T-Mobile US Annual Report 2019

Plain-text annual report

SUPERCHARGING THE UN-CARRIER® 2019 ANNUAL REPORT ONCE AGAIN, SETTING NEW RECORDS MIKE SIEVERT President and Chief Executive Ofﬁ cer Seven years ago we set out to disrupt the wireless industry and change the status quo by Changing Wireless for Good listening to our customers and solving their pain points through our signature Un-carrier As the Un-carrier, weʼve built a differentiated brand that is backed by a culture centered around moves. It’s this Un-carrier strategy and our unrivaled customer-experience obsession that caring about our customers. It’s these tens of thousands of crazy-talented, customer-obsessed are the driving force of our success. employees who are the secret sauce to our success. Year after year T-Mobile continues to ﬁ re on all cylinders, and 2019 was no different. In 2019 All the while, T-Mobile has been working diligently over the last two years to effectively close our merger we delivered record ﬁ nancial results and strong customer growth. On top of that, we launched with Sprint to create New T-Mobile on April 1, 2020, while simultaneously delivering record business America’s ﬁ rst nationwide 5G network with our 600 MHz spectrum. This 5G network is the results. With New T-Mobile, we will create the world’s most transformative 5G network—supercharging foundational layer of 5G coverage, and it’s just the beginning of our 5G journey! In addition, innovation in the U.S. and connecting people throughout the country. Ultimately, the merger allows we continue to expand our footprint and improve network performance, because customers us to unlock the potential of massive scale, enabling us to support better services at lower prices. shouldn’t have to sacriﬁ ce network quality for a better value. Together we have the brand, the people, and the network to SUPERCHARGE our Un-carrier strategy! CUSTOMER CONNECTIONS (END OF YEAR) 86.0M 79.7M 71.5M 72.6M 63.3M 55.0M 46.7M 33.4M 26.1M 37.4M 43.5M 49.3M 54.2M 58.7M 63.7M 67.9M 2012 2013 2014 2015 2016 2017 2018 2019 TOTAL CUSTOMER CONNECTIONS BRANDED CUSTOMERS 2019 CUSTOMER HIGHLIGHTS 7.0M TOTAL NET ADDITIONS 4.9M BRANDED NET CUSTOMER ADDITIONS 4.5M BRANDED POSTPAID NET CUSTOMER ADDITIONS 6th year in a row >5M customer connections 6th year in a row >4M customer additions 5th year in a row leading the industry 3.1M BRANDED POSTPAID PHONE NET CUSTOMER ADDITIONS 6th year in a row leading the industry 339K BRANDED PREPAID NET CUSTOMER ADDITIONS Larger branded prepaid customer base than AT&T and Verizon 0.89% BRANDED POSTPAID PHONE CHURN Beat AT&T 5 quarters in a row Note: The 2012 ﬁ gures represent the standalone results of T-Mobile. The term customer connections is synonymous, and is used interchangeably with, customers. STRONG CUSTOMER GROWTH In 2019 T-Mobile continued its trend of strong customer growth, as more Americans chose to join the Un-carrier movement. The company delivered 7 million total net additions, our sixth consecutive year with more than 5 million. In addition, the company added 4.9 million branded customer additions, our sixth year in a row with more than 4 million. T-Mobile led the industry, once again, with a total of 3.1 million branded postpaid phone net customer additions, further illustrating our ability to compete and take share in a competitive marketplace. And not only have customers chosen to join the Un-carrier movement—theyʼre staying longer than ever before, as reﬂ ected by our low branded postpaid phone churn. In total, approximately 53 million customers have joined T-Mobile since the launch of the Un-carrier in 2013. Weʼll continue forward with our customer-experience obsession, determined to bring the Un-carrier to every potential customer in the United States. J. BRAXTON CARTER Executive Vice President and Chief Financial Ofﬁ cer RECORD-HIGH FINANCIALS T-Mobile’s 2019 full-year ﬁ nancial performance proved that putting customers ﬁ rst is also beneﬁ cial to stockholders. Once again we successfully translated strong customer growth into record ﬁ nancial performance—including industry-leading Service Revenue percentage growth, as well as record Total Revenues, strong Net Cash Provided by Operating Activities, and record Free Cash Flow. All the while continuing our virtuous circle of translating strong customer growth into revenue growth and using those proﬁ ts to further invest back into our customers. It’s a win-win! TMUS STOCK PRICE +23.3% IN 2019! 12.31.18 $63.61 2019 FINANCIAL RESULTS 12.31.19 $78.42 Total Revenue $45.0B +3.9% YEAR OVER YEAR • Record high • 7th year in a row growing YoY Service Revenue $34.0B +6.3% YEAR OVER YEAR • Record high • 6th year in a row leading the industry in percentage growth Net Income $3.5B +20.1% YEAR OVER YEAR • Strong net income and YoY growth Adjusted EBITDA $13.4B +7.9% YEAR OVER YEAR • Record high • Leading the industry in percentage growth Net Cash Provided by Operating Activities $6.8B +75.0% YEAR OVER YEAR • Record high • 3rd year in a row growing YoY Free Cash Flow $4.3B +21.6% YEAR OVER YEAR • Record high • 4th year in a row growing YoY Note: Adjusted EBITDA and Free Cash Flow are non-GAAP ﬁ nancial measures. Deﬁ nitions, explanations, and reconciliations to the most directly comparable GAAP metrics are provided in our annual report on Form 10-K for the year ended December 31, 2019. NEVILLE RAY President of Technology AMERICA’S FIRST, LARGEST AND ONLY NATIONWIDE 5G NETWORK In December 2019 T-Mobile launched America’s ﬁ rst, largest, and only nationwide 5G network. Covering more than 200 million people and more than 5,000 cities and towns across the United States with 5G—that’s more people and more places compared to anyone else! This network is our foundational layer of 5G coverage on 600 MHz low-band spectrum—and we’re just getting started! As we believe, 5G should be for everyone, everywhere. BIGGER BETTER FARTHER OUR 5G COVERS MORE PEOPLE AND PLACES THAN ANYONE ELSE. COVERING 200M POPS NO OTHER 5G SIGNAL IS MORE RELIABLE INDOORS AND OUT. >5,000 CITIES & TOWNS OTHER 5G ONLY COVERS CITY BLOCKS. OURS COVERS THOUSANDS OF MILES. >1M SQ. MILES 600 MHz Spectrum T-Mobile continues its rapid deployment of 4G LTE on 600 MHz spectrum using 5G-ready equipment, with 1.5 million square miles already lit up. By the end of 2019, we covered 248 million people in nearly 8,900 cities and towns in 49 states and Puerto Rico. Combining 600 MHz spectrum and 700 MHz spectrum, we’ve deployed low-band spectrum to 316 million people. 248M POPS 4G LTE NEARLY 8,900 CITIES & TOWNS IN 49 STATES + PUERTO RICO, 1.5M SQ. MILES We continue to expand our footprint and improve the quality of our network to better serve our customers. By the end of 2019 T-Mobile covered 327 million Americans with 4G LTE—that’s approximately 99% of Americans! We’ve effectively caught up to Verizon and AT&T’s network population coverage. CUSTOMER-EXPERIENCE OBSESSION Customers have shown that they want to do business with a company that treats them right, eliminates their pain points, and changes the rules of the industry in their favor—and thatʼs the Un-carrier way! At T-Mobile weʼre unabashedly customer-experience obsessed. Every decision we make is centered around doing what’s right for our customers and putting them ﬁ rst. It’s this unrivaled level of customer service that serves as our key differentiator and sets us apart from the competition. We continue to raise the bar and usher in a new era of customer experience—not just in our industry, but in every industry. Expanding Retail and Delighting Customers In 2019 we increased our retail store footprint by 1 million people, and now cover more than 270 million people nationwide with our T-Mobile and Metro by T-Mobile stores, allowing even more customers to join the Un-carrier revolution! Customers have been so satisﬁ ed with our store experience that T-Mobile received record-breaking customer satisfaction scores, with an all-time-high Net Promoter Score of 82 for full-year 2019. In addition, in August 2019 T-Mobile received the number-one spot according to the J.D. Power 2019 U.S. Wireless Purchase Experience Full-Service Performance Study—Volume 2. This was our fourth consecutive win in delivering the best customer experience in our branded retail stores, leading the full- service wireless industry for two straight years! Famous for Customer Care JON A. FREIER Executive Vice President, Consumer Markets Two years ago we launched Team of Experts—a radical re-invention of the broken wireless customer service model, bringing a dedicated team of highly trained experts assigned to customer accounts. And the results speak for themselves! Customers are happier, staying longer, and deepening their relationships with T-Mobile—all while experiencing record customer satisfaction levels. In fact, T-Mobile received the highest score in both volumes of the J.D. Power 2019 U.S. Wireless Customer Care Full-Service Study and, most recently, received the highest score from J.D. Power for their J.D. Power 2020 U.S. Wireless Customer Care Full-Service Performance Study—Volume 1. CALLIE R. FIELD Executive Vice President, Customer Care MATTHEW A. STANEFF Executive Vice President and Chief Marketing Ofﬁ cer MICHAEL J. KATZ Executive Vice President, T-Mobile for Business Essentials Unlimited 55+ After two years of continued success with T-Mobile’s Magenta Unlimited 55+ plan, we decided to up the ante. In September 2019 T-Mobile launched Essentials Unlimited 55+—the Un-carrier’s best deal for customers age 55 and up, with two lines of unlimited talk, text, and high-speed data for $55 plus tax. Magenta Military In April 2018 T-Mobile launched the Magenta Military plan, delivering one of the biggest discounts ever for active duty military, veterans, and their families, by offering them 50% off family lines. Magenta Military forced AT&T and Verizon to respond and altogether created a wave of change, potentially saving military families more than a billion dollars every year. Magenta First Responder In October 2019 T-Mobile launched Magenta First Responder—the best discount in wireless for ﬁ rst responders and their families, with 50% off family lines! With Magenta First Responder, we’re putting money right back in the pockets of our nationʼs ﬁ rst responders and their families. EXPANDING IN UNDERPENETRATED CUSTOMER SEGMENTS T-Mobile for Business Five years ago T-Mobile went after the business market with our Un-carrier move 9.0—Business Unleashed. Since then T-Mobile for Business has more than tripled its subscriber base and continues to be a driving force in our success. In fact, we swept the highly coveted annual J.D. Power 2019 Business Wireless Customer Satisfaction Study for businesses of all sizes, for the last three years! JANICE KAPNER Executive Vice President and Chief Communications Ofﬁ cer FOSTERING A CULTURE BUILT ON VALUES Community T-Mobile continues to disrupt the wireless industry by staking our business on putting people ﬁ rst. Now we’re applying our Un-carrier spirit to tackle the most pressing problems facing our communities. That means connecting the disconnected, investing in youth, serving our veterans, aiding in disaster response, and empowering employees to give back to local communities. We’re mobilizing for good. Sustainability We’re actively renewing our commitment to the planet. T-Mobile has a long and strong history of disrupting the status quo, and now we’re getting real about doing good for our environment. We’re regreening our planet, one tree at a time, through our partnership with The Nature Conservancy. We’re going green at our headquarters, and shaking up the industry as the ﬁ rst carrier to set science-based targets for curbing our carbon emissions. And as our boldest move yet—we’ve set an industry-leading commitment to renewable energy. Where we lead, others follow. Diversity and Inclusion Diversity and inclusion have been in the Un-carrierʼs DNA since day one—and weʼve been making signiﬁ cant strides ever since. Today our culture is an undeniable differentiator. It’s our commitment to inclusion across race, gender, age, religion, identity, and experience that drives us to challenge the status quo every day. Diversity brings fresh perspectives. Inclusion enables new and different thinking. They are key to our culture and our success, and they will continue as key aspects of who we are. THANK YOU, JOHN LEGERE Effective April 1, 2020, Mike Sievert succeeded John Legere as Chief Executive Ofﬁ cer of T-Mobile, pursuant to previously announced leadership transition plans. John will continue in his role as a member of T-Mobile’s Board of Directors through the 2020 Annual Meeting of Shareholders. From all of us at T-Mobile, we are grateful to John Legere for his incredible leadership over the last seven years. John has led an unprecedented turnaround and success story that have positioned T-Mobile toward an even brighter future, and greatly impacted the lives of customers, employees, partners, and investors. COMPANY AWARDS 16 UN-CARRIER MOVES Glassdoor Best Places to Work (2020, 2019, 2018, 2017) Glassdoor Top CEOs (2019, 2018, 2017) Comparably Top CEOs for Diversity (2019, 2018) SIMPLE CHOICE SIMPLE GLOBAL CARRIER FREEDOM Fortune 100 Best Companies to Work For (2019, 2018) TEST DRIVE WI-FI UNLEASHED Fortune Best Places to Work for Women (2019, 2018) Fortune Best Places to Work for Millennials (2019, 2018) Best Places to Work for Disability and Inclusion (2019) Best CEOs for Minority Workers (2019) 100 on the HRC Corporate Equality Index (2019, 2017) Forbes America’s Best Employers for Diversity (2020) UN-CARRIER FOR BUSINESS UN-CARRIER NEXT TEAM OF EXPERTS NEW T-MOBILE 5G FOR GOOD 7 YEARS OF UN-CARRIER® 7 YEARS OF UN-CARRIER John Legere joined T-Mobile in September 2012 as President and Chief Executive Ofﬁ cer, and found a stupid, broken, arrogant wireless industry that was in desperate need of a customer advocate. Since then, John and his leadership team have crisscrossed the nation, listening to customers and employees, attacking their pain points, forcing the industry to respond and, ultimately, changing wireless for good! Carrier Freedom Test Drive Music Freedom Simple Choice “A break from industry norms, the Simple Choice Plan eliminates restrictive annual contracts, taking pain and confusion out of the wireless experience.” New T-Mobile 5G for Good First, Largest, and Only Nationwide 5G Network Jump! Wi-Fi Unleashed Un-carrier for Business T-Mobile Tuesday Un-carrier Next Simple Global Data Stash Binge On T-Mobile ONE Netﬂ ix On Us Team of Experts CEO Transition 2013 2014 2015 2016 2017 2018 2019 33M 2012 86M 2019 2.6x $45.0B $34.0B $19.8B $17.2B $3.5B -$7.3B 2012 2019 2.3x TOTAL REVENUE 2012 2019 2.0x SERVICE REVENUE 2012 2019 FROM - TO + NET INCOME $13.4B $5.0B 2012 2019 2.7x ADJ. EBITDA $4.3B $78.42 $6.8B $3.9B 2012 2019 1.8x NET CASH PROVIDED BY OPERATING ACTIVITIES $961M $16.52 2012 2019 4.5x FREE CASH FLOW 5.1.2013 12.31.2019 4.7x TMUS STOCK PRICE FROM METRO PCS MERGER TOTAL CUSTOMER CONNECTIONS! INCREDIBLE FINANCIAL GROWTH Notes: 1 The 2012 ﬁ gures represent the stand-alone results of T-Mobile. 2 Adjusted EBITDA and Free Cash Flow are non-GAAP financial measures. Definitions, explanations and reconciliations to the most directly comparable GAAP measures are provided in this annual report, including the 10-K for the year ended December 31, 2019. 3 Effective January 1, 2017, we changed an accounting principle. The imputed discount on Equipment Installment Plan receivables, which is amortized over the ﬁ nanced installment term using the effective interest method and was previously presented within Interest income in our Consolidated Statements of Comprehensive Income, is now presented within Other revenues in our Consolidated Statements of Comprehensive Income. We have applied this change retrospectively and presented the effect of $72 million on the year ended December 31, 2012. FIRST, LARGEST, AND ONLY NATIONWIDE 5G NETWORK CREATING NEW T-MOBILE On April 29, 2018, T-Mobile and Sprint entered into a Business Combination Agreement to come together New T-Mobile Un-carrier Move 1.0—5G for Good On November 7, 2019, T-Mobile announced its plans for the ﬁ rst Un-carrier move for New T-Mobile— 5G for Good! This move features three bold initiatives that harness the new company’s transformational network capabilities to bring accessibility and connectivity to all Americans! to form New T-Mobile. After nearly two years of tremendous hard work from both companies, T-Mobile Connecting Heroes Initiative™ completed its acquisition of Sprint on April 1, 2020, to create New T-Mobile. A 10-year commitment to provide free 5G service—unlimited talk, text, and smartphone data—to public New T-Mobile is a bigger and stronger company, positioned as a ﬁ erce competitor and formidable disrupter in the wireless industry and beyond! With T-Mobile’s low-band and high-band spectrum, and nonproﬁ t state and local ﬁ rst-responder agencies, ensuring ﬁ rst responders always maintain the highest priority on T-Mobile’s network, regardless of data consumption. and Sprint’s mid-band spectrum holdings, weʼre going to create the world’s most transformational Project 10 Million 5G network. This will allow us to SUPERCHARGE the Un-carrier strategy and be a force for An unprecedented $10 billion commitment to help eradicate the “homework gap” that exists for millions good—as we work to unlock the potential of our massive scale. Backed by the additional capacity, of children by offering free service, hotspots, and devices at a reduced cost to 10 million households New T-Mobile’s network will be able to offer unmatched value to consumers, with better service around the U.S. over ﬁ ve years. at lower prices—delivering substantial value to shareholders, employees, and the communities we serve. New T-Mobile gives us the opportunity to become number one—in market share and in our customers’ hearts—as we strive to be one of the most loved brands in the world, famous for putting customers ﬁ rst. T-Mobile® Connect In response to the COVID-19 pandemic, T-Mobile launched T-Mobile Connect ahead of schedule in March 2020, because having a reliable, low-cost connection is critical for many Americans facing ﬁ nancial strain during a time of crisis. This groundbreaking prepaid service offer delivers a new, Together we have the brand, the people, and the network to supercharge the Un-carrier—bringing competitive $15 per month prepaid option to everyone, particularly lower-income consumers. That’s more competition, more innovation, and even more customer-experience obsession! With New T-Mobile half the price of T-Mobile’s lowest plan at the time of launch. New T-Mobile is not just a bigger company, we have the scale and ﬁ nancial ﬁ repower to take on AT&T, Verizon, and big cable like never before! we’re a BETTER company! TRANSITIONING LEADERSHIP Mike Sievert CEO of T-Mobile, Effective April 1, 2020 Effective April 1, 2020, Mike Sievert, previously our President and Chief Operating Ofﬁ cer, stepped into Unlock the Potential of Massive Scale With the combined resources of T-Mobile and Sprint, we have the opportunity to unlock the potential of massive scale. We plan to rapidly execute a seamless, high-quality integration plan, enabling us to unleash an unprecedented $43 billion in synergies—creating a company with dramatically lower costs thatʼs able to support better services at lower prices. In the end our competitors will be scrambling to catch up, ultimately leaving consumers as the ultimate winners. Build the World’s Most Transformative 5G Network Together with T-Mobile’s low-band and high-band spectrum and Sprint’s mid-band spectrum holdings, weʼll build the world’s most transformative 5G network, which will be our foundation for growth! New T-Mobile will have the only 5G network thatʼs both broad and deep, reaching nearly everyone. This network will have 14 times the capacity versus T-Mobile standalone, allowing us to leapfrog the the role of Chief Executive Ofﬁ cer of T-Mobile, pursuant to previously announced leadership transition competition in terms of network performance and capacity! plans. This decision was made as part of a thorough, multi-year succession planning process, to ensure a natural progression of the business and ﬁ nd a next-generation leader who is committed to the strategic direction of the company. Mike Sievert joined T-Mobile in 2012 as Chief Marketing Ofﬁ cer, and he became Chief Operating Ofﬁ cer in 2015. In 2018 he joined the Board of Directors and was appointed President of the company. Mike has been instrumental in leading the design and execution of 16 Un-carrier moves, and is 100% committed to continuing the Un-carrier strategy. 2020 Priorities with New T-Mobile Become #1 for Customers At T-Mobile we have a brand thatʼs second to none, and we have an opportunity to become number one for customers—in market share and in our customers’ hearts. With New T-Mobile’s massive scale and the world’s most transformative 5G network, enabling us to take on the competition like never before. Our commitment to our customers is our key differentiator, and weʼll continue to strive to be one of the most loved brands in the world and famous for our customer experience across all industries. Create Substantial Value for Stakeholders New T-Mobile is well positioned to create substantial value for all stakeholders —including shareholders, employees, and the communities we serve. Armed with the massive capacity of our 5G network, Looking ahead to 2020 and beyond, our long-term strategy remains to effectively balance growth and customers will no longer have to choose between great service or a lower price—with New T-Mobile proﬁ tability. To get there, our strategy is simple: theyʼll get both! #AREYOUWITHUS? #WEWONTSTOP (cid:44)(cid:87)(cid:183)(cid:86)(cid:3)(cid:69)(cid:72)(cid:72)(cid:81)(cid:3)(cid:86)(cid:72)(cid:89)(cid:72)(cid:81)(cid:3)(cid:76)(cid:81)(cid:70)(cid:85)(cid:72)(cid:71)(cid:76)(cid:69)(cid:79)(cid:72)(cid:3)(cid:92)(cid:72)(cid:68)(cid:85)(cid:86)(cid:3)(cid:69)(cid:88)(cid:76)(cid:79)(cid:71)(cid:76)(cid:81)(cid:74)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:56)(cid:81)(cid:16)(cid:70)(cid:68)(cid:85)(cid:85)(cid:76)(cid:72)(cid:85)(cid:17)(cid:3)(cid:44)(cid:81)(cid:3)(cid:87)(cid:75)(cid:68)(cid:87)(cid:3)(cid:87)(cid:76)(cid:80)(cid:72)(cid:3)(cid:90)(cid:72)(cid:380)(cid:89)(cid:72)(cid:3)(cid:79)(cid:68)(cid:88)(cid:81)(cid:70)(cid:75)(cid:72)(cid:71)(cid:3)(cid:20)(cid:25)(cid:3) (cid:56)(cid:81)(cid:16)(cid:70)(cid:68)(cid:85)(cid:85)(cid:76)(cid:72)(cid:85)(cid:3)(cid:80)(cid:82)(cid:89)(cid:72)(cid:86)(cid:3)(cid:87)(cid:75)(cid:68)(cid:87)(cid:3)(cid:75)(cid:72)(cid:79)(cid:83)(cid:72)(cid:71)(cid:3)(cid:86)(cid:82)(cid:79)(cid:89)(cid:72)(cid:3)(cid:70)(cid:88)(cid:86)(cid:87)(cid:82)(cid:80)(cid:72)(cid:85)(cid:86)(cid:183)(cid:3)(cid:79)(cid:68)(cid:85)(cid:74)(cid:72)(cid:86)(cid:87)(cid:3)(cid:83)(cid:68)(cid:76)(cid:81)(cid:3)(cid:83)(cid:82)(cid:76)(cid:81)(cid:87)(cid:86)(cid:3)(cid:90)(cid:76)(cid:87)(cid:75)(cid:76)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:76)(cid:81)(cid:71)(cid:88)(cid:86)(cid:87)(cid:85)(cid:92)(cid:4) (cid:55)(cid:75)(cid:72)(cid:86)(cid:72)(cid:3)(cid:80)(cid:82)(cid:89)(cid:72)(cid:86)(cid:3)(cid:70)(cid:85)(cid:72)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:83)(cid:72)(cid:85)(cid:80)(cid:68)(cid:81)(cid:72)(cid:81)(cid:87)(cid:3)(cid:86)(cid:87)(cid:85)(cid:88)(cid:70)(cid:87)(cid:88)(cid:85)(cid:68)(cid:79)(cid:3)(cid:70)(cid:75)(cid:68)(cid:81)(cid:74)(cid:72)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:73)(cid:82)(cid:85)(cid:70)(cid:72)(cid:71)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:76)(cid:81)(cid:71)(cid:88)(cid:86)(cid:87)(cid:85)(cid:92)(cid:3)(cid:87)(cid:82)(cid:3)(cid:85)(cid:72)(cid:86)(cid:83)(cid:82)(cid:81)(cid:71)(cid:17)(cid:3) (cid:58)(cid:72)(cid:380)(cid:85)(cid:72)(cid:3)(cid:70)(cid:75)(cid:68)(cid:81)(cid:74)(cid:76)(cid:81)(cid:74)(cid:3)(cid:90)(cid:76)(cid:85)(cid:72)(cid:79)(cid:72)(cid:86)(cid:86)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:74)(cid:82)(cid:82)(cid:71)(cid:179)(cid:68)(cid:81)(cid:71)(cid:3)(cid:90)(cid:72)(cid:3)(cid:90)(cid:82)(cid:81)(cid:183)(cid:87)(cid:3)(cid:86)(cid:87)(cid:82)(cid:83)(cid:4) UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2019 or TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 1-33409 ☒ ☐ T-MOBILE US, INC. (Exact name of registrant as specified in its charter) Delaware (State or other jurisdiction of incorporation or organization) 20-0836269 m (I.R.S. Employer Identification No.) 12920 SE 38th Street Bellevue, Washington (Address of principal executive offiff ces) 98006-1350 (Zip Code) (425) 378-4000 (Registrant’s telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act: Title of each class Common Stock, par value $0.00001 per share Trading Symbol TMUS Securities registered pursuant to Section 12(g) of the Act: None Name of each exchange on which registered The NASDAQ Stock Market LLC ff d in Rule 405 of the Securities Act. Yes ☒ No □ the preceding 12 months (or forff Indicate by check mark if the registrant is a well-known seasoned issuer, as defined Indicate by check mark if the registrant is not required to filff e reports pursuant to Section 13 or 15(d) of the Act. Yes □ No ☒ Indicate by check mark whether the registrant (1) has filed all reports required to be filff ed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐ Indicate by check mark whether the registrant has submitted electronically every I pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) durd ing the preceding 12 months (or forff registrant was required to submit such files). Yes ☒ No ☐ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filff er,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. nteractive Data File required to be submitted such shorter period that the registrant was required to file such reports), such shorter period that the rr Large accelerated filer Non-accelerated filer ☒ ☐ Accelerated filer Smaller reporting company Emerging growth company ☐ ☐ ☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ Indicate by check mark whether the registrant is a shell companym As of June 28, 2019, the aggregate market value of the voting and non-voting common equity held by non-affiliates was $23.2 billion based on the closing sale price as reported on the NASDAQ Global Select Market. As of January 3rr shares of common stock outstanding. (as definff ed in Rule 12b-2 of the Exchange Act). 1, 2020, there were 856,932,845 Yes ☐ No ☒ DOCUMENTS INCORPORATED BY REFERENCE Part III of this Annual Report on Form 10-K will be incorporated by reference froff m certain portions of the definiti ve Proxy Statement for the Registrant’s Annual Meeting of Stockholders, which definitive Proxy Statement will be filed with the Securities and Exchange Commission pursuant to Regulation 14A or will be included in an amendment to this Report. ff T-Mobile US, Inc. Form 10-K For the Year Ended December 31, 2019 Table of Contents PART I. Item 1. Business Item 1A. Risk Factors Item 1B. Unresolved Staff Comments Item 2. Item 3. Item 4. Properties Legal Proceedings Mine Safety Disclosures PART II. Item 5. Item 6. Item 7. Item 7A. Item 8. Item 9. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Selected Financial Data Management’s Discussion and Analysis of Financial Condition and Results of Operations Quantitative and Qualitative Disclosures About Market Risk Financial Statements and Supplementary Data Changes in and Disagreements With Accountants on Accounting and Financial Disclosure Item 9A. Controls and Procedures Item 9B. Other Information PART III. Item 10. Item 11. Item 12. Item 13. Item 14. PART IV. Directors, Executive Officers and Corporate Governance Executive Compensation Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Certain Relationships and Related Transactions, and Director Independence Principal Accounting Fees and Services Item 15. Exhibits, Financial Statement Schedules Item 16. Form 10-K Summary INDEX TO EXHIBITS SIGNATURE 5 9 26 27 27 27 27 28 30 53 55 111 111 112 112 112 112 113 113 113 113 114 123 Cautionary Statement Regarding Forward-Looking Statements This Annual Report on Form 10-K (“Form 10-K”) includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical fact, including information concerning our future results of operations, are forward-looking statements. These forward-looking statements are generally identified by the words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “could” or similar expressions. Forward- looking statements are based on current expectations and assumptions, which are subject to risks and uncertainties and may cause actual results to differ materially from the forward-looking statements. The following important factors, along with the Risk Factors included in Part I, Item 1A of this Form 10-K, could affect future results and cause those results to differ materially from those expressed in the forward-looking statements: • • • • • • • • • • • • • • • • • • the failure to obtain, or delays in obtaining, regulatory approval 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 regulatory approval for the Transactions, and the risk that such regulatory approval 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 risk that the antitrust litigation related to the Transactions brought by the attorneys general of certain states and the District of Columbia will result in an order preventing the completion of the Transactions and the risk of other litigation or regulatory actions related to the Transactions; the exercise by one or both parties of a right 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; the assumption of significant liabilities in connection with, and significant costs related to, the Transactions, including liabilities of Sprint that may become liabilities of the combined company or that may otherwise arise and financing costs; 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; differences with Sprint’s 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; costs or difficulties related to the completion of the Divestiture Transaction and the satisfaction of the Government Commitments (each as defined below); 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; 3 • • • 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 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 cards, dealers, or subscriptions; and interests of our majority stockholder may differ from the interests of other stockholders. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. We undertake no obligation to revise or publicly release the results of any revision to these forward-looking statements, except as required by law. In this Form 10-K, unless the context indicates otherwise, references to “T-Mobile,” “T-Mobile US,” “our Company,” “the Company,” “we,” “our,” and “us” refer to T-Mobile US, Inc., a Delaware corporation, and its wholly-owned subsidiaries. Investors and others should note that we announce material financial and operational information to our investors using our investor relations website, press releases, SEC filings and public conference calls and webcasts. We intend to also use certain social media accounts as means of disclosing information about us and our services and for complying with our disclosure obligations under Regulation FD (the @TMobileIR Twitter account (https://twitter.com/TMobileIR) and through April 30, 2020, the @JohnLegere Twitter (https://twitter.com/JohnLegere), Facebook and Periscope accounts, which Mr. Legere also uses as means for personal communications and observations, and on and after May 1, 2020 the @SievertMike Twitter (https:// twitter.com/SievertMike) account, which Mr. Sievert also uses as a means for personal communications and observations). The information we post through these social media channels may be deemed material. Accordingly, investors should monitor these social media channels in addition to following our press releases, SEC filings and public conference calls and webcasts. The social media channels that we intend to use as a means of disclosing the information described above may be updated from time to time as listed on our investor relations website. 4 PART I. Item 1. Business Business Overview and Strategy Un-carrier Strategy We are the Un-carrier. Through our Un-carrier strategy, we have disrupted the wireless communications services industry, by actively engaging with and listening to our customers and eliminating their existing pain points, including providing them with added value, an exceptional experience and implementing signature Un-carrier initiatives that have changed wireless for good. We ended annual service contracts, overages, unpredictable international roaming fees, data buckets and so much more. We are inspired by a relentless customer experience focus, consistently leading the wireless industry in customer care by delivering an excellent customer experience with our “Team of Experts,” which drives our record-high customer satisfaction levels while enabling operational efficiencies. Since the launch of the Un-carrier in 2013, approximately 53 million customers have joined the Un-carrier movement, and we will continue forward with our customer experience focus, determined to bring the Un-carrier to every potential customer in the United States. Our network is the foundation of our success and everything we do is powered by our nationwide 4G Long-Term Evolution (“LTE”) network, which covers 327 million Americans (99% of the U.S. population) and our recently launched nationwide 5G network. We continue to expand the footprint and improve the quality of our network, providing outstanding wireless experiences for customers who will not have to compromise on quality and value. Going forward, it is this network that will allow us to deliver new, innovative products and services with the same customer experience focus and industry-disrupting mentality that has redefined the wireless communications services industry in the United States in the customers’ favor. History T-Mobile USA, Inc. (“T-Mobile USA”), a Delaware corporation, was formed in 1994 as VoiceStream Wireless PCS (“VoiceStream”), a subsidiary of Western Wireless Corporation (“Western Wireless”). VoiceStream was spun off from Western Wireless in 1999, acquired by Deutsche Telekom AG (“DT”) in 2001 and renamed T-Mobile USA, Inc. in 2002. In 2013, T-Mobile US, Inc., a Delaware corporation, was formed through the business combination of T-Mobile USA and MetroPCS Communications, Inc. (“MetroPCS”). The business combination was accounted for as a reverse acquisition with T- Mobile USA as the accounting acquirer. Accordingly, T-Mobile USA’s historical financial statements became the historical financial statements of the combined company. Proposed Sprint Transactions On April 29, 2018, we entered into the Business Combination Agreement with Sprint to merge in an all-stock transaction at a fixed exchange ratio of 0.10256 shares of T-Mobile common stock for each share of Sprint common stock, or 9.75 shares of Sprint common stock for each share of T-Mobile common stock. If the Merger closes, the combined company will be named “T-Mobile,” and as a result of the Merger, is expected to be able to build upon our recently launched foundational 5G network of 600 MHz spectrum to deliver transformational broad, deep and nationwide 5G for all, accelerate innovation and increase competition in the U.S. wireless, video and broadband industries. If the Merger closes, we expect to be able to combine Sprint’s 2.5 GHz mid-band spectrum with our foundational layer of 5G and millimeter-wave spectrum, completing the “layer cake” of spectrum and providing customers with an unmatched 5G experience at lower prices. The consummation of the Merger remains subject to certain closing conditions, as well as pending judicial and regulatory proceedings. We expect the Merger will be permitted to close in early 2020. For more information regarding our Business Combination Agreement, see Note 2 – Business Combinations of the Notes to the Consolidated Financial Statements. Business We provide wireless services to 86.0 million postpaid, prepaid and wholesale customers and generate revenue by providing affordable wireless communications services to these customers, as well as a wide selection of wireless devices and accessories. Our most significant expenses relate to acquiring and retaining high-quality customers, providing a full range of devices, compensating employees, and operating and expanding our network. We provide service, devices and accessories across our flagship brands, T-Mobile and Metro by T-Mobile, through our owned and operated retail stores, as well as through our 5 websites (www.T-Mobile.com and www.metrobyt-mobile.com), T-Mobile app and customer care channels. In addition, we sell devices to dealers and other third-party distributors for resale through independent third-party retail outlets and a variety of third-party websites. The information on our websites is not part of this Form 10-K. See Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations for additional information. Customers We provide wireless communications services to three primary categories of customers: • • Branded postpaid customers generally include customers who are qualified to pay after receiving wireless communications services utilizing phones, wearables, DIGITS or other connected devices which includes tablets and SyncUp DRIVE™; Branded prepaid customers generally include customers who pay for wireless communications services in advance. Our branded prepaid customers include customers of T-Mobile and Metro by T-Mobile; and • Wholesale customers include Machine-to-Machine (“M2M”) and Mobile Virtual Network Operator (“MVNO”) customers that operate on our network but are managed by wholesale partners. We generate the majority of our service revenues by providing wireless communications services to branded postpaid and branded prepaid customers. Our ability to acquire and retain branded postpaid and prepaid customers is important to our business in the generation of service revenues, equipment revenues and other revenues. In 2019, our service revenues generated by providing wireless communications services by customer category were: • • • 67% Branded postpaid customers; 28% Branded prepaid customers; and 5% Wholesale customers and Roaming and other services. Starting with the three months ended March 31, 2020, we plan to discontinue reporting wholesale customers and instead focus on branded customers and wholesale revenues, which we consider more relevant than the number of wholesale customers given the expansion of M2M and Internet of Things (“IoT”) products. All of our revenues for the years ended December 31, 2019, 2018, and 2017 were earned in the United States, including Puerto Rico and the U.S. Virgin Islands. Services and Products We provide wireless communications services through a variety of service plan options. We also offer a wide selection of wireless devices, including smartphones, wearables, tablets and other mobile communication devices, which are manufactured by various suppliers. Our primary service plan offering, which allows customers to subscribe for wireless communications services separately from the purchase of a device, is our signature Magenta plan (“Magenta”) and is packed with exclusive benefits, including unlimited talk, text and smartphone data on our network, free stuff, discounts, and more every week from T-Mobile Tuesdays and “Team of Experts,” our dedicated customer care team. Customers also have the ability to choose additional features for an additional cost on Magenta Plus. We also offer an Essentials rate plan, for customers who want the basics, as well as specific rate plans to qualifying customers, including Unlimited 55+, Military, First Responder, and Business. Our device options for qualifying customers on Magenta, and previously on T-Mobile ONE and Simple Choice plans, include: • • • The option of financing all or a portion of the individual device or accessory purchase price at the time of sale over an installment period of up to 36 or 12 months, respectively, using an Equipment Installment Plan ("EIP"); For qualifying customers who finance their initial device with an EIP, an option to enroll in our Just Upgrade My Phone (“JUMP!®”) program to later upgrade their device; and The option to lease a device over a period of up to 18 months and upgrade it for a new device up to one time per month with JUMP! On Demand™. 6 5G • • In December 2019, T-Mobile launched America’s first nationwide 5G network, including prepaid 5G with Metro by T-Mobile, covering more than 200 million people and more than 5,000 cities and towns across the United States with 5G. In addition, we introduced two new 600 MHz 5G capable superphones, the exclusive OnePlus 7T Pro 5G McLaren and the Samsung Galaxy Note10+ 5G and anticipate offering an industry-leading smartphone portfolio built to work on nationwide 5G in 2020. This 5G network is our foundational layer of 5G coverage on 600 MHz low-band spectrum. T-Mobile’s 5G network is not just bigger, it’s better. T-Mobile’s 5G is based on real, standards-based 5G and covers more than 60% of the population across more than 1 million square miles. T-Mobile’s 5G network works indoors and is available to anyone with a capable device. Spectrum Position We provide wireless communications services utilizing mid-band spectrum licenses, such as Advanced Wireless Services (“AWS”) and Personal Communications Service (“PCS”), low-band spectrum licenses utilizing our 600 MHz and 700 MHz spectrum, and mmWave spectrum. • We owned an average of 111 MHz of spectrum nationwide as of December 31, 2019, not including mmWave spectrum. The spectrum comprises an average of 31 MHz in the 600 MHz band, 10 MHz in the 700 MHz band, 29 MHz in the 1900 MHz PCS band and 41 MHz in the AWS band. • We have cleared 600 MHz spectrum covering approximately 275 million POPs as of December 31, 2019 and expect to clear the remaining 600 MHz spectrum POPs in 2020. • We continue our deployment of LTE on 600 MHz spectrum using 5G-ready equipment. As of December 31, 2019, we were live with 4G LTE in nearly 8,900 cities and towns in 49 states and Puerto Rico covering 1.5 million square miles and 248 million POPs. • • Combining 600 and 700 MHz spectrum, we have deployed 4G LTE in low-band spectrum to 316 million POPs. Currently, more than 33 million devices on T-Mobile’s network are compatible with 600 MHz spectrum. • On June 3, 2019, the Federal Communications Commission (“FCC”) announced the results of Auctions 101 (28 GHz spectrum) and 102 (24 GHz spectrum). In the combined auctions, T-Mobile spent $842 million to more than quadruple its nationwide average total mmWave spectrum holdings from 104 MHz to 471 MHz. • We will evaluate future spectrum purchases in current and upcoming auctions and in the secondary market to further augment our current spectrum position. We are not aware of any such spectrum purchase options that come close to matching the efficiencies and synergies possible from the Merger. Network Coverage Growth • We continue to expand our coverage breadth and covered 327 million people with 4G LTE as of December 31, 2019; • • Our nationwide 5G network covered more than 200 million people as of December 31, 2019; and As of December 31, 2019, we had equipment deployed on approximately 66,000 macro cell sites and 25,000 small cell/distributed antenna system sites. Network Capacity Growth Due to industry spectrum limitations (especially in mid-band), we continue to make efforts to expand our capacity and increase the quality of our network through the re-farming of existing spectrum and implementation of new technologies including Voice over LTE (“VoLTE”), Carrier Aggregation, 4x4 multiple-input and multiple-output (“MIMO”), 256 Quadrature Amplitude Modulation (“QAM”) and Licensed Assisted Access (“LAA”). • • • VoLTE comprised 90% of total voice calls in the fourth quarter of 2019, compared to 87% in the fourth quarter of 2018. Carrier aggregation is live for our customers in 969 markets as of December 31, 2019, up from 923 markets as of December 31, 2018. 4x4 MIMO is currently available in 708 markets as of December 31, 2019, up from 564 markets as of December 31, 2018. 7 • Our customers have 256 QAM available across the Un-carrier's entire 4G LTE footprint. • We are the first carrier globally to have rolled out the combination of carrier aggregation, 4x4 MIMO and 256 QAM. This trifecta of standards has been rolled out to 701 markets as of December 31, 2019, up from 549 markets as of December 31, 2018. • LAA has been deployed to 30 cities including Atlanta, Austin, Chicago, Denver, Houston, Las Vegas, Los Angeles, Miami, New Orleans, New York, Philadelphia, Sacramento, San Diego, Seattle, and Washington DC. Competition The wireless communications services industry is highly competitive. We are the third largest provider of postpaid service plans and the second largest provider of prepaid service plans in the U.S. as measured by customers. Our competitors include other national carriers, such as AT&T Inc. (“AT&T”), Verizon Communications, Inc. (“Verizon”) and Sprint. AT&T and Verizon are significantly larger than we are and enjoy greater resources and scale advantages as compared to us. In addition, our competitors include numerous smaller regional carriers, mobile virtual network operators (“MVNOs”), including TracFone Wireless, Inc., Comcast Corporation, Charter Communications, Inc., and Altice USA, Inc., many of which offer no-contract, postpaid and prepaid service plans. Competitors also include providers who offer similar communication services, such as voice, messaging and data services, using alternative technologies or services. Competitive factors within the wireless communications services industry include pricing, market saturation, service and product offerings, customer experience, network investment and quality, development and deployment of technologies, availability of additional spectrum licenses and regulatory changes. Some competitors have shown a willingness to use aggressive pricing as a source of differentiation. Other competitors have sought to add ancillary services, like mobile video or music streaming services, to enhance their offerings. Taken together, the competitive factors we face continue to put pressure on growth and margins as companies compete to retain the current customer base and continue to add new customers. Employees As of December 31, 2019, we employed approximately 53,000 full-time and part-time employees, including network, retail, administrative and customer support functions. Regulation The FCC regulates many key aspects of our business, including licensing, construction, the operation and use of our network, modifications of our network, control and ownership of our licenses and authorizations, the sale, transfer and acquisition of certain licenses, domestic roaming arrangements and interconnection agreements, pursuant to its authority under the Communications Act of 1934, as amended (“Communications Act”). The FCC has a number of complex requirements that affect our operations and pending proceedings regarding additional or modified requirements that could increase our costs or diminish our revenues. For example, the FCC has rules regarding provision of 911 and E-911 services, porting telephone numbers, interconnection, roaming, internet openness or net neutrality, disabilities access, privacy and cybersecurity, consumer protection, and the universal service and Lifeline programs. Many of these and other issues are being considered in ongoing proceedings, and we cannot predict whether or how such actions will affect our business, financial condition or results of operations. Our ability to provide services and generate revenues could be harmed by adverse regulatory action or changes to existing laws and regulations. In addition, regulation of companies that offer competing services can impact our business indirectly. Except for operations in certain unlicensed frequency bands, wireless communications services providers generally must be licensed by the FCC to provide communications services at specified spectrum frequencies within specified geographic areas and must comply with the rules and policies governing the use of the spectrum as adopted by the FCC. The FCC issues each license for a fixed period of time, typically 10-15 years depending on the particular licenses. While the FCC has generally renewed licenses given to operating companies like us, the FCC has authority to both revoke a license for cause and to deny a license renewal if a renewal is not in the public interest. Furthermore, we could be subject to fines, forfeitures and other penalties for failure to comply with FCC regulations, even if any such non-compliance was unintentional. In extreme cases, penalties can include revocation of our licenses. The loss of any licenses, or any related fines or forfeitures, could adversely affect our business, results of operations and financial condition. Additionally, Congress’ and the FCC’s allocation of additional spectrum for broadband commercial mobile radio service (“CMRS”), which includes cellular, PCS, miscellaneous wireless services and specialized mobile radio, could significantly increase and intensify competition. We cannot assess the impact that any developments that may occur in the U.S. economy or any future spectrum allocations by the FCC may have on license values. FCC spectrum auctions and other market 8 developments may adversely affect the market value of our licenses in the future. A significant decline in the value of our licenses could adversely affect our financial condition and results of operations. In addition, the FCC periodically reviews its policies on how to evaluate carriers’ spectrum holdings. A change in these policies could affect spectrum resources and competition among us and other carriers. Congress and the FCC have imposed limitations on foreign ownership of CMRS licensees that exceed 20% direct ownership or 25% indirect ownership through an entity controlling the licensee. The FCC has ruled that higher levels of indirect foreign ownership, even up to 100%, are presumptively consistent with the public interest, but must be reviewed and approved. Consistent with that established policy, the FCC has issued a declaratory ruling authorizing up to 100% ownership of our Company by DT. This declaratory ruling, and our licenses, are conditioned on DT’s and the Company’s compliance with a network security agreement with the Department of Justice, the Federal Bureau of Investigation and the Department of Homeland Security. Failure to comply with the terms of this agreement could result in fines, injunctions and other penalties, including potential revocation of our spectrum licenses. While the Communications Act generally preempts state and local governments from regulating the entry of, or the rates charged by, wireless communications services providers, certain state and local governments regulate other terms and conditions of wireless service, including billing, termination of service arrangements and the imposition of early termination fees, advertising, network outages, the use of devices while driving, zoning and land use. Additionally, after the FCC’s adoption of the 2017 “Restoring Internet Freedom” (RIF) Order reclassifying broadband internet access services as Title I (non-common carrier services), a number of states have sought to impose state-specific net neutrality and privacy requirements on providers’ broadband services. The FCC ruling broadly preempted such state efforts, which are inconsistent with the FCC’s federal deregulatory approach. Recently, however, the DC Circuit issued a ruling largely upholding the RIF Order, but also vacating the portion of the ruling broadly preempting state/local net neutrality laws. The court left open the prospect that particular state laws could still unlawfully conflict with the FCC net neutrality rules and be preempted. A petition seeking rehearing of the decision has been filed. Court challenges to some of the state enactments also remain pending. While most states are largely seeking to codify the repealed federal rules, there are differences in some states, notably California, which has passed separate privacy and net neutrality legislation. There are also efforts within Congress to pass federal legislation to codify uniform federal privacy and net neutrality requirements, while also ensuring the preemption of separate state requirements, including the California laws. If not rescinded, separate state requirements will impose significant business costs and could also result in increased litigation costs and enforcement risks. State authority over wireless broadband services will remain unsettled until final action by the courts or Congress. In addition, the Federal Trade Commission (“FTC”) and other federal agencies have jurisdiction over some consumer protection and elimination and prevention of anticompetitive business practices with respect to the provision of non-common carrier services. Further, the FCC and the Federal Aviation Administration regulate the siting, lighting and construction of transmitter towers and antennae. Tower siting and construction are also subject to state and local zoning, as well as federal statutes regarding environmental and historic preservation. The future costs to comply with all relevant regulations are to some extent unknown and changes to regulations, or the applicability of regulations, could result in higher operating and capital expenses, or reduced revenues in the future. Available Information The SEC maintains an internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically at www.sec.gov. Our Form 10-K and all other reports and amendments filed with or furnished to the SEC are also publicly available free of charge on the investor relations section of our website at investor.t-mobile.com as soon as reasonably practicable after these materials are filed with or furnished to the SEC. Our corporate governance guidelines, code of ethics for senior financial officers, code of business conduct, speak-up policy, supplier code of conduct, and charters for the audit, compensation, nominating and corporate governance and executive committees of our Board of Directors are also posted on the investor relations section of our website at investor.t-mobile.com. The information on our websites is not part of this or any other report we file with, or furnish to, the SEC. Item 1A. Risk Factors In addition to the other information contained in this Form 10-K, the following risk factors should be considered carefully in evaluating T-Mobile. Our business, financial condition, liquidity, or operating results, as well as the price of our common stock and other securities, could be materially adversely affected by any of these risks. 9 Risks Related to Our Business and the Wireless Industry Competition, industry consolidation, and changes in the market for wireless services could negatively affect our ability to attract and retain customers and adversely affect our business, financial condition, and operating results. We have multiple wireless competitors, some of which have greater resources than we have and compete for customers based principally on service/device offerings, price, network coverage, speed and quality and customer service. We expect market saturation to continue to cause the wireless industry’s customer growth rate to be moderate in comparison with historical growth rates, or possibly negative, leading to ongoing competition for customers. We also expect that our customers’ appetite for data services will place increasing demands on our network capacity. This competition and our capacity will continue to put pressure on pricing and margins as companies compete for potential customers. Our ability to compete will depend on, among other things, continued absolute and relative improvement in network quality and customer service, effective marketing and selling of products and services, innovation, attractive pricing, and cost management, all of which will involve significant expenses. Joint ventures, mergers, acquisitions and strategic alliances in the wireless sector have resulted in and are expected to result in larger competitors competing for a limited number of customers. The two largest national wireless communications services providers currently serve a significant percentage of all wireless customers and hold significant spectrum and other resources. Our largest competitors may be able to enter into exclusive handset, device, or content arrangements, execute pervasive advertising and marketing campaigns, or otherwise improve their cost position relative to ours. In addition, refusal of our large competitors to provide critical access to resources and inputs, such as roaming services on reasonable terms could improve their position within the wireless broadband mobile services industry. We face intense and increasing competition from other service providers as industry sectors converge, such as cable, telecom services and content, satellite, and other service providers. Companies like Comcast and AT&T (with acquisitions of DirecTV and Time Warner, Inc.) will have the scale and assets to aggressively compete in a converging industry. Verizon, through its acquisitions of AOL, Inc. and Yahoo! Inc. is also a significant competitor focusing on premium content offerings to diversify outside of core wireless. Further, some of our competitors now provide content services in addition to voice and broadband services, and consumers are increasingly accessing video content from Internet-based providers and applications, all of which create increased competition in this area. These factors, together with the effects of the increasing aggregate penetration of wireless services in all metropolitan areas and the ability of our larger competitors to use resources to build out their networks and to quickly deploy advanced technologies, such as 5G, could make it more difficult for us to continue to attract and retain customers, and may adversely affect our competitive position and ability to grow, which would have a material adverse effect on our business, financial condition and operating results. The scarcity and cost of additional wireless spectrum, and regulations relating to spectrum use, may adversely affect our business, financial condition and operating results. We will need to acquire additional spectrum in order to continue our customer growth, expand and deepen our coverage, maintain our quality of service, meet increasing customer demands, and deploy new technologies. We will be at a competitive disadvantage and possibly experience erosion in the quality of service in certain geographic areas if we fail to gain access to necessary spectrum before reaching network capacity. As a result, we are actively seeking to make additional investment in spectrum, which could be significant. The continued interest in, and acquisition of, spectrum by existing carriers and others may reduce our ability to acquire and/or increase the cost of acquiring spectrum in the secondary market or negatively impact our ability to gain access to spectrum through other means, including government auctions. We may need to enter into spectrum sharing or leasing arrangements, which are subject to certain risks and uncertainties and may involve significant expenditures. In addition, our return on investment in spectrum depends on our ability to attract additional customers and to provide additional services and usage to existing customers. As a result, the return on any investment in spectrum that we make may not be as much as we anticipate or take longer than expected. Additionally, the FCC may not be able to provide sufficient additional spectrum to auction or we may be unable to secure the spectrum we need in any auction we may elect to participate in or in the secondary market, on favorable terms or at all. The FCC may impose conditions on the use of new wireless broadband mobile spectrum that may negatively impact our ability to obtain spectrum economically or in appropriate configurations or coverage areas. Additional conditions that may be imposed by the FCC include heightened build-out requirements, limited license terms or renewal rights, and clearing obligations that may make it less attractive or less economical to acquire spectrum. In addition, rules may be established for future government 10 spectrum auctions that may negatively impact our ability to obtain spectrum economically or in appropriate configurations or coverage areas. If we cannot acquire needed spectrum from the government or otherwise, if competitors acquire spectrum that will allow them to provide services competitive with our services, or if we cannot deploy services over acquired spectrum on a timely basis without burdensome conditions, at reasonable cost, and while maintaining network quality levels, then our ability to attract and retain customers and our business, financial condition and operating results could be materially adversely affected. If we are unable to take advantage of technological developments on a timely basis, we may experience a decline in demand for our services or face challenges in implementing or evolving our business strategy. Significant technological changes continue to impact the communications industry. In general, these technological changes enhance communications and enable a broader array of companies to offer services competitive with ours. In order to grow and remain competitive with new and evolving technologies in our industry, we will need to adapt to future changes in technology, continually invest in our network, increase network capacity, enhance our existing offerings, and introduce new offerings to address our current and potential customers’ changing demands. Enhancing our network, including our 5G network, is subject to risk from equipment changes and migration of customers from older technologies and the potential inability to secure mid- band 5G spectrum that is necessary to add capacity to advanced technologies. Adopting new and sophisticated technologies may result in implementation issues such as scheduling and supplier delays, unexpected or increased costs, technological constraints, regulatory permitting issues, customer dissatisfaction, and other issues that could cause delays in launching new technological capabilities, which in turn could result in significant costs or reduce the anticipated benefits of the upgrades. In general, the development of new services in the wireless telecommunications industry will require us to anticipate and respond to the continuously changing demands of our customers, which we may not be able to do accurately or timely. If our new services fail to retain or gain acceptance in the marketplace or if costs associated with these services are higher than anticipated, this could have a material adverse effect on our business, financial condition and operating results. We could be harmed by data loss or other security breaches, whether directly or indirectly. Our business, like that of most retailers and wireless companies, involves the receipt, storage, and transmission of our customers’ confidential information, including sensitive personal information and payment card information, confidential information about our employees and suppliers, and other sensitive information about our Company, such as our business plans, transactions and intellectual property (“Confidential Information”). Unauthorized access to Confidential Information may be difficult to anticipate, detect, or prevent, particularly given that the methods of unauthorized access constantly change and evolve. We are subject to the threat of unauthorized access or disclosure of Confidential Information by state-sponsored parties, malicious actors, third parties or employees, errors or breaches by third-party suppliers, or other security incidents that could compromise the confidentiality and integrity of Confidential Information. In August 2018 and November 2019, we notified affected customers of incidents involving unauthorized access to certain customer information (not involving credit card information, financial data, social security numbers or passwords). While we do not believe these security incidents were material, we expect to continue to be the target of cyber-attacks, data breaches, or security incidents, which may in the future have a material adverse effect on our business, reputation, financial condition, and operating results. Cyber-attacks, such as denial of service and other malicious attacks, could disrupt our internal systems and applications, impair our ability to provide services to our customers, and have other adverse effects on our business and that of others who depend on our services. As a telecommunications carrier, we are considered a critical infrastructure provider and therefore may be more likely to be the target of such attacks. Such attacks against companies may be perpetrated by a variety of groups or persons, including those in jurisdictions where law enforcement measures to address such attacks are ineffective or unavailable, and such attacks may even be perpetrated by or at the behest of foreign governments. In addition, we provide confidential, proprietary and personal information to third-party service providers as part of our business operations. These third-party service providers have experienced data breaches and other attacks that included unauthorized access to Confidential Information in the past, and face security challenges common to all parties that collect and process information. Past data breaches include a breach of the networks of one of our credit decisioning providers in September 2015, during which a subset of records containing current and potential customer information was acquired by an external party. Our procedures and safeguards to prevent unauthorized access to sensitive data and to defend against attacks seeking to disrupt our services must be continually evaluated and revised to address the ever-evolving threat landscape. We cannot make assurances that all preventive actions taken will adequately repel a significant attack or prevent information security breaches or the misuses of data, unauthorized access by third parties or employees, or exploits against third-party supplier environments. If 11 we or our third-party suppliers are subject to such attacks or security breaches, we may incur significant costs or other material financial impacts, which may not be covered by, or may exceed the coverage limits of, our cyber insurance, be subject to regulatory investigations, sanctions and private litigation, experience disruptions to our operations or suffer damage to our reputation. Any future cyber-attacks, data breaches, or security incidents may have a material adverse effect on our business, financial condition, and operating results. System failures and business disruptions may allow unauthorized use of or interference with our network and other systems which could materially adversely affect our reputation and financial condition. To be successful, we must provide our customers with reliable, trustworthy service and protect the communications, location, and personal information shared or generated by our customers. We rely upon both our systems and networks and the systems and networks of other providers and suppliers to provide and support our services and, in some cases, protect our customers’ information and our information. Failure of our or others’ systems, networks, or infrastructure may prevent us from providing reliable service or may allow for the unauthorized use of or interference with our networks and other systems or for the compromise of customer information. Examples of these risks include: • • • • • • human error such as responding to deceptive communications or unintentionally executing malicious code; physical damage, power surges or outages, or equipment failure, including those as a result of severe weather, natural disasters, terrorist attacks, political instability and volatility, and acts of war; theft of customer and/or proprietary information offered for sale for competitive advantage or corporate extortion; unauthorized access to our IT and business systems or to our network and critical infrastructure and those of our suppliers and other providers; supplier failures or delays; and system failures or outages of our business systems or communications network. Such events could cause us to lose customers, lose revenue, incur expenses, suffer reputational damage, and subject us to litigation or governmental investigation. Remediation costs could include liability for information loss, repairing infrastructure and systems, and/or costs of incentives offered to customers. Our insurance may not cover, or be adequate to fully reimburse us for, costs and losses associated with such events. We continue implementing a new billing system, which will support a portion of our subscribers, while maintaining our legacy billing systems. Any unanticipated difficulties, disruption, or significant delays could have adverse operational, financial, and reputational effects on our business. We continue implementing a new customer billing system, that involves a new third-party supported platform and utilization of a phased deployment approach. Elements of the billing system have been placed into service and are operational and we plan to operate both the existing and new billing systems in parallel to aid in the transition to the new system until all phases of the conversion are complete. The ongoing implementation may cause major system or business disruptions, or we may fail to implement the new billing system in its entirety or in a timely or effective manner. In addition, we or the supporting vendor may experience errors, cyber- attacks, or other operational disruptions that could negatively impact us and over which we may have limited control. Interruptions and/or failure of this billing services system could disrupt our operations and impact our ability to provide or bill for our services, retain customers, attract new customers, or negatively impact overall customer experience. Any occurrence of the foregoing could cause material adverse effects on our operations and financial condition, material weaknesses in our internal control over financial reporting, and reputational damage. We rely on third parties to provide products and services for the operation of our business, and the failure or inability of such parties to provide these products or services could adversely affect our business, financial condition, and operating results. We depend heavily on suppliers, service providers, their subcontractors and other third parties for us to efficiently operate our business. Due to the complexity of our business, it is not unusual to engage a diverse set of suppliers to help us develop, maintain, and troubleshoot products and services such as network components, software development services, and billing and customer service support. Some of our suppliers may provide services from outside of the United States, which carries additional regulatory and legal obligations. We commonly rely on suppliers to provide us with contractual assurances and to disclose accurate information regarding risks associated with their provision of products or services in accordance with our 12 policies and standards, including our Supplier Code of Conduct and our third party-risk management practices. The failure of our suppliers to comply with our expectations and policies could have a material adverse effect on our business, financial condition, and operating results. Many of the products and services we use are available through multiple sources and suppliers. However, there are a limited number of suppliers who can support or provide billing services, voice and data communications transport services, network infrastructure, equipment, handsets, other devices, and payment processing services, among other products and services. Disruptions or failure of such suppliers to adequately perform could have a material adverse effect on our business, financial condition, and operating results. In the past, our suppliers, service providers and their subcontractors may not have always performed at the levels we expected or at the levels required by their contracts. Our business could be severely disrupted if critical suppliers or service providers fail to comply with their contracts or if we experience delays or service degradation during any transition to a new outsourcing provider or other supplier or if we are required to replace the supplied products or services with those from another source, especially if the replacement becomes necessary on short notice. Any such disruptions could have a material adverse effect on our business, financial condition, and operating results. Economic, political, and market conditions may adversely affect our business, financial condition, and operating results, as well as our access to financing on favorable terms or at all. Our business, financial condition, and operating results are sensitive to changes in general economic conditions, including interest rates, consumer credit conditions, consumer debt levels, consumer confidence, rates of inflation (or concerns about deflation), unemployment rates, economic growth, energy costs, and other macro-economic factors. Difficult, or worsening, general economic conditions could have a material adverse effect on our business, financial condition, and operating results. Market volatility, political and economic uncertainty, and weak economic conditions, such as a recession or economic slowdown, may materially adversely affect our business, financial condition, and operating results in a number of ways. Our services and device financing plans are available to a broad customer base, a significant segment of which may be more vulnerable to weak economic conditions, particularly our subprime customers. We may have greater difficulty in gaining new customers within this segment, and existing customers may be more likely to terminate service and default on device financing plans due to an inability to pay. Weak economic conditions and credit conditions may also adversely impact our suppliers, dealers, and MVNOs, some of which may file for or may be considering bankruptcy, or may experience cash flow or liquidity problems, or may be unable to obtain or refinance credit such that they may no longer be able to operate. Any of these could adversely impact our ability to distribute, market, or sell our products and services. In addition, instability in the global financial markets could lead to periodic volatility in the credit, equity, and fixed income markets. This volatility could limit our access to the credit markets, leading to higher borrowing costs or, in some cases, the inability to obtain financing on terms that are acceptable to us or at all. The agreements governing our indebtedness and other financing arrangements include restrictive covenants that limit our operating flexibility. The agreements governing our indebtedness and other financing arrangements impose significant operating and financial restrictions on us. These restrictions, subject in certain cases to customary baskets, exceptions, and incurrence-based ratio tests, may limit our or our subsidiaries’ ability to pursue strategic business opportunities and engage in certain transactions, including the following: • • • • • • • • incurring additional indebtedness and issuing preferred stock; paying dividends, redeeming capital stock, or making other restricted payments or investments; selling or buying assets, properties, or licenses; developing assets, properties, or licenses that we have 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 13 • placing restrictions on the ability of subsidiaries to pay dividends or make other payments. These restrictions could limit our ability to obtain debt financing, engage in share repurchases, refinance or pay principal on our outstanding indebtedness, complete acquisitions for cash or indebtedness or react to business, economic, market and industry conditions and other changes in our operating environment or the economy. Any future indebtedness that we incur may contain similar or more restrictive covenants. Any failure to comply with the restrictions of our debt agreements and other financing arrangements may result in an event of default under these agreements, which in turn may result in defaults or acceleration of obligations under these and other agreements, giving our lenders the right to terminate any commitments they had made to provide us with further funds and to require us to repay all amounts then outstanding plus any interest, fees, penalties or premiums, which may require us to sell certain assets securing indebtedness. Any of these events could have a material adverse effect on our business, financial condition, and operating results. Our significant indebtedness could adversely affect our business, financial condition and operating results. Our ability to make payments on our debt, to repay our existing indebtedness when due, to fund our capital-intensive business and operations, and to make significant planned capital expenditures will depend on our ability to generate cash in the future, which is in turn subject to the operational risks described elsewhere in this report. Our debt service obligations could have material adverse effects on our business, financial condition, and operating results, including by: • • • limiting our flexibility in planning for, or reacting to, changes in our business or the communications industry or pursuing growth opportunities; reducing the amount of cash available for other operational or strategic needs; and placing us at a competitive disadvantage to competitors who are less leveraged than we are. Any hedging agreements we have and may continue to enter into to limit our exposure to interest rate increases or foreign currency fluctuations may not offer complete protection from these risks or may be unsuccessful, and consequently may effectively increase the interest rate we pay on our debt or the exchange rate with respect to such debt, and any portion not subject to such hedging agreements would have full exposure to interest rate increases or foreign currency fluctuations, as applicable. We are exposed to credit-related losses in the event of nonperformance by counterparties to our hedging agreements. The primary credit exposure that we have with respect to our hedging agreements is that a counterparty will default on payments due, which could result in us having to acquire a replacement derivative from a different counterparty at a higher cost or we may be unable to find a suitable replacement. The counterparties to our hedging agreements are all major financial institutions; however, this does not eliminate our exposure to credit risk with these institutions. In addition, any netting and/or set off rights we may have through master netting arrangements with these counterparties may not apply to affiliates of a counterparty with whom we may have various other financial arrangements. If any financial institutions that are parties to our hedging agreements were to default on their payment obligations to us, declare bankruptcy or become insolvent, we would be unhedged against the underlying exposures. Any of these risks could have a material adverse effect on our business, financial condition and operating results. Additionally, under some of our hedging agreements, the counterparties’ and our obligations are required to be secured by cash or U.S. Treasury securities, subject to defined thresholds. Any additional posting of collateral by us under these arrangements would negatively impact our liquidity. The modification or termination of our hedging agreements could also negatively impact our liquidity or other financial metrics. Some of our debt has a variable rate of interest linked to various indices. If the changes in indices result in interest rate increases, our debt service requirements will increase, which could adversely affect our cash flow and operating results. In particular, some or all of our variable-rate indebtedness may use the London Inter-Bank Offered Rate (“LIBOR”) or similar rates as a benchmark for establishing the rate. LIBOR will be discontinued after 2021 and will be replaced with an alternative reference rate. The consequence of this development cannot be entirely predicted but could include an increase in the cost of our variable rate indebtedness. Failure to maintain effective internal controls in accordance with Section 404 of the Sarbanes-Oxley Act could result in a loss of investor confidence regarding our financial statements or may have a material adverse effect on our business. Under Section 404 of the Sarbanes-Oxley Act of 2002, we along with our independently registered public accounting firm are required to report on the effectiveness of our internal control over financial reporting. We rely heavily on IT systems and, manual and automated processes as an important part of our internal controls in order to operate, transact, and otherwise manage our business, as well as provide effective and timely reporting of our financial results. Failure to design and maintain effective internal controls, including those over our IT systems, could constitute a material weakness that could result in 14 inaccurate financial statements, inaccurate disclosures, or failure to prevent fraud. If we or our independent registered public accounting firm were unable to conclude that we have effective internal control over financial reporting, investor confidence regarding our financial statements and our business could be materially adversely affected. Our financial condition and operating results will be impaired if we experience high fraud rates related to device financing, credit cards, dealers, or subscriptions. Our operating costs could increase substantially as a result of fraud, including any fraud related to device financing, customer credit card, subscriptions, or dealers. If our fraud detection strategies and processes are not successful in detecting and controlling fraud, whether directly or by way of the systems, processes, and operations of third parties such as national retailers, dealers, and others, the resulting loss of revenue or increased expenses could have a material adverse effect on our financial condition and operating results. We rely on highly skilled personnel throughout all levels of our business. Our business could be harmed if we are unable to retain or motivate key personnel, hire qualified personnel or maintain our corporate culture. The market for highly skilled workers and leaders in our industry is extremely competitive. We believe that our future success depends in substantial part on our ability to recruit, hire, motivate, develop, and retain talented and highly-skilled personnel for all areas of our organization, including our CEO, the other members of our senior leadership team and highly skilled employees in technical, marketing and staff positions. Doing so may be difficult due to many factors, including fluctuations in economic and industry conditions, changes to U.S. immigration policy, competitors’ hiring practices, employee tolerance for the significant amount of change within and demands on our Company and our industry, and the effectiveness of our compensation programs. Our continued ability to compete effectively depends on our ability to retain and motivate our existing employees and to attract new employees. If we do not succeed in retaining and motivating our existing key employees and attracting new key personnel, we may not be able to meet our business plan and, as a result, our revenue growth and profitability may be materially adversely affected. In addition, certain members of our senior leadership team, including our CEO, have term employment agreements with us. Our inability to extend the terms of these employment agreements or to replace these members or our senior leadership team at the end of their terms with qualified and capable successors could hinder our strategic planning and execution. In November 2019, we announced that John Legere would retire as our Chief Executive Officer on April 30, 2020. Our ability to execute our business strategies and retain key executives may be adversely affected by the transition to our successor, Michael Sievert. Any acquisition, investment, or merger may subject us to significant risks, any of which may harm our business. We may pursue acquisitions of, investments in or mergers with businesses, technologies, services and/or products that complement or expand our business. Some of these potential transactions could be significant relative to the size of our business and operations. Any such transaction would involve a number of risks and could present financial, managerial and operational challenges, including: • • • • • • • • diversion of management attention from running our existing business; increased costs to integrate the networks, spectrum, technology, personnel, customer base and business practices of the business involved in any such transaction with our business; difficulties in effectively integrating the financial and operational systems of the business involved in any such transaction into (or supplanting such systems with) our financial and operational reporting infrastructure and internal control framework in an effective and timely manner; potential exposure to material liabilities not discovered in the due diligence process or as a result of any litigation arising in connection with any such transaction; significant transaction expenses in connection with any such transaction, whether consummated or not; risks related to our ability to obtain any required regulatory approvals necessary to consummate any such transaction; acquisition financing may not be available on reasonable terms or at all and any such financing could significantly increase our outstanding indebtedness or otherwise affect our capital structure or credit ratings; and any business, technology, service, or product involved in any such transaction may significantly under-perform relative to our expectations, and we may not achieve the benefits we expect from the transaction, which could, among other things, also result in a write-down of goodwill and other intangible assets associated with such transaction. For any or all of these reasons, our pursuit of an acquisition, investment, or merger may have a material adverse effect on our business, financial condition, and operating results. 15 Risks Related to Legal and Regulatory Matters Changes in regulations or in the regulatory framework under which we operate could adversely affect our business, financial condition and operating results. The FCC regulates the licensing, construction, modification, operation, ownership, sale, and interconnection of wireless communications systems, as do some state and local regulatory agencies. In particular, the FCC imposes significant regulation on licensees of wireless spectrum with respect to how radio spectrum is used by licensees, the nature of the services that licensees may offer and how the services may be offered, and the resolution of issues of interference between spectrum bands. Additionally, the FTC and other federal and state agencies have asserted that they have jurisdiction over some consumer protection, and elimination and prevention of anticompetitive business practices with respect to the provision of wireless products and services. We are subject to regulatory oversight by various federal, state and local agencies, as well as judicial review and actions, on issues related to the wireless industry that include, but are not limited to: roaming, interconnection, spectrum allocation and licensing, facilities siting, pole attachments, intercarrier compensation, Universal Service Fund (“USF”), net neutrality, 911 services, consumer protection, consumer privacy, and cybersecurity. We are also subject to regulations in connection with other aspects of our business, including handset financing and insurance activities. We cannot assure you that the FCC or any other federal, state or local agencies will not adopt regulations or take enforcement or other actions that would adversely affect our business, impose new costs, or require changes in current or planned operations. For example, under the Obama administration, the FCC established net neutrality and privacy regimes that applied to our operations. Both sets of rules potentially subjected some of our initiatives and practices to more burdensome requirements and heightened scrutiny by federal and state regulators, the public, edge providers, and private litigants regarding whether such initiatives or practices are compliant. While the FCC rules are now largely rolled back under the Trump administration, some states and other jurisdictions have enacted, or are considering enacting, laws in these areas (including for example the CCPA cited below), perpetuating the risk and uncertainty regarding the regulatory environment and compliance around these issues. In addition, states are increasingly focused on the quality of service and support that wireless communications services providers provide to their customers and several states have proposed or enacted new and potentially burdensome regulations in this area. We also face potential investigations by, and inquiries from or actions by state public utility commissions. We also cannot assure you that Congress will not amend the Communications Act, from which the FCC obtains its authority, and which serves to limit state authority, or enact other legislation in a manner that could be adverse to our business. Additionally, in June 2018, California passed the California Consumer Privacy Act (the “CCPA”) effective January 2020, creating new data privacy rights for California residents and new compliance obligations for us. We have incurred and will continue to incur significant implementation costs to ensure compliance with the CCPA, and we could see increased litigation costs with the law now in effect. The California Attorney General has proposed related CCPA regulations, which could be adopted in a form that increases our costs and/or litigation exposure. If we are unable to put proper controls and procedures in place to ensure compliance, it could have an adverse effect on our business. A California ballot initiative has recently been introduced by the original proponent of the CCPA that would provide additional data privacy rights and require additional implementation processes if passed. Other states, such as Nevada and Washington, have passed or are considering similar legislation, which, if passed, could create more risks and potential costs for us, especially to the extent the specific requirements of these laws vary significantly from those in California, Nevada and other existing laws. Failure to comply with applicable regulations could have a material adverse effect on our business, financial condition and operating results. We could be subject to fines, forfeitures, and other penalties (including, in extreme cases, revocation of our spectrum licenses) for failure to comply with FCC or other governmental regulations, even if any such non-compliance was unintentional. The loss of any licenses, or any related fines or forfeitures, could adversely affect our business, financial condition, and operating results. Unfavorable outcomes of legal proceedings may adversely affect our business, financial condition and operating results. We are regularly involved in a number of legal proceedings before various state and federal courts, the FCC, the FTC, other federal agencies, and state and local regulatory agencies, including state attorneys general. Such legal proceedings can be complex, costly, and highly disruptive to our business operations by diverting the attention and energy of management and other key personnel. The assessment of the outcome of legal proceedings, including our potential liability, if any, is a highly subjective process that requires judgments about future events that are not within our control. The amounts ultimately received or paid upon settlement or pursuant to final judgment, order or decree may differ materially from amounts accrued in our financial statements. In addition, litigation or similar proceedings could impose restraints on our current or future manner of 16 doing business. Such potential outcomes including judgments, awards, settlements or orders could have a material adverse effect on our business, financial condition and operating results. We offer highly regulated financial services products. These products expose us to a wide variety of state and federal regulations. The financing of devices, through our EIP and JUMP! On Demand programs, has expanded our regulatory compliance obligations. Failure to remain compliant with applicable regulations, may increase our risk exposure in the following areas: • • consumer complaints and potential examinations or enforcement actions by federal and state regulatory agencies, including but not limited to the Consumer Financial Protection Bureau, state attorneys general, the FCC and the FTC; and regulatory fines, penalties, enforcement actions, civil litigation, and/or class action lawsuits. Failure to comply with applicable regulations and the realization of any of these risks could have a material adverse effect on our business, financial condition, and operating results. We may not be able to adequately protect the intellectual property rights on which our business depends or may be accused of infringing intellectual property rights of third parties. We rely on a combination of patent, service mark, trademark, and trade secret laws and contractual restrictions to establish and protect our proprietary rights, all of which offer only limited protection. The steps we have taken to protect our intellectual property may not prevent the misappropriation of our proprietary rights. We may not have the ability in certain jurisdictions to adequately protect intellectual property rights. Moreover, others may independently develop processes and technologies that are competitive to ours. Also, we may not be able to discover or determine the extent of any unauthorized use of our proprietary rights. Unauthorized use of our intellectual property rights may increase the cost of protecting these rights or reduce our revenues. We cannot be sure that any legal actions against such infringers will be successful, even when our rights have been infringed. We cannot assure you that our pending or future patent applications will be granted or enforceable, or that the rights granted under any patent that may be issued will provide us with any competitive advantages. In addition, we cannot assure you that any trademark or service mark registrations will be issued with respect to pending or future applications or will provide adequate protection of our brands. We do not have insurance coverage for intellectual property losses, and as such, a charge for an anticipated settlement or an adverse ruling awarding damages represents an unplanned loss event. Any of these factors could have a material adverse effect on our business, financial condition, and operating results. Third parties may claim we infringe their intellectual property rights. We are a defendant in numerous intellectual property lawsuits, including patent infringement lawsuits, which exposes us to the risk of adverse financial impact either by way of significant settlement amounts or damage awards. As we adopt new technologies and new business systems and provide customers with new products and/or services, we may face additional infringement claims. These claims could require us to cease certain activities or to cease selling relevant products and services. These claims can be time-consuming and costly to defend, and divert management resources, and expose us to significant damages awards or settlements, any or all of which could have a material adverse effect on our operations and financial condition. In addition to litigation directly involving our Company, our vendors and suppliers can be threatened with patent litigation and/or subjected to the threat of disruption or blockage of sale, use, or importation of products, posing the risk of supply chain interruption to particular products and associated services which could have a material adverse effect on our business, financial condition and operating results. Our business may be impacted by new or amended tax laws or regulations, judicial interpretations of same or administrative actions by federal, state, and/or local taxing authorities. In connection with the products and services we sell, we calculate, collect, and remit various federal, state, and local taxes, fees and regulatory charges (“tax” or “taxes”) to numerous federal, state and local governmental authorities, including federal USF contributions and common carrier regulatory fees. In addition, we incur and pay state and local taxes and fees on purchases of goods and services used in our business. Tax laws are dynamic and subject to change as new laws are passed and new interpretations of the law are issued or applied. In many cases, the application of existing, newly enacted or amended tax laws (such as the U.S. Tax Cuts and Jobs Act of 2017) may be uncertain and subject to differing interpretations, especially when evaluated against new technologies and telecommunications services, such as broadband internet access and cloud related services. Changes in tax laws could also impact revenue reported on tax inclusive plans. 17 In the event that we have incorrectly described, disclosed, determined, calculated, assessed, or remitted amounts that were due to governmental authorities, we could be subject to additional taxes, fines, penalties, or other adverse actions, which could materially impact our business, financial condition and operating results. In the event that federal, state, and/or local municipalities were to significantly increase taxes on our network, operations, or services, or seek to impose new taxes, it could have a material adverse effect on our business, financial condition and operating results. Our wireless licenses are subject to renewal and may be revoked in the event that we violate applicable laws. Our existing wireless licenses are subject to renewal upon the expiration of the 10-year or 15-year period for which they are granted. Historically, the FCC has approved our license renewal applications. However, the Communications Act provides that licenses may be revoked for cause and license renewal applications denied if the FCC determines that a renewal would not serve the public interest. In addition, our licenses are subject to our compliance with the terms set forth in the agreement pertaining to national security among us, DT, the Federal Bureau of Investigation, the Department of Justice and the Department of Homeland Security. The failure of DT or the Company to comply with the terms of this agreement could result in fines, injunctions and other penalties, including potential revocation or non-renewal of our spectrum licenses. If we fail to timely file to renew any wireless license or fail to meet any regulatory requirements for renewal, including construction and substantial service requirements, we could be denied a license renewal. Many of our wireless licenses are subject to interim or final construction requirements and there is no guarantee that the FCC will find our construction, or the construction of prior licensees, sufficient to meet the build-out or renewal requirements. Accordingly, we cannot assure you that the FCC will renew our wireless licenses upon their expiration. If any of our wireless licenses were to be revoked or not renewed upon expiration, we would not be permitted to provide services under that license, which could have a material adverse effect on our business, financial condition, and operating results. Our business could be adversely affected by findings of product liability for health or safety risks from wireless devices and transmission equipment, as well as by changes to regulations or radio frequency emission standards. We do not manufacture the devices or other equipment that we sell, and we depend on our suppliers to provide defect-free and safe equipment. Suppliers are required by applicable law to manufacture their devices to meet certain governmentally imposed safety criteria. However, even if the devices we sell meet the regulatory safety criteria, we could be held liable with the equipment manufacturers and suppliers for any harm caused by products we sell if such products are later found to have design or manufacturing defects. We generally seek to enter into indemnification agreements with the manufacturers who supply us with devices to protect us from losses associated with product liability, but we cannot guarantee that we will be protected in whole or in part against losses associated with a product that is found to be defective. Allegations have been made that the use of wireless handsets and wireless transmission equipment, such as cell towers, may be linked to various health concerns, including cancer and brain tumors. Lawsuits have been filed against manufacturers and carriers in the industry claiming damages for alleged health problems arising from the use of wireless handsets. In addition, the FCC has from time to time gathered data regarding wireless handset emissions and its assessment of this issue may evolve based on its findings. The media has also reported incidents of handset battery malfunction, including reports of batteries that have overheated. These allegations may lead to changes in regulatory standards. There have also been other allegations regarding wireless technology, including allegations that wireless handset emissions may interfere with various electronic medical devices (including hearing aids and pacemakers), airbags and anti-lock brakes. Defects in the products of our suppliers, such as the 2016 recall by a handset original equipment manufacturer of one of its smartphone devices, could have a material adverse effect on our business, financial condition and operating results. Any of these allegations or risks could result in customers purchasing fewer devices and wireless services, and could also result in significant legal and regulatory liability. Additionally, there are safety risks associated with the use of wireless devices while operating vehicles or equipment. Concerns over any of these risks and the effect of any legislation, rules or regulations that have been and may be adopted in response to these risks could limit our ability to sell our wireless services. Risks Related to Ownership of our Common Stock We are controlled by DT, whose interests may differ from the interests of our other stockholders. DT beneficially owns and possesses majority voting power of the fully diluted shares of our common stock. Through its control of the voting power of our common stock and the rights granted to DT in our certificate of incorporation and the Stockholder’s Agreement, DT controls the election of our directors and all other matters requiring the approval of our stockholders. By virtue of DT’s voting control, we are a “controlled company,” as defined in The NASDAQ Stock Market LLC (“NASDAQ”) listing 18 rules, and are not subject to NASDAQ requirements that would otherwise require us to have a majority of independent directors, a nominating committee composed solely of independent directors or a compensation committee composed solely of independent directors. Accordingly, our stockholders will not be afforded the same protections generally as stockholders of other NASDAQ-listed companies with respect to corporate governance for so long as we rely on these exemptions from the corporate governance requirements. In addition, our certificate of incorporation and the Stockholder’s Agreement restrict us from taking certain actions without DT’s prior written consent as long as DT beneficially owns 30% or more of the outstanding shares of our common stock, including: • • • • • • • • the incurrence of debt (excluding certain permitted debt) if our consolidated ratio of debt to cash flow, as defined in the indenture dated April 28, 2013, for the most recently ended four full fiscal quarters for which financial statements are available would exceed 5.25 to 1.0 on a pro forma basis; the acquisition of any business, debt or equity interests, operations or assets of any person for consideration in excess of $1.0 billion; the sale of any of our or our subsidiaries’ divisions, businesses, operations or equity interests for consideration in excess of $1.0 billion; the incurrence of secured debt (excluding certain permitted secured debt); any change in the size of our Board of Directors; the issuances of equity securities in excess of 10% of our outstanding shares or to repurchase debt held by DT; the repurchase or redemption of equity securities or the declaration of extraordinary or in-kind dividends or distributions other than on a pro rata basis; and the termination or hiring of our chief executive officer. These restrictions could prevent us from taking actions that our Board of Directors may otherwise determine are in the best interests of the Company and our stockholders or that may be in the best interests of our other stockholders. DT effectively has control over all matters submitted to our stockholders for approval, including the election or removal of directors, changes to our certificate of incorporation, a sale or merger of our Company and other transactions requiring stockholder approval under Delaware law. DT’s controlling interest may have the effect of making it more difficult for a third party to acquire, or discouraging a third party from seeking to acquire, the Company. DT may have strategic, financial, or other interests different from our other stockholders, including as the holder of a substantial amount of our indebtedness and as the counter-party in a number of commercial arrangements, and may make decisions adverse to the interests of our other stockholders. In addition, we license certain trademarks from DT, including the right to use the trademark “T-Mobile” as a name for the Company and our flagship brand, under a trademark license agreement with DT. As described in more detail in our proxy statement under the heading “Transactions with Related Persons and Approval,” we are obligated under the trademark license agreement to pay DT a royalty in an amount equal to 0.25%, which we refer to as the royalty rate, of the net revenue (as defined in the trademark license) generated by products and services we sell under the licensed trademarks. The trademark license agreement includes a royalty rate adjustment mechanism that would have occurred in early 2018 and potentially resulted in a new royalty rate effective in January 2019. The license agreement includes a royalty rate adjustment mechanism that has been postponed until the conclusion of the proposed Sprint Merger. The current royalty rate will remain effective until that time. The royalty rate under the license agreement will be adjusted retroactively if the Business Combination Agreement is terminated. We also have the right to terminate the trademark license upon one year’s prior notice. An increase in the royalty rate or termination of the trademark license could have a material adverse effect on our business, financial condition and operating results. Future sales or issuances of our common stock, including sales by DT, could have a negative impact on our stock price. We cannot predict the effect, if any, that market sales of shares or the availability of shares of our common stock will have on the prevailing trading price of our common stock from time to time. Sales or issuances of a substantial number of shares of our common stock could cause our stock price to decline and could result in dilution of your shares. We and DT are parties to the Stockholder’s Agreement pursuant to which DT is free to transfer its shares in public sales without notice, as long as such transactions would not result in the transferee owning 30% or more of the outstanding shares of our common stock. If a transfer would exceed the 30% threshold, it is prohibited unless the transferee makes a binding offer to 19 purchase all of the other outstanding shares on the same price and terms. The Stockholder’s Agreement does not otherwise impose any other restrictions on the sales of common stock by DT. Moreover, we may be required to file a shelf registration statement with respect to the common stock and certain debt securities held by DT, which would facilitate the resale by DT of all or any portion of the shares of our common stock it holds. The sale of shares of our common stock by DT (other than in transactions involving the purchase of all of our outstanding shares) could significantly increase the number of shares available in the market, which could cause a decrease in our stock price. In addition, even if DT does not sell a large number of its shares into the market, its right to transfer a large number of shares into the market may depress our stock price. Our stock price may be volatile and may fluctuate based upon factors that have little or nothing to do with our business, financial condition and operating results. The trading prices of the securities of communications companies historically have been highly volatile, and the trading price of our common stock may be subject to wide fluctuations. Our stock price may fluctuate in reaction to a number of events and factors that may include, among other things: • • • • • • • • our or our competitors’ actual or anticipated operating and financial results; introduction of new products and services by us or our competitors or changes in service plans or pricing by us or our competitors; analyst projections, predictions and forecasts, analyst target prices for our securities and changes in, or our failure to meet, securities analysts’ expectations; transaction in our common stock by major investors; share repurchases by us or purchases by DT; DT’s financial performance, results of operation, or actions implied or taken by DT; entry of new competitors into our markets or perceptions of increased price competition, including a price war; our performance, including subscriber growth, and our financial and operational performance; • market perceptions relating to our services, network, handsets, and deployment of our LTE and 5G platforms and our access to iconic handsets, services, applications, or content; • market perceptions of the wireless communications services industry and valuation models for us and the industry; • • • • • • • • • conditions or trends in the Internet and the industry sectors in which we operate; changes in our credit rating or future prospects; changes in interest rates; changes in our capital structure, including issuance of additional debt or equity to the public; the availability or perceived availability of additional capital in general and our access to such capital; actual or anticipated consolidation, or other strategic mergers or acquisition activities involving us or our competitors, or other participants in related or adjacent industries, or market speculations regarding such activities, including the pending Merger and views of market participants regarding the likelihood the conditions to the Merger will be satisfied and the anticipated benefits of the Merger will be realized; disruptions of our operations or service providers or other vendors necessary to our network operations; the general state of the U.S. and world politics and economies; and availability of additional spectrum, whether by the announcement, commencement, bidding and closing of auctions for new spectrum or the acquisition of companies that own spectrum, and the extent to which we or our competitors succeed in acquiring additional spectrum. In addition, the stock market has been volatile in the recent past and has experienced significant price and volume fluctuations, which may continue for the foreseeable future. This volatility has had a significant impact on the trading price of securities issued by many companies, including companies in the communications industry. These changes frequently occur irrespective of the operating performance of the affected companies. Hence, the trading price of our common stock could fluctuate based upon factors that have little or nothing to do with our business, financial condition and operating results. We have never paid or declared any cash dividends on our common stock, and we do not intend to declare or pay any cash dividends on our common stock in the foreseeable future. We have never paid or declared any cash dividends on our common stock, and we do not intend to declare or pay any cash dividends on our common stock in the foreseeable future. Our credit facilities and the indentures and supplemental indentures 20 governing our long-term debt to affiliates and third parties contain covenants that, among other things, restrict our ability to declare or pay dividends on our common stock. We currently intend to use future earnings, if any, to invest in our business and to fund our previously authorized stock repurchase program if the Merger fails to close. Our previously announced stock repurchase program, and any subsequent stock purchase program put in place from time to time, could affect the price of our common stock, increase the volatility of our common stock and could diminish our cash reserves. Such repurchase program may be suspended or terminated at any time, which may result in a decrease in the trading price of our common stock. We may have in place from time to time, a stock repurchase program. Any such stock repurchase program adopted will not obligate the Company to repurchase any dollar amount or number of shares of common stock and may be suspended or discontinued at any time, which could cause the market price of our common stock to decline. The timing and actual number of shares repurchased under any such stock repurchase program depends on a variety of factors including the timing of open trading windows, the price of our common stock, corporate and regulatory requirements and other market conditions. We may effect repurchases under any stock repurchase program from time to time in the open market, in privately negotiated transactions or otherwise, including accelerated stock repurchase arrangements. Repurchases pursuant to any such stock repurchase program could affect our stock price and increase its volatility. The existence of a stock repurchase program could also cause our stock price to be higher than it would be in the absence of such a program and could potentially reduce the market liquidity for our stock. There can be no assurance that any stock repurchases will enhance stockholder value because the market price of our common stock may decline below the levels at which we repurchased shares of common stock. Although our stock repurchase program is intended to enhance stockholder value, short-term stock price fluctuations could reduce the program’s effectiveness. Additionally, our share repurchase program could diminish our cash reserves, which may impact our ability to finance future growth and to pursue possible future strategic opportunities and acquisitions. See Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources for additional information. Risks Related to the Proposed Transactions The closing of the Transactions is subject to a number of conditions, including the receipt of approval from, and the absence of any order preventing the closing issued by, governmental entities, which may not approve the Transactions, may delay the approval for, or may impose conditions or restrictions on, jeopardize or delay completion of, or reduce or delay the anticipated benefits of, the Transactions, and if these conditions are not satisfied or waived, the Transactions will not be completed. The completion of the Transactions is subject to a number of conditions, including, among others, the receipt of approval from, and the absence of any legal requirements preventing the completion of the Transactions enacted or enforced by, governmental entities, including courts. As noted below, while the parties have obtained a number of approvals from governmental entities to date, the Transactions remain subject to various judicial proceedings, and the California Public Utility Commission review remains pending. In connection with the required approval for the Transactions, we have agreed to significant actions and conditions, including the planned Prepaid Transaction (as defined below) and ongoing commercial and transition services arrangements to be entered into in connection with such Prepaid Transaction, which we and Sprint announced on July 26, 2019 (collectively, the “Divestiture Transaction”), a stipulation and order and proposed final judgment with the U.S. Department of Justice, which we and Sprint announced on July 26, 2019 (the “Consent Decree”), the proposed commitments contained in the ex parte presentation filed with the Secretary of the FCC, which we and Sprint announced on May 20, 2019 (the “FCC Commitments”) and commitments and undertakings we have entered into at the federal and state level (collectively, with the Consent Decree, the FCC Commitments and any other commitments or undertakings that we have entered into and may in the future enter into with governmental authorities (including but not limited to those we have made to certain states) and nongovernmental organizations, the “Government Commitments”). All state public utility commission proceedings have been completed other than the California Public Utility Commission review, which remains pending. While the parties have received approval from the FCC, the DOJ and the Committee on Foreign Investment in the United States for the Transactions to proceed subject to the above-described commitments and undertakings, the Transactions remain subject to several judicial proceedings. The Consent Decree is subject to judicial approval, which proceeding is underway. The attorneys general of certain states and the District of Columbia filed a lawsuit in New York federal court seeking an order prohibiting the consummation of the Transactions. The trial in that case has concluded and the parties are awaiting the judge’s ruling. Another case seeking to prohibit the Transactions was filed in California federal court on behalf of individual consumers, and has been stayed pending the outcome of the New York case. Appeals of any or all of these judicial and agency actions could be filed, which could further delay the Transactions or, if the Transactions close over a pending proceeding, create 21 risk and uncertainty after the Transactions close. The ultimate outcome of these matters is uncertain and there is no assurance that we will prevail or prevail in a timely manner, or whether remaining required approvals will be subject to additional required actions, conditions, limitations or restrictions on the combined company’s business, operations or assets. Such litigation, and any such additional required actions, conditions, limitations or restrictions, may prevent the completion of the Transactions, or, even if they do not prevent the completion of the Transactions, they may delay such completion, or reduce or delay the anticipated benefits of the Transactions, which could result in a material adverse effect on our or the combined company’s business, financial condition or operating results. In particular, the substantial delay in the completion of the Transactions may delay, reduce or eliminate synergies and other benefits anticipated to be realized from the Transactions and/or increase costs and expenses associated with the Transactions. In addition, because the Transactions were not completed by the “outside date” provided in the Business Combination Agreement, each of T-Mobile and Sprint may terminate the Business Combination Agreement unless the parties agree to extend such outside date, and there can be no assurance that the parties will not exercise this termination right or will agree to extend the outside date. Furthermore, the completion of the Transactions is also subject to T-Mobile USA having specified minimum credit ratings on the closing date of the Transactions (after giving effect to the Merger) from at least two of three specified credit rating agencies, subject to certain qualifications. There is no assurance that the required ratings will be obtained or that they will be obtained in a timely manner. In the event that we terminate the Business Combination Agreement in connection with a failure to satisfy the closing condition related to the specified minimum credit ratings, then in certain circumstances, we may be required to pay Sprint an amount equal to $600 million. The Business Combination Agreement may also be terminated if there is a final and non-appealable order or injunction preventing the consummation of the Transactions or the other conditions to closing are not satisfied, and we and Sprint may also mutually decide to terminate or amend the Business Combination Agreement. Failure to complete, or additional delay in the completion of, the Merger could negatively impact us and our business, assets, liabilities, prospects, outlook, financial condition or results of operations. If the completion of the Merger is prevented or continues to be delayed, or if the Merger is not completed for any other reason, we may be subject to a number of material risks. The price of our common stock may decline to the extent that its current market price reflects a market assumption that the Merger will or may be completed. In addition, significant costs related to the Transactions must be paid by us whether or not the Transactions are completed. Furthermore, we may experience negative reactions from our stockholders, customers, employees, suppliers, distributors, retailers, dealers and others who deal with us, which could have an adverse effect on our business, financial condition and results of operations. In addition, it is expected that if the Merger is not completed, we will continue to lack the network, scale and financial resources of the current market share leaders in, and other companies that have more recently begun providing, wireless services. Further, if the Merger is not completed, we will need to seek access to additional wireless spectrum, in particular mid-band wireless spectrum through other sources, which if we are not successful, in turn would impact our ability to maintain (or improve) service from current levels, and to deploy a broad and deep nationwide 5G network on the same scale and on the same timeline as the combined company, and therefore limit our ability to compete effectively in the 5G era. We are subject to various uncertainties, including litigation and contractual restrictions and requirements while the Transactions are pending that could disrupt our or the combined company’s business and adversely affect our or the combined company’s business, assets, liabilities, prospects, outlook, financial condition and results of operations. Uncertainty about whether the Transactions will be completed and/or the effect of the Transactions on employees, customers, suppliers, vendors, distributors, dealers and retailers may have an adverse effect on us or the combined company. These uncertainties may impair the ability to attract, retain and motivate key personnel during the pendency of the Transactions and, whether or not the Transactions are completed, for a period of time thereafter, as existing and prospective employees may experience uncertainty about their future roles with us or the combined company. If key employees, including key employees of Sprint, depart because of issues related to the uncertainty and difficulty of integration or a desire not to remain with the combined company, the combined company’s business following the completion of the Transactions could be negatively impacted. We or the combined company may have to incur significant costs in identifying, hiring and retaining replacements for departing employees and may lose significant expertise and talent. Additionally, these uncertainties could cause customers, suppliers, distributors, dealers, retailers and others to seek to change or cancel existing business relationships with us or the combined company or fail to renew existing relationships. Suppliers, distributors and content and application providers may also delay or cease developing for us or the combined company new products that are necessary for the operations of its business due to the uncertainty created by the Transactions. Competitors may also target our existing customers by highlighting potential uncertainties and integration difficulties that may result from the Transactions. 22 The Business Combination Agreement also restricts us, without Sprint’s consent, from taking certain actions outside of the ordinary course of business while the Transactions are pending, including, among other things, certain acquisitions or dispositions of businesses and assets, entering into or amending certain contracts, repurchasing or issuing securities, making capital expenditures, incurring indebtedness, and refinancing existing indebtedness, in each case subject to certain exceptions. These restrictions and the inability to independently access the debt capital markets during the pendency of the Merger may have a significant negative impact on our business, results of operations and financial condition. Management and financial resources have been diverted and will continue to be diverted toward the completion of the Transactions. We have incurred, and expect to incur, significant costs, expenses and fees for professional services and other transaction costs in connection with the Transactions. These costs could adversely affect our or the combined company’s financial condition and results of operations. In addition, we and our affiliates are involved in various disputes, governmental and/or regulatory inspections, investigations and proceedings and litigation matters, including for example the antitrust litigation related to the Transactions brought by the attorneys general of certain states and the District of Columbia, and it is possible that an unfavorable resolution of these matters or other future matters, could prevent the consummation of the Transactions and/or adversely affect us and our results of operations, financial condition and cash flows and the results of operations, financial condition and cash flows of the combined company. The Business Combination Agreement contains provisions that restrict the ability of our Board to pursue alternatives to the Transactions. The Business Combination Agreement contains non-solicitation provisions that restrict our ability to solicit, initiate, knowingly encourage or knowingly take any other action designed to facilitate, any inquiries regarding, or the making of, any proposal the completion of which would constitute an alternative transaction for purposes of the Business Combination Agreement. In addition, the Business Combination Agreement does not permit us to terminate the Business Combination Agreement in order to enter into an agreement providing for, or to complete, such an alternative transaction. Furthermore, if the completion of the Transactions continues to be delayed, we or the combined company may be unable to pursue strategic opportunities or business transactions that we may otherwise pursue, such as spectrum acquisitions, share buybacks and/or debt transactions. Our directors and officers may have interests in the Transactions different from the interests of our stockholders. Certain of our directors and executive officers negotiated the terms of the Business Combination Agreement. Our directors and executive officers may have interests in the Transactions that are different from, or in addition to, those of our stockholders. These interests include, but are not limited to, the continued service of certain of our directors as directors of the combined company, the continued employment of certain of our executive officers by the combined company, severance arrangements and employment terms linked to the Transactions and other rights held by our directors and executive officers, and provisions in the Business Combination Agreement regarding continued indemnification of and advancement of expenses to our directors and officers. Risks Related to Integration and the Combined Company Although we expect that the Transactions will result in synergies and other benefits, those synergies and benefits may not be realized or may not be realized within the expected time frame, and risks associated with the foregoing may increase as a result of the extended delay in the completion of the Transactions. Our ability to realize the anticipated benefits of the Transactions will depend, to a large extent, on the combined company’s ability to integrate our and Sprint’s businesses in a manner that facilitates growth opportunities and achieves the projected standalone cost savings and revenue growth trends identified by each company without adversely affecting current revenues and investments in future growth. In addition, some of the anticipated synergies are not expected to occur for a significant time period following the completion of the Transactions and will require substantial capital expenditures in the near term to be fully realized. Moreover, additional delay in the completion of the Transactions may delay, reduce or eliminate the anticipated synergies and other benefits of the Transactions, including as a result of the delay in the integration of, or inability to integrate, the networks of T-Mobile and Sprint to launch a broad and deep nationwide 5G network and increasing costs and expenses incurred by T-Mobile and Sprint during the pendency of the Transactions. Even if the combined company is able to integrate the two companies successfully, the anticipated benefits of the Transactions, including the expected synergies and network benefits, may not be realized fully or at all or may take longer to realize than expected. Our business and Sprint’s business may not be integrated successfully or such integration may be more difficult, time consuming or costly than expected. Operating costs, customer loss and business disruption, including difficulties in 23 completing the Divestiture Transaction, satisfying all of the Government Commitments and maintaining relationships with employees, customers, suppliers or vendors, may be greater than expected following the Transactions. Revenues following the Transactions may be lower than expected. The combination of two independent businesses is complex, costly and time-consuming and may divert significant management attention and resources to combining our and Sprint’s business practices and operations. This process, as well as the Divestiture Transaction and the Government Commitments, may disrupt our business or otherwise impact our ability to compete. The failure to meet the challenges involved in combining our and Sprint’s businesses and to realize the anticipated benefits of the Transactions could cause an interruption of, or a loss of momentum in, the activities of the combined company and could adversely affect the results of operations of the combined company. The overall combination of our and Sprint’s businesses, the completion of the Divestiture Transaction and compliance with the Government Commitments may also result in material unanticipated problems, expenses, liabilities, competitive responses and impacts, and loss of customer and other business relationships. The difficulties of combining the operations of the companies, completing the Divestiture Transaction and satisfying all of the Government Commitments include, among others: • • • • • • • • • • • • • • • • • 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 the ongoing commercial and transition services arrangements to be entered into in connection with the Divestiture Transaction; known or potential unknown liabilities arising in connection with the Divestiture Transaction that are larger than expected; an increase in competition from DISH and other third parties that DISH may enter into commercial agreements with, who are significantly larger than we are and enjoy greater resources and scale advantages as compared to us; difficulties in satisfying the large number of Government Commitments in the required timeframes and cost incurred in the tracking and monitoring of them, including the network build-out obligations under the Government Commitments; known or potential unknown liabilities of Sprint that are larger than expected; and other potential adverse consequences and unforeseen increased expenses or liabilities associated with the Transactions, the Divestiture Transaction and the Government Commitments. Some of these factors are outside of our control and/or will be outside the control of the combined company, and any one of them could result in lower revenues, higher costs and diversion of management time and energy, which could materially impact the business, financial condition and results of operations of the combined company. In addition, even if the operations of our and Sprint’s businesses are integrated successfully, the full benefits of the Merger may not be realized, including, among others, the synergies, cost savings or sales or growth opportunities that are expected, including as a result of the Divestiture Transaction, the Government Commitments and/or the other actions and conditions we have agreed to in connection with the Transactions, or otherwise. These benefits may not be achieved within the anticipated time frame or at all. Further, additional unanticipated costs may be incurred in the integration of our and Sprint’s businesses and in connection with the Divestiture Transaction and the Government Commitments, including potential penalties that could arise if we fail to fulfill our obligations thereunder. All of these factors could suppress the earnings per share of the combined company, decrease or delay the projected accretive effect of the Merger, and negatively impact the price of our common stock following the Merger. As a result, it cannot be assured that the combination of T-Mobile and Sprint will result in the realization of the full benefits expected from the Transactions within the anticipated time frames or at all. 24 The indebtedness of the combined company following the completion of the Transactions will be substantially greater than the indebtedness of each of T-Mobile and Sprint on a standalone basis prior to the execution of the Business Combination Agreement. This increased level of indebtedness could adversely affect the combined company’s business flexibility and increase its borrowing costs. In connection with the Transactions, we and Sprint have conducted, and expect to conduct, certain pre-Merger financing transactions, which will be used in part to prepay a portion of our and Sprint’s existing indebtedness and to fund liquidity needs. After giving effect to the pre-Merger financing transactions and the Transactions, we anticipate that the combined company will have consolidated indebtedness of up to approximately $69.0 billion to $71.0 billion, based on estimated December 31, 2019 debt and cash balances, and excluding tower obligations and operating lease liabilities. Our substantially increased indebtedness following the Transactions could have the effect, among other things, of reducing our flexibility to respond to changing business, economic, market and industry conditions and increasing the amount of cash required to meet interest payments. In addition, this increased level of indebtedness following the Transactions may reduce funds available to support efforts to combine our and Sprint’s businesses and realize the expected benefits of the Transactions, and may also reduce funds available for capital expenditures, share repurchases and other activities that may put the combined company at a competitive disadvantage relative to other companies with lower debt levels. Further, it may be necessary for the combined company to incur substantial additional indebtedness in the future, subject to the restrictions contained in its debt instruments, which could increase the risks associated with the capital structure of the combined company. Because of the substantial indebtedness of the combined company following the completion of the Transactions, there is a risk that the combined company may not be able to service its debt obligations in accordance with their terms. The ability of the combined company to service its substantial debt obligations following the Transactions will depend on future performance, which will be affected by business, economic, market and industry conditions and other factors, including the ability of the combined company to achieve the expected benefits of the Transactions. There is no guarantee that the combined company will be able to generate sufficient cash flow to service its debt obligations when due. If the combined company is unable to meet such obligations or fails to comply with the financial and other restrictive covenants contained in the agreements governing such debt obligations, it may be required to refinance all or part of its debt, sell important strategic assets at unfavorable prices or make additional borrowings. The combined company may not be able to, at any given time, refinance its debt, sell assets or make additional borrowings on commercially reasonable terms or at all, which could have a material adverse effect on its business, financial condition and results of operations after the Transactions. Some or all of the combined company’s variable-rate indebtedness may use LIBOR as a benchmark for establishing the rate. LIBOR will be discontinued after 2021 and will be replaced with an alternative reference rate. The consequence of this development cannot be entirely predicted but could include an increase in the cost of our variable rate indebtedness. In addition, any hedging agreements we have and may continue to enter into to limit our exposure to interest rate increases or foreign currency fluctuations may not offer complete protection from these risks or may be unsuccessful, and consequently may effectively increase the interest rate we pay on our debt or the exchange rate with respect to such debt, and any portion not subject to such hedging agreements would have full exposure to interest rate increases or foreign currency fluctuations, as applicable. If any financial institutions that are parties to our hedging agreements were to default on their payment obligations to us, declare bankruptcy or become insolvent, we would be unhedged against the underlying exposures. Any posting of collateral by us under our hedging agreements and the modification or termination of any of our hedging agreements could negatively impact our liquidity or other financial metrics. Any of these risks could have a material adverse effect on our business, financial condition and operating results. The agreements governing the combined company’s indebtedness and other financings will include restrictive covenants that limit the combined company’s operating flexibility. The agreements governing the combined company’s indebtedness and other financings will impose material operating and financial restrictions on the combined company. These restrictions, subject in certain cases to customary baskets, exceptions and maintenance and incurrence-based financial tests, may limit the combined company’s ability to engage in transactions and pursue strategic business opportunities, including the following: • • • • incurring additional indebtedness and issuing preferred stock; paying dividends, redeeming capital stock or making other restricted payments or investments; selling or buying assets, properties or licenses; developing assets, properties or licenses which the combined company has or in the future may procure; 25 • • • • • 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. These restrictions could limit the combined company’s ability to obtain debt financing, make share repurchases, refinance or pay principal on its outstanding indebtedness, complete acquisitions for cash or indebtedness or react to business, economic, market and industry conditions and other changes in its operating environment or the economy. Any future indebtedness that the combined company incurs may contain similar or more restrictive covenants. Any failure to comply with the restrictions of the combined company’s debt agreements may result in an event of default under these agreements, which in turn may result in defaults or acceleration of obligations under these and other agreements, giving the combined company’s lenders the right to terminate any commitments they had made to provide it with further funds and to require the combined company to repay all amounts then outstanding plus any interest, fees, penalties or premiums, and which may include requiring the combined company to sell certain assets securing indebtedness. The financing of the Transactions is not assured. We have received commitments for $27.0 billion in debt financing to fund the Transactions, which is comprised of (i) a $4.0 billion secured revolving credit facility, (ii) a $4.0 billion term loan credit facility and (iii) a $19.0 billion secured bridge loan facility. Furthermore, the Merger financing commitments currently expire on May 1, 2020, and if the completion of the Transactions continues to be delayed, any extension of the financing commitments or new financing commitments may not be obtained on the expected terms or at all. Our reliance on the financing from the $19.0 billion secured bridge loan facility commitment is intended to be reduced through one or more secured note offerings or other long-term financings prior to the Merger closing. However, there can be no assurance that we will be able to issue any such secured notes or other long-term financings on terms we find acceptable or at all, especially in light of recent debt market volatility, in which case we may have to exercise some or all of the commitments under the secured bridge facility to fund the Transactions. The obligation of the lenders to provide these debt financing facilities is subject to a number of conditions and the financing of the Transactions may not be obtained on the expected terms or at all. Accordingly, the costs of financing for the Transactions may be higher than expected. Credit rating downgrades could adversely affect the businesses, cash flows, financial condition and operating results of T-Mobile and, following the Transactions, the combined company. Credit ratings impact the cost and availability of future borrowings, and, as a result, cost of capital. Our current ratings reflect each rating agency’s opinion of our financial strength, operating performance and ability to meet our debt obligations or, following the completion of the Transactions, obligations to the combined company’s obligors. Each rating agency reviews these ratings periodically and there can be no assurance that such ratings will be maintained in the future. A downgrade in the rating of us and/or Sprint could adversely affect the businesses, cash flows, financial condition and operating results of T- Mobile and, following the Transactions, the combined company. We have incurred, and will incur, direct and indirect costs as a result of the Transactions. We have incurred, and will incur, substantial expenses in connection with and as a result of completing the Transactions, the Divestiture Transaction and compliance with the Government Commitments, and over a period of time following the completion of the Transactions, the combined company also expects to incur substantial expenses in connection with integrating and coordinating our and Sprint’s businesses, operations, policies and procedures. A portion of the transaction costs related to the Transactions will be incurred regardless of whether the Transactions are completed. While we have assumed that a certain level of transaction expenses will be incurred, factors beyond our control could affect the total amount or the timing of these expenses. Many of the expenses that will be incurred, by their nature, are difficult to estimate accurately. These expenses will exceed the costs historically borne by us. These costs could adversely affect our financial condition and results of operations prior to the Transactions and the financial condition and results of operations of the combined company following the Transactions. Item 1B. Unresolved Staff Comments None. 26 Item 2. Properties As of December 31, 2019, our significant properties that we primarily lease and use in connection with switching centers, data centers, call centers and warehouses were as follows: Switching centers Data centers Call center Warehouses As of December 31, 2019, we primarily leased: Approximate Number Approximate Size in Square Feet 62 7 17 17 1,400,000 600,000 1,500,000 500,000 • • • • Approximately 66,000 macro towers and 25,000 distributed antenna system and small cell sites. Approximately 2,200 T-Mobile and Metro by T-Mobile retail locations, including stores and kiosks ranging in size from approximately 100 square feet to 17,000 square feet. Office space totaling approximately 1,200,000 square feet for our corporate headquarters in Bellevue, Washington. We use these offices for engineering and administrative purposes. Office space throughout the U.S., totaling approximately 1,700,000 square feet, for use by our regional offices primarily for administrative, engineering and sales purposes. Item 3. Legal Proceedings See Note 2 - Business Combinations and Note 16 – Commitments and Contingencies of the Notes to the Consolidated Financial Statements for information regarding certain legal proceedings in which we are involved. Item 4. Mine Safety Disclosures None. PART II. Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our common stock is traded on the NASDAQ Global Select Market under the symbol “TMUS.” T-Mobile was added to the S&P 500 Index effective prior to the open of trading on July 15, 2019. We were added to the S&P 500 GICS (Global Industry Classification Standard) Wireless Telecommunication Services Sub-Industry index. As of December 31, 2019, there were 258 registered stockholders of record of our common stock, but we estimate the total number of stockholders to be much higher as a number of our shares are held by brokers or dealers for their customers in street name. 27 Performance Graph The graph below compares the five-year cumulative total returns of T-Mobile, the S&P 500 index, the NASDAQ Composite index and the Dow Jones US Mobile Telecommunications TSM index. The graph tracks the performance of a $100 investment, with the reinvestment of all dividends, from December 31, 2014 to December 31, 2019. COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN* Among T-Mobile US, Inc., the S&P 500 Index, the NASDAQ Composite Index and the Dow Jones US Mobile Telecommunications TSM Index $350 $300 $250 $200 $150 $100 $50 $0 2014 2015 2016 2017 2018 2019 T-Mobile US, Inc. S&P 500 NASDAQ Composite Dow Jones US Mobile Telecommunications TSM *$100 invested on 12/31/14 in stock or index, including reinvestment of dividends. Fiscal year ending December 31. Copyright© 2020 Standard & Poor’s, a division of S&P Global. All rights reserved. Copyright© 2020 S&P Dow Jones Indices LLC, a division of S&P Global. All rights reserved. The five-year cumulative total returns of T-Mobile, the S&P 500 index, the NASDAQ Composite index and the Dow Jones US Mobile Telecommunications TSM index, as illustrated in the graph above, are as follows: T-Mobile US, Inc. S&P 500 NASDAQ Composite Dow Jones US Mobile Telecommunications TSM At December 31, 2014 2015 2016 2017 2018 2019 $ 100.00 $ 145.21 $ 213.47 $ 235.75 $ 236.12 $ 100.00 100.00 100.00 101.38 106.96 104.87 113.51 116.45 133.65 138.29 150.96 136.66 132.23 146.67 162.64 291.09 173.86 200.49 184.44 The stock price performance included in this graph is not necessarily indicative of future ff stock price performance. Item 6. Selected Financial Data The following selected financial data are derived from our consolidated financial statements. The data below should be read together with Risk Factors included in Part I, Item 1A, Management’s Discussion and Analysis of Financial Condition and Results of Operations included in Part II, Item 7 and Financial Statements and Supplementary Data included in Part II, Item 8 of this Form 10-K. 28 Selected Financial Data (in millions, except per share and customer amounts) Statement of Operations Data Total service revenues Total revenues Operating income Total other expense, net Income tax (expense) benefit (3) Net income Net income attributable to common stockholders Earnings per share Basic Diluted Balance Sheet Data Cash and cash equivalents Property and equipment, net (1) Spectrum licenses Total assets (1) Total debt and financing lease liabilities, excluding tower obligations (1) Stockholders' equity Statement of Cash Flows and Operational Data Net cash provided by operating activities (4) Purchases of property and equipment Purchases of spectrum licenses and other intangible assets, including deposits Proceeds related to beneficial interests in securitization transactions (4) Net cash (used in) provided by financing activities (4) Total customers (in thousands) (5) 2019 (1) 2018 (2) 2017 2016 2015 As of and for the Year Ended December 31, $ 33,994 $ 31,992 $ 30,160 $ 27,844 $ $ $ $ $ 44,998 5,722 (1,119) (1,135) 3,468 3,468 4.06 4.02 1,528 21,984 36,465 86,921 27,272 28,789 $ $ $ 43,310 5,309 (1,392) (1,029) 2,888 2,888 3.40 3.36 1,203 23,359 35,559 72,468 27,547 24,718 $ $ $ 40,604 4,888 (1,727) 1,375 4,536 4,481 5.39 5.20 1,219 22,196 35,366 70,563 28,319 22,559 $ $ $ 37,490 4,050 (1,723) (867) 1,460 1,405 1.71 1.69 5,500 20,943 27,014 65,891 27,786 18,236 $ $ $ 6,824 $ (6,391) 3,899 $ (5,541) 3,831 $ (5,237) 2,779 $ (4,702) (967) 3,876 (2,374) 86,046 (127) 5,406 (3,336) 79,651 (5,828) 4,319 (1,367) 72,585 (3,968) 3,356 463 71,455 24,821 32,467 2,479 (1,501) (245) 733 678 0.83 0.82 4,582 20,000 23,955 62,413 26,243 16,557 1,877 (4,724) (1,935) 3,537 3,413 63,282 (1) On January 1, 2019, we adopted Accounting Standards Update (“ASU”) 2016-02, “Leases (Topic 842)” and all the related amendments (collectively, the “new lease standard”), using the modified retrospective method with the cumulative effect of initially applying the guidance recognized at the date of initial application. Comparative information has not been restated and continues to be reported under the standards in effect for those periods. See Note 1 – Summary of Significant Accounting Policies of the Notes to the Consolidated Financial Statements included in Part II, Item 8 of this Form 10-K for further information. (2) On January 1, 2018, we adopted ASU 2014-09, “Revenue from Contracts with Customers (Topic 606)” and all the related amendments (collectively, the “new revenue standard”), using the modified retrospective method with the cumulative effect of initially applying the guidance recognized at the date of initial application. Comparative information has not been restated and continues to be reported under the standards in effect for those periods. See Note 1 – Summary of Significant Accounting Policies of the Notes to the Consolidated Financial Statements included in Part II, Item 8 of this Form 10-K for further information. (3) In December 2017, the Tax Cuts and Jobs Act of 2017 (“TCJA”) was signed into legislation. The TCJA included numerous changes to existing tax law, including a permanent reduction in the federal corporate income tax rate from 35% to 21%. The rate reduction took place on January 1, 2018. We recognized a net tax benefit of $2.2 billion associated with the enactment of the TCJA in Income tax (expense) benefit in our Consolidated Statements of Comprehensive Income in the fourth quarter of 2017, primarily due to a re-measurement of deferred tax assets and liabilities. (4) On January 1, 2018, we adopted ASU 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments” (the “new cash flow standard”) which impacted the presentation of our cash flows related to our beneficial interests in securitization transactions, which is the deferred purchase price, resulting in a reclassification of cash inflows from Operating activities to Investing activities of approximately $4.3 billion, $3.4 billion and $3.5 billion for the years ended December 31, 2017, 2016 and 2015, respectively, in our Consolidated Statements of Cash Flows. The new cash flow standard also impacted the presentation of our cash payments for debt prepayment and debt extinguishment costs, resulting in a reclassification of cash outflows from Operating activities to Financing activities of $188 million for the year ended December 31, 2017, in our Consolidated Statements of Cash Flows. There were no cash payments for debt prepayment and debt extinguishment costs during the years ended December 31, 2016 and 2015. We have applied the new cash flow standard retrospectively to all periods presented. (5) We believe current and future regulatory changes have made the Lifeline program offered by our wholesale partners uneconomical. We will continue to support our wholesale partners offering the Lifeline program, but have excluded the Lifeline customers from our reported wholesale subscriber base resulting in the removal of 4,528,000 reported wholesale customers in 2017. 29 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations The objectives of our Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) are to provide users of our Consolidated Financial Statements with the following: • • • A narrative explanation from the perspective of management of our financial condition, results of operations, cash flows, liquidity and certain other factors that may affect future results; Context to the financial statements; and Information that allows assessment of the likelihood that past performance is indicative of future performance. Our MD&A is provided as a supplement to, and should be read together with, our audited Consolidated Financial Statements for the three years ended December 31, 2019, included in Part II, Item 8 of this Form 10-K. Except as expressly stated, the financial condition and results of operations discussed throughout our MD&A are those of T-Mobile US, Inc. and its consolidated subsidiaries. Business Overview Un-carrier Strategy We are the Un-carrier. Through our Un-carrier strategy, we have disrupted the wireless communications services industry, rattling the status quo, by actively engaging with and listening to our customers and eliminating their existing pain points, including providing them with an unrivaled value, an exceptional experience and implementing signature Un-carrier initiatives that have changed wireless for good. Proposed Sprint Transactions On April 29, 2018, we entered into the Business Combination Agreement with Sprint to merge in an all-stock transaction at a fixed exchange ratio of 0.10256 shares of T-Mobile common stock for each share of Sprint common stock, or 9.75 shares of Sprint common stock for each share of T-Mobile common stock. If the Merger closes, the combined company will be named “T-Mobile” and, as a result of the Merger, is expected to be able to build upon our recently launched foundational 5G network 600 MHz spectrum to deliver transformational broad, deep and nationwide 5G for all, accelerate innovation and increase competition in the U.S. wireless, video and broadband industries. Immediately following the Merger, it is anticipated that DT and SoftBank Group Corp. (“SoftBank”) will hold, directly or indirectly, on a fully diluted basis, approximately 41.5% and 27.2%, respectively, of the outstanding T-Mobile common stock, with the remaining approximately 31.3% of the outstanding T-Mobile common stock held by other stockholders, based on closing share prices and certain other assumptions as of December 31, 2019. The consummation of the Merger remains subject to certain closing conditions. We expect the Merger will be permitted to close in early 2020. For more information regarding our Business Combination Agreement, see Note 2 – Business Combinations of the Notes to the Consolidated Financial Statements. 5G Launch In December 2019, T-Mobile launched America’s first nationwide 5G network, including prepaid 5G with Metro by T-Mobile, covering more than 200 million people and more than 5,000 cities and towns across the United States with 5G. Magenta Plans In June 2019, we rebranded our T-Mobile ONE and ONE Plus plans to Magenta and Magenta Plus. TVision Home In April 2019, we introduced TVisionTM Home, a rebranded and upgraded version of Layer3 TV. TVisionTM Home delivers what customers want most from high-end home TV, including a premium TV experience and HD and 4K channels. TVisionTM Home launched in eight markets. 30 T-Mobile MONEY In April 2019, we launched T-Mobile MONEY nationwide, offering customers a no-fee, interest-earning, mobile-first checking account which can be opened and managed from customers’ smartphones. Accounts are held at BankMobile, a Division of Customers Bank, member Federal Deposit Insurance Corporation. Our ability to acquire and retain branded customers is important to our business in the generation of revenues and we believe our Un-carrier strategy, along with ongoing network improvements, has been successful in attracting and retaining customers as evidenced by continued branded customer growth and improved branded postpaid phone and branded prepaid customer churn. (in thousands) Net customer additions Branded postpaid customers Branded prepaid customers Total branded customers Branded postpaid phone churn Branded prepaid churn Year Ended December 31, 2019 Versus 2018 2018 Versus 2017 2019 2018 2017 # Change % Change # Change % Change 4,515 339 4,854 4,459 460 4,919 3,620 855 4,475 56 (121) (65) 1 % (26)% (1)% 839 (395) 444 23 % (46)% 10 % Year Ended December 31, 2019 2018 2017 Bps Change 2019 Versus 2018 Bps Change 2018 Versus 2017 0.89 % 3.82 % 1.01 % 3.96 % 1.18 % 4.04 % -12 bps -14 bps -17 bps -8 bps Accounting Pronouncements Adopted During the Current Year Leases On January 1, 2019, we adopted the new lease standard. See Note 1 – Summary of Significant Accounting Policies of the Notes to the Consolidated Financial Statements for information regarding the impact of our adoption of the new lease standard. 31 Results of Operations Highlights for the year ended December 31, 2019, compared to the same period in 2018 • • • • Total revenues of $45.0 billion for the year ended December 31, 2019, increased $1.7 billion, or 4%, primarily driven by growth in Service revenues, partially offset by a decrease in Equipment revenues, as further discussed below. Service revenues of $34.0 billion for the year ended December 31, 2019, increased $2.0 billion, 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 and growth in other connected devices and wearables, specifically the Apple Watch, partially offset by lower postpaid phone and prepaid Average Revenue Per User (“ARPU”). Equipment revenues of $9.8 billion for the year ended December 31, 2019, decreased $169 million, or 2%, primarily due to a decrease in the number of devices sold, excluding purchased leased devices, and a decrease in lease revenues, partially offset by higher average revenue per device sold, excluding purchased leased devices. Operating income of $5.7 billion for the year ended December 31, 2019, increased $413 million, or 8%, primarily due to higher Service revenues, partially offset by higher Selling, general and administrative expenses and higher Cost of services. Operating income included the following: • • • • The impact of Merger-related costs was $620 million for the year ended December 31, 2019, compared to $196 million for the year ended December 31, 2018. The impact from commission costs capitalized and amortized beginning upon the adoption of ASC 606 on January 1, 2018, reduced Operating income by $337 million for the year ended December 31, 2019, compared to year ended December 31, 2018. The positive impact of hurricane-related reimbursements, net of costs, was $158 million for the year ended December 31, 2018. There were no significant impacts from hurricanes for the year ended December 31, 2019. The positive impact of the new lease standard of approximately $195 million for the year ended December 31, 2019. • Net income of $3.5 billion for the year ended December 31, 2019, increased $580 million, or 20%, primarily due to higher Operating income and lower Interest expense to affiliates and Interest expense, partially offset by higher Income tax expense. Net income included the following: • • • • The impact of Merger-related costs was $501 million, net of tax, for the year ended December 31, 2019, compared to $180 million, net of tax, for the year ended December 31, 2018. The impact from commission costs capitalized and amortized, beginning upon the adoption of ASC 606 on January 1, 2018, reduced Net income by $249 million for the year ended December 31, 2019, compared to year ended December 31, 2018. The positive impact of hurricane-related reimbursements, net of costs, was $99 million, net of tax, for the year ended December 31, 2018. There were no significant impacts from hurricanes for the year ended December 31, 2019. The positive impact of the new lease standard of approximately $175 million, net of tax, for the year ended December 31, 2019. • • • Adjusted EBITDA, a non-GAAP financial measure, of $13.4 billion for the year ended December 31, 2019, increased $985 million, or 8%, primarily due to higher Operating income driven by the factors described above. Merger-related costs are excluded from Adjusted EBITDA. See “Performance Measures” for additional information. Net cash provided by operating activities of $6.8 billion for the year ended December 31, 2019, increased $2.9 billion, or 75%. See “Liquidity and Capital Resources” for additional information. Free Cash Flow, a non-GAAP financial measure, of $4.3 billion for the year ended December 31, 2019, increased $767 million, or 22%. Free Cash Flow includes $442 million and $86 million in payments for Merger-related costs for the years ended December 31, 2019 and 2018, respectively. See “Liquidity and Capital Resources” for additional information. 32 Summary of our consolidated financial results: (in millions) Revenues Branded postpaid revenues Branded prepaid revenues Wholesale revenues Roaming and other service revenues Total service revenues Equipment revenues Other revenues Total revenues Operating expenses Cost of services, exclusive of depreciation and amortization shown separately below Cost of equipment sales, exclusive of depreciation and amortization shown separately below Selling, general and administrative Depreciation and amortization Gains on disposal of spectrum licenses Total operating expenses Operating income Other income (expense) Interest expense Interest expense to affiliates Interest income Other expense, net Total other expense, net Income before income taxes Income tax (expense) benefit Net income Statement of Cash Flows Data Net cash provided by operating activities Net cash used in investing activities Net cash used in financing activities Non-GAAP Financial Measures Adjusted EBITDA Free Cash Flow Year Ended December 31, 2019 Versus 2018 2018 Versus 2017 2019 2018 2017 $ Change % Change $ Change % Change $ 22,673 $ 20,862 $ 19,448 $ 1,811 9 % $ 1,414 9,543 1,279 499 33,994 9,840 1,164 44,998 9,598 1,183 349 31,992 10,009 1,309 43,310 9,380 1,102 230 30,160 9,375 1,069 40,604 6,622 6,307 6,100 11,899 14,139 6,616 — 39,276 5,722 (727) (408) 24 (8) (1,119) 4,603 (1,135) 3,468 6,824 (4,125) (2,374) $ $ 12,047 13,161 6,486 — 38,001 5,309 (835) (522) 19 (54) (1,392) 3,917 (1,029) 2,888 3,899 (579) (3,336) $ $ 11,608 12,259 5,984 (235) 35,716 4,888 (1,111) (560) 17 (73) (1,727) 3,161 1,375 4,536 3,831 (6,745) (1,367) $ $ $ $ $ 13,383 $ 12,398 $ 11,213 $ 4,319 3,552 2,725 (55) 96 150 2,002 (169) (145) 1,688 315 (148) 978 130 — 1,275 413 108 114 5 46 273 686 (106) 580 2,925 (3,546) 962 985 767 (1)% 8 % 43 % 6 % (2)% (11)% 4 % 5 % (1)% 7 % 2 % NM 3 % 8 % (13)% (22)% 26 % (85)% (20)% 18 % 10 % 218 81 119 1,832 634 240 2,706 207 439 902 502 235 2,285 421 276 38 2 19 335 756 (2,404) 20 % $ (1,648) 75 % $ 68 612 % (29)% 6,166 (1,969) 8 % $ 1,185 22 % 827 7 % 2 % 7 % 52 % 6 % 7 % 22 % 7 % 3 % 4 % 7 % 8 % (100)% 6 % 9 % (25)% (7)% 12 % (26)% (19)% 24 % (175)% (36)% 2 % (91)% 144 % 11 % 30 % 33 The following discussion and analysis are for the year ended December 31, 2019, compared to the same period in 2018 unless otherwise stated. For a discussion and analysis of the year ended December 31, 2018, compared to the same period in 2017 please refer to Management’s Discussion and Analysis of Financial Condition and Results of Operations included in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2018, filed with the SEC on February 7, 2019. Total revenues increased $1.7 billion, or 4%, as discussed below. Branded postpaid revenues increased $1.8 billion, or 9%, primarily from: • • • 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; and Higher average branded postpaid other customers, driven by higher other connected devices and wearables, 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. Branded prepaid revenues were essentially flat. Wholesale revenues increased $96 million, or 8%, primarily from the continued success of our MVNO partnerships. Roaming and other service revenues increased $150 million, or 43%, primarily from increases in domestic and international roaming revenues, including growth from Sprint. Equipment revenues decreased $169 million, or 2%, primarily from: • • A decrease of $94 million in device sales revenues, excluding purchased leased devices, primarily from: • • A 7% decrease in the number of devices sold, excluding purchased leased 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 $93 million in lease revenues primarily due to a lower number of customer devices under lease, partially offset by higher revenue per device under lease. Other revenues decreased $145 million, or 11%, primarily from: • • • • A decrease of $185 million for the year ended December 31, 2019, in co-location rental revenue from the adoption of the new lease standard; and Hurricane-related reimbursements of $71 million included in the year ended December 31, 2018, compared to no impact from hurricanes in the year ended December 31, 2019; partially offset by Higher advertising revenues; and Higher spectrum lease revenue from the reciprocal long-term lease agreement with Sprint executed during the three months ended December 31, 2018. Our operating expenses consist of the following categories: • Cost of services primarily includes costs directly attributable to providing wireless service through the operation of our network, including direct switch and cell site costs, such as rent, network access and transport costs, utilities, maintenance, associated labor costs, long distance costs, regulatory program costs, roaming fees paid to other carriers and data content costs. In addition, certain costs for customer appreciation programs are included in Cost of services. 34 • • Cost of equipment sales primarily includes costs of devices and accessories sold to customers and dealers, device costs to fulfill insurance and warranty claims, costs related to returned and purchased leased devices, write-downs of inventory related to shrinkage and obsolescence, and shipping and handling costs. Selling, general and administrative primarily includes costs not directly attributable to providing wireless service for the operation of sales, customer care and corporate activities. These include commissions paid to dealers and retail employees for customer activations and upgrades, labor and facilities costs associated with retail sales force and administrative space, marketing and promotional costs, customer support and billing, bad debt expense, losses from sales of receivables and back office administrative support activities. Operating expenses increased $1.3 billion, or 3%, primarily from higher Selling, general and administrative expenses and Cost of services as discussed below. Cost of services, exclusive of depreciation and amortization, increased $315 million, or 5%, primarily from: • • • • • Higher costs for employee-related expenses, network expansion, expenses from new leases and repair and maintenance; Hurricane-related reimbursements, net of costs, of $76 million included in the year ended December 31, 2018, compared to no significant impact from hurricanes in the year ended December 31, 2019; and Higher spectrum lease expense from the reciprocal long-term lease agreement with Sprint executed during the three months ended December 31, 2018; partially offset by The positive impact of the new lease standard of approximately $380 million in the year ended December 31, 2019, resulting from the decrease in the average lease term and the change in accounting conclusion for certain sale- leaseback sites; and Lower regulatory program costs. Cost of equipment sales, exclusive of depreciation and amortization, decreased $148 million, or 1%, primarily from: • • • • • A decrease of $98 million in device cost of equipment sales, excluding purchased leased devices, primarily from: • • A 7% decrease in the number of devices sold, excluding purchased leased devices, partially offset by Higher average cost per device sold due to an increase in the high-end device mix; A decrease of $30 million in returned handset expenses due to reduced device sales; A decrease in leased device cost of equipment sales, primarily due to lower leased device returns; and A decrease in extended warranty costs, primarily due to a lower volume of purchased handsets for warranty replacement; partially offset by An increase in costs related to the liquidation of inventory. Selling, general and administrative expenses increased $978 million, or 7%, primarily from: • • • • • • An increase of $424 million in Merger-related costs; Higher commissions expense resulting from an increase of $337 million in amortization expense related to commission costs that were capitalized beginning upon the adoption of ASC 606 on January 1, 2018; Higher employee-related costs primarily due to annual pay increases and growth in headcount; and Higher costs related to outsourced functions; partially offset by Lower commissions expense from lower branded prepaid customer additions and compensation structure changes; and Lower advertising costs. 35 Depreciation and amortization increased $130 million or 2%, primarily from: • • • Network expansion, including the continued deployment of low band spectrum, including 600 MHz, and the nationwide launch of our 5G network; and Higher costs related to the acceleration of depreciation for certain assets due to our accelerated 600 MHz build-out and 5G nationwide launch; partially offset by Lower depreciation expense resulting from a lower total number of customer devices under lease. Operating income, the components of which are discussed above, increased $413 million, or 8%. Interest expense decreased $108 million, or 13%, primarily from: • • • An increase of $43 million in capitalized interest costs, primarily due to the build-out of our network to utilize our 600 MHz spectrum licenses and the nationwide launch of our 5G network; The redemption in April 2018 of an aggregate principal amount of $2.4 billion of Senior Notes, with various interest rates and maturity dates; and A $34 million reduction in interest expense from the change in accounting conclusion related to the reassessment of previously failed sale-leasebacks of certain T-Mobile-owned wireless communications tower sites associated with the adoption of the new lease standard. Interest expense to affiliates decreased $114 million, or 22%, primarily from: • • • An increase of $67 million in capitalized interest costs, primarily due to the build-out of our network to utilize our 600 MHz spectrum licenses and the nationwide launch of our 5G network; Lower interest on $600 million aggregate principal amount of Senior Reset Notes retired in April 2019; and Lower interest rates achieved through refinancing a total of $2.5 billion of Senior Reset Notes in April 2018. Other expense, net decreased $46 million, or 85%, primarily from: • • • • • An $86 million loss during the year ended December 31, 2018, on the early redemption of $2.5 billion of DT Senior Reset Notes due 2021 and 2022; and A $32 million loss during the year ended December 31, 2018, on the early redemption of $1.0 billion of 6.125% Senior Notes due 2022; partially offset by A $30 million gain during the year ended December 31, 2018, on the sale of auction rate securities which were originally acquired with MetroPCS; 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 year ended December 31, 2018; and A $28 million redemption premium on the DT Senior Reset Notes; partially offset by the write-off of embedded derivatives upon redemption of the debt which resulted in a gain of $11 million during the year ended December 31, 2019. Income tax expense increased $106 million, or 10%, primarily from: • • Higher income before taxes; partially offset by A reduction of the effective income tax rate to 24.7% for the year ended December 31, 2019, compared to 26.3% for the year ended December 31, 2018, primarily from: • • A $115 million increase in income tax expense during the year ended December 31, 2018, due to a tax regime change in certain state tax jurisdictions; and The favorable rate impact of certain non-recurring legal entity restructuring in 2019. 36 Net income, the components of which are discussed above, increased $580 million, or 20%, primarily due to higher Operating income and lower interest expense to affiliates and interest expense. Net income included the following: • Merger-related costs of $501 million, net of tax, for the year ended December 31, 2019, compared to Merger-related costs of $180 million, net of tax, for the year ended December 31, 2018; • • • The negative impact from commission costs capitalized and amortized beginning upon the adoption of ASC 606 on January 1, 2018, net of tax, of $249 million for the year ended December 31, 2019, compared to year ended December 31, 2018; Hurricane-related reimbursements, net of costs, of $99 million, net of tax, for the year ended December 31, 2018. There were no significant impacts from hurricanes for the year ended December 31, 2019; and The positive impact of the new lease standard of approximately $175 million, net of tax, for the year ended December 31, 2019. Guarantor Subsidiaries Pursuant to the applicable indentures and supplemental indentures, the long-term debt to affiliates and third parties issued by T- Mobile USA (“Issuer”) is fully and unconditionally guaranteed, jointly and severally, on a senior unsecured basis by T-Mobile (“Parent”) and certain of the Issuer’s 100% owned subsidiaries (“Guarantor Subsidiaries”). The financial condition and results of operations of the Parent, Issuer and Guarantor Subsidiaries is substantially similar to our consolidated financial condition. In 2019, certain Non-Guarantor Subsidiaries became Guarantor Subsidiaries. Certain prior period amounts have been reclassified to conform to the current period’s presentations. The most significant components of the financial condition of our Non- Guarantor Subsidiaries were as follows: (in millions) Other current assets Property and equipment, net Tower obligations Total stockholders' deficit December 31, 2019 December 31, 2018 Change $ % $ $ 684 194 2,161 (1,620) $ 644 246 2,173 (1,454) 40 (52) (12) (166) 6 % (21)% (1)% 11 % The most significant components of the results of operations of our Non-Guarantor Subsidiaries were as follows: (in millions) Service revenues Cost of equipment sales, exclusive of depreciation and amortization Selling, general and administrative Total comprehensive income Year Ended December 31, Change 2019 2018 $ % $ 3,003 $ 2,333 $ 1,207 989 608 1,010 892 301 670 197 97 307 29 % 20 % 11 % 102 % The change to the results of operations of our Non-Guarantor Subsidiaries was primarily from: • • • 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 rates as well as growth in our customer base related to a premium service that launched at the end of August 2018 and sales of a 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 higher costs related to outsourced functions. All other results of operations of the Parent, Issuer and Guarantor Subsidiaries are substantially similar to the Company’s consolidated results of operations. See Note 18 – Guarantor Financial Information of the Notes to the Consolidated Financial Statements. 37 Performance Measures In managing our business and assessing financial performance, we supplement the information provided by our financial statements with other operating or statistical data and non-GAAP financial measures. These operating and financial measures are utilized by our management to evaluate our operating performance and, in certain cases, our ability to meet liquidity requirements. Although companies in the wireless industry may not define each of these measures in precisely the same way, we believe that these measures facilitate comparisons with other companies in the wireless industry on key operating and financial measures. Total Customers A customer is generally defined as a SIM number with a unique T-Mobile identifier which is associated with an account that generates revenue. Branded customers generally include customers that are qualified either for postpaid service utilizing phones, wearables, DIGITS or other connected devices which includes tablets and SyncUp DRIVE™, where they generally pay after receiving service, or prepaid service, where they generally pay in advance. Our branded prepaid customers include customers of T-Mobile and Metro by T-Mobile. Wholesale customers include M2M and MVNO customers that operate on our network but are managed by wholesale partners. Starting with the three months ended March 31, 2020, we plan to discontinue reporting wholesale customers and instead focus on branded customers and wholesale revenues, which we consider more relevant than the number of wholesale customers given the expansion of M2M and IoT products. On July 18, 2019, we entered into an agreement whereby certain T-Mobile branded prepaid products will now be offered and distributed by a current MVNO partner. Upon the effective date, the agreement resulted in a base adjustment to reduce branded prepaid customers by 616,000, as we no longer actively support the branded product offering. Prospectively, new customer activity associated with these products is recorded within wholesale customers and revenue for these customers is recorded within Wholesale revenues in our Consolidated Statements of Comprehensive Income. The following table sets forth the number of ending customers: (in thousands) Customers, end of period Branded postpaid phone customers Branded postpaid other customers Total branded postpaid customers Branded prepaid customers (1) Total branded customers Wholesale customers (1) Total customers, end of period Adjustment to branded prepaid customers (1) As of December 31, 2019 Versus 2018 2018 Versus 2017 2019 2018 2017 # Change % Change # Change % Change 40,345 6,689 47,034 20,860 67,894 18,152 86,046 (616) 37,224 5,295 42,519 21,137 63,656 15,995 79,651 — 34,114 3,933 38,047 20,668 58,715 13,870 72,585 — 3,121 1,394 4,515 (277) 4,238 2,157 6,395 (616) 8 % 26 % 11 % (1)% 7 % 13 % 8 % NM 3,110 1,362 4,472 469 4,941 2,125 7,066 — 9 % 35 % 12 % 2 % 8 % 15 % 10 % — % (1) On July 18, 2019, we entered into an agreement whereby certain T-Mobile branded prepaid products will now be offered and distributed by a current MVNO partner. As a result, we included a base adjustment in Q3 2019 to reduce branded prepaid customers by 616,000. Prospectively, new customer activity associated with these products is recorded within wholesale customers. Branded Customers Total branded customers increased 4,238,000, or 7%, primarily from: • • • 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 promotional activities and lower churn; and Higher branded postpaid other customers, primarily due to strength in additions from other connected devices; partially offset by Lower branded prepaid customers driven primarily by a reduction of 616,000 customers resulting from a base adjustment for certain T-Mobile branded prepaid products now being offered and distributed by a current MVNO partner, partially offset by the continued success of our prepaid brands due to promotional activities and rate plan offers. 38 Wholesale Wholesale customers increased 2,157,000, or 13%, primarily due to the continued success of our M2M and MVNO partnerships. Net Customer Additions The following table sets forth the number of net customer additions: (in thousands) Net customer additions Branded postpaid phone customers Branded postpaid other customers Total branded postpaid customers Branded prepaid customers (1) Total branded customers Wholesale customers (1) Total net customer additions Year Ended December 31, 2019 Versus 2018 2018 Versus 2017 2019 2018 2017 # Change % Change # Change % Change 3,121 1,394 4,515 339 4,854 2,157 7,011 3,097 1,362 4,459 460 4,919 2,125 7,044 2,817 803 3,620 855 4,475 1,183 5,658 24 32 56 (121) (65) 32 (33) 1 % 2 % 1 % (26)% (1)% 2 % — % 280 559 839 (395) 444 942 1,386 10 % 70 % 23 % (46)% 10 % 80 % 24 % (1) On July 18, 2019, we entered into an agreement whereby certain T-Mobile branded prepaid products will now be offered and distributed by a current MVNO partner. As a result, we included a base adjustment in Q3 2019 to reduce branded prepaid customers by 616,000. Prospectively, new customer activity associated with these products is recorded within wholesale customers. Branded Customers Total branded net customer additions decreased 65,000, or 1%, primarily from: • • • Lower branded prepaid net customer additions primarily due to the impact of continued competitor promotional activities in the marketplace, partially offset by lower churn; partially offset by Higher branded postpaid other net customer additions primarily due to additions from other connected devices, partially offset by higher deactivations from a growing customer base; and Higher branded postpaid phone net customer additions primarily due to lower churn. Wholesale Wholesale net customer additions increased 32,000, or 2%, primarily due to higher additions from the continued success of our M2M and MVNO partnerships. Customers Per Account Customers per account is calculated by dividing the number of branded postpaid customers as of the end of the period by the number of branded postpaid accounts as of the end of the period. An account may include branded postpaid phone customers and branded postpaid other customers which includes wearables, DIGITS, and other connected devices such as tablets and SyncUp DRIVE™. We believe branded postpaid customers per account provides management, investors and analysts with useful information to evaluate our branded postpaid customer base. The following table sets forth the branded postpaid customers per account: Branded postpaid customers per account 3.13 3.03 2.93 0.10 3 % 0.10 3 % As of December 31, 2019 Versus 2018 2018 Versus 2017 2019 2018 2017 # Change % Change # Change % Change Branded postpaid customers per account increased 3% primarily from continued growth of new customer segments and rate plans such as Unlimited 55+, Military, Business and Essentials, promotional activities targeting families and the continued success of other connected devices and wearables, specifically tablets and the Apple Watch. 39 Starting with the three months ended March 31, 2020, we plan to report Average Revenue per Postpaid Account or Postpaid ARPA, in addition to our existing ARPU metrics, reflecting the increasing importance of non-phone devices to our customers. We also plan to discontinue reporting branded postpaid customers per account. Churn Churn represents the number of customers whose service was disconnected as a percentage of the average number of customers during the specified period. The number of customers whose service was disconnected is presented net of customers that subsequently have their service restored within a certain period of time. We believe that churn provides management, investors and analysts with useful information to evaluate customer retention and loyalty. The following table sets forth the churn: Branded postpaid phone churn Branded prepaid churn Year Ended December 31, 2019 2018 2017 Bps Change 2019 Versus 2018 Bps Change 2018 Versus 2017 0.89 % 3.82 % 1.01 % 3.96 % 1.18 % 4.04 % -12 bps -14 bps -17 bps -8 bps Branded postpaid phone churn decreased 12 basis points, primarily from increased customer satisfaction and loyalty from ongoing improvements to network quality, industry-leading customer service and the overall value of our offerings. Branded prepaid churn decreased 14 basis points, primarily from increased customer satisfaction and loyalty from ongoing improvements to network quality and the continued success of our prepaid brands due to promotional activities and rate plan offers. Average Revenue Per User ARPU represents the average monthly service revenue earned from customers. We believe ARPU provides management, investors and analysts with useful information to assess and evaluate our service revenue per customer and assist in forecasting our future service revenues generated from our customer base. Branded postpaid phone ARPU excludes Branded postpaid other customers and related revenues which includes wearables, DIGITS and other connected devices such as tablets and SyncUp DRIVE™. The following table illustrates the calculation of our operating measure ARPU and reconciles this measure to the related service revenues: Year Ended December 31, 2019 Versus 2018 2018 Versus 2017 2019 2018 2017 $ Change % Change $ Change % Change (in millions, except average number of customers and ARPU) Calculation of Branded Postpaid Phone ARPU Branded postpaid service revenues Less: Branded postpaid other revenues Branded postpaid phone service revenues Divided by: Average number of branded postpaid phone customers (in thousands) and number of months in period Branded postpaid phone ARPU Calculation of Branded Prepaid ARPU Branded prepaid service revenues Divided by: Average number of branded prepaid customers (in thousands) and number of months in period $ $ $ $ 22,673 (1,344) 21,329 38,602 46.04 9,543 $ $ $ $ 20,862 (1,117) 19,745 35,458 46.40 9,598 $ $ $ $ 19,448 (1,077) 18,371 32,596 46.97 9,380 $ $ $ $ 1,811 (227) 1,584 3,144 (0.36) 9 % $ 1,414 20 % (40) 8 % $ 1,374 9 % (1)% $ 2,862 (0.57) (55) (1)% $ 218 20,955 20,761 20,204 194 (0.58) 1 % (2)% $ 557 (0.16) 7 % 4 % 7 % 9 % (1)% 2 % 3 % — % Branded prepaid ARPU $ 37.95 $ 38.53 $ 38.69 $ 40 Branded Postpaid Phone ARPU Branded postpaid phone ARPU decreased $0.36, or 1%, primarily due to: • • • • • An increase in promotional activities, including the ongoing growth in our Netflix offering, which totaled $0.54 for the year ended December 31, 2019, and decreased branded postpaid phone ARPU by $0.19 compared to the year ended December 31, 2018; A reduction in regulatory program revenues from the continued adoption of tax inclusive plans; and A reduction in certain non-recurring charges; partially offset by Higher premium services revenue; and The growing success of new customer segments and rate plans. We expect Branded postpaid phone ARPU in full-year 2020 to be generally stable compared to full-year 2019 within a range of plus 1% to minus 1%. Branded Prepaid ARPU Branded prepaid ARPU decreased $0.58, or 2%, primarily due to: • • • Dilution from promotional activity; and Growth in our Amazon Prime offering - included as a benefit with certain Metro by T-Mobile unlimited rate plans as of the fourth quarter of 2018 - which impacted branded prepaid ARPU by $0.39 for the year ended December 31, 2019, and decreased branded prepaid ARPU by $0.36 compared to the year ended December 31, 2018; partially offset by The removal of certain branded prepaid customers associated with products now offered and distributed by a current MVNO partner as those customers had lower ARPU. Adjusted EBITDA Adjusted EBITDA represents earnings before Interest expense, net of Interest income, Income tax expense, Depreciation and amortization, non-cash Stock-based compensation and certain income and expenses not reflective of our operating performance. Net income margin represents Net income divided by Service revenues. Adjusted EBITDA margin represents Adjusted EBITDA divided by Service revenues. Adjusted EBITDA is a non-GAAP financial measure utilized by our management to monitor the financial performance of our operations. We use Adjusted EBITDA internally as a measure to evaluate and compensate our personnel and management for their performance, and as a benchmark to evaluate our operating performance in comparison to our competitors. Management believes analysts and investors use Adjusted EBITDA as a supplemental measure to evaluate overall operating performance and facilitate comparisons with other wireless communications services companies because it is indicative of our ongoing operating performance and trends by excluding the impact of interest expense from financing, non-cash depreciation and amortization from capital investments, non-cash stock-based compensation, network decommissioning costs and costs related to the Transactions, as they are not indicative of our ongoing operating performance, as well as certain other nonrecurring income and expenses. Adjusted EBITDA has limitations as an analytical tool and should not be considered in isolation or as a substitute for income from operations, net income or any other measure of financial performance reported in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”). 41 The following table illustrates the calculation of Adjusted EBITDA and reconciles Adjusted EBITDA to Net income, which we consider to be the most directly comparable GAAP financial measure: Year Ended December 31, 2019 Versus 2018 2018 Versus 2017 2019 2018 2017 $ Change % Change $ Change % Change $ 3,468 $ 2,888 $ 4,536 $ 580 20 % $ (1,648) (36)% (in millions) Net income Adjustments: Interest expense Interest expense to affiliates Interest income Other expense, net Income tax expense (benefit) Operating income Depreciation and amortization Stock-based compensation (1) Merger-related costs Other, net (2) 727 408 (24) 8 1,135 5,722 6,616 423 620 2 835 522 (19) 54 1,029 5,309 6,486 389 196 18 1,111 560 (17) 73 (1,375) 4,888 5,984 307 — 34 (108) (114) (5) (46) 106 413 130 34 424 (16) 985 (13)% (22)% 26 % (85)% 10 % 8 % 2 % 9 % 216 % (89)% (276) (38) (2) (19) 2,404 421 502 82 196 (16) 8 % $ 1,185 100 bps — bps (25)% (7)% 12 % (26)% (175)% 9 % 8 % 27 % NM (47)% 11 % -600 bps 200 bps Adjusted EBITDA $ 13,383 $ 12,398 $ 11,213 $ Net income margin (Net income divided by service revenues) Adjusted EBITDA margin (Adjusted EBITDA divided by service revenues) 10 % 39 % 9 % 39 % 15 % 37 % (1) Stock-based compensation includes payroll tax impacts and may not agree to stock-based compensation expense in the 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 Consolidated Statements of Comprehensive Income primarily due to certain non-routine operating activities, such as other special items that would not be expected to reoccur or are not reflective of T-Mobile’s ongoing operating performance, and are therefore excluded in Adjusted EBITDA. Adjusted EBITDA increased $985 million, or 8%, primarily due to: • • • • • • Higher service revenues, as further discussed above; and The positive impact of the new lease standard of approximately $195 million; partially offset by Higher Selling, general and administrative expenses, excluding Merger-related costs; Higher Cost of services expenses; and The impact from hurricane-related reimbursements, net of costs, of $158 million for the year ended December 31, 2018. There were no significant impacts from hurricanes for the year ended December 31, 2019. The impact from commission costs capitalized and amortized beginning upon the adoption of ASC 606 on January 1, 2018, reduced Adjusted EBITDA by $337 million for the year ended December 31, 2019, compared to year ended December 31, 2018. Liquidity and Capital Resources Our principal sources of liquidity are our cash and cash equivalents and cash generated from operations, proceeds from issuance of long-term debt and common stock, financing leases, the sale of certain receivables, financing arrangements of vendor payables which effectively extend payment terms and secured and unsecured revolving credit facilities with DT. Upon consummation of the Transactions, we will incur substantial third-party indebtedness which will increase our future financial commitments, including aggregate interest payments on higher total indebtedness, and may adversely impact our liquidity. Further, the incurrence of additional indebtedness may inhibit our ability to incur new debt under the terms governing our existing and future indebtedness, which may make it more difficult for us to incur new debt in the future to finance our business strategy. 42 Cash Flows The following is a condensed schedule of our cash flows for the years ended December 31, 2019 and 2018: Year Ended December 31, 2019 Versus 2018 2018 Versus 2017 (in millions) 2019 2018 2017 $ Change % Change $ Change % Change Net cash provided by operating activities $ 6,824 $ 3,899 $ 3,831 $ Net cash used in investing activities Net cash used in financing activities (4,125) (2,374) (579) (3,336) (6,745) (1,367) 2,925 (3,546) 962 75 % $ 612 % (29)% 68 6,166 (1,969) 2 % (91)% 144 % Operating Activities Net cash provided by operating activities increased $2.9 billion, or 75%, from: • • A $2.0 billion decrease in net cash outflows from changes in working capital, primarily due to lower use from Accounts receivable, Accounts payable and accrued liabilities and Equipment installment plan receivables, partially offset by higher use from Inventories; and A $951 million increase in Net income and net non-cash adjustments to Net income. With the adoption of the new lease standard, changes in Operating lease right-of-use assets and Short and long-term operating lease liabilities are now presented in Changes in operating assets and liabilities. The net impact of changes in these accounts decreased Net cash provided by operating activities by $235 million for the year ended December 31, 2019. Investing Activities Net cash used in investing activities increased $3.5 billion, or 612%. The use of cash for the year ended December 31, 2019, was primarily from: • • • • $6.4 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 launched our nationwide 5G network; $967 million in Purchases of spectrum licenses and other intangible assets, including deposits; and $632 million in Net cash related to derivative contracts under collateral exchange arrangements, see Note 7 - Fair Value Measurements of the Notes to the Consolidated Financial Statements for further information; partially offset by $3.9 billion in Proceeds related to beneficial interests in securitization transactions. Financing Activities Net cash used in financing activities decreased $1.0 billion, or 29%. The use of cash for the year ended December 31, 2019, was primarily from: • • • • • $798 million for Repayments of financing lease obligations; $775 million for Repayments of short-term debt for purchases of inventory, property and equipment; $600 million for Repayments of long-term debt; and $156 million for Tax withholdings on share-based awards. Activity under the revolving credit facility included borrowing and full repayment of $2.3 billion, for a net of $0 impact. Cash and Cash Equivalents As of December 31, 2019, our Cash and cash equivalents were $1.5 billion compared to $1.2 billion at December 31, 2018. Free Cash Flow Free Cash Flow represents Net cash provided by operating activities less payments for Purchases of property and equipment, including Proceeds from sales of tower sites and Proceeds related to beneficial interests in securitization transactions, less Cash 43 payments for debt prepayment or debt extinguishment costs. Free Cash Flow is a non-GAAP financial measure utilized by our management, investors and analysts of our financial information to evaluate cash available to pay debt and provide further investment in the business. In 2019, we sold tower sites for proceeds of $38 million which are included in Proceeds from sales of tower sites within Net cash used in investing activities in our Consolidated Statements of Cash Flows. As these proceeds were from the sale of fixed assets and are used by management to assess cash available for capital expenditures during the year, we determined the proceeds are relevant for the calculation of Free Cash Flow and included them in the table below. Other proceeds from the sale of fixed assets for the periods presented are not significant. We have presented the impact of the sales in the table below, which illustrates the calculation of Free Cash Flow and reconciles Free Cash Flow to Net cash provided by operating activities, which we consider to be the most directly comparable GAAP financial measure. (in millions) 2019 2018 2017 $ Change % Change $ Change % Change Year Ended December 31, 2019 Versus 2018 2018 Versus 2017 Net cash provided by operating activities $ 6,824 $ 3,899 $ 3,831 $ Cash purchases of property and equipment (6,391) (5,541) (5,237) Proceeds from sales of tower sites 38 — — 2,925 (850) 38 Proceeds related to beneficial interests in securitization transactions Cash payments for debt prepayment or debt extinguishment costs 3,876 5,406 4,319 (1,530) (28) (212) (188) 184 767 Free Cash Flow $ 4,319 $ 3,552 $ 2,725 $ Free Cash Flow increased $767 million, or 22%, primarily from: 75 % $ 15 % NM (28)% (87)% 22 % $ 68 (304) — 1,087 (24) 827 2 % 6 % NM 25 % 13 % 30 % • • • • • Higher Net cash provided by operating activities, as described above; and Lower Cash payments for debt prepayment or 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, including capitalized interest of $473 million and $362 million for the years ended December 31, 2019 and 2018, respectively. Free Cash Flow includes $442 million and $86 million in payments for Merger-related costs for the years ended December 31, 2019 and 2018, respectively. Borrowing Capacity and Debt Financing As of December 31, 2019, our total debt and financing lease liabilities were $27.3 billion, excluding our tower obligations, of which $24.9 billion was classified as long-term debt. Effective April 28, 2019, we redeemed $600 million aggregate principal amount of our DT Senior Reset Notes. The notes were redeemed at a redemption price equal to 104.666% of the principal amount of the notes (plus accrued and unpaid interest thereon) and were paid on April 29, 2019. The redemption premium was $28 million and was included in Other expense, net in our Consolidated Statements of Comprehensive Income and in Cash payments for debt prepayment or debt extinguishment costs in our Consolidated Statements of Cash Flows. Certain components of the reset features were required to be bifurcated from the DT Senior Reset Notes and were separately accounted for as embedded derivatives. The write-off of embedded derivatives upon redemption resulted in a gain of $11 million, which was included in Other expense, net in our Consolidated Statements of Comprehensive Income. See Note 7 - Fair Value Measurements of the Notes to the Consolidated Financial Statements for further information. We maintain a $2.5 billion revolving credit facility with DT which is comprised of a $1.0 billion unsecured revolving credit agreement and a $1.5 billion secured revolving credit agreement. In December 2019, we amended the terms of the revolving credit facility with DT to extend the maturity date to December 29, 2022. As of December 31, 2019 and 2018, there were no outstanding borrowings under the revolving credit facility. We maintain a financing arrangement with Deutsche Bank AG, which allows for up to $108 million in borrowings. Under the financing arrangement, we can effectively extend payment terms for invoices payable to certain vendors. As of December 31, 2019 and 2018, there were no outstanding balances. 44 We maintain vendor financing arrangements with our primary network equipment suppliers. Under the respective agreements, we can obtain extended financing terms. During the year ended December 31, 2019, we utilized $800 million and repaid $775 million under the vendor financing arrangements. Invoices subject to extended payment terms have various due dates through the first quarter of 2020. Payments on vendor financing agreements are included in Repayments of short-term debt for purchases of inventory, property and equipment, net, in our Consolidated Statements of Cash Flows. As of December 31, 2019, there were $25 million in outstanding borrowings under the vendor financing agreements which were included in Short-term debt in our Consolidated Balance Sheets. As of December 31, 2018, there was no outstanding balance. Consents on Debt On May 18, 2018, under the terms and conditions described in the Consent Solicitation Statement dated as of May 14, 2018, we obtained consents necessary to effect certain amendments to certain of our existing debt and certain existing debt of our subsidiaries. If the Merger is consummated, we will make payments for requisite consents to third-party note holders. There was no payment accrued as of December 31, 2019. In connection with the entry into the Business Combination Agreement, DT and T-Mobile USA entered into a financing matters agreement, dated as of April 29, 2018, pursuant to which DT agreed, among other things, to consent to the incurrence by T-Mobile USA of secured debt in connection with and after the consummation of the Merger. If the Merger is consummated, we will make payments for requisite consents to DT. There was no payment accrued as of December 31, 2019. See Note 8 - Debt of the Notes to the Consolidated Financial Statements for further information. Commitment Letter In connection with the entry into the Business Combination Agreement, T-Mobile USA entered into a commitment letter, dated as of April 29, 2018 (as amended and restated on May 15, 2018 and on September 6, 2019, the “Commitment Letter”). In connection with the financing provided for in the Commitment Letter, we expect to incur certain fees payable to the financial institutions, including certain financing fees on the secured term loan commitment. If the Merger closes, we will incur additional fees for the financial institutions structuring and providing the commitments and certain take-out fees associated with the issuance of permanent secured bond debt in lieu of the secured bridge loan. In total, we may incur up to approximately $340 million in fees associated with the Commitment Letter. We began incurring certain Commitment Letter fees on November 1, 2019, which were recognized in Selling, general and administrative expenses in our Consolidated Statements of Comprehensive Income. There were $12 million of fees accrued as of December 31, 2019. See Note 8 - Debt of the Notes to the Consolidated Financial Statements for further information. Future Sources and Uses of Liquidity We may seek additional sources of liquidity, including through the issuance of additional long-term debt in 2020, to continue to opportunistically acquire spectrum licenses or other assets in private party transactions or for the refinancing of existing long- term debt on an opportunistic basis. Excluding liquidity that could be needed for spectrum acquisitions, or for other assets, we expect our principal sources of funding to be sufficient to meet our anticipated liquidity needs for business operations for the next 12 months as well as our longer-term liquidity needs. Our intended use of any such funds is for general corporate purposes, including for capital expenditures, spectrum purchases, opportunistic investments and acquisitions, redemption of high yield callable debt and stock purchases. In October 2018, we entered into interest rate lock derivatives with notional amounts of $9.6 billion. The fair value of interest rate lock derivatives was a liability of $1.2 billion and $447 million as of December 31, 2019 and 2018, respectively, and was included in Other current liabilities in our Consolidated Balance Sheets. In November 2019, we extended the mandatory termination date on our interest rate lock derivatives to June 3, 2020. In December 2019, we made net collateral transfers to certain of our derivative counterparties totaling $632 million, which included variation margin transfers to (or from) such derivative counterparties based on daily market movements. These collateral transfers are included in Other current assets in our Consolidated Balance Sheets and in Net cash related to derivative contracts under collateral exchange arrangements within Net cash used in investing activities in our Consolidated Statements of Cash Flows. The interest rate lock derivatives will be settled upon the earlier of the issuance of fixed-rate debt or the current mandatory termination date. Upon settlement of the interest rate lock derivatives, we will receive, or make, a cash payment in the amount of the fair value of the cash flow hedge as of the settlement date. We expect our existing sources of liquidity to be sufficient to meet the requirements of the interest rate lock derivatives. 45 We determine future liquidity requirements, for both operations and capital expenditures, based in large part upon projected financial and operating performance, and opportunities to acquire additional spectrum. We regularly review and update these projections for changes in current and projected financial and operating results, general economic conditions, the competitive landscape and other factors. There are a number of risks and uncertainties that could cause our financial and operating results and capital requirements to differ materially from our projections, which could cause future liquidity to differ materially from our assessment. The indentures and credit facilities governing our long-term debt to affiliates and third parties, excluding capital leases, contain covenants that, among other things, limit the ability of the Issuer and the Guarantor Subsidiaries to incur more debt, pay dividends and make distributions on our common stock, make certain investments, repurchase stock, create liens or other encumbrances, enter into transactions with affiliates, enter into transactions that restrict dividends or distributions from subsidiaries, and merge, consolidate or sell, or otherwise dispose of, substantially all of their assets. Certain provisions of each of the credit facilities, indentures and supplemental indentures relating to the long-term debt to affiliates and third parties restrict the ability of the Issuer to loan funds or make payments to the Parent. However, the Issuer is allowed to make certain permitted payments to the Parent under the terms of each of the credit facilities, indentures and supplemental indentures relating to the long-term debt to affiliates and third parties. We were in compliance with all restrictive debt covenants as of December 31, 2019. Financing Lease Facilities We have entered into uncommitted financing lease facilities with certain partners, which provide us with the ability to enter into financing leases for network equipment and services. As of December 31, 2019, we have committed to $3.9 billion of financing leases under these financing lease facilities, of which $898 million was executed during the year ended December 31, 2019. Capital Expenditures Our liquidity requirements have been driven primarily by capital expenditures for spectrum licenses and the construction, expansion and upgrading of our network infrastructure. Property and equipment capital expenditures primarily relate to our network transformation, including the build-out of our network to utilize our 600 MHz spectrum licenses and the deployment of 5G. We expect cash purchases of property and equipment, including capitalized interest of approximately $400 million, to be $5.9 to $6.2 billion and cash purchases of property and equipment, excluding capitalized interest, to be $5.5 to $5.8 billion in 2020. This includes expenditures for 600 MHz and 5G deployment. This does not include property and equipment obtained through financing lease agreements, vendor financing agreements, leased wireless devices transferred from inventory or any additional purchases of spectrum licenses. Share Repurchases On December 6, 2017, our Board of Directors authorized a stock repurchase program for up to $1.5 billion of our common stock through December 31, 2018 (the “2017 Stock Repurchase Program”). Repurchased shares are retired. The 2017 Stock Repurchase Program was completed on April 29, 2018. On April 27, 2018, our Board of Directors authorized an increase in the total stock repurchase program to $9.0 billion, consisting of the $1.5 billion in repurchases previously completed and up to an additional $7.5 billion of repurchases of our common stock through the year ending December 31, 2020 (the "2018 Stock Repurchase Program"). The additional $7.5 billion repurchase authorization is contingent upon the termination of the Business Combination Agreement and the abandonment of the Transactions contemplated under the Business Combination Agreement. There were no repurchases of our common stock under the 2018 Stock Repurchase Program in 2019 or 2018. See Note 12 - Repurchases of Common Stock of the Notes to the Consolidated Financial Statements for further information. Dividends We have never paid or declared any cash dividends on our common stock, and we do not intend to declare or pay any cash dividends on our common stock in the foreseeable future. Our credit facilities and the indentures and supplemental indentures governing our long-term debt to affiliates and third parties, excluding financing leases, contain covenants that, among other things, restrict our ability to declare or pay dividends on our common stock. 46 Contractual Obligations The following table summarizes our contractual obligations and borrowings as of December 31, 2019 and the timing and effect that such commitments are expected to have on our liquidity and capital requirements in future periods: 25,000 6,606 2,447 1,268 14,968 9,850 60,139 (in millions) Long-term debt (1) Interest on long-term debt Financing lease liabilities, including imputed interest Tower obligations (2) Operating lease liabilities, including imputed interest Purchase obligations (3) Less Than 1 Year 1 - 3 Years 4 - 5 Years More Than 5 Years Total $ — $ 5,500 $ 1,282 1,013 160 2,754 3,603 2,365 1,147 321 4,894 3,263 7,300 $ 1,796 12,200 $ 1,163 172 320 3,523 1,597 115 467 3,797 1,387 Total contractual obligations $ 8,812 $ 17,490 $ 14,708 $ 19,129 $ (1) Represents principal amounts of long-term debt to affiliates and third parties at maturity, excluding unamortized premium from purchase price allocation fair value adjustment, financing lease obligations and vendor financing arrangements. See Note 8 – Debt of the Notes to the Consolidated Financial Statements for further information. (2) Future minimum payments, including principal and interest payments and imputed lease rental income, related to the tower obligations. See Note 9 – Tower Obligations of the Notes to the Consolidated Financial Statements for further information. (3) The minimum commitment for certain obligations is based on termination penalties that could be paid to exit the contracts. Termination penalties are included in the above table as payments due as of the earliest we could exit the contract, typically in less than one year. For certain contracts that include fixed volume purchase commitments and fixed prices for various products, the purchase obligations are calculated using fixed volumes and contractually fixed prices for the products that are expected to be purchased. This table does not include open purchase orders as of December 31, 2019 under normal business purposes. See Note 16 – Commitments and Contingencies of the Notes to the Consolidated Financial Statements for further information. Certain commitments and obligations are included in the table based on the year of required payment or an estimate of the year of payment. Other long-term liabilities have been omitted from the table above due to the uncertainty of the timing of payments, combined with the absence of historical trending to be used as a predictor of such payments. See Note 17 – Additional Financial Information of the Notes to the Consolidated Financial Statements for further information. The purchase obligations reflected in the table above are primarily commitments to purchase and lease spectrum licenses, wireless devices, network services, equipment, software, marketing sponsorship agreements and other items in the ordinary course of business. These amounts do not represent our entire anticipated purchases in the future, but represent only those items for which we are contractually committed. Where we are committed to make a minimum payment to the supplier regardless of whether we take delivery, we have included only that minimum payment as a purchase obligation. The acquisition of spectrum licenses is subject to regulatory approval and other customary closing conditions. In October 2018, we entered into interest rate lock derivatives with notional amounts of $9.6 billion. The fair value of interest rate lock derivatives was a liability of $1.2 billion and $447 million as of December 31, 2019 and 2018, respectively, and was included in Other current liabilities in our Consolidated Balance Sheets. Balances related to the cash flow hedges have been omitted from the table above due to the uncertainty of the amount and timing of settlements. See Note 7 – Fair Value Measurements of the Notes to the Consolidated Financial Statements for further information. Related Party Transactions We have related party transactions associated with DT or its affiliates in the ordinary course of business, including intercompany servicing and licensing. See Note 17 - Additional Financial Information of the Notes to the Consolidated Financial Statements for further information. Disclosure of Iranian Activities under Section 13(r) of the Securities Exchange Act of 1934 Section 219 of the Iran Threat Reduction and Syria Human Rights Act of 2012 added Section 13(r) to the Exchange Act of 1934, as amended (“Exchange Act”). Section 13(r) requires an issuer to disclose in its annual or quarterly reports, as applicable, whether it or any of its affiliates knowingly engaged in certain activities, transactions or dealings relating to Iran or with designated natural persons or entities involved in terrorism or the proliferation of weapons of mass destruction. Disclosure is required even where the activities, transactions or dealings are conducted outside the U.S. by non-U.S. affiliates in compliance with applicable law, and whether or not the activities are sanctionable under U.S. law. 47 As of the date of this report, we are not aware of any activity, transaction or dealing by us or any of our affiliates for the year ended December 31, 2019, that requires disclosure in this report under Section 13(r) of the Exchange Act, except as set forth below with respect to affiliates that we do not control and that are our affiliates solely due to their common control with DT. We have relied upon DT for information regarding their activities, transactions and dealings. DT, through certain of its non-U.S. subsidiaries, is party to roaming and interconnect agreements with the following mobile and fixed line telecommunication providers in Iran, some of which are or may be government-controlled entities: MTN Irancell, Telecommunication Kish Company, Mobile Telecommunication Company of Iran, and Telecommunication Infrastructure Company of Iran. In addition, during the year ended December 31, 2019, DT, through certain of its non-U.S. subsidiaries, provided basic telecommunications services to three customers in Germany identified on the Specially Designated Nationals and Blocked Persons List maintained by the U.S. Department of Treasury’s Office of Foreign Assets Control: Bank Melli, Bank Sepah, and Europäisch-Iranische Handelsbank. These services have been terminated or are in the process of being terminated. For the year ended December 31, 2019, gross revenues of all DT affiliates generated by roaming and interconnection traffic and telecommunications services with the Iranian parties identified herein were less than $0.1 million, and the estimated net profits were less than $0.1 million. In addition, DT, through certain of its non-U.S. subsidiaries that operate a fixed-line network in their respective European home countries (in particular Germany), provides telecommunications services in the ordinary course of business to the Embassy of Iran in those European countries. Gross revenues and net profits recorded from these activities for the year ended December 31, 2019 were less than $0.1 million. We understand that DT intends to continue these activities. Off-Balance Sheet Arrangements We have arrangements, as amended from time to time, to sell certain EIP accounts receivable and service accounts receivable on a revolving basis as a source of liquidity. As of December 31, 2019, we derecognized net receivables of $2.6 billion upon sale through these arrangements. See Note 4 – Sales of Certain Receivables of the Notes to the Consolidated Financial Statements for further information. Critical Accounting Policies and Estimates Our significant accounting policies are fundamental to understanding our results of operations and financial condition as they require that we use estimates and assumptions that may affect the value of our assets or liabilities and financial results. See Note 1 - Summary of Significant Accounting Policies of the Notes to the Consolidated Financial Statements for further information. Eight of these policies, discussed below, are critical because they require management to make difficult, subjective and complex judgments about matters that are inherently uncertain and because it is likely that materially different amounts would be reported under different conditions or using different assumptions. Actual results could differ from those estimates. Management and the Audit Committee of the Board of Directors have reviewed and approved these critical accounting policies. Leases We adopted the new lease standard on January 1, 2019 and recognized right-of-use assets and lease liabilities for operating leases that have not previously been recorded. Significant Judgments: The most significant judgments and impacts upon adoption of the standard include the following: • In evaluating contracts to determine if they qualify as a lease, we consider factors such as if we have obtained or transferred substantially all of the 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. Identification of a lease may require significant judgment. • 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. 48 • • • • 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 Consolidated Balance Sheet. Certain line items in the Consolidated Statements of Cash Flows and the “Supplemental 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 presented as “Repayments of financing lease obligations” and “Assets acquired under capital lease obligations” is now presented as “Financing lease right-of-use assets obtained in exchange for lease obligations.” In the “Operating Activities” section of the 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 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. Determining a credit spread as secured by our assets may require significant judgment. 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 hindsight is an estimated decrease in Total operating expenses of $240 million in fiscal year 2019. • We were also required to reassess the previously failed sale-leasebacks of certain T-Mobile-owned wireless communications 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. Determining whether the transfer of control criteria has been met requires significant judgement. • 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 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. 49 Lease Expense We have operating leases for cell sites, retail locations, corporate offices and dedicated transportation lines, some of which have escalating rentals during the initial lease term and during subsequent optional renewal periods. We recognize a right-of-use asset and lease liability for operating leases based on the net present value of future minimum lease payments. Lease expense is recognized on a straight-line basis over the non-cancelable lease term and renewal periods that are considered reasonably certain. We consider several factors in assessing whether renewal periods are reasonably certain of being exercised, including the continued maturation of our network nationwide, technological advances within the telecommunications industry and the availability of alternative sites. See Note 1 - Summary of Significant Accounting Policies and Note 15 - Leases of the Notes to the Consolidated Financial Statements for further information. Revenue Recognition We primarily generate our revenue from providing wireless services to customers and selling or leasing devices and accessories. Our contracts with customers may involve multiple performance obligations, which include wireless services, wireless devices or a combination thereof, and we allocate the transaction price between each performance obligation based on its relative standalone selling price. Significant Judgments The most significant judgments affecting the amount and timing of revenue from contracts with our customers include the following items: • • • • • • Revenue for service contracts that we assess are not probable of collection is not recognized until the contract is completed or terminated and cash is received. Collectibility is re-assessed when there is a significant change in facts or circumstances. Our assessment of collectibility considers whether we may limit our exposure to credit risk through our right to stop transferring additional service in the event the customer is delinquent as well as certain contract terms such as down payments that reduce our exposure to credit risk. Customer credit behavior is inherently uncertain. See “Allowances,” below, for more discussion on how we assess credit risk. Promotional EIP bill credits offered to a customer on an equipment sale that are paid over time and are contingent on the customer maintaining a service contract may result in an extended service contract based on whether a substantive penalty is deemed to exist. Determining whether contingent EIP bill credits result in a substantive termination penalty may require significant judgment. The identification of distinct performance obligations within our service plans may require significant judgment. Revenue is recorded net of costs paid to another party for performance obligations where we arrange for the other party to transfer goods or services to the customer (i.e., when we are acting as an agent). For example, performance obligations relating to services provided by third-party content providers where we neither control a right to the content provider’s service nor control the underlying service itself are presented net because we are acting as an agent. The determination of whether we control the underlying service or right to the service prior to our transfer to the customer requires, at times, significant judgment. For transactions where we recognize a significant financing component, judgment is required to determine the discount rate. For EIP sales, the discount rate used to adjust the transaction price primarily reflects current market interest rates and the estimated credit risk of the customer. Customer credit behavior is inherently uncertain. See “Allowances”, below, for more discussion on how we assess credit risk. Our products are generally sold with a right of return, which is accounted for as variable consideration when estimating the amount of revenue to recognize. Device return levels are estimated based on the expected value method as there are a large number of contracts with similar characteristics and the outcome of each contract is independent of the others. Historical return rate experience is a significant input to our expected value methodology. 50 • • • Sales of equipment to indirect dealers who have been identified as our customer (referred to as the sell-in model) often include credits subsequently paid to the dealer as a reimbursement for any discount promotions offered to the end consumer. These credits (payments to a customer) are accounted for as variable consideration when estimating the amount of revenue to recognize from the sales of equipment to indirect dealers and are estimated based on historical experience and other factors, such as expected promotional activity. The determination of the standalone selling price for contracts that involve more than one performance obligation may require significant judgment, such as when the selling price of a good or service is not readily observable. For capitalized contract costs, determining the amortization period over which such costs are recognized as well as assessing the indicators of impairment may require significant judgment. See Note 1 - Summary of Significant Accounting Policies and Note 10 - Revenue From Contracts with Customers of the Notes to the Consolidated Financial Statements for further information. Allowances We maintain an allowance for credit losses, which is management’s estimate of such losses inherent in our receivables portfolio, comprised of accounts receivable and EIP receivable segments. Changes in the allowance for credit losses and, therefore, in related provision for credit losses (“bad debt expense”) can materially affect earnings. Credit risk characteristics are assessed for each receivable segment. In applying the judgment and review required to determine the allowance for credit losses, management considers a number of factors, including receivable volumes, receivable delinquency status, historical loss experience and other conditions influencing loss expectations, such as macro-economic conditions. While our methodology attributes portions of the allowance to specific portfolio segments, the entire allowance for credit losses is available to absorb credit losses inherent in the total receivables portfolio. Management also considers an amount that represents management’s judgment of risks inherent in the process and assumptions used in establishing the allowance for credit losses, including process risk and other subjective factors, including industry trends and emerging risk assessments. To the extent that actual loss experience differs significantly from historical trends or assumptions, the appropriate allowance levels for realized credit losses could differ from the estimate. We write off account balances if collection efforts are unsuccessful and the receivable balance is deemed uncollectible, based on factors such as customer credit ratings and the length of time from the original billing date. We offer certain retail customers the option to pay for their devices and other purchases in installments over a period of up to 36 months using an EIP. EIP receivables not held for sale are reported in our Consolidated Balance Sheets at outstanding principal adjusted for any charge-offs, allowance for credit losses and unamortized discounts. Receivables held for sale are reported at the lower of amortized cost or fair value. At the time of an installment sale, we impute a discount for interest if the EIP term exceeds 12 months as there is no stated rate of interest on the EIP receivables. The EIP receivables are recorded at their present value, which is determined by discounting future cash payments at the imputed interest rate. The difference between the recorded amount of the EIP receivables and their unpaid principal balance (i.e., the contractual amount due from the customer) results in a discount which is allocated to the performance obligations of the arrangement and recorded as a reduction in transaction price. We determine the imputed discount rate based primarily on current market interest rates and the estimated credit risk on the EIP receivables. As a result, we do not recognize a separate credit loss allowance at the time of issuance as the effects of uncertainty about future cash flows resulting from credit risk are included in the initial present value measurement of the receivable. The imputed discount on EIP receivables is amortized over the financed installment term using the effective interest method and recognized as Other revenues in our Consolidated Statements of Comprehensive Income. Subsequent to the initial determination of the imputed discount, we assess the need for and, if necessary, recognize an allowance for credit losses to the extent the amount of estimated probable losses on the gross EIP receivable balances exceed the remaining unamortized imputed discount balances. Deferred Purchase Price Assets In connection with the sales of certain service and EIP accounts receivable pursuant to the sale arrangements, we have deferred purchase price assets measured at fair value that are based on a discounted cash flow model using unobservable Level 3 inputs, including customer default rates and credit worthiness, dilutions and recoveries. See Note 4 – Sales of Certain Receivables of the Notes to the Consolidated Financial Statements for further information. 51 Depreciation Depreciation commences once assets have been placed in service. We generally depreciate property and equipment over the period the property and equipment provide economic benefit. Leased wireless devices are depreciated to their estimated residual value over the period expected to provide utility to us, which is generally shorter than the lease term and considers expected losses. Depreciable life studies are performed periodically to confirm the appropriateness of depreciable lives for certain categories of property, plant and equipment. These studies consider actual usage, physical wear and tear, replacement history and assumptions about technology evolution. When these factors indicate that the useful life of an asset is different from the previous assessment, the remaining book values are depreciated prospectively over the adjusted remaining estimated useful life. See Note 1 – Summary of Significant Accounting Policies and Note 5 – Property and Equipment of the Notes to the Consolidated Financial Statements for information regarding depreciation of assets, including management’s underlying estimates of useful lives. Evaluation of Goodwill and Indefinite-Lived Intangible Assets for Impairment We assess the carrying value of our goodwill and other indefinite-lived intangible assets, such as our spectrum licenses, for potential impairment annually as of December 31, or more frequently if events or changes in circumstances indicate such assets might be impaired. We have identified two reporting units for which discrete financial information is available and results are regularly reviewed by management: wireless and Layer3. The Layer3 reporting unit consists of the assets and liabilities of Layer3 TV, Inc., which was acquired in January 2018. The wireless reporting unit consists of the remaining assets and liabilities of T-Mobile US, Inc., excluding Layer3 TV, Inc. We separately evaluate these reporting units for impairment. When assessing goodwill for impairment we may elect to first perform a qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. If we do not perform a qualitative assessment, or if the qualitative assessment indicates it is more likely than not that the fair value of a reporting unit is less than its carrying amount, we perform a quantitative test. We recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized would not exceed the total amount of goodwill allocated to that reporting unit. We employed a qualitative approach to assess the wireless reporting unit. The fair value of the wireless reporting unit is determined using a market approach, which is based on market capitalization. We recognize market capitalization is subject to volatility and will monitor changes in market capitalization to determine whether declines, if any, necessitate an interim impairment review. In the event market capitalization does decline below its book value, we will consider the length, severity and reasons for the decline when assessing whether potential impairment exists, including considering whether a control premium should be added to the market capitalization. We believe short-term fluctuations in share price may not necessarily reflect the underlying aggregate fair value. We employed a quantitative approach to assess the Layer3 reporting unit. The fair value of the Layer3 reporting unit is determined using an income approach, which is based on estimated discounted future cash flows. We made estimates and assumptions regarding future cash flows, discount rates and long-term growth rates to determine the reporting unit’s estimated fair value. The key assumptions used were as follows: • • Expected cash flows underlying the Layer3 business plan for the periods 2020 through 2024, which took into account estimates of subscribers for TVision services, average revenue and content cost per subscriber, operating costs and capital expenditures. Cash flows beyond 2024 were projected to grow at a long-term growth rate estimated at 3%. Estimating a long-term growth rate requires significant judgment about future business strategies as well as micro- and macro-economic environments that are inherently uncertain. • We used a discount rate of 32% to risk adjust the cash flow projections in determining the estimated fair value. The estimated fair value of the Layer3 reporting unit exceeded its carrying value by approximately 3% as of December 31, 2019. Delays in the national launch of TVision services or cash flows that do not meet our projections could result in a goodwill impairment of Layer3 in the future. The carrying value of the goodwill associated with the Layer3 reporting unit was $218 million as of December 31, 2019. 52 We test our spectrum licenses for impairment on an aggregate basis, consistent with our management of the overall business at a national level. We may elect to first perform a qualitative assessment to determine whether it is more likely than not that the fair value of an intangible asset is less than its carrying value. If we do not perform the qualitative assessment, or if the qualitative assessment indicates it is more likely than not that the fair value of the intangible asset is less than its carrying amount, we calculate the estimated fair value of the intangible asset. If the estimated fair value of the spectrum licenses is lower than their carrying amount, an impairment loss is recognized for the difference. We estimate fair value using the Greenfield methodology, which is an income approach, to estimate the price at which an orderly transaction to sell the asset would take place between market participants at the measurement date under current market conditions. The Greenfield methodology values the spectrum licenses by calculating the cash flow generating potential of a hypothetical start-up company that goes into business with no assets except the asset to be valued (in this case, spectrum licenses). The value of the spectrum licenses can be considered as equal to the present value of the cash flows of this hypothetical start-up company. We base the assumptions underlying the Greenfield methodology on a combination of market participant data and our historical results, trends and business plans. Future cash flows in the Greenfield methodology are based on estimates and assumptions of market participant revenues, EBITDA margin, network build-out period and a long-term growth rate for a market participant. The cash flows are discounted using a weighted average cost of capital. The valuation approaches utilized to estimate fair value for the purposes of the impairment tests of goodwill and spectrum licenses require the use of assumptions and estimates, which involve a degree of uncertainty. If actual results or future expectations are not consistent with the assumptions, this may result in the recording of significant impairment charges on goodwill or spectrum licenses. The most significant assumptions within the valuation models are the discount rate, revenues, EBITDA margins, capital expenditures and the long-term growth rate. See Note 1 – Summary of Significant Accounting Policies and Note 6 – Goodwill, Spectrum License Transactions and Other Intangible Assets of the Notes to the Consolidated Financial Statements for information regarding our annual impairment test and impairment charges. Income Taxes Deferred tax assets and liabilities are recognized based on temporary differences between the financial statement and tax bases of assets and liabilities using enacted tax rates expected to be in effect when these differences are realized. A valuation allowance is recorded when it is more likely than not that some portion or all of a deferred tax asset will not be realized. The ultimate realization of a deferred tax asset depends on the ability to generate sufficient taxable income of the appropriate character and in the appropriate taxing jurisdictions within the carryforward periods available. We account for uncertainty in income taxes recognized in the financial statements in accordance with the accounting guidance for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. We assess whether it is more likely than not that a tax position will be sustained upon examination based on the technical merits of the position and adjust the unrecognized tax benefits in light of changes in facts and circumstances, such as changes in tax law, interactions with taxing authorities and developments in case law. Accounting Pronouncements Not Yet Adopted See Note 1 – Summary of Significant Accounting Policies of the Notes to the Consolidated Financial Statements for information regarding recently issued accounting standards. Item 7A. Quantitative and Qualitative Disclosures About Market Risk We are exposed to economic risks in the normal course of business, primarily from changes in interest rates, including changes in investment yields and changes in spreads due to credit risk and other factors. These risks, along with other business risks, impact our cost of capital. Our policy is to manage exposure related to fluctuations in interest rates in order to manage capital costs, control financial risks and maintain financial flexibility over the long term. We have established interest rate risk limits that are closely monitored by measuring interest rate sensitivities of our debt portfolio. We do not foresee significant changes in the strategies used to manage market risk in the near future. We are exposed to changes in interest rates on our Incremental Term Loan Facility with DT, our majority stockholder. See Note 8 – Debt of the Notes to the Consolidated Financial Statements for further information. To perform the sensitivity analysis, we selected hypothetical changes in market rates that are expected to reflect reasonably possible near-term changes in those rates. We assessed the risk of a change in the fair value from the effect of a hypothetical interest rate change for 30-day LIBOR rates of positive 150 and negative 50 basis points. In cases where the debt is redeemable and the fair value calculation results in a liability greater than the cost to replace the debt, the maximum liability is assumed to 53 be no greater than the current cost to redeem the debt. As of December 31, 2019, the change in the fair value of our Incremental Term Loan Facility, based on this hypothetical change, is shown in the table below: (in millions) Carrying Amount Fair Value +150 Basis Point Shift -50 Basis Point Shift LIBOR plus 1.50% Senior Secured Term Loan due 2022 $ LIBOR plus 1.75% Senior Secured Term Loan due 2024 2,000 $ 2,000 2,000 $ 2,000 1,966 $ 1,956 2,000 2,000 Fair Value Assuming We are exposed to changes in the benchmark interest rate associated with our interest rate lock derivatives. See Note 7 – Fair Value Measurements of the Notes to the Consolidated Financial Statements for further information. To perform the sensitivity analysis, we selected hypothetical changes in market rates that are expected to reflect reasonably possible near-term changes in those rates. We assessed the risk of a change in fair value from the effect of a hypothetical interest rate change for eight and 10-year LIBOR swap rates of positive 200 and negative 100 basis points. As of December 31, 2019, the change in the fair value of our interest rate lock derivatives, based on this hypothetical change, is shown in the table below: (in millions) Interest rate lock derivatives Fair Value Assuming Fair Value +200 Basis Point Shift -100 Basis Point Shift $ (1,170) $ 410 $ (2,077) 54 Item 8. Financial Statements and Supplementary Data Report of Independent Registered Public Accounting Firm To the Board of Directors and Stockholders of T-Mobile US, Inc. Opinions on the Financial Statements and Internal Control over Financial Reporting We have audited the accompanying consolidated balance sheets of T-Mobile US, Inc. and its subsidiaries (the “Company”) as of December 31, 2019 and 2018, and the related consolidated statements of comprehensive income, of stockholders’ equity and of cash flows for each of the three years in the period ended December 31, 2019, including the related notes (collectively referred to as the “consolidated financial statements”). We also have audited the Company's internal control over financial reporting as of December 31, 2019, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2019 and 2018, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2019 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2019, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO. Changes in Accounting Principles As discussed in Note 1 to the consolidated financial statements, the Company changed the manner in which it accounts for leases in 2019 and the manner in which it accounts for revenues in 2018. Basis for Opinions The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Annual Report on Internal Control over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions. Definition and Limitations of Internal Control over Financial Reporting A company’s internal control over financial reporting is a process designed 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. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the 55 company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Critical Audit Matters The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Adoption of Leases Standard As described in Notes 1 and 15 to the consolidated financial statements, the Company has adopted the new accounting standard on Leases, on January 1, 2019, by recognizing and measuring leases at the adoption date with a cumulative effect of initially applying the guidance recognized at the date of initial application. As a result, among other adjustments, the Company recognized operating lease right-of-use assets of $9,251 million and operating lease liabilities of $11,364 million on the balance sheet on the date of adoption. As of December 31, 2019, the carrying amounts of operating and finance lease right-of-use assets were $10,933 million and $2,715 million respectively and operating and finance lease liabilities were $12,826 million and $2,303 million respectively. The Company recorded $3,406 million of lease expense during the year. Management also reassessed the previously failed sale-leasebacks of certain T-Mobile-owned wireless communication tower sites to 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. This reassessment resulted in (i) assets relating to 6,200 tower sites transferred pursuant to a master prepaid lease arrangement continuing to be accounted for as failed sale-leasebacks; (ii) a sale being recognized for 1,400 tower sites sold that were not associated with the master prepaid lease. Upon adoption, the Company derecognized its 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 principal considerations for our determination that performing procedures relating to the adoption of the lease standard is a critical audit matter are (i) there was significant judgment by management in applying the lease standard to a large volume of leases in the company’s lease portfolio; (ii) implementation of new lease accounting systems resulted in material changes to the Company’s internal control over financial reporting; and (iii) significant judgment in the application of the standard relating to sale-leaseback accounting. This in turn led to a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating audit evidence related to the implementation of new lease accounting systems and management’s significant judgments, including the assessment of the previously failed sale-leaseback tower sites. The audit effort involved the use of professionals with specialized skill and knowledge to assist in evaluating the audit evidence obtained from the procedures. Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to the adoption of the new standard on the Company’s various lease portfolios, including those associated with previously failed sale- leaseback transactions and testing of controls over the implementation and functionality of the new lease accounting systems. The procedures also included, among others, testing the completeness and accuracy of management’s identification of the leases in the Company’s lease portfolios and evaluating the reasonableness of significant judgments made by management to identify contractual terms in lease arrangements that impact the determination of the right-of-use asset and lease liability amount recognized. Professionals with specialized skill and knowledge were used to assist with the evaluation of previous failed sales-leaseback tower sites. /s/ PricewaterhouseCoopers LLP Seattle, Washington February 6, 2020 We have served as the Company’s auditor since 2001. 56 T-Mobile US, Inc. Consolidated Balance Sheets (in millions, except share and per share amounts) Assets Current assets Cash and cash equivalents Accounts receivable, net of allowances of $61 and $67 Equipment installment plan receivables, net Accounts receivable from affiliates Inventory Other current assets Total current assets Property and equipment, net Operating lease right-of-use assets Financing lease right-of-use assets Goodwill Spectrum licenses Other intangible assets, net Equipment installment plan receivables due after one year, net Other assets Total assets Liabilities and Stockholders' Equity Current liabilities Accounts payable and accrued liabilities Payables to affiliates Short-term debt Deferred revenue Short-term operating lease liabilities Short-term financing lease liabilities Other current liabilities Total current liabilities Long-term debt Long-term debt to affiliates Tower obligations Deferred tax liabilities Operating lease liabilities Financing lease liabilities Deferred rent expense Other long-term liabilities Total long-term liabilities Commitments and contingencies (Note 16) Stockholders' equity Common Stock, par value $0.00001 per share, 1,000,000,000 shares authorized; 858,418,615 and 851,675,119 shares issued, 856,905,400 and 850,180,317 shares outstanding Additional paid-in capital Treasury stock, at cost,1,513,215 and 1,494,802 shares issued Accumulated other comprehensive loss Accumulated deficit Total stockholders' equity Total liabilities and stockholders' equity December 31, 2019 December 31, 2018 $ $ $ $ 1,528 1,888 2,600 20 964 2,305 9,305 21,984 10,933 2,715 1,930 36,465 115 1,583 1,891 86,921 $ 1,203 1,769 2,538 11 1,084 1,676 8,281 23,359 — — 1,901 35,559 198 1,547 1,623 72,468 6,746 $ 7,741 187 25 631 2,287 957 1,673 12,506 10,958 13,986 2,236 5,607 10,539 1,346 — 954 45,626 — 38,498 (8) (868) (8,833) 28,789 $ 86,921 $ 200 841 698 — — 787 10,267 12,124 14,582 2,557 4,472 — — 2,781 967 37,483 — 38,010 (6) (332) (12,954) 24,718 72,468 The accompanying notes are an integral part of these Consolidated Financial Statements. 57 T-Mobile US, Inc. Consolidated Statements of Comprehensive Income (in millions, except share and per share amounts) Year Ended December 31, 2019 2018 2017 Revenues Branded postpaid revenues Branded prepaid revenues Wholesale revenues Roaming and other service revenues Total service revenues Equipment revenues Other revenues Total revenues Operating expenses Cost of services, exclusive of depreciation and amortization shown separately below Cost of equipment sales, exclusive of depreciation and amortization shown separately below Selling, general and administrative Depreciation and amortization Gains on disposal of spectrum licenses Total operating expenses Operating income Other income (expense) Interest expense Interest expense to affiliates Interest income Other expense, net Total other expense, net Income before income taxes Income tax (expense) benefit Net income Dividends on preferred stock Net income attributable to common stockholders Net income Other comprehensive (loss) income, net of tax Unrealized gain on available-for-sale securities, net of tax effect of $0, $0, and $2 Unrealized loss on cash flow hedges, net of tax effect of $(187), $(115), and $0 Other comprehensive (loss) income Total comprehensive income Earnings per share Basic Diluted Weighted average shares outstanding Basic Diluted $ 22,673 $ 20,862 $ 9,543 1,279 499 33,994 9,840 1,164 44,998 6,622 11,899 14,139 6,616 — 39,276 5,722 (727) (408) 24 (8) (1,119) 4,603 (1,135) 3,468 — 3,468 3,468 — (536) (536) 2,932 4.06 4.02 $ $ $ $ $ $ 9,598 1,183 349 31,992 10,009 1,309 43,310 6,307 12,047 13,161 6,486 — 38,001 5,309 (835) (522) 19 (54) (1,392) 3,917 (1,029) 2,888 — 2,888 2,888 — (332) (332) 2,556 3.40 3.36 $ $ $ $ $ $ $ $ $ $ $ $ 19,448 9,380 1,102 230 30,160 9,375 1,069 40,604 6,100 11,608 12,259 5,984 (235) 35,716 4,888 (1,111) (560) 17 (73) (1,727) 3,161 1,375 4,536 (55) 4,481 4,536 7 — 7 4,543 5.39 5.20 854,143,751 863,433,511 849,744,152 858,290,174 831,850,073 871,787,450 The accompanying notes are an integral part of these Consolidated Financial Statements. 58 T-Mobile US, Inc. Consolidated Statements of Cash Flows Year Ended December 31, 2019 2018 2017 $ 3,468 $ 2,888 $ (in millions) Operating activities Net income Adjustments to reconcile net income to net cash provided by operating activities Depreciation and amortization Stock-based compensation expense Deferred income tax expense (benefit) Bad debt expense Losses from sales of receivables Deferred rent expense Losses on redemption of debt Gains on disposal of spectrum licenses Changes in operating assets and liabilities Accounts receivable Equipment installment plan receivables Inventories Operating lease right-of-use assets Other current and long-term assets Accounts payable and accrued liabilities Short and long-term operating lease liabilities Other current and long-term liabilities Other, net Net cash provided by operating activities Investing activities Purchases of property and equipment, including capitalized interest of $473, $362 and $136 Purchases of spectrum licenses and other intangible assets, including deposits Proceeds from sales of tower sites Proceeds related to beneficial interests in securitization transactions Net cash related to derivative contracts under collateral exchange arrangements Acquisition of companies, net of cash acquired Other, net Net cash used in investing activities Financing activities Proceeds from issuance of long-term debt Proceeds from borrowing on revolving credit facility Repayments of revolving credit facility Repayments of financing lease obligations Repayments of short-term debt for purchases of inventory, property and equipment, net Repayments of long-term debt Repurchases of common stock Tax withholdings on share-based awards Dividends on preferred stock Cash payments for debt prepayment or debt extinguishment costs Other, net Net cash used in financing activities Change in cash and cash equivalents Cash and cash equivalents Beginning of period End of period Supplemental disclosure of cash flow information Interest payments, net of amounts capitalized Operating lease payments (1) Income tax payments Non-cash investing and financing activities Non-cash beneficial interest obtained in exchange for securitized receivables (Decrease) increase in accounts payable for purchases of property and equipment Leased devices transferred from inventory to property and equipment Returned leased devices transferred from property and equipment to inventory Short-term debt assumed for financing of property and equipment Operating lease right-of-use assets obtained in exchange for lease obligations Financing lease right-of-use assets obtained in exchange for lease obligations $ $ $ 6,616 495 1,091 307 130 — 19 — (3,709) (1,015) (617) 1,896 (144) 17 (2,131) 144 257 6,824 (6,391) (967) 38 3,876 (632) (31) (18) (4,125) — 2,340 (2,340) (798) (775) (600) — (156) — (28) (17) (2,374) 325 1,203 1,528 1,128 2,783 88 6,509 (935) 1,006 (267) 800 3,621 1,041 $ $ $ 6,486 424 980 297 157 26 122 — (4,617) (1,598) (201) — (181) (867) — (69) 52 3,899 (5,541) (127) — 5,406 — (338) 21 (579) 2,494 6,265 (6,265) (700) (300) (3,349) (1,071) (146) — (212) (52) (3,336) (16) 1,219 1,203 1,525 — 51 4,972 65 1,011 (326) 291 — 885 $ $ $ 4,536 5,984 306 (1,404) 388 299 76 86 (235) (3,931) (1,812) (844) — (575) 1,079 — (233) 111 3,831 (5,237) (5,828) — 4,319 — — 1 (6,745) 10,480 2,910 (2,910) (486) (300) (10,230) (427) (166) (55) (188) 5 (1,367) (4,281) 5,500 1,219 2,028 — 31 4,063 313 1,131 (742) 292 — 887 (1) On January 1, 2019, we adopted Accounting Standards Update (“ASU”) 2016-02, “Leases (Topic 842),” which requires certain supplemental cash flow disclosures. Where these disclosures or a comparable figure were not required under the former lease standard, we have not retrospectively presented historical amounts. See Note 1 – Summary of Significant Accounting Policies for additional details. The accompanying notes are an integral part of these Consolidated Financial Statements. 59 T-Mobile US, Inc. Consolidated Statement of Stockholders’ Equity (in millions, except shares) Preferred Stock Outstanding Common Stock Outstanding Treasury Shares at Cost Par Value and Additional Paid-in Capital Accumulated Other Comprehensive Loss Balance as of December 31, 2016 20,000,000 826,357,331 $ (1) $ 38,846 $ Net income Other comprehensive income Stock-based compensation Exercise of stock options Stock issued for employee stock purchase plan Issuance of vested restricted stock units Shares withheld related to net share settlement of stock awards and stock options Mandatory conversion of preferred shares to common shares Repurchases of common stock Transfer RSU to NQDC plan Dividends on preferred stock — — — — — — — — — 450,493 1,832,043 8,338,271 — (2,754,721) (20,000,000) 32,237,983 — — — (7,010,889) (43,860) — Balance as of December 31, 2017 — 859,406,651 Net income Other comprehensive loss Stock-based compensation Exercise of stock options Stock issued for employee stock purchase plan Issuance of vested restricted stock units Issuance of restricted stock awards Shares withheld related to net share settlement of stock awards and stock options Repurchases of common stock Transfer RSU from NQDC plan Prior year Retained Earnings(1) Balance as of December 31, 2018 Net income Other comprehensive loss Stock-based compensation Exercise of stock options Stock issued for employee stock purchase plan Issuance of vested restricted stock units Forfeiture of restricted stock awards Shares withheld related to net share settlement of stock awards and stock options Transfer RSU from NQDC plan Prior year Retained Earnings(1) Balance as of December 31, 2019 — — — — — — — — — — — — — — 187,965 2,011,794 7,448,148 225,799 (2,321,827) (16,738,758) (39,455) — — 850,180,317 — — — — — — — — — — — — — 85,083 2,091,650 6,685,950 (24,682) (2,094,555) (18,363) — — — — — — — — — — (3) — (4) — — — — — — — — — (2) — (6) — — — — — — — — (2) — — — 344 19 82 — (166) — (444) 3 (55) 38,629 — — 473 3 103 — — (146) (1,054) 2 — 38,010 — — 517 1 124 — — (156) 2 — Accumulated Deficit Total Stockholders' Equity $ (20,610) $ 4,536 18,236 4,536 — — — — — — — — — — (16,074) 2,888 — — — — — — — — — 232 (12,954) 3,468 — — — — — — — — 653 7 344 19 82 — (166) — (444) — (55) 22,559 2,888 (332) 473 3 103 — — (146) (1,054) — 224 24,718 3,468 (536) 517 1 124 — — (156) — 653 1 — 7 — — — — — — — — — 8 — (332) — — — — — — — — (8) (332) — (536) — — — — — — — — — 856,905,400 $ (8) $ 38,498 $ (868) $ (8,833) $ 28,789 (1) Prior year Retained Earnings represents the impact of the adoption of new accounting standards on beginning Accumulated Deficit and Accumulated Other Comprehensive Loss. See Note 1 – Summary of Significant Accounting Policies for further information. The accompanying notes are an integral part of these Consolidated Financial Statements 60 T-Mobile US, Inc. Index for Notes to the Consolidated Financial Statements Summary of Significant Accounting Policies Business Combinations Receivables and Allowance for Credit Losses Sales of Certain Receivables Property and Equipment Goodwill, Spectrum License Transactions and Other Intangible Assets Fair Value Measurements Debt Tower Obligations Revenue from Contracts with Customers Employee Compensation and Benefit Plans Repurchases of Common Stock Income Taxes Earnings Per Share Leases Commitments and Contingencies Additional Financial Information Guarantor Financial Information Note 1 Note 2 Note 3 Note 4 Note 5 Note 6 Note 7 Note 8 Note 9 Note 10 Note 11 Note 12 Note 13 Note 14 Note 15 Note 16 Note 17 Note 18 62 74 76 77 80 81 82 85 88 89 91 92 93 96 97 99 101 101 61 T-Mobile US, Inc. Notes to the Consolidated Financial Statements Note 1 – Summary of Significant Accounting Policies Description of Business T-Mobile US, Inc. (“T-Mobile,” “we,” “our,” “us” or the “Company”), together with its consolidated subsidiaries, is a leading provider of mobile communications services, including voice, messaging and data, under its flagship brands, T-Mobile and Metro™ by T-Mobile ("Metro by T-Mobile"), in the United States (“U.S.”), Puerto Rico and the U.S. Virgin Islands. All of our revenues were earned in, and all of our long-lived assets are located in, the U.S., Puerto Rico and the U.S. Virgin Islands. We provide mobile communications services primarily using our 4G Long-Term Evolution (“LTE”) network and our newly deployed 5G technology network. We also offer a wide selection of wireless devices, including handsets, tablets and other mobile communication devices, and accessories for sale, as well as financing through Equipment Installment Plans (“EIP”) and leasing through JUMP! On Demand™. Additionally, we provide reinsurance for handset insurance policies and extended warranty contracts offered to our mobile communications customers. Basis of Presentation The consolidated financial statements include the balances and results of operations of T-Mobile and our consolidated subsidiaries. We consolidate majority-owned subsidiaries over which we exercise control, as well as variable interest entities (“VIE”) where we are deemed to be the primary beneficiary and VIEs, which cannot be deconsolidated, such as those related to Tower obligations. Intercompany transactions and balances have been eliminated in consolidation. We operate as a single operating segment. The preparation of financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires our management to make estimates and assumptions which affect the financial statements and accompanying notes. Estimates are based on historical experience, where applicable, and other assumptions which our management believes are reasonable under the circumstances. These estimates are inherently subject to judgment and actual results could differ from these estimates. Certain prior year amounts have been reclassified to conform to the current year's presentation. See “Accounting Pronouncements Adopted During the Current Year” below. Cash and Cash Equivalents Cash equivalents consist of highly liquid money market funds and U.S. Treasury securities with remaining maturities of three months or less at the date of purchase. Receivables and Allowance for Credit Losses Accounts receivable consist primarily of amounts currently due from customers, other carriers and third-party retail channels. Accounts receivable not held for sale are reported in the balance sheet at outstanding principal adjusted for any charge-offs and the allowance for credit losses. Accounts receivable held for sale are reported at the lower of amortized cost or fair value. We have an arrangement to sell the majority of service accounts receivable on a revolving basis, which are treated as sales of financial assets. We offer certain retail customers the option to pay for their devices and certain other purchases in installments typically over a period of 24, but up to 36, months using an EIP. EIP receivables not held for sale are reported in our Consolidated Balance Sheets at outstanding principal adjusted for any charge-offs, allowance for credit losses and unamortized discounts. At the time of an installment sale, we impute a discount for interest if the EIP term exceeds 12 months as there is no stated rate of interest on the EIP receivables. The EIP receivables are recorded at their present value, which is determined by discounting future cash payments at the imputed interest rate. The difference between the recorded amount of the EIP receivables and their unpaid principal balance (i.e., the contractual amount due from the customer) results in a discount which is allocated to the performance obligations in the arrangement and recorded as a reduction in transaction price in Total service revenues and Equipment revenues in our Consolidated Statements of Comprehensive Income. We determine the imputed discount rate based primarily on current market interest rates and the estimated credit risk on the EIP receivables. As a result, we do not recognize a separate credit loss allowance at the time of issuance as the effects of uncertainty about future cash flows resulting from credit risk are included in the initial present value measurement of the receivable. The imputed discount on EIP receivables is 62 amortized over the financed installment term using the effective interest method and recognized as Other revenues in our Consolidated Statements of Comprehensive Income. Subsequent to the initial determination of the imputed discount, we assess the need for and, if necessary, recognize an allowance for credit losses to the extent the amount of estimated probable losses on the gross EIP receivable balances exceed the remaining unamortized imputed discount balances. Total imputed discount and allowances were approximately 7.0% and 8.1% of the total amount of gross accounts receivable, including EIP receivables, at December 31, 2019 and 2018, respectively. The current portion of the EIP receivables is included in Equipment installment plan receivables, net and the long-term portion of the EIP receivables is included in Equipment installment plan receivables due after one year, net in our Consolidated Balance Sheets. We have an arrangement to sell certain EIP receivables on a revolving basis, which are treated as sales of financial assets. We maintain an allowance for credit losses and determine its appropriateness through an established process that assesses the losses inherent in our receivables portfolio. We develop and document our allowance methodology at the portfolio segment level - accounts receivable portfolio and EIP receivable portfolio segments. While we attribute portions of the allowance to our respective accounts receivable and EIP portfolio segments, the entire allowance is available to absorb credit losses inherent in the total receivables portfolio. Our process involves procedures to appropriately consider the unique risk characteristics of our accounts receivable and EIP receivable portfolio segments. For each portfolio segment, losses are estimated collectively for groups of receivables with similar characteristics. Our allowance levels are influenced by receivable volumes, receivable delinquency status, historical loss experience and other conditions influencing loss expectations, such as macro-economic conditions. Inventories Inventories consist primarily of wireless devices and accessories, which are valued at the lower of cost or net realizable value. Cost is determined using standard cost which approximates average cost. Shipping and handling costs paid to wireless device and accessories vendors, and costs to refurbish used devices recovered through our device upgrade programs are included in the standard cost of inventory. Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. We record inventory write-downs to net realizable value for obsolete and slow-moving items based on inventory turnover trends and historical experience. Long-Lived Assets Long-lived assets include assets that do not have indefinite lives, such as property and equipment and other intangible assets. All of our long-lived assets are located in the U.S., including Puerto Rico and the U.S. Virgin Islands. We assess potential impairments to our long-lived assets when events or changes in circumstances indicate the carrying amount of the asset may not be recoverable. If any indicators of impairment are present, we test recoverability. The carrying value of a long-lived asset or asset group is not recoverable if it exceeds the sum of the undiscounted cash flows expected to be generated from the use and eventual disposition of the asset or asset group. If the undiscounted cash flows do not exceed the asset or asset group’s carrying amount, then an impairment loss is recorded, measured as the amount by which the carrying amount of a long-lived asset or asset group exceeds its fair value. Property and Equipment Property and equipment consists of buildings and equipment, wireless communications systems, leasehold improvements, capitalized software, leased wireless devices and construction in progress. Buildings and equipment include certain network server equipment. Wireless communications systems include assets to operate our wireless network and IT data centers, including tower assets and leasehold improvements and assets related to the liability for the retirement of long-lived assets. Leasehold improvements include asset improvements other than those related to the wireless network. Property and equipment are recorded at cost less accumulated depreciation and impairments, if any, in Property and equipment, net on our Consolidated Balance Sheets. We generally depreciate property and equipment over the period the property and equipment provide economic benefit. Depreciable life studies are performed periodically to confirm the appropriateness of depreciable lives for certain categories of property and equipment. These studies take into account actual usage, physical wear 63 and tear, replacement history and assumptions about technology evolution. When these factors indicate the useful life of an asset is different from the previous assessment, the remaining book value is depreciated prospectively over the adjusted remaining estimated useful life. Leasehold improvements are depreciated over the shorter of their estimated useful lives or the related lease term. JUMP! On Demand allows customers to lease a device over a period of up to 18 months and upgrade it for a new device up to one time per month. To date, all of our leased devices were classified as operating leases. At operating lease inception, leased wireless devices are transferred from inventory to property and equipment. Leased wireless devices are depreciated to their estimated residual value over the period expected to provide utility to us, which is generally shorter than the lease term and considers expected losses. Revenues associated with the leased wireless devices, net of incentives, are generally recognized over the lease term. Upon device upgrade or at lease end, customers must return or purchase their device. Returned devices transferred from Property and equipment, net are recorded as inventory and are valued at the lower of cost or net realizable value with any write-down recognized as Cost of equipment sales in our Consolidated Statements of Comprehensive Income. Costs of major replacements and improvements are capitalized. Repair and maintenance expenditures which do not enhance or extend the asset’s useful life are charged to operating expenses as incurred. Construction costs, labor and overhead incurred in the expansion or enhancement of our wireless network are capitalized. Capitalization commences with pre-construction period administrative and technical activities, which includes obtaining leases, zoning approvals and building permits, and ceases at the point at which the asset is ready for its intended use. We capitalize interest associated with the acquisition or construction of certain property and equipment. Capitalized interest is reported as a reduction in interest expense and depreciated over the useful life of the related assets. We record an asset retirement obligation for the fair value of legal obligations associated with the retirement of tangible long- lived assets and a corresponding increase in the carrying amount of the related asset in the period in which the obligation is incurred. In periods subsequent to initial measurement, we recognize changes in the liability resulting from the passage of time and revisions to either the timing or the amount of the original estimate. Over time, the liability is accreted to its present value and the capitalized cost is depreciated over the estimated useful life of the asset. Our obligations relate primarily to certain legal obligations to remediate leased property on which our network infrastructure and administrative assets are located. We capitalize certain costs incurred in connection with developing or acquiring internal use software. Capitalization of software costs commences once the final selection of the specific software solution has been made and management authorizes and commits to funding the software project. Capitalized software costs are included in Property and equipment, net in our Consolidated Balance Sheets and are amortized on a straight-line basis over the estimated useful life of the asset. Costs incurred during the preliminary project stage, as well as maintenance and training costs, are expensed as incurred. Other Intangible Assets Intangible assets that do not have indefinite useful lives are amortized over their estimated useful lives. Customer lists are amortized using the sum-of-the-years'-digits method over the expected period in which the relationship is expected to contribute to future cash flows. The remaining finite-lived intangible assets are amortized using the straight-line method. Goodwill and Indefinite-Lived Intangible Assets Goodwill Goodwill consists of the excess of the purchase price over the fair value of identifiable net assets acquired in a business combination. Goodwill is allocated to our two reporting units, wireless and Layer3. Spectrum Licenses Spectrum licenses are carried at costs incurred to acquire the spectrum licenses and the costs to prepare the spectrum licenses for their intended use, such as costs to clear acquired spectrum licenses. The Federal Communications Commission (“FCC”) issues spectrum licenses which provide us with the exclusive right to utilize designated radio frequency spectrum within specific geographic service areas to provide wireless communications services. While spectrum licenses are issued for a fixed period of time, typically for up to fifteen years, the FCC has granted license renewals routinely and at a nominal cost. The spectrum licenses held by us expire at various dates. We believe we will be able to meet all requirements necessary to secure renewal of our spectrum licenses at nominal costs. Moreover, we determined there are currently no legal, regulatory, contractual, competitive, economic or other factors that limit the useful lives of our spectrum licenses. Therefore, we determined the spectrum licenses should be treated as indefinite-lived intangible assets. 64 At times, we enter into agreements to sell or exchange spectrum licenses. Upon entering into the arrangement, if the transaction has been deemed to have commercial substance, spectrum licenses are reviewed for impairment and transferred at their carrying value, net of any impairment, to assets held for sale included in Other current assets in our Consolidated Balance Sheets until approval and completion of the exchange or sale. Upon closing of the transaction, spectrum licenses acquired as part of an exchange of nonmonetary assets are valued at fair value and the difference between the fair value of the spectrum licenses obtained, book value of the spectrum licenses transferred and cash paid, if any, is recognized as a gain and included in Gains on disposal of spectrum licenses in our Consolidated Statements of Comprehensive Income. Our fair value estimates of spectrum licenses are based on information for which there is little or no observable market data. If the transaction lacks commercial substance or the fair value is not measurable, the acquired spectrum licenses are recorded at the book value of the assets transferred or exchanged. Impairment We assess the carrying value of our goodwill and other indefinite-lived intangible assets, such as our spectrum licenses, for potential impairment annually as of December 31, or more frequently if events or changes in circumstances indicate such assets might be impaired. When assessing goodwill for impairment we may elect to first perform a qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. If we do not perform a qualitative assessment, or if the qualitative assessment indicates it is more likely than not that the fair value of the two reporting units, wireless and Layer3, is less than its carrying amount, we perform a quantitative test. We recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized would not exceed the total amount of goodwill allocated to that reporting unit. We test our spectrum licenses for impairment on an aggregate basis, consistent with our management of the overall business at a national level. We may elect to first perform a qualitative assessment to determine whether it is more likely than not that the fair value of an intangible asset is less than its carrying value. If we do not perform the qualitative assessment, or if the qualitative assessment indicates it is more likely than not that the fair value of the intangible asset is less than its carrying amount, we calculate the estimated fair value of the intangible asset. If the estimated fair value of the spectrum licenses is lower than their carrying amount, an impairment loss is recognized for the difference. We estimate fair value using the Greenfield methodology, which is an income approach based on discounted cash flows associated with the intangible asset, to estimate the price at which an orderly transaction to sell the asset would take place between market participants at the measurement date under current market conditions. Guarantee Liabilities We offer a device trade-in program, Just Upgrade My Phone (“JUMP!”), which provides eligible customers a specified-price trade-in right to upgrade their device. Upon enrollment, participating customers must finance the purchase of a device on an EIP and have a qualifying T-Mobile monthly wireless service plan, which is treated as an arrangement with multiple performance obligations when entered into at or near the same time. Upon a qualifying JUMP! program upgrade, the customer’s remaining EIP balance is settled provided they trade-in their eligible used device in good working condition and purchase a new device from us on a new EIP. For customers who enroll in JUMP!, we recognize a liability and reduce revenue for the portion of revenue which represents the estimated fair value of the specified-price trade-in right guarantee. The guarantee liability is valued based on various economic and customer behavioral assumptions, which requires judgment, including estimating the customer's remaining EIP balance at trade-in, the expected fair value of the used device at trade-in, and the probability and timing of trade-in. When customers upgrade their device, the difference between the EIP balance credit to the customer and the fair value of the returned device is recorded against the guarantee liabilities. All assumptions are reviewed periodically. Fair Value Measurements We carry certain assets and liabilities at fair value. Fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The three-tier hierarchy for inputs used in measuring fair value, which prioritizes the inputs based on the observability as of the measurement date, is as follows: 65 Level 1 Level 2 Level 3 Quoted prices in active markets for identical assets or liabilities; Observable inputs other than the quoted prices in active markets for identical assets and liabilities; and Unobservable inputs for which there is little or no market data, which require us to develop assumptions of what market participants would use in pricing the asset or liability. Assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement requires judgment, and may affect the placement of assets and liabilities being measured within the fair value hierarchy. The carrying values of cash and cash equivalents, short-term investments, accounts receivable, accounts receivable from affiliates and accounts payable approximate fair value due to the short-term maturities of these instruments. The carrying values of EIP receivables approximate fair value as the receivables are recorded at their present value, net of unamortized discount and allowance for credit losses. There were no financial instruments with a carrying value materially different from their fair value, based on quoted market prices or rates for the same or similar instruments, or internal valuation models. Derivative Financial Instruments Derivative financial instruments are recognized as either assets or liabilities and are measured at fair value. We do not use derivatives for trading or speculative purposes. For derivative instruments designated as cash flow hedges associated with forecasted debt issuances, changes in fair value are reported as a component of Accumulated other comprehensive loss until reclassified into Interest expense in the same period the hedged transaction affects earnings, generally over the life of the related debt. Unrealized gains on derivatives designated as cash flow hedges are recorded at fair value as assets, and unrealized losses on derivatives designated as cash flow hedges are recorded at fair value as liabilities. Revenue Recognition (effective January 1, 2018) We primarily generate our revenue from providing wireless services to customers and selling or leasing devices and accessories. Our contracts with customers may involve multiple performance obligations, which include wireless services, wireless devices or a combination thereof, and we allocate the transaction price between each performance obligation based on its relative standalone selling price. Significant Judgments The most significant judgments affecting the amount and timing of revenue from contracts with our customers include the following items: • • • • Revenue for service contracts that we assess are not probable of collection is not recognized until the contract is completed or terminated and cash is received. Collectibility is re-assessed when there is a significant change in facts or circumstances. Our assessment of collectibility considers whether we may limit our exposure to credit risk through our right to stop transferring additional service in the event the customer is delinquent as well as certain contract terms such as down payments that reduce our exposure to credit risk. Customer credit behavior is inherently uncertain. See “Receivables and Allowance for Credit Losses”, above, for more discussion on how we assess credit risk. Promotional EIP bill credits offered to a customer on an equipment sale that are paid over time and are contingent on the customer maintaining a service contract may result in an extended service contract based on whether a substantive penalty is deemed to exist. Determining whether contingent EIP bill credits result in a substantive termination penalty may require significant judgment. The identification of distinct performance obligations within our service plans may require significant judgment. Revenue is recorded net of costs paid to another party for performance obligations where we arrange for the other party to transfer goods or services to the customer (i.e., when we are acting as an agent). For example, performance obligations relating to services provided by third-party content providers where we neither control a right to the content provider’s service nor control the underlying service itself are presented net because we are acting as an agent. The determination of whether we control the underlying service or right to the service prior to our transfer to the customer requires, at times, significant judgment. 66 • • • • • For transactions where we recognize a significant financing component, judgment is required to determine the discount rate. For EIP sales, the discount rate used to adjust the transaction price primarily reflects current market interest rates and the estimated credit risk of the customer. Customer credit behavior is inherently uncertain. See “Receivables and Allowance for Credit Losses”, above, for more discussion on how we assess credit risk. Our products are generally sold with a right of return, which is accounted for as variable consideration when estimating the amount of revenue to recognize. Device return levels are estimated based on the expected value method as there are a large number of contracts with similar characteristics and the outcome of each contract is independent of the others. Historical return rate experience is a significant input to our expected value methodology. Sales of equipment to indirect dealers who have been identified as our customer (referred to as the sell-in model) often include credits subsequently paid to the dealer as a reimbursement for any discount promotions offered to the end consumer. These credits (payments to a customer) are accounted for as variable consideration when estimating the amount of revenue to recognize from the sales of equipment to indirect dealers and are estimated based on historical experience and other factors, such as expected promotional activity. The determination of the standalone selling price for contracts that involve more than one performance obligation may require significant judgment, such as when the selling price of a good or service is not readily observable. For capitalized contract costs, determining the amortization period over which such costs are recognized as well as assessing the indicators of impairment may require significant judgment. Wireless Services Revenue We generate our wireless services revenues from providing access to, and usage of, our wireless communications network. Service revenues also include revenues earned for providing value added services to customers, such as handset insurance services. Service contracts are billed monthly either in advance or arrears, or are prepaid. Generally, service revenue is recognized as we satisfy our performance obligation to transfer service to our customers. We typically satisfy our stand-ready performance obligations, including unlimited wireless services, evenly over the contract term. For usage-based and prepaid wireless services, we satisfy our performance obligations when services are rendered. Consideration payable to a customer is treated as a reduction of the total transaction price, unless the payment is in exchange for a distinct good or service, such as certain commissions paid to dealers. Federal Universal Service Fund (“USF”) and other fees are assessed by various governmental authorities in connection with the services we provide to our customers and are included in Cost of services. When we separately bill and collect these regulatory fees from customers, they are recorded gross in Total service revenues in our Consolidated Statements of Comprehensive Income. For the years ended December 31, 2019, 2018 and 2017, we recorded approximately $93 million, $161 million and $258 million, respectively, of USF fees on a gross basis. We have made an accounting policy election to exclude from the measurement of the transaction price all taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction and collected by us from a customer (e.g., sales, use, value added, and some excise taxes). Equipment Revenues We generate equipment revenues from the sale or lease of mobile communication devices and accessories. For performance obligations related to equipment contracts, we typically transfer control at a point in time when the device or accessory is delivered to, and accepted by, the customer or dealer. We have elected to account for shipping and handling activities that occur after control of the related good transfers as fulfillment activities instead of assessing such activities as performance obligations. We estimate variable consideration (e.g., device returns or certain payments to indirect dealers) primarily based on historical experience. Equipment sales not probable of collection are generally recorded as payments are received. Our assessment of collectibility considers contract terms such as down payments that reduce our exposure to credit risk. We offer certain customers the option to pay for devices and accessories in installments using an EIP. Generally, we recognize as a reduction of the total transaction price the effects of a financing component in contracts where customers purchase their devices and accessories on an EIP with a term of more than one year, including those financing components that are not considered to be significant to the contract. However, we have elected the practical expedient to not recognize the effects of a 67 significant financing component for contracts where we expect, at contract inception, that the period between the transfer of a performance obligation to a customer and the customer’s payment for that performance obligation will be one year or less. In addition, for customers who enroll in our JUMP! program, we recognize a liability based on the estimated fair value of the specified-price trade-in right guarantee. The fair value of the guarantee is deducted from the transaction price and the remaining transaction price is allocated to other elements of the contract, including service and equipment performance obligations. See “Guarantee Liabilities” above for further information. JUMP! On Demand allows customers to lease a device over a period of up to 18 months and upgrade it for a new device up to one time per month. To date, all of our leased wireless devices are accounted for as operating leases and estimated contract consideration is allocated between lease elements and non-lease elements (such as service and equipment performance obligations) based on the relative standalone selling price of each performance obligation in the contract. Lease revenues are recorded as equipment revenues and recognized as earned on a straight-line basis over the lease term. Lease revenues on contracts not probable of collection are limited to the amount of payments received. See “Property and Equipment” above for further information. Contract Balances Generally, our devices and service plans are available at standard prices, which are maintained on price lists and published on our website and/or within our retail stores. For contracts that involve more than one product or service that are identified as separate performance obligations, the transaction price is allocated to the performance obligations based on their relative standalone selling prices. The standalone selling price is the price at which we would sell the good or service separately to a customer and is most commonly evidenced by the price at which we sell that good or service separately in similar circumstances and to similar customers. A contract asset is recorded when revenue is recognized in advance of our right to receive consideration (i.e., we must perform additional services in order to receive consideration). Amounts are recorded as receivables when our right to consideration is unconditional. When consideration is received, or we have an unconditional right to consideration in advance of delivery of goods or services, a contract liability is recorded. The transaction price can include non-refundable upfront fees, which are allocated to the identifiable performance obligations. Contract assets are included in Other current assets and Other assets and contract liabilities are included in Deferred revenue in our Consolidated Balance Sheets. Contract Modifications Our service contracts allow customers to frequently modify their contracts without incurring penalties in many cases. Each time a contract is modified, we evaluate the change in scope or price of the contract to determine if the modification should be treated as a separate contract, as if there is a termination of the existing contract and creation of a new contract, or if the modification should be considered a change associated with the existing contract. We typically do not have significant impacts from contract modifications. Contract Costs We incur certain incremental costs to obtain a contract that we expect to recover, such as sales commissions. We record an asset when these incremental costs to obtain a contract are incurred and amortize them on a systematic basis that is consistent with the transfer to the customer of the goods or services to which the asset relates. We amortize deferred costs incurred to obtain service contracts on a straight-line basis over the term of the initial contract and anticipated renewal contracts to which the costs relate, currently 24 months for postpaid service contracts. However, we have elected the practical expedient permitting expensing of costs to obtain a contract when the expected amortization period is one year or less for prepaid service contracts. Incremental costs to obtain equipment contracts (e.g., commissions paid on device and accessory sales) are recognized when the equipment is transferred to the customer. 68 See Note 1 - Summary of Significant Accounting Policies included in our Annual Report on Form 10-K for the year ended December 31, 2017 for more discussion regarding the accounting policies that governed revenue recognition prior to January 1, 2018. Advertising Expense We expense the cost of advertising and other promotional expenditures to market our services and products as incurred. For the years ended December 31, 2019, 2018 and 2017, advertising expenses included in Selling, general and administrative expenses in our Consolidated Statements of Comprehensive Income were $1.6 billion, $1.7 billion and $1.8 billion, respectively. Income Taxes Deferred tax assets and liabilities are recognized based on temporary differences between the financial statement and tax bases of assets and liabilities using enacted tax rates expected to be in effect when these differences are realized. A valuation allowance is recorded when it is more likely than not that some portion or all of a deferred tax asset will not be realized. The ultimate realization of a deferred tax asset depends on the ability to generate sufficient taxable income of the appropriate character and in the appropriate taxing jurisdictions within the carryforward periods available. We account for uncertainty in income taxes recognized in the financial statements in accordance with the accounting guidance for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. We assess whether it is more likely than not that a tax position will be sustained upon examination based on the technical merits of the position and adjust the unrecognized tax benefits in light of changes in facts and circumstances, such as changes in tax law, interactions with taxing authorities and developments in case law. Other Comprehensive Income (Loss) Other comprehensive income (loss) consists of adjustments, net of tax, related to unrealized gains (losses) on cash flow hedges and available-for-sale securities. This is reported in Accumulated other comprehensive loss as a separate component of stockholders’ equity until realized in earnings. Stock-Based Compensation Stock-based compensation cost for stock awards, which include restricted stock units (“RSUs”) and performance-based restricted stock units (“PRSUs”), is measured at fair value on the grant date and recognized as expense, net of expected forfeitures, over the related service period. The fair value of stock awards is based on the closing price of our common stock on the date of grant. RSUs are recognized as expense using the straight-line method. PRSUs are recognized as expense following a graded vesting schedule with their performance re-assessed and updated on a quarterly basis, or more frequently as changes in facts and circumstances warrant. Earnings Per Share Basic earnings per share is computed by dividing Net income attributable to common stockholders by the weighted-average number of common shares outstanding for the period. Diluted earnings per share is computed by giving effect to all potentially dilutive common shares outstanding during the period. Potentially dilutive common shares consist of outstanding stock options, RSUs and PRSUs, calculated using the treasury stock method, and prior to the conversion of our preferred stock in December 2017, potentially dilutive common shares included mandatory convertible preferred stock calculated using the if-converted method. See Note 14 - Earnings Per Share for further information. Variable Interest Entities VIEs are entities that lack sufficient equity to permit the entity to finance its activities without additional subordinated financial support from other parties, have equity investors that do not have the ability to make significant decisions relating to the entity's operations through voting rights, do not have the obligation to absorb the expected losses or do not have the right to receive the residual returns of the entity. The most common type of VIE is a special purpose entity (“SPE”). SPEs are commonly used in securitization transactions in order to isolate certain assets and distribute the cash flows from those assets to investors. SPEs are generally structured to insulate investors from claims on the SPE's assets by creditors of other entities, including the creditors of the seller of the assets. 69 The primary beneficiary is required to consolidate the assets and liabilities of the VIE. The primary beneficiary is the party which has both the power to direct the activities of an entity that most significantly impact the VIE's economic performance, and through its interests in the VIE, the obligation to absorb losses or the right to receive benefits from the VIE which could potentially be significant to the VIE. We consolidate VIEs when we are deemed to be the primary beneficiary or when the VIE cannot be deconsolidated. In assessing which party is the primary beneficiary, all the facts and circumstances are considered, including each party’s role in establishing the VIE and its ongoing rights and responsibilities. This assessment includes, first, identifying the activities that most significantly impact the VIE’s economic performance; and second, identifying which party, if any, has power over those activities. In general, the parties that make the most significant decisions affecting the VIE (such as asset managers and servicers) or have the right to unilaterally remove those decision-makers are deemed to have the power to direct the activities of a VIE. Accounting Pronouncements Adopted During the Current Year Leases In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-02, “Leases (Topic 842),” and has since modified the standard with several ASUs (collectively, the “new lease standard”). The new lease standard was effective for us, and we adopted the standard, on January 1, 2019. We adopted the standard by recognizing and measuring leases at the adoption date with a cumulative effect of initially applying the guidance recognized at the date of initial application and as a result did not restate the prior periods presented in the Consolidated Financial Statements. The new lease standard provides for a number of optional practical expedients in transition. We did not elect the “package of practical expedients” and as a result reassessed under the new lease standard our prior accounting conclusions about lease identification, lease classification and initial direct costs. We elected to use hindsight for determining the reasonably certain lease term. We did not elect the practical expedient pertaining to land easements as it is not applicable to us. The new lease standard provides practical expedients and policy elections for an entity’s ongoing accounting. Generally, we elected the practical expedient to not separate lease and non-lease components in arrangements whereby we are the lessee. For arrangements in which we are the lessor of wireless devices, we did not elect this practical expedient. We did not elect the short-term lease recognition exemption, which includes the recognition of right-of-use assets and lease liabilities for existing short-term leases at transition. We have also applied this election to all active leases at transition. The most significant judgments and impacts upon adoption of the standard include the following: • In evaluating contracts to determine if they qualify as a lease, we consider factors such as if we have obtained or transferred substantially all of the 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 are no longer 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 Consolidated Balance Sheet. Certain line items in the Consolidated Statements of Cash Flows and the “Supplemental 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 presented as “Repayments of financing lease obligations” and “Assets acquired under capital lease obligations” is now presented as “Financing lease right-of-use assets obtained in exchange for lease obligations.” In the “Operating Activities” section of the 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 70 in the operating lease asset and liability, respectively. Additionally, in the “Supplemental disclosure of cash flow information” section of the 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. Determining a credit spread as secured by our assets may require significant judgment. 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 hindsight is an estimated decrease in Total operating expenses of $240 million in fiscal year 2019. • We were also required to reassess the previously failed sale-leasebacks of certain T-Mobile-owned wireless communications 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. Determining whether the transfer of control criteria has been met requires significant judgement. • 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 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. 71 Including the impacts from a change in the accounting conclusion on the 1,400 previously failed sale-leaseback tower sites, the cumulative effect of initially applying the new lease standard on January 1, 2019 is as follows: (in millions) Assets Other current assets Property and equipment, net Operating lease right-of-use assets Financing lease right-of-use assets Other intangible assets, net Other assets Liabilities and Stockholders’ Equity Accounts payable and accrued liabilities Other current liabilities Short-term and long-term debt Tower obligations Deferred tax liabilities Deferred rent expense Short-term and long-term operating lease liabilities Short-term and long-term financing lease liabilities Other long-term liabilities Accumulated deficit January 1, 2019 Beginning Balance Cumulative Effect Adjustment Beginning Balance, As Adjusted $ 1,676 $ (78) $ 23,359 — — 198 1,623 7,741 787 12,965 2,557 4,472 2,781 — — 967 (12,954) (2,339) 9,251 2,271 (12) (71) (65) 28 (2,015) (345) 231 (2,781) 11,364 2,016 (64) 653 1,598 21,020 9,251 2,271 186 1,552 7,676 815 10,950 2,212 4,703 — 11,364 2,016 903 (12,301) Including the impacts from the change in the accounting conclusion on the 1,400 previously failed sale-leaseback tower sites and the change in presentation on the income statement of the 6,200 tower sites for which a sale did not occur, the cumulative effects of initially applying the new lease standard for the year ended December 31, 2019 are estimated as follows: • • The aggregate impact is a decrease in Other revenues of $185 million, a decrease in Total operating expenses of $380 million, a decrease in Interest expense of $34 million and an increase to Net income of $175 million. The impact on our 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. For arrangements where we are the lessor, including arrangements to lease devices to our service customers, the adoption of the new lease standard did not have a material impact on our financial statements as these leases are classified as operating leases. Device lease payments are presented as Equipment revenues and recognized as earned on a straight-line basis over the lease term. Recognition of equipment revenue on lease contracts that are determined to not be probable of collection is limited to the amount of payments received. We have made an accounting policy election to exclude from the consideration in the contract all taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction and collected by us from a customer (e.g., sales, use, value added, and some excise taxes). At operating lease inception, leased wireless devices are transferred from Inventory to Property and equipment, net. Leased wireless devices are depreciated to their estimated residual value over the period expected to provide utility to us, which is generally shorter than the lease term and considers expected losses. Returned devices transferred from Property and equipment, net, are recorded as Inventory and are valued at the lower of cost or market with any write-down to market recognized as Cost of equipment sales in our Consolidated Statements of Comprehensive Income. We do not have any leasing transactions with related parties. See Note 15 - Leases for further information. We have implemented significant new lease accounting systems, processes and internal controls over lease accounting to assist us in the application of the new lease standard. 72 Lease Expense We have operating leases for cell sites, retail locations, corporate offices and dedicated transportation lines, some of which have escalating rentals during the initial lease term and during subsequent optional renewal periods. We recognize a right-of-use asset and lease liability for operating leases based on the net present value of future minimum lease payments. Lease expense is recognized on a straight-line basis over the non-cancelable lease term and renewal periods that are considered reasonably certain. We consider several factors in assessing whether renewal periods are reasonably certain of being exercised, including the continued maturation of our network nationwide, technological advances within the telecommunications industry and the availability of alternative sites. We have financing leases for certain network equipment. The financing leases do not have renewal options and contain a bargain purchase option at the end of the lease. We recognize a right-of-use asset and lease liability for financing leases based on the net present value of future minimum lease payments. Lease expense for our financing leases is comprised of the amortization of the right-of-use asset and interest expense recognized based on the effective interest method. Accounting Pronouncements Not Yet Adopted Financial Instruments In June 2016, the FASB issued ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments,” and has since modified the standard with several ASUs (collectively, the “new credit loss standard”). The new credit loss standard requires a financial asset (or a group of financial assets) measured at amortized cost basis to be presented at the net amount expected to be collected. The measurement of expected credit losses is based on relevant information about past events, including historical experience, current conditions and reasonable and supportable forecasts that affect the collectibility of the reported amount. The new credit loss standard will become effective for us beginning on January 1, 2020, and requires a cumulative-effect adjustment to Accumulated deficit as of the beginning of the first reporting period in which the guidance is effective (that is, a modified-retrospective approach). We will adopt the new credit loss standard on January 1, 2020, and plan to recognize lifetime expected credit losses at the inception of our credit risk exposures whereas we currently recognize credit losses only when it is probable that they have been incurred. We will also recognize expected credit losses on our EIP receivables, excluding consideration of any unamortized discount on those receivables resulting from the imputation of interest. We currently offset our estimate of incurred losses on our EIP receivables by the amount of the related unamortized discounts on those receivables. We have developed an expected credit loss model and are refining the inputs including the forward-looking loss indicators. The estimated impact of the new credit loss standard on our receivables portfolio as of December 31, 2019, would be an increase to our allowance for credit losses of $85 million to $95 million, a decrease to our net deferred tax liabilities of $22 million to $25 million and an increase to our Accumulated deficit of $63 million to $70 million. Cloud Computing Arrangements In August 2018, the FASB issued ASU 2018-15, “Intangibles - Goodwill and Other - Internal-Use Software (Topic 350): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract.” The standard aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. We will adopt the standard on a prospective basis beginning on the effective date of January 1, 2020. Upon adoption of the standard, implementation costs are capitalized in the period incurred, which will result in an increase to Other assets in our Consolidated Balance Sheets. These capitalized amounts will be amortized over the term of the hosting arrangement to Cost of services or Selling, general and administrative expenses in our Consolidated Statements of Comprehensive Income based on the nature of the hosting arrangement. The impact of this standard on our Consolidated Financial Statements is dependent on the nature and composition of the hosting arrangements entered into subsequent to adoption. 73 Income Taxes In December 2019, the FASB issued ASU 2019-12, "Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes." The standard simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. The standard will become effective for us beginning January 1, 2021. Early adoption is permitted for us at any time. We are currently evaluating the impact this guidance will have on our Consolidated Financial Statements and the timing of adoption. Other recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the American Institute of Certified Public Accountants, and the Securities and Exchange Commission (the “SEC”) did not have, or are not expected to have, a significant impact on our present or future Consolidated Financial Statements. Note 2 – Business Combinations Proposed Sprint Transactions On April 29, 2018, we entered into a Business Combination Agreement to merge with Sprint in an all-stock transaction at a fixed exchange ratio of 0.10256 shares of T-Mobile common stock for each share of Sprint common stock, or 9.75 shares of Sprint common stock for each share of T-Mobile common stock (the “Merger”). The combined company will be named “T- Mobile” and, as a result of the Merger, is expected to be able to rapidly launch a broad and deep nationwide 5G network, accelerate innovation and increase competition in the U.S. wireless, video and broadband industries. Neither T-Mobile nor Sprint on its own could generate comparable benefits to consumers. The Merger and the other transactions contemplated by the Business Combination Agreement (collectively, the “Transactions”) have been approved by the boards of directors of T-Mobile and Sprint and the required approvals of the stockholders of each of T-Mobile and Sprint have been obtained. Immediately following the Merger, it is anticipated that Deutsche Telekom AG (“DT”) and SoftBank Group Corp. (“SoftBank”) will hold, directly or indirectly, on a fully diluted basis, approximately 41.5% and 27.2%, respectively, of the outstanding T-Mobile common stock, with the remaining approximately 31.3% of the outstanding T-Mobile common stock held by other stockholders, based on closing share prices and certain other assumptions as of December 31, 2019. In connection with the entry into the Business Combination Agreement, T-Mobile USA, Inc. (“T-Mobile USA”) entered into commitment letter, dated as of April 29, 2018 (as amended and restated on May 15, 2018 and on September 6, 2019, the “Commitment Letter”). The funding of the debt facilities provided for in the Commitment Letter is subject to the satisfaction of the conditions set forth therein, including consummation of the Merger. The proceeds of the debt financing provided for in the Commitment Letter will be used to refinance certain existing debt of us, Sprint and our and Sprint’s respective subsidiaries and for post-closing working capital needs of the combined company. See Note 8 – Debt for further information. In connection with the entry into the Business Combination Agreement, DT and T-Mobile USA entered into a Financing Matters Agreement, dated as of April 29, 2018 (the “Financing Matters Agreement”), pursuant to which DT agreed, among other things, to consent to, subject to certain conditions, certain amendments to certain existing debt owed to DT, in connection with the Merger. If the Merger is consummated, we will make payments for requisite consents to DT of $13 million. There was no payment accrued as of December 31, 2019. See Note 8 – Debt for further information. On May 18, 2018, under the terms and conditions described in the Consent Solicitation Statement dated as of May 14, 2018 (the "Consent Solicitation Statement"), we obtained consents necessary to effect certain amendments to certain existing debt of us and our subsidiaries. If the Merger is consummated, we will make payments for requisite consents to third-party note holders of $95 million. There were no consent payments accrued as of December 31, 2019. Under the terms of the Business Combination Agreement, if the Business Combination Agreement is terminated, Sprint may be required to reimburse us for 33% of the consent, bank, and other fees we paid or accrued, which totaled $18 million as of December 31, 2019. There were no reimbursements accrued as of December 31, 2019. Sprint also obtained consents necessary to effect certain amendments to certain existing debt of Sprint and its subsidiaries. In connection with receiving the requisite consents, Sprint made upfront payments to third-party note holders and related bank fees of $242 million. Under the terms of the Business Combination Agreement, if the Business Combination Agreement is terminated, we may also be required to reimburse Sprint for 67% of the upfront consent and related bank fees it paid, which totaled $162 million as of December 31, 2019. There were no fees accrued as of December 31, 2019. 74 We recognized Merger-related costs of $620 million and $196 million for the years ended December 31, 2019 and 2018, respectively. These costs generally included consulting and legal fees and were recognized as Selling, general and administrative expenses in our Consolidated Statements of Comprehensive Income. Payments for Merger-related costs were $442 million and $86 million for the years ended December 31, 2019 and 2018, respectively, and were recognized within Net cash provided by operating activities in our Consolidated Statements of Cash Flows. The Business Combination Agreement contains certain termination rights for both Sprint and us. If we terminate the Business Combination Agreement in connection with a failure to satisfy the closing condition related to specified minimum credit ratings for the combined company on the closing date of the Merger (after giving effect to the Merger) from at least two of the three credit rating agencies, then in certain circumstances, we may be required to pay Sprint an amount equal to $600 million. On June 18, 2018, we filed a Public Interest Statement and applications for approval of the Merger with the FCC. On July 18, 2018, the FCC issued a Public Notice formally accepting our applications and establishing a period for public comment. On May 20, 2019, to facilitate the FCC’s review and approval of the FCC license transfers associated with the proposed Merger, we and Sprint filed with the FCC a written ex parte presentation (the “Presentation”) relating to the proposed Merger. The Presentation included proposed commitments from us and Sprint. The FCC approved the Merger on November 5, 2019. On June 11, 2019, a number of state attorneys general filed a lawsuit against us, DT, Sprint, and SoftBank in the U.S. District Court for the Southern District of New York, alleging that the Merger, if consummated, would violate Section 7 of the Clayton Act and so should be enjoined. After it was filed, several additional states joined the lawsuit. Of the states that joined the lawsuit, two have subsequently withdrawn from the suit having resolved their concerns with the Merger. We believe the plaintiffs’ claims are without merit, and have defended the case vigorously. Trial concluded after two weeks of witness testimony and presentation of document evidence. We are now waiting for the trial court’s ruling. On November 25, 2019, individual consumers filed a similar lawsuit in the Northern District of California. That case has been stayed pending the outcome of the New York litigation. On July 26, 2019, we entered into an Asset Purchase Agreement (the “Asset Purchase Agreement”) with Sprint and DISH Network Corporation (“DISH”). We and Sprint are collectively referred to as the “Sellers.” Pursuant to the Asset Purchase Agreement, upon the terms and subject to the conditions thereof, following the consummation of the Merger, DISH will acquire Sprint’s prepaid wireless business, currently operated under the Boost Mobile and Sprint prepaid brands (excluding the Assurance brand Lifeline customers and the prepaid wireless customers of Shenandoah Telecommunications Company and Swiftel Communications, Inc.), including customer accounts, inventory, contracts, intellectual property and certain other specified assets (the “Prepaid Business”), and will assume certain related liabilities (the “Prepaid Transaction”). DISH will pay the Sellers $1.4 billion for the Prepaid Business, subject to a working capital adjustment. The consummation of the Prepaid Transaction is subject to the consummation of the Merger and other customary closing conditions. At the closing of the Prepaid Transaction, the Sellers and DISH will enter into (i) a License Purchase Agreement pursuant to which (a) the Sellers will sell certain 800 MHz spectrum licenses held by Sprint to DISH for a total of approximately $3.6 billion in a transaction to be completed, subject to certain additional closing conditions, following an application for FCC approval to be filed three years following the closing of the Merger and (b) the Sellers will have the option to lease back from DISH, as needed, a portion of the spectrum sold for an additional two years following the closing of the spectrum sale transaction, (ii) a Transition Services Agreement providing for the Sellers’ provision of transition services to DISH in connection with the Prepaid Business for a period of up to three years following the closing of the Prepaid Transaction, (iii) a Master Network Services Agreement providing for the Sellers’ provision of network services to customers of the Prepaid Business for a period of up to seven years following the closing of the Prepaid Transaction, and (iv) an Option to Acquire Tower and Retail Assets offering DISH the option to acquire certain decommissioned towers and retail locations from the Sellers, subject to obtaining all necessary third-party consents, for a period of up to five years following the closing of the Prepaid Transaction. On July 26, 2019, in connection with the entry into the Asset Purchase Agreement, we and the other parties to the Business Combination Agreement entered into Amendment No. 1 (the “Amendment”) to the Business Combination Agreement. The Amendment extended the Outside Date (as defined in the Business Combination Agreement) to November 1, 2019, or, if the Marketing Period (as defined in the Business Combination Agreement) had started and was in effect at such date, then January 2, 2020. Because the Transactions were not completed by the Outside Date, each of T-Mobile and Sprint currently has the right to terminate the Business Combination Agreement or the terms may be amended. On July 26, 2019, the U.S. Department of Justice (the “DOJ”) filed a complaint and a proposed final judgment (the “Proposed Consent Decree”) agreed to by us, DT, Sprint, SoftBank and DISH with the U.S. District Court for the District of Columbia. 75 The Proposed Consent Decree would fully resolve DOJ’s investigation into the Merger and would require the parties to, among other things, carry out the divestitures to be made pursuant to the Asset Purchase Agreement described above upon closing of the Merger. The Proposed Consent Decree is subject to judicial approval. The consummation of the Merger remains subject to certain closing conditions. We expect the Merger will be permitted to close in early 2020. Note 3 – Receivables and Allowance for Credit Losses Our portfolio of receivables is comprised of two portfolio segments: accounts receivable and EIP receivables. Our accounts receivable segment primarily consists of amounts currently due from customers, including service and leased device receivables, other carriers and third-party retail channels. Based upon customer credit profiles, we classify the EIP receivables segment into two customer classes of “Prime” and “Subprime.” Prime customer receivables are those with lower delinquency risk and Subprime customer receivables are those with higher delinquency risk. Customers may be required to make a down payment on their equipment purchases. In addition, certain customers within the Subprime category are required to pay an advance deposit. To determine a customer’s credit profile, we use a proprietary credit scoring model that measures the credit quality of a customer using several factors, such as credit bureau information, consumer credit risk scores and service and device plan characteristics. The following table summarizes the EIP receivables, including imputed discounts and related allowance for credit losses: (in millions) EIP receivables, gross Unamortized imputed discount EIP receivables, net of unamortized imputed discount Allowance for credit losses EIP receivables, net Classified on the balance sheet as: Equipment installment plan receivables, net Equipment installment plan receivables due after one year, net EIP receivables, net December 31, 2019 December 31, 2018 $ $ $ $ 4,582 $ (299) 4,283 (100) 4,183 2,600 1,583 4,183 $ $ $ 4,534 (330) 4,204 (119) 4,085 2,538 1,547 4,085 To determine the appropriate level of the allowance for credit losses, we consider a number of credit quality factors, including historical credit losses and timely payment experience as well as current collection trends such as write-off frequency and severity, aging of the receivable portfolio, credit quality of the customer base and other qualitative factors such as macro- economic conditions. We write off account balances if collection efforts are unsuccessful and the receivable balance is deemed uncollectible, based on factors such as customer credit ratings and the length of time from the original billing date. For EIP receivables, subsequent to the initial determination of the imputed discount, we assess the need for and, if necessary, recognize an allowance for credit losses to the extent the amount of estimated incurred losses on the gross EIP receivable balances exceed the remaining unamortized imputed discount balances. The EIP receivables had weighted average effective imputed interest rates of 8.8% and 10.0% as of December 31, 2019, and 2018, respectively. 76 Activity for the years ended December 31, 2019, 2018 and 2017, in the allowance for credit losses and unamortized imputed discount balances for the accounts receivable and EIP receivables segments were as follows: December 31, 2019 December 31, 2018 December 31, 2017 (in millions) Accounts Receivable Allowance EIP Receivables Allowance Accounts Receivable Allowance EIP Receivables Allowance Total Accounts Receivable Allowance EIP Receivables Allowance Total Total Allowance for credit losses and imputed discount, beginning of period $ Bad debt expense Write-offs, net of recoveries Change in imputed discount on short-term and long-term EIP receivables Impact on the imputed discount from sales of EIP receivables Allowance for credit losses and imputed discount, end of period $ 67 77 $ 449 230 $ 516 307 $ 86 69 $ 396 228 $ 482 297 $ 102 104 $ 316 284 418 388 (83) (249) (332) (88) (240) (328) (120) (273) (393) N/A 136 136 N/A 250 250 N/A 252 252 N/A (167) (167) N/A (185) (185) N/A (183) (183) $ 61 $ 399 $ 460 $ 67 $ 449 $ 516 $ 86 $ 396 $ 482 Management considers the aging of receivables to be an important credit indicator. The following table provides delinquency status for the unpaid principal balance for receivables within the EIP portfolio segment, which we actively monitor as part of our current credit risk management practices and policies: December 31, 2019 December 31, 2018 Prime Subprime Total EIP Receivables, gross Prime Subprime Total EIP Receivables, gross $ $ 2,384 $ 2,108 $ 4,492 $ 1,987 $ 2,446 $ 4,433 13 7 7 28 17 18 41 24 25 15 6 7 32 19 22 47 25 29 2,411 $ 2,171 $ 4,582 $ 2,015 $ 2,519 $ 4,534 (in millions) Current - 30 days past due 31 - 60 days past due 61 - 90 days past due More than 90 days past due Total receivables, gross Note 4 – Sales of Certain Receivables We have entered into transactions to sell certain service and EIP receivables. The transactions, including our continuing involvement with the sold receivables and the respective impacts to our Consolidated Financial Statements, are described below. Sales of Service Accounts Receivable Overview of the Transaction In 2014, we entered into an arrangement to sell certain service accounts receivable on a revolving basis (the “service receivable sale arrangement”). The maximum funding commitment of the service receivable sale arrangement is $950 million. In February 2019, the service receivable sale arrangement was amended to extend the scheduled expiration date, as well as certain third- party credit support under the arrangement, to March 2021. As of December 31, 2019 and 2018, the service receivable sale arrangement provided funding of $924 million and $774 million, respectively. Sales of receivables occur daily and are settled on a monthly basis. The receivables consist of service charges currently due from customers and are short-term in nature. In connection with the service receivable sale arrangement, we formed a wholly-owned subsidiary, which qualifies as a bankruptcy remote entity, to sell service accounts receivable (the “Service BRE”). The Service BRE does not qualify as a VIE, and due to the significant level of control we exercise over the entity, it is consolidated. Pursuant to the service receivable sale arrangement, certain of our wholly-owned subsidiaries transfer selected receivables to the Service BRE. The Service BRE then sells the receivables to an unaffiliated entity (the “Service VIE”), which was established to facilitate the sale of beneficial ownership interests in the receivables to certain third parties. 77 Variable Interest Entity We determined that the Service VIE qualifies as a VIE as it lacks sufficient equity to finance its activities. We have a variable interest in the Service VIE but are not the primary beneficiary as we lack the power to direct the activities that most significantly impact the Service VIE’s economic performance. Those activities include committing the Service VIE to legal agreements to purchase or sell assets, selecting which receivables are purchased in the service receivable sale arrangement, determining whether the Service VIE will sell interests in the purchased service receivables to other parties, funding of the entity and servicing of receivables. We do not hold the power to direct the key decisions underlying these activities. For example, while we act as the servicer of the sold receivables, which is considered a significant activity of the Service VIE, we are acting as an agent in our capacity as the servicer and the counterparty to the service receivable sale arrangement has the ability to remove us as the servicing agent of the receivables at will with no recourse available to us. As we have determined we are not the primary beneficiary, the balances and results of the Service VIE are not included in our Consolidated Financial Statements. The following table summarizes the carrying amounts and classification of assets, which consists primarily of the deferred purchase price and liabilities included in our Consolidated Balance Sheets that relate to our variable interest in the Service VIE: (in millions) Other current assets Accounts payable and accrued liabilities Other current liabilities Sales of EIP Receivables Overview of the Transaction December 31, 2019 December 31, 2018 $ 350 $ 25 342 339 59 149 In 2015, we entered into an arrangement to sell certain EIP accounts receivable on a revolving basis (the “EIP sale arrangement”). The maximum funding commitment of the EIP sale arrangement is $1.3 billion, and the scheduled expiration date is November 2020. As of both December 31, 2019 and 2018, the EIP sale arrangement provided funding of $1.3 billion. Sales of EIP receivables occur daily and are settled on a monthly basis. In connection with this EIP sale arrangement, we formed a wholly-owned subsidiary, which qualifies as a bankruptcy remote entity (the “EIP BRE”). Pursuant to the EIP sale arrangement, our wholly-owned subsidiary transfers selected receivables to the EIP BRE. The EIP BRE then sells the receivables to a non-consolidated and unaffiliated third-party entity for which we do not exercise any level of control, nor does the third-party entity qualify as a VIE. Variable Interest Entity We determined that the EIP BRE is a VIE as its equity investment at risk lacks the obligation to absorb a certain portion of its expected losses. We have a variable interest in the EIP BRE and determined that we are the primary beneficiary based on our ability to direct the activities which most significantly impact the EIP BRE’s economic performance. Those activities include selecting which receivables are transferred into the EIP BRE and sold in the EIP sale arrangement and funding of the EIP BRE. Additionally, our equity interest in the EIP BRE obligates us to absorb losses and gives us the right to receive benefits from the EIP BRE that could potentially be significant to the EIP BRE. Accordingly, we include the balances and results of operations of the EIP BRE in our Consolidated Financial Statements. The following table summarizes the carrying amounts and classification of assets, which consists primarily of the deferred purchase price, and liabilities included in our Consolidated Balance Sheets that relate to the EIP BRE: (in millions) Other current assets Other assets Other long-term liabilities December 31, 2019 December 31, 2018 $ 344 $ 89 18 321 88 22 78 In addition, the EIP BRE is a separate legal entity with its own separate creditors who will be entitled, prior to any liquidation of the EIP BRE, to be satisfied prior to any value in the EIP BRE becoming available to us. Accordingly, the assets of the EIP BRE may not be used to settle our general obligations and creditors of the EIP BRE have limited recourse to our general credit. Sales of Receivables The transfers of service receivables and EIP receivables to the non-consolidated entities are accounted for as sales of financial assets. Once identified for sale, the receivable is recorded at the lower of cost or fair value. Upon sale, we derecognize the net carrying amount of the receivables. We recognize the cash proceeds received upon sale in Net cash provided by operating activities in our Consolidated Statements of Cash Flows. We recognize proceeds net of the deferred purchase price, consisting of a receivable from the purchasers that entitles us to certain collections on the receivables. We recognize the collection of the deferred purchase price in Net cash used in investing activities in our Consolidated Statements of Cash Flows as Proceeds related to beneficial interests in securitization transactions. The deferred purchase price represents a financial asset that is primarily tied to the creditworthiness of the customers and which can be settled in such a way that we may not recover substantially all of our recorded investment, due to default by the customers on the underlying receivables. We elected, at inception, to measure the deferred purchase price at fair value with changes in fair value included in Selling, general and administrative expense in our Consolidated Statements of Comprehensive Income. The fair value of the deferred purchase price is determined based on a discounted cash flow model which uses primarily unobservable inputs (Level 3 inputs), including customer default rates. As of December 31, 2019, and 2018, our deferred purchase price related to the sales of service receivables and EIP receivables was $781 million and $746 million, respectively. The following table summarizes the impact of the sale of certain service receivables and EIP receivables in our Consolidated Balance Sheets: (in millions) Derecognized net service receivables and EIP receivables Other current assets of which, deferred purchase price Other long-term assets of which, deferred purchase price Accounts payable and accrued liabilities Other current liabilities Other long-term liabilities Net cash proceeds since inception Of which: Change in net cash proceeds during the year-to-date period Net cash proceeds funded by reinvested collections December 31, 2019 December 31, 2018 $ 2,584 $ 2,577 694 692 89 89 25 342 18 1,944 65 1,879 660 658 88 88 59 149 22 1,879 (179) 2,058 We recognized losses from sales of receivables, including adjustments to the receivables’ fair values and changes in fair value of the deferred purchase price, of $130 million, $157 million and $299 million for the years ended December 31, 2019, 2018 and 2017, respectively, in Selling, general and administrative expense in our Consolidated Statements of Comprehensive Income. Continuing Involvement Pursuant to the sale arrangements described above, we have continuing involvement with the service receivables and EIP receivables we sell as we service the receivables and are required to repurchase certain receivables, including ineligible receivables, aged receivables and receivables where write-off is imminent. We continue to service the customers and their related receivables, including facilitating customer payment collection, in exchange for a monthly servicing fee. As the receivables are sold on a revolving basis, the customer payment collections on sold receivables may be reinvested in new receivable sales. While servicing the receivables, we apply the same policies and procedures to the sold receivables as we apply to our owned receivables, and we continue to maintain normal relationships with our customers. Pursuant to the EIP sale 79 arrangement, under certain circumstances, we are required to deposit cash or replacement EIP receivables primarily for contracts terminated by customers under our JUMP! Program. In addition, we have continuing involvement with the sold receivables as we may be responsible for absorbing additional credit losses pursuant to the sale arrangements. Our maximum exposure to loss related to the involvement with the service receivables and EIP receivables sold under the sale arrangements was $1.1 billion as of December 31, 2019. The maximum exposure to loss, which is a required disclosure under U.S. GAAP, represents an estimated loss that would be incurred under severe, hypothetical circumstances whereby we would not receive the deferred purchase price portion of the contractual proceeds withheld by the purchasers and would also be required to repurchase the maximum amount of receivables pursuant to the sale arrangements without consideration for any recovery. We believe the probability of these circumstances occurring is remote and the maximum exposure to loss is not an indication of our expected loss. Note 5 – Property and Equipment The components of property and equipment were as follows: (in millions) Buildings and equipment Wireless communications systems Leasehold improvements Capitalized software Leased wireless devices Construction in progress Accumulated depreciation and amortization Property and equipment, net Useful Lives December 31, 2019 December 31, 2018 Up to 40 years $ 2,587 $ Up to 20 years Up to 12 years Up to 10 years Up to 18 months 34,353 1,345 12,705 1,139 2,973 (33,118) $ 21,984 $ 2,428 35,282 1,299 11,712 1,159 2,776 (31,297) 23,359 We capitalize interest associated with the acquisition or construction of certain property and equipment and spectrum intangible assets. We recognized capitalized interest of $473 million, $362 million and $136 million for the years ended December 31, 2019, 2018 and 2017, respectively. In December 2019, we sold 168 T-Mobile-owned wireless communications tower sites to an unrelated third party in exchange for net proceeds of $38 million which are included in Proceeds from sales of tower sites within Net cash used in investing activities in our Consolidated Statements of Cash Flows. A gain of $13 million was recognized as a reduction in Cost of services, exclusive of depreciation and amortization, in our Consolidated Statements of Comprehensive Income. We lease back space at certain of the sold tower sites for an initial term of ten years, followed by optional renewals. Total depreciation expense relating to property and equipment was $6.0 billion, $6.4 billion and $5.8 billion for the years ended December 31, 2019, 2018 and 2017, respectively. Included in the total depreciation expense for the years ended December 31, 2019, 2018 and 2017 was $543 million, $940 million and $1.0 billion, respectively, related to leased wireless devices. Asset retirement obligations are primarily for certain legal obligations to remediate leased property on which our network infrastructure and administrative assets are located. Activity in our asset retirement obligations was as follows: (in millions) Asset retirement obligations, beginning of year Liabilities incurred Liabilities settled Accretion expense Changes in estimated cash flows Asset retirement obligations, end of year Classified on the balance sheet as: Other long-term liabilities December 31, 2019 December 31, 2018 $ $ $ 609 $ 35 (2) 32 (15) 659 659 $ $ 562 26 (9) 30 — 609 609 The corresponding assets, net of accumulated depreciation, related to asset retirement obligations were $159 million and $194 million as of December 31, 2019 and 2018, respectively. 80 Note 6 – Goodwill, Spectrum License Transactions and Other Intangible Assets Goodwill The changes in the carrying amount of goodwill for the years ended December 31, 2019 and 2018, are as follows: (in millions) Historical goodwill Goodwill from acquisition of Layer3 TV Accumulated impairment losses at December 31, 2018 Balance as of December 31, 2018 Goodwill from acquisition in 2019 Balance as of December 31, 2019 Accumulated impairment losses at December 31, 2019 Goodwill 12,449 218 (10,766) 1,901 29 1,930 (10,766) $ $ $ In July 2019, we completed our acquisition of a mobile marketing company, for cash consideration of $32 million. Upon closing of the transaction, the acquired company became a wholly-owned consolidated subsidiary to T-Mobile. We recorded Goodwill of approximately $29 million, calculated as the excess of the purchase price paid over the fair value of net assets acquired. The acquired goodwill was allocated to our wireless reporting unit and will be tested for impairment at this level. The assets acquired and liabilities assumed were not material to our Consolidated Balance Sheets. The financial results from the acquisition closing date through December 31, 2019 were not material to our Consolidated Statements of Comprehensive Income. The acquisition was not material to our prior period consolidated results on a pro forma basis. Spectrum Licenses The following table summarizes our spectrum license activity for the years ended December 31, 2019 and 2018: (in millions) Spectrum licenses, beginning of year Spectrum license acquisitions Spectrum licenses transferred to held for sale Costs to clear spectrum Spectrum licenses, end of year 2019 2018 35,559 $ 35,366 857 — 49 138 (1) 56 36,465 $ 35,559 $ $ The following is a summary of significant spectrum transactions for the year ended December 31, 2019: • In June 2019, the FCC announced that we were the winning bidder of 2,211 licenses in the 24 GHz and 28 GHz spectrum auctions for an aggregate price of $842 million. • • At the inception of the 28 GHz spectrum auction in October 2018, we deposited $20 million with the FCC. Upon conclusion of the 28 GHz spectrum auction in February 2019, we made an additional payment of $19 million for the purchase price of licenses won in the auction. At the inception of the 24 GHz spectrum auction in February 2019, we deposited $147 million with the FCC. Upon conclusion of the 24 GHz spectrum auction in June 2019, we made an additional payment of $656 million for the purchase price of licenses won in the auction. The licenses are included in Spectrum licenses as of December 31, 2019, in our Consolidated Balance Sheets. Cash payments to acquire spectrum licenses and payments for costs to clear spectrum are included in Purchases of spectrum licenses and other intangible assets, including deposits in our Consolidated Statements of Cash Flows for the year ended December 31, 2019. The following is a summary of significant spectrum transactions for the year ended December 31, 2018: • We recorded spectrum licenses received as part of our acquisition of the remaining equity interest in Iowa Wireless Services, LLC, at their estimated fair value of approximately $87 million. 81 • We closed on multiple spectrum purchase agreements in which we acquired total spectrum licenses of approximately $50 million for cash consideration. • In 2018, we signed a reciprocal long-term lease arrangement with Sprint in which both parties have the right to use a portion of spectrum owned by the other party. This executory agreement does not qualify as an acquisition of spectrum licenses, and we have not capitalized amounts related to the lease. The reciprocal long-term lease is a distinct transaction from the Merger. Goodwill and Other Intangible Assets Impairment Assessments Our impairment assessment of goodwill and other indefinite-lived intangible assets (spectrum licenses) resulted in no impairment as of December 31, 2019 and 2018. Other Intangible Assets The components of Other intangible assets were as follows: (in millions) Customer lists Useful Lives Up to 6 years Trademarks and patents Up to 19 years Other Up to 28 years Other intangible assets $ $ December 31, 2019 December 31, 2018 Gross Amount Accumulated Amortization Net Amount Gross Amount Accumulated Amortization Net Amount 1,104 $ (1,104) $ — $ 1,104 $ (1,086) $ 323 100 (258) (50) 65 50 312 149 (225) (56) 1,527 $ (1,412) $ 115 $ 1,565 $ (1,367) $ 18 87 93 198 Amortization expense for intangible assets subject to amortization was $82 million, $124 million and $163 million for the years ended December 31, 2019, 2018 and 2017, respectively. The estimated aggregate future amortization expense for intangible assets subject to amortization are summarized below: (in millions) Year Ending December 31, 2020 2021 2022 2023 2024 Thereafter Total Note 7 – Fair Value Measurements Estimated Future Amortization $ $ 83 14 3 3 3 9 115 The carrying values of Cash and cash equivalents, Accounts receivable, Accounts receivable from affiliates, Accounts payable and accrued liabilities, borrowings under vendor financing arrangements with our primary network equipment suppliers, and borrowings under our revolving credit facility with DT, our majority stockholder, approximate fair value due to the short-term maturities of these instruments. Derivative Financial Instruments Interest rate lock derivatives Periodically, we use derivatives to manage exposure to market risk, such as interest rate risk. We designated certain derivatives as hedging instruments in a qualifying hedge accounting relationship (cash flow hedge) to help minimize significant, unplanned fluctuations in cash flows caused by interest rate volatility. We do not use derivatives for trading or speculative purposes. We record interest rate lock derivatives on our Consolidated Balance Sheets at fair value that is derived primarily from observable market data, including yield curves. Interest rate lock derivatives were classified as Level 2 in the fair value 82 hierarchy. Cash flows associated with qualifying hedge derivative instruments are presented in the same category on the Consolidated Statements of Cash Flows as the item being hedged. In October 2018, we entered into interest rate lock derivatives with notional amounts of $9.6 billion. The fair value of interest rate lock derivatives was a liability of $1.2 billion and $447 million as of December 31, 2019 and 2018, respectively, and was included in Other current liabilities in our Consolidated Balance Sheets. As of the years ended December 31, 2019 and 2018, no amounts were accrued or amortized into Interest expense in the Consolidated Statements of Comprehensive Income. Aggregate changes in fair value, net of tax, of $868 million and $332 million are presented in Accumulated other comprehensive loss as of December 31, 2019, and 2018, respectively. In November 2019, we extended the mandatory termination date on our interest rate lock derivatives to June 3, 2020. In December 2019, we made net collateral transfers to certain of our derivative counterparties totaling $632 million, which included variation margin transfers to (or from) such derivative counterparties based on daily market movements. These collateral transfers are included in Other current assets in our Consolidated Balance Sheets and in Net cash related to derivative contracts under collateral exchange arrangements within Net cash used in investing activities in our Consolidated Statements of Cash Flows. The interest rate lock derivatives will be settled upon the earlier of the issuance of fixed-rate debt or the mandatory termination date. Upon settlement of the interest rate lock derivatives, we will receive, or make, a cash payment in the amount of the fair value of the cash flow hedge as of the settlement date. Embedded derivatives In connection with our business combination with MetroPCS, we issued senior reset notes to DT. We determined certain components of the reset feature are required to be bifurcated from the senior reset notes and separately accounted for as embedded derivative instruments. The interest rates on our senior reset notes to DT were adjusted at the reset dates to rates defined in the applicable supplemental indentures to manage interest rate risk related to the senior reset notes. Our embedded derivatives are recorded at fair value primarily based on unobservable inputs and were classified as Level 3 in the fair value hierarchy for 2019 and 2018. Effective April 28, 2019, we redeemed $600 million aggregate principal amount of our 9.332% Senior Reset Notes due 2023 held by DT. The notes were redeemed at a redemption price equal to 104.666% of the principal amount of the notes (plus accrued and unpaid interest thereon) and were paid on April 29, 2019. The write-off of embedded derivatives upon redemption of the DT Senior Reset Notes resulted in a gain of $11 million and is included in Other expense, net in our Consolidated Statements of Comprehensive Income. The fair value of embedded derivative instruments was $19 million as of December 31, 2018, and is included in Other long-term liabilities in our Consolidated Balance Sheets. For the years ended December 31, 2019, 2018, and 2017, we recognized $8 million, $29 million and $52 million from the gain activity related to embedded derivatives instruments in Interest expense to affiliates in our Consolidated Statements of Comprehensive Income. Deferred Purchase Price Assets In connection with the sales of certain service and EIP accounts receivable pursuant to the sale arrangements, we have deferred purchase price assets measured at fair value that are based on a discounted cash flow model using unobservable Level 3 inputs, including customer default rates. See Note 4 – Sales of Certain Receivables for further information. The carrying amounts and fair values of our assets measured at fair value on a recurring basis included in our Consolidated Balance Sheets were as follows: (in millions) Assets: Level within the Fair Value Hierarchy December 31, 2019 December 31, 2018 Carrying Amount Fair Value Carrying Amount Fair Value Deferred purchase price assets 3 $ 781 $ 781 $ 746 $ 746 Long-term Debt The fair value of our Senior Notes to third parties was determined based on quoted market prices in active markets, and therefore was classified as Level 1 within the fair value hierarchy. The fair values of our Senior Notes to affiliates, Incremental Term Loan Facility to affiliates and Senior Reset Notes to affiliates were determined based on a discounted cash flow approach using market interest rates of instruments with similar terms and maturities and an estimate for our standalone credit risk. 83 Accordingly, our Senior Notes to affiliates, Incremental Term Loan Facility to affiliates and Senior Reset Notes to affiliates were classified as Level 2 within the fair value hierarchy. Although we have determined the estimated fair values using available market information and commonly accepted valuation methodologies, considerable judgment was required in interpreting market data to develop fair value estimates for the Senior Notes to affiliates, Incremental Term Loan Facility to affiliates and Senior Reset Notes to affiliates. The fair value estimates were based on information available as of December 31, 2019, and 2018. As such, our estimates are not necessarily indicative of the amount we could realize in a current market exchange. The carrying amounts and fair values of our short-term and long-term debt included in our Consolidated Balance Sheets were as follows: (in millions) Liabilities: Senior Notes to third parties Senior Notes to affiliates Incremental Term Loan Facility to affiliates Senior Reset Notes to affiliates Guarantee Liabilities Level within the Fair Value Hierarchy December 31, 2019 December 31, 2018 Carrying Amount Fair Value Carrying Amount Fair Value 1 2 2 2 $ 10,958 $ 11,479 $ 10,950 $ 9,986 4,000 — 10,366 4,000 — 9,984 4,000 598 10,945 9,802 3,976 640 We offer a device trade-in program, JUMP!, which provides eligible customers a specified-price trade-in right to upgrade their device. For customers who enroll in JUMP!, we recognize a liability and reduce revenue for the portion of revenue which represents the estimated fair value of the specified-price trade-in right guarantee, incorporating the expected probability and timing of handset upgrade and the estimated fair value of the handset which is returned. Accordingly, our guarantee liabilities were classified as Level 3 within the fair value hierarchy. When customers upgrade their device, the difference between the EIP balance credit to the customer and the fair value of the returned device is recorded against the guarantee liabilities. Guarantee liabilities are included in Other current liabilities in our Consolidated Balance Sheets. The carrying amounts of our guarantee liabilities measured at fair value on a non-recurring basis included in our Consolidated Balance Sheets were $62 million and $73 million as of December 31, 2019, and 2018, respectively. The total estimated remaining gross EIP receivable balances of all enrolled handset upgrade program customers, which are the remaining EIP amounts underlying the JUMP! guarantee, including EIP receivables that have been sold, was $3.0 billion as of December 31, 2019. This is not an indication of our expected loss exposure as it does not consider the expected fair value of the used handset or the probability and timing of the trade-in. 84 Note 8 – Debt Debt was as follows: (in millions) 5.300% Senior Notes to affiliates due 2021 4.000% Senior Notes to affiliates due 2022 4.000% Senior Notes due 2022 Incremental term loan facility to affiliates due 2022 6.000% Senior Notes due 2023 9.332% Senior Reset Notes to affiliates due 2023 6.000% Senior Notes due 2024 6.500% Senior Notes due 2024 6.000% Senior Notes to affiliates due 2024 6.000% Senior Notes to affiliates due 2024 Incremental term loan facility to affiliates due 2024 5.125% Senior Notes to affiliates due 2025 5.125% Senior Notes due 2025 6.375% Senior Notes due 2025 6.500% Senior Notes due 2026 4.500% Senior Notes due 2026 4.500% Senior Notes to affiliates due 2026 5.375% Senior Notes due 2027 5.375% Senior Notes to affiliates due 2027 4.750% Senior Notes due 2028 4.750% Senior Notes to affiliates due 2028 Capital leases (1) Unamortized premium on debt to affiliates Unamortized discount on Senior Notes to affiliates Financing arrangements for property and equipment Debt issuance costs and consent fees Total debt Less: Current portion of capital leases Less: Financing arrangements for property and equipment Total long-term debt Classified on the balance sheet as: Long-term debt Long-term debt to affiliates Total long-term debt December 31, 2019 December 31, 2018 $ 2,000 1,000 500 2,000 1,300 — 1,000 1,000 1,350 650 2,000 1,250 500 1,700 2,000 1,000 1,000 500 1,250 1,500 1,500 — 43 (53) 25 (46) 24,969 — 25 24,944 10,958 13,986 24,944 $ $ $ 2,000 1,000 500 2,000 1,300 600 1,000 1,000 1,350 650 2,000 1,250 500 1,700 2,000 1,000 1,000 500 1,250 1,500 1,500 2,015 52 (64) — (56) 27,547 841 — 26,706 12,124 14,582 26,706 $ $ $ $ (1) Capital lease liabilities previously included in Short-term debt and Long-term debt were reclassified to Financing lease liabilities in our Consolidated Balance Sheet. See Note 1 – Summary of Significant Accounting Policies for additional details. 85 Debt to Affiliates During the year ended December 31, 2019, we made the following note redemption: (in millions) Principal Amount 9.332% Senior Notes due 2023 $ 600 $ Write -off of Embedded Derivatives (1) 11 Other (2) Redemption Date Redemption Price $ 28 April 28, 2019 104.6660 % (1) Certain components of the reset features were required to be bifurcated from the DT Senior Reset Notes and separately accounted for as embedded derivative instruments. The write-off of embedded derivatives upon redemption resulted in a gain and is included in Other expense, net in our Consolidated Statements of Comprehensive Income and in Losses on redemption of debt within Net cash provided by operating activities in our Consolidated Statements of Cash Flows. (2) Cash for the premium portion of the redemption price set forth in the indenture governing the DT Senior Reset Notes, plus accrued but unpaid interest on the DT Senior Reset Notes. The redemption premium was included in Other expense, net in our Consolidated Statements of Comprehensive Income and in Cash payments for debt prepayment or debt extinguishment costs in our Consolidated Statements of Cash Flows. Incremental Term Loan Facility In March 2018, we amended the terms of our secured term loan facility (“Incremental Term Loan Facility”) with DT, our majority stockholder. Following this amendment, the applicable margin payable on LIBOR indexed loans is 1.50% under the $2.0 billion Incremental Term Loan Facility maturing on November 9, 2022 and 1.75% under the $2.0 billion Incremental Term Loan Facility maturing on January 31, 2024. The amendment also modified the Incremental Term Loan Facility to update certain covenants and other provisions to make them substantially consistent, subject to certain additional carve outs, with our most recently issued public notes. No issuance fees were incurred related to this debt facility for the years ended December 31, 2019 and 2018. Commitment Letter In connection with the entry into the Business Combination Agreement, T-Mobile USA entered into a commitment letter, dated as of April 29, 2018 (as amended and restated on May 15, 2018 and on September 6, 2019, the “Commitment Letter”), with certain financial institutions named therein that have committed to provide up to $30.0 billion in secured and unsecured debt financing, including a $4.0 billion secured revolving credit facility, a $7.0 billion secured term loan facility, and a $19.0 billion secured bridge loan facility. On September 6, 2019, T-Mobile USA amended and restated the Commitment Letter which (i) reduced the commitments under the secured term loan facility from $7.0 billion to $4.0 billion and (ii) extended the commitments thereunder through May 1, 2020. The funding of the debt facilities provided for in the Commitment Letter is subject to the satisfaction of the conditions set forth therein, including consummation of the Merger. The proceeds of the debt financing provided for in the Commitment Letter will be used to refinance certain existing debt of us, Sprint and our and Sprint’s respective subsidiaries and for post-closing working capital needs of the combined company. In connection with the financing provided for in the Commitment Letter, we expect to incur certain fees payable to the financial institutions, including certain financing fees on the secured term loan commitment. If the Merger closes, we will incur additional fees for the financial institutions structuring and providing the commitments and certain take-out fees associated with the issuance of permanent secured bond debt in lieu of the secured bridge loan. In total, we may incur up to approximately $340 million in fees associated with the Commitment Letter. We began incurring certain Commitment Letter fees on November 1, 2019, which were recognized in Selling, general and administrative expenses in our Consolidated Statements of Comprehensive Income. There were $12 million of fees accrued as of December 31, 2019. Financing Matters Agreement Pursuant to the Financing Matters Agreement, DT agreed, among other things, to consent to the incurrence by T-Mobile USA of secured debt in connection with and after the consummation of the Merger, and to provide a lock up on sales thereby as to certain senior notes of T-Mobile USA held thereby. In addition, T-Mobile USA agreed, among other things, to repay and terminate, upon closing of the Merger, the Incremental Term Loan Facility and the revolving credit facility of T-Mobile USA which are provided by DT, as well as $2.0 billion of T-Mobile USA’s 5.300% Senior Notes due 2021 and $2.0 billion of T- Mobile USA’s 6.000% Senior Notes due 2024. In addition, T-Mobile USA and DT agreed, upon closing of the Merger, to amend the $1.25 billion of T-Mobile USA’s 5.125% Senior Notes due 2025 and $1.25 billion of T-Mobile USA’s 5.375% Senior Notes due 2027 to change the maturity dates thereof to April 15, 2021 and April 15, 2022, respectively (the “2025 and 2027 Amendments”). In connection with receiving the requisite consents, we made upfront payments to DT of $7 million during the second quarter of 2018. These payments were recognized as a reduction to Long-term debt to affiliates in our Consolidated Balance Sheets. In accordance with the consents received from DT, on December 20, 2018, T-Mobile USA, the guarantors and Deutsche Bank Trust Company Americas, as trustee, executed and delivered the 38th supplemental indenture to 86 the Indenture, pursuant to which, with respect to certain T-Mobile USA Senior Notes held by DT, the Proposed Amendments (as defined below under “Consents on Debt to Third Parties”) and the 2025 and 2027 Amendments will become effective immediately prior to the consummation of the Merger. If the Merger is consummated, we will make additional payments for requisite consents to DT of $13 million. There were no additional payments accrued as of December 31, 2019 and 2018. Consents on Debt to Third Parties On May 18, 2018, under the terms and conditions described in the Consent Solicitation Statement, we obtained consents necessary to effect certain amendments to our Senior Notes to third parties in connection with the Business Combination Agreement. Pursuant to the Consent Solicitation Statement, third-party note holders agreed, among other things, to consent to increasing the amount of Secured Indebtedness under Credit Facilities that can be incurred from the greater of $9.0 billion and 150% of Consolidated Cash Flow to the greater of $9.0 billion and an amount that would not cause the Secured Debt to Cash Flow Ratio (calculated net of cash and cash equivalents) to exceed 2.00x (the “Ratio Secured Debt Proposed Amendments”) and in each case as such capitalized term is defined in the Indenture. In connection with receiving the requisite consents for the Ratio Secured Debt Proposed Amendments, we made upfront payments to third-party note holders of $17 million during the second quarter of 2018. These payments were recognized as a reduction to Long-term debt in our Consolidated Balance Sheets. These upfront payments increased the effective interest rate of the related debt. In addition, note holders agreed, among other things, to allow certain entities related to Sprint’s existing spectrum securitization notes program (“Existing Sprint Spectrum Program”) to be non-guarantor Restricted Subsidiaries, provided that the principal amount of the spectrum notes issued and outstanding under the Existing Sprint Spectrum Program does not exceed $7.0 billion and that the principal amount of such spectrum notes reduces the amount available under the Credit Facilities ratio basket, and to revise the definition of GAAP to mean generally accepted accounting principles in effect from time to time, unless the Company elects to “freeze” GAAP as of any date, and to exclude the effect of the changes in the accounting treatment of lease obligations (the “Existing Sprint Spectrum and GAAP Proposed Amendments,” and together with the Ratio Secured Debt Proposed Amendments, the “Proposed Amendments”). In connection with receiving the requisite consents for the Existing Sprint Spectrum and GAAP Proposed Amendments, we made upfront payments to third-party note holders of $14 million during the second quarter of 2018. These payments were recognized as a reduction to Long-term debt in our Consolidated Balance Sheets. These upfront payments increased the effective interest rate of the related debt. In connection with obtaining the requisite consents, on May 20, 2018, T-Mobile USA, the guarantors and Deutsche Bank Trust Company Americas, as trustee, executed and delivered the 37th supplemental indenture to the Indenture, pursuant to which, with respect to each of the Notes, the Proposed Amendments will become effective immediately prior to the consummation of the Merger. We paid third-party bank fees associated with obtaining the requisite consents related to the Proposed Amendments of $6 million during the second quarter of 2018, which we recognized as Selling, general and administrative expenses in our Consolidated Statements of Comprehensive Income. If the Merger is consummated, we will make additional payments to third- party note holders for requisite consents related to the Ratio Secured Debt Proposed Amendments of up to $54 million and additional payments to third-party note holders for requisite consents related to the Existing Sprint Spectrum and GAAP Proposed Amendments of up to $41 million. There were no payments accrued as of December 31, 2019. Financing Arrangements We maintain a financing arrangement with Deutsche Bank AG, which allows for up to $108 million in borrowings. Under the financing arrangement, we can effectively extend payment terms for invoices payable to certain vendors. The interest rate on the financing arrangement is determined based on LIBOR plus a specified margin per the arrangement. Obligations under the financing arrangement are included in Short-term debt in our Consolidated Balance Sheets. As of December 31, 2019 and 2018, there were no outstanding balances. We maintain vendor financing arrangements with our primary network equipment suppliers. Under the respective agreements, we can obtain extended financing terms. During the year ended December 31, 2019, we utilized $800 million and repaid $775 million under the vendor financing arrangements. Invoices subject to extended payment terms have various due dates through the first quarter of 2020. Payments on vendor financing agreements are included in Repayments of short-term debt for purchases of inventory, property and equipment, net, in our Consolidated Statements of Cash Flows. As of December 31, 2019, there was $25 million in outstanding borrowings under the vendor financing agreements which were included in Short-term debt in our Consolidated Balance Sheets. As of December 31, 2018, there was no outstanding balance. 87 Revolving Credit Facility We maintain a $2.5 billion revolving credit facility with DT which is comprised of a $1.0 billion unsecured revolving credit agreement and a $1.5 billion secured revolving credit agreement. In December 2019, we amended the terms of the revolving credit facility with DT to extend the maturity date to December 29, 2022. The proceeds and borrowings from the revolving credit facility are presented in Proceeds from borrowing on revolving credit facility and Repayments of revolving credit facility within Net cash used in financing activities in our Consolidated Statements of Cash Flows. As of December 31, 2019 and 2018, there were no outstanding borrowings under the revolving credit facility. Standby Letters of Credit For the purposes of securing our obligations to provide handset insurance services, we maintain an agreement for standby letters of credit with JP Morgan Chase Bank, N.A. (“JP Morgan Chase”). For purposes of securing our general purpose obligations, we maintain a letter of credit reimbursement agreement with Deutsche Bank. The following table summarizes the outstanding standby letters of credit under each agreement: (in millions) JP Morgan Chase Deutsche Bank Total outstanding balance Note 9 – Tower Obligations December 31, 2019 December 31, 2018 $ $ 20 93 113 $ $ 20 66 86 In 2012, we conveyed to CCI the exclusive right to manage and operate approximately 7,100 T-Mobile-owned wireless communications tower sites in exchange for net proceeds of $2.5 billion (the “2012 Tower Transaction”). Rights to approximately 6,200 of the tower sites were transferred to CCI via a master prepaid lease with site lease terms ranging from 23 to 37 years (“CCI Lease Sites”), while the remaining tower sites were sold to CCI (“CCI Sales Sites”). CCI has fixed-price purchase options for the CCI Lease Sites totaling approximately $2.0 billion, exercisable at the end of the lease term. We lease back space at certain tower sites for an initial term of ten years, followed by optional renewals at customary terms. In 2015, we conveyed to PTI the exclusive right to manage and operate certain T-Mobile-owned wireless communications tower sites (“PTI Sales Sites”) in exchange for net proceeds of approximately $140 million (the “2015 Tower Transaction”). Rights to approximately 150 of the tower sites remain operated by PTI under a management agreement. We lease back space at certain tower sites for an initial term of ten years, followed by optional renewals at customary terms. Assets and liabilities associated with the operation of the tower sites were transferred to special purpose entities (“SPEs”). Assets included ground lease agreements or deeds for the land on which the towers are situated, the towers themselves and existing subleasing agreements with other mobile network operator tenants, who lease space at the tower sites. Liabilities included the obligation to pay ground lease rentals, property taxes and other executory costs. Upon closing of the 2012 Tower Transaction, CCI acquired all of the equity interests in the SPE containing CCI Sales Sites and an option to acquire the CCI Lease Sites at the end of their respective lease terms and entered into a master lease agreement under which we agreed to lease back space at certain of the tower sites. Upon closing of the 2015 Tower Transaction, PTI acquired all of the equity interests in the SPEs containing PTI Sales Sites and entered into a master lease agreement under which we agreed to lease back space at certain of the tower sites. We determined the SPEs containing the CCI Lease Sites (“Lease Site SPEs”) are VIEs as our equity investment lacks the power to direct the activities that most significantly impact the economic performance of the VIEs. These activities include managing tenants and underlying ground leases, performing repair and maintenance on the towers, the obligation to absorb expected losses and the right to receive the expected future residual returns from the purchase option to acquire the CCI Lease Sites. As we determined that we are not the primary beneficiary and do not have a controlling financial interest in the Lease Site SPEs, the balances and operating results of the Lease Site SPEs are not included in our Consolidated Financial Statements. Due to our continuing involvement with the tower sites, we previously determined that we were precluded from applying sale- leaseback accounting. We recorded long-term financial obligations in the amount of the net proceeds received and recognized interest on the tower obligations at a rate of approximately 8% for the 2012 Tower Transaction and 5% for the 2015 Tower Transaction using the effective interest method. The tower obligations are increased by interest expense and amortized through 88 contractual leaseback payments made by us to CCI or PTI and through net cash flows generated and retained by CCI or PTI from operation of the tower sites. The principal payments on the tower obligations are included in Other, net within Net cash used in financing activities in our Consolidated Statements of Cash Flows. Our historical tower site asset costs are reported in Property and equipment, net in our Consolidated Balance Sheets and are depreciated. Upon adoption of the new leasing standard we were required to reassess the previously failed sale-leasebacks and determine whether the transfer of the assets to the tower operator under the arrangement met the transfer of control criteria in the revenue standard and whether a sale should be recognized. We concluded that a sale has not occurred for the CCI Lease Sites and these sites continue to be accounted for as a failed sale-leaseback. We concluded that a sale had occurred for the CCI Sales Sites and the PTI Sales Sites and therefore we derecognized our existing long-term financial obligation and the tower-related property and equipment associated with these sites as part of the cumulative effect adjustment on January 1, 2019. See Note 1 - Summary of Significant Accounting Policies for further information. The following table summarizes the balances of the failed sale-leasebacks in the Consolidated Balance Sheets: (in millions) Property and equipment, net Tower obligations December 31, 2019 December 31, 2018 $ 198 $ 2,236 329 2,557 Future minimum payments related to the tower obligations are approximately $160 million for the year ending December 31, 2020, $321 million in total for the years ending December 31, 2021 and 2022, $320 million in total for years ending December 31, 2023 and 2024, and $467 million in total for years thereafter. We are contingently liable for future ground lease payments through the remaining term of the CCI Lease Sites. These contingent obligations are not included in Operating lease liabilities as any amount due is contractually owed by CCI based on the subleasing arrangement. Note 10 – Revenue from Contracts with Customers Disaggregation of Revenue We provide wireless communications services to three primary categories of customers: • • Branded postpaid customers generally include customers who are qualified to pay after receiving wireless communications services utilizing phones, wearables, DIGITS, or other connected devices which includes tablets and SyncUP DRIVE™; Branded prepaid customers generally include customers who pay for wireless communications services in advance. Our branded prepaid customers include customers of T-Mobile and Metro by T-Mobile; and • Wholesale customers include Machine-to-Machine (“M2M”) and Mobile Virtual Network Operator (“MVNO”) customers that operate on our network but are managed by wholesale partners. Branded postpaid service revenues, including branded postpaid phone revenues and branded postpaid other revenues, were as follows: (in millions) Branded postpaid service revenues Branded postpaid phone revenues Branded postpaid other revenues Total branded postpaid service revenues Year Ended December 31, 2019 2018 2017 $ $ 21,329 1,344 22,673 $ $ 19,745 1,117 20,862 $ $ 18,371 1,077 19,448 We operate as a single operating segment. The balances presented within each revenue line item in our Consolidated Statements of Comprehensive Income represent categories of revenue from contracts with customers disaggregated by type of product and service. Service revenues also include revenues earned for providing value added services to customers, such as handset insurance services. Revenue generated from the lease of mobile communication devices is included within Equipment revenues in our Consolidated Statements of Comprehensive Income. 89 Equipment revenues from the lease of mobile communication devices were as follows: (in millions) Year Ended December 31, 2019 2018 2017 Equipment revenues from the lease of mobile communication devices $ 599 $ 692 $ 877 Contract Balances The opening and closing balances of our contract asset and contract liability balances from contracts with customers as of December 31, 2018 and December 31, 2019, were as follows: (in millions) Balance as of December 31, 2018 Balance as of December 31, 2019 Change Contract Assets Contract Liabilities $ $ 51 63 12 $ $ 645 560 (85) Contract assets primarily represent revenue recognized for equipment sales with promotional bill credits offered to customers that are paid over time and are contingent on the customer maintaining a service contract. The change in the contract asset balance includes customer activity related to new promotions, offset by billings on existing contracts and impairment which is recognized as bad debt expense. The current portion of our Contract Assets of approximately $50 million and $51 million as of December 31, 2019 and 2018, respectively, was included in Other current assets in our Consolidated Balance Sheets. Contract liabilities are recorded when fees are collected, or we have an unconditional right to consideration (a receivable) in advance of delivery of goods or services. The change in contract liabilities is primarily related to the migration of customers to unlimited rate plans. Contract liabilities are included in Deferred revenue in our Consolidated Balance Sheets. Revenues for the years ended December 31, 2019 and 2018, include the following: (in millions) Year Ended December 31, 2019 2018 Amounts included in the beginning of year contract liability balance $ 643 $ 710 Remaining Performance Obligations As of December 31, 2019, the aggregate amount of transaction price allocated to remaining service performance obligations for branded postpaid contracts with promotional bill credits that result in an extended service contract is $237 million. We expect to recognize this revenue as service is provided over the extended contract term in the next 24 months. Certain of our wholesale, roaming and other service contracts include variable consideration based on usage. This variable consideration has been excluded from the disclosure of remaining performance obligations. As of December 31, 2019, the aggregate amount of the contractual minimum consideration for wholesale, roaming and other service contracts is $1.3 billion, $894 million and $791 million for 2020, 2021 and 2022 and beyond, respectively. These contracts have a remaining duration ranging from less than one year to ten years. Information about remaining performance obligations that are part of a contract that has an original expected duration of one year or less have been excluded from the above, which primarily consists of monthly service contracts. Contract Costs The total balance of deferred incremental costs to obtain contracts was $906 million and $644 million as of December 31, 2019 and 2018, respectively. Deferred contract costs incurred to obtain postpaid service contracts are amortized over a period of 24 months. The amortization period is monitored to reflect any significant change in assumptions. Amortization of deferred contract costs is included in Selling, general and administrative expenses in our Consolidated Statements of Comprehensive Income and was $604 million and $267 million for the years ended December 31, 2019 and 2018, respectively. The deferred contract cost asset is assessed for impairment on a periodic basis. There were no impairment losses recognized on deferred contract cost assets for the years ended December 31, 2019 and 2018. 90 Note 11 – Employee Compensation and Benefit Plans Under our 2013 Omnibus Incentive Plan (the "Incentive Plan"), we are authorized to issue up to 82 million shares of our common stock. Under the Incentive Plan, we can grant stock options, stock appreciation rights, restricted stock, restricted stock units ("RSUs"), and performance awards to eligible employees, consultants, advisors and non-employee directors. As of December 31, 2019, there were approximately 19 million shares of common stock available for future grants under the Incentive Plan. We grant RSUs to eligible employees, key executives and certain non-employee directors and performance-based restricted stock units (“PRSUs”) to eligible key executives. RSUs entitle the grantee to receive shares of our common stock upon vesting (with vesting generally occurring annually over a three year period), subject to continued service through the applicable vesting date. PRSUs entitle the holder to receive shares of our common stock at the end of a performance period of generally up to three years if the applicable performance goals are achieved and generally subject to continued service through the applicable performance period. The number of shares ultimately received by the holder of PRSUs is dependent on our business performance against the specified performance goal(s) over a pre-established performance period. We also maintain an employee stock purchase plan (“ESPP”), under which eligible employees can purchase our common stock at a discounted price. Stock-based compensation expense and related income tax benefits were as follows: (in millions, except shares, per share and contractual life amounts) Stock-based compensation expense Income tax benefit related to stock-based compensation Weighted average fair value per stock award granted Unrecognized compensation expense Weighted average period to be recognized (years) Fair value of stock awards vested Stock Awards Time-Based Restricted Stock Units and Restricted Stock Awards December 31, 2019 December 31, 2018 December 31, 2017 $ $ $ $ $ 495 92 73.25 515 1.6 512 $ $ $ $ $ 424 81 61.52 547 1.8 471 $ $ $ $ $ 306 73 60.21 445 1.9 503 (in millions, except shares, per share and contractual life amounts) Nonvested, December 31, 2018 Granted Vested Forfeited Nonvested, December 31, 2019 Number of Units or Awards Weighted Average Grant Date Fair Value 11,010,635 $ 6,099,719 (5,862,128) (745,015) 10,503,211 57.66 73.13 55.52 65.87 67.31 Performance-Based Restricted Stock Units and Restricted Stock Awards (in millions, except shares, per share and contractual life amounts) Nonvested, December 31, 2018 Granted Vested Forfeited Nonvested, December 31, 2019 Number of Units or Awards Weighted Average Grant Date Fair Value 3,851,554 $ 1,046,792 (1,006,404) (88,403) 3,803,539 64.03 73.98 52.47 62.02 69.78 Weighted Average Remaining Contractual Term (Years) Aggregate Intrinsic Value 1.0 $ 700 0.9 824 Weighted Average Remaining Contractual Term (Years) Aggregate Intrinsic Value 1.6 $ 245 1.0 300 PRSUs included in the table above are shown at target. Share payout can range from 0% to 200% based on different performance outcomes. Payment of the underlying shares in connection with the vesting of stock awards generally triggers a tax obligation for the employee, which is required to be remitted to the relevant tax authorities. We have agreed to withhold shares of common stock otherwise issuable under the award to cover certain of these tax obligations, with the net shares issued to the employee accounted for as outstanding common stock. We withheld 2,094,555 and 2,321,827 shares of common stock to cover tax 91 obligations associated with the payment of shares upon vesting of stock awards and remitted cash of $156 million and $146 million to the appropriate tax authorities for the years ended December 31, 2019 and 2018, respectively. Employee Stock Purchase Plan Our ESPP allows eligible employees to contribute up to 15% of their eligible earnings toward the semi-annual purchase of our shares of common stock at a discounted price, subject to an annual maximum dollar amount. Employees can purchase stock at a 15% discount applied to the closing stock price on the first or last day of the six-month offering period, whichever price is lower. The number of shares issued under our ESPP was 2,091,650 and 2,011,794 for the years ended December 31, 2019 and 2018, respectively. As of December 31, 2019, the number of securities remaining available for future sale and issuance under the ESPP was 1,397,894. Our ESPP provides for an annual increase in the aggregate number of shares of our common stock reserved for sale and authorized for issuance thereunder as of the first day of each fiscal year (beginning with fiscal year 2016) equal to the lesser of (i) 5,000,000 shares of our common stock, and (ii) the number of shares of Common Stock determined by the Compensation Committee of the Board of Directors of the Company (the “Compensation Committee”). For fiscal years 2016 through 2019, the Compensation Committee determined that no such increase in shares of our common stock was necessary. However, an additional 5,000,000 shares of our common stock were automatically added to the ESPP share reserve as of January 1, 2020. Stock Options Stock options outstanding relate to the Metro Communications, Inc. 2010 Equity Incentive Compensation Plan, the Amended and Restated Metro Communications, Inc. 2004 Equity Incentive Compensation Plan, and the Layer3 TV, Inc. 2013 Stock Plan (collectively, the “Stock Option Plans”). No new awards have been or may be granted under the Stock Option Plans. The following activity occurred under the Stock Option Plans: Outstanding at December 31, 2018 Exercised Expired/canceled Outstanding at December 31, 2019 Exercisable at December 31, 2019 Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Term (Years) 284,811 $ (85,083) (4,786) 194,942 180,966 14.58 15.94 22.75 13.80 13.48 3.8 2.9 2.6 Stock options exercised under the Stock Option Plans generated proceeds of approximately $1 million and $3 million for the years ended December 31, 2019 and 2018, respectively. Employee Retirement Savings Plan We sponsor a retirement savings plan for the majority of our employees under Section 401(k) of the Internal Revenue Code and similar plans. The plans allow employees to contribute a portion of their pretax and post-tax income in accordance with specified guidelines. The plans provide that we match a percentage of employee contributions up to certain limits. Employer matching contributions were $119 million, $102 million and $87 million for the years ended December 31, 2019, 2018 and 2017, respectively. Note 12 – Repurchases of Common Stock 2017 Stock Repurchase Program On December 6, 2017, our Board of Directors authorized a stock repurchase program for up to $1.5 billion of our common stock through December 31, 2018 (the “2017 Stock Repurchase Program”). Repurchased shares are retired. The 2017 Stock Repurchase Program completed on April 29, 2018. 92 The following table summarizes information regarding repurchases of our common stock under the 2017 Stock Repurchase Program: (In millions, except shares and per share price) Year ended December 31, 2018 2017 2018 Stock Repurchase Program Number of Shares Repurchased Average Price Paid Per Share Total Purchase Price 16,738,758 $ 7,010,889 23,749,647 62.96 63.34 63.07 $ $ 1,054 444 1,498 On April 27, 2018, our Board of Directors authorized an increase in the total stock repurchase program to $9.0 billion, consisting of the $1.5 billion in repurchases previously completed and for up to an additional $7.5 billion of repurchases of our common stock through the year ending December 31, 2020 (the "2018 Stock Repurchase Program"). The additional $7.5 billion repurchase authorization is contingent upon the termination of the Business Combination Agreement and the abandonment of the transactions contemplated under the Business Combination Agreement. There were no repurchases of our common stock under the 2018 Stock Repurchase Program in 2019 or 2018. Under the 2018 Stock Repurchase Program, repurchases can be made from time to time using a variety of methods, which may include open market purchases, privately negotiated transactions or otherwise, all in accordance with the rules of the SEC and other applicable legal requirements. The specific timing, price and size of purchases will depend on prevailing stock prices, general economic and market conditions, and other considerations. The 2018 Stock Repurchase Program does not obligate us to acquire any particular amount of common stock, and the repurchase program may be suspended or discontinued at any time at our discretion. Repurchased shares are retired. Stock Purchases by Affiliate In the first quarter of 2018, DT, our majority stockholder and an affiliated purchaser, purchased 3.3 million additional shares of our common stock at an aggregate market value of $200 million in the public market or from other parties, in accordance with the rules of the SEC and other applicable legal requirements. There were no purchases in the remainder of 2018 and in 2019. We did not receive proceeds from these purchases. Note 13 – Income Taxes Our sources of Income before income taxes were as follows: (in millions) U.S. Puerto Rico Income before income taxes Year Ended December 31, 2019 2018 2017 $ $ 4,557 46 4,603 $ $ 3,686 231 3,917 $ $ 3,274 (113) 3,161 93 Income tax (expense) benefit is summarized as follows: (in millions) Current tax benefit (expense) Federal State Puerto Rico Total current tax expense Deferred tax benefit (expense) Federal State Puerto Rico Year Ended December 31, 2019 2018 2017 $ 24 $ 39 $ (70) 2 (44) (954) (125) (12) (63) (25) (49) (750) (160) (70) (980) (1,029) $ — (28) (1) (29) 1,182 173 49 1,404 1,375 Total deferred tax (expense) benefit Total income tax (expense) benefit (1,091) (1,135) $ $ The reconciliation between the U.S. federal statutory income tax rate and our effective income tax rate is as follows: Federal statutory income tax rate Effect of law and rate changes Change in valuation allowance State taxes, net of federal benefit Equity-based compensation Puerto Rico taxes, net of federal benefit Permanent differences Federal tax credits, net of reserves Other, net Effective income tax rate Year Ended December 31, 2019 2018 2017 21.0 % 21.0 % 35.0 % 0.4 (1.8) 5.1 (0.6) 0.3 1.2 (0.8) (0.1) 1.9 (1.6) 4.8 (0.6) 2.4 1.3 (2.9) — (68.9) (11.4) 4.8 (2.4) (1.5) 0.5 0.3 0.1 24.7 % 26.3 % (43.5)% Significant components of deferred income tax assets and liabilities, tax effected, are as follows: (in millions) Deferred tax assets Loss carryforwards Deferred rents Lease liability Reserves and accruals Federal and state tax credits Other Deferred tax assets, gross Valuation allowance Deferred tax assets, net Deferred tax liabilities Spectrum licenses Property and equipment Lease right-of-use assets Other intangible assets Other Total deferred tax liabilities Net deferred tax liabilities Classified on the balance sheet as: Deferred tax liabilities December 31, 2019 December 31, 2018 $ 823 $ 1,526 — 3,403 659 331 903 6,119 (129) 5,990 5,902 2,506 2,881 19 289 11,597 5,607 $ 784 — 668 340 620 3,938 (210) 3,728 5,494 2,434 — 40 232 8,200 4,472 5,607 $ 4,472 $ $ 94 As of December 31, 2019, we have tax effected net operating loss (“NOL”) carryforwards of $470 million for federal income tax purposes and $710 million for state income tax purposes, expiring through 2039. Federal NOLs and certain state NOLs generated in and after 2018 do not expire. As of December 31, 2019, our tax effected federal and state NOL carryforwards for financial reporting purposes were approximately $138 million and $282 million, respectively, less than our NOL carryforwards for federal and state income tax purposes, due to unrecognized tax benefits of the same amount. The unrecognized tax benefit amounts exclude indirect tax effects of $63 million in other jurisdictions. As of December 31, 2019, we have available Alternative Minimum Tax (“AMT”) credit carryforwards of $23 million. The AMT credits will be fully recovered by 2021. We also have research and development and foreign tax credit carryforwards with a combined value of $347 million for federal income tax purposes, which begin to expire in 2020. As of December 31, 2019, 2018 and 2017, our valuation allowance was $129 million, $210 million and $273 million, respectively. The change from December 31, 2018 to December 31, 2019 primarily related to a reduction in the valuation allowance against deferred tax assets in certain state jurisdictions resulting from legal entity reorganizations. The change from December 31, 2017 to December 31, 2018 primarily related to a reduction in the valuation allowance against deferred tax assets in certain state jurisdictions from a change in tax status of certain subsidiaries. We will continue to monitor positive and negative evidence related to the utilization of the remaining deferred tax assets for which a valuation allowance continues to be provided. It is possible that our valuation allowance may change within the next twelve months. We file income tax returns in the U.S. federal jurisdiction, various state jurisdictions and in Puerto Rico. We are currently under examination by various states. Management does not believe the resolution of any of the audits will result in a material change to our financial condition, results of operations or cash flows. The IRS has concluded its audits of our federal tax returns through the 2013 tax year; however, NOL and other carryforwards for certain audited periods remain open for examination. We are generally closed to U.S. federal, state and Puerto Rico examination for years prior to 2000. A reconciliation of the beginning and ending amount of unrecognized tax benefits were as follows: (in millions) Unrecognized tax benefits, beginning of year Gross (decreases) increases to tax positions in prior periods Gross increases due to current period business acquisitions Gross increases to current period tax positions Unrecognized tax benefits, end of year Year Ended December 31, 2019 2018 2017 462 $ 412 $ (7) — 59 6 10 34 514 $ 462 $ 410 (10) — 12 412 $ $ As of December 31, 2019 and 2018, we had $367 million and $315 million, respectively, in unrecognized tax benefits that, if recognized, would affect our annual effective tax rate. Penalties and interest on income tax assessments are included in Selling, general and administrative expenses and Interest expense, respectively, in our Consolidated Statements of Comprehensive Income. The accrued interest and penalties associated with unrecognized tax benefits are insignificant. 95 Note 14 – Earnings Per Share The computation of basic and diluted earnings per share was as follows: (in millions, except shares and per share amounts) Net income Less: Dividends on mandatory convertible preferred stock Net income attributable to common stockholders - basic Add: Dividends related to mandatory convertible preferred stock Net income attributable to common stockholders Weighted average shares outstanding - basic Effect of dilutive securities: Outstanding stock options and unvested stock awards Mandatory convertible preferred stock Weighted average shares outstanding - diluted Earnings per share - basic Earnings per share - diluted Potentially dilutive securities: Year Ended December 31, 2019 2018 2017 3,468 $ 2,888 $ — 3,468 — — 2,888 — 3,468 $ 2,888 $ 4,536 (55) 4,481 55 4,536 854,143,751 849,744,152 831,850,073 9,289,760 8,546,022 — — 9,200,873 30,736,504 863,433,511 858,290,174 871,787,450 4.06 4.02 $ $ 3.40 3.36 $ $ 5.39 5.20 $ $ $ $ Outstanding stock options and unvested stock awards 16,359 148,422 33,980 As of December 31, 2019, we had authorized 100 million shares of preferred stock, with a par value of $0.00001 per share. There was no preferred stock outstanding as of December 31, 2019 and 2018. Potentially dilutive securities were not included in the computation of diluted earnings per share if to do so would have been anti-dilutive. 96 Note 15 - Leases Leases (Topic 842) Disclosures Lessee We are lessee for non-cancelable operating and financing leases for cell sites, switch sites, retail stores and office facilities with contractual terms that generally extend through 2029. The majority of cell site leases have an initial non-cancelable term of five to ten years with several renewal options that can extend the lease term from five to thirty-five years. In addition, we have financing leases for network equipment that generally have a non-cancelable lease term of two to five years; the financing leases do not have renewal options and contain a bargain purchase option at the end of the lease. The components of lease expense were as follows: (in millions) Operating lease expense Financing lease expense: Amortization of right-of-use assets Interest on lease liabilities Total financing lease expense Variable lease expense Total lease expense Information relating to the lease term and discount rate is as follows: Weighted Average Remaining Lease Term (Years) Operating leases Financing leases Weighted Average Discount Rate Operating leases Financing leases Maturities of lease liabilities as of December 31, 2019, were as follows: (in millions) Twelve Months Ending December 31, 2020 2021 2022 2023 2024 Thereafter Total lease payments Less imputed interest Total Year Ended December 31, 2019 $ $ 2,558 523 82 605 243 3,406 December 31, 2019 6 3 4.8 % 4.0 % Operating Leases Finance Leases $ 2,754 $ 1,013 2,583 2,311 1,908 1,615 3,797 14,968 2,142 $ 12,826 $ 733 414 101 71 115 2,447 144 2,303 Interest payments for financing leases for the year ended December 31, 2019, were $82 million. As of December 31, 2019, we have additional operating leases for cell sites and commercial properties that have not yet commenced with future lease payments of approximately $341 million. As of December 31, 2019, we were contingently liable for future ground lease payments related to the tower obligations. These contingent obligations are not included in the above table as the amounts owed are contractually owed by CCI based on the subleasing arrangement. See Note 9 - Tower Obligations for further information. 97 Lessor JUMP! On Demand allows customers to lease a device (handset or tablet) over a period of 18 months and upgrade it for a new device up to one time per month. Upon device upgrade or at lease end, customers must return or purchase their device. The purchase price at the expiration of the lease is established at lease commencement and reflects the estimated residual value of the device, which reflects the estimated fair value of the underlying asset at the end of the lease term. The JUMP! On Demand leases do not contain any residual value guarantees or variable lease payments, and there are no restrictions or covenants imposed by these leases. Leased wireless devices are included in Property and equipment, net in our Consolidated Balance Sheets. The components of leased wireless devices under our JUMP! On Demand program were as follows: (in millions) Leased wireless devices, gross Accumulated depreciation Leased wireless devices, net December 31, 2019 December 31, 2018 $ $ 1,139 (407) 732 $ $ 1,159 (622) 537 For equipment revenues from the lease of mobile communication devices, see Note 10 - Revenue from Contracts with Customers. Future minimum payments expected to be received over the lease term related to the leased wireless devices, which exclude optional residual buy-out amounts at the end of the lease term, are summarized below: (in millions) Twelve Months Ending December 31, 2020 2021 Total Leases (Topic 840) Disclosures Total $ $ 417 99 516 On January 1, 2019, we adopted the new lease standard using a modified-retrospective approach by recognizing and measuring leases at the adoption date with a cumulative effect of initially applying the guidance recognized at the date of initial application and did not restate the prior periods presented in our Consolidated Financial Statements. As such, prior periods presented in our Consolidated Financial Statements continue to be in accordance with the former lease standard, Topic 840 Leases. See Note 1 - Summary of Significant Accounting Policies for further information. Operating Leases Under the previous lease standard, we had non-cancelable operating leases for cell sites, switch sites, retail stores and office facilities. As of December 31, 2018, these leases had contractual terms expiring through 2028, with the majority of cell site leases having an initial non-cancelable term of five to ten years with several renewal options. In addition, we had operating leases for dedicated transportation lines with varying expiration terms through 2027. Our commitments under leases existing as of December 31, 2018 were approximately $2.7 billion for the year ending December 31, 2019, $4.7 billion in total for the years ending December 31, 2020 and 2021, $3.3 billion in total for the years ending December 31, 2022 and 2023 and $3.8 billion in total for years thereafter. Total rent expense under operating leases, including dedicated transportation lines, was $3.0 billion for the year ended December 31, 2018, and was classified as Cost of services and Selling, general and administrative expense in our Consolidated Statements of Comprehensive Income. 98 Lessor As of December 31, 2018, the future minimum payments expected to be received over the lease term related to the leased wireless devices, which exclude optional residual buy-out amounts at the end of the lease term, are summarized below: (in millions) Year Ended December 31, 2019 2020 Total Capital Leases Total $ $ 419 59 478 Within property and equipment, wireless communications systems include capital lease agreements for network equipment with varying expiration terms through 2033. Capital lease assets and accumulated amortization were $3.1 billion and $867 million as of December 31, 2018. As of December 31, 2018, the future minimum payments required under capital leases, including interest and maintenance, over their remaining terms are summarized below: (in millions) Year Ended December 31, 2019 2020 2021 2022 2023 Thereafter Total Included in Total Interest Maintenance Note 16 – Commitments and Contingencies Purchase Commitments Future Minimum Payments $ $ $ 909 631 389 102 66 106 2,203 143 45 We have commitments for non-dedicated transportation lines with varying expiration terms that generally extend through 2035. In addition, we have commitments to purchase and lease spectrum licenses, wireless devices, network services, equipment, software, marketing sponsorship agreements and other items in the ordinary course of business, with various terms through 2043. These amounts are not reflective of our entire anticipated purchases under the related agreements but are determined based on the non-cancelable quantities or termination amounts to which we are contractually obligated. Our purchase commitments are approximately $3.6 billion for the year ending December 31, 2020, $3.3 billion in total for the years ending December 31, 2021 and 2022, $1.6 billion in total for the years ending December 31, 2023 and 2024 and $1.4 billion in total for the years thereafter. In 2018, we signed a reciprocal long-term spectrum lease with Sprint. The lease includes an offsetting amount to be received from Sprint for the lease of our spectrum. Lease payments began in the fourth quarter of 2018. The minimum commitment under this lease as of December 31, 2019, is $481 million and is included in the purchase obligations above. The reciprocal long-term lease is a distinct transaction from the Merger. Under the previous lease standard certain of our network backhaul arrangements were accounted for as operating leases. Obligations under these agreements were included within our operating lease commitments as of December 31, 2018. 99 These agreements no longer qualify as leases under the new lease standard. Our commitments under these agreements as of December 31, 2019, were approximately $164 million for the year ending December 31, 2020, $267 million in total for the years ended December 31, 2021 and 2022, $171 million in total for the years ended December 31, 2023 and 2024, and $196 million in total for years thereafter. The commitments under these agreements are included in the purchase commitments above. Interest rate lock derivatives We have entered into interest rate lock derivatives with notional amounts of $9.6 billion. These interest rate lock derivatives were designated as cash flow hedges to reduce variability in cash flows due to changes in interest payments attributable to increases or decreases in the benchmark interest rate during the period leading up to the probable issuance of fixed-rate debt. The fair value of interest rate lock derivatives as of December 31, 2019, was a liability of $1.2 billion and is included in Other current liabilities in our Consolidated Balance Sheets. See Note 7 – Fair Value Measurements for further information. Renewable Energy Purchase Agreements In April 2019, T-Mobile USA entered into a Renewable Energy Purchase Agreement (“REPA”) with a third party that is based on the expected operation of a solar photovoltaic electrical generation facility located in Texas and will remain in effect until the fifteenth anniversary of the facility’s entry into commercial operation. Commercial operation of the facility is expected to occur in July 2021. The REPA consists of an energy forward agreement that is net settled based on energy prices and the energy output generated by the facility. We have determined that the REPA does not meet the definition of a derivative because the expected energy output of the facility may not be reliably estimated (the arrangement lacks a notional amount). The REPA does not contain any unconditional purchase obligations because amounts under the agreement are not fixed and determinable. Our participation in the REPA did not require an upfront investment or capital commitment. We do not control the activities that most significantly impact the energy-generating facility, nor do we direct the use of, or receive specific energy output from, the facility. Contingencies and Litigation Litigation Matters On June 11, 2019, a number of state attorneys general filed a lawsuit against us, DT, Sprint, and SoftBank in the U.S. District Court for the Southern District of New York, alleging that the Merger, if consummated, would violate Section 7 of the Clayton Act and so should be enjoined. The trial concluded after two weeks of witness testimony and presentation of document evidence. We are now waiting for the trial court’s ruling. See Note 2 – Business Combinations for further information. In addition to the litigation associated with the Transactions discussed above, we are involved in various lawsuits and disputes, claims, government agency investigations and enforcement actions, and other proceedings (“Litigation Matters”) that arise in the ordinary course of business, which include claims of patent infringement (most of which are asserted by non-practicing entities primarily seeking monetary damages), class actions, and proceedings to enforce FCC rules and regulations. The Litigation Matters described above have progressed to various stages and some of them may proceed to trial, arbitration, hearing or other adjudication that could result in fines, penalties, or awards of monetary or injunctive relief in the coming 12 months if they are not otherwise resolved. We have established an accrual with respect to certain of these matters, where appropriate, which is reflected in the Consolidated Financial Statements but that is not considered to be, individually or in the aggregate, material. An accrual is established when we believe it is both probable that a loss has been incurred and an amount can be reasonably estimated. For other matters, where we have not determined that a loss is probable or because the amount of loss cannot be reasonably estimated, we have not recorded an accrual due to various factors typical in contested proceedings, including but not limited to uncertainty concerning legal theories and their resolution by courts or regulators, uncertain damage theories and demands, and a less than fully developed factual record. While we do not expect that the ultimate resolution of these proceedings, individually or in the aggregate, will have a material adverse effect on our financial position, an unfavorable outcome of some or all of these proceedings could have a material adverse impact on results of operations or cash flows for a particular period. This assessment is based on our current understanding of relevant facts and circumstances. As such, our view of these matters is subject to inherent uncertainties and may change in the future. 100 Note 17 – Additional Financial Information Supplemental Consolidated Balance Sheets Information Accounts Payable and Accrued Liabilities Accounts payable and accrued liabilities are summarized as follows: (in millions) Accounts payable Payroll and related benefits Property and other taxes, including payroll Interest Commissions Network decommissioning Toll and interconnect Advertising Other December 31, 2019 December 31, 2018 $ 4,322 $ 5,487 802 682 227 251 — 156 127 179 709 642 227 243 65 157 76 135 Accounts payable and accrued liabilities $ 6,746 $ 7,741 Book overdrafts included in accounts payable and accrued liabilities were $463 million and $630 million as of December 31, 2019 and 2018, respectively. Supplemental Consolidated Statements of Comprehensive Income Information Related Party Transactions We have related party transactions associated with DT or its affiliates in the ordinary course of business, which are included in the Consolidated Financial Statements. The following table summarizes the impact of significant transactions with DT or its affiliates included in Operating expenses in the Consolidated Statements of Comprehensive Income: (in millions) Discount related to roaming expenses Fees incurred for use of the T-Mobile brand Expenses for telecommunications and IT services International long distance agreement Year Ended December 31, 2019 2018 2017 $ (9) $ — $ 88 — 39 84 — 36 — 79 12 55 We have an agreement with DT for the reimbursement of certain administrative expenses, which were $11 million for each of the years ended December 31, 2019, 2018 and 2017. Note 18 – Guarantor Financial Information Pursuant to the applicable indentures and supplemental indentures, the long-term debt to affiliates and third parties issued by T- Mobile USA (“Issuer”) is fully and unconditionally guaranteed, jointly and severally, on a senior unsecured basis by T-Mobile (“Parent”) and certain of the Issuer’s 100% owned subsidiaries (“Guarantor Subsidiaries”). The guarantees of the Guarantor Subsidiaries are subject to release in limited circumstances only upon the occurrence of certain customary conditions. The indentures and credit facilities governing the long-term debt contain covenants that, among other things, limit the ability of the Issuer and the Guarantor Subsidiaries to incur more debt, pay dividends and make distributions, make certain investments, repurchase stock, create liens or other encumbrances, enter into transactions with affiliates, enter into transactions that restrict dividends or distributions from subsidiaries, and merge, consolidate or sell, or otherwise dispose of, substantially all of their assets. Certain provisions of each of the credit facilities, indentures and supplemental indentures relating to the long-term debt restrict the ability of the Issuer to loan funds or make payments to Parent. However, the Issuer and Guarantor Subsidiaries are allowed to make certain permitted payments to the Parent under the terms of the indentures and the supplemental indentures. 101 On October 23, 2018, SLMA LLC was formed as a limited liability company in Delaware to serve as an escrow subsidiary to facilitate the contemplated issuance of notes by Parent in connection with the Transactions. SLMA LLC is an indirect, 100% owned finance subsidiary of Parent, as such term is used in Rule 3-10(b) of Regulation S-X, and has been designated as an unrestricted subsidiary under the Issuer’s existing debt securities. Any debt securities that may be issued from time to time by SLMA LLC will be fully and unconditionally guaranteed by Parent. In 2019, certain Non-Guarantor Subsidiaries became Guarantor Subsidiaries. Certain prior period amounts have been reclassified to conform to the current period’s presentation. Presented below is the condensed consolidating financial information as of December 31, 2019 and 2018, and for the years ended December 31, 2019, 2018 and 2017. 102 Condensed Consolidating Balance Sheet Information December 31, 2019 $ $ $ (in millions) Assets Current assets Cash and cash equivalents Accounts receivable, net Equipment installment plan receivables, net Accounts receivable from affiliates Inventory Other current assets Total current assets Property and equipment, net (1) Operating lease right-of-use assets Financing lease right-of-use assets Goodwill Spectrum licenses Other intangible assets, net Investments in subsidiaries, net Intercompany receivables and note receivables Equipment installment plan receivables due after one year, net Other assets Total assets Liabilities and Stockholders' Equity Current liabilities Accounts payable and accrued liabilities Payables to affiliates Short-term debt Deferred revenue Short-term operating lease liabilities Short-term financing lease liabilities Other current liabilities Total current liabilities Long-term debt Long-term debt to affiliates Tower obligations (1) Deferred tax liabilities Operating lease liabilities Financing lease liabilities Negative carrying value of subsidiaries, net Intercompany payables and debt Other long-term liabilities Total long-term liabilities Total stockholders' equity (deficit) Parent Issuer Guarantor Subsidiaries Non- Guarantor Subsidiaries Consolidating and Eliminating Adjustments Consolidated $ 5 — — — — — 5 — — — — — — 28,898 — — — 1 — — — — 646 647 — — — — — — 51,306 3,464 — 18 $ 1,350 $ 1,616 2,600 20 964 975 7,525 21,790 10,933 2,715 1,930 36,465 115 — — 1,583 1,797 172 272 — — — 684 1,128 194 — — — — — — — — 239 $ — $ — — — — — — — — — — — — (80,204) (3,464) — (163) 1,528 1,888 2,600 20 964 2,305 9,305 21,984 10,933 2,715 1,930 36,465 115 — — 1,583 1,891 28,903 $ 55,435 $ 84,853 $ 1,561 $ (83,831) $ 86,921 — $ — — — — — — — — — — — — — — 114 — 114 28,789 252 145 25 — — — 1,171 1,593 10,958 13,986 — — — — — — — 24,944 28,898 $ 6,236 $ 258 $ — $ 6,746 42 — 631 2,287 957 139 10,292 — — 75 5,770 10,539 1,346 864 2,968 937 22,499 52,062 — — — — — 363 621 — — 2,161 — — — — 382 17 2,560 (1,620) — — — — — — — — — — (163) — — (864) (3,464) — (4,491) (79,340) 187 25 631 2,287 957 1,673 12,506 10,958 13,986 2,236 5,607 10,539 1,346 — — 954 45,626 28,789 86,921 Total liabilities and stockholders' equity $ 28,903 $ 55,435 $ 84,853 $ 1,561 $ (83,831) $ (1) Assets and liabilities for Non-Guarantor Subsidiaries are primarily included in VIEs related to the 2012 Tower Transaction. See Note 9 – Tower Obligations for further information. 103 Condensed Consolidating Balance Sheet Information December 31, 2018 (in millions) Assets Current assets Cash and cash equivalents Accounts receivable, net Equipment installment plan receivables, net Accounts receivable from affiliates Inventory Other current assets Total current assets Property and equipment, net (1) Goodwill Spectrum licenses Other intangible assets, net Investments in subsidiaries, net Intercompany receivables and note receivables Equipment installment plan receivables due after one year, net Other assets Total assets Liabilities and Stockholders' Equity Current liabilities Accounts payable and accrued liabilities $ $ $ Payables to affiliates Short-term debt Deferred revenue Other current liabilities Total current liabilities Long-term debt Long-term debt to affiliates Tower obligations (1) Deferred tax liabilities Deferred rent expense Negative carrying value of subsidiaries, net Intercompany payables and debt Other long-term liabilities Total long-term liabilities Total stockholders' equity (deficit) Parent Issuer Guarantor Subsidiaries Non- Guarantor Subsidiaries Consolidating and Eliminating Adjustments Consolidated $ 2 — — — — — 2 — — — — 1 — — — — — 1 — — — — 25,314 — — — 46,516 5,174 — 7 $ 1,082 $ 1,510 2,538 11 1,084 1,032 7,257 23,113 1,901 35,559 198 — — 1,547 1,540 118 259 — — — 644 1,021 246 — — — — — — 217 $ — $ — — — — — — — — — — (71,830) (5,174) — (141) 1,203 1,769 2,538 11 1,084 1,676 8,281 23,359 1,901 35,559 198 — — 1,547 1,623 25,316 $ 51,698 $ 71,115 $ 1,484 $ (77,145) $ 72,468 — $ — — — — — — — — — — — 598 — 598 24,718 228 157 — — 447 832 10,950 14,582 — — — — — 20 25,552 25,314 $ 7,263 $ 250 $ — $ 7,741 43 841 698 164 9,009 1,174 — 384 4,613 2,781 676 4,258 926 14,812 47,294 — — — 176 426 — — 2,173 — — — 318 21 2,512 (1,454) — — — — — — — — (141) — (676) (5,174) — (5,991) (71,154) 200 841 698 787 10,267 12,124 14,582 2,557 4,472 2,781 — — 967 37,483 24,718 72,468 Total liabilities and stockholders' equity $ 25,316 $ 51,698 $ 71,115 $ 1,484 $ (77,145) $ (1) Assets and liabilities for Non-Guarantor Subsidiaries are primarily included in VIEs related to the 2012 Tower Transaction. See Note 9 – Tower Obligations for further information. 104 (in millions) Revenues Service revenues Equipment revenues Other revenues Total revenues Operating expenses Cost of services, exclusive of depreciation and amortization shown separately below Cost of equipment sales, exclusive of depreciation and amortization shown separately below Selling, general and administrative Depreciation and amortization Total operating expense Operating income Other income (expense) Interest expense Interest expense to affiliates Interest income Other (expense) income, net Total other expense, net Income (loss) before income taxes Income tax expense Earnings of subsidiaries Net income Net income Other comprehensive (loss) income, net of tax Other comprehensive (loss) income, net of tax Total comprehensive income $ $ $ Condensed Consolidating Statement of Comprehensive Income Information Year Ended December 31, 2019 Parent Issuer Guarantor Subsidiaries Non- Guarantor Subsidiaries Consolidating and Eliminating Adjustments Consolidated $ — $ — $ 32,268 $ 3,003 $ (1,277) $ 33,994 — — — — — — — — — — — — — — — — 3,468 3,468 3,468 $ $ — 19 19 — — 16 — 16 3 (454) (409) 22 (13) (854) (851) — 4,319 3,468 3,468 $ $ 10,053 1,109 43,430 3 203 3,209 (216) (167) (1,660) 9,840 1,164 44,998 6,733 — (111) 6,622 10,908 14,467 6,564 38,672 4,758 (88) (20) 20 6 (82) 4,676 (965) 31 3,742 3,742 $ $ 1,207 989 52 2,248 961 (185) — 3 (1) (183) 778 (170) — 608 608 — $ $ (216) (1,333) — (1,660) — — 21 (21) — — — — (7,818) (7,818) $ 11,899 14,139 6,616 39,276 5,722 (727) (408) 24 (8) (1,119) 4,603 (1,135) — 3,468 (7,818) $ 3,468 (536) 2,932 (536) (536) 186 350 2,932 $ 2,932 $ 3,928 $ 608 $ (7,468) $ 105 Condensed Consolidating Statement of Comprehensive Income Information Year Ended December 31, 2018 Parent Issuer Guarantor Subsidiaries Non- Guarantor Subsidiaries Consolidating and Eliminating Adjustments Consolidated $ — $ — $ 30,637 $ 2,333 $ (978) $ 10,209 1,113 41,959 1 228 2,562 (201) (61) (1,240) 31,992 10,009 1,309 43,310 (in millions) Revenues Service revenues Equipment revenues Other revenues Total revenues Operating expenses Cost of services, exclusive of depreciation and amortization shown separately below Cost of equipment sales, exclusive of depreciation and amortization shown separately below Selling, general and administrative Depreciation and amortization Total operating expenses Operating income Other income (expense) Interest expense Interest expense to affiliates Interest income Other (expense) income, net Total other expense, net Income (loss) before income taxes Income tax expense Earnings of subsidiaries Net income Net income Other comprehensive (loss) income, net of tax Other comprehensive (loss) income, net of tax Total comprehensive income $ $ $ — — — — — — — — — — — — — — — — 2,888 2,888 2,888 $ $ — 29 29 — — 11 — 11 18 (528) (522) 23 (87) (1,114) (1,096) — 3,984 2,888 2,888 $ $ 6,283 24 — 6,307 11,239 13,296 6,422 37,240 4,719 (114) (21) 16 33 (86) 4,633 (950) 32 3,715 3,715 $ $ 1,010 892 64 1,990 572 (193) — 1 — (192) 380 (79) — 301 301 — $ $ (202) (1,038) — (1,240) — — 21 (21) — — — — (6,904) (6,904) $ 12,047 13,161 6,486 38,001 5,309 (835) (522) 19 (54) (1,392) 3,917 (1,029) — 2,888 (6,904) $ 2,888 (332) 2,556 (332) (332) 116 216 2,556 $ 2,556 $ 3,831 $ 301 $ (6,688) $ 106 (in millions) Revenues Service revenues Equipment revenues Other revenues Total revenues Operating expenses Cost of services, exclusive of depreciation and amortization shown separately below Cost of equipment sales, exclusive of depreciation and amortization shown separately below Selling, general and administrative Depreciation and amortization Gains on disposal of spectrum licenses Total operating expenses Operating income Other income (expense) Interest expense Interest expense to affiliates Interest income Other income (expense), net Total other income (expense), net Income (loss) before income taxes Income tax expense (benefit) Earnings (loss) of subsidiaries Net income Dividends on preferred stock Net income attributable to common stockholders Net income Other comprehensive loss, net of tax Other comprehensive loss, net of tax Total comprehensive income $ $ $ Condensed Consolidating Statement of Comprehensive Income Information Year Ended December 31, 2017 Parent Issuer Guarantor Subsidiaries Non- Guarantor Subsidiaries Consolidating and Eliminating Adjustments Consolidated $ — $ — $ 28,894 $ 2,113 $ (847) $ 30,160 — — — — — — — — — — — — 1 — 1 1 — 4,535 4,536 (55) 4,481 4,536 7 $ $ — 3 3 — — — — — — 3 (811) (560) 29 (88) (1,430) (1,427) — 5,962 4,535 — 4,535 4,535 7 $ $ 9,620 879 39,393 — 212 2,325 (245) (25) (1,117) 9,375 1,069 40,604 6,076 24 — 6,100 10,849 12,276 5,914 (235) 34,880 4,513 (109) (23) 10 16 (106) 4,407 1,527 (57) 5,877 — 5,877 5,877 7 $ $ 1,003 856 70 — 1,953 372 (191) — — (1) (192) 180 (152) — 28 — 28 28 — 28 $ $ $ (244) (873) — — (1,117) — — 23 (23) — — — — (10,440) (10,440) — 11,608 12,259 5,984 (235) 35,716 4,888 (1,111) (560) 17 (73) (1,727) 3,161 1,375 — 4,536 (55) (10,440) $ 4,481 (10,440) $ 4,536 (14) (10,454) $ 7 4,543 4,543 $ 4,542 $ 5,884 $ 107 (in millions) Operating activities Net cash (used in) provided by operating activities Investing activities Purchases of property and equipment Purchases of spectrum licenses and other intangible assets, including deposits Proceeds from sales of tower sites Proceeds related to beneficial interests in securitization transactions Net cash related to derivative contracts under collateral exchange arrangements Acquisition of companies, net of cash acquired Other, net Net cash (used in) provided by investing activities Financing activities Proceeds from borrowing on revolving credit facility, net Repayments of revolving credit facility Repayments of financing lease obligations Repayments of short-term debt for purchases of inventory, property and equipment, net Repayments of long-term debt Intercompany advances, net Tax withholdings on share-based awards Cash payments for debt prepayment or debt extinguishment costs Intercompany dividend paid Other, net Net cash provided (used in) by financing activities Change in cash and cash equivalents Cash and cash equivalents Beginning of period End of period $ Condensed Consolidating Statement of Cash Flows Information Year Ended December 31, 2019 Parent Issuer Guarantor Subsidiaries Non- Guarantor Subsidiaries Consolidating and Eliminating Adjustments Consolidated $ — $ (752) $ 11,338 $ (3,207) $ (555) $ 6,824 (6,391) (967) 38 37 — 1 (6) — — — 3,839 — — — (7,288) 3,839 — — — — — (23) — — (555) — (578) 54 — (2,340) (798) (775) (600) 934 (156) (28) — (19) (3,782) 268 1,082 $ 1,350 $ — — — — — — — — — — — — — — — — 555 — 555 — (6,391) (967) 38 3,876 (632) (31) (18) (4,125) 2,340 (2,340) (798) (775) (600) — (156) (28) — (17) (2,374) 325 1,203 1,528 118 172 $ — — $ — — — — — — — — — — — — — 1 — — — 2 3 3 2 5 $ — — — — (632) (32) (12) (676) 2,340 — — — — (912) — — — — 1,428 — 1 1 108 Condensed Consolidating Statement of Cash Flows Information Year Ended December 31, 2018 (in millions) Operating activities Net cash (used in) provided by operating activities Investing activities Purchases of property and equipment Purchases of spectrum licenses and other intangible assets, including deposits Proceeds related to beneficial interests in securitization transactions Acquisition of companies, net of cash Equity investment in subsidiary Other, net Net cash (used in) provided by investing activities Financing activities Proceeds from issuance of long-term debt Proceeds from borrowing on revolving credit facility, net Repayments of revolving credit facility Repayments of financing lease obligations Repayments of short-term debt for purchases of inventory, property and equipment, net Repayments of long-term debt Repurchases of common stock Intercompany advances, net Equity investment from parent Tax withholdings on share-based awards Cash payments for debt prepayment or debt extinguishment costs Intercompany dividend paid Other, net Net cash (used in) provided by financing activities Change in cash and cash equivalents Cash and cash equivalents Beginning of period End of period Parent Issuer Guarantor Subsidiaries Non- Guarantor Subsidiaries Consolidating and Eliminating Adjustments Consolidated $ — $ (1,254) $ 10,414 $ (5,041) $ (220) $ 3,899 (5,536) (127) 53 (338) (43) 28 (5) — 5,353 — — — (5,963) 5,348 — — (6,265) (700) (300) (3,349) — 6,530 43 (146) (212) — (56) (4,455) (4) 1,086 — — — — — — — (27) — — — (220) — (247) 60 58 $ 1,082 $ 118 $ — — — — 43 — 43 — — — — — — — — (43) — — 220 — 177 — — — $ (5,541) (127) 5,406 (338) — 21 (579) 2,494 6,265 (6,265) (700) (300) (3,349) (1,071) — — (146) (212) — (52) (3,336) (16) 1,219 1,203 — — — — — — — — — — — — — (1,071) 995 — — — — 4 (72) (72) $ 74 2 $ — — — — — (7) (7) 2,494 6,265 — — — — — (7,498) — — — — — 1,261 — 1 1 109 (in millions) Operating activities Net cash provided by (used in) operating activities Investing activities Purchases of property and equipment Purchases of spectrum licenses and other intangible assets, including deposits Proceeds related to beneficial interests in securitization transactions Equity investment in subsidiary Other, net Net cash (used in) provided by investing activities Financing activities Proceeds from issuance of long-term debt Proceeds from borrowing on revolving credit facility, net Repayments of revolving credit facility Repayments of financing lease obligations Repayments of short-term debt for purchases of inventory, property and equipment, net Repayments of long-term debt Repurchases of common stock Intercompany advances, net Equity investment from parent Tax withholdings on share-based awards Dividends on preferred stock Cash payments for debt prepayment or debt extinguishment costs Intercompany dividend paid Other, net Net cash provided by (used in) financing activities Condensed Consolidating Statement of Cash Flows Information Year Ended December 31, 2017 Parent Issuer Guarantor Subsidiaries Non- Guarantor Subsidiaries Consolidating and Eliminating Adjustments Consolidated $ 1 $ (1,613) $ 9,761 $ (4,218) $ (100) $ 3,831 — — — (308) — (308) — — — — — — (427) 484 — — (55) — — 21 23 — — — — — — 10,480 2,910 — — — — — (14,817) 308 — — — — — (5,237) (5,828) 43 — 1 (11,021) — — (2,910) (486) (300) (10,230) — 14,300 — (166) — (188) — (16) (1,119) (2,732) 4 (1,256) — — 4,276 — — 4,276 — — — — — — — 33 — — — — (100) — (67) (9) — — — 308 — 308 — — — — — — — — (308) — — — 100 — (208) — — — $ (5,237) (5,828) 4,319 — 1 (6,745) 10,480 2,910 (2,910) (486) (300) (10,230) (427) — — (166) (55) (188) — 5 (1,367) (4,281) 5,500 1,219 Change in cash and cash equivalents (284) Cash and cash equivalents Beginning of period End of period 358 74 $ 2,733 2,342 1 $ 1,086 $ $ 67 58 $ 110 Supplementary Data Quarterly Financial Information (Unaudited) (in millions, except share and per share amounts) First Quarter Second Quarter Third Quarter Fourth Quarter Full Year 2019 Total revenues Operating income Net income Net income attributable to common stockholders Earnings per share Basic Diluted Weighted average shares outstanding Basic Diluted 2018 Total revenues Operating income Net income Net income attributable to common stockholders Earnings per share Basic Diluted Weighted average shares outstanding Basic Diluted $ $ $ $ $ $ 11,080 $ 10,979 $ 11,061 $ 11,878 $ 1,476 908 908 1,541 939 939 1,471 870 870 1,234 751 751 1.07 1.06 $ $ 1.10 1.09 $ $ 1.02 1.01 $ $ 0.88 0.87 $ $ 44,998 5,722 3,468 3,468 4.06 4.02 851,223,498 858,643,481 854,368,443 860,135,593 854,578,241 862,690,751 856,294,467 864,158,739 854,143,751 863,433,511 10,455 $ 10,571 $ 10,839 $ 11,445 $ 1,282 671 671 1,450 782 782 1,440 795 795 1,137 640 640 0.78 0.78 $ $ 0.92 0.92 $ $ 0.94 0.93 $ $ 0.75 0.75 $ $ 43,310 5,309 2,888 2,888 3.40 3.36 855,222,664 862,244,084 847,660,488 852,040,670 847,087,120 853,852,764 849,102,785 856,344,347 849,744,152 858,290,174 Earnings per share is computed independently for each quarter and the sum of the quarters may not equal earnings per share for the full year. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None. Item 9A. Controls and Procedures Evaluation of Disclosure Controls and Procedures We maintain disclosure controls and procedures designed to ensure information required to be disclosed in our periodic reports filed or submitted under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Our disclosure controls are also designed to ensure that information required to be disclosed in the reports we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. Under the supervision and with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer, we carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective, as of the end of the period covered by this Form 10-K. The certifications required by Section 302 of the Sarbanes-Oxley Act of 2002 are filed as exhibits 31.1 and 31.2, respectively, to this Form 10-K. 111 Changes in Internal Control over Financial Reporting Beginning January 1, 2019, we adopted the new lease standard and implemented significant new lease accounting systems, processes and internal controls over lease accounting to assist us in the application of the new lease standard. Other than as discussed above, there were no changes in our internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act, during our most recently completed fiscal quarter that materially affected or are reasonably likely to materially affect our internal control over financial reporting. Management's Annual Report on Internal Control over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is a process to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Internal control over financial reporting includes maintaining records that in reasonable detail accurately and fairly reflect our transactions, providing reasonable assurance that transactions are recorded as necessary for preparation of our financial statements in accordance with generally accepted accounting principles, providing reasonable assurance that receipts and expenditures are made in accordance with management authorization, and providing reasonable assurance that unauthorized acquisition, use or disposition of company assets that could have a material effect on our financial statements would be prevented or detected on a timely basis. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with policies and procedures may deteriorate. Management conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework and criteria established in Internal Control – Integrated Framework (2013), issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, management concluded that our internal control over financial reporting was effective as of December 31, 2019. The effectiveness of our internal control over financial reporting as of December 31, 2019 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report herein. Item 9B. Other Information None. PART III. OTHER INFORMATION Item 10. Directors, Executive Officers and Corporate Governance We maintain a code of ethics applicable to our Chief Executive Officer, Chief Financial Officer, Chief Accounting Officer, Treasurer, and Controller, which is a “Code of Ethics for Senior Financial Officers” as defined by applicable rules of the SEC. This code is publicly available on our website at investor.t-mobile.com. If we make any amendments to this code other than technical, administrative or other non-substantive amendments, or grant any waivers, including implicit waivers, from a provision of this code we will disclose the nature of the amendment or waiver, its effective date and to whom it applies on our website at investor.t-mobile.com or in a Current Report on Form 8-K filed with the SEC. The remaining information required by this item, including information about our Directors, Executive Officers and Audit Committee, will be incorporated by reference from our definitive Proxy Statement to be filed with the SEC pursuant to Regulation 14A or be included in an amendment to this Report. Item 11. Executive Compensation The information required by this item will be incorporated by reference from our definitive Proxy Statement to be filed with the SEC pursuant to Regulation 14A or to be included in an amendment to this Report. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters The information required by this item will be incorporated by reference from our definitive Proxy Statement to be filed with the SEC pursuant to Regulation 14A or to be included in an amendment to this Report. 112 Item 13. Certain Relationships and Related Transactions, and Director Independence The information required by this item will be incorporated by reference from our definitive Proxy Statement to be filed with the SEC pursuant to Regulation 14A or to be included in an amendment to this Report. Item 14. Principal Accounting Fees and Services The information required by this item will be incorporated by reference from our definitive Proxy Statement to be filed with the SEC pursuant to Regulation 14A or to be included in an amendment to this Report. PART IV. Item 15. Exhibits, Financial Statement Schedules (a) Documents filed as a part of this Form 10-K 1. Financial Statements The following financial statements are included in Part II, Item 8 of this Form 10-K: Report of Independent Registered Public Accounting Firm Consolidated Balance Sheets Consolidated Statements of Comprehensive Income Consolidated Statements of Cash Flows Consolidated Statement of Stockholders’ Equity Notes to the Consolidated Financial Statements 2. Financial Statement Schedules All other schedules have been omitted because they are not required, not applicable, or the required information is otherwise included. 3. Exhibits See the Index to Exhibits immediately following “Item 16. Form 10-K Summary” of this Form 10-K. Item 16. Form 10–K Summary None. 113 INDEX TO EXHIBITS Exhibit No. Exhibit Description 2.1 2.2 2.3 2.4 2.5 2.6 3.1 3.2 3.3 3.4 3.5 4.1 4.2 4.3 4.4 4.5 Business Combination Agreement, dated as of October 3, 2012, by and among MetroPCS Communications, Inc., Deutsche Telekom AG, T-Mobile Zwischenholding GMBH, T-Mobile Global Holding GMBH and T-Mobile USA, Inc. Consent Solicitation Letter Agreement, dated December 5, 2012, by and among MetroPCS Communications, Inc. and Deutsche Telekom AG, amending Exhibit G to the Business Combination Agreement. Amendment No. 1 to the Business Combination Agreement by and among Deutsche Telekom AG, T-Mobile USA, Inc., T-Mobile Global Zwischenholding GmbH, T-Mobile Global Holding GmbH and MetroPCS Communications, Inc., dated April 14, 2013. Business Combination Agreement, dated as of April 29, 2018, by and among T-Mobile US, Inc., Huron Merger Sub LLC, Superior Merger Sub Corporation, Sprint Corporation, Starburst I, Inc., Galaxy Investment Holdings, Inc., and for the limited purposes set forth therein, Deutsche Telekom AG, Deutsche Telekom Holding B.V. and SoftBank Group Corp. Amendment No. 1, dated as of July 26, 2019, to the Business Combination Agreement, dated as of April 29, 2018, by and among T-Mobile US, Inc., Huron Merger Sub LLC, Superior Merger Sub Corporation, Sprint Corporation, Starburst I, Inc., Galaxy Investment Holdings, Inc., and for the limited purposes set forth therein, Deutsche Telekom AG, Deutsche Telekom Holding B.V., and SoftBank Group Corp. Asset Purchase Agreement, dated as of July 26, 2019, by and among T-Mobile US, Inc., Sprint Corporation and DISH Network Corporation Fourth Amended and Restated Certificate of Incorporation. Fifth Amended and Restated Bylaws. Sixth Amended and Restated Bylaws of T-Mobile US, Inc. Certificate of Designations of 5.50% Mandatory Convertible Preferred Stock, Series A, of T-Mobile US, Inc., dated December 12, 2014. Certificate of Elimination of 5.5% Mandatory Convertible Preferred Stock, Series A, Par Value $0.00001 Per Share, dated February 15, 2018. Indenture, dated as of April 28, 2013 among T-Mobile USA, Inc., the guarantors party thereto, and Deutsche Bank Trust Company Americas, as trustee. Eleventh Supplemental Indenture, dated as of May 1, 2013 among T-Mobile USA, Inc., the guarantors party thereto, and Deutsche Bank Trust Company Americas, as trustee. Fourteenth Supplemental Indenture, dated as of November 21, 2013, by and among T-Mobile USA, Inc., the Guarantors and Deutsche Bank Trust Company Americas, as trustee, including the Form of 6.125% Senior Note due 2022. Fifteenth Supplemental Indenture, dated as of November 21, 2013, by and among T-Mobile USA, Inc., the Guarantors and Deutsche Bank Trust Company Americas, as trustee, including the Form of 6.500% Senior Note due 2024. Sixteenth Supplemental Indenture, dated as of August 11, 2014, by and among T-Mobile USA, Inc., the guarantors party thereto and Deutsche Bank Trust Company Americas, as trustee. 114 Incorporated by Reference Form 8-K Date of First Filing 10/3/2012 Exhibit Number 2.1 Filed Herein 8-K 12/7/2012 2.1 8-K 4/15/2013 2.1 8-K 04/30/2018 2.1 8-K 7/26/2019 2.2 8-K 7/26/2019 2.1 8-K 8-K 8-K 8-K 5/2/2013 5/2/2013 10/11/2019 12/15/2014 3.1 3.2 3.1 3.1 8-K 2/22/2018 3.1 8-K 5/2/2013 4.1 8-K 5/2/2013 4.12 8-K 11/22/2013 4.1 8-K 11/22/2013 4.2 10-Q 10/28/2014 4.3 Incorporated by Reference Form 8-K Date of First Filing 9/5/2014 Exhibit Number 4.1 Filed Herein 8-K 9/5/2014 4.2 10-Q 10/27/2015 4.3 8-K 11/5/2015 4.1 8-K 4/1/2016 4.1 8-K 3/16/2017 4.1 8-K 3/16/2017 4.2 8-K 3/16/2017 4.3 8-K 4/28/2017 4.1 8-K 4/28/2017 4.2 8-K 4/28/2017 4.3 8-K 5/9/2017 4.1 Exhibit No. Exhibit Description 4.6 4.7 4.8 4.9 4.10 4.11 4.12 4.13 4.14 4.15 4.16 4.17 Seventeenth Supplemental Indenture, dated as of September 5, 2014, by and among T-Mobile USA, Inc., the guarantors party thereto and Deutsche Bank Trust Company Americas, as trustee, including the Form of 6.000% Senior Notes due 2023. Eighteenth Supplemental Indenture, dated as of September 5, 2014, by and among T-Mobile USA, Inc., the guarantors party thereto and Deutsche Bank Trust Company Americas, as trustee, including the Form of 6.375% Senior Notes due 2025. Nineteenth Supplemental Indenture, dated as of September 28, 2015, by and among T-Mobile USA, Inc., the guarantors party thereto and Deutsche Bank Trust Company Americas, as trustee. Twentieth Supplemental Indenture, dated as of November 5, 2015, by and among T-Mobile USA, Inc., the guarantors party thereto and Deutsche Bank Trust Company Americas, as Trustee, including the Form of 6.500% Senior Notes due 2026. Twenty-First Supplemental Indenture, dated as of November 5, 2015, by and among T-Mobile USA, Inc., the guarantors party thereto and Deutsche Bank Trust Company Americas, as Trustee, including the Form of 6.000% Senior Notes due 2024. Twenty-Third Supplemental Indenture, dated as of March 16, 2017, by and among T-Mobile USA, Inc., T-Mobile US, Inc., the other guarantors party thereto and Deutsche Bank Trust Company Americas, as trustee, including the Form of 4.000% Senior Note due 2022. Twenty-Fourth Supplemental Indenture, dated as of March 16, 2017, by and among T-Mobile USA, Inc., T-Mobile US, Inc., the other guarantors party thereto and Deutsche Bank Trust Company Americas, as trustee, including the Form of 4.000% Senior Note due 2025. Twenty-Fifth Supplemental Indenture, dated as of March 16, 2017, by and among T-Mobile USA, Inc., the other guarantors party thereto and Deutsche Bank Trust Company Americas, as trustee, including the Form of 5.375% Senior Note due 2027. Twenty-Sixth Supplemental Indenture, dated as of April 27, 2017, by and among T-Mobile USA, Inc., T-Mobile US, Inc., the other guarantors party thereto and Deutsche Bank Trust Company Americas, as trustee, including the Form of 4.000% Senior Note due 2022-1. Twenty-Seventh Supplemental Indenture, dated as of April 28, 2017, by and among T-Mobile USA, Inc., T-Mobile US, Inc., the other guarantors party thereto and Deutsche Bank Trust Company Americas, as trustee, including the Form of 5.125% Senior Note due 2025-1. Twenty-Eighth Supplemental Indenture, dated as of April 28, 2017, by and among T-Mobile USA, Inc., T-Mobile US, Inc., the other guarantors party thereto and Deutsche Bank Trust Company Americas, as trustee, including the Form of 5.375% Senior Note due 2027-1. Twenty-Ninth Supplemental Indenture, dated as of May 9, 2017, by and among T-Mobile USA, Inc., T-Mobile US, Inc., the other guarantors party thereto and Deutsche Bank Trust Company Americas, as trustee, including the Form of 5.300% Senior Notes due 2021. 115 Incorporated by Reference Form 8-K Date of First Filing 5/9/2017 Exhibit Number 4.2 Filed Herein 8-K 1/25/2018 4.1 8-K 1/25/2018 4.2 8-K 5/2/2013 4.13 10-Q 5/1/2018 4.5 8-K 5/4/2018 4.1 8-K 5/4/2018 4.2 8-K 5/21/2018 4.1 8-K 12/21/2018 4.1 10-K 2/7/2019 4.41 10-Q 10/28/2019 4.1 10-Q 8/8/2013 10.1 X 10-Q 8/8/2013 10.2 10-K 2/7/2019 10.3 Exhibit No. Exhibit Description 4.18 4.19 4.20 4.21 4.22 4.23 4.24 4.25 4.26 4.27 4.28 4.29 10.1 10.2 10.3 Thirtieth Supplemental Indenture, dated as of May 9, 2017, by and among T-Mobile USA, Inc., T-Mobile US, Inc., the other guarantors party thereto and Deutsche Bank Trust Company Americas, as trustee. Thirty-Second Supplemental Indenture, dated as of January 25, 2018, by and among T-Mobile USA, Inc., T-Mobile US, Inc., the other guarantors party thereto and Deutsche Bank Trust Company Americas, as trustee, including the Form of 4.500% Senior Note due 2026. Thirty-Third Supplemental Indenture, dated as of January 25, 2018, by and among T-Mobile USA, Inc., T-Mobile US, Inc., the other guarantors party thereto and Deutsche Bank Trust Company Americas, as trustee, including the Form of 4.750% Senior Note due 2028. Noteholder Agreement dated as of April 28, 2013, by and between Deutsche Telekom AG and T-Mobile USA, Inc. Thirty-Fourth Supplemental Indenture, dated as of April 26, 2018, by and among T-Mobile USA, Inc., T-Mobile US, Inc., the other guarantors party thereto and Deutsche Bank Trust Company Americas, as trustee. Thirty-Fifth Supplemental Indenture, dated as of April 30, 2018, by and among T-Mobile USA, Inc., T-Mobile US, Inc., the other guarantors party thereto and Deutsche Bank Trust Company Americas, as trustee, including the Form of 4.500% Senior Note due 2026-1. Thirty-Sixth Supplemental Indenture, dated as of April 30, 2018, by and among T-Mobile USA, Inc., T-Mobile US, Inc., the other guarantors party thereto and Deutsche Bank Trust Company Americas, as trustee, including the Form of 4.750% Senior Note due 2028-1. Thirty-Seventh Supplemental Indenture, dated as of May 20, 2018, by and among T-Mobile USA, Inc., the guarantors party thereto, and Deutsche Bank Trust Company Americas. Thirty-Eighth Supplemental Indenture, dated as of December 20, 2018, by and among T-Mobile USA, Inc., the guarantors party thereto, and Deutsche Bank Trust Company Americas. Thirty-Ninth Supplemental Indenture, dated as of December 20, 2018, by and among T-Mobile USA, Inc., the guarantors party thereto, and Deutsche Bank Trust Company Americas. Fortieth Supplemental Indenture, dated as of September 27, 2019, by and among T-Mobile USA, Inc., T-Mobile US, Inc., the other guarantors party thereto and Deutsche Bank Trust Company Americas, as trustee. Description of Securities Master Agreement, dated as of September 28, 2012, among T-Mobile USA, Inc., Crown Castle International Corp., and certain T-Mobile and Crown subsidiaries. Amendment No. 1, dated as of November 30, 2012, to Master Agreement, dated as of November 30, 2012, among Crown Castle International Corp., and certain T-Mobile and Crown subsidiaries. Settlement and Amendment No. 2, dated as of May 8, 2014, to Master Agreement, dated as of November 2012, among Crown Castle International Corp., and certain T-Mobile and Crown subsidiaries. 116 Incorporated by Reference Form 10-Q Date of First Filing 8/8/2013 Exhibit Number 10.3 Filed Herein 10-Q 8/8/2013 10.4 10-Q 8/8/2013 10.5 10-K 2/7/2019 10.7 10-Q 8/8/2013 10.6 10-Q 8/8/2013 10.7 10-K 2/7/2019 10.10 10-K 2/7/2019 10.11 10-Q 8/8/2013 10.8 Exhibit No. Exhibit Description 10.4 10.5 10.6 10.7 10.8 10.9 10.10 10.11 10.12 Master Prepaid Lease, dated as of November 30, 2012, by and among T-Mobile USA Tower LLC, T-Mobile West Tower LLC, T-Mobile USA, Inc. and CCTMO LLC. MPL Site Master Lease Agreement, dated as of November 30, 2012, by and among Cook Inlet/VS GSM IV PCS Holdings, LLC, T-Mobile Central LLC, T-Mobile South LLC, Powertel/ Memphis, Inc., Voicestream Pittsburgh, L.P., T-Mobile West LLC, T-Mobile Northeast LLC, Wireless Alliance, LLC, Suncom Wireless Operating Company, L.L.C., T-Mobile USA, Inc. and CCTMO LLC. First Amendment, dated as of November 30, 2012, to MPL Site Master Lease Agreement, dated as of November 30, 2012, by and among Cook Inlet/VS GSM IV PCS Holdings, LLC, T-Mobile Central LLC, T-Mobile South LLC, Powertel/ Memphis, Inc., Voicestream Pittsburgh, L.P., T-Mobile West LLC, T-Mobile Northeast LLC, Wireless Alliance, LLC, Suncom Wireless Operating Company, L.L.C., T-Mobile USA, Inc. and CCTMO LLC. Second Amendment, dated as of October 31, 2014, to MPL Site Master Lease Agreement, dated as of November 30, 2012, by and among Cook Inlet/VS GSM IV PCS Holdings, LLC, T-Mobile Central LLC, T-Mobile South LLC, Powertel/ Memphis, Inc., Voicestream Pittsburgh, L.P., T-Mobile West LLC, T-Mobile Northeast LLC, Suncom Wireless Operating Company, L.L.C., T-Mobile USA, Inc. Sale Site Master Lease Agreement, dated as of November 30, 2012, by and among Cook Inlet/VS GSM IV PCS Holdings, LLC, T-Mobile Central LLC, T-Mobile South LLC, Powertel/ Memphis, Inc., Voicestream Pittsburgh, L.P., T-Mobile West LLC, T-Mobile Northeast LLC, Wireless Alliance, LLC, Suncom Wireless Operating Company, L.L.C., T-Mobile USA, Inc., T3 Tower 1 LLC and T3 Tower 2 LLC. First Amendment, dated as of November 30, 2012, to Sale Site Master Lease Agreement, dated as of November 30, 2012, by and Cook Inlet/VS GSM IV PCS Holdings, LLC, T- Mobile Central LLC, T-Mobile South LLC, Powertel/ Memphis, Inc., Voicestream Pittsburgh, L.P., T-Mobile West LLC, T-Mobile Northeast LLC, Wireless Alliance, LLC, Suncom Wireless Operating Company, L.L.C., T-Mobile USA, Inc., T3 Tower 1 LLC and T3 Tower 2 LLC. Second Amendment, dated as of October 31, 2014, to Sale Site Master Lease Agreement, dated as of November 30, 2012, by and Cook Inlet/VS GSM IV PCS Holdings, LLC, T- Mobile Central LLC, T-Mobile South LLC, Powertel/ Memphis, Inc., Voicestream Pittsburgh, L.P., T-Mobile West LLC, T-Mobile Northeast LLC, Suncom Wireless Operating Company, L.L.C., T-Mobile USA, Inc., T3 Tower 1 LLC and T3 Tower 2 LLC. Settlement Technical Closing Agreement, dated as of October 1, 2014, among Crown Castle International Corp., and certain T-Mobile and Crown subsidiaries. Management Agreement, dated as of November 30, 2012, by and among Suncom Wireless Operating Company, L.L.C., Cook Inlet/VS GSM IV PCS Holdings, LLC, T-Mobile Central LLC, T-Mobile South LLC, Powertel/Memphis, Inc., Voicestream Pittsburgh, L.P., T-Mobile West LLC, T-Mobile Northeast LLC, Wireless Alliance, LLC, Suncom Wireless Property Company, L.L.C., T-Mobile USA Tower LLC, T- Mobile West Tower LLC, CCTMO LLC, T3 Tower 1 LLC and T3 Tower 2 LLC. 117 Exhibit No. Exhibit Description 10.13 Stockholder’s Agreement dated as of April 30, 2013 by and between MetroPCS Communications, Inc. and Deutsche Telekom AG. Incorporated by Reference Form 8-K Date of First Filing 5/2/2013 Exhibit Number 10.1 Filed Herein 10.14 Waiver of Required Approval Under Section 3.6(a) of the 10-Q 8/8/2013 10.10 10.15 10.16 10.17 10.18 10.19 10.20 10.21 10.22 10.23 10.24 10.25 10.26 Stockholder’s Agreement, dated August 7, 2013, between T- Mobile US, Inc. and Deutsche Telekom AG. License Agreement dated as of April 30, 2013 by and between T-Mobile US, Inc. and Deutsche Telekom AG. Supplemental Agreement, effective as of June 3, 2019, to the License Agreement, dated as of April 30, 2013, by and between T-Mobile US, Inc. and Deutsche Telekom AG. Receivables Sale and Conveyancing Agreement, dated as of February 26, 2014, among T-Mobile West LLC, T-Mobile Central LLC, T-Mobile Northeast LLC and T-Mobile South LLC, as sellers, and T-Mobile PCS Holdings LLC, as purchaser. Joinder and First Amendment to the Receivables Sale and Conveyancing Agreement, dated as of November 28, 2014, among Powertel/Memphis, Inc., Triton PCS Holdings Company L.L.C., T-Mobile West LLC, T-Mobile Central LLC, T-Mobile Northeast LLC and T-Mobile South LLC, as sellers, and T-Mobile PCS Holdings LLC, as purchaser. Joinder and Second Amendment to the Receivables Sale and Conveyancing Agreement, dated as of January 9, 2015, among SunCom Wireless Operating Company, LLC, Powertel/Memphis, Inc., Triton PCS Holdings Company L.L.C., T-Mobile West LLC, T-Mobile Central LLC, T- Mobile Northeast LLC and T-Mobile South LLC, as sellers, and T-Mobile PCS Holdings LLC, as purchaser. Receivables Sale and Contribution Agreement, dated as of February 26, 2014, between T-Mobile PCS Holdings LLC, as seller, and T-Mobile Airtime Funding LLC, as purchaser. First Amendment to the Receivables Sale and Contribution Agreement, dated as of November 28, 2014, between T- Mobile PCS Holdings LLC, as seller, and T-Mobile Airtime Funding LLC, as purchaser. Second Amendment to the Receivables Sale and Contribution Agreement, dated as of January 9, 2015, by and among T- Mobile PCS Holdings LLC, as seller, and T-Mobile Airtime Funding LLC, as purchaser. Third Amendment to the Receivables Sale and Contribution Agreement, dated as of November 30, 2016, by and among T- Mobile PCS Holdings LLC, as seller, and T-Mobile Airtime Funding LLC, as purchaser. Fourth Amendment to the Receivables Sale and Contribution Agreement, dated as of May 5, 2017, by and among T-Mobile PCS Holdings LLC, as seller, and T-Mobile Airtime Funding LLC, as purchaser. Fourth Amended and Restated Master Receivables Purchase Agreement, dated as of February 26, 2019, among T-Mobile Funding LLC, as funding seller, Billing Gate One LLC, as purchaser, Landesbank Hessen-Thüringen Giroznetrale, as bank purchasing agent, MUFG Bank (Europe) N.V., Germany Branch, as bank collection agent, T-Mobile PCS Holdings LLC, as servicer, and T-Mobile US, Inc. and T-Mobile USA, Inc., as performance guarantors. Term Loan Credit Agreement, dated as of November 9, 2015, among T-Mobile USA, Inc., the lenders party thereto and Deutsche Bank AG New York Branch, as administrative agent and collateral agent. 118 8-K 5/2/2013 10.2 10-Q 7/26/2019 10.5 8-K 3/4/2014 10.1 10-K 2/19/2015 10.55 10-Q 4/28/2015 10.5 8-K 3/4/2014 10.2 10-K 2/19/2015 10.56 10-Q 4/28/2015 10.6 10-K 2/14/2017 10.33 10-Q 7/20/2017 10.1 8-K 3/4/2019 10.1 8-K 11/12/2015 10.1 Incorporated by Reference Form 10-Q Date of First Filing 4/24/2017 Exhibit Number 10.3 Filed Herein 10-Q 4/24/2017 10.4 10-Q 4/24/2017 10.5 8-K 7/27/2017 10.1 8-K 3/30/2018 10.1 8-K 12/30/2016 10.3 8-K 1/25/2017 10.1 10-Q 10/30/2018 10.2 10-Q 10/30/2018 10.1 10-K 2/7/2019 10.45 Exhibit No. Exhibit Description 10.27 10.28 10.29 10.30 10.31 10.32 10.33 10.34 10.35 10.36 Amendment No.1 to the Term Loan Credit Agreement, dated as of January 25, 2017, among T-Mobile USA, Inc., the guarantors party thereto, the lenders party thereto and Deutsche Bank AG New York Branch, as administrative agent and collateral agent. Amendment No.2 to the Term Loan Credit Agreement, dated as of January 25, 2017, among T-Mobile USA, Inc., the guarantors party thereto, the lenders party thereto and Deutsche Bank AG New York Branch, as administrative agent and collateral agent. Amendment No.3 to the Term Loan Credit Agreement, dated as of March 28, 2017, among T-Mobile USA, Inc., the guarantors party thereto, the lenders party thereto and Deutsche Bank AG New York Branch, as administrative agent and collateral agent. Amendment No.4 to the Term Loan Credit Agreement, dated as of July 25, 2017, among T-Mobile USA, Inc., the guarantors party thereto, the lenders party thereto and Deutsche Bank AG New York Branch, as administrative agent and collateral agent. Amendment No. 5 to the Term Loan Credit Agreement, dated as of March 29, 2018, among T-Mobile USA, Inc., the guarantors party thereto, the lenders party thereto and Deutsche Bank AG New York Branch, as administrative agent and collateral agent. First Incremental Facility Amendment, dated as of December 29, 2016, to the Term Loan Credit Agreement, dated as of November 9, 2015, by and among T-Mobile USA, Inc., the guarantors party thereto, the several banks and other financial institutions or entities from time to time parties thereto as lenders, and Deutsche Bank AG New York Branch, as administrative agent. Second Incremental Facility Amendment, dated as of January 25, 2017, to the Term Loan Credit Agreement, dated as of November 9, 2015, as amended by that certain First Incremental Facility Amendment dated as of December 29, 2016, by and among T-Mobile USA, Inc., the guarantors party thereto, the several banks and other financial institutions or entities from time to time parties thereto as lenders, and Deutsche Bank AG New York Branch, as administrative agent. Third Amended and Restated Receivables Sale Agreement, dated as of October 23, 2018, by and between T-Mobile Financial LLC, as seller, and T-Mobile Handset Funding LLC, as purchaser. Third Amended and Restated Receivables Purchase and Administration Agreement, dated as of October 23, 2018, by and among T-Mobile Handset Funding LLC, as transferor, T- Mobile Financial LLC, as servicer, T-Mobile US, Inc., as performance guarantor, Royal Bank of Canada, as administrative agent, and certain financial institutions party thereto. First Amendment, dated as of December 21, 2018, to Third Amended and Restated Receivables Purchase and Administration Agreement, dated as of October 23, 2018, by and among T-Mobile Handset Funding LLC, as transferor, T- Mobile Financial LLC, as servicer, T-Mobile US, Inc., as performance guarantor, Royal Bank of Canada, as administrative agent, and certain financial institutions party thereto 119 Incorporated by Reference Form 8-K Date of First Filing 3/7/2016 Exhibit Number 1.1 Filed Herein 8-K 11/2/2016 10.1 8-K 4/26/2016 1.1 8-K 11/2/2016 10.2 8-K 4/29/2016 1.1 8-K 11/2/2016 10.3 8-K 3/16/2017 10.1 8-K 1/25/2018 10.1 8-K 12/30/2016 10.1 8-K 3/30/2018 10.3 8-K 12/30/2016 10.2 8-K 3/30/2018 10.2 S-1/A 2/27/2007 10.1(a) Schedule 14A 10-Q 4/19/2010 Annex A 8/9/2010 10.2 10-Q 10/30/2012 10.1 Exhibit No. Exhibit Description 10.37 10.38 10.39 10.40 10.41 10.42 10.43 10.44 Purchase Agreement, dated as of March 6, 2016, among T- Mobile USA, Inc., the guarantor party thereto and Deutsche Telekom AG. Amendment No. 1 to Purchase Agreement, dated as of October 28, 2016, to Purchase Agreement, dated as of March 6, 2016, by and among T-Mobile USA, Inc., the guarantors party thereto and Deutsche Telekom AG. Purchase Agreement, dated as of April 25, 2016, among T- Mobile USA, Inc., the guarantor party thereto and Deutsche Telekom AG. Amendment No. 1 to Purchase Agreement, dated as of October 28, 2016, to Purchase Agreement, dated as of April 25, 2016, by and among T-Mobile USA, Inc., the guarantors party thereto and Deutsche Telekom AG. Purchase Agreement, dated as of April 29, 2016, among T- Mobile USA, Inc., the guarantor party thereto and Deutsche Telekom AG. Amendment No. 1 to Purchase Agreement, dated as of October 28, 2016, to Purchase Agreement, dated as of April 29, 2016, by and among T-Mobile USA, Inc., the guarantors party thereto and Deutsche Telekom AG. Purchase Agreement, dated as of March 13, 2017, among T- Mobile USA, Inc., the guarantors party thereto and Deutsche Telekom AG. Purchase Agreement, dated as of January 22, 2018, among T- Mobile USA, Inc., the guarantors party thereto and Deutsche Telekom AG. 10.47 10.46 10.45 Unsecured Revolving Credit Agreement, dated as of December 29, 2016, by and among T-Mobile US, Inc., T- Mobile USA, Inc., the several banks and other financial institutions or entities from time to time party thereto as lenders, and Deutsche Telekom AG, as administrative agent. Amendment No. 1, dated as of March 29, 2018, to the Unsecured Revolving Credit Agreement, dated as of December 29, 2016, among T-Mobile USA, Inc., T-Mobile US, Inc., the other guarantors party thereto and Deutsche Telekom AG, as administrative agent and lender. Secured Revolving Credit Agreement, dated as of December 29, 2016, by and among T-Mobile US, Inc., T-Mobile USA, Inc., the several banks and other financial institutions or entities from time to time party thereto as lenders, and Deutsche Telekom AG, as administrative agent. Amendment No. 1, dated as of March 29, 2018, to the Secured Revolving Credit Agreement, dated as of December 29, 2016, among T-Mobile USA, Inc., T-Mobile US, Inc., the other guarantors party thereto and Deutsche Telekom AG, as administrative agent and lender. Amended and Restated MetroPCS Communications, Inc. 2004 Equity Incentive Compensation Plan. 10.50* MetroPCS Communications, Inc. 2010 Equity Incentive 10.49* 10.48 10.51* 10.52* Compensation Plan. Form Change in Control Agreement for MetroPCS Communications, Inc. Form Change in Control Agreement Amendment for MetroPCS Communications, Inc. 120 Exhibit No. Exhibit Description 10.53* MetroPCS Communications, Inc. Employee Non-qualified Stock Option Award Agreement relating to the MetroPCS Communications, Inc. Amended and Restated 2004 Equity Incentive Compensation Plan. 10.54* 10.55* 10.56* 10.57* 10.58* 10.59* 10.60* 10.61* 10.62* 10.63* 10.64* 10.65* 10.66* 10.67* 10.68* 10.69* 10.70* 10.71* 10.72* 10.73* 10.74* 10.75* Form MetroPCS Communications, Inc. 2010 Equity Incentive Compensation Plan Employee Non-Qualified Stock Option Award Agreement. Amended and Restated Employment Agreement, dated as of December 20, 2017, between T-Mobile US, Inc. and J. Braxton Carter. First Amendment, dated as of April 28, 2018, to Amended and Restated Employment Agreement, dated as of December 20, 2017, between T-Mobile US, Inc. and J. Braxton Carter. Second Amendment, dated as of March 25, 2019, to Amended and Restated Employment Agreement, dated as of December 20, 2017, between T-Mobile US, Inc. and J. Braxton Carter. Third Amendment to Amended and Restated Employment Agreement, effective as of November 15, 2019, between T- Mobile US, Inc. and J. Braxton Carter. Amended and Restated Employment Agreement, dated as of March 28, 2017, between T-Mobile US, Inc. and John J. Legere. First Amendment, dated as of April 28, 2018, to Amended and Restated Employment Agreement, dated as of April 1, 2017, between T-Mobile US, Inc. and John Legere. Employment Agreement, effective November 15, 2019, between T-Mobile US, Inc. and Michael Sievert. Letter Agreement, dated as of February 19, 2018, between T- Mobile US, Inc. and David R. Carey. Compensation Term Sheet, dated as of April 28, 2018, by and between T-Mobile US, Inc. and David R. Carey. Letter Agreement, dated as of April 28, 2018, between T- Mobile US, Inc. and David R. Carey. Compensation Term Sheet between Neville Ray and T- Mobile US, Inc., effective as of November 15, 2019. Form of Severance Letter Agreement. Form of Indemnification and Advancement Agreement. T-Mobile US, Inc. Non-Qualified Deferred Executive Compensation Plan (As Amended and Restated Effective as of January 1, 2014). First Amendment to T-Mobile US, Inc. Non-Qualified Deferred Executive Compensation Plan T-Mobile US, Inc. Executive Continuity Plan as Amended and Restated Effective as of January 1, 2014. T-Mobile US, Inc. 2013 Omnibus Incentive Plan (as amended and restated on August 7, 2013). Amendment to T-Mobile US, Inc. 2013 Omnibus Incentive Plan (as amended and restated on August 7, 2013). T-Mobile USA, Inc. 2011 Long-Term Incentive Plan. Annual Incentive Award Notice under the 2013 Omnibus Incentive Plan. Form of Restricted Stock Unit Award Agreement for Non- Employee Directors under the T-Mobile US, Inc. 2013 Omnibus Incentive Plan. 121 Incorporated by Reference Form 10-K Date of First Filing 3/1/2013 Exhibit Number 10.9(a) Filed Herein 10-K 2/29/2012 10.12 10-K 2/8/2018 10.69 10-Q 5/1/2018 10.12 10-Q 10/28/2019 10.1 X X X X 10-Q 4/24/2017 10.7 10-Q 5/1/2018 10.10 10-Q 7/26/2019 10.1 10-Q 7/26/2019 10.2 10-Q 7/26/2019 10.3 10-Q 10-K 10-K 5/1/2018 2/8/2018 2/25/2014 10.9 10.76 10.39 10-K 2/7/2019 10.75 8-K 10/25/2013 10.1 10-Q 8/8/2013 10.20 Schedule 14A 10-Q 4/26/2018 Annex A 8/8/2013 10.21 8-K 6/4/2013 10.2 Incorporated by Reference Form Date of First Filing Exhibit Number Filed Herein X X S-8 10-Q 2/19/2015 7/26/2019 99.1 10.4 8-K 04/30/2018 10.1 8-K 9/9/2019 10.1 8-K 04/30/2018 10.3 X X X X X X X X X X X Exhibit No. Exhibit Description 10.76* 10.77* 10.78* 10.79* 10.80* 10.81 10.82 21.1 23.1 24.1 Form of Restricted Stock Unit Award Agreement (Time- Vesting) for Executive Officers under the T-Mobile US, Inc. 2013 Omnibus Incentive Plan. Form of Restricted Stock Unit Award Agreement (Performance-Vesting) for Executive Officers under the T- Mobile US, Inc. 2013 Omnibus Incentive Plan. T-Mobile US, Inc. 2014 Employee Stock Purchase Plan. Amended Director Compensation Program effective as of May 1, 2013 (amended June 4, 2014 and further amended on June 1, 2015, June 16, 2016, June 13, 2017 and June 13, 2019). Support Agreement, dated as of April 29, 2018, by and among SoftBank Group Corp., SoftBank Group Capital Limited, Starburst I, Inc., Galaxy Investment Holdings, Inc., T-Mobile US, Inc., and Deutsche Telekom AG. Second Amended and Restated Commitment Letter, dated as of September 6, 2019, by and among T-Mobile USA, Inc. and the financial institutions party thereto. Financing Matters Agreement, dated as of April 29, 2018, by and between T-Mobile USA, Inc. and Deutsche Telekom AG. Subsidiaries of Registrant. Consent of PricewaterhouseCoopers LLP. Power of Attorney, pursuant to which amendments to this Form 10-K may be filed (included on the signature page contained in Part IV of the Form 10-K). 31.2 31.1 32.1** Certifications of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Certifications of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 101.INS XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. 32.2** 101.SCH XBRL Taxonomy Extension Schema Document. 101.CAL XBRL Taxonomy Extension Calculation Linkbase Document. 101.DEF XBRL Taxonomy Extension Definition Linkbase Document. 101.LAB XBRL Taxonomy Extension Label Linkbase Document. 101.PRE XBRL Taxonomy Extension Presentation Linkbase 104 Document. Cover Page Interactive Data File (the cover page XBRL tags are embedded within the Inline XBRL document). * ** Indicates a management contract or compensatory plan or arrangement. Furnished herein. 122 Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. SIGNATURES February 6, 2020 T-MOBILE US, INC. /s/ John J. Legere John J. Legere Chief Executive Officer POWER OF ATTORNEY Each person whose signature appears below constitutes and appoints John J. Legere, J. Braxton Carter and David A. Miller, and each or any of them, his or her true and lawful attorney-in-fact and agent, each acting alone, with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any or all amendments or supplements (including post-effective amendments) to this Report, and to file the same, with all exhibits thereto, and all documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent, or his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated as of February 6, 2020. Signature Title /s/ John J. Legere John J. Legere /s/ G. Michael Sievert G. Michael Sievert /s/ J. Braxton Carter J. Braxton Carter /s/ Peter Osvaldik Peter Osvaldik /s/ Timotheus Höttges Timotheus Höttges /s/ Srikant Datar Srikant Datar Chief Executive Officer and Director (Principal Executive Officer) President and Chief Operating Officer Director Executive Vice President and Chief Financial Officer (Principal Financial Officer) Senior Vice President, Finance and Chief Accounting Officer (Principal Accounting Officer) Chairman of the Board Director 123 /s/ Lawrence H. Guffey Lawrence H. Guffey /s/ Christian P. Illek Christian P. Illek /s/ Srini Gopalan Srini Gopalan /s/ Bruno Jacobfeuerborn Bruno Jacobfeuerborn /s/ Raphael Kübler Raphael Kübler /s/ Thorsten Langheim Thorsten Langheim /s/ Teresa A. Taylor Teresa A. Taylor /s/ Kelvin R. Westbrook Kelvin R. Westbrook Director Director Director Director Director Director Director Director 124 T-MOBILE US, Inc. Reconciliation of Additional Non-GAAP Financial Measures to GAAP Financial Measures (Unaudited) This Annual Report includes certain additional non-GAAP financial measures for the year ended December 31, 2012 that are not otherwise included in our Form 10-K for the year ended December 31, 2019. The non-GAAP financial measures should be considered in addition to, but not as a substitute for, the information provided in accordance with GAAP. Reconciliations for the non-GAAP financial measures to the most directly comparable GAAP financial measures are provided below. Adjusted EBITDA is reconciled to Net loss as follows: (in millions) Net loss Adjustments: Interest expense to affiliates Interest income Other expense, net Income tax expense Operating loss Depreciation and amortization Impairment charges MetroPCS transaction and integration costs Restructuring costs Other, net (1) Adjusted EBITDA Year Ended December 31, 2012 (7,336) 661 (5) 5 350 (6,325) 3,187 8,134 7 85 (130) 4,958 $ $ (1) Other, net for the year ended December 31, 2012 represents transaction-related retention costs from the terminated AT&T acquisition of T- Mobile USA, Inc., gains/losses on intangible assets, and other material transactions. Other, net transactions may not agree in total to the other, net classification in the Consolidated Statements of Comprehensive Income due to certain routine operating activities that are not excluded from Adjusted EBITDA. Free Cash Flow is calculated as follows: (in millions) Net cash provided by operating activities Cash purchases of property and equipment Free Cash Flow Year Ended December 31, 2012 $ $ 3,862 (2,901) 961 125 [THIS PAGE INTENTIONALLY LEFT BLANK] [THIS PAGE INTENTIONALLY LEFT BLANK] [THIS PAGE INTENTIONALLY LEFT BLANK] SENIOR LEADERSHIP TEAM, DIRECTORS AND BOARD COMMITTEES* Senior Leadership Team Abdul Saad Stephen Kappes Executive Vice President (cid:51)(cid:68)(cid:85)(cid:87)(cid:81)(cid:72)(cid:85)(cid:15)(cid:3) CEO Selection Committee (cid:55)(cid:76)(cid:80)(cid:82)(cid:87)(cid:75)(cid:72)(cid:88)(cid:86)(cid:3)(cid:43)(cid:124)(cid:87)(cid:87)(cid:74)(cid:72)(cid:86)(cid:3)(cid:11)(cid:38)(cid:75)(cid:68)(cid:76)(cid:85)(cid:12) G. Michael Sievert** (cid:68)(cid:81)(cid:71)(cid:3)(cid:38)(cid:75)(cid:76)(cid:72)(cid:73)(cid:3)(cid:55)(cid:72)(cid:70)(cid:75)(cid:81)(cid:82)(cid:79)(cid:82)(cid:74)(cid:92)(cid:3)(cid:50)(cid:73)(cid:192)(cid:70)(cid:72)(cid:85) (cid:55)(cid:82)(cid:85)(cid:70)(cid:75)(cid:3)(cid:43)(cid:76)(cid:79)(cid:79)(cid:3)(cid:44)(cid:81)(cid:89)(cid:72)(cid:86)(cid:87)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3)(cid:51)(cid:68)(cid:85)(cid:87)(cid:81)(cid:72)(cid:85)(cid:86)(cid:3) (cid:38)(cid:75)(cid:85)(cid:76)(cid:86)(cid:87)(cid:76)(cid:68)(cid:81)(cid:3)(cid:51)(cid:17)(cid:3)(cid:44)(cid:79)(cid:79)(cid:72)(cid:78) (cid:51)(cid:85)(cid:72)(cid:86)(cid:76)(cid:71)(cid:72)(cid:81)(cid:87)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:38)(cid:75)(cid:76)(cid:72)(cid:73)(cid:3)(cid:40)(cid:91)(cid:72)(cid:70)(cid:88)(cid:87)(cid:76)(cid:89)(cid:72)(cid:3)(cid:50)(cid:73)(cid:192)(cid:70)(cid:72)(cid:85) Nestor Cano Executive Vice President and Chief Senior Vice President of the Cody M. Sanford Raphael Kübler Thorsten Langheim Teresa A. Taylor (cid:40)(cid:91)(cid:72)(cid:70)(cid:88)(cid:87)(cid:76)(cid:89)(cid:72)(cid:3)(cid:57)(cid:76)(cid:70)(cid:72)(cid:3)(cid:51)(cid:85)(cid:72)(cid:86)(cid:76)(cid:71)(cid:72)(cid:81)(cid:87)(cid:15)(cid:3)(cid:44)(cid:81)(cid:87)(cid:72)(cid:74)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3) (cid:44)(cid:81)(cid:73)(cid:82)(cid:85)(cid:80)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:51)(cid:85)(cid:82)(cid:71)(cid:88)(cid:70)(cid:87)(cid:3)(cid:50)(cid:73)(cid:192)(cid:70)(cid:72)(cid:85) (cid:38)(cid:82)(cid:85)(cid:83)(cid:82)(cid:85)(cid:68)(cid:87)(cid:72)(cid:3)(cid:50)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:50)(cid:73)(cid:192)(cid:70)(cid:72)(cid:15)(cid:3) Transaction Committee (cid:68)(cid:81)(cid:71)(cid:3)(cid:55)(cid:85)(cid:68)(cid:81)(cid:86)(cid:73)(cid:82)(cid:85)(cid:80)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:15)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:54)(cid:87)(cid:85)(cid:68)(cid:87)(cid:72)(cid:74)(cid:76)(cid:70)(cid:3) (cid:39)(cid:72)(cid:88)(cid:87)(cid:86)(cid:70)(cid:75)(cid:72)(cid:3)(cid:55)(cid:72)(cid:79)(cid:72)(cid:78)(cid:82)(cid:80)(cid:3)(cid:36)(cid:42) (cid:55)(cid:75)(cid:82)(cid:85)(cid:86)(cid:87)(cid:72)(cid:81)(cid:3)(cid:47)(cid:68)(cid:81)(cid:74)(cid:75)(cid:72)(cid:76)(cid:80)(cid:3)(cid:11)(cid:38)(cid:75)(cid:68)(cid:76)(cid:85)(cid:12) (cid:36)(cid:71)(cid:89)(cid:76)(cid:86)(cid:82)(cid:85)(cid:3)(cid:87)(cid:82)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:40)(cid:50)(cid:3) John Saw (cid:40)(cid:91)(cid:72)(cid:70)(cid:88)(cid:87)(cid:76)(cid:89)(cid:72)(cid:3)(cid:57)(cid:76)(cid:70)(cid:72)(cid:3)(cid:51)(cid:85)(cid:72)(cid:86)(cid:76)(cid:71)(cid:72)(cid:81)(cid:87)(cid:15) Thorsten Langheim J. Braxton Carter** Advanced and Emerging Technologies (cid:48)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:39)(cid:72)(cid:88)(cid:87)(cid:86)(cid:70)(cid:75)(cid:72)(cid:3)(cid:55)(cid:72)(cid:79)(cid:72)(cid:78)(cid:82)(cid:80)(cid:3)(cid:36)(cid:42)(cid:3) Executive Vice President (cid:37)(cid:82)(cid:68)(cid:85)(cid:71)(cid:3)(cid:82)(cid:73)(cid:3)(cid:48)(cid:68)(cid:81)(cid:68)(cid:74)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:15)(cid:3)(cid:56)(cid:54)(cid:36)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:42)(cid:85)(cid:82)(cid:88)(cid:83)(cid:3) (cid:68)(cid:81)(cid:71)(cid:3)(cid:38)(cid:75)(cid:76)(cid:72)(cid:73)(cid:3)(cid:41)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:50)(cid:73)(cid:192)(cid:70)(cid:72)(cid:85) Matthew A. Staneff** Development Executive Vice President Dow Draper (cid:68)(cid:81)(cid:71)(cid:3)(cid:38)(cid:75)(cid:76)(cid:72)(cid:73)(cid:3)(cid:48)(cid:68)(cid:85)(cid:78)(cid:72)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:50)(cid:73)(cid:192)(cid:70)(cid:72)(cid:85) John J. Legere (cid:40)(cid:91)(cid:72)(cid:70)(cid:88)(cid:87)(cid:76)(cid:89)(cid:72)(cid:3)(cid:57)(cid:76)(cid:70)(cid:72)(cid:3)(cid:51)(cid:85)(cid:72)(cid:86)(cid:76)(cid:71)(cid:72)(cid:81)(cid:87)(cid:15) Emerging Products Directors G. Michael Sievert (cid:38)(cid:75)(cid:85)(cid:76)(cid:86)(cid:87)(cid:76)(cid:68)(cid:81)(cid:3)(cid:51)(cid:17)(cid:3)(cid:44)(cid:79)(cid:79)(cid:72)(cid:78) (cid:47)(cid:68)(cid:90)(cid:85)(cid:72)(cid:81)(cid:70)(cid:72)(cid:3)(cid:43)(cid:17)(cid:3)(cid:42)(cid:88)(cid:73)(cid:73)(cid:72)(cid:92)(cid:3) STOCKHOLDER INFORMATION Corporate Headquarters (cid:20)(cid:21)(cid:28)(cid:21)(cid:19)(cid:3)(cid:54)(cid:40)(cid:3)(cid:22)(cid:27)(cid:87)(cid:75)(cid:3)(cid:54)(cid:87)(cid:17) (cid:37)(cid:72)(cid:79)(cid:79)(cid:72)(cid:89)(cid:88)(cid:72)(cid:15)(cid:3)(cid:58)(cid:36)(cid:3)(cid:28)(cid:27)(cid:19)(cid:19)(cid:25) (cid:51)(cid:85)(cid:72)(cid:86)(cid:76)(cid:71)(cid:72)(cid:81)(cid:87)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:38)(cid:75)(cid:76)(cid:72)(cid:73)(cid:3)(cid:40)(cid:91)(cid:72)(cid:70)(cid:88)(cid:87)(cid:76)(cid:89)(cid:72)(cid:3)(cid:50)(cid:73)(cid:192)(cid:70)(cid:72)(cid:85)(cid:15)(cid:3) Phone:(cid:3)(cid:20)(cid:16)(cid:27)(cid:19)(cid:19)(cid:16)(cid:22)(cid:20)(cid:27)(cid:16)(cid:28)(cid:21)(cid:26)(cid:19) Peter A. Ewens** Timotheus Höttges, Chair (cid:55)(cid:16)(cid:48)(cid:82)(cid:69)(cid:76)(cid:79)(cid:72)(cid:3)(cid:56)(cid:54)(cid:15)(cid:3)(cid:44)(cid:81)(cid:70)(cid:17) (cid:40)(cid:91)(cid:72)(cid:70)(cid:88)(cid:87)(cid:76)(cid:89)(cid:72)(cid:3)(cid:57)(cid:76)(cid:70)(cid:72)(cid:3)(cid:51)(cid:85)(cid:72)(cid:86)(cid:76)(cid:71)(cid:72)(cid:81)(cid:87)(cid:15)(cid:3) (cid:38)(cid:75)(cid:76)(cid:72)(cid:73)(cid:3)(cid:40)(cid:91)(cid:72)(cid:70)(cid:88)(cid:87)(cid:76)(cid:89)(cid:72)(cid:3)(cid:50)(cid:73)(cid:192)(cid:70)(cid:72)(cid:85)(cid:15)(cid:3) Corporate Strategy and Development (cid:39)(cid:72)(cid:88)(cid:87)(cid:86)(cid:70)(cid:75)(cid:72)(cid:3)(cid:55)(cid:72)(cid:79)(cid:72)(cid:78)(cid:82)(cid:80)(cid:3)(cid:36)(cid:42) Teresa A. Taylor Website www.T-Mobile.com Callie R. Field Marcelo Claure (cid:37)(cid:79)(cid:88)(cid:72)(cid:3)(cid:57)(cid:68)(cid:79)(cid:79)(cid:72)(cid:92)(cid:3)(cid:36)(cid:71)(cid:89)(cid:76)(cid:86)(cid:82)(cid:85)(cid:86)(cid:15)(cid:3)(cid:47)(cid:47)(cid:38) Transfer Agent (cid:40)(cid:91)(cid:72)(cid:70)(cid:88)(cid:87)(cid:76)(cid:89)(cid:72)(cid:3)(cid:57)(cid:76)(cid:70)(cid:72)(cid:3)(cid:51)(cid:85)(cid:72)(cid:86)(cid:76)(cid:71)(cid:72)(cid:81)(cid:87)(cid:15)(cid:3) (cid:38)(cid:75)(cid:76)(cid:72)(cid:73)(cid:3)(cid:40)(cid:91)(cid:72)(cid:70)(cid:88)(cid:87)(cid:76)(cid:89)(cid:72)(cid:3)(cid:50)(cid:73)(cid:192)(cid:70)(cid:72)(cid:85)(cid:15)(cid:3) Customer Care (cid:54)(cid:82)(cid:73)(cid:87)(cid:37)(cid:68)(cid:81)(cid:78)(cid:3)(cid:42)(cid:85)(cid:82)(cid:88)(cid:83)(cid:3)(cid:44)(cid:81)(cid:87)(cid:72)(cid:85)(cid:81)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:68)(cid:79)(cid:3) Kelvin R. Westbrook (cid:36)(cid:80)(cid:72)(cid:85)(cid:76)(cid:70)(cid:68)(cid:81)(cid:3)(cid:54)(cid:87)(cid:82)(cid:70)(cid:78)(cid:3)(cid:55)(cid:85)(cid:68)(cid:81)(cid:86)(cid:73)(cid:72)(cid:85)(cid:3) (cid:68)(cid:81)(cid:71)(cid:3)(cid:55)(cid:85)(cid:88)(cid:86)(cid:87)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:15)(cid:3)(cid:47)(cid:47)(cid:38) (cid:38)(cid:75)(cid:76)(cid:72)(cid:73)(cid:3)(cid:50)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:50)(cid:73)(cid:192)(cid:70)(cid:72)(cid:85)(cid:15)(cid:3) (cid:51)(cid:85)(cid:72)(cid:86)(cid:76)(cid:71)(cid:72)(cid:81)(cid:87)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:38)(cid:75)(cid:76)(cid:72)(cid:73)(cid:3)(cid:40)(cid:91)(cid:72)(cid:70)(cid:88)(cid:87)(cid:76)(cid:89)(cid:72)(cid:3)(cid:50)(cid:73)(cid:192)(cid:70)(cid:72)(cid:85)(cid:15)(cid:3) (cid:25)(cid:21)(cid:19)(cid:20)(cid:3)(cid:20)(cid:24)(cid:87)(cid:75)(cid:3)(cid:36)(cid:89)(cid:72)(cid:17) (cid:38)(cid:75)(cid:76)(cid:72)(cid:73)(cid:3)(cid:40)(cid:91)(cid:72)(cid:70)(cid:88)(cid:87)(cid:76)(cid:89)(cid:72)(cid:3)(cid:50)(cid:73)(cid:192)(cid:70)(cid:72)(cid:85)(cid:15) Jon A. Freier (cid:54)(cid:82)(cid:73)(cid:87)(cid:37)(cid:68)(cid:81)(cid:78)(cid:3)(cid:42)(cid:85)(cid:82)(cid:88)(cid:83)(cid:3)(cid:38)(cid:82)(cid:85)(cid:83)(cid:17)(cid:3) (cid:46)(cid:53)(cid:58)(cid:3)(cid:36)(cid:71)(cid:89)(cid:76)(cid:86)(cid:82)(cid:85)(cid:86)(cid:15)(cid:3)(cid:47)(cid:47)(cid:38) (cid:40)(cid:91)(cid:72)(cid:70)(cid:88)(cid:87)(cid:76)(cid:89)(cid:72)(cid:3)(cid:57)(cid:76)(cid:70)(cid:72)(cid:3)(cid:51)(cid:85)(cid:72)(cid:86)(cid:76)(cid:71)(cid:72)(cid:81)(cid:87)(cid:15)(cid:3) (cid:40)(cid:91)(cid:72)(cid:70)(cid:88)(cid:87)(cid:76)(cid:89)(cid:72)(cid:3)(cid:38)(cid:75)(cid:68)(cid:76)(cid:85)(cid:80)(cid:68)(cid:81)(cid:15)(cid:3) (cid:38)(cid:82)(cid:81)(cid:86)(cid:88)(cid:80)(cid:72)(cid:85)(cid:3)(cid:48)(cid:68)(cid:85)(cid:78)(cid:72)(cid:87)(cid:86) (cid:55)(cid:75)(cid:72)(cid:3)(cid:58)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:3)(cid:11)(cid:58)(cid:72)(cid:58)(cid:82)(cid:85)(cid:78)(cid:12) Board Committees Janice Kapner Srikant M. Datar Audit Committee (cid:37)(cid:85)(cid:82)(cid:82)(cid:78)(cid:79)(cid:92)(cid:81)(cid:15)(cid:3)(cid:49)(cid:60)(cid:3)(cid:20)(cid:20)(cid:21)(cid:20)(cid:28) (cid:51)(cid:75)(cid:82)(cid:81)(cid:72)(cid:29)(cid:3)(cid:20)(cid:16)(cid:27)(cid:19)(cid:19)(cid:16)(cid:28)(cid:22)(cid:26)(cid:16)(cid:24)(cid:23)(cid:23)(cid:28) Stock Exchange (cid:55)(cid:16)(cid:48)(cid:82)(cid:69)(cid:76)(cid:79)(cid:72)(cid:3)(cid:56)(cid:54)(cid:15)(cid:3)(cid:44)(cid:81)(cid:70)(cid:17) Executive Vice President and (cid:36)(cid:85)(cid:87)(cid:75)(cid:88)(cid:85)(cid:3)(cid:47)(cid:82)(cid:90)(cid:72)(cid:86)(cid:3)(cid:39)(cid:76)(cid:70)(cid:78)(cid:76)(cid:81)(cid:86)(cid:82)(cid:81)(cid:3)(cid:51)(cid:85)(cid:82)(cid:73)(cid:72)(cid:86)(cid:86)(cid:82)(cid:85)(cid:3)(cid:82)(cid:73)(cid:3) (cid:54)(cid:85)(cid:76)(cid:78)(cid:68)(cid:81)(cid:87)(cid:3)(cid:48)(cid:17)(cid:3)(cid:39)(cid:68)(cid:87)(cid:68)(cid:85)(cid:3)(cid:11)(cid:38)(cid:75)(cid:68)(cid:76)(cid:85)(cid:12) (cid:38)(cid:82)(cid:80)(cid:80)(cid:82)(cid:81)(cid:3)(cid:86)(cid:87)(cid:82)(cid:70)(cid:78)(cid:3)(cid:87)(cid:85)(cid:68)(cid:71)(cid:72)(cid:86)(cid:3)(cid:82)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3) (cid:38)(cid:75)(cid:76)(cid:72)(cid:73)(cid:3)(cid:38)(cid:82)(cid:80)(cid:80)(cid:88)(cid:81)(cid:76)(cid:70)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:3)(cid:50)(cid:73)(cid:192)(cid:70)(cid:72)(cid:85) Business Administration and Senior Teresa A. Taylor (cid:49)(cid:36)(cid:54)(cid:39)(cid:36)(cid:52)(cid:3)(cid:42)(cid:79)(cid:82)(cid:69)(cid:68)(cid:79)(cid:3)(cid:54)(cid:72)(cid:79)(cid:72)(cid:70)(cid:87)(cid:3)(cid:48)(cid:68)(cid:85)(cid:78)(cid:72)(cid:87)(cid:3) (cid:36)(cid:86)(cid:86)(cid:82)(cid:70)(cid:76)(cid:68)(cid:87)(cid:72)(cid:3)(cid:39)(cid:72)(cid:68)(cid:81)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:56)(cid:81)(cid:76)(cid:89)(cid:72)(cid:85)(cid:86)(cid:76)(cid:87)(cid:92)(cid:3)(cid:36)(cid:73)(cid:73)(cid:68)(cid:76)(cid:85)(cid:86)(cid:15)(cid:3) (cid:46)(cid:72)(cid:79)(cid:89)(cid:76)(cid:81)(cid:3)(cid:53)(cid:17)(cid:3)(cid:58)(cid:72)(cid:86)(cid:87)(cid:69)(cid:85)(cid:82)(cid:82)(cid:78) Michael J. Katz (cid:43)(cid:68)(cid:85)(cid:89)(cid:68)(cid:85)(cid:71)(cid:3)(cid:37)(cid:88)(cid:86)(cid:76)(cid:81)(cid:72)(cid:86)(cid:86)(cid:3)(cid:54)(cid:70)(cid:75)(cid:82)(cid:82)(cid:79) T-Mobile US, Investor Relations (cid:40)(cid:91)(cid:72)(cid:70)(cid:88)(cid:87)(cid:76)(cid:89)(cid:72)(cid:3)(cid:57)(cid:76)(cid:70)(cid:72)(cid:3)(cid:51)(cid:85)(cid:72)(cid:86)(cid:76)(cid:71)(cid:72)(cid:81)(cid:87)(cid:15)(cid:3) T-Mobile for Business Ronald D. Fisher Compensation Committee (cid:46)(cid:72)(cid:79)(cid:89)(cid:76)(cid:81)(cid:3)(cid:53)(cid:17)(cid:3)(cid:58)(cid:72)(cid:86)(cid:87)(cid:69)(cid:85)(cid:82)(cid:82)(cid:78)(cid:3)(cid:11)(cid:38)(cid:75)(cid:68)(cid:76)(cid:85)(cid:12) (cid:20)(cid:3)(cid:51)(cid:68)(cid:85)(cid:78)(cid:3)(cid:36)(cid:89)(cid:72)(cid:17) (cid:20)(cid:23)(cid:87)(cid:75)(cid:3)(cid:41)(cid:79)(cid:82)(cid:82)(cid:85) Deeanne King** (cid:39)(cid:76)(cid:85)(cid:72)(cid:70)(cid:87)(cid:82)(cid:85)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:57)(cid:76)(cid:70)(cid:72)(cid:3)(cid:38)(cid:75)(cid:68)(cid:76)(cid:85)(cid:80)(cid:68)(cid:81)(cid:15)(cid:3) (cid:54)(cid:82)(cid:73)(cid:87)(cid:37)(cid:68)(cid:81)(cid:78)(cid:3)(cid:42)(cid:85)(cid:82)(cid:88)(cid:83)(cid:3)(cid:38)(cid:82)(cid:85)(cid:83)(cid:17)(cid:3) Executive Vice President and (cid:39)(cid:76)(cid:85)(cid:72)(cid:70)(cid:87)(cid:82)(cid:85)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:38)(cid:75)(cid:68)(cid:76)(cid:85)(cid:80)(cid:68)(cid:81)(cid:15)(cid:3) Marcelo Claure (cid:38)(cid:75)(cid:85)(cid:76)(cid:86)(cid:87)(cid:76)(cid:68)(cid:81)(cid:3)(cid:51)(cid:17)(cid:3)(cid:44)(cid:79)(cid:79)(cid:72)(cid:78) (cid:53)(cid:68)(cid:83)(cid:75)(cid:68)(cid:72)(cid:79)(cid:3)(cid:46)(cid:129)(cid:69)(cid:79)(cid:72)(cid:85) (cid:49)(cid:72)(cid:90)(cid:3)(cid:60)(cid:82)(cid:85)(cid:78)(cid:15)(cid:3)(cid:49)(cid:60)(cid:3)(cid:20)(cid:19)(cid:19)(cid:20)(cid:25) investor.relations@T-Mobile.com (cid:51)(cid:75)(cid:82)(cid:81)(cid:72)(cid:29)(cid:3)(cid:20)(cid:16)(cid:27)(cid:26)(cid:26)(cid:16)(cid:21)(cid:27)(cid:20)(cid:16)(cid:55)(cid:48)(cid:56)(cid:54)(cid:3)(cid:82)(cid:85)(cid:3) (cid:38)(cid:75)(cid:76)(cid:72)(cid:73)(cid:3)(cid:43)(cid:88)(cid:80)(cid:68)(cid:81)(cid:3)(cid:53)(cid:72)(cid:86)(cid:82)(cid:88)(cid:85)(cid:70)(cid:72)(cid:86)(cid:3)(cid:50)(cid:73)(cid:192)(cid:70)(cid:72)(cid:85) (cid:54)(cid:37)(cid:3)(cid:44)(cid:81)(cid:89)(cid:72)(cid:86)(cid:87)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3)(cid:36)(cid:71)(cid:89)(cid:76)(cid:86)(cid:72)(cid:85)(cid:86)(cid:3)(cid:11)(cid:56)(cid:54)(cid:12)(cid:3)(cid:44)(cid:81)(cid:70)(cid:17) Thorsten Langheim (cid:20)(cid:16)(cid:21)(cid:20)(cid:21)(cid:16)(cid:22)(cid:24)(cid:27)(cid:16)(cid:22)(cid:21)(cid:20)(cid:19) Susan Loosmore Srini Gopalan Nominating and Corporate Annual Report (cid:40)(cid:91)(cid:72)(cid:70)(cid:88)(cid:87)(cid:76)(cid:89)(cid:72)(cid:3)(cid:57)(cid:76)(cid:70)(cid:72)(cid:3)(cid:51)(cid:85)(cid:72)(cid:86)(cid:76)(cid:71)(cid:72)(cid:81)(cid:87)(cid:15)(cid:3) (cid:48)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:37)(cid:82)(cid:68)(cid:85)(cid:71)(cid:3)(cid:82)(cid:73)(cid:3)(cid:48)(cid:68)(cid:81)(cid:68)(cid:74)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:15)(cid:3) Governance Committee (cid:55)(cid:75)(cid:72)(cid:3)(cid:21)(cid:19)(cid:20)(cid:28)(cid:3)(cid:36)(cid:81)(cid:81)(cid:88)(cid:68)(cid:79)(cid:3)(cid:53)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:3)(cid:76)(cid:86)(cid:3)(cid:68)(cid:89)(cid:68)(cid:76)(cid:79)(cid:68)(cid:69)(cid:79)(cid:72)(cid:3) Financial Planning & Analysis (cid:39)(cid:72)(cid:88)(cid:87)(cid:86)(cid:70)(cid:75)(cid:72)(cid:3)(cid:55)(cid:72)(cid:79)(cid:72)(cid:78)(cid:82)(cid:80)(cid:3)(cid:36)(cid:42)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:40)(cid:88)(cid:85)(cid:82)(cid:83)(cid:72) (cid:55)(cid:72)(cid:85)(cid:72)(cid:86)(cid:68)(cid:3)(cid:36)(cid:17)(cid:3)(cid:55)(cid:68)(cid:92)(cid:79)(cid:82)(cid:85)(cid:3)(cid:11)(cid:38)(cid:75)(cid:68)(cid:76)(cid:85)(cid:12) online at www.T-Mobile.com. Jeremy Malasky (cid:54)(cid:72)(cid:81)(cid:76)(cid:82)(cid:85)(cid:3)(cid:57)(cid:76)(cid:70)(cid:72)(cid:3)(cid:51)(cid:85)(cid:72)(cid:86)(cid:76)(cid:71)(cid:72)(cid:81)(cid:87)(cid:15)(cid:3) Lawrence H. Guffey (cid:48)(cid:68)(cid:81)(cid:68)(cid:74)(cid:76)(cid:81)(cid:74)(cid:3)(cid:51)(cid:68)(cid:85)(cid:87)(cid:81)(cid:72)(cid:85)(cid:15)(cid:3) (cid:54)(cid:85)(cid:76)(cid:81)(cid:76)(cid:3)(cid:42)(cid:82)(cid:83)(cid:68)(cid:79)(cid:68)(cid:81) (cid:54)(cid:87)(cid:82)(cid:70)(cid:78)(cid:75)(cid:82)(cid:79)(cid:71)(cid:72)(cid:85)(cid:86)(cid:3)(cid:80)(cid:68)(cid:92)(cid:3)(cid:85)(cid:72)(cid:70)(cid:72)(cid:76)(cid:89)(cid:72)(cid:3)(cid:70)(cid:82)(cid:83)(cid:76)(cid:72)(cid:86)(cid:3) without charge by contacting Investor Executive Committee (cid:53)(cid:72)(cid:79)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:17) (cid:38)(cid:82)(cid:85)(cid:83)(cid:82)(cid:85)(cid:68)(cid:87)(cid:72)(cid:3)(cid:54)(cid:72)(cid:85)(cid:89)(cid:76)(cid:70)(cid:72)(cid:86)(cid:15)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:38)(cid:75)(cid:76)(cid:72)(cid:73)(cid:3)(cid:82)(cid:73)(cid:3)(cid:54)(cid:87)(cid:68)(cid:73)(cid:73) Twin Point Capital (cid:55)(cid:76)(cid:80)(cid:82)(cid:87)(cid:75)(cid:72)(cid:88)(cid:86)(cid:3)(cid:43)(cid:124)(cid:87)(cid:87)(cid:74)(cid:72)(cid:86)(cid:3)(cid:11)(cid:38)(cid:75)(cid:68)(cid:76)(cid:85)(cid:12) David A. Miller** Christian P. Illek Marcelo Claure (cid:53)(cid:82)(cid:81)(cid:68)(cid:79)(cid:71)(cid:3)(cid:39)(cid:17)(cid:3)(cid:41)(cid:76)(cid:86)(cid:75)(cid:72)(cid:85) Executive Vice President and (cid:38)(cid:75)(cid:76)(cid:72)(cid:73)(cid:3)(cid:41)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:72)(cid:3)(cid:50)(cid:73)(cid:192)(cid:70)(cid:72)(cid:85)(cid:15) (cid:47)(cid:68)(cid:90)(cid:85)(cid:72)(cid:81)(cid:70)(cid:72)(cid:3)(cid:43)(cid:17)(cid:3)(cid:42)(cid:88)(cid:73)(cid:73)(cid:72)(cid:92) (cid:42)(cid:72)(cid:81)(cid:72)(cid:85)(cid:68)(cid:79)(cid:3)(cid:38)(cid:82)(cid:88)(cid:81)(cid:86)(cid:72)(cid:79)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:54)(cid:72)(cid:70)(cid:85)(cid:72)(cid:87)(cid:68)(cid:85)(cid:92) (cid:39)(cid:72)(cid:88)(cid:87)(cid:86)(cid:70)(cid:75)(cid:72)(cid:3)(cid:55)(cid:72)(cid:79)(cid:72)(cid:78)(cid:82)(cid:80)(cid:3)(cid:36)(cid:42) Neville Ray** President of Technology * As of April 6, 2020 (cid:13)(cid:13)(cid:3)(cid:40)(cid:91)(cid:72)(cid:70)(cid:88)(cid:87)(cid:76)(cid:89)(cid:72)(cid:3)(cid:50)(cid:73)(cid:192)(cid:70)(cid:72)(cid:85) (cid:38)(cid:75)(cid:85)(cid:76)(cid:86)(cid:87)(cid:76)(cid:68)(cid:81)(cid:3)(cid:51)(cid:17)(cid:3)(cid:44)(cid:79)(cid:79)(cid:72)(cid:78) (cid:53)(cid:68)(cid:83)(cid:75)(cid:68)(cid:72)(cid:79)(cid:3)(cid:46)(cid:129)(cid:69)(cid:79)(cid:72)(cid:85) Thorsten Langheim (cid:42)(cid:17)(cid:3)(cid:48)(cid:76)(cid:70)(cid:75)(cid:68)(cid:72)(cid:79)(cid:3)(cid:54)(cid:76)(cid:72)(cid:89)(cid:72)(cid:85)(cid:87)

Continue reading text version or see original annual report in PDF format above