T-Mobile US, Inc. A-Block Spectrum Transactions Exhibit 99.2 |
Disclaimer 2 This presentation contains “forward-looking” statements within the meaning of the U.S. federal securities laws. For those statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Any statements made herein that are not statements of historical fact, including statements about the expected benefits of the spectrum transactions with Verizon and T-Mobile US, Inc.'s plans, outlook, beliefs, opinions, projections, guidance, strategy, integration of MetroPCS, expected network modernization and other advancements (including build-out of our network on A-block spectrum we own or acquire in the future), are forward- looking statements. Generally, forward-looking statements may be identified by words such as "anticipate," "expect," "suggests," "plan," "project," "believe," "intend," "estimates," "targets," "views," "may," "will," "forecast," and other similar expressions. The forward-looking statements speak only as of the date made, are based on current assumptions and expectations, and involve a number of risks and uncertainties. Important factors that could affect future results and cause those results to differ materially from those expressed in the forward-looking statements include, among others, the following: the satisfaction of the conditions to closing of the spectrum transactions with Verizon and the closing of the transactions; our ability to compete in the highly competitive U.S. wireless telecommunications industry; adverse conditions in the U.S. and international economies and markets; significant capital commitments and the capital expenditures required to effect our business plan, including the build-out of our network on A-block spectrum we own or acquire in the future; our ability to adapt to future changes in technology, enhance existing offerings, and introduce new offerings to address customers' changing demands; our ability to develop effective solutions to interoperability issues that may impact deployment of our network on the A-block spectrum we own or acquire in the future; the availability of devices that are compatible with A-block spectrum we own or acquire in the future; changes in legal and regulatory requirements, including any change or increase in restrictions on our ability to operate our network; our ability to successfully maintain and improve our network, and the possibility of incurring additional costs in doing so; major equipment failures; severe weather conditions or other force majeure events; and other risks described in our filings with the Securities and Exchange Commission, including those described in our Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on August 8, 2013. You should not place undue reliance on these forward- looking statements. We do not undertake to update forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. |
Agenda Financial Overview Strategic Overview Spectrum and Network Overview Braxton Carter, CFO John Legere, President and CEO 3 Neville Ray, CTO Q&A |
Strategic Overview John Legere President and CEO 4 |
Recent Activity 5 Oct 22 Launched Un-carrier 3.0, Part 2: Tablets Unleashed Nov 5 Reported Strong Q3 Results Nov 20 Completed the sale of primary shares raising net proceeds of approximately $1.8 billion Nov 21 Completed the sale of $2 billion of Senior Notes |
Highlights of A-Block Transactions 6 700 MHz A-Block spectrum from Verizon for $3.315B in consideration – $2.365 billion in cash and the transfer of some AWS and PCS spectrum licenses valued at approximately $950 million* Including existing A-Block holdings in Boston, spectrum covers 158 million people or approximately 50% of the U.S. population in key places such as New York, Los Angeles, Dallas, Houston, Philadelphia, Atlanta, Washington D.C., and Detroit. – 9 of the top 10, and 21 of the top 30 markets across the United States – Covers 70% of the existing T-Mobile customer base Positive regulatory and technological developments enhance attractiveness of transactions Build out can begin immediately after closing on licenses that cover over half the total population Transactions result in net gain in spectrum position in a significant number of major markets Complements our already “best-in-class” mid-band spectrum position This description summarizes two transactions that have been entered into with Verizon, one pursuant to a License Purchase Agreement and the second pursuant to a License Exchange Agreement. * |
Enhancing Our Spectrum Position 7 Completed AWS deal with U.S. Cellular Announced 700 MHz A-Block spectrum licenses from Verizon Wireless Excellent opportunities to acquire valuable spectrum in the near future (e.g., AWS-3 and 600 MHz auctions) |
Financial Overview 8 Braxton Carter CFO |
Details of Transactions 9 (1) Markets defined as Cellular Market Areas (CMAs) (2) Markets defined as Basic Trading Areas (BTAs) Comparable Spectrum Note: $ per MHz pop price estimates will vary based on the year of underlying population data used in the denominator. Comparable Spectrum Comps – 700 MHz Highlights TMUS receives: 700 MHz A Block spectrum in 240 metro areas covering 150M POPs 8 of Top 10 markets (1) 20 of Top 30 markets (1) VZ receives: $2.365B in cash AWS spectrum in 19 markets (1) covering 34M POPs PCS spectrum in 8 markets (2) covering 21M POPs 700 MHZ Secondary Market Transactions 700 MHZ Auction (Mar-08) AT&T 700 MHz Auction Top 25 B-block licenses Verizon A-Block Verizon B-block to AT&T (LA, Chicago, Miami, etc.) (Sept-13) Verizon A-block to Leap (Chicago) (Aug-12) Verizon B-block to Grain (Carolina Markets) (Sept-13) $1.47 $3.15 $4.50 $1.57 $4.08 $4.29 $1.85 T-Mobile purchase of Verizon 700 MHz A-block spectrum (Jan-14) • Secondary markets based on various Wall Street estimates. • Auction data based on FCC data provided with the auction results. • T-Mobile purchase of Verizon 700 MHz A-block spectrum based on internal assessment of fair market value |
Value-Creating Deals for TMUS Shareholders 10 “Best in Class” mid-band = Speed and Capacity New low-band = Coverage and Reliability Subscriber and capital impacts: – Increased gross adds – Lower Churn – Reduction in future capex Spectrum dispositions will not impair our ability to reach 20+20 MHz 4G LTE in 90% of Top 25 metro areas in 2014 and beyond |
Financing Detail 11 Purchase to be funded by cash on hand, supported by our recent equity and debt deals Equity Debt (1) Based on 3Q13 cash, proforma for recent debt and equity raise $14.0 $16.4 Current Post Deal Net Debt excl. towers ($B) (1) 2.6x 3.0x Current Post Deal LTM Leverage Ratio (1) $6.2 $3.8 Current Post Deal Cash ($B) (1) – 11/20/13: Completed sale of 72.8M shares at $25.00 per share. Net proceeds of ~$1.8B – 11/21/13: Completed sale of $2B in Senior Notes due 2022/2024 |
Implementation and Next Steps 12 Deals are expected to close in mid-2014 Rapid deployment 2014 capex guidance to be provided with 4Q13 results Increased optionality around future spectrum transactions – Disciplined in evaluation of future A-Block transactions – Remain open to future swaps – Plan to participate in AWS-3 and 600 MHz auctions |
Spectrum and Network Overview Neville Ray CTO 13 |
What are we Buying? 14 A-Block License Areas T-Mobile’s 700 MHz A-Block holdings would cover 158 million people (including Boston) and 70% of T-Mobile’s customers. 251 metropolitan areas, including 9 of the top 10 and 21 of the top 30 markets. Legend New license Existing |
Enhanced Spectrum Position 15 Transactions significantly improve T-Mobile’s spectrum depth Total spectrum in Top 25 Major Metro Areas (in MHz) (1) MHz totals do not tie out exactly due to rounding (1) (1) 45 31 0.4 77 42 30 9 82 AWS PCS 700MHz Total Before After |
Importance of Low-Band Spectrum 16 Cell sites overlaid with 700MHz will benefit from a significantly larger coverage footprint in suburban and rural areas Cost effective coverage extension outside of dense urban areas Sub-Urban and Rural Coverage Improved in-building penetration with twice as strong signal indoors compared to mid-band Significantly improved in-building experience In-Building Penetration Complements Mid-Band Spectrum Excellent supplement to strong mid- band portfolio Additional capacity and speed in addition to extended reach in suburban and rural areas Mid-band coverage Low-band coverage Sub-Urban Rural Urban |
Resolution of A-Block Interference 17 Lower 700 MHz Band Digital TV Channel 51 Channel 51 service areas cover less than 50% of licensed POPs Mitigation techniques exists to shrink these zones today Fully resolved as part of the Broadcast Incentive Auction E-Block transmissions Dish agreed to reduce the power levels of transmissions from its E Block spectrum and FCC approved associated order in October Resolved with 700MHz interoperability agreement E A B C A B C D Digital TV 698 704 710 734 740 746 716 722 728 Uplink Downlink Ch.51 |
Early Deployment Opportunity 18 A-Block build-out can start in 2014 outside the Ch.51 Service contours with more than 50% of covered population in such areas Initial markets where Ch.51 is not present include Washington DC, Dallas, Philadelphia, Houston, Miami and Minneapolis T-Mobile has large number of existing sites (~15,000) outside Ch.51 service contours, presenting early deployment opportunity |
Handsets and Infrastructure 19 Infrastructure A-block network infrastructure has already been developed and deployed We have a large base of existing sites to facilitate rapid deployment We have a strong record of deploying new bands and technologies rapidly Handsets First devices compatible with A- block already exist today Device development required to support T-Mobile network is relatively small Initial devices supporting A- block and T-Mobile network as early as 4Q2014 |
Recap Highlights John Legere President and CEO 20 |
Recap Highlights 21 700 MHz A-Block spectrum from Verizon for $3.315B – $2.365 billion in cash and the transfer of some AWS and PCS spectrum licenses valued at approximately $950 million* approximately 50% of the U.S. population in key places such as New York, Los Angeles, Dallas, Houston, Philadelphia, Atlanta, Washington D.C., and Detroit. – 9 of the top 10, and 21 of the top 30 markets across the United States – Covers 70% of the existing T-Mobile customer base Positive regulatory and technological developments enhance attractiveness of transactions Build out can begin immediately after closing on licenses that cover over half the total population Transactions result in net gain in spectrum position in a significant number of major markets Complements our already “best-in-class” mid-band spectrum position * This description summarizes two transactions that have been entered into with Verizon, one pursuant to a License Purchase Agreement and the second pursuant to a License Exchange Agreement. |
22 Q&A |
23 Appendix |
A-Block: 21 of the Top 30 Cellular Market Areas 24 |
AWS/PCS License Exchange Markets 25 Note: License exchange markets ranked by Cellular Market Areas (CMAs) AWS markets defined by Cellular Market Areas (CMAs) PCS markets defined as Basic Trading Areas (BTAs) The spectrum blocks being exchanged by the two companies for realignment purposes net to zero. CMA BTA TO T-MOBILE: CMA BTA Covered Covered AWS PCS 700 Total AWS PCS 700 AWS PCS 700 Total AWS PCS 700 Total Market Market Market Name POPs (MM) POPs (MM) (MHz) (MHz) (MHz) (MHz) (MHz) (MHz) (MHz) (MHz) (MHz) (MHz) (MHz) (MHz) (MHz) (MHz) (MHz) 2 Los Angeles, CA 17.2 50 30 0 80 10 12 40 30 12 82 (10) 0 12 2 7 404 San Francisco-Oakland, CA 4.4 7.7 50 50 0 100 10 10 12 40 40 12 92 (10) (10) 12 (8) 9 Dallas-Forth Worth, TX 6.6 60 40 0 100 10 12 50 40 12 102 (10) 0 12 2 24 Atlanta, GA 5.7 48 50 0 98 10 12 48 40 12 100 0 (10) 12 2 112 Detroit, MI 4.9 50 40 0 90 10 12 50 30 12 92 0 (10) 12 2 35 Sacramento, CA 2.0 50 45 0 95 10 12 40 45 12 97 (10) 0 12 2 107 434 Stockton, CA 0.7 0.7 50 50 0 100 10 10 12 40 40 12 92 (10) (10) 12 (8) 53 Syracuse, NY 0.6 50 20 0 70 10 40 20 0 60 (10) 0 0 (10) 107 Daytona Beach, FL 0.6 47 48 0 95 10 12 47 38 12 97 0 (10) 12 2 111 Vallejo-Fairfield-Napa, CA 0.5 50 50 0 100 10 10 12 40 40 12 92 (10) (10) 12 (8) 289 Melbourne, FL 0.5 50 50 0 100 10 12 50 40 12 102 0 (10) 12 2 124 Santa Barbara-Santa Maria-Lompoc, CA 0.4 60 20 0 80 10 12 50 20 12 82 (10) 0 12 2 160 Gainesville, GA 0.3 50 60 0 110 10 12 50 50 12 112 0 (10) 12 2 340 California 5 - San Luis Obispo 0.3 60 15 0 75 10 12 50 15 12 77 (10) 0 12 2 22 Athens, GA 0.3 40 50 0 90 10 12 40 40 12 92 0 (10) 12 2 215 Chico, CA 0.2 50 45 0 95 10 12 40 45 12 97 (10) 0 12 2 336 California 1 - Del Norte 0.2 50 34 0 84 10 12 40 34 12 86 (10) 0 12 2 270 Bellingham, WA 0.2 70 40 0 110 20 50 40 0 90 (20) 0 0 (20) 254 Redding, CA 0.2 50 45 0 95 10 40 45 0 85 (10) 0 0 (10) 346 California 11 - El Dorado 0.2 50 45 0 95 10 12 40 45 12 97 (10) 0 12 2 274 Yuba City, CA 0.2 50 45 0 95 10 12 40 45 12 97 (10) 0 12 2 344 California 9 - Mendocino 0.2 50 40 0 90 10 12 40 40 12 92 (10) 0 12 2 343 California 8 - Tehama 0.1 50 45 0 95 10 40 45 0 85 (10) 0 0 (10) 345 California 10 - Sierra 0.1 50 45 0 95 10 12 40 45 12 97 (10) 0 12 2 337 California 2 - Modoc 0.1 50 34 0 84 10 40 34 0 74 (10) 0 0 (10) 34.2 20.8 BEFORE TRANSACTION TRANSACTION AFTER TRANSACTION CHANGE TMUS Spectrum Ownership in AWS/PCS/700 MHz Bands TO VERIZON: TMUS Spectrum Ownership in AWS/PCS/700 MHz Bands TMUS Spectrum Ownership in AWS/PCS/700 MHz Bands |