Cover Page
Cover Page - shares | 3 Months Ended | |
Mar. 31, 2020 | Apr. 30, 2020 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Mar. 31, 2020 | |
Document Transition Report | false | |
Entity File Number | 1-33409 | |
Entity Registrant Name | T-MOBILE US, INC. | |
Entity Central Index Key | 0001283699 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | FY | |
Amendment Flag | false | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 20-0836269 | |
Entity Address, Address Line One | 12920 SE 38th Street | |
Entity Address, City or Town | Bellevue | |
Entity Address, State or Province | WA | |
Entity Address, Postal Zip Code | 98006-1350 | |
City Area Code | (425) | |
Local Phone Number | 378-4000 | |
Title of 12(b) Security | Common Stock, par value $0.00001 per share | |
Trading Symbol | TMUS | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 1,235,763,488 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Millions | Mar. 31, 2020 | Dec. 31, 2019 |
Current assets | ||
Cash and cash equivalents | $ 1,112 | $ 1,528 |
Accounts receivable, net of allowance for credit losses of $69 and $61 | 1,836 | 1,888 |
Equipment installment plan receivables, net of allowance for credit losses and imputed discount of $386 and $333 | 2,406 | 2,600 |
Accounts receivable from affiliates | 26 | 20 |
Inventory | 1,225 | 964 |
Other current assets | 2,882 | 2,305 |
Total current assets | 9,487 | 9,305 |
Property and equipment, net | 22,149 | 21,984 |
Operating lease right-of-use assets | 10,956 | 10,933 |
Financing lease right-of-use assets | 2,749 | 2,715 |
Goodwill | 1,930 | 1,930 |
Spectrum licenses | 36,471 | 36,465 |
Other intangible assets, net | 91 | 115 |
Equipment installment plan receivables due after one year, net of allowance for credit losses and imputed discount of $83 and $66 | 1,367 | 1,583 |
Other assets | 2,026 | 1,891 |
Total assets | 87,226 | 86,921 |
Current liabilities | ||
Accounts payable and accrued liabilities | 6,003 | 6,746 |
Payables to affiliates | 228 | 187 |
Short-term debt | 0 | 25 |
Due to Affiliate, Current | 2,000 | 0 |
Deferred revenue | 619 | 631 |
Short-term operating lease liabilities | 2,187 | 2,287 |
Short-term financing lease liabilities | 918 | 957 |
Other current liabilities | 2,801 | 1,673 |
Total current liabilities | 14,756 | 12,506 |
Long-term debt | 10,959 | 10,958 |
Long-term debt to affiliates | 11,987 | 13,986 |
Tower obligations | 2,230 | 2,236 |
Deferred tax liabilities | 5,618 | 5,607 |
Operating lease liabilities | 10,464 | 10,539 |
Financing lease liabilities | 1,276 | 1,346 |
Other long-term liabilities | 959 | 954 |
Total long-term liabilities | 43,493 | 45,626 |
Commitments and contingencies (Note 11) | ||
Stockholders' equity | ||
Common Stock, par value $0.00001 per share, 1,000,000,000 shares authorized; 862,636,935 and 858,418,615 shares issued, 861,128,106 and 856,905,400 shares outstanding | 0 | 0 |
Additional paid-in capital | 38,597 | 38,498 |
Treasury stock, at cost, 1,508,829 and 1,513,215 shares issued | (11) | (8) |
Accumulated other comprehensive loss | (1,660) | (868) |
Accumulated deficit | (7,949) | (8,833) |
Total stockholders' equity | 28,977 | 28,789 |
Total liabilities and stockholders' equity | $ 87,226 | $ 86,921 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Millions | Mar. 31, 2020 | Dec. 31, 2019 |
Statement of Financial Position [Abstract] | ||
Allowance for credit losses | $ 69 | $ 61 |
Allowance for credit losses and imputed discount | 386 | 333 |
Allowance for credit losses and imputed discount | $ 83 | $ 66 |
Common stock, par value (in USD per share) | $ 0.00001 | $ 0.00001 |
Common stock, shares authorized (in shares) | 1,000,000,000 | 1,000,000,000 |
Common stock, shares issued (in shares) | 862,636,935 | 858,418,615 |
Common stock, shares outstanding (in shares) | 861,128,106 | 856,905,400 |
Treasury stock, at cost (in shares) | 1,508,829 | 1,513,215 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Revenues | ||
Revenues | $ 11,113 | $ 11,080 |
Operating expenses | ||
Selling, general and administrative | 3,688 | 3,442 |
Depreciation and amortization | 1,718 | 1,600 |
Total operating expenses | 9,574 | 9,604 |
Operating income | 1,539 | 1,476 |
Other income (expense) | ||
Interest expense | (185) | (179) |
Interest expense to affiliates | (99) | (109) |
Interest income | 12 | 8 |
Other (expense) income, net | (10) | 7 |
Total other expense, net | (282) | (273) |
Income before income taxes | 1,257 | 1,203 |
Income tax expense | (306) | (295) |
Net income | 951 | 908 |
Net income | 951 | 908 |
Other comprehensive loss, net of tax | ||
Unrealized loss on cash flow hedges, net of tax effect of $(276) and $(66) | (792) | (189) |
Other comprehensive income (loss) | (792) | (189) |
Total comprehensive income | $ 159 | $ 719 |
Earnings per share | ||
Basic (in USD per share) | $ 1.11 | $ 1.07 |
Diluted (in USD per share) | $ 1.10 | $ 1.06 |
Weighted average shares outstanding | ||
Basic (in shares) | 858,148,284 | 851,223,498 |
Diluted (in shares) | 865,998,532 | 858,643,481 |
Branded postpaid revenues | ||
Revenues | ||
Revenues | $ 5,887 | $ 5,493 |
Branded prepaid revenues | ||
Revenues | ||
Revenues | 2,373 | 2,386 |
Wholesale revenues | ||
Revenues | ||
Revenues | 325 | 304 |
Roaming and other service revenues | ||
Revenues | ||
Revenues | 128 | 94 |
Service | ||
Revenues | ||
Revenues | 8,713 | 8,277 |
Operating expenses | ||
Cost of services and equipment sales | 1,639 | 1,546 |
Equipment | ||
Revenues | ||
Revenues | 2,117 | 2,516 |
Operating expenses | ||
Cost of services and equipment sales | 2,529 | 3,016 |
Other revenues | ||
Revenues | ||
Revenues | $ 283 | $ 287 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Income (Parenthetical) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Income Statement [Abstract] | ||
Cash flow hedges, tax effect | $ (276) | $ (66) |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Operating activities | ||
Net income | $ 951 | $ 908 |
Adjustments to reconcile net income to net cash provided by operating activities | ||
Depreciation and amortization | 1,718 | 1,600 |
Stock-based compensation expense | 138 | 110 |
Deferred income tax expense | 310 | 288 |
Bad debt expense | 113 | 73 |
Losses from sales of receivables | 25 | 35 |
Changes in operating assets and liabilities | ||
Accounts receivable | (748) | (1,143) |
Equipment installment plan receivables | 69 | (250) |
Inventories | (511) | (265) |
Operating lease right-of-use assets | 527 | 435 |
Other current and long-term assets | 6 | (87) |
Accounts payable and accrued liabilities | (405) | 13 |
Short and long-term operating lease liabilities | (725) | (522) |
Other current and long-term liabilities | 79 | 121 |
Other, net | 70 | 76 |
Net cash provided by operating activities | 1,617 | 1,392 |
Investing activities | ||
Purchases of property and equipment, including capitalized interest of $112 and $118 | (1,753) | (1,931) |
Purchases of spectrum licenses and other intangible assets, including deposits | (99) | (185) |
Proceeds related to beneficial interests in securitization transactions | 868 | 1,157 |
Net cash related to derivative contracts under collateral exchange arrangements | (580) | 0 |
Other, net | (16) | (7) |
Net cash used in investing activities | (1,580) | (966) |
Financing activities | ||
Proceeds from borrowing on revolving credit facility | 0 | 885 |
Repayments of revolving credit facility | 0 | (885) |
Repayments of financing lease obligations | (282) | (86) |
Repayments of short-term debt for purchases of inventory, property and equipment, net | (25) | 0 |
Tax withholdings on share-based awards | (141) | (100) |
Other, net | (5) | (4) |
Net cash used in financing activities | (453) | (190) |
Change in cash and cash equivalents | (416) | 236 |
Cash and cash equivalents | ||
Beginning of period | 1,528 | 1,203 |
End of period | 1,112 | 1,439 |
Supplemental disclosure of cash flow information | ||
Interest payments, net of amounts capitalized | 341 | 340 |
Operating lease payments | 875 | 688 |
Income tax payments | 24 | 32 |
Non-cash investing and financing activities | ||
Non-cash beneficial interest obtained in exchange for securitized receivables | 1,613 | 1,512 |
Decrease in accounts payable for purchases of property and equipment | (301) | (333) |
Leased devices transferred from inventory to property and equipment | 309 | 147 |
Returned leased devices transferred from property and equipment to inventory | (59) | (57) |
Short-term debt assumed for financing of property and equipment | 0 | 250 |
Operating lease right-of-use assets obtained in exchange for lease obligations | 555 | 694 |
Financing lease right-of-use assets obtained in exchange for lease obligations | $ 178 | $ 180 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Cash Flows (Parenthetical) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Statement of Cash Flows [Abstract] | ||
Capitalized interest | $ 112 | $ 118 |
Condensed Consolidated Statem_5
Condensed Consolidated Statement of Stockholders' Equity - USD ($) $ in Millions | Total | Common Stock Outstanding | Treasury Shares at Cost | Par Value and Additional Paid-in Capital | Accumulated Other Comprehensive Loss | Accumulated Deficit |
Balance, beginning of period at Dec. 31, 2018 | $ 24,718 | $ (6) | $ 38,010 | $ (332) | $ (12,954) | |
Common stock outstanding, beginning balance (in shares) at Dec. 31, 2018 | 850,180,317 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income | 908 | 908 | ||||
Other comprehensive (loss) income | (189) | (189) | ||||
Stock-based compensation | 121 | 121 | ||||
Exercise of stock options | 1 | 1 | ||||
Exercise of stock options (in shares) | 31,874 | |||||
Stock issued for employee stock purchase plan | 69 | 69 | ||||
Stock issued for employee stock purchase plan (in shares) | 1,172,511 | |||||
Issuance of vested restricted stock units (in shares) | 4,343,972 | |||||
Shares withheld related to net share settlement of stock awards and stock options | (100) | (100) | ||||
Shares withheld related to net share settlement of stock awards and stock options (in shares) | (1,364,621) | |||||
Distribution from NQDC plan | 1 | (1) | ||||
Distribution from NQDC plan (in shares) | 16,065 | |||||
Prior year Retained Earnings | 653 | 653 | ||||
Balance, end of period at Mar. 31, 2019 | 26,181 | (5) | 38,100 | (521) | (11,393) | |
Common stock outstanding, ending balance (in shares) at Mar. 31, 2019 | 854,380,118 | |||||
Balance, beginning of period at Dec. 31, 2019 | $ 28,789 | (8) | 38,498 | (868) | (8,833) | |
Common stock outstanding, beginning balance (in shares) at Dec. 31, 2019 | 856,905,400 | 856,905,400 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income | $ 951 | 951 | ||||
Other comprehensive (loss) income | (792) | (792) | ||||
Executive put option | 1 | 1 | ||||
Executive put option (in shares) | (342,000) | |||||
Stock-based compensation | 152 | 152 | ||||
Exercise of stock options | 1 | 1 | ||||
Exercise of stock options (in shares) | 49,193 | |||||
Stock issued for employee stock purchase plan | 83 | 83 | ||||
Stock issued for employee stock purchase plan (in shares) | 1,246,317 | |||||
Issuance of vested restricted stock units (in shares) | 4,755,209 | |||||
Shares withheld related to net share settlement of stock awards and stock options | (141) | (141) | ||||
Shares withheld related to net share settlement of stock awards and stock options (in shares) | (1,490,399) | |||||
Transfer RSU from NQDC plan | (3) | 3 | ||||
Transfer RSU to NQDC plan (in shares) | 4,386 | |||||
Prior year Retained Earnings | (67) | (67) | ||||
Balance, end of period at Mar. 31, 2020 | $ 28,977 | $ (11) | $ 38,597 | $ (1,660) | $ (7,949) | |
Common stock outstanding, ending balance (in shares) at Mar. 31, 2020 | 861,128,106 | 861,128,106 |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Summary of Significant Accounting Policies | Note 1 – Summary of Significant Accounting Policies Basis of Presentation The unaudited condensed consolidated financial statements of T-Mobile US, Inc. (“T-Mobile,” “we,” “our,” “us” or “the Company”) include all adjustments of a normal recurring nature necessary for the fair presentation of the results for the interim periods presented. The results for the interim periods are not necessarily indicative of those for the full year. The condensed consolidated financial statements should be read in conjunction with our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2019. 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 our obligations to pay for the management and operation of certain of our wireless communications tower sites (“Tower Obligations”). 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, including but not limited to the potential impacts arising from the COVID-19 pandemic. Due to the uncertainty around the magnitude and duration of the impacts of the COVID-19 pandemic, these estimates are inherently subject to judgment and actual results could differ from those estimates. Accounting Pronouncements Adopted During the Current Year Receivables and Expected Credit Losses In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments,” and has since modified the standard with several ASUs (collectively, the “new credit loss standard”). The new credit loss 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 forecasts that affect the collectibility of the reported amount. The new credit loss standard became effective for us, and we adopted the standard, on January 1, 2020. The new credit loss standard required a cumulative-effect adjustment to Accumulated deficit at the date of initial application, and as a result, we did not restate prior periods presented in the condensed consolidated financial statements. Under the new credit loss standard we recognize lifetime expected credit losses at the inception of our credit risk exposures whereas we previously recognized credit losses only when it was probable that they had been incurred. We also recognize expected credit losses on our equipment installment plan (“EIP”) receivables separately from, and in addition to, any unamortized discount on those receivables. Prior to the adoption of the new credit loss standard, we had offset our estimate of probable losses on our EIP receivables by the amount of the related unamortized discounts on those receivables. We have developed an expected credit loss model incorporating forward-looking loss indicators. The cumulative effect of initially applying the new credit loss standard on our receivables portfolio on January 1, 2020 was an increase to our allowance for credit losses of $91 million, a decrease to our net deferred tax liabilities of $24 million and an increase to our Accumulated deficit of $67 million. Accounts Receivable Portfolio Segment Accounts receivable consists primarily of amounts currently due from customers (e.g., for wireless services), handset insurance administrators, wholesale partners, other carriers and third-party retail channels. Accounts receivable are presented in our Condensed Consolidated Balance Sheets at the amortized cost basis (i.e., the receivables’ outstanding principal balance adjusted for any write-offs), net of the allowance for expected credit losses. We have an arrangement to sell the majority of customer service accounts receivable on a revolving basis, which are treated as sales of financial assets. EIP Receivables Portfolio Segment We offer certain retail customers the option to pay for their devices and other purchases in installments over a period of, generally, 24 months and up to 36 months using an EIP. EIP receivables are presented in our Condensed Consolidated Balance Sheets at the amortized cost basis (i.e., the receivables’ outstanding principal balance adjusted for any write-offs and unamortized discounts), net of the allowance for expected credit losses. At the time of an installment sale, we impute a discount for interest if the EIP term exceeds 12 months as there is no stated rate of interest on the EIP receivables. The EIP receivables are recorded at their present value, which is determined by discounting expected future cash payments at the imputed interest rate. The difference between the recorded amount of the EIP receivables and their unpaid principal balance (i.e., the contractual amount due from the customer) results in a discount which is allocated to the performance obligations of the arrangement and recorded as a reduction in transaction price in Total service revenues and Equipment revenues in our Condensed Consolidated Statements of Comprehensive Income. We determine the imputed discount rate based primarily on current market interest rates and the estimated credit risk on the EIP receivables. The imputed discount on EIP receivables is amortized over the financed installment term using the effective interest method and recognized as Other revenues in our Condensed Consolidated Statements of Comprehensive Income. At the time that we originate EIP loans to customers, we recognize an allowance for credit losses that we expect to incur over the lifetime of such assets. This allowance represents the portion of the amortized cost basis of EIP receivables that we do not expect to collect. The current portion of the EIP receivables is included in Equipment installment plan receivables, net and the long-term portion of the EIP receivables is included in Equipment installment plan receivables due after one year, net in our Condensed Consolidated Balance Sheets. We have an arrangement to sell certain EIP receivables on a revolving basis, which are treated as sales of financial assets. Allowance for Credit Losses We maintain an allowance for expected credit losses and determine its appropriateness through an established process that assesses the lifetime credit losses that we expect to incur related to our receivable portfolio. We develop and document our allowance methodology at the portfolio segment level for the accounts receivable portfolio and EIP receivables portfolio segments. While we attribute portions of the allowance to our respective accounts receivable and EIP portfolio segments, the entire allowance is available to absorb expected credit losses related to the total receivable portfolio. Our process involves procedures to appropriately consider the unique risk characteristics of our accounts receivable and EIP receivable portfolio segments. For each portfolio segment, losses are estimated collectively for groups of receivables with similar characteristics. Our allowance levels are influenced by receivable volumes, receivable delinquency status, historical loss experience and other conditions influencing loss expectations, such as changes in credit and collections policies and forecasts of macro-economic conditions. Total imputed discount and allowances were approximately 8.7% and 7.0% of the total amount of gross accounts receivable, including EIP receivables, at March 31, 2020 and December 31, 2019. We consider a receivable past due when a customer has not paid us by the contractually specified payment due date. 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. 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 also requires the presentation of the amortization of the capitalized implementation costs in the same line item in the Condensed Consolidated Statements of Comprehensive Income as the fees associated with the hosting arrangement. The standard became effective for us, and we adopted the standard, on January 1, 2020. We adopted the standard on a prospective basis applying it to implementation costs incurred subsequent to January 1, 2020 and as a result did not restate the prior periods presented in the condensed consolidated financial statements. The adoption of the standard did not have a material impact on our condensed consolidated financial statements for the three months ended March 31, 2020. Income Taxes In December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes.” The standard simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. We early adopted the standard on January 1, 2020 and have applied the standard retrospectively to all periods presented. The adoption of this standard did not have an impact on our condensed consolidated financial statements. Guarantor Financial Information On March 2, 2020, the Securities and Exchange Commission (the “SEC”) adopted amendments to the financial disclosure requirements for guarantors and issuers of guaranteed securities, as well for affiliates whose securities collateralize a registrant’s securities. The amendments revise Rules 3-10 and 3-16 of Regulation S-X, and relocate part of Rule 3-10 and all of Rule 3-16 to the new Article 13 in Regulation S-X, which is comprised of new Rules 13-01 and 13-02. We early adopted the requirements of the amendments on January 1, 2020, which included replacing guarantor condensed consolidating financial information with summarized financial information for the consolidated obligor group (Parent, Issuer, and Guarantor Subsidiaries) as well as no longer requiring guarantor cash flow information, financial information for non-guarantor subsidiaries, and a reconciliation to the consolidated results. Accounting Pronouncements Not Yet Adopted Other recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the American Institute of Certified Public Accountants, and the SEC did not have, or are not expected to have, a significant impact on our present or future condensed consolidated financial statements. |
Business Combination
Business Combination | 3 Months Ended |
Mar. 31, 2020 | |
Business Combinations [Abstract] | |
Business Combination | Note 2 – Business Combination Business Combination and Amendments On April 29, 2018, we entered into a Business Combination Agreement to merge with Sprint in an all-stock transaction at a fixed exchange ratio of 0.10256 shares of T-Mobile common stock for each share of Sprint common stock, or 9.75 shares of Sprint common stock for each share of T-Mobile common stock (the “Merger”). On July 26, 2019, in connection with the entry into the Asset Purchase Agreement, described below, we and the other parties to the Business Combination Agreement entered into Amendment No. 1 (“Amendment No. 1”) to the Business Combination Agreement. Amendment No. 1 extended the Outside Date (as defined in the Business Combination Agreement) to November 1, 2019, or, if the Marketing Period (as defined in the Business Combination Agreement) had started and was in effect at such date, then January 2, 2020. On February 20, 2020, we and the other parties to the Business Combination Agreement entered into Amendment No. 2 (“Amendment No. 2”) to the Business Combination Agreement, extending the Outside Date to July 1, 2020. In addition, pursuant to Amendment No. 2, SoftBank Group Corp. (“SoftBank”) agreed to indemnify T-Mobile and its subsidiaries following the closing of the Merger and the other transactions contemplated by the Business Combination Agreement (collectively, the “Transactions”) against (i) any monetary losses arising out of or resulting from certain specified matters and (ii) the loss of value to T-Mobile and its subsidiaries arising out of or resulting from cessation of access to spectrum of Sprint or its subsidiaries under certain circumstances, subject to limitations and qualifications contained in Amendment No. 2. Concurrently with entry into Amendment No. 2, T-Mobile, SoftBank and Deutsche Telekom AG (“DT”) entered into a letter agreement (the “Letter Agreement”). Pursuant to the Letter Agreement, SoftBank agreed to cause its applicable affiliates to surrender to T-Mobile, for no additional consideration, an aggregate of 48,751,557 shares of T-Mobile common stock (such number of shares, the “SoftBank Specified Shares Amount”), effective immediately following the Effective Time (as defined in the Business Combination Agreement), making SoftBank’s exchange ratio 11.31 shares of Sprint common stock for each share of T-Mobile common stock. This resulted in an effective exchange ratio of approximately 11.00 shares of Sprint common stock for each share of T-Mobile common stock immediately following the closing of the Merger, an increase from the originally agreed 9.75 shares. Sprint shareholders other than SoftBank received the original fixed exchange ratio of 0.10256 shares of T-Mobile common stock for each share of Sprint common stock, or the equivalent of approximately 9.75 shares of Sprint common stock for each share of T-Mobile common stock. The Letter Agreement further provides that if the trailing 45-day volume-weighted average price per share of T-Mobile common stock on the NASDAQ Global Select Market is equal to or greater than $150.00 at any time during the period commencing on April 1, 2022 and ending on December 31, 2025, T-Mobile will issue to SoftBank, for no additional consideration, a number of shares of T-Mobile common stock equal to the SoftBank Specified Shares Amount, subject to the terms and conditions set forth in the Letter Agreement. Sprint Merger Subsequent to March 31, 2020, on April 1, 2020, we completed the Merger, and as a result, Sprint and its subsidiaries became wholly-owned consolidated subsidiaries of T-Mobile. Sprint is a communications company offering a comprehensive range of wireless and wireline communications products and services. As a combined company, we expect to be able to rapidly launch a broad and deep nationwide 5G network, accelerate innovation, increase competition in the U.S. wireless, video and broadband industries and achieve synergies. Upon completion of the Merger, each share of Sprint common stock was exchanged for 0.10256 shares of T-Mobile common stock, or 9.75 shares of Sprint common stock for each share of T-Mobile common stock. After adjustments, including the holdback of the SoftBank Specified Shares Amount and fractional shares, we issued 373,396,310 shares of T-Mobile common stock to Sprint shareholders. Based on the T-Mobile closing share price as of March 31, 2020 of $83.90, the value of the T-Mobile common stock provided in exchange for Sprint common stock was approximately $31.3 billion. In addition to the exchange of common stock, the consideration transferred also included the assumption and repayment of certain outstanding debt balances of Sprint, the replacement of equity awards of certain Sprint employees for services provided prior to the Merger and contingent consideration payable to SoftBank, pursuant to the Letter Agreement described above. Our valuation of these components of consideration is not yet complete. The major classes of assets acquired through the Merger include cash and cash equivalents, accounts receivable, equipment installment plan receivables, inventory, fixed assets and network equipment, operating and financing lease right-of-use assets, spectrum licenses and other intangible assets. The major classes of liabilities assumed include accounts payable and accrued liabilities, short-term debt, operating and financing lease liabilities, net pension plan liabilities, deferred tax liabilities and long-term debt with an aggregate principal balance of $26.5 billion. Due to the limited time since the acquisition date, restrictions on access to Sprint information arising from antitrust considerations prior to the closing of the Merger and the size and complexity of the Transactions, the accounting for the business combination is not yet complete. We are not able to provide the valuation of certain components of consideration transferred or provide the allocation of consideration paid to the assets acquired or liabilities assumed, including any indemnification assets and contingent consideration. Supplemental pro forma revenue and earnings of the combined company are predicated on the completion of the business combination accounting and allocation of consideration. Immediately following the closing of the Merger and the surrender of the SoftBank Specified Shares Amount, pursuant to the Letter Agreement described above, DT and SoftBank Group held, directly or indirectly, approximately 43.6% and 24.7%, respectively, of the outstanding T-Mobile common stock, with the remaining approximately 31.7% of the outstanding T-Mobile common stock held by other stockholders. Subsequent to March 31, 2020, on April 22, 2020, we filed a Form S-8 to register a total of 25,304,224 shares of common stock, representing those covered by the Sprint Corporation 1997 Long-Term Stock Incentive Program (the “1997 Program”), the Sprint Corporation 2007 Omnibus Incentive Plan (the “2007 Plan”) and the Sprint Corporation Amended and Restated 2015 Omnibus Incentive Plan (as amended and restated, the “2015 Plan” and, together with the 2007 Plan and the 1997 Program, the “Sprint Plans”) that T-Mobile assumed in connection with the closing of the Merg er. We recognized Merger-related costs of $143 million and $113 million for the three months ended March 31, 2020 and 2019, respectively. These costs generally included consulting and legal fees and were recognized as Selling, general and administrative expenses in our Condensed Consolidated Statements of Comprehensive Income. Payments for Merger-related costs were $161 million and $34 million for the three months ended March 31, 2020 and 2019, respectively, and were recognized within Net cash provided by operating activities in our Condensed Consolidated Statements of Cash Flows. Financing 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 and on September 6, 2019, the “Commitment Letter”). The funding of the debt facilities provided for in the Commitment Letter was subject to the satisfaction of the conditions set forth therein, including consummation of the Merger. Subsequent to March 31, 2020, on April 1, 2020, in connection with the closing of the Merger, we drew down on our $19.0 billion New Secured Bridge Loan Facility and our $4.0 billion New Secured Term Loan Facility (each as defined below). We used the net proceeds from the draw down of the secured facilities to refinance certain existing debt of us, Sprint and our and Sprint’s respective subsidiaries and for post-closing general corporate purposes of the combined company. See Note 7 – Debt for further information. In connection with the financing provided for in the Commitment Letter, we incurred certain fees payable to the financial institutions. Subsequent to March 31, 2020, on April 1, 2020, in connection with the closing of the Merger, we paid $355 million in Commitment Letter fees to certain financial institutions, of which $30 million were accrued for as of March 31, 2020, and were recognized in Selling, general and administrative expenses in our Condensed Consolidated Statements of Comprehensive Income. See Note 7 – Debt for further information. 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 which DT agreed, among other things, to consent to, subject to certain conditions, certain amendments to certain existing debt owed to DT, in connection with the Merger. Subsequent to March 31, 2020, on April 1, 2020, in connection with the closing of the Merger, we made a payment for requisite consents to DT of $13 million. There was no consent payment accrued as of March 31, 2020. See Note 7 – Debt for further information. On May 18, 2018, under the terms and conditions described in the Consent Solicitation Statement dated as of May 14, 2018 (the "Consent Solicitation Statement"), we obtained consents necessary to effect certain amendments to certain existing debt of us and our subsidiaries. Subsequent to March 31, 2020, on April 1, 2020, in connection with the closing of the Merger, we made payments for requisite consents to third-party note holders of $95 million. There were no consent payments accrued as of March 31, 2020. See Note 7 – Debt for further information. Regulatory Matters On June 18, 2018, we filed a Public Interest Statement and applications for approval of the Merger with the Federal Communications Commission (“FCC”). On July 18, 2018, the FCC issued a Public Notice formally accepting our applications and establishing a period for public comment. On May 20, 2019, to facilitate the FCC’s review and approval of the FCC license transfers associated with the proposed Merger, we and Sprint filed with the FCC a written ex parte presentation (the “Presentation”) relating to the proposed Merger. The Presentation included proposed commitments from us and Sprint. The FCC approved the Merger on November 5, 2019. On June 11, 2019, a number of state attorneys general filed a lawsuit against us, DT, Sprint, and SoftBank in the U.S. District Court for the Southern District of New York, alleging that the Merger, if consummated, would violate Section 7 of the Clayton Act and so should be enjoined. In connection with the lawsuit, we settled with certain state attorneys general by making commitments regarding our operations, employment and network capabilities in those states. See Note 1 1 - Commitments and Contingencies for further information. On February 11, 2020, the U.S. District Court for the Southern District of New York issued judgment in favor of us, Sprint, and the other defendants, concluding the Merger was not reasonably likely to reduce competition, and denying the plaintiffs’ request to enjoin the Merger. On July 26, 2019, the U.S. Department of Justice (the “DOJ”) filed a complaint and a proposed final judgment (the “Consent Decree”) agreed to by us, DT, Sprint, SoftBank and DISH Network Corporation (“DISH”) with the U.S. District Court for the District of Columbia. The Consent Decree, which was approved by the Court on April 1, 2020, fully resolved the DOJ’s investigation into the Merger and requires the parties to, among other things, carry out the divestitures to be made pursuant to the Asset Purchase Agreement described below upon closing of the Merger. On April 16, 2020, the California Public Utilities Commission voted unanimously to approve the Merger of our and Sprint’s operations within the state of California with several conditions, including requirements for faster speeds, broader coverage, job creation, and offerings for low-income customers. Prepaid Transaction On July 26, 2019, we entered into an Asset Purchase Agreement (the “Asset Purchase Agreement”) with Sprint and DISH. We and Sprint are collectively referred to as the “Sellers.” Pursuant to the Asset Purchase Agreement, upon the terms and subject to the conditions thereof, following the consummation of the Merger, DISH will acquire Sprint’s prepaid wireless business, currently operated under the Boost Mobile and Sprint prepaid brands (excluding the Assurance brand Lifeline customers and the prepaid wireless customers of Shenandoah Telecommunications Company and Swiftel Communications, Inc.), including customer accounts, inventory, contracts, intellectual property and certain other specified assets (the “Prepaid Business”), and will assume certain related liabilities (the “Prepaid Transaction”). DISH will pay the Sellers $1.4 billion for the Prepaid Business, subject to a working capital adjustment. The consummation of the Prepaid Transaction is subject to customary closing conditions and is expected to close in the middle of 2020. At the closing of the Prepaid Transaction, the Sellers and DISH will enter into (i) a License Purchase Agreement pursuant to which (a) the Sellers will sell certain 800 MHz spectrum licenses held by Sprint to DISH for a total of approximately $3.6 billion in a transaction to be completed, subject to certain additional closing conditions, following an application for FCC approval to be filed three years following the closing of the Merger and (b) the Sellers will have the option to lease back from DISH, as needed, a portion of the spectrum sold for an additional two years following the closing of the spectrum sale transaction, (ii) a Transition Services Agreement providing for the Sellers’ provision of transition services to DISH in connection with the Prepaid Business for a period of up to three years following the closing of the Prepaid Transaction, (iii) a Master Network Services Agreement providing for the Sellers’ provision of network services to customers of the Prepaid Business for a period of up to seven years following the closing of the Prepaid Transaction, and (iv) an Option to Acquire Tower and Retail Assets offering DISH the option to acquire certain decommissioned towers and retail locations from the Sellers, subject to obtaining all necessary third-party consents, for a period of up to five years following the closing of the Prepaid Transaction. |
Receivables and Expected Credit
Receivables and Expected Credit Losses | 3 Months Ended |
Mar. 31, 2020 | |
Receivables [Abstract] | |
Receivables and Expected Credit Losses | Note 3 – Receivables and Expected Credit Losses Our portfolio of receivables is comprised of two portfolio segments: accounts receivable and EIP receivables. Accounts Receivable Portfolio Segment Our accounts receivable segment primarily consists of amounts currently due from customers, including service and leased device receivables, handset insurance administrators, wholesale partners, other carriers and third-party retail channels. We estimate expected credit losses associated with our accounts receivable portfolio using an aging schedule methodology that utilizes historical information and current conditions to develop expected credit losses by aging bucket, including for receivables that are not past due. To determine the appropriate credit loss percentages by aging bucket, we consider a number of factors, including our overall historical credit losses, net of recoveries and timely payment experience as well as current collection trends such as write-off frequency and severity, credit quality of the customer base, and other qualitative factors such as macro-economic conditions, including an expected economic slowdown or recession as a result of the COVID-19 pandemic. We consider the need to adjust our estimate of expected credit losses for reasonable and supportable forecasts of future economic conditions. To do so, we monitor professional forecasts of changes in real U.S. gross domestic product and forecasts of consumer credit behavior for comparable credit exposures. We also periodically evaluate other economic indicators such as unemployment rates to assess their level of correlation with our historical credit loss statistics. EIP Receivables Portfolio Segment Based upon customer credit profiles, we classify the EIP receivables segment into two customer classes of “Prime” and “Subprime.” Prime customer receivables are those with lower credit risk and Subprime customer receivables are those with higher credit risk. Customers may be required to make a down payment on their equipment purchases. 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 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, 2020 December 31, 2019 EIP receivables, gross $ 4,242 $ 4,582 Unamortized imputed discount (268) (299) EIP receivables, net of unamortized imputed discount 3,974 4,283 Allowance for credit losses (1) (201) (100) EIP receivables, net of allowance for credit losses and imputed discount $ 3,773 $ 4,183 Classified on the balance sheet as: Equipment installment plan receivables, net of allowance for credit losses and imputed discount $ 2,406 $ 2,600 Equipment installment plan receivables due after one year, net of allowance for credit losses and imputed discount 1,367 1,583 EIP receivables, net of allowance for credit losses and imputed discount $ 3,773 $ 4,183 (1) Allowance for credit losses as of March 31, 2020, was impacted by the cumulative effect of initially applying the new credit loss standard on our receivables portfolio on January 1, 2020, of $91 million. We manage our EIP receivables portfolio using delinquency and customer credit class as key credit quality indicators. The following table presents the amortized cost of our EIP receivables by delinquency status, customer credit class, and year of origination. As a part of the adoption of the new credit loss standard, we now disclose our EIP receivables portfolio disaggregated by origination year. The information is updated as of March 31, 2020. Originated in 2020 Originated in 2019 Originated prior to 2019 Total EIP Receivables, net of (in millions) Prime Subprime Prime Subprime Prime Subprime Prime Subprime Grand total Current - 30 days past due $ 504 $ 519 $ 1,168 $ 1,082 $ 375 $ 234 $ 2,047 $ 1,835 $ 3,882 31 - 60 days past due 2 4 10 23 4 6 16 33 49 61 - 90 days past due — — 5 11 1 3 6 14 20 More than 90 days past due — — 4 10 2 7 6 17 23 EIP receivables, net of unamortized imputed discount $ 506 $ 523 $ 1,187 $ 1,126 $ 382 $ 250 $ 2,075 $ 1,899 $ 3,974 We estimate expected credit losses on our EIP receivables by using historical data adjusted for current conditions to calculate default probabilities for our outstanding EIP loans. We consider various risk characteristics when calculating default probabilities, such as how long such loans have been outstanding, customer credit ratings, customer tenure, delinquency status and other correlated variables identified through statistical analyses. We multiply these estimated default probabilities by our estimated loss given default, which considers recoveries. As we do for our accounts receivable portfolio segment, we consider the need to adjust our estimate of expected losses on EIP receivables for reasonable and supportable forecasts of economic conditions through monitoring of external professional forecasts and periodic internal statistical analyses, including the impact from an expected economic slowdown or recession as a result of the COVID-19 pandemic. The EIP receivables had weighted average effective imputed interest rates of 8.8% as of both March 31, 2020 and December 31, 2019. Activity for the three months ended March 31, 2020 and 2019, in the allowance for credit losses and unamortized imputed discount balances for the accounts receivable and EIP receivables segments were as follows: March 31, 2020 March 31, 2019 (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 $ 61 $ 399 $ 460 $ 67 $ 449 $ 516 Beginning balance adjustment due to implementation of the new credit loss standard — 91 91 — — — Bad debt expense 42 71 113 15 59 74 Write-offs, net of recoveries (34) (61) (95) (19) (74) (93) Change in imputed discount on short-term and long-term EIP receivables N/A 5 5 N/A 53 53 Impact on the imputed discount from sales of EIP receivables N/A (36) (36) N/A (42) (42) Allowance for credit losses and imputed discount, end of period $ 69 $ 469 $ 538 $ 63 $ 445 $ 508 Off-Balance-Sheet Credit Exposures We do not have material, unmitigated off-balance-sheet credit exposures as of March 31, 2020. In connection with the sales of certain service and EIP accounts receivable pursuant to the sale arrangements, we have deferred purchase price assets included in our Condensed Consolidated Balance Sheets measured at fair value that are based on a discounted cash flow model using unobservable Level 3 inputs, including customer default rates and credit worthiness, dilutions and recoveries. See Note 4 – Sales of Certain Receivables for further information. |
Sales of Certain Receivables
Sales of Certain Receivables | 3 Months Ended |
Mar. 31, 2020 | |
Transfers and Servicing [Abstract] | |
Sales of Certain Receivables | Note 4 – Sales of Certain Receivables We have entered into transactions to sell certain service and EIP receivables. The transactions, including our continuing involvement with the sold receivables and the respective impacts to our condensed consolidated financial statements, are described below. Sales of Service Accounts Receivable Overview of the Transaction In 2014, we entered into an arrangement to sell certain service accounts receivable on a revolving basis (the “service receivable sale arrangement”). The maximum funding commitment of the service receivable sale arrangement is $950 million. In February 2019, the service receivable sale arrangement was amended to extend the scheduled expiration date, as well as certain third-party credit support under the arrangement, to March 2021. As of March 31, 2020 and December 31, 2019, the service receivable sale arrangement provided funding of $895 million and $924 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. 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, 2020 December 31, 2019 Other current assets $ 353 $ 350 Accounts payable and accrued liabilities 54 25 Other current liabilities 355 342 Sales of EIP Receivables Overview of the Transaction In 2015, we entered into an arrangement to sell certain EIP accounts receivable on a revolving basis (the “EIP sale arrangement”). The maximum funding commitment of the EIP sale arrangement is $1.3 billion, and the scheduled expiration date is November 2020. In February 2020, we amended the EIP sale arrangement to provide for an alternative advance rate methodology for the EIP accounts receivables sold in the EIP sale arrangement and to make certain other administrative changes. Subsequent to March 31, 2020, on April 30, 2020, we agreed with the purchaser banks to update our collection policies to temporarily allow for flexibility for modifications to the accounts receivable sold that are impacted by COVID-19 and exclusion of such accounts receivable from all pool performance triggers. As of both March 31, 2020 and December 31, 2019, the EIP sale arrangement provided funding of $1.3 billion. Sales of EIP receivables occur daily and are settled on a monthly basis. 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 include the balances and results of operations of the EIP BRE in our condensed consolidated financial statements. The following table summarizes the carrying amounts and classification of assets, which consists primarily of the deferred purchase price, and liabilities included in our Condensed Consolidated Balance Sheets that relate to the EIP BRE: (in millions) March 31, 2020 December 31, 2019 Other current assets $ 335 $ 344 Other assets 92 89 Other long-term liabilities 8 18 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 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, 2020 and December 31, 2019, our deferred purchase price related to the sales of service receivables and EIP receivables was $779 million and $781 million, respectively. The following table summarizes the impact of the sale of certain service receivables and EIP receivables in our Condensed Consolidated Balance Sheets: (in millions) March 31, 2020 December 31, 2019 Derecognized net service receivables and EIP receivables $ 2,545 $ 2,584 Other current assets 688 694 of which, deferred purchase price 687 692 Other long-term assets 92 89 of which, deferred purchase price 92 89 Accounts payable and accrued liabilities 54 25 Other current liabilities 355 342 Other long-term liabilities 8 18 Net cash proceeds since inception 1,939 1,944 Of which: Change in net cash proceeds during the year-to-date period (5) 65 Net cash proceeds funded by reinvested collections 1,944 1,879 We recognized losses from sales of receivables, including adjustments to the receivables’ fair values and changes in fair value of the deferred purchase price, of $25 million and $35 million for the three months ended March 31, 2020 and 2019, respectively, in Selling, general and administrative expense in our Condensed Consolidated 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. At the direction of the purchasers of the sold receivables, we apply the same policies and procedures while servicing the sold receivables as we apply to our owned receivables, and we continue to maintain normal relationships with our customers. Pursuant to the EIP sale arrangement, under certain circumstances, we are required to deposit cash or replacement EIP receivables primarily for contracts terminated by customers under our 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 $1.1 billion as of March 31, 2020. The maximum exposure to loss, which is a required disclosure under U.S. 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. We believe the probability of these circumstances occurring is remote and the maximum exposure to loss is not an indication of our expected loss. |
Spectrum License Transactions
Spectrum License Transactions | 3 Months Ended |
Mar. 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Spectrum License Transactions | Note 5 - Spectrum License Transactions In March 2020, the FCC announced that we were the winning bidder of 2,384 licenses in Auction 103 (37/39 GHz and 47 GHz spectrum bands) for an aggregate price of $873 million, net of an incentive payment of $59 million. At the inception of Auction 103 in October 2019, we deposited $82 million with the FCC. Upon conclusion of Auction 103 in March 2020, we made a down payment of $93 million for the purchase price of the licenses won in the auction. The deposit and down payment are included in Other current assets as of March 31, 2020, in our Condensed Consolidated Balance Sheets. Cash payments to acquire spectrum licenses and payments for costs to clear spectrum are included in Purchases of spectrum licenses and other intangible assets, including deposits in our Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2020. Subsequent to March 31, 2020, on April 8, 2020, we paid the FCC the remaining $698 million of the purchase price for the licenses won in the auction. |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Mar. 31, 2020 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Note 6 – Fair Value Measurements The carrying values of Cash and cash equivalents, Accounts receivable, Accounts receivable from affiliates, Accounts payable and accrued liabilities, borrowings under vendor financing arrangements with our primary network equipment suppliers, and borrowings under our 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 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 $2.3 billion and $1.2 billion as of March 31, 2020 and December 31, 2019, respectively, and was included in Other current liabilities in our Condensed Consolidated Balance Sheets. For the three months ended March 31, 2020 and 2019, no amounts were accrued or amortized into Interest expense in the Condensed Consolidated Statements of Comprehensive Income. Aggregate changes in fair value, net of tax, of $1.7 billion and $868 million are presented in Accumulated other comprehensive loss as of March 31, 2020 and December 31, 2019, respectively. In November 2019, we extended the mandatory termination date on our interest rate lock derivatives to June 3, 2020. For the three months ended March 31, 2020, we made net collateral transfers to certain of our derivative counterparties totaling $580 million, which included variation margin transfers to (or from) such derivative counterparties based on daily market movements. These collateral transfers are included in Other current assets in our Condensed Consolidated Balance Sheets and in Net cash related to derivative contracts under collateral exchange arrangements within Net cash used in investing activities in our Condensed Consolidated Statements of Cash Flows. In March 2020, we received floating rate payments from our derivative counterparties totaling $46 million. These floating rate payments were recognized as an increase to the interest rate lock derivatives liability included in Other current liabilities in our Condensed Consolidated Balance Sheets and in changes in Other current and long-term liabilities within Net cash provided by operating activities in our Condensed Consolidated Statements of Cash Flows. Subsequent to March 31, 2020, during April 2 to April 6, 2020, in connection with the issuance of senior secured notes, we terminated our interest rate lock derivatives. See Note 7 - Debt for further information regarding the issuance of senior secured notes. At the time of termination, the interest rate lock derivatives were a liability of $2.3 billion, $1.2 billion of which was cash-collateralized. Consequently, the net cash out flow required to settle the interest rate lock derivatives was an additional $1.1 billion and was paid at termination. Total cash payments to settle the swaps of $2.3 billion will be presented in changes in Other current and long-term liabilities within Net cash provided by operating activities in our Condensed Consolidated Statements of Cash Flows. The return of cash collateral of $1.2 billion will be presented as an inflow in Net cash related to derivative contracts under collateral exchange arrangements within Net cash used in investing activities. Deferred Purchase Price Assets In connection with the sales of certain service and EIP accounts receivable pursuant to the sale arrangements, we have deferred purchase price assets measured at fair value that are based on a discounted cash flow model using unobservable Level 3 inputs, including customer default rates. See Note 4 – Sales of Certain Receivables for further information. 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, 2020 December 31, 2019 (in millions) Carrying Amount Fair Value Carrying Amount Fair Value Assets: Deferred purchase price assets 3 $ 779 $ 779 $ 781 $ 781 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 and Incremental Term Loan Facility 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 and Incremental Term Loan Facility 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 and Incremental Term Loan Facility to affiliates. The fair value estimates were based on information available as of March 31, 2020, and December 31, 2019. As such, our estimates are not necessarily indicative of the amount we could realize in a current market exchange. As of March 31, 2020, the carrying value of the Incremental Term Loan Facility to affiliates, $2.0 billion of 5.300% Senior Notes to affiliates due 2021 and $2.0 billion of 6.000% Senior Notes to Affiliates due 2024 equated the fair value as the debt was repaid at par value on April 1, 2020, in connection with the closing of the Merger. 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, 2020 December 31, 2019 (in millions) Carrying Amount Fair Value Carrying Amount Fair Value Liabilities: Senior Notes to third parties 1 $ 10,959 $ 11,325 $ 10,958 $ 11,479 Senior Notes to affiliates 2 9,987 10,184 9,986 10,366 Incremental Term Loan Facility to affiliates 2 4,000 4,000 4,000 4,000 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 Condensed 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 $59 million and $62 million as of March 31, 2020, and December 31, 2019, 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 $2.9 billion as of March 31, 2020. 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. |
Debt
Debt | 3 Months Ended |
Mar. 31, 2020 | |
Debt Disclosure [Abstract] | |
Debt | Note 7 – Debt Commitment Letter In connection with the entry into the Business Combination Agreement, T-Mobile USA entered into the Commitment Letter, with certain financial institutions named therein that committed to provide up to $27.0 billion in secured debt financing through May 1, 2020, including a $4.0 billion secured revolving credit facility, a $4.0 billion secured term loan facility, and a $19.0 billion secured bridge loan facility. The funding of the debt facilities provided for in the Commitment Letter was subject to the satisfaction of the conditions set forth therein, including consummation of the Merger. Subsequent to March 31, 2020, on April 1, 2020, in connection with the closing of the Merger, T-Mobile USA and certain of its affiliates, as guarantors, entered into a Bridge Loan Credit Agreement (the “Bridge Loan Credit Agreement”) with certain financial institutions named therein, providing for a $19.0 billion secured bridge loan facility (“New Secured Bridge Loan Facility”). The New Secured Bridge Loan Facility bears interest at a rate equal to a per annum rate of LIBOR plus a margin of 1.25% and matures on March 31, 2021. Subsequent to March 31, 2020, on April 1, 2020, in connection with the closing of the Merger, T-Mobile USA and certain of its affiliates, as guarantors, entered into a Credit Agreement (the “New Credit Agreement”) with certain financial institutions named therein, providing for a $4.0 billion secured term loan facility (“New Secured Term Loan Facility”) and a $4.0 billion revolving credit facility (“New Revolving Credit Facility”). The New Secured Term Loan Facility bears interest at a rate equal to a per annum rate of LIBOR plus a margin of 3.00% and matures on April 1, 2027. The New Revolving Credit Facility bears interest at a rate equal to a per annum rate of LIBOR plus a margin of 1.25% with the margin subject to a reduction to 1.00% if T-Mobile’s Total First Lien Net Leverage Ratio (as defined in the New Credit Agreement) is less than or equal to 0.75 to 1.00. The commitments under the New Revolving Credit Facility mature on April 1, 2025. The New Credit Agreement contains customary representations, warranties and covenants, including a financial maintenance covenant of 3.3x with respect to T-Mobile’s Total First Lien Net Leverage Ratio and excess cash flow prepayment requirements commencing in 2021. Subsequent to March 31, 2020, on April 1, 2020, in connection with the closing of the Merger, we drew down on our $19.0 billion New Secured Bridge Loan Facility and our $4.0 billion New Secured Term Loan Facility. We used the net proceeds of $22.6 billion from the draw down of the secured facilities to repay our $4.0 billion Incremental Term Loan Facility with DT and to repurchase from DT $4.0 billion of indebtedness to affiliates, consisting of $2.0 billion of 5.300% Senior Notes due 2021 and $2.0 billion of 6.000% Senior Notes due 2024, as well as to redeem certain debt of Sprint and Sprint’s subsidiaries, including the secured term loans due 2024 with a total principal amount outstanding of $5.9 billion, accounts receivable facility with a total amount outstanding of $2.3 billion, and Sprint Corporation 7.250% Guaranteed Notes due 2028 with a total principal amount outstanding of $1.0 billion, and for post-closing general corporate purposes of the combined company. In connection with the financing provided for in the Commitment Letter, we incurred certain fees payable to the financial institutions, including certain financing fees on the secured term loan commitment and fees for structuring, funding, and providing the commitments. Subsequent to March 31, 2020, on April 1, 2020, in connection with the closing of the Merger, we paid $355 million in Commitment Letter fees to certain financial institutions, of which $30 million were accrued for as of March 31, 2020, and were recognized in Selling, general and administrative expenses in our Condensed Consolidated Statements of Comprehensive Income. Subsequent to March 31, 2020, on April 9, 2020, T-Mobile USA and certain of its affiliates, as guarantors, issued $3.0 billion of 3.500% Senior Secured Notes due 2025, $4.0 billion of 3.750% Senior Secured Notes due 2027, $7.0 billion of 3.875% Senior Secured Notes due 2030, $2.0 billion of 4.375% Senior Secured Notes due 2040, and $3.0 billion of 4.500% Senior Secured Notes due 2050 and used the net proceeds of $18.8 billion together with cash on hand to repay at par all of the outstanding amounts under, and terminate, our $19.0 billion New Secured Bridge Loan Facility. Additionally, in connection with the repayment of our New Secured Bridge Loan Facility, we received a reimbursement of $71 million, which represents a portion of the Commitment Letter fees that were paid to certain financial institutions when we drew down on the New Secured Bridge Loan Facility on April 1, 2020. 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 Incremental Term Loan Facility and the revolving credit facility of T-Mobile USA which are provided by DT; • To repurchase $2.0 billion of 5.300% Senior Notes to affiliates due 2021 and $2.0 billion of 6.000% Senior Notes to affiliates due 2024; and • Upon closing of the Merger, to amend the $1.25 billion of 5.125% Senior Notes due 2025 and $1.25 billion of 5.375% Senior Notes due 2027, which represent indebtedness to affiliates, to change the maturity dates thereof to April 15, 2021 and April 15, 2022, respectively (the “2025 and 2027 Amendments”). In connection with receiving the requisite consents, we made upfront payments to DT of $7 million during the second quarter of 2018. These payments were recognized as a reduction to Long-term debt to affiliates in our Condensed Consolidated Balance Sheets. In accordance with the consents received from DT, on December 20, 2018, T-Mobile USA, the guarantors and Deutsche Bank Trust Company Americas, as trustee, executed and delivered the 38 th supplemental indenture to the Indenture, pursuant to which, with respect to certain T-Mobile USA Senior Notes held by DT, the Debt Amendments (as defined below under “Consents on Debt to Third Parties”) and the 2025 and 2027 Amendments would become effective immediately prior to the consummation of the Merger. Subsequent to March 31, 2020, on April 1, 2020, in connection with the closing of the Merger, we repaid our $4.0 billion Incremental Term Loan Facility with DT and repurchased from DT $4.0 billion of indebtedness to affiliates, consisting of $2.0 billion of 5.300% Senior Notes due 2021 and $2.0 billion of 6.000% Senior Notes due 2024, as described above, as well as made an additional payment for requisite consents to DT of $13 million. There was no consent payment accrued as of March 31, 2020. Consents on Debt to Third Parties On May 18, 2018, under the terms and conditions described in the Consent Solicitation Statement, we obtained consents necessary to effect certain amendments to our Senior Notes to third parties in connection with the Business Combination Agreement. Pursuant to the Consent Solicitation Statement, third-party note holders agreed, among other things, to consent to increasing the amount of Secured Indebtedness under Credit Facilities that can be incurred from the greater of $9.0 billion and 150% of Consolidated Cash Flow to the greater of $9.0 billion and an amount that would not cause the Secured Debt to Cash Flow Ratio (calculated net of cash and cash equivalents) to exceed 2.00x (the “Ratio Secured Debt Amendments”) and in each case as such capitalized term is defined in the Indenture. In connection with receiving the requisite consents for the Ratio Secured Debt Amendments, we made upfront payments to third-party note holders of $17 million during the second quarter of 2018. These payments were recognized as a reduction to Long-term debt in our Condensed Consolidated Balance Sheets. These upfront payments increased the effective interest rate of the related debt. In addition, note holders agreed, among other things, to allow certain entities related to Sprint’s existing spectrum securitization notes program (“Existing Sprint Spectrum Program”) to be non-guarantor Restricted Subsidiaries, provided that the principal amount of the spectrum notes issued and outstanding under the Existing Sprint Spectrum Program does not exceed $7.0 billion and that the principal amount of such spectrum notes reduces the amount available under the Credit Facilities ratio basket, and to revise the definition of GAAP to mean generally accepted accounting principles in effect from time to time, unless the Company elects to “freeze” GAAP as of any date, and to exclude the effect of the changes in the accounting treatment of lease obligations (the “Existing Sprint Spectrum and GAAP Amendments,” and together with the Ratio Secured Debt Amendments, the “Debt Amendments”). In connection with receiving the requisite consents for the Existing Sprint Spectrum and GAAP Amendments, we made upfront payments to third-party note holders of $14 million during the second quarter of 2018. These payments were recognized as a reduction to Long-term debt in our Condensed Consolidated Balance Sheets. These upfront payments increased the effective interest rate of the related debt. In connection with obtaining the requisite consents, on May 20, 2018, T-Mobile USA, the guarantors and Deutsche Bank Trust Company Americas, as trustee, executed and delivered the 37 th supplemental indenture to the Indenture, pursuant to which, with respect to each of the Notes, the Debt Amendments would become effective immediately prior to the consummation of the Merger. We paid third-party bank fees associated with obtaining the requisite consents related to the Debt Amendments of $6 million during the second quarter of 2018, which we recognized as Selling, general and administrative expenses in our Condensed Consolidated Statements of Comprehensive Income. Subsequent to March 31, 2020, on April 1, 2020, in connection with the closing of the Merger, we made additional payments to third-party note holders for requisite consents related to the Ratio Secured Debt Amendments of $54 million and related to the Existing Sprint Spectrum and GAAP Amendments of $41 million. There were no consent payments accrued as of March 31, 2020. |
Revenue from Contracts with Cus
Revenue from Contracts with Customers | 3 Months Ended |
Mar. 31, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Revenue from Contracts with Customers | Note 8 – Revenue from Contracts with Customers Disaggregation of Revenue We provide wireless communications services to three primary categories of customers: • Branded postpaid customers generally include customers who are qualified to pay after receiving wireless communications services utilizing phones, wearables, DIGITS, or other connected devices which includes tablets and SyncUP products; • Branded prepaid customers generally include customers who pay for wireless communications services in advance. Our branded prepaid customers include customers of T-Mobile and Metro by T-Mobile; and • Wholesale customers include Machine-to-Machine and Mobile Virtual Network Operator customers that operate on our network but are managed by wholesale partners. Branded postpaid service revenues, including branded postpaid phone revenues and branded postpaid other revenues, were as follows: Three Months Ended March 31, (in millions) 2020 2019 Branded postpaid service revenues Branded postpaid phone revenues $ 5,577 $ 5,183 Branded postpaid other revenues 310 310 Total branded postpaid service revenues $ 5,887 $ 5,493 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 is included within Equipment revenues in our Condensed Consolidated Statements of Comprehensive Income. Equipment revenues from the lease of mobile communication devices were as follows: Three Months Ended March 31, (in millions) 2020 2019 Equipment revenues from the lease of mobile communication devices $ 165 $ 161 Contract Balances The opening and closing balances of our contract asset and contract liability balances from contracts with customers as of December 31, 2019 and March 31, 2020, were as follows: (in millions) Contract Assets Contract Liabilities Balance as of December 31, 2019 $ 63 $ 560 Balance as of March 31, 2020 59 534 Change $ (4) $ (26) 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, offset by billings on existing contracts and impairment which is recognized as bad debt expense. The current portion of our Contract Assets of approximately $45 million and $50 million as of March 31, 2020 and December 31, 2019, respectively, was included in Other current assets in our Condensed Consolidated Balance Sheets. Contract liabilities are recorded when fees are collected, or we have an unconditional right to consideration (a receivable) in advance of delivery of goods or services. The change in contract liabilities is primarily related to the volume and rate plans of active prepaid subscribers. Contract liabilities are included in Deferred revenue in our Condensed Consolidated Balance Sheets. Revenues for the three months ended March 31, 2020 and 2019, include the following: Three Months Ended March 31, (in millions) 2020 2019 Amounts included in the beginning of year contract liability balance $ 528 $ 560 Remaining Performance Obligations As of March 31, 2020, the aggregate amount of transaction price allocated to remaining service performance obligations for branded postpaid contracts with promotional bill credits that result in an extended service contract is $157 million. We expect to recognize this revenue as service is provided over the extended contract term in the next 24 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, 2020, the aggregate amount of the contractual minimum consideration for wholesale, roaming and other service contracts is $998 million, $1.0 billion and $917 million for 2021, 2022 and 2023 and beyond, respectively. These contracts have a remaining duration ranging from less than one year to ten 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. Contract Costs The total balance of deferred incremental costs to obtain contracts was $887 million and $906 million as of March 31, 2020 and December 31, 2019, respectively. Deferred contract costs incurred to obtain postpaid service contracts are amortized over a period of 24 months. The amortization period is monitored to reflect any significant change in assumptions. Amortization of deferred contract costs is included in Selling, general and administrative expenses in our Condensed Consolidated Statements of Comprehensive Income and was $205 million and $116 million for the three months ended March 31, 2020 and 2019, 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, 2020 and 2019. |
Earnings Per Share
Earnings Per Share | 3 Months Ended |
Mar. 31, 2020 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Note 9 – 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) 2020 2019 Net income $ 951 $ 908 Weighted average shares outstanding - basic 858,148,284 851,223,498 Effect of dilutive securities: Outstanding stock options and unvested stock awards 7,850,248 7,419,983 Weighted average shares outstanding - diluted 865,998,532 858,643,481 Earnings per share - basic $ 1.11 $ 1.07 Earnings per share - diluted $ 1.10 $ 1.06 Potentially dilutive securities: Outstanding stock options and unvested stock awards 1,807,812 266,452 As of March 31, 2020, we had authorized 100 million shares of preferred stock, with a par value of $0.00001 per share. There was no preferred stock outstanding as of March 31, 2020 and 2019. Potentially dilutive securities were not included in the computation of diluted earnings per share if to do so would have been anti-dilutive. Subsequent to March 31, 2020, on April 1, 2020, we completed our Merger with Sprint. Upon completion of the Merger, we issued 373,396,310 shares of T-Mobile common stock to Sprint shareholders. See Note 2 - Business Combinatio n for further information. Subsequent to March 31, 2020, on April 1, 2020, in connection with the closing of the Merger, we amended and restated the Company’s certificate of incorporation in the form of the Fifth Amended and Restated Certificate of Incorporation (the “Restated Certificate”). Pursuant to the Restated Certificate, the authorized capital stock of T-Mobile consists of 2,000,000,000 shares of T-Mobile common stock and 100,000,000 shares of preferred stock, par value $0.00001 per share. |
Leases
Leases | 3 Months Ended |
Mar. 31, 2020 | |
Leases [Abstract] | |
Leases | Note 10 - Leases Lessee We are a lessee for non-cancelable operating and financing leases for cell sites, switch sites, retail stores and office facilities with contractual terms that generally extend through 2029. The majority of cell site leases have an initial non-cancelable term of five five financing leases for network equipment that generally have a non-cancelable lease term of two The components of lease expense were as follows: Three Months Ended March 31, (in millions) 2020 2019 Operating lease expense $ 684 $ 602 Financing lease expense: Amortization of right-of-use assets 145 113 Interest on lease liabilities 20 20 Total financing lease expense 165 133 Variable lease expense 62 65 Total lease expense $ 911 $ 800 Information relating to the lease term and discount rate is as follows: March 31, 2020 Weighted Average Remaining Lease Term (Years) Operating leases 6 Financing leases 3 Weighted Average Discount Rate Operating leases 4.7 % Financing leases 3.9 % Maturities of lease liabilities as of March 31, 2020, were as follows: (in millions) Operating Leases Finance Leases Twelve Months Ending March 31, 2021 $ 2,636 $ 976 2022 2,605 722 2023 2,294 369 2024 1,929 97 2025 1,626 68 Thereafter 3,561 100 Total lease payments 14,651 2,332 Less imputed interest 2,000 138 Total $ 12,651 $ 2,194 Interest payments for financing leases for both the three months ended March 31, 2020 and 2019, were $20 million. As of March 31, 2020, we have additional operating leases for cell sites and commercial properties that have not yet commenced with future lease payments of approximately $310 million. As of March 31, 2020, 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 Crown Castle International Corp. based on the subleasing arrangement. See Note 9 - Tower Obligations in Part II, Item 8 of our Annual Report on Form 10-K for the year ended December 31, 2019 for further information. Lessor JUMP! On Demand allows customers to lease a device (handset or tablet) over a period of 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, 2020 December 31, 2019 Leased wireless devices, gross $ 1,223 $ 1,139 Accumulated depreciation (404) (407) Leased wireless devices, net $ 819 $ 732 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, 2021 $ 456 2022 86 Total $ 542 |
Leases | Note 10 - Leases Lessee We are a lessee for non-cancelable operating and financing leases for cell sites, switch sites, retail stores and office facilities with contractual terms that generally extend through 2029. The majority of cell site leases have an initial non-cancelable term of five five financing leases for network equipment that generally have a non-cancelable lease term of two The components of lease expense were as follows: Three Months Ended March 31, (in millions) 2020 2019 Operating lease expense $ 684 $ 602 Financing lease expense: Amortization of right-of-use assets 145 113 Interest on lease liabilities 20 20 Total financing lease expense 165 133 Variable lease expense 62 65 Total lease expense $ 911 $ 800 Information relating to the lease term and discount rate is as follows: March 31, 2020 Weighted Average Remaining Lease Term (Years) Operating leases 6 Financing leases 3 Weighted Average Discount Rate Operating leases 4.7 % Financing leases 3.9 % Maturities of lease liabilities as of March 31, 2020, were as follows: (in millions) Operating Leases Finance Leases Twelve Months Ending March 31, 2021 $ 2,636 $ 976 2022 2,605 722 2023 2,294 369 2024 1,929 97 2025 1,626 68 Thereafter 3,561 100 Total lease payments 14,651 2,332 Less imputed interest 2,000 138 Total $ 12,651 $ 2,194 Interest payments for financing leases for both the three months ended March 31, 2020 and 2019, were $20 million. As of March 31, 2020, we have additional operating leases for cell sites and commercial properties that have not yet commenced with future lease payments of approximately $310 million. As of March 31, 2020, 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 Crown Castle International Corp. based on the subleasing arrangement. See Note 9 - Tower Obligations in Part II, Item 8 of our Annual Report on Form 10-K for the year ended December 31, 2019 for further information. Lessor JUMP! On Demand allows customers to lease a device (handset or tablet) over a period of 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, 2020 December 31, 2019 Leased wireless devices, gross $ 1,223 $ 1,139 Accumulated depreciation (404) (407) Leased wireless devices, net $ 819 $ 732 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, 2021 $ 456 2022 86 Total $ 542 |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 11 – Commitments and Contingencies Interest rate lock derivatives We have 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 fixed-rate debt. The fair value of interest rate lock derivatives as of March 31, 2020, was a liability of $2.3 billion and was included in Other current liabilities in our Condensed Consolidated Balance Sheets. Subsequent to March 31, 2020, during April 2 to April 6, 2020, in connection with the issuance of senior secured notes, we terminated our interest rate lock derivatives. See Note 6 – Fair Value Measurements for further information. Merger Commitments The contractual commitments and purchase obligations of Sprint were assumed upon the completion of the Merger. These contractual commitments and purchase obligations are primarily commitments to purchase wireless devices, network services, equipment, software, marketing sponsorship agreements and other items in the ordinary course of business. Due to the limited time since the acquisition date and restrictions on access to Sprint information arising from antitrust considerations prior to the closing of the Merger, quantification and assessment of commitments and obligations under the assumed contracts is not yet complete. In connection with the regulatory proceedings and approvals of the Transactions, we made commitments to various state and federal agencies, including the DOJ and FCC. These commitments include, among other things, extensive 5G network build-out commitments, obligations to deliver high-speed wireless services to the vast majority of Americans, including Americans residing in rural areas, and the marketing of an in-home broadband product where spectrum capacity is available. Other commitments relate to national security, pricing, service and device availability to specified percentages of certain state populations, employment and support of diversity initiatives. Many of the commitments specify time frames for compliance. Failure to fulfill our obligations under these commitments in a timely manner could result in substantial fines, penalties, or other legal and administrative actions. Contingencies and Litigation Litigation Matters On February 28, 2020, we received a Notice of Apparent Liability for Forfeiture and Admonishment from the FCC (“FCC NAL”), which proposed a penalty against us for allegedly violating section 222 of the Communications Act and the FCC’s regulations governing the privacy of customer information. We recorded an accrual for an estimated payment amount as of March 31, 2020, which was included in Accounts payable and accrued liabilities in our Condensed Consolidated Balance Sheets. 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 are asserted by non-practicing entities primarily seeking monetary damages), class actions, and proceedings to enforce 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 but that is not considered to be, individually or in the aggregate, material. An accrual is established when we believe it is both probable that a loss has been incurred and an amount can be reasonably estimated. For other matters, where we have not determined that a loss is probable or because the amount of loss cannot be reasonably estimated, we have not recorded an accrual due to various factors typical in contested proceedings, including but not limited to uncertainty concerning legal theories and their resolution by courts or regulators, uncertain damage theories and demands, and a less than fully developed factual record. 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. |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 12 – Subsequent Events On April 1, 2020, we closed on the Merger to combine T-Mobile and Sprint pursuant to the Business Combination Agreement dated April 29, 2018. As a result, Sprint became a wholly-owned consolidated subsidiary of T-Mobile and we issued 373,396,310 shares of T-Mobile common stock to Sprint shareholders. Subsequently, on April 22, 2020, we filed a Form S-8 to register a total of 25,304,224 shares of common stock, representing those covered by the Sprint Plans that T-Mobile assumed in connection with the closing of the Merger. See Note 2 - Business Combinations for further information. On April 1, 2020, in connection with the closing of the Merger, we drew down on our $19.0 billion New Secured Bridge Loan Facility and our $4.0 billion New Secured Term Loan Facility under the terms of the Bridge Loan Credit Agreement and New Credit Agreement, respectively, with certain financial institutions. We used the net proceeds to redeem certain debt of us, Sprint and our and Sprint’s respective subsidiaries and for post-closing general corporate purposes of the combined company. Subsequently, on April 9, 2020, we repaid our $19.0 billion New Secured Bridge Loan Facility with the net proceeds of an offering of senior secured notes together with cash on hand. See Note 7 - Debt for further information. During April 2 to April 6, 2020, in connection with the issuance of senior secured notes, we terminated our interest rate lock derivatives. See Note 6 – Fair Value Measurements for further information. On April 8, 2020, we paid the FCC the remaining $698 million of the purchase price for the 2,384 licenses won in Auction 103 (37/39 GHz and 47 GHz spectrum bands). See Note 5 - Spectrum License Transactions for further information. On April 16, 2020, the California Public Utilities Commission voted unanimously to approve the merger of our and Sprint’s operations within the state of California. See Note 2 - Business Combinations for further information. On April 30, 2020, we agreed with the purchaser banks to update our collection policies to temporarily allow for flexibility for modifications to the accounts receivable sold that are impacted by COVID-19 and exclusion of such accounts receivable from all pool performance triggers. See Note 4 - Sales of Certain Receivables for further information. In April, we extended our commitment to the FCC’s Keep Americans Connected Pledge to June 30, 2020. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Consolidation | The unaudited condensed consolidated financial statements of T-Mobile US, Inc. (“T-Mobile,” “we,” “our,” “us” or “the Company”) include all adjustments of a normal recurring nature necessary for the fair presentation of the results for the interim periods presented. The results for the interim periods are not necessarily indicative of those for the full year. The condensed consolidated financial statements should be read in conjunction with our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2019. 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 our obligations to pay for the management and operation of certain of our wireless communications tower sites (“Tower Obligations”). Intercompany transactions and balances have been eliminated in consolidation. |
Basis of Accounting | 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. |
Use of Estimates | Estimates are based on historical experience, where applicable, and other assumptions which our management believes are reasonable under the circumstances, including but not limited to the potential impacts arising from the COVID-19 pandemic. Due to the uncertainty around the magnitude and duration of the impacts of the COVID-19 pandemic, these estimates are inherently subject to judgment and actual results could differ from those estimates. |
Accounting Pronouncements Adopted During the Current Year/Accounting Pronouncements Not Yet Adopted | Accounting Pronouncements Adopted During the Current Year Receivables and Expected Credit Losses In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments,” and has since modified the standard with several ASUs (collectively, the “new credit loss standard”). The new credit loss 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 forecasts that affect the collectibility of the reported amount. The new credit loss standard became effective for us, and we adopted the standard, on January 1, 2020. The new credit loss standard required a cumulative-effect adjustment to Accumulated deficit at the date of initial application, and as a result, we did not restate prior periods presented in the condensed consolidated financial statements. Under the new credit loss standard we recognize lifetime expected credit losses at the inception of our credit risk exposures whereas we previously recognized credit losses only when it was probable that they had been incurred. We also recognize expected credit losses on our equipment installment plan (“EIP”) receivables separately from, and in addition to, any unamortized discount on those receivables. Prior to the adoption of the new credit loss standard, we had offset our estimate of probable losses on our EIP receivables by the amount of the related unamortized discounts on those receivables. We have developed an expected credit loss model incorporating forward-looking loss indicators. The cumulative effect of initially applying the new credit loss standard on our receivables portfolio on January 1, 2020 was an increase to our allowance for credit losses of $91 million, a decrease to our net deferred tax liabilities of $24 million and an increase to our Accumulated deficit of $67 million. Accounts Receivable Portfolio Segment Accounts receivable consists primarily of amounts currently due from customers (e.g., for wireless services), handset insurance administrators, wholesale partners, other carriers and third-party retail channels. Accounts receivable are presented in our Condensed Consolidated Balance Sheets at the amortized cost basis (i.e., the receivables’ outstanding principal balance adjusted for any write-offs), net of the allowance for expected credit losses. We have an arrangement to sell the majority of customer service accounts receivable on a revolving basis, which are treated as sales of financial assets. EIP Receivables Portfolio Segment We offer certain retail customers the option to pay for their devices and other purchases in installments over a period of, generally, 24 months and up to 36 months using an EIP. EIP receivables are presented in our Condensed Consolidated Balance Sheets at the amortized cost basis (i.e., the receivables’ outstanding principal balance adjusted for any write-offs and unamortized discounts), net of the allowance for expected credit losses. At the time of an installment sale, we impute a discount for interest if the EIP term exceeds 12 months as there is no stated rate of interest on the EIP receivables. The EIP receivables are recorded at their present value, which is determined by discounting expected future cash payments at the imputed interest rate. The difference between the recorded amount of the EIP receivables and their unpaid principal balance (i.e., the contractual amount due from the customer) results in a discount which is allocated to the performance obligations of the arrangement and recorded as a reduction in transaction price in Total service revenues and Equipment revenues in our Condensed Consolidated Statements of Comprehensive Income. We determine the imputed discount rate based primarily on current market interest rates and the estimated credit risk on the EIP receivables. The imputed discount on EIP receivables is amortized over the financed installment term using the effective interest method and recognized as Other revenues in our Condensed Consolidated Statements of Comprehensive Income. At the time that we originate EIP loans to customers, we recognize an allowance for credit losses that we expect to incur over the lifetime of such assets. This allowance represents the portion of the amortized cost basis of EIP receivables that we do not expect to collect. The current portion of the EIP receivables is included in Equipment installment plan receivables, net and the long-term portion of the EIP receivables is included in Equipment installment plan receivables due after one year, net in our Condensed Consolidated Balance Sheets. We have an arrangement to sell certain EIP receivables on a revolving basis, which are treated as sales of financial assets. Allowance for Credit Losses We maintain an allowance for expected credit losses and determine its appropriateness through an established process that assesses the lifetime credit losses that we expect to incur related to our receivable portfolio. We develop and document our allowance methodology at the portfolio segment level for the accounts receivable portfolio and EIP receivables portfolio segments. While we attribute portions of the allowance to our respective accounts receivable and EIP portfolio segments, the entire allowance is available to absorb expected credit losses related to the total receivable portfolio. Our process involves procedures to appropriately consider the unique risk characteristics of our accounts receivable and EIP receivable portfolio segments. For each portfolio segment, losses are estimated collectively for groups of receivables with similar characteristics. Our allowance levels are influenced by receivable volumes, receivable delinquency status, historical loss experience and other conditions influencing loss expectations, such as changes in credit and collections policies and forecasts of macro-economic conditions. Total imputed discount and allowances were approximately 8.7% and 7.0% of the total amount of gross accounts receivable, including EIP receivables, at March 31, 2020 and December 31, 2019. We consider a receivable past due when a customer has not paid us by the contractually specified payment due date. 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. 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 also requires the presentation of the amortization of the capitalized implementation costs in the same line item in the Condensed Consolidated Statements of Comprehensive Income as the fees associated with the hosting arrangement. The standard became effective for us, and we adopted the standard, on January 1, 2020. We adopted the standard on a prospective basis applying it to implementation costs incurred subsequent to January 1, 2020 and as a result did not restate the prior periods presented in the condensed consolidated financial statements. The adoption of the standard did not have a material impact on our condensed consolidated financial statements for the three months ended March 31, 2020. Income Taxes In December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes.” The standard simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. We early adopted the standard on January 1, 2020 and have applied the standard retrospectively to all periods presented. The adoption of this standard did not have an impact on our condensed consolidated financial statements. Guarantor Financial Information On March 2, 2020, the Securities and Exchange Commission (the “SEC”) adopted amendments to the financial disclosure requirements for guarantors and issuers of guaranteed securities, as well for affiliates whose securities collateralize a registrant’s securities. The amendments revise Rules 3-10 and 3-16 of Regulation S-X, and relocate part of Rule 3-10 and all of Rule 3-16 to the new Article 13 in Regulation S-X, which is comprised of new Rules 13-01 and 13-02. We early adopted the requirements of the amendments on January 1, 2020, which included replacing guarantor condensed consolidating financial information with summarized financial information for the consolidated obligor group (Parent, Issuer, and Guarantor Subsidiaries) as well as no longer requiring guarantor cash flow information, financial information for non-guarantor subsidiaries, and a reconciliation to the consolidated results. Accounting Pronouncements Not Yet Adopted Other recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the American Institute of Certified Public Accountants, and the SEC did not have, or are not expected to have, a significant impact on our present or future condensed consolidated financial statements. |
Receivables and Expected Cred_2
Receivables and Expected Credit Losses (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Receivables [Abstract] | |
Schedule of Equipment Installment Plan Receivables | The following table summarizes the EIP receivables, including imputed discounts and related allowance for credit losses: (in millions) March 31, 2020 December 31, 2019 EIP receivables, gross $ 4,242 $ 4,582 Unamortized imputed discount (268) (299) EIP receivables, net of unamortized imputed discount 3,974 4,283 Allowance for credit losses (1) (201) (100) EIP receivables, net of allowance for credit losses and imputed discount $ 3,773 $ 4,183 Classified on the balance sheet as: Equipment installment plan receivables, net of allowance for credit losses and imputed discount $ 2,406 $ 2,600 Equipment installment plan receivables due after one year, net of allowance for credit losses and imputed discount 1,367 1,583 EIP receivables, net of allowance for credit losses and imputed discount $ 3,773 $ 4,183 (1) Allowance for credit losses as of March 31, 2020, was impacted by the cumulative effect of initially applying the new credit loss standard on our receivables portfolio on January 1, 2020, of $91 million. |
Schedule of Equipment Installment Plan Receivables by Credit Category | The following table presents the amortized cost of our EIP receivables by delinquency status, customer credit class, and year of origination. As a part of the adoption of the new credit loss standard, we now disclose our EIP receivables portfolio disaggregated by origination year. The information is updated as of March 31, 2020. Originated in 2020 Originated in 2019 Originated prior to 2019 Total EIP Receivables, net of (in millions) Prime Subprime Prime Subprime Prime Subprime Prime Subprime Grand total Current - 30 days past due $ 504 $ 519 $ 1,168 $ 1,082 $ 375 $ 234 $ 2,047 $ 1,835 $ 3,882 31 - 60 days past due 2 4 10 23 4 6 16 33 49 61 - 90 days past due — — 5 11 1 3 6 14 20 More than 90 days past due — — 4 10 2 7 6 17 23 EIP receivables, net of unamortized imputed discount $ 506 $ 523 $ 1,187 $ 1,126 $ 382 $ 250 $ 2,075 $ 1,899 $ 3,974 |
Schedule of Unamortized Imputed Discount and Allowance for Credit Losses for Equipment Installment Plan Receivables | Activity for the three months ended March 31, 2020 and 2019, in the allowance for credit losses and unamortized imputed discount balances for the accounts receivable and EIP receivables segments were as follows: March 31, 2020 March 31, 2019 (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 $ 61 $ 399 $ 460 $ 67 $ 449 $ 516 Beginning balance adjustment due to implementation of the new credit loss standard — 91 91 — — — Bad debt expense 42 71 113 15 59 74 Write-offs, net of recoveries (34) (61) (95) (19) (74) (93) Change in imputed discount on short-term and long-term EIP receivables N/A 5 5 N/A 53 53 Impact on the imputed discount from sales of EIP receivables N/A (36) (36) N/A (42) (42) Allowance for credit losses and imputed discount, end of period $ 69 $ 469 $ 538 $ 63 $ 445 $ 508 |
Sales of Certain Receivables (T
Sales of Certain Receivables (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Transfers and Servicing [Abstract] | |
Schedule of Variable Interest Entities | 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, 2020 December 31, 2019 Other current assets $ 353 $ 350 Accounts payable and accrued liabilities 54 25 Other current liabilities 355 342 |
Schedule of variable interest entities - EIP | The following table summarizes the carrying amounts and classification of assets, which consists primarily of the deferred purchase price, and liabilities included in our Condensed Consolidated Balance Sheets that relate to the EIP BRE: (in millions) March 31, 2020 December 31, 2019 Other current assets $ 335 $ 344 Other assets 92 89 Other long-term liabilities 8 18 |
Schedule of Factoring Arrangement | The following table summarizes the impact of the sale of certain service receivables and EIP receivables in our Condensed Consolidated Balance Sheets: (in millions) March 31, 2020 December 31, 2019 Derecognized net service receivables and EIP receivables $ 2,545 $ 2,584 Other current assets 688 694 of which, deferred purchase price 687 692 Other long-term assets 92 89 of which, deferred purchase price 92 89 Accounts payable and accrued liabilities 54 25 Other current liabilities 355 342 Other long-term liabilities 8 18 Net cash proceeds since inception 1,939 1,944 Of which: Change in net cash proceeds during the year-to-date period (5) 65 Net cash proceeds funded by reinvested collections 1,944 1,879 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Fair Value Disclosures [Abstract] | |
Schedule of Carrying Values and Fair Values of Long-term Debt | 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, 2020 December 31, 2019 (in millions) Carrying Amount Fair Value Carrying Amount Fair Value Assets: Deferred purchase price assets 3 $ 779 $ 779 $ 781 $ 781 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, 2020 December 31, 2019 (in millions) Carrying Amount Fair Value Carrying Amount Fair Value Liabilities: Senior Notes to third parties 1 $ 10,959 $ 11,325 $ 10,958 $ 11,479 Senior Notes to affiliates 2 9,987 10,184 9,986 10,366 Incremental Term Loan Facility to affiliates 2 4,000 4,000 4,000 4,000 |
Revenue from Contracts with C_2
Revenue from Contracts with Customers (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of Disaggregation of Revenue | Branded postpaid service revenues, including branded postpaid phone revenues and branded postpaid other revenues, were as follows: Three Months Ended March 31, (in millions) 2020 2019 Branded postpaid service revenues Branded postpaid phone revenues $ 5,577 $ 5,183 Branded postpaid other revenues 310 310 Total branded postpaid service revenues $ 5,887 $ 5,493 Equipment revenues from the lease of mobile communication devices were as follows: Three Months Ended March 31, (in millions) 2020 2019 Equipment revenues from the lease of mobile communication devices $ 165 $ 161 |
Schedule of Contract Liability and Receivable Balances | The opening and closing balances of our contract asset and contract liability balances from contracts with customers as of December 31, 2019 and March 31, 2020, were as follows: (in millions) Contract Assets Contract Liabilities Balance as of December 31, 2019 $ 63 $ 560 Balance as of March 31, 2020 59 534 Change $ (4) $ (26) Revenues for the three months ended March 31, 2020 and 2019, include the following: Three Months Ended March 31, (in millions) 2020 2019 Amounts included in the beginning of year contract liability balance $ 528 $ 560 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Earnings Per Share [Abstract] | |
Schedule of 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) 2020 2019 Net income $ 951 $ 908 Weighted average shares outstanding - basic 858,148,284 851,223,498 Effect of dilutive securities: Outstanding stock options and unvested stock awards 7,850,248 7,419,983 Weighted average shares outstanding - diluted 865,998,532 858,643,481 Earnings per share - basic $ 1.11 $ 1.07 Earnings per share - diluted $ 1.10 $ 1.06 Potentially dilutive securities: Outstanding stock options and unvested stock awards 1,807,812 266,452 |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Leases [Abstract] | |
Components of Lease Expense | The components of lease expense were as follows: Three Months Ended March 31, (in millions) 2020 2019 Operating lease expense $ 684 $ 602 Financing lease expense: Amortization of right-of-use assets 145 113 Interest on lease liabilities 20 20 Total financing lease expense 165 133 Variable lease expense 62 65 Total lease expense $ 911 $ 800 |
Schedule of Information Relating to Lease Term and Discount Rate | Information relating to the lease term and discount rate is as follows: March 31, 2020 Weighted Average Remaining Lease Term (Years) Operating leases 6 Financing leases 3 Weighted Average Discount Rate Operating leases 4.7 % Financing leases 3.9 % |
Maturity Schedule of Operating Lease Liabilities | Maturities of lease liabilities as of March 31, 2020, were as follows: (in millions) Operating Leases Finance Leases Twelve Months Ending March 31, 2021 $ 2,636 $ 976 2022 2,605 722 2023 2,294 369 2024 1,929 97 2025 1,626 68 Thereafter 3,561 100 Total lease payments 14,651 2,332 Less imputed interest 2,000 138 Total $ 12,651 $ 2,194 |
Maturity Schedule of Finance Lease Liabilities | Maturities of lease liabilities as of March 31, 2020, were as follows: (in millions) Operating Leases Finance Leases Twelve Months Ending March 31, 2021 $ 2,636 $ 976 2022 2,605 722 2023 2,294 369 2024 1,929 97 2025 1,626 68 Thereafter 3,561 100 Total lease payments 14,651 2,332 Less imputed interest 2,000 138 Total $ 12,651 $ 2,194 |
Schedule of Leased Wireless Devices | The components of leased wireless devices under our JUMP! On Demand program were as follows: (in millions) March 31, 2020 December 31, 2019 Leased wireless devices, gross $ 1,223 $ 1,139 Accumulated depreciation (404) (407) Leased wireless devices, net $ 819 $ 732 |
Schedule of Future Minimum Payments Expected to be Received | 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, 2021 $ 456 2022 86 Total $ 542 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2020 | Jan. 01, 2020 | Dec. 31, 2019 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Accumulated deficit | $ 7,949 | $ 8,833 | |
Total imputed discount and allowance rate | 8.70% | 7.00% | |
Minimum | EIP Securitization Arrangement | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Equipment installment plan, maximum payment term | 24 months | ||
Maximum | EIP Securitization Arrangement | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Equipment installment plan, maximum payment term | 36 months | ||
Accounting Standards Update 2016-13 | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Allowance for credit losses | $ (91) | ||
Deferred tax assets | 24 | ||
Accumulated deficit | $ 67 |
Business Combination - Narrativ
Business Combination - Narrative (Details) - USD ($) | Apr. 22, 2020 | Apr. 01, 2020 | Feb. 20, 2020 | Jul. 26, 2019 | May 18, 2018 | Apr. 29, 2018 | Mar. 31, 2020 | Mar. 31, 2019 | Jun. 30, 2018 |
Business Acquisition [Line Items] | |||||||||
Share price at closing (in USD per share) | $ 83.90 | ||||||||
DISH | T-Mobile and Sprint | Prepaid Business | |||||||||
Business Acquisition [Line Items] | |||||||||
Payments for asset acquisition | $ 1,400,000,000 | ||||||||
DISH | T-Mobile and Sprint | Prepaid Business | Transition Services Agreement | |||||||||
Business Acquisition [Line Items] | |||||||||
Transition period (up to) | 3 years | ||||||||
DISH | T-Mobile and Sprint | Prepaid Business | Master Network Services Agreement | |||||||||
Business Acquisition [Line Items] | |||||||||
Transition period (up to) | 7 years | ||||||||
DISH | T-Mobile and Sprint | Spectrum Licenses | |||||||||
Business Acquisition [Line Items] | |||||||||
Payments for asset acquisition | $ 3,600,000,000 | ||||||||
Additional lease period | 2 years | ||||||||
T-Mobile and Sprint | DISH | Decommissioned Towers and Retail Locations | |||||||||
Business Acquisition [Line Items] | |||||||||
Option period (up to) | 5 years | ||||||||
Sprint | |||||||||
Business Acquisition [Line Items] | |||||||||
Exchange ratio (in shares) | 0.10256 | ||||||||
Exchange ratio (in shares) | 9.75 | ||||||||
Value of common stock provided in exchange for acquiree common stock | $ 31,300,000,000 | ||||||||
Fully-diluted shares of combined company held by public stockholders (percent) | 31.70% | ||||||||
Costs recognized associated with merger transaction | $ 143,000,000 | $ 113,000,000 | |||||||
Payments for Merger-related costs | 161,000,000 | $ 34,000,000 | |||||||
Required fees by acquirer upon consummation | 0 | ||||||||
Sprint | DT | |||||||||
Business Acquisition [Line Items] | |||||||||
Payments of consent fees | $ 7,000,000 | ||||||||
Required fees by acquirer upon consummation | $ 0 | ||||||||
Sprint | Senior Notes | |||||||||
Business Acquisition [Line Items] | |||||||||
Payments for requisite consents to third-party note holders | $ 95,000,000 | $ 54,000,000 | |||||||
Sprint | Secured Term Loan Facility | |||||||||
Business Acquisition [Line Items] | |||||||||
Financing commitment, amount | $ 4,000,000,000 | ||||||||
Sprint | Subsequent Event | |||||||||
Business Acquisition [Line Items] | |||||||||
Stock issued (in shares) | 373,396,310 | ||||||||
Aggregate principal balance of debt | $ 26,500,000,000 | ||||||||
Sprint | Subsequent Event | DT | |||||||||
Business Acquisition [Line Items] | |||||||||
Payments for requisite consents to DT | 13,000,000 | ||||||||
Sprint | Subsequent Event | Secured Term Loan Facility | |||||||||
Business Acquisition [Line Items] | |||||||||
Financing commitment, amount | $ 4,000,000,000 | ||||||||
Sprint | SoftBank | |||||||||
Business Acquisition [Line Items] | |||||||||
Fully-diluted shares expected to be held immediately following merger (percent) | 24.70% | ||||||||
Sprint | DT | |||||||||
Business Acquisition [Line Items] | |||||||||
Fully-diluted shares expected to be held immediately following merger (percent) | 43.60% | ||||||||
Sprint | Common Stock | |||||||||
Business Acquisition [Line Items] | |||||||||
Exchange ratio (in shares) | 11 | ||||||||
Sprint | Common Stock | Subsequent Event | 1997 Program | |||||||||
Business Acquisition [Line Items] | |||||||||
Number of shares registered (in shares) | 25,304,224 | ||||||||
Sprint | Common Stock | SoftBank | |||||||||
Business Acquisition [Line Items] | |||||||||
Exchange ratio (in shares) | 11.31 | ||||||||
Aggregate surrendered (in shares) | 48,751,557 | ||||||||
Volume-weighted average price (in USD per share) | $ 150 |
Receivables and Expected Cred_3
Receivables and Expected Credit Losses - EIP Receivables (Details) $ in Millions | 3 Months Ended | ||
Mar. 31, 2020USD ($)segmentclass | Jan. 01, 2020USD ($) | Dec. 31, 2019USD ($) | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Portfolio segments | segment | 2 | ||
Customer classes | class | 2 | ||
Total EIP Receivables, net of unamortized imputed discounts | $ 4,242 | $ 4,582 | |
Unamortized imputed discount | (268) | (299) | |
EIP receivables, net of unamortized imputed discount | 3,974 | 4,283 | |
Allowance for credit losses | (201) | (100) | |
Equipment installment plan receivables, net | 3,773 | 4,183 | |
Accounting Standards Update 2016-13 | |||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Cumulative effect of initially applying new credit loss standard | $ (91) | ||
Equipment installment plan receivables, net of allowance for credit losses and imputed discount | |||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Equipment installment plan receivables, net | 2,406 | 2,600 | |
Equipment installment plan receivables due after one year, net of allowance for credit losses and imputed discount | |||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Equipment installment plan receivables, net | $ 1,367 | $ 1,583 |
Receivables and Expected Cred_4
Receivables and Expected Credit Losses - Gross EIP Receivables by Credit Category (Details) - USD ($) $ in Millions | Mar. 31, 2020 | Dec. 31, 2019 |
Financing Receivable, Credit Quality Indicator [Line Items] | ||
Total EIP Receivables, net of unamortized imputed discounts | $ 3,974 | $ 4,283 |
Prime | ||
Financing Receivable, Credit Quality Indicator [Line Items] | ||
Originated in 2020 | 506 | |
Originated in 2019 | 1,187 | |
Originated prior to 2019 | 382 | |
Total EIP Receivables, net of unamortized imputed discounts | 2,075 | |
Subprime | ||
Financing Receivable, Credit Quality Indicator [Line Items] | ||
Originated in 2020 | 523 | |
Originated in 2019 | 1,126 | |
Originated prior to 2019 | 250 | |
Total EIP Receivables, net of unamortized imputed discounts | 1,899 | |
Current - 30 days past due | ||
Financing Receivable, Credit Quality Indicator [Line Items] | ||
Total EIP Receivables, net of unamortized imputed discounts | 3,882 | |
Current - 30 days past due | Prime | ||
Financing Receivable, Credit Quality Indicator [Line Items] | ||
Originated in 2020 | 504 | |
Originated in 2019 | 1,168 | |
Originated prior to 2019 | 375 | |
Total EIP Receivables, net of unamortized imputed discounts | 2,047 | |
Current - 30 days past due | Subprime | ||
Financing Receivable, Credit Quality Indicator [Line Items] | ||
Originated in 2020 | 519 | |
Originated in 2019 | 1,082 | |
Originated prior to 2019 | 234 | |
Total EIP Receivables, net of unamortized imputed discounts | 1,835 | |
31 - 60 days past due | ||
Financing Receivable, Credit Quality Indicator [Line Items] | ||
Total EIP Receivables, net of unamortized imputed discounts | 49 | |
31 - 60 days past due | Prime | ||
Financing Receivable, Credit Quality Indicator [Line Items] | ||
Originated in 2020 | 2 | |
Originated in 2019 | 10 | |
Originated prior to 2019 | 4 | |
Total EIP Receivables, net of unamortized imputed discounts | 16 | |
31 - 60 days past due | Subprime | ||
Financing Receivable, Credit Quality Indicator [Line Items] | ||
Originated in 2020 | 4 | |
Originated in 2019 | 23 | |
Originated prior to 2019 | 6 | |
Total EIP Receivables, net of unamortized imputed discounts | 33 | |
61 - 90 days past due | ||
Financing Receivable, Credit Quality Indicator [Line Items] | ||
Total EIP Receivables, net of unamortized imputed discounts | 20 | |
61 - 90 days past due | Prime | ||
Financing Receivable, Credit Quality Indicator [Line Items] | ||
Originated in 2020 | 0 | |
Originated in 2019 | 5 | |
Originated prior to 2019 | 1 | |
Total EIP Receivables, net of unamortized imputed discounts | 6 | |
61 - 90 days past due | Subprime | ||
Financing Receivable, Credit Quality Indicator [Line Items] | ||
Originated in 2020 | 0 | |
Originated in 2019 | 11 | |
Originated prior to 2019 | 3 | |
Total EIP Receivables, net of unamortized imputed discounts | 14 | |
More than 90 days past due | ||
Financing Receivable, Credit Quality Indicator [Line Items] | ||
Total EIP Receivables, net of unamortized imputed discounts | 23 | |
More than 90 days past due | Prime | ||
Financing Receivable, Credit Quality Indicator [Line Items] | ||
Originated in 2020 | 0 | |
Originated in 2019 | 4 | |
Originated prior to 2019 | 2 | |
Total EIP Receivables, net of unamortized imputed discounts | 6 | |
More than 90 days past due | Subprime | ||
Financing Receivable, Credit Quality Indicator [Line Items] | ||
Originated in 2020 | 0 | |
Originated in 2019 | 10 | |
Originated prior to 2019 | 7 | |
Total EIP Receivables, net of unamortized imputed discounts | $ 17 |
Receivables and Expected Cred_5
Receivables and Expected Credit Losses - Unamortized Imputed Discount and Allowance for Credit Losses (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Financing Receivable, Allowance for Credit Loss [Roll Forward] | |||
Allowance for credit losses and imputed discount, beginning of period | $ 460 | $ 516 | $ 516 |
Bad debt expense | 113 | 74 | |
Write-offs, net of recoveries | (95) | (93) | |
Change in imputed discount on short-term and long-term EIP receivables | 5 | 53 | |
Impact on the imputed discount from sales of EIP receivables | (36) | (42) | |
Allowance for credit losses and imputed discount, end of period | 538 | 508 | 460 |
Beginning balance adjustment due to implementation of the new credit loss standard | |||
Financing Receivable, Allowance for Credit Loss [Roll Forward] | |||
Allowance for credit losses and imputed discount, beginning of period | 91 | ||
Allowance for credit losses and imputed discount, end of period | 91 | ||
Accounts Receivable Allowance | |||
Financing Receivable, Allowance for Credit Loss [Roll Forward] | |||
Allowance for credit losses and imputed discount, beginning of period | 61 | 67 | 67 |
Bad debt expense | 42 | 15 | |
Write-offs, net of recoveries | (34) | (19) | |
Allowance for credit losses and imputed discount, end of period | 69 | 63 | 61 |
Accounts Receivable Allowance | Beginning balance adjustment due to implementation of the new credit loss standard | |||
Financing Receivable, Allowance for Credit Loss [Roll Forward] | |||
Allowance for credit losses and imputed discount, beginning of period | $ 0 | ||
Allowance for credit losses and imputed discount, end of period | $ 0 | ||
EIP Receivables Allowance | |||
Financing Receivable, Allowance for Credit Loss [Line Items] | |||
Weighted average effective imputed interest rate (percentage) | 8.80% | 8.80% | |
Financing Receivable, Allowance for Credit Loss [Roll Forward] | |||
Allowance for credit losses and imputed discount, beginning of period | $ 399 | 449 | $ 449 |
Bad debt expense | 71 | 59 | |
Write-offs, net of recoveries | (61) | (74) | |
Change in imputed discount on short-term and long-term EIP receivables | 5 | 53 | |
Impact on the imputed discount from sales of EIP receivables | (36) | (42) | |
Allowance for credit losses and imputed discount, end of period | 469 | $ 445 | 399 |
EIP Receivables Allowance | Beginning balance adjustment due to implementation of the new credit loss standard | |||
Financing Receivable, Allowance for Credit Loss [Roll Forward] | |||
Allowance for credit losses and imputed discount, beginning of period | $ 91 | ||
Allowance for credit losses and imputed discount, end of period | $ 91 |
Sales of Certain Receivables -
Sales of Certain Receivables - Sales of Service Receivables (Details) - USD ($) | Mar. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2014 |
Variable Interest Entity [Line Items] | |||
Other current assets | $ 2,882,000,000 | $ 2,305,000,000 | |
Accounts payable and accrued liabilities | 6,003,000,000 | 6,746,000,000 | |
Other current liabilities | 2,801,000,000 | 1,673,000,000 | |
Factoring Arrangement | Variable Interest Entity, Not Primary Beneficiary | |||
Variable Interest Entity [Line Items] | |||
Revolving receivables facility, maximum borrowing capacity | $ 950,000,000 | ||
Revolving receivables facility, outstanding borrowings | 895,000,000 | 924,000,000 | |
Other current assets | 353,000,000 | 350,000,000 | |
Accounts payable and accrued liabilities | 54,000,000 | 25,000,000 | |
Other current liabilities | $ 355,000,000 | $ 342,000,000 |
Sales of Certain Receivables _2
Sales of Certain Receivables - Sales of EIP Receivables (Details) - USD ($) | Mar. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2015 |
Variable Interest Entity [Line Items] | |||
Other current assets | $ 2,882,000,000 | $ 2,305,000,000 | |
Other assets | 2,026,000,000 | 1,891,000,000 | |
EIP Securitization Arrangement | |||
Variable Interest Entity [Line Items] | |||
Revolving receivables facility, maximum borrowing capacity | 1,300,000,000 | 1,300,000,000 | $ 1,300,000,000 |
Other current assets | 335,000,000 | 344,000,000 | |
Other assets | 92,000,000 | 89,000,000 | |
Other long-term liabilities | $ 8,000,000 | $ 18,000,000 |
Sales of Certain Receivables _3
Sales of Certain Receivables - Sales of Receivables and Continuing Involvement (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Qualitative and Quantitative Information, Transferor's Continuing Involvement [Line Items] | |||
Other current assets | $ 2,882 | $ 2,305 | |
Other long-term assets | 2,026 | 1,891 | |
Accounts payable and accrued liabilities | 6,003 | 6,746 | |
Other current liabilities | 2,801 | 1,673 | |
Other long-term liabilities | 959 | 954 | |
Of which: | |||
Losses from sales of receivables | 25 | $ 35 | |
Factoring and EIP Securitization Arrangement | Variable Interest Entity, Primary Beneficiary | |||
Of which: | |||
Maximum exposure to loss, Factoring VIE | 1,100 | ||
Factoring and EIP Securitization Arrangement | Variable Interest Entity, Primary Beneficiary | |||
Qualitative and Quantitative Information, Transferor's Continuing Involvement [Line Items] | |||
Derecognized net service receivables and EIP receivables | 2,545 | 2,584 | |
Other current assets | 688 | 694 | |
Deferred purchase price assets | 779 | 781 | |
Other long-term assets | 92 | 89 | |
Accounts payable and accrued liabilities | 54 | 25 | |
Other current liabilities | 355 | 342 | |
Other long-term liabilities | 8 | 18 | |
Net cash proceeds since inception | 1,939 | 1,944 | |
Of which: | |||
Change in net cash proceeds during the year-to-date period | (5) | 65 | |
Net cash proceeds funded by reinvested collections | 1,944 | 1,879 | |
Losses from sales of receivables | 25 | $ 35 | |
Factoring and EIP Securitization Arrangement | Other current assets - of which, deferred purchase price | Variable Interest Entity, Primary Beneficiary | |||
Qualitative and Quantitative Information, Transferor's Continuing Involvement [Line Items] | |||
Deferred purchase price assets | 687 | 692 | |
Factoring and EIP Securitization Arrangement | Other long-term assets - of which, deferred purchase price | Variable Interest Entity, Primary Beneficiary | |||
Qualitative and Quantitative Information, Transferor's Continuing Involvement [Line Items] | |||
Deferred purchase price assets | $ 92 | $ 89 |
Spectrum License Transactions -
Spectrum License Transactions - Schedule of Spectrum License Activity (Details) $ in Millions | Apr. 08, 2020USD ($)license | Mar. 31, 2020USD ($) | Mar. 31, 2020USD ($) | Mar. 31, 2019USD ($) | Oct. 31, 2019USD ($) |
Indefinite-lived Intangible Assets [Line Items] | |||||
Purchase of spectrum licenses | $ 99 | $ 185 | |||
Licensing Agreements | Auction 103 | |||||
Indefinite-lived Intangible Assets [Line Items] | |||||
Purchase of spectrum licenses | $ 873 | ||||
Incentive payments | 59 | ||||
Asset purchase deposit | $ 82 | ||||
Down payment | $ 93 | ||||
Licensing Agreements | Auction 103 | Subsequent Event | |||||
Indefinite-lived Intangible Assets [Line Items] | |||||
Number of licenses | license | 2,384 | ||||
Purchase of spectrum licenses | $ 698 |
Fair Value Measurements - Narra
Fair Value Measurements - Narrative (Details) - USD ($) $ in Millions | Apr. 06, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Mar. 31, 2020 | Mar. 31, 2019 | Oct. 31, 2018 |
Derivative [Line Items] | ||||||
Accumulated other comprehensive loss | $ 1,660 | $ 868 | $ 1,660 | |||
Net collateral transfers to certain derivative counterparties | (580) | 580 | $ 0 | |||
Floating rate payments received from derivative counterparties | 46 | |||||
Guarantee liabilities | 59 | 62 | 59 | |||
Total EIP Receivables, net of unamortized imputed discounts | 4,242 | 4,582 | 4,242 | |||
Equipment installment plan receivables, net of allowance for credit losses and imputed discount | ||||||
Derivative [Line Items] | ||||||
Total EIP Receivables, net of unamortized imputed discounts | 2,900 | 2,900 | ||||
Interest Rate Contract | Subsequent Event | ||||||
Derivative [Line Items] | ||||||
Net collateral transfers to certain derivative counterparties | $ 1,100 | |||||
Derivative liabilities | 2,300 | |||||
Cash-collateralized | $ 1,200 | |||||
Interest Rate Contract | Cash Flow Hedging | ||||||
Derivative [Line Items] | ||||||
Aggregate notional amount | $ 9,600 | |||||
Fair value of derivative instrument | $ 2,300 | $ 1,200 | $ 2,300 |
Fair Value Measurements - Fair
Fair Value Measurements - Fair Value of Short-term Investments and Long-term Debt (Details) - USD ($) $ in Millions | Mar. 31, 2020 | Dec. 31, 2019 |
Level 3 | Carrying Amount | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Deferred purchase price assets | $ 779 | $ 781 |
Level 3 | Fair Value | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Deferred purchase price assets | 779 | 781 |
Level 1 | Carrying Amount | Senior Notes | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Long-term debt | 10,959 | 10,958 |
Level 1 | Fair Value | Senior Notes | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Long-term debt | 11,325 | 11,479 |
Level 2 | Carrying Amount | Secured Term Loan | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Term loans | 4,000 | 4,000 |
Level 2 | Carrying Amount | Senior Notes | Affiliates | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Long-term debt | 9,987 | 9,986 |
Level 2 | Fair Value | Secured Term Loan | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Term loans | 4,000 | 4,000 |
Level 2 | Fair Value | Senior Notes | Affiliates | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Long-term debt | $ 10,184 | $ 10,366 |
Debt - Commitment Letter (Detai
Debt - Commitment Letter (Details) - USD ($) | Apr. 09, 2020 | Apr. 01, 2020 | Jun. 30, 2018 | Mar. 31, 2020 |
Subsequent Event | Senior Notes | Issuer | ||||
Debt Instrument [Line Items] | ||||
Net proceeds from senior notes | $ 18,800,000,000 | |||
Secured Bridge Loan Facility | Subsequent Event | ||||
Debt Instrument [Line Items] | ||||
Reimbursement of commitments letter fees | 71,000,000 | |||
Guaranteed Notes due 2028 | Subsequent Event | Sprint | ||||
Debt Instrument [Line Items] | ||||
Interest rate, stated percentage | 7.25% | |||
Principal amount outstanding | $ 1,000,000,000 | |||
3.500% Senior Secured Notes due 2025 | Subsequent Event | Senior Notes | Issuer | ||||
Debt Instrument [Line Items] | ||||
Debt instrument, face amount | $ 3,000,000,000 | |||
Interest rate, stated percentage | 3.50% | |||
3.750% Senior Secured Notes due 2027 | Subsequent Event | Senior Notes | Issuer | ||||
Debt Instrument [Line Items] | ||||
Debt instrument, face amount | $ 4,000,000,000 | |||
Interest rate, stated percentage | 3.75% | |||
3.875% Senior Secured Notes due 2030 | Subsequent Event | Senior Notes | Issuer | ||||
Debt Instrument [Line Items] | ||||
Debt instrument, face amount | $ 7,000,000,000 | |||
Interest rate, stated percentage | 3.875% | |||
4.375% Senior Secured Notes due 2040 | Subsequent Event | Senior Notes | Issuer | ||||
Debt Instrument [Line Items] | ||||
Debt instrument, face amount | $ 2,000,000,000 | |||
Interest rate, stated percentage | 4.375% | |||
4.500% Senior Secured Notes due 2050 | Subsequent Event | Senior Notes | Issuer | ||||
Debt Instrument [Line Items] | ||||
Debt instrument, face amount | $ 3,000,000,000 | |||
Interest rate, stated percentage | 4.50% | |||
Sprint | ||||
Debt Instrument [Line Items] | ||||
Required fees by acquirer upon consummation | $ 0 | |||
Sprint | DT | ||||
Debt Instrument [Line Items] | ||||
Payments of consent fees | $ 7,000,000 | |||
Required fees by acquirer upon consummation | 0 | |||
Sprint | Subsequent Event | DT | Senior Notes | Affiliates | ||||
Debt Instrument [Line Items] | ||||
Indebtedness to affiliates | 4,000,000,000 | |||
Sprint | Secured Debt Financing | Subsequent Event | ||||
Debt Instrument [Line Items] | ||||
Financing commitment, amount | 27,000,000,000 | |||
Proceeds from Lines of Credit | 22,600,000,000 | |||
Sprint | Secured Revolving Credit Facility | Subsequent Event | ||||
Debt Instrument [Line Items] | ||||
Financing commitment, amount | $ 4,000,000,000 | |||
Sprint | Secured Revolving Credit Facility | Subsequent Event | LIBOR | Maximum | ||||
Debt Instrument [Line Items] | ||||
Variable rate | 1.25% | |||
Sprint | Secured Revolving Credit Facility | Subsequent Event | LIBOR | Minimum | ||||
Debt Instrument [Line Items] | ||||
Variable rate | 1.00% | |||
Sprint | Secured Term Loan Facility | ||||
Debt Instrument [Line Items] | ||||
Financing commitment, amount | $ 4,000,000,000 | |||
Sprint | Secured Term Loan Facility | Subsequent Event | ||||
Debt Instrument [Line Items] | ||||
Financing commitment, amount | $ 4,000,000,000 | |||
Net leverage ratio | 0.75 | |||
Sprint | Secured Term Loan Facility | Subsequent Event | DT | ||||
Debt Instrument [Line Items] | ||||
Repayment of debt | $ 4,000,000,000 | |||
Sprint | Secured Term Loan Facility | Subsequent Event | LIBOR | ||||
Debt Instrument [Line Items] | ||||
Variable rate | 3.00% | |||
Sprint | Secured Bridge Loan Facility | Subsequent Event | ||||
Debt Instrument [Line Items] | ||||
Financing commitment, amount | $ 19,000,000,000 | $ 19,000,000,000 | ||
Sprint | Secured Bridge Loan Facility | Subsequent Event | LIBOR | ||||
Debt Instrument [Line Items] | ||||
Variable rate | 1.25% | |||
Sprint | New Credit Agreement | Subsequent Event | ||||
Debt Instrument [Line Items] | ||||
Financial maintenance covenant | 3.3 | |||
Sprint | 5.300% Senior Notes due 2021 | Subsequent Event | DT | Senior Notes | ||||
Debt Instrument [Line Items] | ||||
Debt instrument, face amount | $ 2,000,000,000 | |||
Interest rate, stated percentage | 5.30% | |||
Sprint | 6.000% Senior Notes due 2024 | Subsequent Event | DT | Senior Notes | ||||
Debt Instrument [Line Items] | ||||
Debt instrument, face amount | $ 2,000,000,000 | |||
Interest rate, stated percentage | 6.00% | |||
Sprint | Secured Term Loan due 2024 | Subsequent Event | ||||
Debt Instrument [Line Items] | ||||
Principal amount outstanding | $ 5,900,000,000 | |||
Sprint | Accounts Receivable Facility | Subsequent Event | ||||
Debt Instrument [Line Items] | ||||
Total amount outstanding | 2,300,000,000 | |||
Sprint | Secured and Unsecured Debt Financing | ||||
Debt Instrument [Line Items] | ||||
Required fees by acquirer upon consummation | $ 30,000,000 | |||
Sprint | Secured and Unsecured Debt Financing | Subsequent Event | ||||
Debt Instrument [Line Items] | ||||
Payments of consent fees | $ 355,000,000 |
Debt - Financing Matters Agreem
Debt - Financing Matters Agreement and Consents on Debt to Third-Parties (Details) - USD ($) | Apr. 01, 2020 | May 18, 2018 | Mar. 31, 2020 | Mar. 31, 2019 | Jun. 30, 2018 |
Debt Instrument [Line Items] | |||||
Payments for third party bank fees | $ 3,688,000,000 | $ 3,442,000,000 | |||
Sprint | |||||
Debt Instrument [Line Items] | |||||
Required fees by acquirer upon consummation | 0 | ||||
Notes issued and outstanding under Existing Sprint Spectrum Program (not exceed) | $ 7,000,000,000 | ||||
Sprint | Credit Facilities | |||||
Debt Instrument [Line Items] | |||||
Financing commitment, amount | $ 9,000,000,000 | ||||
Secured indebtedness, limit, percentage | 150.00% | ||||
Secured debt to cash flow | 2 | ||||
Sprint | Senior Notes | |||||
Debt Instrument [Line Items] | |||||
Payments for third party bank fees | $ 6,000,000 | ||||
Payments for requisite consents to third-party note holders | $ 95,000,000 | 54,000,000 | |||
Sprint | Senior Notes | Long-term debt | |||||
Debt Instrument [Line Items] | |||||
Payments of consent fees | 17,000,000 | ||||
Sprint | Senior Notes | Existing Sprint Spectrum Notes | |||||
Debt Instrument [Line Items] | |||||
Payments for requisite consents to third-party note holders | 41,000,000 | ||||
Sprint | Senior Notes | Existing Sprint Spectrum Notes | Long-term debt | |||||
Debt Instrument [Line Items] | |||||
Payments of consent fees | 14,000,000 | ||||
Sprint | DT | |||||
Debt Instrument [Line Items] | |||||
Payments of consent fees | $ 7,000,000 | ||||
Required fees by acquirer upon consummation | $ 0 | ||||
Sprint | DT | Subsequent Event | |||||
Debt Instrument [Line Items] | |||||
Payments for requisite consents to DT | $ 13,000,000 | ||||
Sprint | DT | Senior Notes | 5.300% Senior Notes due 2021 | Subsequent Event | |||||
Debt Instrument [Line Items] | |||||
Debt instrument, face amount | $ 2,000,000,000 | ||||
Interest rate, stated percentage | 5.30% | ||||
Sprint | DT | Senior Notes | 6.000% Senior Notes due 2024 | Subsequent Event | |||||
Debt Instrument [Line Items] | |||||
Debt instrument, face amount | $ 2,000,000,000 | ||||
Interest rate, stated percentage | 6.00% | ||||
Sprint | DT | Senior Notes | 5.125% Senior Notes Due 2025 | Subsequent Event | |||||
Debt Instrument [Line Items] | |||||
Debt instrument, face amount | $ 1,250,000,000 | ||||
Interest rate, stated percentage | 5.125% | ||||
Sprint | DT | Senior Notes | 5.375% Senior Notes Due 2027 | Subsequent Event | |||||
Debt Instrument [Line Items] | |||||
Debt instrument, face amount | $ 1,250,000,000 | ||||
Interest rate, stated percentage | 5.375% |
Revenue from Contracts with C_3
Revenue from Contracts with Customers - Disaggregation of Revenue (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Disaggregation of Revenue [Line Items] | ||
Revenues | $ 11,113 | $ 11,080 |
Branded postpaid phone revenues | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 5,577 | 5,183 |
Branded postpaid other revenues | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 310 | 310 |
Branded postpaid service revenues | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 5,887 | 5,493 |
Equipment revenues from the lease of mobile communication devices | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | $ 165 | $ 161 |
Revenue from Contracts with C_4
Revenue from Contracts with Customers - Contract Balances (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Change in Contract with Customer, Asset and Liability [Abstract] | |||
Contract Assets | $ 59 | $ 63 | |
Contract Liabilities | 534 | 560 | |
Change in contract assets included in other current assets | (4) | ||
Change in contracts liabilities included in deferred revenue | (26) | ||
Current portion of contract assets | 45 | $ 50 | |
Amounts included in the beginning of year contract liability balance | $ 528 | $ 560 |
Revenue from Contracts with C_5
Revenue from Contracts with Customers - Remaining Performance Obligations, Branded Postpaid Contracts (Details) $ in Millions | 3 Months Ended |
Mar. 31, 2020USD ($) | |
Branded postpaid service revenues | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation | $ 157 |
Remaining contract duration (in years) | 24 months |
Minimum | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining contract duration (in years) | 1 year |
Maximum | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining contract duration (in years) | 10 years |
Revenue from Contracts with C_6
Revenue from Contracts with Customers - Remaining Performance Obligations (Details) $ in Millions | Mar. 31, 2020USD ($) |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation | $ 998 |
Remaining performance obligation, expected timing of satisfaction, period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation | $ 1,000 |
Remaining performance obligation, expected timing of satisfaction, period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation | $ 917 |
Remaining performance obligation, expected timing of satisfaction, period |
Revenue from Contracts with C_7
Revenue from Contracts with Customers - Contract Costs (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Capitalized Contract Cost [Abstract] | |||
Deferred incremental costs to obtain contracts | $ 887,000,000 | $ 906,000,000 | |
Average amortization period, deferred contract costs (in months) | 24 months | ||
Amortization of deferred costs | $ 205,000,000 | $ 116,000,000 | |
Impairment losses recognized on deferred contract cost assets | $ 0 | $ 0 |
Earnings Per Share - Computatio
Earnings Per Share - Computation of Basic and Diluted Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Earnings Per Share [Abstract] | ||
Net income | $ 951 | $ 908 |
Weighted average shares outstanding - basic (in shares) | 858,148,284 | 851,223,498 |
Effect of dilutive securities: | ||
Outstanding stock options and unvested stock awards (in shares) | 7,850,248 | 7,419,983 |
Weighted average shares outstanding - diluted (in shares) | 865,998,532 | 858,643,481 |
Earnings per share - basic (in USD per share) | $ 1.11 | $ 1.07 |
Earnings per share - diluted (in USD per share) | $ 1.10 | $ 1.06 |
Outstanding stock options and unvested stock awards | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Potentially dilutive securities (in shares) | 1,807,812 | 266,452 |
Earnings Per Share - Narrative
Earnings Per Share - Narrative (Details) - $ / shares | Apr. 01, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Mar. 31, 2019 |
Class of Stock [Line Items] | ||||
Common stock, shares authorized (in shares) | 1,000,000,000 | 1,000,000,000 | ||
Subsequent Event | ||||
Class of Stock [Line Items] | ||||
Common stock, shares authorized (in shares) | 2,000,000,000 | |||
Mandatory Convertible Preferred Stock Series A | ||||
Class of Stock [Line Items] | ||||
Preferred shares authorized (in shares) | 100,000,000 | |||
Preferred stock, par value (in USD per share) | $ 0.00001 | |||
Preferred shares outstanding (in shares) | 0 | 0 |
Leases - Narrative (Details)
Leases - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Lessee, Lease, Description [Line Items] | ||
Interest payments for financing leases | $ 20 | $ 20 |
Additional operating leases not yet commenced, payments due | $ 310 | |
Device upgrade period | 18 months | |
Minimum | ||
Lessee, Lease, Description [Line Items] | ||
Lessee leasing arrangements, operating leases, term of contract (years) | 5 years | |
Option to extend lease term | 5 years | |
Lessee leasing arrangements, finance leases, term of contract | 2 years | |
Maximum | ||
Lessee, Lease, Description [Line Items] | ||
Lessee leasing arrangements, operating leases, term of contract (years) | 10 years | |
Option to extend lease term | 35 years | |
Lessee leasing arrangements, finance leases, term of contract | 5 years |
Leases - Schedule of Lease Expe
Leases - Schedule of Lease Expense (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Leases [Abstract] | ||
Operating lease expense | $ 684 | $ 602 |
Financing lease expense: | ||
Amortization of right-of-use assets | 145 | 113 |
Interest on lease liabilities | 20 | 20 |
Total financing lease expense | 165 | 133 |
Variable lease expense | 62 | 65 |
Total lease expense | $ 911 | $ 800 |
Leases - Schedule of Informatio
Leases - Schedule of Information Related to Lease Term and Discount Rate (Details) | Mar. 31, 2020 |
Weighted Average Remaining Lease Term (Years) | |
Operating leases | 6 years |
Financing leases | 3 years |
Weighted Average Discount Rate | |
Operating leases | 4.70% |
Financing leases | 3.90% |
Leases - Schedule of Future Min
Leases - Schedule of Future Minimum Operating and Finance Lease Maturities (Details) $ in Millions | Mar. 31, 2020USD ($) |
Operating Leases | |
2021 | $ 2,636 |
2022 | 2,605 |
2023 | 2,294 |
2024 | 1,929 |
2025 | 1,626 |
Thereafter | 3,561 |
Total lease payments | 14,651 |
Less imputed interest | 2,000 |
Total | 12,651 |
Finance Leases | |
2021 | 976 |
2022 | 722 |
2023 | 369 |
2024 | 97 |
2025 | 68 |
Thereafter | 100 |
Total lease payments | 2,332 |
Less imputed interest | 138 |
Total | $ 2,194 |
Leases - Leased Wireless Device
Leases - Leased Wireless Devices (Details) - USD ($) $ in Millions | Mar. 31, 2020 | Dec. 31, 2019 |
Property, Plant and Equipment [Line Items] | ||
Property and equipment, net | $ 22,149 | $ 21,984 |
Leased wireless devices | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment | 1,223 | 1,139 |
Accumulated depreciation | (404) | (407) |
Property and equipment, net | $ 819 | $ 732 |
Leases - Schedule of Future M_2
Leases - Schedule of Future Minimum Payments Expected to be Received (under 842) (Details) $ in Millions | Mar. 31, 2020USD ($) |
Leases [Abstract] | |
2021 | $ 456 |
2022 | 86 |
Total | $ 542 |
Commitments and Contingencies -
Commitments and Contingencies - Narrative (Details) - Interest Rate Contract - Cash Flow Hedging - USD ($) $ in Millions | Mar. 31, 2020 | Dec. 31, 2019 | Oct. 31, 2018 |
Operating Leased Assets [Line Items] | |||
Aggregate notional amount | $ 9,600 | ||
Fair value of derivative instrument | $ 2,300 | $ 1,200 |
Subsequent Events - Narrative (
Subsequent Events - Narrative (Details) | Apr. 22, 2020shares | Apr. 08, 2020USD ($)license | Apr. 01, 2020USD ($)shares | Mar. 31, 2020USD ($) | Mar. 31, 2020USD ($) | Mar. 31, 2019USD ($) | Apr. 09, 2020USD ($) |
Subsequent Event [Line Items] | |||||||
Purchase of spectrum licenses | $ 99,000,000 | $ 185,000,000 | |||||
Auction 103 | Licensing Agreements | |||||||
Subsequent Event [Line Items] | |||||||
Purchase of spectrum licenses | $ 873,000,000 | ||||||
Subsequent Event | Auction 103 | Licensing Agreements | |||||||
Subsequent Event [Line Items] | |||||||
Purchase of spectrum licenses | $ 698,000,000 | ||||||
Number of licenses | license | 2,384 | ||||||
Sprint | Secured Term Loan Facility | |||||||
Subsequent Event [Line Items] | |||||||
Financing commitment, amount | $ 4,000,000,000 | ||||||
Sprint | Subsequent Event | |||||||
Subsequent Event [Line Items] | |||||||
Stock issued (in shares) | shares | 373,396,310 | ||||||
Sprint | Subsequent Event | Secured Bridge Loan Facility | |||||||
Subsequent Event [Line Items] | |||||||
Financing commitment, amount | $ 19,000,000,000 | $ 19,000,000,000 | |||||
Sprint | Subsequent Event | Secured Term Loan Facility | |||||||
Subsequent Event [Line Items] | |||||||
Financing commitment, amount | $ 4,000,000,000 | ||||||
Sprint | Subsequent Event | 1997 Program | Common Stock Outstanding | |||||||
Subsequent Event [Line Items] | |||||||
Number of shares registered (in shares) | shares | 25,304,224 |