower Transaction. See Note 8 – Tower Obligations included in the Annual Report on Form 10-K for the year ended December 31, 2016.





Condensed Consolidating StatementConsolidated Statements of Comprehensive Income Information
Three Months Endedduring the nine months ended September 30, 20172022.

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 T-Mobile and Sprint 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 intend to vigorously defend this lawsuit, but we are unable to predict the potential outcome.

Note 15 – Restructuring Costs
(in millions)Parent Issuer Guarantor Subsidiaries Non-Guarantor Subsidiaries Consolidating and Eliminating Adjustments Consolidated
Revenues           
Service revenues$—
 $—
 $7,312
 $527
 $(210) $7,629
Equipment revenues—
 —
 2,160
 —
 (42) 2,118
Other revenues—
 —
 224
 55
 (7) 272
Total revenues—
 —
 9,696
 582
 (259) 10,019
Operating expenses           
Cost of services, exclusive of depreciation and amortization shown separately below—
 —
 1,588
 6
 —
 1,594
Cost of equipment sales—
 —
 2,418
 241
 (42) 2,617
Selling, general and administrative—
 —
 3,106
 209
 (217) 3,098
Depreciation and amortization—
 —
 1,399
 17
 —
 1,416
Gains on disposal of spectrum licenses—
 —
 (29) —
 —
 (29)
Total operating expense—
 —
 8,482
 473
 (259) 8,696
Operating income—
 —
 1,214
 109
 —
 1,323
Other income (expense)           
Interest expense—
 (176) (30) (47) —
 (253)
Interest expense to affiliates—
 (167) (6) —
 6
 (167)
Interest income—
 7
 1
 —
 (6) 2
Other expense, net—
 1
 1
 (1) —
 1
Total other expense, net—
 (335) (34) (48) —
 (417)
Income (loss) before income taxes—
 (335) 1,180
 61
 —
 906
Income tax expense—
 —
 (335) (21) —
 (356)
Earnings of subsidiaries550
 885
 —
 —
 (1,435) —
Net income550
 550
 845
 40
 (1,435) 550
Dividends on preferred stock(13) —
 —
 —
 —
 (13)
Net income attributable to common stockholders$537
 $550
 $845
 $40
 $(1,435) $537
            
Net Income$550
 $550
 $845
 $40
 $(1,435) $550
Other comprehensive income (loss), net of tax           
Other comprehensive income (loss), net of tax1
 1
 1
 —
 (2) 1
Total comprehensive income$551
 $551
 $846
 $40
 $(1,437) $551


Upon close of the Merger, we began implementing restructuring initiatives to realize cost efficiencies and reduce redundancies. The major activities associated with the Merger restructuring initiatives to date include 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.


The following table summarizes the expenses incurred in connection with our Merger restructuring initiatives:
(in millions)Three Months Ended September 30, 2022Nine Months Ended September 30, 2022Incurred to Date
Contract termination costs$— $56 $248 
Severance costs131 164 566 
Network decommissioning318 642 1,323 
Total restructuring plan expenses$449 $862 $2,137 

The expenses associated with our Merger restructuring initiatives are included in Costs of services and Selling, general and administrative on our Condensed Consolidating StatementConsolidated Statements of Comprehensive IncomeIncome.

Our Merger restructuring initiatives also include the acceleration or termination of certain of our operating and financing leases for cell sites, switch sites, retail stores, network equipment and office facilities. Incremental expenses associated with accelerating amortization of the right-of-use assets on lease contracts were $384 million and $265 million for the three months ended September 30, 2022 and 2021, respectively, and $1.6 billion and $649 million for the nine months ended September 30, 2022 and 2021, respectively, and are included in Costs of services and Selling, general and administrative on our Condensed Consolidated Statements of Comprehensive Income.

28
The changes in the liabilities associated with our Merger restructuring initiatives, including expenses incurred and cash payments, are as follows:
(in millions)December 31, 2021Expenses IncurredCash Payments
Adjustments for Non-Cash Items (1)
September 30, 2022
Contract termination costs$14 $56 $(14)$— $56 
Severance costs1 164 (46)— 119 
Network decommissioning71 642 (221)(231)261 
Total$86 $862 $(281)$(231)$436 
(1)    Non-cash items 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 Condensed Consolidated Balance Sheets.

Our Merger restructuring activities are expected to occur over the next year with substantially all costs incurred by the end of fiscal year 2023. We are evaluating additional restructuring initiatives, which are dependent on consultations and negotiation with certain counterparties and the expected impact on our business operations, which could affect the amount or timing of the restructuring costs and related payments.

Note 16 – Additional Financial Information
Three Months Ended
Accounts Payable and Accrued Liabilities

Accounts payable and accrued liabilities, excluding amounts classified as held for sale, are summarized as follows:
(in millions)September 30,
2022		December 31,
2021
Accounts payable$6,822 $6,499 
Payroll and related benefits1,282 1,343 
Property and other taxes, including payroll1,756 1,830 
Accrued interest805 710 
Commissions340 348 
Toll and interconnect216 248 
Other750 427 
Accounts payable and accrued liabilities$11,971 $11,405 

Book overdrafts included in accounts payable were $453 million and $378 million as of September 30, 20162022, and December 31, 2021, respectively.

29
(in millions)Parent Issuer Guarantor Subsidiaries (As adjusted - See Note 1) Non-Guarantor Subsidiaries Consolidating and Eliminating Adjustments Consolidated (As adjusted - See Note 1)
Revenues           
Service revenues$—
 $—
 $6,822
 $520
 $(209) $7,133
Equipment revenues—
 —
 2,049
 —
 (101) 1,948
Other revenues—
 —
 180
(1)48
 (4) 224
Total revenues—
 —
 9,051
(1)568
 (314) 9,305
Operating expenses           
Cost of services, exclusive of depreciation and amortization shown separately below—
 —
 1,430
 6
 —
 1,436
Cost of equipment sales—
 —
 2,340
 300
 (101) 2,539
Selling, general and administrative—
 —
 2,884
 227
 (213) 2,898
Depreciation and amortization—
 —
 1,549
 19
 —
 1,568
Cost of MetroPCS business combination—
 —
 15
 —
 —
 15
Gains on disposal of spectrum licenses—
 —
 (199) —
 —
 (199)
Total operating expense—
 —
 8,019
 552
 (314) 8,257
Operating income—
 —
 1,032
(1)16
 —
 1,048
Other income (expense)           
Interest expense—
 (303) (26) (47) —
 (376)
Interest expense to affiliates—
 (76) —
 —
 —
 (76)
Interest income—
 7
 (4)(1)—
 —
 3
Other expense, net—
 —
 (1) —
 —
 (1)
Total other expense, net—
 (372) (31)(1)(47) —
 (450)
Income (loss) before income taxes—
 (372) 1,001
 (31) —
 598
Income tax (expense) benefit—
 —
 (242) 10
 —
 (232)
Earnings (loss) of subsidiaries366
 738
 (4) —
 (1,100) —
Net income (loss)366
 366
 755
 (21) (1,100) 366
Dividends on preferred stock(13) —
 —
 —
 —
 (13)
Net income attributable to common stockholders$353
 $366
 $755
 $(21) $(1,100) $353
            
Net Income (loss)$366
 $366
 $755
 $(21) $(1,100) $366
Other comprehensive income, net of tax           
Other comprehensive income, net of tax2
 2
 2
 2
 (6) 2
Total comprehensive income (loss)$368
 $368
 $757
 $(19) $(1,106) $368
(1)
The amortized imputed discount on EIP receivables previously recognized as Interest income has been retrospectively reclassified as Other revenues. See Note 1 - Basis of Presentation for further detail.


Supplemental Condensed Consolidating Statement of Comprehensive Income Information
Nine Months Ended September 30, 2017
(in millions)Parent Issuer Guarantor Subsidiaries Non-Guarantor Subsidiaries Consolidating and Eliminating Adjustments Consolidated
Revenues           
Service revenues$—
 $—
 $21,457
 $1,580
 $(634) $22,403
Equipment revenues—
 —
 6,878
 —
 (211) 6,667
Other revenues—
 —
 634
 158
 (17) 775
Total revenues—
 —
 28,969
 1,738
 (862) 29,845
Operating expenses           
Cost of services, exclusive of depreciation and amortization shown separately below—
 —
 4,502
 18
 —
 4,520
Cost of equipment sales—
 —
 7,622
 738
 (211) 8,149
Selling, general and administrative—
 —
 8,967
 652
 (651) 8,968
Depreciation and amortization—
 —
 4,446
 53
 —
 4,499
Gains on disposal of spectrum licenses—
 —
 (67) —
 —
 (67)
Total operating expenses—
 —
 25,470
 1,461
 (862) 26,069
Operating income—
 —
 3,499
 277
 —
 3,776
Other income (expense)           
Interest expense—
 (634) (80) (143) —
 (857)
Interest expense to affiliates—
 (398) (18) —
 18
 (398)
Interest income—
 24
 9
 —
 (18) 15
Other expense, net—
 (87) (1) (1) —
 (89)
Total other expense, net—
 (1,095) (90) (144) —
 (1,329)
Income (loss) before income taxes—
 (1,095) 3,409
 133
 —
 2,447
Income tax expense—
 —
 (572) (46) —
 (618)
Earnings (loss) of subsidiaries1,829
 2,924
 (17) —
 (4,736) —
Net income1,829
 1,829
 2,820
 87
 (4,736) 1,829
Dividends on preferred stock(41) —
 —
 —
 —
 (41)
Net income attributable to common stockholders$1,788
 $1,829
 $2,820
 $87
 $(4,736) $1,788
            
Net Income$1,829
 $1,829
 $2,820
 $87
 $(4,736) $1,829
Other comprehensive income, net of tax           
Other comprehensive income, net of tax3
 3
 3
 —
 (6) 3
Total comprehensive income$1,832
 $1,832
 $2,823
 $87
 $(4,742) $1,832



Condensed Consolidating Statement of Comprehensive Income Information
Nine Months Ended September 30, 2016
(in millions)Parent Issuer Guarantor Subsidiaries (As adjusted - See Note 1) Non-Guarantor Subsidiaries Consolidating and Eliminating Adjustments Consolidated (As adjusted - See Note 1)
Revenues           
Service revenues$—
 $—
 $19,683
 $1,500
 $(584) $20,599
Equipment revenues—
 —
 6,328
 —
 (341) 5,987
Other revenues—
 —
 538
(1)145
 (13) 670
Total revenues—
 —
 26,549
(1)1,645
 (938) 27,256
Operating expenses           
Cost of services, exclusive of depreciation and amortization shown separately below—
 —
 4,268
 18
 —
 4,286
Cost of equipment sales—
 —
 7,104
 768
 (340) 7,532
Selling, general and administrative—
 —
 8,372
 645
 (598) 8,419
Depreciation and amortization—
 —
 4,636
 59
 —
 4,695
Cost of MetroPCS business combination—
 —
 110
 —
 —
 110
Gains on disposal of spectrum licenses—
 —
 (835) —
 —
 (835)
Total operating expenses—
 —
 23,655
 1,490
 (938) 24,207
Operating income—
 —
 2,894
(1)155
 —
 3,049
Other income (expense)           
Interest expense—
 (881) (61) (141) —
 (1,083)
Interest expense to affiliates—
 (248) —
 —
 —
 (248)
Interest income—
 23
 (14)(1)—
 —
 9
Other expense, net—
 —
 (6) —
 —
 (6)
Total other expense, net—
 (1,106) (81)(1)(141) —
 (1,328)
Income (loss) before income taxes—
 (1,106) 2,813
 14
 —
 1,721
Income tax expense—
 —
 (643) (8) —
 (651)
Earnings (loss) of subsidiaries1,070
 2,176
 (15) —
 (3,231) —
Net income1,070
 1,070
 2,155
 6
 (3,231) 1,070
Dividends on preferred stock(41) —
 —
 —
 —
 (41)
Net income attributable to common stockholders$1,029
 $1,070
 $2,155
 $6
 $(3,231) $1,029
            
Net income$1,070
 $1,070
 $2,155
 $6
 $(3,231) $1,070
Other comprehensive income, net of tax           
Other comprehensive income, net of tax2
 2
 2
 2
 (6) 2
Total comprehensive income$1,072
 $1,072
 $2,157
 $8
 $(3,237) $1,072
(1)
The amortized imputed discount on EIP receivables previously recognized as Interest income has been retrospectively reclassified as Other revenues. See Note 1 - Basis of Presentation for further detail.



Condensed Consolidating StatementConsolidated Statements of Cash Flows Information
Three Months Ended September 30, 2017

(in millions)Parent Issuer Guarantor Subsidiaries Non-Guarantor Subsidiaries Consolidating and Eliminating Adjustments Consolidated
Operating activities           
Net cash provided by (used in) operating activities$(2) $(1,554) $3,904
 $14
 $—
 $2,362
            
Investing activities           
Purchases of property and equipment—
 —
 (1,441) —
 —
 (1,441)
Purchases of spectrum licenses and other intangible assets, including deposits—
 —
 (15) —
 —
 (15)
Other, net—
 —
 1
 —
 —
 1
Net cash used in investing activities—
 —
 (1,455) —
 —
 (1,455)
            
Financing activities           
Proceeds from issuance of long-term debt—
 500
 —
 —
 —
 500
Proceeds from borrowing on revolving credit facility, net—
 1,055
 —
 —
 —
 1,055
Repayments of revolving credit facility—
 —
 (1,735) —
 —
 (1,735)
Repayments of capital lease obligations—
 —
 (141) —
 —
 (141)
Repayments of short-term debt for purchases of inventory, property and equipment, net—
 —
 (4) —
 —
 (4)
Tax withholdings on share-based awards—
 —
 (6) —
 —
 (6)
Dividends on preferred stock(13) —
 —
 —
 —
 (13)
Other, net1
 —
 (6) —
 —
 (5)
Net cash (used in) provided by financing activities(12) 1,555
 (1,892) —
 —
 (349)
Change in cash and cash equivalents(14) 1
 557
 14
 —
 558
Cash and cash equivalents           
Beginning of period43
 1
 121
 16
 —
 181
End of period$29
 $2
 $678
 $30
 $—
 $739
The following table summarizes T-Mobile’s supplemental cash flow information:

Three Months Ended September 30,Nine Months Ended September 30,
(in millions)2022202120222021
Interest payments, net of amounts capitalized$781 $884 $2,548 $2,742 
Operating lease payments1,073 2,251 3,163 5,165 
Income tax payments12 38 75 123 
Non-cash investing and financing activities
Non-cash beneficial interest obtained in exchange for securitized receivables1,181 891 3,189 3,361 
Change in accounts payable and accrued liabilities for purchases of property and equipment390 113 139 (427)
Leased devices transferred from inventory to property and equipment67 214 279 1,032 
Returned leased devices transferred from property and equipment to inventory(65)(309)(343)(1,170)
Increase in Tower obligations from contract modification— — 1,158 — 
Operating lease right-of-use assets obtained in exchange for lease obligations479 985 7,045 2,939 
Financing lease right-of-use assets obtained in exchange for lease obligations348 623 1,197 1,109 


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 Condensed Consolidating StatementConsolidated Statements of Cash Flows Informationwere included on our Condensed Consolidated Balance Sheets as follows:
(in millions)September 30,
2022		December 31,
2021
Cash and cash equivalents$6,888 $6,631 
Cash and cash equivalents held for sale (included in Other current Assets)28 — 
Restricted cash (included in Other assets)73 72 
Cash and cash equivalents, including restricted cash and cash held for sale$6,989 $6,703 
Three Months Ended
Note 17 – Subsequent Events

Subsequent to September 30, 20162022, 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 $1.0 billion of gross EIP receivables and future collections on such receivables. See Note 6 – Debt for additional information.

(in millions)Parent Issuer Guarantor Subsidiaries Non-Guarantor Subsidiaries Consolidating and Eliminating Adjustments Consolidated
Operating activities           
Net cash provided by (used in) operating activities$1
 $(84) $1,850
 $8
 $(35) $1,740
            
Investing activities           
Purchases of property and equipment—
 —
 (1,159) —
 —
 (1,159)
Purchases of spectrum licenses and other intangible assets, including deposits—
 —
 (705) —
 —
 (705)
Other, net—
 —
 5
 —
 —
 5
Net cash used in investing activities—
 —
 (1,859) —
 —
 (1,859)
            
Financing activities           
Repayments of capital lease obligations—
 —
 (54) —
 —
 (54)
Repayments of long-term debt—
 —
 (5) —
 —
 (5)
Tax withholdings on share-based awards—
 —
 (3) —
 —
 (3)
Intercompany dividend paid—
 —
 —
 (35) 35
 —
Dividends on preferred stock(13) —
 —
 —
 —
 (13)
Other, net11
 —
 (3) —
 —
 8
Net cash used in financing activities(2) —
 (65) (35) 35
 (67)
Change in cash and cash equivalents(1) (84) (74) (27) —
 (186)
Cash and cash equivalents           
Beginning of period367
 2,683
 2,439
 49
 —
 5,538
End of period$366
 $2,599
 $2,365
 $22
 $—
 $5,352


Condensed Consolidating Statement of Cash Flows Information
Nine Months EndedSubsequent to September 30, 2017
2022, on October 17, 2022, we entered into an Amended and Restated Credit Agreement. See Note 6 – Debt for additional information.
(in millions)Parent Issuer Guarantor Subsidiaries Non-Guarantor Subsidiaries Consolidating and Eliminating Adjustments Consolidated
Operating activities           
Net cash provided by (used in) operating activities$—
 $(16,429) $22,370
 $43
 $(80) $5,904
            
Investing activities           
Purchases of property and equipment—
 —
 (4,316) —
 —
 (4,316)
Purchases of spectrum licenses and other intangible assets, including deposits—
 —
 (5,820) —
 —
 (5,820)
Equity investment in subsidiary(308) —
 —
 —
 308
 —
Other, net—
 —
 (2) —
 —
 (2)
Net cash used in investing activities(308) —
 (10,138) —
 308
 (10,138)
            
Financing activities           
Proceeds from issuance of long-term debt—
 10,480
 —
 —
 —
 10,480
Proceeds from borrowing on revolving credit facility, net—
 2,910
 —
 —
 —
 2,910
Repayments of revolving credit facility—
 —
 (2,910) —
 —
 (2,910)
Repayments of capital lease obligations—
 —
 (350) —
 —
 (350)
Repayments of short-term debt for purchases of inventory, property and equipment, net—
 —
 (296) —
 —
 (296)
Repayments of long-term debt—
 —
 (10,230) —
 —
 (10,230)
Equity investment from parent—
 308
 —
 —
 (308) —
Tax withholdings on share-based awards—
 —
 (101) —
 —
 (101)
Intercompany dividend paid—
 —
 —
 (80) 80
 —
Dividends on preferred stock(41) —
 —
 —
 —
 (41)
Other, net20
 —
 (9) —
 —
 11
Net cash (used in) provided by financing activities(21) 13,698
 (13,896) (80) (228) (527)
Change in cash and cash equivalents(329) (2,731) (1,664) (37) —
 (4,761)
Cash and cash equivalents           
Beginning of period358
 2,733
 2,342
 67
 —
 5,500
End of period$29
 $2
 $678
 $30
 $—
 $739



Condensed Consolidating Statement of Cash Flows Information
Nine Months EndedSubsequent to September 30, 20162022, from October 1, 2022, through October 20, 2022, we repurchased 5,964,813 shares of our common stock at an average price per share of $136.57 for a total purchase price of $815 million. See Note 9 – Repurchases of Common Stock for additional information regarding the 2022 Stock Repurchase Program.

30
(in millions)Parent Issuer Guarantor Subsidiaries Non-Guarantor Subsidiaries Consolidating and Eliminating Adjustments Consolidated
Operating activities           
Net cash provided by (used in) operating activities$4
 $(2,165) $6,745
 $59
 $(110) $4,533
            
Investing activities           
Purchases of property and equipment—
 —
 (3,843) —
 —
 (3,843)
Purchases of spectrum licenses and other intangible assets, including deposits—
 —
 (3,544) —
 —
 (3,544)
Sales of short-term investments—
 2,000
 998
 —
 —
 2,998
Other, net—
 —
 3
 —
 —
 3
Net cash provided by (used in) investing activities—
 2,000
 (6,386) —
 —
 (4,386)
            
Financing activities           
Proceeds from issuance of long-term debt—
 997
 —
 —
 —
 997
Repayments of capital lease obligations—
 —
 (133) —
 —
 (133)
Repayments of short-term debt for purchases of inventory, property and equipment, net—
 —
 (150) —
 —
 (150)
Repayments of long-term debt—
 —
 (15) —
 —
 (15)
Tax withholdings on share-based awards—
 —
 (52) —
 —
 (52)
Intercompany dividend paid—
 —
 —
 (110) 110
 —
Dividends on preferred stock(41) —
 —
 —
 —
 (41)
Other, net25
 —
 (8) —
 —
 17
Net cash (used in) provided by financing activities(16) 997
 (358) (110) 110
 623
Change in cash and cash equivalents(12) 832
 1
 (51) —
 770
Cash and cash equivalents           
Beginning of period378
 1,767
 2,364
 73
 —
 4,582
End of period$366
 $2,599
 $2,365
 $22
 $—
 $5,352
Table of Contents



Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations


Cautionary Statement Regarding Forward-Looking Statements


This Quarterly Report on Form 10-Q (“Form 10-Q”) of T-Mobile US, Inc. (“T-Mobile,” “we,” “our,” “us” or the “Company”) includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical fact, including information concerning our future results of operations, are forward-looking statements. These forward-looking statements are generally identified by the words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “could” or similar expressions. Forward-looking statements are based on current expectations and assumptions, which are subject to risks and uncertainties andthat may cause actual results to differ materially from the forward-looking statements. The following important factors, along with the Risk Factors included in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2016,2021, and Part II, Item 1A of this Form 10-Q, could affect future results and cause those results to differ materially from those expressed in the forward-looking statements:

•adverse impact caused by the COVID-19 pandemic (the “Pandemic”), including supply chain shortages;
•competition, industry consolidation and changes in the market for wireless services;
•disruption, data loss or other security breaches, such as the criminal cyberattack we became aware of in August 2021;
•our inability to take advantage of technological developments on a timely basis;
•our inability to retain or motivate key personnel, hire qualified personnel or maintain our corporate culture;
•system failures and business disruptions, allowing for unauthorized use of or interference with our network and other systems;
•the scarcity and cost of additional wireless spectrum, and regulations relating to spectrum use;
•the impacts of the actions we have taken and conditions we have agreed to in connection with the regulatory proceedings and approvals of the Transactions (as defined below), including the acquisition by DISH Network Corporation (“DISH”) of the prepaid wireless business operated under the Boost Mobile and Sprint prepaid brands (excluding the Assurance brand Lifeline customers and the prepaid wireless customers of Shenandoah Personal Communications Company LLC and Swiftel Communications, Inc.), including customer accounts, inventory, contracts, intellectual property and certain other specified assets, and the assumption of certain related liabilities (collectively, the “Prepaid Transaction”), the complaint and proposed final judgment agreed to by us, Deutsche Telekom AG (“DT”), Sprint Corporation, now known as Sprint LLC (“Sprint”), SoftBank Group Corp. (“SoftBank”) and DISH with the U.S. District Court for the District of Columbia, which was approved by the Court on April 1, 2020, the proposed commitments filed with the Secretary of the Federal Communications Commission (“FCC”), which we announced on May 20, 2019, certain national security commitments and undertakings, and any other commitments or undertakings entered into, including but not limited to, those we have made to certain states and nongovernmental organizations (collectively, the “Government Commitments”), and the challenges in satisfying the Government Commitments in the required time frames and the significant cumulative costs incurred in tracking and monitoring compliance;
•adverse economic, political or politicalmarket conditions in the U.S. and international markets;markets, including changes resulting from increases in inflation, impacts of current geopolitical instability caused by the war in Ukraine, and those caused by the Pandemic;
competition•our inability to manage the ongoing commercial and transition services arrangements entered into in connection with the wireless services market, including new competitors entering Prepaid Transaction, and known or unknown liabilities arising in connection therewith;
•the industry as technologies converge;
thetiming and effects of any future acquisition, disposition, investment, or merger involving us;
•any disruption or acquisition involving us, as well asfailure of our third parties (including key suppliers) to provide products or services for the effectsoperation of mergersour business;
•our substantial level of indebtedness and our inability to service our debt obligations in accordance with their terms or acquisitionsto comply with the restrictive covenants contained therein;
•changes in the technology, mediacredit market conditions, credit rating downgrades or an inability to access debt markets;
•restrictive covenants including the agreements governing our indebtedness and telecommunications industry;other financings;
challenges•the risk of future material weaknesses we may identify while we continue to work to integrate following the Merger (as defined below), or any other failure by us to maintain effective internal controls, and the resulting significant costs and reputational damage;
•any changes in implementing our business strategiesregulations or funding our wireless operations,in the regulatory framework under which we operate;
•laws and regulations relating to the handling of privacy and data protection;
•unfavorable outcomes of and increased costs from existing or future legal proceedings, including payment for additional spectrum or network upgrades;these proceedings and inquiries relating to the criminal cyberattack we became aware of in August 2021;
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•the possibility that we may be unable to renewadequately protect our spectrum licenses on attractive termsintellectual property rights or acquire be accused of infringing the intellectual property rights of others;
•our offering of regulated financial services products and exposure to a wide variety of state and federal regulations;
•new spectrum licenses at reasonableor amended tax laws or regulations or administrative interpretations and judicial decisions affecting the scope or application of tax laws or regulations;
•our exclusive forum provision as provided in our Certificate of Incorporation;
•interests of our significant stockholders that may differ from the interests of other stockholders;
•future sales of our common stock by DT and SoftBank and our inability to attract additional equity financing outside the United States due to foreign ownership limitations by the FCC;
•our 2022 Stock Repurchase Program (as defined in Note 9 – Repurchases of Common Stock of the Notes to the Condensed Consolidated Financial Statements) may not be fully consummated, and our share repurchase program may not enhance long-term stockholder value;
•failure to realize the expected benefits and synergies of the merger (the “Merger”) with Sprint, 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”) in the expected time frames or in the amounts anticipated;
•any delay and costs and terms;
of, or difficulties in, managing growth in wireless data services, including network quality;
material changes in available technology;
the timing, scopeintegrating our business and financial impact of our deployment of advanced networkSprint’s business and operations, and unexpected additional operating costs, customer loss and business technologies;disruptions, including challenges in maintaining relationships with employees, customers, suppliers or vendors; and
the impact on our networks and business from major technology equipment failures;
breaches of our and/or our third party vendors’ networks, information technology and data security;
natural disasters, terrorist attacks or similar incidents;
existing or future litigation;
any changes in the regulatory environments in which we operate, including any increase in restrictions on the ability to operate our networks;
any•unanticipated difficulties, disruption, or failure ofsignificant delays in our third parties’ or key suppliers’ provisioning of products or services;long-term strategy to migrate Sprint’s legacy customers onto T-Mobile’s existing billing platforms.
material adverse changes in labor matters, including labor campaigns, negotiations or additional organizing activity, and any resulting financial, operational and/or reputational impact;
the ability to make payments on our debt or to repay our existing indebtedness when due;
adverse change in the ratings of our debt securities or adverse conditions in the credit markets;
changes in accounting assumptions that regulatory agencies, including the Securities and Exchange Commission (“SEC”), may require, which could result in an impact on earnings; and
changes in tax laws, regulations and existing standards and the resolution of disputes with any taxing jurisdictions.


Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. We undertake no obligation to revise or publicly release the results of any revision to these forward-looking statements, except as required by law. In this Form 10-Q, unless the context indicates otherwise, references to “T-Mobile,” “T-Mobile US,” “our Company,” “the Company,” “we,” “our,” and “us” refer to T-Mobile US, Inc., a Delaware corporation, and its wholly-owned subsidiaries.


Investors and others should note that we announce material financial and operational information to our investors using our investor relations website (https://investor.t-mobile.com), newsroom website (https://t-mobile.com/news), press releases, SEC filings and public conference calls and webcasts. We intend to also use thecertain social media accounts as means of disclosing information about us and our services and for complying with our disclosure obligations under Regulation FD (the @TMobileIR Twitter account (https://twitter.com/TMobileIR) and, the @JohnLegere@MikeSievert Twitter account (https://twitter.com/JohnLegere)MikeSievert), Facebook and Periscope accounts, which Mr. LegereSievert also uses as a means for personal communications and observations, and the @TMobileCFO Twitter Account (https://twitter.com/tmobilecfo) and our Chief Financial Officer’s LinkedIn account (https://www.linkedin.com/in/peter-osvaldik-3887394), both of which Mr. Osvaldik also uses as a means of disclosing information about the Companyfor personal communication and its services and for complying with its disclosure obligations under Regulation FD.observations). The information we post through these social media channels may be deemed material. Accordingly, investors should monitor these social media channels in addition to following the Company’sour press releases, SEC filings and public conference calls and webcasts. The social media channels that we intend to use as a means of disclosing the information described above may be updated from time to time as listed on the Company’s investor relationsour Investor Relations website.



Overview


The objectives of our Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) are to provide users of our condensed consolidated financial statements with the following:


•A narrative explanation from the perspective of management of our financial condition, results of operations, cash flows, liquidity and certain other factors that may affect future results;
•Context to the condensed consolidated financial statements; and
•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 nine months ended September 30, 2022, included in Part I, Item 1 of this Form 10-Q, and audited Consolidated Financial Statementsconsolidated financial statements, included in Part II, Item 8 of our Annual Report on Form 10-K for the year ended December 31, 2016.2021. Except as expressly stated, the financial condition and results of operations discussed throughout our MD&A are those of T-Mobile US, Inc. and its consolidated subsidiaries.


Business Overview
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Effective January 1, 2017,Sprint Merger, Network Integration and Decommissioning Activities

Merger-Related Costs

Merger-related costs associated with the imputed discountMerger and acquisitions of affiliates generally include:

•Integration costs to achieve efficiencies in network, retail, information technology and back office operations, migrate customers to the T-Mobile network and billing systems and the impact of legal matters assumed as part of the Merger;
•Restructuring costs, including severance, store rationalization and network decommissioning; and
•Transaction costs, including legal and professional services related to the completion of the transactions.

Restructuring costs are disclosed in Note 15 – Restructuring Costs of the Notes to the Condensed Consolidated Financial Statements. Merger-related costs have been excluded from our calculations of Adjusted EBITDA and Core Adjusted EBITDA, which are non-GAAP financial measures, as we do not consider these costs to be reflective of our ongoing operating performance. See “Adjusted EBITDA and Core Adjusted EBITDA” in the “Performance Measures” section of this MD&A. Net cash payments for Merger-related costs, including payments related to our restructuring plan, are included in Net cash provided by operating activities on EIP receivables, which is amortized over the financed installment term using the effective interest method and was previously recognized within Interest income in our Consolidated Statements of Comprehensive Income, is recognized within Other revenues in our Condensed Consolidated Statements of Comprehensive Income. Cash Flows.

Merger-related costs are presented below:
(in millions)Three Months Ended
September 30,		ChangeNine Months Ended
September 30,		Change
20222021$%20222021$%
Merger-related costs
Cost of services, exclusive of depreciation and amortization$812 $279 $533 191 %$2,380 $688 $1,692 246 %
Cost of equipment sales, exclusive of depreciation and amortization258 236 22 9 %1,468 340 1,128 332 %
Selling, general and administrative226 440 (214)(49)%529 836 (307)(37)%
Total Merger-related costs$1,296 $955 $341 36 %$4,377 $1,864 $2,513 135 %
Net cash payments for Merger-related costs$942 $617 $325 53 %$2,742 $1,084 $1,658 153 %

We believe this presentation is preferable because it providesexpect to incur a better representationtotal of amounts earned from$12.0 billion of Merger-related costs, excluding capital expenditures, of which $10.9 billion has been incurred since the Company’s major ongoing operationsbeginning of 2018, including $700 million of costs incurred by Sprint prior to the Merger. We expect to incur the remaining $1.1 billion to complete our integration and alignsrestructuring activities over the next year with industry practice thereby enhancing comparability. We have applied this change retrospectivelysubstantially all costs incurred by the end of 2023.

Total Merger-related costs for the year ending December 31, 2022, are expected to be between $4.8 billion to $5.0 billion, including $1.3 billion and the effect of this change for$4.4 billion incurred during the three and nine months ended September 30, 2016, was a reclassification of $59 million2022, respectively. We are evaluating additional restructuring initiatives which are dependent on consultations and $189 million, respectively, from Interest income to Other revenues. The amortization of imputed discountnegotiation with certain counterparties and the expected impact on our EIP receivablesbusiness operations, which could affect the amount or timing of the restructuring costs and related payments. We expect our principal sources of funding to be sufficient to meet our liquidity requirements and anticipated payments associated with the restructuring initiatives.

Network Integration

To achieve Merger synergies in network costs, we are performing rationalization activities to identify duplicative networks, backhaul services and other agreements in addition to decommissioning certain small cell sites and distributed antenna systems. These initiatives also include the acceleration or termination of certain of our operating and financing leases for cell sites, switch sites and network equipment. As of September 30, 2022, we have decommissioned substantially all targeted Sprint macro sites.

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To allow for the realization of these synergies associated with network integration, we retired certain legacy networks, including the legacy Sprint CDMA network in the second quarter and the LTE network in the third quarter of 2022. Customers impacted by the decommissioning of these networks have been excluded from our customer base and postpaid account base. See the “Performance Measures” section of this MD&A for more details.

Restructuring

Upon the close of the Merger, we began implementing restructuring initiatives to realize cost efficiencies from the Merger. The major activities associated with the restructuring initiatives to date include:

•Contract termination costs associated with rationalization of retail stores, distribution channels, duplicative network and backhaul services and other agreements;
•Severance costs associated with the reduction of redundant processes and functions; and
•The decommissioning of certain small cell sites and distributed antenna systems to achieve Merger synergies in network costs.

For more information regarding our restructuring activities, see Note 15 – Restructuring Costs of the Notes to the Condensed Consolidated Financial Statements.

Other Impacts

Anticipated Merger Synergies

As a result of our ongoing restructuring and integration activities, we expect to realize Merger synergies by eliminating redundancies within our combined network as well as other business processes and operations. For full-year 2022, we expect Merger synergies from Selling, general and administrative expense reductions of $2.4 billion, Cost of service expense reductions of $2.0 billion to $2.1 billion and avoided network expenses of $1.3 billion.

Wireline Impacts

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 support our wireless network and the associated customers and cash flows in a significant manner. The results of this assessment indicated that certain Wireline long-lived assets were impaired, and as a result, we recorded non-cash impairment expense of $477 million related to Wireline Property and equipment, Operating lease right-of-use assets and Other intangible assets for the nine months ended September 30, 2022, all of which relates to the impairment recognized during the three months ended June 30, 2022. We continue to provide Wireline services to existing Wireline customers.

For more information regarding this non-cash impairment, see Note 10 – Wireline of the Notes to the Condensed Consolidated Financial Statements.

On September 6, 2022, we entered into a Purchase Agreement to sell the Wireline Business for a total purchase price of $1. In addition, at the consummation of the Wireline Transaction, we will enter into an agreement for IP transit services for $700 million. Subject to the satisfaction or waiver of certain conditions and the other terms and conditions of the Purchase Agreement, the Wireline Transaction is expected to close in the second half of 2023. As a result of the Purchase Agreement and related anticipated Wireline Transaction, we concluded that the Wireline Business met the held for sale criteria upon entering into the Purchase Agreement. As such, the assets and liabilities of the Wireline Business disposal group are classified as held for sale and presented within Other current assets and Other current liabilities on our Condensed Consolidated Balance Sheets as of September 30, 2022. In connection with the expected sale of the Wireline Business and classification of related assets and liabilities as held for sale, we recognized a pre-tax loss of $1.1 billion during the three and nine months ended September 30, 2017, was $74 million2022, which is included within Loss on disposal group held for sale on our Condensed Consolidated Statements of Comprehensive Income. The fair value of the Wireline Business disposal group, less costs to sell, will be reassessed during each reporting period it remains classified as held for sale, and $204 million, respectively. any remeasurement to the lower of carrying amount or fair value less costs to sell will be reported as an adjustment to the Loss on disposal group held for sale.
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For additionalmore information regarding the Purchase Agreement to sell the Wireline Business, see Note 1 - Basis of Presentation10 – Wireline of the Notes to the Condensed Consolidated Financial Statements.


Cyberattack

As we previously reported, we were subject to a criminalcyberattack involving unauthorized access to T-Mobile’s systems. We promptly located and closed the unauthorized access to our systems. Our forensic investigation was completed in October 2021. There are no material updates with respect to the August 2021 cyberattack and subsequent inquiries, investigations, litigations and remedial measures from our Annual Report on Form 10-K for the year ended December 31, 2021, except as disclosed in Note 14 – Commitments and Contingencies of the Notes to the Condensed Consolidated Financial Statements.

In January 2017,connection with the proposed class action settlement and the separate settlements reached with a number of consumers, we introduced, Un-carrier Next, where monthly wireless service fees and sales taxes are includedrecorded a total pre-tax charge of approximately $400 million in the advertised monthly recurring charge for T-Mobile ONE.second quarter of 2022. We also unveiled Kickback on T-Mobile ONE, where participating customers who use 2 GB or lessexpect to continue to incur additional expenses in future periods, including costs to remediate the attack, resolve inquiries by various government authorities, provide additional customer support and enhance customer protection, only some of data in a month, will get up to a $10 credit per qualifying line on their next month’s bill.which may be covered and reimbursable by insurance. In addition to the committed aggregate incremental spend of $150 million for data security and related technology in 2022 and 2023 under the proposed settlement agreement, we introducedintend to commit substantial additional resources towards cybersecurity initiatives over the Un-contract for T-Mobile ONE with the first-ever price guarantee on an unlimited 4G LTE plan which allows current T-Mobile ONE customers to keep their price for service until they decide to change it.next several years.


In September 2017, we introduced, Un-carrier Next: Netflix On Us, through an exclusive new partnership with Netflix where a standard monthly Netflix service plan is included at no charge to qualifying T-Mobile ONE customers on family plans.























During the third quarter of 2017, our operations in Texas, Florida and Puerto Rico experienced losses related to hurricanes. Based on our preliminary assessment, the approximate impacts for the three and nine months ended September 30, 2017,2022, we recognized $50 million in reimbursements from lost revenue, assets damaged or destroyed and other hurricane relatedinsurance carriers for costs incurred related to the August 2021 cyberattack. We are pursuing additional reimbursements from insurance carriers for costs incurred related to the August 2021 cyberattack.

COVID-19 Pandemic and Other Macroeconomic Trends

The Pandemic has resulted in a widespread health crisis that has adversely affected businesses, economies and financial markets worldwide, and has caused significant volatility in the U.S. and international debt and equity markets. In addition, the Pandemic has resulted in economic uncertainty, which could affect our customers’ purchasing decisions and ability to make timely payments. Current and future Pandemic-related restrictions on, or disruptions of, transportation networks and supply chain shortages could impact our ability to acquire handsets or other end user devices in amounts sufficient to meet customer demand and to obtain the equipment required to meet our current and future network build-out plans. We will continue to monitor the Pandemic and its impacts and may adjust our actions as needed to continue to provide our products and services to our communities and employees.

As a critical communications infrastructure provider as designated by the government, our focus has been on providing crucial connectivity to our customers and impacted communities while ensuring the safety and well-being of our employees.

Other macroeconomic trends may result in adverse impacts on our business, and we continue to monitor these potential impacts, including higher inflation, rising interest rates, potential economic recession and changes in the Federal Reserve’s monetary policy and geopolitical risks, including the war in Ukraine. Such scenarios and uncertainties may affect, among others, expected credit loss activity as well as certain fair value estimates.

Inflation Reduction Act

On August 16, 2022, President Biden signed the Inflation Reduction Act of 2022 (“IRA”) into law. The IRA includes several changes to existing tax law, including a minimum tax on adjusted financial statement income of applicable corporations and an excise tax on certain corporate stock buybacks. The tax provisions included in the table below. As of September 30, 2017, our loss assessmentIRA are generally effective beginning January 1, 2023, and no significant impact to the 2022 consolidated financial statements is ongoing and we expect additional expensesanticipated. Management continues to be incurred and customer activityreview the IRA tax provisions to be impacted in the fourth quarter of 2017, primarily relatedassess impacts to our operations in Puerto Rico. We have not recognized any potential insurance recoveries related to those hurricane losses as we continue to assess the damage and work with our insurance carriers.

future consolidated financial statements.
35
(in millions, except per share amounts, ARPU, ABPU, and bad debt expense and losses from sales of receivables as a percentage of total revenues)Three Months Ended September 30, Nine Months Ended September 30,
2017 2017
Increase (Decrease)   
Revenues   
Branded postpaid revenues$(20) $(20)
Of which, branded postpaid phone revenues(19) (19)
Branded prepaid revenues(11) (11)
Total service revenues(31) (31)
Equipment revenues(8) (8)
Total revenues$(39) $(39)
    
Operating expenses   
Cost of services$69
 $69
Cost of equipment sales4
 4
Selling, general and administrative36
 36
Of which, bad debt expense20
 20
Total operating expense$109
 $109
    
Operating income$(148) $(148)
Net income$(90) $(90)
    
Earnings per share - basic$(0.11) $(0.11)
Earnings per share - diluted$(0.10) $(0.10)
    
Operating measures   
Bad debt expense and losses from sales of receivables as a percentage of total revenues0.20% 0.07%
Branded postpaid phone ARPU$(0.19) $(0.07)
Branded postpaid ABPU$(0.18) $(0.06)
Branded prepaid ARPU$(0.18) $(0.06)
    
Non-GAAP financial measures   
Adjusted EBITDA$(148) $(148)
Table of Contents



Results of Operations


Highlights for the three months ended September 30, 2017, compared to the same period in 2016

Total revenues of $10.0 billion for the three months ended September 30, 2017, increased $714 million, or 8%. The increase was primarily driven by growth in service and equipment revenues as further discussed below. On September 1, 2016, we sold our marketing and distribution rights to certain existing T-Mobile co-branded customers to a current Mobile Virtual Network Operator (“MVNO”) partner for nominal consideration (the “MVNO Transaction”). The MVNO Transaction shifted Branded postpaid revenues to Wholesale revenues, but did not materially impact total revenues.

Service revenues of $7.6 billion for the three months ended September 30, 2017, increased $496 million, or 7%. The increase was primarily due to growth in our average branded customer base as a result of strong customer response to our Un-carrier initiatives, promotions and the success of our MetroPCS brand.

Equipment revenues of $2.1 billion for the three months ended September 30, 2017, increased $170 million, or 9%. The increase was primarily due to an increase from customer purchases of leased devices at the end of the lease term, the liquidation of returned customer handsets and a higher average revenue per device sold, partially offset by lower lease revenues.

Operating income of $1.3 billion for the three months ended September 30, 2017, increased $275 million, or 26%. The increase was primarily due to an increase in total service revenues and lower Depreciation and amortization, partially offset by higher Selling, general and administrative expenses, higher Cost of services expense and a decrease in Gains on disposal of spectrum licenses.

Net income of $550 million for the three months ended September 30, 2017, increased $184 million, or 50%. The increase was primarily due to higher operating income driven by the factors described above and a net decrease in interest expense, partially offset by higher income tax expense primarily due to an increase in income before income taxes and the negative impact from hurricanes. Net incomeincluded net, after-tax gains of $18 million and $122 million, for the three months ended September 30, 2017 and 2016, respectively.

Adjusted EBITDA (see “Performance Measures”), a non-GAAP financial measure, of $2.8 billion for the three months ended September 30, 2017, increased $133 million, or 5%. The increase was primarily due to higher operating income driven by the factors described above, partially offset by lower Gains on disposal of spectrum licenses. Adjusted EBITDA included pre-tax spectrum gains of $29 million and $199 million for the three months ended September 30, 2017 and 2016, respectively.

Net cash provided by operating activities of $2.4 billion for the three months ended September 30, 2017, increased $622 million, or 36% (see “Liquidity and Capital Resources”).

Free Cash Flow, a non-GAAP financial measure, of $921 million for the three months ended September 30, 2017, increased $340 million, or 59% (see “Liquidity and Capital Resources”).



Highlights for the nine months ended September 30, 2017, compared to the same period in 2016

Total revenues of $29.8 billion for the nine months ended September 30, 2017, increased $2.6 billion, or 9%. The increase was primarily driven by growth in service and equipment revenues as further discussed below. On September 1, 2016, we sold our marketing and distribution rights to certain existing T-Mobile co-branded customers to a current Mobile Virtual Network Operator (“MVNO”) partner for nominal consideration (the “MVNO Transaction”). The MVNO Transaction shifted Branded postpaid revenues to Wholesale revenues, but did not materially impact total revenues.

Service revenues of $22.4 billion for the nine months ended September 30, 2017, increased $1.8 billion, or 9%. The increase was primarily due to growth in our average branded customer base as a result of strong customer response to our Un-carrier initiatives, promotions and the success of our MetroPCS brand.

Equipment revenues of $6.7 billion for the nine months ended September 30, 2017, increased $680 million, or 11%. The increase was primarily due to higher average revenue per device sold and an increase from customer purchases of leased devices at the end of the lease term, partially offset by lower lease revenues.

Operating income of $3.8 billion for the nine months ended September 30, 2017, increased $727 million, or 24%. The increase was primarily due to higher Total service revenues and lower Depreciation and amortization, partially offset by lower Gains on disposal of spectrum licenses and higher Selling, general and administrative and Cost of services expenses.

Net income of $1.8 billion for the nine months ended September 30, 2017, increased $759 million, or 71%. The increase was primarily due to higher operating income driven by the factors described above, a lower tax rate primarily due to a reduction in the valuation allowance against deferred tax assets and a net decrease in interest expense, partially offset by the negative impact from hurricanes. Net income included net, after-tax gains of $41 million and $511 million, for the nine months ended September 30, 2017 and 2016, respectively.

Adjusted EBITDA, a non-GAAP financial measure, of $8.5 billion for the nine months ended September 30, 2017, increased $470 million, or 6%. The increase was primarily due to higher operating income driven by the factors described above, partially offset by lower Gains on disposal of spectrum licenses. Adjusted EBITDA included pre-tax spectrum gains of $67 million and $835 million for the nine months ended September 30, 2017 and 2016, respectively.

Net cash provided by operating activities of $5.9 billion for the nine months ended September 30, 2017, increased $1.4 billion, or 30% (see “Liquidity and Capital Resources”).

Free Cash Flow, a non-GAAP financial measure, of $1.6 billion for the nine months ended September 30, 2017, increased $898 million, or 130% (see “Liquidity and Capital Resources”).


Set forth below is a summary of our consolidated financial results:
 Three Months Ended September 30, Change Nine Months Ended September 30, Change
 2017 2016 $ % 2017 2016 $ %
(in millions)  (As Adjusted - See Note 1)     (As Adjusted - See Note 1)  
Revenues               
Branded postpaid revenues$4,920
 $4,647
 $273
 6 % $14,465
 $13,458
 $1,007
 7 %
Branded prepaid revenues2,376
 2,182
 194
 9 % 7,009
 6,326
 683
 11 %
Wholesale revenues274
 238
 36
 15 % 778
 645
 133
 21 %
Roaming and other service revenues59
 66
 (7) (11)% 151
 170
 (19) (11)%
Total service revenues7,629
 7,133
 496
 7 % 22,403
 20,599
 1,804
 9 %
Equipment revenues2,118
 1,948
 170
 9 % 6,667
 5,987
 680
 11 %
Other revenues272
 224
 48
 21 % 775
 670
 105
 16 %
Total revenues10,019
 9,305
 714
 8 % 29,845
 27,256
 2,589
 9 %
Operating expenses               
Cost of services, exclusive of depreciation and amortization shown separately below1,594
 1,436
 158
 11 % 4,520
 4,286
 234
 5 %
Cost of equipment sales2,617
 2,539
 78
 3 % 8,149
 7,532
 617
 8 %
Selling, general and administrative3,098
 2,898
 200
 7 % 8,968
 8,419
 549
 7 %
Depreciation and amortization1,416
 1,568
 (152) (10)% 4,499
 4,695
 (196) (4)%
Cost of MetroPCS business combination—
 15
 (15) NM
 —
 110
 (110) NM
Gains on disposal of spectrum licenses(29) (199) 170
 (85)% (67) (835) 768
 (92)%
Total operating expense8,696
 8,257
 439
 5 % 26,069
 24,207
 1,862
 8 %
Operating income1,323
 1,048
 275
 26 % 3,776
 3,049
 727
 24 %
Other income (expense)               
Interest expense(253) (376) 123
 (33)% (857) (1,083) 226
 (21)%
Interest expense to affiliates(167) (76) (91) 120 % (398) (248) (150) 60 %
Interest income2
 3
 (1) (33)% 15
 9
 6
 67 %
Other income (expense), net1
 (1) 2
 NM
 (89) (6) (83) NM
Total other expense, net(417) (450) 33
 (7)% (1,329) (1,328) (1) — %
Income before income taxes906
 598
 308
 52 % 2,447
 1,721
 726
 42 %
Income tax expense(356) (232) (124) 53 % (618) (651) 33
 (5)%
Net income$550
 $366
 $184
 50 % $1,829
 $1,070
 $759
 71 %
                
Net cash provided by operating activities$2,362
 $1,740
 $622
 36 % $5,904
 $4,533
 $1,371
 30 %
Net cash used in investing activities(1,455) (1,859) 404
 (22)% (10,138) (4,386) (5,752) 131 %
Net cash (used in) provided by financing activities(349) (67) (282) 421 % (527) 623
 (1,150) (185)%
                
Non-GAAP Financial Measures               
Adjusted EBITDA$2,822
 $2,689
 $133
 5 % $8,502
 $8,032
 $470
 6 %
Free Cash Flow921
 581
 340
 59 % 1,588
 690
 898
 130 %
Three Months Ended
September 30,		ChangeNine Months Ended
September 30,		Change
(in millions)20222021$%20222021$%
Revenues
Postpaid revenues$11,548 $10,804 $744 7 %$34,194 $31,599 $2,595 8 %
Prepaid revenues2,484 2,481 3 — %7,408 7,259 149 2 %
Wholesale and other service revenues1,329 1,437 (108)(8)%4,203 4,548 (345)(8)%
Total service revenues15,361 14,722 639 4 %45,805 43,406 2,399 6 %
Equipment revenues3,855 4,660 (805)(17)%12,679 15,221 (2,542)(17)%
Other revenues261 242 19 8 %814 706 108 15 %
Total revenues19,477 19,624 (147)(1)%59,298 59,333 (35)— %
Operating expenses
Cost of services, exclusive of depreciation and amortization shown separately below3,712 3,538 174 5 %11,499 10,413 1,086 10 %
Cost of equipment sales, exclusive of depreciation and amortization shown separately below4,982 5,145 (163)(3)%16,036 15,740 296 2 %
Selling, general and administrative5,118 5,212 (94)(2)%16,030 14,840 1,190 8 %
Impairment expense— — — NM477 — 477 NM
Loss on disposal group held for sale1,071 — 1,071 NM1,071 — 1,071 NM
Depreciation and amortization3,313 4,145 (832)(20)%10,389 12,511 (2,122)(17)%
Total operating expenses18,196 18,040 156 1 %55,502 53,504 1,998 4 %
Operating income1,281 1,584 (303)(19)%3,796 5,829 (2,033)(35)%
Other expense, net
Interest expense, net(827)(836)9 (1)%(2,542)(2,521)(21)1 %
Other expense, net(3)(60)57 (95)%(35)(186)151 (81)%
Total other expense, net(830)(896)66 (7)%(2,577)(2,707)130 (5)%
Income before income taxes451 688 (237)(34)%1,219 3,122 (1,903)(61)%
Income tax benefit (expense)57 3 54 NM(106)(520)414 (80)%
Net income$508 $691 $(183)(26)%$1,113 $2,602 $(1,489)(57)%
Statement of Cash Flows Data
Net cash provided by operating activities$4,391 $3,477 $914 26 %$12,445 $10,917 $1,528 14 %
Net cash used in investing activities(2,555)(4,152)1,597 (38)%(10,206)(17,474)7,268 (42)%
Net cash provided by (used in) financing activities1,927 (3,060)4,987 (163)%(1,953)237 (2,190)NM
Non-GAAP Financial Measures
Adjusted EBITDA7,039 6,811 228 3 %20,993 20,622 371 2 %
Core Adjusted EBITDA6,728 6,041 687 11 %19,809 17,897 1,912 11 %
Free Cash Flow2,065 1,55950632 %5,472 4,53493821 %
NM - Not Meaningful

36

Table of Contents

The following discussion and analysis is for the three and nine months ended September 30, 2017,2022, compared to the same periodsperiod in 20162021 unless otherwise stated.


Total revenues decreased slightly for the three months ended and were relatively flat for the nine months ended September 30, 2022. The components of these changes are discussed below.

Postpaid revenues increased $714$744 million, or 7%, for the three months ended and increased $2.6 billion, or 8%, for the nine months ended September 30, 2022, primarily from:

•Higher average postpaid accounts; and
•Higher postpaid ARPA. See “Postpaid ARPA” in the “Performance Measures” section of this MD&A.

Prepaid revenues were flat for the three months ended and increased $149 million, or 2%, for the nine months ended September 30, 2022.

The increase for the nine months ended September 30, 2022, was primarily from:

•Higher average prepaid customers; and
•Higher prepaid ARPU. See “Prepaid ARPU” in the “Performance Measures” section of this MD&A.

Wholesale and other service revenues decreased $108 million, or 8%, for the three months ended and $2.6 billion,decreased $345 million, or 9%8%, for the nine months ended September 30, 2017,2022.

The decrease for the three months ended September 30, 2022, was primarily due to higherfrom:

•Lower MVNO and Wireline revenues.

The decrease for the nine months ended September 30, 2022, was primarily from:

•Lower advertising, Wireline and MVNO revenues; partially offset by
•Higher Lifeline revenues.

Equipment revenues from branded postpaid and prepaid customers as well as higher equipment revenues as discussed below.

Branded postpaid revenues increased $273 decreased $805 million, or 6%17%, for the three months ended and $1.0decreased $2.5 billion, or 7%17%, for the nine months ended September 30, 2017.2022.


The changedecrease for the three months ended September 30, 20172022, was primarily from:


Growth•A decrease of $458 million in the customer base driven by strong customer response to our Un-carrier initiativeslease revenues and promotions for services and devices; and
The positive impact from a decrease of $158 million in the non-cash net revenue deferral for Data Stash; partially offset by
The MVNO Transaction;
Lower branded postpaid phone average revenue per user (“ARPU”); and
The negative impact from hurricanes of $20 million.

The change for the nine months ended September 30, 2017 was primarily from:

Growth in the customer base driven by strong customer response to our Un-carrier initiatives and promotions for services and devices, including the growing success of our business channel, T-Mobile for Business; and
The positive impact from a decrease in the non-cash net revenue deferral for Data Stash; partially offset by
The MVNO Transaction; and
The negative impact from hurricanes of $20 million.

Branded prepaid revenues increased $194 million, or 9%, for the three months ended and $683 million, or 11%, for the nine months ended September 30, 2017, primarily from:

Higher average branded prepaid customers primarily driven by growth in the customer base; and
Higher branded prepaid ARPU from the success of our MetroPCS brand; partially offset by
The impact from the optimization of our third-party distribution channels; and
The negative impact from hurricanes of $11 million.

Wholesale revenues increased $36 million, or 15%, for the three months ended and $133 million, or 21%, for the nine months ended September 30, 2017, primarily from the impact of increased Wholesale revenues resulting from the MVNO Transaction.

Roaming and other service revenues decreased $7 million, or 11%, for the three months ended and $19 million, or 11%, for the nine months ended September 30, 2017.

Equipment revenues increased$170 million, or 9%, for the three months ended and $680 million, or 11%, for the nine months ended September 30, 2017.

The change for the three months ended September 30, 2017 was primarily from:

An increase of $137 million from the purchasepurchases of leased devices, atprimarily due to a lower number of customer devices under lease as a result of the endcontinued strategic shift in device financing from leasing to EIP; and
•A decrease of their lease term;
An increase of $116 million primarily related to proceeds from the liquidation of returned customer handsets in the third quarter of 2017;
An increase of $78$102 million in device sales revenuesrevenue, excluding purchased leased devices, primarily due to:
from:
Higher average revenue per device sold primarily due to an Original Equipment Manufacturer (“OEM”) recall of its smartphone devices in the third quarter of 2016 and a decrease in promotional spending; partially offset by
•A 5% decrease in the number of devices sold. Device sales revenuesold due to fewer prepaid and postpaid upgrades; and
•An increase in contra-revenue primarily driven by higher imputed interest rates on equipment installment plans, which is recognized atin Other revenues over the time of sale; and
An increase of $22 million in SIM and upgrade revenue;device financing term; partially offset by

A decrease of $194 million in lease revenues from declining JUMP! On Demand population due to shifting focus to our EIP financing option beginning in the first quarter of 2016; and
The negative impact from hurricanes of $8 million.

The change for the nine months ended September 30, 2017 was primarily from:

An increase of $413 million in device sales revenues excluding purchased leased devices, primarily due to:
•Higher average revenue per device sold primarily due to an increase in the high-end device mix and an OEM recallphone mix.

37
Table of its smartphone devices in the third quarter of 2016, partially offset by an increase in promotional spending; partially offset byContents

A 1%The decrease in the number of devices sold. Device sales revenue is recognized at the time of sale;
An increase of $366 million from the purchase of leased devices at the end of the lease term;
An increase of $137 million primarily related to proceeds from the liquidation of returned customer handsets in the third quarter of 2017; and
An increase of $117 million in SIM and upgrade revenue; partially offset by
A decrease of $345 million in lease revenues from declining JUMP! On Demand population due to shifting focus to our EIP financing option beginning in the first quarter of 2016; and
The negative impact from hurricanes of $8 million.

Under our JUMP! On Demand program, upon device upgrade or at lease end, customers must return or purchase their device. Revenue for purchased leased devices is recorded as equipment revenues when revenue recognition criteria have been met.

Gross EIP device financing to our customers increased by $115 million for the three months ended and $303 million for the nine months ended September 30, 2017,2022, was primarily from:

•A decrease of $1.5 billion in lease revenues and a decrease of $493 million in customer purchases of leased devices primarily due to growtha lower number of customer devices under lease as a result of the continued strategic shift in device financing from leasing to EIP; and
•A decrease of $310 million in device sales revenue, excluding purchased leased devices, primarily from:
•Lower average revenue per device sold, primarily driven by higher promotions, which included promotions for Sprint customers to facilitate their migration to the T-Mobile network; and
•An increase in contra-revenue primarily driven by higher imputed interest rates on equipment installment plans, which is recognized in Other revenues over the device financing term; partially offset by
•An increase in the gross amountnumber of equipment financed on EIP. devices sold, including higher upgrade volume for Sprint customers to facilitate their migration to the T-Mobile network, partially offset by lower prepaid upgrades.

Other revenues increased slightly for the three months ended and increased $108 million, or 15%, for the nine months ended September 30, 2022.

The increase for the nine months ended September 30, 2022, was also due to certain customersprimarily from:

•Higher interest income driven by higher imputed interest rates on leased devices reachingequipment installment plans which is recognized over the enddevice financing term.

Total operating expenses increased slightly for the three months ended and increased $2.0 billion, or 4%, for the nine months ended September 30, 2022. The components of lease term who financed their devices over nine-month EIP.this change are discussed below.


Operating expensesCost of services, exclusive of depreciation and amortization, increased $439$174 million, or 5%, for the three months ended and $1.9increased $1.1 billion, or 10%, for the nine months ended September 30, 2022.

The increase for the three months ended September 30, 2022, was primarily from:

•An increase of $533 million in Merger-related costs related to network decommissioning and integration costs; and
•Higher site costs related to the continued build-out of our nationwide 5G network; partially offset by
•Higher realized Merger synergies.

The increase for the nine months ended September 30, 2022, was primarily from:

•An increase of $1.7 billion in Merger-related costs related to network decommissioning and integration costs; and
•Higher site costs related to the continued build-out of our nationwide 5G network; partially offset by
•Higher realized Merger synergies.

Cost of equipment sales, exclusive of depreciation and amortization, decreased $163 million, or 3%, for the three months ended and increased $296 million, or 2%, for the nine months ended September 30, 2022.

The decrease for the three months ended September 30, 2022, was primarily from:

•A decrease of $225 million in customer purchases of leased devices, primarily due to a lower number of customer devices under lease as a result of the continued strategic shift in device financing from leasing to EIP; and
•A decrease of $81 millionin device cost of equipment sales, excluding purchased leased devices, primarily from:
•A decrease in the number of devices sold due to fewer prepaid and postpaid upgrades; partially offset by
•Higher average cost per device sold, driven by an increase in the high-end phone mix; partially offset by
•Higher device insurance claims and warranty fulfillment.
•Merger-related costs, primarily to facilitate the migration of Sprint customers to the T-Mobile network, were $258 million for the three months ended September 30, 2022, compared to $236 million for the three months ended September 30, 2021.

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Table of Contents

The increase for the nine months ended September 30, 2022, was primarily from:

•An increase of $871 millionin device cost of equipment sales, excluding purchased leased devices, primarily from:
•Higher average costs per device sold due to an increase in the high-end device mix; and
•An increase in the number of devices sold, including higher upgrade volume, primarily to facilitate the migration of Sprint customers to the T-Mobile network, partially offset by lower prepaid upgrades; and
•Higher device insurance claims and warranty fulfillment; partially offset by
•A decrease of $807 million in customer purchases of leased devices, primarily due to a lower number of customer devices under lease as a result of the continued strategic shift in device financing from leasing to EIP.
•Merger-related costs, primarily to facilitate the migration of Sprint customers to the T-Mobile network, were $1.5 billion for the nine months ended September 30, 2022, compared to $340 million for the nine months ended September 30, 2021.

Selling, general and administrative expenses decreased $94 million, or 2%, for the three months ended and increased $1.2 billion, or 8%, for the nine months ended September 30, 2017,2022.

The decrease for the three months ended September 30, 2022, was primarily from:

•Lower Merger-related costs and higher realized Merger synergies; and
•Gains from the sale of certain IP addresses held by the Wireline Business; partially offset by
•Higher bad debt expense driven by higher Cost of services, Cost of equipment sales, receivable balances, as well as normalization relative to muted Pandemic levels a year ago.
•Selling, general and administrative expenses for the three months ended September 30, 2022, included $226 million of Merger-related costs, primarily related to integration and lower Gains on disposalrestructuring, compared to $440 million of spectrum licenses,Merger-related costs for the three months ended September 30, 2021.

The increase for the nine months ended September 30, 2022, was primarily from:

•Higher bad debt expense driven by higher receivable balances, as well as normalization relative to muted Pandemic levels a year ago and estimated potential future macroeconomic impacts; and
•Higher legal-related expenses, net of recoveries, including $400 million recognized in June 2022 for the settlement of certain litigation associated with the August 2021 cyberattack; partially offset by
•Higher realized Merger synergies and lower Merger-related costs; and
•Gains from the sale of certain IP addresses held by the Wireline Business
•Selling, general and administrative expenses for the nine months ended September 30, 2022, included $529 million of Merger-related costs, primarily related to integration, restructuring and legal-related expenses, offset by legal settlement gains, compared to $836 million of Merger-related costs for the nine months ended September 30, 2021.

Impairmentexpense was $477 million for the nine months ended September 30, 2022, due to the non-cash impairment of certain Wireline Property and equipment, Operating lease right-of-use assets and Other intangible assets. See Note 10 - Wireline of the Notes to the Condensed Consolidated Financial Statements for additional information. There was no impairment expense for the three months ended September 30, 2022, or the three and nine months ended September 30, 2021.

Loss on disposal group held for sale was $1.1 billion for the three and nine months ended September 30, 2022, due to the agreement for the sale of the Wireline Business. See Note 10 - Wireline of the Notes to the Condensed Consolidated Financial Statements for additional information. There was no loss on disposal group held for sale for the three and nine months ended September 30, 2021.

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Table of Contents

Depreciation and amortization as discussed below.

Cost of services increased $158 decreased $832 million, or 11%20%, for the three months ended and $234 million,decreased $2.1 billion, or 5%17%, for the nine months ended September 30, 2017.

The change for the three months ended September 30, 2017 was2022, primarily from:


•Lower depreciation expense on leased devices, resulting from a lower number of total customer devices under lease; and
Higher lease expenses associated with our•Certain 4G-related network expansion;
The negative impact from hurricanesassets becoming fully depreciated, including assets impacted by the decommissioning of $69 million; the legacy Sprint CDMA and LTE networks; partially offset by
Lower regulatory expenses.•Higher depreciation expense, excluding leased devices, from the continued build-out of our nationwide 5G network.


The change forOperating income, the nine months ended September 30, 2017 was primarily from:

Higher lease expenses associated with network expansion; and
The negative impact from hurricanescomponents of $69 million; partially offset by
Lower long distance and toll costs as we continue to renegotiate contracts with vendors; and
Lower regulatory expenses.

Cost of equipment sales increased $78which are discussed above, decreased $303 million, or 3%19%, for the three months ended and $617 million,decreased $2.0 billion, or 8%35%, for the nine months ended September 30, 2017.2022.


The change for
Interest expense, net was essentially flat and was impacted by the three months ended September 30, 2017 was primarily from:following:


An increase•Lower average debt outstanding and a lower average effective interest rate due to the retirement of $66 million in device costhigher interest rate debt and the issuance of equipment sales, excluding purchased leased devices, primarily due to:
A higher average cost per device sold primarily from an OEM recalla lower gross principal amount of its smartphone devices in the third quarter of 2016; partiallylower interest rate debt; offset by

A 5% decrease in the number of devices sold; and
An increase of $58 million in lease device cost of equipment sales, primarily due to:
An increase in lease buyouts as leases began reaching their term dates in 2017; partially offset by
A decrease in device upgrades from fewer customers in the handset lease program.
These increases are partially offset by a decrease of $31 million in cost of equipment•Lower capitalized interest related to an increase in proceeds from the liquidationdeployment of returned customer handsets under our insurance programs; and600 MHz spectrum.
The negative impact from hurricanes of $4 million.


The change for the nine months ended September 30, 2017 was primarily from:

An increase of $483 million in device cost of equipment sales, excluding purchased leased devices, primarily due to:
A higher average cost per device sold primarily from an increase in high-end device mix and an OEM recall of its smartphone devices in the third quarter of 2016; partially offset by
A 1% decrease in the number of devices sold; and
An increase of $245 million in lease device cost of equipment sales, primarily due to:
An increase in lease buyouts as leases began reaching their term dates in 2017; partially offset by
A decrease in device upgrades from fewer customers in the handset lease program.
These increases are partially offset by a decrease of $69 million primarily due to inventory adjustments related to obsolete inventory; and
The negative impact from hurricanes of $4 million.

Under our JUMP! On Demand program, upon device upgrade or at the end of the lease term, customers must return or purchase their device. The cost of purchased leased devices is recorded as Cost of equipment sales. Returned devices transferred from Property and equipment,Other expense, net are recorded as inventory and are valued at the lower of cost or market with any write-down to market recognized as Cost of equipment sales.

Selling, general and administrative increased $200decreased $57 million, or 7%95%, for the three months ended and $549decreased $151 million, or 7%81%, for the nine months ended September 30, 2017, primarily from strategic investments to support our growing customer base including higher employee related costs, promotional costs, commissions, and higher costs related to managed services and outsourced functions, partially offset by lower external labor costs. Additionally, the negative impact from hurricanes of $36 million contributed to the increase.

Depreciation and amortization decreased $152 million, or 10%,2022. The decrease for the three months ended and $196 million, or 4%, for the nine months ended September 30, 2017, primarily from:

Lower depreciation expense related to our JUMP! On Demand program resulting from a lower number of devices under lease. Under our JUMP! On Demand program, the cost of a leased wireless device is depreciated over the lease term to its estimated residual value; partially offset by
The continued build-out of our 4G LTE network.

Cost of MetroPCS business combination decreased $15 million for the three months ended and $110 million for the nine months ended September 30, 2017. On July 1, 2015, we officially completed the shutdown of the MetroPCS CDMA network. Network decommissioning costs primarily relate to the acceleration of lease costs for cell sites that would have otherwise been recognized as cost of services over the remaining lease term had we not decommissioned the cell sites. We do not expect to incur significant additional network decommissioning costs in 2017.

Gains on disposal of spectrum licenses decreased $170 million, or 85%, for the three months ended and $768 million, or 92%, for the nine months ended September 30, 2017. The change for the nine months ended September 30, 20172022, was primarily from a $636 million gain from a spectrum license transaction with AT&T duringlower losses on the first quarterextinguishment of 2016.debt.


Net Income increased $184 million, or 50%, for the three months ended and $759 million, or 71%, for the nine months ended September 30, 2017, primarily from higher operating before income and a net decrease in interest expense, partially offset by the negative impact from hurricanes of approximately $90 million. Net income for the three months ended September 30, 2017 was partially offset by higher income tax expense as discussed below. Net income for the nine months ended September 30, 2017 additionally included the impact from a lower tax rate as discussed below.

Operating incometaxes, the components of which are discussed above, was $451 million and include the negative impact from hurricanes, increased $275$688 million, or 26%, for the three months ended and $727 million, or 24%, for the nine months ended September 30, 2017.The negative impact from the hurricanes for the three and nine months ended September 30, 2017 was approximately $148 million.

Income tax expense increased $124 million, or 53%, for the three months ended and decreased $33 million, or 5%, for the nine months ended September 30, 2017.

The change for the three months ended September 30, 20172022 and 2021, respectively, and was primarily from higher income before income taxes. The effective$1.2 billion and $3.1 billion for the nine months ended September 30, 2022 and 2021, respectively.

Income tax rate was 39.3% and 38.8%benefit increased $54 million for the three months ended September 30, 2017 and 2016, respectively.

The change for the nine months ended September 30, 2017 was2022 primarily from:


•Tax benefits associated with internal restructuring; and
A lower effective tax rate which was 25.3% and 37.8% for•Lower Income before income taxes; partially offset by
•Tax benefits recognized in the nine months ended September 30, 2017 and 2016, respectively, primarily duethird quarter of 2021 associated with legal entity reorganization related to historical Sprint entities, including a reduction in the valuation allowance against deferred tax assets in certain state jurisdictions, that resulted in the recognition of $270 million in tax benefits in the first quarter of 2017 and the recognition of an additional $19 million in tax benefits through the third quarter of 2017. Total tax benefits related to the reduction in the valuation allowance were $289 million through September 30, 2017. Thedid not impact 2022.

Our effective tax rate was further decreased by the recognition of $62 million of excess tax benefits related to share-based payments for the nine months ended September 30, 2017, compared to $24 million for the same period in 2016; partially offset by
Higher income before income taxes.

See Note 8 - Income Taxes of the Notes to the Condensed Consolidated Financial Statements.

Interest expensedecreased $123 million, or 33%, for the three months ended (12.4)% and $226 million, or 21%, for the nine months ended September 30, 2017, primarily from:

The early extinguishment of our LIBOR plus 2.750% Senior Secured Term Loan and redemption of $8.3 billion of Senior Notes; partially offset by
The issuance of $1.5 billion of Senior Notes in March 2017.
The decrease for the nine months ended September 30, 2017 was also impacted by the issuance of $1.0 billion of Senior Notes in April 2016.

Interest expense to affiliates increased $91 million, or 120%, for the three months ended and $150 million, or 60%, for the nine months ended September 30, 2017, primarily from:

An increase in interest associated with a $4.0 billion secured Incremental Term Loan Facility with DT entered into in January 2017;
The issuance of $4.0 billion in Senior Notes to DT in May 2017; and
Draws on our Revolving Credit Facility; partially offset by
Lower interest rates achieved through refinancing $2.5 billion of Senior Reset Notes in April 2017.
The increase(0.3)% for the three months ended September 30, 2017, was also partially from the net issuance of $5002022 and 2021, respectively.

Income tax expense decreased $414 million, in Senior Notes in April 2017.

See Note 7 – Debt of the Notes to the Condensed Consolidated Financial Statements for additional details.

Other income (expense)or 80%, net remained flat for the three months ended and increased $83 million for the nine months ended September 30, 2017. The change2022, primarily from:

•Lower Income before income taxes; and
•Tax benefits associated with internal restructuring; partially offset by
•Tax benefits recognized in the third quarter of 2021 associated with legal entity reorganization related to historical Sprint entities, including a reduction in the valuation allowance against deferred tax assets in certain state jurisdictions, that did not impact 2022; and
•A decrease in excess tax benefits related to the vesting of restricted stock awards.

Our effective tax rate was 8.7% and 16.7% for the nine months ended September 30, 20172022 and 2021, respectively.

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Net income, the components of which are discussed above, was primarily from:

A $73 million net loss recognized from the early redemption of certain Senior Notes; and
A $13 million net loss recognized from the refinancing of our outstanding Senior Secured Term Loans.

See Note 7 – Debt of the Notes to the Condensed Consolidated Financial Statements.


Net income included net, after-tax gains on disposal of spectrum licenses of $18$508 million and $122$691 million for the three months ended September 30, 20172022 and 2016,2021, respectively, and $41 millionwas $1.1 billion and $511 million$2.6 billion for the nine months ended September 30, 20172022 and 2016,2021, respectively.


Guarantor Subsidiaries

The financial condition and results of operations of the Parent, Issuer and Guarantor Subsidiaries is substantially similar to our consolidated financial condition. The most significant components of the financial condition of our Non-Guarantor Subsidiaries were as follows:
 September 30,
2017		 December 31,
2016		 Change
(in millions)  $ %
Other current assets$576
 $565
 $11
 2 %
Property and equipment, net322
 375
 (53) (14)%
Tower obligations2,204
 2,221
 (17) (1)%
Total stockholders' deficit(1,386) (1,374) (12) 1 %

The most significant components of the results of operations of our Non-Guarantor Subsidiaries were as follows:
 Three Months Ended September 30, Change Nine Months Ended September 30, Change
(in millions)2017 2016$ %2017 2016$ %
Service revenues$527
 $520
 $7
 1 % $1,580
 $1,500
 $80
 5 %
Cost of equipment sales241
 300
 (59) (20)% 738
 768
 (30) (4)%
Selling, general and administrative209
 227
 (18) (8)% 652
 645
 7
 1 %
Total comprehensive income (loss)40
 (19) 59
 (311)% 87
 8
 79
 988 %

The change to the results of operations of our Non-Guarantor SubsidiariesNet income for the three months ended September 30, 2017 was primarily from:2022, included the following:


Higher Service revenues primarily due•Merger-related costs, net of tax, of $972 million for the three months ended September 30, 2022, compared to $707 million for the resultthree months ended September 30, 2021.
•Loss on disposal group held for sale of an increase in activity$803 million, net of tax, for the non-guarantor subsidiary that provides device insurance, primarily driven by growth in our customer base;three months ended September 30, 2022, compared to no loss on disposal group held for sale for the three months ended September 30, 2021.
Lower Cost of equipment sales expenses primarily due to decrease in claims activity and lower device costs used; and
Lower Selling, general and administrative expenses primarily due to a decrease in program service fees, partially offset by higher costs to support our growing customer base.

The change to the results of operations of our Non-Guarantor SubsidiariesNet income for the nine months ended September 30, 2017 was primarily from:2022, included the following:


Higher Service revenues primarily due•Merger-related costs, net of tax, of $3.3 billion for the nine months ended September 30, 2022, compared to $1.4 billion for the nine months ended September 30, 2021.
•Loss on disposal group held for sale of $803 million, net of tax, for the nine months ended September 30, 2022, compared to no loss on disposal group held for sale for the nine months ended September 30, 2021.
•Impairment expense of $358 million, net of tax, for the nine months ended September 30, 2022, compared to no impairment expense for the nine months ended September 30, 2021.
•Legal-related expenses, net of recoveries, including from the impact of the settlement of certain litigation associated with the August 2021 cyberattack, of $286 million, net of tax, for the nine months ended September 30, 2022.

Guarantor Financial Information

In connection with our Merger with Sprint, we assumed certain registered debt to third parties issued by Sprint, Sprint Communications LLC, formerly known as Sprint Communications, Inc. (“Sprint Communications”) and Sprint Capital Corporation (collectively, the “Sprint Issuers”).

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

Pursuant to the applicable indentures and supplemental indentures, the Senior Secured Notes to third parties issued by T-Mobile USA, Inc. are fully and unconditionally guaranteed, jointly and severally, on a senior secured basis by Parent and the Guarantor Subsidiaries, except for the guarantees of Sprint, Sprint Communications and Sprint Capital Corporation, which are provided on a senior unsecured basis.

The guarantees of the non-guarantor subsidiaryGuarantor Subsidiaries are subject to release in limited circumstances only upon the occurrence of certain customary conditions. The indentures, supplemental indentures and credit agreements governing the long-term debt contain covenants that, provides device insurance, primarily driven by growth in our customer base;
Lower Costamong other things, limit the ability of equipment sales expenses primarily duethe Issuers or borrowers and the Guarantor Subsidiaries to lower non-return fees chargedincur more debt, pay dividends and make distributions, make certain investments, repurchase stock, create liens or other encumbrances, enter into transactions with affiliates, enter into transactions that restrict dividends or distributions from subsidiaries, and merge, consolidate or sell, or otherwise dispose of, substantially all of their assets. Certain provisions of each of the credit agreements, indentures and supplemental indentures relating to the customer; and
Higher Selling, general and administrative expenses primarily due to higher costs to support our growing customer base, partially offset by a decrease in program service fees.

All other results of operationslong-term debt restrict the ability of the Parent, IssuerIssuers or borrowers to loan funds or make payments to Parent. However, the Issuers or borrowers and Guarantor Subsidiaries are substantially similarallowed to make certain permitted payments to Parent under the Company’sterms of the indentures, supplemental indentures and credit agreements.

Basis of Presentation

The following tables include summarized financial information of the obligor groups of debt issued by T-Mobile USA, Inc., Sprint, Sprint Communications and Sprint Capital Corporation. The summarized financial information of each obligor group is presented on a combined basis with balances and transactions within the obligor group eliminated. Investments in and the equity in earnings of non-guarantor subsidiaries, which would otherwise be consolidated in accordance with GAAP, are excluded from the below summarized financial information pursuant to SEC Regulation S-X Rule 13-01.

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The summarized balance sheet information for the consolidated obligor group of debt issued by T-Mobile USA, Inc. is presented in the table below:
(in millions)September 30, 2022December 31, 2021
Current assets$20,131 $19,522 
Noncurrent assets181,426 174,980 
Current liabilities24,836 22,195 
Noncurrent liabilities119,797 115,126 
Due to non-guarantors8,171 8,208 
Due to related parties1,535 3,842 

The summarized results of operations. See Note 11 – Guarantor Financial Informationoperations information for the consolidated obligor group of debt issued by T-Mobile USA, Inc. is presented in the Notes totable below:
Nine Months Ended
September 30, 2022		Year Ended
December 31, 2021
(in millions)
Total revenues$57,423 $78,538 
Operating income1,144 3,835 
Net (loss) income(1,178)402 
Revenue from non-guarantors1,823 1,769 
Operating expenses to non-guarantors1,981 2,655 
Other expense to non-guarantors(192)(148)

The summarized balance sheet information for the Condensed Consolidated Financial Statements.consolidated obligor group of debt issued by Sprint and Sprint Communications is presented in the table below:
(in millions)September 30, 2022December 31, 2021
Current assets$12,020 $11,969 
Noncurrent assets9,661 10,347 
Current liabilities17,394 15,136 
Noncurrent liabilities62,408 70,262 
Due to non-guarantors923 — 
Due from non-guarantors— 1,787 
Due to related parties1,535 3,842 



The summarized results of operations information for the consolidated obligor group of debt issued by Sprint and Sprint Communications is presented in the table below:
Nine Months Ended
September 30, 2022		Year Ended
December 31, 2021
(in millions)
Total revenues$5 $7 
Operating loss(2,805)(751)
Net income (loss)3,382 (2,161)
Other income, net, from non-guarantors603 1,706 

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)September 30, 2022December 31, 2021
Current assets$12,020 $11,969 
Noncurrent assets17,733 19,375 
Current liabilities17,465 15,208 
Noncurrent liabilities66,871 75,753 
Due from non-guarantors8,072 10,814 
Due to related parties1,535 3,842 

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The summarized results of operations information for the consolidated obligor group of debt issued by Sprint Capital Corporation is presented in the table below:
Nine Months Ended
September 30, 2022		Year Ended
December 31, 2021
(in millions)
Total revenues$5 $7 
Operating loss(2,805)(751)
Net income (loss)3,456 (2,590)
Other income, net, from non-guarantors900 2,076 

Performance Measures


In managing our business and assessing financial performance, we supplement the information provided by our condensed consolidated financial statements with other operating or statistical data and non-GAAP financial measures. These operating and financial measures are utilized by our management to evaluate our operating performance and, in certain cases, our ability to meet liquidity requirements. Although companies in the wireless industry may not define each of these measures in precisely the same way, we believe that these measures facilitate comparisons with other companies in the wireless industry on key operating and financial measures.


Total Postpaid Accounts

A postpaid account is generally defined as a billing account number that generates revenue. Postpaid accounts generally consist of customers that are qualified for postpaid service utilizing phones, High Speed Internet, wearables, DIGITS or other connected devices, which include tablets and SyncUP products, where they generally pay after receiving service.
As of September 30,Change
(in thousands)20222021#%
Total postpaid customer accounts (1) (2)
28,212 26,901 1,311 5 %
(1)     Customers impacted by the decommissioning of the legacy Sprint CDMA and LTE and T-Mobile UMTS networks have been excluded from our postpaid account base resulting in the removal of 57,000 postpaid accounts in the first quarter of 2022 and 69,000 postpaid accounts in the second quarter of 2022.
(2)    In the first quarter of 2021, we acquired 4,000 postpaid accounts through our acquisition of an affiliate. In the third quarter of 2021, we acquired 270,000 postpaid accounts through our acquisition of the Wireless Assets of Shentel.

Total postpaid customer accounts increased 1,311,000, or 5%, primarily due to the Company’s differentiated growth strategy in new and under-penetrated markets, including continued growth in High Speed Internet.

Postpaid Net Account Additions

The following table sets forth the number of postpaid net account additions:
Three Months Ended
September 30,		ChangeNine Months Ended
September 30,		Change
(in thousands)20222021#%20222021#%
Postpaid net account additions394 268 126 47 %1,122 873 249 29 %

Postpaid net account additions increased 126,000, or 47%, for the three months ended and increased 249,000, or 29%, for the nine months ended September 30, 2022, primarily due to the Company’s differentiated growth strategy in new and under-penetrated markets, including continued growth in High Speed Internet.

Customers


A customer is generally defined as a SIM number with a unique T-Mobile identifier which is associated with an account that generates revenue. Branded customers generally include customers thatCustomers are qualified either for postpaid service utilizing phones, mobile broadbandHigh Speed Internet, wearables, DIGITS or other connected devices, (including tablets), or DIGITS,which include tablets and SyncUP products, where they generally pay after receiving service, or prepaid service, where they generally pay in advance. Wholesale customers include Machine to Machine (“M2M”) and MVNO customers that operate on our network, but are managed by wholesale partners.advance of receiving service.


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The following table sets forth the number of ending customers:
As of September 30,Change
(in thousands)20222021#%
Customers, end of period
Postpaid phone customers (1) (2)
71,907 69,418 2,489 4 %
Postpaid other customers (1) (2)
18,507 16,495 2,012 12 %
Total postpaid customers90,414 85,913 4,501 5 %
Prepaid customers (1)
21,341 21,007 334 2 %
Total customers111,755 106,920 4,835 5 %
Adjustments to customers (1) (2)
(1,878)818 (2,696)NM
 September 30,
2017		 September 30,
2016		 Change
(in thousands)# %
Customers, end of period       
Branded postpaid phone customers (1)
33,223
 30,364
 2,859
 9 %
Branded postpaid other customers (1)
3,752
 2,866
 886
 31 %
Total branded postpaid customers36,975
 33,230
 3,745
 11 %
Branded prepaid customers20,519
 19,272
 1,247
 6 %
Total branded customers57,494
 52,502
 4,992
 10 %
Wholesale customers13,237
 16,852
 (3,615) (21)%
Total customers, end of period70,731
 69,354
 1,377
 2 %
Adjustments to branded postpaid phone customers (2)
—
 (1,365) 1,365
 
Adjustments to branded prepaid customers (2)
—
 (326) 326
 
Adjustments to wholesale customers (2) (3)
(160) 1,691
 (1,851) 
(1)During the third quarter of 2017, we retitled our “Branded postpaid mobile broadband customers” category to “Branded postpaid other customers” and reclassified 253,000 DIGITS customers from our “Branded postpaid phone customers” category for the second quarter of 2017, when the DIGITS product was released.
(2)The MVNO Transaction resulted in a transfer of branded postpaid phone customers and branded prepaid customers to wholesale customers on September 1, 2016. Prospectively from September 1, 2016, net customer additions for these customers are included within Wholesale customers.
(3)We believe current and future regulatory changes have made the Lifeline program offered by our wholesale partners uneconomical. We will continue to support our wholesale partners offering the Lifeline program, but have excluded the Lifeline customers from our reported wholesale subscriber base resulting in the removal of 160,000 and 4,368,000 reported wholesale customers as of the beginning of the third quarter of 2017 and the beginning of the second quarter of 2017, respectively. No further Lifeline adjustments are expected in future periods.

Branded     Customers

Total branded customers increased 4,992,000, or 10%, primarily from:

Higher branded impacted by the decommissioning of the legacy Sprint CDMA and LTE and T-Mobile UMTS networks have been excluded from our customer base resulting in the removal of 212,000 postpaid phone customers driven by strong customer response to our Un-carrier initiatives and promotional activities and the growing success of our business channel, T-Mobile for Business, partially offset by increased competitive activity349,000 postpaid other customers in the marketplacefirst quarter of 2022 and less reliance on add a line promotions;
Higher branded284,000 postpaid phone customers, 946,000 postpaid other customers and 28,000 prepaid customers drivenin the second quarter of 2022. In connection with our acquisition of companies, we included a base adjustment in the first quarter of 2022 to increase postpaid phone customers by 17,000 and reduce postpaid other customers by 14,000. Certain customers now serviced through reseller contracts were removed from our reported postpaid customer base resulting in the removal of 42,000 postpaid phone customers and 20,000 postpaid other customers in the second quarter of 2022.
(2)     In the first quarter of 2021, we acquired 11,000 postpaid phone customers and 1,000 postpaid other customers through our acquisition of an affiliate. In the third quarter of 2021, we acquired 716,000 postpaid phone customers and 90,000 postpaid other customers through our acquisition of the Wireless Assets from Shentel.
NM - Not Meaningful

Total customers increased 4,835,000, or 5%, primarily from:

•Higher postpaid phone customers, primarily due to growth in new customer account relationships;
•Higher postpaid other customers, primarily due to growth in other connected devices, including growth in High Speed Internet and wearable products; and
•Higher prepaid customers, primarily due to the continued success of our MetroPCS brandprepaid business due to promotional activity and continued growth from our distribution expansion,rate plan offers; partially offset by the optimizationlower prepaid industry demand associated with continued industry shift to postpaid plans.

Total customers included High Speed Internet customers of our third-party distribution channels;2,122,000 and
•
Higher branded postpaid other customers primarily due to the launch of SyncUP DRIVETM and DIGITS.

Wholesale

Wholesale customers decreased 3,615,000, or 21%, primarily due to Lifeline subscribers, which were excluded from our reported wholesale subscriber base 422,000 as of the beginning of the second quarter of 2017. This decrease was partially offset by the continued success of our M2M partnerships.September 30, 2022 and 2021, respectively.


Net Customer Additions


The following table sets forth the number of net customer additions (losses):additions:
Three Months Ended
September 30,		ChangeNine Months Ended
September 30,		Change
(in thousands)20222021#%20222021#%
Net customer additions
Postpaid phone customers854 673 181 27 %2,166 2,073 93 4 %
Postpaid other customers773 586 187 32 %2,435 1,672 763 46 %
Total postpaid customers1,627 1,259 368 29 %4,601 3,745 856 23 %
Prepaid customers105 66 39 59 %313 293 20 7 %
Total customers1,732 1,325 407 31 %4,914 4,038 876 22 %
Adjustments to customers— 806 (806)(100)%(1,878)818 (2,696)NM
NM - Not Meaningful

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 Three Months Ended September 30, Change Nine Months Ended September 30, Change
(in thousands)2017 2016# %2017 2016# %
Net customer additions (losses)               
Branded postpaid phone customers (1)
595
 851
 (256) (30)% 1,926
 2,374
 (448) (19)%
Branded postpaid other customers (1)
222
 118
 104
 88 % 622
 526
 96
 18 %
Total branded postpaid customers817
 969
 (152) (16)% 2,548
 2,900
 (352) (12)%
Branded prepaid customers226
 684
 (458) (67)% 706
 1,967
 (1,261) (64)%
Total branded customers1,043
 1,653
 (610) (37)% 3,254
 4,867
 (1,613) (33)%
Wholesale customers (2)
286
 317
 (31) (10)% 550
 1,205
 (655) (54)%
Total net customer additions1,329
 1,970
 (641) (33)% 3,804
 6,072
 (2,268) (37)%
Adjustments to branded postpaid phone customers (1)
—
 —
 —
 
 (253) —
 (253) 
Adjustments to branded postpaid other customers (1)
—
 —
 —
 
 253
 —
 253
 
(1)During the third quarter of 2017, we retitled our “Branded postpaid mobile broadband customers” category to “Branded postpaid other customers” and reclassified 253,000 DIGITS customer net additions from our “Branded postpaid phone customers” category for the second quarter of 2017, when the DIGITS product was released.
(2)Net customer activity for Lifeline was excluded beginning in the second quarter of 2017 due to our determination based upon changes in the applicable government regulations that the Lifeline program offered by our wholesale partners is uneconomical.

Branded Customers

Total branded net customer additions decreased 610,000,increased 407,000, or 37%31%, for the three months ended and 1,613,000,increased 876,000, or 33%22%, for the nine months ended September 30, 2017.2022.


The decreaseincrease for the three months ended September 30, 20172022, was primarily from:


Lower branded•Higher postpaid other net customer additions, primarily due to continued growth in High Speed Internet, partially offset by lower net additions from mobile internet devices and wearables;
•Higher postpaid phone net customer additions, primarily due to higher gross additions driven by growth in new customer account relationships and lower churn; and
•Higher prepaid net customer additions, primarily due to higher MetroPCS deactivations from a growingthe introduction of our High Speed Internet offering.
•High Speed Internet net customer baseadditions included in postpaid other net customer additions were 488,000 and increased competitive activity134,000 for the three months ended September 30, 2022 and 2021, respectively. High Speed Internet net customer additions included in prepaid net customer additions were 90,000 for the three months ended September 30, 2022. Our prepaid High Speed Internet launch was in the marketplace,first quarter of 2022. Therefore, there were no prepaid High Speed Internet net customer additions for the three months ended September 30, 2021.

The increase for the nine months ended September 30, 2022, was primarily from:

•Higher postpaid other net customer additions, primarily due to an increase in High Speed Internet net customer additions and wearables, partially offset by lower net additions from mobile internet devices;
Lower branded•Higher postpaid phone net customer additions, primarily due to lower churn and higher gross additions driven by growth in new account relationships; and
•Higher prepaid net customer additions, from increased competitive activity inprimarily due to the marketplace, the split and shift in iPhone launch timing, and the negative impact from hurricanes;introduction of our High Speed Internet offering, partially offset by
•
Higher branded postpaid other net customer additions primarily driven by strength of SyncUP DRIVETM launched in the fourth quarter of 2016 as well as the launch of DIGITS in the second quarter of 2017.

the continued industry shift to postpaid plans.
The decrease•High Speed Internet net customer additions included in postpaid other net customer additions were 1,314,000 and 322,000 for the nine months ended September 30, 2017 was primarily from:

Lower branded2022 and 2021, respectively. High Speed Internet net customer additions included in prepaid net customer additions primarily due to higher MetroPCS deactivations from a growing customer base and increased competitive activity in the marketplace. Additional decreases resulted from the optimization of our third party distribution channels, and
Lower branded postpaid phone net customer additions primarily due to lower gross customer additions from increased competitive activity in the marketplace and lower customer migrations, partially offset by lower deactivations; partially offset by
•
Higher branded postpaid other net customer additions primarily driven by strength of SyncUP DRIVETM launched in the fourth quarter of 2016 as well as the launch of DIGITS in the second quarter of 2017, partially offset by overall market softness of tablets.

Wholesale

Wholesale net customer additions decreased 31,000, or 10%, for the three months ended and 655,000, or 54%,were 162,000 for the nine months ended September 30, 2017 from lower gross2022. Our prepaid High Speed Internet launch was in the first quarter of 2022. Therefore, there were no prepaid High Speed Internet net customer additions partially offset by lower customer deactivations. We believe current and future regulatory changes have madefor the Lifeline program offered by our wholesale partners uneconomical.nine months ended September 30, 2021.

We will continue to support our wholesale partners offering the Lifeline program, but have excluded the Lifeline customers from our reported wholesale subscriber base resulting in the removal of 160,000 and 4,368,000 reported wholesale customers as of the beginning of the third quarter of 2017 and beginning of the second quarter of 2017, respectively. No further Lifeline adjustments are expected in future periods.

Customers Per Account

Customers per account is calculated by dividing the number of branded postpaid customers as of the end of the period by the number of branded postpaid accounts as of the end of the period. An account may include branded postpaid phone, mobile broadband, and DIGITS customers. We believe branded postpaid customers per account provides management, investors and analysts with useful information to evaluate our branded postpaid customer base on a per account basis.
 September 30,
2017		 September 30,
2016		 Change
  # %
Branded postpaid customers per account2.92
 2.78
 0.14
 5%

Branded postpaid customers per account increased 0.14 points, or 5%, primarily from growth of customers on family plan promotions.


Churn


Churn represents the number of customers whose service was disconnected as a percentage of the average number of customers during the specified period further divided by the number of months in the period. The number of customers whose service was disconnected is presented net of customers that subsequently have their service restored within a certain period of time. We believe that churn provides management, investors and analysts with useful information to evaluate customer retention and loyalty.
 Three Months Ended September 30, Bps Change Nine Months Ended September 30, Bps Change
2017 20162017 2016
Branded postpaid phone churn1.23% 1.32% -9 bps 1.18% 1.30% -12 bps
Branded prepaid churn4.25% 3.82% 43 bps 4.06% 3.86% 20 bps


The following table sets forth the churn:
Three Months Ended
September 30,		ChangeNine Months Ended
September 30,		Change
2022202120222021
Postpaid phone churn0.88 %0.96 %-8 bps0.87 %0.93 %-6 bps
Prepaid churn2.88 %2.90 %-2 bps2.71 %2.76 %-5 bps
Branded postpaid
Postpaid phone churn decreased 98 basis points for the three months ended and 12decreased 6 basis points for the nine months ended September 30, 2017,2022, primarily duefrom:

•Reduced Sprint churn as we progress through the integration process; partially offset by
•More normalized switching activity and payment performance relative to the MVNO Transaction as the customers transferred hadmuted Pandemic-driven conditions a higher rateyear ago.
45
Table of churn.Contents


Branded prepaidPrepaid churn increased 43decreased 2 basis points for the three months ended and 20decreased 5 basis points for the nine months ended September 30, 2017,2022, primarily duefrom:

•Promotional activity; partially offset by
•More normalized switching activity and payment performance relative to higher MetroPCS churn from increased competitive activitythe muted Pandemic-driven conditions a year ago.

Average Revenue Per Account

Average Revenue per Account (“ARPA”) represents the average monthly postpaid service revenue earned per account. We believe postpaid ARPA provides management, investors and analysts with useful information to assess and evaluate our postpaid service revenue realization and assist in forecasting our future postpaid service revenues on a per account basis. We consider postpaid ARPA to be indicative of our revenue growth potential given the increase in the marketplace.average number of postpaid phone customers per account and increases in postpaid other customers, including High Speed Internet, wearables, DIGITS or other connected devices, which include tablets and SyncUP products.


The following table sets forth our operating measure ARPA:
(in dollars)Three Months Ended
September 30,		ChangeNine Months Ended
September 30,		Change
20222021$%20222021$%
Postpaid ARPA$137.49 $134.54 $2.95 2 %$137.32 $133.68 $3.64 3 %

Postpaid ARPA increased $2.95, or 2%, for the three months ended and increased $3.64, or 3%, for the nine months ended September 30, 2022.

The increase for the three months ended September 30, 2022, was primarily from:

•Higher premium services, including Magenta Max;
•Continued adoption of High Speed Internet from existing accounts; and
•Higher non-recurring charges relative to muted Pandemic levels; partially offset by
•An increase in High Speed Internet only accounts; and
•An increase in promotional impacts for Sprint customers from the network transition.

The increase for the nine months ended September 30, 2022, was primarily from:

•Higher premium services, including Magenta Max;
•Continued adoption of High Speed Internet from existing accounts; and
•Higher non-recurring charges relative to muted Pandemic levels; partially offset by
•An increase in promotional impacts for Sprint customers from the network transition; and
•An increase in High Speed Internet only accounts.

Average Revenue Per User Average Billings Per User


ARPU represents the average monthly service revenue earned from customers. We believe ARPU provides management, investors and analysts with useful information to assess and evaluate our service revenue realization per customer and assist in forecasting our future service revenues generated from our customer base. Branded postpaidPostpaid phone ARPU excludes mobile broadband and DIGITSpostpaid other customers and related revenues.revenues, which include High Speed Internet, wearables, DIGITS and other connected devices such as tablets and SyncUP products.


Average Billings Per User (“ABPU”) represents the average monthly customer billings, including monthly lease revenues and EIP billings before securitization, per customer. We believe branded postpaid ABPU provides management, investors and analysts with useful information to evaluate average branded postpaid customer billings as it is indicative
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Table of estimated cash collections, including device financing payments, from our customers each month.Contents



The following tables illustrate the calculation oftable sets forth our operating measures ARPU and ABPU and reconcile these measures to the related service revenues:measure ARPU:
(in dollars)Three Months Ended
September 30,		ChangeNine Months Ended
September 30,		Change
20222021$%20222021$%
Postpaid phone ARPU$48.89 $48.06 $0.83 2 %$48.75 $47.66 $1.09 2 %
Prepaid ARPU38.86 39.49 (0.63)(2)%38.92 38.61 0.31 1 %
(in millions, except average number of customers, ARPU and ABPU)Three Months Ended September 30, Change Nine Months Ended September 30, Change
2017 2016 $ % 2017 2016 $ %
Calculation of Branded Postpaid Phone ARPU               
Branded postpaid service revenues$4,920
 $4,647
 $273
 6 % $14,465
 $13,458
 $1,007
 7 %
Less: Branded postpaid other revenues(294) (193) (101) 52 % (774) (568) (206) 36 %
Branded postpaid phone service revenues$4,626
 $4,454
 $172
 4 % $13,691
 $12,890
 $801
 6 %
Divided by: Average number of branded postpaid phone customers (in thousands) and number of months in period32,852
 30,836
 2,016
 7 % 32,248
 30,364
 1,884
 6 %
Branded postpaid phone ARPU (1)
$46.93
 $48.15
 $(1.22) (3)% $47.17
 $47.17
 $—
 — %
     

 

     

 

Calculation of Branded Postpaid ABPU    

 

     

 

Branded postpaid service revenues$4,920
 $4,647
 $273
 6 % $14,465
 $13,458
 $1,007
 7 %
EIP billings1,481
 1,394
 87
 6 % 4,285
 4,062
 223
 5 %
Lease revenues159
 353
 (194) (55)% 717
 1,062
 (345) (32)%
Total billings for branded postpaid customers$6,560
 $6,394
 $166
 3 % $19,467
 $18,582
 $885
 5 %
Divided by: Average number of branded postpaid customers (in thousands) and number of months in period36,505
 33,632
 2,873
 9 % 35,627
 32,966
 2,661
 8 %
Branded postpaid ABPU$59.89
 $63.38
 $(3.49) (6)% $60.71
 $62.63
 $(1.92) (3)%
     

 

     

 

Calculation of Branded Prepaid ARPU    

 

     

 

Branded prepaid service revenues$2,376
 $2,182
 $194
 9 % $7,009
 $6,326
 $683
 11 %
Divided by: Average number of branded prepaid customers (in thousands) and number of months in period20,336
 19,134
 1,202
 6 % 20,119
 18,586
 1,533
 8 %
Branded prepaid ARPU$38.93
 $38.01
 $0.92
 2 % $38.71
 $37.82
 $0.89
 2 %
(1)Branded postpaid phone ARPU includes the reclassification of 43,000 DIGITS average customers and related revenue to the “Branded postpaid other customers” category for the second quarter of 2017.


Branded Postpaid Phone ARPU


Branded postpaidPostpaid phone ARPU decreased $1.22, or 3%, for the three months ended and remained flat for the nine months ended September 30, 2017.

The change for the three months ended September 30, 2017 was primarily from:

The continued adoption of T-Mobile ONE including taxes and fees and dilution from promotional activities; and
The negative impact from hurricanes of $0.19; partially offset by
The transfer of customers as part of the MVNO transaction as those customers had lower ARPU; and
A decrease in the non-cash net revenue deferral for Data Stash.

Flat for the nine months ended September 30, 2017 primarily from:

A decrease in the non-cash net revenue deferral for Data Stash;
The transfer of customers as part of the MVNO transaction as those customers had lower ARPU; offset by
The continued adoption of T-Mobile ONE including taxes and fees and dilution from promotional activities; and
The negative impact from hurricanes of $0.07.

T-Mobile continues to expect that Branded postpaid phone ARPU in full-year 2017 will be generally stable compared to full-year 2016, with some quarterly variations driven by the actual migrations to T-Mobile ONE rate plans, inclusive of Un-carrier Next promotions.


Branded Postpaid ABPU

Branded postpaid ABPU decreased $3.49, or 6%, for the three months ended and $1.92, or 3%, for the nine months ended September 30, 2017.

The change for the three months ended September 30, 2017 was primarily from:

Lower lease revenues;
Lower branded postpaid phone ARPU;
Growth in the branded postpaid other customer base with lower ARPU; and
The negative impact from hurricanes of $0.18.

The change for the nine months ended September 30, 2017 was primarily from:

Lower lease revenues;
Growth in the branded postpaid other customer base with lower ARPU; and
The negative impact from hurricanes of $0.06.

Branded Prepaid ARPU

Branded prepaid ARPU increased $0.92,$0.83, or 2%, for the three months ended and $0.89,increased $1.09, or 2%, for the nine months ended September 30, 2017, compared2022, primarily due to:

•Higher premium services, including Magenta Max; and
•Higher non-recurring charges relative to the same periods in 2016, primarily from continued growth of MetroPCS customers who generate higher ARPU. These increases weremuted Pandemic levels; partially offset by
•An increase in promotional impacts for Sprint customers from the negative impact from hurricanes of $0.18network transition; and $0.06
•Higher lines per account driven by deepening Sprint relationships.

Prepaid ARPU

Prepaid ARPU decreased $0.63, or 2%, for the three months ended and increased $0.31, or 1%, for the nine months ended September 30, 2017, respectively.2022.


The decrease for the three months ended September 30, 2022, was primarily from:

•Increased promotional activity; partially offset by
•An increase in one-time fees.

The increase for the nine months ended September 30, 2022, was primarily from:

•Higher premium services; partially offset by
•Increased promotional activity.

Adjusted EBITDA and Core Adjusted EBITDA


Adjusted EBITDA represents earnings before Interest expense, net of Interest income, Income tax expense, Depreciation and amortization, non-cash Stock-basedstock-based compensation and certain income and expenses not reflective of T-Mobile’sour ongoing operating performance. Net income marginCore Adjusted EBITDA represents Net income divided by ServiceAdjusted EBITDA less device lease revenues. Adjusted EBITDA margin represents Adjusted EBITDA divided by Service revenues. Core Adjusted EBITDA margin represents Core Adjusted EBITDA divided by Service revenues.


Adjusted EBITDA, is aAdjusted EBITDA margin, Core Adjusted EBITDA and Core Adjusted EBITDA margin are non-GAAP financial measuremeasures utilized by our management to monitor the financial performance of our operations. We use Adjusted EBITDA internally as a metricmeasure to evaluate and compensate our personnel and management for their performance,performance. We use Adjusted EBITDA and Core Adjusted EBITDA as a benchmarkbenchmarks to evaluate our operating performance in comparison to our competitors. Management believes analysts and investors use Adjusted EBITDA and Core Adjusted EBITDA as a supplemental measuremeasures to evaluate overall operating performance and facilitate comparisons with other wireless communications services companies because it isthey are indicative of our ongoing operating performance and trends by excluding the impact of interest expense from financing, non-cash depreciation and amortization from capital investments, non-cash stock-based compensation, Merger-related costs, including network decommissioning costs, impairment expense, losses on disposal groups held for sale and certain legal-related recoveries and expenses, as they are not indicative of our ongoing operating performance, as well as certain nonrecurring income and certain other nonrecurring expenses. Management believes analysts and investors use Core Adjusted EBITDA hasbecause it normalizes for the transition in the Company’s device financing strategy, by excluding the impact of device lease revenues from Adjusted EBITDA, to align with the exclusion of the related depreciation expense on leased devices from Adjusted EBITDA. Adjusted EBITDA, Adjusted EBITDA margin, Core Adjusted EBITDA and Core Adjusted EBITDA margin have limitations as an analytical tooltools and should not be considered in isolation or as a substitutesubstitutes for income from operations, net income or any other measure of financial performance reported in accordance with GAAP.

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The following table illustrates the calculation of Adjusted EBITDA and Core Adjusted EBITDA and reconciles Adjusted EBITDA and Core Adjusted EBITDA to Net income, which we consider to be the most directly comparable GAAP financial measure:
Three Months Ended
September 30,		ChangeNine Months Ended
September 30,		Change
(in millions)20222021$%20222021$%
Net income$508 $691 $(183)(26)%$1,113 $2,602 $(1,489)(57)%
Adjustments:
Interest expense, net827 836 (9)(1)%2,542 2,521 21 1 %
Other expense, net3 60 (57)(95)%35 186 (151)(81)%
Income tax (benefit) expense(57)(3)(54)NM106 520 (414)(80)%
Operating income1,281 1,584 (303)(19)%3,796 5,829 (2,033)(35)%
Depreciation and amortization3,313 4,145 (832)(20)%10,389 12,511 (2,122)(17)%
Stock-based compensation (1)
145 127 18 14 %430 386 44 11 %
Merger-related costs1,296 955 341 36 %4,377 1,864 2,513 135 %
Impairment expense— — — NM477 — 477 NM
Legal-related (recoveries) expenses, net (2)
(19)— (19)NM381 — 381 NM
Loss on disposal group held for sale1,071 — 1,071 NM1,071 — 1,071 NM
Other, net (3)
(48)— (48)NM72 32 40 125 %
Adjusted EBITDA7,039 6,811 228 3 %20,993 20,622 371 2 %
Lease revenues(311)(770)459 (60)%(1,184)(2,725)1,541 (57)%
Core Adjusted EBITDA$6,728 $6,041 $687 11 %$19,809 $17,897 $1,912 11 %
Net income margin (Net income divided by Service revenues)3 %5 %-200 bps2 %6 %-400 bps
Adjusted EBITDA margin (Adjusted EBITDA divided by Service revenues)46 %46 %— bps46 %48 %-200 bps
Core Adjusted EBITDA margin (Core Adjusted EBITDA divided by Service revenues)44 %41 %300 bps43 %41 %200 bps
 Three Months Ended September 30, Change Nine Months Ended September 30, Change
(in millions)2017 2016 $ % 2017 2016 $ %
Net income$550
 $366
 $184
 50 % $1,829
 $1,070
 $759
 71 %
Adjustments:    

 

     

 

Interest expense253
 376
 (123) (33)% 857
 1,083
 (226) (21)%
Interest expense to affiliates167
 76
 91
 120 % 398
 248
 150
 60 %
Interest income (1)
(2) (3) 1
 (33)% (15) (9) (6) 67 %
Other (income) expense, net(1) 1
 (2) (200)% 89
 6
 83
 1,383 %
Income tax expense356
 232
 124
 53 % 618
 651
 (33) (5)%
Operating income (1)
1,323
 1,048
 275
 26 % 3,776
 3,049
 727
 24 %
Depreciation and amortization1,416
 1,568
 (152) (10)% 4,499
 4,695
 (196) (4)%
Cost of MetroPCS business combination (2)
—
 15
 (15) (100)% —
 110
 (110) (100)%
Stock-based compensation (3)
83
 57
 26
 46 % 222
 171
 51
 30 %
Other, net (3)
—
 1
 (1) (100)% 5
 7
 (2) (29)%
Adjusted EBITDA (1)
$2,822
 $2,689
 $133
 5 % $8,502
 $8,032
 $470
 6 %
Net income margin (Net income divided by service revenues)7% 5% 

 200 bps
 8% 5% 

 300 bps
Adjusted EBITDA margin (Adjusted EBITDA divided by service revenues) (1)
37% 38% 

 -100 bps
 38% 39% 

 -100 bps
(1)
The amortized imputed discount on EIP receivables previously recognized as Interest income has been retrospectively re-classified as Other revenues. See Note 1 - Basis of Presentation of the Notes to the Condensed Consolidated Financial Statements and table below for further detail.
(2)Beginning in the first quarter of 2017, the Company will no longer separately present Cost of MetroPCS business combination as it is insignificant.
(3)Stock-based compensation includes payroll tax impacts and may not agree to stock-based compensation expense in the consolidated financial statements. Other, net may not agree to the Condensed Consolidated Statements of Comprehensive Income primarily due to certain non-routine operating activities, such as other special items that would not be expected to reoccur, and are therefore excluded in Adjusted EBITDA.

(1)Stock-based compensation includes payroll tax impacts and may not agree with stock-based compensation expense on the condensed consolidated financial statements. Additionally, certain stock-based compensation expenses associated with the Transactions have been included in Merger-related costs.
(2)Legal-related (recoveries) expenses, net, consists of the settlement of certain litigation associated with the August 2021 cyberattack and is presented net of insurance recoveries.
(3)Other, net, primarily consists of certain severance, restructuring and other expenses and income, including gains from the sale of IP addresses, not directly attributable to the Merger which would not be expected to reoccur or are not reflective of T-Mobile’s ongoing operating performance (“special items”), and are, therefore, excluded from Adjusted EBITDA and Core Adjusted EBITDA.
NM - Not meaningful

Core Adjusted EBITDA increased $133$687 million, or 5%11%, for the three months ended and $470 million,increased $1.9 billion, or 6%11%, for the nine months ended September 30, 2017.2022. The components comprising Core Adjusted EBITDA are discussed further above.


The changeincrease for the three months ended September 30, 20172022, was primarily from:due to:


An increase in branded postpaid and prepaid•Higher Total service revenues primarily due to strong customer response to our Un-carrier initiatives, the ongoing successrevenues;
•Lower Cost of our promotional activities,services, excluding Merger-related costs; and the continued strength
•Lower Cost of our MetroPCS brand; and
Lower losses on equipment;equipment sales, excluding Merger-related costs; partially offset by
•Lower Equipment revenues, excluding lease revenues; and
•Higher selling,Selling, general and administrative expenses;expenses, excluding Merger-related costs and other special items, such as gains from the sale of IP addresses.

Higher cost
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Table of services expense;Contents

Lower gains on disposal of spectrum licenses of $170 million; gains on disposal were $29 million for the three months ended September 30, 2017, compared to $199 million in the same period in 2016; and
The negative impact from hurricanes of $148 million.

The changeincrease for the nine months ended September 30, 20172022, was primarily from:due to:


An increase in branded postpaid and prepaid•Higher Total service revenues primarily due to strong customer response to our Un-carrier initiatives, the ongoing successrevenues;
•Lower Cost of our promotional activities,equipment sales, excluding Merger-related costs; and the continued strength
•Lower Cost of our MetroPCS brand; and
Higher wholesale revenues;services, excluding Merger-related costs; partially offset by
•Higher Selling, general and administrative expenses, excluding Merger-related costs, certain legal-related expenses, net of recoveries, and other special items, such as gains from the sale of IP addresses; and
•Lower gains on disposal of spectrum licenses of $768Equipment revenues, excluding lease revenues.

Adjusted EBITDA increased $228 million,; gains on disposal were $67 million or 3%, for the three months ended and increased $371 million, or 2%, for the nine months ended September 30, 2017, compared to $835 million in the same period in 2016;
Higher selling, general and administrative expenses;
Higher cost of services expense; and
2022. The negative impact from hurricanes of $148 million.

Effective January 1, 2017, the imputed discount on EIP receivables, which was previously recognized within Interest income in our Condensed Consolidated Statements of Comprehensive Income, is recognized within Other revenues in our Condensed Consolidated Statements of Comprehensive Income. Due to this presentation, the imputed discount on EIP receivables is included in Adjusted EBITDA. See Note 1 - Basis of Presentation of Notesslight increases were primarily due to the Condensed Consolidated Financial Statementsfluctuations in Core Adjusted EBITDA, discussed above, including changes in Lease revenues. Lease revenues decreased $459 million for additional details.

We have applied this change retrospectively and presented the effect on the three months ended and decreased $1.5 billion for the nine months ended September 30, 2016, in the table below.2022.

 Three Months Ended September 30, 2016 Nine Months Ended September 30, 2016
(in millions)As Filed Change in Accounting Principle As Adjusted As Filed Change in Accounting Principle As Adjusted
Operating income$989
 $59
 $1,048
 $2,860
 $189
 $3,049
Interest income62
 (59) 3
 198
 (189) 9
Net income366
 —
 366
 1,070
 —
 1,070
Net income as a percentage of service revenue5% —% 5% 5% —% 5%
Adjusted EBITDA2,630
 59
 2,689
 7,843
 189
 8,032
Adjusted EBITDA margin (Adjusted EBITDA divided by service revenues)37% 1% 38% 38% 1% 39%

Liquidity and Capital Resources


Our principal sources of liquidity are our cash and cash equivalents and cash generated from operations, proceeds from issuance of long-term debt, capitalfinancing leases, common and preferred stock, the sale of certain receivables financing arrangementsand the Revolving Credit Facility (as defined below). Further, the incurrence of vendor payablesadditional indebtedness may inhibit our ability to incur new debt under the terms governing our existing and future indebtedness, which effectively extend payment terms and secured and unsecured revolving credit facilities with DT.may make it more difficult for us to incur new debt in the future to finance our business strategy.


Cash Flows


The following is an analysisa condensed schedule of our cash flows for three and nine months ended September 30, 2017 and 2016:flows:
Three Months Ended
September 30,		ChangeNine Months Ended
September 30,		Change
(in millions)20222021$%20222021$%
Net cash provided by operating activities$4,391 $3,477 $914 26 %$12,445 $10,917 $1,528 14 %
Net cash used in investing activities(2,555)(4,152)1,597 (38)%(10,206)(17,474)7,268 (42)%
Net cash provided by (used in) financing activities1,927 (3,060)4,987 (163)%(1,953)237 (2,190)(924)%
 Three Months Ended September 30, Change Nine Months Ended September 30, Change
(in millions)2017 2016 $ % 2017 2016 $ %
Net cash provided by operating activities$2,362
 $1,740
 $622
 36 % $5,904
 $4,533
 $1,371
 30 %
Net cash used in investing activities(1,455) (1,859) 404
 (22)% (10,138) (4,386) (5,752) 131 %
Net cash (used in) provided by financing activities(349) (67) (282) 421 % (527) 623
 (1,150) (185)%


Operating Activities


Net cash provided by operating activities increased $622$914 million, or 36%26%, for the three months ended and $1.4increased $1.5 billion, or 30%14%, for the nine months ended September 30, 2017, compared to the same periods in 2016.2022.


The changeincrease for the three months ended September 30, 20172022, was primarily from:


•A $1.4 billion decrease in net cash outflows from changes in working capital, primarily due to lower use of cash from Short- and long-term operating lease liabilities, including the impact of a $1.0 billion advance rent payment related to the modification of one of our master lease agreements during the three months ended September 30, 2021, Other current and long-term liabilities and Equipment installment plan receivables, partially offset by higher use of cash from Accounts receivable; partially offset by
Higher net•A $468 million decrease in Net income, adjusted for non-cash income and higher non-cash adjustments toexpense.
•Net cash provided by operating activities includes the impact of $942 million and $617 million in net incomepayments for Merger-related costs for the three months ended September 30, 2022 anda lower net use from working capital changes.
2021, respectively.


The changeincrease for the nine months ended September 30, 20172022, was primarily from:


Higher Net income and higher non-cash adjustments to•A $3.9 billion decrease in net income includingcash outflows from lower Gains on disposal of spectrum licenses and Depreciation and amortization. In total, changes in working capital, were relatively flat as improvements in primarily due to lower use of cash from Short- and long-term operating lease liabilities, including the impact of a $1.0 billion advance rent payment related to the modification of one of our master lease agreements during the nine months ended September 30, 2021, Accounts payable and accrued liabilities, Equipment installment plan receivables, other Current and Inventories werelong-term liabilities and
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Operating lease right-of-use assets, partially offset by changes in Equipment installment plan receivables. The change in EIP receivables was primarily due to ahigher use of cash from Accounts receivable and Inventories; partially offset by
•A $2.4 billion decrease in Net income, adjusted for non-cash income and expense.
•Net cash provided by operating activities includes the impact of $2.7 billion and $1.1 billion in net cash proceeds frompayments for Merger-related costs for the sale of EIP receivables as the nine months ended September 30, 2016 benefited from net cash proceeds of $366 million primarily related to upsizing of the EIP securitization facility as well as an increase in devices financed on EIP.
2022 and 2021, respectively.



Investing Activities


Net cash used in investing activities decreased $404 million$1.6 billion, or 38%, for the three months ended and increased $5.8decreased $7.3 billion, or 42%, for the nine months ended September 30, 2017.2022.


The changeuse of cash for the three months ended September 30, 20172022, was primarily from:


•$3.6 billion in Purchases of property and equipment, including capitalized interest, from the accelerated build-out of our nationwide 5G network, including from network integration related to the Merger; and
A $690•$360 million decrease in Purchases of spectrum licenses and other intangible assets, including deposits;deposits, primarily due to $239 million paid for spectrum licenses won at the conclusion of Auction 108 in September 2022; partially offset by
•$1.3 billion in Proceeds related to beneficial interests in securitization transactions.
A $282 million increase
The use of cash for the nine months ended September 30, 2022, was primarily from:

•$10.6 billion in Purchases of property and equipment, including capitalized interest.
interest, from the accelerated build-out of our nationwide 5G network, including from network integration related to the Merger; and

The change for the nine months ended September 30, 2017 was primarily from:

A $3.0•$3.3 billion decrease in Sales of short-term investments;
A $2.3 billion increase in Purchases of spectrum licenses and other intangible assets, including deposits, primarily drivendue to $2.8 billion paid for spectrum licenses won at the conclusion of Auction 110 in February 2022 and $304 million paid in total for spectrum licenses won at the conclusion of Auction 108 in September 2022; partially offset by our winning bid for 1,525 licenses
•$3.6 billion in the 600 MHz spectrum auction during the second quarter of 2017; and
Proceeds related to beneficial interests in securitization transactions.
A $473 million increase in Purchases of property and equipment, including capitalized interest.


Financing Activities


Net cash provided by andfinancing activities increased $5.0 billion from a net use of cash for the three months ended September 30, 2021, to a net source of cash for the three months ended September 30, 2022. Net cash used in financing activities increased $282 million to$2.2 billion from a usenet source of $349 million in the three months ended and increased $1.2 billion to a use of $527 million incash for the nine months ended September 30, 2017.

The2021, to a net use of cash infor the nine months ended September 30, 2022.

The net source of cash for the three months ended September 30, 20172022, was primarily from:

•$1.73.0 billion for Repayments of our revolving credit facility; partially offset by
$1.1 billion in Proceeds from borrowing on our revolving credit facility; and
$500 million in Proceeds from issuance of long-term debt.
debt; partially offset by

•$557 million in Repurchases of common stock; and
•$311 million in Repayments of financing lease obligations.

The net use of cash infor the nine months ended September 30, 20172022, was primarily from:


•$10.23.1 billion for in Repayments of long-term debt;
•$2.9 billion for901 million in Repayments of our revolving credit facility;
financing lease obligations;
•$350557 million for Repayments in Repurchases of capital lease obligations;common stock; and
•$296225 million for Repayments of short-term debt for purchases of inventory, property and equipment, net; in Tax withholdings on share-based awards; partially offset by
•$10.53.0 billion in Proceeds from issuance of long-term debt; and
debt.
$2.9 billion in Proceeds from borrowing on our revolving credit facility.

Cash and Cash Equivalents


As of September 30, 2017,2022, our Cash and cash equivalents were $739 million.$6.9 billion compared to $6.6 billion at December 31, 2021.


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Free Cash Flow


Free Cash Flow represents netNet cash provided by operating activities less cash payments for purchasesPurchases of property and equipment.equipment, including Proceeds from sales of tower sites and Proceeds related to beneficial interests in securitization transactions, less Cash payments for debt prepayment or debt extinguishment. Free Cash Flow is a non-GAAP financial measure utilized by our management, investors and analysts of T-Mobile’sour financial information to evaluate cash available to pay debt and provide further investment in the business.



The following table illustrates the calculationbelow provides a reconciliation of Free Cash Flow and reconciles Free Cash Flow to Net cash provided by operating activities, which we consider to
be the most directly comparable GAAP financial measure:measure.
Three Months Ended
September 30,		ChangeNine Months Ended
September 30,		Change
(in millions)20222021$%20222021$%
Net cash provided by operating activities$4,391 $3,477 $914 26 %$12,445 $10,917 $1,528 14 %
Cash purchases of property and equipment, including capitalized interest(3,634)(2,944)(690)23 %(10,587)(9,397)(1,190)13 %
Proceeds from sales of tower sites— — — NM— 31 (31)(100)%
Proceeds related to beneficial interests in securitization transactions1,308 1,071 237 22 %3,614 3,099 515 17 %
Cash payments for debt prepayment or debt extinguishment costs— (45)45 (100)%— (116)116 (100)%
Free Cash Flow$2,065 $1,559 $506 32 %$5,472 $4,534 $938 21 %
 Three Months Ended September 30, Change Nine Months Ended September 30, Change
(in millions)2017 2016 $ % 2017 2016 $ %
Net cash provided by operating activities$2,362
 $1,740
 $622
 36% $5,904
 $4,533
 $1,371
 30%
Cash purchases of property and equipment(1,441) (1,159) (282) 24% (4,316) (3,843) (473) 12%
Free Cash Flow$921
 $581
 $340
 59% $1,588
 $690
 $898
 130%


Free Cash Flow increased $340$506 million, or 32%, for the three months ended and $898increased $938 million, or 21%, for the nine months ended September 30, 20172022.

The increase for the three months ended September 30, 2022, was primarily from higher netimpacted by the following:

•Higher Net cash provided by operating activities, due to working capital changes, as described above,above; and
•Higher Proceeds related to beneficial interests in securitization transactions, which were offset in Net cash provided by operating activities; partially offset by higher
•Higher Cash purchases of property and equipment, including capitalized interest.
•Free Cash Flow includes $942 million and $617 million in net payments for Merger-related costs for the three months ended September 30, 2022 and 2021, respectively.

The increase for the nine months ended September 30, 2022, was primarily dueimpacted by the following:

•Higher Net cash provided by operating activities, as described above; and
•Higher Proceeds related to new site developmentbeneficial interests in securitization transactions, which were offset in Net cash provided by operating activities; partially offset by
•Higher Cash purchases of property and capacity expansion.equipment, including capitalized interest.

•Free Cash Flow includes $2.7 billion and $1.1 billion in net payments for Merger-related costs for the nine months ended September 30, 2022 and 2021, respectively.

During the three and nine months ended September 30, 2022 and 2021, there were no significant net cash proceeds from securitization.

Borrowing Capacity

We maintain a revolving credit facility (the “Revolving Credit Facility”) with an aggregate commitment amount of $5.5 billion. As of September 30, 2022, there was no outstanding balance under the Revolving Credit Facility.

Subsequent to September 30, 2022, on October 17, 2022, we entered into an Amended and Restated Credit Agreement, which, among other things, increased the aggregate commitment amount of the Revolving Credit Facility to $7.5 billion. See Note 6 - Debt of the Notes to the Condensed Consolidated Financial Statements for more information regarding the Amended and Restated Credit Agreement.
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Debt Financing


As of September 30, 2017,2022, our total debt was $28.3and financing lease liabilities were $76.6 billion, excluding our tower obligations, of which $27.7$66.3 billion was classified as long-term debt.debt and $1.6 billion was classified as long-term financing lease liabilities.

The following table sets forth the debt balances and activity as of, and for the nine months ended, September 30, 2017:
(in millions)December 31,
2016		��
Issuances and Borrowings (1)
 
Note Redemptions (1)
 
Extinguishments (1)
 Repayments 
Other (2)
 September 30,
2017
Short-term debt$354
 $—
 $—
 $(20) $—
 $224
 $558
Long-term debt21,832
 1,495
 (8,365) (1,947) —
 148
 13,163
Total debt to third parties22,186
 1,495
 (8,365) (1,967) —
 372
 13,721
Short-term debt to affiliates—
 2,910
 —
 —
 (2,910) —
 —
Long-term debt to affiliates5,600
 8,985
 —
 —
 —
 1
 14,586
Total debt to affiliates5,600
 11,895
 —
 —
 (2,910) 1
 14,586
Total debt$27,786
 $13,390
 $(8,365) $(1,967) $(2,910) $373
 $28,307
(1)Issuances and borrowings, note redemptions and extinguishments are recorded net of related issuance costs, discounts and premiums. Issuances and borrowings for Short-term debt to affiliates represent net outstanding borrowings on our senior secured revolving credit facility.
(2)Other includes: $299 million issuances of short-term debt related to vendor financing arrangements, of which $291 million is related to financing of property and equipment. During the nine months ended September 30, 2017, we repaid $296 million under the vendor financing arrangements. As of September 30, 2017, vendor financing arrangements totaled $3 million. Vendor financing arrangements are included in Short-term debt within Total current liabilities in our Condensed Consolidated Balance Sheets. Additional activity in Other includes capital leases and the amortization of discounts and premiums. As of September 30, 2017 and December 31, 2016, capital lease liabilities totaled $1.8 billion and $1.4 billion, respectively.

Debt to Third Parties

Issuances and Borrowings


During the nine months ended September 30, 2017,2022, we issued the following Senior Notes:
(in millions)Principal Issuances Issuance Costs Net Proceeds from Issuance of Long-Term Debt
4.000% Senior Notes due 2022$500
 $2
 $498
5.125% Senior Notes due 2025500
 2
 498
5.375% Senior Notes due 2027500
 1
 499
Total of Senior Notes Issued$1,500
 $5
 $1,495

On March 16, 2017, T-Mobile USA and certain of its affiliates, as guarantors, issued a total of $1.5 billion of public Senior Notes with various interest rates and maturity dates. Issuance costs related to the publiclong-term debt issuance totaled $5 million for the nine months ended September 30, 2017. We used the net proceeds of $1.495 billion from the transaction to redeem callable high yield debt.


Notes Redemptions

During the nine months ended September 30, 2017, we made the following note redemptions:
(in millions)Principal Amount 
Write-off of Premiums, Discounts and Issuance Costs (1)
 
Call Penalties (1) (2)
 Redemption
Date		 Redemption Price
6.625% Senior Notes due 2020$1,000
 $(45) $22
 February 10, 2017 102.208%
5.250% Senior Notes due 2018500
 1
 7
 March 4, 2017 101.313%
6.250% Senior Notes due 20211,750
 (71) 55
 April 1, 2017 103.125%
6.464% Senior Notes due 20191,250
 —
 —
 April 28, 2017 100.000%
6.542% Senior Notes due 20201,250
 —
 21
 April 28, 2017 101.636%
6.633% Senior Notes due 20211,250
 —
 41
 April 28, 2017 103.317%
6.731% Senior Notes due 20221,250
 —
 42
 April 28, 2017 103.366%
Total note redemptions$8,250
 $(115) $188
    
(1)Write-off of premiums, discounts, issuance costs and call penalties are included in Other income (expense), net in our Condensed Consolidated Statements of Comprehensive Income. Write-off of premiums, discounts and issuance costs are included in Other, net within Net cash provided by operating activities in our Condensed Consolidated Statements of Cash Flows.
(2)The call penalty is the excess paid over the principal amount. Call penalties are included within Net cash provided by operating activities in our Condensed Consolidated Statements of Cash Flows.

Debt to Affiliates

Issuances and Borrowings

During the nine months ended September 30, 2017, we made the following borrowings:
(in millions)Net Proceeds From Issuance of Long-Term Debt Extinguishments 
Write-off of Discounts and Issuance Costs (1)
LIBOR plus 2.00% Senior Secured Term Loan due 2022$2,000
 $—
 $—
LIBOR plus 2.00% Senior Secured Term Loan due 20242,000
 —
 —
LIBOR plus 2.750% Senior Secured Term Loan (2)
—
 (1,980) 13
Total$4,000
 $(1,980) $13
(1)Write-off of discounts and issuance costs are included in Other income (expense), net in our Condensed Consolidated Statements of Comprehensive Income and Other, net within Net cash provided by operating activities in our Condensed Consolidated Statements of Cash Flows.
(2)
Our Senior Secured Term Loan extinguished during the nine months endedSeptember 30, 2017 was Third Party debt.

On January 25, 2017, T-Mobile USA, Inc. (“T-Mobile USA”), and certain of its affiliates, as guarantors, entered into an agreement to borrow $4.0 billion under a secured term loan facility (“Incremental Term Loan Facility”) with DT, our majority stockholder, to refinance $1.98 billion of outstanding senior secured term loans under its Term Loan Credit Agreement dated November 9, 2015, with the remaining net proceeds from the transaction used to redeem callable high yield debt. The Incremental Term Loan Facility increased DT’s incremental term loan commitment provided to T-Mobile USA under that certain First Incremental Facility Amendment dated as of December 29, 2016, from $660 million to $2.0$3.0 billion and provided T-Mobile USArepaid short- and long-term debt with an additional $2.0 billion incremental term loan commitment.

On January 31, 2017, the loans under the Incremental Term Loan Facility were drawn in two tranches: (i) $2.0 billion of which bears interest at a rate equal to a per annum rate of LIBOR plus a margin of 2.00% and matures on November 9, 2022, and (ii) $2.0 billion of which bears interest at a rate equal to a per annum rate of LIBOR plus a margin of 2.25% and matures on January 31, 2024. In July 2017, we repriced the $2.0 billion Incremental Term Loan Facility maturing on January 31, 2024, with DT by reducing the interest rate to a per annum rate of LIBOR plus a margin of 2.00%. No issuance fees were incurred related to this debt agreement for the nine months ended September 30, 2017.

On March 31, 2017, the Incremental Term Loan Facility was amended to waive all interim principal payments. The outstanding principal balance will be due at maturity.


During the nine months ended September 30, 2017, we issued the following Senior Notes to DT:
(in millions)Principal Issuances (Redemptions) 
Discounts (1)
 Net proceeds from issuance of long-term debt
4.000% Senior Notes due 2022$1,000
 $(23) $977
5.125% Senior Notes due 20251,250
 (28) 1,222
5.375% Senior Notes due 2027 (2)
1,250
 (28) 1,222
6.288% Senior Reset Notes due 2019(1,250) —
 (1,250)
6.366% Senior Reset Notes due 2020(1,250) —
 (1,250)
Total$1,000
 $(79) $921
(1)Discounts reduce Proceeds from issuance of long-term debt and are included within Net cash (used in) provided by financing activities in our Condensed Consolidated Statements of Cash Flows.
(2)In April 2017, we issued to DT $750 million in aggregate principal amount of the 5.375% Senior Notes due 2027, and in September 2017, we issued to DT the remaining $500 million in aggregate principal amount of the 5.375% Senior Notes due 2027.

On March 13, 2017, DT agreed to purchase a total of $3.5 billion in aggregate principal amounts of Senior Notes with various interest rates and maturity dates (the “new DT Notes”).

Through net settlement in April 2017, we issued to DT a total of $3.0 billion in aggregate principal amount of the new DT$3.1 billion.

Subsequent to September 30, 2022, on October 12, 2022, we issued $750 million of 4.910% Class A senior ABS Notes and redeemed the $2.5 billionto third-party investors in outstanding aggregate principal amount of Senior Reset Notes with various interest rates and maturity dates (the “old DT Notes”).a private placement transaction.


The redemption pricesFor more information regarding our debt financing transactions, see Note 6 – Debt of the old DT Notes were 103.144% and 103.183%, resulting in a total of $79 million in early redemption fees. These early redemption fees were recorded as discounts onto the issuance of the new DT Notes.Condensed Consolidated Financial Statements.


Spectrum Auctions

In September 2017,January 2022, the Federal Communications Commission (“FCC”) announced that we issued to DT $500 millionwere the winning bidder of 199 licenses in Auction 110 (mid-band spectrum) for an aggregate principal amount of 5.375% Senior Notes due 2027, which is the final tranche of the new DT Notes. We were not required to pay any underwriting fees or issuance costs in connection with the issuance of the notes.

Net proceeds from the issuance of the new DT Notes were $921 million and are included in Proceeds from issuance of long-term debt in our Condensed Consolidated Statements of Cash Flows.

On May 9, 2017, we exercised our option under existing purchase agreements and issued the following Senior Notes to DT:
(in millions)Principal Issuances Premium Net proceeds from issuance of long-term debt
5.300% Senior Notes due 2021$2,000
 $—
 $2,000
6.000% Senior Notes due 20241,350
 40
 1,390
6.000% Senior Notes due 2024650
 24
 674
Total$4,000
 $64
 $4,064

The proceeds were used to fund a portion of the purchase price of spectrum$2.9 billion. At the inception of Auction 110 in September 2021, we deposited $100 million. We paid the FCC the remaining $2.8 billion for the licenses won in the 600 MHzauction in February 2022.

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

For more information regarding our spectrum auction. Net proceeds from these issuances include $64 million in debt premiums. See licenses, see Note 5 -4 – Spectrum License Transactions 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 further information.total cash consideration of $3.5 billion.


Revolving Credit FacilityFor more information regarding our License Purchase Agreements, see Note 4 – Spectrum License Transactions of the Notes to the Condensed Consolidated Financial Statements.


Off-Balance Sheet Arrangements

We had no outstanding borrowings under our $1.5 billion senior securedhave arrangements, as amended from time to time, to sell certain EIP accounts receivable and service accounts receivable on a revolving credit facility with DTbasis as a source of liquidity. As of September 30, 2017 and December 31, 2016. Proceeds and borrowings from2022, we derecognized net receivables of $2.4 billion upon sale through these arrangements. 

For more information regarding these off-balance sheet arrangements, see Note 3 – Sales of Certain Receivables of the revolving credit facility are presented in Proceeds from borrowing on revolving credit facility and Repayments of revolving credit facility within Net cash (used in) provided by financing activities in ourNotes to the Condensed Consolidated StatementsFinancial Statements.

Future Sources and Uses of Cash Flows.Liquidity


We couldmay seek additional sources of liquidity, including through the issuance of additional long-term debt, in 2017, to continue to opportunistically acquire spectrum licenses or other long-lived assets in private party transactions, repurchase shares, or for the refinancing of existing long-term debt on an opportunistic basis. Excluding liquidity that could be needed for spectrum acquisitions, other long-lived assets or other assets,for any potential stockholder returns, we expect our principal sources of funding to be sufficient to meet our anticipated liquidity needs for business operations for the next 12 months.months as well as our longer-term liquidity needs. Our intended use of any such funds is for general corporate purposes, including for capital expenditures, spectrum purchases, opportunistic investments and acquisitions, and redemption of high yield callable debt.debt, tower obligations, share repurchases and the execution of our integration plan.


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We determine future liquidity requirements for both operations, and capital expenditures and share repurchases based in large part upon projected financial and operating performance, and opportunities to acquire additional spectrum.spectrum or repurchase shares. We regularly review and update these projections for changes in current and projected financial and operating results, general economic conditions, the competitive landscape and other factors. We have incurred, and will incur, substantial expenses to comply with the Government Commitments, and we are also expected to incur substantial restructuring expenses in connection with integrating and coordinating T-Mobile’s and Sprint’s businesses, operations, policies and procedures. See “Restructuring” in this MD&A. While we have assumed that a certain level of Merger-related expenses will be incurred, factors beyond our control, including required consultation and negotiation with certain counterparties, could affect the total amount or the timing of these expenses. These expenses could exceed the costs historically borne by us and adversely affect our financial condition and results of operations. There are a number of additional risks and uncertainties, including those due to the impact of the Pandemic, that could cause our financial and operating results and capital requirements to differ materially from our projections, which could cause future liquidity to differ materially from our assessment.


The indentures, supplemental indentures and credit facilitiesagreements governing our long-term debt to affiliates and third parties, excluding capitalfinancing leases, contain covenants that, among other things, limit the ability of the IssuerIssuers or borrowers and the Guarantor Subsidiaries to:to incur more debt; pay dividends and make distributions on our common stock; make certain investments; repurchase stock;debt, create liens or other encumbrances; enter into transactions with affiliates; enter into transactions that restrict dividends or distributions from subsidiaries;encumbrances, and merge, consolidate or sell, or otherwise dispose of, substantially all of their assets. Certain provisions of each of the credit facilities, indentures and supplemental indentures relating to the long-term debt to affiliates and third parties restrict the ability of the Issuer to loan funds or make payments to the Parent. However, the Issuer is allowed to make certain permitted payments to the Parent under the terms of each of the credit facilities, indentures and supplemental indentures relating to the long-term debt to affiliates and third parties. We were in compliance with all restrictive debt covenants as of September 30, 2017.2022.


CapitalFinancing Lease Facilities


We have entered into uncommitted capitalfinancing lease facilities with certain partners, whichthird parties that provide us with the ability to enter into capitalfinancing leases for network equipment and services. As of September 30, 2017,2022, we have committed to $2.0$7.5 billion of capitalfinancing leases under these capitalfinancing lease facilities, of which $138$325 million and $735 million$1.2 billion was executed during the three and nine months ended September 30, 2017,2022, respectively. We expect to enter into up to an additional $165$40 million in capitalfinancing lease commitments during 2017.the year ending December 31, 2022.


Capital Expenditures


Our liquidity requirements have been driven primarily by capital expenditures for spectrum licenses, and the construction, expansion and upgrading of our network infrastructure.infrastructure and the integration of the networks, spectrum, technology, personnel and customer base of T-Mobile and Sprint. Property and equipment capital expenditures primarily relate to the integration of our network transformation,and spectrum licenses, including theacquired Sprint PCS and 2.5 GHz spectrum licenses, as we build out of 700 MHz A-Block spectrum licenses.our nationwide 5G network. We expect cash purchasesa reduction in capital expenditures related to these efforts following 2022. Future capital expenditure requirements will include the deployment of propertyour recently acquired C-band and equipment to be in the range of $4.8 billion to $5.1 billion in 2017, excluding capitalized interest. We expect to be at the high end 3.45 GHz licenses.

For more information regarding our spectrum licenses, see Note 4 – Spectrum License Transactionsof the range. This does not include property and equipment obtained through capital lease agreements, leased wireless devices transferred from inventory or any additional purchases of spectrum licenses.

In April 2017, the Federal Communications Commission (the “FCC”) announced that we were the winning bidder of 1,525 licenses in the 600 MHz spectrum auction for an aggregate price of $8.0 billion. At the inception of the auction in June 2016, we deposited $2.2 billion with the FCC which, based on the outcome of the auction, was sufficient to cover our down payment obligation due in April 2017. In May 2017, we paid the FCC the remaining $5.8 billion of the purchase price using cash reserves and by issuing debt to Deutsche Telekom AG (“DT”), our majority stockholder, pursuant to existing debt purchase commitments. See Note 7 - Debt of the Notes to the Condensed Consolidated Financial StatementsStatements.

Stockholder Returns

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

During the three and nine months ended September 30, 2022, we repurchased shares of our common stock for further information.

The $5.8 billion payment of thea total purchase price is included in Purchases of spectrum licenses$669 million, all of which were purchased under the 2022 Stock Repurchase program and other intangible assets, including deposits within Net cash used in investing activities in our Condensed Consolidated Statements of Cash Flows. The licenses are included in Spectrum licenses asoccurred during the period from September 8, 2022, through September 30, 2022. As of September 30, 2017, on2022, we had up to approximately $13.3 billion remaining under the 2022 Stock Repurchase Program, of which up to approximately $2.3 billion was available for the remainder of 2022.

Subsequent to September 30, 2022, from October 1, 2022, through October 20, 2022, we repurchased additional shares of our Condensed Consolidated Balance Sheets. We began deploymentcommon stock for a total purchase price of these licenses on our network in$815 million. As of October 20, 2022, we had up to approximately $12.5 billion remaining under the third quarter2022 Stock Repurchase Program, of 2017. See which up to approximately $1.5 billion is available for the remainder of 2022.

For additional information regarding the 2022 Stock Repurchase Program, see Note 5 - Spectrum License Transactions9 – Repurchases of Common Stock of the Notes to the Condensed Consolidated Financial Statements for additional details.Statements.


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In 2015, we entered into an arrangement, as amended, to sell certain EIP accounts receivable on a revolving basis through November 2017 as an additional source of liquidity. In August 2017, the arrangement was amended to reduce the maximum funding commitment to $1.2 billion and extend the scheduled expiration date to November 2018. In 2014, we entered into an arrangement, as amended, to sell certain service accounts receivable on a revolving basis through March 2017 as an additional source of liquidity. In November 2016, the arrangement was amended to increase the maximum funding commitment to $950 million and extend the scheduled expiration date to March 2018. As of September 30, 2017, T-Mobile derecognized net receivables of $2.4 billion upon sale through these arrangements. See Note 4 – Sales of Certain Receivables of the Notes to the Condensed Consolidated Financial Statements.

Related-PartyRelated Party Transactions

During the nine months ended September 30, 2017, we entered into certain debt related transactions with affiliates. See Note 7 – Debt of the Notes to the Condensed Consolidated Financial Statements for additional details.


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


As of October 20, 2022, DT and SoftBank held, directly or indirectly, approximately 48.6% and 3.2%, respectively, of the outstanding T-Mobile common stock, with the remaining approximately 48.2% of the outstanding T-Mobile common stock held by other stockholders. As a result of the Proxy, Lock-Up and ROFR Agreement, dated April 1, 2020, by and between DT and SoftBank and the Proxy, Lock-Up and ROFR Agreement, dated June 22, 2020, by and among DT, Claure Mobile LLC, and Marcelo Claure, DT has voting control, as of October 20, 2022, over approximately 52.2% of the outstanding T-Mobile common stock.

Disclosure of Iranian Activities under Section 13(r) of the Securities Exchange Act of 1934


Section 219 of the Iran Threat Reduction and Syria Human Rights Act of 2012 added Section 13(r) to the Exchange Act of 1934, as amended (“Exchange Act”). Section 13(r) requires an issuer to disclose in its annual or quarterly reports, as applicable, whether it or any of its affiliates knowingly engaged in certain activities, transactions or dealings relating to Iran or with designated natural persons or entities involved in terrorism or the proliferation of weapons of mass destruction. Disclosure is required even where the activities, transactions or dealings are conducted outside the U.S. by non-U.S. affiliates in compliance with applicable law, and whether or not the activities are sanctionable under U.S. law.


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, 2017,2022, 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 DT.either DT or SoftBank. We have relied upon DT and SoftBank for information regarding their respective activities, transactions and dealings.


DT, through certain of its non-U.S. subsidiaries, is party to roaming and interconnect agreements with the following mobile and fixed line telecommunication providers in Iran, some of which are or may be government-controlled entities: Gostaresh Ertebatat Taliya, Irancell Telecommunications Services Company, (“MTN Irancell”), Telecommunication Kish Company, Mobile Telecommunication Company of Iran, and Telecommunication Infrastructure Company of Iran. In addition, during the three months ended September 30, 2022, DT, through certain of its non-U.S. subsidiaries, provided basic telecommunications services to four customers in Germany identified on the Specially Designated Nationals and Blocked Persons List maintained by the U.S. Department of Treasury’s Office of Foreign Assets Control: Bank Melli, Europäisch-Iranische Handelsbank, CPG Engineering & Commercial Services GmbH and Golgohar Trade and Technology GmbH. These services have been terminated or are in the process of being terminated.For the three months ended September 30, 2017,2022, gross revenues of all DT affiliates generated by roaming and interconnection traffic and telecommunications services with Iranthe Iranian parties identified herein were less than $1.0$0.1 million, and the estimated net profits were less than $1.0$0.1 million.


In addition, DT, through certain of its non-U.S. subsidiaries operatingthat operate a fixed linefixed-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 September 30, 20172022, were less than $0.1 million. We understand that DT intends to continue these activities.


Separately, SoftBank, through one of its non-U.S. subsidiaries, provides roaming services in Iran through Irancell Telecommunications Services Company. During the three months ended September 30, 2022, 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 September 30, 2022, 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.

In addition, SoftBank, through one of its non-U.S. indirect subsidiaries, provides office supplies to the Embassy of Iran in Japan. SoftBank estimates that gross revenue and net profit generated by such services during the three months ended September 30, 2022, were both under $0.1 million. We understand that the SoftBank subsidiary intends to continue such activities.

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Critical Accounting Policies and Estimates


Preparation of our condensed consolidated financial statements in accordance with U.S. GAAP requires us to make estimates and assumptions that affect the reported amounts of certain assets, liabilities, revenues and expenses, as well as related disclosure of contingent assets and liabilities. There have been no material changes to the critical accounting policies and estimates as previously disclosed in Part II, Item 8 of our Annual Report on Form 10-K for the year ended December 31, 2016.2021, and which are hereby incorporated by reference herein.


Accounting Pronouncements Not Yet Adopted


See For information regarding recently issued accounting standards, see Note 1 – BasisSummary of PresentationSignificant Accounting Policies of the Notes to the Condensed Consolidated Financial Statements.Statements.


Item 3. Quantitative and Qualitative Disclosures About Market Risk


There have been no material changes to the interest ratemarket risk as previously disclosed in Part II, Item 7A of our Annual Report on Form 10-K for the year ended December 31, 2016.2021.


Item 4. Controls and Procedures


Evaluation of Disclosure Controls and Procedures


We maintain disclosure controls and procedures designed to ensure information required to be disclosed in our periodic reports filed or submitted under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Our disclosure controls include the use of a Disclosure Committee which is comprised of representatives from our Accounting, Legal, Treasury, Technology, Risk Management, Government Affairs and Investor Relations functions and are also designed to ensure that information required to be disclosed in

the reports we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.


Under the supervision and with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer, we carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective, as of the end of the period covered by this Form 10-Q.


The certifications required by Section 302 of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”) are filed as exhibits Exhibits 31.1 and 31.2, respectively, to this Form 10-Q.


Changes in Internal Control over Financial Reporting


There were no changes in our internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act, during our most recently completed fiscal quarter that materially affected or are reasonably likely to materially affect our internal control over financial reporting.


PART II. OTHER INFORMATION


Item 1. Legal Proceedings


See For more information regarding the legal proceedings in which we are involved, see Note 10 -14 – Commitments and Contingencies of the Notes to the Condensed Consolidated Financial Statements included in Part I, Item 1Statements.

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Table of this Form 10-Q for information regarding certain legal proceedings in which we are involved.Contents

Item 1A. Risk Factors


ThereOther than the updated risk factors below, there have been no material changes in our risk factors as previously disclosed in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2016.2021.


Risks Related to Our Business and the Wireless Industry

We have experienced criminal cyberattacks and could in the future be further harmed by disruption, data loss or other security breaches, whether directly or indirectly through third parties.

Our business involves the receipt, storage, and transmission of confidential information about our customers, such as sensitive personal, account and payment card information, confidential information about our employees and suppliers, and other sensitive information about our Company, such as our business plans, transactions, financial information, and intellectual property (collectively, “Confidential Information”). We are subject to persistent cyberattacks and threats to our networks, systems, and supply chain from a variety of bad actors, many of whom attempt to gain access to and compromise Confidential Information by exploiting bugs, errors, misconfigurations or other vulnerabilities in our networks and other systems (including purchased and third-party systems) or by engaging in credential harvesting or social engineering. In some cases, these bad actors may obtain unauthorized access to Confidential Information utilizing credentials taken from our customers, employees, or third parties. Other bad actors aim to cause serious operational disruptions to our business or networks through other means, such as through ransomware or distributed denial of services attacks.
Cyberattacks against companies like ours have increased in frequency and potential harm over time, and the methods used to gain unauthorized access constantly evolve, making it increasingly difficult to anticipate, prevent, and/or detect incidents successfully in every instance. They are perpetrated by a variety of groups and persons, including state-sponsored parties, malicious actors, employees, contractors, or other unrelated third parties. Some of these persons reside in jurisdictions where law enforcement measures to address such attacks are ineffective or unavailable, and such attacks may even be perpetrated by or at the behest of foreign governments.

In addition, we routinely provide certain Confidential Information to third-party providers whose products and services are used in our business operations, including as part of our IT systems, such as cloud services. These third-party providers have experienced in the past, and will continue to experience in the future, cyberattacks that involve attempts to obtain unauthorized access to our Confidential Information and/or to create operational disruptions that could adversely affect our business, and these providers also face other security challenges common to all parties that collect and process information.

In August 2021, we disclosed that our systems were subject to a criminal cyberattack that compromised certain data of millions of our current customers, former customers, and prospective customers, including, in some instances, social security numbers, names, addresses, dates of birth and driver’s license/identification numbers. With the assistance of 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 have incurred certain cyberattack-related expenses, including costs to remediate the attack, provide additional customer support and enhance customer protection, and expect to incur additional expense in future periods resulting from the attack. For more information, see “Cyberattack” in the Overview section of MD&A. As a result of the August 2021 cyberattack, we are subject to numerous claims, lawsuits and regulatory inquiries, the ongoing costs of which may be material, and we may be subject to further regulatory inquiries and private litigation. For more information, see “– Contingencies and Litigation – Litigation and Regulatory Matters” in Note 14 – Commitments and Contingencies of the Notes to the Condensed Consolidated Financial Statements.” As a result of the August 2021 cyberattack, we may incur significant costs or experience other material financial impacts, which may not be covered by, or may exceed the coverage limits of, our cyber insurance, and such costs and impacts may have a material adverse effect on our business, reputation, financial condition, cash flows and operating results.

In addition to the August 2021 cyberattack, we have experienced other unrelated immaterial incidents involving unauthorized access to certain Confidential Information. Typically, these incidents have involved attempts to commit fraud by taking control of a customer’s phone line, often by using compromised credentials. In other cases, the incidents have involved unauthorized access to certain of our customers’ private information, including credit card information, financial data, social security numbers or passwords, and to certain of our intellectual property.
Our procedures and safeguards to prevent unauthorized access to Confidential Information and to defend against cyberattacks seeking to disrupt our operations must be continually evaluated and enhanced to address the ever-evolving threat landscape and changing cybersecurity regulations. These preventative actions require the investment of significant resources and management
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time and attention. Additionally, we do not have control of the cybersecurity systems, breach prevention, and response protocols of our third-party providers. While T-Mobile may have contractual rights to assess the effectiveness of many of our providers’ systems and protocols, we do not have the means to know or assess the effectiveness of all of our providers’ systems and controls at all times. We cannot provide any assurances that actions taken by us, or our third-party providers, will adequately repel a significant cyberattack or prevent or substantially mitigate the impacts of cybersecurity breaches or misuses of Confidential Information, unauthorized access to our networks or systems or exploits against third-party environments, or that we, or our third-party providers, will be able to effectively identify, investigate, and remediate such incidents in a timely manner or at all. We expect to continue to be the target of cyberattacks, given the nature of our business, and we expect the same with respect to our third-party providers. Our inability to protect Confidential Information or to prevent operational disruptions from future cyberattacks may have a material adverse effect on our business, reputation, financial condition, cash flows, and operating results.

Risks Related to Our Indebtedness

Our substantial level of indebtedness could adversely affect our business flexibility, ability to service our debt, and increase our borrowing costs.

We have, and we expect that we will continue to have, a substantial amount of debt. Our substantial level of indebtedness could have the effect of, among other things, reducing our flexibility in responding to changing business, economic, market and industry conditions and increasing the amount of cash required to service our debt. In addition, this level of indebtedness may also reduce funds available for capital expenditures, any board-approved share repurchases and other activities. Those impacts may put us at a competitive disadvantage relative to other companies with lower debt levels. Further, we may need to incur substantial additional indebtedness in the future, subject to the restrictions contained in our debt instruments, if any, which could increase the risks associated with our capital structure.

Our ability to service our substantial debt obligations will depend on future performance, which will be affected by business, economic, market and industry conditions and other factors, including our ability to achieve the expected benefits of the Transactions. There is no guarantee that we will be able to generate sufficient cash flow to service our debt obligations when due. If we are unable to meet such obligations or fail to comply with the financial and other restrictive covenants contained in the agreements governing such debt obligations, we may be required to refinance all or part of our debt, sell important strategic assets at unfavorable prices or make additional borrowings. We may not be able to, at any given time, refinance our debt, sell assets or make additional borrowings on commercially reasonable terms or at all, which could have a material adverse effect on our business, financial condition and operating results.

Changes in credit market conditions could adversely affect our ability to raise debt favorably.

Instability in the global financial markets, inflation, policies of various governmental and regulatory agencies, including changes in monetary policy and interest rates, and other general economic conditions could lead to volatility in the credit and equity markets. This volatility could limit our access to the capital markets, leading to higher borrowing costs or, in some cases, the inability to obtain financing on terms that are acceptable to us or at all.

In addition, any hedging agreements we have and may continue to enter into to limit our exposure to interest rate increases or foreign currency fluctuations may not offer complete protection from these risks or may be unsuccessful, and consequently may effectively increase the interest rate we pay on our debt or the exchange rate with respect to any debt we may incur in a foreign currency, and any portion not subject to such hedging agreements would have full exposure to interest rate increases or foreign currency fluctuations, as applicable. If any financial institutions that are parties to our hedging agreements were to default on their payment obligations to us, declare bankruptcy or become insolvent, we would be unhedged against the underlying exposures. Any posting of collateral by us under our hedging agreements and the modification or termination of any of our hedging agreements could negatively impact our liquidity or other financial metrics. Any of these risks could have a material adverse effect on our business, financial condition and operating results.

The agreements governing our indebtedness and other financings include restrictive covenants that limit our operating
flexibility.

The agreements governing our indebtedness and other financings impose operating and financial restrictions. These restrictions, subject in certain cases to customary baskets, exceptions and maintenance and incurrence-based financial tests, together with our debt service obligations, may limit our ability to engage in transactions and pursue strategic business opportunities. These restrictions could limit our ability to obtain debt financing, refinance or pay principal on our outstanding indebtedness,
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complete acquisitions for cash or indebtedness or react to business, economic, market and industry conditions and other changes in our operating environment or the economy. Any future indebtedness that we incur may contain similar or more restrictive covenants. Any failure to comply with the restrictions of our debt agreements may result in an event of default under these agreements, which in turn may result in defaults or acceleration of obligations under these and other agreements, giving our lenders the right to terminate the commitments they had made or the right to require us to repay all amounts then outstanding plus any interest, fees, penalties or premiums. An event of default may also compel us to sell certain assets securing indebtedness under certain of these agreements.

Credit rating downgrades and/or inability to access debt markets could adversely affect our business, cash flows, financial condition and operating results.

Credit ratings impact the cost and availability of future borrowings and, as a result, cost of capital. Our current ratings reflect each rating agency’s opinion of our financial strength, operating performance and ability to meet our debt obligations. Our capital structure and business model are reliant on continued access to debt markets. Each rating agency reviews our ratings periodically, and there can be no assurance that such ratings will be maintained in the future. A downgrade in our corporate rating and/or our issued debt ratings could impact our ability to access debt markets and adversely affect our business, cash flows, financial condition and operating results.

Risks Related to Legal and Regulatory Matters

Unfavorable outcomes of legal proceedings may adversely affect our business, reputation, financial condition, cash flows and operating results.

We and our affiliates are involved in various disputes, governmental and/or regulatory inspections, investigations and proceedings, mass arbitrations and litigation matters. Such legal proceedings can be complex, costly, and highly disruptive to our business operations by diverting the attention and energy of management and other key personnel.

In connection with the Transactions, we became subject to a number of legal proceedings, including a putative shareholder class action and derivative lawsuit and a putative antitrust class action. For more information, see “– Contingencies and Litigation – Litigation and Regulatory Matters” in Note 14 – Commitments and Contingencies of the Notes to the Condensed Consolidated Financial Statements. It is possible that stockholders of T-Mobile and/or Sprint may file additional putative class action lawsuits or shareholder derivative actions against the Company and the legacy T-Mobile board of directors and/or the legacy Sprint board of directors. Among other remedies, these stockholders could seek damages. The outcome of any litigation is uncertain and any such potential lawsuits could result in substantial costs and may be costly and distracting to management.

Additionally, 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. Unfavorable resolution of these matters could require making additional reimbursements and paying additional fines and penalties.

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. We recorded an accrual for an estimated payment amount as of March 31, 2020, which was included in Accounts payable and accrued liabilities on our Consolidated Balance Sheets.

As a result of the August 2021 cyberattack, we are subject to numerous lawsuits, including consolidated class action lawsuits seeking unspecified monetary damages, mass consumer arbitrations, a shareholder derivative lawsuit and inquiries by various government agencies, law enforcement and other governmental authorities, and we may be subject to further regulatory inquiries and private litigation. We are cooperating fully with regulators and vigorously defending against the class actions and other lawsuits. On July 22, 2022, we entered into an agreement to settle the consolidated class action lawsuit. On July 26, 2022, we received preliminary approval of the proposed settlement, which remains subject to final court approval. Final court approval of the terms of the settlement is expected as early as January 2023 but could be delayed by appeals or other proceedings. If approved by the court, under the terms of the proposed 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 would also commit to an aggregate incremental spend of $150 million for data security and related technology in 2022 and 2023. In connection with the proposed class action settlement and other settlements of separate consumer claims that have been previously completed or are currently pending, we recorded a total pre-tax charge of approximately $400 million in the second quarter of 2022. In light of the inherent uncertainties involved in such matters and based on the information currently available
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to us, 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 proceedings and inquiries related to the August 2021 cyberattack, may be substantial, and losses associated with any adverse judgments, settlements, penalties or other resolutions of such proceedings and inquiries could be significant and have a material adverse impact on our business, reputation, financial condition, cash flows and operating results.

We, along with equipment manufacturers and other carriers, are subject to current and potential future lawsuits alleging adverse health effects arising from the use of wireless handsets or from wireless transmission equipment such as cell towers. In addition, the FCC has from time to time gathered data regarding wireless device emissions, and its assessment of the risks associated with using wireless devices may evolve based on its findings. Any of these allegations or changes in risk assessments could result in customers purchasing fewer devices and wireless services, could result in significant legal and regulatory liability, and could have a material adverse effect on our business, reputation, financial condition, cash flows and operating results.

The assessment of the outcome of legal proceedings, including our potential liability, if any, is a highly subjective process that requires judgments about future events that are not within our control. The amounts ultimately received or paid upon settlement or pursuant to final judgment, order or decree may differ materially from amounts accrued in our financial statements. In addition, litigation or similar proceedings could impose restraints on our current or future manner of doing business. Such potential outcomes including judgments, awards, settlements or orders could have a material adverse effect on our business, reputation, financial condition, cash flows and operating results.

Risks Related to Ownership of Our Common Stock

We cannot guarantee that our 2022 Stock Repurchase Program will be fully consummated or that our 2022 Stock Repurchase Program will enhance long-term stockholder value.

Our Board of Directors has authorized our 2022 Stock Repurchase Program for up to $14.0 billion of the Company’s common stock through September 30, 2023, including up to $3.0 billion through 2022, with $669 million spent by the Company on share repurchases as of September 30, 2022. Any share repurchases will depend upon, among other factors, our cash balances and potential future capital requirements, our results of operations and financial condition, our ability to access capital markets, our priorities for the use of cash for other purposes, the price of our common stock, and other factors that we may deem relevant.

The existence of the 2022 Stock Repurchase Program could cause our stock price, in certain cases, to be higher or lower than it otherwise would be and could potentially reduce the market liquidity or have other unintended consequences for our stock. We can provide no assurance that we will repurchase shares of our common stock at favorable prices, if at all. Although the program is intended to enhance long-term stockholder value, there is no assurance it will do so.

In addition, the 2022 Stock Repurchase Program does not obligate the Company to acquire any particular amount of common stock. The 2022 Stock Repurchase Program may be suspended or discontinued, or the amount to be spent by the Company to repurchase shares could be reduced, at any time at the Company’s discretion. Any decision to reduce or discontinue repurchasing shares of our common stock pursuant to our 2022 Stock Repurchase Program could cause the market price for our common stock to decline and may negatively impact our reputation and investor confidence in us.

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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds


None.Issuer Purchases of Equity Securities


The table below provides information regarding our share repurchases during the three months ended September 30, 2022:
(in millions, except share and per share amounts)Total Number of Shares PurchasedAverage Price Paid per ShareTotal Number of Shares Purchased as Part of Publicly Announced Plans or Programs
Approximate Dollar Value of Shares that may yet be Purchased Under the Plans or Programs (1)
July 1, 2022 - July 31, 2022— — — — 
August 1, 2022 - August 31, 2022— — — — 
September 1, 2022 - September 30, 20224,892,315 $136.65 4,892,315 $13,331 
Total4,892,315 4,892,315 
(1)    On September 8, 2022, our Board of Directors authorized our 2022 Stock Repurchase Program for up to $14.0 billion of our common stock through September 30, 2023. The amounts presented represent the remaining shares authorized for purchase under the 2022 Stock Repurchase Program as of the end of the period, of which approximately $2.3 billion is available for the remainder of 2022.

See Note 9- Repurchases of Common Stock in the Notes to the Condensed Consolidated Financial Statements for more information about our 2022 Stock Repurchase Program.

Item 3. Defaults Upon Senior Securities


None.


Item 4. Mine Safety Disclosures


None.Not applicable.


Item 5. Other Information


None.


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Item 6. Exhibits

Incorporated by Reference
Exhibit No.Exhibit DescriptionFormDate of First FilingExhibit NumberFiled Herein
2.1*8-K9/7/20222.1
4.18-K9/15/20224.1
4.28-K9/15/20224.2
4.38-K9/15/20224.3
4.48-K9/15/20224.4
10.1*X
10.2*X
10.3*8-K8/22/202210.1
22.1X
31.1X
31.2X
32.1**X
32.2**X
101.INSXBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCHXBRL Taxonomy Extension Schema Document.X
101.CALXBRL Taxonomy Extension Calculation Linkbase Document.X
101.DEFXBRL Taxonomy Extension Definition Linkbase Document.X
101.LABXBRL Taxonomy Extension Label Linkbase Document.X
101.PREXBRL Taxonomy Extension Presentation Linkbase.X
104Cover Page Interactive Data File (the cover page XBRL tags)
See the Index to Exhibits immediately following this page.


INDEX TO EXHIBITS
    Incorporated by Reference  
Exhibit No. Exhibit Description Form Date of First Filing Exhibit Number Filed/Furnished Herewith
10.1
 
Fourth Amendment, dated as of July 25, 2017, to the Term Loan Credit Agreement, dated as of November 9, 2015, as amended, among T-Mobile USA, Inc., the lenders party thereto and Deutsche Bank AG New York Branch, as administrative agent and collateral agent.
 8-K 7/27/2017 10.1 
10.2
 
Second Amended and Restated Receivables Sale Agreement, dated as of August 21, 2017, by and between T-Mobile Financial LLC, as seller, and T-Mobile Handset Funding LLC, as purchaser.
 
 
 
 X
10.3
 
Second Amended and Restated Receivables Purchase and Administration Agreement, dated as of August 21, 2017, by and among T-Mobile Handset Funding LLC, as transferor, T-Mobile Financial LLC, as servicer, T-Mobile US, Inc. as performance guarantor, Royal Bank of Canada, as administrative agent, and certain financial institutions party thereto from time to time.
 
 
 
 X
31.1
 
Certifications of Chief Executive Officer Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.
 
 
 
 X
31.2
 
Certifications of Chief Financial Officer Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.
 
 
 
 X
32.1*
 
Certification of Chief Executive Officer Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
 
 
 
 X
32.2*
 
Certification of Chief Financial Officer Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
 
 
 
 X
101.INS XBRL Instance Document. 
 
 
 X
101.SCH XBRL Taxonomy Extension Schema Document. 
 
 
 X
101.CAL XBRL Taxonomy Extension Calculation Linkbase Document. 
 
 
 X
101.DEF XBRL Taxonomy Extension Definition Linkbase Document. 
 
 
 X
101.LAB XBRL Taxonomy Extension Label Linkbase Document. 
 
 
 X
101.PRE XBRL Taxonomy Extension Presentation Linkbase Document. 
 
 
 X

*
Schedules or similar attachments to this exhibit have been omitted pursuant to Item 601(a)(5) of Regulation S-K, and portions of this exhibit that are not material and that the registrant customarily and actually treats as private or confidential have been omitted pursuant to Item 601(b)(10)(iv) of Regulation S-K.
**Furnished herewith.herein.

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SIGNATURESIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


T-MOBILE US, INC.
October 27, 2022T-MOBILE US, INC./s/ Peter Osvaldik
Peter Osvaldik
October 23, 2017/s/ J. Braxton Carter
J. Braxton Carter
Executive Vice President and Chief Financial Officer
(Principal Financial Officer and Authorized Signatory)



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