UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, ~~2018~~2019


¨	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

T-MOBILE US, INC.

(Exact name of registrant as specified in its charter)



DELAWARE		20-0836269
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

12920 SE 38th Street, Bellevue, Washington		98006-1350
(Address of principal executive offices)		(Zip Code)

(425) 378-4000
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:

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 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.



Class		Shares Outstanding as of April ~~27, 2018~~18, 2019
Common Stock, $0.00001 par value per share		~~846,845,766~~854,303,011

T-Mobile US, Inc.

Form 10-Q

For the Quarter Ended March 31, ~~2018~~2019

Table of Contents



PART I. FINANCIAL INFORMATION
	Item 1.	Financial Statements	3
		Condensed Consolidated Balance Sheets	3
		Condensed Consolidated Statements of Comprehensive Income	4
		Condensed Consolidated Statements of Cash Flows	5
		Consolidated Statement of Stockholders’ Equity	6
		Notes to the Condensed Consolidated Financial Statements	68
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3733
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	6151
	Item 4.	Controls and Procedures	6151

PART II. OTHER INFORMATION
	Item 1.	Legal Proceedings	6252
	Item 1A.	Risk Factors	6252
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	66
~~Item 3.~~	~~Defaults Upon Senior Securities~~	66
~~Item 4.~~	~~Mine Safety Disclosures~~	66
~~Item 5.~~	~~Other Information~~	67
~~Item 6.~~	~~Exhibits~~	6852
	~~SIGNATURE~~Item 3.	71Defaults Upon Senior Securities	52
	Item 4.	Mine Safety Disclosures	52
	Item 5.	Other Information	52
	Item 6.	Exhibits	53
		SIGNATURE	54

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)	March 31, 2018			December 31, 2017			March 31, 2019			December 31, 2018
Assets
Current assets
Cash and cash equivalents	$	2,527		$	1,219		$	1,439		$	1,203
Accounts receivable, net of allowances of $76 and $86	1,689			1,915
Accounts receivable, net of allowances of $63 and $67							1,749			1,769
Equipment installment plan receivables, net	2,281			2,290			2,466			2,538
Accounts receivable from affiliates	13			22			16			11
Inventories	1,311			1,566
Inventory							1,261			1,084
Other current assets	1,788			1,903			1,814			1,676
Total current assets	9,609			8,915			8,745			8,281
Property and equipment, net	22,308			22,196			21,464			23,359
Operating lease right-of-use assets							9,509			—
Financing lease right-of-use assets							2,339			—
Goodwill	1,901			1,683			1,901			1,901
Spectrum licenses	35,504			35,366			35,618			35,559
Other intangible assets, net	291			217			174			198
Equipment installment plan receivables due after one year, net	1,234			1,274			1,662			1,547
Other assets	1,157			912			1,661			1,623
Total assets	$	72,004		$	70,563		$	83,073		$	72,468
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable and accrued liabilities	$	7,157		$	8,528		$	7,330		$	7,741
Payables to affiliates	291			182			242			200
Short-term debt	3,320			1,612			250			841
Short-term debt to affiliates	445			—			598			—
Deferred revenue	791			779			665			698
Short-term operating lease liabilities							2,202			—
Short-term financing lease liabilities							911			—
Other current liabilities	353			414			1,129			787
Total current liabilities	12,357			11,515			13,327			10,267
Long-term debt	12,127			12,121			10,952			12,124
Long-term debt to affiliates	14,586			14,586			13,985			14,582
Tower obligations	2,582			2,590			2,244			2,557
Deferred tax liabilities	3,813			3,537			4,925			4,472
Operating lease liabilities							9,339			—
Financing lease liabilities							1,224			—
Deferred rent expense	2,730			2,720			—			2,781
Other long-term liabilities	933			935			896			967
Total long-term liabilities	36,771			36,489			43,565			37,483
Commitments and contingencies (Note 13)
Commitments and contingencies (Note 11)
Stockholders' equity
Common Stock, par value $0.00001 per share, 1,000,000,000 shares authorized; 854,576,971 and 860,861,998 shares issued, 853,066,229 and 859,406,651 shares outstanding	—			—
Common Stock, par value $0.00001 per share, 1,000,000,000 shares authorized; 855,858,890 and 851,675,119 shares issued, 854,380,118 and 850,180,317 shares outstanding							—			—
Additional paid-in capital	38,057			38,629			38,100			38,010
Treasury stock, at cost, 1,510,742 and 1,455,347 shares issued	(7		)	(4		)
Treasury stock, at cost, 1,478,772 and 1,494,802 shares issued							(5		)	(6		)
Accumulated other comprehensive income	5			8			(521		)	(332		)
Accumulated deficit	(15,179		)	(16,074		)	(11,393		)	(12,954		)
Total stockholders' equity	22,876			22,559			26,181			24,718
Total liabilities and stockholders' equity	$	72,004		$	70,563		$	83,073		$	72,468

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

T-Mobile US, Inc.

Condensed Consolidated Statements of Comprehensive Income

(Unaudited)


	Three Months Ended March 31,						Three Months Ended March 31,
(in millions, except share and per share amounts)	2018			2017			2019			2018
Revenues
Branded postpaid revenues	$	5,070		$	4,725		$	5,493		$	5,070
Branded prepaid revenues	2,402			2,299			2,386			2,402
Wholesale revenues	266			270			304			266
Roaming and other service revenues	68			35			94			68
Total service revenues	7,806			7,329			8,277			7,806
Equipment revenues	2,353			2,043			2,516			2,353
Other revenues	296			241			287			296
Total revenues	10,455			9,613			11,080			10,455
Operating expenses
Cost of services, exclusive of depreciation and amortization shown separately below	1,589			1,408			1,546			1,589
Cost of equipment sales	2,845			2,686
Cost of equipment sales, exclusive of depreciation and amortization shown separately below							3,016			2,845
Selling, general and administrative	3,164			2,955			3,442			3,164
Depreciation and amortization	1,575			1,564			1,600			1,575
Gains on disposal of spectrum licenses	—			(37		)
Total operating expense	9,173			8,576			9,604			9,173
Operating income	1,282			1,037			1,476			1,282
Other income (expense)
Interest expense	(251		)	(339		)	(179		)	(251		)
Interest expense to affiliates	(166		)	(100		)	(109		)	(166		)
Interest income	6			7			8			6
Other income, net	10			2
Other income (expense), net							7			10
Total other expense, net	(401		)	(430		)	(273		)	(401		)
Income before income taxes	881			607			1,203			881
Income tax (expense) benefit	(210		)	91
Income tax expense							(295		)	(210		)
Net income	671			698			$	908		$	671
Dividends on preferred stock	—			(14		)
Net income attributable to common stockholders	$	671		$	684

Net income	$	671		$	698		$	908		$	671
Other comprehensive (loss) income, net of tax
Unrealized (loss) gain on available-for-sale securities, net of tax effect of $(1) and $1	(3		)	1
Other comprehensive (loss) income	(3		)	1
Other comprehensive loss, net of tax
Unrealized loss on available-for-sale securities, net of tax effect of $0 and $(1)							—			(3		)
Unrealized loss on cash flow hedges, net of tax effect of $(66) and $0							(189		)	—
Other comprehensive loss							(189		)	(3		)
Total comprehensive income	$	668		$	699		$	719		$	668
Earnings per share
Basic	$	0.78		$	0.83		$	1.07		$	0.78
Diluted	$	0.78		$	0.80		$	1.06		$	0.78
Weighted average shares outstanding
Basic	855,222,664			827,723,034			851,223,498			855,222,664
Diluted	862,244,084			869,395,984			858,643,481			862,244,084

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

T-Mobile US, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)


	Three Months Ended March 31,						Three Months Ended March 31,
(in millions)	2018			2017			2019			2018
Operating activities
Net income	$	671		$	698		$	908		$	671
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization	1,575			1,564			1,600			1,575
Stock-based compensation expense	97			67			110			97
Deferred income tax expense (benefit)	206			(97		)
Deferred income tax expense							288			206
Bad debt expense	54			93			73			54
Losses from sales of receivables	52			95			35			52
Deferred rent expense	4			20			—			4
Gains on disposal of spectrum licenses	—			(37		)
Losses on redemption of debt							—			32
Changes in operating assets and liabilities
Accounts receivable	(873		)	(1,025		)	(1,143		)	(873		)
Equipment installment plan receivables	(222		)	(209		)	(250		)	(222		)
Inventories	33			44			(265		)	33
Operating lease right-of-use assets							435			—
Other current and long-term assets	132			(11		)	(87		)	132
Accounts payable and accrued liabilities	(1,028		)	(651		)	13			(1,028		)
Short and long-term operating lease liabilities							(522		)	—
Other current and long-term liabilities	45			45			121			45
Other, net	24			12			76			(8		)
Net cash provided by operating activities	770			608			1,392			770
Investing activities
Purchases of property and equipment, including capitalized interest of $43 and $48	(1,366		)	(1,528		)
Purchases of property and equipment, including capitalized interest of $118 and $43							(1,931		)	(1,366		)
Purchases of spectrum licenses and other intangible assets, including deposits	(51		)	(14		)	(185		)	(51		)
Proceeds related to beneficial interests in securitization transactions	1,295			1,134			1,157			1,295
Acquisition of companies, net of cash acquired	(333		)	—			—			(333		)
Other, net	(7		)	(8		)	(7		)	(7		)
Net cash used in investing activities	(462		)	(416		)	(966		)	(462		)
Financing activities
Proceeds from issuance of long-term debt	2,494			5,495			—			2,494
Proceeds from borrowing on revolving credit facility	2,170			—			885			2,170
Repayments of revolving credit facility	(1,725		)	—			(885		)	(1,725		)
Repayments of capital lease obligations	(172		)	(90		)
Repayments of financing lease obligations							(86		)	(172		)
Repayments of long-term debt	(999		)	(3,480		)	—			(999		)
Repurchases of common stock	(666		)	—			—			(666		)
Tax withholdings on share-based awards	(74		)	(92		)	(100		)	(74		)
Dividends on preferred stock	—			(14		)
Cash payments for debt prepayment or debt extinguishment costs							—			(31		)
Other, net	(28		)	(10		)	(4		)	3
Net cash provided by financing activities	1,000			1,809
Net cash (used in) provided by financing activities							(190		)	1,000
Change in cash and cash equivalents	1,308			2,001			236			1,308
Cash and cash equivalents
Beginning of period	1,219			5,500			1,203			1,219
End of period	$	2,527		$	7,501		$	1,439		$	2,527
Supplemental disclosure of cash flow information
Interest payments, net of amounts capitalized	$	378		$	495		$	340		$	378
Operating lease payments ⁽¹⁾							688			—
Income tax payments	1			15			32			1
Noncash investing and financing activities
Noncash beneficial interest obtained in exchange for securitized receivables	1,128			1,016			$	1,512		$	1,128
Noncash investing and financing activities
Changes in accounts payable for purchases of property and equipment	$	(364	)	$	(325	)	(333		)	(364		)
Leased devices transferred from inventory to property and equipment	304			243			147			304
Returned leased devices transferred from property and equipment to inventory	(82		)	(197		)	(57		)	(82		)
Issuance of short-term debt for financing of property and equipment	237			288
Assets acquired under capital lease obligations	142			284
Short-term debt assumed for financing of property and equipment							250			237
Operating lease right-of-use assets obtained in exchange for lease obligations							694			—
Financing lease right-of-use assets obtained in exchange for lease obligations							180			142

(1) On January 1, 2019, we adopted ASU 2016-02, “Leases (Topic 842),” which requires certain supplemental cash flow disclosures. Where these disclosures or a comparable figure were not required under the former lease standard, we have not retrospectively presented historical amounts. See Note 1 – Summary of Significant Accounting Policies for additional details.

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

T-Mobile US, Inc.

Condensed Consolidated Statement of Stockholders’ Equity

(Unaudited)



(in millions, except shares)	Common Stock Outstanding		Treasury Shares at Cost			Par Value and Additional Paid-in Capital			Accumulated Other Comprehensive Income (Loss)			Accumulated Deficit			Total Stockholders' Equity
Balance as of December 31, 2017	859,406,651		$	(4	)	$	38,629		$	8		$	(16,074	)	$	22,559
Net income	—		—			—			—			671			671
Other comprehensive income	—		—			—			(3		)	—			(3		)
Stock-based compensation	—		—			108			—			—			108
Exercise of stock options	78,435		—			2			—			—			2
Stock issued for employee stock purchase plan	1,069,512		—			55			—			—			55
Issuance of vested restricted stock units	3,947,005		—			—			—			—			—
Issuance of restricted stock awards	354,459		—			—			—			—			—
Shares withheld related to net share settlement of stock awards and stock options	(1,235,899	)	—			(74		)	—			—			(74		)
Repurchases of common stock	(10,498,539	)	—			(666		)	—			—			(666		)
Transfer RSU to NQDC plan	(55,395	)	(3		)	3			—			—			—
Prior year retained earnings	—		—			—			—			224			224
Balance as of March 31, 2018	853,066,229		$	(7	)	$	38,057		$	5		$	(15,179	)	$	22,876

Balance as of December 31, 2018	850,180,317		$	(6	)	$	38,010		$	(332	)	$	(12,954	)	$	24,718
Net income	—		—			—			—			908			908
Other comprehensive income	—		—			—			(189		)	—			(189		)
Stock-based compensation	—		—			121			—			—			121
Exercise of stock options	31,874		—			1			—			—			1
Stock issued for employee stock purchase plan	1,172,511		—			69			—			—			69
Issuance of vested restricted stock units	4,343,972		—			—			—			—			—
Shares withheld related to net share settlement of stock awards and stock options	(1,364,621	)	—			(100		)	—			—			(100		)
Repurchases of common stock	—		—			—			—			—			—
Transfer RSU from NQDC plan	16,065		1			(1		)	—			—			—
Prior year retained earnings	—		—			—			—			653			653
Balance as of March 31, 2019	854,380,118		$	(5	)	$	38,100		$	(521	)	$	(11,393	)	$	26,181

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

T-Mobile US, Inc.

Index for Notes to the Condensed Consolidated Financial Statements

T-Mobile US, Inc.

Notes to the Condensed Consolidated Financial Statements

(Unaudited)

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”~~“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, ~~2017.~~2018.

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”) where we are deemed to be the primary beneficiary and VIEs which cannot be deconsolidated, such as those related to Tower obligations (Tower obligations are included in VIEs related to the 2012 Tower Transaction. See Note 87 - Tower Obligations ~~included in our Annual Report on Form 10-K~~ for ~~the year ended December 31, 2017)~~further information). 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 which affect the financial statements and accompanying notes. Estimates are based on historical experience, where applicable, and other assumptions which our management believes are reasonable under the circumstances. These estimates are inherently subject to judgment and actual results could differ from those estimates.

Accounting Pronouncements Adopted During the Current Year

~~Revenue~~Leases

In ~~May 2014,~~February 2016, the Financial Accounting Standards Board (“FASB”) issued ~~ASU 2014-09, “Revenue from Contracts with Customers~~Accounting Standards Update (“ASU”) 2016-02, “Leases (Topic ~~606)~~842),”, and has since modified the standard with several ASUs (collectively, the “new ~~revenue~~lease standard”). The new ~~revenue~~lease 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;is effective for us, and ~~recognition of revenue as the entity satisfies the performance obligations. We~~we adopted the ~~new revenue~~ standard, on January 1, ~~2018, using~~2019.

We adopted the ~~modified retrospective method~~standard by recognizing and measuring leases at the adoption date with ~~the~~a cumulative effect of initially applying the guidance recognized at the date of initial ~~application. Comparative information has~~application and as a result did not ~~been restated~~restate the prior periods presented in the Condensed Consolidated Financial Statements.

The new lease standard provides for a number of optional practical expedients in transition. We did not elect the “package of practical expedients” and ~~continues to be reported~~as a result reassessed under the ~~standards in effect~~new lease standard our prior accounting conclusions about lease identification, lease classification and initial direct costs. We elected to use hindsight for ~~those periods.~~determining the reasonably certain lease term. We ~~have applied~~did not elect the practical expedient pertaining to land easements as it is not applicable to us.

The new ~~revenue~~lease standard ~~only to contracts not completed as of the date of initial application, referred to as open contracts. We have~~provides practical expedients and policy elections for an entity’s ongoing accounting. Generally, we elected the practical expedient ~~that permits an entity~~ to ~~reflect~~not separate lease and non-lease components in arrangements whereby we are the ~~aggregate effect~~lessee. For arrangements in which we are lessor we did not elect this practical expedient. We did not elect the short-term lease recognition exemption, which includes the recognition of right-of-use assets and lease liabilities for existing short-term leases at transition. We have also applied this election to all active leases at transition.

The most significant judgments and impacts upon adoption of the standard include the following:

In evaluating contracts to determine if they qualify as a lease, we consider factors such as if we have obtained or transferred substantially all of the modifications (on a contract-by-contract basis) that occurred before the date of initial application in determining the transaction price, identifying the satisfied and unsatisfied performance obligations, and allocating the transaction pricerights to the ~~performance obligations. Electing this practical expedient does not~~underlying asset through exclusivity, if we can or if we have ~~a significant impact on our financial statements due~~transferred the ability to direct the ~~short-term duration~~use of ~~most of our contracts~~the asset by making decisions about how and for what purpose the ~~nature of our contract modifications.~~asset will be used and if the lessor has substantive substitution rights.

We recognized right-of-use assets and operating lease liabilities for operating leases that have ~~implemented significant new revenue accounting systems, processes and internal controls over revenue recognition to assist us in the application of the new revenue standard.~~

~~Revenue Recognition~~

We primarily generate our revenue from providing wireless services to customers and selling or leasing devices and accessories. Our contracts with customers may involve multiple performance obligations, which include wireless services, wireless devices or a combination thereof, and we allocate the transaction price between each performance obligationnot previously been recorded. The lease liability for operating leases is based on ~~its relative standalone selling price.~~

the net present value of future minimum lease payments.

Index for Notes to the Condensed Consolidated Financial Statements

~~Significant Judgments~~

The ~~most significant judgments affecting~~right-of-use asset for operating leases is based on the ~~amount~~lease liability adjusted for the reclassification of certain balance sheet amounts such as prepaid rent and ~~timing~~deferred rent, which we remeasured at adoption due to the application of ~~revenue from contracts with~~hindsight to our ~~customers include the following items:~~lease term estimates. Deferred and prepaid rent will no longer be presented separately.

~~For transactions where we recognize a significant~~Capital lease assets previously included within Property and equipment, net were reclassified to financing ~~component, judgment is required~~lease right-of-use assets, and capital lease liabilities previously included in Short-term debt and Long-term debt were reclassified to ~~determine the discount rate. For equipment installment plan (“EIP”) sales,~~financing lease liabilities in our Condensed Consolidated Balance Sheet.

•

Certain line items in the Condensed Consolidated Statements of Cash Flows and the “Supplementary disclosure of cash flow information” have been renamed to align with the new terminology presented in the new standard; “Repayment of capital lease obligations” is now presenting as “Repayments of financing lease obligations” and “Assets acquired under capital lease obligations” is now presenting as “Financing lease right-of-use assets obtained in exchange for lease obligations.” In the “Operating Activities” section of the Condensed Consolidated Statements of Cash Flows we have added “Operating lease right-of-use assets” and “Short and long-term operating lease liabilities” which represent the change in the operating lease asset and liability, respectively. Additionally, in the “Supplemental disclosure of cash flow information” section of the Condensed Consolidated Statements of Cash Flows we have added “Operating lease payments,” and in the “Noncash investing and financing activities” section we have added “Operating lease right-of-use assets obtained in exchange for lease obligations.”

In determining the discount rate used to ~~adjust~~measure the ~~transaction~~right-of-use asset and lease liability, we use rates implicit in the lease, or if not readily available, we use our incremental borrowing rate. Our incremental borrowing rate is based on an estimated secured rate comprised of a risk-free LIBOR rate plus a credit spread as secured by our assets.

Certain of our lease agreements include rental payments based on changes in the consumer price ~~primarily reflects current market interest rates~~index (“CPI”). Lease liabilities are not remeasured as a result of changes in the CPI; instead, changes in the CPI are treated as variable lease payments and are excluded from the ~~estimated credit risk~~measurement of the ~~customer.~~right-of-use asset and lease liability. These payments are recognized in the period in which the related obligation was incurred. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.

~~Our products~~

We elected the use of hindsight whereby we applied current lease term assumptions that are ~~generally sold~~applied to new leases in determining the expected lease term period for all cell sites. Upon adoption of the new standard and application of hindsight, our expected lease term has shortened to reflect payments due for the initial non-cancelable lease term only. This assessment corresponds to our lease term assessment for new leases and aligns with the payments that have been disclosed as lease commitments in prior years. As a ~~right~~result, the average remaining lease term for cell sites has decreased from approximately nine to five years based on lease contracts in effect at transition on January 1, 2019. The aggregate impact of ~~return, which~~using the hindsight is an estimated decrease in Total operating expense of $240 million in fiscal year 2019.

We were also required to reassess the previously failed sale-leasebacks of certain T-Mobile-owned wireless communication tower sites and determine whether the transfer of the assets to the tower operator under the arrangement met the transfer of control criteria in the revenue standard and whether a sale should be recognized.

We concluded that a sale has not occurred for the 6,200 tower sites transferred to Crown Castle International Corp. (“CCI”) pursuant to a master prepaid lease arrangement; therefore, these sites will continue to be accounted for as ~~variable consideration when estimating~~failed sale-leasebacks.

We concluded that a sale should be recognized for the 900 tower sites transferred to CCI pursuant to the sale of a subsidiary and the 500 tower sites transferred to Phoenix Tower International (“PTI”). Upon adoption on January 1, 2019, we derecognized our existing long-term financial obligation and the tower-related property and equipment associated with these 1,400 previously failed sale-leaseback tower sites and recognized a lease liability and right-of-use asset for the leaseback of the tower sites. The estimated impacts from the change in accounting conclusion are primarily a decrease in Other revenues of $44 million and a decrease in Interest expense of $34 million.

Rental revenues and expenses associated with co-location tower sites are presented on a net basis under the new lease standard. These revenues and expenses were presented on a gross basis under the former lease standard.

Index for Notes to the Condensed Consolidated Financial Statements

Including the impacts from a change in the accounting conclusion on the 1,400 previously failed sale-leaseback tower sites, the cumulative effect of initially applying the new lease standard on January 1, 2019 is as follows:



	January 1, 2019
(in millions)	Beginning Balance			Cumulative Effect Adjustment			Beginning Balance, As Adjusted
Assets
Other current assets	$	1,676		$	(78	)	$	1,598
Property and equipment, net	23,359			(2,339		)	21,020
Operating lease right-of-use assets	—			9,251			9,251
Financing lease right-of-use assets	—			2,271			2,271
Other intangible assets, net	198			(12		)	186
Other assets	1,623			(71		)	1,552
Liabilities and Stockholders’ Equity
Accounts payable and accrued liabilities	7,741			(65		)	7,676
Other current liabilities	787			28			815
Short-term and long-term debt	12,965			(2,015		)	10,950
Tower obligations	2,557			(345		)	2,212
Deferred tax liabilities	4,472			231			4,703
Deferred rent expense	2,781			(2,781		)	—
Short-term and long-term operating lease liabilities	—			11,364			11,364
Short-term and long-term financing lease liabilities	—			2,016			2,016
Other long-term liabilities	967			(64		)	903
Accumulated deficit	$	(12,954	)	$	653		$	(12,301	)

Including the impacts from the change in the accounting conclusion on the 1,400 previously failed sale-leaseback tower sites and the change in presentation on the income statement of the 6,200 tower sites for which a sale did not occur, the cumulative effects of initially applying the new lease standard for fiscal year 2019 are estimated as follows:

The aggregate impact is a decrease in Other revenues of $185 million, a decrease in Total operating expenses of $380 million, a decrease in Interest expense of $34 million and an increase to Net income of $175 million.


•	The expected impact on our Condensed Consolidated Statements of Cash Flows is a decrease in Net cash provided by operating activities of $10 millionand a decrease in Net cash used in financing activities of $10 million.

For arrangements where we are the lessor, including arrangements to lease devices to our service customers, the adoption of the new lease standard did not have a material impact on our financial statements as these leases are classified as operating leases.

Device lease payments are presented as Equipment revenues and recognized as earned on a straight-line basis over the lease term. Recognition of equipment revenue on lease contracts that are determined to not be probable of collection are limited to the amount of ~~revenue to recognize. Expected device returns are estimated based on historical experience.~~

Promotional bill credits offered to a customer on an equipment sale that are paid over time and are contingent on the customer maintaining a service contract may result in an extended service contract based on whether a substantive penalty is deemed to exist. Determining whether contingent bill credits result in a substantive termination penalty, and determining the term over which a substantive termination penalty exists, may require significant judgment.

~~For capitalized contract costs, determining the amortization period as well as assessing the indicators of impairment may require significant judgment.~~

~~The determination of the standalone selling price for contracts that involve more than one product or service (or performance obligation) may require significant judgment.~~

~~The identification of distinct performance obligations within our service plans may require significant judgment.~~

~~Wireless Services Revenue~~

We generate our wireless services revenues from providing access to, and usage of, our wireless communications network. Service revenues also include revenues earned for providing value added services to customers, such as handset insurance services. Service contracts are billed monthly either in advance or arrears, or are prepaid. Generally, service revenue is recognized as we satisfy our performance obligation to transfer service to our customers. We typically satisfy our stand-ready-performance obligations, including unlimited wireless services, evenly over the contract term. For usage-based and prepaid wireless services, we satisfy our performance obligations when services are rendered.

~~Revenue for service contracts that we assess are not probable of collection is not recognized until the contract is completed and cash is~~payments received. Collectibility is re-assessed when there is a significant change in facts or circumstances. Our assessment of collectibility considers whether we may limit our exposure to credit risk through our right to stop transferring additional service in the event the customer is delinquent.

Consideration payable to a customer is treated as a reduction of the total transaction price, unless the payment is in exchange for a distinct good or service, such as certain commissions paid to dealers.

Revenue is recorded net of costs paid to another party for performance obligations where we arrange for the other party to transfer goods or services to the customer (i.e., when we are acting as an agent). For example, performance obligations relating to services provided by third-party content providers where T-Mobile neither controls a right to the content provider’s service nor controls the underlying service itself are presented net because T-Mobile is acting as an agent.

Federal Universal Service Fund (“USF”) and other regulatory fees are assessed by various governmental authorities in connection with the services we provide to our customers and included in Cost of services. When we separately bill and collect these regulatory fees from customers, they are recorded in Total service revenues in our Condensed Consolidated Statements of Comprehensive Income.

We have made an accounting policy election to exclude from the ~~measurement of~~consideration in the ~~transaction price~~contract all taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction and collected by ~~T-Mobile~~us from a customer (for example, sales, use, value added, and some excise taxes).

~~Equipment Revenues~~

~~We generate equipment revenues from the sale or~~At operating lease of mobile communication devices and accessories. For performance obligations related to equipment contracts, we typically transfer control at a point in time when the device or accessory is delivered to, and accepted by, the customer or dealer. We have elected to account for shipping and handling activities that occur after control of the related good transfers as fulfillment activities instead of assessing such activities as performance

~~Index for Notes to the Condensed Consolidated Financial Statements~~

obligations. We establish provisions for estimated device returns based on historical experience. Equipment sales not probable of collection are generally recorded as payments are received. Our assessment of collectibility considers payment terms such as down payments that reduce our exposure to credit risk.

We offer certain customers the option to pay for devices and accessories in installments using an EIP. Generally, we recognize as a reduction of the total transaction price the effects of a financing component in contracts where customers purchase their devices and accessories on an EIP with a term of more than one year, including those financing components that are not considered to be significant to the contract. However, we have elected the practical expedient to not recognize the effects of a significant financing component for contracts where we expect, at contract inception, ~~that the period between the transfer of a performance obligation to a customer and the customer’s payment for that performance obligation will be one year or less.~~

~~In addition, for customers who enroll in our Just Upgrade My Phone (“JUMP!”~~^®) program, we recognize a liability based on the estimated fair value of the specified-price trade-in right guarantee. The fair value of the guarantee is deducted from the transaction price under the new revenue standard, and the remaining transaction price is allocated to other elements of the contract, including service and equipment performance obligations. See “Guarantee Liabilities” in ~~Note 1 - Summary of Significant Accounting Policies~~ ~~included in our Annual Report on Form 10-K for the year ended December 31, 2017.~~

~~In 2015, we introduced JUMP! On Demand, which allows customers to lease a device and upgrade their leased wireless device for a new device up to one time per month. To date, all of our~~ leased wireless devices are ~~accounted for as operating leases and estimated contract consideration is allocated between lease elements and non-lease elements (such as service~~transferred from Inventory to Property and equipment, ~~performance obligations) based on~~net. Leased wireless devices are depreciated to their estimated residual value over the ~~relative standalone selling price of each performance obligation in~~period expected to provide utility to us, which is generally shorter than the ~~contract. Lease revenues~~lease term and considers expected losses. Returned devices transferred from Property and equipment, net are recorded as ~~equipment revenues~~Inventory and are valued at the lower of cost or market with any write-down to market recognized as ~~earned on a straight-line basis over the lease term. Lease revenues on contracts not probable~~Cost of ~~collection are limited to the amount of payments received. See “Property and Equipment” in~~ ~~Note 1 - Summary of Significant Accounting Policies~~ ~~included in our Annual Report on Form 10-K for the year ended December 31, 2017.~~

~~Contract Balances~~

~~Generally, T-Mobile devices and service plans are available at standard prices, which are maintained on price lists and published on our website and/or within our retail stores.~~

For contracts that involve more than one product or service that are identified as separate performance obligations, the transaction price is generally allocated to the performance obligations based on their relative standalone selling prices. Standalone selling price is the price that T-Mobile would sell the good or service separately to a customer and is best evidenced by the price that T-Mobile sells that good or service separately in similar circumstances and to similar customers.

A contract asset is recorded when revenue is recognized in advance of our right to receive consideration (e.g., we must perform additional services in order to receive consideration). Amounts are recorded as receivables when our right to consideration is unconditional. When consideration is received or we have an unconditional right to consideration in advance of delivery of goods or services, a contract liability is recorded. The transaction price can include non-refundable upfront fees, which are allocated to the identifiable performance obligations.

~~Contract assets are included in Other current assets and Other assets and contract liabilities are included in Deferred revenue in our Condensed Consolidated Balance Sheets.~~

~~Contract Modifications~~

Our service contracts allow customers to frequently modify their contracts without incurring penalties in many cases. Each time a contract is modified, we evaluate the change in scope or price of the contract to determine if the modification should be treated as a separate contract, as if there is a termination of the existing contract and creation of a new contract, or if the modification should be considered a change associated with the existing contract. We typically do not have significant impacts from contract modifications.

~~Contract Costs~~

We incur certain incremental costs to obtain a contract that we expect to recover, such as sales commissions. We record an asset when these incremental costs to obtain a contract are incurred and amortize them on a systematic basis that is consistent with the transfer to the customer of the goods or services to which the asset relates.

~~Index for Notes to the Condensed Consolidated Financial Statements~~

We amortize deferred costs incurred to obtain service contracts on a straight-line basis over the term of the initial contract and anticipated renewal contracts to which the costs relate. However, we have elected the practical expedient permitting expensing of costs to obtain a contract when the expected amortization period is one year or less.

~~Incremental costs to obtain equipment contracts (e.g., commissions paid on device and accessory sales) are recognized when the equipment is transferred to the customer.~~

~~Financial Statement Impacts of Applying the New Revenue Standard~~

~~The cumulative effect of initially applying the new revenue standard to all open contracts as of January 1, 2018 is as follows:~~

January 1, 2018
(in millions) Beginning Balance Cumulative Effect Adjustment Beginning Balance, As Adjusted
Assets
Other current assets $ 1,903
$ 140
$ 2,043
Other assets 912
150
1,062
Liabilities and Stockholders’ Equity
Deferred revenue $ 779
$ 4
$ 783
Deferred tax liabilities 3,537
73
3,610
Accumulated deficit (16,074 ) 213
(15,861 )

~~The most significant impacts upon adoption of the new revenue standard on January 1, 2018 include the following items:~~

A deferred contract cost asset of $150 million was recorded at transition in Other assets in our Condensed Consolidated Balance Sheets for incremental contract acquisition costs paid on open contracts, which consists primarily of commissions paid to acquire branded postpaid service contracts; and

A contract asset of $140 million was recorded at transition in Other current assets in our Condensed Consolidated Balance Sheets primarily for contracts with promotional bill credits offered to customers on equipment sales ~~that are paid over time and are contingent on the customer maintaining a service contract.~~

~~Index for Notes to the Condensed Consolidated Financial Statements~~

~~Financial statement results as reported under the new revenue standard as compared to the previous revenue standard for the three months ended and as of March 31, 2018 are as follows:~~

Three Months Ended March 31, 2018
(in millions, except per share amounts) Previous Revenue Standard New Revenue Standard Change
Revenues
Branded postpaid revenues $ 5,099
$ 5,070
$ (29 )
Branded prepaid revenues 2,403
2,402
(1 )
Wholesale revenues 266
266
—
Roaming and other service revenues 68
68
—
Total service revenues 7,836
7,806
(30 )
Equipment revenues 2,276
2,353
77
Other revenues 296
296
—
Total revenues 10,408
10,455
47
Operating expenses
Cost of services, exclusive of depreciation and amortization shown separately below 1,589
1,589
—
Cost of equipment sales 2,845
2,845
—
Selling, general and administrative 3,212
3,164
(48 )
Depreciation and amortization 1,575
1,575
—
Total operating expenses 9,221
9,173
(48 )
Operating income 1,187
1,282
95
Total other expense, net (401 ) (401 ) —
Income before income taxes 786
881
95
Income tax expense (186 ) (210 ) (24 )
Net income $ 600
$ 671
$ 71
Earnings per share
Basic earnings per share $ 0.70
$ 0.78
$ 0.08
Diluted earnings per share $ 0.70
$ 0.78
$ 0.08

March 31, 2018
(in millions) Previous Revenue Standard New Revenue Standard Change
Assets
Other current assets $ 1,684
$ 1,788
$ 104
Other assets 866
1,157
291
Liabilities and Stockholders’ Equity
Deferred revenue $ 777
$ 791
$ 14
Deferred tax liabilities 3,716
3,813
97
Accumulated deficit (15,463 ) (15,179 ) 284

~~The most significant impacts to financial statement results as reported under the new revenue standard as compared to the previous revenue standard for the current reporting period are as follows:~~

~~Under the new revenue standard, certain commissions paid to dealers previously recognized as a reduction to Equipment revenues~~ in our ~~Condensed~~ Consolidated Statements of Comprehensive ~~Income are now recorded as commission costs in Selling, general and administrative expense.~~Income.

Contract costs capitalized for new contracts will accumulate in Other assets in our Condensed Consolidated Balance Sheets during 2018. As a result, there will be a net benefit to Operating income in our Condensed Consolidated Statements of Comprehensive Income during 2018 as capitalization of costs exceed amortization. As capitalized costs amortize into expense over time, the accretive benefit to Operating income anticipated in 2018 is expected to moderate in 2019 and normalize in 2020.

~~Index for Notes to the Condensed Consolidated Financial Statements~~

~~For contracts~~We do not have any leasing transactions with promotional bill credits that are contingent on the customer maintaining a service contract that result in an extended service contract, a contract asset is recorded when control of the equipment transfers to the customer and is subsequently recognized as a reduction to Total service revenues in our Condensed Consolidated Statements of Comprehensive Income over the extended contract term.

related parties. See ~~disclosures related to Contracts with Customers under the new revenue standard in~~ Note 10 - ~~Revenue from Contracts with Customers~~Leases. for further information.

~~Statement of Cash Flows~~

In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments” (the “new cash flow standard”). The new cash flow 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. We adopted the new cash flow standard on January 1, 2018, which was the date it became effective for us. We have applied the new cash flow standard retrospectively to all periods presented. The new cash flow standard impacted the presentation of cash flows related to our beneficial interests in securitization transactions, which is the deferred purchase price, resulting in a reclassification of cash inflows from Operating activities to Investing activities of approximately $1.3 billion and $1.1 billion for the three months ended March 31, 2018 and 2017, respectively, in our Condensed Consolidated Statements of Cash Flows. The new cash flow standard also impacted the presentation of our cash payments for debt prepayment and debt extinguishment costs, resulting in a reclassification of cash outflows from Operating activities to Financing activities of $31 million and $29 million for the three months ended March 31, 2018 and 2017, respectively, in our Condensed Consolidated Statements of Cash Flows.

~~Income Taxes~~

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 sales and transfers of property, except for inventory, be recognized when the transfer occurs. The standard became effective for us, and we adopted the standard, on January 1, 2018. The standard requires any deferred taxes not yet recognized on intra-entity transfers to be recorded to retained earnings under a modified retrospective approach. The implementation of this standard did not have a material impact on our condensed consolidated financial statements.

~~Accounting Pronouncements Not Yet Adopted~~

~~Leases~~

In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842)” (the “new lease standard”). The new lease 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 new lease standard requires lessees and lessors to classify most leases using principles similar to existing lease accounting. For lessors, the new lease standard modifies the classification criteria and the accounting for sales-type and direct financing leases. We are currently evaluating the new lease standard, which will require recognizing and measuring leases at the beginning of the earliest period presented using a modified retrospective approach. Our evaluation includes assessing which of our arrangements qualify as a lease, and aggregating lease data and related information as well as determining whether previous conclusions for certain transactions, such as failed sale leaseback arrangements under the previous lease standard, Leases (Topic 840), would change under the new lease standard. We plan to adopt the new lease standard when it becomes effective for us beginning January 1, 2019, and expect the adoption of the new lease 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~~implemented significant new lease accounting systems, processes and internal controls over lease ~~recognition, which will ultimately~~accounting to assist us in the application of the new lease standard.

Index for Notes to the Condensed Consolidated Financial Statements

Accounting Pronouncements Not Yet Adopted

Financial Instruments

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” In November 2018, the FASB issued ASU 2018-19, “Codification Improvements to Topic 326, Financial Instruments-Credit Losses,” which amends the scope and transition requirements of ASU 2016-13. The standard requires a financial asset (or a group of financial assets) measured at amortized cost basis to be presented at the net amount expected to be collected. The measurement of expected credit losses is based on relevant information about past events, including historical experience, current conditions and reasonable and supportable

~~Index for Notes to the Condensed Consolidated Financial Statements~~

forecasts that affect the collectibility of the reported amount. The standard will become effective for us beginning January 1, 2020 and will require a cumulative-effect adjustment to Accumulated deficit as of the beginning of the first reporting period in which the guidance is effective (that is, a modified-retrospective approach). ~~Early adoption is permitted for us as of January 1, 2019.~~ We are currently evaluating the impact this guidance will have on our ~~condensed consolidated financial statements~~Consolidated Financial Statements.

Cloud Computing Arrangements

In August 2018, the FASB issued ASU 2018-15, “Intangibles - Goodwill and Other - Internal-Use Software (Topic 350): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract.” The standard aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The standard will become effective for us beginning January 1, 2020 and can be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. Early adoption is permitted for us at any time. We are currently evaluating the impact this guidance will have on our Consolidated Financial Statements and the timing of adoption.

Other recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the American Institute of Certified Public Accountants, and the Securities and Exchange Commission ~~(“SEC”~~(the “SEC”) did not have, or are not ~~believed by management~~expected to have, a significant impact on our present or future ~~consolidated financial statements.~~Consolidated Financial Statements.

Note 2 - Significant Transactions

Business Combinations

~~During the three months ended March 31,~~Proposed Sprint Transaction

On April 29, 2018, we ~~completed the following acquisitions which were accounted for as business combinations:~~

~~On January 1, 2018, we closed on our previously announced Unit Purchase~~entered into a Business Combination Agreement (the “Business Combination Agreement”) to ~~acquire the remaining equity in Iowa Wireless Services, LLC~~merge with Sprint Corporation (“~~IWS”~~Sprint”)~~, a 54% owned unconsolidated subsidiary, for a purchase price of $25 million.~~

. See Note 3 - Business Combinations for further information.

~~Hurricane Impacts~~

During the three months ended March 31, 2018, our operations in Puerto Rico continued to experience losses related to hurricanes. The negative impacts to Operating income and Net income for the three months ended March 31, 2018, primarily from incremental costs to maintain our services in Puerto Rico, were $36 million and $23 million, respectively. We expect additional expenses to be incurred in 2018, primarily related to our operations in Puerto Rico. We continue to assess the damage of the hurricanes and work with our insurance carriers to submit claims for property damage and business interruption. During the three months ended March 31, 2018, we received $94 million in reimbursement from our insurance carriers, which eliminated the $93 million receivable we accrued for reimbursements as of December 31, 2017. No additional reimbursements were recorded during the three months ended March 31, 2018, however, we expect to record additional insurance recoveries related to these hurricanes in future periods.

~~Debt~~

~~During the three months ended March 31, 2018, we completed significant transactions with both third parties and affiliates related to the issuance, borrowing and redemption of debt. See~~ ~~Note 9 - Debt~~ ~~for further information.~~

Sales of Certain Receivables

In February ~~2018,~~2019, the service receivable sale ~~agreement~~arrangement was amended to extend the scheduled expiration date, as well as extend certain third-party credit support under the arrangement, to March ~~2019.~~2021. See Note 5 – Sales of Certain Receivables for further information.

~~Repurchases~~Note Redemption

In March 2019, we delivered a notice of ~~Common Stock~~

~~During the three months ended March 31, 2018, we made additional repurchases~~redemption on $600 million aggregate principal amount of our ~~common stock. Additionally, during the three months ended March 31, 2018,~~9.332% Senior Reset Notes due 2023 (the “DT Senior Reset Notes”) held by Deutsche Telekom AG (“DT”), our majority ~~stockholder~~stockholder. The notes will be redeemed on April 28, 2019, at a redemption price equal to 104.666% of the principal amount of the notes (plus accrued and ~~an affiliated purchaser, made additional repurchases~~unpaid interest thereon), payable on April 29, 2019. The redemption premium is $28 million. The outstanding principal amount was reclassified from Long-term debt to affiliates to Short-term debt to affiliates in our Condensed Consolidated Balance Sheets as of March 31, 2019.

Certain components of the reset features were required to be bifurcated from the DT Senior Reset Notes and are separately accounted for as embedded derivatives. The balance of embedded derivatives was reclassified from Other long-term liabilities to Other current liabilities in our ~~common stock.~~Condensed Consolidated Balance Sheets as of March 31, 2019. The write-off of embedded derivatives upon redemption will be $11 million. See Note ~~11 – Repurchases of Common Stock~~6 - Fair Value Measurements for further information.

~~Corporate Headquarters Leases~~

~~In February 2018, we extended the leases related to our corporate headquarters facility. See~~ ~~Note 13 – Commitments and Contingencies~~ ~~for further information.~~

Index for Notes to the Condensed Consolidated Financial Statements

Note 3 -– Business Combinations

~~Acquisition of Layer3 TV~~Proposed Sprint Transactions

On ~~January 22,~~April 29, 2018, we ~~completed our acquisition~~entered into a Business Combination Agreement to merge with Sprint in an all-stock transaction at a fixed exchange ratio of ~~television innovator Layer3 TV~~0.10256 shares of T-Mobile common stock for ~~cash consideration~~each share of ~~$318 million,~~Sprint common stock, or 9.75 shares of Sprint common stock for each share of T-Mobile common stock (the “Merger”). The combined company will be named “T-Mobile” and, as a result of the Merger, is expected to be able to rapidly launch a broad and deep nationwide 5G network, accelerate innovation and increase competition in the U.S. wireless, video and broadband industries. Neither T-Mobile nor Sprint on its own could generate comparable benefits to consumers.

The Merger and the other transactions contemplated by the Business Combination Agreement (collectively, the “Transactions”) have been approved by the boards of directors of T-Mobile and Sprint and the required approvals of the stockholders of each of T-Mobile and Sprint have been obtained. Immediately following the Merger, it is anticipated that DT and SoftBank Group Corp. (“SoftBank”) will hold, directly or indirectly, on a fully diluted basis, approximately 41.7% and 27.4%, respectively, of the outstanding T-Mobile common stock, with the remaining approximately 30.9% of the outstanding T-Mobile common stock held by other stockholders, based on closing share prices and certain other assumptions as of December 31, 2018.

In connection with the entry into the Business Combination Agreement, T-Mobile USA, Inc. (“T-Mobile USA”) entered into a commitment letter, dated as of April 29, 2018 (as amended and restated on May 15, 2018, the “Commitment Letter”). The funding of the debt facilities provided for in the Commitment Letter is subject to ~~customary~~the satisfaction of the conditions set forth therein, including consummation of the Merger. The proceeds of the debt financing provided for in the Commitment Letter will be used to refinance certain existing debt of us, Sprint and our and Sprint’s respective subsidiaries and for post-closing working capital needs of the combined company. In connection with the financing provided for in the Commitment Letter, we expect to incur certain fees if the Merger closes. There were no fees accrued as of March 31, 2019. We also may be required to draw down on the $7 billion secured term loan facility prior to closing and, if so, will be required to place the proceeds in escrow and pay interest thereon until the Merger closes.

In connection with the entry into the Business Combination Agreement, DT and T-Mobile USA entered into a financing matters agreement, dated as of April 29, 2018, pursuant to which DT agreed, among other ~~post-closing adjustments. The consideration includes a $5 million payment that was made~~things, to consent to the incurrence by T-Mobile USA of secured debt in connection with and after the ~~closing date. Upon closing~~consummation of the ~~transaction, Layer3 TV became a wholly-owned consolidated subsidiary. Layer3 TV acquires~~Merger. If the Merger is consummated, we will make payments for requisite consents to DT. There were no consent payments accrued as of March 31, 2019.

On May 18, 2018, under the terms and ~~distributes digital entertainment programming primarily through~~conditions described in the ~~internet~~Consent Solicitation Statement dated as of May 14, 2018, we obtained consents necessary to ~~residential subscribers, offering direct~~effect certain amendments to ~~home digital television~~certain existing debt of us and ~~multi-channel video programming distribution services. This transaction represented an opportunity~~our subsidiaries. If the Merger is consummated, we will make payments for requisite consents to ~~acquire a complementary service~~third-party note holders. There were no consent payments accrued as of March 31, 2019.

Under the terms of the Business Combination Agreement, Sprint may be required to ~~our~~reimburse us for 33% of the upfront consent and related bank fees we paid, or $14 million, if the Business Combination Agreement is terminated. There were no reimbursements accrued as of March 31, 2019. On May 18, 2018, Sprint also obtained consents necessary to effect certain amendments to certain existing ~~wireless service~~debt of Sprint and its subsidiaries. Under the terms of the Business Combination Agreement, we may also be required to ~~advance our video strategy.~~reimburse Sprint for 67% of the upfront consent and related bank fees it paid, or $161 million, if the Business Combination Agreement is terminated. There were no fees accrued as of March 31, 2019.

~~We accounted for~~For the ~~purchase~~three months ended March 31, 2019, we recognized merger-related costs of ~~Layer3 TV as a business combination. Costs related to this acquisition~~$113 million. These costs generally included consulting and legal fees and were immaterial to our Condensed Consolidated Statements of Comprehensive Income. The grant-date fair value of cash-based and share-based incentive compensation awards attributable to post-combination services was approximately $37 million.

~~The following table shows the amounts~~ recognized as ~~of the acquisition date for each major class of assets acquired~~Selling, general and ~~liabilities assumed and the resultant purchase price allocation:~~

(in millions) January 22,
2018
Assets acquired
Cash and cash equivalents $ 2
Other current assets 14
Property and equipment, net 11
Intangible assets 100
Goodwill 218
Deferred tax assets 2
Total assets acquired $ 347
Liabilities assumed
Accounts payable and accrued liabilities $ 27
Short-term debt 2
Total liabilities assumed 29
Total consideration transferred $ 318

~~We recognized a liability of $21 million within Accounts payable and accrued liabilities~~administrative expenses in our Condensed Consolidated Balance Sheets and an associated indemnification asset of $12 million in our Condensed Consolidated Balance Sheets related to minimum commitments under acquired content agreements. The maximum amount that would be received under the indemnification agreement is $12 million.

Goodwill of $218 million is calculated as the excess of the purchase price paid over the net assets acquired. The goodwill recorded as part of the Layer3 TV acquisition primarily reflects industry knowledge of the retained management team, as well as intangible assets that do not qualify for separate recognition. None of the goodwill is deductible for tax purposes. See ~~Note 6 - Goodwill~~ ~~for further information.~~

As part of the transaction, we acquired an identifiable intangible asset of developed technology with an estimated fair value of $100 million, which is being amortized on a straight-line basis over a useful life of 5 years.

~~The financial results from the acquisition of Layer3 TV since the closing date through March 31, 2018 were not material to~~ our Condensed Consolidated Statements of Comprehensive Income.

~~Acquisition~~The consummation of ~~Iowa Wireless~~

~~On January 1, 2018 (the “acquisition date”),~~the Transactions is subject to regulatory approvals and certain other customary closing conditions. We expect to receive federal regulatory approval in the first half of 2019. The Business Combination Agreement contains certain termination rights for both Sprint and us. If we ~~closed~~terminate the Business Combination Agreement in connection with a failure to satisfy the closing condition related to specified minimum credit ratings for the combined company on ~~our previously announced Unit Purchase Agreement to acquire~~ the ~~remaining equity in IWS, a 54% owned unconsolidated subsidiary, for a purchase price~~closing date of ~~$25 million. We accounted for our acquisition of IWS as a business combination.~~

~~Prior~~the Merger (after giving effect to the ~~acquisition date,~~Merger) from at least two of the three credit rating agencies, then in certain circumstances, we accounted for our previously-held investment in IWS under the equity method as we had significant influence, but not control. Authoritative guidance on accounting for business combinations requires thatmay be required to pay Sprint an ~~acquirer~~amount equal to $600 million.

Index for Notes to the Condensed Consolidated Financial Statements

~~re-measure its previously held equity interest in~~On June 18, 2018, we filed the ~~acquiree at its acquisition date fair value~~Public Interest Statement and ~~recognize the resulting gain or loss in earnings. As such, we valued our previously held equity interest in IWS at $56 million as of the acquisition date and recognized a gain of $15 million.~~

~~The following table highlights the consideration transferred, the fair value~~applications for approval of our ~~previously held equity interest~~Merger with Sprint with the Federal Communications Commission (“FCC”). On July 18, 2018, the FCC issued a Public Notice formally accepting our applications and ~~bargain purchase:~~establishing a period for public comment. The transaction remains subject to FCC review. The FCC’s informal transaction review clock, which has stopped and started several times as T-Mobile and Sprint have filed additional information, is currently set to expire on June 3, 2019.

(in millions) January 1,
2018
Consideration transferred:
Cash paid $ 25
Previously held equity interest:
Acquisition date fair value of previously held equity interest 56
Bargain purchase gain 25
Net assets acquired $ 106

As part of the acquisition of IWS, we recognized a bargain purchase gain of approximately $25 million, which represents the fair value of the identifiable net assets acquired, primarily IWS spectrum licenses, in excess of the purchase price and fair value of our previously held equity interest. We were in a favorable position to acquire the remaining shares of IWS as a result of our previously held 54% equity interest in IWS, an unprofitable business with valuable spectrum holdings.

~~The following table shows the amounts recognized as of the acquisition date for each major class of assets acquired and liabilities assumed and the resultant purchase price allocation:~~

(in millions) January 1,
2018
Assets acquired
Current assets
Cash and cash equivalents $ 3
Accounts receivables, net 6
Equipment installment plan receivables, net 3
Inventories 1
Other current assets 2
Total current assets 15
Property and equipment, net 36
Spectrum licenses 87
Total assets acquired $ 138
Liabilities assumed
Accounts payable and accrued liabilities $ 6
Deferred revenue 2
Total current liabilities 8
Deferred tax liabilities 17
Other long-term liabilities 7
Total long-term liabilities 24
Net assets acquired $ 106

We included both the gain on our previously held equity interest in IWS and the bargain purchase gain within Other income, net in our Condensed Consolidated Statements of Comprehensive Income for the three months ended March 31, 2018.

~~Pro forma information~~

~~The acquisitions of Layer3 TV and IWS were not material to our prior period consolidated results on a pro forma basis.~~

~~Index for Notes to the Condensed Consolidated Financial Statements~~

Note 4 – Receivables and Allowance for Credit Losses

Our portfolio of receivables is comprised of two portfolio segments, accounts receivable and EIP receivables. Our accounts receivable segment primarily consists of amounts currently due from customers, including service and leased device receivables, other carriers and third-party retail channels.

Based upon customer credit profiles, we classify the EIP receivables segment into two customer classes of “Prime” and “Subprime.” Prime customer receivables are those with lower delinquency risk and Subprime customer receivables are those with higher delinquency risk. 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.

To determine a customer’s credit profile, we use a proprietary credit scoring model that measures the credit quality of a customer ~~at the time of application for wireless communications service~~ using several factors, such as credit bureau information, consumer credit risk scores and service and device plan characteristics.

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



(in millions)	March 31, 2019			December 31, 2018
EIP receivables, gross	$	4,573		$	4,534
Unamortized imputed discount	(341		)	(330		)
EIP receivables, net of unamortized imputed discount	4,232			4,204
Allowance for credit losses	(104		)	(119		)
EIP receivables, net	$	4,128		$	4,085
Classified on the balance sheet as:
Equipment installment plan receivables, net	$	2,466		$	2,538
Equipment installment plan receivables due after one year, net	1,662			1,547
EIP receivables, net	$	4,128		$	4,085

(in millions) March 31,
2018 December 31,
2017
EIP receivables, gross $ 3,896
$ 3,960
Unamortized imputed discount (267 ) (264 )
EIP receivables, net of unamortized imputed discount 3,629
3,696
Allowance for credit losses (114 ) (132 )
EIP receivables, net $ 3,515
$ 3,564

Classified on the balance sheet as:
Equipment installment plan receivables, net $ 2,281
$ 2,290
Equipment installment plan receivables due after one year, net 1,234
1,274
EIP receivables, net $ 3,515
$ 3,564

To determine the appropriate level of the allowance for credit losses, we consider a number of credit quality indicators, including historical credit losses and timely payment experience as well as current collection trends such as write-off frequency and severity, aging of the receivable portfolio, credit quality of the customer base and other qualitative factors such as macro-economic conditions.

We write off account balances if collection efforts are unsuccessful and the receivable balance is deemed uncollectible, based on customer credit quality and the aging of the receivable.

For EIP receivables, subsequent to the initial determination of the imputed discount, we assess the need for and, if necessary, recognize an allowance for credit losses to the extent the amount of estimated probable losses on the gross EIP receivable balances exceed the remaining unamortized imputed discount balances.

The EIP receivables had weighted average effective imputed interest rates of ~~9.9%~~9.8% and ~~9.6%~~10.0% as of March 31, ~~2018~~2019 and December 31, ~~2017,~~2018, respectively.

Index for Notes to the Condensed Consolidated Financial Statements

Activity for the three months ended March 31, ~~2018~~2019 and ~~2017,~~2018 in the allowance for credit losses and unamortized imputed discount balances for the accounts receivable and EIP ~~receivable~~receivables segments were as follows:



	March 31, 2019									March 31, 2018
(in millions)	Accounts Receivable Allowance			EIP Receivables Allowance			Total			Accounts Receivable Allowance			EIP Receivables Allowance			Total
Allowance for credit losses and imputed discount, beginning of period	$	67		$	449		$	516		$	86		$	396		$	482
Bad debt expense	15			59			74			4			50			54
Write-offs, net of recoveries	(19		)	(74		)	(93		)	(14		)	(67		)	(81		)
Change in imputed discount on short-term and long-term EIP receivables	N/A			53			53			N/A			53			53
Impact on the imputed discount from sales of EIP receivables	N/A			(42		)	(42		)	N/A			(51		)	(51		)
Allowance for credit losses and imputed discount, end of period	$	63		$	445		$	508		$	76		$	381		$	457

March 31, 2018 March 31, 2017
(in millions) Accounts Receivable Allowance EIP Receivables Allowance Total Accounts Receivable Allowance EIP Receivables Allowance Total
Allowance for credit losses and imputed discount, beginning of period $ 86
$ 396
$ 482
$ 102
$ 316
$ 418
Bad debt expense 4
50
54
37
56
93
Write-offs, net of recoveries (14 ) (67 ) (81 ) (39 ) (75 ) (114 )
Change in imputed discount on short-term and long-term EIP receivables N/A
53
53
N/A
48
48
Impact on the imputed discount from sales of EIP receivables N/A
(51 ) (51 ) N/A
(41 ) (41 )
Allowance for credit losses and imputed discount, end of period $ 76
$ 381
$ 457
$ 100
$ 304
$ 404

Management considers the aging of receivables to be an important credit indicator. The following table provides delinquency status for the unpaid principal balance for receivables within the EIP portfolio segment, which we actively monitor as part of our current credit risk management practices and policies:



	March 31, 2019						December 31, 2018
(in millions)	Prime		Subprime		Total EIP Receivables, gross		Prime		Subprime		Total EIP Receivables, gross
Current - 30 days past due	$	2,091	$	2,395	$	4,486	$	1,987	$	2,446	$	4,433
31 - 60 days past due	14		25		39		15		32		47
61 - 90 days past due	6		15		21		6		19		25
More than 90 days past due	7		20		27		7		22		29
Total receivables, gross	$	2,118	$	2,455	$	4,573	$	2,015	$	2,519	$	4,534

March 31, 2018 December 31, 2017
(in millions) Prime Subprime Total EIP Receivables, gross Prime Subprime Total EIP Receivables, gross
Current - 30 days past due $ 1,648
$ 2,168
$ 3,816
$ 1,727
$ 2,133
$ 3,860
31 - 60 days past due 14
24
38
17
29
46
61 - 90 days past due 5
13
18
6
16
22
More than 90 days past due 7
17
24
8
24
32
Total receivables, gross $ 1,674
$ 2,222
$ 3,896
$ 1,758
$ 2,202
$ 3,960

Note 5 – Sales of Certain Receivables

We have entered into transactions to sell certain service and EIP ~~accounts receivable.~~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 Service ~~Receivables~~Accounts Receivable

Overview of the Transaction

In 2014, we entered into an arrangement to sell certain service accounts receivable on a revolving basis ~~and in November 2016, the arrangement was amended to increase the maximum funding commitment to $950 million~~ (the “service receivable sale arrangement”) ~~and extend~~. The maximum funding commitment of the ~~scheduled expiration date to March 2018.~~service receivable sale arrangement is $950 million. In February ~~2018,~~2019, the service receivable sale arrangement was ~~again~~ amended to extend the scheduled expiration date, as well as certain third-party credit support under the arrangement, to March 2019. In April 2018, the service receivable sale arrangement was again amended to update certain terms and covenants contained therein to make them consistent with analogous terms and covenants in documents of our other financing arrangements.2021. As of March 31, ~~2018~~2019 and December 31, ~~2017,~~2018, the service receivable sale arrangement provided funding of ~~$802~~$891 million and ~~$880~~$774 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 receivable (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 service receivable sale 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.

Index for Notes to the Condensed Consolidated Financial Statements

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, funding 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 servicer of the sold receivables, which is considered a significant activity of the Service VIE, we are acting as an agent in our capacity as the servicer and the counterparty 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 balances and results of the Service VIE are not included 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 our variable interest in the Service VIE:



(in millions)	March 31, 2019		December 31, 2018
Other current assets	$	342	$	339
Accounts payable and accrued liabilities	—		59
Other current liabilities	230		149

(in millions) March 31,
2018 December 31,
2017
Other current assets $ 266
$ 236
Accounts payable and accrued liabilities —
25
Other current liabilities 118
180

Sales of EIP Receivables

Overview of the Transaction

In 2015, we entered into an arrangement to sell certain EIP accounts ~~receivables~~receivable on a revolving basis ~~and in August 2017,~~(the “EIP sale arrangement”). The maximum funding commitment of the EIP sale arrangement ~~was amended to reduce the maximum funding commitment to $1.2~~is $1.3 billion, ~~(the “EIP sale arrangement”)~~ and ~~extend~~ the scheduled expiration date tois November 2018. In December 2017, the EIP sale arrangement was again amended to increase the maximum funding commitment to $1.3 billion. In April 2018, the EIP sale arrangement was again amended to update certain terms and covenants contained therein to make them consistent with analogous terms and covenants in the documentation of our other financing arrangements. 2020.

As of both March 31, ~~2018~~2019 and December 31, ~~2017,~~2018, the EIP sale arrangement provided funding of $1.3 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.~~

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 third-party entity qualify as a VIE.

Variable Interest Entity

We determined that the EIP BRE is a VIE as its equity investment at risk lacks the obligation to absorb a certain portion of its expected losses. We have a variable interest in the EIP BRE and 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.

~~Index for Notes to the Condensed Consolidated Financial Statements~~



(in millions)	March 31, 2019		December 31, 2018
Other current assets	$	327	$	321
Other assets	71		88
Other long-term liabilities	20		22

Index for Notes to the Condensed Consolidated Financial Statements

(in millions) March 31,
2018 December 31,
2017
Other current assets $ 370
$ 403
Other assets 93
109
Other long-term liabilities 10
3

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 transfers of service receivables and EIP receivables to the non-consolidated entities are accounted for as sales of financial assets. Once identified for sale, the receivable is recorded at the lower of cost or fair value. Upon sale, we derecognize the net carrying amount of the receivables.

We recognize the cash proceeds received upon sale in Net cash provided by operating activities in our Condensed Consolidated Statements of Cash Flows. We recognize proceeds net of the deferred purchase price, consisting of a receivable from the purchasers that entitles us to certain collections on the receivables. We recognize the collection of the deferred purchase price in Net cash ~~provided by~~used in investing activities in our Condensed Consolidated Statements of Cash Flows as Proceeds related to beneficial interests in securitization transactions.

The deferred purchase price represents a financial asset that is primarily tied to the creditworthiness of the customers and which can be settled in such a way that we may not recover substantially all of our recorded investment, due to default by the customers on the underlying receivables. 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 in 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 unobservable inputs (Level 3 inputs), including customer default rates. As of March 31, ~~2018~~2019 and December 31, ~~2017,~~2018, our deferred purchase price related to the sales of service receivables and EIP receivables was ~~$728~~$738 million and ~~$745~~$746 million, respectively.

The following table summarizes the impacts of the sale of certain service receivables and EIP receivables in our Condensed Consolidated Balance ~~Sheets~~:Sheets:



(in millions)	March 31, 2019			December 31, 2018
Derecognized net service receivables and EIP receivables	$	2,546		$	2,577
Other current assets	669			660
of which, deferred purchase price	667			658
Other long-term assets	71			88
of which, deferred purchase price	71			88
Accounts payable and accrued liabilities	—			59
Other current liabilities	230			149
Other long-term liabilities	20			22
Net cash proceeds since inception	1,861			1,879
Of which:
Change in net cash proceeds during the year-to-date period	(18		)	(179		)
Net cash proceeds funded by reinvested collections	1,879			2,058

(in millions) March 31,
2018 December 31,
2017
Derecognized net service receivables and EIP receivables $ 2,663
$ 2,725
Other current assets 636
639
of which, deferred purchase price 635
636
Other long-term assets 93
109
of which, deferred purchase price 93
109
Accounts payable and accrued liabilities —
25
Other current liabilities 118
180
Other long-term liabilities 10
3
Net cash proceeds since inception 1,908
2,058
Of which:
Change in net cash proceeds during the year-to-date period (150 ) 28
Net cash proceeds funded by reinvested collections 2,058
2,030

We recognized losses from sales of receivables, of $52 million and $95 million for the three months ended March 31, 2018 and 2017, respectively. These losses from sales of receivables were recognized in Selling, general and administrative expense in our Condensed Consolidated Statements of Comprehensive Income. Losses from sales of receivables includeincluding adjustments to the receivables’ fair values and changes in fair value of the deferred purchase ~~price.~~

~~Index~~price, of $35 million and $52 million for ~~Notes to~~ the three months ended March 31, 2019 and 2018, respectively, in Selling, general and administrative expense in our Condensed Consolidated ~~Financial~~ Statements

of Comprehensive Income.

Continuing Involvement

Pursuant to the sale arrangements described above, we have continuing involvement with the service receivables 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 write-off is imminent. 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 servicing the receivables, we apply the same policies and procedures to the sold receivables as we apply to our owned receivables, and we continue to maintain normal relationships with our customers. Pursuant to the EIP sale

Index for Notes to the Condensed Consolidated Financial Statements

arrangement, under certain circumstances, we are required to deposit cash or replacement EIP receivables primarily for contracts terminated by customers under our JUMP! Program.

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 ~~$1.3~~$1.1 billion as of March 31, ~~2018.~~2019. 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 6 - Goodwill~~

~~The changes in the carrying amount of goodwill for the three months ended March 31, 2018, are as follows:~~

(in millions)
Historical goodwill $ 12,449
Accumulated impairment losses at December 31, 2017 (10,766 )
Balance as of December 31, 2017 1,683
Goodwill from acquisition of Layer3 TV 218
Balance as of March 31, 2018 $ 1,901
Accumulated impairment losses at March 31, 2018 $ (10,766 )

On January 22, 2018, we completed our acquisition of television innovator Layer3 TV. This purchase was accounted for as a business combination resulting in $218 million in goodwill. Layer3 TV is a separate reporting unit and the acquired goodwill will be tested for impairment at this level. See ~~Note 3 - Business Combinations~~ ~~for additional information.~~

~~Note 7 – Spectrum License Transactions~~

~~The following table summarizes our spectrum license activity for the three months ended March 31, 2018:~~

(in millions) Spectrum Licenses
Balance at December 31, 2017 $ 35,366
Spectrum license acquisitions 125
Costs to clear spectrum 13
Balance at March 31, 2018 $ 35,504

~~We had the following spectrum license transactions for the three months ended March 31, 2018:~~


•	~~We recorded spectrum licenses received as part of our acquisition of the remaining equity interest in IWS at their estimated fair value of approximately $87 million. See~~ ~~Note 3 - Business Combinations~~ ~~for further information.~~

We closed on multiple spectrum purchase agreements in which we acquired total spectrum licenses of approximately $38 million for cash consideration. No gains or losses were recognized on the spectrum license purchases.

~~Index for Notes to the Condensed Consolidated Financial Statements~~

Note 86 – Fair Value Measurements

The carrying values of ~~cash~~Cash and cash equivalents, ~~accounts~~Accounts receivable, ~~accounts~~Accounts receivable from affiliates, ~~accounts~~Accounts payable and accrued liabilities, and borrowings under our ~~senior secured~~ revolving credit facility with DT, our majority stockholder, approximate fair value due to the short-term maturities of these instruments.

Derivative Financial Instruments

Interest rate lock derivatives

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.

We enter into and designate interest rate lock derivatives (forward-starting swap instruments) as cash flow hedges to reduce variability in cash flows due to changes in interest payments attributable to increases or decreases in the benchmark interest rate during the period leading up to the probable issuance of fixed-rate debt.

We record interest rate lock derivatives on our Condensed Consolidated Balance Sheets at fair value that is derived primarily from observable market data, including yield curves. Interest rate lock derivatives were classified as Level 2 in the fair value hierarchy. Cash flows associated with qualifying hedge derivative instruments are presented in the same category on the Condensed Consolidated Statements of Cash Flows as the item being hedged.

In October 2018, we entered into interest rate lock derivatives with notional amounts of $9.6 billion. The fair value of interest rate lock derivatives was a liability of $703 million and $447 million as of March 31, 2019 and December 31, 2018, respectively, and were included in Other current liabilities in our Condensed Consolidated Balance Sheets. As of and for the three months ended March 31, 2019, no amounts were accrued or amortized into Interest expense in the Condensed Consolidated Statements of Comprehensive Income while changes in fair value, net of tax, of $521 million and $332 million are presented in Accumulated other comprehensive income as of March 31, 2019 and December 31, 2018, respectively. There were no cash payments or receipts associated with these derivatives for the three months ended March 31, 2019.

Embedded derivatives

In March 2019, we delivered a notice of redemption on $600 million aggregate principal amount of our 9.332% Senior Reset Notes due 2023 held by DT. The notes will be redeemed effective April 28, 2019, at a redemption price equal to 104.666% of the principal amount of the notes (plus accrued and unpaid interest thereon), payable on April 29, 2019. The balance of embedded derivatives associated with the DT Senior Reset Notes was reclassified from Other long-term liabilities to Other current liabilities in our Condensed Consolidated Balance Sheets as of March 31, 2019. The write-off of embedded derivatives upon redemption will be $11 million.

Deferred Purchase Price Assets

In connection with the sales of certain service and EIP ~~receivables~~accounts receivable pursuant to the sale arrangements, we have deferred purchase price assets measured at fair value that are based on a discounted cash flow model using unobservable Level 3 inputs, including customer default rates. See Note 5 – Sales of Certain Receivables for further ~~information~~.information.

Index for Notes to the Condensed Consolidated Financial Statements

The carrying amounts and fair values of our assets measured at fair value on a recurring basis included in our Condensed Consolidated Balance Sheets were as follows:



	Level within the Fair Value Hierarchy	March 31, 2019				December 31, 2018
(in millions)	Level within the Fair Value Hierarchy	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Assets:
Deferred purchase price assets	3	$	738	$	738	$	746	$	746

Level within the Fair Value Hierarchy March 31, 2018 December 31, 2017
(in millions) Carrying Amount Fair Value Carrying Amount Fair Value
Assets:
Deferred purchase price assets 3 $ 728
$ 728
$ 745
$ 745

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 our Senior Notes to affiliates, Incremental Term Loan Facility to affiliates and Senior Reset Notes to affiliates were determined based on a discounted cash flow approach using market interest rates of instruments with similar terms and maturities and an estimate for our standalone credit risk. Accordingly, our Senior Notes to affiliates, Incremental Term Loan Facility to affiliates and Senior Reset Notes to affiliates 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 and Senior Reset Notes to affiliates. The fair value estimates were based on information available as of March 31, ~~2018~~2019 and December 31, ~~2017.~~2018. As such, our estimates are not necessarily indicative of the amount we could realize in a current market exchange.

The carrying amounts and fair values of our short-term and long-term debt included in our Condensed Consolidated Balance Sheets were as follows:



	Level within the Fair Value Hierarchy	March 31, 2019				December 31, 2018
(in millions)	Level within the Fair Value Hierarchy	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Liabilities:
Senior Notes to third parties	1	$	10,952	$	11,354	$	10,950	$	10,945
Senior Notes to affiliates	2	9,985		10,201		9,984		9,802
Incremental Term Loan Facility to affiliates	2	4,000		4,000		4,000		3,976
Senior Reset Notes to affiliates	2	598		632		598		640

Level within the Fair Value Hierarchy March 31, 2018 December 31, 2017
(in millions) Carrying Amount Fair Value Carrying Amount Fair Value
Liabilities:
Senior Notes to third parties 1 $ 13,402
$ 13,732
$ 11,910
$ 12,540
Senior Notes to affiliates 2 7,486
7,659
7,486
7,852
Incremental Term Loan Facility to affiliates 2 4,000
4,000
4,000
4,020
Senior Reset Notes to affiliates 2 3,100
3,223
3,100
3,260

Guarantee Liabilities

We offer a device trade-in program, JUMP!, which provides eligible customers a specified-price trade-in right to upgrade their device. For customers who enroll in JUMP!, we recognize a liability and reduce revenue for the portion of revenue which represents the estimated fair value of the specified-price trade-in right guarantee, incorporating the expected probability and timing of handset upgrade and the estimated fair value of the handset which is returned. Accordingly, our guarantee liabilities were classified as Level 3 within the fair value hierarchy. When customers upgrade their device, the difference between the EIP balance credit to the customer and the fair value of the returned device is recorded against the guarantee liabilities. Guarantee liabilities are included in Other current liabilities in our Consolidated Balance Sheets.

The carrying amounts of our guarantee liabilities measured at fair value on a non-recurring basis included in our Condensed Consolidated Balance Sheets were $76 million and $73 million as of March 31, 2019 and December 31, 2018, respectively.

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 $3.1 billion as of March 31, 2019. This is not an indication of our expected loss exposure as it does not consider the expected fair value of the used handset or the probability and timing of the trade-in.

Note 7 – Tower Obligations

In 2012, we conveyed to CCI the exclusive right to manage and operate approximately 7,100 T-Mobile-owned wireless communication tower sites (“CCI Tower Sites”) in exchange for net proceeds of $2.5 billion (the “2012 Tower Transaction”). Rights to approximately 6,200 of the tower sites were transferred to CCI via a master prepaid lease with site lease terms

ranging from 23 to 37 years (“CCI Lease Sites”), while the remaining tower sites were sold to CCI (“CCI Sales Sites”). CCI has fixed-price purchase options for the CCI Lease Sites totaling approximately $2.0 billion, exercisable at the end of the lease term. We lease back space at certain tower sites for an initial term of ten years, followed by optional renewals at customary terms.

In 2015, we conveyed to PTI the exclusive right to manage and operate certain T-Mobile-owned wireless communication tower sites (“PTI Sales Sites”) in exchange for net proceeds of approximately $140 million (the “2015 Tower Transaction”). As of March 31, 2019, rights to approximately 150 of the tower sites remain operated by PTI under a management agreement (“PTI Managed Sites”). We lease back space at certain tower sites for an initial term of ten years, followed by optional renewals at customary terms.

Assets and liabilities associated with the operation of the tower sites were transferred to 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, who lease space at the tower sites. Liabilities included the obligation to pay ground lease rentals, property taxes and other executory costs. Upon closing of the 2012 Tower Transaction, CCI acquired all of the equity interests in the SPE containing CCI Sales Sites and an option to acquire the CCI Lease Sites at the end of their respective lease terms and entered into a master lease agreement under which we agreed to lease back space at certain of the tower sites. Upon closing of the 2015 Tower Transaction, PTI acquired all of the equity interests in the SPEs containing PTI Sales Sites and entered into a master lease agreement under which we agreed to lease back space at certain of the tower sites.

We determined the SPEs containing the CCI Lease Sites (“Lease Site SPEs”) are VIEs as our equity investment lacks the power to direct the activities that most significantly impact the economic performance of the VIEs. 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 balances and operating results of the Lease Site SPEs are not included in our Consolidated Financial Statements.

Due to our continuing involvement with the tower sites, we previously determined that we were precluded from applying sale-leaseback accounting. We recorded long-term financial obligations in the amount of the net proceeds received and recognized interest on the tower obligations at a rate of approximately 8% for the 2012 Tower Transaction and 5% for the 2015 Tower Transaction using the effective interest method. The tower obligations are increased by interest expense and amortized through contractual leaseback payments made by us to CCI or PTI and through net cash flows generated and retained by CCI or PTI from operation of the tower sites. Our historical tower site asset costs continue to be reported in Property and equipment, net in our Condensed Consolidated Balance Sheets and are depreciated.

Upon adoption of the new leasing standard we were required to reassess the previously failed sale-leasebacks and determine whether the transfer of the assets to the tower operator under the arrangement met the transfer of control criteria in the revenue standard and whether a sale should be recognized. We concluded that a sale has not occurred for the CCI Lease Sites and these sites continue to be accounted for as a failed sale-leaseback. We concluded that a sale had occurred for the CCI Sales Sites and the PTI Sales Sites and therefore we derecognized our existing long-term financial obligation and the tower-related property and equipment associated with these sites as part of the cumulative effect adjustment on January 1, 2019.

The following table summarizes the balances of the failed sale-leasebacks in the Condensed Consolidated Balance Sheets:



(in millions)	March 31, 2019		December 31, 2018
Property and equipment, net	$	237	$	329
Tower obligations	2,244		2,557

Future minimum payments related to the tower obligations are approximately $157 million for the year ended March 31, 2020, $314 million in total for the years ended March 31, 2021 and 2022, $314 million in total for years ended March 31, 2023 and 2024 and $574 million in total for years thereafter.

We are contingently liable for future ground lease payments through the remaining term of the CCI Lease Sites. These contingent obligations are not included in Operating lease liabilities as any amount due is contractually owed by CCI based on the subleasing arrangement. See Note 10 - Leases for further information.

Index for Notes to the Condensed Consolidated Financial Statements

~~Note 9 – Debt~~

~~The following table sets forth the debt balances and activity as of, and for the three months ended, March 31, 2018~~:

(in millions) December 31,
2017
Issuances and Borrowings ⁽¹⁾

Note Redemptions ⁽¹⁾
Repayments
Reclassifications ⁽¹⁾

Other ⁽²⁾
March 31,
2018
Short-term debt $ 1,612
$ —
$ (999 ) $ —
$ 2,425
$ 282
$ 3,320
Long-term debt 12,121
2,494
—
—
(2,425 ) (63 ) 12,127
Total debt to third parties 13,733
2,494
(999 ) —
—
219
15,447
Short-term debt to affiliates —
2,170
—
(1,725 ) —
—
445
Long-term debt to affiliates 14,586
—
—
—
—
—
14,586
Total debt $ 28,319
$ 4,664
$ (999 ) $ (1,725 ) $ —
$ 219
$ 30,478


~~(1)~~	Issuances and borrowings, note redemptions, and reclassifications are recorded net of related issuance costs, discounts and premiums. Issuances and borrowings and repayments for Short-term debt to affiliates represent net outstanding borrowings and net repayments on our senior secured revolving credit facility.

~~(2)~~

Other includes: $246 million of issuances of short-term debt related to vendor financing arrangements, of which $237 million related to financing of property and equipment. During the three months ended March 31, 2018, we did not have any repayments under the vendor financing arrangements. Vendor financing arrangements are included in Short-term debt within Total current liabilities in our Condensed Consolidated Balance Sheets. Other also includes capital leases and the amortization of discounts and premiums. Capital lease liabilities totaled $1.8 billion at both March 31, 2018 and December 31, 2017.

~~Debt to Third Parties~~

~~Issuances and Borrowings~~

~~During the three months ended March 31, 2018, we issued the following Senior Notes:~~

(in millions) Principal Issuances Issuance Costs Net Proceeds from Issuance of Long-Term Debt
4.500% Senior Notes due 2026 $ 1,000
$ 2
$ 998
4.750% Senior Notes due 2028 1,500
4
1,496
Total of Senior Notes issued $ 2,500
$ 6
$ 2,494

On January 25, 2018, T-Mobile USA, Inc. (“T-Mobile USA”) and certain of its affiliates, as guarantors, issued (i) $1.0 billion of public 4.500% Senior Notes due 2026 and (ii) $1.5 billion of public 4.750% Senior Notes due 2028. Issuance costs related to the public debt issuance totaled approximately $6 million.

Subsequent to March 31, 2018, we used the net proceeds of $2.494 billion from the transaction to redeem our $1.75 billion of 6.625% Senior Notes due 2023, on April 1, 2018, and to redeem our $600 million of 6.836% Senior Notes due 2023 on April 28, 2018, as further discussed below, and for general corporate purposes, including the partial repayment of borrowings under our revolving credit facility with DT.

~~Notes Redemptions~~

~~During the three months ended March 31, 2018, we made the following note redemption:~~

(in millions) Principal Amount
Write-off of Premiums, Discounts and Issuance Costs ⁽¹⁾

Call Penalties^{(1) (2)}
Redemption
Date Redemption Price
6.125% Senior Notes due 2022 $ 1,000
$ 1
$ 31
January 15, 2018 103.063 %


~~(1)~~	Write-off of premiums, discounts, issuance costs and call penalties are included in Other income, 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 financing activities in our Condensed Consolidated Statements of Cash Flows.~~

Prior to March 31, 2018, we delivered a notice of redemption on $1.75 billion aggregate principal amount of our 6.625% Senior Notes due 2023. The notes were redeemed on April 1, 2018 at a redemption price equal to 103.313% of the principal amount of the notes (plus accrued and unpaid interest thereon), payable on April 2, 2018. The redemption premium was

~~Index for Notes to the Condensed Consolidated Financial Statements~~

approximately $58 million, the write-off of issuance costs was less than $1 million, and the write-off of premiums was approximately $75 million. The outstanding principal amount was reclassified from Long-term debt to Short-term debt in our Condensed Consolidated Balance Sheets as of March 31, 2018.

Prior to March 31, 2018, we delivered a notice of redemption on $600 million aggregate principal amount of our 6.836% Senior Notes due 2023. The notes were redeemed on April 28, 2018 at a redemption price equal to 103.418% of the principal amount of the notes (plus accrued and unpaid interest thereon), payable on April 30, 2018. The redemption premium was approximately $21 million and the write-off of issuance costs was less than $1 million. The outstanding principal amount was reclassified from Long-term debt to Short-term debt in our Condensed Consolidated Balance Sheets as of March 31, 2018.

~~Debt to Affiliates~~

~~Issuances and Borrowings~~

On January 22, 2018, DT agreed to purchase (i) $1.0 billion in aggregate principal amount of 4.500% Senior Notes due 2026 and (ii) $1.5 billion in aggregate principal amount of 4.750% Senior Notes due 2028 directly from T-Mobile USA and certain of its affiliates, as guarantors, with no underwriting discount (the “DT Notes”). As of March 31, 2018, there were no outstanding balances on the DT Notes.

Prior to March 31, 2018, we delivered a notice of redemption on (i) $1.25 billion in aggregate principal amount of 8.097% Senior Reset Notes due 2021 and (ii) $1.25 billion in aggregate principal amount of 8.195% Senior Reset Notes due 2022 (collectively, the “DT Senior Reset Notes”) held by DT. Subsequent to March 31, 2018, through net settlement on April 30, 2018, we issued to DT a total of $2.5 billion in aggregate principal amount of DT Notes and redeemed the DT Senior Reset Notes. The 8.097% Senior Reset Notes due 2021 were redeemed on April 28, 2018 at a redemption price equal to 104.0485% of the principal amount of the notes (plus accrued and unpaid interest thereon), payable on April 30, 2018. The 8.195% Senior Reset Notes due 2022 were redeemed on April 28, 2018 at a redemption price equal to 104.0975% of the principal amount of the notes (plus accrued and unpaid interest thereon), payable on April 30, 2018. In connection with the net settlement, we paid DT $102 million in cash for the premium portion of the redemption price set forth in the indenture governing the DT Senior Reset Notes, plus accrued but unpaid interest on the DT Senior Reset Notes to, but not including, the exchange date.

~~Incremental Term Loan Facility~~

In March 2018, we amended the terms of the Incremental Term Loan Facility. Following this amendment, the applicable margin payable on LIBOR indexed loans is 1.50% under the $2.0 billion Incremental Term Loan Facility maturing on November 9, 2022 and 1.75% under the $2.0 billion Incremental Term Loan Facility maturing on January 31, 2024. The amendment also modified the Incremental Term Loan Facility to (i) include a soft-call prepayment premium of 1.00% of the outstanding principal amount of the loans under the Incremental Term Loan Facility payable to DT upon certain refinancings of such loans by us with lower priced debt prior to a date that is six months after March 29, 2018 and (ii) update certain covenants and other provisions to make them substantially consistent, subject to certain additional carve outs, with our most recently publicly issued notes. No issuance fees were incurred related to this debt agreement for the three months ended March 31, 2018.

~~Revolving Credit Facility~~

In January 2018, we utilized proceeds under our revolving credit facility with DT to redeem $1.0 billion in aggregate principal amount of our 6.125% Senior Notes due 2022 and for general corporate purposes. On January 29, 2018, the proceeds utilized under our revolving credit facility with DT were repaid. The 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 provided by financing activities in our Condensed Consolidated Statements of Cash Flows. As of March 31, 2018, there was $445 million in outstanding borrowings under the revolving credit facility. As of December 31, 2017, there were no outstanding borrowings under the revolving credit facility.

In March 2018, we amended the terms of (a) our Secured Revolving Credit Facility and (b) our Unsecured Revolving Credit Facility. Following these amendments, (i) the range of applicable margin payable under the Secured Revolving Credit Facility is 1.05% to 1.80%, (ii) the range of the applicable margin payable under the Unsecured Revolving Credit Facility is 2.05% to 3.05%, (iii) the range of the undrawn commitment fee applicable to the Secured Revolving Credit Facility is 0.25% to 0.45%, (iv) the range of the undrawn commitment fee applicable to the Unsecured Revolving Credit Facility is 0.20% to 0.575% and (v) the maturity date of the revolving credit facility with DT is December 29, 2020. The amendments also modify the facility to

~~Index for Notes to the Condensed Consolidated Financial Statements~~

~~update certain covenants and other provisions to make them substantially consistent, subject to certain additional carve outs, with our most recently publicly issued notes.~~

Note ~~10 -~~8 – Revenue from Contracts with Customers

Disaggregation of ~~revenue~~Revenue

We provide wireless communication services to three primary categories of customers:

Branded postpaid customers generally include customers ~~that~~who are qualified to pay after receiving wireless communication services utilizing phones, ~~mobile broadband devices (including tablets),~~ DIGITS, or ~~other devices;~~connected devices which includes tablets, wearables and SyncUP DRIVE™ ;

Branded prepaid customers generally include customers who pay for wireless communication services in advance. Our branded prepaid customers include customers of T-Mobile and ~~MetroPCS;~~Metro by T-Mobile; and

Wholesale customers include Machine-to-Machine (“M2M”) and Mobile Virtual Network Operator (“MVNO”) customers that operate on our network but are managed by wholesale partners.

Branded postpaid service revenues, ~~include~~including branded postpaid phone revenues and branded postpaid other revenues, ~~which~~ were ~~$4.8 billion and $259 million, respectively, for the three months ended March 31, 2018 and $4.5 billion and $225 million, respectively, for the three months ended March 31, 2017.~~as follows:



	Three Months Ended March 31,
(in millions)	2019		2018
Branded postpaid service revenues
Branded postpaid phone revenues	$	5,183	$	4,811
Branded postpaid other revenues	310		259
Total branded postpaid service revenues	$	5,493	$	5,070

We operate as a single operating segment. The balances presented within each revenue line item in our Condensed Consolidated Statements of Comprehensive Income represent categories of revenue from contracts with customers disaggregated by type of product and service. Service revenues also include revenues earned for providing value added services to customers, such as handset insurance services. Revenue generated from the lease of mobile communication devices ~~and accessories~~ is included within Equipment revenues in our Condensed Consolidated Statements of Comprehensive Income. ~~For the three months ended March 31, 2018, and 2017, we recorded approximately $171 million and $324 million, respectively, of~~

Equipment revenues from the lease of mobile communication devices ~~and accessories.~~were as follows:



	Three Months Ended March 31,
(in millions)	2019		2018
Equipment revenues from the lease of mobile communication devices	$	161	$	171

Contract ~~balances~~Balances

The opening and closing balances of ~~T-Mobile’s~~our contract asset and contract liability ~~and receivables~~ balances from contracts with customers ~~for the three months ended~~as of December 31, 2018 and March 31, ~~2018 are~~2019, were as follows:



(in millions)	Contract Assets Included in Other Current Assets			Contract Liabilities Included in Deferred Revenue
Balance as of December 31, 2018	$	51		$	645
Balance as of March 31, 2019	44			615
Change	$	(7	)	$	(30	)

(in millions) Contract Assets Included in Other Current Assets Contract Liabilities Included in Deferred Revenue
Balance as of January 1, 2018 $ 140
$ 718
Balance as of March 31, 2018 104
718
Change (36 ) —

Contract assets primarily represent revenue recognized for equipment sales with promotional bill credits offered to customers that are paid over time and are contingent on the customer maintaining a service contract. The change in the contract asset balance includes customer activity related to new promotions, ~~customers that churn and forfeit their bill credits~~offset by billings on existing contracts and impairment ~~of bill credits~~ which ~~are~~is recognized as bad debt expense.

Contract liabilities are recorded when fees are collected, or we have an unconditional right to consideration (a receivable) in advance of delivery of goods or services. The change in contract liabilities is primarily related to customer activity associated with our prepaid plans including the receipt of cash payments and the satisfaction of our performance obligations.

Index for Notes to the Condensed Consolidated Financial Statements

Revenues for the three months ended March 31, ~~2018,~~2019, include the following:



	Three Months Ended March 31,
(in millions)	2019		2018
Amounts included in the beginning of period contract liability balance	$	560	$	528

Three Months Ended March 31,
(in millions) 2018
Amounts included in the beginning of period contract liability balance $ 528
Amounts associated with performance obligations satisfied in previous periods —

~~Index for Notes to the Condensed Consolidated Financial Statements~~

Remaining ~~performance obligations~~Performance Obligations

As of March 31, ~~2018,~~2019, the aggregate amount of ~~the~~ transaction price allocated to remaining service performance obligations for branded postpaid contracts with promotional bill credits that result in an extended service contract is ~~$694~~$269 million. We expect to recognize this revenue as service is provided over the extended contract term in the next 1224 months.

Certain of our wholesale, roaming and other service contracts include variable consideration based on usage. This variable consideration has been excluded from the disclosure of remaining performance obligations. As of March 31, ~~2018,~~2019, the aggregate amount of the ~~guaranteed~~contractual minimum consideration allocated to remaining service performance obligations for wholesale, roaming and other service contracts is ~~$879~~$901 million, $1.1 billion and ~~$901 million~~$1.5 billion for ~~2018,~~ 2019, 2020 and ~~2020~~2021 and beyond, respectively. These contracts have a remaining duration of less than one ~~year~~ to six years.

Information about remaining performance obligations that are part of a contract that has an original expected duration of one year or less have been excluded from the above, which primarily consists of monthly service contracts. The aggregate amount of the transaction price allocated to remaining service performance obligations includes the estimated amount to be invoiced to the customer.

Contract ~~costs~~Costs

~~Deferred contract cost balances at~~The total balance of deferred incremental costs to obtain contracts as of March 31, ~~2018 were~~2019 was $719 million compared to $644 million as ~~follows:~~

(in millions) At March 31, 2018
Total deferred incremental costs to obtain contracts $ 290

of December 31, 2018. Deferred contract costs incurred to obtain postpaid service contracts ~~have an average amortization~~are amortized over a period of ~~approximately~~ 24 months. The amortization period is monitored ~~every period~~ to reflect any significant change in assumptions. Amortization of deferred contract costs was $116 million and $35 million for the three months ended March 31, ~~2018.~~2019 and 2018, 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 months ended March 31, 2019 and 2018.

~~Note 11 – Repurchases of Common Stock~~

~~2017 Stock Repurchase Program~~

On December 6, 2017, our Board of Directors authorized a stock repurchase program for up to $1.5 billion of our common stock through December 31, 2018 (the “2017 Stock Repurchase Program”). During the three months ended March 31, 2018, we repurchased a total of 10.5 million shares of our common stock for $666 million. From the inception of the 2017 Stock Repurchase Program through April 27, 2018, we repurchased 23.7 million shares of our common stock at an average price per share of $63.07 for a total purchase price of $1.5 billion. Repurchased shares are retired.

For the three months ended March 31, 2018, DT, our majority stockholder and an affiliated purchaser, purchased 3.3 million additional shares of our common stock at an aggregate market value of $200 million in the public market or from other parties, in accordance with the rules of the SEC and other applicable legal requirements. We do not receive proceeds from these purchases.

~~2018 Stock Repurchase Program~~

On April 27, 2018, our Board of Directors authorized an increase in the total stock repurchase program to $9.0 billion, consisting of the $1.5 billion in repurchases previously completed and for up to an additional $7.5 billion of repurchases of our common stock, allocated as up to $500 million of shares of common stock through December 31, 2018, up to $3.0 billion of shares of common stock for the year ending December 31, 2019 and up to $4.0 billion of shares of common stock for the year ending December 31, 2020, with any authorized but unutilized repurchase capacity for any of the foregoing periods increasing the authorized repurchase capacity for the succeeding period by the amount of such unutilized repurchase capacity. The additional $7.5 billion repurchase authorization is contingent upon the termination of the Business Combination Agreement with Sprint (the “Business Combination Agreement”) and the abandonment of the transactions contemplated under the agreement.

~~Index for Notes to the Condensed Consolidated Financial Statements~~

Under the repurchase program, repurchases can be made from time to time using a variety of methods, which may include open market purchases, privately negotiated transactions or otherwise, all in accordance with the rules of the Securities and Exchange Commission and other applicable legal requirements. The specific timing, price and size of purchases will depend on prevailing stock prices, general economic and market conditions, and other considerations. The repurchase program does not obligate us to acquire any particular amount of common stock, and the repurchase program may be suspended or discontinued at any time at our discretion. Repurchased shares are retired.

Note 129 – Earnings Per Share

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



	Three Months Ended March 31,
(in millions, except shares and per share amounts)	2019		2018
Net income	$	908	$	671

Weighted average shares outstanding - basic	851,223,498		855,222,664
Effect of dilutive securities:
Outstanding stock options and unvested stock awards	7,419,983		7,021,420
Weighted average shares outstanding - diluted	858,643,481		862,244,084

Earnings per share - basic	$	1.07	$	0.78
Earnings per share - diluted	$	1.06	$	0.78

Potentially dilutive securities:
Outstanding stock options and unvested stock awards	266,452		67,580

Three Months Ended March 31,
(in millions, except shares and per share amounts) 2018 2017
Net income $ 671
$ 698
Less: Dividends on mandatory convertible preferred stock —
(14 )
Net income attributable to common stockholders - basic 671
684
Add: Dividends related to mandatory convertible preferred stock —
14
Net income attributable to common stockholders - diluted $ 671
$ 698

Weighted average shares outstanding - basic 855,222,664
827,723,034
Effect of dilutive securities:
Outstanding stock options and unvested stock awards 7,021,420
9,434,950
Mandatory convertible preferred stock —
32,238,000
Weighted average shares outstanding - diluted 862,244,084
869,395,984

Earnings per share - basic $ 0.78
$ 0.83
Earnings per share - diluted $ 0.78
$ 0.80

Potentially dilutive securities:
Outstanding stock options and unvested stock awards 67,580
9,993

As of March 31, ~~2018,~~2019, we had authorized 100 million shares of ~~5.50% mandatory convertible~~ preferred stock, ~~series A,~~ with a par value of $0.00001 per share. There ~~were~~was no preferred ~~shares~~stock outstanding as of March 31, 2019 and 2018.

On December 15, 2017, 20 million shares of our preferred stock converted to approximately 32 million shares of our common stock at a conversion rate of 1.6119 shares of common stock for each share of previously outstanding preferred stock and certain cash-in-lieu of fractional shares.

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

Index for Notes to the Condensed Consolidated Financial Statements

Note 10 - Leases

Leases (Topic 842) Disclosures

Lessee

We are lessee for non-cancellable operating and finance leases for cell sites, switch sites, retail stores and office facilities with contractual terms through 2029. The majority of cell site leases have an initial non-cancelable term of five to ten years with several renewal options that can extend the lease term from five to thirty-five years. In addition, we have finance leases for network equipment that generally have a non-cancelable lease term of two to four years; the finance leases do not have renewal options and contain a bargain purchase option at the end of the lease.

The components of lease expense were as follows:



(in millions)	Three Months Ended March 31, 2019
Operating lease expense	$	602
Financing lease expense:
Amortization of right-of-use assets	113
Interest on lease liabilities	20
Total financing lease expense	133
Variable lease expense	65
Total lease expense	$	800

Information relating to the lease term and discount rate is as follows:



	Three Months Ended March 31, 2019
Weighted Average Remaining Lease Term (Years)
Operating leases	6
Financing leases	3
Weighted Average Discount Rate
Operating leases	5.4	%
Financing leases	4.5	%

Maturities of lease liabilities as of March 31, 2019, were as follows:



(in millions)	Operating Leases			Finance Leases
Twelve Months Ending March 31,
2020	$	2,623		$	961
2021	2,446			644
2022	2,196			380
2023	1,814			115
2024	1,350			73
Thereafter	3,300			108
Total lease payments	13,729			2,281
Less imputed interest	(2,188		)	(146		)
Total	$	11,541		$	2,135

Interest payments for financing leases for the three months ended March 31, 2019 were $20 million.

As of March 31, 2019, we have additional operating leases, for cell sites and commercial properties, that have not yet commenced with lease payments of approximately $350 million.

Index for Notes to the Condensed Consolidated Financial Statements

As of March 31, 2019, we were contingently liable for future ground lease payments related to the tower obligations. These contingent obligations are not included in the above table as the amounts owed are contractually owed by CCI based on the subleasing arrangement. See Note 7 - Tower Obligations for further information.

Lessor

JUMP! On Demand allows customers to lease a device (handset or tablet) over a period of up to 18 months and upgrade it for a new device up to one time per month. Upon device upgrade or at lease end, customers must return or purchase their device. The purchase price at the expiration of the lease is established at lease commencement and reflects the estimated residual value of the device, which reflects the estimated fair value of the underlying asset at the end of the lease term. The JUMP! On Demand leases do not contain any residual value guarantees or variable lease payments, and there are no restrictions or covenants imposed by these leases. Leased wireless devices are included in Property and equipment, net in our Condensed Consolidated Balance Sheets.

The components of leased wireless devices under our JUMP! On Demand program were as follows:



(in millions)	March 31, 2019			December 31, 2018
Leased wireless devices, gross	$	1,080		$	1,159
Accumulated depreciation	(638		)	(622		)
Leased wireless devices, net	$	442		$	537

For equipment revenues from the lease of mobile communication devices, see Note 8 - Revenue from Contracts with Customers.

Future minimum payments expected to be received over the lease term related to the leased wireless devices, which exclude optional residual buy-out amounts at the end of the lease term, are summarized below:



(in millions)	Total
Twelve Months Ending March 31,
2020	$	352
2021	46
Total	$	398

Leases (Topic 840) Disclosures

On January 1, 2019, we adopted the new lease standard using a modified-retrospective approach by recognizing and measuring leases at the adoption date with a cumulative effect of initially applying the guidance recognized at the date of initial application and did not restate the prior periods presented in our Consolidated Financial Statements. As such, prior periods presented in our Consolidated Financial Statements continue to be in accordance with the former lease standard, Topic 840 Leases. See Note 1 - Summary of Significant Accounting Policies for further information.

Operating Leases

Under the previous lease standard, we had non-cancellable operating leases for cell sites, switch sites, retail stores and office facilities. As of December 31, 2018, these leases had contractual terms expiring through 2028, with the majority of cell site leases having an initial non-cancelable term of five to ten years with several renewal options. In addition, we had operating leases for dedicated transportation lines with varying expiration terms through 2027.

Our commitments under leases existing as of December 31, 2018 were approximately $2.7 billion for the year ending December 31, 2019, $4.7 billion in total for the years ending December 31, 2020 and 2021, $3.3 billion in total for the years ending December 31, 2022 and 2023 and $3.8 billion in total for years thereafter.

Total rent expense under operating leases, including dedicated transportation lines, was $734 million for the three months ended March 31, 2018, and was classified as Cost of services and Selling, general and administrative expense in our Condensed Consolidated Statements of Comprehensive Income.

Index for Notes to the Condensed Consolidated Financial Statements

Lessor

As of December 31, 2018, the future minimum payments expected to be received over the lease term related to the leased wireless devices, which exclude optional residual buy-out amounts at the end of the lease term, are summarized below:



(in millions)	Total
Year Ended December 31,
2019	$	419
2020	59
Total	$	478

Capital Leases

Within property and equipment, wireless communication systems include capital lease agreements for network equipment with varying expiration terms through 2033. Capital lease assets and accumulated amortization were $3.1 billion and $867 million as of December 31, 2018.

As of December 31, 2018, the future minimum payments required under capital leases, including interest and maintenance, over their remaining terms are summarized below:



(in millions)	Future Minimum Payments
Year Ended December 31,
2019	$	909
2020	631
2021	389
2022	102
2023	66
Thereafter	106
Total	$	2,203
Included in Total
Interest	$	143
Maintenance	45

Note 1311 – Commitments and Contingencies

Purchase Commitments

~~Operating Leases~~

In ~~February~~September 2018, we ~~extended the leases related~~signed a reciprocal long-term spectrum lease with Sprint. The lease includes an offsetting amount to ~~our corporate headquarters facility. These agreements, increased our minimum lease payments by approximately $400 million in the aggregate.~~

~~In February 2018, we amended an agreement related to~~be received from Sprint for the lease of our spectrum. Lease payments began in the fourth quarter of 2018. The minimum commitment under this lease as of March 31, 2019 is $523 million. The reciprocal long-term lease is a distinct transaction from the Merger.

Under the previous lease standard certain ~~wireless communication tower sites. This agreement increased~~of our ~~minimum~~network backhaul arrangements were accounted for as operating leases. Obligations under these agreements were included within our operating lease ~~payments by~~commitments as of December 31, 2018.

These agreements no longer qualify as leases under the new lease standard. Our commitments under these agreements as of March 31, 2019, were approximately ~~$385~~$131 million for the year ending March 31, 2020, $224 million in total for the ~~aggregate.~~years ended March 31, 2021 and 2022, $158 million in total for the years ended March 31, 2023 and 2024, and $190 million in total for years thereafter.

Interest rate lock derivatives

In October 2018, we entered into interest rate lock derivatives with notional amounts of $9.6 billion. These interest rate lock derivatives were designated as cash flow hedges to reduce variability in cash flows due to changes in interest payments attributable to increases or decreases in the benchmark interest rate during the period leading up to the probable issuance of

Index for Notes to the Condensed Consolidated Financial Statements

fixed-rate debt. The fair value of interest rate lock derivatives as of March 31, 2019 was a liability of $703 million and is included in Other current liabilities in our Condensed Consolidated Balance Sheets. See Note 6 – Fair Value Measurements for further information.

Renewable Energy Purchase Agreements

In April 2019, T-Mobile USA entered into a Renewable Energy Purchase Agreement (“REPA”) with a third party that is based on the expected operation of a solar photovoltaic electrical generation facility located in Texas and will remain in effect until the fifteenth anniversary of the respective facility’s entry into commercial operation. Commercial operation of the facility is expected to occur in July 2021. The REPA does not contain a defined commitment, volume, or penalty amount.

Contingencies and Litigation

Litigation Matters

We are involved in various lawsuits and disputes, claims, government agency investigations and enforcement actions, and other proceedings (“Litigation Matters”) that arise in the ordinary course of business, which include claims of patent infringement (most of which

~~Index for Notes to the Condensed Consolidated Financial Statements~~

are asserted by non-practicing entities primarily seeking monetary damages), class actions, and proceedings to enforce ~~Federal Communications Commission (“FCC”)~~FCC rules and regulations. The Litigation Matters described above have progressed to various stages and some of them may proceed to trial, arbitration, hearing or other adjudication that could result in fines, penalties, or awards of monetary or injunctive relief in the coming 12 months if they are not otherwise resolved. We have established an accrual with respect to certain of these matters, where appropriate, which is reflected in the ~~condensed consolidated financial statements~~Consolidated Financial Statements but that ~~we do~~is 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. While we do not expect that the ultimate resolution of these proceedings, individually or in the aggregate, will have a material adverse effect on our financial position, an unfavorable outcome of some or all of these proceedings 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.

Note 1412 – Subsequent ~~Events~~Event

~~Note Redemptions~~

In April 2018, we redeemed $1.75 billion of 6.625% Senior Notes due 2023 and $600 million of 6.836% Senior Notes due 2023. Additionally, through net settlement in April 2018, we issued to DT a total of $2.5 billion in aggregate principal amount of DT Notes and redeemed $1.25 billion in aggregate principal amount of 8.097% Senior Reset Notes due 2021 and $1.25 billion in aggregate principal amount of 8.195% Senior Reset Notes due 2022 held by DT. See ~~Note 9 - Debt~~ ~~for further information.~~

~~Repurchases of Common Stock~~

~~We made common stock repurchases through April 27, 2018, under the stock repurchase program authorized by our Board of Directors on December 6, 2017.~~

On April 27, 2018, our Board of Directors authorized an increase in the total stock repurchase program to $9.0 billion, consisting of the $1.5 billion in repurchases previously authorized and for up to an additional $7.5 billion of our common stock.

~~See~~ ~~Note 11- Repurchases of Common Stock~~ ~~for further information.~~

~~Business Combination Agreement~~

~~On April 29, 2018, we~~2019, T-Mobile USA entered into a ~~Business Combination Agreement~~REPA with Sprint Corporation (“Sprint”), Huron Merger Sub LLC (“T-Mobile Merger Company”), Superior Merger Sub Corporation (“Merger Sub”), Starburst I, Inc., (“Starburst”), Galaxy Investment Holdings, Inc., (“Galaxy,”a third party. See Note 11 - Commitments and ~~together with Starburst, the “SoftBank US HoldCos”) and~~Contingencies for ~~the limited purposes set forth therein, DT, Deutsche Telekom Holding B.V. (“DT Holding”), and SoftBank Group Corp. (“SoftBank”).~~further information.

Pursuant to the Business Combination Agreement and upon the terms and subject to the conditions described therein, the SoftBank US HoldCos will merge with and into T-Mobile Merger Company, with T-Mobile Merger Company continuing as the surviving entity and our wholly owned subsidiary (the “HoldCo Mergers”). Immediately following the HoldCo Mergers, Merger Sub will merge with and into Sprint, with Sprint continuing as the surviving corporation and our wholly owned indirect subsidiary (the “Merger” and, together with the HoldCo Mergers, the “Merger Transactions”). Pursuant to the Business Combination Agreement, (i) at the effective time of the HoldCo Mergers, all the issued and outstanding shares of common stock of Galaxy and Starburst held by SoftBank Group Capital Limited, a wholly owned subsidiary of SoftBank and the sole stockholder of Galaxy and Starburst (“Softbank UK”), will be converted such that SoftBank UK will receive an aggregate number of shares of our common stock equal to the product of (x) 0.10256 (the “Exchange Ratio”) and (y) the aggregate number of shares of common stock of Sprint (“Sprint Common Stock”), held by the SoftBank US HoldCos, collectively, immediately prior to the effective time of the HoldCo Mergers, and (ii) at the effective time of the Merger, each share of Sprint Common Stock issued and outstanding immediately prior to the effective time of the Merger (other than shares of Sprint Common Stock that were held by the SoftBank US HoldCos or are held by Sprint as treasury stock) will be converted into the right to receive a number of shares of our common stock equal to the Exchange Ratio. SoftBank and its affiliates will receive the same amount of our common stock per share of Sprint Common Stock as all other Sprint stockholders. Immediately following the Merger Transactions, DT and SoftBank are expected to hold approximately 42% and 27% of the fully diluted

Index for Notes to the Condensed Consolidated Financial Statements

~~shares of the combined company, respectively, with the remaining approximately 31% of the fully-diluted shares of the combined company held by public stockholders.~~

The consummation of the Merger Transactions and the other transactions contemplated by the Business Combination Agreement (collectively, the “Transactions”) is subject to obtaining the consent of the holders of a majority of the outstanding shares of Sprint Common Stock in favor of the adoption of the Business Combination Agreement (the “Sprint Stockholder Approval”). Subsequent to the execution of the Business Combination Agreement, SoftBank entered into a support agreement (the “SoftBank Support Agreement”), pursuant to which it has agreed to cause SoftBank UK, Galaxy and Starburst to deliver a written consent in favor of the adoption of the Business Combination Agreement, which will constitute receipt by Sprint of the Sprint Stockholder Approval. As of April 25, 2018, SoftBank beneficially owned approximately 84.8% of Sprint Common Stock outstanding. Under the terms of the SoftBank Support Agreement, SoftBank and its affiliates are generally prohibited from transferring ownership of Sprint Common Stock prior to the earlier of the consummation of the Merger and the termination of the Business Combination Agreement in accordance with its terms. The consummation of the Transactions is also subject to obtaining the consent of the holders of a majority of the outstanding shares of our common stock in favor of the issuance of our common stock in the Merger Transactions (the “T-Mobile Stock Issuance Approval”) and in favor of the amendment and restatement of our certificate of incorporation (the “T-Mobile Charter Amendment”) (collectively, the “T-Mobile Stockholder Approval”). Subsequent to the execution of the Business Combination Agreement, DT entered into a support agreement (the “DT Support Agreement”), pursuant to which it has agreed to deliver a written consent in favor of the T-Mobile Stock Issuance Approval and the T-Mobile Charter Amendment, which will constitute receipt by T-Mobile of the T-Mobile Stockholder Approval. As of April 25, 2018, DT beneficially owned approximately 63.5% of our outstanding common stock. Under the terms of the DT Support Agreement, DT and its affiliates are generally prohibited from transferring ownership of our common stock prior to the earlier of the consummation of the Merger and the termination of the Business Combination Agreement in accordance with its terms.

The consummation of the Transactions is also subject to the satisfaction or waiver, if legally permitted, of certain other conditions, including, among other things, (i) the accuracy of representations and warranties and performance of covenants of the parties, (ii) the effectiveness of the registration statement for the shares of our common stock to be issued in the Merger Transactions, and the approval of the listing of such shares on the NASDAQ Global Select Market (“NASDAQ”), (iii) receipt of certain regulatory approvals, including approvals of the Federal Communications Commission, applicable state public utility commissions and expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and favorable completion of review by the Committee on Foreign Investments in the United States, (iv) specified minimum credit ratings for the combined company on the closing date of the Merger Transaction (after giving effect to the Merger) from at least two of the three credit rating agencies, subject to certain qualifications and (v) no material adverse effect with respect to Sprint or us since the date of the Business Combination Agreement.

The Business Combination Agreement contains representations and warranties and covenants customary for a transaction of this nature. Sprint and SoftBank, and we and DT, are each subject to restrictions on the ability to solicit alternative acquisition proposals and to provide information to, and engage in discussion with, third parties regarding such proposals, except under limited circumstances to permit Sprint’s and our boards of directors to comply with fiduciary duties. Subject to certain exceptions, each of the parties to the Business Combination Agreement has agreed to use its reasonable best efforts to take or cause to be taken actions necessary to consummate the Transactions, including with respect to obtaining required government approvals. The Business Combination Agreement also contains certain termination rights for both Sprint and us. If we terminate the Business Combination Agreement in connection with a failure to satisfy the closing condition related to the specified minimum credit ratings noted above, then in certain circumstances, we may be required to pay Sprint $600 million.

Pursuant to the terms of the Business Combination Agreement, we, SoftBank and DT will also enter into an amended and restated stockholders’ agreement (the “Stockholders Agreement”), which will become effective upon the closing of the Transactions and will provide that the board of directors of the combined company will consist of fourteen members, comprising nine directors designated by DT (of which at least two will be independent), four directors designated by SoftBank (of which at least two will be independent), and the combined company’s chief executive officer. The Stockholders Agreement will also set forth certain consent rights for each of SoftBank and DT over certain material transactions of the combined company and will contain a non-compete which will apply to SoftBank, DT and their respective affiliates, subject to certain exceptions, until such time as SoftBank’s or DT’s ownership in the combined company has been reduced below an agreed threshold.

In addition, pursuant to the terms of the Business Combination Agreement, SoftBank and DT will enter into a proxy, lock-up and right of first refusal agreement (the “PLR Agreement”), which will become effective upon the closing of the Transactions, and which will set forth certain rights and obligations in respect to the shares of our common stock owned by each of SoftBank, DT and their respective affiliates to enable DT to consolidate us into DT’s financial statements following the consummation of

~~Index for Notes to the Condensed Consolidated Financial Statements~~

the Transactions. Among other terms, these rights and obligations will require SoftBank to agree to vote its shares of our common stock as directed by DT and will restrict SoftBank from transferring its shares of our common stock in a manner that would prevent DT from consolidating us into DT’s financial statements following the consummation of the Transactions, subject in each case to certain exceptions set forth in the PLR Agreement. In addition, the PLR Agreement will impose certain restrictions on SoftBank’s and DT’s ability to transfer their shares of our common stock in the four year period following the closing of the Transactions and will provide each of SoftBank and DT with a right of first refusal with respect to proposed transfers of shares of our common stock by the other party, subject in each case to certain exceptions and limitations set forth in the PLR Agreement. As a result of the PLR Agreement, we are expected to continue to be a “Controlled Company” for purposes of NASDAQ rules following consummation of the Merger, which provides us with exemptions from certain corporate governance requirements under the NASDAQ rules.

~~Commitment Letter~~

In connection with entry into the Business Combination Agreement, T-Mobile USA entered into a commitment letter, dated as of April 29, 2018 (the “Commitment Letter”), with Barclays Bank PLC, Credit Suisse AG, Deutsche Bank AG, Goldman Sachs Bank USA, Morgan Stanley Senior Funding, Inc., RBC Capital Markets, and certain of their affiliates (collectively, the “Commitment Parties”), pursuant to which, subject to the terms and conditions set forth therein, certain of the Commitment Parties have committed to provide up to $38.0 billion in secured and unsecured debt financing, including a $4.0 billion secured revolving credit facility, a $7.0 billion secured term loan facility, a $19.0 billion secured bridge loan facility and an $8.0 billion unsecured bridge loan facility. The funding of the debt facilities provided for in the Commitment Letter is subject to the satisfaction of the conditions set forth therein, including consummation of the proposed merger with Sprint. The proceeds of the debt financing provided for in the Commitment Letter will be used to refinance certain existing debt of us, Sprint and our and Sprint’s respective subsidiaries and for post-closing working capital needs of the combined company.

~~Financing Matters Agreement~~

In connection with the entry into the Business Combination Agreement, DT and T-Mobile USA entered into a Financing Matters Agreement, dated as of April 29, 2018 (the “Financing Matters Agreement”). Pursuant to the Financing Matters Agreement, DT agreed, among other things, to consent to the incurrence by T-Mobile USA of secured debt in connection with and after the consummation of the Merger, and to provide a lock up on sales thereby as to certain senior notes of T-Mobile USA held thereby. In addition, T-Mobile USA agreed, among other things, to repay and terminate, upon closing of the Merger, the existing credit facilities of T-Mobile USA which are provided by DT, as well as $2.0 billion of T-Mobile USA’s 5.300% senior notes due 2021 and $2.0 billion of T-Mobile USA’s 6.000% senior notes due 2024. In addition, T-Mobile USA and DT agreed, upon closing of the Merger, to amend the $1.25 billion of T-Mobile USA’s 5.125% senior notes due 2025 and $1.25 billion of T-Mobile USA’s 5.375% senior notes due 2027 to change the maturity dates thereof to April 15, 2021 and April 15, 2022, respectively.

Note 1513 – Guarantor Financial Information

Pursuant to the applicable indentures and supplemental indentures, the long-term debt to affiliates and third parties issued by T-Mobile USA (“Issuer”) is fully and unconditionally guaranteed, jointly and severally, on a senior unsecured basis by T-Mobile (“Parent”) and certain of the Issuer’s 100% owned subsidiaries (“Guarantor Subsidiaries”).

~~In January 2018, T-Mobile USA and certain of its affiliates, as guarantors, issued (i) $1.0 billion of public 4.500% Senior Notes due 2026 and (ii) $1.5 billion of public 4.750% Senior Notes due 2028.~~

In April 2018, T-Mobile USA and certain of its affiliates, as guarantors, issued (i) $1.0 billion in aggregate principal amount of 4.500% Senior Notes due 2026 and (ii) $1.5 billion in aggregate principal amount of 4.750% Senior Notes due 2028. Additionally, T-Mobile USA and certain of its affiliates, as guarantors, redeemed through net settlement, (i) the $1.25 billion in aggregate principal amount of 8.097% Senior Reset Notes due 2021 and (ii) $1.25 billion in aggregate principal amount of 8.195% Senior Reset Notes due 2022.

~~See~~ ~~Note 9 - Debt~~ ~~for further information.~~

The guarantees of the Guarantor Subsidiaries are subject to release in limited circumstances only upon the occurrence of certain customary conditions. The indentures and credit facilities governing the long-term debt contain covenants that, among other things, limit the ability of the Issuer and the Guarantor Subsidiaries ~~to:~~to incur more ~~debt;~~debt, pay dividends and make ~~distributions;~~distributions, make certain ~~investments;~~investments, repurchase ~~stock;~~stock, create liens or other ~~encumbrances;~~encumbrances, enter into transactions with ~~affiliates;~~affiliates, enter into transactions that restrict dividends or distributions from ~~subsidiaries;~~subsidiaries, and merge, consolidate or sell, or otherwise dispose

~~Index for Notes to the Condensed Consolidated Financial Statements~~

of, substantially all of their assets. Certain provisions of each of 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 Parent under the terms of the indentures and the supplemental indentures.

~~During~~On October 23, 2018, SLMA LLC was formed as a limited liability company in Delaware to serve as an escrow subsidiary to facilitate the ~~preparation~~contemplated issuance of notes by Parent in connection with the ~~condensed consolidating financial information~~Transactions. SLMA LLC is an indirect, 100% owned finance subsidiary of ~~T-Mobile US, Inc.~~Parent, as such term is used in Rule 3-10(b) of Regulation S-X, and ~~Subsidiaries for the year ended December 31, 2017, it was determined~~has been designated as an unrestricted subsidiary under Issuer’s existing debt securities. Any debt securities that ~~certain intercompany advances were misclassified in Net cash provided~~may be issued from time to time by ~~(used in) operating activities~~SLMA LLC will be fully and ~~Net cash provided~~unconditionally guaranteed by (used in) financing activities in the Condensed Consolidating Statement of Cash Flows Information for the three months ended March 31, 2017, as filed in our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2017. We have revised the Issuer, Guarantor Subsidiaries and Non-Guarantor Subsidiaries columns of the Condensed Consolidating Statement of Cash Flows Information to reclassify Intercompany advances, net from Net cash provided by (used in) operating activities to Net cash provided by (used in) financing activities. The impacts to the Issuer, Guarantor Subsidiaries and Non-Guarantor Subsidiaries columns for the three months ended March 31, 2017 were $5.0 billion, $5.0 billion and $11 million, respectively. The revisions, which we have determined are not material, are eliminated upon consolidation and have no impact on our Condensed Consolidating Statement of Cash Flows Information.Parent.

Presented below is the condensed consolidating financial information as of March 31, ~~2018~~2019 and December 31, ~~2017,~~2018, and for the three months ended March 31, ~~2018~~2019 and ~~2017.~~2018.

Index for Notes to the Condensed Consolidated Financial Statements

Condensed Consolidating Balance Sheet Information

March 31, ~~2018~~2019


(in millions)	Parent		Issuer		Guarantor Subsidiaries		Non-Guarantor Subsidiaries			Consolidating and Eliminating Adjustments			Consolidated		Parent		Issuer		Guarantor Subsidiaries		Non-Guarantor Subsidiaries			Consolidating and Eliminating Adjustments			Consolidated
Assets
Current assets
Cash and cash equivalents	$	1	$	1	$	2,395	$	130		$	—		$	2,527	$	3	$	2	$	1,314	$	120		$	—		$	1,439
Accounts receivable, net	—		—		1,469		220			—			1,689		—		—		1,465		284			—			1,749
Equipment installment plan receivables, net	—		—		2,281		—			—			2,281		—		—		2,466		—			—			2,466
Accounts receivable from affiliates	—		5		13		—			(5		)	13		—		5		16		—			(5		)	16
Inventories	—		—		1,311		—			—			1,311
Inventory															—		—		1,260		1			—			1,261
Other current assets	—		—		1,144		644			—			1,788		—		—		1,155		659			—			1,814
Total current assets	1		6		8,613		994			(5		)	9,609		3		7		7,676		1,064			(5		)	8,745
Property and equipment, net ⁽¹⁾	—		—		22,008		300			—			22,308		—		—		21,155		309			—			21,464
Operating lease right-of-use assets															—		—		9,505		4			—			9,509
Financing lease right-of-use assets															—		—		2,338		1			—			2,339
Goodwill	—		—		1,683		218			—			1,901		—		—		1,683		218			—			1,901
Spectrum licenses	—		—		35,504		—			—			35,504		—		—		35,618		—			—			35,618
Other intangible assets, net	—		—		194		97			—			291		—		—		97		77			—			174
Investments in subsidiaries, net	23,426		42,581		—		—			(66,007		)	—		26,686		48,221		—		—			(74,907		)	—
Intercompany receivables and note receivables	—		10,039		—		—			(10,039		)	—		—		5,275		—		—			(5,275		)	—
Equipment installment plan receivables due after one year, net	—		—		1,234		—			—			1,234		—		—		1,662		—			—			1,662
Other assets	—		3		1,074		225			(145		)	1,157		—		7		1,596		211			(153		)	1,661
Total assets	$	23,427	$	52,629	$	70,310	$	1,834		$	(76,196	)	$	72,004	$	26,689	$	53,510	$	81,330	$	1,884		$	(80,340	)	$	83,073
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable and accrued liabilities	$	—	$	211	$	6,679	$	267		$	—		$	7,157	$	—	$	136	$	6,883	$	311		$	—		$	7,330
Payables to affiliates	—		256		35		—			—			291		—		189		58		—			(5		)	242
Short-term debt	—		2,670		648		2			—			3,320		—		250		—		—			—			250
Short-term debt to affiliates	—		445		5		—			(5		)	445		—		598		—		—			—			598
Deferred revenue	—		—		791		—			—			791		—		—		665		—			—			665
Short-term operating lease liabilities															—		—		2,199		3			—			2,202
Short-term financing lease liabilities															—		—		911		—			—			911
Other current liabilities	17		18		176		142			—			353		—		714		157		258			—			1,129
Total current liabilities	17		3,600		8,334		411			(5		)	12,357		—		1,887		10,873		572			(5		)	13,327
Long-term debt	—		10,978		1,149		—			—			12,127		—		10,952		—		—			—			10,952
Long-term debt to affiliates	—		14,586		—		—			—			14,586		—		13,985		—		—			—			13,985
Tower obligations ⁽¹⁾	—		—		391		2,191			—			2,582		—		—		76		2,168			—			2,244
Deferred tax liabilities	—		—		3,958		—			(145		)	3,813		—		—		5,078		—			(153		)	4,925
Deferred rent expense	—		—		2,730		—			—			2,730
Operating lease liabilities															—		—		9,337		2			—			9,339
Financing lease liabilities															—		—		1,224		—			—			1,224
Negative carrying value of subsidiaries, net	—		—		590		—			(590		)	—		—		—		761		—			(761		)	—
Intercompany payables and debt	534		—		9,244		261			(10,039		)	—		508		—		4,412		355			(5,275		)	—
Other long-term liabilities	—		39		884		10			—			933		—		—		876		20			—			896
Total long-term liabilities	534		25,603		18,946		2,462			(10,774		)	36,771		508		24,937		21,764		2,545			(6,189		)	43,565
Total stockholders' equity (deficit)	22,876		23,426		43,030		(1,039		)	(65,417		)	22,876		26,181		26,686		48,693		(1,233		)	(74,146		)	26,181
Total liabilities and stockholders' equity	$	23,427	$	52,629	$	70,310	$	1,834		$	(76,196	)	$	72,004	$	26,689	$	53,510	$	81,330	$	1,884		$	(80,340	)	$	83,073


(1)	Assets and liabilities for Non-Guarantor Subsidiaries are primarily included in VIEs related to the 2012 Tower Transaction. See Note 87 – Tower Obligations ~~included in our Annual Report on Form 10-K for the year ended December 31, 2017~~ for further information.

Index for Notes to the Condensed Consolidated Financial Statements

Condensed Consolidating Balance Sheet Information

December 31, ~~2017~~2018



(in millions)	Parent		Issuer		Guarantor Subsidiaries		Non-Guarantor Subsidiaries			Consolidating and Eliminating Adjustments			Consolidated
Assets
Current assets
Cash and cash equivalents	$	2	$	1	$	1,079	$	121		$	—		$	1,203
Accounts receivable, net	—		—		1,510		259			—			1,769
Equipment installment plan receivables, net	—		—		2,538		—			—			2,538
Accounts receivable from affiliates	—		—		11		—			—			11
Inventory	—		—		1,084		—			—			1,084
Other current assets	—		—		1,031		645			—			1,676
Total current assets	2		1		7,253		1,025			—			8,281
Property and equipment, net ⁽¹⁾	—		—		23,062		297			—			23,359
Goodwill	—		—		1,683		218			—			1,901
Spectrum licenses	—		—		35,559		—			—			35,559
Other intangible assets, net	—		—		116		82			—			198
Investments in subsidiaries, net	25,314		46,516		—		—			(71,830		)	—
Intercompany receivables and note receivables	—		5,174		—		—			(5,174		)	—
Equipment installment plan receivables due after one year, net	—		—		1,547		—			—			1,547
Other assets	—		7		1,540		221			(145		)	1,623
Total assets	$	25,316	$	51,698	$	70,760	$	1,843		$	(77,149	)	$	72,468
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable and accrued liabilities	$	—	$	228	$	7,240	$	273		$	—		$	7,741
Payables to affiliates	—		157		43		—			—			200
Short-term debt	—		—		841		—			—			841
Deferred revenue	—		—		698		—			—			698
Other current liabilities	—		447		164		176			—			787
Total current liabilities	—		832		8,986		449			—			10,267
Long-term debt	—		10,950		1,174		—			—			12,124
Long-term debt to affiliates	—		14,582		—		—			—			14,582
Tower obligations ⁽¹⁾	—		—		384		2,173			—			2,557
Deferred tax liabilities	—		—		4,617		—			(145		)	4,472
Deferred rent expense	—		—		2,781		—			—			2,781
Negative carrying value of subsidiaries, net	—		—		676		—			(676		)	—
Intercompany payables and debt	598		—		4,234		342			(5,174		)	—
Other long-term liabilities	—		20		926		21			—			967
Total long-term liabilities	598		25,552		14,792		2,536			(5,995		)	37,483
Total stockholders' equity (deficit)	24,718		25,314		46,982		(1,142		)	(71,154		)	24,718
Total liabilities and stockholders' equity	$	25,316	$	51,698	$	70,760	$	1,843		$	(77,149	)	$	72,468

(in millions) Parent Issuer Guarantor Subsidiaries Non-Guarantor Subsidiaries Consolidating and Eliminating Adjustments Consolidated
Assets
Current assets
Cash and cash equivalents $ 74
$ 1
$ 1,086
$ 58
$ —
$ 1,219
Accounts receivable, net —
—
1,659
256
—
1,915
Equipment installment plan receivables, net —
—
2,290
—
—
2,290
Accounts receivable from affiliates —
—
22
—
—
22
Inventories —
—
1,566
—
—
1,566
Other current assets —
—
1,275
628
—
1,903
Total current assets 74
1
7,898
942
—
8,915
Property and equipment, net ⁽¹⁾
—
—
21,890
306
—
22,196
Goodwill —
—
1,683
—
—
1,683
Spectrum licenses —
—
35,366
—
—
35,366
Other intangible assets, net —
—
217
—
—
217
Investments in subsidiaries, net 22,534
40,988
—
—
(63,522 ) —
Intercompany receivables and note receivables —
8,503
—
—
(8,503 ) —
Equipment installment plan receivables due after one year, net —
—
1,274
—
—
1,274
Other assets —
2
814
236
(140 ) 912
Total assets $ 22,608
$ 49,494
$ 69,142
$ 1,484
$ (72,165 ) $ 70,563
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable and accrued liabilities $ —
$ 253
$ 8,014
$ 261
$ —
$ 8,528
Payables to affiliates —
146
36
—
—
182
Short-term debt —
999
613
—
—
1,612
Deferred revenue —
—
779
—
—
779
Other current liabilities 17
—
192
205
—
414
Total current liabilities 17
1,398
9,634
466
—
11,515
Long-term debt —
10,911
1,210
—
—
12,121
Long-term debt to affiliates —
14,586
—
—
—
14,586
Tower obligations ⁽¹⁾
—
—
392
2,198
—
2,590
Deferred tax liabilities —
—
3,677
—
(140 ) 3,537
Deferred rent expense —
—
2,720
—
—
2,720
Negative carrying value of subsidiaries, net —
—
629
—
(629 ) —
Intercompany payables and debt 32
—
8,201
270
(8,503 ) —
Other long-term liabilities —
65
866
4
—
935
Total long-term liabilities 32
25,562
17,695
2,472
(9,272 ) 36,489
Total stockholders' equity (deficit) 22,559
22,534
41,813
(1,454 ) (62,893 ) 22,559
Total liabilities and stockholders' equity $ 22,608
$ 49,494
$ 69,142
$ 1,484
$ (72,165 ) $ 70,563


(1)	Assets and liabilities for Non-Guarantor Subsidiaries are primarily included in VIEs related to the 2012 Tower Transaction. See Note 87 – Tower Obligations ~~included in our Annual Report on Form 10-K for the year ended December 31, 2017,~~ for further information.

Index for Notes to the Condensed Consolidated Financial Statements

Condensed Consolidating Statement of Comprehensive Income Information

Three Months Ended March 31, ~~2018~~2019


(in millions)	Parent			Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating and Eliminating Adjustments			Consolidated			Parent			Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating and Eliminating Adjustments			Consolidated
Revenues
Service revenues	$	—		$	—		$	7,487		$	540		$	(221	)	$	7,806		$	—		$	—		$	7,859		$	732		$	(314	)	$	8,277
Equipment revenues	—			—			2,407			—			(54		)	2,353			—			—			2,570			—			(54		)	2,516
Other revenues	—			1			249			55			(9		)	296			—			6			273			50			(42		)	287
Total revenues	—			1			10,143			595			(284		)	10,455			—			6			10,702			782			(410		)	11,080
Operating expenses
Cost of services, exclusive of depreciation and amortization shown separately below	—			—			1,580			9			—			1,589			—			—			1,568			6			(28		)	1,546
Cost of equipment sales	—			—			2,664			236			(55		)	2,845
Cost of equipment sales, exclusive of depreciation and amortization shown separately below																			—			—			2,798			272			(54		)	3,016
Selling, general and administrative	—			—			3,157			236			(229		)	3,164			—			1			3,494			275			(328		)	3,442
Depreciation and amortization	—			—			1,554			21			—			1,575			—			—			1,578			22			—			1,600
Total operating expense	—			—			8,955			502			(284		)	9,173			—			1			9,438			575			(410		)	9,604
Operating income	—			1			1,188			93			—			1,282			—			5			1,264			207			—			1,476
Other income (expense)
Interest expense	—			(174		)	(29		)	(48		)	—			(251		)	—			(112		)	(20		)	(47		)	—			(179		)
Interest expense to affiliates	—			(166		)	(5		)	—			5			(166		)	—			(109		)	(5		)	—			5			(109		)
Interest income	—			6			5			—			(5		)	6			—			5			7			1			(5		)	8
Other (expense) income, net	—			(32		)	42			—			—			10
Total other (expense) income, net	—			(366		)	13			(48		)	—			(401		)
Other income (expense), net																			—			8			(1		)	—			—			7
Total other expense, net																			—			(208		)	(19		)	(46		)	—			(273		)
Income (loss) before income taxes	—			(365		)	1,201			45			—			881			—			(203		)	1,245			161			—			1,203
Income tax expense	—			—			(199		)	(11		)	—			(210		)	—			—			(261		)	(34		)	—			(295		)
Earnings (loss) of subsidiaries	671			1,036			(6		)	—			(1,701		)	—
Earnings of subsidiaries																			908			1,111			7			—			(2,026		)	—
Net income	671			671			996			34			(1,701		)	671			$	908		$	908		$	991		$	127		$	(2,026	)	$	908

Net Income	$	671		$	671		$	996		$	34		$	(1,701	)	$	671
Other comprehensive loss, net of tax
Other comprehensive loss, net of tax	(3		)	(3		)	(3		)	—			6			(3		)
Net income																			$	908		$	908		$	991		$	127		$	(2,026	)	$	908
Other comprehensive (loss) income, net of tax
Other comprehensive (loss) income, net of tax																			(189		)	(189		)	65			—			124			(189		)
Total comprehensive income	$	668		$	668		$	993		$	34		$	(1,695	)	$	668		$	719		$	719		$	1,056		$	127		$	(1,902	)	$	719

Index for Notes to the Condensed Consolidated Financial Statements

Condensed Consolidating Statement of Comprehensive Income Information

Three Months Ended March 31, ~~2017~~2018


(in millions)	Parent			Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating and Eliminating Adjustments			Consolidated			Parent			Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating and Eliminating Adjustments			Consolidated
Revenues
Service revenues	$	—		$	—		$	7,018		$	525		$	(214	)	$	7,329		$	—		$	—		$	7,487		$	540		$	(221	)	$	7,806
Equipment revenues	—			—			2,143			—			(100		)	2,043			—			—			2,407			—			(54		)	2,353
Other revenues	—			—			194			52			(5		)	241			—			1			249			55			(9		)	296
Total revenues	—			—			9,355			577			(319		)	9,613			—			1			10,143			595			(284		)	10,455
Operating expenses
Cost of services, exclusive of depreciation and amortization shown separately below	—			—			1,402			6			—			1,408			—			—			1,580			9			—			1,589
Cost of equipment sales	—			—			2,540			246			(100		)	2,686
Cost of equipment sales, exclusive of depreciation and amortization shown separately below																			—			—			2,664			236			(55		)	2,845
Selling, general and administrative	—			—			2,928			246			(219		)	2,955			—			—			3,157			236			(229		)	3,164
Depreciation and amortization	—			—			1,546			18			—			1,564			—			—			1,554			21			—			1,575
Gains on disposal of spectrum licenses	—			—			(37		)	—			—			(37		)
Total operating expenses	—			—			8,379			516			(319		)	8,576			—			—			8,955			502			(284		)	9,173
Operating income	—			—			976			61			—			1,037			—			1			1,188			93			—			1,282
Other income (expense)
Interest expense	—			(264		)	(27		)	(48		)	—			(339		)	—			(174		)	(29		)	(48		)	—			(251		)
Interest expense to affiliates	—			(99		)	(7		)	—			6			(100		)	—			(166		)	(5		)	—			5			(166		)
Interest income	—			9			4			—			(6		)	7			—			6			5			—			(5		)	6
Other income (expense), net	—			3			(1		)	—			—			2
Total other expense, net	—			(351		)	(31		)	(48		)	—			(430		)
Other (expense) income, net																			—			(32		)	42			—			—			10
Total other (expense) income, net																			—			(366		)	13			(48		)	—			(401		)
Income (loss) before income taxes	—			(351		)	945			13			—			607			—			(365		)	1,201			45			—			881
Income tax benefit (expense)	—			—			96			(5		)	—			91
Income tax expense																			—			—			(199		)	(11		)	—			(210		)
Earnings (loss) of subsidiaries	698			1,049			(31		)	—			(1,716		)	—			671			1,036			(6		)	—			(1,701		)	—
Net income	698			698			1,010			8			(1,716		)	698			$	671		$	671		$	996		$	34		$	(1,701	)	$	671
Dividends on preferred stock	(14		)	—			—			—			—			(14		)
Net income attributable to common stockholders	$	684		$	698		$	1,010		$	8		$	(1,716	)	$	684

Net income	$	698		$	698		$	1,010		$	8		$	(1,716	)	$	698		$	671		$	671		$	996		$	34		$	(1,701	)	$	671
Other comprehensive income, net of tax
Other comprehensive income, net of tax	1			1			1			1			(3		)	1
Other comprehensive loss, net of tax
Other comprehensive loss, net of tax																			(3		)	(3		)	(3		)	—			6			(3		)
Total comprehensive income	$	699		$	699		$	1,011		$	9		$	(1,719	)	$	699		$	668		$	668		$	993		$	34		$	(1,695	)	$	668

Index for Notes to the Condensed Consolidated Financial Statements

Condensed Consolidating Statement of Cash Flows Information

Three Months Ended March 31, 2019



(in millions)	Parent		Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating and Eliminating Adjustments			Consolidated
Operating activities
Net cash (used in) provided by operating activities	$	—	$	(248	)	$	2,797		$	(1,017	)	$	(140	)	$	1,392
Investing activities
Purchases of property and equipment	—		—			(1,926		)	(5		)	—			(1,931		)
Purchases of spectrum licenses and other intangible assets, including deposits	—		—			(185		)	—			—			(185		)
Proceeds related to beneficial interests in securitization transactions	—		—			9			1,148			—			1,157
Other, net	—		—			(7		)	—			—			(7		)
Net cash (used in) provided by investing activities	—		—			(2,109		)	1,143			—			(966		)
Financing activities
Proceeds from borrowing on revolving credit facility, net	—		885			—			—			—			885
Repayments of revolving credit facility	—		—			(885		)	—			—			(885		)
Repayments of financing lease obligations	—		—			(85		)	(1		)	—			(86		)
Intercompany advances, net	—		(636		)	622			14			—			—
Tax withholdings on share-based awards	—		—			(100		)	—			—			(100		)
Intercompany dividend paid	—		—			—			(140		)	140			—
Other, net	1		—			(5		)	—			—			(4		)
Net cash provided (used in) by financing activities	1		249			(453		)	(127		)	140			(190		)
Change in cash and cash equivalents	1		1			235			(1		)	—			236
Cash and cash equivalents
Beginning of period	2		1			1,079			121			—			1,203
End of period	$	3	$	2		$	1,314		$	120		$	—		$	1,439

Index for Notes to the Condensed Consolidated Financial Statements

Condensed Consolidating Statement of Cash Flows Information

Three Months Ended March 31, 2018



(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		$	(404	)	$	2,374		$	(1,201	)	$	—	$	770
Investing activities
Purchases of property and equipment	—			—			(1,366		)	—			—		(1,366		)
Purchases of spectrum licenses and other intangible assets, including deposits	—			—			(51		)	—			—		(51		)
Proceeds related to beneficial interests in securitization transactions	—			—			13			1,282			—		1,295
Acquisition of companies, net of cash	—			—			(333		)	—			—		(333		)
Other, net	��			—			(7		)	—			—		(7		)
Net cash (used in) provided by investing activities	—			—			(1,744		)	1,282			—		(462		)
Financing activities
Proceeds from issuance of long-term debt	—			2,494			—			—			—		2,494
Proceeds from borrowing on revolving credit facility, net	—			2,170			—			—			—		2,170
Repayments of revolving credit facility	—			—			(1,725		)	—			—		(1,725		)
Repayments of financing lease obligations	—			—			(172		)	—			—		(172		)
Repayments of long-term debt	—			—			(999		)	—			—		(999		)
Repurchases of common stock	(666		)	—			—			—			—		(666		)
Intercompany advances, net	590			(4,260		)	3,679			(9		)	—		—
Tax withholdings on share-based awards	—			—			(74		)	—			—		(74		)
Cash payments for debt prepayment or debt extinguishment costs	—			—			(31		)	—			—		(31		)
Other, net	2			—			1			—			—		3
Net cash provided by (used in) financing activities	(74		)	404			679			(9		)	—		1,000
Change in cash and cash equivalents	(73		)	—			1,309			72			—		1,308
Cash and cash equivalents
Beginning of period	74			1			1,086			58			—		1,219
End of period	$	1		$	1		$	2,395		$	130		$	—	$	2,527

(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
$ (404 ) $ 2,374
$ (1,201 ) $ —
$ 770

Investing activities
Purchases of property and equipment —
—
(1,366 ) —
—
(1,366 )
Purchases of spectrum licenses and other intangible assets, including deposits —
—
(51 ) —
—
(51 )
Proceeds related to beneficial interests in securitization transactions —
—
13
1,282
—
1,295
Acquisition of companies, net of cash acquired —
—
(333 ) —
—
(333 )
Other, net —
—
(7 ) —
—
(7 )
Net cash provided by (used in) investing activities —
—
(1,744 ) 1,282
—
(462 )

Financing activities
Proceeds from issuance of long-term debt —
2,494
—
—
—
2,494
Proceeds from borrowing on revolving credit facility, net —
2,170
—
—
—
2,170
Repayments of revolving credit facility —
—
(1,725 ) —
—
(1,725 )
Repayments of capital lease obligations —
—
(172 ) —
—
(172 )
Repayments of long-term debt —
—
(999 ) —
—
(999 )
Repurchases of common stock (666 ) —
—
—
—
(666 )
Intercompany advances, net 590
(4,260 ) 3,679
(9 ) —
—
Tax withholdings on share-based awards —
—
(74 ) —
—
(74 )
Other, net 2
—
(30 ) —
—
(28 )
Net cash (used in) provided by financing activities (74 ) 404
679
(9 ) —
1,000
Change in cash and cash equivalents (73 ) —
1,309
72
—
1,308
Cash and cash equivalents
Beginning of period 74
1
1,086
58
—
1,219
End of period $ 1
$ 1
$ 2,395
$ 130
$ —
$ 2,527

~~Index for Notes to the Condensed Consolidated Financial Statements~~

~~Condensed Consolidating Statement of Cash Flows Information~~

~~Three Months Ended March 31, 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 $ 1
$ (134 ) $ 1,855
$ (1,114 ) $ —
$ 608

Investing activities
Purchases of property and equipment —
—
(1,528 ) —
—
(1,528 )
Purchases of spectrum licenses and other intangible assets, including deposits —
—
(14 ) —
—
(14 )
Proceeds related to beneficial interests in securitization transactions —
—
10
1,124
—
1,134
Other, net —
—
(8 ) —
—
(8 )
Net cash (used in) provided by investing activities —
—
(1,540 ) 1,124
—
(416 )

Financing activities
Proceeds from issuance of long-term debt —
5,495
—
—
—
5,495
Repayments of capital lease obligations —
—
(90 ) —
—
(90 )
Repayments of long-term debt —
—
(3,480 ) —
—
(3,480 )
Intercompany advances, net —
(4,956 ) 4,967
(11 ) —
—
Tax withholdings on share-based awards —
—
(92 ) —
—
(92 )
Dividends on preferred stock (14 ) —
—
—
—
(14 )
Other, net 15
—
(25 ) —
—
(10 )
Net cash provided by (used in) financing activities 1
539
1,280
(11 ) —
1,809
Change in cash and cash equivalents 2
405
1,595
(1 ) —
2,001
Cash and cash equivalents
Beginning of period 358
2,733
2,342
67
—
5,500
End of period $ 360
$ 3,138
$ 3,937
$ 66
$ —
$ 7,501

~~Balances have been revised based on the guidance in ASU 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments.” See~~ ~~Note 1 - Summary of Significant Accounting Policies~~ ~~of the Notes to the Condensed Consolidated Financial Statements, for further information.~~

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”) 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 and 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, ~~2017, as supplemented by the Risk Factors included in Part II, Item 1A “Risk Factors” below,~~2018, could affect future results and cause those results to differ materially from those expressed in the forward-looking statements:

the failure to obtain, or delays in obtaining, required regulatory approvals for the ~~Transactions,~~merger (the “Merger”) with Sprint Corporation (“Sprint”), pursuant to the Business Combination Agreement with Sprint and other parties therein (the “Business Combination Agreement”) and the other transactions contemplated by the Business Combination Agreement (collectively, the “Transactions”), and the risk that such approvals may result in the imposition of conditions that could adversely affect the combined company or the expected benefits of the Transactions, or the failure to satisfy any of the other conditions to the Transactions on a timely basis or at all;

the occurrence of events that may give rise to a right of one or both of the parties to terminate the Business Combination Agreement;

adverse effects on the market price of our common stock or on our ~~or Sprint’s~~ operating results because of a failure to complete the ~~Transactions~~Merger in the anticipated timeframe or at all;

inability to obtain the financing contemplated to be obtained in connection with the Transactions on the expected terms or timing or at all;

the ability of us, Sprint and the combined company to make payments on debt or to repay existing or future indebtedness when due or to comply with the covenants contained therein;

adverse changes in the ratings of our or Sprint’s debt securities or adverse conditions in the credit markets;

negative effects of the announcement, pendency or consummation of the Transactions on the market price of our common stock and on our or Sprint’s operating results, including as a result of changes in key customer, supplier, employee or other business relationships;

significant costs related to the Transactions, including financing costs and unknown ~~liabilities;~~

liabilities of Sprint or that may arise;

failure to realize the expected benefits and synergies of the Transactions in the expected timeframes or at all;

costs or difficulties related to the integration of Sprint’s network and operations into our network and operations;

the risk of litigation or regulatory actions related to the Transactions;

the inability of us, Sprint or the combined company to retain and hire key personnel;

the risk that certain contractual restrictions contained in the Business Combination Agreement during the pendency of the Transactions could adversely affect our or Sprint’s ability to pursue business opportunities or strategic transactions;

adverse economic, political or ~~political~~market conditions in the U.S. and international markets;

competition, industry consolidation, and changes in the market for wireless services, which could negatively affect our ability to attract and retain customers;

the effects of any future merger, investment, or acquisition involving us, as well as the effects of mergers, investments, or acquisitions in the technology, media and telecommunications industry;

challenges in implementing our business strategies or funding our operations, including payment for additional spectrum or network upgrades;

the possibility that we may be unable to renew our spectrum licenses on attractive terms or acquire new spectrum licenses at reasonable costs and terms;

difficulties in managing growth in wireless data services, including network quality;

material changes in available technology and the effects of such changes, including product substitutions and deployment costs and performance;

the timing, scope and financial impact of our deployment of advanced network and business technologies;

the impact on our networks and business from major technology equipment failures;

breaches of our and/or our third-party vendors’ networks, information technology (“IT”) and data ~~security;~~

security, resulting in unauthorized access to customer confidential information;

natural disasters, terrorist attacks or similar incidents;

unfavorable outcomes of 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;~~

networks and changes in data privacy laws;

any disruption or failure of our third parties’ or key suppliers’ provisioning of products or services;

material adverse changes in labor matters, including labor campaigns, negotiations or additional organizing activity, and any resulting financial, operational and/or reputational impact;

changes in accounting assumptions that regulatory agencies, including the Securities and Exchange Commission (“SEC”), may require, which could result in an impact on earnings;

changes in tax laws, regulations and existing standards and the resolution of disputes with any taxing jurisdictions; ~~and~~

the possibility that the reset process under our trademark license ~~with DT~~ results in changes to the royalty rates for our ~~trademarks.~~trademarks;

the possibility that we may be unable to adequately protect our intellectual property rights or be accused of infringing the intellectual property rights of others;

our business, investor confidence in our financial results and stock price may be adversely affected if our internal controls are not effective;

the occurrence of high fraud rates related to device financing, credit card, dealers, or subscriptions; and

interests of a majority stockholder may differ from the interests of other stockholders.

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, press releases, SEC filings and public conference calls and webcasts. We intend to also use the @TMobileIR Twitter account (https://twitter.com/TMobileIR) and the @JohnLegere Twitter (https://twitter.com/JohnLegere), Facebook and Periscope accounts, which Mr. Legere also uses as means for personal communications and observations, as means of disclosing information about ~~the Company~~us and ~~its~~our services and for complying with ~~its~~our disclosure obligations under Regulation FD. 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’s~~our 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~~our 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 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 for the three months ended March 31, ~~2018,~~2019, included in Part I, Item 1 of this Form 10-Q and audited consolidated financial statements included in Part II, Item 8 of our Annual Report on Form 10-K for the year ended December 31, ~~2017.~~2018. 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

~~Business Combination Agreement~~In April 2019, T-Mobile introduced TVision^TM Home, a rebranded and upgraded version of Layer3 TV. TVision^TM Home delivers what customers want most from high-end home TV, including a premium TV experience and HD and 4K channels. TVision^TM Home launched in eight markets, with other markets coming later in 2019.

In April 2019, T-Mobile launched T-Mobile MONEY nationwide, offering customers a no-fee, interest-earning, mobile-first checking account which can be opened and managed from customers’ smartphones.

Proposed Sprint Transaction

On April 29, 2018, we ~~announced that we~~ entered into athe Business Combination Agreement to merge with Sprint ~~to merge~~ in an all-stock transaction at ana fixed exchange ratio of 0.10256 shares of ~~our shares~~T-Mobile common stock for each share of Sprint ~~share.~~common stock, or 9.75 shares of Sprint common stock for each share of T-Mobile common stock. The combined company will be named ~~T-Mobile,~~“T-Mobile” and, as a result of the ~~New T-Mobile~~Merger, is expected to be able to rapidly launch a ~~force for positive change~~broad and deep nationwide 5G network, accelerate innovation and increase competition in the U.S. wireless, video and broadband industries. ~~With added network scale~~Immediately following the Merger, it is anticipated that DT and ~~resources,~~SoftBank will hold, directly or indirectly, on a fully diluted basis, approximately 41.7% and 27.4%, respectively, of the ~~companied company will supercharge T-Mobile’s Un-carrier strategy to disrupt~~outstanding T-Mobile common stock, with the ~~marketplace~~remaining approximately 30.9% of the outstanding T-Mobile common stock held by other stockholders, based on closing share prices and ~~lay the foundation for U.S. companies and innovators to lead in the 5G era.~~certain other assumptions as of December 31, 2018. The ~~transaction~~Merger is subject to ~~customary closing conditions, including~~ regulatory approvals and ~~is expected~~certain other customary closing conditions. We expect to ~~close~~receive federal regulatory approval in the first half of 2019.

For more information regarding our Business Combination Agreement, see Note ~~14 - Subsequent Events~~3 – Business Combinations ~~in the Notes~~

~~to the Condensed Consolidated Financial Statements.~~

~~Acquisitions~~

On January 1, 2018, we closed on our previously announced Unit Purchase Agreement to acquire the remaining equity in Iowa Wireless Services, LLC (“IWS”), a 54% owned unconsolidated subsidiary, for a purchase price of $25 million. We accounted for our acquisition of IWS as a business combination and recognized a bargain purchase gain of approximately $25 million as part of our purchase price allocation and a gain on our previously held equity interest of approximately $15 million which have been included within Other income, net in our Condensed Consolidated Statements of Comprehensive Income for the three months ended March 31, 2018.

On January 22, 2018, we completed our acquisition of television innovator Layer3 TV, Inc. (“Layer3 TV”) for cash consideration of $318 million, subject to customary working capital and other post-closing adjustments. Upon closing of the transaction, Layer3 TV became a wholly-owned consolidated subsidiary. Layer3 TV acquires and distributes digital entertainment programming primarily through the internet to residential subscribers, offering direct to home digital television and multi-channel video programming distribution services. This transaction represented an opportunity to acquire a complementary service to our existing wireless service to advance our video strategy. We accounted for the purchase of Layer3 TV as a business combination and recognized $218 million of goodwill as part of our purchase price allocation.

~~For more information regarding our acquisitions, see~~ ~~Note 3 - Business Combinations~~ ~~in the~~ Notes to the Condensed Consolidated Financial ~~Statements.~~Statements.

Accounting Pronouncements Adopted During the Current Year

~~Revenue Recognition~~Leases

On January 1, ~~2018,~~2019, we adopted ~~ASU 2014-09, “Revenue from Contracts with Customers (Topic 606)” and all~~ the ~~related amendments (collectively, the “new revenue standard”).~~new lease standard. See Note ~~10 - Revenue from Contracts with Customers~~1 – Summary of Significant Accounting Policies of the Notes to the Condensed Consolidated Financial Statements for information regarding the ~~new revenue standard and~~ ~~Note 1 - Summary of Significant Accounting Policies~~ ~~of the Notes to the Condensed Consolidated Financial Statements for information regarding recently issued accounting standards.~~

~~The~~ impact of our adoption of the new ~~revenue standard is presented in~~ ~~Note 1 – Summary of Significant Accounting Policies~~ and in the following table which presents a comparison of selected financial information under both the new revenue standard and the previous revenue standard for the three months ended March 31, 2018:

Three Months Ended March 31, 2018
Previous Revenue Standard New Revenue Standard Change
Performance Measures
Branded postpaid phone ARPU $ 46.88
$ 46.66
$ (0.22 )
Branded postpaid ABPU $ 60.39
$ 60.14
$ (0.25 )
Branded prepaid ARPU $ 38.92
$ 38.90
$ (0.02 )

Adjusted EBITDA (in millions) $ 2,861
$ 2,956
$ 95

~~Statement of Cash Flows~~

On January 1, 2018, we adopted ASU 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments” (the “new cash flow standard”) which impacted the presentation of our cash flows related to our beneficial interests in securitization transactions, which is the deferred purchase price, resulting in a reclassification of cash inflows from Operating activities to Investing activities of approximately $1.3 billion and $1.1 billion for the three months ended March 31, 2018 and 2017, respectively, in our Condensed Consolidated Statements of Cash Flows. The new cash flow standard also impacted the presentation of our cash payments for debt prepayment and debt extinguishment costs, resulting in a reclassification of cash outflows from Operating activities to Financing activities of $31 million and $29 million for the three months ended March 31, 2018 and 2017, respectively, in our Condensed Consolidated Statements of Cash Flows. We have applied the new cash flow standard retrospectively to all periods presented.

~~For additional information regarding the new cash flow standard and the impact of our adoptions, see~~ ~~Note 1 - Summary of Significant Accounting Policies~~ ~~of the Notes to the Condensed Consolidated Financial Statements.~~

~~Income Taxes~~

~~Hurricane Impacts~~

During the three months ended March 31, 2018, our operations in Puerto Rico continued to experience losses related to hurricanes, primarily from incremental costs to maintain our services in Puerto Rico. We expect additional expenses to be incurred in 2018, primarily related to our operations in Puerto Rico. We continue to assess the damage of the hurricanes and work with our insurance carriers to submit claims for property damage and business interruption. During the three months ended March 31, 2018, we received $94 million in reimbursement from our insurance carriers which eliminated the $93 million receivable we accrued for reimbursements as of December 31, 2017. No additional reimbursements were recorded during the three months ended March 31, 2018, however, we expect to record additional insurance recoveries related to these hurricanes in future periods. Significant impacts to our results, operating metrics and non-GAAP financial measures during the three months ended March 31, 2018 are presented in the table below:

(in millions, except per share amounts) Three Months Ended March 31,
2018
Increase (decrease)
Cost of services $ 36

Operating income (loss) $ (36 )
Net income (loss) $ (23 )

Earnings per share - basic $ (0.03 )
Earnings per share - diluted $ (0.03 )

Non-GAAP financial measures
Adjusted EBITDA $ (36 )

lease standard.

Results of Operations

Highlights for the three months ended March 31, ~~2018,~~2019, compared to the same period in ~~2017~~2018

Total revenues of ~~$10.5~~$11.1 billion for the three months ended March 31, 2019 increased ~~$842~~$625 million, or ~~9%. The increase was~~6%, primarily driven by growth in service and equipment revenues as further discussed below.

Service revenues of ~~$7.8~~$8.3 billion for the three months ended March 31, 2019 increased ~~$477~~$471 million, or ~~7%. The increase was~~6%, primarily due to growth in our average branded customer base ~~as a result of~~driven by the continued growth in existing and Greenfield markets, including the growing success of ~~our business channel,~~new customer segments and rate plans such as T-Mobile ONE Unlimited 55+, T-Mobile ONE Military, T-Mobile for Business ~~continued~~and T-Mobile Essentials, along with record low churn and growth in ~~existing markets, distribution expansion to new Greenfield markets, lower churn, higher~~wearables and other connected ~~devices and DIGITS, and the success of our MetroPCS brand.~~devices.

Equipment revenues of ~~$2.4~~$2.5 billion for the three months ended March 31, 2019 increased ~~$310~~$163 million, or ~~15%. The increase was~~7%, primarily due to a higher average revenue per device sold, ~~a positive impact from the new revenue standard of $77 million, and proceeds from liquidation of returned customer handsets,~~ partially offset by a decrease in the number of devices sold, excluding purchased ~~lease devices, lower lease revenues and a decrease from customer purchases of~~ leased ~~devices at the end of the lease term.~~devices.

Operating income of ~~$1.3~~$1.5 billion for the three months ended March 31, 2019 increased ~~$245~~$194 million, or ~~24%. The increase was~~15%, primarily due to higher ~~Total service revenues and Equipment~~Service revenues, partially offset by higher Selling, general and administrative expenses, ~~Cost~~including merger-related costs of ~~services, and Cost of equipment sales. The positive impact to~~$113 million. Operating income also included the negative impact from hurricanes of ~~the adoption of the new revenue standard was $95 million.~~$36 million for three months ended March 31, 2018.

Net income of ~~$671~~$908 million ~~decreased $27~~for the three months ended March 31, 2019 increased $237 million, or ~~4%. The decrease was~~35%, primarily due to ~~a change in Income tax (expense) benefit of $301 million,~~higher Operating income and lower interest expense and interest expense to affiliates, partially offset by higher Income tax expense. The negative impact of merger-related costs was $93 million, net of tax, for the ~~increase in Operating income of $245 million discussed above. The positive impact to~~three months ended March 31, 2019. Net income also included the negative impact from hurricanes of ~~the adoption~~$23 million, net of ~~the new revenue standard was $71 million.~~tax, for three months ended March 31, 2018.


•	Adjusted EBITDA, a non-GAAP financial measure, of ~~$3.0~~$3.3 billion for the three months ended March 31, 2019 increased ~~$288~~$328 million, or 11%~~. The increase was~~, primarily due to higher Operating income driven by the factors described ~~above, partially offset~~above. See “Performance Measures” for additional information.


•	Net cash provided by ~~lower Gains on disposal~~operating activities of ~~spectrum licenses. The positive impact to Adjusted EBITDA from~~$1.4 billion for the ~~adoption~~three months ended March 31, 2019 increased $622 million, or 81%. See “Liquidity and Capital Resources” for additional information.


•	Free Cash Flow, a non-GAAP financial measure, of ~~the new revenue standard resulted in an increase of approximately $95~~$618 million for the three months ended March 31, ~~2018.~~2019 decreased $50 million, or 7%. Free Cash Flow includes $34 million in payments for merger-related costs for the three months ended March 31, 2019. See “~~Performance Measures” for more information.~~


•	~~Net cash provided by operating activities of $770 million increased $162 million, or 27%. See “~~Liquidity and Capital Resources” for additional information.


•	~~Free Cash Flow, a non-GAAP financial measure, of $668 million increased $483 million, or 261%. See “Liquidity and Capital Resources” for additional information.~~

Set forth below is a summary of our unaudited condensed consolidated financial results:


	Three Months Ended March 31,						Change					Three Months Ended March 31,						Change
(in millions)	2018			2017			$			%		2019			2018			$			%
Revenues
Branded postpaid revenues	$	5,070		$	4,725		$	345		7	%	$	5,493		$	5,070		$	423		8	%
Branded prepaid revenues	2,402			2,299			103			4	%	2,386			2,402			(16		)	(1	)%
Wholesale revenues	266			270			(4		)	(1	)%	304			266			38			14	%
Roaming and other service revenues	68			35			33			94	%	94			68			26			38	%
Total service revenues	7,806			7,329			477			7	%	8,277			7,806			471			6	%
Equipment revenues	2,353			2,043			310			15	%	2,516			2,353			163			7	%
Other revenues	296			241			55			23	%	287			296			(9		)	(3	)%
Total revenues	10,455			9,613			842			9	%	11,080			10,455			625			6	%
Operating expenses
Cost of services, exclusive of depreciation and amortization shown separately below	1,589			1,408			181			13	%	1,546			1,589			(43		)	(3	)%
Cost of equipment sales	2,845			2,686			159			6	%
Cost of equipment sales, exclusive of depreciation and amortization shown separately below												3,016			2,845			171			6	%
Selling, general and administrative	3,164			2,955			209			7	%	3,442			3,164			278			9	%
Depreciation and amortization	1,575			1,564			11			1	%	1,600			1,575			25			2	%
Gains on disposal of spectrum licenses	—			(37		)	37			NM
Total operating expense	9,173			8,576			597			7	%	9,604			9,173			431			5	%
Operating income	1,282			1,037			245			24	%	1,476			1,282			194			15	%
Other income (expense)
Interest expense	(251		)	(339		)	88			(26	)%	(179		)	(251		)	72			(29	)%
Interest expense to affiliates	(166		)	(100		)	(66		)	66	%	(109		)	(166		)	57			(34	)%
Interest income	6			7			(1		)	(14	)%	8			6			2			33	%
Other income, net	10			2			8			NM
Other income (expense), net												7			10			(3		)	(30	)%
Total other expense, net	(401		)	(430		)	29			(7	)%	(273		)	(401		)	128			(32	)%
Income before income taxes	881			607			274			45	%	1,203			881			322			37	%
Income tax (expense) benefit	(210		)	91			(301		)	(331	)%
Income tax expense												(295		)	(210		)	(85		)	40	%
Net income	$	671		$	698		$	(27	)	(4	)%	$	908		$	671		$	237		35	%

Statement of Cash Flows Data
Net cash provided by operating activities	$	770		$	608		$	162		27	%	$	1,392		$	770		$	622		81	%
Net cash used in investing activities	(462		)	(416		)	(46		)	11	%	(966		)	(462		)	(504		)	109	%
Net cash provided by financing activities	1,000			1,809			(809		)	(45	)%

Net cash (used in) provided by financing activities												(190		)	1,000			(1,190		)	(119	)%
Non-GAAP Financial Measures
Adjusted EBITDA	$	2,956		$	2,668		$	288		11	%	$	3,284		$	2,956		$	328		11	%
Free Cash Flow	668			185			483			261	%	618			668			(50		)	(7	)%

~~NM - Not Meaningful~~

The following discussion and analysis isare for the three months ended March 31, ~~2018,~~2019, compared to the same period in ~~2017~~2018 unless otherwise stated.

Total revenues increased ~~$842~~$625 million, or 9%6%, ~~primarily due to higher revenues from branded postpaid customers, higher equipment revenues and growth in branded prepaid customers~~ as discussed below.

Branded postpaid revenues increased ~~$345~~$423 million, or 7%8%, primarily from:

~~A 9% increase in~~Higher average branded postpaid phone customers, primarily from growth in our customer base driven by the ~~growing success of new segments such as T-Mobile for Business,~~ continued growth in existing and Greenfield ~~markets;~~markets including the growing success of new customer segments and rate plans such as T-Mobile ONE Unlimited 55+, T-Mobile ONE Military, T-Mobile for Business and T-Mobile Essentials, along with record low churn; and

~~A 29% increase in~~Higher average branded postpaid other customers, driven by higher wearables and other connected devices, ~~and DIGITS;~~specifically the Apple watch; partially offset by

~~A 2% decrease in branded postpaid phone Average Revenue Per User (“ARPU”) primarily driven by:~~

~~A decrease in regulatory program revenues with the continued adoption of T-Mobile ONE tax inclusive plans;~~

~~Promotions targeting families and new segments;~~

~~Lower insurance program revenue per subscriber; and~~

•

~~The negative impact from~~Lower branded postpaid phone Average Revenue Per User (“ARPU”). See “Branded Postpaid Phone ARPU” in the ~~new revenue standard~~“Performance Measures” section of ~~approximately $29 million or $0.22 of ARPU primarily due to promotions on devices that are allocated to service revenues. See~~ ~~Note 10 - Revenue from Contracts with Customers~~ ~~of the Notes to the Condensed Consolidated Financial Statements for additional information. These decreases were partially offset by~~this MD&A.

~~The positive impact from our T-Mobile ONE rate plans.~~

Branded prepaid revenues ~~increased $103 million, or 4%, primarily from:~~

~~A 3% increase in~~were essentially flat with higher average branded prepaid customers ~~primarily~~ driven by ~~growth in~~ the ~~customer base; and~~

~~A 1% increase in branded prepaid ARPU from the~~continued success of our ~~MetroPCS brand.~~Metro by T-Mobile brand, offset by lower branded prepaid ARPU. See “Branded Prepaid ARPU” in the “Performance Measures” section of this MD&A.

Wholesale revenues ~~slightly decreased $4~~ increased $38 million, or ~~1%.~~14%, primarily from the continued success of our MVNO partnerships.

Roaming and other service revenuesincreased ~~$33~~$26 million, or ~~94%~~38%, primarily from ~~an increase~~increases in ~~international~~domestic and ~~domestic~~international roaming revenues.

Equipment revenues increased~~$310~~ $163 million, or ~~15%~~7%, primarily from:

~~An increase of $423~~$136 million in device sales revenues, excluding purchased ~~lease~~leased devices, primarily ~~due to:~~

from:

Higher average revenue per device sold due to an increase in the high-end device mix and ~~a decrease in~~lower promotions; ~~and~~partially offset by


•	~~A positive impact from the new revenue standard of $77 million primarily related to certain commission costs now recorded as Selling, general and administrative expenses. See~~ ~~Note 10 - Revenue from Contracts with Customers~~ ~~of the Notes to the Condensed Consolidated Financial Statements for additional information. These increases were partially offset by~~

~~A 3%~~An 8% decrease in the number of devices sold, excluding purchased leased devices.

Other revenues decreased $9 million, or 3%, primarily from:

A decrease of $46 million in co-location rental revenue from the adoption of the new lease ~~devices, driven primarily by a lower branded postpaid handset upgrade rate.~~

~~An increase of $73 million primarily related to proceeds from liquidation of returned customer handsets;~~standard; partially offset by


•	~~A decrease of $153 million~~ ~~in lease revenues from declining Just Upgrade My Phone! (“JUMP!”~~^®~~) On Demand customers due to shifting focus to our equipment installation plan (“EIP”) financing option and the success of affordable devices~~ Higher amortized imputed discount on ~~leasing programs with lower monthly lease payments; and~~

~~A decrease of $34 million from lower volumes of purchased leased devices at the end of the lease term.~~

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 $233 million~~receivables primarily due to ~~growth~~an increase in ~~the gross amount of equipment financed on EIP.~~volumes financed; and

Higher advertising revenues.

~~Other revenues~~Operating expenses increased ~~$55~~$431 million, or ~~23%, primarily due to higher revenue from revenue share agreements with third parties.~~

~~Operating expenses~~ ~~increased $597 million, or 7%~~5%, primarily from higher Selling, general and administrative expenses ~~Cost of services,~~ and Cost of equipment sales as discussed below.

Cost of services ~~increased $181~~ decreased $43 million, or ~~13%~~3%, primarily from:

~~Higher~~The positive impact of the new lease standard of approximately $95 million resulting from the decrease in the average lease term and ~~employee-related expenses associated with network expansion;~~the change in accounting conclusion for certain sale-leaseback sites;

Lower regulatory program costs; and

The negative impact from hurricanes of $36 ~~million; and~~

~~Higher international roaming expenses;~~million for three months ended March 31, 2018; partially offset by

~~A lower Universal Service Fund expense~~Higher costs for ~~overpayment of expenses in 2017.~~customer appreciation programs and network expansion.

Cost of equipment sales increased ~~$159~~$171 million, or 6%, primarily from:

An increase ~~of $273 million~~ in device cost of equipment sales, excluding purchased leased devices, primarily due ~~to:~~

Ato a higher average cost per device sold, primarily due to an increase in the high-end device ~~mix;~~mix, partially offset by

~~A 3%~~ an 8% decrease in the number of devices sold, excluding purchased lease ~~devices, driven primarily by a lower branded postpaid handset upgrade rate.~~

~~A decrease of $86 million from fewer lease buyouts as fewer customers are in the handset lease program; and~~

~~A decrease of $26 million primarily related to:~~

~~A decrease in insurance and warranty costs due to a decrease in higher cost devices used in the insurance program;~~

~~Higher proceeds from liquidation of returned customer handsets under our insurance program;~~devices; partially offset by

~~Higher costs from an increase in the volume of liquidated returned customer handsets outside of our insurance program.~~Lower warranty costs.

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, 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 expenses increased ~~$209~~$278 million, or 7%9%, primarily from:

Higher ~~employee-related~~commissions including an $81 million increase in amortization expense related to commission costs that were capitalized beginning upon the adoption of ASC 606 on January 1, 2018;

Merger-related costs of $113 million versus zero in Q1 2018; and

Higher costs related to outsourced functions, managed services and ~~managed services;~~

~~Higher commissions driven by compensation structure and channel mix; and~~

~~An increase in business taxes;~~

~~An approximately $40 million FCC settlement related to local ring back tones in rural areas;~~employee-related costs; partially offset by

Lower ~~bad debt expense~~promotional and ~~losses from sales of receivables reflecting our ongoing focus on managing customer quality;~~advertising costs.

~~Lower handset repair services cost; and~~

The positive impact from the new revenue standard of $48 million primarily related to a net impact from higher commissions, which were previously recorded as contra equipment revenue and capitalized commission costs on new contracts in excess of the related amortization.

Depreciation and amortization increased ~~$11~~$25 million, or 1%2%, primarily from:

The continued ~~build-out~~deployment of ~~our 4G LTE network;~~

~~The implementation of~~low band spectrum, including 600 MHz, and laying the ~~first component of our new billing system; and~~

~~Growth in our distribution footprint;~~groundwork for 5G; partially offset by

Lower depreciation expense related to our JUMP! On Demand program resulting from a lower total number of devices under lease. ~~Under our JUMP! On Demand program, the cost of a leased wireless device is depreciated to its estimated residual value over the period expected to provide utility to us.~~

~~Gains on disposal of spectrum licenses~~ decreased $37 million. We had no gains on disposal of spectrum license transactions during the three months ended March 31, 2018, compared to gains of $37 million on disposal of spectrum licenses during the three months ended March 31, 2017.

~~Net income~~ ~~decreased $27 million, or 4%, primarily due to a change in Income tax (expense) benefit of $301 million, partially offset by higher~~ Operating income including the positive impact to Net income of the adoption of the new revenue standard of $71 million. Net income also included net, after-tax spectrum gains of $23 million and the recognition of a $270 million tax benefit related to a reduction in the valuation allowance against deferred tax assets in certain state jurisdictions for the three months ended March 31, 2017. There were no spectrum gains for the three months ended March 31, 2018.

~~Operating income~~, the components of which are discussed above, increased ~~$245~~$194 million, or ~~24%~~15%, ~~which includes~~for the ~~positive impact from~~three months ended March 31, 2019 primarily due to higher Service revenues, partially offset by higher Selling, general and administrative expenses. Operating income included the ~~new revenue standard~~following:

Merger-related costs of ~~$95 million and the~~$113 million;

The negative impact from hurricanes of $36 ~~million.~~

~~Income tax (expense) benefit~~ ~~changed $301 million, from a benefit of $91~~ million for the three months ended March 31, ~~2017 to expense of $210 million for the three months ended March 31, 2018 primarily from:~~

~~A $270 million tax benefit recognized~~2018. The impact from hurricanes is not material in the three months ended March 31, ~~2017 related to a reduction in~~2019; and

The net positive impact of the ~~valuation allowance against deferred tax assets in certain state jurisdictions that did not impact 2018; and~~new lease standard of approximately $49 million.

~~Higher income before taxes; partially offset by~~

~~Benefits from a reduction in the federal corporate income tax rate provided by the Tax Cuts and Jobs Act, which took effect on January 1, 2018, from 35% to 21%.~~

Interest expense decreased ~~$88~~$72 million, or ~~26%~~29%, primarily from:

~~Redemption~~The redemption in April 2018 of aggregate principal amount of ~~$6.8~~$2.4 billion of Senior Notes, with various interest rates and maturity ~~dates, in April 2017;~~dates; and

~~Redemption in January 2018~~Higher capitalized interest costs of ~~$1.0 billion~~$32 million, primarily due to the build out of ~~6.125% Senior Notes due 2022; partially offset by~~

~~Issuance of aggregate principal amount of $1.5 billion of Senior Notes, with various interest rates and maturity dates, in March 2017;~~

~~Issuance in January 2018 of $1.0 billion of public 4.500% Senior Notes due 2026; and~~

~~Issuance in January 2018 of $1.5 billion of public 4.750% Senior Notes due 2028.~~our network to utilize our 600 MHz spectrum licenses.

~~See~~ ~~Note 9 – Debt~~ ~~of the~~ ~~Notes to the Condensed Consolidated Financial Statements~~ ~~for further information~~

Interest expense to affiliates ~~increased $66~~ decreased $57 million, or ~~66%~~34%, primarily from:

~~Issuance~~Higher capitalized interest costs of ~~$4.0 billion~~$43 million, primarily due to the build out of ~~Incremental Secured Term Loan facility entered into in January 2017, which refinanced $1.98 billion of outstanding senior secured term loans;~~

~~Issuance of $4.0 billion in aggregate principal amount of Senior Notes, with various interest rates and maturity dates, in May 2017;~~

~~Issuance of $3.0 billion in aggregate principal amount of Senior Notes, with various interest rates and maturity dates, in April 2017;~~our network to utilize our 600 MHz spectrum licenses; and

~~Issuance of $0.5 billion in aggregate principal amount of 5.375% Senior Notes due 2027 in September 2017; partially offset by~~

~~A decrease from lower~~Lower interest rates achieved through refinancing of a total of $2.5 billion of Senior Reset Notes in April ~~2017.~~2018.

~~See~~ ~~Note 9 – Debt~~ ~~of the~~ ~~Notes to the Condensed Consolidated Financial Statements~~ ~~for further information.~~

Other income (expense), net ~~increased $8~~ decreased $3 million, ~~primarily from:~~

or 30%. Other income (expense), net for the three months ended March 31, 2018 included the following:

A ~~$15 million gain on our previously held equity interest in IWS and a~~ $25 million bargain purchase gain as part of our purchase price allocation related to the IWS acquisition and a $15 million gain on our previously held equity interest in IWS; partially offset by

A $32 million loss on early redemption of $1.0 billion of 6.125% Senior Notes due 2022 in January 2018.

Income tax expense increased $85 million, or 40%, primarily from higher income before taxes.

Net income, the components of which are discussed above, increased $237 million, or 35%, primarily due to higher Operating income and lower interest expense and interest expense to affiliates, partially offset by higher Income tax expense. Net income included the following:

Merger-related costs of $93 million, net of tax; partially offset by

No significant impact from hurricanes for the three months ended March 31, 2019, compared to a negative impact from hurricanes of $23 million net of tax for three months ended March 31, 2018.

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:


	March 31, 2018			December 31, 2017			Change					March 31, 2019			December 31, 2018			Change
(in millions)	March 31, 2018			December 31, 2017			$			%		March 31, 2019			December 31, 2018			$			%
Other current assets	$	644		$	628		$	16		3	%	$	659		$	645		$	14		2	%
Property and equipment, net	300			306			(6		)	(2	)%	309			297			12			4	%
Goodwill	218			—			218			NM		218			218			—			NM
Tower obligations	2,191			2,198			(7		)	—	%	2,168			2,173			(5		)	—	%
Total stockholders' deficit	(1,039		)	(1,454		)	415			(29	)%	(1,233		)	(1,142		)	(91		)	8	%

NM - Not Meaningful

The most significant components of the results of operations of our Non-Guarantor Subsidiaries were as follows:


	Three Months Ended March 31,				Change					Three Months Ended March 31,				Change
(in millions)	2018		2017		$			%		2019		2018		$		%
Service revenues	$	540	$	525	$	15		3	%	$	732	$	540	$	192	36	%
Cost of equipment sales	236		246		(10		)	(4	)%
Cost of equipment sales, exclusive of depreciation and amortization shown separately below										272		236		36		15	%
Selling, general and administrative	236		246		(10		)	(4	)%	275		236		39		17	%
Total comprehensive income	34		9		25			278	%	127		34		93		274	%

The change to the results of operations of our Non-Guarantor Subsidiaries for the three months ended March 31, 2019 was primarily from:

Higher Service revenues, primarily due to ~~the result of~~ an increase in activity of the non-guarantor subsidiary that provides device insurance, primarily driven by a net increase in average revenue as well as growth in our customer ~~base;~~base related to a device protection product that launched at the end of August 2018 and sales of the new product; partially offset by

~~Lower~~Higher Cost of equipment sales, ~~expenses~~exclusive of depreciation and amortization shown separately below, primarily due to ~~a decrease in device insurance claims and a decrease in~~ higher cost devices used for device insurance claims fulfillment, partially offset by an increase in device liquidations and a decrease in device non-return fees charged to customers; and

~~Lower~~Higher Selling, general and administrative expenses, primarily due to ~~lower reserves against bad debt~~an increase in billing services fees due to an increase in rate during the ~~non-guarantor subsidiary involved in the Service BRE transactions, offset by new operating costs from the non-guarantor Layer3 TV subsidiary acquired in the first~~fourth quarter of ~~2018.~~2018 and an increase in program expenses.

All other results of operations of the Parent, Issuer and Guarantor Subsidiaries are substantially similar to the Company’s ~~condensed~~ consolidated results of operations. See Note 1513 – Guarantor Financial Information of the Notes to the Condensed Consolidated Financial Statements.

Performance Measures

In managing our business and assessing financial performance, we supplement the information provided by our 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 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 that are qualified either for postpaid service utilizing phones, ~~mobile broadband~~DIGITS or connected devices ~~(including tablets), or DIGITS,~~which includes tablets, wearables and SyncUp DRIVE, where they generally pay after receiving service, or prepaid service, where they generally pay in advance. Our branded prepaid customers include customers of T-Mobile and Metro by T-Mobile. Wholesale customers include Machine-to-Machine (“M2M”) and ~~MVNO~~Mobile Virtual Network Operator (“MVNO”) customers that operate on our network but are managed by wholesale partners.

The following table sets forth the number of ending customers:


	March 31, 2018	March 31, 2017	Change				March 31, 2019	March 31, 2018	Change
(in thousands)	March 31, 2018	March 31, 2017	#		%		March 31, 2019	March 31, 2018	#	%
Customers, end of period
Branded postpaid phone customers ⁽¹⁾	34,744	32,095	2,649		8	%	37,880	34,744	3,136	9	%
Branded postpaid other customers	4,321	3,246	1,075		33	%	5,658	4,321	1,337	31	%
Total branded postpaid customers	39,065	35,341	3,724		11	%	43,538	39,065	4,473	11	%
Branded prepaid customers ⁽¹⁾	20,876	20,199	677		3	%	21,206	20,876	330	2	%
Total branded customers	59,941	55,540	4,401		8	%	64,744	59,941	4,803	8	%
Wholesale customers⁽²⁾	14,099	17,057	(2,958	)	(17	)%	16,557	14,099	2,458	17	%
Total customers, end of period	74,040	72,597	1,443		2	%	81,301	74,040	7,261	10	%

~~NM - Not Meaningful~~


~~(1)~~	~~As a result of the acquisition of IWS, we included an adjustment of 13,000~~ ~~branded postpaid phone and~~ ~~4,000~~ ~~branded prepaid IWS customers in our reported subscriber base as of January 1, 2018. Additionally, as a result of the acquisition of Layer3 TV, we included an adjustment of~~ ~~5,000~~ ~~branded prepaid customers in our reported subscriber base as of January 22, 2018.~~

~~(2)~~

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 and second quarters of 2017, respectively.~~

Branded Customers

Total branded customers increased ~~4,401,000,~~4,803,000, or 8%, primarily from:

Higher branded postpaid phone customers driven by the growing success of new customer segments and rate plans such as T-Mobile ONE Unlimited 55+, T-Mobile ONE Military, T-Mobile for Business and T-Mobile Essentials and continued growth in existing and Greenfield markets, ~~and lower churn;~~along with record-low churn, partially offset by competitive activity;

Higher branded postpaid other customers, primarily due to ~~higher connected devices, specifically the Apple watch, and DIGITS;~~strength in gross customer additions from wearables; and

Higher branded prepaid customers driven by the continued success of our ~~MetroPCS~~Metro by T-Mobile brand due to promotional activities, rate plan offers, and ~~continued~~ growth ~~from distribution expansion that occurred~~ in ~~2017, partially offset by the optimization of our third-party distribution channels, which began in the fourth quarter of 2016.~~connected devices, along with lower churn.

Wholesale

Wholesale customers ~~decreased 2,958,000,~~increased 2,458,000, or 17%, primarily due to ~~Lifeline subscribers, which were excluded from our reported wholesale subscriber base as of the beginning of the second quarter of 2017. This decrease was partially offset by~~ the continued success of our M2M and MVNO partnerships.

Net Customer Additions

The following table sets forth the number of net customer ~~additions (losses):~~additions:


	Three Months Ended March 31,			Change				Three Months Ended March 31,		Change
(in thousands)	2018	2017		#		%		2019	2018	#		%
Net customer additions (losses)
Branded postpaid phone customers ^{(1) (2)}	617	798		(181	)	(23	)%
Net customer additions
Branded postpaid phone customers								656	617	39		6	%
Branded postpaid other customers ⁽²⁾	388	116		272		234	%	363	388	(25	)	(6	)%
Total branded postpaid customers	1,005	914		91		10	%	1,019	1,005	14		1	%
Branded prepaid customers ⁽¹⁾	199	386		(187	)	(48	)%	69	199	(130	)	(65	)%
Total branded customers	1,204	1,300		(96	)	(7	)%	1,088	1,204	(116	)	(10	)%
Wholesale customers ⁽³⁾	229	(158	)	387		245	%	562	229	333		145	%
Total net customer additions	1,433	1,142		291		25	%	1,650	1,433	217		15	%


~~(1)~~	~~As a result of the acquisition of IWS and Layer3 TV, customer activity post acquisition was included in our net customer additions for the first quarter of 2018.~~


~~(2)~~	~~During the third quarter of 2017, we retitled our “Branded postpaid mobile broadband customers” category to “Branded postpaid other customers” and included DIGITS customers.~~


~~(3)~~	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 ~~96,000,~~116,000, or 7%10%, for the three months ended March 31, ~~2018~~2019 primarily from:

Lower branded prepaid net customer additions primarily ~~driven by increased competitive activity~~due to continued promotional activities in the marketplace, partially offset by lower churn; and

Lower branded postpaid other net customer additions primarily due to higher deactivations from a growing customer base, partially offset by ~~a higher impact from the optimization of our third-party distribution channels in the prior period, which began in the fourth quarter of 2016 resulting in~~ lower ~~churn, and lower migrations to branded postpaid plans; and~~churn; partially offset by

~~Lower~~Higher branded postpaid phone net customer additions primarily due to lower gross customer additions as a result of more aggressive promotions and the launch of Un-carrier Next - All Unlimited with taxes and fees included during the three months ended March 31, 2017 and increased competitive activity in the marketplace, partially offset by the growing success of new segments such as T-Mobile for Business, continued growth in existing and Greenfield markets, along with record churn performance; partially offset byrecord-low churn.

Higher branded postpaid other net customer additions primarily due to higher gross customer additions from connected devices, specifically the Apple watch, and DIGITS, partially offset by higher deactivations from a growing customer base.

Wholesale

Wholesale net customer additions increased ~~387,000,~~333,000, or ~~245%~~145%, for the three months ended March 31, ~~2018~~2019 primarily due to higher gross additions from ~~lower deactivations driven by~~ the ~~removal~~continued success of ~~Lifeline program customers, partially offset by lower~~our M2M ~~net customer additions.~~and MVNO partnerships.

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,~~customers and branded postpaid other customers which includes DIGITS ~~customers.~~and connected devices such as tablets, wearables and SyncUp DRIVE. We believe branded postpaid customers per account provides management, investors and analysts with useful information to evaluate our branded postpaid customer ~~base on a~~base.

The following table sets forth the branded postpaid customers per ~~account basis.~~account:


	March 31, 2018	March 31, 2017	Change			March 31, 2019	March 31, 2018	Change
			#	%				#	%
Branded postpaid customers per account	2.95	2.88	0.07	2	%	3.06	2.95	0.11	4	%

Branded postpaid customers per account increased ~~2% for the three months ended March 31, 2018~~4% primarily from ~~promotions~~continued growth of new customer segments and rate plans such as T-Mobile ONE Unlimited 55+, T-Mobile ONE Military, T-Mobile for Business and T-Mobile Essentials, promotional activities targeting ~~families.~~families and the continued success of connected devices.

Churn

Churn represents the number of customers whose service was disconnected as a percentage of the average number of customers during the specified 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.

The following table sets forth the churn:


	Three Months Ended March 31,				Bps Change	Three Months Ended March 31,				Bps Change
	2018		2017		Bps Change	2019		2018		Bps Change
Branded postpaid phone churn	1.07	%	1.18	%	-11 bps	0.88	%	1.07	%	-19 bps
Branded prepaid churn	3.94	%	4.01	%	-7 bps	3.85	%	3.94	%	-9 bps

Branded postpaid phone churn decreased 1119 basis points for the three months ended March 31, ~~2018~~2019, primarily from increased customer satisfaction and loyalty from ongoing improvements to network quality, industry-leading customer service and the overall value of our ~~offerings in the marketplace. Our customer care improvements included the lowest-ever calls per account and a record-high Net Promoter Score.~~offerings.

Branded prepaid churn decreased 79 basis points for the three months ended March 31, ~~2018~~2019, primarily due to ~~increased customer satisfaction and loyalty from ongoing improvements to network quality and~~ the ~~overall value~~continued success of our ~~offerings in the marketplace, partially offset~~Metro by ~~higher churn from increased competitive activity in the marketplace.~~T-Mobile brand due to promotional activities and rate plan offers.

Average Revenue Per User ~~Average Billings Per User~~

~~Average Revenue Per User (“ARPU”)~~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 postpaid phone ARPU excludes ~~mobile broadband and DIGITS~~Branded postpaid other customers and related ~~revenues.~~revenues which includes DIGITS and connected devices such as tablets, wearables and SyncUp DRIVE.

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 of estimated cash collections, including device financing payments, from our customers each month.

The following tables illustrate the calculation of our operating ~~measures~~measure ARPU and ~~ABPU and reconcile these measures~~reconciles this measure to the related service revenues:


(in millions, except average number of customers, ARPU and ABPU)	Three Months Ended March 31,						Change
	2018			2017			$			%
(in millions, except average number of customers and ARPU)												Three Months Ended March 31,						Change
(in millions, except average number of customers and ARPU)												2019			2018			$			%
Calculation of Branded Postpaid Phone ARPU
Branded postpaid service revenues	$	5,070		$	4,725		$	345		7	%	$	5,493		$	5,070		$	423		8	%
Less: Branded postpaid other revenues	(259		)	(225		)	(34		)	15	%	(310		)	(259		)	(51		)	20	%
Branded postpaid phone service revenues	$	4,811		$	4,500		$	311		7	%	$	5,183		$	4,811		$	372		8	%
Divided by: Average number of branded postpaid phone customers (in thousands) and number of months in period	34,371			31,564			2,807			9	%	37,504			34,371			3,133			9	%
Branded postpaid phone ARPU	$	46.66		$	47.53		$	(0.87	)	(2	)%	$	46.07		$	46.66		$	(0.59	)	(1	)%

Calculation of Branded Postpaid ABPU
Branded postpaid service revenues	$	5,070		$	4,725		$	345		7	%
EIP billings	1,698			1,402			296			21	%
Lease revenues	171			324			(153		)	(47	)%
Total billings for branded postpaid customers	$	6,939		$	6,451		$	488		8	%
Divided by: Average number of branded postpaid customers (in thousands) and number of months in period	38,458			34,740			3,718			11	%
Branded postpaid ABPU	$	60.14		$	61.89		$	(1.75	)	(3	)%

Calculation of Branded Prepaid ARPU
Branded prepaid service revenues	$	2,402		$	2,299		$	103		4	%	$	2,386		$	2,402		$	(16	)	(1	)%
Divided by: Average number of branded prepaid customers (in thousands) and number of months in period	20,583			19,889			694			3	%	21,122			20,583			539			3	%
Branded prepaid ARPU	$	38.90		$	38.53		$	0.37		1	%	$	37.65		$	38.90		$	(1.25	)	(3	)%

Branded Postpaid Phone ARPU

Branded postpaid phone ARPU decreased ~~$0.87,~~$0.59, or 2%1%, for the three months ended March 31, ~~2018~~2019 primarily ~~from:~~due to:

A ~~decrease~~reduction in regulatory program revenues ~~with~~from the continued adoption of ~~T-Mobile ONE~~ tax inclusive plans;

~~Promotions targeting families and new segments;~~A reduction in certain non-recurring charges;

~~Lower insurance program revenue per subscriber; and~~


•	~~The negative impact from the new revenue standard of $0.22. See~~ ~~Note 10 - Revenue from Contracts with Customers~~ ~~of the Notes to the Condensed Consolidated Financial Statements for additional information; partially offset by~~

The ~~positive impact from our~~growing success of new customer segments and rate plans such as T-Mobile ONE ~~rate plans.~~Unlimited 55+, T-Mobile ONE Military, T-Mobile for Business and T-Mobile Essentials; and

The ongoing growth in our Netflix offering, which totaled $0.51 for the three months ended March 31, 2019, and decreased branded postpaid phone ARPU by $0.27 compared to the three months ended March 31, 2018; partially offset by

Higher premium services revenue; and

A net reduction in promotional activities.

We continue to expect that Branded postpaid phone ARPU in full-year ~~2018~~2019 will be generally stable compared to full-year ~~2017, excluding the impact from the new revenue standard.~~2018.

Branded ~~Postpaid ABPU~~Prepaid ARPU

Branded ~~postpaid ABPU~~prepaid ARPU decreased ~~$1.75,~~$1.25 or 3%, for the three months ended March 31, ~~2018~~2019 primarily ~~from:~~due to:

~~Lower lease revenues;~~

~~Lower branded postpaid phone ARPU including the impact of the new revenue standard;~~Dilution from promotional rate plans; and

Growth in ~~the branded postpaid other customer base with a lower ARPU than branded postpaid phone; partially offset by~~

~~Growth in EIP billings due to growth in the gross amount of equipment financed on EIP.~~

~~Branded Prepaid ARPU~~

~~Branded~~our Amazon Prime offering, which impacted prepaid ARPU ~~increased $0.37, or 1%,~~by $0.32, is included as a benefit to certain Metro by T-Mobile unlimited rate plans for the three months ended March 31, ~~2018 primarily from the continued success of our MetroPCS brand.~~2019; partially offset by


•	Certain non-recurring charges.

Adjusted EBITDA

Adjusted EBITDA represents earnings before Interest expense, net of Interest income, Income tax ~~(expense) benefit,~~expense, Depreciation and amortization, non-cash Stock-based compensation and certain income and expenses not reflective of ~~T-Mobile’s~~our operating performance. Net income margin represents Net income divided by Service revenues. Adjusted EBITDA margin represents Adjusted EBITDA divided by Service revenues.

Adjusted EBITDA is a non-GAAP financial measure utilized by our management to monitor the financial performance of our operations. We use Adjusted EBITDA internally as a ~~metric~~measure to evaluate and compensate our personnel and management for their performance, and as a benchmark to evaluate our operating performance in comparison to our competitors. Management believes analysts and investors use Adjusted EBITDA as a supplemental measure to evaluate overall operating performance and facilitate comparisons with other wireless communications companies because it is 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, network decommissioning costs and costs related to the Transactions, as they are not indicative of our ongoing operating performance, ~~and~~as well as certain other nonrecurring income and expenses. Adjusted EBITDA has limitations as an analytical tool and should not be considered in isolation or as a substitute for income from operations, net income or any other measure of financial performance reported in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”).

The following table illustrates the calculation of Adjusted EBITDA and reconciles Adjusted EBITDA to Net income, which we consider to be the most directly comparable GAAP financial measure:


	Three Months Ended March 31,						Change					Three Months Ended March 31,						Change
(in millions)	2018			2017			$			%		2019			2018			$			%
Net income	$	671		$	698		$	(27	)	(4	)%	$	908		$	671		$	237		35	%
Adjustments:
Interest expense	251			339			(88		)	(26	)%	179			251			(72		)	(29	)%
Interest expense to affiliates	166			100			66			66	%	109			166			(57		)	(34	)%
Interest income	(6		)	(7		)	1			(14	)%	(8		)	(6		)	(2		)	33	%
Other income, net	(10		)	(2		)	(8		)	400	%
Other (income) expense, net												(7		)	(10		)	3			(30	)%
Income tax expense (benefit)	210			(91		)	301			(331	)%	295			210			85			40	%
Operating income	1,282			1,037			245			24	%	1,476			1,282			194			15	%
Depreciation and amortization	1,575			1,564			11			1	%	1,600			1,575			25			2	%
Stock-based compensation ⁽¹⁾	96			67			29			43	%	93			96			(3		)	(3	)%
Merger-related costs												113			—			113			NM
Other, net ⁽²⁾	3			—			3			NM		2			3			(1		)	(33	)%
Adjusted EBITDA	$	2,956		$	2,668		$	288		11	%	$	3,284		$	2,956		$	328		11	%
Net income margin (Net income divided by service revenues)	9		%	10		%				-100 bps		11		%	9		%				200 bps
Adjusted EBITDA margin (Adjusted EBITDA divided by service revenues)	38		%	36		%				200 bps		40		%	38		%				200 bps


(1)	Stock-based compensation includes payroll tax impacts and may not agree to stock-based compensation expense in the condensed consolidated financial statements. Additionally, certain stock-based compensation expenses associated with the Transactions have been included in Merger-related costs.


(2)	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 or are not reflective of T-Mobile’s ongoing operating performance, and are therefore excluded in Adjusted EBITDA.

Adjusted EBITDA increased ~~$288~~$328 million, or 11%, for the three months ended March 31, ~~2018~~2019 primarily from:

~~An increase in branded postpaid and prepaid service revenues;~~

~~Lower net losses on equipment sales; and~~


•	~~The positive impact from the new revenue standard of $95 million. See~~ ~~Note 10 - Revenue from Contracts with Customers~~ ~~of the Notes to the Condensed Consolidated Financial Statements for additional information. These increases were partially offset by~~

~~Higher selling, general and administrative expenses;~~

Higher ~~cost~~service revenues, as further discussed above;

The positive impact of ~~services expense;~~

~~Lower gains on disposal~~the new lease standard of ~~spectrum licenses;~~approximately $49 million; and

The negative impact from hurricanes of $36 ~~million.~~million for three months ended March 31, 2018. There was no significant impact from hurricanes for the three months ended March 31, 2019; partially offset by

Higher Selling, general and administrative expenses.

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 and common stock, ~~capital~~financing leases, the sale of certain receivables, financing arrangements of vendor payables which effectively extend payment terms and secured and unsecured revolving credit facilities with DT. Upon consummation of the Transactions, we will incur substantial third-party indebtedness which will increase our future financial commitments, including aggregate interest payments on ~~our existing and new~~higher total indebtedness, and may adversely impact our liquidity. Further, the incurrence of additional indebtedness may inhibit our ability to incur new debt under the terms governing our existing and future indebtedness, which 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 analysis~~a condensed schedule of our cash flows for the three months ended March 31, ~~2018~~2019 and ~~2017:~~2018:


	Three Months Ended March 31,						Change					Three Months Ended March 31,						Change
(in millions)	2018			2017			$			%		2019			2018			$			%
Net cash provided by operating activities	$	770		$	608		$	162		27	%	$	1,392		$	770		$	622		81	%
Net cash used in investing activities	(462		)	(416		)	(46		)	11	%	(966		)	(462		)	(504		)	109	%
Net cash provided by financing activities	1,000			1,809			(809		)	(45	)%
Net cash (used in) provided by financing activities												(190		)	1,000			(1,190		)	(119	)%

Operating Activities

Net cash provided by operating activities increased ~~$162~~$622 million, or ~~27%~~81%, ~~for the three months ended March 31, 2018~~ primarily from:

A ~~$295~~$237 million increase in ~~net non-cash adjustments to~~ Net ~~income, primarily due to changes in Deferred income tax expense (benefit); partially offset by~~

income; and

A ~~$106~~$215 million ~~increase~~decrease in net cash outflows from changes in working capital, primarily due to ~~the change in~~lower use from Accounts payable and accrued liabilities, partially offset by ~~improvements~~an increase in Inventories, Accounts receivable and Other current and long-term assets.

Changes in Operating lease right-of-use assets and Short and long-term operating lease liabilities are now presented in Changes in operating assets and liabilities due to the adoption of the new lease standard. The net impact of changes in these accounts decreased Net cash provided by operating activities by $87 million.

Investing Activities

Net cash used in investing activities increased ~~$46~~$504 million, or ~~11%~~109%, to a use of ~~$462~~$966 million for the three months ended March 31, ~~2018~~2019. The use of cash for the three months ended March 31, 2019, was primarily from:

$~~1.4~~1.9 billion in Purchases of property and equipment, including capitalized interest, primarily driven by growth in network build as we continued deployment of low band spectrum, including ~~beginning deployment of~~ 600 ~~MHz;~~MHz, and started laying the groundwork for 5G; and

$~~333~~185 million in Purchases of ~~cash consideration paid, net of cash acquired, for the acquisitions of Layer3~~spectrum licenses and ~~IWS;~~other intangible assets, including deposits; partially offset by

$~~1.3~~1.2 billion in ~~proceeds~~Proceeds related to beneficial ~~interest~~interests in securitization transactions.

Financing Activities

Net cash (used in) provided by financing activities ~~decreased $809 million,~~changed by $1.2 billion, or ~~45%~~119%, to ~~an inflow~~a use of ~~$1.0 billion,~~$190 million for the three months ended March 31, ~~2018~~2019. The use of cash for the three months ended March 31, 2019, was primarily from:

$~~2.5 billion in Proceeds from issuance of long-term debt;~~100 million for Tax withholdings on share-based awards; and

$~~2.2 billion in Proceeds from borrowing on our revolving credit facility; partially offset by~~

~~$1.7 billion for Repayments of our revolving credit facility;~~

~~$1.0 billion for Repayments of long-term debt;~~

~~$666 million for Repurchases of common stock; and~~

~~$172~~86 million for Repayments of capital lease obligations.

Activity under the revolving credit facility included borrowing and full repayment of $885 million, for a net of $0 impact.

Cash and Cash Equivalents

As of March 31, ~~2018,~~2019, our Cash and cash equivalents were ~~$2.5~~$1.4 billion.

Free Cash Flow

Free Cash Flow represents ~~net~~Net cash provided by operating activities less payments for ~~purchases~~Purchases of property and equipment, including ~~proceeds~~Proceeds related to beneficial interests in securitization transactions and less ~~cash~~Cash payments for debt prepayment or debt extinguishment costs. Free Cash Flow is a non-GAAP financial measure utilized by our management, investors and analysts of ~~T-Mobile’s~~our financial information to evaluate cash available to pay debt and provide further investment in the business.



	Three Months Ended March 31,						Change
(in millions)	2019			2018			$			%
Net cash provided by operating activities	$	1,392		$	770		$	622		81	%
Cash purchases of property and equipment	(1,931		)	(1,366		)	(565		)	41	%
Proceeds related to beneficial interests in securitization transactions	1,157			1,295			(138		)	(11	)%
Cash payments for debt prepayment or debt extinguishment costs	—			(31		)	31			NM
Free Cash Flow	$	618		$	668		$	(50	)	(7	)%

~~In the first quarter of 2018, we redefined our non-GAAP financial measure~~ Free Cash Flow to reflect the adoption of ASU 2016-15 to present cash flows on a consistent basis for investor transparency. We have applied the change in definition retrospectively in the table below, which illustrates the calculation 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:

Three Months Ended March 31, Change
(in millions) 2018 2017 $ %
Net cash provided by operating activities $ 770
$ 608
$ 162
27 %
Cash purchases of property and equipment (1,366 ) (1,528 ) 162
(11 )%
Proceeds related to beneficial interests in securitization transactions 1,295
1,134
161
1
14 %
Cash payments for debt prepayment or debt extinguishment costs (31 ) (29 ) (2 ) 2
7 %
Free Cash Flow $ 668
$ 185
$ 483
3
261 %

~~Free Cash Flow increased $483~~decreased $50 million, or ~~261%~~7%, primarily from:

Higher Cash Purchases of property and equipment, net of capitalized interest of $118 million and $43 million for the three months ended March 31, 2019 and 2018, ~~primarily from:~~

~~Higher net~~respectively. The increase in cash ~~provided by operating activities, as described above;~~

~~Lower purchases of property and equipment. Cash~~ purchases of property and equipment ~~include capitalized interest~~was primarily due to growth in network build as we continued deployment of ~~$43 million~~low band spectrum, including 600 MHz, and ~~$48 million~~started laying the groundwork for ~~2018 and 2017;~~5G; and

~~Higher~~Lower proceeds related to our deferred purchase price from securitization ~~transactions.~~transactions; partially offset by

Higher Net cash provided by operating activities.

Free Cash Flow includes $34 million in payments for merger-related costs for the three months ended March 31, 2019.

~~Debt~~

Borrowing Capacity and Debt Financing

As of March 31, ~~2018,~~2019, our total debt was ~~$30.5~~$25.8 billion, excluding our tower obligations, of which ~~$26.7~~$24.9 billion was classified as long-term debt. ~~Significant debt-related activity for the three months ended~~

In March ~~31, 2018 included:~~

~~Debt to Third Parties~~

~~Issuances and Borrowings~~

~~During the three months ended March 31, 2018, we issued the following Senior Notes:~~

~~Notes Redemptions~~

~~During the three months ended March 31, 2018, we made the following note redemption:~~


~~(1)~~	Write-off of premiums, discounts, issuance costs and call penalties are included in Other income, 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 financing activities in our Condensed Consolidated Statements of Cash Flows.~~

~~Prior to March 31, 2018,~~2019, we delivered a notice of redemption on ~~$1.75 billion~~$600 million aggregate principal amount of our ~~6.625%~~9.332% Senior Reset Notes due ~~2023.~~2023 held by DT, our majority stockholder. The notes ~~were~~will be redeemed oneffective April ~~1, 2018~~28, 2019, at a redemption price equal to ~~103.313%~~104.666% of the principal amount of the notes (plus accrued and unpaid interest thereon), payable on April ~~2, 2018.~~29, 2019. The redemption premium ~~was approximately $58 million, the write-off of issuance costs was less than $1 million, and the write-off of premiums was approximately $75~~is $28 million. The outstanding principal amount was reclassified from Long-term debt to affiliates to Short-term debt to affiliates in our Condensed Consolidated Balance Sheets as of March 31, ~~2018.~~2019.

~~Prior to March 31, 2018, we delivered~~We maintain a notice of redemption on $600 million aggregate principal amount of our 6.836% Senior Notes due 2023. The notes were redeemed on April 28, 2018 at a redemption price equal to 103.418% of the principal amount of the notes (plus accrued and unpaid interest thereon), payable on April 30, 2018. The redemption premium was approximately $21 million and the write-off of issuance costs was less than $1 million. The outstanding principal amount was reclassified from Long-term debt to Short-term debt in our Condensed Consolidated Balance Sheets as of March 31, 2018.

~~Debt to Affiliates~~

~~Issuances and Borrowings~~

~~of its affiliates, as guarantors, with no underwriting discount (the “DT Notes”). As of March 31, 2018, there were no outstanding balances on the DT Notes.~~

~~Incremental Term Loan Facility~~

~~Revolving Credit Facility~~

~~In January 2018, we utilized proceeds under our~~ revolving credit facility with DT ~~to redeem~~which is comprised of a $1.0 billion ~~in aggregate principal amount of our 6.125% Senior Notes due 2022 and for general corporate purposes. On January 29, 2018, the proceeds utilized under our~~unsecured revolving credit ~~facility with DT were repaid. The proceeds~~agreement and ~~borrowings from the~~a $1.5 billion secured revolving credit ~~facility are presented in Proceeds from borrowing on revolving credit facility and Repayments~~agreement, with a maturity date of ~~revolving credit facility within Net cash provided by financing activities in our Condensed Consolidated Statements of Cash Flows.~~December 29, 2021. As of March 31, ~~2018, there was $445 million in outstanding borrowings under the revolving credit facility. As of~~2019 and December 31, ~~2017,~~2018, there were no outstanding borrowings under the revolving credit facility.

We maintain a handset financing arrangement with Deutsche Bank AG (“Deutsche Bank”), which allows for up to $108 million in borrowings. Under the handset financing arrangement, we can effectively extend payment terms for invoices payable to certain handset vendors. As of March 31, 2019 and December 31, 2018, there was no outstanding balance.

We maintain vendor financing arrangements with our primary network equipment suppliers. Under the respective agreements, we can obtain extended financing terms. As of March 31, 2019, there was $250 million in outstanding borrowings under the vendor financing agreements. As of December 31, 2018, there was no outstanding balance.

Consents on Debt

T-Mobile USA of secured debt in connection with and after the consummation of the Merger. If the Merger is consummated, we will make payments for requisite consents to DT. There was no payment accrued as of March 31, 2019.

On May 18, 2018, under the terms and conditions described in the Consent Solicitation Statement dated as of May 14, 2018, we ~~amended the terms of (a) our Secured Revolving Credit Facility and (b) our Unsecured Revolving Credit Facility. Following these~~obtained consents necessary to effect certain amendments (i) the range of applicable margin payable under the Secured Revolving Credit Facility is 1.05% to 1.80%, (ii) the range of the applicable margin payable under the Unsecured Revolving Credit Facility is 2.05% to 3.05%, (iii) the range of the undrawn commitment fee applicable to the Secured Revolving Credit Facility is 0.25% to 0.45%, (iv) the range of the undrawn commitment fee applicable to the Unsecured Revolving Credit Facility is 0.20% to 0.575% and (v) the maturity date of the revolving credit facility with DT is December 29, 2020. The amendments also modify the facility to update certain covenants and other provisions to make them substantially consistent, subject to certain ~~additional carve outs, with~~existing debt of us and our ~~most recently publicly issued notes.~~subsidiaries. If the Merger is consummated, we will make payments for requisite consents to third-party note holders. There was no payment accrued as of March 31, 2019.

See Note ~~9 – Debt~~3 - Business Combinations ~~of the~~ ~~Notes to the Condensed Consolidated Financial Statements~~ for further information.

Future Sources and Uses of Liquidity

We ~~could~~may seek additional sources of liquidity, including through the issuance of additional long-term debt in ~~2018,~~2019, to continue to opportunistically acquire spectrum licenses or other assets in private party transactions or for the refinancing of existing long-term debt on an opportunistic basis. Excluding liquidity that could be needed for spectrum acquisitions, or for other assets, 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, redemption of high yield callable debt and stock purchases.

We determine future liquidity requirements, for both operations and capital expenditures, based in large part upon projected financial and operating performance, and opportunities to acquire additional spectrum. 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. There are a number of risks and uncertainties that could cause our financial and operating results

and capital requirements to differ materially from our projections, which could cause future liquidity to differ materially from our assessment.

The indentures and credit facilities governing our long-term debt to affiliates and third parties, excluding capital leases, contain covenants that, among other things, limit the ability of the Issuer and the Guarantor Subsidiaries to: incur more debt; pay dividends and make distributions on our common stock; 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 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 March 31, ~~2018.~~2019.

~~Capital~~Financing Lease Facilities

We have entered into uncommitted ~~capital~~financing lease facilities with certain partners, which provide us with the ability to enter into ~~capital~~financing leases for network equipment and services. As of March 31, ~~2018,~~2019, we have committed to ~~$2.3~~$3.1 billion of ~~capital~~financing leases under these ~~capital~~financing lease facilities, of which ~~$142~~$91 million was executed during the three months ended March 31, ~~2018.~~2019. We expect to enter into up to an additional ~~$758~~$809 million in ~~capital~~financing lease commitments during ~~2018.~~2019.

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. Property and equipment capital expenditures primarily relate to our network transformation, including the ~~build out~~build-out of ~~700 MHz A-Block and~~our network to utilize our 600 MHz spectrum licenses. We expect cash purchases of property and equipment, excluding capitalized interest of approximately $400 million, to be ~~in the range~~$5.4 to $5.7 billion and cash purchases of ~~$4.9 billion~~property and equipment, including capitalized interest, to ~~$5.3~~be $5.8 to $6.1 billion in ~~2018.~~2019. This includes expenditures for the continued deployment of 600 MHz and laying the groundwork for 5G deployment. ~~Similar to 2017, cash capital expenditures will be front-end loaded in 2018 due to the timing of network build activity.~~ This does not include property and equipment obtained through ~~capital~~financing lease agreements, leased wireless devices transferred from inventory or any additional purchases of spectrum licenses.

Share Repurchases

~~Effective as of~~On December 6, 2017, our Board of Directors authorized a stock repurchase program for up to $1.5 billion of our common stock through December 31, ~~2018. Under the program, we may repurchase~~2018 (the “2017 Stock Repurchase Program”). Repurchased shares of our common stock in the open market or in private transactions. During the three months ended March 31, 2018, we repurchased a total of 10.5 million shares of our common stock at an aggregate market value of $666 million. In addition, in April 2018, we repurchased another 6.2 million shares of our common stock at an aggregate market value of $388 million.are retired. The ~~repurchase program~~2017 Stock Repurchase Program completed on April 29, 2018.

On April 27, 2018, our Board of Directors authorized an increase in the total stock repurchase program to $9.0 billion, consisting of the $1.5 billion in repurchases previously ~~authorized~~completed and ~~for~~ up to an additional $7.5 billion of repurchases of our common stock. ~~See~~ ~~Note 11 – Repurchases of Common Stock~~The additional $7.5 billion repurchase authorization is contingent upon the termination of the ~~Notes~~Business Combination Agreement and the abandonment of the Transactions contemplated under the Business Combination Agreement.

Dividends

We have never paid or declared 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 ~~Condensed Consolidated Financial Statements~~ ~~for further information.~~foreseeable future. Our credit facilities and the indentures and supplemental indentures governing our long-term debt to affiliates and third parties, excluding financing leases, contain covenants that, among other things, restrict our ability to declare or pay dividends on our common stock.

~~Related-Party~~Related Party Transactions

~~During the three months ended March 31, 2018, we entered into certain debt related transactions with affiliates. See~~ ~~Note 9 – Debt~~ ~~of the~~ ~~Notes to the Condensed Consolidated Financial Statements~~ ~~for further information.~~

In the three months ended March 31, 2018, DT, our majority stockholder and an affiliated purchaser purchased 3.3 million additional shares of our common stock at an aggregate market value of $200 million in the public market or from other parties, in accordance with the rules of the SEC and other applicable legal requirements. We do not receive proceeds from these purchases.

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

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 March 31, ~~2018,~~2019, 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. We have relied upon DT for information regarding their 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 March 31, 2019, DT, through certain of its non-U.S. subsidiaries, provided basic telecommunications services to Telecommunication Company of Iran and to three 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, Bank Sepah, and Europäisch-Iranische Handelsbank. These services have been terminated or are in the process of being terminated. For the three months ended March 31, ~~2018,~~2019, gross revenues of all DT affiliates generated by roaming and interconnection traffic and telecommunications services with ~~Iran~~the Iranian parties identified herein were less than $1$0.1 million, and the estimated net profits were less than $1$0.1 million.

In addition, DT, through certain of its non-U.S. subsidiaries, operating a ~~fixed line~~fixed-line network in their respective European home countries (in particular Germany), provides telecommunications services in the ordinary course of business to the Embassy of Iran in those European countries. Gross revenues and net profits recorded from these activities for the three months ended March 31, ~~2018~~2019 were less than $0.1 million. We understand that DT intends to continue these activities.

Off-Balance Sheet Arrangements

We have arrangements, as amended from time to time, to sell certain EIP accounts receivable and service accounts receivable on a revolving basis as a source of liquidity. As of March 31, ~~2018, T-Mobile~~2019, we derecognized net receivables of ~~$2.7~~$2.5 billion upon sale through these arrangements. See Note 5 – Sales of Certain Receivablesof the Notes to the Condensed Consolidated Financial Statements for further information.

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. Except as described below, 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, ~~2017.~~2018.

The policy below is critical because it requires management to make difficult, subjective and complex judgments about matters that are inherently uncertain and because it is likely that materially different amounts would be reported under different conditions or using different assumptions. Actual results could differ from those estimates.

Management and the Audit Committee of the Board of Directors have reviewed and approved these critical accounting policies.

~~Revenue Recognition~~Leases

We ~~primarily generate our revenue from providing wireless services to customers~~adopted the new lease standard on January 1, 2019 and ~~selling or leasing devices~~recognized right-of-use assets and accessories. Our contracts with customers may involve multiple performance obligations, which include wireless services, wireless devices or a combination thereof, and we allocate the transaction price between each performance obligation based on its relative standalone selling price.lease liabilities for operating leases that have not previously been recorded.

Significant ~~Judgments~~Judgments:

The most significant judgments ~~affecting~~and impacts upon adoption of the ~~amount and timing of revenue from contracts with our customers~~standard include the ~~following items:~~following:

~~For transactions where we recognize a significant financing component, judgment is required~~In evaluating contracts to determine if they qualify as a lease, we consider factors such as if we have obtained or transferred substantially all of the ~~discount rate. For~~rights to the underlying asset through exclusivity, if we can or if we have transferred the ability to direct the use of the asset by making decisions about how and for what purpose the asset will be used and if the lessor has substantive substitution rights.

We recognized right-of-use assets and operating lease liabilities for operating leases that have not previously been recorded. The lease liability for operating leases is based on the net present value of future minimum lease payments. The right-of-use asset for operating leases is based on the lease liability adjusted for the reclassification of certain balance sheet amounts such as prepaid rent and deferred rent which we remeasured at adoption due to the application of hindsight to our lease term estimates. Deferred and prepaid rent will no longer be presented separately.

Capital lease assets previously included within Property and equipment, ~~installment plan (“EIP”) sales,~~net were reclassified to financing lease right-of-use assets and capital lease liabilities previously included in Short-term debt and Long-term debt were reclassified to financing lease liabilities in our Condensed Consolidated Balance Sheet.

•

Certain of our lease agreements include rental payments based on changes in the consumer price ~~primarily reflects current market interest rates and~~index (CPI). Lease liabilities are not remeasured as a result of changes in the ~~estimated credit risk of~~CPI; instead, changes in the ~~customer.~~

~~Our products~~CPI are ~~generally sold with a right of return, which is accounted for~~treated as variable ~~consideration when estimating the amount of revenue to recognize. Expected device returns are estimated based on historical experience.~~

~~Promotional bill credits offered to a customer on an equipment sale that are paid over time~~lease payments and are contingent on the customer maintaining a service contract may result in an extended service contract based on whether a substantive penalty is deemed to exist. Determining whether contingent bill credits result in a substantive termination penalty, and determining the term over which a substantive termination penalty exists, may require significant judgment.

~~For capitalized contract costs, determining the amortization period as well as assessing the indicators of impairment may require significant judgment.~~

~~The determination of the standalone selling price for contracts that involve more than one product or service (or performance obligation) may require significant judgment.~~

~~The identification of distinct performance obligations within our service plans may require significant judgment.~~

~~Wireless Services Revenue~~

Revenue for service contracts that we assess are not probable of collection is not recognized until the contract is completed and cash is received. Collectibility is re-assessed when there is a significant change in facts or circumstances. Our assessment of collectibility considers whether we may limit our exposure to credit risk through our right to stop transferring additional service in the event the customer is delinquent.

~~Consideration payable to a customer is~~ ~~treated as a reduction of the total transaction price, unless the payment is in exchange for a distinct good or service, such as certain commissions paid to dealers~~.

~~We have made an accounting policy election to exclude~~excluded from the measurement of the ~~transaction price all taxes assessed by a governmental authority~~right-of-use asset and lease liability. These payments are recognized in the period in which the related obligation was incurred. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.

We elected the use of hindsight whereby we applied current lease term assumptions that are ~~both imposed~~applied to new leases in determining the expected lease term period for all cell sites. Upon adoption of the new standard and application of hindsight our expected lease term has shortened to reflect payments due for the initial non-cancelable lease term only. This assessment corresponds to our lease term assessment for new leases and aligns with the payments that have been disclosed as lease commitments in prior years. As a result, the average remaining lease term for cell sites has decreased from approximately nine to five years based on ~~and concurrent with a specific revenue-producing transaction and collected by T-Mobile from a customer (for example, sales, use, value added, and some excise taxes).~~lease contracts in effect at transition on January 1, 2019. The aggregate impact of using the hindsight is an estimated decrease in Total operating expense of $240 million in fiscal year 2019.

~~Equipment Revenues~~

We ~~generate equipment revenues from~~were also required to reassess the ~~sale or lease~~previously failed sale-leasebacks of ~~mobile~~certain T-Mobile-owned wireless communication ~~devices~~tower sites and accessories. For performance obligations related to equipment contracts, we typically transfer control at a point in time when the device or accessory is delivered to, and accepted by, the customer or dealer. We have elected to account for shipping and handling activities that occur after control of the related good transfers as fulfillment activities instead of assessing such activities as performance obligations. We establish provisions for estimated device returns based on historical experience. Equipment sales not probable of collection are generally recorded as payments are received. Our assessment of collectibility considers payment terms such as down payments that reduce our exposure to credit risk.

We offer certain customers the option to pay for devices and accessories in installments using an EIP. Generally, we recognize as a reduction of the total transaction price the effects of a financing component in contracts where customers purchase their devices and accessories on an EIP with a term of more than one year, including those financing components that are not considered to be significant to the contract. However, we have elected the practical expedient to not recognize the effects of a significant financing component for contracts where we expect, at contract inception, that the period betweendetermine whether the transfer of the assets to the tower operator under the arrangement met the transfer of control criteria in the revenue standard and whether a ~~performance obligation~~sale should be recognized.

We concluded that a sale has not occurred for the 6,200 tower sites transferred to CCI pursuant to a ~~customer~~master prepaid lease arrangement; therefore, these sites will continue to be accounted for as failed sale-leasebacks.

We concluded that a sale should be recognized for the 900 tower sites transferred to CCI pursuant to the sale of a subsidiary and the ~~customer’s payment~~500 tower sites transferred to PTI. Upon adoption on January 1, 2019 we derecognized our existing long-term financial obligation and the tower-related property and equipment associated with these 1,400 previously failed sale-leaseback tower sites and recognized a lease liability and right-of-use asset for ~~that performance obligation will be one year or less.~~

~~In addition, for customers who enroll in our Just Upgrade My Phone (“JUMP!”~~^®~~) program, we recognize a liability based on~~ the ~~estimated fair value~~leaseback of the ~~specified-price trade-in right guarantee.~~tower sites. The ~~fair value of the guarantee is deducted~~estimated impacts from the ~~transaction price~~change in accounting conclusion are primarily a decrease in Other revenues of $44 million and a decrease in Interest expense of $34 million.

Rental revenues and expenses associated with co-location tower sites are presented on a net basis under the new ~~revenue standard,~~lease standard. These revenues and expenses were presented on a gross basis under the ~~remaining transaction price is allocated to other elements of the contract, including service and equipment performance obligations.~~ former lease standard.

See ~~“Guarantee Liabilities” in~~ Note 1 - Summary of Significant Accounting Policies ~~included in our Annual Report on Form 10-K for the year ended December 31, 2017~~ and ~~Note 8 - Fair Value Measurements~~ ~~in this Form 10-Q.~~

In 2015, we introduced JUMP! On Demand, which allows customers to lease a device and upgrade their leased wireless device for a new device up to one time per month. To date, all of our leased wireless devices are accounted for as operating leases and estimated contract consideration is allocated between lease elements and non-lease elements (such as service and equipment performance obligations) based on the relative standalone selling price of each performance obligation in the contract. Lease revenues are recorded as equipment revenues and recognized as earned on a straight-line basis over the lease term. Lease revenues on contracts not probable of collection are limited to the amount of payments received. See “Property and Equipment” in ~~Note 1 - Summary of Significant Accounting Policies~~ ~~included in our Annual Report on Form 10-K for the year ended December 31, 2017.~~

~~Contract Balances~~

~~Generally, T-Mobile devices and service plans are available at standard prices, which are maintained on price lists and published on our website and/or within our retail stores.~~

~~Contract assets are included in Other current assets and Other assets and contract liabilities are included in Deferred revenue in our Condensed Consolidated Balance Sheets.~~

~~Contract Modifications~~

~~Contract Costs~~

~~Incremental costs to obtain equipment contracts (e.g., commissions paid on device and accessory sales) are recognized when the equipment is transferred to the customer.~~

~~See~~ ~~Note 1 - Summary of Significant Accounting Policies~~ ~~and~~ Note 10 - ~~Revenue from Contracts with Customers~~Leases of the Notes to the Condensed Consolidated Financial Statements for further information.

Accounting Pronouncements Not Yet Adopted

See Note 1 -– Summary of Significant Accounting Policies of the Notes to the Condensed Consolidated Financial Statements for information regarding recently issued accounting standards.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

There have been no material changes to the interest rate risk as previously disclosed in Part II, Item 7A of our Annual Report on Form 10-K for the year ended December 31, ~~2017.~~2018.

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 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 are filed as exhibits 31.1 and 31.2, respectively, to this Form 10-Q.

Changes in Internal Control over Financial Reporting

Beginning January 1, ~~2018,~~2019, we adopted ~~ASU 2014-09, “Revenue from Contracts with Customers (Topic 606)” and related amendments (collectively,~~ the ~~“new revenue standard”).~~new lease standard. As a result of our adoption of the new ~~revenue~~lease standard, we have implemented significant new ~~revenue~~lease accounting systems, processes and internal controls over ~~revenue recognition~~lease accounting to assist us in the application of the new ~~revenue~~lease standard. There were no other 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 Note ~~13 -~~11 – Commitments and Contingenciesof the Notes to the Condensed Consolidated Financial Statements for information regarding certain legal proceedings in which we are involved.

Item 1A. Risk Factors

~~In addition to the other information contained~~There have been no material changes in ~~this Form 10-Q, the~~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, 2017, and the following risk factors, should be considered carefully in evaluating T-Mobile. Our business, financial condition, liquidity, or operating results, as well as the price of our common stock and other securities, could be materially adversely affected by any of these risks.2018.

~~Risks Related to the Proposed Transactions~~

The closing of the Transactions is subject to many conditions, including the receipt of approvals from various governmental entities, which may not approve the Transactions, may delay the approvals for, or may impose conditions or restrictions on, jeopardize or delay completion of, or reduce the anticipated benefits of, the Transactions, and if these conditions are not satisfied or waived, the Transactions will not be completed.

The completion of the Transactions is subject to a number of conditions, including, among others, obtaining certain governmental authorizations, consents, orders or other approvals and the absence of any injunction prohibiting the Transactions or any legal requirements enacted by a court or other governmental entity preventing consummation of the Transactions. There is no assurance that these required authorizations, consents, orders or other approvals will be obtained or that they will be obtained in a timely manner, or whether they will be subject to required actions, conditions, limitations or restrictions on our or the combined company’s business, operations or assets. If any such required actions, conditions, limitations or restrictions are imposed, they may jeopardize or delay completion of the Transactions, reduce or delay the anticipated benefits of the Transactions or allow the parties to terminate the Transactions, which could result in a material adverse effect on our or the combined company’s business, financial condition or operating results. In addition, the completion of the Transactions is also subject to T-Mobile USA having specified minimum credit ratings on the closing date of the Transactions (after giving effect to the Merger) from at least two of the three credit rating agencies, subject to certain qualifications. In the event that the Company terminates the Business Combination Agreement in connection with a failure to satisfy the closing condition related to the specified minimum credit ratings, then in certain circumstances, the Company may be required to pay Sprint $600 million.

Failure to complete the Transactions, or a delay in completing the Transactions, could negatively impact our stock price and the future business, assets, liabilities, prospects, outlook, financial condition and results of operations of us or the combined company.

If the Transactions are not completed or delayed, our common stock price and future business and financial results could be negatively affected, or our employees, suppliers, vendors, distributors, retailers, dealers or customers could lose focus on our business, cease doing business with us, or curtail their activities with us. In addition, the Business Combination Agreement may be terminated if, among other things, required regulatory approvals or consents are not obtained or either party breaches certain of its obligations under the Business Combination Agreement. If this were to occur it could have an adverse effect on our business, financial condition, operating results and stock price.

We and Sprint are subject to various uncertainties and contractual restrictions and requirements while the Transactions are pending that could disrupt our or the combined company’s business and adversely affect our business, assets, liabilities, prospects, outlook, financial condition and results of operations.

Uncertainty about the effect of the Transactions on employees, customers, suppliers, vendors, distributors, dealers and retailers may have an adverse effect on us. These uncertainties may impair our ability to attract, retain and motivate key personnel during the pendency of the Transactions and, if the Transactions are completed, for a period of time thereafter, as existing and prospective employees may experience uncertainty about their future roles with the combined company. If key employees depart because of issues related to the uncertainty and difficulty of integration or a desire not to remain with us, our business following the Transactions could be negatively impacted. Additionally, these uncertainties could cause customers, suppliers, distributors, dealers, retailers and others who deal with us to seek to change or cancel existing business relationships with us or fail to renew existing relationships with us. Suppliers, distributors and content and application providers may also delay or cease developing for us new products that are necessary for the operations of our business due to the uncertainty created by the

~~Transactions. Competitors may also target our or Sprint’s existing customers by highlighting potential uncertainties and integration difficulties that may result from the Transactions.~~

The Business Combination Agreement also restricts each of us and Sprint, without the other’s consent, from taking certain actions outside of the ordinary course of business while the Transactions are pending, including, among other things, certain acquisitions or dispositions of businesses and assets, entering into or amending certain contracts, repurchasing or issuing securities, making capital expenditures and incurring indebtedness, in each case subject to certain exceptions. These restrictions may have a significant negative impact on our business, results of operations and financial condition.

In addition, management and financial resources have been diverted and will continue to be diverted toward the completion of the Transactions. We have incurred, and expect to incur, significant costs, expenses and fees for professional services and other transaction costs in connection with the Transactions. These costs could adversely affect our financial condition and results of operation prior to the consummation of the Transactions.

~~The Business Combination Agreement contains provisions that restrict the ability of our Board to pursue alternatives to the Transactions.~~

The Business Combination Agreement contains non-solicitation provisions that restrict our ability to solicit, initiate, knowingly encourage or knowingly take any other action designed to facilitate, any inquiries regarding, or the making of, any proposal the consummation of which would constitute an alternative transaction for purposes of the Business Combination Agreement.

A significant stockholder of our Company has executed a support agreement that requires that such stockholder execute a written consent voting all of its shares of our common stock in favor of the Transactions, which will constitute approval of the Transactions by our stockholders, even if our Board changes its recommendation to our stockholders.

Subsequent to the execution of the Business Combination Agreement, DT, holder of approximately 63.5% of our common stock, entered into a support agreement (the “Support Agreement”), pursuant to which DT has agreed to deliver a written consent in favor of the Transactions. The DT written consent will constitute receipt by the Company of the requisite approval of the Transactions by our stockholders and under the terms of the Support Agreement, DT is required to deliver the written consent even if our Board changes its recommendation to our stockholders with respect to the Transactions.

~~Our directors and executive officers may have interests in the Transactions that may be different from, or in addition to, those of other of our stockholders.~~

Our directors and executive officers may have interests in the Transactions that may differ from, or that are in addition to, the interests of our other stockholders. These interests with respect to our directors and executive officers may include, among others, continued service as a director or an executive officer of the combined company, employment or consulting arrangements, arrangements that provide for severance benefits if certain executive officers’ employment is terminated under certain circumstances following the completion of the Transactions and rights to indemnification and directors’ and officers’ liability insurance following the completion of the Transactions. Our Board and the independent committee of the Board were aware of these interests during the time that the Business Combination Agreement was being negotiated and at the time they approved the Transactions. These interests may cause our directors and executive officers to view the Transactions differently than another stockholder may view it and will be described in the definitive consent solicitation statement / prospectus mailed to our stockholders in connection with the Transactions.

~~Risks Related to Integration and the Combined Company~~

~~Although we expect that the Transactions will result in synergies and other benefits to us, those benefits may not be realized fully or at all or may not be realized within the expected time frame.~~

Our ability to realize the anticipated benefits of the Transactions will depend, to a large extent, on the combined company’s ability to integrate our and Sprint’s businesses in a manner that facilitates growth opportunities and achieves the projected stand-alone cost savings and revenue growth trends identified by each company without adversely affecting current revenues and investments in future growth. In addition, some of the anticipated synergies are not expected to occur for a significant time period following the completion of the Transactions and will require substantial capital expenditures in the near term to be fully realized. Even if the combined company is able to integrate the two companies successfully, the anticipated benefits of the Transactions may not be realized fully or at all or may take longer to realize than expected.

Our business and Sprint’s business may not be integrated successfully or such integration may be more difficult, time consuming or costly than expected. Operating costs, customer loss and business disruption, including difficulties in maintaining relationships with employees, customers, suppliers or vendors, may be greater than expected following the Transactions. Revenues following the Transactions may be lower than expected.

The combination of two independent businesses is complex, costly and time-consuming and may divert significant management attention and resources to combining our and Sprint’s business practices and operations. This process may disrupt our business. The failure to meet the challenges involved in combining the two businesses and to realize the anticipated benefits of the Transactions could cause an interruption of, or a loss of momentum in, the activities of the combined company and could adversely affect the results of operations of the combined company. The overall combination of our and Sprint’s businesses may also result in material unanticipated problems, expenses, liabilities, competitive responses, and loss of customer and other business relationships. The difficulties of combining the operations of the companies include, among others:

difficulties in integrating the companies’ operations and systems, including intellectual property and communications systems, administrative and information technology infrastructure and financial reporting and internal control systems, including compliance by the combined company with Section 404 of the Sarbanes-Oxley Act of 2002, as amended, and the rules promulgated by the SEC;

~~challenges in conforming standards, controls, procedures, accounting and other policies, business cultures, and compensation structures between the two companies;~~

~~difficulties in assimilating employees and in attracting and retaining key personnel;~~

~~challenges in keeping existing customers and obtaining new customers;~~

~~difficulties in achieving anticipated synergies, business opportunities, and growth prospects from the combination;~~

~~difficulties in managing the expanded operations of a significantly larger and more complex company;~~

~~the transition of management to the combined company executive management team;~~

~~determining whether and how to address possible differences in corporate cultures and management philosophies;~~

~~the impact of the additional debt financing expected to be incurred in connection with the Transactions;~~

~~contingent liabilities that are larger than expected; and~~

~~potential unknown liabilities, adverse consequences, and unforeseen increased expenses associated with the Transactions.~~

Many of these factors are outside of our and Sprint’s control and/or will be outside the control of the combined company, and any one of them could result in increased costs, decreased expected revenues and diversion of management time and energy, which could materially impact the business, financial condition and results of operations of the combined company. In addition, even if the operations of our business and Sprint’s business are combined successfully, the full benefits of the Transactions may not be realized, including the synergies or sales or growth opportunities that are expected. These benefits may not be achieved within the anticipated time frame, or at all. Further, additional unanticipated costs may be incurred in combining our business and Sprint’s business. All of these factors could cause dilution to the earnings per share of the combined company, decrease or delay the expected accretive effect of the Transactions, and negatively impact the price of our common stock. As a result, it cannot be assured that the combination of our business and Sprint’s business will result in the realization of the full benefits anticipated from the Transactions within the anticipated time frames or at all.

Our indebtedness following the completion of the Transactions will be substantially greater than our indebtedness on a stand-alone basis and greater than the combined indebtedness of us and Sprint prior to the announcement of the Transactions. This increased level of indebtedness could adversely affect the combined company’s business flexibility, and increase its borrowing costs.

In connection with the Transactions, we expect to incur merger-related debt financing, which will be used in part to prepay a portion of our existing indebtedness and a portion of Sprint’s existing indebtedness and to fund liquidity needs, and to assume Sprint’s remaining existing indebtedness. As a result, after giving effect to the Transactions and the related transactions contemplated by the Business Combination Agreement, including the incurrence of the merger-related debt financing, we anticipate that the combined company will have consolidated indebtedness of approximately $75.0 billion to $77.0 billion based on estimated December 31, 2018 debt and cash balances excluding tower obligations.

Our substantially increased indebtedness following completion of the Transactions in comparison to our indebtedness prior to the Transactions will have the effect, among other things, of reducing our flexibility to respond to changing business and economic conditions. In addition, the amount of cash required to pay interest on our increased indebtedness levels will increase

following completion of the Transactions, and thus the demands on our cash resources will be greater than prior to the Transactions. The increased levels of indebtedness following completion of the Transactions may reduce funds available to fund our efforts to combine our business with Sprint’s business and realize the expected benefits of the Transactions and/or may also reduce funds available for capital expenditures, share repurchases, and other activities and may create competitive disadvantages for us relative to other companies with lower debt levels.

Further, it may be necessary to incur substantial additional indebtedness in the future after the Transactions, subject to the restrictions contained in our debt instruments. If new indebtedness is added to our debt levels as of the closing of the Transactions, the related risks that we now face could intensify.

~~Because of our substantial indebtedness following the completion of the Transactions, we may not be able to service our debt obligations in accordance with their terms after the Transactions.~~

Our ability to service our substantial debt obligations following the completion of the Transactions will depend on our future performance, which will be affected by financial, business, economic and other factors, including our ability to achieve the expected benefits and cost savings from the Transactions. There is no guarantee that we will be able to generate sufficient cash flow to pay our debt service obligations when due. If we are unable to meet our debt service obligations after the Transactions or we fail to comply with our financial and other restrictive covenants contained in the agreements governing our indebtedness, we may be required to refinance all or part of our debt, sell important strategic assets at unfavorable prices or borrow more money. We may not be able to, at any given time, refinance our debt, sell assets or borrow more money on terms acceptable to us or at all. Our inability to refinance our debt could have a material adverse effect on our business, financial condition and results of operations after the Transactions.

~~The agreements governing the combined company’s indebtedness will include restrictive covenants that limit the combined company’s operating flexibility.~~

The agreements governing the combined company’s indebtedness will impose material operating and financial restrictions on the combined company. These restrictions, subject in certain cases to customary baskets, exceptions and incurrence-based ratio tests, may limit the combined company’s ability to engage in some transactions, including the following:

~~incurring additional indebtedness and issuing preferred stock;~~

~~paying dividends, redeeming capital stock or making other restricted payments or investments;~~

~~selling or buying assets, properties or licenses;~~

~~developing assets, properties or licenses which the combined company has or in the future may procure;~~

~~creating liens on assets;~~

~~participating in future FCC auctions of spectrum or private sales of spectrum;~~

~~engaging in mergers, acquisitions, business combinations, or other transactions;~~

~~entering into transactions with affiliates; and~~

~~placing restrictions on the ability of subsidiaries to pay dividends or make other payments.~~

These restrictions could limit the combined company’s ability to obtain debt financing, repurchase stock, refinance or pay principal on its outstanding indebtedness, complete acquisitions for cash or indebtedness or react to changes in its operating environment or the economy. Any future indebtedness that the combined company incurs may contain similar or more restrictive covenants. Any failure to comply with the restrictions of the combined company’s 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 agreements and other agreements, giving the combined company's lenders the right to terminate any commitments they had made to provide it with further funds and to require the combined company to repay all amounts then outstanding.

~~Financing of the combination is not assured.~~

Although we have received debt financing commitments from lenders to provide various bridge and other credit facilities to finance the Transactions, the obligation of the lenders to provide these facilities is subject to a number of conditions. We also expect to enter into other financing arrangements in connection with the Transactions for which we do not presently have commitments. Furthermore, we may seek to modify our existing financing arrangements in connection with the Transactions, and we do not have commitments from the lenders providing our existing financing arrangements for these modifications. Accordingly, financing of the Transactions is not assured. Even if we are able to obtain financing or modify our existing

financing arrangements, the terms of such new or modified financing arrangements may not be available to us on favorable terms and we may incur significant costs in connection with entering into such financing.

~~Downgrades of our and/or Sprint’s ratings could adversely affect our, Sprint’s and/or the combined company’s respective businesses, cash flows, financial condition and operating results.~~

Our credit ratings impact the cost and availability of future borrowings, and, as a result, our cost of capital. Our ratings reflect each rating organization’s opinion of our financial strength, operating performance and ability to meet our debt obligations or, following completion of the Transactions, obligations to the combined company’s insureds. Each of the rating organizations reviews our ratings and Sprint’s ratings periodically, and there can be no assurance that our or Sprint’s current ratings will be maintained in the future. Downgrades in our health and/or Sprint’s ratings could adversely affect our, Sprint’s and/or the combined company’s businesses, cash flows, financial condition and operating results. As noted above, the Business Combination Agreement also contains certain conditions relating to a minimum credit rating of T-Mobile USA on the closing date of the Transactions.

In addition, if the Transactions are completed and the credit ratings of certain of Sprint’s outstanding notes are downgraded, this may in certain circumstances constitute a change of control triggering event under the indentures governing the notes, requiring Sprint to offer to repurchase the notes at 101% of the principal amount thereof plus accrued interest. The Business Combination Agreement requires Sprint to seek noteholder consents to amend the indentures governing these notes such that the Transactions will not constitute a change of control triggering event. If such consents are not obtained and a change of control triggering event occurs, the combined company may have to incur additional indebtedness to finance the repurchase of the relevant Sprint notes. There is no guarantee that the combined company will be able to incur this additional indebtedness on commercially reasonable terms or at all.

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

~~Repurchases of Common Stock~~None.

~~Share repurchase activity during the three months ended March 31, 2018 was as follows:~~

Number of Shares Purchased (a) Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Repurchase Plans or Programs (b) Maximum Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (in millions) (c)
01/01/2018 - 01/31/2018 4,422,765
$ 64.30
4,422,765
$ 772
02/01/2018 - 02/28/2018 4,063,608
60.51
1,618,608
672
03/01/2018 - 03/31/2018 5,317,030
63.32
4,457,166
390
Total 13,803,403
$ 62.76
10,498,539
$ 390


~~(a)~~	~~The table presented includes purchases made by DT, our majority stockholder and an affiliated purchaser, in accordance with the rules of the SEC and other applicable legal requirements.~~


~~(b)~~	During the three months ended March 31, 2018, DT purchased 3.3 million additional shares of our common stock at an aggregate market value of $200 million in the public market or from other parties, which are not included against the dollar value of shares that may be purchased under programs approved by the Board of Directors.


~~(c)~~	~~Effective as of December 6, 2017, our Board of Directors authorized a stock repurchase program for up to $1.5 billion of our common stock through December 31, 2018. See~~ ~~Note 11 - Repurchases of Common Stock~~ ~~in the~~ ~~Notes to the Condensed Consolidated Financial Statements~~ ~~for further information.~~

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

None.

Item 5. Other Information

None.

Item 6. Exhibits

Incorporated by Reference
Exhibit No. Exhibit Description Form Date of First Filing Exhibit Number Filed Herein
2.1*
Business Combination Agreement, dated as of April 29, 2018, by and among T-Mobile US, Inc., Huron Merger Sub LLC, Superior Merger Sub Corporation, Sprint Corporation, Starburst I, Inc., Galaxy Investment Holdings, Inc., and for the limited purposes set forth therein, Deutsche Telekom AG, Deutsche Telekom Holding B.V. and SoftBank Group Corp.
8-K 4/30/2018 2.1
3.1
Certificate of Elimination of 5.5% Mandatory Convertible Preferred Stock, Series A, Par Value $0.00001 Per Share, dated February 15, 2018.
8-K 2/22/2018 3.1
4.1
Ninth Supplemental Indenture, dated as of January 25, 2018, by and among T-Mobile USA, Inc., the other guarantors party thereto, and Deutsche Bank Trust Company Americas, as trustee.
10-K 2/8/2018 4.24
4.2
Thirty-First Supplemental Indenture, dated as of January 25, 2018, by and among T-Mobile USA, Inc., T-Mobile US, Inc., the other guarantors party thereto and Deutsche Bank Trust Company Americas, as trustee.
10-K 2/8/2018 4.56
4.3
Thirty-Second Supplemental Indenture, dated as of January 25, 2018, by and among T-Mobile USA, Inc., T-Mobile US, Inc., the other guarantors party thereto and Deutsche Bank Trust Company Americas, as trustee, including the Form of 4.500% Senior Note due 2026.
8-K 1/25/2018 4.1
4.4
Thirty-Third Supplemental Indenture, dated as of January 25, 2018, by and among T-Mobile USA, Inc., T-Mobile US, Inc., the other guarantors party thereto and Deutsche Bank Trust Company Americas, as trustee, including the Form of 4.750% Senior Note due 2028.
8-K 1/25/2018 4.2
4.5
Thirty-Fourth Supplemental Indenture, dated as of April 26, 2018, by and among T-Mobile USA, Inc., T-Mobile US, Inc., the other guarantors party thereto and Deutsche Bank Trust Company Americas, as trustee.

X
10.1
Purchase Agreement, dated as of January 22, 2018, among T-Mobile USA, Inc., T-Mobile US, Inc., the other guarantors party thereto and Deutsche Telekom AG.
8-K 1/25/2018 10.1
10.2
Third Amended and Restated Master Receivables Purchase Agreement, dated as of February 5, 2018, among T-Mobile Airtime Funding LLC, as funding seller, Billing Gate One LLC, as purchaser, Landesbank Hessen-Thüringen Girozentrale, as bank purchasing agent, The Bank of Tokyo Mitsubishi UFJ, Ltd., as bank collection agent, TMobile PCS Holdings LLC, as servicer, and T-Mobile US, Inc., as performance guarantor.
10-K 2/8/2018 10.31
10.3
Amendment No. 5, dated as of March 29, 2018, to the Term Loan Agreement, dated as of November 9, 2015, among T-Mobile USA, Inc., T-Mobile US, Inc., the other guarantors party thereto, Deutsche Bank AG, New York Branch, as administrative agent, and Deutsche Telekom AG, as lender.
8-K 3/30/2018 10.1
10.4
Amendment No. 1, dated as of March 29, 2018, to the Secured Revolving Credit Agreement, dated as of December 29, 2016, among T-Mobile USA, Inc., T-Mobile US, Inc., the other guarantors party thereto and Deutsche Telekom AG, as administrative agent and lender.
8-K 3/30/2018 10.2
10.5
Amendment No. 1, dated as of March 29, 2018, to the Unsecured Revolving Credit Agreement, dated as of December 29, 2016, among T-Mobile USA, Inc., T-Mobile US, Inc., the other guarantors party thereto and Deutsche Telekom AG, as administrative agent and lender.
8-K 3/30/2018 10.3

Incorporated by Reference
Exhibit No. Exhibit Description Form Date of First Filing Exhibit Number Filed Herein
10.6
Support Agreement, dated as of April 29, 2018, by and among SoftBank Group Corp., SoftBank Group Capital Limited, Starburst I, Inc., Galaxy Investment Holdings, Inc., T-Mobile US, Inc., and Deutsche Telekom AG.
8-K 4/30/2018 10.1
10.7
Commitment Letter, dated as of April 29, 2018, by and among T-Mobile USA, Inc. and the financial institutions party thereto.
8-K 4/30/2018 10.2
10.8
Financing Matters Agreement, dated as of April 29, 2018, by and between T-Mobile USA, Inc. and Deutsche Telekom AG.
8-K 4/30/2018 10.3
10.9**
Form of Severance Letter Agreement.
X
10.10**
First Amendment, dated as of April 28, 2018, to Amended and Restated Employment Agreement, dated as of April 1, 2017, between T-Mobile US, Inc. and John Legere.
X
10.11**
First Amendment, dated as of April 28, 2018, to Updated Compensation Term Sheet, dated as of January 1, 2017, between T-Mobile US, Inc. and Michael Sievert.
X
10.12**
First Amendment, dated as of April 28, 2018, to Amended and Restated Employment Agreement, dated as of December 20, 2017, between T-Mobile US, Inc. and J. Braxton Carter.
X
10.13
First Amendment, dated as of April 3, 2018, to Third Amended and Restated Master Receivables Purchase Agreement, dated as of February 5, 2018, among T-Mobile Airtime Funding LLC, as funding seller, Billing Gate One LLC, as purchaser, Landesbank Hessen-Thüringen Girozentrale, as bank purchasing agent, MUFG Bank (Europe) N.V, Germany Branch, as bank collection agent, T-Mobile PCS Holdings LLC, as servicer, and T-Mobile US, Inc. and T-Mobile USA, Inc., as performance guarantors.

X
10.14
Second Amendment, dated as of April 3, 2018, to the Second Amended and Restated Receivables Purchase and Administrative Agreement, dated as of August 21, 2017, among T-Mobile Handset Funding LLC, as transferor, T-Mobile Financial LLC, as servicer, T-Mobile US, Inc. and T-Mobile USA, Inc., as performance guarantors, Royal Bank of Canada, as administrative agent, and certain financial institutions party thereto.

X
23.1
Consent of PricewaterhouseCoopers LLP.

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.

32.2***
Certification of Chief Financial Officer Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.

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



		Incorporated by Reference
Exhibit No.	Exhibit Description	Form	Date of First Filing	Exhibit Number	Filed Herein
10.1	Fourth Amended and Restated Master Receivables Purchase Agreement, dated as of February 26, 2019, among T-Mobile Funding LLC, as funding seller, Billing Gate One LLC, as purchaser, Landesbank Hessen-Thüringen Girozentrale, as bank purchasing agent, MUFG Bank (Europe) N.V., Germany Branch, as bank collection agent, T-Mobile PCS Holdings LLC, as servicer, and T-Mobile US, Inc. and T-Mobile USA, Inc., as performance guarantors.	8-K	03/04/2019	10.1
10.2*	Second Amendment, dated as of March 25, 2019, to Amended and Restated Employment Agreement, dated as of December 20, 2017, between T-Mobile US, Inc. and J. Braxton Carter.				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.
32.2**	Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	XBRL 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.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



*		This filing excludes certain schedules and exhibits pursuant to Item 601(b)(2) of Regulation S-K, which the registrant agrees to furnish supplementally to the SEC upon request by the SEC; provided, however, that the registrant may request confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, for any schedules or exhibits so furnished.
**		Indicates a management contract or compensatory plan or arrangement.
***		Furnished herein.



		~~SIGNATURE~~SIGNATURES

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.

~~May 1, 2018~~April 25, 2019		/s/ J. Braxton Carter
		J. Braxton Carter
		Executive Vice President and Chief Financial Officer
		(Principal Financial Officer and Authorized Signatory)

7154



Note 1	Summary of Significant Accounting Policies	78
Note 2	Significant Transactions	11
Note 3	Business Combinations	12
Note 4	Receivables and Allowance for Credit Losses	13
Note 35	~~Business Combinations~~Sales of Certain Receivables	14
Note 46	~~Receivables and Allowance for Credit Losses~~	16
~~Note 5~~	~~Sales of Certain Receivables~~Fair Value Measurements	17
Note 67	~~Goodwill~~Tower Obligations	18
Note 8	Revenue from Contracts with Customers	20
Note 79	~~Spectrum License Transactions~~	20
~~Note 8~~	~~Fair Value Measurements~~Earnings Per Share	21
Note 910	~~Debt~~Leases	22
Note 1011	~~Revenue from Contracts with Customers~~Commitments and Contingencies	24
Note 1112	~~Repurchases of Common Stock~~Subsequent Event	25
Note 1213	~~Earnings Per Share~~Guarantor Financial Information	26
~~Note 13~~	~~Commitments and Contingencies~~	26
~~Note 14~~	~~Subsequent Events~~	27
~~Note 15~~	~~Guarantor Financial Information~~	29



	January 1, 2018
(in millions)	Beginning Balance			Cumulative Effect Adjustment		Beginning Balance, As Adjusted
Assets
Other current assets	$	1,903		$	140	$	2,043
Other assets	912			150		1,062
Liabilities and Stockholders’ Equity
Deferred revenue	$	779		$	4	$	783
Deferred tax liabilities	3,537			73		3,610
Accumulated deficit	(16,074		)	213		(15,861		)



	Three Months Ended March 31, 2018
(in millions, except per share amounts)	Previous Revenue Standard			New Revenue Standard			Change
Revenues
Branded postpaid revenues	$	5,099		$	5,070		$	(29	)
Branded prepaid revenues	2,403			2,402			(1		)
Wholesale revenues	266			266			—
Roaming and other service revenues	68			68			—
Total service revenues	7,836			7,806			(30		)
Equipment revenues	2,276			2,353			77
Other revenues	296			296			—
Total revenues	10,408			10,455			47
Operating expenses
Cost of services, exclusive of depreciation and amortization shown separately below	1,589			1,589			—
Cost of equipment sales	2,845			2,845			—
Selling, general and administrative	3,212			3,164			(48		)
Depreciation and amortization	1,575			1,575			—
Total operating expenses	9,221			9,173			(48		)
Operating income	1,187			1,282			95
Total other expense, net	(401		)	(401		)	—
Income before income taxes	786			881			95
Income tax expense	(186		)	(210		)	(24		)
Net income	$	600		$	671		$	71
Earnings per share
Basic earnings per share	$	0.70		$	0.78		$	0.08
Diluted earnings per share	$	0.70		$	0.78		$	0.08



(in millions)	January 22, 2018
Assets acquired
Cash and cash equivalents	$	2
Other current assets	14
Property and equipment, net	11
Intangible assets	100
Goodwill	218
Deferred tax assets	2
Total assets acquired	$	347
Liabilities assumed
Accounts payable and accrued liabilities	$	27
Short-term debt	2
Total liabilities assumed	29
Total consideration transferred	$	318



(in millions)	January 1, 2018
Consideration transferred:
Cash paid	$	25
Previously held equity interest:
Acquisition date fair value of previously held equity interest	56
Bargain purchase gain	25
Net assets acquired	$	106



	March 31, 2018									March 31, 2017
(in millions)	Accounts Receivable Allowance			EIP Receivables Allowance			Total			Accounts Receivable Allowance			EIP Receivables Allowance			Total
Allowance for credit losses and imputed discount, beginning of period	$	86		$	396		$	482		$	102		$	316		$	418
Bad debt expense	4			50			54			37			56			93
Write-offs, net of recoveries	(14		)	(67		)	(81		)	(39		)	(75		)	(114		)
Change in imputed discount on short-term and long-term EIP receivables	N/A			53			53			N/A			48			48
Impact on the imputed discount from sales of EIP receivables	N/A			(51		)	(51		)	N/A			(41		)	(41		)
Allowance for credit losses and imputed discount, end of period	$	76		$	381		$	457		$	100		$	304		$	404



	March 31, 2018						December 31, 2017
(in millions)	Prime		Subprime		Total EIP Receivables, gross		Prime		Subprime		Total EIP Receivables, gross
Current - 30 days past due	$	1,648	$	2,168	$	3,816	$	1,727	$	2,133	$	3,860
31 - 60 days past due	14		24		38		17		29		46
61 - 90 days past due	5		13		18		6		16		22
More than 90 days past due	7		17		24		8		24		32
Total receivables, gross	$	1,674	$	2,222	$	3,896	$	1,758	$	2,202	$	3,960



(in millions)
Historical goodwill	$	12,449
Accumulated impairment losses at December 31, 2017	(10,766		)
Balance as of December 31, 2017	1,683
Goodwill from acquisition of Layer3 TV	218
Balance as of March 31, 2018	$	1,901
Accumulated impairment losses at March 31, 2018	$	(10,766	)



(in millions)	Spectrum Licenses
Balance at December 31, 2017	$	35,366
Spectrum license acquisitions	125
Costs to clear spectrum	13
Balance at March 31, 2018	$	35,504



(in millions)	December 31, 2017		Issuances and Borrowings ⁽¹⁾		Note Redemptions ⁽¹⁾			Repayments			Reclassifications ⁽¹⁾			Other ⁽²⁾			March 31, 2018
Short-term debt	$	1,612	$	—	$	(999	)	$	—		$	2,425		$	282		$	3,320
Long-term debt	12,121		2,494		—			—			(2,425		)	(63		)	12,127
Total debt to third parties	13,733		2,494		(999		)	—			—			219			15,447
Short-term debt to affiliates	—		2,170		—			(1,725		)	—			—			445
Long-term debt to affiliates	14,586		—		—			—			—			—			14,586
Total debt	$	28,319	$	4,664	$	(999	)	$	(1,725	)	$	—		$	219		$	30,478



(in millions)	Principal Issuances		Issuance Costs		Net Proceeds from Issuance of Long-Term Debt
4.500% Senior Notes due 2026	$	1,000	$	2	$	998
4.750% Senior Notes due 2028	1,500		4		1,496
Total of Senior Notes issued	$	2,500	$	6	$	2,494



(in millions)	Principal Amount		Write-off of Premiums, Discounts and Issuance Costs ⁽¹⁾		Call Penalties^{(1) (2)}		Redemption Date	Redemption Price
6.125% Senior Notes due 2022	$	1,000	$	1	$	31	January 15, 2018	103.063	%



(in millions)	At March 31, 2018
Total deferred incremental costs to obtain contracts	$	290



	Number of Shares Purchased (a)	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Repurchase Plans or Programs (b)	Maximum Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (in millions) (c)
01/01/2018 - 01/31/2018	4,422,765	$	64.30	4,422,765	$	772
02/01/2018 - 02/28/2018	4,063,608	60.51		1,618,608	672
03/01/2018 - 03/31/2018	5,317,030	63.32		4,457,166	390
Total	13,803,403	$	62.76	10,498,539	$	390