Delaware
|
|
20-0836269
|
(State or other jurisdiction of incorporation or organization)
|
|
(I.R.S. Employer Identification No.)
|
Title of each class
|
|
Trading Symbol
|
|
Name of each exchange on which registered
|
Common Stock, par value $0.00001 per share
|
|
TMUS
|
|
The NASDAQ Stock Market LLC
|
Class
|
|
Shares Outstanding as of July 22, 2019
|
|
Common Stock, par value $0.00001 per share
|
|
854,457,048
|
|
|
|||
|
|||
|
|
||
|
|
||
|
|
||
|
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||
|
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||
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|||
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|
|
(in millions, except share and per share amounts)
|
June 30,
2019 |
|
December 31,
2018 |
||||
Assets
|
|
|
|
||||
Current assets
|
|
|
|
||||
Cash and cash equivalents
|
$
|
1,105
|
|
|
$
|
1,203
|
|
Accounts receivable, net of allowances of $61 and $67
|
1,817
|
|
|
1,769
|
|
||
Equipment installment plan receivables, net
|
2,446
|
|
|
2,538
|
|
||
Accounts receivable from affiliates
|
18
|
|
|
11
|
|
||
Inventory
|
998
|
|
|
1,084
|
|
||
Other current assets
|
1,730
|
|
|
1,676
|
|
||
Total current assets
|
8,114
|
|
|
8,281
|
|
||
Property and equipment, net
|
21,847
|
|
|
23,359
|
|
||
Operating lease right-of-use assets
|
10,439
|
|
|
—
|
|
||
Financing lease right-of-use assets
|
2,589
|
|
|
—
|
|
||
Goodwill
|
1,901
|
|
|
1,901
|
|
||
Spectrum licenses
|
36,430
|
|
|
35,559
|
|
||
Other intangible assets, net
|
157
|
|
|
198
|
|
||
Equipment installment plan receivables due after one year, net
|
1,604
|
|
|
1,547
|
|
||
Other assets
|
1,707
|
|
|
1,623
|
|
||
Total assets
|
$
|
84,788
|
|
|
$
|
72,468
|
|
Liabilities and Stockholders' Equity
|
|
|
|
||||
Current liabilities
|
|
|
|
||||
Accounts payable and accrued liabilities
|
$
|
7,260
|
|
|
$
|
7,741
|
|
Payables to affiliates
|
198
|
|
|
200
|
|
||
Short-term debt
|
300
|
|
|
841
|
|
||
Deferred revenue
|
620
|
|
|
698
|
|
||
Short-term operating lease liabilities
|
2,268
|
|
|
—
|
|
||
Short-term financing lease liabilities
|
963
|
|
|
—
|
|
||
Other current liabilities
|
1,564
|
|
|
787
|
|
||
Total current liabilities
|
13,173
|
|
|
10,267
|
|
||
Long-term debt
|
10,954
|
|
|
12,124
|
|
||
Long-term debt to affiliates
|
13,985
|
|
|
14,582
|
|
||
Tower obligations
|
2,247
|
|
|
2,557
|
|
||
Deferred tax liabilities
|
5,090
|
|
|
4,472
|
|
||
Operating lease liabilities
|
10,145
|
|
|
—
|
|
||
Financing lease liabilities
|
1,314
|
|
|
—
|
|
||
Deferred rent expense
|
—
|
|
|
2,781
|
|
||
Other long-term liabilities
|
913
|
|
|
967
|
|
||
Total long-term liabilities
|
44,648
|
|
|
37,483
|
|
||
Commitments and contingencies (Note 12)
|
|
|
|
|
|
||
Stockholders' equity
|
|
|
|
||||
Common Stock, par value $0.00001 per share, 1,000,000,000 shares authorized; 855,970,789 and 851,675,119 shares issued, 854,452,642 and 850,180,317 shares outstanding
|
—
|
|
|
—
|
|
||
Additional paid-in capital
|
38,242
|
|
|
38,010
|
|
||
Treasury stock, at cost, 1,518,147 and 1,494,802 shares issued
|
(8
|
)
|
|
(6
|
)
|
||
Accumulated other comprehensive loss
|
(813
|
)
|
|
(332
|
)
|
||
Accumulated deficit
|
(10,454
|
)
|
|
(12,954
|
)
|
||
Total stockholders' equity
|
26,967
|
|
|
24,718
|
|
||
Total liabilities and stockholders' equity
|
$
|
84,788
|
|
|
$
|
72,468
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
(in millions, except share and per share amounts)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Revenues
|
|
|
|
|
|
|
|
||||||||
Branded postpaid revenues
|
$
|
5,613
|
|
|
$
|
5,164
|
|
|
$
|
11,106
|
|
|
$
|
10,234
|
|
Branded prepaid revenues
|
2,379
|
|
|
2,402
|
|
|
4,765
|
|
|
4,804
|
|
||||
Wholesale revenues
|
313
|
|
|
275
|
|
|
617
|
|
|
541
|
|
||||
Roaming and other service revenues
|
121
|
|
|
90
|
|
|
215
|
|
|
158
|
|
||||
Total service revenues
|
8,426
|
|
|
7,931
|
|
|
16,703
|
|
|
15,737
|
|
||||
Equipment revenues
|
2,263
|
|
|
2,325
|
|
|
4,779
|
|
|
4,678
|
|
||||
Other revenues
|
290
|
|
|
315
|
|
|
577
|
|
|
611
|
|
||||
Total revenues
|
10,979
|
|
|
10,571
|
|
|
22,059
|
|
|
21,026
|
|
||||
Operating expenses
|
|
|
|
|
|
|
|
||||||||
Cost of services, exclusive of depreciation and amortization shown separately below
|
1,649
|
|
|
1,530
|
|
|
3,195
|
|
|
3,119
|
|
||||
Cost of equipment sales, exclusive of depreciation and amortization shown separately below
|
2,661
|
|
|
2,772
|
|
|
5,677
|
|
|
5,617
|
|
||||
Selling, general and administrative
|
3,543
|
|
|
3,185
|
|
|
6,985
|
|
|
6,349
|
|
||||
Depreciation and amortization
|
1,585
|
|
|
1,634
|
|
|
3,185
|
|
|
3,209
|
|
||||
Total operating expense
|
9,438
|
|
|
9,121
|
|
|
19,042
|
|
|
18,294
|
|
||||
Operating income
|
1,541
|
|
|
1,450
|
|
|
3,017
|
|
|
2,732
|
|
||||
Other income (expense)
|
|
|
|
|
|
|
|
||||||||
Interest expense
|
(182
|
)
|
|
(196
|
)
|
|
(361
|
)
|
|
(447
|
)
|
||||
Interest expense to affiliates
|
(101
|
)
|
|
(128
|
)
|
|
(210
|
)
|
|
(294
|
)
|
||||
Interest income
|
4
|
|
|
6
|
|
|
12
|
|
|
12
|
|
||||
Other expense, net
|
(22
|
)
|
|
(64
|
)
|
|
(15
|
)
|
|
(54
|
)
|
||||
Total other expense, net
|
(301
|
)
|
|
(382
|
)
|
|
(574
|
)
|
|
(783
|
)
|
||||
Income before income taxes
|
1,240
|
|
|
1,068
|
|
|
2,443
|
|
|
1,949
|
|
||||
Income tax expense
|
(301
|
)
|
|
(286
|
)
|
|
(596
|
)
|
|
(496
|
)
|
||||
Net income
|
$
|
939
|
|
|
$
|
782
|
|
|
$
|
1,847
|
|
|
$
|
1,453
|
|
|
|
|
|
|
|
|
|
||||||||
Net income
|
$
|
939
|
|
|
$
|
782
|
|
|
$
|
1,847
|
|
|
$
|
1,453
|
|
Other comprehensive loss, net of tax
|
|
|
|
|
|
|
|
||||||||
Unrealized gain on available-for-sale securities, net of tax effect of $0, $1, $0 and $0
|
—
|
|
|
3
|
|
|
—
|
|
|
—
|
|
||||
Unrealized loss on cash flow hedges, net of tax effect of $(102), $0, $(168), and $0
|
(292
|
)
|
|
—
|
|
|
(481
|
)
|
|
—
|
|
||||
Other comprehensive (loss) income
|
(292
|
)
|
|
3
|
|
|
(481
|
)
|
|
—
|
|
||||
Total comprehensive income
|
$
|
647
|
|
|
$
|
785
|
|
|
$
|
1,366
|
|
|
$
|
1,453
|
|
Earnings per share
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
1.10
|
|
|
$
|
0.92
|
|
|
$
|
2.16
|
|
|
$
|
1.71
|
|
Diluted
|
$
|
1.09
|
|
|
$
|
0.92
|
|
|
$
|
2.14
|
|
|
$
|
1.69
|
|
Weighted average shares outstanding
|
|
|
|
|
|
|
|
||||||||
Basic
|
854,368,443
|
|
|
847,660,488
|
|
|
852,796,369
|
|
|
851,420,686
|
|
||||
Diluted
|
860,135,593
|
|
|
852,040,670
|
|
|
860,890,870
|
|
|
858,728,832
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
(in millions)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Operating activities
|
|
|
|
|
|
|
|
||||||||
Net income
|
$
|
939
|
|
|
$
|
782
|
|
|
$
|
1,847
|
|
|
$
|
1,453
|
|
Adjustments to reconcile net income to net cash provided by operating activities
|
|
|
|
|
|
|
|
||||||||
Depreciation and amortization
|
1,585
|
|
|
1,634
|
|
|
3,185
|
|
|
3,209
|
|
||||
Stock-based compensation expense
|
130
|
|
|
112
|
|
|
240
|
|
|
209
|
|
||||
Deferred income tax expense
|
267
|
|
|
272
|
|
|
555
|
|
|
478
|
|
||||
Bad debt expense
|
71
|
|
|
75
|
|
|
144
|
|
|
129
|
|
||||
Losses from sales of receivables
|
28
|
|
|
27
|
|
|
63
|
|
|
79
|
|
||||
Deferred rent expense
|
—
|
|
|
7
|
|
|
—
|
|
|
11
|
|
||||
Losses on redemption of debt
|
19
|
|
|
90
|
|
|
19
|
|
|
122
|
|
||||
Changes in operating assets and liabilities
|
|
|
|
|
|
|
|
||||||||
Accounts receivable
|
(805
|
)
|
|
(1,136
|
)
|
|
(1,948
|
)
|
|
(2,009
|
)
|
||||
Equipment installment plan receivables
|
(150
|
)
|
|
(286
|
)
|
|
(400
|
)
|
|
(508
|
)
|
||||
Inventories
|
162
|
|
|
125
|
|
|
(103
|
)
|
|
158
|
|
||||
Operating lease right-of-use assets
|
469
|
|
|
—
|
|
|
904
|
|
|
—
|
|
||||
Other current and long-term assets
|
(83
|
)
|
|
(248
|
)
|
|
(170
|
)
|
|
(116
|
)
|
||||
Accounts payable and accrued liabilities
|
43
|
|
|
(79
|
)
|
|
56
|
|
|
(1,107
|
)
|
||||
Short and long-term operating lease liabilities
|
(521
|
)
|
|
—
|
|
|
(1,043
|
)
|
|
—
|
|
||||
Other current and long-term liabilities
|
(27
|
)
|
|
(105
|
)
|
|
94
|
|
|
(60
|
)
|
||||
Other, net
|
20
|
|
|
(9
|
)
|
|
96
|
|
|
(17
|
)
|
||||
Net cash provided by operating activities
|
2,147
|
|
|
1,261
|
|
|
3,539
|
|
|
2,031
|
|
||||
Investing activities
|
|
|
|
|
|
|
|
||||||||
Purchases of property and equipment, including capitalized interest of $125 and $102 and $243 and $145
|
(1,789
|
)
|
|
(1,629
|
)
|
|
(3,720
|
)
|
|
(2,995
|
)
|
||||
Purchases of spectrum licenses and other intangible assets, including deposits
|
(665
|
)
|
|
(28
|
)
|
|
(850
|
)
|
|
(79
|
)
|
||||
Proceeds related to beneficial interests in securitization transactions
|
839
|
|
|
1,323
|
|
|
1,996
|
|
|
2,618
|
|
||||
Acquisition of companies, net of cash acquired
|
—
|
|
|
(5
|
)
|
|
—
|
|
|
(338
|
)
|
||||
Other, net
|
—
|
|
|
33
|
|
|
(7
|
)
|
|
26
|
|
||||
Net cash used in investing activities
|
(1,615
|
)
|
|
(306
|
)
|
|
(2,581
|
)
|
|
(768
|
)
|
||||
Financing activities
|
|
|
|
|
|
|
|
||||||||
Proceeds from issuance of long-term debt
|
—
|
|
|
—
|
|
|
—
|
|
|
2,494
|
|
||||
Payments of consent fees related to long-term debt
|
—
|
|
|
(38
|
)
|
|
—
|
|
|
(38
|
)
|
||||
Proceeds from borrowing on revolving credit facility
|
880
|
|
|
2,070
|
|
|
1,765
|
|
|
4,240
|
|
||||
Repayments of revolving credit facility
|
(880
|
)
|
|
(2,195
|
)
|
|
(1,765
|
)
|
|
(3,920
|
)
|
||||
Repayments of financing lease obligations
|
(229
|
)
|
|
(155
|
)
|
|
(315
|
)
|
|
(327
|
)
|
||||
Repayments of long-term debt
|
(600
|
)
|
|
(2,350
|
)
|
|
(600
|
)
|
|
(3,349
|
)
|
||||
Repurchases of common stock
|
—
|
|
|
(405
|
)
|
|
—
|
|
|
(1,071
|
)
|
||||
Tax withholdings on share-based awards
|
(4
|
)
|
|
(10
|
)
|
|
(104
|
)
|
|
(84
|
)
|
||||
Cash payments for debt prepayment or debt extinguishment costs
|
(28
|
)
|
|
(181
|
)
|
|
(28
|
)
|
|
(212
|
)
|
||||
Other, net
|
(5
|
)
|
|
(3
|
)
|
|
(9
|
)
|
|
—
|
|
||||
Net cash used in financing activities
|
(866
|
)
|
|
(3,267
|
)
|
|
(1,056
|
)
|
|
(2,267
|
)
|
||||
Change in cash and cash equivalents
|
(334
|
)
|
|
(2,312
|
)
|
|
(98
|
)
|
|
(1,004
|
)
|
||||
Cash and cash equivalents
|
|
|
|
|
|
|
|
||||||||
Beginning of period
|
1,439
|
|
|
2,527
|
|
|
1,203
|
|
|
1,219
|
|
||||
End of period
|
$
|
1,105
|
|
|
$
|
215
|
|
|
$
|
1,105
|
|
|
$
|
215
|
|
Supplemental disclosure of cash flow information
|
|
|
|
|
|
|
|
||||||||
Interest payments, net of amounts capitalized
|
$
|
245
|
|
|
$
|
559
|
|
|
$
|
585
|
|
|
$
|
937
|
|
Operating lease payments (1)
|
703
|
|
|
—
|
|
|
1,391
|
|
|
—
|
|
||||
Income tax payments
|
40
|
|
|
10
|
|
|
72
|
|
|
11
|
|
||||
Noncash investing and financing activities
|
|
|
|
|
|
|
|
||||||||
Noncash beneficial interest obtained in exchange for securitized receivables
|
$
|
1,616
|
|
|
$
|
1,205
|
|
|
$
|
3,128
|
|
|
$
|
2,333
|
|
Changes in accounts payable for purchases of property and equipment
|
(113
|
)
|
|
(386
|
)
|
|
(446
|
)
|
|
(750
|
)
|
||||
Leased devices transferred from inventory to property and equipment
|
167
|
|
|
280
|
|
|
314
|
|
|
584
|
|
||||
Returned leased devices transferred from property and equipment to inventory
|
(67
|
)
|
|
(90
|
)
|
|
(124
|
)
|
|
(172
|
)
|
||||
Short-term debt assumed for financing of property and equipment
|
50
|
|
|
54
|
|
|
300
|
|
|
291
|
|
||||
Operating lease right-of-use assets obtained in exchange for lease obligations
|
1,400
|
|
|
—
|
|
|
2,094
|
|
|
—
|
|
||||
Financing lease right-of-use assets obtained in exchange for lease obligations
|
368
|
|
|
176
|
|
|
548
|
|
|
318
|
|
(in millions, except shares)
|
Common Stock Outstanding
|
|
Treasury Shares at Cost
|
|
Par Value and Additional Paid-in Capital
|
|
Accumulated Other Comprehensive Loss
|
|
Accumulated Deficit
|
|
Total Stockholders' Equity
|
|||||||||||
Balance as of March 31, 2019
|
854,380,118
|
|
|
$
|
(5
|
)
|
|
$
|
38,100
|
|
|
$
|
(521
|
)
|
|
$
|
(11,393
|
)
|
|
$
|
26,181
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
939
|
|
|
939
|
|
|||||
Other comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(292
|
)
|
|
—
|
|
|
(292
|
)
|
|||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
143
|
|
|
—
|
|
|
—
|
|
|
143
|
|
|||||
Exercise of stock options
|
19,261
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Stock issued for employee stock purchase plan
|
(36,710
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Issuance of vested restricted stock units
|
206,143
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Forfeiture of restricted stock awards
|
(20,769
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Shares withheld related to net share settlement of stock awards and stock options
|
(56,041
|
)
|
|
—
|
|
|
(4
|
)
|
|
—
|
|
|
—
|
|
|
(4
|
)
|
|||||
Repurchases of common stock
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Transfer RSU to NQDC plan
|
(39,360
|
)
|
|
(3
|
)
|
|
3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Balance as of June 30, 2019
|
854,452,642
|
|
|
$
|
(8
|
)
|
|
$
|
38,242
|
|
|
$
|
(813
|
)
|
|
$
|
(10,454
|
)
|
|
$
|
26,967
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Balance as of December 31, 2018
|
850,180,317
|
|
|
$
|
(6
|
)
|
|
$
|
38,010
|
|
|
$
|
(332
|
)
|
|
$
|
(12,954
|
)
|
|
$
|
24,718
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,847
|
|
|
1,847
|
|
|||||
Other comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(481
|
)
|
|
—
|
|
|
(481
|
)
|
|||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
264
|
|
|
—
|
|
|
—
|
|
|
264
|
|
|||||
Exercise of stock options
|
51,135
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|||||
Stock issued for employee stock purchase plan
|
1,135,801
|
|
|
—
|
|
|
69
|
|
|
—
|
|
|
—
|
|
|
69
|
|
|||||
Issuance of vested restricted stock units
|
4,550,115
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Forfeiture of restricted stock awards
|
(20,769
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Shares withheld related to net share settlement of stock awards and stock options
|
(1,420,662
|
)
|
|
—
|
|
|
(104
|
)
|
|
—
|
|
|
—
|
|
|
(104
|
)
|
|||||
Repurchases of common stock
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Transfer RSU from NQDC plan
|
(23,295
|
)
|
|
(2
|
)
|
|
2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Prior year retained earnings
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
653
|
|
|
653
|
|
|||||
Balance as of June 30, 2019
|
854,452,642
|
|
|
$
|
(8
|
)
|
|
$
|
38,242
|
|
|
$
|
(813
|
)
|
|
$
|
(10,454
|
)
|
|
$
|
26,967
|
|
(in millions, except shares)
|
Common Stock Outstanding
|
|
Treasury Shares at Cost
|
|
Par Value and Additional Paid-in Capital
|
|
Accumulated Other Comprehensive Income (Loss)
|
|
Accumulated Deficit
|
|
Total Stockholders' Equity
|
|||||||||||
Balance as of March 31, 2018
|
853,066,229
|
|
|
$
|
(7
|
)
|
|
$
|
38,057
|
|
|
$
|
5
|
|
|
$
|
(15,179
|
)
|
|
$
|
22,876
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
782
|
|
|
782
|
|
|||||
Other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
3
|
|
|
—
|
|
|
3
|
|
|||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
126
|
|
|
—
|
|
|
—
|
|
|
126
|
|
|||||
Exercise of stock options
|
59,106
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|||||
Stock issued for employee stock purchase plan
|
(17
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Issuance of vested restricted stock units
|
508,554
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Shares withheld related to net share settlement of stock awards and stock options
|
(167,907
|
)
|
|
—
|
|
|
(10
|
)
|
|
—
|
|
|
—
|
|
|
(10
|
)
|
|||||
Repurchases of common stock
|
(6,240,219
|
)
|
|
—
|
|
|
(388
|
)
|
|
—
|
|
|
—
|
|
|
(388
|
)
|
|||||
Transfer RSU to NQDC plan
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Prior year retained earnings
|
—
|
|
|
—
|
|
|
—
|
|
|
(8
|
)
|
|
8
|
|
|
—
|
|
|||||
Balance as of June 30, 2018
|
847,225,746
|
|
|
$
|
(7
|
)
|
|
$
|
37,786
|
|
|
$
|
—
|
|
|
$
|
(14,389
|
)
|
|
$
|
23,390
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Balance as of December 31, 2017
|
859,406,651
|
|
|
$
|
(4
|
)
|
|
$
|
38,629
|
|
|
$
|
8
|
|
|
$
|
(16,074
|
)
|
|
$
|
22,559
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,453
|
|
|
1,453
|
|
|||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
234
|
|
|
—
|
|
|
—
|
|
|
234
|
|
|||||
Exercise of stock options
|
137,541
|
|
|
—
|
|
|
3
|
|
|
—
|
|
|
—
|
|
|
3
|
|
|||||
Stock issued for employee stock purchase plan
|
1,069,495
|
|
|
—
|
|
|
55
|
|
|
—
|
|
|
—
|
|
|
55
|
|
|||||
Issuance of vested restricted stock units
|
4,455,559
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Issuance of restricted stock awards
|
354,459
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Shares withheld related to net share settlement of stock awards and stock options
|
(1,403,806
|
)
|
|
—
|
|
|
(84
|
)
|
|
—
|
|
|
—
|
|
|
(84
|
)
|
|||||
Repurchases of common stock
|
(16,738,758
|
)
|
|
—
|
|
|
(1,054
|
)
|
|
—
|
|
|
—
|
|
|
(1,054
|
)
|
|||||
Transfer RSU from NQDC plan
|
(55,395
|
)
|
|
(3
|
)
|
|
3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Prior year retained earnings
|
—
|
|
|
—
|
|
|
—
|
|
|
(8
|
)
|
|
232
|
|
|
224
|
|
|||||
Balance as of June 30, 2018
|
847,225,746
|
|
|
$
|
(7
|
)
|
|
$
|
37,786
|
|
|
$
|
—
|
|
|
$
|
(14,389
|
)
|
|
$
|
23,390
|
|
•
|
In evaluating contracts to determine if they qualify as a lease, we consider factors such as if we have obtained or transferred substantially all of the rights to the underlying asset through exclusivity, if we can or if we have transferred the ability to direct the use of the asset by making decisions about how and for what purpose the asset will be used and if the lessor has substantive substitution rights.
|
•
|
We recognized right-of-use assets and operating lease liabilities for operating leases that have not previously been recorded. The lease liability for operating leases is based on the net present value of future minimum lease payments.
|
•
|
Capital lease assets previously included within Property and equipment, net were reclassified to financing lease right-of-use assets, and capital lease liabilities previously included in Short-term debt and Long-term debt were reclassified to financing lease liabilities in our Condensed Consolidated Balance Sheet.
|
•
|
Certain line items in the Condensed Consolidated Statements of Cash Flows and the “Supplementary disclosure of cash flow information” have been renamed to align with the new terminology presented in the new lease standard; “Repayment of capital lease obligations” is now presenting as “Repayments of financing lease obligations” and “Assets acquired under capital lease obligations” is now presenting as “Financing lease right-of-use assets obtained in exchange for lease obligations.” In the “Operating Activities” section of the Condensed Consolidated Statements of Cash Flows we have added “Operating lease right-of-use assets” and “Short and long-term operating lease liabilities” which represent the change in the operating lease asset and liability, respectively. Additionally, in the “Supplemental disclosure of cash flow information” section of the Condensed Consolidated Statements of Cash Flows we have added “Operating lease payments,” and in the “Noncash investing and financing activities” section we have added “Operating lease right-of-use assets obtained in exchange for lease obligations.”
|
•
|
In determining the discount rate used to measure the right-of-use asset and lease liability, we use rates implicit in the lease, or if not readily available, we use our incremental borrowing rate. Our incremental borrowing rate is based on an estimated secured rate comprised of a risk-free LIBOR rate plus a credit spread as secured by our assets.
|
•
|
Certain of our lease agreements include rental payments based on changes in the consumer price index (“CPI”). Lease liabilities are not remeasured as a result of changes in the CPI; instead, changes in the CPI are treated as variable lease payments and are excluded from the measurement of the right-of-use asset and lease liability. These payments are recognized in the period in which the related obligation was incurred. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.
|
•
|
We elected the use of hindsight whereby we applied current lease term assumptions that are applied to new leases in determining the expected lease term period for all cell sites. Upon adoption of the new lease standard and application of hindsight, our expected lease term has shortened to reflect payments due for the initial non-cancelable lease term only. This assessment corresponds to our lease term assessment for new leases and aligns with the payments that have been disclosed as lease commitments in prior years. As a result, the average remaining lease term for cell sites has decreased from approximately nine to five years based on lease contracts in effect at transition on January 1, 2019. The aggregate impact of using the hindsight is an estimated decrease in Total operating expense of $240 million in fiscal year 2019.
|
•
|
We were also required to reassess the previously failed sale-leasebacks of certain T-Mobile-owned wireless communication tower sites and determine whether the transfer of the assets to the tower operator under the arrangement met the transfer of control criteria in the revenue standard and whether a sale should be recognized.
|
•
|
We concluded that a sale has not occurred for the 6,200 tower sites transferred to Crown Castle International Corp. (“CCI”) pursuant to a master prepaid lease arrangement; therefore, these sites will continue to be accounted for as failed sale-leasebacks.
|
•
|
We concluded that a sale should be recognized for the 900 tower sites transferred to CCI pursuant to the sale of a subsidiary and for the 500 tower sites transferred to Phoenix Tower International (“PTI”). Upon adoption on January 1, 2019, we derecognized our existing long-term financial obligation and the tower-related property and equipment associated with these 1,400 previously failed sale-leaseback tower sites and recognized a lease liability and right-of-use asset for the leaseback of the tower sites. The estimated impacts from the change in accounting conclusion are primarily a decrease in Other revenues of $44 million and a decrease in Interest expense of $34 million in fiscal year 2019.
|
•
|
Rental revenues and expenses associated with co-location tower sites are presented on a net basis under the new lease standard. These revenues and expenses were presented on a gross basis under the former lease standard.
|
|
January 1, 2019
|
||||||||||
(in millions)
|
Beginning Balance
|
|
Cumulative Effect Adjustment
|
|
Beginning Balance, As Adjusted
|
||||||
Assets
|
|
|
|
|
|
||||||
Other current assets
|
$
|
1,676
|
|
|
$
|
(78
|
)
|
|
$
|
1,598
|
|
Property and equipment, net
|
23,359
|
|
|
(2,339
|
)
|
|
21,020
|
|
|||
Operating lease right-of-use assets
|
—
|
|
|
9,251
|
|
|
9,251
|
|
|||
Financing lease right-of-use assets
|
—
|
|
|
2,271
|
|
|
2,271
|
|
|||
Other intangible assets, net
|
198
|
|
|
(12
|
)
|
|
186
|
|
|||
Other assets
|
1,623
|
|
|
(71
|
)
|
|
1,552
|
|
|||
Liabilities and Stockholders’ Equity
|
|
|
|
|
|
||||||
Accounts payable and accrued liabilities
|
7,741
|
|
|
(65
|
)
|
|
7,676
|
|
|||
Other current liabilities
|
787
|
|
|
28
|
|
|
815
|
|
|||
Short-term and long-term debt
|
12,965
|
|
|
(2,015
|
)
|
|
10,950
|
|
|||
Tower obligations
|
2,557
|
|
|
(345
|
)
|
|
2,212
|
|
|||
Deferred tax liabilities
|
4,472
|
|
|
231
|
|
|
4,703
|
|
|||
Deferred rent expense
|
2,781
|
|
|
(2,781
|
)
|
|
—
|
|
|||
Short-term and long-term operating lease liabilities
|
—
|
|
|
11,364
|
|
|
11,364
|
|
|||
Short-term and long-term financing lease liabilities
|
—
|
|
|
2,016
|
|
|
2,016
|
|
|||
Other long-term liabilities
|
967
|
|
|
(64
|
)
|
|
903
|
|
|||
Accumulated deficit
|
$
|
(12,954
|
)
|
|
$
|
653
|
|
|
$
|
(12,301
|
)
|
•
|
The aggregate impact is a decrease in Other revenues of $185 million, a decrease in Total operating expenses of $380 million, a decrease in Interest expense of $34 million and an increase to Net income of $175 million.
|
•
|
The expected impact on our Condensed Consolidated Statements of Cash Flows is a decrease in Net cash provided by operating activities of $10 million and a decrease in Net cash used in financing activities of $10 million.
|
(in millions)
|
June 30,
2019 |
|
December 31,
2018 |
||||
EIP receivables, gross
|
$
|
4,490
|
|
|
$
|
4,534
|
|
Unamortized imputed discount
|
(335
|
)
|
|
(330
|
)
|
||
EIP receivables, net of unamortized imputed discount
|
4,155
|
|
|
4,204
|
|
||
Allowance for credit losses
|
(105
|
)
|
|
(119
|
)
|
||
EIP receivables, net
|
$
|
4,050
|
|
|
$
|
4,085
|
|
Classified on the balance sheet as:
|
|
|
|
||||
Equipment installment plan receivables, net
|
$
|
2,446
|
|
|
$
|
2,538
|
|
Equipment installment plan receivables due after one year, net
|
1,604
|
|
|
1,547
|
|
||
EIP receivables, net
|
$
|
4,050
|
|
|
$
|
4,085
|
|
|
June 30, 2019
|
|
June 30, 2018
|
||||||||||||||||||||
(in millions)
|
Accounts Receivable Allowance
|
|
EIP Receivables Allowance
|
|
Total
|
Accounts Receivable Allowance
|
|
EIP Receivables Allowance
|
|
Total
|
|||||||||||||
Allowance for credit losses and imputed discount, beginning of period
|
$
|
67
|
|
|
$
|
449
|
|
|
$
|
516
|
|
|
$
|
86
|
|
|
$
|
396
|
|
|
$
|
482
|
|
Bad debt expense
|
31
|
|
|
113
|
|
|
144
|
|
|
25
|
|
|
103
|
|
|
128
|
|
||||||
Write-offs, net of recoveries
|
(37
|
)
|
|
(127
|
)
|
|
(164
|
)
|
|
(41
|
)
|
|
(119
|
)
|
|
(160
|
)
|
||||||
Change in imputed discount on short-term and long-term EIP receivables
|
N/A
|
|
|
89
|
|
|
89
|
|
|
N/A
|
|
|
102
|
|
|
102
|
|
||||||
Impact on the imputed discount from sales of EIP receivables
|
N/A
|
|
|
(84
|
)
|
|
(84
|
)
|
|
N/A
|
|
|
(98
|
)
|
|
(98
|
)
|
||||||
Allowance for credit losses and imputed discount, end of period
|
$
|
61
|
|
|
$
|
440
|
|
|
$
|
501
|
|
|
$
|
70
|
|
|
$
|
384
|
|
|
$
|
454
|
|
|
June 30, 2019
|
|
December 31, 2018
|
||||||||||||||||||||
(in millions)
|
Prime
|
|
Subprime
|
|
Total EIP Receivables, gross
|
|
Prime
|
|
Subprime
|
|
Total EIP Receivables, gross
|
||||||||||||
Current - 30 days past due
|
$
|
2,222
|
|
|
$
|
2,177
|
|
|
$
|
4,399
|
|
|
$
|
1,987
|
|
|
$
|
2,446
|
|
|
$
|
4,433
|
|
31 - 60 days past due
|
14
|
|
|
30
|
|
|
44
|
|
|
15
|
|
|
32
|
|
|
47
|
|
||||||
61 - 90 days past due
|
6
|
|
|
17
|
|
|
23
|
|
|
6
|
|
|
19
|
|
|
25
|
|
||||||
More than 90 days past due
|
7
|
|
|
17
|
|
|
24
|
|
|
7
|
|
|
22
|
|
|
29
|
|
||||||
Total receivables, gross
|
$
|
2,249
|
|
|
$
|
2,241
|
|
|
$
|
4,490
|
|
|
$
|
2,015
|
|
|
$
|
2,519
|
|
|
$
|
4,534
|
|
(in millions)
|
June 30,
2019 |
|
December 31,
2018 |
||||
Other current assets
|
$
|
351
|
|
|
$
|
339
|
|
Accounts payable and accrued liabilities
|
—
|
|
|
59
|
|
||
Other current liabilities
|
293
|
|
|
149
|
|
(in millions)
|
June 30,
2019 |
|
December 31,
2018 |
||||
Other current assets
|
$
|
340
|
|
|
$
|
321
|
|
Other assets
|
74
|
|
|
88
|
|
||
Other long-term liabilities
|
23
|
|
|
22
|
|
(in millions)
|
June 30,
2019 |
|
December 31,
2018 |
||||
Derecognized net service receivables and EIP receivables
|
$
|
2,616
|
|
|
$
|
2,577
|
|
Other current assets
|
691
|
|
|
660
|
|
||
of which, deferred purchase price
|
689
|
|
|
658
|
|
||
Other long-term assets
|
74
|
|
|
88
|
|
||
of which, deferred purchase price
|
74
|
|
|
88
|
|
||
Accounts payable and accrued liabilities
|
—
|
|
|
59
|
|
||
Other current liabilities
|
293
|
|
|
149
|
|
||
Other long-term liabilities
|
23
|
|
|
22
|
|
||
Net cash proceeds since inception
|
1,956
|
|
|
1,879
|
|
||
Of which:
|
|
|
|
||||
Change in net cash proceeds during the year-to-date period
|
77
|
|
|
(179
|
)
|
||
Net cash proceeds funded by reinvested collections
|
1,879
|
|
|
2,058
|
|
(in millions)
|
2019
|
||
Balance at December 31, 2018
|
$
|
35,559
|
|
Spectrum license acquisitions
|
857
|
|
|
Spectrum licenses transferred to held for sale
|
—
|
|
|
Costs to clear spectrum
|
14
|
|
|
Balance at June 30, 2019
|
$
|
36,430
|
|
|
Level within the Fair Value Hierarchy
|
|
June 30, 2019
|
|
December 31, 2018
|
||||||||||||
(in millions)
|
|
Carrying Amount
|
|
Fair Value
|
|
Carrying Amount
|
|
Fair Value
|
|||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
||||||||
Deferred purchase price assets
|
3
|
|
$
|
763
|
|
|
$
|
763
|
|
|
$
|
746
|
|
|
$
|
746
|
|
|
Level within the Fair Value Hierarchy
|
|
June 30, 2019
|
|
December 31, 2018
|
||||||||||||
(in millions)
|
|
Carrying Amount
|
|
Fair Value
|
|
Carrying Amount
|
|
Fair Value
|
|||||||||
Liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||
Senior Notes to third parties
|
1
|
|
$
|
10,954
|
|
|
$
|
11,485
|
|
|
$
|
10,950
|
|
|
$
|
10,945
|
|
Senior Notes to affiliates
|
2
|
|
9,985
|
|
|
10,344
|
|
|
9,984
|
|
|
9,802
|
|
||||
Incremental Term Loan Facility to affiliates
|
2
|
|
4,000
|
|
|
4,000
|
|
|
4,000
|
|
|
3,976
|
|
||||
Senior Reset Notes to affiliates
|
2
|
|
—
|
|
|
—
|
|
|
598
|
|
|
640
|
|
(in millions)
|
June 30,
2019 |
|
December 31,
2018 |
||||
Property and equipment, net
|
$
|
224
|
|
|
$
|
329
|
|
Tower obligations
|
2,247
|
|
|
2,557
|
|
•
|
Branded postpaid customers generally include customers who are qualified to pay after receiving wireless communication services utilizing phones, DIGITS, or connected devices which includes tablets, wearables and SyncUP DRIVE™;
|
•
|
Branded prepaid customers generally include customers who pay for wireless communication services in advance. Our branded prepaid customers include customers of T-Mobile and Metro by T-Mobile; and
|
•
|
Wholesale customers include Machine-to-Machine (“M2M”) and Mobile Virtual Network Operator (“MVNO”) customers that operate on our network but are managed by wholesale partners.
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
(in millions)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Branded postpaid service revenues
|
|
|
|
|
|
|
|
||||||||
Branded postpaid phone revenues
|
$
|
5,287
|
|
|
$
|
4,892
|
|
|
$
|
10,470
|
|
|
$
|
9,703
|
|
Branded postpaid other revenues
|
326
|
|
|
272
|
|
|
636
|
|
|
531
|
|
||||
Total branded postpaid service revenues
|
$
|
5,613
|
|
|
$
|
5,164
|
|
|
$
|
11,106
|
|
|
$
|
10,234
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
(in millions)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Equipment revenues from the lease of mobile communication devices
|
$
|
143
|
|
|
$
|
177
|
|
|
$
|
304
|
|
|
$
|
348
|
|
(in millions)
|
Contract Assets Included in Other Current Assets
|
|
Contract Liabilities Included in Deferred Revenue
|
||||
Balance as of December 31, 2018
|
$
|
51
|
|
|
$
|
645
|
|
Balance as of June 30, 2019
|
42
|
|
|
571
|
|
||
Change
|
$
|
(9
|
)
|
|
$
|
(74
|
)
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
(in millions)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Amounts included in the beginning of period contract liability balance
|
$
|
43
|
|
|
$
|
31
|
|
|
$
|
603
|
|
|
$
|
559
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
(in millions, except shares and per share amounts)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Net income
|
$
|
939
|
|
|
$
|
782
|
|
|
$
|
1,847
|
|
|
$
|
1,453
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted average shares outstanding - basic
|
854,368,443
|
|
|
847,660,488
|
|
|
852,796,369
|
|
|
851,420,686
|
|
||||
Effect of dilutive securities:
|
|
|
|
|
|
|
|
||||||||
Outstanding stock options and unvested stock awards
|
5,767,150
|
|
|
4,380,182
|
|
|
8,094,501
|
|
|
7,308,146
|
|
||||
Weighted average shares outstanding - diluted
|
860,135,593
|
|
|
852,040,670
|
|
|
860,890,870
|
|
|
858,728,832
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Earnings per share - basic
|
$
|
1.10
|
|
|
$
|
0.92
|
|
|
$
|
2.16
|
|
|
$
|
1.71
|
|
Earnings per share - diluted
|
$
|
1.09
|
|
|
$
|
0.92
|
|
|
$
|
2.14
|
|
|
$
|
1.69
|
|
|
|
|
|
|
|
|
|
||||||||
Potentially dilutive securities:
|
|
|
|
|
|
|
|
||||||||
Outstanding stock options and unvested stock awards
|
67,856
|
|
|
797,948
|
|
|
39,342
|
|
|
487,133
|
|
(in millions)
|
Three Months Ended
June 30, 2019
|
|
Six Months Ended
June 30, 2019
|
||||
Operating lease expense
|
$
|
634
|
|
|
$
|
1,236
|
|
Financing lease expense:
|
|
|
|
||||
Amortization of right-of-use assets
|
117
|
|
|
230
|
|
||
Interest on lease liabilities
|
20
|
|
|
40
|
|
||
Total financing lease expense
|
137
|
|
|
270
|
|
||
Variable lease expense
|
58
|
|
|
123
|
|
||
Total lease expense
|
$
|
829
|
|
|
$
|
1,629
|
|
|
June 30, 2019
|
|
Weighted Average Remaining Lease Term (Years)
|
|
|
Operating leases
|
6
|
|
Financing leases
|
3
|
|
Weighted Average Discount Rate
|
|
|
Operating leases
|
5.2
|
%
|
Financing leases
|
3.9
|
%
|
(in millions)
|
June 30,
2019 |
|
December 31,
2018 |
||||
Leased wireless devices, gross
|
$
|
988
|
|
|
$
|
1,159
|
|
Accumulated depreciation
|
(570
|
)
|
|
(622
|
)
|
||
Leased wireless devices, net
|
$
|
418
|
|
|
$
|
537
|
|
(in millions)
|
Total
|
||
Twelve Months Ending June 30,
|
|
||
2020
|
$
|
318
|
|
2021
|
47
|
|
|
Total
|
$
|
365
|
|
(in millions)
|
Total
|
||
Year Ended December 31,
|
|
||
2019
|
$
|
419
|
|
2020
|
59
|
|
|
Total
|
$
|
478
|
|
(in millions)
|
Future Minimum Payments
|
||
Year Ended December 31,
|
|
||
2019
|
$
|
909
|
|
2020
|
631
|
|
|
2021
|
389
|
|
|
2022
|
102
|
|
|
2023
|
66
|
|
|
Thereafter
|
106
|
|
|
Total
|
$
|
2,203
|
|
Included in Total
|
|
||
Interest
|
$
|
143
|
|
Maintenance
|
45
|
|
(in millions)
|
Parent
|
|
Issuer
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Consolidating and Eliminating Adjustments
|
|
Consolidated
|
||||||||||||
Assets
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Current assets
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Cash and cash equivalents
|
$
|
4
|
|
|
$
|
2
|
|
|
$
|
970
|
|
|
$
|
129
|
|
|
$
|
—
|
|
|
$
|
1,105
|
|
Accounts receivable, net
|
—
|
|
|
—
|
|
|
1,526
|
|
|
291
|
|
|
—
|
|
|
1,817
|
|
||||||
Equipment installment plan receivables, net
|
—
|
|
|
—
|
|
|
2,446
|
|
|
—
|
|
|
—
|
|
|
2,446
|
|
||||||
Accounts receivable from affiliates
|
—
|
|
|
—
|
|
|
18
|
|
|
—
|
|
|
—
|
|
|
18
|
|
||||||
Inventory
|
—
|
|
|
—
|
|
|
998
|
|
|
—
|
|
|
—
|
|
|
998
|
|
||||||
Other current assets
|
—
|
|
|
—
|
|
|
1,052
|
|
|
678
|
|
|
—
|
|
|
1,730
|
|
||||||
Total current assets
|
4
|
|
|
2
|
|
|
7,010
|
|
|
1,098
|
|
|
—
|
|
|
8,114
|
|
||||||
Property and equipment, net (1)
|
—
|
|
|
—
|
|
|
21,535
|
|
|
312
|
|
|
—
|
|
|
21,847
|
|
||||||
Operating lease right-of-use assets
|
—
|
|
|
—
|
|
|
10,436
|
|
|
3
|
|
|
—
|
|
|
10,439
|
|
||||||
Financing lease right-of-use assets
|
—
|
|
|
—
|
|
|
2,589
|
|
|
—
|
|
|
—
|
|
|
2,589
|
|
||||||
Goodwill
|
—
|
|
|
—
|
|
|
1,683
|
|
|
218
|
|
|
—
|
|
|
1,901
|
|
||||||
Spectrum licenses
|
—
|
|
|
—
|
|
|
36,430
|
|
|
—
|
|
|
—
|
|
|
36,430
|
|
||||||
Other intangible assets, net
|
—
|
|
|
—
|
|
|
85
|
|
|
72
|
|
|
—
|
|
|
157
|
|
||||||
Investments in subsidiaries, net
|
27,332
|
|
|
49,416
|
|
|
—
|
|
|
—
|
|
|
(76,748
|
)
|
|
—
|
|
||||||
Intercompany receivables and note receivables
|
—
|
|
|
4,618
|
|
|
—
|
|
|
—
|
|
|
(4,618
|
)
|
|
—
|
|
||||||
Equipment installment plan receivables due after one year, net
|
—
|
|
|
—
|
|
|
1,604
|
|
|
—
|
|
|
—
|
|
|
1,604
|
|
||||||
Other assets
|
—
|
|
|
8
|
|
|
1,637
|
|
|
226
|
|
|
(164
|
)
|
|
1,707
|
|
||||||
Total assets
|
$
|
27,336
|
|
|
$
|
54,044
|
|
|
$
|
83,009
|
|
|
$
|
1,929
|
|
|
$
|
(81,530
|
)
|
|
$
|
84,788
|
|
Liabilities and Stockholders' Equity
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Current liabilities
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Accounts payable and accrued liabilities
|
$
|
—
|
|
|
$
|
229
|
|
|
$
|
6,736
|
|
|
$
|
295
|
|
|
$
|
—
|
|
|
$
|
7,260
|
|
Payables to affiliates
|
—
|
|
|
147
|
|
|
51
|
|
|
—
|
|
|
—
|
|
|
198
|
|
||||||
Short-term debt
|
—
|
|
|
300
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
300
|
|
||||||
Deferred revenue
|
—
|
|
|
—
|
|
|
619
|
|
|
1
|
|
|
—
|
|
|
620
|
|
||||||
Short-term operating lease liabilities
|
—
|
|
|
—
|
|
|
2,265
|
|
|
3
|
|
|
—
|
|
|
2,268
|
|
||||||
Short-term financing lease liabilities
|
—
|
|
|
—
|
|
|
963
|
|
|
—
|
|
|
—
|
|
|
963
|
|
||||||
Other current liabilities
|
—
|
|
|
1,097
|
|
|
154
|
|
|
313
|
|
|
—
|
|
|
1,564
|
|
||||||
Total current liabilities
|
—
|
|
|
1,773
|
|
|
10,788
|
|
|
612
|
|
|
—
|
|
|
13,173
|
|
||||||
Long-term debt
|
—
|
|
|
10,954
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10,954
|
|
||||||
Long-term debt to affiliates
|
—
|
|
|
13,985
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
13,985
|
|
||||||
Tower obligations (1)
|
—
|
|
|
—
|
|
|
76
|
|
|
2,171
|
|
|
—
|
|
|
2,247
|
|
||||||
Deferred tax liabilities
|
—
|
|
|
—
|
|
|
5,254
|
|
|
—
|
|
|
(164
|
)
|
|
5,090
|
|
||||||
Operating lease liabilities
|
—
|
|
|
—
|
|
|
10,145
|
|
|
—
|
|
|
—
|
|
|
10,145
|
|
||||||
Financing lease liabilities
|
—
|
|
|
—
|
|
|
1,314
|
|
|
—
|
|
|
—
|
|
|
1,314
|
|
||||||
Negative carrying value of subsidiaries, net
|
—
|
|
|
—
|
|
|
815
|
|
|
—
|
|
|
(815
|
)
|
|
—
|
|
||||||
Intercompany payables and debt
|
369
|
|
|
—
|
|
|
3,872
|
|
|
377
|
|
|
(4,618
|
)
|
|
—
|
|
||||||
Other long-term liabilities
|
—
|
|
|
—
|
|
|
890
|
|
|
23
|
|
|
—
|
|
|
913
|
|
||||||
Total long-term liabilities
|
369
|
|
|
24,939
|
|
|
22,366
|
|
|
2,571
|
|
|
(5,597
|
)
|
|
44,648
|
|
||||||
Total stockholders' equity (deficit)
|
26,967
|
|
|
27,332
|
|
|
49,855
|
|
|
(1,254
|
)
|
|
(75,933
|
)
|
|
26,967
|
|
||||||
Total liabilities and stockholders' equity
|
$
|
27,336
|
|
|
$
|
54,044
|
|
|
$
|
83,009
|
|
|
$
|
1,929
|
|
|
$
|
(81,530
|
)
|
|
$
|
84,788
|
|
(1)
|
Assets and liabilities for Non-Guarantor Subsidiaries are primarily included in VIEs related to the 2012 Tower Transaction. See Note 8 – Tower Obligations for further information.
|
(in millions)
|
Parent
|
|
Issuer
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Consolidating and Eliminating Adjustments
|
|
Consolidated
|
||||||||||||
Assets
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Current assets
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Cash and cash equivalents
|
$
|
2
|
|
|
$
|
1
|
|
|
$
|
1,079
|
|
|
$
|
121
|
|
|
$
|
—
|
|
|
$
|
1,203
|
|
Accounts receivable, net
|
—
|
|
|
—
|
|
|
1,510
|
|
|
259
|
|
|
—
|
|
|
1,769
|
|
||||||
Equipment installment plan receivables, net
|
—
|
|
|
—
|
|
|
2,538
|
|
|
—
|
|
|
—
|
|
|
2,538
|
|
||||||
Accounts receivable from affiliates
|
—
|
|
|
—
|
|
|
11
|
|
|
—
|
|
|
—
|
|
|
11
|
|
||||||
Inventory
|
—
|
|
|
—
|
|
|
1,084
|
|
|
—
|
|
|
—
|
|
|
1,084
|
|
||||||
Other current assets
|
—
|
|
|
—
|
|
|
1,031
|
|
|
645
|
|
|
—
|
|
|
1,676
|
|
||||||
Total current assets
|
2
|
|
|
1
|
|
|
7,253
|
|
|
1,025
|
|
|
—
|
|
|
8,281
|
|
||||||
Property and equipment, net (1)
|
—
|
|
|
—
|
|
|
23,062
|
|
|
297
|
|
|
—
|
|
|
23,359
|
|
||||||
Goodwill
|
—
|
|
|
—
|
|
|
1,683
|
|
|
218
|
|
|
—
|
|
|
1,901
|
|
||||||
Spectrum licenses
|
—
|
|
|
—
|
|
|
35,559
|
|
|
—
|
|
|
—
|
|
|
35,559
|
|
||||||
Other intangible assets, net
|
—
|
|
|
—
|
|
|
116
|
|
|
82
|
|
|
—
|
|
|
198
|
|
||||||
Investments in subsidiaries, net
|
25,314
|
|
|
46,516
|
|
|
—
|
|
|
—
|
|
|
(71,830
|
)
|
|
—
|
|
||||||
Intercompany receivables and note receivables
|
—
|
|
|
5,174
|
|
|
—
|
|
|
—
|
|
|
(5,174
|
)
|
|
—
|
|
||||||
Equipment installment plan receivables due after one year, net
|
—
|
|
|
—
|
|
|
1,547
|
|
|
—
|
|
|
—
|
|
|
1,547
|
|
||||||
Other assets
|
—
|
|
|
7
|
|
|
1,540
|
|
|
221
|
|
|
(145
|
)
|
|
1,623
|
|
||||||
Total assets
|
$
|
25,316
|
|
|
$
|
51,698
|
|
|
$
|
70,760
|
|
|
$
|
1,843
|
|
|
$
|
(77,149
|
)
|
|
$
|
72,468
|
|
Liabilities and Stockholders' Equity
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Current liabilities
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Accounts payable and accrued liabilities
|
$
|
—
|
|
|
$
|
228
|
|
|
$
|
7,240
|
|
|
$
|
273
|
|
|
$
|
—
|
|
|
$
|
7,741
|
|
Payables to affiliates
|
—
|
|
|
157
|
|
|
43
|
|
|
—
|
|
|
—
|
|
|
200
|
|
||||||
Short-term debt
|
—
|
|
|
—
|
|
|
841
|
|
|
—
|
|
|
—
|
|
|
841
|
|
||||||
Deferred revenue
|
—
|
|
|
—
|
|
|
698
|
|
|
—
|
|
|
—
|
|
|
698
|
|
||||||
Other current liabilities
|
—
|
|
|
447
|
|
|
164
|
|
|
176
|
|
|
—
|
|
|
787
|
|
||||||
Total current liabilities
|
—
|
|
|
832
|
|
|
8,986
|
|
|
449
|
|
|
—
|
|
|
10,267
|
|
||||||
Long-term debt
|
—
|
|
|
10,950
|
|
|
1,174
|
|
|
—
|
|
|
—
|
|
|
12,124
|
|
||||||
Long-term debt to affiliates
|
—
|
|
|
14,582
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
14,582
|
|
||||||
Tower obligations (1)
|
—
|
|
|
—
|
|
|
384
|
|
|
2,173
|
|
|
—
|
|
|
2,557
|
|
||||||
Deferred tax liabilities
|
—
|
|
|
—
|
|
|
4,617
|
|
|
—
|
|
|
(145
|
)
|
|
4,472
|
|
||||||
Deferred rent expense
|
—
|
|
|
—
|
|
|
2,781
|
|
|
—
|
|
|
—
|
|
|
2,781
|
|
||||||
Negative carrying value of subsidiaries, net
|
—
|
|
|
—
|
|
|
676
|
|
|
—
|
|
|
(676
|
)
|
|
—
|
|
||||||
Intercompany payables and debt
|
598
|
|
|
—
|
|
|
4,234
|
|
|
342
|
|
|
(5,174
|
)
|
|
—
|
|
||||||
Other long-term liabilities
|
—
|
|
|
20
|
|
|
926
|
|
|
21
|
|
|
—
|
|
|
967
|
|
||||||
Total long-term liabilities
|
598
|
|
|
25,552
|
|
|
14,792
|
|
|
2,536
|
|
|
(5,995
|
)
|
|
37,483
|
|
||||||
Total stockholders' equity (deficit)
|
24,718
|
|
|
25,314
|
|
|
46,982
|
|
|
(1,142
|
)
|
|
(71,154
|
)
|
|
24,718
|
|
||||||
Total liabilities and stockholders' equity
|
$
|
25,316
|
|
|
$
|
51,698
|
|
|
$
|
70,760
|
|
|
$
|
1,843
|
|
|
$
|
(77,149
|
)
|
|
$
|
72,468
|
|
(1)
|
Assets and liabilities for Non-Guarantor Subsidiaries are primarily included in VIEs related to the 2012 Tower Transaction. See Note 8 – Tower Obligations for further information.
|
(in millions)
|
Parent
|
|
Issuer
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Consolidating and Eliminating Adjustments
|
|
Consolidated
|
||||||||||||
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Service revenues
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
7,992
|
|
|
$
|
767
|
|
|
$
|
(333
|
)
|
|
$
|
8,426
|
|
Equipment revenues
|
—
|
|
|
—
|
|
|
2,320
|
|
|
2
|
|
|
(59
|
)
|
|
2,263
|
|
||||||
Other revenues
|
—
|
|
|
3
|
|
|
276
|
|
|
51
|
|
|
(40
|
)
|
|
290
|
|
||||||
Total revenues
|
—
|
|
|
3
|
|
|
10,588
|
|
|
820
|
|
|
(432
|
)
|
|
10,979
|
|
||||||
Operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Cost of services, exclusive of depreciation and amortization shown separately below
|
—
|
|
|
—
|
|
|
1,668
|
|
|
9
|
|
|
(28
|
)
|
|
1,649
|
|
||||||
Cost of equipment sales, exclusive of depreciation and amortization shown separately below
|
—
|
|
|
—
|
|
|
2,418
|
|
|
302
|
|
|
(59
|
)
|
|
2,661
|
|
||||||
Selling, general and administrative
|
—
|
|
|
—
|
|
|
3,595
|
|
|
293
|
|
|
(345
|
)
|
|
3,543
|
|
||||||
Depreciation and amortization
|
—
|
|
|
—
|
|
|
1,564
|
|
|
21
|
|
|
—
|
|
|
1,585
|
|
||||||
Total operating expense
|
—
|
|
|
—
|
|
|
9,245
|
|
|
625
|
|
|
(432
|
)
|
|
9,438
|
|
||||||
Operating income
|
—
|
|
|
3
|
|
|
1,343
|
|
|
195
|
|
|
—
|
|
|
1,541
|
|
||||||
Other income (expense)
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Interest expense
|
—
|
|
|
(114
|
)
|
|
(21
|
)
|
|
(47
|
)
|
|
—
|
|
|
(182
|
)
|
||||||
Interest expense to affiliates
|
—
|
|
|
(102
|
)
|
|
(4
|
)
|
|
—
|
|
|
5
|
|
|
(101
|
)
|
||||||
Interest income
|
—
|
|
|
5
|
|
|
3
|
|
|
1
|
|
|
(5
|
)
|
|
4
|
|
||||||
Other expense, net
|
—
|
|
|
(19
|
)
|
|
(3
|
)
|
|
—
|
|
|
—
|
|
|
(22
|
)
|
||||||
Total other expense, net
|
—
|
|
|
(230
|
)
|
|
(25
|
)
|
|
(46
|
)
|
|
—
|
|
|
(301
|
)
|
||||||
Income (loss) before income taxes
|
—
|
|
|
(227
|
)
|
|
1,318
|
|
|
149
|
|
|
—
|
|
|
1,240
|
|
||||||
Income tax expense
|
—
|
|
|
—
|
|
|
(270
|
)
|
|
(31
|
)
|
|
—
|
|
|
(301
|
)
|
||||||
Earnings of subsidiaries
|
939
|
|
|
1,166
|
|
|
10
|
|
|
—
|
|
|
(2,115
|
)
|
|
—
|
|
||||||
Net income
|
$
|
939
|
|
|
$
|
939
|
|
|
$
|
1,058
|
|
|
$
|
118
|
|
|
$
|
(2,115
|
)
|
|
$
|
939
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net income
|
$
|
939
|
|
|
$
|
939
|
|
|
$
|
1,058
|
|
|
$
|
118
|
|
|
$
|
(2,115
|
)
|
|
$
|
939
|
|
Other comprehensive (loss) income, net of tax
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Other comprehensive (loss) income, net of tax
|
(292
|
)
|
|
(292
|
)
|
|
103
|
|
|
—
|
|
|
189
|
|
|
(292
|
)
|
||||||
Total comprehensive income
|
$
|
647
|
|
|
$
|
647
|
|
|
$
|
1,161
|
|
|
$
|
118
|
|
|
$
|
(1,926
|
)
|
|
$
|
647
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions)
|
Parent
|
|
Issuer
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Consolidating and Eliminating Adjustments
|
|
Consolidated
|
||||||||||||
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Service revenues
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
7,609
|
|
|
$
|
551
|
|
|
$
|
(229
|
)
|
|
$
|
7,931
|
|
Equipment revenues
|
—
|
|
|
—
|
|
|
2,370
|
|
|
1
|
|
|
(46
|
)
|
|
2,325
|
|
||||||
Other revenues
|
—
|
|
|
2
|
|
|
267
|
|
|
55
|
|
|
(9
|
)
|
|
315
|
|
||||||
Total revenues
|
—
|
|
|
2
|
|
|
10,246
|
|
|
607
|
|
|
(284
|
)
|
|
10,571
|
|
||||||
Operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Cost of services, exclusive of depreciation and amortization shown separately below
|
—
|
|
|
—
|
|
|
1,522
|
|
|
8
|
|
|
—
|
|
|
1,530
|
|
||||||
Cost of equipment sales, exclusive of depreciation and amortization shown separately below
|
—
|
|
|
—
|
|
|
2,556
|
|
|
262
|
|
|
(46
|
)
|
|
2,772
|
|
||||||
Selling, general and administrative
|
—
|
|
|
6
|
|
|
3,201
|
|
|
216
|
|
|
(238
|
)
|
|
3,185
|
|
||||||
Depreciation and amortization
|
—
|
|
|
—
|
|
|
1,611
|
|
|
23
|
|
|
—
|
|
|
1,634
|
|
||||||
Total operating expenses
|
—
|
|
|
6
|
|
|
8,890
|
|
|
509
|
|
|
(284
|
)
|
|
9,121
|
|
||||||
Operating income (loss)
|
—
|
|
|
(4
|
)
|
|
1,356
|
|
|
98
|
|
|
—
|
|
|
1,450
|
|
||||||
Other income (expense)
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Interest expense
|
—
|
|
|
(120
|
)
|
|
(28
|
)
|
|
(48
|
)
|
|
—
|
|
|
(196
|
)
|
||||||
Interest expense to affiliates
|
—
|
|
|
(129
|
)
|
|
(4
|
)
|
|
—
|
|
|
5
|
|
|
(128
|
)
|
||||||
Interest income
|
—
|
|
|
6
|
|
|
4
|
|
|
1
|
|
|
(5
|
)
|
|
6
|
|
||||||
Other expense, net
|
—
|
|
|
(59
|
)
|
|
(5
|
)
|
|
—
|
|
|
—
|
|
|
(64
|
)
|
||||||
Total other expense, net
|
—
|
|
|
(302
|
)
|
|
(33
|
)
|
|
(47
|
)
|
|
—
|
|
|
(382
|
)
|
||||||
Income (loss) before income taxes
|
—
|
|
|
(306
|
)
|
|
1,323
|
|
|
51
|
|
|
—
|
|
|
1,068
|
|
||||||
Income tax expense
|
—
|
|
|
—
|
|
|
(277
|
)
|
|
(9
|
)
|
|
—
|
|
|
(286
|
)
|
||||||
Earnings of subsidiaries
|
782
|
|
|
1,088
|
|
|
23
|
|
|
—
|
|
|
(1,893
|
)
|
|
—
|
|
||||||
Net income
|
$
|
782
|
|
|
$
|
782
|
|
|
$
|
1,069
|
|
|
$
|
42
|
|
|
$
|
(1,893
|
)
|
|
$
|
782
|
|
Other comprehensive income (loss), net of tax
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Other comprehensive income, net of tax
|
3
|
|
|
3
|
|
|
3
|
|
|
—
|
|
|
(6
|
)
|
|
3
|
|
||||||
Total comprehensive income
|
$
|
785
|
|
|
$
|
785
|
|
|
$
|
1,072
|
|
|
$
|
42
|
|
|
$
|
(1,899
|
)
|
|
$
|
785
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions)
|
Parent
|
|
Issuer
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Consolidating and Eliminating Adjustments
|
|
Consolidated
|
||||||||||||
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Service revenues
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
15,851
|
|
|
$
|
1,499
|
|
|
$
|
(647
|
)
|
|
$
|
16,703
|
|
Equipment revenues
|
—
|
|
|
—
|
|
|
4,890
|
|
|
2
|
|
|
(113
|
)
|
|
4,779
|
|
||||||
Other revenues
|
—
|
|
|
9
|
|
|
549
|
|
|
101
|
|
|
(82
|
)
|
|
577
|
|
||||||
Total revenues
|
—
|
|
|
9
|
|
|
21,290
|
|
|
1,602
|
|
|
(842
|
)
|
|
22,059
|
|
||||||
Operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Cost of services, exclusive of depreciation and amortization shown separately below
|
—
|
|
|
—
|
|
|
3,236
|
|
|
15
|
|
|
(56
|
)
|
|
3,195
|
|
||||||
Cost of equipment sales, exclusive of depreciation and amortization shown separately below
|
—
|
|
|
—
|
|
|
5,216
|
|
|
574
|
|
|
(113
|
)
|
|
5,677
|
|
||||||
Selling, general and administrative
|
—
|
|
|
1
|
|
|
7,089
|
|
|
568
|
|
|
(673
|
)
|
|
6,985
|
|
||||||
Depreciation and amortization
|
—
|
|
|
—
|
|
|
3,142
|
|
|
43
|
|
|
—
|
|
|
3,185
|
|
||||||
Total operating expense
|
—
|
|
|
1
|
|
|
18,683
|
|
|
1,200
|
|
|
(842
|
)
|
|
19,042
|
|
||||||
Operating income
|
—
|
|
|
8
|
|
|
2,607
|
|
|
402
|
|
|
—
|
|
|
3,017
|
|
||||||
Other income (expense)
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Interest expense
|
—
|
|
|
(226
|
)
|
|
(41
|
)
|
|
(94
|
)
|
|
—
|
|
|
(361
|
)
|
||||||
Interest expense to affiliates
|
—
|
|
|
(211
|
)
|
|
(9
|
)
|
|
—
|
|
|
10
|
|
|
(210
|
)
|
||||||
Interest income
|
—
|
|
|
10
|
|
|
10
|
|
|
2
|
|
|
(10
|
)
|
|
12
|
|
||||||
Other expense, net
|
—
|
|
|
(11
|
)
|
|
(4
|
)
|
|
—
|
|
|
—
|
|
|
(15
|
)
|
||||||
Total other expense, net
|
—
|
|
|
(438
|
)
|
|
(44
|
)
|
|
(92
|
)
|
|
—
|
|
|
(574
|
)
|
||||||
Income (loss) before income taxes
|
—
|
|
|
(430
|
)
|
|
2,563
|
|
|
310
|
|
|
—
|
|
|
2,443
|
|
||||||
Income tax expense
|
—
|
|
|
—
|
|
|
(531
|
)
|
|
(65
|
)
|
|
—
|
|
|
(596
|
)
|
||||||
Earnings of subsidiaries
|
1,847
|
|
|
2,277
|
|
|
17
|
|
|
—
|
|
|
(4,141
|
)
|
|
—
|
|
||||||
Net income
|
$
|
1,847
|
|
|
$
|
1,847
|
|
|
$
|
2,049
|
|
|
$
|
245
|
|
|
$
|
(4,141
|
)
|
|
$
|
1,847
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net income
|
$
|
1,847
|
|
|
$
|
1,847
|
|
|
$
|
2,049
|
|
|
$
|
245
|
|
|
$
|
(4,141
|
)
|
|
$
|
1,847
|
|
Other comprehensive (loss) income, net of tax
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Other comprehensive (loss) income, net of tax
|
(481
|
)
|
|
(481
|
)
|
|
168
|
|
|
—
|
|
|
313
|
|
|
(481
|
)
|
||||||
Total comprehensive income
|
$
|
1,366
|
|
|
$
|
1,366
|
|
|
$
|
2,217
|
|
|
$
|
245
|
|
|
$
|
(3,828
|
)
|
|
$
|
1,366
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions)
|
Parent
|
|
Issuer
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Consolidating and Eliminating Adjustments
|
|
Consolidated
|
||||||||||||
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Service revenues
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
15,096
|
|
|
$
|
1,091
|
|
|
$
|
(450
|
)
|
|
$
|
15,737
|
|
Equipment revenues
|
—
|
|
|
—
|
|
|
4,777
|
|
|
1
|
|
|
(100
|
)
|
|
4,678
|
|
||||||
Other revenues
|
—
|
|
|
3
|
|
|
516
|
|
|
110
|
|
|
(18
|
)
|
|
611
|
|
||||||
Total revenues
|
—
|
|
|
3
|
|
|
20,389
|
|
|
1,202
|
|
|
(568
|
)
|
|
21,026
|
|
||||||
Operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Cost of services, exclusive of depreciation and amortization shown separately below
|
—
|
|
|
—
|
|
|
3,102
|
|
|
17
|
|
|
—
|
|
|
3,119
|
|
||||||
Cost of equipment sales, exclusive of depreciation and amortization shown separately below
|
—
|
|
|
—
|
|
|
5,220
|
|
|
498
|
|
|
(101
|
)
|
|
5,617
|
|
||||||
Selling, general and administrative
|
—
|
|
|
6
|
|
|
6,358
|
|
|
452
|
|
|
(467
|
)
|
|
6,349
|
|
||||||
Depreciation and amortization
|
—
|
|
|
—
|
|
|
3,165
|
|
|
44
|
|
|
—
|
|
|
3,209
|
|
||||||
Total operating expenses
|
—
|
|
|
6
|
|
|
17,845
|
|
|
1,011
|
|
|
(568
|
)
|
|
18,294
|
|
||||||
Operating income (loss)
|
—
|
|
|
(3
|
)
|
|
2,544
|
|
|
191
|
|
|
—
|
|
|
2,732
|
|
||||||
Other income (expense)
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Interest expense
|
—
|
|
|
(294
|
)
|
|
(57
|
)
|
|
(96
|
)
|
|
—
|
|
|
(447
|
)
|
||||||
Interest expense to affiliates
|
—
|
|
|
(295
|
)
|
|
(9
|
)
|
|
—
|
|
|
10
|
|
|
(294
|
)
|
||||||
Interest income
|
—
|
|
|
12
|
|
|
9
|
|
|
1
|
|
|
(10
|
)
|
|
12
|
|
||||||
Other (expense) income, net
|
—
|
|
|
(91
|
)
|
|
37
|
|
|
—
|
|
|
—
|
|
|
(54
|
)
|
||||||
Total other expense, net
|
—
|
|
|
(668
|
)
|
|
(20
|
)
|
|
(95
|
)
|
|
—
|
|
|
(783
|
)
|
||||||
Income (loss) before income taxes
|
—
|
|
|
(671
|
)
|
|
2,524
|
|
|
96
|
|
|
—
|
|
|
1,949
|
|
||||||
Income tax expense
|
—
|
|
|
—
|
|
|
(476
|
)
|
|
(20
|
)
|
|
—
|
|
|
(496
|
)
|
||||||
Earnings of subsidiaries
|
1,453
|
|
|
2,124
|
|
|
17
|
|
|
—
|
|
|
(3,594
|
)
|
|
—
|
|
||||||
Net income
|
$
|
1,453
|
|
|
$
|
1,453
|
|
|
$
|
2,065
|
|
|
$
|
76
|
|
|
$
|
(3,594
|
)
|
|
$
|
1,453
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net income
|
$
|
1,453
|
|
|
$
|
1,453
|
|
|
$
|
2,065
|
|
|
$
|
76
|
|
|
$
|
(3,594
|
)
|
|
$
|
1,453
|
|
Other comprehensive loss, net of tax
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Other comprehensive loss, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Total comprehensive income
|
$
|
1,453
|
|
|
$
|
1,453
|
|
|
$
|
2,065
|
|
|
$
|
76
|
|
|
$
|
(3,594
|
)
|
|
$
|
1,453
|
|
(in millions)
|
Parent
|
|
Issuer
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Consolidating and Eliminating Adjustments
|
|
Consolidated
|
||||||||||||
Operating activities
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net cash (used in) provided by operating activities
|
$
|
—
|
|
|
$
|
(124
|
)
|
|
$
|
3,112
|
|
|
$
|
(686
|
)
|
|
$
|
(155
|
)
|
|
$
|
2,147
|
|
Investing activities
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Purchases of property and equipment
|
—
|
|
|
—
|
|
|
(1,740
|
)
|
|
(49
|
)
|
|
—
|
|
|
(1,789
|
)
|
||||||
Purchases of spectrum licenses and other intangible assets, including deposits
|
—
|
|
|
—
|
|
|
(665
|
)
|
|
—
|
|
|
—
|
|
|
(665
|
)
|
||||||
Proceeds related to beneficial interests in securitization transactions
|
—
|
|
|
—
|
|
|
8
|
|
|
831
|
|
|
—
|
|
|
839
|
|
||||||
Net cash (used in) provided by investing activities
|
—
|
|
|
—
|
|
|
(2,397
|
)
|
|
782
|
|
|
—
|
|
|
(1,615
|
)
|
||||||
Financing activities
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Proceeds from borrowing on revolving credit facility, net
|
—
|
|
|
880
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
880
|
|
||||||
Repayments of revolving credit facility
|
—
|
|
|
—
|
|
|
(880
|
)
|
|
—
|
|
|
—
|
|
|
(880
|
)
|
||||||
Repayments of financing lease obligations
|
—
|
|
|
—
|
|
|
(229
|
)
|
|
—
|
|
|
—
|
|
|
(229
|
)
|
||||||
Repayments of long-term debt
|
—
|
|
|
—
|
|
|
(600
|
)
|
|
—
|
|
|
—
|
|
|
(600
|
)
|
||||||
Intercompany advances, net
|
—
|
|
|
(756
|
)
|
|
688
|
|
|
68
|
|
|
—
|
|
|
—
|
|
||||||
Tax withholdings on share-based awards
|
—
|
|
|
—
|
|
|
(4
|
)
|
|
—
|
|
|
—
|
|
|
(4
|
)
|
||||||
Cash payments for debt prepayment or debt extinguishment costs
|
—
|
|
|
—
|
|
|
(28
|
)
|
|
—
|
|
|
—
|
|
|
(28
|
)
|
||||||
Intercompany dividend paid
|
—
|
|
|
—
|
|
|
—
|
|
|
(155
|
)
|
|
155
|
|
|
—
|
|
||||||
Other, net
|
1
|
|
|
—
|
|
|
(6
|
)
|
|
—
|
|
|
—
|
|
|
(5
|
)
|
||||||
Net cash provided (used in) by financing activities
|
1
|
|
|
124
|
|
|
(1,059
|
)
|
|
(87
|
)
|
|
155
|
|
|
(866
|
)
|
||||||
Change in cash and cash equivalents
|
1
|
|
|
—
|
|
|
(344
|
)
|
|
9
|
|
|
—
|
|
|
(334
|
)
|
||||||
Cash and cash equivalents
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Beginning of period
|
3
|
|
|
2
|
|
|
1,314
|
|
|
120
|
|
|
—
|
|
|
1,439
|
|
||||||
End of period
|
$
|
4
|
|
|
$
|
2
|
|
|
$
|
970
|
|
|
$
|
129
|
|
|
$
|
—
|
|
|
$
|
1,105
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions)
|
Parent
|
|
Issuer
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Consolidating and Eliminating Adjustments
|
|
Consolidated
|
||||||||||||
Operating activities
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net cash (used in) provided by operating activities
|
$
|
(1
|
)
|
|
$
|
(258
|
)
|
|
$
|
2,932
|
|
|
$
|
(1,282
|
)
|
|
$
|
(130
|
)
|
|
$
|
1,261
|
|
Investing activities
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Purchases of property and equipment
|
—
|
|
|
—
|
|
|
(1,624
|
)
|
|
(5
|
)
|
|
—
|
|
|
(1,629
|
)
|
||||||
Purchases of spectrum licenses and other intangible assets, including deposits
|
—
|
|
|
—
|
|
|
(28
|
)
|
|
—
|
|
|
—
|
|
|
(28
|
)
|
||||||
Proceeds related to beneficial interests in securitization transactions
|
—
|
|
|
—
|
|
|
12
|
|
|
1,311
|
|
|
—
|
|
|
1,323
|
|
||||||
Acquisition of companies, net of cash acquired
|
—
|
|
|
—
|
|
|
(5
|
)
|
|
—
|
|
|
—
|
|
|
(5
|
)
|
||||||
Equity investment in subsidiary
|
—
|
|
|
—
|
|
|
(26
|
)
|
|
—
|
|
|
26
|
|
|
—
|
|
||||||
Other, net
|
—
|
|
|
—
|
|
|
33
|
|
|
—
|
|
|
—
|
|
|
33
|
|
||||||
Net cash (used in) provided by investing activities
|
—
|
|
|
—
|
|
|
(1,638
|
)
|
|
1,306
|
|
|
26
|
|
|
(306
|
)
|
||||||
Financing activities
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Payments of consent fees related to long-term debt
|
—
|
|
|
—
|
|
|
(38
|
)
|
|
—
|
|
|
—
|
|
|
(38
|
)
|
||||||
Proceeds from borrowing on revolving credit facility, net
|
—
|
|
|
2,070
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,070
|
|
||||||
Repayments of revolving credit facility
|
—
|
|
|
—
|
|
|
(2,195
|
)
|
|
—
|
|
|
—
|
|
|
(2,195
|
)
|
||||||
Repayments of financing lease obligations
|
—
|
|
|
—
|
|
|
(154
|
)
|
|
(1
|
)
|
|
—
|
|
|
(155
|
)
|
||||||
Repayments of long-term debt
|
—
|
|
|
—
|
|
|
(2,350
|
)
|
|
—
|
|
|
—
|
|
|
(2,350
|
)
|
||||||
Repurchases of common stock
|
(405
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(405
|
)
|
||||||
Intercompany advances, net
|
405
|
|
|
(1,810
|
)
|
|
1,406
|
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
||||||
Equity investment from parent
|
—
|
|
|
—
|
|
|
—
|
|
|
26
|
|
|
(26
|
)
|
|
—
|
|
||||||
Tax withholdings on share-based awards
|
—
|
|
|
—
|
|
|
(10
|
)
|
|
—
|
|
|
—
|
|
|
(10
|
)
|
||||||
Cash payments for debt prepayment or debt extinguishment costs
|
—
|
|
|
—
|
|
|
(181
|
)
|
|
—
|
|
|
—
|
|
|
(181
|
)
|
||||||
Intercompany dividend paid
|
—
|
|
|
—
|
|
|
—
|
|
|
(130
|
)
|
|
130
|
|
|
—
|
|
||||||
Other, net
|
1
|
|
|
—
|
|
|
(4
|
)
|
|
—
|
|
|
—
|
|
|
(3
|
)
|
||||||
Net cash provided (used in) by financing activities
|
1
|
|
|
260
|
|
|
(3,526
|
)
|
|
(106
|
)
|
|
104
|
|
|
(3,267
|
)
|
||||||
Change in cash and cash equivalents
|
—
|
|
|
2
|
|
|
(2,232
|
)
|
|
(82
|
)
|
|
—
|
|
|
(2,312
|
)
|
||||||
Cash and cash equivalents
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Beginning of period
|
1
|
|
|
1
|
|
|
2,395
|
|
|
130
|
|
|
—
|
|
|
2,527
|
|
||||||
End of period
|
$
|
1
|
|
|
$
|
3
|
|
|
$
|
163
|
|
|
$
|
48
|
|
|
$
|
—
|
|
|
$
|
215
|
|
(in millions)
|
Parent
|
|
Issuer
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Consolidating and Eliminating Adjustments
|
|
Consolidated
|
||||||||||||
Operating activities
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net cash (used in) provided by operating activities
|
$
|
—
|
|
|
$
|
(372
|
)
|
|
$
|
5,909
|
|
|
$
|
(1,703
|
)
|
|
$
|
(295
|
)
|
|
$
|
3,539
|
|
Investing activities
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Purchases of property and equipment
|
—
|
|
|
—
|
|
|
(3,666
|
)
|
|
(54
|
)
|
|
—
|
|
|
(3,720
|
)
|
||||||
Purchases of spectrum licenses and other intangible assets, including deposits
|
—
|
|
|
—
|
|
|
(850
|
)
|
|
—
|
|
|
—
|
|
|
(850
|
)
|
||||||
Proceeds related to beneficial interests in securitization transactions
|
—
|
|
|
—
|
|
|
17
|
|
|
1,979
|
|
|
—
|
|
|
1,996
|
|
||||||
Other, net
|
—
|
|
|
—
|
|
|
(7
|
)
|
|
—
|
|
|
—
|
|
|
(7
|
)
|
||||||
Net cash (used in) provided by investing activities
|
—
|
|
|
—
|
|
|
(4,506
|
)
|
|
1,925
|
|
|
—
|
|
|
(2,581
|
)
|
||||||
Financing activities
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Proceeds from borrowing on revolving credit facility, net
|
—
|
|
|
1,765
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,765
|
|
||||||
Repayments of revolving credit facility
|
—
|
|
|
—
|
|
|
(1,765
|
)
|
|
—
|
|
|
—
|
|
|
(1,765
|
)
|
||||||
Repayments of financing lease obligations
|
—
|
|
|
—
|
|
|
(314
|
)
|
|
(1
|
)
|
|
—
|
|
|
(315
|
)
|
||||||
Repayments of long-term debt
|
—
|
|
|
—
|
|
|
(600
|
)
|
|
—
|
|
|
—
|
|
|
(600
|
)
|
||||||
Intercompany advances, net
|
—
|
|
|
(1,392
|
)
|
|
1,310
|
|
|
82
|
|
|
—
|
|
|
—
|
|
||||||
Tax withholdings on share-based awards
|
—
|
|
|
—
|
|
|
(104
|
)
|
|
—
|
|
|
—
|
|
|
(104
|
)
|
||||||
Cash payments for debt prepayment or debt extinguishment costs
|
—
|
|
|
—
|
|
|
(28
|
)
|
|
—
|
|
|
—
|
|
|
(28
|
)
|
||||||
Intercompany dividend paid
|
—
|
|
|
—
|
|
|
—
|
|
|
(295
|
)
|
|
295
|
|
|
—
|
|
||||||
Other, net
|
2
|
|
|
—
|
|
|
(11
|
)
|
|
—
|
|
|
—
|
|
|
(9
|
)
|
||||||
Net cash provided (used in) by financing activities
|
2
|
|
|
373
|
|
|
(1,512
|
)
|
|
(214
|
)
|
|
295
|
|
|
(1,056
|
)
|
||||||
Change in cash and cash equivalents
|
2
|
|
|
1
|
|
|
(109
|
)
|
|
8
|
|
|
—
|
|
|
(98
|
)
|
||||||
Cash and cash equivalents
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Beginning of period
|
2
|
|
|
1
|
|
|
1,079
|
|
|
121
|
|
|
—
|
|
|
1,203
|
|
||||||
End of period
|
$
|
4
|
|
|
$
|
2
|
|
|
$
|
970
|
|
|
$
|
129
|
|
|
$
|
—
|
|
|
$
|
1,105
|
|
(in millions)
|
Parent
|
|
Issuer
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Consolidating and Eliminating Adjustments
|
|
Consolidated
|
||||||||||||
Operating activities
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net cash (used in) provided by operating activities
|
$
|
—
|
|
|
$
|
(662
|
)
|
|
$
|
5,306
|
|
|
$
|
(2,483
|
)
|
|
$
|
(130
|
)
|
|
$
|
2,031
|
|
Investing activities
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Purchases of property and equipment
|
—
|
|
|
—
|
|
|
(2,990
|
)
|
|
(5
|
)
|
|
—
|
|
|
(2,995
|
)
|
||||||
Purchases of spectrum licenses and other intangible assets, including deposits
|
—
|
|
|
—
|
|
|
(79
|
)
|
|
—
|
|
|
—
|
|
|
(79
|
)
|
||||||
Proceeds related to beneficial interests in securitization transactions
|
—
|
|
|
—
|
|
|
25
|
|
|
2,593
|
|
|
—
|
|
|
2,618
|
|
||||||
Acquisition of companies, net of cash
|
—
|
|
|
—
|
|
|
(338
|
)
|
|
—
|
|
|
—
|
|
|
(338
|
)
|
||||||
Equity investment in subsidiary
|
—
|
|
|
—
|
|
|
(26
|
)
|
|
—
|
|
|
26
|
|
|
—
|
|
||||||
Other, net
|
—
|
|
|
—
|
|
|
26
|
|
|
—
|
|
|
—
|
|
|
26
|
|
||||||
Net cash (used in) provided by investing activities
|
—
|
|
|
—
|
|
|
(3,382
|
)
|
|
2,588
|
|
|
26
|
|
|
(768
|
)
|
||||||
Financing activities
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Proceeds from issuance of long-term debt
|
—
|
|
|
2,494
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,494
|
|
||||||
Payments of consent fees related to long-term debt
|
—
|
|
|
—
|
|
|
(38
|
)
|
|
—
|
|
|
—
|
|
|
(38
|
)
|
||||||
Proceeds from borrowing on revolving credit facility, net
|
—
|
|
|
4,240
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,240
|
|
||||||
Repayments of revolving credit facility
|
—
|
|
|
—
|
|
|
(3,920
|
)
|
|
—
|
|
|
—
|
|
|
(3,920
|
)
|
||||||
Repayments of financing lease obligations
|
—
|
|
|
—
|
|
|
(326
|
)
|
|
(1
|
)
|
|
—
|
|
|
(327
|
)
|
||||||
Repayments of long-term debt
|
—
|
|
|
—
|
|
|
(3,349
|
)
|
|
—
|
|
|
—
|
|
|
(3,349
|
)
|
||||||
Repurchases of common stock
|
(1,071
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,071
|
)
|
||||||
Intercompany advances, net
|
995
|
|
|
(6,070
|
)
|
|
5,085
|
|
|
(10
|
)
|
|
—
|
|
|
—
|
|
||||||
Equity investment from parent
|
—
|
|
|
—
|
|
|
—
|
|
|
26
|
|
|
(26
|
)
|
|
—
|
|
||||||
Tax withholdings on share-based awards
|
—
|
|
|
—
|
|
|
(84
|
)
|
|
—
|
|
|
—
|
|
|
(84
|
)
|
||||||
Cash payments for debt prepayment or debt extinguishment costs
|
—
|
|
|
—
|
|
|
(212
|
)
|
|
—
|
|
|
—
|
|
|
(212
|
)
|
||||||
Intercompany dividend paid
|
—
|
|
|
—
|
|
|
—
|
|
|
(130
|
)
|
|
130
|
|
|
—
|
|
||||||
Other, net
|
3
|
|
|
—
|
|
|
(3
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Net cash (used in) provided by financing activities
|
(73
|
)
|
|
664
|
|
|
(2,847
|
)
|
|
(115
|
)
|
|
104
|
|
|
(2,267
|
)
|
||||||
Change in cash and cash equivalents
|
(73
|
)
|
|
2
|
|
|
(923
|
)
|
|
(10
|
)
|
|
—
|
|
|
(1,004
|
)
|
||||||
Cash and cash equivalents
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Beginning of period
|
74
|
|
|
1
|
|
|
1,086
|
|
|
58
|
|
|
—
|
|
|
1,219
|
|
||||||
End of period
|
$
|
1
|
|
|
$
|
3
|
|
|
$
|
163
|
|
|
$
|
48
|
|
|
$
|
—
|
|
|
$
|
215
|
|
|
|
|
|
|
|
|
|
|
|
|
|
•
|
the failure to obtain, or delays in obtaining, required regulatory approvals for the merger (the “Merger”) with Sprint Corporation (“Sprint”), pursuant to the Business Combination Agreement with Sprint and other parties therein (as amended, the “Business Combination Agreement”) and the other transactions contemplated by the Business Combination Agreement (collectively, the “Transactions”), risks associated with the actions and conditions we have agreed to in connection with such approvals, and the risk that such approvals may result in the imposition of additional conditions that, if accepted by the parties, could adversely affect the combined company or the expected benefits of the Transactions, or the failure to satisfy any of the other conditions to the Transactions on a timely basis or at all;
|
•
|
the occurrence of events that may give rise to a right of one or both of the parties to terminate the Business Combination Agreement;
|
•
|
adverse effects on the market price of our common stock or on our operating results because of a failure to complete the Merger in the anticipated timeframe, on the anticipated terms or at all;
|
•
|
inability to obtain the financing contemplated to be obtained in connection with the Transactions on the expected terms or timing or at all;
|
•
|
the ability of us, Sprint and the combined company to make payments on debt or to repay existing or future indebtedness when due or to comply with the covenants contained therein;
|
•
|
adverse changes in the ratings of our or Sprint’s debt securities or adverse conditions in the credit markets;
|
•
|
negative effects of the announcement, pendency or consummation of the Transactions on the market price of our common stock and on our or Sprint’s operating results, including as a result of changes in key customer, supplier, employee or other business relationships;
|
•
|
significant costs related to the Transactions, including financing costs and unknown liabilities of Sprint or that may arise;
|
•
|
failure to realize the expected benefits and synergies of the Transactions in the expected timeframes, in part or at all;
|
•
|
costs or difficulties related to the integration of Sprint’s network and operations into our network and operations, including intellectual property and communications systems, administrative and information technology infrastructure and accounting, financial reporting and internal control systems, and the alignment of the two companies’ guidelines and practices;
|
•
|
costs or difficulties related to the completion of Divestiture Transaction and the satisfaction of the Government Commitments (as defined below);
|
•
|
the risk of litigation or regulatory actions related to the Transactions, including the antitrust litigation related to the Transactions brought by the attorneys general of thirteen states and the District of Columbia;
|
•
|
the inability of us, Sprint or the combined company to retain and hire key personnel;
|
•
|
the risk that certain contractual restrictions contained in the Business Combination Agreement during the pendency of the Transactions could adversely affect our or Sprint’s ability to pursue business opportunities or strategic transactions;
|
•
|
adverse economic, political or market conditions in the U.S. and international markets;
|
•
|
competition, industry consolidation, and changes in the market for wireless services, which could negatively affect our ability to attract and retain customers;
|
•
|
the effects of any future merger, investment, or acquisition involving us, as well as the effects of mergers, investments, or acquisitions in the technology, media and telecommunications industry;
|
•
|
challenges in implementing our business strategies or funding our operations, including payment for additional spectrum or network upgrades;
|
•
|
the possibility that we may be unable to renew our spectrum licenses on attractive terms or acquire new spectrum licenses at reasonable costs and terms;
|
•
|
difficulties in managing growth in wireless data services, including network quality;
|
•
|
material changes in available technology and the effects of such changes, including product substitutions and deployment costs and performance;
|
•
|
the timing, scope and financial impact of our deployment of advanced network and business technologies;
|
•
|
the impact on our networks and business from major technology equipment failures;
|
•
|
inability to implement and maintain effective cyber security measures over critical business systems;
|
•
|
breaches of our and/or our third-party vendors’ networks, information technology (“IT”) and data security, resulting in unauthorized access to customer confidential information;
|
•
|
natural disasters, terrorist attacks or similar incidents;
|
•
|
unfavorable outcomes of existing or future litigation;
|
•
|
any changes in the regulatory environments in which we operate, including any increase in restrictions on the ability to operate our networks and changes in data privacy laws;
|
•
|
any disruption or failure of our third parties’ or key suppliers’ provisioning of products or services;
|
•
|
material adverse changes in labor matters, including labor campaigns, negotiations or additional organizing activity, and any resulting financial, operational and/or reputational impact;
|
•
|
changes in accounting assumptions that regulatory agencies, including the Securities and Exchange Commission (“SEC”), may require, which could result in an impact on earnings;
|
•
|
changes in tax laws, regulations and existing standards and the resolution of disputes with any taxing jurisdictions;
|
•
|
the possibility that the reset process under our trademark license results in changes to the royalty rates for our trademarks;
|
•
|
the possibility that we may be unable to adequately protect our intellectual property rights or be accused of infringing the intellectual property rights of others;
|
•
|
our business, investor confidence in our financial results and stock price may be adversely affected if our internal controls are not effective;
|
•
|
the occurrence of high fraud rates related to device financing, credit card, dealers, or subscriptions; and
|
•
|
interests of a majority stockholder may differ from the interests of other stockholders.
|
•
|
A narrative explanation from the perspective of management of our financial condition, results of operations, cash flows, liquidity and certain other factors that may affect future results;
|
•
|
Context to the financial statements; and
|
•
|
Information that allows assessment of the likelihood that past performance is indicative of future performance.
|
•
|
Total revenues of $11.0 billion for the three months ended June 30, 2019 increased $408 million, or 4%, primarily driven by growth in service revenues as further discussed below.
|
•
|
Service revenues of $8.4 billion for the three months ended June 30, 2019 increased $495 million, or 6%, primarily due to growth in our average branded customer base driven by the continued growth in existing and Greenfield markets, including the growing success of new customer segments and rate plans such as Unlimited 55+, Military, Business and Essentials, along with record low churn and growth in wearables and other connected devices, partially offset by lower postpaid phone and prepaid Average Revenue Per User (“ARPU”).
|
•
|
Equipment revenues of $2.3 billion for the three months ended June 30, 2019 decreased $62 million, or 3%, primarily due to a decrease in the number of devices sold, excluding purchased leased devices, partially offset by a higher average revenue per device sold.
|
•
|
Operating income of $1.5 billion for the three months ended June 30, 2019 increased $91 million, or 6%, primarily due to higher Service revenues, partially offset by higher Selling, general and administrative expenses, including merger-related costs of $222 million, compared to $41 million for the three months ended June 30, 2018, and higher Costs of services. Operating income for the three months ended June 30, 2018 benefited from hurricane related reimbursements of $70 million.
|
•
|
Net income of $939 million for the three months ended June 30, 2019 increased $157 million, or 20%, primarily due to higher Operating income and lower Other expense. The impact of merger-related costs was $175 million, net of tax, for the three months ended June 30, 2019, compared to $39 million for the three months ended June 30, 2018. Net income for the three months ended June 30, 2018 benefited from hurricane related reimbursements of $45 million, net of tax.
|
•
|
Adjusted EBITDA, a non-GAAP financial measure, of $3.5 billion for the three months ended June 30, 2019 increased $228 million, or 7%, primarily due to higher Operating income driven by the factors described above. See “Performance Measures” for additional information.
|
•
|
Net cash provided by operating activities of $2.1 billion for the three months ended June 30, 2019 increased $886 million, or 70%. See “Liquidity and Capital Resources” for additional information.
|
•
|
Free Cash Flow, a non-GAAP financial measure, of $1.2 billion for the three months ended June 30, 2019 increased $395 million, or 51%. Free Cash Flow includes $151 million and $17 million in payments for merger-related costs for the three months ended June 30, 2019 and 2018, respectively. See “Liquidity and Capital Resources” for additional information.
|
•
|
Total revenues of $22.1 billion for the six months ended June 30, 2019 increased $1.0 billion, or 5%, primarily driven by growth in service and equipment revenues as further discussed below.
|
•
|
Service revenues of $16.7 billion for the six months ended June 30, 2019 increased $966 million, or 6%, primarily due to growth in our average branded customer base driven by the continued growth in existing and Greenfield markets, including the growing success of new customer segments and rate plans such as Unlimited 55+, Military, Business and Essentials, along with record low churn and growth in wearables and other connected devices, partially offset by lower postpaid phone and prepaid ARPU.
|
•
|
Equipment revenues of $4.8 billion for the six months ended June 30, 2019 increased $101 million, or 2%, primarily due to a higher average revenue per device sold, partially offset by a decrease in the number of devices sold, excluding purchased leased devices.
|
•
|
Operating income of $3.0 billion for the six months ended June 30, 2019 increased $285 million, or 10%, primarily due to higher Total revenues, partially offset by higher Selling, general and administrative expenses, including merger-related costs of $335 million, compared to $41 million for the six months ended June 30, 2018, and higher Cost of services. Operating income for the six months ended June 30, 2018, benefited from hurricane related reimbursements, net of costs, of $34 million.
|
•
|
Net income of $1.8 billion for the six months ended June 30, 2019 increased $394 million, or 27%, primarily due to higher Operating income and lower Interest expense and Interest expense to affiliates, partially offset by higher Income tax expense. The impact of merger-related costs was $268 million, net of tax, for the six months ended June 30, 2019, compared to $39 million for the six months ended June 30, 2018. Net income for the six months ended June 30, 2018 benefited from hurricane related reimbursements, net of costs, of $22 million, net of tax.
|
•
|
Adjusted EBITDA, a non-GAAP financial measure, of $6.7 billion for the six months ended June 30, 2019 increased $556 million, or 9%, primarily due to higher Operating income driven by the factors described above. See “Performance Measures” for additional information.
|
•
|
Net cash provided by operating activities of $3.5 billion for the six months ended June 30, 2019 increased $1.5 billion, or 74%. See “Liquidity and Capital Resources” for additional information.
|
•
|
Free Cash Flow, a non-GAAP financial measure, of $1.8 billion for the six months ended June 30, 2019 increased $345 million, or 24%. Free Cash Flow includes $185 million and $17 million in payments for merger-related costs for the six months ended June 30, 2019 and 2018, respectively. See “Liquidity and Capital Resources” for additional information.
|
|
Three Months Ended June 30,
|
|
Change
|
|
Six Months Ended
June 30,
|
|
Change
|
||||||||||||||||||||||
(in millions)
|
2019
|
|
2018
|
|
$
|
|
%
|
|
2019
|
|
2018
|
|
$
|
|
%
|
||||||||||||||
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Branded postpaid revenues
|
$
|
5,613
|
|
|
$
|
5,164
|
|
|
$
|
449
|
|
|
9
|
%
|
|
$
|
11,106
|
|
|
$
|
10,234
|
|
|
$
|
872
|
|
|
9
|
%
|
Branded prepaid revenues
|
2,379
|
|
|
2,402
|
|
|
(23
|
)
|
|
(1
|
)%
|
|
4,765
|
|
|
4,804
|
|
|
(39
|
)
|
|
(1
|
)%
|
||||||
Wholesale revenues
|
313
|
|
|
275
|
|
|
38
|
|
|
14
|
%
|
|
617
|
|
|
541
|
|
|
76
|
|
|
14
|
%
|
||||||
Roaming and other service revenues
|
121
|
|
|
90
|
|
|
31
|
|
|
34
|
%
|
|
215
|
|
|
158
|
|
|
57
|
|
|
36
|
%
|
||||||
Total service revenues
|
8,426
|
|
|
7,931
|
|
|
495
|
|
|
6
|
%
|
|
16,703
|
|
|
15,737
|
|
|
966
|
|
|
6
|
%
|
||||||
Equipment revenues
|
2,263
|
|
|
2,325
|
|
|
(62
|
)
|
|
(3
|
)%
|
|
4,779
|
|
|
4,678
|
|
|
101
|
|
|
2
|
%
|
||||||
Other revenues
|
290
|
|
|
315
|
|
|
(25
|
)
|
|
(8
|
)%
|
|
577
|
|
|
611
|
|
|
(34
|
)
|
|
(6
|
)%
|
||||||
Total revenues
|
10,979
|
|
|
10,571
|
|
|
408
|
|
|
4
|
%
|
|
22,059
|
|
|
21,026
|
|
|
1,033
|
|
|
5
|
%
|
||||||
Operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Cost of services, exclusive of depreciation and amortization shown separately below
|
1,649
|
|
|
1,530
|
|
|
119
|
|
|
8
|
%
|
|
3,195
|
|
|
3,119
|
|
|
76
|
|
|
2
|
%
|
||||||
Cost of equipment sales, exclusive of depreciation and amortization shown separately below
|
2,661
|
|
|
2,772
|
|
|
(111
|
)
|
|
(4
|
)%
|
|
5,677
|
|
|
5,617
|
|
|
60
|
|
|
1
|
%
|
||||||
Selling, general and administrative
|
3,543
|
|
|
3,185
|
|
|
358
|
|
|
11
|
%
|
|
6,985
|
|
|
6,349
|
|
|
636
|
|
|
10
|
%
|
||||||
Depreciation and amortization
|
1,585
|
|
|
1,634
|
|
|
(49
|
)
|
|
(3
|
)%
|
|
3,185
|
|
|
3,209
|
|
|
(24
|
)
|
|
(1
|
)%
|
||||||
Total operating expense
|
9,438
|
|
|
9,121
|
|
|
317
|
|
|
3
|
%
|
|
19,042
|
|
|
18,294
|
|
|
748
|
|
|
4
|
%
|
||||||
Operating income
|
1,541
|
|
|
1,450
|
|
|
91
|
|
|
6
|
%
|
|
3,017
|
|
|
2,732
|
|
|
285
|
|
|
10
|
%
|
||||||
Other income (expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Interest expense
|
(182
|
)
|
|
(196
|
)
|
|
14
|
|
|
(7
|
)%
|
|
(361
|
)
|
|
(447
|
)
|
|
86
|
|
|
(19
|
)%
|
||||||
Interest expense to affiliates
|
(101
|
)
|
|
(128
|
)
|
|
27
|
|
|
(21
|
)%
|
|
(210
|
)
|
|
(294
|
)
|
|
84
|
|
|
(29
|
)%
|
||||||
Interest income
|
4
|
|
|
6
|
|
|
(2
|
)
|
|
(33
|
)%
|
|
12
|
|
|
12
|
|
|
—
|
|
|
—
|
%
|
||||||
Other expense, net
|
(22
|
)
|
|
(64
|
)
|
|
42
|
|
|
(66
|
)%
|
|
(15
|
)
|
|
(54
|
)
|
|
39
|
|
|
(72
|
)%
|
||||||
Total other expense, net
|
(301
|
)
|
|
(382
|
)
|
|
81
|
|
|
(21
|
)%
|
|
(574
|
)
|
|
(783
|
)
|
|
209
|
|
|
(27
|
)%
|
||||||
Income before income taxes
|
1,240
|
|
|
1,068
|
|
|
172
|
|
|
16
|
%
|
|
2,443
|
|
|
1,949
|
|
|
494
|
|
|
25
|
%
|
||||||
Income tax expense
|
(301
|
)
|
|
(286
|
)
|
|
(15
|
)
|
|
5
|
%
|
|
(596
|
)
|
|
(496
|
)
|
|
(100
|
)
|
|
20
|
%
|
||||||
Net income
|
$
|
939
|
|
|
$
|
782
|
|
|
$
|
157
|
|
|
20
|
%
|
|
$
|
1,847
|
|
|
$
|
1,453
|
|
|
$
|
394
|
|
|
27
|
%
|
Statement of Cash Flows Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Net cash provided by operating activities
|
$
|
2,147
|
|
|
$
|
1,261
|
|
|
$
|
886
|
|
|
70
|
%
|
|
$
|
3,539
|
|
|
$
|
2,031
|
|
|
$
|
1,508
|
|
|
74
|
%
|
Net cash used in investing activities
|
(1,615
|
)
|
|
(306
|
)
|
|
(1,309
|
)
|
|
428
|
%
|
|
(2,581
|
)
|
|
(768
|
)
|
|
(1,813
|
)
|
|
236
|
%
|
||||||
Net cash used in financing activities
|
(866
|
)
|
|
(3,267
|
)
|
|
2,401
|
|
|
(73
|
)%
|
|
(1,056
|
)
|
|
(2,267
|
)
|
|
1,211
|
|
|
(53
|
)%
|
||||||
Non-GAAP Financial Measures
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Adjusted EBITDA
|
$
|
3,461
|
|
|
$
|
3,233
|
|
|
$
|
228
|
|
|
7
|
%
|
|
$
|
6,745
|
|
|
$
|
6,189
|
|
|
$
|
556
|
|
|
9
|
%
|
Free Cash Flow
|
1,169
|
|
|
774
|
|
|
395
|
|
|
51
|
%
|
|
1,787
|
|
|
1,442
|
|
|
345
|
|
|
24
|
%
|
•
|
Higher average branded postpaid phone customers, primarily from growth in our customer base driven by the continued growth in existing and Greenfield markets, including the growing success of new customer segments and rate plans such as Unlimited 55+, Military, Business and Essentials, along with record low churn; and
|
•
|
Higher average branded postpaid other customers, driven by higher wearables and other connected devices, specifically the Apple watch; partially offset by
|
•
|
Lower branded postpaid phone ARPU. See “Branded Postpaid Phone ARPU” in the “Performance Measures” section of this MD&A.
|
•
|
A decrease of $86 million in device sales revenues, excluding purchased leased devices, primarily from:
|
•
|
An 11% decrease in the number of devices sold, excluding purchased lease devices; partially offset by
|
•
|
Higher average revenue per device sold primarily due to an increase in the high-end device mix; and
|
•
|
A decrease of $34 million in lease revenues primarily due to a lower number of customer devices under lease; partially offset by
|
•
|
An increase of $27 million related to proceeds from liquidations of inventory; and
|
•
|
An increase of $25 million in other equipment-related revenues.
|
•
|
An increase of $50 million in device sales revenues, excluding purchased leased devices, primarily from:
|
•
|
Higher average revenue per device sold due to an increase in the high-end device mix and lower promotions; partially offset by
|
•
|
A 10% decrease in the number of devices sold, excluding purchased leased devices;
|
•
|
A $53 million increase in other equipment-related revenues; and
|
•
|
A $21 million increase related to proceeds from liquidation of inventory; partially offset by
|
•
|
A $44 million decrease in lease revenues primarily due to a lower number of customer devices under lease.
|
•
|
A decrease of $46 million for the three months ended and $92 million for the six months ended June 30, 2019 in co-location rental revenue from the adoption of the new lease standard; partially offset by
|
•
|
Higher amortized imputed discount on EIP receivables primarily due to an increase in volume of devices financed; and
|
•
|
Higher advertising revenues.
|
•
|
Higher costs for employee-related expenses and network expansion; and
|
•
|
Hurricane-related reimbursements of $70 million included in the three months ended June 30, 2018; partially offset by
|
•
|
Lower regulatory program costs; and
|
•
|
The positive impact of the new lease standard of approximately $95 million included in the three months ended June 30, 2019 resulting from the decrease in the average lease term and the change in accounting conclusion for certain sale-leaseback sites.
|
•
|
Higher costs for employee-related expenses, customer appreciation programs and network expansion; and
|
•
|
Hurricane-related reimbursements, net of costs, of $34 million included in the six months ended June 30, 2018; partially offset by
|
•
|
Lower regulatory program costs;
|
•
|
The positive impact of the new lease standard of approximately $190 million in the first half of 2019 resulting from the decrease in the average lease term and the change in accounting conclusion for certain sale-leaseback sites.
|
•
|
A decrease of $87 million in device cost of equipment sales, excluding purchased leased devices, primarily from:
|
•
|
An 11% decrease in the number of devices sold, excluding purchased lease devices; partially offset by
|
•
|
Higher average cost per device sold due to an increase in high-end device mix; and
|
•
|
A decrease of $46 million in extended warranty costs; partially offset by
|
•
|
An increase of $36 million in costs related to the liquidation of inventory.
|
•
|
An increase of $113 million in device cost of equipment sales, excluding purchased leased devices, primarily from:
|
•
|
Higher average cost per device sold due to an increase in high-end device mix; partially offset by
|
•
|
A 10% decrease in the number of devices sold, excluding purchased lease devices; and
|
•
|
An increase of $44 million in costs related to the liquidation of inventory and increased volumes; partially offset by
|
•
|
A decrease of $70 million in extended warranty costs; and
|
•
|
A decrease of $27 million from lower volume of returned devices at the end of the lease term.
|
•
|
An increase of $181 million in merger-related costs;
|
•
|
Higher costs related to outsourced functions and employee-related costs; and
|
•
|
Higher commissions expense resulting from an increase of $80 million in amortization expense related to commission costs that were capitalized beginning upon the adoption of ASC 606 on January 1, 2018; partially offset by lower commissions expense from lower gross customer additions and compensation structure changes.
|
•
|
An increase of $294 million in merger-related costs;
|
•
|
Higher costs related to outsourced functions;
|
•
|
Higher commissions expense resulting from an increase of $161 million in amortization expense related to commission costs that were capitalized beginning upon the adoption of ASC 606 on January 1, 2018; partially offset by lower commissions expense from lower gross customer additions and compensation structure changes; and
|
•
|
Higher employee-related costs.
|
•
|
Lower depreciation expense resulting from a lower total number of customer devices under lease; partially offset by
|
•
|
The continued deployment of low band spectrum, including 600 MHz, and laying the groundwork for 5G.
|
•
|
The redemption in April 2018 of aggregate principal amount of $2.4 billion Senior Notes, with various interest rates and maturity dates; and
|
•
|
An increase of $37 million in capitalized interest costs, primarily due to the build out of our network to utilize our 600 MHz spectrum licenses.
|
•
|
An increase of $18 million in capitalized interest costs for the three months ended and $61 million for six months ended June 30, 2019, primarily due to the build out of our network to utilize our 600 MHz spectrum licenses; and
|
•
|
Lower interest rates achieved through refinancing a total of $2.5 billion of Senior Reset Notes in April 2018.
|
•
|
An $86 million loss during the three months ended June 30, 2018 on the early redemption of $2.5 billion of DT Senior Reset Notes due 2021 and 2022; partially offset by
|
•
|
A $30 million gain during the three months ended June 30, 2018 on the sale of auction rate securities which were originally acquired with MetroPCS; and
|
•
|
During the three months ended June 30, 2019, a $28 million redemption premium on the DT Senior Reset Notes; partially offset by the write-off embedded derivatives upon redemption of the debt which resulted in a gain of $11 million.
|
•
|
A $25 million bargain purchase gain as part of our purchase price allocation related to the acquisition of Iowa Wireless Services, LLC (“IWS”) and a $15 million gain on our previously held equity interest in IWS, both recognized during the three months ended March 31, 2018; partially offset by
|
•
|
A $32 million loss on the early redemption of $1.0 billion of 6.125% Senior Notes due 2022 during the three months ended March 31, 2018.
|
•
|
Merger-related costs of $175 million and $268 million, net of tax, for the three and six months ended June 30, 2019, respectively, compared to merger-related costs of $39 million, net of tax, for both the three and six months ended June 30, 2018; and
|
•
|
Hurricane related reimbursements, net costs, of $45 million and $22 million, net of tax, for the three and six months ended June 30, 2018, respectively. There were no impacts from hurricanes for the three and six months ended June 30, 2019.
|
|
June 30,
2019 |
|
December 31,
2018 |
|
Change
|
|||||||||
(in millions)
|
$
|
|
%
|
|||||||||||
Other current assets
|
$
|
678
|
|
|
$
|
645
|
|
|
$
|
33
|
|
|
5
|
%
|
Property and equipment, net
|
312
|
|
|
297
|
|
|
15
|
|
|
5
|
%
|
|||
Goodwill
|
218
|
|
|
218
|
|
|
—
|
|
|
NM
|
|
|||
Tower obligations
|
2,171
|
|
|
2,173
|
|
|
(2
|
)
|
|
—
|
%
|
|||
Total stockholders' deficit
|
(1,254
|
)
|
|
(1,142
|
)
|
|
(112
|
)
|
|
10
|
%
|
|
Three Months Ended June 30,
|
|
Change
|
|
Six Months Ended
June 30,
|
|
Change
|
||||||||||||||||||||||
(in millions)
|
2019
|
|
2018
|
$
|
|
%
|
2019
|
|
2018
|
$
|
|
%
|
|||||||||||||||||
Service revenues
|
$
|
767
|
|
|
$
|
551
|
|
|
$
|
216
|
|
|
39
|
%
|
|
$
|
1,499
|
|
|
$
|
1,091
|
|
|
$
|
408
|
|
|
37
|
%
|
Cost of equipment sales, exclusive of depreciation and amortization shown separately below
|
302
|
|
|
262
|
|
|
40
|
|
|
15
|
%
|
|
574
|
|
|
498
|
|
|
76
|
|
|
15
|
%
|
||||||
Selling, general and administrative
|
293
|
|
|
216
|
|
|
77
|
|
|
36
|
%
|
|
568
|
|
|
452
|
|
|
116
|
|
|
26
|
%
|
||||||
Total comprehensive income
|
118
|
|
|
42
|
|
|
76
|
|
|
181
|
%
|
|
245
|
|
|
76
|
|
|
169
|
|
|
222
|
%
|
•
|
Higher Service revenues, primarily due to an increase in activity of the non-guarantor subsidiary that provides premium services, primarily driven by a net increase in average revenue as well as growth in our customer base related to a premium service that launched at the end of August 2018 and sales of the new product; partially offset by
|
•
|
Higher Cost of equipment sales, exclusive of depreciation and amortization, primarily due to higher cost devices used for device insurance claims fulfillment, partially offset by an increase in device liquidations; and
|
•
|
Higher Selling, general and administrative expenses, primarily due to an increase in billing services fees due to an increase in rate during the fourth quarter of 2018 and an increase in program expenses, changes in fair value of the deferred purchase price assets for sold EIP receivables and certain employee-related costs from the non-guarantor Layer3 TV subsidiary.
|
•
|
Higher Service revenues, primarily due to an increase in activity of the non-guarantor subsidiary that provides premium services, primarily driven by a net increase in average revenue as well as growth in our customer base related to a premium service that launched at the end of August 2018 and sales of the new product; partially offset by
|
•
|
Higher Selling, general and administrative expenses, primarily due to an increase in billing services fees due to an increase in rate during the fourth quarter of 2018 and an increase in program expenses and certain employee-related costs from the non-guarantor Layer3 TV subsidiary; and
|
•
|
Higher Cost of equipment sales, exclusive of depreciation and amortization, primarily due to higher cost devices used for device insurance claims fulfillment, partially offset by an increase in device liquidations.
|
|
June 30,
2019 |
|
June 30,
2018 |
|
Change
|
||||||
(in thousands)
|
#
|
|
%
|
||||||||
Customers, end of period
|
|
|
|
|
|
|
|
||||
Branded postpaid phone customers
|
38,590
|
|
|
35,430
|
|
|
3,160
|
|
|
9
|
%
|
Branded postpaid other customers
|
6,056
|
|
|
4,652
|
|
|
1,404
|
|
|
30
|
%
|
Total branded postpaid customers
|
44,646
|
|
|
40,082
|
|
|
4,564
|
|
|
11
|
%
|
Branded prepaid customers
|
21,337
|
|
|
20,967
|
|
|
370
|
|
|
2
|
%
|
Total branded customers
|
65,983
|
|
|
61,049
|
|
|
4,934
|
|
|
8
|
%
|
Wholesale customers
|
17,069
|
|
|
14,570
|
|
|
2,499
|
|
|
17
|
%
|
Total customers, end of period
|
83,052
|
|
|
75,619
|
|
|
7,433
|
|
|
10
|
%
|
•
|
Higher branded postpaid phone customers driven by the growing success of new customer segments and rate plans such as Unlimited 55+, Military, Business and Essentials and continued growth in existing and Greenfield markets, along with record-low churn, partially offset by competitive activity;
|
•
|
Higher branded postpaid other customers, primarily due to strength in gross customer additions from wearables and other connected devices; and
|
•
|
Higher branded prepaid customers driven by the continued success of our prepaid brands due to promotional activities, rate plan offers, and growth in connected devices, along with lower churn.
|
|
Three Months Ended June 30,
|
|
Change
|
|
Six Months Ended
June 30,
|
|
Change
|
||||||||||||||||
(in thousands)
|
2019
|
|
2018
|
#
|
|
%
|
2019
|
|
2018
|
|
# Change
|
|
% Change
|
||||||||||
Net customer additions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Branded postpaid phone customers
|
710
|
|
|
686
|
|
|
24
|
|
|
3
|
%
|
|
1,366
|
|
|
1,303
|
|
|
63
|
|
|
5
|
%
|
Branded postpaid other customers
|
398
|
|
|
331
|
|
|
67
|
|
|
20
|
%
|
|
761
|
|
|
719
|
|
|
42
|
|
|
6
|
%
|
Total branded postpaid customers
|
1,108
|
|
|
1,017
|
|
|
91
|
|
|
9
|
%
|
|
2,127
|
|
|
2,022
|
|
|
105
|
|
|
5
|
%
|
Branded prepaid customers
|
131
|
|
|
91
|
|
|
40
|
|
|
44
|
%
|
|
200
|
|
|
290
|
|
|
(90
|
)
|
|
(31
|
)%
|
Total branded customers
|
1,239
|
|
|
1,108
|
|
|
131
|
|
|
12
|
%
|
|
2,327
|
|
|
2,312
|
|
|
15
|
|
|
1
|
%
|
Wholesale customers
|
512
|
|
|
471
|
|
|
41
|
|
|
9
|
%
|
|
1,074
|
|
|
700
|
|
|
374
|
|
|
53
|
%
|
Total net customer additions
|
1,751
|
|
|
1,579
|
|
|
172
|
|
|
11
|
%
|
|
3,401
|
|
|
3,012
|
|
|
389
|
|
|
13
|
%
|
•
|
Higher branded postpaid other net customer additions primarily due to higher gross customer additions from connected devices and lower churn;
|
•
|
Higher branded prepaid net customer additions primarily due to lower churn, partially offset by the impact of continued promotional activities in the marketplace; and
|
•
|
Higher branded postpaid phone net customer additions primarily due to record-low churn.
|
•
|
Higher branded postpaid phone net customer additions primarily due to record-low churn; and
|
•
|
Higher branded postpaid other net customer additions primarily due to higher gross customer additions from connected devices, partially offset by higher deactivations from a growing customer base; partially offset by
|
•
|
Lower branded prepaid net customer additions primarily due to continued promotional activities in the marketplace, partially offset by lower churn.
|
|
June 30,
2019 |
|
June 30,
2018 |
|
Change
|
||||||
#
|
|
%
|
|||||||||
Branded postpaid customers per account
|
3.08
|
|
|
2.97
|
|
|
0.11
|
|
|
4
|
%
|
|
Three Months Ended June 30,
|
|
Bps Change
|
|
Six Months Ended
June 30,
|
|
Bps Change
|
||||||||
2019
|
|
2018
|
2019
|
|
2018
|
||||||||||
Branded postpaid phone churn
|
0.78
|
%
|
|
0.95
|
%
|
|
-17 bps
|
|
0.83
|
%
|
|
1.01
|
%
|
|
-18 bps
|
Branded prepaid churn
|
3.49
|
%
|
|
3.81
|
%
|
|
-32 bps
|
|
3.67
|
%
|
|
3.87
|
%
|
|
-20 bps
|
(in millions, except average number of customers and ARPU)
|
Three Months Ended June 30,
|
|
Change
|
|
Six Months Ended
June 30,
|
|
Change
|
||||||||||||||||||||||
2019
|
|
2018
|
|
$
|
|
%
|
|
2019
|
|
2018
|
$
|
|
%
|
||||||||||||||||
Calculation of Branded Postpaid Phone ARPU
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Branded postpaid service revenues
|
$
|
5,613
|
|
|
$
|
5,164
|
|
|
$
|
449
|
|
|
9
|
%
|
|
$
|
11,106
|
|
|
$
|
10,234
|
|
|
$
|
872
|
|
|
9
|
%
|
Less: Branded postpaid other revenues
|
(326
|
)
|
|
(272
|
)
|
|
(54
|
)
|
|
20
|
%
|
|
(636
|
)
|
|
(531
|
)
|
|
(105
|
)
|
|
20
|
%
|
||||||
Branded postpaid phone service revenues
|
$
|
5,287
|
|
|
$
|
4,892
|
|
|
$
|
395
|
|
|
8
|
%
|
|
$
|
10,470
|
|
|
$
|
9,703
|
|
|
$
|
767
|
|
|
8
|
%
|
Divided by: Average number of branded postpaid phone customers (in thousands) and number of months in period
|
38,226
|
|
|
35,051
|
|
|
3,175
|
|
|
9
|
%
|
|
37,865
|
|
|
34,711
|
|
|
3,154
|
|
|
9
|
%
|
||||||
Branded postpaid phone ARPU
|
$
|
46.10
|
|
|
$
|
46.52
|
|
|
$
|
(0.42
|
)
|
|
(1
|
)%
|
|
$
|
46.09
|
|
|
$
|
46.59
|
|
|
$
|
(0.50
|
)
|
|
(1
|
)%
|
Calculation of Branded Prepaid ARPU
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Branded prepaid service revenues
|
$
|
2,379
|
|
|
$
|
2,402
|
|
|
$
|
(23
|
)
|
|
(1
|
)%
|
|
$
|
4,765
|
|
|
$
|
4,804
|
|
|
$
|
(39
|
)
|
|
(1
|
)%
|
Divided by: Average number of branded prepaid customers (in thousands) and number of months in period
|
21,169
|
|
|
20,806
|
|
|
363
|
|
|
2
|
%
|
|
21,146
|
|
|
20,695
|
|
|
451
|
|
|
2
|
%
|
||||||
Branded prepaid ARPU
|
$
|
37.46
|
|
|
$
|
38.48
|
|
|
$
|
(1.02
|
)
|
|
(3
|
)%
|
|
$
|
37.56
|
|
|
$
|
38.69
|
|
|
$
|
(1.13
|
)
|
|
(3
|
)%
|
•
|
A reduction in regulatory program revenues from the continued adoption of tax inclusive plans;
|
•
|
The ongoing growth in our Netflix offering, which totaled $0.61 for the three months ended June 30, 2019, and decreased branded postpaid phone ARPU by $0.30 compared to the three months ended June 30, 2018;
|
•
|
A reduction in certain non-recurring charges; and
|
•
|
The growing success of new customer segments and rate plans such as Unlimited 55+, Military, Business and Essentials; partially offset by
|
•
|
Higher premium services revenue.
|
•
|
A reduction in regulatory program revenues from the continued adoption of tax inclusive plans;
|
•
|
The ongoing growth in our Netflix offering, which totaled $0.56 for the six months ended June 30, 2019, and decreased branded postpaid phone ARPU by $0.28 compared to the six months ended June 30, 2018; and
|
•
|
A reduction in certain non-recurring charges; partially offset by
|
•
|
Higher premium services revenue.
|
•
|
Dilution from promotional rate plans; and
|
•
|
Growth in our Amazon Prime offering - included as a benefit with certain Metro by T-Mobile unlimited rate plans as of Q4 2018 - which impacted prepaid ARPU by $0.47 for the three months ended June 30, 2019; partially offset by
|
•
|
An increase in certain non-recurring charges.
|
•
|
Dilution from promotional rate plans; and
|
•
|
Growth in our Amazon Prime offering - included as a benefit with certain Metro by T-Mobile unlimited rate plans as of Q4 2018 - which impacted prepaid ARPU by $0.39 for the six months ended June 30, 2019; partially offset by
|
•
|
An increase in certain non-recurring charges.
|
|
Three Months Ended June 30,
|
|
Change
|
|
Six Months Ended
June 30,
|
|
Change
|
||||||||||||||||||||||
(in millions)
|
2019
|
|
2018
|
$
|
|
%
|
2019
|
|
2018
|
$
|
|
%
|
|||||||||||||||||
Net income
|
$
|
939
|
|
|
$
|
782
|
|
|
$
|
157
|
|
|
20
|
%
|
|
$
|
1,847
|
|
|
$
|
1,453
|
|
|
$
|
394
|
|
|
27
|
%
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest expense
|
182
|
|
|
196
|
|
|
(14
|
)
|
|
(7
|
)%
|
|
361
|
|
|
447
|
|
|
(86
|
)
|
|
(19
|
)%
|
||||||
Interest expense to affiliates
|
101
|
|
|
128
|
|
|
(27
|
)
|
|
(21
|
)%
|
|
210
|
|
|
294
|
|
|
(84
|
)
|
|
(29
|
)%
|
||||||
Interest income
|
(4
|
)
|
|
(6
|
)
|
|
2
|
|
|
(33
|
)%
|
|
(12
|
)
|
|
(12
|
)
|
|
—
|
|
|
—
|
%
|
||||||
Other (income) expense, net
|
22
|
|
|
64
|
|
|
(42
|
)
|
|
(66
|
)%
|
|
15
|
|
|
54
|
|
|
(39
|
)
|
|
(72
|
)%
|
||||||
Income tax expense (benefit)
|
301
|
|
|
286
|
|
|
15
|
|
|
5
|
%
|
|
596
|
|
|
496
|
|
|
100
|
|
|
20
|
%
|
||||||
Operating income
|
1,541
|
|
|
1,450
|
|
|
91
|
|
|
6
|
%
|
|
3,017
|
|
|
2,732
|
|
|
285
|
|
|
10
|
%
|
||||||
Depreciation and amortization
|
1,585
|
|
|
1,634
|
|
|
(49
|
)
|
|
(3
|
)%
|
|
3,185
|
|
|
3,209
|
|
|
(24
|
)
|
|
(1
|
)%
|
||||||
Stock-based compensation (1)
|
111
|
|
|
106
|
|
|
5
|
|
|
5
|
%
|
|
204
|
|
|
202
|
|
|
2
|
|
|
1
|
%
|
||||||
Merger-related costs
|
222
|
|
|
41
|
|
|
181
|
|
|
441
|
%
|
|
335
|
|
|
41
|
|
|
294
|
|
|
717
|
%
|
||||||
Other, net (2)
|
2
|
|
|
2
|
|
|
—
|
|
|
—
|
%
|
|
4
|
|
|
5
|
|
|
(1
|
)
|
|
(20
|
)%
|
||||||
Adjusted EBITDA
|
$
|
3,461
|
|
|
$
|
3,233
|
|
|
$
|
228
|
|
|
7
|
%
|
|
$
|
6,745
|
|
|
$
|
6,189
|
|
|
$
|
556
|
|
|
9
|
%
|
Net income margin (Net income divided by service revenues)
|
11
|
%
|
|
10
|
%
|
|
|
|
|
100 bps
|
|
|
11
|
%
|
|
9
|
%
|
|
|
|
|
200 bps
|
|
||||||
Adjusted EBITDA margin (Adjusted EBITDA divided by service revenues)
|
41
|
%
|
|
41
|
%
|
|
|
|
|
0 bps
|
|
|
40
|
%
|
|
39
|
%
|
|
|
|
|
100 bps
|
|
(1)
|
Stock-based compensation includes payroll tax impacts and may not agree to stock-based compensation expense in the condensed consolidated financial statements. Additionally, certain stock-based compensation expenses associated with the Transactions have been included in Merger-related costs.
|
(2)
|
Other, net may not agree to the Condensed Consolidated Statements of Comprehensive Income primarily due to certain non-routine operating activities, such as other special items that would not be expected to reoccur or are not reflective of T-Mobile’s ongoing operating performance, and are therefore excluded in Adjusted EBITDA.
|
•
|
Higher service revenues, as further discussed above; partially offset by
|
•
|
Higher Selling, general and administrative expenses;
|
•
|
Higher Cost of services expenses; and
|
•
|
The impact from hurricane-related reimbursements of $70 million for the three months ended June 30, 2018. There was no impact from hurricanes for the three months ended June 30, 2019.
|
•
|
Higher service revenues, as further discussed above; and
|
•
|
The positive impact of the new lease standard of approximately $98 million; partially offset by
|
•
|
Higher Selling, general and administrative expenses;
|
•
|
Higher Cost of services expenses; and
|
•
|
The impact from hurricane-related reimbursements, net of costs, of $34 million included in the six months ended June 30, 2018. There was no impact from hurricanes for the six months ended June 30, 2019.
|
|
Three Months Ended June 30,
|
|
Change
|
|
Six Months Ended
June 30,
|
|
Change
|
||||||||||||||||||||||
(in millions)
|
2019
|
|
2018
|
|
$
|
|
%
|
|
2019
|
|
2018
|
|
$
|
|
%
|
||||||||||||||
Net cash provided by operating activities
|
$
|
2,147
|
|
|
$
|
1,261
|
|
|
$
|
886
|
|
|
70
|
%
|
|
$
|
3,539
|
|
|
$
|
2,031
|
|
|
$
|
1,508
|
|
|
74
|
%
|
Net cash used in investing activities
|
(1,615
|
)
|
|
(306
|
)
|
|
(1,309
|
)
|
|
428
|
%
|
|
(2,581
|
)
|
|
(768
|
)
|
|
(1,813
|
)
|
|
236
|
%
|
||||||
Net cash used in financing activities
|
(866
|
)
|
|
(3,267
|
)
|
|
2,401
|
|
|
(73
|
)%
|
|
(1,056
|
)
|
|
(2,267
|
)
|
|
1,211
|
|
|
(53
|
)%
|
•
|
A $817 million decrease in net cash outflows from changes in working capital, primarily due to lower use from Accounts receivable, Other current and long-term assets, Equipment installment plan receivables and Accounts payable and accrued liabilities; and
|
•
|
A $157 million increase in Net income.
|
•
|
A $1.0 billion decrease in net cash outflows from changes in working capital, primarily due to lower use from Accounts payable and accrued liabilities and Other current and long-term liabilities, partially offset by higher use from inventories; and
|
•
|
A $394 million increase in Net income.
|
•
|
$1.8 billion in Purchases of property and equipment, including capitalized interest, primarily driven by growth in network build as we continued deployment of low band spectrum, including 600 MHz, and started laying the groundwork for 5G; and
|
•
|
$665 million in Purchases of spectrum licenses and other intangible assets, including deposits; partially offset by
|
•
|
$839 million in Proceeds related to beneficial interests in securitization transactions.
|
•
|
$3.7 billion in Purchases of property and equipment, including capitalized interest, primarily driven by growth in network build as we continued deployment of low band spectrum, including 600 MHz, and started laying the groundwork for 5G; and
|
•
|
$850 million in Purchases of spectrum licenses and other intangible assets, including deposits; partially offset by
|
•
|
$2.0 billion in Proceeds related to beneficial interests in securitization transactions.
|
•
|
$600 million for Repayments of long-term debt; and
|
•
|
$229 million for Repayments of financing lease obligations.
|
•
|
Activity under the revolving credit facility included borrowing and full repayment of $880 million, for a net of $0 impact.
|
•
|
$600 million for Repayments of long-term debt;
|
•
|
$315 million for Repayments of financing lease obligations; and
|
•
|
$104 million for Tax withholdings on share-based awards.
|
•
|
Activity under the revolving credit facility included borrowing and full repayment of $1.8 billion, for a net of $0 impact.
|
|
Three Months Ended June 30,
|
|
Change
|
|
Six Months Ended
June 30,
|
|
Change
|
||||||||||||||||||||||
(in millions)
|
2019
|
|
2018
|
$
|
|
%
|
2019
|
|
2018
|
$
|
|
%
|
|||||||||||||||||
Net cash provided by operating activities
|
$
|
2,147
|
|
|
$
|
1,261
|
|
|
$
|
886
|
|
|
70
|
%
|
|
$
|
3,539
|
|
|
$
|
2,031
|
|
|
$
|
1,508
|
|
|
74
|
%
|
Cash purchases of property and equipment
|
(1,789
|
)
|
|
(1,629
|
)
|
|
(160
|
)
|
|
10
|
%
|
|
(3,720
|
)
|
|
(2,995
|
)
|
|
(725
|
)
|
|
24
|
%
|
||||||
Proceeds related to beneficial interests in securitization transactions
|
839
|
|
|
1,323
|
|
|
(484
|
)
|
|
(37
|
)%
|
|
1,996
|
|
|
2,618
|
|
|
(622
|
)
|
|
(24
|
)%
|
||||||
Cash payments for debt prepayment or debt extinguishment costs
|
(28
|
)
|
|
(181
|
)
|
|
153
|
|
|
(85
|
)%
|
|
(28
|
)
|
|
(212
|
)
|
|
184
|
|
|
(87
|
)%
|
||||||
Free Cash Flow
|
$
|
1,169
|
|
|
$
|
774
|
|
|
$
|
395
|
|
|
51
|
%
|
|
$
|
1,787
|
|
|
$
|
1,442
|
|
|
$
|
345
|
|
|
24
|
%
|
•
|
Higher Net cash provided by operating activities, as described above; and
|
•
|
Lower Cash payments for debt extinguishment costs; partially offset by
|
•
|
Lower Proceeds related to our deferred purchase price from securitization transactions; and
|
•
|
Higher Cash purchases of property and equipment, net of capitalized interest of $125 million and $102 million for the three months ended June 30, 2019 and 2018, respectively.
|
•
|
Free Cash Flow includes $151 million and $17 million in payments for merger-related costs for the three months ended June 30, 2019 and 2018, respectively.
|
•
|
Higher Net cash provided by operating activities, as described above; and
|
•
|
Lower Cash payments for debt extinguishment costs; partially offset by
|
•
|
Higher Cash Purchases of property and equipment, net of capitalized interest of $243 million and $145 million for the six months ended June 30, 2019 and 2018, respectively; and
|
•
|
Lower Proceeds related to our deferred purchase price from securitization transactions.
|
•
|
Free Cash Flow includes $185 million and $17 million in payments for merger-related costs for the six months ended June 30, 2019 and 2018, respectively.
|
•
|
In evaluating contracts to determine if they qualify as a lease, we consider factors such as if we have obtained or transferred substantially all of the rights to the underlying asset through exclusivity, if we can or if we have transferred the ability to direct the use of the asset by making decisions about how and for what purpose the asset will be used and if the lessor has substantive substitution rights.
|
•
|
We recognized right-of-use assets and operating lease liabilities for operating leases that have not previously been recorded. The lease liability for operating leases is based on the net present value of future minimum lease payments. The right-of-use asset for operating leases is based on the lease liability adjusted for the reclassification of certain balance sheet amounts such as prepaid rent and deferred rent which we remeasured at adoption due to the application of hindsight to our lease term estimates. Deferred and prepaid rent will no longer be presented separately.
|
•
|
Capital lease assets previously included within Property and equipment, net, were reclassified to financing lease right-of-use assets and capital lease liabilities previously included in Short-term debt and Long-term debt were reclassified to financing lease liabilities in our Condensed Consolidated Balance Sheet.
|
•
|
Certain line items in the Condensed Consolidated Statements of Cash Flows and the “Supplementary disclosure of cash flow information” have been renamed to align with the new terminology presented in the new lease standard; “Repayment of capital lease obligations” is now presenting as “Repayments of financing lease obligations” and “Assets acquired under capital lease obligations” is now presenting as “Financing lease right-of-use assets obtained in exchange for lease obligations.” In the “Operating Activities” section of the Condensed Consolidated Statements of Cash Flows we have added “Operating lease right-of-use assets” and “Short and long-term operating lease liabilities” which represent the change in the operating lease asset and liability, respectively. Additionally, in the “Supplemental disclosure of cash flow information” section of the Condensed Consolidated Statements of Cash Flows we have added “Operating lease payments,” and in the “Noncash investing and financing activities” section we have added “Operating lease right-of-use assets obtained in exchange for lease obligations.”
|
•
|
In determining the discount rate used to measure the right-of-use asset and lease liability, we use rates implicit in the lease, or if not readily available, we use our incremental borrowing rate. Our incremental borrowing rate is based on an estimated secured rate comprised of a risk-free LIBOR rate plus a credit spread as secured by our assets.
|
•
|
Certain of our lease agreements include rental payments based on changes in the consumer price index (“CPI”). Lease liabilities are not remeasured as a result of changes in the CPI; instead, changes in the CPI are treated as variable lease payments and are excluded from the measurement of the right-of-use asset and lease liability. These payments are recognized in the period in which the related obligation was incurred. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.
|
•
|
We elected the use of hindsight whereby we applied current lease term assumptions that are applied to new leases in determining the expected lease term period for all cell sites. Upon adoption of the new lease standard and application of hindsight our expected lease term has shortened to reflect payments due for the initial non-cancelable lease term only. This assessment corresponds to our lease term assessment for new leases and aligns with the payments that have been disclosed as lease commitments in prior years. As a result, the average remaining lease term for cell sites has decreased from approximately nine to five years based on lease contracts in effect at transition on January 1, 2019. The aggregate impact of using the hindsight is an estimated decrease in Total operating expense of $240 million in fiscal year 2019.
|
•
|
We were also required to reassess the previously failed sale-leasebacks of certain T-Mobile-owned wireless communication tower sites and determine whether the transfer of the assets to the tower operator under the arrangement met the transfer of control criteria in the revenue standard and whether a sale should be recognized.
|
•
|
We concluded that a sale has not occurred for the 6,200 tower sites transferred to CCI pursuant to a master prepaid lease arrangement; therefore, these sites will continue to be accounted for as failed sale-leasebacks.
|
•
|
We concluded that a sale should be recognized for the 900 tower sites transferred to CCI pursuant to the sale of a subsidiary and for the 500 tower sites transferred to PTI. Upon adoption on January 1, 2019 we derecognized our existing long-term financial obligation and the tower-related property and equipment associated with these 1,400 previously failed sale-leaseback tower sites and recognized a lease liability and right-of-use asset for the leaseback of the tower sites. The estimated impacts from the change in accounting conclusion are primarily a decrease in Other revenues of $44 million and a decrease in Interest expense of $34 million in fiscal year 2019.
|
•
|
Rental revenues and expenses associated with co-location tower sites are presented on a net basis under the new lease standard. These revenues and expenses were presented on a gross basis under the former lease standard.
|
•
|
the diversion of management attention to integration matters;
|
•
|
difficulties in integrating operations and systems, including intellectual property and communications systems, administrative and information technology infrastructure and financial reporting and internal control systems;
|
•
|
challenges in conforming standards, controls, procedures and accounting and other policies, business cultures and compensation structures between the two companies;
|
•
|
differences in control environments, cultures, and auditor expectations may result in future material weaknesses, significant deficiencies, and/or control deficiencies while we work to integrate the companies and align guidelines and practices;
|
•
|
alignment of key performance measurements may result in a greater need to communicate and manage clear expectations while we work to integrate the companies and align guidelines and practices;
|
•
|
difficulties in integrating employees and attracting and retaining key personnel;
|
•
|
challenges in retaining existing customers and obtaining new customers;
|
•
|
difficulties in achieving anticipated cost savings, synergies, accretion targets, business opportunities, financing plans and growth prospects from the combination;
|
•
|
difficulties in managing the expanded operations of a significantly larger and more complex company;
|
•
|
the impact of the additional debt financing expected to be incurred in connection with the Transactions;
|
•
|
the transition of management to the combined company management team, and the need to address possible differences in corporate cultures and management philosophies;
|
•
|
challenges in managing the divestiture process for the Divestiture Transaction and in conjunction with the ongoing commercial and transition services arrangements to be entered into in connection with the Divestiture Transaction;
|
•
|
difficulties in satisfying the large number of Government Commitments in the required timeframes and the tracking and monitoring of them, including the network build-out obligations under the FCC Commitments;
|
•
|
contingent liabilities that are larger than expected; and
|
•
|
potential unknown liabilities, adverse consequences and unforeseen increased expenses associated with the Transactions, the Divestiture Transaction and the Government Commitments.
|
•
|
incurring additional indebtedness and issuing preferred stock;
|
•
|
paying dividends, redeeming capital stock or making other restricted payments or investments;
|
•
|
selling or buying assets, properties or licenses;
|
•
|
developing assets, properties or licenses which the combined company has or in the future may procure;
|
•
|
creating liens on assets securing indebtedness or other obligations;
|
•
|
participating in future FCC auctions of spectrum or private sales of spectrum;
|
•
|
engaging in mergers, acquisitions, business combinations or other transactions;
|
•
|
entering into transactions with affiliates; and
|
•
|
placing restrictions on the ability of subsidiaries to pay dividends or make other payments.
|
|
|
|
|
Incorporated by Reference
|
|
|
||||
Exhibit No.
|
|
Exhibit Description
|
|
Form
|
|
Date of First Filing
|
|
Exhibit Number
|
|
Filed Herein
|
10.1*
|
|
|
|
|
|
|
|
|
X
|
|
10.2*
|
|
|
|
|
|
|
|
|
X
|
|
10.3*
|
|
|
|
|
|
|
|
|
X
|
|
10.4*
|
|
|
|
|
|
|
|
|
X
|
|
10.5
|
|
|
|
|
|
|
|
|
|
X
|
31.1
|
|
|
|
|
|
|
|
|
X
|
|
31.2
|
|
|
|
|
|
|
|
|
X
|
|
32.1**
|
|
|
|
|
|
|
|
|
|
|
32.2**
|
|
|
|
|
|
|
|
|
|
|
101.INS
|
|
XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
|
|
|
|
|
|
|
|
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document.
|
|
|
|
|
|
|
|
X
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document.
|
|
|
|
|
|
|
|
X
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document.
|
|
|
|
|
|
|
|
X
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document.
|
|
|
|
|
|
|
|
X
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document.
|
|
|
|
|
|
|
|
X
|
*
|
|
Indicates a management contract or compensatory plan or arrangement.
|
**
|
|
Furnished herein.
|
|
|
SIGNATURES
|
|
|
|
T-MOBILE US, INC.
|
|
|
|
|
|
July 26, 2019
|
|
/s/ J. Braxton Carter
|
|
|
|
J. Braxton Carter
|
|
|
|
Executive Vice President and Chief Financial Officer
|
|
|
|
(Principal Financial Officer and Authorized Signatory)
|
|
GENERAL
|
As you know, the Company anticipates entering into a Business Combination Agreement with Sprint Corporation and certain other parties named therein (the “BCA”) on or around April 29, 2018. This Term Sheet confirms our understanding and agreement about your role and certain compensation opportunities with the Company, effective as of the date on which the BCA is fully executed (the “Effective Date”).
|
TERM
|
Subject to the provisions for earlier termination set forth below, the term of this Term Sheet (the “Term”) will commence on the Effective Date and continue until the second (2nd) anniversary thereof (the “Expiration Date”). Your employment remains “at will,” meaning that it may be terminated by you or the Company, for any reason or for no reason whatsoever, with or without notice and with or without cause. The at-will nature of your employment relationship cannot be changed other than by a written agreement signed by you and a duly authorized Company officer.
|
POSITION
|
During the Term, you will continue to serve as the Executive Vice President, Corporate Services of the Company reporting to the Chief Executive Officer (“CEO”). You will have such duties and authority commensurate with the position of Executive Vice President, Corporate Services of the Company and you will perform such other duties commensurate with such position as the CEO may from time-to-time assign. You will continue to devote your full professional time, attention and energies to the business of the Company. Your position will continue to be based in Bellevue, WA.
|
COMPENSATION
|
During the Term, your compensation will be as follows:
|
•
|
You will receive an annual base salary of no less than $775,000 payable in accordance with the Company’s standard payroll practices (but no less often than monthly).
|
•
|
Effective as of the Effective Date, and for each calendar year commencing after the Effective Date during the Term, your annual target STI (“Target STI”) will be no less than 125% of your eligible base earnings during such calendar year.
|
•
|
STI awards will continue be based on the achievement of Company goals (and, as applicable, individual performance) as determined by the Compensation
|
•
|
Effective as of the Effective Date, with the next annual LTI award after such date anticipated to be granted in February 2019, your annual LTI awards will have an annual aggregate grant-date target value (as determined by the Committee) of no less than $4,359,375.
|
•
|
LTI awards will continue to be made in such form and on such terms as the Committee may determine. Each LTI award (including the Transaction PRSUs (as defined below)) will be subject to the terms and conditions of the Company’s 2013 Omnibus Incentive Plan (as amended from time to time, the “Plan”) and an award agreement prescribed by the Company, which shall evidence the grant of the LTI award.
|
•
|
Effective as of the Effective Date, you will be granted a one-time special equity award as follows:
|
o
|
On the Effective Date, the Company will grant to you, under the Plan, a one-time award of performance-based restricted stock units (“PRSUs”) with respect to a number of shares of Company common stock equal to the quotient of $5,719,000 divided by the average closing price of the Company’s common stock over the 90 calendar-day period ending with (and including) April 27, 2018, rounded up to the nearest whole share (the “Transaction PRSUs”).
|
o
|
The Transaction PRSUs will be subject to substantially the same terms and conditions applicable to the award of PRSUs granted to you on February 15, 2018, except that: (i) 50% of the Transaction PRSUs shall be eligible to vest upon the earlier of (x) the closing (the “Closing”) of the transactions (collectively, the “Transaction”) contemplated by the BCA and (y) the Expiration Date, and (ii) the remaining 50% of the Transaction PRSUs shall be eligible to vest on the Expiration Date. Vesting of the Transaction PRSUs shall be based on the Company’s total shareholder return relative to the Company’s peer group during the applicable performance period, subject to your continued employment through the applicable vesting date, and further subject to accelerated vesting upon certain terminations of your employment in accordance the Transaction PRSU award agreement (and any other applicable Company plan or arrangement in which you participate). In addition, for purposes of determining the level of attainment of the total shareholder return performance goals applicable to the Transaction PRSUs, the Company’s and each peer company’s share price shall equal (x) as of the grant date, the volume weighted average price of the Company’s (or such peer company’s) common stock over the 90 calendar-day period ending with (and including) April 27, 2018, (y) as of the Closing, the average closing price of the Company’s (or such peer
|
o
|
The Transaction PRSUs will be administered as exempt from Section 409A (as defined below) for purposes of the application of your Side Letter (defined below) and any relevant agreements or plans (for clarify, the PRSUs will vest upon your Separation under your Side Letter (as defined therein) and be paid to you upon vesting).
|
SIDE LETTER
|
You and the Company acknowledge and agree that the Letter Regarding Eligibility for Certain Payments and Benefits by and between you and the Company, dated February 19, 2018 (the “Side Letter”), remains in effect in accordance with its terms.
|
CODE SECTIONS
|
The payments and benefits described in this Term Sheet are intended to comply with or be exempt from Section 409A of the Internal Revenue Code of 1986, as amended (“Section 409A”). See Attachment A, which is hereby incorporated into this Term Sheet, for additional details. In addition, you acknowledge and agree that the payments and benefits described in this Term Sheet (in addition to any other payments and benefits payable to you by the Company or any affiliate thereof) may be subject to reduction as set forth on Attachment B, which is hereby incorporated into this Term Sheet.
|
SUCCESSORS
|
This Term Sheet is personal to you and, without the prior written consent of the Company, shall not be assignable by you other than by will or the laws of descent and distribution. This Term Sheet shall inure to the benefit of and be binding upon the Company and its successors and assigns.
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WITHHOLDING
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All compensation and other benefits to or on behalf of you pursuant to this Term Sheet shall be subject to such deductions and withholding as may be agreed to by you or required by applicable law, rule or regulation or Company policy.
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DISPUTE RESOLUTION
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Except for any claims arising out of, or relating to, your restrictive covenant, confidentiality or similar agreement with the Company (the “Restrictive Covenant and Confidentiality Agreement”) (to which you remain bound) and, any other written and fully executed agreements to which you and the Company or an affiliate thereof are parties that expressly provide for a different dispute resolution mechanism, any controversy, claim or dispute arising out of or relating to this Term Sheet or your employment with the Company or termination thereof, either during the existence of the employment relationship or afterward, and including, but not limited to, any common law or statutory claims for wrongful discharge, discrimination or unpaid compensation, shall be resolved exclusively by arbitration in King County, Washington, conducted in accordance with the then prevailing commercial arbitration rules of the American Arbitration Association (the “AAA”), with one arbitrator designated in accordance with those rules. The parties agree to abide by all decisions and awards rendered in such proceedings. Such decisions and awards rendered by the arbitrator shall be final and conclusive and may be entered in any court having jurisdiction thereof as a basis of judgment and of the issuance of execution for its collection. All such controversies, claims or disputes
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ENTIRE AGREEMENT
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This Term Sheet, along with the Restrictive Covenant and Confidentiality Agreement, your Side Letter and your STI and LTI award agreements, embody the entire agreement and understanding between the parties with respect to the subject matters hereof (including but not limited to your compensation terms) and supersedes all prior oral and written agreements and understandings between the Company and you with respect to the subject matters hereof, and it can only be modified in a fully executed written agreement between you and a duly authorized Company officer. It may be executed by facsimile and in counterparts which, taken together, shall constitute one original. To the extent the provisions of this Term Sheet are inconsistent with the terms of any underlying compensation plan or program, including without limitation any annual performance bonus plan or the Plan, the terms of this Term Sheet shall control. Notwithstanding the foregoing or anything herein to the contrary, to the extent that the Plan or any short-term incentive or long-term-incentive award agreement provides for more favorable treatment to you of your STI award(s) and/or LTI award(s) than the terms of this Term Sheet, the terms of the Plan or award agreement (as applicable) shall control. For avoidance of doubt, this Term Sheet is not intended to deprive you of any right, entitlement or protection (e.g., indemnification and insurance), in any case, that is not inconsistent with this Term Sheet and that you may have under any other agreement, plan, or policy of the Company applicable to you that may provide more favorable treatment than this Term Sheet, nor is it intended to exclude you from being eligible to receive any employee benefits (provided that such benefits would not result in you receiving a duplication of benefits) that may in the future be broadly provided to similarly-situated employees. Similarly, for avoidance of doubt, this Term Sheet is not intended to relieve you of obligations to the Company or requirements of the Company set forth in any other written agreement, plan, or policy of the Company applicable to you (including, without limitation, the Company’s Executive Incentive Compensation Recoupment Policy as adopted October 30, 2014, as amended from time to time), unless such obligations or requirements are expressly contrary to a commitment in this Term Sheet. This Term Sheet shall be exclusively governed by and interpreted under the laws of the State of Washington.
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EFFECTIVENESS
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This Term Sheet shall become effective as of the Effective Date. If the BCA is not fully executed for any reason, this Term Sheet shall be null and void and of no force or effect.
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1.
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Eligibility
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2.
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Non-Employee Director Compensation
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a.
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Cash Compensation
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Annual Retainer for Board Service
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$133,333
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Additional Retainer for Lead Independent Director
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$45,000
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Audit Committee Chair
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$60,000
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Compensation Committee Chair
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$25,000
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Nominating and Corporate Governance Committee Chair
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$15,000
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Additional Retainer for Audit Committee Members (including AC Chair)
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$15,000
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b.
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Reimbursement of Expenses
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c.
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Restricted Stock Unit Grants
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3.
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Amendment
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(1)
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Whereas, the Parties entered into a License Agreement which became effective on 30 April 2013 (the "License Agreement") and in which DT granted the Licensee the right to use certain trademarks, domain names and its company name in the United States, Puerto Rico and certain territories and protectorates of the United States.
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(2)
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Whereas, § 7.4 of the License Agreement provides that the Parties shall enter into a process to determine a New License Fee (as defined in the License Agreement) that is effective from January 1, 2019.
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(3)
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Whereas, Licensee, DT, Sprint Corporation (“Sprint”) and certain other parties have entered into a Business Combination Agreement dated April 29, 2018 (the "Business Combination Agreement"), pursuant to which Licensee, Sprint and the other parties to the Business Combination Agreement have agreed that Licensee and Sprint shall combine in one or more transactions. The Business Combination Agreement contains specific provisions for the determination of the New License Fee in the event that the transactions (the “Merger Transactions”) contemplated therein are consummated.
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(4)
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Whereas, prior to obtaining clarity on whether the Merger Transactions will close giving effect to the provisions in the Business Combination Agreement regarding the New License Fee the Parties wish to defer the process contained in the License Agreement for determining the New License Fee.
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1.
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General Rules
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1.1
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Any capitalized terms in this Supplemental Agreement shall have the same meaning as defined in the License Agreement, unless this Supplemental Agreement explicitly provides a different definition.
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1.2
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"Triggering Date" shall mean the date on which the Business Combination Agreement is terminated, such that the parties agree it shall not successfully close. For the avoidance of doubt, none of the provisions of this Supplemental Agreement to the License Agreement shall become effective if and when the transactions contemplated by the BCA close successfully.
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1.3
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"New License Fee Determination Date" shall mean the earlier of: (i) the date on which the Parties agree on the New License Fee, or (ii) both Parties have received in writing or by e-mail the determination of the accounting firm jointly appointed by the Parties, or (iii) the arbitral award determining the New License Fee is received by both Parties, pursuant to the terms of the License Agreement.
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1.4
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Sections 15 (Jurisdiction and Venue, Choice of Law) and 16 (Miscellaneous) of the License Agreement shall apply accordingly to this Supplemental Agreement.
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1.5
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The deferral of the calculation of a New License Fee pursuant to the License Agreement and all arrangements set out herein shall be without prejudice to the understanding of each party regarding the appropriate level of a New License Fee and nothing contained herein shall suggest that the current License Fee is an appropriate New License Fee. No party shall be deemed to waive any rights it may have by continuing the current practice regarding the calculation of the License Fee pursuant to the License Agreement.
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2.
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Schedule of the Process for Determining the New License Fee
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2.1
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The Parties agree that the dates and deadlines for the determination of the New License Fee as provided in § 7.4, second paragraph of the License Agreement shall be adjusted as follows:
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(a)
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The deadline of March 31, 2018 shall be replaced by the date that is 60 days after the Triggering Date.
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(b)
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The deadline of July 31, 2018 shall be replaced by the date that is 180 days after the Triggering Date.
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2.2
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The New License Fee determined in accordance with the procedure provided in § 7.4 of the License Agreement and the deadlines provided in section 2.1 herein shall be effective retroactively as of January 1, 2019. For this process the following rules shall apply:
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(a)
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Until the New License Fee Determination Date the Licensee shall continue to pay on a preliminary basis the License Fee currently agreed in the License Agreement.
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(b)
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In the event the New License Fee is determined to be higher than the previously agreed License Fee, the Licensee shall pay the difference between the License Fee and New License Fee for all calendar quarters since January 1, 2019, including the calendar quarter in which the New License Fee Determination Date takes place. The difference shall be due 6 weeks after the calendar quarter in which the New License Fee Determination Date takes place.
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(c)
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In the event the New License Fee is determined to be lower than the previously agreed License Fee, DT shall pay back the difference between the License Fee and New License Fee for all calendar quarters since January 1, 2019, including the calendar quarter in which the New License Fee Determination Date takes place. The repayment by DT shall be due 6 weeks after the calendar quarter in which the New License Fee Determination Date takes place.
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3.
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Effective Date, Termination
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3.1
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This Supplemental Agreement shall become effective on the date it is signed by both Parties.
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1.
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I have reviewed this Quarterly Report on Form 10-Q of T-Mobile US, Inc.;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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(a)
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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(b)
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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(c)
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Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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(d)
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Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
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5.
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The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
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(a)
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
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(b)
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
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/s/ John J. Legere
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John J. Legere
Chief Executive Officer
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1.
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I have reviewed this Quarterly Report on Form 10-Q of T-Mobile US, Inc.;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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(a)
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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(b)
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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(c)
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Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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(d)
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Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
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5.
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The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
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(a)
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
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(b)
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
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/s/ J. Braxton Carter
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J. Braxton Carter
Executive Vice President and Chief Financial Officer
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1.
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The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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2.
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The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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/s/ John J. Legere
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John J. Legere
Chief Executive Officer
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1.
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The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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2.
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The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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/s/ J. Braxton Carter
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J. Braxton Carter
Executive Vice President and Chief Financial Officer
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