T-Mobile US
Annual Report 2021

Plain-text annual report

UNSTOPPABLE UN-CARRIER 2021 ANNUAL REPORT  HIGHEST    EVER GROWTH YEAR Year after winning year, T-Mobile’s Un-carrier revolution continues to change the wireless industry, delivering the best value and best experiences on America’s largest and fastest nationwide 5G network. In 2021 we posted our strongest results ever, exceeding not only our own bold goals for profitability and customer growth, but Wall Street expectations as well. By year end, we also further extended our unrivaled 5G network leadership to reach 310M people, 210M of whom are covered by super-fast Ultra Capacity 5G. This record-setting year was particularly momentous for the Un-carrier because it was our first full year as a combined company since the close of the Sprint merger. We used our expanded network, scale and resources to deliver 5G for All and build a more connected and sustainable future for our stakeholders. In 2021 we laid the foundation of a new Un-carrier era through great execution and strategic investments—and as we head into 2022 our winning formula uniquely positions T-Mobile to accelerate growth across multiple paths that have the potential to unlock shareholder value for years to come. Continuing our trend of unstoppable growth momentum, in 2021 the Un-carrier saw its best postpaid customer net add growth EVER. Our postpaid net customer additions of 5.5M were not only our highest ever, but they also led the industry for the seventh consecutive year. We also added 1.2M postpaid net accounts—the most in the industry—and more than doubled 2020’s adds. This measure of total billing relationships is an important barometer of wireless network switching, a battle T-Mobile is clearly winning. We also delivered 2.9M postpaid phone net adds, up 32% from last year, and our T-Mobile branded postpaid phone churn in 2021 was the lowest in the industry for the second year in a row. On top of all that, we not only had the highest phone gross adds in the industry, but we had the highest in T-Mobile 1 0 8 . 7 M 1 0 2 . 1 M8 6 0 M . RESULTS 2021 CUSTOMER HIGHLIGHTS 1.2M POSTPAID NET ACCOUNT ADDITIONS More than doubled YoY 5.5M POSTPAID NET CUSTOMER ADDITIONS A record high, exceeding guidance history! As of year end, we closed out 2021 with a total net customer count of 108.7M, a record high. 7 9 . 7 M 7 1 . 5 M . 7 2 6 M TOTAL CUSTOMERS (END OF YEAR) . 6 3 3 M . 5 5 0 M 4 6 . 7 M . 3 3 4 M 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 AT&T Inc. historically does not disclose postpaid net account additions. The results and analysis presented in this report include the impact of T-Mobileʼs merger with “Sprint” Corporation on a prospective basis from the close date of April 1, 2020, and the impact of the acquisition of Shentelʼs Wireless Assets on a prospective basis from the close date of July 1, 2021. Historical results prior to the respective close dates have not been retroactively adjusted. As such, the year-over-year changes may not be meaningful as further detailed in this annual report. STRONG STRONG STRONG STRONG FINANCIALS We’ve said it before, and it proved true again in 2021: Put customers first and results will follow. Customers flocked to the best value proposition on the nation’s largest and fastest 5G network, leading to yet another record-setting year of Service Revenues, record Net Cash Provided by Operating Activities and record Free Cash Flow. The Un-carrier has a proven track record of converting customer growth into revenue growth, and most importantly, investing in the network, products and services that bring even more happy customers. T-Mobileʼs synergy- backed model enables conversion of record service revenues into industry-leading cash flow growth. Year after year, this is how we win—and this journey is just getting started. 2021 FINANCIAL RESULTS TOTAL REVENUES SERVICE REVENUES $80.1B $68.4B IN 2020 $58.4B $50.4B IN 2020 NET INCOME $3.0B $3.1B IN 2020 NET CASH Provided by Operating Activities $13.9B $8.6B IN 2020 CORE ADJUSTED EBITDA $23.6B $20.4B IN 2020 FREE CASH FLOW Excluding Gross Payments for the Settlement of Interest Rate Swaps $5.6B $3.0B IN 2020 Core Adjusted EBITDA and Free Cash Flow excluding gross payments for the settlement of interest rate swaps are non-GAAP financial measures. Definitions, explanations, and reconciliations to the most directly comparable GAAP measures are provided in our annual report on Form 10-K for the year ended December 31, 2021, which is included herewith as a portion of this annual report to stockholders. LARGEST Americaʼs Largest 5G Network - Nearly 2x the geographic coverage of AT&Tʼs and nearly 5x Verizonʼs - Extended Range 5G covers 310M people or 94% of U.S. population - First to launch mid-band 5G; already covers 210M people nationwide UNRIVALED NETWORK LEADERSHIP With America’s ONLY nationwide stand-alone 5G network, T-Mobile is the clear leader in the 5G race. In 2021, we set an audacious goal of getting Ultra Capacity 5G to 200M people, and once again we crushed that goal, reaching 210M at yearʼs end. To understand the magnitude of this unprecedented feat, it takes roughly three times the number of cell-site upgrades to get from 100M to 200M—and we did it in just one year! And don’t forget that at the end of 2021, our Extended Range 5G covered 94% of Americans, including 310M people across 1.8 million square miles—delivering nearly five times more geographic coverage than Verizon and nearly two times more than AT&T. FASTEST Americaʼs Fastest 5G Network* - Delivering speeds faster than Wi-Fi to more people than any other wireless provider** - More than 20 third-party network reports last year: TMUS is #1 in 5G speed and availability Network and coverage data current as of December 31, 2021 4G LTE 5G EXTENDED RANGE 5G ULTRA CAPACITY *Fastest based on median, overall combined 5G speeds according to analysis by Ookla® of Speedtest Intelligence® data 5G download speeds for Q4 2021. Ookla trademarks used under license and reprinted with permission. ** Based on analysis by T-Mobile of Speedtest Intelligence® data from Ookla® U.S. median 5G T-Mobile speed tests from cities with 2.5GHz deployed compared to mobile Wi-Fi results for Q4 2021. Ookla trademarks used under license and reprinted with permission. 5G 5G 5G 5G 5G EXTENDINGOUR 5G FURTHER The Un-carrier is continuing to set the pace for the 5G era thanks to our superior spectrum portfolio, unprecedented deployment rate and synergy-backed model. As the only telecom with deployed, dedicated mid-band spectrum nationwide, T-Mobile continues to expand the breadth and depth of our 5G footprint, including in smaller markets and rural areas and with new product experiences like High Speed Internet, which has helped provide more choices for customers. We’re also planning to bring Ultra Capacity 5G to 260M people in 2022 and 300M in 2023—which will expand our geographic coverage by FIVE TIMES what it is today. We’re not slowing down! 5G 5G 5G 5G 5G 5G LEADERSHIP Plan to bring Ultra Capacity 5G to 260M by year-end 2022 and 300M by year-end 2023 Added to industry-best mid-band portfolio with purchase of 3.45Hz spectrum Tripled our Ultra Capacity 5G square mileage in 2021 and plan for 3x again in 2022 Fueling 5G innovation with T-Mobile Accelerator, Tech Experience 5G Hub and 5G Open Innovation Lab 5G 5G 5G 5G 5G ACCELERATING INTEGRATION SYNERGIES & Our business is firing on all cylinders as we continue our integration of the largest merger in telecom history. We realized $3.8B in merger synergies, nearly tripling year over year. And our merger synergies are expected to further ramp up to between $5.0B and $5.3B in 2022. True to form, we’re doing better than planned. Network migration is the most challenging aspect of integration, and even there we’re ahead of schedule. By the end of 2021, 64% of Sprint customers had been migrated to the T-Mobile network. This is even more impressive when you consider that fewer than 10% were migrated at the end of 2020! At that accelerated pace, we expect to wrap up network migration by mid-2022, putting us on track to complete integration in three years rather than four and to deliver approximately $7.5B in synergies per year by 2024. NETWORK MIGRATION By the end of 2021, 64% of Sprint customers migrated to the T-Mobile network. SYNERGIES We delivered $3.8B in merger synergies in 2021, up 3x year over year, and expect to deliver $5.0B– $5.3B in merger synergies in 2022. TO MORE PEOPLE IN MORE PLACES WITH OUR WINNING COMBINATION OF NETWORK AND VALUE 5G for All–Including Small Town America T-Mobile is committed to bringing our winning formula to America’s under-served smaller markets and rural areas. This is 40% of the country where we haven’t meaningfully played before. In 2021, we grew our presence and expanded the reach of our network and distribution, including hundreds of new stores and millions of investments in small town USA that increased our market share from approximately 13% to roughly 15%. This is also one of the many places our network leadership stands out, as we’re the only 5G game in town for many of these communities. As our network expansion continues, we plan to reach 99% of Americans with 5G—including 300M people with our Ultra Capacity 5G—by the end of 2023, by which time other carriers aspire to cover only 175M to 200M people with mid-band 5G. And it’s not just our wireless network that’s reaching more people than ever, but broadband too—which is especially important in those places that have only one option, or sometimes, none at all. In 2021, we brought High Speed Internet connectivity options to millions of households in these rural communities, and we’re just getting started! High Speed Internet: From Pilot to Performer At the beginning of 2021, T-Mobile High Speed Internet was still in pilot phase and by year end it had attracted 646K customers, far exceeding our expectation of 500K. In Q4 2021, the Un-carrier was the fastest-growing broadband provider in the industry! Just consider the fact that we added more wireless broadband customers in Q4 alone than Verizon has added in total since their launch three years ago. Customers love the network performance and the simplicity of this 5G-based product, and we love that 40% of them are new to T-Mobile, creating another front door to fuel our mobile growth. DELIVERING THEBESTCUSTOMER EXPERIENCES When it comes to enterprise-grade T-Mobile for Business: Another Great Year 5G solutions, T-Mobile for Business is delivering differentiated network experiences that set us apart. Through continued hands-on testing with major business customers we’ve proven the superior strength of our network, and as a result in 2021 we delivered win share well above our market share. Just to put that in perspective, as of year-end 2021, T-Mobile was already at a win share in Enterprise and Government that would get us to our targeted 20% market share by 2025. We already have revenue-generating 5G advanced network services in place with large enterprise businesses—including a large logistics company, as well as the federal government—and that will continue to serve as a growth engine for T-Mobile. We are just at the beginning of expanding our solutions and capabilities for large organizations, and we have lots of room to run! Our Commitment to Taking Care of Customers Putting customers first and treating them right is at the heart of who we are at T-Mobile—that will never change. As we work to help customers solve pain points through our unique and personalized Team of Experts (TEX) approach, our unstoppable Care team furthers our Un-carrier mission of being the best in the world at connecting customers to their world. This best-in-class service was recognized in 2021 by third parties like J.D. Power, with Metro by T-Mobile earning first place in the first half of 2021 in its segment for the 10th time and T-Mobile once again winning the top spot for the 9th consecutive award period and 23rd time overall! In 2021, we began expanding TEX to our Sprint customer base, ending the year with millions of Sprint customers getting a true TEX experience. We love our customers and the employees who support them every day—and it shows: our Customer Experience Centers won more than 20 Best Place to Work Awards last year alone! USING OUR NETWORK, SCALE & RESOURCES FOR FOR Bridging the Digital Divide In 2021, we also further extended our efforts to help bridge the digital divide by removing economic and geographic barriers to connectivity. By the end of 2021, Project 10Million—our $10.7B initiative that officially launched in 2020—had brought free or subsidized connectivity to nearly 1,500 school districts, and all in all we’ve connected ~3.2M students nationwide. Our 5G High Speed Internet is giving families a new option for affordable, reliable home broadband that’s available to 30M homes nationwide, with millions of those in rural areas. In light of pandemic hardships, the Un-carrier launched T-Mobile Connect, its lowest-priced plan ever, and recently expanded our participation in the federal government’s Affordable Connectivity Program (ACP) to Metro by T-Mobile in addition to ongoing support from Assurance Wireless. Fostering Diversity, Equity and Inclusion In early 2021, T-Mobile continued to evolve and expand our longstanding commitment to Diversity, Equity and Inclusion (DE&I) with the launch of our new Equity In Action plan. The plan is based on feedback from our employees, key external stakeholders and customers, and gives us a five-year DE&I plan and road map to lead by example, put people first and ensure that DE&I remains at the core of everything we do. As part of our Equity In Action plan, we invested millions in new programs for students entering Historically Black Colleges and Universities (HBCUs), the NextTech Diversity Program for career training and placement for thousands of underrepresented candidates, and Magenta Edge, a professional development resource for Black entrepreneurs and other people of color. T-Mobile also expanded its longstanding support of organizations that serve LGBTQ+ youth with a $1M donation to the Human Rights Campaign (HRC) Foundation’s new financial and digital literacy initiatives. And for the ninth year in a row, T-Mobile was awarded a 100% score on the 2021 Human Rights Campaign Corporate Equality Index, recognizing that we’ve created one of the best places to work for LGBTQ+ employees. Mobilizing for a Thriving Planet 2021 was a milestone year for the Un-carrier’s environmental efforts. Back in 2018, T-Mobile was the first and only U.S. provider to create a plan to source 100% of our total electricity usage with renewable energy by the end of 2021. It was an ambitious goal we deeply believed in, and in one of our proudest moments, last year we achieved it—far ahead of our competitors, even as a historic merger expanded our electricity needs. In addition, T-Mobile has also led Green America’s Wireless Scorecard three years in a row, and we received a top grade in the 2021 CDP Climate Change questionnaire. ACCELERATING INTO A NEW UN-CARRIER ERA In 2021, T-Mobile has experienced our greatest momentum in company history. The investments we made and will make in the coming year will enable us to grow customer AND service revenues while further expanding in underpenetrated markets—all with a focus on solving customer pain points and further connecting them to their world. And as we take our network build to yet another level in 2022 and beyond, we’ll keep using our scale and resources to change the rules of wireless for the benefit of customers and force the industry to follow. We’re already setting a new standard for wireless, but this journey is just getting started. We are entering a new era of Un-carrier and no goal is too ambitious or transformative when you’re focused on doing what’s right for customers. # WE # WONT STOP # # # # financial results. America’s only stand-alone nationwide 5G network. T-Mobile did it all in 2021, thanks to of the Un-carrier. Our path into the future centric Un-carrier brand. We’re grateful Record customer growth. Spectacular to our employees and customers—and people along into this thrilling new era we look forward to bringing even more our unwavering belief in our customer- couldn’t be brighter. 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, 2021 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 TM T-MOBILE US, INC. (Exact name of registrant as specified in its charter) Delaware (State or other jurisdiction of incorporation or organization) 20-0836269 (I.R.S. Employer Identification No.) 12920 SE 38th Street Bellevue, Washington (Address of principal executive offices) 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 Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securitie Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes Indicate by check mark whether the registrant (1) has filedff Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to filff e such reports), and (2) has been subject to such filing requirements for Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. all reports required to be filed by Section 13 or 15(d) of a non-accelerated filer, a smaller the past 90 days. Yes ☒ No ☐ s Act. Yes ☒ No the Securities RR ff ff ff No ☒ Large accelerated filer ff Non-accelerated filer ff ☒ ☐ 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 ff complying with any new or revised financial accounting standards provide Indicate by check mark whether the registrant has filedff of its internal control over financial reporting unde ff public accounting firm that prepared or issued its audit report. ☒ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). As of June 30, 2021, the aggregate market value of the voting and non-voting common equity held by non-affiliates was $86.1 billion based on the closing sale price as reported on the NASDAQ Global Select Market. As of February 7, 2022, there were 1,249,289,954 shares of common stock outstanding. r Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered a report on and attestation to its management’s assessment of the effectiveness d pursuant to Section 13(a) of the Exchange Act. ☐ ☐ No ☒ Yes RR DOCUMENTS INCORPORATED BY REFERENCE Part III of this Annual Report on Form 10-K will be incorporated by reference from certain portions of the definitive Proxy Statement for the Registrant’s 2022 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, 2021 Table of Contents PART I. Item 1. Business Item 1A. Item 1B. Item 2. Item 3. Item 4. Risk Factors Unresolved Staff Comments Properties Legal Proceedings Mine Safetff y Disclosures PART II. Item 5. Item 6. Item 7. Item 7A. Item 8. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities [Reserved] Management’s Discussion and Analysis of Financial Condition and Results of Operations Quantitative and Qualitative Disclosures About Market Risk Financial Statements and Supplementary Data Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure Item 9A. Item 9B. Item 9C. PART III. Item 10. Item 11. Item 12. Item 13. Item 14. PART IV. Controls and Procedures Other Information Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 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 Accountant Fees and Services Item 15. Exhibit and Financial Statement Schedules Item 16. Form 10-K Summary Index to Exhibits Signatures 5 11 25 25 26 26 26 27 28 53 53 115 115 116 116 116 116 116 117 117 117 117 118 132 2 Cautionary Statement Regarding Forward-Looking Statements ff This Annual Report on Form 10-K (“Form 10-K”) includes forwa Securities Litigation Reform Act of 1995. All statements, other than statements of historical facff concerning our future results of operations, are forward-looking statements. These forwff 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 that 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 affecff materially fromff rd-looking statements within the meaning of the Private those expressed in the forward-looking statements: results and cause those results to differ ard-looking statements are generally t, including information t futff uret • • • • • • • • • • • • • • • • • • • • • adverse impact caused by the COVID-19 pandemic (the “Pandemic”); competition, industry consolidation and changes in the market for wireless services; r disrupti on, data loss or other security breaches, such as the criminal cyberattack we became aware of in August 2021; our inabila ity to take advantage of technological developments on a timely basis; our inabila ity to retain or motivate key personnel, hire qualified personnel or maintain our corporate culture; t system failures and business disruptions, allowing for unauthorized use of or interference with our network and other systems; ion (“DISH”) of the prepaid wireless business operated under the Boost Mobile and Sprint prepaid brands the scarcity and cost of additional wireless spectrum, and regulations relating to spectrum use; the impacts of the actions we have taken and conditions we have agreed to in connection with the regulatory proceedings and approvals of the Transactions (as defined below), including the acquisition by DISH Network Corporat r (excluding the Assurance brand Lifeline customers and the prepaid wireless customers of Shenandoah Personal Communications Company LLC (“Shentel”) and Swiftel Communications, Inc.), including customer accounts, inventory, contracts, intellectual property and certain other specified assets (the “Prepaid Business”), and the assumptim on of certain related liabia lities (collectively, the “Prepaid Transaction”), the complaint and proposed final judgment (the “Consent Decree”) agreed to by us, Deutsche Telekom AG (“DT”), Sprint Corporation, now known as Sprint LLC (“Sprint”), SoftBank Group Corp. (“SoftBank”) and DISH with the U.S. District Court for the District of Columbia, which was approve d by the Court on April 1, 2020, the proposed commitments fileff d with the Secretary of the Federal Communications Commission (“FCC”), which we announced on May 20, 2019, certain national security commitments and undertakings, and any other commitments or undertakings entered into, including but not limited to, those we have made to certain states and nongovernmental organizations (collectively, the “Government Commitments”), and the challenges in satisfying the Government Commitments in the required time framff significant cumulative costs incurred in tracking and monitoring compliance; es and the a adverse economic, political or market conditions in the U.S. and international markets, including those caused by the Pandemic; our inabila the Prepaid Transaction, and known or unknown liabilities arising in connection therewith; ity to manage the ongoing commercial and transition services arrangements entered into in connection with the effecff ts of any futuret acquisition, investment, or merger involving us; any disruption or failure of our third parties (including key suppliers) to provide products or services for the operation of our business; our substantial level of indebtedness and our inabila to comply with the restrictive covenants contained therein; ity to service our debt obligations in accordance with their terms or changes in the credit market conditions, credit rating downgrades or an inability to access debt markets; restrictive covenants including the agreements governing our indebtedness and other finaff ncings; ff the risk of future principles and practices of the two companies follow maintain effect ff ff material weaknesses we may identify while we continue to work to integrate and align policies, ing the Merger (as defined below), or any other faiff lure by us to ive internal controls, and the resulting significant costs and reputational damage; any changes in regulations or in the regulatory framework under which we operate; laws and regulations relating to the handling of privacy and data protection; unfavorablea criminal cyberattack we became aware of in August 2021; outcomes of existing or future legal proceedings, including these proceedings and inquiries relating to the the possibility that we may be unablea the intellectual property rights of others; to adequately protect our intellectual property rights or be accused of infringing our offering of regulated finaff ncial services products and exposure to a wide variety of state and federal regulations; 3 • • • • • • • new or amended tax laws or regulations or administrative interpretations and judicial decisions affecting the scope or application of tax laws or regulations; our exclusive forum provision as provided in our Certificate of Incorporation (as defined below); interests of our significant stockholders that may differ from the interests of other stockholders; sales of our common stock by DT and SoftBank and our inabila future ff the United States due to foreign ownership limitations by the FCC; ity to attract additional equity finaff ncing outside re to realize the expected benefits and synergies of the merger (the “Merger”) with Sprint, pursuant to the failuff Business Combination Agreement with Sprint and the other parties named therein (as amended, the “Business Combination Agreement”) and the other transactions contemplated by the Business Combination Agreement (collectively, the “Transactions”) in the expected time frames or in the amounts anticipated; any delay and costs of, or difficulties in, integrating our business and Sprint’s business and operations, and unexpected additional operating costs, customer loss and business disruptions, including challenges in maintaining relationships with employees, customers, suppliers or vendors; and unanticipated difficulties, disruption, or significant delays in our long-term strategy to migrate Sprint’s legacy customers onto T-Mobile’s existing billing platforms. 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,” “our Company,” “the Company,” “we,” “our,” and “us” refer to T-Mobile US, Inc. as a stand-alone company prior to April 1, 2020, the date we completed the Merger with Sprint, and on and afteff r April 1, 2020, refer to the combined company as a result of the Merger. ld /i/i/// nvestor.t (e (hhttps:////t-m bilobile.c -mobille.com)), newsroom web ibsit /t// witter.com/TMobileIR) and the @MikeSievert Twitter account (https:/ e intend to also use certain social media accounts as means of disclosing information about us should note thhat we announce mat dand othhers h bi ieri lal i finformatiion to our iinvestors usingsing our iinvestor ings lreleases, SEC filfilings Investors (h(htt t /ps:/ conference c lallls andd w bebcasts W. and our services and for complying with our disclosure obligations under Regulation FD (the @TMobileIR Twitter account /t// witter.com/MikeSievert), which Mr. Sievert t (https:/ 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 u means of disclosing the information described above website. time to time as listed on our Investor Relations lrelatiions web ibsite publiic bl dand /om/new )s), press may be upda ted fromff a t 4 PART I. Item 1. Business Business Overview and Strategy Un-carrier Strategye We are America’s supercharged 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 signaturet changed wireless for good. We ended annual service contracts, overages, unpredictablea and so much more. We are inspired by a relentless customer experience focus, consistently leading the wireless industry in customer care by delivering award-winning customer experience with our “Team of Experts,” which drives our record-high customer satisfaction levels while enablia international roaming fees, data buckets Un-carrier initiatives that have ng operational efficiencies. As the Un-carrier, we are on a mission to build America’s best 5G network, offering customers unrivalled coverage and capac ity where they live, work and play. Our network is the foundation of our success and powers everything we do. We are a leveraging our mid-band spectrum licenses, including 1700 MHz Advanced Wireless Services (“AWS”), 1900 MHz Personal Communications Services (“PCS”) and 2.5 GHz, our millimeter-wave licenses and our foundational layer of low-band spectrum, including 600 MHz, 700 MHz and 800 MHz, to create a “layer cake” of spectrum to provide an unmatched 5G experience to our customers. We believe this layer cake will broaden and deepen our nationwide 5G network enabling accelerated innovation and increased competm ition in the U.S. wireless, video and broadband industries. As a result of the Merger, we have achieved and expect to continue to achieve significant synergies and cost reductions by eliminating redundancies within our network as well as other business processes and operations. We continue to expand the foot t print 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. and improve the quality of our network, providing outstanding wireless experiences for ff Our Operations wireless communications services to these customers, as well as a wide selection of wireless devices As of December 31, 2021, we provide wireless services to 108.7 million postpaid and prepaid customers and generate revenue by providing affordablea and accessories. Our most significant expenses relate to operating and expanding our network, providing a full m acquiring and retaining high-quality customers and compensat across our flagship brands, T-Mobile and Metro by T-Mobile, through our owned and operated retail stores, as well as through our websites (www.t-mobile.com and www.metrobyt-mobile.com), T-Mobile app, customer care channels and through national retailers. 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. ing employees. We provide services, devices and accessories range of devices, ff 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, by various suppliers. s, tablets and other mobile communication devices, which are manufactured wearablea t Our primary service plan offering, which allows customers to subscribe for wireless communications services separately from the purchase of a device, is our signaturet Magenta plan (“Magenta”), which includes, among other benefits, unlimited talk, text and smartphone data on our network, 5G access at no extra cost, scam protection features and more. Customers also have the ability to choose additional feaff on our Magenta Max plan. We also offer an Essentials rate plan forff plans to qualifying customers, including Unlimited 55+, Military and Veterans, First Responder, and Business. tures, such as unlimited premium data with our Ultra Capaa customers who want the basics, as well as specificff city 5G service, for an additional cost rate 5 Our device options for qualifying customers 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, generally of 24 months, using an equipment installment plan (“EIP”); and The option to lease a device over a period of up to 18 months and upgrade u it when eligibility requirements are met. In addition to our wireless communications services, we offer fast and reliablea network. Our fixed wireless High Speed Internet provides a real alternative to traditional landline internet service providers and expands access to many people who have historically had only one choice or no access to traditional home broadband. With our High Speed Internet plan, customers can access the internet without worrying about annual service contracts, data overages, startupt High Speed Internet utilizing our nationwide costs or hidden feeff s. We also provide products and services that are complementary to our wireless communications services, including device protection and wireline communication services to domestic and international customers. Customers We provide wireless communications services to two primary categories of customers: • • Postpaid customers generally include customers who are qualified to pay after receiving wireless communications services utilizing phones, High Speed Internet, wearables, DIGITS (a service that allows our customers to use multiple mobile numbers on any compatm ible smartphone, wearablea or other device with internet connection) or other connected devices, which include tabla ets and SyncUp products; and Prepaid customers generally include customers who pay forff wireless communications services in advance. Our prepaid customers include customers of T-Mobile and Metro by T-Mobile. We provide Machine-to-Machine (“M2M”) and Mobile Virtual This access and the customer relationship is managed by wholesale partners. t Network Operator (“MVNO”) customers access to our network. We generate the majoa rity of our service revenues by providing wireless communications services to postpaid and prepaid customers. Our ability to attract and retain postpaid and prepaid customers is important to our business in the generation of service revenues, equipment revenues and other revenues. In 2021, our service revenues generated by providing wireless communications services by customer category were: • • • 73% Postpai t d customers; 17% Prepaid customers; and 10% Wholesale and other services. Substantially all of our revenues forff including Puerto Rico and the U.S. Virgin Islands. the years ended December 31, 2021, 2020 and 2019, were earned in the United States, Network Strategy Utilizing our multi-layer spectrum portfolio, our mission is to be “Famous for Network.” We have deployed low-band and mid- band spectrum dedicated forff network. 5G across our dense and broad network to create America’s largest, fastest and most reliable 5G Our Merger with Sprint greatly enhanced our spectrum position. Integration of the spectrum and network assets acquired in the Merger is expected to occur through 2023. The integration strategy includes deploying the acquired spectrum on the combined network assets to supple decommissioning redundant sites to realize synergies. city, migrating Sprint customers to our network and optimizing the combined assets by ment capaa u 6 Spectrumtt Positiii on We provide wireless communications services utilizing mid-band spectrumr . spectrum licenses utilizing our 600 MHz, 700 MHz and 800 MHz spectrum and mmWave spectrumrr licenses, such as AWS, PCS and 2.5 GHz, low-band • We controlled an average of 357 MHz of combined low- and mid-band spectrumrr nationwide as of December 31, 2021. This spectrum is comprised of: • • • • • • • An average of 40 MHz in the 600 MHz band; An average of 10 MHz in the 700 MHz band; An average of 14 MHz in the 800 MHz band; An average of 41 MHz in the 1700 MHz AWS band; An average of 66 MHz in the 1900 MHz PCS band; An average of 159 MHz in the 2.5 GHz band; and An average of 27 MHz in the C-band. • We controlled an average of 1,157 GHz of combined millimeter spectrumr licenses. • • In March 2021, the FCC announced that we were the winning bidder of 142 licenses in Auction 107 (“C-band spectrum”) forff an aggregate purchase price of $9.3 billion. The licenses acquired include an average of 40 MHz across the top markets and an average of 27 MHz nationwide. We expect to incur an additional $1.0 billion in relocation costs associated with the C-band spectrum acquired, which will be paid through 2024. In January 2022, the FCC announced that we were the winning bidder of 199 licenses in Auction 110 (mid-band spectrum) for an aggregate purchase price of $2.9 billion. Subsequent to Auction 110, we will control an average of 12 MHz in the 3.45 GHz band nationwide. • We plan to evaluate futff uret spectrumrr purchases in current and upcoming auctions and in the secondary market to further augment our current spectrum position. • As of December 31, 2021, we had equipment deployed on approximately 102,000 macro cell sites and 41,000 small cell/distributed antenna system sites across our network. 5G Leadershipii : Our 5G network is America’s largest, fastest and most reliablea • • As of December 31, 2021, our Ultra Capacity 5G covers 210 million people and can deliver speeds of 400 Mbps or more. As of December 31, 2021, our Extended Range 5G covers 310 million people, reaching 94% of Americans. Competition The wireless communications services industry is highly competitive. We are the second largest provider of wireless communications services in the U.S. as measured by our total postpaid and prepaid customers. Our competitors include other national carriers, such as AT&T Inc. (“AT&T”) and Verizon Communications, Inc. (“Verizon”). In addition, our competitors include numerous smaller regional carriers, MVNOs, including Comcast Corporation, Charter Communications, Inc., Altice USA, Inc. and DISH, 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 and regulatory changes. Some competitors have shown a willingness to use aggressive pricing or offering bundled services 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 competm e to retain the current customer base and continue to add new customers. 7 Human Capital o Employees As of December 31, 2021, we employed approxi administrative and customer support functions. a mately 75,000 full-time and part-time employees, including network, retail, Attract iontt tt and Retentt tion We employ a highly skilled workforce within a broad range of functions. Substantially all of our employees are located throughout the United States, including Puerto Rico, to serve our nationwide network and retail operations. Our headquarters are located in Bellevue, Washington and Overland Park, Kansas. We attract and retain our workforce through a dynamic and inclusive culturet and by providing exceptional benefits, including: • • • • • • • • Competitive medical, dental and vision benefits; Annual stock grants to all full ff -time and part-time employees and a discounted Employee Stock Purchase Program; A 401(k) Savings Plan; Nationwide minimum pay of at least $20 per hour to all fulff LiveMagenta: a custom-branded program forff coaches, financial coaches and tools for healthy living; Access to personal health advocates offering independent guidance; Tuition assistance forff ff all full -time and part-time employees; and A matching program forff employee donations and volunteering. l-time and part-time employees; employee engagement and well-being, including free access to life Training and Development We believe in providing opportunities for our employe variety of programs, including: m es to improve their skills and advance their careers. We do this through a • • • • • Award-winning career and development programs forff Transparent career paths available to employees and candidates that provide realistic progression timelines, salaries and expectations; all employees at all levels; A Customer Care organization that uses 102 types of programs to train our front line representatives and leaders; A Leader-to-Executives Program that provides elite career track opportunit and t ies forff select MBA students and graduates; Training for employees with disabilities pursuant to U.S. Department of Labor a standards. Diversityii , Eyy quityii and Inclusion Diversity, equity and inclusion (“DE&I”) have always been a part of the Un-carrier culture, DE&I touch every aspect of our future. Our Equity in Action Plan is a fivff e-year plan that spans the values we live by, how we invest in and provide opportunities for our employe es, how we select the suppliers we do business with and how we advocate for our communities. and we are committed to having m t sh and maintain a culturet For our employees, we have establia of inclusion. Currently, we have over 50 DE&I chapters across the nation that help spearhead establia volunteer opportunities, events and meaningful conversation with employees at a local level. Our DE&I networks include the following: shed six DE&I Employee Resource Groups and four sub-affinity groups that have helped us • Accessibility Community at T-Mobile; • Multicultural t Alliance; ◦ ◦ ◦ Asia Pacific & Allies Network; Black Empowerment Network; Indigenous Peoples Network; 8 ◦ Magenta Latinx Network; • Multigenerational Network; • • Pride; Veterans & Allies Network; and • Women & Allies Network. shed an External Diversity and Inclusion Council in connection with our civil rights memorandum of We have establia understanding. The council includes civil rights leaders representing a wide-range of underrepresented communities. Together with T-Mobile, the council will help identify ways to improve our efforts in focus workforce recruitment and retention, procurement, entrepreneurship, philanthropy and community investment. areas such as corporate governance, ff Environmental Sustainability Reducing Carbon Footprintii We are working to do our part to combat climate change and preserve the environment by setting carbon reduction goals that are aligned with science and investing in renewablea through several initiatives, including: energy. We are reducing our carbon footprint t • • • • Setting science-based targets to reduce our Scope 1, 2 and 3 greenhouse gas emissions; Investing in renewable energy, as evidenced by our RE100 pledge, a global initiative that unites businesses committed to 100% renewable energy. We met this goal in 2021 through credits and our engagement in Virtual Power Purchasing Agreements (VPPAs) and a Green Direct tariff agreement with nine clean energy providers for expected annual provision of approximately 3.4 million megawatt hours of renewable energy; Continuously testing and evaluating new, efficient equipment for our facilities, including switch stations, cell sites, retail stores and customer experience centers to reduce energy consumption; and Promoting the circular economy through our device reuse and recycle program, which collects millions of devices for reuse, resale, and recycling annually. Responsible Sourcingii We believe our suppliers are a valuablea expectations around ethical business practices for our suppliers. We require our suppliers to operate in full compliance with laws, rules, regulations and ethical standards of the country in which they operate or provide products or services. We expect our suppliers to share our commitment to ethical conduct and environmentally responsible business practices while they conduct business with or on behalf of us. extension of our business and corporate values. Our Supplier Code of Conduct outlines We employ a third-party risk management (“TPRM”) process to screen forff environmental risks before engaging with a supplier. Our TPRM process also continuously monitors current suppliers for policy violations and risks. anti-corruption, global sanctions, human rights and As DE&I is instrumental to our culture and values, we are on a mission to create fair and equitable opportunit suppliers, including veteran or service-disabled veteran-owned, disability-owned, woman-owned, minority-owned, LGBT- owned and small and disadvantaged businesses. ies forff all t 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 examplem , 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 operating 9 results. 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. ff ncy bands, wireless communications services providers generally must be Except for operations in certain unlicensed freque licensed by the FCC to provide communications services at specified spectrum frequencies within specified geographic areas and must complym with the rules and policies governing the use of the spectrum as adopted by the FCC. The FCC issues each license for a fixff ed 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 forff failure to comply with FCC regulations, even if any such noncomplim ance 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. In addition, the FCC retains the right to modify rules related to use of licensed spectrum, which could impact T-Mobile’s ability to provide services. a Additionally, Congress’s and the FCC’s allocation of additional spectrum for broadband commercial mobile radio service (“CMRS”), which includes cellular, PCS and other wireless services, could significantly increase and intensify competm ition. We cannot assess the impact that any developments that may occur in the U.S. economy or any futuret FCC may have on license values. FCC spectrum auctions and other market developments may adversely affecff t the market value of our licenses or our competitive position 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 affecff carriers. t spectrum resources and competm ition among us and other spectrum allocations by the 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 foreff ownership, even up tu d. Consistent with that establia Company by DT. o 100%, are presumptively consistent with the public interest, but must be reviewed and approve shed policy, the FCC has issued a declaratory ruling authorizing up to 100% ownership of our ign a o 95% of their capacity forff s previously limited eligibility to hold ons and certain governmental, religious and nonprofitff entities, while permitting For our Educational Broadband Service (“EBS”) licenses in the 2.5 GHz band, FCC rulerr EBS licenses to accredited educational instituti t those license holders to lease up tu spectrum through long-term leasing arrangements with EBS license holders. Our EBS spectrum leases typically have an initial term equal to the remaining term of the EBS license, with an option to renew the lease forff term of up to 30 years. On April 27, 2020, the FCC lifted the restriction on who can hold EBS licenses and the 30-year limitation on lease duration, among other changes. T-Mobile has started to acquire some of these EBS licenses but we continue to lease most of our spectrum in this band and expect that to be the case for some time. The elimination of these restrictions will allow and may encourage current license holders to sell their licenses to other parties, including to T-Mobile. While a majorit y of our leases have contractual provisions enabling us to match offers, we may be forced to compete with others to purchase 2.5 GHz licenses on the secondary market and expend additional capital earlier than we may have anticipated. non-educational purposes. Therefore, we primarily access EBS additional terms, forff a total lease a 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, service mapping, protection of consumer information, zoning and land use. Notwithstanding this federal preemption, in response to the Pandemic, several state legislatures are considering bills or have passed laws that could potentially set prices, minimum performance standards, and/or restrictions on service discontinuation that could impact our business in those states. In addition, following 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’s RIF Order preempted such state efforts, which are inconsistent with the FCC’s federal deregulatory approach. Recently, however, the DC Circuit issued a rulr 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; court challenges to some state enactments are pending. ing largely 10 While most states are largely seeking to codify the repealed fede ff California, which has passed separate privacy and net neutrality legislation, and Colorado and Virginia, which have passed privacy laws. There are also efforts within Congress to pass federa ff neutrality requirements, while also ensuring the preemption of separate state requirements, including the California laws. If not preempted or 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 finff al action by the courts or Congress. l legislation to codify uniform federal privacy and net nces in some states, notably ral rules, there are differe ff In addition, the Federal Trade Commission (“FTC”) and other fede 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 s towers and antennae. Tower siting and construction are also subject to state and local zoning, as well as federal statutet 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 applicabila ity of regulations, could result in higher operating and capital expenses, or reduced revenues in the future. ral agencies have jurisdiction over some consumer protection ff 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 Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act are also publicly available freff e of charge on the investor relations section of our website at investor.t-mobile.com as soon as reasonably practicable after they are electronically filff ed with or furnished to the SEC. Our corporate governance guidelines, ff director selection 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, executive and CEO selection 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 website 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 affecff ted by any of these risks. ii Risks relatll edtt to the Pandemic The Pandemic may continue to adversely affect our business, liquidity, financial condition and operating results. The Pandemic has impacm ted the ways in which our customers use their devices, where and how we work, and our suppliers and vendors’ ability to provide products to us. As a result, our business, liquidity, financial condition, and operating results may Pandemic-related restrictions on, or disruptions of, continue to be adversely impacted by the Pandemic. Current and futuret transportation networks and supply chain shortages could impact our ability to acquire handsets or other end user devices in amounts sufficient to meet customer demand and to obtain the equipment required to meet our current and futuret buildout plans, either of which could materially adversely affect us. network tors outside of our control, including the timing, extent, trajectory and durat The extent to which the Pandemic may impact our futuret subject to many facff emergence of new variants, the continued development, availabila the imposition of protective public safety measures and the impact of the Pandemic on the economy and consumer demand. Potential negative impacts of these external facff products and services; our supply execute strategic plans; and our profitabila results of operations and financial condition, it may also have the effect of exacerbating the other risks discussed in this “Risk Factors” section. operational and financial performance remains uncertain and is d ion of the Pandemic, the tiveness of vaccines and treatments, ity, distribution and effecff s on demand for our ity of customer accounts; our ability to tors include, but are not limited to, material adverse effect chain and sales and distribution channels; collectabila To the extent the Pandemic adversely affect ity and cost structure. s our business, u ff ff t 11 Risks Relatedtt to Our Business ii and the WirWW elesll s Indust II rytt 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 competitors that possess either more or different access to wireless assets, and yet we compete forff customers based principally on service/device offerings, price, network coverage, speed and quality, and customer service. We expect the wireless industry’s customer growth rate to moderate in comparison with historical growth rates, leading to ongoing competition for customers. We also expect that our customers’ appe network capacity. This competition and our capaa compete forff compete will depend upon, among other things, continued absolute and relative improvement in network quality and customer service, effecff significant expenses. city will continue to put pressure on pricing and margins as companies a relatively fixed pool of customers with an ever-expanding variety of products and services. Our ability to tive marketing and selling of products and services, innovation, and attractive pricing, all of which will involve tite for data services will place increasing demands on our a We face increased competition from other service providers, including from cablea sectors converge. Cable companies such as Comcast, Charter, and Altice are diversifying outside cabla e, voice and broadband services to also offer wireless services. Wireline companies, such as Frontier and Windstream have announced plans for fiber buildouts, often supported by government funding, which may impact our fixed wireless High Speed Internet growth plans. We expect DISH, which has already acquired several MVNOs, to meet their government commitments and build a wireless network and offer competitive postpaid and prepaid wireless service plans. Verizon and AT&T have refocused services, including fiber builds and deployment of next generation wireless technology, and we expect both companies to increase competm itive pressure, including expanding partnerships and offerings. These facff us to continue to attract and retain customers, adversely affecting our competitive position and abia lity to grow, which could have a material adverse effecff t on our business, financial condition and operating results. , wireline and satellite providers, as industry tors could make it more difficult forff on connectivity ff t We have seen, and continue to expect, additional joint ventures, connectivity sector, which could result in larger competitors competing for a limited number of customers. Further consolidation could negatively impact our businesses, including wholesale. For examplem , we will experience declining revenues from our wholesale business as Verizon migrates legacy TracFone customers off the T-Mobile network and DISH migrates Boost customers to either their standalone network or AT&T. Our competitors may also 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 competitors and partners to provide critical access to resources and inputs, such as roaming and/or backhaul services, on reasonable terms could negatively impact our business. mergers, acquisitions and strategic alliances in the converged We have recently experienced a criminal cyberattack and could in the future be furff or other security breaches, whether directly or indirectly through third parties. ther harmed by disruption, data loss Our business 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 (collectively, “Confidential Information”). Unauthorized access to Confidential Information is difficult to anticipate, detect or prevent, particularly given that the methods used by third parties to gain unauthorized access constantly change and evolve. We and our third-party service and equipment providers are subject to attacks and threats to our and their IT networks, systems and supply chain, including attacks and threats by state-sponsored parties, malicious actors, employe es or third parties, who may exploit bugs, errors, misconfigurations or other vulnerabilities or engage in social engineering to compromise the confidentiality and integrity of Confidential Information or cause serious operational disruptions (e.g., ransomware). m As a telecommunications carrier, we are considered a critical infrastructuret provider and therefore are a persistent target of cyberattacks. In addition, the Pandemic has presented additional operational and cybersecurity risks to our IT systems dued work-from-home arrangements at the Company and our third-party service and equipment providers. Attacks against companies like ours are perpetrated by a variety of groups and persons, including those in jurisdictions where law enforcement measures to address such attacks are ineffective or unavailablea , and such attacks may even be perpetrated by or at the behest of foreign governments. to In addition, we provide confidential, proprietary and personal information to third-party service and equipment providers as part of our business operations. These third-party service and equipment providers have experienced in the past and will likely continue to experience data breaches and other attacks that involve unauthorized access to Confidential Information and create operational disruptions, and they facff e security challenges common to all parties that collect and process information. 12 ff r customers, and prospective customers, including, in some instances, social security numbers, In August 2021, we disclosed that our systems were subject to a criminal cyberattack that compromised certain data of millions of our current customers, forme names, addresses, dates of birth and driver’s license/identification numbers. With the assistance of outside cybersecurity experts, we located and closed the unauthorized access to our systems and identified current, former and prospective customers whose information was impacted and notified them, consistent with state and federal requirements. We have incurred certain cyberattack-related expenses and expect to continue to incur additional expenses in future periods, including costs to remediate the attack, provide additional customer support and enhance customer protection. For more information, see “Cyberattack” in the Overview section of MD&A. As a result of the August 2021 cyberattack, we are subject to numerous lawsuits and regulatory inquiries, the ongoing costs of which may be material, and we may be subject to further regulatory inquiries and private litigation. For more information, see “– Contingencies and Litigation – Litigation and Regulatory Matters” in Note 17 – Commitments and Contingencies of the Notes to the Consolidated Financial Statements, and “– Unfavorable outcomes of legal proceedings may adversely affect our business, reputation, financial condition, cash flows and operating results” below. As a result of the August 2021 cyberattack or other cyberattacks or security breaches involving our Company or our third-party service and equipment providers, we may incur significant costs or experience other material financial impacts, which may not be covered by, or may exceed the coverage limits of, our cyber insurance, and such costs and impacts may have a material adverse effect on our business, reputation, financial condition, cash flows and operating results. In addition to the August 2021 cyberattack, we have experienced other unrelated immaterial incidents involving unauthorized access to certain Confidential Information, and we expect to experience cyberattacks and other cybersecurity incidents in the future. Typically, these incidents have involved attempts to commit fraud by taking control of a customer’s phone line. In other cases, the incidents have also involved unauthorized access to certain of our customers’ private information, including credit card information, financial data, social security numbers or passwords. We have also experienced, and expect to continue to experience, cyberattacks and other incidents involving our supply chain and in relation to third-party products and services (including cloud services) that are used in our IT environment and business. Our procedures and safeguards to prevent unauthorized access to information and to defendff our services must be continually evaluated and enhanced to address the ever-evolving threat landscape and changing cybersecurity regulations, which could require the investment of significant resources. We cannot make assurances that all preventive actions taken will adequately repel a significant attack or prevent or substantially mitigate the impacts of securityt u breaches or misuses of data, unauthorized access by third parties or employe environments, or that we or our third-party service and equipment providers will be able to effect ively identify, investigate or remediate such incidents in a timely manner or at all. We expect to continue to be the target of cyberattacks, data breaches or security incidents, given the naturet equipment providers. Any futuret business, reputation, financial condition, cash flows and operating results. cyberattacks, data breaches, or security incidents may have a material adverse effect on our of our business, and we expect the same with respect to our third-party service and es or exploits against third-party suppli against attacks seeking to disrupt m er ff 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. to changes in availablea technology, continually invest in our network, increase network capaa Significant technological changes continue to impact our industry. In order to grow and remain competitive, we will need to adapta city, enhance our existing offerings, and introduce new offerings to address our current and potential customers’ changing demands. Enhancing our network, including the ongoing deployment of our 5G network, is subject to risks related to equipment changes and the migration of customers from older technologies. Negative public perception of, and regulations regarding, the perceived health risks relating to 5G networks could undermine market acceptance of our 5G services. 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 capabila upgrades. 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, brand, financial condition and operating results. ities, which in turn could result in significant costs or reduce the anticipated benefits of the 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 is extremely competitive. This competition has become exacerbated by the increase in employee resignations currently taking place throughout the United States as a result of the Pandemic. We believe our future success depends in substantial part on our ability to recruit, hire, motivate, develop, and retain talented personnel forff 13 to many factors, including fluctuations in economic and industry conditions, changes to U.S. immigration policy, all areas of our organization, including our CEO and the other members of our senior leadership team. Doing so may be difficult dued competitors’ hiring practices, employee tolerance forff the significant amount of change within and demands on our Company and our industry, and the effectiveness of our compensation programs. Further, our vaccination and return to office protocols during the Pandemic may also impacm t the recruitment and retention of employees. If key employees depart or we are unable to recruit successfully, our business could be negatively impacted. In addition, certain members of our senior leadership team, including our CEO have term employment agreements with us. Our inabila end of their terms with qualified and capaa blea ent agreements or to replace these members of our senior leadership team at the successors could hinder our strategic planning and execution. ity to extend the terms of these employm m In addition, the continued integration of T-Mobile’s and Sprint’s businesses and culture could have an adverse impact on our employees. This integration may impact our ability to attract, retain and motivate key personnel, as existing and prospective employees may experience uncertainty about negatively impacted. We may incur significant costs in identifying, hiring and replacing departing employees and may lose significant expertise and talent. As a result, we may not be able to meet our business plan, and our business, financial condition and operating results may be materially adversely affected. roles with us. If key employees depart, our business could be their futuret a ff ures and business disruptions may prevent us from providing reliable service, which could materially System fail adversely affect our reputation and financial condition. u systems and networks - those of third-party suppliers and other providers, in addition to our own - to provide and We rely upon support our services. System, network or infrastructure failures may prevent us from providing reliablea these risks include: service. Examples of • • • • • physical damage, power surges or outages, or equipment failure with respect to both our wireless and wireline networks, including those as a result of severe weather and natural disasters, which may occur more frequently or with greater intensity at volatility and acts of war; s a result of global climate change, public health crises, terrorist attacks, political instabila ity and human error, such as responding to deceptive communications or unintentionally executing malicious code; 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 and revenue, incur expenses, suffer reputational damage, and subject us to finff es, penalties, adverse actions or judgments, litigation or governmental investigations. Remediation costs could include liability forff information loss, costs of repairing infrastructure and systems, and/or costs of incentives offered to customers. Our insurance may not cover, or be adequate to full y reimburse us for, costs and losses associated with such events. ff 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 continue to deploy spectrum to expand and deepen our coverage, particularly 5G coverage, maintain our quality of service, meet increasing customer demands, and deploy new technologies. However, as we continue to expand and differentiate from our competitors, we may acquire additional spectrum in the future. As a result, we will continue to actively seek to make additional investment in spectrum, which could be significant. The continued interest in, and acquisition of, spectrum by existing carriers and others, including speculators, may reduce our ability to acquire and/or increase the cost of acquiring spectrum in the secondary market, including leasing or purchasing additional spectrum in the 2.5 GHz band, or negatively impact our ability to gain access to spectrumr through other means, including government auctions. Additionally, increased interest from third parties in acquiring spectrum may make it difficult to renew leases of some of our existing 2.5 GHz spectrum holdings in the futff ure. provide sufficient additional spectrum to auction or we may be unablea our competitive position in any auction we may elect to participate in or in the secondary market, on favorable terms or at all. Any return on our investment in spectrum depends on our ability to attract additional customers and to provide additional services and usage to existing customers. Additionally, the FCC may not be able to to secure the spectrum necessary to maintain or enhance t 14 The FCC, or other government entities, may impose conditions on the acquisition and use of new wireless broadband mobile spectrum that may negatively impact our ability to obtain spectrum economically or in appropria te configurations or coverage areas. a If we cannot acquire needed spectrum from the government or otherwise, if competitors acquire spectrumrr 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, our ability to attract and retain customers and our business, financial condition and operating results could be materially adversely affecff that will allow them ted. The challenges in satisfying the large number of Government Commitments in the required time frames and the significant cumulative cost incurred in tracking, monitoring and complying with them could adversely impact our business, financial condition and operating results. a ls required to close the Transactions, we agreed to various In connection with the regulatory proceedings and approva Government Commitments. These Government Commitments include, among other things, extensive 5G network build-out commitments, obligations to deliver high-speed wireless services to the vast majority of Americans, and marketing an in-home fixed wireless product to households where spectrumrr ient. Other Government Commitments relate to national security, pricing and availabila implementation of diversity and inclusion initiatives. Many Government Commitments specify time frames for complim ance and reporting. Failure to fulfill our obligations under these Government Commitments in a timely manner could result in substantial fines, penalties, or other legal and administrative actions and reputational harm. a capac ent, substantial monetary contributions to support organizations, and ity of rate plans, employm ity is sufficff m We expect to incur significant costs, expenses and feeff Government Commitments. In addition, abiding by the Government Commitments may divert our management’s time and energy away from other business operations and could force us to make business decisions we would not otherwise make and forego taking actions that might be beneficial to the Company. The challenges in satisfying the large number of Government Commitments in the required time framff es and the cost incurred in tracking, monitoring and complying with them could also adversely impact our business, financial condition and operating results and hinder our ability to effectively compete. s to track, monitor, comply with and fulfill our obligations under these Economic, political and market conditions may adversely affect our business, financial condition, and operating results. 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, unemployment rates, economic growth, energy costs, rates of inflation (or concerns about deflation), and other macro-economic facff tors. The wireless industry, broadly, is dependent on population growth. In addition, the Government Commitments place certain limitations on our ability to increase prices, which limits our ability to pass growing costs to customers. Rising prices forff services and labor due to inflation could adversely impact our margins and/or growth. a goods, Our services and device finff ancing plans are available to a broad customer base, a significant segment of which may be 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 inabila ity to pay. Further, because Sprint offered a device leasing plan, we expect to realize economic benefit fromff the estimated residual value of a leased device, which reflects the estimated fair value of the underlying asset at the end of the expected lease term. Changes in residual value assumptim ons made at lease inception affect the amount of depreciation expense and the net amount of equipment revenue under operating leases. If estimated residual values, in the aggregate, significantly decline due to economic facff including Pandemic impacts, obsolescence, or other circumstances, we may not realize such residual value. Sprint historically suffered, and we may suffer, negative consequences including increased costs and increased losses on devices as a result of a lease customer default, the related termination of a lease, and the attempted repossession of the device, including failure of a lease customer to returnt a leased device. tors, Weak economic and credit conditions may also adversely impact our suppliers, dealers, and wholesale partners or MVNOs, some of which may file forff 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. bankruptcy, or may experience cash flow or liquidity problems, or may be unable to obtain or 15 Our business may be adversely impacted if we are not able to successfully manage the ongoing commercial and transition services arrangements entered into in connection with the Prepaid Transaction and known or unknown liabilities arising in connection therewith. In connection with the closing of the Prepaid Transaction, we and DISH entered into certain commercial and transition services arrangements, including a Master Network Services Agreement (the “MNSA”) and a Spectrum Purchase Agreement (the “Spectrum Purchase Agreement”). Pursuant to the MNSA, DISH will receive network services from the Company for a period of seven years. As set forth in the MNSA, the Company will provide DISH, among other things, (a) legacy network services for certain Boost Mobile prepaid end users on the Sprint network, (b) T-Mobile network services for certain end users that have been migrated to the T-Mobile network or provisioned on the T-Mobile network by or on behalf of DISH and (c) infrastructure mobile network operator services to assist in the access and integration of the DISH network. Pursuant to the Spectrum Purchase Agreement, DISH has agreed to purchase all of Sprint’s 800 MHz spectrum (approxim spectrum) for a total of approximately $3.6 billion; provided, however, that if DISH breaches the Spectrum Purchase agreement prior to the closing or fails to deliver the purchase price following the satisfaction or waiver of all closing conditions, DISH’s sole liability will be to pay us a feeff of approximately $72 million. In such instance, T-Mobile may be required to conduct an auction sale of all of Sprint’s 800 MHz spectrum under the terms set fort divest such spectrum for an amount less than $3.6 billion. The covered spectrum sale will not occur before the third anniversary of the Merger (i.e., not before April 1, 2023), but must be divested within the later of three years after the closing of the Prepaid Transaction and fiveff l the transfer, following an application for FCC approva to be filed by the third anniversary of the closing of the Merger. T-Mobile may exercise an option to lease back 4 MHz (2 MHz downlink + 2 MHz uplink) of the spectrum for two years following the closing of the 800 MHz spectrum sale at the same per person rate used to calculate the purchase price paid by DISH to T-Mobile – a rate of approxim h in the Consent Decree, but would not be required to days after receipt of the approval fromff ately 13.5 MHz of nationwide ately $68 million per year. the FCC forff a a a ff Failure to successfully manage these ongoing commercial and transition services arrangements entered into in connection with the Prepaid Transaction and liabia lities arising in connection therewith may result in material unanticipated problems, including diversion of management time and energy, significant expenses and liabilities. There may also be other potential adverse consequences and unforeseen increased expenses or liabilities associated with the Prepaid Transaction, the occurrence of which could materially impact our business, financial condition, liquidity and operating results. In addition, there may be an increase in competition from DISH and other third parties that DISH may enter into commercial agreements with, who are significantly larger and with greater resources and scale advantages as compared to us. Such increased competm ition may result in our loss of customers and other business relationships. 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; diffiff culties 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 infrastructuret control framework in an effective and timely manner; and internal potential exposure to material liabila arising in connection with any such transaction; ities not discovered in the dued diligence process or as a result of any litigation significant transaction-related 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; 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, as well as unknown risks, acquisitions, investments, or mergers may have a material adverse effect on our business, financial condition and operating results. 16 We rely on third parties to provide products and services forff such parties to provide these products or services could adversely affect our business, financ results. ff the operation of our business, and the failure or inability of ial condition and operating We depend heavily on suppliers, service providers, their subcontractors and other third parties forff business. Due to the complexity of our business, it is not unusual to engage a diverse set of suppli maintain, and troubleshoot products and services such as wireless and wireline network components, software development services, and billing and customer service support. Some of our suppliers may provide services fromff 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 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. us to efficiently operate our ers to help us develop, outside of the United u t 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, wireless or wireline 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. Our suppliers, service providers and their subcontractors may not perform at the levels we expect or at the levels required by their contracts. Our suppliers are also subject to their own risks, including, but not limited to, economic, financial and credit conditions, labor force disruptions, disruptions in global supply chain and the risks of natural catastrophic events such as earthquakes, floods, hurricanes and public health crises such as the Pandemic. 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. ii Risks Relatedtt to Our Indebtedness Our substantial level of indebtedness could adversely affect our business flexibility, ability to service our debt, and increase our borrowing costs. We have, and we expect that we will continue to have, a substantial amount of debt. Our substantial level of indebtedness could have the effect of, among other things, reducing our flexibility in responding to changing business, economic, market and industry conditions and increasing the amount of cash required to service our debt. In addition, this level of indebtedness may also reduce funds availablea impacts may put us at a competitive disadvantage relative to other companies with lower debt levels. Further, we may need to incur substantial additional indebtedness in the future increase the risks associated with our capia tal structure. any potential board-approved share repurchases and other activities. Those , subject to the restrictions contained in our debt instruments, which could al expenditures, for capita ff t Our ability to service our substantial debt obligations will depend on future performance, which will be affecff economic, market and industry conditions and other factors, including our ability to achieve the expected benefits of the Transactions. There is no guarantee that we will be abla e to generate sufficient cash flow to service our debt obligations when to meet such obligations or fail to comply with the finff ancial and other restrictive covenants contained in due. If we are unablea the agreements governing such debt obligations, we may be required to refinaff assets at unfavorable prices or make additional borrowings. We may not be able to, at any given time, refinance our debt, sell assets or make additional borrowings on commercially reasonable terms or at all, which could have a material adverse effect on our business, financial condition and operating results. nce all or part of our debt, sell important strategic ted by business, Changes in credit market conditions could adversely affecff t our ability to raise debt favorabl ff y. ity in the global finff ancial markets, inflation, policies of various governmental and regulatory agencies, including Instabila changes in monetary policy and interest rates, and other general economic conditions could lead to volatility in the credit and equity markets. This volatility could limit our access to the capita the inabila al markets, leading to higher borrowing costs or, in some cases, ity to obtain financing on terms that are acceptablea to us or at all. 17 ility and certain funded We are subjeb ct to risks related to the cessation of LIBOR. Amounts drawn under our revolving credit facff amounts under our EIP sale arrangement and our service receivable sale arrangement currently bear interest at rates that are calculated based on U.S. dollar LIBOR, which is expected to be discontinued by 2023. Any alternative reference rate that replaces U.S. dollar LIBOR under our revolving credit facility, is used as a benchmark on any other borrowings or is used as a benchmark under our EIP sale arrangement or service receivablea prior to its discontinuance, which could result in an increase in the cost of our indebtedness or funded amounts. Further, credit markets may be disrupted as a result of the phase-out or replacement of LIBOR. In addition, any hedging agreements we have and may continue to enter into to limit our exposure to interest rate increases or foreign currency flucff 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 any debt we may incur in a foreff such hedging agreements would have full exposure to interest rate increases or foreign currency fluctuat any financial instituti 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 effecff condition and operating results. ions, as applicable. If ons that are parties to our hedging agreements were to default on their payment obligations to us, declare ign currency, and any portion not subject to t sale arrangement could be higher or more volatile than LIBOR t on our business, financial tuations may not offer t The agreements governing our indebtedness and other finff ancings include restrictive covenants that limit our operating flexibility. ncings impose material operating and financial restrictions. These The agreements governing our indebtedness and other finaff restrictions, subject in certain cases to customary baskets, exceptions and maintenance and incurrence-based financial tests, together with our debt service obligations, may limit our ability to engage in transactions and pursue strategic business opportunities. These restrictions could limit our ability to obtain debt financing, make 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 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 the commitments they had made or the right to require us to repay all amounts then outstanding plus any interest, fees, penalties or premiums. An event of default may also compel us to sell certain assets securing indebtedness under these agreements. Credit rating downgrades and/or inability to access debt markets could adversely affecff financial condition and operating results. t our business, cash flows, Credit ratings impact the cost and availability of futuret each rating agency’s opinion of our financial strength, operating performance and ability to meet our debt obligations. Our al structure and business model are reliant on continued access to debt markets. Each rating agency reviews our ratings capita periodically, and there can be no assurance that such ratings will be maintained in the future. A downgrade in our corporate rating and/or our issued debt ratings, or our amount of secured debt outstanding, could impact our ability to access debt markets, including the investment-grade debt market for our secured debt issuances, and adversely affecff flows, financial condition and operating results. borrowings and, as a result, cost of capia tal. Our current ratings reflect t our business, cash t ii Risks Relatedtt to Legal and Regulatorytt Mattett rs Any material weaknesses we identify while we continue to work to integrate and align policies, principles and practices of the two companies following the Merger, or any other failure by us to maintain effecff result in a loss of investor confidence regarding our financial statements and reputational damage. tive internal controls, could t r ncial reporting. While we continue to integrate and align the s-Oxley Act, we, along with our independent registered public accounting firm, are required Under Section 404 of the Sarbane to report on the effectiveness of our internal control over finaff es following the Merger, as a result of the differe policies, principles and practices of the two companim environments and cultures, we could identify material weaknesses that could result in materially inaccurate finff ancial statements, materially inaccurate disclosures, or failure to prevent error or fraud for the combined company. There can be no assurance that remediation of any material weaknesses identified during integration of the two companies would be completed in a timely manner or that the remedial measures will prevent other control deficiencies or material weaknesses. If we are unable to remediate material weaknesses in internal control over finaff ncial reporting, then our ability to analyze, record and report financial information free of material misstatements, to prepare financial statements within the time periods specified by the rules and forms of the SEC and otherwise to comply with the requirements of Section 404 of the Sarbanes-Oxley Act would be nces in control ff 18 negatively impacted. The impact could negatively impact our business, financial condition or operating results, restrict our ability to access the capital markets, require the expenditure of significant resources to correct the weaknesses or deficiencies, subject us to finff es, penalties, investigations or judgments, harm our reputation, or otherwise cause a decline in trading price of our stock and investor confidence. Changes in regulations or in the regulatory framework under which we operate could adversely affect our business, financial condition and operating results. 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, 911 services, consumer protection, consumer privacy, and cybersecurity. We are also subject to regulations in connection with other aspects of our business, including device finff ancing and insurance activities. 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 on licensees of wireless spectrum with respect to how radio spectrum is used by licensees, the naturet licensees may offer and how the services may be offered, and the resolution of issues of interference between spectrum bands. Changes necessary to resolve interference issues or concerns may have a significant impact on our ability to fully utilize our spectrum. As an example, we recently we won spectrum licenses in the so-called “C band” to support our rollout of 5G technology and services. There have been concerns raised that use of this spectrum by wireless carriers for 5G deployment could interfere with the altimeters in certain aircraft, and there is an ongoing discussion between the industry, the FCC and the FAA as to whether and how 5G operations should be limited around airports. 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. significant regulation of the services that m shed net neutrality and privacy regimes that applied to our operations. Both sets of rules certain California customers facing financial hardship. Additionally, in March 2015, the FCC We cannot assure that the FCC or any other federal, state or local agencies will not adopt regulations, implement new programs in response to the Pandemic, or take enforcement or other actions that would adversely affecff t our business, impose new costs, or require changes in current or planned operations, including timing of the shutdown of legacy technologies. For examplem , in response to the Pandemic, the California Public Utilities Commission adopted a resolution providing a moratorium on customer disconnects and late fees forff establia 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 rulerr s were largely rolled back in December 2017, the current FCC could decide to establish new net neutrality requirements. In addition, some states and other jurisdictions have enacted laws in these areas (including, for example, the CCPA and CPRA aRR s discussed below) and others are considering enacting similar laws. It also is uncertain what rules may be promulgated under the current administration (e.g., the FTC has discussed promulgating privacy ruler ing the risk and uncertainty regarding the regulatory environment and compliance around these issues. potentially subjected some of s), perpetuat r t In addition, states are increasingly focused on the quality of service and support that wireless communications service 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 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. regulations could have a material adverse effect on our business, financial condition and Failure to comply with applicablea operating results. We could be subject to fineff spectrum licenses) for failure to comply with FCC or other governmental regulations, even if any such noncompliance was t s or forfeit ures, ff unintentional. The loss of any licenses, or any related fineff condition and operating results. and other penalties (including, in extreme cases, revocation of our t our business, financial could adversely affecff s, forfeitures, t Laws and regulations relating to the handling of privacy and data protection may result in increased costs, legal claims, fines against us, or reputational damage. In January 2020, the California Consumer Privacy Act (the “CCPA”) became effective, creating new data privacy rights forff California residents and new compliance obligations for us. We have incurred and will continue to incur significant implementation costs to ensure complim ance with the CCPA, and we could see increased litigation costs. Moreover, a new privacy law, the California Privacy Rights Act (“CPRA”), was passed by Californians via ballot initiative during the November RR 19 3, 2020 election. The CPRA, which is scheduled to take effecff significantly modify the CCPA and will impose additional data protection obligations on companies such as ours doing business in California. Other states (such as Nevada) have passed or are considering similar legislation (such as Washington), which could create more risks and potential costs for us, especially to the extent the specific requirements vary from those in ff Californi t on January 1, 2023 (with a lookback to January 1, 2022), will a, Nevada and other existing laws. We have incurred and will continue to incur significant implementation costs to ensure complim ance with the CCPA, the CPRA,RR and their related regulations and any additional laws and regulations could cause us to incur further costs or further constrain our business, strategies, offerings and initiatives. Unfavorable outcomes of legal proceedings may adversely affect our business, reputation, financial condition, cash flows and operating results. ff iates are involved in various disputes, governmental and/or regulatory inspections, investigations and We and our affilff proceedings and litigation matters. 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. In connection with the Transactions, it is possible that stockholders of T-Mobile and/or Sprint may filff e putative class action lawsuits or shareholder derivative actions against the Company and the legacy T-Mobile board of directors and/or the legacy Sprint board of directors. Among other remedies, these stockholders could seek damages. The outcome of any litigation is uncertain and any such potential lawsuits could result in substantial costs and may be costly and distracting to management. Additionally, on April 1, 2020, in connection with the closing of the Merger, we assumed the contingencies and litigation matters of Sprint. Those matters include a wide variety of disputes, claims, government agency investigations and enforcement actions and other proceedings, including, among other things, certain ongoing FCC and state government agency investigations into Sprint’s Lifeline program. In September 2019, Sprint notified the FCC that it had claimed monthly subsidies forff customers even though those customers may not have met usage requirements under Sprint’s usage policy forff program due to an inadvertent coding issue in the system used to identify qualifying customer usage that occurred in July 2017 while the system was being updated. Sprint has made a number of payments to reimburse the federal government and certain states for excess subsidy payments. Unfavorable resolution of these matters could require making additional reimbursements and paying additional finff es and penalties. the Lifeline serving On February 28, 2020, we received a Notice of Apparent Liability for Forfeiture and Admonishment from the FCC, which proposed a penalty against us for allegedly violating Section 222 of the Communications Act and the FCC’s regulations governing the privacy of customer information. We recorded an accrual for an estimated payment amount as of March 31, 2020, which was included in Accounts payablea liabilities on our Consolidated Balance Sheets. and accruedr ff r As a result of the August 2021 cyberattack, we are subject to numerous lawsuits, including multiple class action lawsuits rations, and inquiries by various government agencies, law enforcement and seeking unspecifieff d monetary damages, mass arbit other governmental authorities, and we may be subject to furthe r regulatory inquiries and private litigation. We are cooperating fully with regulators and vigorously defending against the class actions and other lawsuits. In light of the inherent uncertainties involved in these proceedings and inquiries, as of the date of this report, we have not recorded any accruals for losses related to these proceedings and inquiries, as any such amounts are not yet probablea possible that we could incur losses associated with these proceedings and inquiries, and we will continue to evaluate information as it losses at the time or times when it is both probable that a loss has been incurred becomes known and the amount of the loss is reasonably estimable. Ongoing legal and other costs related to these proceedings and inquiries, as well as any potential futuret proceedings and inquiries, may be substantial, and losses associated with any adverse judgments, settlements, penalties or other resolutions of such proceedings and inquiries could be significff ant and have a material adverse impact on our business, reputation, financial condition, cash flows and operating results. or estimable. We believe it is reasonablya and will record an estimate forff k We, along with equipment manufacturers and other carriers, are subject to current and potential future lawsuits alleging adverse health effects arising from the use of wireless handsets or from wireless transmission equipment such as cell towers. In addition, the FCC has fromff associated with using wireless devices may evolve based on its findings could result in customers purchasing fewer devices and wireless services, could result in significant legal and regulatory liability, and could have a material adverse effect on our business, reputation, financial condition, cash flows and operating results. time to time gathered data regarding wireless device emissions, and its assessment of the risks . Any of these allegations or changes in risk assessments ff 20 a futuret The assessment of the outcome of legal proceedings, including our potential liability, if any, is a highly subjective process that requires judgments about settlement or pursuant to final judgment, order or decree may differ materially fromff amounts accrued in our financial statements. In addition, litigation or similar proceedings could impose restraints on our current or future manner of doing business. Such potential outcomes including judgments, awards, settlements or orders could have a material adverse effect on our business, reputation, financial condition, cash flows and operating results. events that are not within our control. The amounts ultimately received or paid upon u We offer regulated financ regulations. ff ial services products. These products expose us to a wide variety of state and federal The financing of devices, such as through our EIP, JUMP! On Demand or other leasing programs, such as those acquired in the Merger, has expanded our regulatory compliance obligations. Failure to remain compliant with applicablea increase our risk exposure in the following areas: regulations may • • 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 appl our business, financial condition and operating results. a icable regulations and the realization of any of these risks could have a material adverse effecff t on Our business may be impacted by new or amended tax laws or regulations or administrative interpretations and judicial decisions affecting the scope or application of tax laws or regulations. 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 and state USF contributions and common carrier regulatory charges and public safety fees. As many of our service plans offer taxes and fees inclusive, our business results could be adversely impacted by increases in taxes and fees. In addition, we incur and pay state and local transaction taxes and fees on purchases of goods and services used in our business. a cation of existing, newly enacted or amended tax laws may be uncertain and subject to different 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 appli interpretations, especially when evaluated against new technologies and telecommunications services, such as broadband internet access and cloud related services and in the context of our merger with Sprint. Legislative changes, administrative interpretations and judicial decisions affecting the scope or application of tax laws could also impacm t revenue reported and taxes due on tax inclusive plans. In the event that T-Mobile, including pre-acquisition Sprint, has 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 and regulatory or public safety charges on our network, operations, or services, or seek to impose new taxes or charges, such as a proposed corporate minimum tax or new limits on interest deductibility, 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 period for which they are granted. Our licenses have been granted with an expectation of renewal and 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. 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 findff renewal requirements. Accordingly, we cannot assure 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 effecff our construction, or the construction of prior licensees, sufficient to meet the build-out or t on our business, financial condition and operating results. 21 Risks Relatedtt to Ownershi rr p oii f Oo ur Common Stock SS Our Fifth Amended and Restated Certificate of Incorporation designates the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain actions and proceedings, which could limit the ability of our stockholders to obtain a judicial forum of their choice for disputes with the Company or its directors, officers or employees. ff Our Fifth Amended and Restated Certificate of Incorporation (the “Certificate of Incorporation”) provides that, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware shall be the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of the Company, (ii) any action asserting a claim of breach of a fiduc (iii) any action asserting a claim arising pursuant to any provision of the General Corporation Law of the State of Delaware, the Certificate of Incorporation or the Company's bylaws or (iv) any other action asserting a claim arising under, in connection with, and governed by the internal affairs doctrine. This choice of forumff provision does not waive our compliance with our obligations under the federal securities laws and the rules and regulations thereunder. Moreover, the provision does not apply to suits brought to enforce a duty or liability created by the Exchange Act or by the Securities Act of 1933, as amended. iary duty owed by any director, officer or employee of the Company to the Company or its stockholders, that the stockholder finds provision may increase costs to bring a claim, discourage claims or limit a stockholder's ability to bring a This choice of forumff claim in a judicial forumff employees, which may discourage such lawsuits against the Company and its directors, officers and employees, even though an action, if successful, might benefit our stockholders. Alternatively, if a court were to find the choice of forum provision to be inappli a jurisdictions, which could increase our costs of litigation and adversely affect our business and financial condition. in an action, we may incur additional costs associated with resolving such matters in other for disputes with the Company or its directors, officers or or unenforceablea favorablea cablea ff Each of DT, which controls a majority of the voting power of our common stock, and SoftBank, a significant stockholder of T-Mobile, may have interests that differ from the interests of our other stockholders. Upon the completion of the Transactions, DT and SoftBank entered into the SoftBank Proxy Agreement, and on June 22, 2020, DT, Claure Mobile LLC (“CM LLC”), and Marcelo Claure entered into a Proxy, Lock-up and ROFR Agreement (“the Claure Proxy Agreement,” together with the SoftBank Proxy Agreement, the “Proxy Agreements”). Pursuant to the Proxy Agreements, at any meeting of our stockholders, the shares of our common stock beneficially owned by SoftBank or CM LLC will be voted in the manner as directed by DT. Accordingly, DT controls a majority of the voting power of our common stock and therefore we are a “controlled company,” as defined in The NASDAQ Stock Market LLC (“NASDAQ”) listing rules, and we 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, pursuant to our Certificate of Incorporation and the Second Amended and Restated Stockholders’ Agreement, as long as DT beneficially owns 30% or more of our outstanding common stock, we are restricted from taking certain actions without DT’s prior written consent, including (i) incurring indebtedness above certain levels based on a specified debt to cash t under any instrument evidencing indebtedness involving DT or its flow ratio, (ii) taking any action that would cause a defaul affiliates, (iii) acquiring or disposing of assets or entering into mergers or similar acquisitions in excess of $1.0 billion, (iv) changing the size of our board of directors, (v) subject to certain exceptions, issuing equity of 10% or more of the then- outstanding shares of our common stock, or issuing equity to redeem debt held by DT, (vi) repurchasing or redeeming equity securities or making any extraordinary or in-kind dividend other than on a pro rata basis, or (vii) making certain changes amending our Certificate of Incorporation and bylaws in any manner that could involving our CEO. We are also restricted fromff adversely affecff t DT’s rights under the Second Amended and Restated Stockholders’ Agreement for as long as DT beneficially owns 5% or more of our outstanding common stock. 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. ff tively has control over all matters submitted to our stockholders for approval, including the election or removal of DT effecff 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 difficff ult for a third 22 party to acquire, or discouraging a third party from seeking to acquire, the Company. DT and Softff Bank, as significant stockholders, may have strategic, finaff substantial amount of our indebtedness and as the counterparty in a number of commercial arrangements, and may make decisions adverse to the interests of our other stockholders. ncial, or other interests different from our other stockholders, including as the holder of a In addition, we license certain trademarks from DT, including the right to use the trademark “T-Mobile” as a name forff Company and our flagship brand, under a trademark license agreement, as amended, with DT. As described in more detail in our Proxy Statement on Schedule 14A filed with the SEC on April 21, 2021 under the heading “Transactions with Related Persons and Approval,” we are obligated to pay DT a royalty in an amount equal to 0.25% (the “royalty rate”) of the net revenue (as defined in the trademark license) generated by products and services sold by the Company under the licensed trademarks subject to a cap of $80.0 million per calendar year through December 31, 2028. We and DT are obligated to al stock of negotiate a new trademark license when (i) DT has 50% or less of the voting power of the outstanding shares of capita the Company or (ii) any third party owns or controls, directly or indirectly, 50% or more of the voting power of the outstanding shares of capita policies of the Company. If we and DT fail to agree on a new trademark license, either we or DT may terminate the trademark tive, in the case of clause (i) above license and such termination shall be effecff termination and, in the case of clause (ii) above increase in the a royalty rate or termination of the trademark license could have a material adverse effect on our business, financial condition and operating results. al stock of the Company, or otherwise has the power to direct or cause the direction of the management and , on the third anniversary afteff ff , on the second anniversary after notice of termination. A further r notice of the a Future sales of our common stock by DT and SoftBank and foreign ownership limitations by the FCC could have a negative impact on our stock price and decrease the value of our stock. We cannot predict the effecff prevailing trading price of our common stock. Sales of a substantial number of shares of our common stock could cause our stock price to decline. t, if any, that market sales of shares of our common stock by DT or SoftBank will have on the We, DT and SoftBank are parties to the Second Amended and Restated Stockholders’ 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 a third party owning more than 30% of the outstanding shares of our common stock. If a transfer would exceed the 30% threshold, it is prohibited unless the transfer is approved by our board of directors, or the transferee makes a binding offer to purchase all of the other outstanding shares on the same price and terms. The Second Amended and Restated Stockholders’ Agreement does not otherwise impose any other restrictions on the sales of common stock by DT or SoftBank. Moreover, the Second Amended and Restated Stockholders’ Agreement generally requires us to cooperate with DT to facff debt securities held by DT under shelf registration statements we have filed. The sale of shares of our common stock by DT or SoftBank (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 or SoftBank does not sell a large number of their shares into the market, their rights to transfer a large number of shares into the market may depress our stock price. ilitate the resale of our common stock or ff al stock may be directly owned, or no more than gn government or its representatives or ign corporation. If an FCC licensee is controlled by another entity, up to 25% of that entity’s capita Furthermore, under existing law, no more than 20% of an FCC licensee’s capita 25% indirectly owned, or voted by non-U.S. citizens or their representatives, by a forei al stock may be by a foreff owned or voted by non-U.S. citizens or their representatives, by a forei gn ff corporation. Foreign ownership above the 25% holding company level may be allowed if the FCC finds such higher levels consistent with the public interest. The FCC has ruled that higher levels of foreign ownership, even up tu presumptively consistent with the public interest with respect to investors from certain nations. If our foreign ownership by ff previously unapproved forei gn parties were to exceed the permitted level, the FCC could subject us to a range of penalties, including an order forff us to divest the foreign ownership in part, fines, license revocation or denials of license renewals. If ownership of our common stock by an unapproved foreign ownership of our common stock violates any other ruler Incorporation provides forff These limitations and our Certificate of Incorporation may limit our ability to attract additional equity finaff United States and decrease the value of our common stock. certain redemption provisions at a pre-determined price which may be less than fair market value. or regulation of the FCC applicable to us, our Certificate of entity were to become subject to such limitations, or if any gn government or its representatives or by a forei ncing outside the o 100%, are ff ff 23 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 futuff re. 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 futff ure. 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 for general corporate purposes, including the integration of T-Mobile’s and Sprint’s businesses, the continued build-out of our 5G network and potential share repurchases as appropriate. Therefore, we do not anticipate paying any cash dividends on our common stock in the foreseeablea iation, if any, of our common stock will be the sole source of potential gain. future, and capia tal apprec Our credit facilities and indentures governing our long-term debt to a t ii Risks Relatedtt to Integre ation Although we expect that the Transactions will result in synergies and other benefits, those synergies and benefits may not be realized in the amounts anticipated or may not be realized within the expected time frame, and risks associated with the foregoing may also result from the extended delay in the integration of the companies. Our ability to realize the anticipated benefits of the Transactions will depend, to a large extent, on our ability to integrate our and Sprint’s businesses in a manner that facff ilitates growth opportunities and achieves the projected cost savings. 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. Our anticipated synergies and other benefits of the Transactions may be reduced d or eliminated, including a delay in the integration of, or an inability to integrate, the networks of T-Mobile and Sprint. Even if we are able to integrate the two companies successfully, the anticipated benefits of the Transactions, including the expected synergies and network benefits, may not be realized full y or at all or may take longer to realize than expected. ff We have incurred substantial expenses as a result of completing the Transactions. We expect to incur substantial additional expenses in connection with migrating the Sprint customer base and integrating T-Mobile’s and Sprint’s businesses, operations, policies and procedures and complim ance with the Government Commitments. While we have assumed that a certain level of transaction-related 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 could exceed the costs historically borne by us and offset the expected synergies. 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 disruptions, including challenges in maintaining relationships with employees, customers, suppliers or vendors, may be greater than expected. The combination of two independent businesses is complex, costly and time-consuming, and may divert significant management attention and resources. This process may disrupt our business or otherwise impact our ability to compete. The overall combination of our and Sprint’s businesses may also result in material unanticipated problems, expenses, liabilities, competitive responses and impacm ts, and loss of customers and other business relationships. The difficff ulties of combining the operations of the companies include, among others: • • • • • • • • • • t and supplier and vendor arrangements; diversion of management attention to integration matters; diffiff culties in integrating operations and systems, including intellectual property and communications systems, administrative and information technology infrastructure, challenges in conforming standards, controls, procedures and accounting and other policies; alignment of key performance measurements may result in a greater need to communicate and manage clear expectations while we work to integrate and align policies and practices; diffiff culties in integrating employees; the need to address possible differences in corporate cultures, management philosophies, and compensation structures; challenges in retaining existing customers and obtaining new customers; difficuff any disruptions to the operations and business in the Shentel service area following the Company’s acquisition of Wireless Assets (as defined in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations) as a result of the transition of such assets to the Company; compliance with Government Commitments relating to national security; lties in managing the expanded operations of a significantly larger and more complex company; 24 • • known or potential unknown liabilities of Sprint that are larger than expected; and other potential adverse consequences and unforeseen increased expenses or liabila ities associated with the Transactions. Additionally, uncertainties over the integration process could cause customers, suppliers, distributors, dealers, retailers and others to seek to change or cancel our existing business relationships or to refuse to renew existing relationships. Suppliers, distributors and content and appl ication providers may also delay or cease developing new products for us that are necessary for the operations of our business due to uncertainties. Competitors may also target our existing customers by highlighting potential uncertainties and integration difficulties. a Some of these factors are outside our control, and any one of them could result in lower revenues, higher costs and diversion of management time and energy, which could adversely impact our business, financial condition and operating results. In addition, even if the integration is successful, the full benefits of the Transactions including, among others, the synergies, cost savings or sales or growth opportunities may not be realized within the anticipated time framff es or at all. In connection with the Merger, we are evaluating the long-term billing system architecture strategy for our customers. Our long-term strategy is to migrate Sprint’s legacy customers onto T-Mobile’s existing billing platforms. We will operate and maintain multiple billing systems until such conversion is completed. Any unanticipated difficulties, disruption, or significant delays could have adverse operational, financial, and reputational effects on our business. Following the closing of the Merger, we are operating and maintaining multiple billing systems. We expect to continue to do so until successful conversion of Sprint’s legacy customers to T-Mobile’s existing billing platforms. We may encounter unanticipated difficulties or experience delays in the ongoing integration efforts with respect to billing, causing majoa r system or business disruptions. In addition, we or our supporting vendors 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 these billing systems could disrupt our operations and impacm t 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, and/or material weaknesses in our internal control over financial reporting and reputational damage. Item 1B. Unresolved Staff Comments None. Item 2. Properties Our properties are best described on a collective basis, as no individual property is material. Our property at consists of the following: nd equipment Wireless communication systems Land, buildings and building equipment Data processing equipment and other Total December 31, 2021 December 31, 2020 66 % 5 % 29 % 100 % 64 % 5 % 31 % 100 % Wireless communication systems primarily consist of assets used to operate our wireless network and information technology ncy equipment, tower assets, construction in progress and leasehold data centers, including switching equipment, radio freque improvements related to the wireless network and assets related to the liability for the retirement of long-lived assets. ff Land, buildings and building equipment primarily consist of land and land improvements, central office buildings or any other buildings that house network equipment, buildings used for administrative and other purposes, related construction in progress and certain network service equipment. Data processing equipment and other primarily consists of data processing equipment, office equipment, capia talized software, leased wireless devices, construction in progress and leasehold improvements. We also lease distributed antenna system and small cell sites, as well as properties throughout the United States that contain data and switching centers, customer call centers, retail locations, warehouses and administrative spaces. 25 Item 3. Legal Proceedings For more information regarding the legal proceedings in which we are involved, see Note 2 – Business Combinations and Note 17 – Commitments and Contingencies of the Notes to the Consolidated Financial Statements. Item 4. Mine Safety Disclosures Not applicable. 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.” We are included within the S&P 500 in the Wireless Telecommunication Services GICS (Global Industry Classification Standard) Sub-Industry index. As of January 31, 2022, there were 15,953 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. 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 foreseeablea future. Our credit facff 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 for general corporate purposes, including the integration of T-Mobile’s and Sprint’s businesses, the continued build-out of our 5G network and potential share repurchases as appropriate. Therefore, we do not anticipate paying any cash dividends on our common stock in the foreseeablea future, capital appreciation, if any, of our common stock will be the sole source of potential gain. governing our long-term debt to ilities and indentures t 26 Performan ff ce Graph The graph below compares the five-year cumulative total returns 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, 2016 to December 31, 2021. of T-Mobile, the S&P 500 index, the NASDAQ Composite t 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 2016 2017 2018 2019 2020 2021 T-Mobile US, Inc. S&P 500 NASDAQ Composite Dow Jones US Mobile Telecommunications TSM *$100 invested on 12/31/16 in stock or index, including reinvestment of dividends. Fiscal year ending December 31. Copyright© 2022 Standard & Poor's, a division of S&P Global. All rights reserved. Copyright© 2022 S&P Dow Jones lndices LLC, a division of S&P Global. All rights reserved. The five-year cumulative total returns Mobile Telecommunications TSM index, as illustrated in the graph above, are as follow of T-Mobile, the S&P 500 index, the NASDAQ Composite index and the Dow Jones US ff s: t T-Mobile US, Inc. S&P 500 NASDAQ Composite Dow Jones US Mobile Telecommunications TSM At December 31, 2016 2017 2018 2019 2020 2021 $ 100.00 $ 110.43 $ 110.61 $ 136.36 $ 234.48 $ 100.00 100.00 100.00 121.83 129.64 102.26 116.49 125.96 121.69 153.17 172.17 138.00 181.35 249.51 150.47 201.67 233.41 304.85 137.48 g stock price performance included in this gii raph is not necessarily indicative of fo utff ure stock price performance. Item 6. [Reserved] 27 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations Overview The objectives of our Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) are to provide users of our consolidated financial statements with the folff lowing: • • • A narrative explanation from the perspective of management of our financial condition, results of operations, cash flows, liquidity and certain other facff Context to the consolidated financial statements; and tors that may affecff t futff uret results; Information that allows assessment of the likelihood that past performance is indicative of futuret performance. Our MD&A is performed on a consolidated basis and is inclusive of the results and operations of Sprint prospectively fromff close of the Merger on April 1, 2020. The Merger enhanced our spectrumr portfolio, increased our customer base, altered our product mix and created opportunities for synergies in our operations. We anticipate an initial increase in our combined operating costs, which we expect to decrease as we realize synergies. We expect the trends and results of operations of the combined company to be materially different than those of the standalone entities. the Our MD&A is provided as a supplement to, and should be read together with, our audited consolidated financial statements as of December 31, 2021 and 2020, and forff Item 8 of this Form 10-K. Except as expressly stated, the finff ancial condition and results of operations discussed throughout our MD&A are those of T-Mobile US, Inc. and its consolidated subsidiaries. each of the three years in the period ended December 31, 2021, included in Part II, Sprint Merger Transaction Overviewi On April 1, 2020, we completed the Merger with Sprint, a communications companym wireless and wireline communications products and services. As a result, Sprint and its subsidiaries became wholly-owned consolidated subsidiaries of T-Mobile. offering a comprehensive range of al requirements The Merger has altered the size and scope of our operations, impacting our assets, liabilities, obligations, capita and performance measures. We expect the trends and results of operations of the combined company to be materially different than those of the standalone entities. As a combined company, we have been able to enhance the breadth and depth of our nationwide 5G network, accelerate innovation, increase competition in the U.S. wireless and broadband industries and achieve significant synergies and cost reductions by eliminating redundancies within the combined network as well as other business processes and operations. For more information regarding the Merger, see Note 2 – Business Combinations of the Notes to the Consolidated Financial Statements. Shentel Wireless Assets Att cquisitiontt On July 1, 2021, we complem ted the acquisition of Shentel’s wireless telecommunications assets (the “Wireless Assets”) used to provide Sprint PCS’s wireless mobility communications network products in certain parts of Maryland, North Carolina, Virginia, West Virginia, Kentucky, Ohio and Pennsylvania. As a result, T-Mobile become the legal owner of the Wireless Assets. This transaction represented an opportunit Shentel’s former affiliate territory and simplify our operations. The acquisition of the Wireless Assets has altered the composition of certain assets and liabilities on our balance sheet, including Goodwill and Other intangible assets. y to reacquire the exclusive rights to deliver Sprint’s wireless network services in t For more information regarding our acquisition of the Wireless Assets, see Note 2 – Business Combinations of the Notes to the Consolidated Financial Statements. 28 Merger-Relatell d CosCC ts Merger-related costs associated with the Merger and acquisitions of affiliates generally include: • • • Integration costs to achieve efficiencies in network, retail, information technology and back office operations, migrate customers to the T-Mobile network and the impact of legal matters assumed as part of the Merger; Restructuring costs, including severance, store rationalization and network decommissioning; and Transaction costs, including legal and professional services related to the completion of the transactions. Transaction and restructuring costs are disclosed in Note 2 – Business Combinations and Note 18 – Restructuring Costs, respectively, of the Notes to the Consolidated Financial Statements. Merger-related costs have been excluded fromff our calculations of Adjusted EBITDA and Core Adjusted EBITDA, which are non-GAAP financial measures, as we do not consider these costs to be reflective of our ongoing operating performance. See “Adjusted EBITDA and Core Adjuste d EBITDA” in the “Performance Measures” section of this MD&A. Cash payments forff Merger-related costs, including payments related to our restructuring plan, are included in Net cash provided by operating activities on our Consolidated Statements of Cash Flows. d Merger-related costs are presented below: (in millions) 2021 2020 2019 $ Change % Change $ Change % Change Year Ended December 31, 2021 Versus 2020 2020 Versus 2019 Merger-related costs Cost of services, exclusive of depreciation and amortization Cost of equipment sales Selling, general and administrative Total Merger-related costs Cash payments for Merger-related costs NM - Not Meaningful $ $ $ 1,015 $ 646 $ — $ 1,018 1,074 3,107 2,170 $ $ 6 1,263 1,915 1,493 $ $ — 620 620 442 $ $ 369 1,012 (189) 1,192 57 % $ NM (15)% 646 6 643 62 % $ 1,295 NM NM 104 % 209 % 677 45 % $ 1,051 238 % Merger-related costs will be impacted by restructuring and integration activities expected to occur through the end of fiscal year 2023, as we implement initiatives to realize cost efficff costs, including legal and professional service feeff expected to continue to decrease. iencies from the Merger and our acquisitions of affiliates. Transaction s related to the completion of the Merger and acquisitions of affiliates, are Restructuring Upon the close of the Merger, we began implementing restructuring initiatives to realize cost efficff majora activities associated with the restructuring initiatives to date include: t iencies from the Merger. The • • • Contract termination costs associated with rationalization of retail stores, distribution channels, duplicative network and backhaul services and other agreements; Severance costs associated with the reduction of redundant processes and functions; and The decommissioning of certain small cell sites and distributed antenna systems to achieve synergies in network costs. Anticipatedtt Impacts We expect to incur a total of $12.0 billion of Merger-related costs, excluding capita been incurred since the beginning of 2018, including $700 million of costs incurred by Sprint prior to the Merger. al expenditures, of which $6.5 billion has t t activities are expected to occur over the next two years with substant t Our remaining integration and restructuring incurred by the end of fiscal year 2023. We expect to incur total Merger-related costs, excluding capita billion to complete our remaining integration and restructuring initiatives which are dependent on consultations and incurred in fiscal year 2022. We are evaluating additional restructuring negotiation with certain counterparties and the expected impact on our business operations, which could affecff t the amount or timing of the restructuring costs and related payments. We expect our principal sources of funding to be sufficient to meet our liquidity requirements and anticipated payments associated with the restructuring activities, $4.5 billion to $5.0 billion of which is expected to be ially all costs of $5.5 al expenditures, initiatives. u t t t 29 As a result of our ongoing restructuring combined network as well as other business processes and operations. We expect these activities to result in a reductd expenses in Cost of services and Selling, general and administrative on our Consolidated Statements of Comprehensive Income. iencies by eliminating redundancies within our activities, we expect to realize cost efficff ion of t For more information regarding our restructuring Financial Statements. t activities, see Note 18 – Restructuring Costs of the Notes to the Consolidated Cyberattack As we previously reported, we were subject to a criminal cyberattack involving unauthorized access to T-Mobile’s systems. We became aware of a potential issue on August 12, 2021. We immediately began a forensic cybersecurity experts to assist with the assessment of the incident and to help determine what data was impacted. As we previously reported, we promptlm y located and closed the unauthorized access to our systems. Our investigation uncovered that the perpetrator illegally gained access to certain areas of our systems on or about took data of current, former and prospective customers beginning on or about August 3, 2021. March 18, 2021, but only gained access to and investigation and engaged a ff Based on the initial investigation findings, we moved to quickly identify current, former and prospective customers whose information was impacted and notify them, consistent with state and federal requirements. Simultaneously, we undertook a number of other measures to demonstrate our continued support and commitment to data privacy and protection and continued to work with our cybersecurity experts to finish our forensic investigation, with the goal to ensure we had a complete understanding of the scope and impact of the unauthorized access. We also coordinated our efforts with law enforcement. ff Also as previously reported, our forensic investigation took time and was completed in October 2021, although our overall investigation into the incident is ongoing. As a result of our forensic investigation, we believe we have a full compromised. We have no evidence that individual finff ancial account numbers, such as full accessed or taken in relation to the August 2021 cyberattack. view of the data credit or debit card numbers, were ff ff Throughout our forensic investigation of the August 2021 cyberattack, our top priority was to support those individuals impacted by the cyberattack. We sent notifications to our customers and customer accounts whose names, dates of birth, Social Security numbers (“SSNs”)/Tax Identifiers (“Tax IDs”) and driver’s license/identification numbers (“ID Numbers”) were taken, consistent with state and federal requirements, including to approximately 7.8 million current customer accounts and r and r and prospective customers. We also notified an additional 1.9 million forme approximately 40.0 million forme prospective customers who had their names, dates of birth and ID Numbers (but not valid SSNs/Tax IDs) taken. ff ff a y sent notifications to approximately 5.3 million customer accounts who had their names, dates of birth and Out of an abundance of caution during the earliest days of our investigation and to help alleviate consumer concerns and confusion, we rapidl addresses taken. These accounts did not have SSNs/Tax IDs or ID Numbers taken. Later in our investigation, we identified approximately 790,000 additional formff er and prospective customers who had similar information — names, dates of birth and, in many cases, addresses, but not SSNs/Tax IDs or ID Numbers — taken and sent them notifications consistent with state and federal requirements. Our investigation also identified approxi information taken, but for whom individual notifications were not required under state and federal law in light of the types of information taken. By that point, since our original notifications, we had already launched a broad-reaching communications outreach program through which we kept our customers and the public informed and made informa on our website to provide support for any individuals who may have been impacted, including information on how they could take steps to protect themselves. mately 26.0 million additional individuals with the same types of tion available and accessible a ff We also took actions to proactively reset the personal identification numbers (“PINs”) forff customer accounts whose names and PINs may have been taken. We previously reported that furthe numbers, Internat numbers were taken; a significant portion of this data was related to inactive devices. For a number of additional current Metro customers, these files included names but no other personally identifiablea ional Mobile Equipment Identity (“IMEI”) numbers and International Mobile Subscriber Identity (“IMSI”) approximately 870,000 current r data files including phone information. r ff 30 As described above reported, this support included: a , supporting individuals impacted by the August 2021 cyberattack was a top priority. As previously • • • • Offering two years of free identity protection services with McAfee’s ID Theft Protection Service to any person who believes they may be affecff ted; Recommending that all eligible customers sign up for free scam-blocking protection through Scam Shield; Supporting individuals impacted by the August 2021 cyberattack with additional best practices and practical security steps such as resetting PINs and passwords; and Publishing a customer support webpage that includes information and access to these tools at https:/ - /www.t // mobile.com/brand/data-breach-20211. t a , we take data protection and the protection of our customers very seriously, and we have worked diligently As described above to further enhance security across our platforms throughout this process. As part of those efforts, and as we have previously reported, we have entered into long-term partnerships with the industry-leading cybersecurity experts at Mandiant, and with consulting firm KPMG LLP, as part of our efforts to ensure that the Company has cybersecurity practices that are among the best in our industry. We have also created a Cyber Transformation Office reporting directly to our Chief Executive Officer that will be responsible for managing our efforts. We have incurred certain cyberattack-related expenses that were not material and expect to continue to incur additional expenses in future periods, including costs to remediate the attack, provide additional customer support and enhance customer protection, only some of which may be covered and reimbursable by insurance. We also intend to commit substantial additional resources towards cybersecurity initiatives over the next several years. It is not possible to precisely measure the amount of lost revenue, if any, directly attributablea We are unable to predict the full impact of the August 2021 cyberattack on customer behavior in the future, including whether a change in our customers’ behavior could negatively impact our results of operations on an ongoing basis. Accordingly, we are not able to predict with any certainty any possible future impact to our revenues or expenses attributable to the August 2021 cyberattack, which could have a material adverse effect on our future results. to the August 2021 cyberattack. As a result of the attack, we are subject to numerous arbitration demands and lawsuits, including class action lawsuits, and regulatory inquiries as described in Note 17 – Commitments and Contingencies of the Notes to the Consolidated Financial Statements and Part I, Item 3. Legal Proceedings, and we could be subject to additional lawsuits and inquiries. We are cooperating fully with regulators in connection with the inquiries, though we cannot predict the timing or outcome of any of these inquiries. In light of the inherent uncertainties involved in such matters and based on the information currently available to us, as of the date of this Annual Report, we have not recorded any accrual losses related to the above proceedings and inquiries as any such amounts (or ranges of amounts) are not probable or estimable at this time. We believe it is reasonably possible that we could incur losses associated with these proceedings and inquiries, and the Company will continue to evaluate information as it becomes known and will record an estimate forff that a loss has been incurred and the amount of the loss is reasonably estimablea settlements, penalties or other resolutions of such proceedings and inquiries, including ongoing costs related thereto, could be material to our business, reputation, financial condition, cash flows and operating results in future losses at the time or times when it is both probablea . Losses associated with any adverse judgments, periods. s forff ff rr 1 The reference to this website is intended to be an inactive textual reference and information on or accessible from such website is not included or incorporated in this report. 31 COVID-19 Pandemic ted businesses, economies and financial markets The Pandemic has resulted in a widespread health crisis that has adversely affecff worldwide, and has caused significant volatility in the U.S. and international debt and equity markets. The impact of the Pandemic has been wide-ranging, including, but not limited to, the temporary closures of many businesses and schools, “shelter in place” orders, travel restrictions, social distancing guidelines and other governmental, business and individual actions taken in response to the Pandemic. These restrictions have impacted, and will continue to impact, our business, including the demand for our products and services and the ways in which our customers purchase and use them. In addition, the Pandemic has resulted in economic uncertainty, which could affect our customers’ purchasing decisions and ability to make timely payments. The availability of vaccines, as well as our continued social distancing measures and incremental cleaning efforts, facilitated the continued operation of our retail stores. Additionally, we have implemented testing policies for our on-site employees to help reduce transmission. We will continue to monitor the Pandemic and its impacts and may adjust our actions as needed to continue to provide our products and services to our communities and employees. have ff As a critical communications infrastructuret connectivity to our customers and impacted communities while ensuring the safety and well-being of our employees. provider as designated by the government, our focus has been on providing cruci rr al 32 Year Ended December 31, 2021 Versus 2020 2020 Versus 2019 2021 2020 2019 $ Change % Change $ Change % Change $ 42,562 $ 36,306 $ 22,673 $ 6,256 17 % $ 13,633 9,733 3,751 2,323 58,369 20,727 1,022 80,118 9,421 2,590 2,078 50,395 17,312 690 68,397 9,543 1,279 1,005 34,500 9,840 658 44,998 312 1,161 245 7,974 3,415 332 11,721 3 % 45 % 12 % 16 % 20 % 48 % 17 % (122) 1,311 1,073 15,895 7,472 32 23,399 13,934 11,878 6,622 2,056 17 % 5,256 Results of Operations Set forth below is a summary of our consolidated financial results: (in millions) Revenues Postpaid revenues Prepaid revenues Wholesale revenues 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 Impairment expense Depreciation and amortization Total operating expenses Operating income Other income (expense) Interest expense Interest expense to affiliates Interest income Other expense, net 22,671 20,238 — 16,383 73,226 6,892 16,388 18,926 418 14,151 61,761 6,636 (3,189) (2,483) (173) 20 (199) (247) 29 (405) 11,899 14,139 — 6,616 39,276 5,722 (727) (408) 24 (8) 6,283 1,312 (418) 2,232 11,465 256 (706) 74 (9) 206 (435) (179) 459 280 (320) (40) 38 % 7 % (100)% 16 % 19 % 4 % 28 % (30)% (31)% (51)% 14 % (5)% (58)% 10 % (100)% (1)% $ 4,489 4,787 418 7,535 22,485 914 (1,756) 161 5 (397) (1,987) (1,073) 349 (724) 320 (404) Total other expense, net (3,541) (3,106) (1,119) Income from continuing operations before income taxes Income tax expense Income from continuing operations Income from discontinued operations, net of tax 3,351 (327) 3,024 — 3,530 (786) 2,744 320 4,603 (1,135) 3,468 — Net income $ 3,024 $ 3,064 $ 3,468 $ Statement of Cash Flows Data Net cash provided by operating activities $ 13,917 $ 8,640 $ 6,824 $ 5,277 61 % $ 1,816 Net cash used in investing activities (19,386) (12,715) Net cash provided by (used in) financing activities 1,709 13,010 (4,125) (2,374) (6,671) (11,301) Non-GAAP Financial Measures Adjusted EBITDA Core Adjusted EBITDA Free Cash Flow, excluding gross payments for the settlement of interest rate swaps NM - Not Meaningful 52 % (87)% 10 % 16 % (8,590) 15,384 11,174 7,592 26,924 23,576 24,557 20,376 13,383 12,784 2,367 3,200 5,646 3,001 4,319 2,645 88 % (1,318) (31)% 33 60 % (1)% 103 % 107 % 46 % 76 % 5 % 52 % 79 % 38 % 34 % NM 114 % 57 % 16 % 242 % (39)% 21 % 4,963 % 178 % (23)% (31)% (21)% NM (12)% 27 % 208 % (648)% 83 % 59 % loll wing discdd ussion and analysis is for the year ended December 31, 2021, compared to t The folff tt For a discussion and analysis of the year ended December 31, 2020, compared to the same period in 2019, otherwise stated. please referff 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, 2020, filed with the SEC on February 23, 2021. s same period in 2020 unlesll tt hett On April 1, 2020, we closed our Merger with Sprint. The Merger was accounted for as business combination and our results are inclusive of the acquired Sprint operations prospectively from the Merger close date. Our results of operations described below l year of Sprint results included in fiscal year 2021 compared to nine months of Sprint results included in are impacted by a fulff fiscal year 2020. Total revenues increased $11.7 billion, or 17%. The components of these changes are discussed below. Postpaid revenues increased $6.3 billion, or 17%, primarily from: ff • • Higher average postpaid accounts; and Higher postpaid ARPA. See “Postpaid ARPA” in the “Performance Measures” section of this MD&A. Prepaid revenues increased $312 million, or 3%, primarily from: • • Higher prepaid ARPU. See “Prepaid ARPU” in the “Performance Measures” section of this MD&A; and Higher average prepaid customers. Wholesale revenues increased $1.2 billion, or 45%, primarily from: ff • • Our Master Network Service Agreement with DISH, which went into effect on July 1, 2020; and The success of our other MVNO relationships. Other service revenues increased $245 million, or 12%, primarily from: • • • Higher Lifeline revenues, primarily associated with operations acquired in the Merger; and Inclusion of wireline operations acquired in the Merger; partially offset by Lower advertising revenues. Equipment revenues increased $3.4 billion, or 20%, primarily from: ff • An increase of $3.5 billion in device sales revenue, excluding purchased leased devices, primarily from: ff • • • • • An increase in the number of devices sold dued activity returning year, a higher upgrade rate and the planned shift in device financing from leasing to EIP; and to more normalized levels compared to the muted conditions from the Pandemic in the prior to a larger customer base as a result of the Merger, switching t Higher average revenue per device sold driven by an increased mix of phone versus other devices, partially offset by an increase in promotional activities; An increase of $373 million in sales of accessories, due to increased retail store traffic, compared to lower retail traffic in the prior period due to closures arising from the Pandemic, and a larger customer base as a result of the Merger; An increase of $221 million in liquidation revenues, primarily due to a higher volume of returne increase in the high-end device mix; partially offset by t d devices and an A decrease of $833 million in lease revenues dued planned shift in device finff ancing from leasing to EIP. to a lower number of customer devices under lease as a result of the 34 Other revenues increased $332 million, or 48%, primarily from: ff • • Higher revenues fromff our device recovery program; and Higher interest income on our EIP receivablea s fromff the planned shift in device finff ancing from leasing to EIP. Operating expenses increased $11.5 billion, or 19%. The components of this change are discussed below. Cost of services, exclusive of depreciation and amortization, increased $2.1 billion, or 17%, primarily from: ff • • • • An increase in expenses associated with leases and utilities primarily due to the Merger and the continued build-out of our nationwide 5G network, including a new tower master lease agreement in 2020; An increase of $369 million in Merger-related costs including incremental costs associated with network decommissioning and integration; and Higher employee-related and benefit-related costs primarily dued Merger; partially offset by to increased average headcount as a result of the Higher realized Merger synergies, including a decrease in expenses associated with backhaul due to the termination of certain agreements acquired in the Merger. Cost of equipment sales, exclusive of depreciation and amortization, increased $6.3 billion, or 38%, primarily from: • An increase of $5.9 billion in device cost of equipment sales, excluding purchased leased devices, primarily from: • • An increase in the number of devices sold dued activity returning year, a higher upgrade rate and the planned shift in device financing from leasing to EIP; and to a larger customer base as a result of the Merger, switching to more normalized levels relative to the muted conditions from the Pandemic in the prior t Higher average costs per device sold due to an increased mix of phone versus other devices; and • An increase of $212 million in cost of accessories, due to increased retail store traffic, compared to lower retail traffic in the prior period due to closures arising from the Pandemic, and a larger customer base as result of the Merger. • Merger-related costs, primarily related to moving Sprint customers to devices that are compatible with the T-Mobile network, were $1.0 billion for the year ended December 31, 2021, compared to $6 million for the year ended December 31, 2020. Selling, general and administrative expenses increased $1.3 billion, or 7%, primarily from: ff • • • • • • • • Higher advertising expense relative to the muted Pandemic-driven conditions in the prior period; Higher external labor a and professional services primarily from the Merger; Higher employee-related costs due to an increase in the average number of employees primarily fromff the Merger; and Higher commissions primarily dued offset by to compensation structure changes and higher customer addition volumes; partially Higher realized Merger synergies; and Lower bad debt expense primarily dued associated with macro-economic impact of the Pandemic. to the release of estimated bad debt reserves establia shed in the prior year Selling, general and administrative expenses for the year ended December 31, 2020, included $458 million of supplemental employee payroll, third-party commissions and cleaning-related COVID-19 costs. There were insignificant COVID-19 costs for the year ended December 31, 2021. Selling, general and administrative expenses for the year ended December 31, 2021, included $1.1 billion of Merger- related costs primarily related to integration, restructuring and legal-related expenses, compared to $1.3 billion of Merger-related costs for the year ended December 31, 2020. 35 Impairment expense decreased $418 million, or 100%, primarily from: ff • • • A $218 million impairment on the goodwill in the Layer3 reporting unit in 2020; and A $200 million impairment on the capitalized software development costs related to our postpaid billing system replacement in 2020. There was no impairment expense for the year ended December 31, 2021. Depreciation and amortization increased $2.2 billion, or 16%, primarily from: ff • • • Higher depreciation expense, excluding leased devices, from the continued build-out of our nationwide 5G network; Accelerated depreciation expense on certain assets due to our Merger integration; and Higher amortization from intangible assets, primarily dued the Merger. to a fulff l year of amortization of intangible assets acquired in Operating income, the components of which are discussed above, increased $256 million, or 4%. Interest expense increased $706 million, or 28%, primarily from: ff • • • Higher average debt outstanding due to debt assumed in the Merger and the issuance of debt; and Lower capita alized interest; partially offset by A lower average effecff tive interest rate due to refinancing of existing debt at lower rates. Interest expense to affiliates decreased $74 million, or 30%, primarily from: • • Lower average debt outstanding due to the redemption of debt; partially offset by Lower capita alized interest. Other expense, net decreased $206 million, or 51%, primarily fromff lower losses on the extinguishment of debt. Income from continuing operations before income taxes, the components of which are discussed above $3.5 billion for the years ended December 31, 2021 and 2020, respectively. a , was $3.4 billion and Income tax expense decreased $459 million, or 58%, primarily from: ff • • • Tax benefits associated with legal entity reorganization related to historical Sprint entities, including a reductd valuation allowance against deferred tax assets in certain state jurisdictions; ion in the Lower Income fromff continuing operations before income taxes; and Increased benefits from tax credits. Our effective tax rate was 9.8% and 22.3% for the years ended December 31, 2021 and 2020, respectively. Income from continuing operations was $3.0 billion and $2.7 billion for the years ended December 31, 2021 and 2020, respectively. The change in Income fromff continuing operations was primarily dued . to the items discussed above a Income from discontinued operations, net of tax was $320 million forff the results of the Prepaid Business that was divested on July 1, 2020. There were no discontinued operations for the year ended December 31, 2021. the year ended December 31, 2020 and consisted of 36 Net income, the components of which are discussed above a , decreased $40 million, or 1%, and included the following: • Merger-related costs, net of tax, of $2.3 billion for the year ended December 31, 2021, compared to $1.5 billion for the year ended December 31, 2020; • • Impairment expense of $366 million, net of tax, for the year ended December 31, 2020, compared to no impairment expense for the year ended December 31, 2021; and The negative impact of supplemental employee payroll, third-party commissions and cleaning-related COVID-19 costs, net of tax, of $339 million forff year ended December 31, 2021. the year ended December 31, 2020, compared to an insignificant impact for the Guarantortt Finaii ncial InfII ormat ff iontt In connection with our Merger with Sprint, we assumed certain registered debt to third parties issued by Sprint, Sprint Communications LLC, formerly known as Sprint Communications, Inc. (“Sprint Communications”) and Sprint Capital Corporation (collectively, the “Sprint Issuers”). Amounts previously disclosed forff assets and liabia lities assumed have been adjusted based on additional information arising subsequent to the initial valuation. These revisions to the estimated values did not have a significant impact on our summarized finaff consolidated obligor group. the estimated values of certain acquired ncial information for the t Pursuant to the applicable indentures Mobile USA, Inc. and the Sprint Issuers (collectively, the “Issuers”) are fully and unconditionally guaranteed, jointly and severally, on a senior unsecured basis by T-Mobile (“Parent”) and certain of Parent’s 100% owned subsidiaries (“Guarantor Subsidiaries”). the Senior Notes to affiliates and third parties issued by T- and supplemental indentures, t Pursuant to the applicable indentures the Senior Secured Notes to third parties issued by T-Mobile USA, Inc. are fully and unconditionally guaranteed, jointly and severally, on a senior secured basis by Parent and the Guarantor Subsidiaries, except for the Guarantees of Sprint, Sprint Communications and Sprint Capital Corporation, which are provided on a senior unsecured basis. mental indentures, u and supple t t ct to release in limited circumstances only upon the occurrence of certain The guarantees of the Guarantor Subsidiaries are subjeu customary conditions. The indentures, supplemental indentures and credit agreements governing the long-term debt contain covenants that, among other things, limit the ability of the Issuers or borrowers 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 affilff ries, and merge, consolidate or sell, or otherwise dispose of, substantially all of their assets. Certain provisions of each of the credit agreements, indentures and supplemental indentures relating to the long-term debt restrict the ability of the Issuers or borrowers to loan funds or make payments to Parent. However, the Issuers or borrowers and Guarantor Subsidiaries are allowed to make certain permitted payments to Parent under the terms of the indentures, iates, enter into transactions that restrict dividends or distributions from subsidia supplemental indentures and credit agreements. u t Basis of Presentation s include summarized finaff The following tablea Sprint, Sprint Communications and Sprint Capital Corporation. The summarized finaff presented on a combined basis with balances and transactions within the obligor group eliminated. Investments in and the equity in earnings of non-guarantor subsidiaries, which would otherwise be consolidated in accordance with U.S. GAAP, are excluded fromff the below summarized financial information pursuant to SEC Regulation S-X Rule 13-01. ncial information of the obligor groups of debt issued by T-Mobile USA, Inc., ncial information of each obligor group is 37 The summarized balance sheet information for the consolidated obligor group of debt issued by T-Mobile USA, Inc. is presented in the tablea below: (in millions) Current assets Noncurrent assets Current liabilities Noncurrent liabilities Due to non-guarantors Due to related parties Due from related parties December 31, 2021 December 31, 2020 $ 19,522 $ 174,980 22,195 115,126 8,208 3,842 27 22,638 165,294 19,982 112,930 7,433 4,873 22 The summarized results of operations information for the consolidated obligor group of debt issued by T-Mobile USA, Inc. is presented in the tablea below: millions) Total revenues Operating income Net income Revenue from non-guarantors Operating expenses to non-guarantors Other expense to non-guarantors Year Ended December 31, 2021 Year Ended December 31, 2020 $ 78,538 $ 3,835 402 1,769 2,655 (148) 67,112 4,335 1,148 1,496 2,127 (114) The summarized balance sheet information for the consolidated obligor group of debt issued by Sprint and Sprint Communications is presented in the tablea below: (in millions) Current assets Noncurrent assets Current liabilities Noncurrent liabilities Due from non-guarantors Due to related parties Due from related parties December 31, 2021 December 31, 2020 $ 11,969 $ 10,347 15,136 70,262 1,787 3,842 27 2,646 26,278 4,209 65,161 25,993 4,786 — The summarized results of operations information for the consolidated obligor group of debt issued by Sprint and Sprint Communications, since the acquisition of Sprint on April 1, 2020, is presented in the tabla e below: (in millions) Total revenues Operating loss Net loss Revenue from non-guarantors Other income, net, from non-guarantors Year Ended December 31, 2021 Nine Months Ended December 31, 2020 $ 7 $ (751) (2,161) 2 1,706 10 (15) (2,229) 6 1,084 The summarized balance sheet information for the consolidated obligor group of debt issued by Sprint Capita presented in the tablea below: al Corporation is (in millions) Current assets Noncurrent assets Current liabilities Noncurrent liabilities Due from non-guarantors Due to related parties Due from related parties December 31, 2021 December 31, 2020 $ 11,969 $ 19,375 15,208 75,753 10,814 3,842 27 2,646 35,330 4,281 70,253 35,046 4,786 — The summarized results of operations information for the consolidated obligor group of debt issued by Sprint Capita Corporation, since the acquisition of Sprint on April 1, 2020, is presented in the tabla e below: al (in millions) Total revenues Operating loss Net loss Revenue from non-guarantors Other income, net, from non-guarantors Year Ended December 31, 2021 Nine Months Ended December 31, 2020 $ 7 $ (751) (2,590) 2 2,076 10 (15) (2,165) 6 1,085 ll Affilff iat estt Whose Securitiett s CollCC atell ralizeii the Senior Secured Notes For a description of the collateral arrangements relating to securities of affiliates that collateralize the Senior Secured Notes, please refer to the section entitled “Affiliates Whose Securities Collateralize the Notes and the Guarantees” in the Company’s Registration Statement on Form S-4/A fileff d with the SEC on April 21, 2021, which section is incorporated herein by reference. The assets, liabilities and results of operations of the combined affilff materially different than the corresponding amounts presented in the consolidated financial statements of the Company. iates whose securities are pledged as Collateral are not Performance Measures In managing our business and assessing financial performance, we supple financial statements with other operating or statistical data and non-GAAP financial measures. These operating and finaff 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. ment the information provided by our consolidated ncial u The performance measures presented below include the impact of the Merger on a prospective basis from the close date of April 1, 2020 and the impact of the acquisition of the Wireless Assets from Shentel on a prospective basis from the close date of July 1, 2021. Historical results prior to the respective close dates have not been retroactively adjuste d. d 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. Customers are qualified either forff DIGITS or other connected devices, which include tabla ets and SyncUp products, where they generally pay afteff service, or prepaid service, where they generally pay in advance of receiving service. postpaid service utilizing phones, High Speed Internet, wearables, r receiving The following tablea sets forth the number of ending customers: thousands) 2021 2020 2019 # % # % As of December 31, 2021 Versus 2020 2020 Versus 2019 Customers, end of period Postpaid phone customers (1)(2) Postpaid other customers (1)(2) Total postpaid customers Prepaid customers (1) Total customers Acquired customers, net of base adjustments (1)(2) 70,262 17,401 87,663 21,056 66,618 14,732 81,350 20,714 108,719 102,064 40,345 6,689 47,034 20,860 67,894 3,644 2,669 6,313 342 6,655 5 % 18 % 8 % 2 % 7 % 26,273 8,043 34,316 (146) 34,170 65 % 120 % 73 % (1)% 50 % 818 29,228 (616) (28,410) (97)% 29,844 NM (1) (2) Includes customers acquired in connection with the Merger and certain customer base adjustments. Additions tables below. In the first quarter of 2021, we acquired 11,000 postpaid phone customers and 1,000 postpaid other customers through our acquisition of an affiliate. In the third quarter of 2021, we acquired 716,000 postpaid phone customers and 90,000 postpaid other customers through our acquisition of the Wireless Assets from Shentel. See Customer Base Adjustments and Net Customer d NM - Not Meaningful 39 Total customers increased 6,655,000, or 7%, primarily from: ff • • • Higher postpaid phone customers, primarily due to the continued success of new customer segments and rate plans, and continued growth in existing and new markets, along with targeted promotional activity and increased retail store traffic, compared to lower retail traffic in the prior period due to closures arising from the Pandemic; Higher postpaid other customers, primarily due to growth in other connected devices, including growth in wearable products, High Speed Internet, and public and educational sector customers; and Higher prepaid customers, primarily due to the continued success of our prepaid business dued and rate plan offers. to promotional activity Customer Base Adjust dd mett nts Certain adjustments were made to align the customer reporting policies of T-Mobile and Sprint. The adjustments made to the reported T-Mobile and Sprint ending customer base as of March 31, 2020, are presented below: (in thousands) to beginning customers T-Mobile customers as reported, end of period March 31, 2020 Sprint customers as reported, end of period March 31, 2020 Total combined customers, end of period March 31, 2020 Adjustments Reseller reclassification to wholesale customers (1) EIP reclassification from postpaid to prepaid (2) Divested prepaid customers (3) Rate plan threshold (4) Customers with non-phone devices (5) Collection policy alignment (6) Miscellaneous adjustments (7) Total Adjustments Adjusted beginning customers as of April 1, 2020 Postpaid phone customers Postpaid other customers Total postpaid customers Prepaid customers Total customers 40,797 25,916 66,713 (199) (963) — (182) (226) (150) (141) (1,861) 64,852 7,014 8,428 15,442 (2,872) — — (918) 226 (46) (43) (3,653) 11,789 47,811 34,344 82,155 (3,071) (963) — (1,100) — (196) (184) (5,514) 76,641 20,732 8,256 28,988 — 963 (9,207) — — — (302) (8,546) 20,442 68,543 42,600 111,143 (3,071) — (9,207) (1,100) — (196) (486) (14,060) 97,083 (1) In connection with the closing of the Merger, we refined our definition of wholesale customers, resulting in the reclassification of certain postpaid and prepaid reseller customers to wholesale customers. Starting with the three months ended March 31, 2020, we discontinued reporting wholesale customers to focus on postpaid and prepaid customers and wholesale revenues, which we consider more relevant than the number of wholesale customers given the expansion of M2M and IoT products. (2) Prepaid customers with a device installment billing plan historically included as Sprint postpaid customers have been reclassified to prepaid customers to align with T-Mobile policy. (3) Customers associated with the Sprint wireless prepaid and Boost Mobile brands that were divested on July 1, 2020, have been excluded from our reported customers. (4) Customers who have rate plans with monthly recurring charges which are considered insignificant have been excluded from our reported customers. (5) Customers with postpaid phone rate plans without a phone (e.g., non-phone devices) have been reclassified from postpaid phone to postpaid other customers to align with T-Mobile policy. (6) Certain Sprint customers subject to collection activity for an extended period of time have been excluded fromff our reported customers to align with T- Mobile policy. (7) Miscellaneous insignificant adjustments to align with T-Mobile policy. 40 Net CustCC ome tt tt r Additions The following tablea sets forth the number of net customer additions: (in thousands) Net customer additions Postpaid phone customers Postpaid other customers Total postpaid customers Prepaid customers Total customers Acquired customers, net of base adjustments NM - Not Meaningful Year Ended December 31, 2021 Versus 2020 2020 Versus 2019 2021 2020 2019 # % # % 2,917 2,578 5,495 342 5,837 818 2,218 3,268 5,486 145 5,631 3,121 1,394 4,515 339 4,854 699 (690) 9 197 206 29,228 (616) (28,410) 32 % (21)% N M 136 % 4 % (97)% (903) 1,874 971 (194) 777 29,844 (29)% 134 % 22 % (57)% 16 % NM Total net customer additions increased 206,000, or 4%, primarily from: ff Higher postpaid phone net customer additions, primarily dued traffic in the prior period due to closures arising from the Pandemic, partially offset by higher churn; and to increased retail store traffic, compared to lower retail Higher prepaid net customer additions, primarily due to lower churn; partially offset by Lower postpaid other net customer additions, primarily due to elevated gross additions in the prior period related to the public and educational sector resulting from the Pandemic and higher disconnects fromff partially offset by growth in High Speed Internet. High Speed Internet net customer additions were 546,000 and 87,000 for the years ended December 31, 2021 and 2020, respectively. an increased customer base, • • • Churn Churn represents the number of customers whose service was disconnected as a percentage of the average number of customers during the specified period further divided by the number of months in the 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 tablea sets forth the churn: Postpaid phone churn Prepaid churn Year Ended December 31, 2021 2020 2019 Bps Change 2021 Versus 2020 Bps Change 2020 Versus 2019 0.98 % 2.83 % 0.90 % 3.03 % 0.89 % 3.82 % 8 bps -20 bps 1 bps -79 bps t Postpai d phone churn increased 8 basis points, primarily from: • Higher churn from customers acquired in the Merger; and • More normalized switching activity relative to the muted Pandemic-driven conditions a year ago. Prepaid churn decreased 20 basis points, primarily from: • • Promotional activity; and Improved quality of recently acquired customers. 41 Total PosPP tpaid Accountstt A postpaid account is generally defined as a billing account number that generates revenue. Postpaid accounts generally consist of customers that are qualified forff connected devices, which include tabla ets and SyncUp products, where they generally pay after receiving service. postpaid service utilizing phones, High Speed Internet, wearables, DIGITS or other (in thousands) Total postpaid customer accounts (1)(2) 2021 2020 2019 # Change % Change # Change % Change 27,216 25,754 15,047 1,462 6 % 10,707 71 % As of December 31, 2021 Versus 2020 2020 Versus 2019 (1) (2) Includes accounts acquired in connection with the Merger and certain account base adjustments. See Account Base Adjustments table below. In the first quarter of 2021, we acquired 4,000 postpaid accounts through our acquisition of an affiliate. In the third quarter of 2021, we acquired 270,000 postpaid accounts through our acquisition of the Wireless Assets of Shentel. Total postpaid customer accounts increased 1,462,000, or 6%, primarily dued segments and rate plans, continued growth in existing and new markets, including our High Speed Internet product, along with targeted promotional activity and increased retail store traffic compared to the prior period due to closures arising from the Pandemic. to the continued success of new customer Account Base Adjustments Certain adjust d ments were made to align the account reporting policies of T-Mobile and Sprint. The adjustments made to the reported T-Mobile and Sprint ending account base as of March 31, 2020 are presented below: (in thousands) Reconciliation to beginning accounts T-Mobile accounts as reported, end of period March 31, 2020 Sprint accounts, end of period March 31, 2020 Total combined accounts, end of period March 31, 2020 Adjustments Reseller reclassification to wholesale accounts (1) EIP reclassification from postpaid to prepaid (2) Rate plan threshold (3) Collection policy alignment (4) Miscellaneous adjustments (5) Total Adjustments Adjusted beginning accounts as of April 1, 2020 Postpaid Accounts 15,244 11,246 26,490 (1) (963) (18) (76) (47) (1,105) 25,385 (1) In connection with the closing of the Merger, we refined our definition of wholesale accounts resulting in the reclassification of certain postpaid and prepaid reseller accounts to wholesale accounts. (2) Prepaid accounts with a customer with a device installment billing plan historically included as Sprint postpaid accounts have been reclassified to prepaid accounts to align with T-Mobile policy. (3) Accounts with customers who have rate plans with monthly recurring charges that are considered insignificant have been excluded from our reported accounts. (4) Certain Sprint accounts subject to collection activity for an extended period of time have been excluded from our reported accounts to align with T- Mobile policy. (5) Miscellaneous insignificant adjustments to align with T-Mobile policy. Postpaid Ni etNN Account Addidd tiii ons The following tablea sets forth the number of postpaid net account additions: (in thousands) 2021 2020 2019 # Change % Change # Change % Change Postpaid net account additions 1,188 566 1,018 622 110 % (452) (44)% As of December 31, 2021 Versus 2020 2020 Versus 2019 Postpai d net account additions increased 622,000, or 110%, primarily due to the continued success of new customer segments t and rate plans, continued growth in existing and new markets, including our High Speed Internet product, along with targeted promotional activity and increased retail store traffic compared to the prior period due to closures arising from the Pandemic. 42 Average Revenue PerPP 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 foreff our future service revenues generated fromff related revenues, which include High Speed Internet, wearablea SyncUp products. our customer base. Postpaid phone ARPU excludes postpaid other customers and s, DIGITS and other connected devices such as tablea ts and casting The following tablea revenues: illustrates the calculation of our operating measure ARPU and reconciles this measure to the related service Year Ended December 31, 2021 Versus 2020 2020 Versus 2019 2021 2020 2019 $ Change % Change $ Change % Change (in millions, except average number of customers and ARPU) Calculation of Postpaid Phone ARPU Postpaid service revenues Less: Postpaid other revenues Postpaid phone service revenues Divided by: Average number of postpaid phone customers (in thousands) and number of months in period Postpaid phone ARPU Calculation of Prepaid ARPU Prepaid service revenues Divided by: Average number of prepaid customers (in thousands) and number of months in period Prepaid ARPU NM - Not Meaningful Postpaid Phone ARPU $ 42,562 $ 36,306 $ 22,673 $ 6,256 17 % $ 13,633 (3,408) 39,154 (2,367) 33,939 (1,344) 21,329 (1,041) 5,215 44 % 15 % (1,023) 12,610 68,327 47.75 9,733 $ $ 59,249 47.74 9,421 $ $ $ $ 38,602 46.04 9,543 $ $ 9,078 0.01 15 % 20,647 NM $ 1.70 312 3 % $ (122) (1)% 20,909 20,594 20,955 $ 38.79 $ 38.12 $ 37.95 $ 315 0.67 2 % 2 % $ (361) 0.17 (2)% — % 60 % 76 % 59 % 53 % 4 % t Postpai d phone ARPU was essentially flat and was primarily impacted by: • • • • Higher premium services, including Magenta Max; and The net impact of customers acquired in the Merger, which have higher ARPU (net of changes arising from the reduction in base due to policy adjust d ments and reclassification of certain ARPU components from the acquired customers being moved to other revenue lines); offset by Promotional activity; and The impact of the transition of Sprint customers to tax-inclusive rate plans. Prepaid ARPU Prepaid ARPU increased $0.67, or 2%, primarily dued to: • • • Higher premium services; and Higher revenues dued to improved rate plan mix; partially offset by A reduction in certain non-recurring charges. Average Revenue Per Account Average Revenue per Account (“ARPA”) represents the average monthly postpaid service revenue earned per account. We believe postpaid ARPA provides management, investors and analysts with useful information to assess and evaluate our postpaid service revenue realization and assist in foreff consider postpaid ARPA to be indicative of our revenue growth potential given the increase in the average number of postpaid phone customers per account and increases in postpaid other customers, including High Speed Internet, wearablea s, DIGITS or other connected devices, which include tabla ets and SyncUp products. casting our future postpaid service revenues on a per account basis. We 43 lowing tablea The folff revenues: illustrates the calculation of our operating measure ARPA and reconciles this measure to the related service (in millions, except average number of accounts, ARPA) Calculation of Postpaid ARPA Postpaid service revenues Divided by: Average number of postpaid accounts (in thousands) and number of months in period Postpaid ARPA $ $ Year Ended December 31, 2021 Versus 2020 2020 Versus 2019 2021 2020 2019 $ Change % Change $ Change % Change 42,562 $ 36,306 $ 22,673 $ 6,256 17 % $ 13,633 60 % 26,464 22,959 14,486 134.03 $ 131.78 $ 130.43 $ 3,505 2.25 15 % 2 % $ 8,473 1.35 58 % 1 % t Postpai d ARPA increased $2.25, or 2%, primarily from: ff • • • An increase in customers per account; and Higher premium services, including Magenta Max; partially offset by Promotional activity. Adjustedtt EBITBB DATT and CorCC e Adjusted EBIEE TDADD Beginning in the firff st quarter of 2021, we began disclosing Core Adjusted EBITDA as a financial measure to improve comparabila ity as we de-emphasize device leasing programs as part of our value proposition. Adjusted EBITDA represents earnings before Interest expense, net of Interest income, Income tax expense, Depreciation and amortization, stock-based compensat Core Adjusted EBITDA represents Adjusted EBITDA less device lease revenues. Adjusted EBITDA margin represents Adjusted EBITDA divided by Service revenues. Core Adjusted EBITDA margin represents Core Adjusted EBITDA divided by Service revenues. ion and certain income and expenses not reflective of our ongoing operating performance. m d d d ed EBITDA and Core Adjust ed EBITDA margin are non-GAAP Adjusted EBITDA, Adjusted EBITDA margin, Core Adjust financial measures utilized by our management to monitor the finff ancial performance of our operations. We use Adjusted EBITDA internally as a measure to evaluate and compensate our personnel and management for their performance. We use d EBITDA as benchmarks to evaluate our operating performance in comparison to our Adjusted EBITDA and Core Adjuste competitors. Management believes analysts and investors use Adjusted EBITDA and Core Adjusted EBITDA as supplemental measures to evaluate overall operating performance and facilitate comparisons with other wireless communications services companies because they are indicative of our ongoing operating performance and trends by excluding the impact of interest ion, Merger- expense from financing, non-cash depreciation and amortization from capia tal investments, stock-based compensat related costs including network decommissioning costs and incremental costs directly attributable to the Pandemic, as they are not indicative of our ongoing operating performance, as well as certain other nonrecurring income and expenses. Management believes analysts and investors use Core Adjusted EBITDA because it normalizes forff financing strategy, by excluding the impact of device lease revenues fromff related depreciation expense on leased devices from Adjuste Adjusted EBITDA and Core Adjusted EBITDA margin have limitations as analytical tools and should not be considered in isolation or as substitutet operations, net income or any other measure of financial performance reported in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”). d EBITDA. Adjusted EBITDA, Adjusted EBITDA margin, Core Adjusted EBITDA, to align with the exclusion of the the transition in the Company’s device income fromff s forff m d 44 lowing tablea The folff EBITDA and Core Adjusted EBITDA to Net income, which we consider to be the most directly comparablea measure: illustrates the calculation of Adjusted EBITDA and Core Adjusted EBITDA and reconciles Adjusted GAAP financial (in millions) Net income Adjustments: Income from discontinued operations, net of tax Income from continuing operations Interest expense Interest expense to affiliates Interest income Other expense, net Income tax expense Operating income Depreciation and amortization Operating income from discontinued operations (1) Stock-based compensation (2) Merger-related costs COVID-19-related costs Impairment expense Other, net (3) Adjusted EBITDA Lease revenues Net income margin (Net income divided by Service revenues) Adjusted EBITDA margin (Adjusted EBITDA divided by Service revenues) Core Adjusted EBITDA margin (Core Adjusted EBITDA divided by Service revenues) NM - Not Meaningful Year Ended December 31, 2021 Versus 2020 2020 Versus 2019 2021 2020 2019 $ Change % Change $ Change % Change $ 3,024 $ 3,064 $ 3,468 $ (40) (1)% $ (404) (12)% — 3,024 3,189 173 (20) 199 327 6,892 16,383 — 521 3,107 — — 21 26,924 (3,348) (320) 2,744 2,483 247 (29) 405 786 6,636 14,151 432 516 1,915 458 418 31 24,557 (4,181) — 3,468 727 408 (24) 8 1,135 5,722 6,616 — 423 620 — — 2 13,383 (599) 320 280 706 (74) 9 (206) (459) 256 2,232 (432) 5 1,192 (458) (418) (10) 2,367 833 (100)% 10 % 28 % (30)% (31)% (51)% (58)% 4 % 16 % (100)% 1 % 62 % (100)% (100)% (32)% 10 % (20)% (320) (724) 1,756 (161) (5) 397 (349) 914 7,535 432 93 1,295 458 418 29 11,174 (3,582) 5 % 6 % 46 % 49 % 10 % 39 % -100 bps -300 bps NM (21)% 242 % (39)% 21 % 4,963 % (31)% 16 % 114 % NM 22 % 209 % NM NM 1,450 % 83 % 598 % 59 % -400 bps 1000 bps 40 % 40 % 37 % — bps 300 bps Core Adjusted EBITDA $ 23,576 $ 20,376 $ 12,784 $ 3,200 16 % $ 7,592 (1) Following the Prepaid Transaction starting on July 1, 2020, we provide MVNO services to DISH. We have included the operating income from April 1, 2020 through June 30, 2020, in our determination of Adjusted EBITDA to reflect contributions of the Prepaid Business that were replaced by the MVNO Agreement beginning on July 1, 2020 in order to enable management, analysts and investors to better assess ongoing operating performance and trends. (2) Stock-based compensation includes payroll tax impacts and may not agree with 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. (3) Other, net may not agree with 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 from Adjusted EBITDA and Core Adjusted EBITDA. Core Adjust Core Adjust d d ed EBITDA increased $3.2 billion, or 16%, for the year ended December 31, 2021. The components comprising ed EBITDA are discussed furthe . r above a ff The increase was primarily dued to: • • • • • Higher Total service revenues; and Higher Equipment revenues, excluding Lease revenues; partially offset by Higher Cost of equipment sales, excluding Merger-related costs; Higher Cost of services, excluding Merger-related costs; and Higher Selling, general and administrative expenses, excluding Merger-related costs and supplemental employee payroll, third-party commissions and cleaning-related COVID-19 costs. Adjusted EBITDA increased $2.4 billion, or 10%, for the year ended December 31, 2021. The change was primarily dued increase in Core Adjusted EBITDA, discussed above year ended December 31, 2021. , partially offset by a decrease of Lease revenues of $833 million for the a to the 45 Liquidity and Capital Resources Our principal sources of liquidity are our cash and cash equivalents and cash generated fromff of debt and common stock, financing leases, the sale of certain receivablea effectively extend payment terms and the Revolving Credit Facility (as defined below). 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 futff uret s, financing arrangements of vendor payables which to finance our business strategy. operations, proceeds from issuance ff sw Cash FlowFF The following is a condensed schedule of our cash flows: (in millions) 2021 2020 2019 $ % $ % Net cash provided by operating activities $ 13,917 $ 8,640 $ 6,824 $ 5,277 61 % $ 1,816 Net cash used in investing activities (19,386) (12,715) Net cash provided by (used in) financing activities 1,709 13,010 (4,125) (2,374) (6,671) (11,301) 52 % (87)% (8,590) 15,384 27 % 208 % (648)% Year Ended December 31, 2021 Versus 2020 2020 Versus 2019 Operatingii Activtt itiett s Net cash provided by operating activities increased $5.3 billion, or 61%, primarily from: • • • A $4.8 billion decrease in net cash outflows from changes in working capia tal, primarily dued to lower use of cash fromff Accounts payable and accrued liabia lities and Inventories, the one-time impact of $2.3 billion in gross payments for the related to Merger financing for the year ended December 31, 2020, included in the use settlement of interest rate swapsa of cash from Other current and long-term liabilities, as well as lower use of cash from Operating lease right-of-use assets, partially offset by higher use of cash from Equipment installment plan receivablea s and Short- and long-term operating lease liabilities, including a $1.0 billion advance rent payment related to the modification of one of our master lease agreements; and A $506 million increase in Net income, adjuste d d forff non-cash income and expense. Net cash provided by operating activities includes $2.2 billion and $1.5 billion in payments forff Merger-related costs for the years ended December 31, 2021 and 2020, respectively. Investingii Activtt itiett s Net cash used in investing activities increased $6.7 billion, or 52%. The use of cash was primarily from: ff • • • • $12.3 billion in Purchases of property and equipment, including capia talized interest, from network integration related to the Merger and the continued build-out of our nationwide 5G network; $9.4 billion in Purchases of spectrum licenses and other intangible assets, including deposits, primarily dued spectrum licenses won at the conclusion of Auction 107 in March 2021; and billion paid forff to $8.9 $1.9 billion in Acquisitions of companies, primarily dued partially offset by to our acquisition of the Wireless Assets from Shentel; $4.1 billion in Proceeds related to beneficial interests in securitization transactions. Financingii Activities Net cash provided by finaff ncing activities decreased $11.3 billion, or 87%. The source of cash was primarily from: ff • • • • $14.7 billion in Proceeds from issuance of long-term debt, net of issuance costs; partially offset by $11.1 billion in Repayments of long-term debt; $1.1 billion in Repayments of financing lease obligations; and $316 million in Tax withholdings on share-based awards. 46 Cash and Cash Equivalents As of December 31, 2021, our Cash and cash equivalents were $6.6 billion compared to $10.4 billion at December 31, 2020. Free Cash FlowFF Free Cash Flow represents Net cash provided by operating activities less cash payments forff Purchases of property and equipment, including Proceeds from sales of tower sites and Proceeds related to beneficial interests in securitization transactions, less Cash payments forff gross payments for the settlement of interest rate swaps,a investors and analysts of our financial information to evaluate cash availablea business. are non-GAAP financial measures utilized by our management, debt prepayment or debt extinguishment. Free Cash Flow and Free Cash Flow, excluding to pay debt and provide further investment in the proceeds of $40 million and $38 million, respectively, which are included in Proceeds In 2021 and 2019, we sold tower sites forff from sales of tower sites within Net cash used in investing activities on our Consolidated Statements of Cash Flows. As these d proceeds were from the sale of fixed assets and are used by management to assess cash available forff the year, we determined the proceeds are relevant for the calculation of Free Cash Flow and included them in the tablea below. Other proceeds from the sale of fixed assets for the periods presented are not significant. We have presented the impact of the below, which reconciles Free Cash Flow and Free Cash Flow, excluding gross payments for the settlement of sales in the tablea interest rate swaps,a to Net cash provided by operating activities, which we consider to be the most directly comparable GAAP financial measure. capia tal expenditures during (in millions) 2021 2020 2019 $ Change % Change $ Change % Change Year Ended December 31, 2021 Versus 2020 2020 Versus 2019 Net cash provided by operating activities $ 13,917 $ 8,640 $ 6,824 $ 5,277 61 % $ Cash purchases of property and equipment (12,326) (11,034) (6,391) (1,292) Proceeds from sales of tower sites Proceeds related to beneficial interests in securitization transactions Cash payments for debt prepayment or debt extinguishment costs Free Cash Flow Gross cash paid for the settlement of interest rate swaps Free Cash Flow, excluding gross payments for the settlement of interest rate swaps NM - Not Meaningful 40 4,131 (116) 5,646 — 3,134 (82) 658 38 3,876 (28) 4,319 40 997 (34) 4,988 12 % NM 32 % 41 % 758 % 1,816 (4,643) (38) (742) (54) (3,661) 27 % 73 % (100)% (19)% 193 % (85)% NM — 2,343 — (2,343) (100)% 2,343 $ 5,646 $ 3,001 $ 4,319 $ 2,645 88 % $ (1,318) (31)% Free Cash Flow, excluding gross payments for the settlement of interest rate swaps,a was primarily impacted by the following: increased $2.6 billion, or 88%. The increase • • • • • Higher Net cash provided by operating activities, as described above; and Higher Proceeds related to beneficial interests in securitization transactions; partially offset by Higher Cash purchases of property and equipment, including capia talized interest. Free Cash Flow, excluding gross payments for settlement of interest rate swaps,a in payments for Merger-related costs for the years ended December 31, 2021 and 2020, respectively. includes $2.2 billion and $1.5 billion The calculation of Free Cash Flow, excluding gross payments for the settlement of interest rate swaps,a one-time impact of gross payments for the settlement of interest rate swapsa for the year ended December 31, 2020. related to Merger finaff excludes the ncing of $2.3 billion CC Borrowing Cn apaci tyii We maintain a finff ancing 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, 2021, there were no outstanding balances under such finaff ncing arrangement. 47 We also maintain vendor financing arrangements primarily with our main network equipment suppliers. Under the respective agreements, we can obtain extended financing terms. During the year ended December 31, 2021, we repaid $184 million, associated with the vendor financing arrangements and other finaff ncial liabilities, on our Consolidated of short-term debt for purchases of inventory, property and equipment and other finaff Statements of Cash Flows. As of December 31, 2021 and December 31, 2020, the outstanding balance under the vendor financing arrangements and other finaff $122 million, respectively, was assumed in connection with the closing of the Merger. ncial liabilities was $47 million and $240 million, respectively, of which $0 and ncial liabilities. These payments are included in Repayments We maintain a revolving credit facility (the “Revolving Credit Facility”) with an aggregate commitment amount of $5.5 billion. As of December 31, 2021, there was no outstanding balance under the Revolving Credit Facility. On October 30, 2020, we entered into a $5.0 billion senior secured term loan commitment with certain financial instituti January 14, 2021, we issued an aggregate of $3.0 billion of Senior Notes. The senior secured term loan commitment was reduced by an amount equal to the aggregate gross proceeds of the Senior Notes, which reduced the commitment to $2.0 billion. On March 23, 2021, we issued an aggregate of $3.8 billion of Senior Notes. The senior secured term loan the issuance of the $3.8 billion of Senior Notes. commitment was terminated upon u t ons. On ii Debt Financ ing As of December 31, 2021, our total debt and financing lease liabia lities were $76.8 billion, excluding our tower obligations, of which $68.6 billion was classified as long-term debt and $1.5 billion was classified as long-term financing lease liabilities. During the year ended December 31, 2021, we issued long-term debt for net proceeds of $14.7 billion and redeemed and repaid short- and long-term debt with an aggregate principal amount of $11.3 billion. For more information regarding our debt financing transactions, see Note 8 – Debt of the Notes to the Consolidated Financial Statements. Spectrumtt Auctions In March 2021, the FCC announced that we were the winning bidder of 142 licenses in Auction 107 (C-band spectrum) forff aggregate purchase price of $9.3 billion, excluding relocation costs. At the inception of Auction 107 in October 2020, we deposited $438 million. Upon conclusion of Auction 107 in March 2021, we paid the FCC the remaining $8.9 billion for the licenses won in the auction. We expect to incur an additional $1.0 billion in relocation costs which will be paid through 2024. an In January 2022, the FCC announced that we were the winning bidder of 199 licenses in Auction 110 (mid-band spectrum) forff an aggregate purchase price of $2.9 billion. At the inception of Auction 110 in September 2021, we deposited $100 million. We paid the FCC the remaining $2.8 billion for the licenses won in the auction in the firff st quarter of 2022. For more information regarding our spectrum licenses, see Note 6 – Goodwill, Spectrum License Transactions and Other Intangible Assets of the Notes to the Consolidated Financial Statements. Shentel Wireless Assets Att cquisitiontt On July 1, 2021, we closed on the acquisition of the Wireless Assets for a cash purchase price of approxim For more information regarding the acquisition of the Wireless Assets, see Note 2 – Business Combinations of the Notes to the Consolidated Financial Statements. ately $1.9 billion. a 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, 2021, we derecognized net receivables of $2.5 billion upon sale through these arrangements. For more information regarding these off-balance sheet arrangements, see Note 4 – Sales of Certain Receivables of the Notes to the Consolidated Financial Statements. 48 Future Sources and Uses of Liquidity We may seek additional sources of liquidity, including through the issuance of additional debt in 2022, 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 forff spectrum acquisitions, or for other assets, we expect our principal sources of funding next 12 months as well as our longer-term liquidity needs. Our intended use of any such funds is for general corporate purposes, al expenditures, including for capita obligations and the execution of our integration plan. spectrum purchases, opportunistic investments and acquisitions, redemptim on of debt, tower to be sufficient to meet our anticipated liquidity needs for business operations for the ff t t t based in large part upon projected ies to acquire additional spectrum. We regularly review and update these ncial and operating results, general economic conditions, the competitive We determine future liquidity requirements, for both operations and capital expenditures, financial and operating performance, and opportunit projections for changes in current and projected finaff landscape and other factors. We have incurred, and will incur, substantial expenses to comply with the Government Commitments, and we are also expected to incur substantial restructuring coordinating T-Mobile’s and Sprint’s businesses, operations, policies and procedures. See “Restructuring” of this MD&A. While we have assumed that a certain level of Merger-related expenses will be incurred, factors beyond our control, including t the total amount or the timing of these expenses. required consultation and negotiation with certain counterparties, could affecff These expenses could exceed the costs historically borne by us and adversely affecff t our financial condition and results of operations. There are a number of additional risks and uncertainties, including those due to the impact of the Pandemic, that could cause our financial and operating results and capia tal requirements to differ materially from our projections, which could cause future liquidity to differ materially fromff expenses in connection with integrating and our assessment. t The indentures, supplemental indentures and credit agreements governing our long-term debt to affiliates and third parties, excluding financing leases, contain covenants that, among other things, limit the ability of the Issuers or borrowers and the Guarantor Subsidiaries to incur more debt, pay dividends and make distributions on our common stock, make certain iates, enter into transactions investments, repurchase stock, create liens or other encumbrances, enter into transactions with affilff that restrict dividends or distributions from subsidia ries, and merge, consolidate or sell, or otherwise dispose of, substantially all of their assets. Certain provisions of each of the credit agreements, indentures and supplemental indentures relating to the long- term debt to affiliates and third parties restrict the ability of the Issuers or borrowers to loan funds or make payments to Parent. However, the Issuers or borrowers are allowed to make certain permitted payments to Parent under the terms of each of the credit agreements, indentures in compliance with all restrictive debt covenants as of December 31, 2021. relating to the long-term debt to affilff iates and third parties. We were mental indentures u and supple u ff t t Finanii cingii Lease Faciliii tiii es We have entered into uncommitted financing lease facff financing leases for network equipment and services. As of December 31, 2021, we have committed to $6.3 billion of financing leases under these financing lease facilities, of which $1.2 billion was executed during the year ended December 31, 2021. We o an additional $1.2 billion in financing lease commitments during the year ending December 31, 2022. expect to enter into up tu ilities with certain partners that provide us with the abila ity to enter into EE Capital Expendit ures Our liquidity requirements have been driven primarily by capia tal expenditures forff expansion and upgrading of our network infrast customer base and business practices of T-Mobile and Sprint. Property and equipment capita the integration of our network and spectrum licenses, including acquired Sprint PCS and 2.5 GHz spectrum licenses and existing 600 MHz spectrum licenses as we build out our nationwide 5G network. We expect the majority ot capita a requirements. ructure and the integration of the networks, spectrum, technology, personnel, primarily relate to r which we currently expect a reduction in capia tal expenditure related to these efforts to occur in 2022, afteff spectrum licenses, the construction, f our remaining al expenditures l expenditures ff t t We expect cash purchases of property and equipment to range from $13.0 billion to $13.5 billion in 2022. For more information regarding our spectrum licenses, see Note 6 – Goodwill, Spectrum License Transactions and Other Intangible Assets of the Notes to the Consolidated Financial Statements. 49 Stockholder Returns We have never declared or paid 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 futff ure. t We may use excess cash to repurchase shares of our common stock, subjecb Directors and our sufficient access to sources liquidity, including potentially debt capita al markets. t to, among other things, approval by the Board of Contractual Obligations In connection with the regulatory approvals of the Transactions, we made commitments to various state and federal agencies, including the U.S. Department of Justice (the “DOJ”) and FCC. For more information regarding these commitments, see Note 17 – Commitments and Contingencies of the Notes to the Consolidated Financial Statements. The following tablea and effecff summarizes our material contractual t obligations and borrowings as of December 31, 2021, and the timing t that such commitments are expected to have on our liquidity and capia tal requirements in futuret periods: (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) Spectrum leases and service credits (4) Less Than 1 Year 1 - 3 Years 4 - 5 Years More Than 5 Years Total $ 5,597 $ 8,448 $ 10,866 $ 47,985 $ 3,177 1,161 415 3,868 4,679 350 5,416 1,305 630 8,083 5,595 611 4,243 164 626 6,314 2,145 591 16,406 29 329 17,387 1,572 4,706 72,896 29,242 2,659 2,000 35,652 13,991 6,258 Total contractual obligations $ 19,247 $ 30,088 $ 24,949 $ 88,414 $ 162,698 (1) Represents principal amounts of long-term debt to affiliates and third parties at maturity, excluding unamortized premiums, discounts, debt issuance costs, consent fees, and financing lease obligations. See Note 8 – Debt of the Notes to the Consolidated Financial Statements for further information. (2) Future minimum payments, including principal and interest payments, 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, 2021 under normal business purposes. See Note 17 – Commitments and Contingencies of the Notes to the Consolidated Financial Statements for further information. (4) Spectrum lease agreements are typically for five to 10 years with automatic renewal provisions, bringing the total term of the agreements up to 30 years. Certain commitments and obligations are included in the tablea of payment. Other long-term liabilities have been omitted fromff combined with the lack of historical trends to predict futff uret payments. based on the year of required payment or an estimate of the year due to the uncertainty of the timing of payments, the table above a The purchase obligations reflected in the tabla e above 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 futff ure, 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. are primarily commitments to purchase spectrum licenses, wireless but represent only those items forff which a t Subsequent to December 31, 2021, on January 3, 2022, we entered into an agreement (the “Crown Agreement”) with Crown Castle International Corp that will enable us to lease towers from CCI through December 2033, followed by optional renewals. The Crown Agreement amends the pricing for our non-dedicated transportation lines, which includes lit fibff er backhaul and small cell circuits. We have committed to an annual volume commitment to execute and deliver 35,000 small cell contracts, including upgrades to existing locations, over the next five years. The minimum commitment for small cells is $1.8 billion through 2039. 50 Related Party Transactions We have related party transactions associated with DT, SoftBank or their affiliates in the ordinary course of business, including intercompany servicing and licensing. See Note 19 – 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 applicablea , whether it or any of its affiliates knowingly engaged in certain activities, transactions or dealings relating to Iran or with persons or entities involved in terrorism or the proliferation of weapons designated natural required even where the activities, transactions or dealings are conducted outside the U.S. by non-U.S. affili with applicablea law, and whether or not the activities are sanctionablea of mass destruction. Disclosure is ates in complim ance under U.S. law. a ff t 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, 2021, that requires disclosure in this report under Section 13(r) of the Exchange Act, except as set fort h below with respect to affilff to their common control with either DT or SoftBank. We have relied upon DT and SoftBank for information regarding their respective activities, transactions and dealings. iates that we do not control and that are our affiliates solely dued ff DT, through certain of its non-U.S. subsidiaries, is party to roaming and interconnect agreements with the folff fixed line telecommunication providers in Iran, some of which are or may be government-controlled entities: Irancell Telecommunications Services Company, Telecommunication Kish Company, Mobile Telecommunication Company of Iran, Company of Iran. In addition, during the year ended December 31, 2021, DT, through and Telecommunication Infrastructuret certain of its non-U.S. subsidiaries, provided basic telecommunications services to two 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 and Europäisch-Iranische Handelsbank. These services have been terminated or are in the process of being terminated. For the year ended December 31, 2021, gross revenues of all DT affiliates generated by roaming and interconnection traffic and telecommunications services with the Iranian parties identified herein were less than $0.4 million, and the estimated net profits were less than $0.4 million. lowing mobile and In addition, DT, through certain of its non-U.S. subsidiaries that operate a fixff ed-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 fromff 2021 were less than $0.4 million. We understand that DT intends to continue these activities. these activities for the year ended December 31, Separately, SoftBank, through one of its non-U.S. subsidiaries, provides roaming services in Iran through Irancell Telecommunications Services Company. During the year ended December 31, 2021, SoftBank had no gross revenues fromff such services and no net profit was generated. We understand that the SoftBank subsidiary intends to continue such services. This subsidiary also provides telecommunications services in the ordinary course of business to accounts affiliated with the Embassy of Iran in Japan. During the year ended December 31, 2021, SoftBank estimates that gross revenues and net profit generated by such services were both under $0.1 million. We understand that the SoftBank subsidiary is obligated under contract and intends to continue such services. In addition, SoftBank, through one of its non-U.S. indirect subsidiaries, provides office supplies to the Embassy of Iran in Japan. SoftBank estimates that gross revenue and net profit generated by such services during the year ended December 31, 2021, were both under $0.1 million. We understand that the SoftBank subsidiary intends to continue such activities. Critical Accounting 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. Three of these policies, discussed below, are critical because they require management to make difficult, subjective and complex judgments about be reported under different conditions or using different assumptim ons. Actual results could differ fromff matters that are inherently uncertain and because it is likely that materially different amounts would those estimates. a 51 Management and the Audit Committee of the Board of Directors have reviewed and approved these critical accounting policies. Depreee ii ciati on Our property and equipment balance represents a significant component of our consolidated assets. We record property and equipment at cost, and we generally depreciate property and equipment on a straight-line basis over the estimated useful life of lives of our in-service the assets. If all other factors were to remain unchanged, we expect that a one-year increase in the usefulff property and equipment, exclusive of leased devices, would have resulted in a decrease of approximately $3.5 billion in our 2021 depreciation expense and that a one-year decrease in the useful life would have resulted in an increase of approximately $4.0 billion in our 2021 depreciation expense. See Note 1 – Summary of Significant Accounting Policies and Note 5 – Property at Consolidated Financial Statements for information regarding depreciation of assets, including management’s underlying estimates of useful lives. nd Equipment of the Notes to the Evaluation of Goodwill all nd Indefinit e e-Ltt tt ived Intangible Assets for Impairme m nt Goodwill and other indefinite-lived intangible assets, such as our spectrum licenses, are not amortized but tested for potential impairment annually, as of December 31, or more frequently if events or changes in circumstances indicate such assets might be impaired. We test goodwill on a reporting unit basis by comparing the estimated faiff fair value exceeds the book value, then no impairment is measured. As of December 31, 2021, we have identified one reporting unit for which discrete finff ancial information is available and results are regularly reviewed by management: wireless. The wireless reporting unit consists of all the assets and liabilities of T-Mobile US, Inc. r value of the reporting unit to its book value. If the When assessing goodwill for impairment we may elect to first perform a qualitative assessment 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 capita alization 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 capita r value. No events or change in circumstances have occurred that indicate the fair value of the wireless reporting unit may be below its carrying amount at December 31, 2021. ions in share price may not necessarily reflect the underlying aggregate faiff alization. We believe short-term fluctuat t We previously identified Layer3, which consisted of the assets and liabilities of Layer3 TV, Inc. and provided services branded as TVisionTM, as its own reporting unit. However, we wound down our TVisionTM services offering on April 29, 2021 and discrete financial information for Layer3 is no longer availablea or regularly reviewed by management. Accordingly, we no longer identify Layer3 as its own reporting unit as of December 31, 2021. During the year ended December 31, 2020, while Layer3 was still identified as its own reporting unit, we determined that our enhanced in-home broadband opportunity following the Merger, along with the acquisition of certain content rights, created a strategic shift in our TVisionTM services offering that indicated that the recoverability of the carrying amount of goodwill assigned to the Layer3 reporting unit should be evaluated for impairment. As a result, we complem ted an interim goodwill impairment evaluation and determined the carrying value of the Layer3 reporting unit exceeded its estimated fair value. Accordingly, we recorded an impairment loss of $218 million forff year ended December 31, 2020, all of which relates to the impairment recognized during the three months ended June 30, 2020. This impairment reduced the goodwill balance previously assigned to the Layer3 reporting unit to zero. the We test 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 faiff calculate the estimated fair r value of the intangible asset is less than its carrying amount, we value of the spectrum licenses is lower than their value of the intangible asset. If the estimated fair ff ff 52 r value using the Greenfiff eld methodology, which is an carrying amount, an impairment loss is recognized. We estimate faiff 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 for the asset to be valued (in this case, spectrum licenses) and makes investments required to build an operation comparablea of this hypothetical start-up company. We base the assumptim ons underlying the Greenfield methodology on a combination of cash flows in the Greenfield methodology market participant data and our historical results, trends and business plans. Futuret 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 capia tal. No events or change in circumstances have occurred that indicate the fair value of the Spectrum licenses may be below their carrying amount at December 31, 2021. to current use. The value of the spectrum licenses can be considered as equal to the present value of the cash flows The valuation approaches utilized to estimate faiff licenses require the use of assumptions and estimates, which involve a degree of uncertainty. If actual results or future r value, it may result in the recording of expectations are not consistent with the assumptions used in our estimate of faiff significant impairment charges on goodwill or spectrum licenses. The most significant assumptim ons within the valuation models are the discount rate, revenues, EBITDA margins, capital expenditures and long-term growth rate. r value for the purposes of the impairment tests of goodwill and spectrum For more information regarding our impairment assessments, 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. 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 deferre ultimate realization of a deferred tax asset depends on the ability to generate sufficient taxablea . character and in the appropriate taxing jurisdictions within the carryforward periods availablea d tax asset will not be realized. The income of the appropriate ff 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. 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 ts and circumstances, such as changes in tax law, interactions with taxing authorities and developments in case law. the unrecognized tax benefits in light of changes in facff t We d Accounting Pronouncements Not Yet Adopted For information regarding recently issued accounting standards, see Note 1 – Summary of Significant Accounting Policies of the Notes to the Consolidated Financial Statements. Item 7A. Quantitative and Qualitative Disclosures About Market Risk We are exposed to economic risks in the normal course of business, primarily fromff 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 capita costs, control financial risks and maintain finaff 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 al. Our policy is to manage exposure related to fluctuations in interest rates in order to manage capia tal shed interest rate risk limits ncial flexibility over the long term. We have establia changes in interest rates, including changes ff Certain potential sources of financing available to us, including our Revolving Credit Facility, bear interest that is indexed to LIBOR plus a fixff ed margin. As of December 31, 2021, we did not have outstanding balances under these facilities. See Note 8 – Debt of the Notes to the Consolidated Financial Statements for additional information. 53 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 thett Financ ii ial Statemtt rr ents and Inter nal II Control over Financ ii ee ial Reporti ngii We have audited the accompanying consolidated balance sheets of T-Mobile US, Inc. and its subsidiaries (the “Company”) as of December 31, 2021 and 2020, and the related consolidated statements of comprehe of cash flows for each of the three years in the period ended December 31, 2021, including the related notes (collectively referred to as the “consolidated finaff reporting as of December 31, 2021, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). ncial statements”). We also have audited the Company's internal control over finaff nsive income, of stockholders’ equity and ncial m 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, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2021 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, 2021, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO. ff Change in Accounting Principlei As discussed in Note 1 to the consolidated finaff leases in 2019. ncial statements, the Company changed the manner in which it accounts forff Basis for Opinions ncial reporting, and forff tive internal The Company's management is responsible for these consolidated financial statements, for maintaining effecff control over finaff ncial reporting, included in Management’s Annual Report on Internal Control over Financial Reporting appearing under Item 9A. Our responsibility is to ncial express opinions on the Company’s consolidated finaff 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 rulr es and regulations of the Securities and Exchange Commission and the PCAOB. ncial statements and on the Company's internal control over finaff its assessment of the effectiveness of internal control over finaff 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 dued to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects. to error or fraud, and performing procedures that respond to those risks. ncial statements included performing procedures to assess the risks of material misstatement Our audits of the consolidated finaff of the consolidated financial statements, whether dued 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 finaff control over finaff risk that a material weakness exists, and testing and evaluating the design and operating effect 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. ncial reporting included obtaining an understanding of internal control over financial reporting, assessing the iveness of internal control based ncial statements. Our audit of internal ff Definitiontt and Limi taii ii tions of Internal tt tt Control over FinFF ancial Reportingii ity of finaff ncial reporting and the preparation of financial statements forff A company’s internal control over finaff reliabila accepted accounting principles. A company’s internal control over finaff that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fair dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit external purposes in accordance with generally ncial reporting includes those policies and procedures ncial reporting is a process designed to provide reasonable assurance regarding the ly reflect the transactions and ff 54 t preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures 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. of the company are being made only in accordance with authorizations of management and directors of the Because of its inherent limitations, internal control over finaff projections of any evaluation of effecff because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. ncial reporting may not prevent or detect misstatements. Also, ct to the risk that controls may become inadequate tiveness to future periods are subjeu Criticatt l Auditdd Matters tt ncial The critical audit matter communicated below is a matter arising from the current period audit of the consolidated finaff 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. Revenue Recognition - Equipment EE revenues ncial statements, the Company’s revenue includes equipment revenues of As described in Note 1 to the consolidated finaff $20,727 million for the year ended December 31, 2021, which are generated from the sale or lease of mobile communication devices and accessories. For performance obligations related to equipment contracts, the Company typically transfers control at a point in time when the device or accessory is delivered to, and accepted by, the customer or dealer. Management estimates or certain payments to indirect dealers) primarily based on historical experience. variable consideration (e.g., device returns Promotional equipment installment plan 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. Lease revenues are recorded as equipment revenues and recognized as earned on a straight-line basis over the lease term. t The principal considerations for our determination that performing procedures relating to revenue recognition of equipment revenues is a critical audit matter are the significant auditor effort in performing procedures and evaluating audit evidence related to the accuracy and existence of equipment revenues recognized. ncial statements. These procedures included testing the effectiveness of controls relating to the Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated finaff revenue recognition process, including controls over the accuracy and existence of equipment revenues recognized. These procedures also included, among others, testing the accuracy and existence of revenue recognized on a test basis by (i) obtaining and inspecting, where appli , invoices, customer contracts, shipping documents, and cash receipts fromff customers, and (ii) evaluating reductions to revenues and accruals for promotional bill credits based upon conditions of the arrangements. the terms and cablea u a /s/ PricewaterhouseCoopers LLP Seattle, Washington February 11, 2022 We have served as the Company’s auditor since 2001. 55 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 allowance for credit losses of $146 and $194 Equipment installment plan receivables, net of allowance forff $478 Accounts receivable from affiliates Inventory Prepaid expenses Other current assets credit losses and imputed discount of $494 and 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 of allowance for credit losses and imputed discount of $136 and $127 Other assets Total assets Liabilities and Stockholders' Equity Current liabilities Accounts payable and accrued liabilities Payables to affiliates Short-term debt Short-term debt to affiliates 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 Other long-term liabilities Total long-term liabilities Commitments and contingencies (Note 17) Stockholders' equity Common Stock, par value $0.00001 per share, 2,000,000,000 shares authorized; 1,250,751,148 and 1,243,345,584 shares issued, 1,249,213,681 and 1,241,805,706 shares outstanding Additional paid-in capital Treasury stock, at cost, 1,537,468 and 1,539,878 shares issued Accumulated other comprehensive loss Accumulated deficit Total stockholders' equity Total liabilities and stockholders' equity December 31, 2021 December 31, 2020 $ $ $ $ $ 6,631 4,167 $ $ 4,748 27 2,567 746 2,005 20,891 39,803 26,959 3,322 12,188 92,606 4,733 2,829 3,232 206,563 11,405 103 3,378 2,245 856 3,425 1,120 967 23,499 67,076 1,494 2,806 10,216 25,818 1,455 5,097 113,962 — 73,292 (13) (1,365) (2,812) 69,102 206,563 $ 10,385 4,254 3,577 22 2,527 624 2,496 23,885 41,175 28,021 3,028 11,117 82,828 5,298 2,031 2,779 200,162 10,196 157 4,579 — 1,030 3,868 1,063 810 21,703 61,830 4,716 3,028 9,966 26,719 1,444 5,412 113,115 — 72,772 (11) (1,581) (5,836) 65,344 200,162 The accompanying notes are an integral part of these consolidated financial statements. 56 T-Mobile US, Inc. Consolidated Statements of Comprehensive Income (in millions, except share and per share amounts) Revenues Postpaid revenues Prepaid revenues Wholesale revenues 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 Impairment expense Depreciation and amortization Total operating expenses Operating income Other income (expense) Interest expense Interest expense to affiliates Interest income Other expense, net Total other expense, net Income from continuing operations before income taxes Income tax expense Income from continuing operations Income from discontinued operations, net of tax Net income Net income Other comprehensive income (loss), net of tax Unrealized gain (loss) on cash flow hedges, net of tax effect of $49, $(250) and $(187) Unrealized (loss) gain on foreign currency translation adjustment, net of tax effect of $0, $1 and $0 Net unrecognized gain on pension and other postretirement benefits, net of tax effect of $28, $2 and $0 Other comprehensive income (loss) Total comprehensive income Earnings per share Basic earnings per share: Continuing operations Discontinued operations Basic Diluted earnings per share: Continuing operations Discontinued operations Diluted Weighted-average shares outstanding Basic Diluted $ $ $ $ $ $ $ $ Year Ended December 31, 2020 2019 2021 42,562 9,733 3,751 2,323 58,369 20,727 1,022 80,118 13,934 22,671 20,238 — 16,383 73,226 6,892 (3,189) (173) 20 (199) (3,541) 3,351 (327) 3,024 — 3,024 3,024 140 (4) 80 216 3,240 2.42 — 2.42 2.41 — 2.41 $ $ $ $ $ $ $ $ 36,306 9,421 2,590 2,078 50,395 17,312 690 68,397 11,878 16,388 18,926 418 14,151 61,761 6,636 (2,483) (247) 29 (405) (3,106) 3,530 (786) 2,744 320 3,064 3,064 (723) 4 6 (713) 2,351 2.40 0.28 2.68 2.37 0.28 2.65 $ $ $ $ $ $ $ $ 22,673 9,543 1,279 1,005 34,500 9,840 658 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 — 4.06 4.02 — 4.02 1,247,154,988 1,254,769,926 1,144,206,326 1,154,749,428 854,143,751 863,433,511 accompanying notes are an integral part of these consolidated financial statements. 57 T-Mobile US, Inc. Consolidated Statements of Cash Flows 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 Bad debt expense Losses from sales of receivables Losses on redemption of debt Impairment expense 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 ($210), ($440) and ($473) 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 and restricted cash acquired Proceeds from the divestiture of prepaid business Other, net Net cash used in investing activities Financing activities Proceeds from issuance of long-term debt Payments of consent fees related to 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 and other financial liabilities Repayments of long-term debt Issuance of common stock Repurchases of common stock Proceeds from issuance of short-term debt Repayments of short-term debt Tax withholdings on share-based awards Cash payments for debt prepayment or debt extinguishment costs Other, net Net cash provided by (used in) financing activities Change in cash and cash equivalents, including restricted cash Cash and cash equivalents, including restricted cash Beginning of period End of period Year Ended December 31, 2021 2020 2019 $ 3,024 $ 3,064 $ 16,383 14,151 540 197 452 15 184 — (3,225) (3,141) 201 4,964 (573) 549 (5,358) (531) 236 13,917 (12,326) (9,366) 40 4,131 — (1,916) — 51 (19,386) 14,727 — — — (1,111) (184) (11,100) — — — — (316) (116) (191) 1,709 (3,760) 10,463 694 822 602 36 371 418 (3,273) (1,453) (2,222) 3,465 (402) (2,123) (3,699) (2,178) 367 8,640 (11,034) (1,333) — 3,134 632 (5,000) 1,224 (338) (12,715) 35,337 (109) — — (1,021) (481) (20,416) 19,840 (19,536) 18,743 (18,929) (439) (82) 103 13,010 8,935 1,528 $ 6,703 $ 10,463 $ 3,468 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 The accompanying notes are an integral part of these consolidated financial statements. 58 T-Mobile US, Inc. Consolidated Statement of Stockholders’ Equity (in millions, except shares) Common Stock Outstanding Treasury Shares at Cost Par Value and Additional Paid-in Capital Accumulated Other Comprehensive Loss Accumulated Deficit Total Stockholders' Equity Balance as of December 31, 2018 850,180,317 $ (6) $ 38,010 $ (332) $ (12,954) $ 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 Transfers with NQDC plan Prior year Retained Earnings(1) Balance as of December 31, 2019 Net income Other comprehensive loss Executive put option 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 Transfers with NQDC plan Shares issued in secondary offering(2) (3) Shares repurchased from SoftBank ff Merger consideration Prior year Retained Earnings(1) — — — 85,083 2,091,650 6,685,950 (24,682) (2,094,555) (18,363) — 856,905,400 — — (342,000) — 906,295 2,144,036 13,263,434 (4,441,107) (26,662) 198,314,426 (198,314,426) 373,396,310 — — — — — — — — — (2) — (8) — — — — — — — — (3) — — — — — — 517 1 124 — — (156) 2 — 38,498 — — 1 750 48 148 — (439) 3 19,766 (19,536) 33,533 — Balance as of December 31, 2020 1,241,805,706 (11) 72,772 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 Remeasurement of uncertain tax positions Transfers with NQDC plan — — — 218,495 2,189,542 7,509,039 (2,511,512) — 2,411 — — — — — — — — (2) — — 606 10 225 — (316) (7) 2 — (536) — — — — — — — — (868) — (713) — — — — — — — — — — — (1,581) — 216 — — — — — — — 3,468 — — — — — — — — 653 (8,833) 3,064 — — — — — — — — — — — (67) (5,836) 3,024 — — — — — — — — 24,718 3,468 (536) 517 1 124 — — (156) — 653 28,789 3,064 (713) 1 750 48 148 — (439) — 19,766 (19,536) 33,533 (67) 65,344 3,024 216 606 10 225 — (316) (7) — Balance as of December 31, 2021 1,249,213,681 $ (13) $ 73,292 $ (1,365) $ (2,812) $ 69,102 (1) Prior year Retained Earnings represents the impact of the adoption of new accounting standards on beginning Accumulated Deficit and Accumulated Other Comprehensive Loss. (2) Shares issued includes 5.0 million shares purchased by Marcelo Claure. (3) In connection with the SoftBank Monetization (as defined below), we received a payment of $304 million from SoftBank (as defined below). This amount, net of tax, was treated as a reduction of the purchase price of the shares acquired from SoftBank and was recorded as Additional Paid-in Capital. The accompanying notes are an integral part of these consolidated financial statements 59 T-Mobile US, Inc. Index for Notes to the Consolidated Financial Statements Summary of Significant Accounting Policies Business Combinations Receivablea s and Related Allowance for Credit Losses s Sales of Certain Receivablea 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 Discontinued Operations Income Taxes SoftBank Equity Transaction Earnings Per Share Leases Commitments and Contingencies Restructuring Costs Additional Financial Information Subsequent Events 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 Note 19 Note 20 61 73 80 82 84 85 88 90 95 97 98 102 103 105 108 108 110 113 114 115 60 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, Puerto Rico and the U.S. Virgin Islands. Substantially all of our revenues were earned in, and substantially 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 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 finaff through JUMP! On Demand™. Additionally, we provide reinsurance forff contracts offered to our mobile communications customers. ncing through equipment installment plans (“EIP”) and leasing device insurance policies and extended warranty Basis of Presentation The accompanying consolidated financial statements include the balances and results of operations of T-Mobile and our u consolidated subsidiaries. We consolidate majori interest entities (“VIEs”) 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. ries over which we exercise control, as well as variable ty-owned subsidia a The preparation of financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires our management to make estimates and assumptions which affecff notes. Estimates are based on historical experience, where applicablea , and other assumptions which our management believes are reasonable under the circumstances, including, but not limited to, the valuation of assets acquired and liabilities assumed through the Merger with Sprint and through our acquisitions of affiliates and the potential impacts arising from the COVID-19 pandemic (the “Pandemic”). These estimates are inherently subject to judgment and actuat estimates. ncial statements and accompanying l results could differ fromff t our consolidated finaff those Business Combinations value at the date of r value of assets acquired and liabilities assumed is recorded as goodwill. Assets acquired and liabilities assumed as part of a business combination are generally recorded at their fair acquisition. The excess of purchase price over the faiff Determining fair value of identifiablea information and in some cases assumptions with respect to the timing and amount of estimates, which are based on all availablea future revenues and expenses associated with an asset or liabila ity. See Note 2 – Business Combinations for further discussion of the Merger between T-Mobile and Sprint and the acquisition of the wireless telecommunications assets (the “Wireless Assets”) of Shenandoah Personal Communications Company LLC (“Shentel”) used to provide Sprint PCS’s wireless mobility communications network products in certain parts of Marylarr Pennsylvania. assets, particularly intangibles, and liabilities acquired requires management to make nd, North Carolina, Virginia, West Virginia Kentucky, Ohio and ff Cash and Cash Equivalents Cash equivalents consist of highly liquid money market funds months or less at the date of purchase. ff and U.S. Treasury securities with remaining maturities of three 61 Receivables and Related Allowance for Credit Losses Accounts Rtt eceivable balances are predominantly composed of amounts currently due from customers (e.g., for wireless services Accounts receivablea and monthly device lease payments), device insurance administrators, wholesale partners, other carriers and third-party retail channels. Accounts receivablea receivables’ unpaid principal balance (“UPB”) as adjusted forff arrangement to sell certain of our customer service accounts receivablea financial assets. are presented on our Consolidated Balance Sheets at the amortized cost basis (i.e., the on a revolving basis, which are treated as sales of any write-offs), net of the allowance forff credit losses. We have an i Equipment ll Installment Plan Receivables d their devices and other purchases in installments, generally over a period of 24 ed for any write-offs and unamortized discounts), net of the allowance for credit losses. At the time We offer certain customers the option to pay forff months using an EIP. EIP receivables are presented on our Consolidated Balance Sheets at the amortized cost basis (i.e., the receivables’ UPB as adjust of an installment sale, we impute a discount for interest if the term exceeds 12 months as there is no stated rate of interest on the receivables. The receivablea payments at the imputed interest rate. This adjustment results in a discount or reduction in transaction price which is allocated to the performance obligations and reduces Service revenues and Equipment revenues on our Consolidated Statements of Comprehensive Income. The imputed discount rate refleff cts a current market interest rate and is predominately comprised of the estimated credit risk underlying the EIP receivablea discount on receivablea Other revenues on our Consolidated Statements of Comprehensive Income. s is amortized over the finff anced installment term using the effective interest method and recognized as s are recorded at their present value, which is determined by discounting expected future , reflecting the estimated credit worthiness of the customer. The imputed cash ff The current portion of the EIP receivablea of the EIP receivables is included in Equipment installment plan receivables due afteff Balance Sheets. We have an arrangement to sell certain EIP receivablea financial assets. r one year, net on our Consolidated s on a revolving basis, which are treated as sales of s is included in Equipment installment plan receivables, net and the long-term portion Allowance for Credit Losses a ng an expected credit loss model. Each period, management assesses the We maintain an allowance for credit losses by applyi appropriateness of the level of allowance for credit losses by considering credit risk inherent within each portfolio segment as of period end. Each portfolio segment is composed of pools of receivables that are evaluated collectively based on similar risk characteristics. Our allowance levels consider estimated credit risk over the contractual life of the receivables and are historical loss experience and other conditions that affect loss influenced by receivablea expectations, such as changes in credit and collections policies and forecasts of macro-economic conditions. While we attribute portions of the allowance to our respective accounts receivablea to credit losses related to the total receivablea and EIP portfolio segments, the entire allowance is availablea volumes, receivable delinquency status, portfolio. m t past due and delinquent when a customer has not paid us by the contractually specified payment due We consider a receivablea date. Account balances are written off against the allowance for credit losses if collection efforts receivable balance is deemed uncollectible (customer default), based on factors such as customer credit ratings as well as the length of time the amounts are past due. are unsuccessful and the ff If there is a deterioration of our customers’ financial condition or if future actual defaul differ fromff our financial results in the period the adjustments are made. those currently anticipated, we will adjust our allowance forff ff t rates on receivablea s in general t credit losses accordingly, which may materially affecff Inventories value. Inventories consist primarily of wireless devices and accessories, which are valued at the lower of cost or net realizablea mates average cost. Shipping and handling costs paid to wireless device Cost is determined using standard cost, which approxi and accessories vendors as well as costs to refurbish used devices 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 disposal and transportation. We record inventory write-downs to net realizablea turnover trends and historical experience. value for obsolete and slow-moving items based on inventory a 62 Deferred Purchase Price Assets In connection with the sales of certain service and EIP accounts receivablea purchase price assets measured at fair value that are based on a discounted cash flowff including estimated customer default rates and credit worthiness. See Note 4 – Sales of Certain Receivables for further information. pursuant to the sale arrangements, we have deferred model using unobservable Level 3 inputs, Long-Lived Assets Long-lived assets include assets that do not have indefinite lives, such as property at nd equipment and certain intangible assets. Substantially 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 impaim rment are present, we test recoverability. The carrying value of a long- lived asset or asset group is not recoverablea flows expected to be generated from the use and eventual future 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 if the carrying value exceeds the sum of the estimated undiscounted futuret disposition of the asset or asset group. If the estimated undiscounted value. cash ff t Property and Equipment Property and equipment consists of buildings and equipment, wireless communications systems, leasehold improvements, capita alized 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 information technology 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 using the straight-line method. Depreciable life studies are performed periodically to confirm the appropria s take into account actual usage, physical wear and tear, replacement history and assumptim ons 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. lives for certain categories of property at nd equipment. These studie teness of depreciablea a t m which do not enhance or Costs of major replacements and improvem ents are capia talized. Repair and maintenance expenditures and overhead incurred in extend the asset’s useful life are charged to operating expenses as incurred. Construction costs, labor the expansion or enhancement of our wireless network are capita alized. Capia talization commences with pre-construction period administrative and technical activities, which include obtaining zoning approvals and building permits, and ceases at the point at which the asset is ready for its intended use. We capita alize interest associated with the acquisition or construction of certain property and equipment. Capia talized interest is reported as a reduction in interest expense and depreciated over the useful life of the related assets. t a We record an asset retirement obligation for the estimated 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 ity resulting from the obligation is incurred. In periods subsequent to initial measurement, we recognize changes in the liabila 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 capita to certain legal obligations to remediate leased property on which our network infrastructure and administrative assets are located. alized cost is depreciated over the estimated useful life of the asset. Our obligations relate primarily lize certain costs incurred in connection with developing or acquiring internal use software. Capita We capita a costs commences once the finaff commits to funding the software project and ceases once the project is ready for its intended use. Capitalized software costs are included in Property and equipment, net on 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. l selection of the specific software solution has been made and management authorizes and alization of software 63 Device Leases Through the Merger, we acquired device lease contracts in which Sprint is the lessor (the “Sprint Flex Lease Program”), substantially all of which are classifieff d as operating leases, as well as the associated fixeff leased devices were recorded as fixeff r value and presented within Property and equipment, net on our Consolidated Balance Sheets. Beginning in 2021, we discontinued offering the Sprint Flex lease program and are shifting customer device finff ancing to EIP plans. d assets at their acquisition date faiff d assets (i.e., the leased devices). These Our leasing programs (“Leasing Programs”), which include JUMP! On Demand and the Sprint Flex Lease Program, allow customers to lease a device (handset or tabla et) generally over a period of 18 months and upgrade the device with a new device when eligibility requirements are met. We depreciate leased devices to their estimated residual value, on a group basis, using the straight-line method over the estimated useful life of the device. The estimated useful life reflects the period for which we estimate the group of leased devices will provide utility to us, which may be longer than the initial lease term based on customer options in the Sprint Flex Lease program to renew the lease on a month-to-month basis after the initial lease term concludes. In determining the estimated useful life, we consider the lease term (e.g., 18 months and month-to-month renewal options for the Sprint Flex Lease Program), trade-in activity and write-offs for lost and stolen devices. Lost and stolen devices are incorporated into the estimates of depreciation expense and recognized as an adjustment to accumulated depreciation when the loss event occurs. Our policy of using the group method of depreciation has been appl originated subsequent to the Merger. Acquired leased devices are grouped based on the age of the device. Revenues associated with the leased devices, net of lease incentives, are generally recognized on a straight-line basis over the lease term. ied to acquired leased devices as well as leases a For arrangements in which we are the lessor of devices, we separate lease and non-lease components. u Upon device upgra de or at lease end, customers in the JUMP! On Demand lease program must return or purchase their device, and customers in the Sprint Flex Lease Program have the option to return or purchase their device or to renew their lease on a month-to-month basis. The purchase price of the device is establia device leased and any down payment made. The Leasing Programs do not contain any residual value guarantees or variablea lease payments, and there are no restrictions or covenants imposed by these leases. Returned devices, including those received upon device upgrade, are transferred fromff are valued at the lower of cost or net realizable value, with any write-down recognized as Cost of equipment sales on our Consolidated Statements of Comprehensive Income. Property and equipment, net to Inventory on our Consolidated Balance Sheets and shed at lease commencement and is based on the type of Other Intangible II Assets Intangible assets that do not have indefinite useful lives are amortized over their estimated useful lives. Customer lists and the Sprint trade name are amortized using the sum-of-the-years digits method over the period in which the asset is expected to contribute to futuret Management Agreement (as defined in Note 2), which represents the period of expected economic benefit. The remaining finite-lived intangible assets are amortized using the straight-line method. cash flows. Reacquired rights are amortized on a straight-line basis over the remaining term of the Goodwill and Indefinite-Lived Intangible Assets Goodwillll Goodwill consists of the excess of the purchase price over the fair value of identifiablea combination and is assigned to our one reporting unit: wireless. net assets acquired in a business Spectrum Licenses a 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 freque specific geographic a fixff ed period o 15 years; however, the FCC has granted license renewals routinely and at a nominal cost. The spectrum of time, typically up tu licenses acquired expire at various dates and we believe we will be able to meet all requirements necessary to secure renewal of our spectrum licenses at a nominal cost. Moreover, we determined that there are currently no legal, regulatory, contractual, competitive, economic or other fact spectrum licenses should be treated as indefini service areas to provide wireless communications services. Spectrumrr lives of our spectrum licenses. Therefore, we determined the te-lived intangible assets. ors that limit the usefulff licenses are issued forff ncy spectrum within ff ff ff 64 any impairment recognized, to assets held forff At times, we enter into agreements to sell or exchange spectrum licenses. Upon entering into the arrangement, if the transaction impairment. The licenses are transferred at has been deemed to have commercial substance, spectrum licenses are reviewed forff sale, which is included in Other current assets their carrying value, as adjusted forff on our Consolidated Balance Sheets until approval spectrum licenses acquired as part of an exchange of nonmonetary assets are recorded at fair value and the differe the fair value of the spectrum licenses obtained, carrying value of the spectrum licenses transferred and cash paid, if any, is recognized as a gain or loss on disposal of spectrum licenses included in Selling, general and administrative expenses on 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 our carrying value of the spectrum assets transferred or exchanged. and completion of the exchange or sale. Upon closing of the transaction, nce between a ff Spectrumtt Leases Through the Merger, we acquired lease agreements (the “Agreements”) with various educational and non-profit instituti provide us with the right to use FCC spectrum licenses (Educational Broadband Services or “EBS spectrum”) in the 2.5 GHz band. In addition to the Agreements with educational institutions and private owners who hold the licenses, we also acquired direct ownership of spectrum licenses previously acquired by Sprint through government auctions or other acquisitions. t ons that The Agreements with educational and certain non-profit institutions are typically forff provisions, bringing the total term of the agreement up to 30 years. A majority of the Agreements include a right of first refusal to acquire, lease or otherwise use the license at the end of the automatic renewal periods. five to 10 years with automatic renewal Leased FCC spectrum licenses are recorded as executory contracts whereby, as a result of business combination accounting, an intangible asset or liabila market rates. These intangible assets or liabilities are amortized over the estimated remaining useful life of the lease agreements. Contractual lease payments are recognized on a straight-line basis over the remaining term of the arrangement, including renewals, and are presented in Costs of services on our Consolidated Statements of Comprehensive Income. ity is recorded reflecting the extent to which contractual or unfavorable to current terms are favorablea t The Agreements enhance the overall value of our spectrum licenses as the collective value is higher than the value of individual bands of spectrumrr across large geographic areas and maintain the same or similar wireless connectivity quality. This enhanced value from combining owned and leased spectrum licenses is referred to as an aggregation premium. within a specific geography. This value is derived fromff the ability to provide wireless service to customers The aggregation premium is a component of the overall fair value of our owned FCC spectrumrr indefinite-lived intangible assets. licenses, which are recorded as Impairmerr nt We assess the carrying value of our goodwill and other indefinite-lived intangible assets, such as our spectrum license portfoli ff for potential impairment annually as of December 31 or more frequently, if events or changes in circumstances indicate such assets might be impaired. o, When assessing goodwill for impairment, we may elect to first perform a qualitative assessment 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 faiff recognize an impairment charge for the amount by which the carrying amount exceeds the wireless reporting unit’s fair value; however, the loss recognized would not exceed the total amount of goodwill recognized in the reporting unit. r value of a reporting unit is less than its carrying amount, we perform a quantitative test. We impairment on an aggregate basis, consistent with our management of the overall business at We test our spectrum licenses forff 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 than their carrying amount, an impairment loss is recognized forff methodology, which is an income approach based on discounted cash flows 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 difference. We estimate fair value using the Greenfield value of the intangible asset. If the estimated fair associated with the intangible asset, to estimate the value of the spectrum licenses is lower ff ff ff 65 Restricted Cash Certain provisions of our debt agreements require us to maintain specified cash collateral balances. Amounts associated with these balances are considered to be restricted cash and are included in Other assets on our Consolidated Balance Sheets. Fair Value Measurements We carry certain assets and liabilities at faiff received to sell an asset or paid to transfer a liabila date. The three-tier hierarchy for inputs used in measuring fair value, which prioritizes the inputs based on the observabila of the measurement date, is as follows: r value. Fair value is defined as an exit price, representing the amount that would be ity in an orderly transaction between market participants at the measurement ity as 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 forff Unobservable inputs for which there is little or no market data, which require us to develop assumptim ons of what market participants would use in pricing the asset or liabila identical assets and liabilities; and ity. 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. and accruedr a liabilities approxim The carrying values of Cash and cash equivalents, Accounts receivablea payablea of EIP receivables approximate fair value as the receivablea s are recorded at their present value using an imputed interest rate. With the exception of certain long-term fixed-rate debt, there were no financial instruments with a carrying value materially different from their faiff our short-term and long-term debt. r value due to the short-term maturities of these instruments. The carrying values a comparim son of the carrying values and fair values of r value. See Note 7 – Fair Value Measurements forff , Accounts receivablea iates and Accounts from affilff ate faiff Derivative Financial Instruments Derivative financial instruments are recognized as either assets or liabilities and are measured at fair value. We do not use derivatives forff trading or speculative purposes. For derivative instruments designated as cash flowff reported as a component the hedged transaction affecff are recorded at fair value as assets, and unrealized losses are recorded at fair value as liabilities. r value are of Accumulated other comprehensive loss until reclassified into Interest expense in the same period ts earnings. Unrealized gains on derivatives designated in qualifying cash flow hedge relationships hedges associated with forecasted debt issuances, changes in faiff m Revenue Recognition We primarily generate our revenue from providing wireless services and selling or leasing devices and accessories to customers. 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. Signifii cant Judgmentstt The most significant judgments affecting the amount and timing of revenue from contracts with our customers include the following items: • • • 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. 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. 66 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. • • • Our products are generally sold with a right of return, which is accounted forff 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 returnt rate experience is a significant input to our expected value methodology. as variable consideration when 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, the dealer) are accounted forff estimating the amount of revenue to recognize from the sales of equipment to indirect dealers and are estimated based tors, such as expected promotional activity. on historical experience and other facff as variable consideration when The determination of the standalone selling price forff . require significant judgment, such as when the selling price of a good or service is not readily observablea contracts that involve more than one performance obligation may 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 premium services to customers, such as device 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 payablea a distinct good or service, such as certain commissions paid to dealers, in which case the payment is treated as a purchase of that distinct good or service. ion of the total transaction price, unless the payment is in exchange for to a customer is treated as a reductd 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 fromff Income. For the years ended December 31, 2021, 2020 and 2019, we recorded approximately $216 million, $267 million and $93 million, respectively, of USF fees on a gross basis. customers, they are recorded gross in Total service revenues on our Consolidated Statements of Comprehensive 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). Wireline Revenue Performance obligations related to our Wireline customers include the provision of domestic and international data communications services, generally to complement wireless services. Wireline revenues are included in Other service revenues on our Consolidated Statements of Comprehensive Income. i 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 experience. Equipment sales not probablea collectibility considers contract terms such as down payments that reduced of collection are generally recorded as payments are received. Our assessment of or certain payments to indirect dealers) primarily based on historical our exposure to credit risk. t 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 finaff 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 ncing component in contracts where customers purchase their 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. Our Leasing Programs allow customers to lease a device over a period of up to 18 months and upgrade the device with a new device when eligibility requirements are met. To date, substantially all of our leased wireless devices are accounted for as operating leases and estimated contract consideration is allocated between lease 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 probablea of collection are limited to the amount of payments received. See “Property at Equipment” above for further information. nd Imputed Interest on EIPEE Receivables For EIP greater than 12 months, we record the effects of financ financing is considered to be significant. The imputation of interest results in a discount of the EIP receivablea the transaction price of the contract with the customer, which is then allocated to the performance obligations of the arrangement. ing on all EIP receivables regardless of whether or not the d ff , thereby adjusti ng 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 estimated credit risk of the customer. Customer credit behavior is inherently uncertain. See “Receivables and Allowance for Credit Losses” above, forff the transaction price primarily reflects current market interest rates and the additional discussion on how we assess credit risk. d s associated with an end service customer in which the sale of the device was not directly to the end customer OEM), the effect of imputing interest is recognized as a reduction to service For receivablea (sell-in model or devices sourced directly fromff revenue over the service contract period. In these transactions, the provision of wireless services is the only performance obligation as the device sale was recognized when transferred to the dealer. Our policies forff the Prepaid Business to DISH on July 1, 2020) customers subsequent to Merger close. imputed interest on EIP receivablea s are applied to receivables originated for Sprint and Boost (up to the sale of 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 receivablea s when our right to consideration is unconditional. When consideration is received, or we have an unconditional right to consideration in advance of delivery of upfront fees, which are goods or services, a contract liability is recorded. The transaction price can include non-refundablea allocated to the identifiablea performance obligations. Contract assets are included in Other current assets and Other assets and contract liabilities are included in Deferre our Consolidated Balance Sheets. See Note 10 – Revenue from Contracts with Customers for further information. ff d revenue on Contract ModiMM fii cations 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. 68 Contract CostsCC 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 capita alize postpaid sales commissions for service activation as costs to acquire a contract and amortize them over the estimated period of benefit, currently 24 months. For capitalized contract costs, determining the amortization period over which such costs are recognized as well as assessing the indicators of impaim rment may require significant judgment. Prepaid commissions are expensed as incurred as their estimated period of benefit does not extend beyond 12 months. Commissions paid upon u the customer has a lease are treated as initial direct costs and recognized over the lease term. device upgrade are not capia talized if the remaining customer contract is less than one year. Commissions paid when Our policies forff of the Prepaid Business to Dish on July 1, 2020) and Assurance Wireless brands subsequent to the Merger close. the capia talization and amortization of costs to acquire a contract are applied to the Sprint, Boost (up to the sale Incremental costs to obtain equipment contracts (e.g., commissions paid on device and accessory sales) are recognized when the equipment is transferred to the customer. See Note 10 – Revenue from Contracts with Customers for further information. Brightstar Distribution We had arrangements with Brightstar US, Inc. (“Brightstar”), a subsidiary of SoftBank, whereby Brightstar provided supply chain and inventory management services to us in our indirect channels. T-Mobile sold devices through Brightstar to T-Mobile indirect channels who then sold the device to an end customer. The supply chain and inventory management arrangement included, among other things, that Brightstar may purchase inventory from the original equipment manufacturers to sell through to our indirect channels. As compensation for these services, we remitted per unit feeff s to Brightstar for each device sold to these indirect dealers. Devices sold fromff T-Mobile to Brightstar remain in inventory until control is transferred upon the sale of the device to the end customer, and in some circumstances to the indirect dealer. T-Mobile to Brightstar do not meet the criteria for a sale. Devices transferred fromff For customers who choose to lease a device previously sold to the indirect dealer, T-Mobile will repurchase the device fromff indirect dealer and originate a lease directly with the end customer. Repurchase activity from the indirect dealer is estimated and treated as a right of return, reducing equipment revenue at the time of sale to the indirect dealer. Upon lease to the end customer, T-Mobile recognizes lease revenue over the associated lease term in Equipment revenues on our Consolidated Statements of Comprehensive Income. the By December 31, 2020, we had terminated or restructured most of our arrangements with Brightstar, except for reverse logistics and trade-in services. Leases (effective January 1, 2019) Cell Site, Retail StoSS re and Offiff ce Facility Ltt eases non-cancelable operating and finaff ilities and dark fiber. We recognize a right-of-use asset and lease liability forff We are a lessee forff office facff value of futuret minimum lease payments. The right-of-use asset for an operating lease is based on the lease liability. Lease expense is recognized on a straight-line basis over the non-cancelable lease term and renewal periods that are considered reasonably certain. ncing leases for cell sites, switch sites, retail stores, network equipment, operating leases based on the net present In addition, we have financing leases for certain network equipment. We recognize a right-of-use asset and lease liability for financing leases based on the net present value of future minimum lease payments. The right-of-use asset for a finaff based on the lease liability. 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. nce lease is certain of being exercised, including the We consider several factors in assessing whether renewal periods are reasonablya continued maturation of our nationwide network, technological advances within the telecommunications industry and the 69 availability of alternative sites. We have concluded we are not reasonably certain to exercise the options to extend or terminate our leases. Therefore, as of the lease commencement date, our lease terms generally do not include these options. We include options to extend or terminate a lease when we are reasonably certain that we will exercise that option. In determining the discount rate used to measure the right-of-use asset and lease liability, we use rates implim cit in the lease, or if not readily availablea , we use our incremental borrowing rate. Our incremental borrowing rate is based on an estimated secured rate comprised of a risk-free 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 fromff which the related obligation is incurred. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. the measurement of the right-of-use asset and lease liability. These payments are recognized in the period in Generally, we elected the practical expedient to not separate lease and non-lease components in arrangements where 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; as such, leases with terms shorter than 12-months are included as a right-of- use asset and lease liability. Rental revenues and expenses associated with co-location tower sites are presented on a net basis under Topic 842. See Note 16 – Leases for further information. Cell Tower Monetization Transactions In 2012, we entered into a prepaid master lease arrangement in which we as the lessor provided the rights to utilize tower sites and we leased back space on certain of those towers. Prior to the Merger, Sprint entered into a similar lease-out and leaseback arrangement that we assumed in the Merger. led sale leasebacks in which the proceeds received are reported as a finff ancing obligation. These arrangements are treated as faiff The principal payments on the tower obligations are included in Other, net within Net cash provided by (used in) finaff activities on our Consolidated Statements of Cash Flows. Our historical tower site asset costs are reported in Property at equipment, net on our Consolidated Balance Sheets and are depreciated. See Note 9 – Tower Obligations for further information. ncing nd Sprint Retirement Pension Plan Through the Merger, we acquired the assets and assumed the liabila “Pension Plan”), which is a defineff December 31, 2005, the Pension Plan was amended to freff eze benefit plan accruals forff d benefit pension plan providing postretirement benefits to certain employees. As of ities associated with the Sprint Retirement Pension Plan (the participants. The investments in the Pension Plan are measured at fair value on a recurring basis each quarter using quoted market prices or the net asset value per share as a practical expedient. The projected benefit obligations associated with the Pension Plan are determined based on actuarial models utilizing mortality tables and discount rates applied to the expected benefit term. See Note 11 – Employee Compensation and Benefit Plans for further information on the Pension Plan. 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, 2021, 2020 and 2019, advertising expenses included in Selling, general and administrative expenses on our Consolidated Statements of Comprehensive Income were $2.2 billion, $1.8 billion and $1.6 billion, respectively. 70 Income Taxes Deferred tax assets and liabia lities are recognized based on temporary differences between the consolidated financial statements and tax bases of assets and liabia lities 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 sufficff . appropriate character and in the appropriate taxing jurisdictions within the carryforward periods availablea income of the ient taxablea We account for uncertainty in income taxes recognized on our consolidated financial statements in accordance with the accounting guidance forff 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 changes in tax law, interactions with taxing authorities and developments in case law. the finff ancial statement recognition and measurement of a tax position taken or expected to be taken in the unrecognized tax benefits in light of changes in facff ts and circumstances, such as d Other Comprehensive Income (Loss) Other comprehensive income (loss) consists of adjustments, net of tax, related to unrealized gains (losses) on cash flow hedges, available-for-sale securities, foreign currency translation and pension and other postretirement benefits. This is reported in Accumulated other comprehensive loss as a separate component of stockholders’ equity until realized in earnings. Stock-Based Compensation m ion expense for stock awards, which include restricted stock units (“RSUs”) and performance-based Stock-based compensat 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 computem d by dividing Net income attributablea t to all potentially number of common shares outstanding for the period. Diluted earnings per share is computed by giving effecff 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. See Note 15 – Earnings Per Share for further information. to common stockholders by the weighted-average Variable Interest Entities VIEs are entities that lack sufficient equity to permit the entity to finff ance 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 securitization transactions in order to isolate certain assets and distribute the cash flows fromff generally structured to insulate investors from claims on the SPEs’ assets by creditors of other entities, including the creditors of the seller of the assets, these SPEs are commonly referred to as being bankruptcy remote. of the entity. The most common type of VIE is a special purpose entity (“SPE”). SPEs are commonly used in those assets to investors. SPEs are t 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 fromff 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. See Note 4 – Sales of Certain Receivablea s and Note 9 – Tower Obligations for further information. 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 affecff servicers) or have the right to unilaterally remove those decision-makers are deemed to have the power to direct the activities of a VIE. ting the VIE (such as asset managers and 71 Device Purchases Cash Flow Presentation We classify all device purchases, whether acquired forff sale or lease, as operating cash outflows as our predominant strategy is to sell devices to customers rather than lease them. See Note 19 – Additional Financial Information for disclosures of Leased devices transferred fromff equipment to inventory. inventory to property and equipment and Returned leased devices transferred fromff property and t Accounting Pronouncements Adopted During the Current Year Management’s Discussi ii on and Analysis, Ss elSS ecll FF ted Financ ial Data and Supplemll II entary Ir nform ation Amendmedd nts On January 11, 2021, the SEC adopted amendments to eliminate the requirement for Selected Financial Data, streamline the requirement to disclose Supplementary Financial Information and amend Management’s Discussion & Analysis of Financial Condition and Results of Operations (“MD&A”). These amendments are intended to eliminate duplicative disclosures and modernize and enhance MD&A forff amendments became effective for us, and we adopted the amendments in February 2021, which included making certain updates to our Management’s Discussion and Analysis and removing Selected Financial Data and Supplementary Information within our Form 10-K for the year ended December 31, 2021. the benefit of investors, while simplifying compliance efforts for registrants. The Accounting Pronouncements Not Yet Adopted Refee rence Rate Reformrr nce rate reformff In March 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-04, nce Rate Reform on Financial Reporting,” and has “Reference Rate Reform (Topic 848): Facilitation of the Effects of Refereff since modified the standard with ASU 2021-01, “Reference Rate Reform (Topic 848): Scope” (together, the “reference rate reform standard”). The refereff to applying existing GAAP for contract modifications and hedging relationships, subject to meeting certain criteria, that reference LIBOR or another reference rate expected to be discontinued as a result of reference rate reform. reform standard is available forff must be elected forff We expect to elect the optional expedients for eligible contract modifications accounted forff occur through December 31, 2022. The appli consolidated financial statements. nce rate adoption through December 31, 2022, and the optional expedients for contract modifications (“ASC”) Topic or Industry Subtopic. under a given ASC Topic as they cation of these expedients is not expected to have a material impact on our all arrangements within a given Accounting Standards Codification standard provides temporary optional expedients and allows for certain exceptions The refereff a ff ff Contract Assets and Contract Liabiliii tiii es Acquired in a Business Combination ii In October 2021, the FASB issued ASU 2021-08, “Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers.” The standard amends ASC 805 such that contract assets and contract liabilities acquired in a business combination are added to the list of exceptions to the recognition and measurement principles such that they are recognized and measured in accordance with ASC 606. The standard will become effective for us beginning January 1, 2023 and should be applied prospectively to all business combinations occurring afteff r the date of adoption. Early adoption is permitted for us at any time. We are currently evaluating the impact this guidance will have on our Consolidated Financial Statements and the timing of adoption. Other recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the American Institutet to have, a significant impact on our present or future Consolidated Financial Statements. of Certified Public Accountants, and the U.S. Securities and Exchange Commission did not have, or are not expected 72 Note 2 – Business Combinations ii Business Combi nati CC on Agreement and Amendments On April 29, 2018, we entered into a Business Combination Agreement with Sprint and the other parties named therein (as amended, the “Business Combination Agreement”) forff amended to provide that, foll Combination Agreement (collectively, the “Transactions”), SoftBank would indemnify us against certain specified matters and the loss of value arising out of, or resulting from, cessation of access to spectrum under certain circumstances and subject to certain limitations and qualifications. owing the closing of the Merger and the other transactions contemplated by the Business the Merger. The Business Combination Agreement was subsequently ff On February 20, 2020, T-Mobile, SoftBank and Deutsche Telekom AG (“DT”) entered into a letter agreement (the “Letter Agreement”). Pursuant to the Letter Agreement, SoftBank agreed to cause its appl no additional consideration, an aggregate of 48,751,557 shares of T-Mobile common stock (such number of shares, the “SoftBank Specified Shares Amount”), effective immediately following the Effective Time (as defined in the Business Combination Agreement), making SoftBank’s exchange ratio 11.31 shares of Sprint common stock for each share of T-Mobile common stock. This resulted in an effective exchange ratio of approximately 11.00 shares of Sprint common stock for each share of T-Mobile common stock immediately following the closing of the Merger, an increase from the originally agreed 9.75 shares. Sprint stockholders, other than SoftBank, received the original fixed exchange ratio of 0.10256 shares of T-Mobile common stock forff for each share of T-Mobile common stock. each share of Sprint common stock, or the equivalent of approximately 9.75 shares of Sprint common stock icable affiliates to surrender to T-Mobile, for a ff The Letter Agreement requires T-Mobile to issue to SoftBank 48,751,557 shares of T-Mobile common stock, subject to the terms and conditions set fort issuance of these shares is contingent on the trailing 45-day volume-weighted average price per share of T-Mobile common stock on the NASDAQ Global Select Market being equal to or greater than $150.00, at any time during on April 1, 2022 and ending on December 31, 2025. If the threshold price is not met, then none of the SoftBank Specified Shares Amount will be issued. no additional consideration, if certain conditions are met. The h in the Letter Agreement, forff d the period commencing Closll ing of Sprintii Merger On April 1, 2020, we completed the Merger, and as a result, Sprint and its subsidiaries became wholly-owned consolidated subsidiaries of T-Mobile. Sprint was the fourth-largest telecommunications company in the U.S., offering a comprehensive range of wireless and wireline communication products and services. As a combined company, we have been able to rapidl y launch a broad and deep nationwide 5G network, accelerate innovation, increase competition in the U.S. wireless and broadband industries and achieve significant synergies and cost reductions by eliminating redundancies within the combined network as well as other business processes and operations. a Upon completion of the Merger, each share of Sprint common stock was exchanged forff stock, or 9.75 shares of Sprint common stock for each share of T-Mobile common stock. After adjustmd tional shares, we issued 373,396,310 shares of T-Mobile common holdback of the SoftBank Specified Shares Amount and fracff stock to Sprint stockholders. The fair value of the T-Mobile common stock provided in exchange for Sprint common stock was approximately $31.3 billion. 0.10256 shares of T-Mobile common ents, including the Additional components of consideration included the repayment of certain of Sprint’s debt, replacement of equity awards SoftBank for certain attributablea reimbursed Merger expenses. to pre-combination services, contingent consideration and a cash payment received fromff ff owing the closing of the Merger and the surrender of the SoftBank Specified Shares Amount, pursuant to the Immediately foll Letter Agreement described above of the outstanding T-Mobile common stock, with the remaining approximately 31.7% of the outstanding T-Mobile common stock held by other stockholders. See Note 14 – SoftBank Equity Transaction for ownership details as of December 31, 2021. , DT and SoftBank held, directly or indirectly, approximately 43.6% and 24.7%, respectively, a 73 Consideradd TT tion Transfe rred The acquisition-date faiff r value of consideration transferred in the Merger totaled $40.8 billion, comprised of the folff lowing: (in millions) Fair value of T-Mobile common stock issued to Sprint stockholders (1) Fair value of T-Mobile replacement equity awards attributable to pre-combination service (2) Repayment of Sprint’s debt (including accrued interest and prepayment penalties) (3) Fair value of contingent consideration (4) Payment received from selling stockholder (5) Total consideration exchanged April 1, 2020 $ $ 31,328 323 7,396 1,882 (102) 40,827 (1) Represents the fair value of T-Mobile common stock issued to Sprint stockholders pursuant to the Business Combination Agreement, less shares surrendered by SoftBank pursuant to the Letter Agreement. The fair value is based on 373,396,310 shares of T-Mobile common stock issued at an exchange ratio of 0.10256 shares of T-Mobile common stock per share of Sprint common stock, less 48,751,557 T-Mobile shares surrendered by SoftBank which are treated as contingent consideration, and the closing price per share of T-Mobile common stock on NASDAQ on March 31, 2020, of $83.90, as shares were transferred to Sprint stockholders prior to the opening of markets on April 1, 2020. (2) Equity-based awards held by Sprint employees prior to the acquisition date have been replaced with T-Mobile equity-based awards. The portion of the equity-based awards that relates to services performed by the employee prior to the acquisition date is included within consideration transferred, and includes stock options, restricted stock units and performance-based restricted stock units. (3) Represents the cash consideration paid concurrent with the close of the Merger to retire certain Sprint debt, as required by change in control provisions of the debt, plus interest and prepayment penalties. (4) Represents the fair value of the SoftBank Specified Shares Amount contingent consideration that may be issued as set forth in the Letter Agreement. (5) Represents receipt of a cash payment from SoftBank for certain reimbursed Merger expenses. The SoftBank Specified Shares Amount was determined to be contingent consideration with an acquisition-date fair value of $1.9 billion. We estimated the fair value using the income approac whereby a Monte Carlo simulation method estimated the probability of different outcomes as the likelihood of achieving the 45-day volume-weighted average price threshold is not easily predicted. This fair value measurement is based on significant inputs not observable in the market and, therefore, represents a Level 3 measurement as defined in ASC 820: Fair Value Measurement. The key assumptions in applying the income approac a was based on historical market trends and the estimated futuret ity-weighted discounted cash flowff h include the estimated future performance of T-Mobile. share-price volatility, which h, a probabila model, a ff The maximum amount of contingent consideration that could be issued to SoftBank has an estimated value of $7.3 billion, based on SoftBank Specified Shares Amount of 48,751,557 multiplied by the defined volume-weighted average price per share of $150.00. The contingent consideration that could be delivered to SoftBank is classified within equity and is not subjeu remeasurement. ct to 74 Fair Value of Ao ssets Acquired and Liabil itll iett s Assumed i We accounted for the Merger as a business combination. The identifiable assets acquired and liabia lities assumed of Sprint were r values as of the acquisition date and consolidated with those of T-Mobile. Assigning fair market values to recorded at their faiff the assets acquired and liabia lities assumed at the date of an acquisition requires the use of significant judgment regarding estimates and assumptions. For the faiff market approaches, including market participant assumptions. r values of the assets acquired and liabia lities assumed, we used the cost, income and The following tablea date. We retained the services of certified valuation specialists to assist with assigning values to certain acquired assets and assumed liabilities. summarizes the fair values for each majoa r class of assets acquired and liabia lities assumed at the acquisition (in millions) Cash and cash equivalents Accounts receivable Equipment installment plan receivables Inventory Prepaid expenses Assets held for sale Other current assets Property and equipment Operating lease right-of-use assets Financing lease right-of-use assets Goodwill Spectrum licenses Other intangible assets Equipment installment plan receivables due after one year, net Other assets (1) Total assets acquired Accounts payable and accrued liabilities Short-term debt Deferred revenue Short-term operating lease liabilities Short-term financing lease liabilities Liabilities held for sale Other current liabilities Long-term debt Tower obligations Deferred tax liabilities Operating lease liabilities Financing lease liabilities Other long-term liabilities Total liabilities assumed Total consideration transferred (1) Included in Other assets acquired is $80 million in restricted cash. April 1, 2020 2,084 1,775 1,088 658 140 1,908 637 18,435 6,583 291 9,423 45,400 6,280 247 540 95,489 5,015 2,760 508 1,818 8 475 681 29,037 950 3,478 5,615 12 4,305 54,662 40,827 $ $ Amounts initially disclosed forff March 31, 2021 (the close of the measurement period) based on information arising afteff the estimated values of certain acquired assets and liabia lities assumed were adjusted through r the initial valuation. Intangibl e All tt ssets and Liabilitll iett s Goodwill with an assigned value of $9.4 billion represents the excess of the consideration transferred over the faiff assets acquired and liabia lities assumed. The goodwill recognized includes synergies expected to be achieved from the operations of the combined company, the assembled workforce of Sprint and intangible assets that do not qualify for separate recognition. Expected synergies fromff infrastructure, All of the goodwill acquired is allocated to the wireless reporting unit. the planned integration of network facilities, personnel and systems. None of the goodwill resulting from the Merger is deductible forff the Merger include the cost savings fromff r values of tax purposes. t 75 Other intangible assets include $4.9 billion of customer relationships with a weighted-average useful life of eight years and tradenames of $207 million with a useful life of two years. Leased spectrum arrangements that have favff orable (asset) and unfavorablea (liability) terms compared to current market rates were assigned fair values of $745 million and $125 million, respectively, with 18-year and 19-year weighted-average useful lives, respectively. value measurement is based on significant inputs not observablea licenses of $45.4 billion was estimated using the income approach, specifically a Greenfieff The fair value of Spectrumr This fair ff h include measurement as defined in ASC 820: Fair Value Measurement. The key assumptions in applying the income approac the discount rate, estimated market share, estimated capital and operating expenditures, forecasted service revenue and a long- term growth rate for a hypothetical market participant that enters the wireless industry and builds a nationwide wireless network. in the market and, therefore, represents a Level 3 ld model. a Acquired Receivablesll The fair value of the assets acquired includes Accounts receivablea under these contracts as of April 1, 2020, the date of the Merger, was $1.8 billion and $1.6 billion, respectively. The differe between the faiff r value and the UPB primarily represents amounts expected to be uncollectible. s of $1.3 billion. The UPB nce of $1.8 billion and EIP receivablea ff Indemnificationtt Assets and Contingent n Liabiliii tiii es the expected reimbursement by SoftBank for certain Lifelff liabilities, and the indemnification asset is presented in Other current assets within our acquired assets and Pursuant to Amendment No 2. to the Business Combination Agreement, SoftBank agreed to indemnify us against certain specified matters and losses. As of the acquisition date, we recorded a contingent liability and an offsetting indemnification asset forff and accruedrr liabilities at the acquisition date. In November 2020, we entered into a consent decree with the Federal Communications Commission (“FCC”) to resolve certain Lifeline matters, which resulted in a payment of $200 million by SoftBank. Final resolution of these matters could require making additional reimbursements and paying additional finff es and penalties, which we do not expect to have a significant impact on our financial results. We expect that any additional liabilities related to these matters would be indemnified and reimbursed by SoftBank. ine matters. The liability is presented in Accounts payablea Deferred Taxes As a result of the Merger, we acquired deferred tax assets for which a valuation allowance reserve is deemed to be necessary, as well as additional uncertain tax benefit reserves. As of the date of the Merger, the amount of the valuation allowance reserve and uncertain tax benefit reserves was $851 million and $660 million, respectively. Transaction Costs We recognized transaction costs of $28 million, $201 million and $106 million forff and 2019, respectively. These costs were associated with legal and professional services and were recognized as Selling, general and administrative expenses on our Consolidated Statements of Comprehensive Income. the years ended December 31, 2021, 2020 76 Pro Forma Inform II ation The following unaudited pro forma finff ancial information gives effect to the Transactions as if they had been completed on January 1, 2019. The unaudited pro forma information was prepared in accordance with the requirements of ASC 805: Business Combinations, which is a different basis than pro forma information prepared under Article 11 of Regulation S-X (“Article 11”). As such, they are not directly comparablea with historical results forff results forff T-Mobile from April 1, 2020 that refleff ct the Transactions and are inclusive of the results and operations of Sprint, the years nor our previously provided pro forma financials prepared in accordance with Article 11. The pro forma results forff ended December 31, 2020 and 2019 include the impact of several significant nonrecurring pro forma adjustments to previously reported operating results. The pro forma adjustments are based on historically reported transactions by the respective companies. The pro forma results do not include any anticipated synergies or other expected benefits of the acquisition. stand-alone T-Mobile prior to April 1, 2020, historical (in millions) Total revenues Income from continuing operations Income from discontinued operations, net of tax Net income Significant nonrecurring pro forma adjustments include: Year Ended December 31, 2020 2019 $ 74,681 $ 3,302 677 3,979 70,607 185 1,594 1,792 • • • • • Transaction costs of $559 million that were incurred during occurred on the pro forma close date of January 1, 2019, and are recognized as if incurred in the first quarter of 2019; The Prepaid Business divested on July 1, 2020, is assumed to have been classified as discontinued operations as of January 1, 2019, and the related activities are presented in Income fromff the year ended December 31, 2020 are assumed to have discontinued operations, net of tax; d Permanent finff ancing issued and debt redemptions occurring in connection with the closing of the Merger are assumed to have occurred on January 1, 2019, and historical interest expense associated with repaid borrowings is removed; Tangible and intangible assets are assumed to be recorded at their estimated faiff depreciated or amortized over their estimated useful lives; and r values as of January 1, 2019 and are Accounting policies of Sprint are conformed to those of T-Mobile including depreciation for leased devices, distribution arrangements with Brightstar US, Inc., amortization of costs to acquire a contract and certain tower lease transactions. The selected unaudited pro forma condensed combined financial information is provided forff not purport to represent what the actual occurred on January 1, 2019, nor do they purport to project the future consolidated results of operations. consolidated results of operations would have been had the Transactions actual illustrative purposes only and does ly t t For the periods subsequent to the Merger close date, the acquired Sprint subsidiaries contributed total revenues and operating income of $20.5 billion and $1.3 billion, respectively, for the year ended December 31, 2020, that were included on our Consolidated Statements of Comprehensive Income. Financingii In connection with the entry into the Business Combination Agreement, T-Mobile USA, Inc. (“T-Mobile USA”) entered into a commitment letter, dated as of April 29, 2018 (as amended and restated on May 15, 2018 and on September 6, 2019, the “Commitment Letter”). On April 1, 2020, in connection with the closing of the Merger, we drew down on our $19.0 billion New Secured Bridge Loan Facility and our $4.0 billion New Secured Term Loan Facility (each as defined below). We used the net proceeds from the drawdown of the secured facilities to refinance certain existing debt of us, Sprint and our and Sprint’s respective subsidiaries and for post-closing general corporate purposes of the combined company. In connection with the financing provided forff institutions. On April 1, 2020, in connection with the closing of the Merger, we paid $355 million in Commitment Letter fees to certain financial instituti in the Commitment Letter, we incurred certain feeff s payable to the financial ons. t 77 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, amendments to certain existing debt owed to DT, in connection with the Merger. On April 1, 2020, in connection with the closing of the Merger, we made a payment for requisite consents to DT of $13 million. 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 effecff subsidiaries. On April 1, 2020, in connection with the closing of the Merger, we made payments forff party note holders of $95 million. t amendments to certain existing debt of us and our requisite consents to third- Regue latorytt Mattett rs The Transactions were the subject of various legal and regulatory proceedings involving a number of state and federal agencies. In connection with those proceedings and the approval of the Transactions, we have certain commitments and other obligations to various state and federal agencies and certain nongovernmental organizations. See Note 17 – Commitments and Contingencies forff further information. a TT Prepaid Tii ransac tion On July 26, 2019, we entered into the Asset Purchase Agreement with Sprint and DISH, pursuant to which, following the consummation of the Merger, DISH would acquire the Prepaid Business. On June 17, 2020, T-Mobile, Sprint and DISH entered into the First Amendment to the Asset Purchase Agreement. Pursuant to the First Amendment of the Asset Purchase Agreement, T-Mobile, Sprint and DISH agreed to proceed with the closing of the Prepaid Transaction in accordance with the Asset Purchase Agreement on July 1, 2020, subject to the terms and conditions of the Asset Purchase Agreement and the terms and conditions of the Consent Decree. On July 1, 2020, pursuant to the Asset Purchase Agreement, we complem ted the Prepaid Transaction. Upon closing of the Prepaid Transaction, we received $1.4 billion from DISH for the Prepaid Business, subject to working capita Note 12 – Discontinued Operations for further information. al adjustments. See Shenandoah Personal rr Communications tt ll Company Affilff iat e Rtt ll elati onshipii Sprint PCS (specifically Sprint Spectrum L.P.) was party to a variety of publicly filed agreements with Shentel, pursuant to which Shentel was the exclusive provider of Sprint PCS’s wireless mobility communications network products in certain parts of Maryland, North Carolina, Virginia, West Virginia, Kentucky, Ohio and Pennsylvania. Pursuant to one such agreement, the Sprint PCS Management Agreement, dated November 5, 1999 (as amended, supplemented and modified fromff time to time, the “Management Agreement”), Sprint PCS was granted an option to purchase Shentel’s Wireless Assets used to provide services pursuant to the Management Agreement. On August 26, 2020, Sprint, now our indirect subsidiary, on behalf of and as the direct or indirect owner of Sprint PCS, exercised its option by delivering a binding notice of exercise to Shentel. On May 28, 2021, T-Mobile USA, Inc., a Delaware corporation and our direct wholly-owned subsidiary, entered into an asset purchase agreement (the “Purchase Agreement”) with Shentel, for the acquisition of the Wireless Assets for an aggregate purchase price of approxim and such additional adjustments agreed by the parties. ately $1.9 billion in cash, subject to certain adjustmd ents prescribed by the Management Agreement a Closll ing of Shentel Wireless Assets Att cquisitiontt On July 1, 2021, upon the completion of certain customary conditions, including the receipt of certain regulatory approvals, we closed on the acquisition of the Wireless Assets pursuant to the Purchase Agreement, and as a result, T-Mobile became the legal owner of the Wireless Assets. Through this transaction, we reacquired the exclusive rights to deliver Sprint’s wireless network services in Shentel’s former affilff Purchase Agreement, T-Mobile and Shentel entered into certain separate transactions, including the effective settlement of the pre-existing arrangements between T-Mobile and Shentel under the Management Agreement. iate territory and simplim fied our operations. Concurrently, and as agreed to through the In exchange, T-Mobile transferredr be consideration transferred for the Wireless Assets and the remainder of which was determined to relate to separate transactions, primarily associated with the effective settlement of pre-existing arrangements between T-Mobile and Shentel. cash of approximately $2.0 billion, approximately $1.9 billion of which was determined to 78 Accordingly, these separate transactions are not included in the calculation of the consideration transferre d in exchange for the Wireless Assets, and the settlement of pre-existing arrangements between T-Mobile and Shentel did not result in material gains or losses. ff Prior to the acquisition of the Wireless Assets, revenues generated from our affiliate relationship with Shentel were presented as Other service revenues. Upon the close of the transaction, revenues generated from postpaid customers within the reacquired territory are presented as Postpai the Wireless Assets since the closing through December 31, 2021, were not material to our Consolidated Statements of Comprehensive Income, nor were they material to our prior period consolidated results on a pro forma basis. d revenues on our Consolidated Statements of Comprehensive Income. The finff ancial results of t Fair Value of Assets Acquired and Liabil itll iett s Assumed i We accounted for the acquisition of the Wireless Assets as a business combination. The identifiable assets acquired and liabilities assumed were recorded at their faiff r values as of the acquisition date and consolidated with those of T-Mobile. Assigning fair market values to the assets acquired and liabilities assumed at the date of an acquisition requires the use of significant judgment regarding estimates and assumptions. For the fair values of the assets acquired and liabilities assumed, we used the cost, income and market approaches, including market participant assumptim ons. The following tablea date. We retained the services of certified valuation specialists to assist with assigning values to certain acquired assets and assumed liabilities. summarizes the fair values for each majoa r class of assets acquired and liabilities assumed at the acquisition (in millions) Inventory Property and equipment Operating lease right-of-use assets Goodwill Other intangible assets Other assets Total assets acquired Short-term operating lease liabilities Operating lease liabilities Other long-term liabilities Total liabilities assumed Total consideration transferred July 1, 2021 2 136 308 1,035 770 7 2,258 73 264 35 372 1,886 $ $ Intangibl e All tt ssets and Liabilitll iett s Goodwill with an assigned value of $1.0 billion, substantially all of which is deductible forff anticipated cost savings from the operations of the combined company resulting from the planned integration of network infrastructuret ilities, the assembled workforce hired concurrently with the acquisition of Wireless Assets, and the intangible assets that do not qualify for separate recognition. All of the goodwill acquired is allocated to the wireless reporting unit. tax purposes, represents the and facff Other intangible assets include $770 million of reacquired rights to provide services in Shentel’s former affiliate territory which is being amortized on a straight-line basis over a usefulff Management Agreement upon the acquisition of the Wireless Assets, which represents the period of expected economic benefits associated with the re-acquisition of such rights. This fair value measurement is based on significant inputs not observable in the market, and therefore, represents a Level 3 measurement as defined in ASC 820. The key assumptions in applying the income approac discount rate, estimated capia tal expenditures, estimated income taxes and the long-term growth rate, as well as forecasted earnings before interest, taxes, depreciation and amortization (“EBITDA”) margins. h include forecasted subscriber growth rates, revenue over an estimated period of time, the life of approximately nine years in line with the remaining term of the a ff 79 Note 3 – Receivables and Related Allowance forff Credit Losses Our portfolio of receivables is comprised of two portfolio segments: accounts receivable and EIP receivables. Accounts Rtt eceivable Portfolioll Segme e nt Accounts receivable balances are predominately composed of amounts currently due from customers (e.g., for wireless services and monthly device lease payments), device insurance administrators, wholesale partners, other carriers and third-party retail channels. We estimate credit losses associated with our accounts receivable portfolio segment using an expected credit loss model, which utilizes an aging schedule methodology based on historical information and adjuste economic conditions and reasonable and supportable foreff asset-specific considerations, current casts. d forff d Our approach considers a number of facff experience as well as current collection trends such as write-off frequency and severity. We also consider other qualitative factors such as macro-economic conditions, including the expected economic impacts of the Pandemic. tors, including our overall historical credit losses, net of recoveries, timely payment We consider the need to adjust our estimate of credit losses forff economic conditions. To do so, we monitor professional forecasts of changes in real U.S. gross domestic product and forecasts of consumer credit behavior for comparable credit exposures. We also periodically evaluate other economic indicators such as unemployment rates to assess their level of correlation with our historical credit loss statistics. reasonable and supportable foreff casts of futuret EIP RII eceivablesll Portfol tt ioll Segment Based upon customer credit profiles at the time of customer origination, we classify the EIP receivables segment into two customer classes of “Prime” and “Subprime.” Prime customer receivablea customer receivablea purchases if their assessed credit risk exceeds established underwriting thresholds. In addition, certain customers within the Subprime category may be required to pay a deposit. s are those with higher credit risk. Customers may be required to make a down payment on their equipment e s are those with lower credit risk and Subprim u To determine a customer’s credit profile and assist in determining their credit class, 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. Installment receivables acquired in the Merger are included in EIP receivablea to the customers acquired in the Merger with an outstanding EIP receivable balance. Based on tenure, consumer credit risk score and credit profile, these acquired customers were classified into our customer classes of Prime or Subprime. For EIP receivables acquired in the Merger, the difference between the fair value and UPB of the receivable at the acquisition date is accreted to interest income over the contractual life of the receivable using the effective interest method. EIP receivables had a combined weighted-average effecff tive interest rate of 5.6% and 6.7% as of December 31, 2021 and 2020, respectively. s. We applied our proprietary credit scoring model The following tablea 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 of allowance for credit losses and imputed discount Classified on the consolidated balance sheets as: Equipment installment plan receivables, net of allowance forff credit losses and imputed discount Equipment installment plan receivables due after one year, net of allowance for credit losses and imputed discount EIP receivables, net of allowance for credit losses and imputed discount December 31, 2021 December 31, 2020 $ $ $ $ 8,207 $ (378) 7,829 (252) 7,577 4,748 2,829 7,577 $ $ $ 6,213 (325) 5,888 (280) 5,608 3,577 2,031 5,608 80 Many of our loss estimation techniques rely on delinquency-based models; therefore, delinquency is an important indicator of credit quality in the establishment of our allowance for credit losses for EIP receivables. We manage our EIP receivables portfolio segment using delinquency and customer credit class as key credit quality indicators. The following tablea t amortized cost of our EIP receivables by delinquency status, 2021: customer credit class and year of origination as of December 31, presents the Originated in 2021 Originated in 2020 Originated prior to 2020 Total EIP Receivables, net of unamortized imputed discounts (in millions) Prime Subprime Prime Subprime Prime Subprime Prime Subprime Grand total - 30 days past due $ 3,894 $ 2,419 $ 878 $ 464 $ 24 8 7 37 15 15 7 3 4 10 5 8 $ 22 — — 1 6 — — 2 $ 4,794 $ 2,889 $ 7,683 31 11 12 47 20 25 78 31 37 31 - 60 days past due 61 - 90 days past due More than 90 days past due EIP receivables, net of unamortized imputed discount $ 3,933 $ 2,486 $ 892 $ 487 $ 23 $ 8 $ 4,848 $ 2,981 $ 7,829 We estimate credit losses on our EIP receivables segment applying an expected credit loss model, which relies on historical loss data adjusted for current conditions to calculate defaul ities or an estimate for the frequency of customer default. Our s assessment of default probabilities includes receivables delinquency status, historical loss experience, how long the receivablea have been outstanding, customer credit ratings as well as customer tenure. We multiply these estimated default probabila ities by our estimated loss given default, which is the estimated amount or severity of the default loss afteff recoveries. r adjusting for estimated t probabila ff As we do for our accounts receivablea receivables for reasonable and supportablea and periodic internal statistical analyses, including the expected economic impacts of the Pandemic. portfolio segment, we consider the need to adjust our estimate of credit losses on EIP forecasts of economic conditions through monitoring external professional forecasts Activity forff balances for the accounts receivablea the years ended December 31, 2021 and 2020, in the allowance for credit losses and unamortized imputed discount s segments were as follows: and EIP receivablea December 31, 2021 December 31, 2020 December 31, 2019 Accounts Receivable Allowance EIP Receivables Allowance Total Accounts Receivable Allowance EIP Receivables Allowance Total Accounts Receivable Allowance EIP Receivables Allowance Total $ 194 $ 605 $ 799 $ 61 $ 399 $ 460 $ 67 $ 449 $ 516 — 231 — 221 — 452 — 338 91 264 91 602 — 77 — 230 — 307 (279) (248) (527) (205) (175) (380) (83) (249) (332) N/A 187 187 N/A 171 171 N/A 136 136 N/A (135) (135) N/A (145) (145) N/A (167) (167) $ 146 $ 630 $ 776 $ 194 $ 605 $ 799 $ 61 $ 399 $ 460 (in millions) Allowance for credit losses and imputed discount, beginning of period Beginning balance adjustment due to implementation of the new credit loss standard 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 81 Off-Balance-Sheet SS EE Credit Eii s xposure We do not have material, unmitigated off-balance-sheet credit exposures as of December 31, 2021. In connection with the sales of certain service and EIP accounts receivablea included on our Consolidated Balance Sheets measured at fair value that are based on a discounted cash flow model using Level 3 inputs, including customer default rates and credit worthiness, dilutions and recoveries. See Note 4 – Sales of Certain Receivables for further information. pursuant to the sale arrangements, we have deferred purchase price assets Note 4 – Sales of Certain Receivables We have entered into transactions to sell certain service accounts receivable and EIP receivables. The transactions, including s and the respective impacts to our consolidated financial statements, are our continuing involvement with the sold receivablea described below. Sales of EIP Receivables Overviewi of the Transaction In 2015, we entered into an arrangement to sell certain EIP receivables on a revolving basis (the “EIP sale arrangement”). The maximum funding commitment of the sale arrangement is $1.3 billion. On November 10, 2021, we extended the scheduled expiration date of the EIP sale arrangement to November 18, 2022. As of both December 31, 2021 and 2020, the EIP sale arrangement provided funding occur daily and are settled on a monthly basis. ff of $1.3 billion. Sales of EIP receivables In connection with this EIP sale arrangement, we forme entity (the “EIP BRE”). Pursuant to the EIP sale arrangement, our wholly-owned subsidiary transfers selected receivablea s to the EIP BRE. The EIP BRE then sells the receivables to a non-consolidated and unaffiliated third-party entity over which we do not exercise any level of control, nor does the third-party entity qualify as a VIE. d a wholly-owned subsidiary, which qualifies as a bankruptcy remote ff Variable Interes tt ytt t EntitEE t nvestment at risk lacks the obligation to absorb a certain portion of its We determined that the EIP BRE is a VIE as its equity i expected losses. We have a variable interest in the EIP BRE and have 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 benefits fromff results of operations of the EIP BRE on our consolidated finaff the EIP BRE that could potentially be significant to the EIP BRE. Accordingly, we include the balances and losses and gives us the right to receive ncial statements. a The following tablea purchase price, and liabia lities included on our Consolidated Balance Sheets with respect to the EIP BRE: d summarizes the carrying amounts and classification of assets, which consist primarily of the deferre ff (in millions) Other current assets Other assets Other long-term liabilities December 31, 2021 December 31, 2020 $ $ 424 125 — 388 120 4 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 Service Accounts Receivable Overviewi of the Transaction In 2014, we entered into an arrangement to sell certain service accounts receivablea sale arrangement”). The maximum funding commitment of the service receivable sale arrangement is $950 million and the on a revolving basis (the “service receivable 82 facility expires in March 2022. As of December 31, 2021 and 2020, the service receivable sale arrangement provided funding of $775 million and $772 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. sale arrangement, we forme In connection with the service receivablea d a wholly-owned subsidiary, which qualifies as a bankruptcy remote entity, to sell service accounts receivable (the “Service BRE”). In March 2021, we amended the sale arrangement to conform its struct things, removal of an unaffiliated special purpose entity that we did not consolidate under the original structuret contractual counterparties. While the amendment simplim fied the structuret not impact the maximum funding commitment under, or the level of fundi to the EIP sale arrangement (the “March 2021 Amendment”). This involved, among other and changes in of the arrangement by making it more efficient, it did ng provided by, the facility. uret rr ff ff Pursuant to the amended service receivablea Service BRE. The Service BRE then sells the receivables to a non-consolidated and unaffiliated third-party entity over which we do not exercise any level of control and which does not qualify as a VIE. sale arrangement, our wholly-owned subsidiary transfers selected receivablea s to the Variable Interes tt ytt t EntitEE Prior to the March 2021 Amendment, the Service BRE did not qualify as a VIE, but due to the significant level of control we exercised over the entity, it was consolidated. sale arrangement triggered a VIE reassessment, and we determined that The March 2021 Amendment to the service receivablea the Service BRE now qualifies as a VIE. We have a variable interest in the Service BRE and have determined that we are the primary beneficiary based on our ability to direct the activities that most significantly impact the Service BRE’s economic performance. Those activities include selecting which receivablea ff receivable sale arrangement and funding absorb losses and gives us the right to receive benefits from the Service BRE that could potentially be significant to the Service BRE. Accordingly, we include the balances and results of operations of the Service BRE on our consolidated finaff statements. s are transferred into the Service BRE and sold in the service the Service BRE. Additionally, our equity interest in the Service BRE obligates us to ncial The following tablea purchase price, and liabia lities included on our Consolidated Balance Sheets with respect to the Service BRE: d summarizes the carrying amounts and classification of assets, which consist primarily of the deferre ff (in millions) Other current assets Other current liabilities December 31, 2021 December 31, 2020 $ $ 231 348 378 357 In addition, the Service BRE is a separate legal entity with its own separate creditors who will be entitled, prior to any liquidation of the Service BRE, to be satisfied prior to any value in the Service BRE becoming availablea assets of the Service BRE may not be used to settle our general obligations, and creditors of the Service BRE have limited recourse to our general credit. to us. Accordingly, the Sales of Receivables The transfers of service receivablea s and EIP receivabla es to the non-consolidated entities are accounted for as sales of finff ancial 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 on our Consolidated Statements of Cash Flows. We recognize proceeds net of the deferred purchase price, consisting of a receivablea entitles us to certain collections on the receivablea d purchase price in Net cash used in investing activities on our Consolidated Statements of Cash Flows as Proceeds related to beneficial interests in securitization transactions. s. We recognize the collection of the deferre from the purchasers that ff The deferred purchase price represents a finff ancial 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 receivablea s. At inception, we elected to measure the deferre changes in fair value included in Selling, general and administrative expense on our Consolidated Statements of Comprehensive Income. The faiff r value of the deferred purchase price is determined based on a discounted cash flow model which uses d purchase price at faiff r value with ff 83 primarily Level 3 inputs, including customer default rates. As of December 31, 2021 and 2020, our deferred purchase price related to the sales of service receivablea s and EIP receivabla es was $779 million and $884 million, respectively. summarizes the impact of the sale of certain service receivablea s and EIP receivables on our Consolidated The following tablea 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 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, 2021 December 31, 2020 $ 2,492 $ 2,528 655 654 125 125 348 — 1,754 39 1,715 766 764 120 120 357 4 1,715 (229) 1,944 As of December 31, 2021 and 2020, the total principal balance of outstanding transferred service receivablea receivables were $1.0 billion and $1.2 billion, respectively. s and EIP We recognized losses fromff s’ fair values and changes in fair value the years ended December 31, 2021 2020 and of the deferred purchase price, of $15 million, $36 million and $130 million forff 2019, respectively, in Selling, general and administrative expense on our Consolidated Statements of Comprehensive Income. sales of receivables, including adjustments to the receivablea Continuing Involvement a , we have continuing involvement with the service receivables and EIP Pursuant to the sale arrangements described above receivables we sell as we service the receivablea aged receivables and receivablea s, reduced collections on our deferred purchase price assets. We continue to service the customers and their related receivablea including facilitating customer payment collection, in exchange for a monthly servicing fee. As the receivablea s are sold on a revolving basis, the customer payment collections on sold receivables may be reinvested in new receivable sales. At the direction of the purchasers of the sold receivables, we apply the same policies and procedures while servicing the sold receivables as we apply to our owned receivablea s where write-off is imminent, and may be responsible for absorbing credit losses through s, and we continue to maintain normal relationships with our customers. s, are required to repurchase certain receivablea s, including ineligible receivables, Note 5 – Property and Equipment The components of property and equipment were as follows: (in millions) Land 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, 2021 December 31, 2020 Up to 30 years Up to 20 years Up to 10 years Up to 10 years Up to 19 months N/A $ $ 225 $ 4,344 57,114 2,160 18,243 3,832 3,703 (49,818) 39,803 $ 236 4,006 49,453 1,879 16,412 6,989 4,595 (42,395) 41,175 Total depreciation expense relating to property and equipment and finaff $13.1 billion and $6.5 billion for the years ended December 31, 2021, 2020 and 2019, respectively. These amounts include depreciation expense related to leased wireless devices of $3.1 billion for each of the years ended December 31, 2021 and 2020 and $543 million forff ncing lease right-of-use assets was $15.2 billion, the year ended December 31, 2019. 84 We capitalize interest associated with the acquisition or construction of certain property and equipment and spectrum intangible assets. We recognized capitalized interest of $210 million, $440 million and $473 million for the years ended December 31, 2021, 2020 and 2019, respectively. Asset retirement obligations are primarily forff infrastructuret and administrative assets are located. certain legal obligations to remediate leased property on which our network Activity in our asset retirement obligations was as folff lows: (in millions) Asset retirement obligations, beginning of year Fair value of liabilities acquired through Merger Liabilities incurred Liabilities settled Accretion expense Changes in estimated cash flows Asset retirement obligations, end of period Classified on the consolidated balance sheets as: Other current liabilities Other long-term liabilities Year Ended December 31, 2021 Year Ended December 31, 2020 $ $ $ 1,817 $ — 54 (173) 62 139 1,899 216 1,683 $ $ 659 1,110 16 (40) 55 17 1,817 14 1,803 The corresponding assets, net of accumulated depreciation, related to asset retirement obligations were $613 million and $912 million as of December 31, 2021 and 2020, respectively. Postpaid Bi illill ngii System Impairmerr nt In connection with the continuing integration of the businesses follow architecture strategy for our postpaid customers. In order to facilitate customer migration from the Sprint legacy billing platform, our postpaid billing system replacement plan and associated development will no longer serve our futuret result, we recorded a non-cash impairment $200 million related to capitalized software development costs for the year ended December 31, 2020, all of which relates to the impairment recognized during the three months ended June 30, 2020. The expense is included in Impairment expense on our Consolidated Statements of Comprehensive Income. There were no impairments recognized for the years ended 2021 and 2019. ing the Merger, we evaluated the long-term billing system needs. As a ff Note 6 – Goodwill, Spectrum License Transactions and Other Intangible Assets Goodwill The changes in the carrying amount of goodwill forff the years ended December 31, 2021 and 2020, are as follow ff s: (in millions) Historical goodwill, net of accumulated impairment losses of $10,766 Goodwill from acquisition in 2020 Layer3 goodwill impairment Balance as of December 31, 2020 Purchase price adjustment of goodwill from acquisitions in 2020 Goodwill from acquisitions in 2021 Balance as of December 31, 2021 Accumulated impairment losses at December 31, 2021 Goodwill 1,930 9,405 (218) 11,117 22 1,049 12,188 (10,984) $ $ $ On April 1, 2020, we completed our Merger with Sprint, which was accounted for as a business combination resulting in $9.4 billion in goodwill. The acquired goodwill was allocated to the wireless reporting unit and will be tested for impairment at this level. See Note 2 – Business Combinations for further information. On July 1, 2021, we completed our acquisition of the Wireless Assets from Shentel, which was accounted forff combination resulting in $1.0 billion in goodwill. The acquired goodwill was allocated to the wireless reporting unit and will be tested for impairment at this level. See Note 2 – Business Combinations for further information. as a business 85 Goodwill Impairment Assessment Certain non-financial assets, including goodwill and indefinite-lived intangible assets such as Spectrum licenses, are not required to be measured at fair value on a recurring basis and are reported at carrying value. However, these assets are required to be assessed for impairment when events or circumstances indicate that carrying value may not be recoverablea annually forff which observable market information may be limited, are classified within Level 3 of the fair value hierarchy. In the event an ed to its estimated fair value using market-based assumptions, to the extent they are impairment is required, the asset is adjust available, as well as other assumptions that may require significant judgement. goodwill and indefinite-lived intangible assets. The nonrecurring measurements of the fair value of these assets, forff , and at least d For our assessment of the wireless reporting unit, we employed a qualitative approach. The fair value of the wireless reporting unit is estimated 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 faiff value of the wireless reporting unit may be below its carrying amount at December 31, 2021. r value. No events or change in circumstances have occurred that indicate the fair In the year ending December 31, 2020, we recognized a goodwill impairment of $218 million forff impairment was the result of our enhanced in-home broadband opportunit certain content rights, which has created a strategic shift in our TVisionTM services offering. The expense is included in Impairment expense on our Consolidated Statements of Comprehensive Income. There were no goodwill impairments recognized for the years ended December 31, 2021 and 2019. the Layer3 reporting unit. The owing the Merger, along with the acquisition of ff y foll t Intangible Assets ii Identifi tt able n Intangible Assets Acquired from the MerMM ger r The following tablea summarizes the fair value of the intangible assets acquired in the Merger: Spectrum licenses Tradenames (1) Customer relationships Favorable spectrum leases Other intangible assets Total intangible assets acquired (1) Tradenames include the Sprint brand Weighted- Average Useful Life (in years) Fair Value as of April 1, 2020 (in millions) Indefinite-lived $ 2 years 8 years 18 years 7 years 45,400 207 4,900 745 428 $ 51,680 The fair value of spectrumr spectrum. licenses includes the value associated with aggregating a nationwide portfolio of owned and leased the lease accounting guidance (ASC 842) and are accounted forff lease payments. We Favorable spectrum leases represent a contract where the market rate is higher than the futff uret lease this spectrum from third parties who hold the spectrum licenses. As these contracts pertain to intangible assets, they are excluded fromff recognized on a straight-line basis over the lease term. Favorablea intangible asset as a result of purchase accounting and will be amortized on a straight-line basis over the associated remaining lease term. Additionally, we recognized unfavorablea spectrum lease liabia lities of $125 million, which are also amortized over their respective remaining lease terms and are included in Other liabilities on our Consolidated Balance Sheets. spectrum leases of $745 million were recorded as an as service contracts in which the expense is contractual t The customer relationship intangible assets represent the value associated with the acquired Sprint customers. The customer relationship intangible assets are amortized using the sum-of-the-years digits method over periods of up to eight years. Other intangible assets are amortized over the remaining period that the asset is expected to provide a benefit to us. 86 i Identifiabl n e Ill ntan II gibl e All ssets Acquired in t ii hett Shenteltt Acquisitioii n We reacquired certain rights under the Management Agreement in connection with the acquisition of the Wireless Assets that these provided us the ability to fully do business in Shentel’s former affilff reacquired rights at its faiff a straight-line basis over a useful life of approximately nine years in line with the remaining term of the Management Agreement upon the acquisition of the Wireless Assets. r value of $770 million as of July 1, 2021. The reacquired rights intangible asset is being amortized on iate territories. We recognized an intangible asset forff Spectrum Licenses The following tablea summarizes our spectrum license activity for the years ended December 31, 2021, 2020 and 2019: (in millions) Spectrum licenses, beginning of year Spectrum license acquisitions Spectrum licenses acquired in Merger Spectrum licenses transferred to held for sale Costs to clear spectrum Spectrum licenses, end of year Spectrumtt Transactions 2021 2020 2019 82,828 $ 36,465 $ 9,545 — (28) 261 1,023 45,400 (83) 23 35,559 857 — — 49 92,606 $ 82,828 $ 36,465 $ $ In March 2021, the FCC announced that we were the winning bidder of 142 licenses in Auction 107 (“C-band spectrumrr aggregate purchase price of $9.3 billion, excluding relocation costs. At the inception of Auction 107 in October 2020, we deposited $438 million. Upon conclusion of Auction 107 in March 2021, we paid the FCC the remaining $8.9 billion for the licenses won in the auction. On July 23, 2021, the FCC issued to us the licenses won in Auction 107. The licenses are included in Spectrum licenses on our Consolidated Balance Sheets as of December 31, 2021. Cash payments to acquire spectrum licenses and payments forff including deposits on our Consolidated Statements of Cash Flows for the year ended December 31, 2021. We expect to incur an additional $1.0 billion in relocation costs which will be paid through 2024. costs to clear spectrum are included in Purchases of spectrum licenses and other intangible assets, ”) for an As of December 31, 2021, the activities that are necessary to get the C-band spectrum ready for its intended use have not begun, as such, capita alization of the interest associated with the costs of acquiring the C-band spectrum has not begun. Subsequent to December 31, 2021, in January 2022, the FCC announced that we were the winning bidder of 199 licenses in Auction 110 (mid-band spectrum) forff an aggregate purchase price of $2.9 billion. At inception of Auction 110 in September 2021, we deposited $100 million. We paid the FCC the remaining $2.8 billion for the licenses won in the auction in the firff st quarter of 2022. Impairmerr nt Assessment For our assessment of Spectrum license impairment, we employed a qualitative approach. No events or change in circumstances have occurred that indicate the fair value of the Spectrum licenses may be below its carrying amount at December 31, 2021. Other Intangible Assets The components of Other intangible assets were as follows: December 31, 2021 December 31, 2020 (in millions) Useful Lives Gross Amount Accumulated Amortization Net Amount Gross Amount Accumulated Amortization Net Amount relationships Up to 8 years $ 4,879 $ (1,863) $ 3,016 $ 4,900 $ (865) $ 4,035 Reacquired rights Up to 9 years Tradenames and patents Up to 19 years Favorable spectrum leases Up to 27 years Other Up to 10 years 770 171 728 377 (46) (91) (74) (118) 724 80 654 259 — 598 790 377 — (412) (35) (55) — 186 755 322 Other intangible assets $ 6,925 $ (2,192) $ 4,733 $ 6,665 $ (1,367) $ 5,298 87 Amortization expense for intangible assets subjecb the years ended December 31, 2021, 2020 and 2019, respectively. The gross amount and accumulated amortization of certain customer relationships, tradenames and patents that became full t to amortization was $1.3 billion, $1.2 billion and $82 million forff y amortized and retired during the year are excluded fromff the table above. a ff The estimated aggregate futff uret amortization expense for intangible assets subjecb t to amortization are summarized below: (in millions) Twelve Months Ending December 31, 2022 2023 2024 2025 2026 Thereafter Total Substantially all of the estimated future through our acquisitions of affiliates. ff Note 7 – Fair Value Measurements Estimated Future Amortization $ $ 1,072 917 760 601 440 943 4,733 amortization expense is associated with intangible assets acquired in the Merger and The carrying values of Cash and cash equivalents, Accounts receivable, Accounts receivable fromff payablea r value due to the short-term maturities of these instruments. a liabilities approxim and accruedr ate faiff affilff iates and Accounts Derivativtt e FinanFF ciali Instrumtt ents Periodically, we use derivatives to manage exposure to market risk, such as interest rate risk. We designate certain derivatives as hedging instruments in a qualifying hedge accounting relationship (cash flow hedge) to help minimize significant, unplanned fluctuations in cash flows caused by interest rate volatility. We do not use derivatives forff trading or speculative purposes. Interest Rate Lock Derivatives In October 2018, we entered into interest rate lock derivatives with notional amounts of $9.6 billion. In November 2019, we extended the mandatory termination date on our interest rate lock derivatives to June 3, 2020. For the three months ended March 31, 2020, we made net collateral transfers to certain of our derivative counterparties totaling $580 million, which included variation margin transfers to (or from) such derivative counterparties based on daily market movements. No amounts were transferred to the derivative counterparties subsequent to March 31, 2020. These collateral transfers are included in Net cash related to derivative contracts under collateral exchange arrangements within Net cash used in investing activities on our Consolidated Statements of Cash Flows. We recorded interest rate lock derivatives on our Consolidated Balance Sheets at fair value that was derived primarily from observable market data, including yield curves. Interest rate lock derivatives were classified as Level 2 in the fair value hierarchy. Cash flows associated with qualifying hedge derivative instruments are presented in the same category on the Consolidated Statements of Cash Flows as the item being hedged. ff Aggregate changes in the fair value of the interest rate lock derivatives, net of tax and amortization, of $1.5 billion and $1.6 billion are presented in Accumulated other comprehensive loss on our Consolidated Balance Sheets as of December 31, 2021 and 2020, respectively. Between April 2 and April 6, 2020, in connection with the issuance of an aggregate of $19.0 billion of Senior Secured Notes bearing interest rates ranging from 3.500% to 4.500% and maturi t derivatives. ng in 2025 through 2050, we terminated our interest rate lock At the time of termination in the second quarter of 2020, the interest rate lock derivatives were a liabia lity of $2.3 billion, of which $1.2 billion was cash-collateralized. The cash flows associated with the settlement of interest rate lock derivatives are presented on a gross basis on our Consolidated Statements of Cash Flows, with the total cash payments to settle the swapsa of $2.3 billion presented in changes in Other current and long-term liabilities within Net cash provided by operating activities and 88 the return or exchange arrangements within Net cash used in investing activities forff f cash collateral of $1.2 billion presented as an inflow in Net cash related to derivative contracts under collateral the year ended December 31, 2020. Upon the issuance of debt to which the hedged interest rate risk related, we began amortizing the Accumulated other comprehensive loss related to the derivatives into Interest expense in a manner consistent with how the hedged interest payments affect earnings. For the years ended December 31, 2021 and 2020, $189 million and $128 million, respectively, were amortized fromff Accumulated other comprehensive loss into Interest expense in the Consolidated Statements of Comprehensive Income. No amounts were amortized into Interest expense for the year ended December 31, 2019. We expect to amortize $203 million of the Accumulated other comprehensive loss associated with the derivatives into Interest expense over the 12 months ended December 31, 2022. Deferred Purchase Price Assets In connection with the sales of certain service and EIP accounts receivablea purchase price assets measured at fair value that are based on a discounted cash flowff including customer default rates. See Note 4 – Sales of Certain Receivables for further information. pursuant to the sale arrangements, we have deferred model using unobservable Level 3 inputs, The carrying amounts of our deferred purchase price assets, which are measured at fair value on a recurring basis and are included on our Consolidated Balance Sheets, were $779 million and $884 million as of December 31, 2021 and 2020, respectively. Fair value was equal to the carrying amount at December 31, 2021 and 2020. Debt The fair value of our Senior Notes and Senior Secured Notes to third parties was determined based on quoted market prices in active markets, and therefore were classified as Level 1 within the fair value hierarchy. The faiff affiliates was determined based on a discounted cash flowff terms and maturities and an estimate forff Level 2 within the fair value hierarchy. our standalone credit risk. Accordingly, our Senior Notes to affilff approach using market interest rates of instruments with similar r value of our Senior Notes to iates were classified as Although we have determined the estimated fair values using available market information and commonly accepted valuation judgment was required in interpreting market data to develop fair value estimates for the Senior methodologies, considerablea Notes to affilff as of December 31, 2021 and 2020. As such, our estimates are not necessarily indicative of the amount we could realize in a current market exchange. iates. The fair value estimates were based on information availablea The carrying amounts and fair values of our short-term and long-term debt included on our Consolidated Balance Sheets were as follows: (in millions) Liabilities: Level within the Fair Value Hierarchy December 31, 2021 December 31, 2020 Carrying Amount (1) Fair Value (1) Carrying Amount (1) Fair Value (1) Senior Notes to third parties Senior Notes to affiliates Senior Secured Notes to third parties 1 2 1 $ 30,309 $ 32,093 $ 29,966 $ 3,739 40,098 3,844 42,393 4,716 36,204 32,450 4,991 40,519 (1) Excludes $47 million and $240 million as of December 31, 2021 and 2020, respectively, in vendor financing arrangements and other debt as the carrying values approximate fair value primarily due to the short-term maturities of these instruments. 89 Note 8 – Debt Debt was as follows: (in millions) 3.360% Series 2016-1 A-1 Notes due 2021 7.250% Senior Notes due 2021 11.500% Senior Notes due 2021 4.000% Senior Notes to affiliates due 2022 4.000% Senior Notes due 2022 5.375% Senior Notes to affiliates due 2022 6.000% Senior Notes due 2022 6.000% Senior Notes due 2023 7.875% Senior Notes due 2023 6.000% Senior Notes due 2024 7.125% Senior Notes due 2024 3.500% Senior Secured Notes due 2025 4.738% Series 2018-1 A-1 Notes due 2025 5.125% Senior Notes due 2025 7.625% Senior Notes due 2025 1.500% Senior Secured Notes due 2026 2.250% Senior Notes due 2026 2.625% Senior Notes due 2026 6.500% Senior Notes due 2026 4.500% Senior Notes due 2026 4.500% Senior Notes to affiliates due 2026 7.625% Senior Notes due 2026 3.750% Senior Secured Notes due 2027 5.375% Senior Notes due 2027 2.050% Senior Secured Notes due 2028 4.750% Senior Notes due 2028 4.750% Senior Notes to affiliates due 2028 5.152% Series 2018-1 A-2 Notes due 2028 6.875% Senior Notes due 2028 2.400% Senior Secured Notes due 2029 2.625% Senior Notes due 2029 3.375% Senior Notes due 2029 3.875% Senior Secured Notes due 2030 2.250% Senior Secured Notes due 2031 2.550% Senior Secured Notes due 2031 2.875% Senior Notes due 2031 3.500% Senior Notes due 2031 2.700% Senior Secured Notes due 2032 8.750% Senior Notes due 2032 4.375% Senior Secured Notes due 2040 3.000% Senior Secured Notes due 2041 4.500% Senior Secured Notes due 2050 3.300% Senior Secured Notes due 2051 3.400% Senior Secured Notes due 2052 3.600% Senior Secured Notes due 2060 Other debt Unamortized premium on debt to third parties Unamortized discount on debt to affiliates Unamortized discount on debt to third parties Debt issuance costs and consent fees Total debt Less: Current portion of Senior Notes to affiliates Less: Current portion of Senior Notes and other debt to third parties Total long-term debt Classified on the consolidated balance sheets as: Long-term debt Long-term debt to affiliates Total long-term debt 90 December 31, 2021 December 31, 2020 — $ — — 1,000 500 1,250 2,280 — 4,250 — 2,500 3,000 1,706 — 1,500 1,000 1,800 1,200 — — — 1,500 4,000 500 1,750 1,500 1,500 1,838 2,475 500 1,000 2,350 7,000 1,000 2,500 1,000 2,450 1,000 2,000 2,000 2,500 3,000 3,000 2,800 1,700 47 1,740 (5) (200) (238) 74,193 2,245 3,378 68,570 $ 67,076 1,494 68,570 $ $ 656 2,250 1,000 1,000 500 1,250 2,280 1,300 4,250 1,000 2,500 3,000 2,100 500 1,500 1,000 — — 2,000 1,000 1,000 1,500 4,000 500 1,750 1,500 1,500 1,838 2,475 — — — 7,000 1,000 2,500 — — — 2,000 2,000 2,500 3,000 3,000 — 1,000 240 2,197 (20) (197) (244) 71,125 — 4,579 66,546 61,830 4,716 66,546 $ $ $ $ Our effective interest rate, excluding the impact of derivatives and capitalized interest, was approximately 4.1% and 4.6% for the years ended December 31, 2021 and 2020, respectively, on weighted-average debt outstanding of $74.0 billion and $58.4 billion for the years ended December 31, 2021 and 2020, respectively. The weighted-average debt outstanding was calculated by appl long-term debt to affilff ying an average of the monthly ending balances of total short-term and long-term debt and short-term and iates, net of unamortized premiums, discounts, debt issuance costs and consent fees. a Issuances and Borrowings During the year ended December 31, 2021, we issued the folff lowing Senior Notes and Senior Secured Notes: millions) 2.250% Senior Notes due 2026 2.625% Senior Notes due 2029 2.875% Senior Notes due 2031 2.625% Senior Notes due 2026 3.375% Senior Notes due 2029 3.500% Senior Notes due 2031 2.250% Senior Notes due 2026 3.375% Senior Notes due 2029 3.500% Senior Notes due 2031 Total of Senior Notes issued 3.400% Senior Secured Notes due 2052 3.600% Senior Secured Notes due 2060 2.400% Senior Secured Notes due 2029 2.700% Senior Secured Notes due 2032 3.400% Senior Secured Notes due 2052 Total of Senior Secured Notes issued Credit Facilities Principal Issuances Premiums/ Discounts and Issuance Costs Net Proceeds from Issuance of Long-Term Debt $ 1,000 $ (7) $ 1,000 1,000 1,200 1,250 1,350 800 1,100 1,100 9,800 1,300 700 500 1,000 1,500 $ $ $ $ $ Issue Date January 14, 2021 January 14, 2021 January 14, 2021 March 23, 2021 March 23, 2021 March 23, 2021 May 13, 2021 May 13, 2021 May 13, 2021 993 993 994 1,193 1,243 1,342 798 1,106 1,106 9,768 (7) (6) (7) (7) (8) (2) 6 6 (32) $ (11) $ 1,289 August 13, 2021 1 (2) (8) (21) 701 August 13, 2021 498 December 6, 2021 992 December 6, 2021 1,479 December 6, 2021 5,000 $ (41) $ 4,959 ff among other things, a $5.5 billion revolving credit facility (“Revolving T-Mobile USA and certain of its affiliates, as guarantors, have a credit agreement (the “Credit Agreement”) with certain financial institutions named therein that provides for, Credit Facility”). Borrowings under the Revolving Credit Facility will bear interest at a rate equal to a per annum rate of ion to 1.00% if T-Mobile’s Total First Lien Net Leverage LIBOR plus a margin of 1.25% with the margin subject to a reductd Ratio (as defined in the Credit Agreement) is less than or equal to 0.75 to 1.00. The commitments under the Revolving Credit Facility mature on April 1, 2025. The Credit Agreement contains customary representations, warranties and covenants, including a finff ancial maintenance covenant of 3.3x with respect to T-Mobile’s Total First Lien Net Leverage Ratio commencing with the period ending September 30, 2020. As of December 31, 2021, we did not have an outstanding balance under this facility. On October 30, 2020, we entered into a $5.0 billion senior secured term loan commitment with certain financial instituti January 14, 2021, we issued an aggregate of $3.0 billion of Senior Notes. A portion of the senior secured term loan commitment was reduced by an amount equal to the aggregate gross proceeds of the Senior Notes, which reduced the commitment to $2.0 billion. On March 23, 2021, we issued an aggregate of $3.8 billion of Senior Notes. The senior secured term loan commitment was terminated upon the issuance of the $3.8 billion of Senior Notes. t ons. On Senior Secured Notes On August 13, 2021, T-Mobile USA and certain of its affiliates, as guarantors, issued an aggregate $2.0 billion of Senior Secured Notes bearing interest at 3.400% and 3.600%, respectively, and maturing in 2052 and 2060, respectively. We used the net proceeds of $2.0 billion, together with cash on hand, to redeem our 4.500% Senior Notes dued 4.500% Senior Notes dued 2026 held by public investors. 2026 held by DT and our 91 On December 6, 2021, T-Mobile USA and certain of its affiliates, as guarantors, issued an aggregate of $3.0 billion of Senior Secured Notes bearing interest rates ranging from 2.400% to 3.400% and maturi proceeds of such issuances for general corporate purposes, which may include among other things, financing acquisitions of additional spectrum and refinancing existing indebtedness on an ongoing basis. ng in 2029 through 2052, and used the net t The Senior Secured Notes issued in 2021 have not been registered under the Securities Act of 1933, as amended (the “Securities Act”), and may not be offered or sold in the United States or to, or for the account or benefit of, U.S. persons except exemption from the registration requirements thereof. Accordingly, the Senior Secured Notes in accordance with an applicablea were offered and sold only (1) to persons reasonably believed to be “qualified instituti 144A under the Securities Act and (2) outside the United States to non-U.S. persons in reliance upon Regulation S under the Securities Act. onal buyers” under RuleRR t ff ially all of our The Senior Secured Notes are secured by a first present and futuret assets, other than certain excluded assets. They are redeemable at our discretion, in whole or in part, at any time. If redeemed prior to their contractually specified par call date, the redemption price is subject to a make-whole premium calculated by reference to then-current U.S. Treasury rates plus a fixeff d spread; if redeemed on or after their respective par call date, the make-whole premium does not apply. The amount of time by which the par call date precedes the maturity date of the one to six months. respective series of Senior Secured Notes varies fromff priority security interest, subject to permitted liens, in substant u We have entered into Registration Rights Agreements that are in effecff Senior Secured Notes issued in 2021. These agreements call for us to use commercially reasonable efforts to file a registration statement and tive within a particular time period and to maintain the effectiveness of the registration statement for a have it declared effecff certain period of time. If a default occurs, we will pay additional interest up to a maximum increase of 0.50% per annum. We have not accruedr . considered probablea any obligations associated with the Registration Rights Agreements as compliance with the agreements is t through the maturity of the appli cablea a In 2021, we exchanged the Senior Secured Notes issued in 2020, which were not registered under the Securities Act, forff substantially identical Senior Secured Notes that were registered under the Securities Act. Senior Notes On January 14, 2021, T-Mobile USA and certain of its affiliates, as guarantors, issued an aggregate of $3.0 billion of Senior Notes bearing interest ranging from 2.250% to 2.875% and maturi ng in 2026 through 2031, and used the net proceeds of t $3.0 billion for general corporate purposes, including among other things, the acquisition of additional spectrum and the refinancing of existing indebtedness subsequent to issuance. On March 23, 2021, T-Mobile USA and certain of its affiliates, as guarantors, issued an aggregate of $3.8 billion of Senior Notes bearing interest ranging from 2.625% to 3.500% and maturi $3.8 billion to acquire spectrum licenses pursuant to the Federal Communications Commission’s C-Band spectrum Auction 107, with the remainder used, together with cash on hand, to redeem T-Mobile USA’s 6.500% Senior Notes dued ng in 2026 through 2031, and used the net proceeds of 2026. t On May 13, 2021, T-Mobile USA and certain of its affiliates, as guarantors, issued an aggregate of $3.0 billion of Senior Notes bearing interest ranging from 2.250% to 3.500% and maturi ng in 2026 through 2031, and used the net proceeds of $3.0 billion to redeem our 6.000% Senior Notes due 2023, 6.000% Senior Notes due 2024, and 5.125% Senior Notes dued remainder used to refinance existing indebtedness subsequent to issuance. 2025 with the t The Senior Notes issued in May 2021 have not been registered under the Securities Act and may not be offered or sold in the United States or to, or for the account or benefit of, U.S. persons except in accordance with an applicable exception from the registration requirements thereof. Accordingly, the Senior Notes issued in May 2021 were offered and sold only (1) to persons reasonably believed to be “qualified institutional buyers” under Rule 144A under the Securities Act and (2) outside the United States to non-U.S. persons in reliance upon Regulation S under the Securities Act. The Senior Notes are guaranteed on a senior unsecured basis by the Company and certain of our consolidated subsidiaries. They are redeemable at our discretion, in whole or in part, at any time. If redeemed prior to their contractual premium end date, the redemption price is subject to a premium calculated by reference to then-current U.S. Treasury rates plus a fixff ed spread; if redeemed on or afteff specified fixeff d premium that steps down gradually as the Senior Notes approach their par call date, on or after which they are redeemable at par. The amount of time by which the par call date precedes the maturity date of the respective series of Senior Notes varies from one to three years. r their respective applicable premium end date, they are redeemablea ly specified applicablea at a contractual ly t t 92 We have entered into a Registration Rights Agreement that is in effect through the maturit 2021. This agreement calls forff us to use commercially reasonable efforts to file a registration statement and have it declared effective within a particular time period and to maintain the effectiveness of the registration statement for a certain period of t occurs, we will pay additional interest up to a maximum increase of 0.50% per annum. We have not accrued time. If a defaul any obligations associated with the Registration Rights Agreement as complim ance with the agreements is considered probable. y of the Senior Notes issued in May ff t Debt Assumed In connection with the Merger, we assumed the folff lowing indebtedness of Sprint: (in millions) 7.250% Senior Notes due 2021 7.875% Senior Notes due 2023 7.125% Senior Notes due 2024 7.625% Senior Notes due 2025 7.625% Senior Notes due 2026 3.360% Senior Secured Series 2016-1 A-1 Notes due 2021 (1) 4.738% Senior Secured Series 2018-1 A-1 Notes due 2025 (1) 5.152% Senior Secured Series 2018-1 A-2 Notes due 2028 (1) 7.000% Senior Notes due 2020 11.500% Senior Notes due 2021 6.000% Senior Notes due 2022 6.875% Senior Notes due 2028 8.750% Senior Notes due 2032 Accounts receivable facility Other debt Total Debt Assumed Fair value as of April 1, 2020 Principal Outstanding as of December 31, 2021 Carrying Value as of December 31, 2021 $ 2,324 $ — $ 4,682 2,746 1,677 1,701 1,310 2,153 1,960 1,510 1,105 2,372 2,834 2,649 2,310 464 4,250 2,500 1,500 1,500 — 1,706 1,838 — — 2,280 2,475 2,000 — — — 4,472 2,650 1,618 1,648 — 1,735 1,936 — — 2,312 2,772 2,577 — — $ 31,797 $ 20,049 $ 21,720 (1) In connection with the closing of the Merger, we assumed Sprint’s spectrum-backed notes, which are collateralized by the acquired directly held and third-party leased Spectrum licenses. See “Spectrum Financing” section below for further information. 93 Note Rtt tt edemptions and Repayments During the year ended December 31, 2021, we made the folff lowing note redemptions and repayments: Principal Amount Write-off of Issuance Cost and Consent Fees (1) Redemption Premium (2) $ 2,000 $ (in millions) 6.500% Senior Notes due 2026 6.000% Senior Notes due 2023 6.000% Senior Notes due 2024 5.125% Senior Notes due 2025 4.500% Senior Notes due 2026 7.250% Senior Notes due 2021 11.500% Senior Notes due 2021 Total Senior Notes to third parties redeemed 4.500% Senior Notes to affiliates due 2026 Total Senior Notes to affiliates redeemed 3.360% Secured Series 2016-1 A-1 Notes due 2021 4.738% Secured Series 2018-1 A-1 Notes due 2025 Other debt Total spectrum financing and other debt repayments $ $ $ $ $ 1,300 1,000 500 1,000 2,250 1,000 9,050 1,000 1,000 656 394 184 $ $ $ $ 1,234 $ 36 10 9 3 5 — — 63 4 4 $ $ $ $ — $ — — — $ Redemption Date March 27, 2021 May 23, 2021 May 23, 2021 May 23, 2021 August 23, 2021 65 — — 6 23 — September 15, 2021 — November 15, 2021 Redemption Price 103.250 % 100.000 % 100.000 % 101.281 % 102.250 % N/A N/A 94 22 22 — — — — August 23, 2021 102.250 % August 20, 2021 Various Various N/A N/A N/A (1) Write-off of issuance costs and consent fees are included in Other expense, net on our Consolidated Statements of Comprehensive Income. Write-off of issuance costs and consent fees are included in Loss on redemption of debt within Net cash provided by operating activities on our Consolidated Statements of Cash Flows. (2) The redemption premium is the excess paid over the principal amount. Redemption premiums are included in Other expense, net on our Consolidated Statements of Comprehensive Income and in Net cash used in financing activities on our Consolidated Statements of Cash Flows. Our losses on extinguishment of debt were $184 million, $371 million, and $19 million for the years ended December 31, 2021, 2020 and 2019, respectively, and are included in Other expense, net on our Consolidated Statements of Comprehensive Income. Spectrumtt Financingii On April 1, 2020, in connection with the closing of the Merger, we assumed Sprint’s spectrum-backed notes, which are collateralized by the acquired directly held and third-party leased Spectrum licenses (collectively, the “Spectrum Portfolio”) transferred to wholly-owned bankruptcy-remote special purpose entities (collectively, the “Spectrum Financing SPEs”). As of December 31, 2021 and 2020, the total outstanding obligations under these Notes was $3.5 billion and $4.6 billion, respectively. In October 2016, certain subsidiaries of Sprint Communications, Inc. transferred the Spectrum Portfolio to the Spectrum Financing SPEs, which was used as collateral to raise an initial $3.5 billion in senior secured notes (the “2016 Spectrum- Backed Notes”) bearing interest at 3.360% per annum under a $7.0 billion securitization program. The 2016 Spectrum-Backed Notes were repayablea principal payments thereafter commencing December 2017 through September 2021. We fully repaid the 2016 Spectrum- Backed Notes in 2021. -year term, with interest-only payments over the firff st four quarters and amortizing quarterly over a fiveff a mately $3.9 billion in aggregate principal amount of senior secured notes (the “2018 In March 2018, Sprint issued approxi Spectrum-Backed Notes” and together with the 2016 Spectrum-Backed Notes, the “Spectrum-Backed Notes”) under the existing $7.0 billion securitization program, consisting of two series of senior secured notes. The first series of notes totaled $2.1 billion in aggregate principal amount, bears interest at 4.738% per annum, and has quarterly interest-only payments until June 2021, and amortizing quarterly principal amounts thereafter commencing in June 2021 through March 2025. As of December 31, 2021, $525 million of the aggregate principal amount was classified as Short-term debt on our Consolidated Balance Sheets. The second series of notes totaled approxi 5.152% per annum, and has quarterly interest-only payments until June 2023, and amortizing quarterly principal amounts thereafter commencing in June 2023 through March 2028. The Spectrum Portfolio, which also serves as collateral for the Spectrum-Backed Notes, remains substantially identical to the original portfolio from October 2016. mately $1.8 billion in aggregate principal amount, bears interest at a 94 the ongoing use of the Spectrum Portfolio. Sprint Communications, Inc. is required to make monthly lease usage rights as Simultaneously with the October 2016 offering, Sprint Communications, Inc. entered a long-term lease with the Spectrumrr Financing SPEs forff payments to the Spectrum Financing SPEs in an aggregate amount that is market-based relative to the spectrumr of the closing date and equal to $165 million per month. The lease payments, which are guaranteed by T-Mobile subsidiaries subsequent to the Merger, are sufficient to service all outstanding series of the 2016 Spectrum-Backed Notes and the lease also constitutes collateral for the senior secured notes. Because the Spectrum Financing SPEs are wholly-owned T-Mobile subsidiaries subsequent to the Merger, these entities are consolidated and all intercompany activity has been eliminated. Each Spectrum Financing SPE is a separate legal entity with its own separate creditors who will be entitled, prior to and upon the liquidation of the respective Spectrum Financing SPE, to be satisfied out of the Spectrum Financing SPE’s assets prior to any assets of such Spectrum Financing SPE becoming available to T-Mobile. Accordingly, the assets of each Spectrum to satisfy the debts and other obligations owed to other creditors of T-Mobile until the Financing SPE are not availablea obligations of such Spectrum Financing SPE under the spectrum-backed senior secured notes are paid in full. Certain provisions of the Spectrum Financing facility require us to maintain specified cash collateral balances. Amounts associated with these balances are considered to be restricted cash. u Restricted Cash Certain provisions of our debt agreements require us to maintain specified cash collateral balances. Amounts associated with these balances are considered to be restricted cash. Standby Letters of Credit For the purposes of securing our obligations to provide device insurance services and for the purposes of securing our general purpose obligations, we maintain an agreement for standby letters of credit with certain finaff certain of Sprint’s standby letters of credit in the Merger. Our outstanding standby letters of credit were $441 million and $555 million as of December 31, 2021 and 2020, respectively. ncial institutions. We assumed Note 9 – Tower Obligations ii Existing CCI Tower Lease Arrangements In 2012, we conveyed to Crown Castle International Corp. (“CCI”) the exclusive right to manage and operate approxim 6,200 tower sites (“CCI Lease Sites”) via a master prepaid lease with site lease terms ranging from 23 to 37 years. CCI has fixed-price purchase options for the CCI Lease Sites totaling approximately $2.0 billion, exercisable annually on a per-tranche basis at the end of the lease term during the period from December 31, 2035 through December 31, 2049. If CCI exercises its purchase option for any tranche, it must purchase all the towers in the tranche. We lease back a portion of the space at certain tower sites forff an initial term of 10 years, followed by optional renewals at customary terms. ately a 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 subleu included the obligation to pay ground lease rentals, property taxes and other executory costs. asing agreements with other mobile network operator tenants that lease space at the tower sites. Liabilities interest in the Lease Site SPEs but are not the primary beneficiary as we lack the power to We determined the SPEs containing the CCI Lease Sites (“Lease Site SPEs”) are VIEs as they lack sufficient equity to finance their activities. We have a variablea direct the activities that most significantly impact the Lease Site SPEs’ economic performance. 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 futuret 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 Lease Site SPEs are not included in our consolidated finaff from the purchase option to acquire the CCI Lease ncial statements. residual returns t However, we also considered if this arrangement resulted in the sale of the CCI Lease Sites forff which we would de-recognize the tower assets. By assessing whether control had transferred, we concluded that transfer of control criteria, as discussed in the revenue standard, were not met. Accordingly, we recorded this arrangement as a finaff financial obligation, and the CCI Lease Sites tower assets remained on our Consolidated Balance Sheets. We recorded long- term financial obligations in the amount of the net proceeds received and recognize interest on the tower obligations at a rate of approximately 8% using the effective interest method. The tower obligations are increased by interest expense and amortized ncing whereby we recorded debt, a 95 through contractual leaseback payments made by us to CCI and through net cash flowff operation of the tower sites. s generated and retained by CCI from Acquired CCI TCC owTT er Lease Arrangements Prior to the Merger, Sprint entered into a lease-out and leaseback arrangement with Global Signal Inc., a third party that was ately 6,400 tower sites subsequently acquired by CCI, that conveyed to CCI the exclusive right to manage and operate approxim the close of the Merger, at which point (“Master Lease Sites”) via a master prepaid lease. These agreements were assumed upon the remaining term of the lease-out was approximately 17 years with no renewal options. CCI has a fixff ed price purchase option for all (but not less than all) of the leased or subleased sites for approximately $2.3 billion, exercisable one year prior to the expiration of the agreement and ending 120 days prior to the expiration of the agreement. We lease back a portion of the space an initial term of 10 years, followed by optional renewals at customary terms. at certain tower sites forff u a We considered if this arrangement resulted in the sale of the Master Lease Sites forff which we would de-recognize the tower assets. By assessing whether control had transferred, we concluded that transfer of control criteria, as discussed in the revenue standard, were not met. Accordingly, we recorded this arrangement as a finff ancing whereby we recorded debt, a finaff obligation, and the Master Lease Sites tower assets remained on our Consolidated Balance Sheets. ncial As of the closing date of the Merger, we recognized Property and equipment with a faiff obligations related to amounts owed to CCI under the leaseback of $1.1 billion. Additionally, we recognized $1.7 billion in Other long-term liabilities associated with contract terms that are unfavorable to current market rates, which includes unfavorablea terms associated with the fixff ed-price purchase option in 2037. r value of $2.8 billion and tower We recognize interest expense on the tower obligations at a rate of approxi mately 6% using the effective interest method. The leaseback payments made by us to CCI. tower obligations are increased by interest expense and amortized through contractual The tower assets are reported in Property and equipment, net on our Consolidated Balance Sheets and are depreciated to their estimated residual values over the expected useful life of the towers, which is 20 years. a t The following tablea Sheets: summarizes the balances associated with both of the tower arrangements on our Consolidated Balance (in millions) Property and equipment, net Tower obligations Other long-term liabilities December 31, 2021 December 31, 2020 $ 2,548 $ 2,806 1,712 2,838 3,028 1,712 Future minimum payments related to the tower obligations are approxim 2022, $630 million in total for the years ending December 31, 2023 and 2024, $626 million in total for the years ending December 31, 2025 and 2026, and $329 million in total for the years thereafter. ately $415 million for the year ending December 31, a futuret We are contingently liabla e forff 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. Under the arrangement, we remain primarily liabla e forff ground lease payments on approximately 900 sites and have included lease liabia lities of $282 million in our Operating lease liabia lities as of December 31, 2021. ground lease payments through the remaining term of the CCI Lease Sites and the Master Subsequent to December 31, 2021, on January 3, 2022, we entered into the Crown Agreement with CCI. The Crown Agreement modifies the leaseback portion of both the Existing CCI Tower Lease Arrangement and Acquired CCI Tower Lease . As a result of the Crown Agreement, we expect an increase in the financing obligation as of the Arrangement detailed above effective date of the agreement of approximately $1.2 billion, with a corresponding decrease to Other long-term liabilities due to a decrease in unfavorable lease terms. There were no changes made to either of our master prepaid leases with CCI. a 96 Note 10 – Revenue froff m Contracts with Customers Disaggregation of Revenue We provide wireless communications services to three primary categories of customers: • • Postpaid customers generally include customers who are qualified to pay after receiving wireless communications services utilizing phones, High Speed Internet, wearablea and SyncUP products; Prepaid customers generally include customers who pay for wireless communications services in advance; and s, DIGITS or other connected devices which includes tablets • Wholesale customers include Machine-to-Machine and Mobile Virtual t Network Operator customers that operate on our network but are managed by wholesale partners. t Postpai d service revenues, including postpaid phone revenues and postpaid other revenues, were as follows: (in millions) Postpaid service revenues Postpaid phone revenues Postpaid other revenues Total postpaid service revenues Year Ended December 31, 2021 2020 2019 $ $ 39,154 3,408 42,562 $ $ 33,939 2,367 36,306 $ $ 21,329 1,344 22,673 We operate as a single operating segment. The balances presented in each revenue line item on 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 premium services to customers, such as device insurance services and customer-based, third-party services. Revenue generated fromff included in Equipment revenues on our Consolidated Statements of Comprehensive Income. the lease of mobile communication devices is Equipment revenues fromff the lease of mobile communication devices were as follows: (in millions) Year Ended December 31, 2021 2020 2019 Equipment revenues from the lease of mobile communication devices $ 3,348 $ 4,181 $ 599 We provide wireline communication services to domestic and international customers. Wireline service revenues were $739 million and $626 million for the years ended December 31, 2021 and 2020, respectively. Wireline service revenues are presented in Other service revenues on our Consolidated Statements of Comprehensive Income. Contract Balances The contract asset and contract liabila follows: ity balances from contracts with customers as of December 31, 2021 and 2020, were as (in millions) Balance as of December 31, 2020 Balance as of December 31, 2021 Change Contract Assets Contract Liabilities $ $ 278 286 8 $ $ 824 763 (61) 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 $219 million and $204 million as of December 31, 2021 and 2020, respectively, was included in Other current assets on our Consolidated Balance Sheets. 97 Contract liabilities are recorded when fees are collected, or we have an unconditional right to consideration (a receivablea advance of delivery of goods or services. Changes in contract liabilities are primarily related to the activity of prepaid customers. Contract liabilities are primarily included in Deferred revenue on our Consolidated Balance Sheets. ) in Revenues for the years ended December 31, 2021, 2020 and 2019 include the following: (in millions) Year Ended December 31, 2021 2020 2019 Amounts included in the beginning of year contract liability balance $ 767 $ 545 $ 643 Remaining Performance Obligations As of December 31, 2021, the aggregate amount of transaction price allocated to remaining service performance obligations for postpaid contracts with subsidized devices and promotional bill credits that result in an extended service contract is $898 million. We expect to recognize revenue as the service is provided on these postpaid contracts over an extended contract term of 24 months at the time of origination. As of December 31, 2021, the aggregate amount of transaction price allocated to remaining service and lease performance obligations associated with device operating leases was $95 million and $58 million, respectively. We expect to recognize this revenue as service is provided over the device lease contract term of 18 months. Information about remaining performance obligations that are part of a contract that has an original expected durat year or less has been excluded from the above, which primarily consists of monthly service contracts. d ion of one Certain of our wholesale, roaming and service contracts include variable consideration based on usage and performance. This variable consideration has been excluded fromff the aggregate amount of the contractual minimum consideration for wholesale, roaming and service contracts is $1.2 billion, $707 million and $685 million for 2022, 2023, and 2024 and beyond, respectively. These contracts have a remaining duration ranging from less than one year to eight years. the disclosure of remaining performance obligations. As of December 31, 2021, Contract Costs ff d incremental costs to obtain contracts with customers was $1.5 billion and $1.1 billion as of The total balance of deferre December 31, 2021 and December 31, 2020, respectively, and is included in Other assets on our Consolidated Balance Sheets. Deferred contract costs incurred to obtain postpaid service contracts are amortized over a period of 24 months. The amortization period is monitored to refleff ct any significant change in assumptim ons. Amortization of deferred contract costs is included in Selling, general and administrative expenses on our Consolidated Statements of Comprehensive Income and were $1.1 billion and $865 million forff the years ended December 31, 2021 and 2020, respectively. The deferred contract cost asset is assessed forff deferred contract cost assets for the years ended December 31, 2021, 2020 and 2019. impairment on a periodic basis. There were no impairment losses recognized on Note 11 – Employee Compensation and Benefit Plans Under our 2013 Omnibus Incentive Plan and the Sprint Corporation Amended and Restated 2015 Omnibus Incentive Plan that T-Mobile assumed in connection with the closing of the Merger (the “Incentive Plans”), we are authorized to issue up to 101 million shares of our common stock. Under our Incentive Plans, 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, 2021, there were approximately 20 million shares of common stock available forff under our Incentive Plans. grants futuret 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 cablea (with vesting generally occurring annually over a three-year service period), subject to continued service through the appli 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. a 98 Stock-based compensation expense and related income tax benefits were as foll ff ows: (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 As of and for the Year Ended December 31, 2021 2020 2019 $ $ $ $ $ 540 100 116.11 625 1.8 944 $ $ $ $ $ 694 132 96.27 592 1.9 1,315 $ $ $ $ $ 495 92 73.25 515 1.6 512 Upon the completion of our Merger with Sprint, T-Mobile assumed Sprint’s stock compensation plans. In addition, pursuant to the Business Combination Agreement, at the Effective Time, each outstanding option to purchase Sprint common stock (other than under Sprint’s Employee Stock Purchase Plan), each award of time-based RSUs in respect of shares of Sprint common stock and each award of performance-based RSUs in respect of shares of Sprint common stock, in each case, that was outstanding immediately prior to the Effective Time was automatically adjuste Business Combination Agreement) and converted into an equity award of the same type covering shares of T-Mobile common stock, on the same terms and conditions (including, if applicable, any continuing vesting requirements (but excluding any t immediately prior to the performance-based vesting conditions)) under the applicable Sprint plan and award agreement in effecff Effective Time (the “Assumed Awards”). The applicable amount of performance-based RSUs eligible forff conversion was based on formulas and approximated 100% of target. Any accrued but unpaid dividend equivalents with respect to any such award of time-based RSUs or performance-based RSUs were assumed by T-Mobile at the Effective Time and became an obligation with respect to the applicable award of RSUs in respect of shares of T-Mobile common stock. d by the Exchange Ratio (as defined in the d On April 22, 2020, we filed a Form S-8 to register a total of 25,304,224 shares of common stock, representing those covered by the Sprint Corporation 1997 Long-Term Stock Incentive Program, the Sprint Corporation 2007 Omnibus Incentive Plan (the “Sprint 2007 Plan”) and the Sprint Corporation Amended and Restated 2015 Omnibus Incentive Plan (the “2015 Plan”) that T- Mobile assumed in connection with the closing of the Merger. This included 7,043,843 shares of T-Mobile common stock issuablea T-Mobile or its subsidiaries who were directors, officers, employe prior to the Effective Time, as well as (i) 12,420,945 shares of T-Mobile common stock that remain availablea the 2015 Plan and (ii) 5,839,436 additional shares of T-Mobile common stock subjeu that may become availablea or are settled in cash. upon exercise or settlement of the Assumed Awards held by current directors, officers, employees and consultants of es and consultants of Sprint or its subsidiaries immediately for issuance under the 2015 Plan if any awards under the 2015 Plan are forfeited, lapsea ct to awards granted under the 2015 Plan for issuance under unexercised m The following activity occurred under the Incentive Plans during the year ended December 31, 2021: Timeii -Based Restricted Stock SS Units and Restricted Stock SS Awards (in millions, except shares, per share and contractual life amounts) Nonvested, December 31, 2020 Granted Vested Forfeited Nonvested, December 31, 2021 Number of Units or Awards Weighted- Average Grant Date Fair Value 10,101,222 $ 4,884,185 (5,273,134) (818,985) 8,893,288 84.61 121.40 79.67 104.40 105.96 Weighted- Average Remaining Contractual Term (Years) Aggregate Intrinsic Value 0.9 $ 1,362 0.8 1,031 99 Perfor rmance-Based Restricted StocSS k UnitsUU and Restricted StocSS k Awards (in millions, except shares, per share and contractual life amounts) Nonvested, December 31, 2020 Granted Performance award achievement adjustments (1) Vested Forfeited Nonvested, December 31, 2021 Number of Units or Awards Weighted- Average Grant Date Fair Value 3,173,101 $ 433,116 576,866 (2,236,918) (56,608) 1,889,557 86.58 125.34 64.44 69.14 99.51 108.97 Weighted- Average Remaining Contractual Term (Years) Aggregate Intrinsic Value 1.0 $ 428 1.0 219 (1) Represents PRSUs granted prior to 2021 for which the performance achievement period was completed in 2021, resulting in incremental unit awards. These PRSU awards are also included in the amount vested in 2021. PRSUs included in the tablea performance outcomes. Weighted-average grant date fair value of RSU and PRSU awards assumed through acquisition is based on the fair value on the date assumed. above are shown at target. Share payout can range from 0% to 200% based on different Payment of the underlying shares in connection with the vesting of RSU and PRSU awards generally triggers a tax obligation for the employee, which is required to be remitted to the relevant tax authorities. With respect to RSUs and PRSUs settled in shares, we have agreed to withhold shares of common stock otherwise issuable under the RSU and PRSU awards to cover certain of these tax obligations, with the net shares issued to the employee accounted forff withheld 2,511,512, 4,441,107 and 2,094,555 shares of common stock to cover tax obligations associated with the payment of shares upon vesting of stock awards and remitted cash of $316 million, $439 million and $156 million to the appropriate tax authorities forff the years ended December 31, 2021, 2020 and 2019, respectively. as outstanding common stock. We Employee Stock Purchase Plan Our ESPP allows eligible employees to contribute up tu 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 2,189,542, 2,144,036 and 2,091,650 for the years ended December 31, 2021, 2020 and 2019, respectively. As of December 31, 2021, the number of securities remaining availablea for future sale and issuance under the ESPP was 7,064,316. Sprint’s ESPP was terminated prior to the Merger close and legacy Sprint employees were eligible to enroll in our ESPP on August 15, 2020. o 15% of their eligible earnings toward the semi-annual purchase of our Our ESPP provides for an annual increase in the aggregate number of shares of our common stock reserved forff authorized for issuance thereunder as of the first day of each fisff cal year (beginning with fisca (i) 5,000,000 shares of our common stock, and (ii) the number of shares of T-Mobile 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 each of January 1, 2020 and January 1, 2021. l year 2016) equal to the lesser of sale and ff 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, the Layer3 TV, Inc. 2013 Stock Plan, the Sprint 2007 Plan and the Sprint 2015 Plan (collectively, the “Stock Option Plans”). No stock option awards were granted during the year ended December 31, 2021. d 100 The folff lowing activity occurred under the Stock Option Plans: Outstanding at December 31, 2020 Exercised Expired/canceled Outstanding at December 31, 2021 Exercisable at December 31, 2021 Shares Weighted- Average Exercise Price 918,695 $ (218,495) (4,356) 695,844 695,844 51.77 48.02 40.74 53.01 53.01 Weighted- Average Remaining Contractual Term (Years) 4.0 3.3 3.3 Weighted-average grant date fair value of stock options assumed through acquisition is based on the fair value on the date assumed. Stock options exercised under the Stock Option Plans generated proceeds of approximately $10 million, $48 million and $1 million for the years ended December 31, 2021, 2020 and 2019, respectively. The grant-date faiff restricted stock units and stock options, from the Merger was approximately $163 million. r value of share-based incentive compensation awards attributable to post-combination services including Pension and Other Postretirement Benefits Plans Upon the completion of our Merger with Sprint, we acquired the assets and assumed the liabila Retirement Pension Plan (the “Pension Plan”) as well as other postretirement employee benefit plans. As of December 31, 2005, the Pension Plan was amended to freff eze benefit plan accruals forff obligations assumed were recognized at fair value on the Merger close date. the participants. The plan assets acquired and ities associated with the Sprint The objective for the investment portfolio of the Pension Plan is to achieve a long-term nominal rate of return, exceeds the Pension Plan's long-term expected rate of returnt investment strategy is governed by an asset allocation policy, whereby a targeted allocation percentage is assigned to each asset class as follows: 41% to equities; 44% to fixed income investments; 11% to real estate, infrastructuret and private assets; and 4% to other investments including hedge funds. Actual allocations are allowed to deviate from target allocation percentages within a range for each asset class as defined in the investment policy. The long-term expected rate of returnt 4% and 5% for the years ended December 31, 2021 and 2020, respectively, while the actual rate of returnt 8% and 21% for the years ended December 31, 2021 and 2020, respectively. The long-term expected rate of returnt investments for funding purposes is 5% for the year ended December 31, 2022. s, that funding purposes. To meet this objective, our on investments forff on plan assets was on plan assets was net of feeff on t The components of net expense recognized forff the Pension Plan were as follows: (in millions) Interest on projected benefit obligations Expected return on pension plan assets Net pension expense Year Ended December 31, 2021 2020 $ $ 61 (56) 5 $ $ 52 (45) 7 The net expense associated with the Pension Plan is included in Other expense, net on our Consolidated Statements of Comprehensive Income. r value on a recurring basis, which is determined using quoted market prices r values. As of December 31, 2021, 14% of the investment portfolio was valued at quoted prices in active identical assets, 81% was valued using quoted prices for similar assets in active or inactive markets, or other Investments of the Pension Plan are measured at faiff or estimated faiff markets forff observable inputs, and 5% was valued using unobservablea of which used the net asset value per share (or its equivalent) as a practical expedient to measure the fair value. As of December 31, 2020, 12% of the investment portfolio was valued at quoted prices in active markets forff using quoted prices for similar assets in active or inactive markets, or other observablea unobservable inputs that are supported by little or no market activity, the majori (or its equivalent) as a practical expedient to measure the fair value. inputs, and 3% was valued using ty of which used the net asset value per share inputs that are supported by little or no market activity, the majority identical assets, 85% was valued a The fair values of our Pension Plan assets and certain other postretirement benefit plan assets in aggregate were $1.5 billion and $1.4 billion and our accumulated benefit obligations in aggregate were $2.2 billion and $2.3 billion as of December 31, 2021 101 and 2020, respectively. As a result, the plans were underfunded by approximately $633 million and $828 million as of December 31, 2021 and 2020, respectively, and were recorded in Other long-term liabilities on our Consolidated Balance Sheets. In determining our pension obligation for both the years ended December 31, 2021, and 2020, we used a weighted- average discount rate of 3%. During the years ended December 31, 2021 and 2020, we made contributions of $83 million and $58 million, respectively, to the benefit plans. We expect to make contributions to the Plan of $37 million through the year ending December 31, 2022. Future benefits expected to be paid are approxim total for the years ending December 31, 2023 and 2024, $215 million in total for the years ending December 31, 2025 and 2026, and $562 million in total forff ately $100 million for the year ending December 31, 2022, $206 million in the years ending December 31, 2027 through December 31, 2031. a Employee Retirement Savings Plan We sponsor retirement savings plans for the majori similar plans. The plans allow employe specified guidelines. The plans provide that we match a percentage of employee contributions up to certain limits. Employe r matching contributions were $190 million, $179 million and $119 million for the years ended December 31, 2021, 2020 and 2019, respectively. es to contribute a portion of their pre-tax and post-tax income in accordance with ty of our employees under Section 401(k) of the Internal Revenue Code and m m a Note 12 – Discontinued Operations On July 26, 2019, we entered into an Asset Purchase Agreement with Sprint and DISH. On June 17, 2020, T-Mobile, Sprint and DISH entered into the First Amendment. Pursuant to the First Amendment to the Asset Purchase Agreement, T-Mobile, Sprint and DISH agreed to proceed with the closing of the Prepaid Transaction in accordance with the Asset Purchase Agreement on July 1, 2020, subject to the terms and conditions of the Asset Purchase Agreement and the terms and conditions of the Consent Decree. On July 1, 2020, pursuant to the Asset Purchase Agreement, upon the Prepaid Transaction. Upon closing of the Prepaid Transaction, we received $1.4 billion from DISH for the Prepaid Business, subject to a working capia tal adjustment. The close of the Prepaid Transaction did not have a significant impact on our Consolidated Statements of Comprehensive Income. ct to the conditions thereof, we completed the terms and subjeu u s originated pursuant to financed equipment purchases by customers The assets of the Prepaid Business included EIP receivablea of the Prepaid Business. At the time of the Prepaid Transaction, DISH did not hold certain licenses required to purchase or originate such contracts. In order to transfer the economics of the contracts to DISH without transferring ownership of them, the parties entered into a Participation Agreement under which we agreed to transfer a 100% participation interest in the contracts to DISH. Under the terms of the agreement, DISH retains all cash flows collected on these assets and there is no recourse against us for any credit losses on such loans. The proceeds received fromff DISH in exchange for this participation interest was a component of total consideration received for the Prepaid Transaction. We will temporarily continue to originate equipment installment contracts on DISH’s behalf under the same terms in exchange for an amount equal to the initial outstanding principal balance of the originated contracts, again without recourse against us for any credit losses. Of the total $1.4 billion of proceeds received under the Prepaid Transaction, approximately $162 million was allocated to the EIP receivables to which we transferred DISH a 100% participation interest. We accounted for this portion of the proceeds as a secured borrowing and present it in Other, net, within Net cash provided by (used in) finaff Statements of Cash Flows accordingly. The remaining $1.2 billion was allocated to the divested net assets of the Prepaid Business. The net cash received for the Prepaid Business is presented in Proceeds from the divestiture of prepaid business within Net cash used in investing activities on our Consolidated Statements of Cash Flows. ncing activities on our Consolidated The results of the Prepaid Business include revenues and expenses directly attributable to the operations disposed. Corporate and administrative expenses, including Interest expense, not directly attributable to the operations were not allocated to the Prepaid Business. The results of the Prepaid Business fromff April 1, 2020, through December 31, 2020, are presented in Income from discontinued operations, net of tax on our Consolidated Statements of Comprehensive Income. There was no income from discontinued operations for the years ended December 31, 2021 or 2019. 102 The components of discontinued operations from the Merger close date of April 1, 2020, through December 31, 2020, were as follows: (in millions) Major classes of line items constituting pretax income from discontinued operations Year Ended December 31, 2020 Prepaid revenues Roaming and other service revenues Total service revenues Equipment revenues Total revenues Cost of services Cost of equipment sales Selling, general and administrative Total operating expenses Pretax income from discontinued operations Income tax expense Income from discontinued operations $ $ 973 27 1,000 270 1,270 25 499 314 838 432 (112) 320 Net cash provided by operating activities fromff the Prepaid Business included in the Consolidated Statements of Cash Flows for the year ended December 31, 2020, were $611 million, all of which relates to the operations of the Prepaid Business during the three months ended June 30, 2020. There were no cash flows from investing or financing activities related to the Prepaid Business for the year ended December 31, 2020. ii Continui ngii Involvement Upon the closing of the Prepaid Transaction, we and DISH entered into (i) a License Purchase Agreement pursuant to which (a) ately $3.6 billion in a transaction to DISH has the option to purchase certain 800 MHz spectrum licenses for a total of approxim l to be filff ed three years be completed, subject to certain additional closing conditions, following an application for FCC approva following the closing of the Merger and (b) we will have the option to lease back fromff 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 our provisioning 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 provisioning of network services to customers of the Prepaid Business forff 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 us, subject to obtaining all necessary third-party consents, for a period of up to five years following the closing of the Prepaid Transaction. a period of up to seven years following the a a In the event DISH breaches the License Purchase Agreement or fails to deliver the purchase price folff waiver of all closing conditions, DISH’s sole liabila of approximately $72 million. Additionally, if DISH ity is to pay us a feeff does not exercise the option to purchase the 800 MHz spectrum licenses, we have an obligation to offer the licenses for sale through an auction. If the specified minimum price of $3.6 billion was not met in the auction, we would retain the licenses. As the sale of 800 MHz spectrum licenses is not expected to close within one year, the criteria for presentation as an asset held for sale is not met. lowing the satisfaction or Cash flows associated with the Master Network Services Agreement and Transition Services Agreement are included in Net cash provided by operating activities on our Consolidated Statements of Cash Flows. Note 13 – Income Taxes Our sources of Income (loss) before income taxes were as follow ff s: (in millions) U.S. income Foreign (loss) income Income from continuing operations before income taxes Year Ended December 31, 2021 2020 2019 $ $ 3,401 (50) 3,351 $ $ 3,493 37 3,530 $ $ 4,557 46 4,603 103 Income tax expense is summarized as follows: (in millions) Current tax (expense) benefit Federal State Foreign Total current tax expense Deferred tax (expense) benefit Federal State Foreign Total deferred tax expense Total income tax expense Year Ended December 31, 2021 2020 2019 $ (22) $ 17 $ (89) (19) (130) (541) 327 17 (197) (84) (10) (77) (676) (34) 1 (709) $ (327) $ (786) $ 24 (70) 2 (44) (954) (125) (12) (1,091) (1,135) The reconciliation between the U.S. federal statutory income tax rate and our effecff tive income tax rate is as follows: Federal statutory income tax rate State taxes, net of federal benefit Effect of law and rate changes Change in valuation allowance Foreign taxes, net of federal benefit Permanent differences Federal tax credits, net of reserves Equity-based compensation Non-deductible compensation Other, net Effective income tax rate Year Ended December 31, 2021 2020 2019 21.0 % 21.0 % 21.0 % 4.5 (1.7) (10.7) 0.1 0.3 (2.5) (2.6) 1.5 (0.1) 4.8 (0.8) (2.6) 0.3 0.4 (0.9) (2.5) 2.3 0.3 5.1 0.4 (1.8) 0.3 0.6 (0.8) (0.6) 0.6 (0.1) 9.8 % 22.3 % 24.7 % Significant components of deferre ff d income tax assets and liabilities, tax effected, are as follow ff s: (in millions) Deferred tax assets Loss carryforwards Lease liabilities Property and equipment 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 consolidated balance sheets as: Deferred tax liabilities 104 December 31, 2021 December 31, 2020 $ 4,414 $ 7,717 — 1,280 404 2,888 16,703 (435) 16,268 18,060 380 6,761 769 514 $ $ 26,484 10,216 $ 4,540 8,031 90 1,348 411 2,665 17,085 (878) 16,207 17,518 — 7,239 912 504 26,173 9,966 10,216 $ 9,966 $ $ $ $ ff gn NOL carryforwards of $37 million, expiring through 2041. Federal and certain state As of December 31, 2021, we have tax effected federal net operating loss (“NOL”) carryforwards of $3.5 billion, state NOL carryforwards of $1.4 billion and forei NOLs generated in and after 2018 do not expire. As of December 31, 2021, our tax effected federal and state NOL carryforwards for financial reporting purposes were approxim NOL carryforwards for federal and state income tax purposes, dued no differences in our foreign NOL carryforwards for financial reporting purposes and our NOL carryforwards for foreign income tax purposes as of December 31, 2021. The unrecognized tax benefit amounts exclude offsetting tax effects of $132 million in other jurisdictions. ately $221 million and $473 million, respectively, less than our to unrecognized tax benefits of the same amount. There were a As of December 31, 2021, we have research and development, forei a combined value of $581 million for federal income tax purposes, an immaterial amount of which begins to expire in 2023. gn tax and other general business credit carryforwards with ff As of December 31, 2021, 2020 and 2019, our valuation allowance was $435 million, $878 million and $129 million, respectively. The change from December 31, 2020 to December 31, 2021 primarily related to a reductd allowance against deferred tax assets in certain state jurisdictions resulting from legal entity reorganizations of legacy Sprint entities. The change from December 31, 2019 to December 31, 2020 primarily related to $851 million of deferred tax assets acquired via the Merger for which a valuation allowance was deemed necessary, partially offset by a reduction in the valuation allowance against deferred tax assets in federal and certain other jurisdictions associated with additional tax attribute utilization and expiration. It is possible that our valuation allowance may change within the next 12 months. ion in the valuation We file income tax returns in the U.S. federal jurisdiction and in various state and foreign jurisdictions. We are currently under examination by the IRS and 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. tax returns t examination. U.S. federal, state and foreign examination for years prior to 2002 are generally closed. through the 2009 tax year; however, NOL and other carryforwards for certain audited periods remain open for The IRS has concluded its audits of our federal ff A reconciliation of the beginning and ending amount of unrecognized tax benefits were as follow ff s: (in millions) Unrecognized tax benefits, beginning of year Gross increases to tax positions in prior periods Gross decreases to tax positions in prior periods Gross increases to current period tax positions Gross increases due to current period business acquisitions Gross decreases due to settlements with taxing authorities Unrecognized tax benefits, end of year Year Ended December 31, 2021 2020 2019 1,159 $ 514 $ 73 (123) 72 36 — 6 (28) 45 624 (2) 1,217 $ 1,159 $ 462 — — 64 — (12) 514 $ $ As of December 31, 2021, 2020 and 2019, we had $932 million, $857 million and $310 million, respectively, in unrecognized tax benefits that, if recognized, would affecff t our annual effective tax rate. Penalties and interest on income tax assessments are included in Selling, general and administrative and Interest expense, respectively, on our Consolidated Statements of Comprehensive Income. The accrued interest and penalties associated with unrecognized tax benefits are insignificant. Note 14 – SoftBank Equity Transaction On June 22, 2020, we entered into a Master Framework Agreement (the “Master Framework Agreement”) by and among the Company, SoftBank, SoftBank Group Capia tal Ltd, a wholly-owned subsidiary of SoftBank (“SBGC”), Delaware Project 4 L.L.C., a wholly-owned subsidiary of SoftBank, Delaware Project 6 L.L.C., a wholly-owned subsidiary of SoftBank, Claure Mobile LLC (“CM LLC”), DT, and T-Mobile Agent LLC, a wholly-owned subsidiary of the Company. The Master Framework Agreement and related transactions were entered into to facilitate SoftBank’s monetization of a portion of our common stock held by SoftBank (the “SoftBank Monetization”). In connection with the Master Framework Agreement, DT waived the restriction on the transfer under its Proxy, Lock-Up and ROFR Agreement, dated April 1, 2020, with SoftBank (the “SoftBank Proxy Agreement”) with respect to approxi (the “Released Shares”). Upon hthe lclose of hthe SoftB kank for $304 million for our dditi tax, of $230 million was rec dordedd as Addi i ffering ((a ds defiineff lrole iin fa icililita iti gng hthe SoftB kank Monetiizatiion. hThe p yayment receiived fd fromff mately 198 million shares of our common stock held by SoftBank ipaid id-in ca ipia tall on our Consolidated Balance Sheets )ow), we rec iei dved a p yayment from Public E iquityy Offering dand iis presentedd as a knk, net of ff SoftBa a bli d bd b lel lonal 105 dreduc ition of Repurchhases of common st kock iin NNet cashh p Statements of Cash Flows. rovided bd by (y (used id i )n) fifinancinging ac iti ivi ities on our Consolidated id Under the terms of the Master Framework Agreement and the agreements contemplated thereby, SBGC sold the Released Shares to us, and we participated in the following transactions: Public Equity Ott ffO erff ing On June 26, 2020, we completed a registered public offering of approximately 154.1 million shares of our common stock ( hthe “P bliublic E iquityy Offering” repurchhase an equall numbber of iissuedd a dnd outstanding purchase gAgreement d, dat ded as of June 22, 2020 ( h(the Re nding hshares of our common st kock from SBGC, pursuant to a Shhare iprice of $$103.00 per hshare. hThe net proce deds of hthe h“Share Repurchhase Aggreement”)), bbetween us Public E iquityy Offering ffering were usedd to ffering”)) at a dand SBGC. bli h Mandatorytt Exchangeable Offeringn Concurrent with the Public Equity Offering, we sold approxim trust. The net proce deds from hthe s lale of hshares to thhe trust hshares of our common st kock from SBGC. a r were usedd to rep ately 19.4 million shares of our common stock to a third-party standi gng di number of if issuedd a dnd out hurchase an eq lual b The trust issued mandatory exchangeable trust securities, which entitle holders to receive quarterly distributions from the trust and a finaff l mandatory exchange price to be settled on June 1, 2023 (“Mandatory Exchangeablea Offering”). The trust was required to use a portion of the net proceeds from the Mandatory Exchangeable Offering to purchase U.S. Treasury securities, to fund quarterly distributions on the mandatory exchangeable trust securities, and the holders of the mandatory exchangeable trust securities will be entitled to a finff al mandatory exchange amount on June 1, 2023 that will depend on the daily volume-weighted average price of shares of our common stock. The sale of shares through the Public Equity Offering and to the trust SBGC. These simultaneous transactions did not result in a net change to our treasury shares or shares of common stock outstanding. occurred simultaneously with the purchase of shares fromff rr As these transactions occurred with separate counterparties, the exchange of shares and cash are recorded on a gross basis on our Consolidated Statement of Stockholders’ Equity and Consolidated Statements of Cash Flows, respectively. The shares sold are presented in Shares issued in secondary offering and the shares purchased from SBGC are presented in Shares repurchased from SoftBank on our Consolidated Statement of Stockholders’ Equity. The cash received from the sale of shares is presented in Issuance of common stock and the cash paid to purchase shares fromff stock within Net cash provided by (used in) finaff ncing activities on our Consolidated Statements of Cash Flows. SoftBank are presented in Repurchases of common The Company is not affilff no ongoing interest, economic or otherwise, in the trust rr securities. iated with the trust, will not retain any proceeds from the offering of the trust securities, and will have Righi ts Offering The Master Framework Agreement provides forff Offering”) resulting in the sale of 19,750,000 shares of our common stock to our stockholders (other than SoftBank, DT and Marcelo Claure and their respective affiliates, who agreed to waive their abia lity to exercise or transfer such rights). The subscription rights provided the stockholders the option to purchase one share of common stock for every 20 shares of common stock owned, at the same price per share as the common stock sold in the Public Equity Offering of $103.00 per share. the issuance of registered, transferable subscription rights (the “Rights The Rights Offering exercise period expired on July 27, 2020. On August 3, 2020, the Rights Offering closed, resulting in the sale of 19,750,000 shares of our common stock. The net proceeds from the Rights Offering were used to purchase an equal number of shares from SBGC pursuant to the Share Repurchase Agreement. Marcelo Cll lauCC re The Master Framework Agreement provided forff the purchase of 5.0 million shares of our common stock by Marcelo Claure, a member of our board of directors, from us at the same price per share as the common stock sold in the Public Equity Offering of $103.00 per share. 106 Following receipt of the necessary regulatory approvals on July 16, 2020, the sale of shares to Marcelo Claure occurred simultaneously with our purchase of an equivalent number of shares fromff Share Repurchase Agreement. SBGC at the same price per share pursuant to the DT Call Oll ptiOO on In exchange for DT consenting to the transfer of the Released Shares and as provided forff in the Master Framework Agreement, DT received direct and indirect call options over up to approximately 101.5 million shares of our common stock held by SBGC. The arrangement provided DT with a fixed-price call option to purchase up to approximately 44.9 million shares at a price of $101.46 per share indirectly fromff SBGC through a back-to-back arrangement where (i) DT could purchase such shares fromff (the “DT Fixed-Price Call Option”) and (ii) we would fulfi simultaneously purchasing the same number of shares on the same economic terms from SBGC (the “T-Mobile Fixed-Price Call Option”). In addition, DT has a floaff directly. ting-price call option to purchase up to approximately 56.6 million shares fromff ll our obligations under the DT Fixed-Price Call Option by SBGC us ff The DT Fixed-Price Call Option and the T-Mobile Fixed-Price Call Option represented freeff recorded at fair value and marked-to-market each period. As the mark-to-market valuations of the T-Mobile Fixed-Price Call Option and the DT Fixed-Price Call Option moved in equal and offsetting directions, there was no net impact on our Consolidated Statements of Comprehensive Income. -standing derivatives and were On October 6, 2020, we assigned our rights under the T-Mobile Fixed-Price Call Option to DT and DT terminated its right to purchase shares from us under the DT Fixed-Price Call Option, resulting in derecognition of the related derivative asset and liability in equal and offsetting amounts of $1.0 billion such that there was no net impact to our Consolidated Statements of Comprehensive Income. Ownership Fii ll ollFF owin g tn hett SoftBo ank Monetization ii The SoftBank Proxy Agreement remains in effect with respect to the remaining shares of our common stock held by SoftBank. In addition, on June 22, 2020, DT, CM LLC, and Marcelo Claure entered into a Proxy, Lock-Up and ROFR Agreement (the “Claure Proxy Agreement,” together with the SoftBank Proxy Agreement, the “Proxy Agreements”), pursuant to which any shares of our common stock acquired after June 22, 2020 by Mr. Claure or CM LLC, an entity controlled by Mr. Claure, other than shares acquired as a result of Mr. Claure’s role as a director or officer of the Company, will be voted in the manner as directed by DT. As of December 31, 2021, DT and SoftBank held, directly or indirectly, approximately 46.7% and 4.9%, respectively, of the outstanding T-Mobile common stock, with the remaining approximately 48.4% of the outstanding T-Mobile common stock held by other stockholders. Accordingly, as a result of the Proxy Agreements, DT has voting control as of December 31, 2021 over approximately 52.0% of the outstanding T-Mobile common stock. 107 Note 15 – Earnings Per Share The computation of basic and diluted earnings per share was as follows: (in millions, except shares and per share amounts) Income from continuing operations Income from discontinued operations, net of tax Net income Weighted-average shares outstanding – basic Effect of dilutive securities: Outstanding stock options and unvested stock awards Weighted-average shares outstanding – diluted Basic earnings per share: Continuing operations Discontinued operations Earnings per share – basic Diluted earnings per share: Continuing operations Discontinued operations Earnings per share – diluted Potentially dilutive securities: Outstanding stock options and unvested stock awards SoftBank contingent consideration (1) $ $ $ $ $ $ Year Ended December 31, 2021 2020 2019 3,024 — 3,024 $ $ 2,744 320 3,064 $ $ 3,468 — 3,468 1,247,154,988 1,144,206,326 854,143,751 7,614,938 10,543,102 9,289,760 1,254,769,926 1,154,749,428 863,433,511 2.42 — 2.42 2.41 — 2.41 $ $ $ $ 2.40 0.28 2.68 2.37 0.28 2.65 $ $ $ $ 4.06 — 4.06 4.02 — 4.02 139,619 48,751,557 80,180 36,630,268 16,359 — (1) Represents the weighted-average SoftBank Specified Shares that are contingently issuable from the acquisition date of April 1, 2020. As of December 31, 2021, 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, 2021 and 2020. Potentially dilutive securities were not included in the computation of diluted earnings per share if to do so would have been anti-dilutive. The SoftBank Specified Shares Amount of 48,751,557 shares of T-Mobile common stock was determined to be contingent consideration for the Merger and is not dilutive until the defined volume-weighted average price per share is reached. Note 16 – Leases Lessee non-cancelable operating and finaff ncing leases for cell sites, switch sites, retail stores, network equipment terms that generally extend through 2035. Additionally, we lease dark fiber through non- ty of cell site leases have a term of five to 15 years with several renewal options that can extend the lease term from five to 35 years. In We are a lessee forff and office facilities with contractual cancelablea non-cancelablea addition, we have financing leases for network equipment that generally have a non-cancelable lease term of two to fiveff The financing leases do not have renewal options and contain a bargain purchase option at the end of the lease. terms that generally extend through 2041. The majori operating leases with contractual a t t years. On September 15, 2021, we modified the terms of one of our master lease agreements, which resulted in a $1.0 billion advance rent payment. Our operating lease liabia lities were reduced as a result of this prepayment. Subsequent to December 31, 2021, on January 3, 2022, we entered into the Crown Agreement with CCI that modified the terms of our leased towers from CCI. The Crown Agreement modifies the monthly rental payment we will pay for sites currently leased by us, extends the non-cancellable lease term for the majority of our sites through December 2033 and will allow us the flexibility to facilitate our network integration and decommissioning activities through new site builds and termination of duplicate tower locations. The initial non-cancellablea term is through December 31, 2033, followed by optional renewals. As a result of this modification, we will remeasure the associated right-of use assets and lease liabia lities with an expected increase of 108 between $4.8 billion to $5.4 billion to each on the effective date of the modification, with a corresponding gross increase to both deferred tax liabilities and assets of between $1.2 billion to $1.4 billion. 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 liabila ities as of December 31, 2021, were as follows: (in millions) Twelve Months Ending December 31, 2022 2023 2024 2025 2026 Thereafter Total lease payments Less: imputed interest Total Year Ended December 31, 2021 2020 2019 5,921 $ 4,438 $ 2,558 738 69 807 429 681 81 762 328 523 82 605 243 7,157 $ 5,528 $ 3,406 $ $ Year Ended December 31, 2021 2020 2019 9 3 3.6 % 2.5 % 10 3 3.9 % 3.3 % 6 3 4.8 % 4.0 % Operating Leases Finance Leases $ 3,868 $ 1,161 4,237 3,846 3,343 2,971 17,387 35,652 6,409 $ 29,243 $ 800 505 128 36 29 2,659 84 2,575 Interest payments for finaff 2020 and 2019, respectively. ncing leases were $69 million, $79 million and $82 million for the years ended December 31, 2021, As of December 31, 2021, we have additional operating leases for commercial properties that have not yet commenced with future lease payments of approximately $98 million. As of December 31, 2021, we were contingently liable for future ground lease payments related to certain tower obligations. These contingent obligations are not included in the above tabla e as the amounts owed are contractually owed by Crown Castle International Corp. based on the subleasing arrangement. See Note 9 – Tower Obligations for further information. 109 Lessor The components of leased wireless devices under our Leasing Programs were as foll ff ows: (in millions) Leased wireless devices, gross Accumulated depreciation Leased wireless devices, net Average Remaining Useful Life 8 months December 31, 2021 December 31, 2020 $ $ 3,832 (2,373) 1,459 $ $ 6,989 (2,170) 4,819 For equipment revenues from the lease of mobile communication devices, see Note 10 – Revenue from Contracts with Customers. Futuret minimum payments expected to be received over the lease term related to 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, 2022 2023 Total Note 17 – Commitments and Contingencies Purchase ComCC mitmii ents Expected Payments $ $ 402 44 446 We have commitments forff non-dedicated transportation lines with varying expiration terms that generally extend through 2031. In addition, we have commitments to purchase wireless devices, network services, equipment, software, marketing sponsorship agreements and other items in the ordinary course of business, with various terms through 2043. the twelve-month periods ending December 31, 2023 and 2024, $2.1 billion in total forff Our purchase commitments are approximately $4.7 billion for the twelve-month period ending December 31, 2022, $5.6 billion in total forff ending December 31, 2025 and 2026, and $1.6 billion in total thereafter. These amounts are not reflective of our entire anticipated purchases under the related agreements but are determined based on the non-cancelablea amounts to which we are contractually obligated. the twelve-month periods quantities or termination Subsequent to December 31, 2021, on January 3, 2022, we entered into the Crown Agreement with CCI that will enable us to lease towers from CCI through December 2033, followed by optional renewals. The Crown Agreement amends the pricing for our non-dedicated transportation lines, which includes lit fibff er backhaul and small cell circuits. We have committed to an annual volume commitment to execute and deliver 35,000 small cell contracts, including upgrades to existing locations, over the next five years. The minimum commitment for small cells is $1.8 billion through 2039. Spectrumtt Leases In connection with the Merger, we assumed certain spectrum lease contracts from Sprint that include service obligations to the lessors. Certain of the spectrum leases provide for minimum lease payments, additional charges, renewal options and escalation clauses. Leased spectrum agreements have varying expiration terms that generally extend through 2050. We expect that all renewal periods in our spectrum leases will be exercised by us. Our spectrum lease and service credit commitments, including renewal periods, are approximately $350 million for the twelve- month period ending December 31, 2022, $611 million in total for the twelve-month periods ending December 31, 2023 and 2024, $591 million in total for the twelve-month periods ending December 31, 2025 and 2026 and $4.7 billion in total thereafter. We accrue a monthly obligation for the services and equipment based on the total estimated available service credits divided by the term of the lease. The obligation is reduced by services provided and as actual invoices are presented and paid to the lessors. The maximum remaining service commitment on December 31, 2021 was $85 million and is expected to be incurred over the term of the related lease agreements, which generally range from 15 to 30 years. t 110 Merger CommCC itmett nts a ls of the Transactions, we have commitments and other obligations ank and DISH Network Corporation (“DISH”) and entered by the U.S. District Court for the In connection with the regulatory proceedings and approva to various state and federal agencies and certain nongovernmental organizations, including pursuant to the Consent Decree agreed to by us, DT, Sprint, SoftBff District of Columbia, and the FCC’s memorandum opinion and order approvi These commitments and obligations include, among other things, extensive 5G network build-out commitments, obligations to deliver high-speed wireless services to the vast majority of Americans, including Americans residing in rural areas, and the marketing of an in-home broadband product where spectrum capaa security, pricing, service, employment and support of diversity initiatives. Many of the commitments specify time frames for compliance. Failure to fulfill our obligations and commitments in a timely manner could result in substantial finff es, penalties, or other legal and administrative actions. ng our applications for approval of the Merger. . Other commitments relate to national city is availablea a We expect that our monetary commitments associated with these matters are approximately $11 million for the twelve-month period ending December 31, 2022, $12 million in total for the twelve-month periods ending December 31, 2023 and 2024. We do not expect any amounts after December 31, 2024. These amounts do not represent our entire anticipated costs to achieve specified network coverage and performance requirements, employm m rate plans, but represent only those amounts for which we are required to make a specified payment in connection with our commitments or settlements. ent targets or commitments to provide access to affordablea ii Continge ncies and Litigat iontt tt i Litigati on and Regulat e ory Matters r We are involved in various lawsuits and disputes, claims, government agency investigations and enforcement actions, and other proceedings (“Litigation and Regulatory 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. Those Litigation and Regulatory Matters are at various stages, and some of ration, hearing, or other adjudication that could result in fines, penalties, or awards of monetary them may proceed to trial, arbit 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. The accruals are reflected in the consolidated finaff ncial statements but they are not considered to be, individually or in the aggregate, material. An accrual is establia shed 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 and Regulatory Matters that may result in a contingent gain, we recognize such gains in the consolidated finaff when the gain is realized or realizablea Regulatory Matters as they are incurred. Except as otherwise specified below, we do not expect that the ultimate resolution of these Litigation and Regulatory Matters, individually or in the aggregate, will have a material adverse effect on our financial position, but we note that an unfavorable outcome of some or all of the specific matters identified below could have a material adverse impacm t 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 futur . We recognize legal costs expected to be incurred in connection with Litigation and record. For Litigation ncial statements e. ff t On February 28, 2020, we received a Notice of Apparent Liability forff Forfeituret proposed a penalty against us for allegedly violating section 222 of the Communications Act and the FCC’s regulations governing the privacy of customer information. In the first quarter of 2020, we recorded an accrual for an estimated payment amount. We maintained the accrual as of December 31, 2021, and that accrual was included in Accounts payablea and accruedrr liabilities on our Consolidated Balance Sheets. and Admonishment from the FCC, which On April 1, 2020, in connection with the closing of the Merger, we assumed the contingencies and litigation matters of Sprint. Those matters include a wide variety of disputes, claims, governme nt agency investigations and enforcement actions, and other r proceedings. These matters include, among other things, certain ongoing FCC and state government agency investigations into Sprint’s Lifeli ff ne program. In September 2019, Sprint notified the FCC that it had claimed monthly subsidies forff subscribers even though these subscribers may not have met usage requirements under Sprint's usage policy for the Lifeline program, due to an inadvertent coding issue in the system used to identify qualifying subscriber usage that occurred in July 2017 while the system was being updated. Sprint has made a number of payments to reimburse the federal government and certain states for excess subsidy payments. serving 111 We note that pursuant to Amendment No. 2 to the Business Combination Agreement, SoftBank agreed to indemnify us against certain specified matters and losses, including those relating to the Lifeline matters described above. Resolution of these matters could require making additional reimbursements and paying additional fines and penalties, which we do not expect to have a significant impact on our financial results. We expect that any additional liabila ities related to these indemnified matters would be indemnified and reimbursed by SoftBank. See Note 2 – Business Combinations for further information. On June 1, 2021, a putative shareholder class action and derivative lawsuit was filed in the Delaware Court of Chancery, Dinkevich v. Deutsche Telekom AG, eG t al., Case No. C.A. No. 2021-0479, against DT, SoftBank and certain of our current and former officers and directors, asserting breach of fiduciary duty claims relating to the repricing amendment to the Business Combination Agreement, and to SoftBank’s monetization of its T-Mobile shares. We are also named as a nominal defenda ff the case. We are unable to predict the potential outcome of these claims. We intend to vigorously defend this lawsuit. nt in a Public Utilities Commission (the “CPUC”)’s April 2020 decision concerning the T-Mobile-Sprint merger. We In October 2020, we notified MVNOs using the legacy Sprint CDMA network that we planned to sunset that network on December 31, 2021. In response to that notice, DISH, which has Boost Mobile customers who use the legacy Sprint CDMA network, has made several efforts to prevent us from sunsetting the CDMA network until mid-2023, including by urging the U.S. Department of Justice to move for a finff ding of contempt under the April 1, 2020 Final Judgment entered by the U.S. District Court for the District of Columbia, and by pursuing a Petition for Modification and related proceedings pursuant to the Californi ff disagree with the merits of DISH’s positions and have opposed them. On October 22, 2021, we announced that we would delay the sunset of the legacy Sprint CDMA network for three months, until March 31, 2022, to, among other things, help ensure that DISH and other MVNOs fulfill their contractual responsibilities and transition customers off the legacy Sprint CDMA network before the sunset. On February 2, 2022, the CPUC Administrative Law Judge presiding over DISH's Petition for Modification released a proposed decision that would deny the Petition for Modification. That proposed decision may be heard by the CPUC as soon as its March 17, 2022 business meeting. We cannot predict the outcome of the proceedings described above, but we intend to vigorously oppose any efforts to furthe r delay the sunset of the legacy Sprint CDMA network. ff ff On August 12, 2021, we became aware of a potential cybersecurity issue involving unauthorized access to T-Mobile’s systems (the “August 2021 cyberattack”). We immediately began an investigation and engaged cybersecurity experts to assist with the assessment of the incident and to help determine what data was impacted. Our investigation uncovered that the perpetrator had illegally gained access to certain areas of our systems on or about current, forme cybersecurity experts, we located and closed the unauthorized access to our systems and identified current, forme prospective customers whose information was impacted and notified them, consistent with state and federal requirements. We also undertook a number of other measures to demonstrate our continued support and commitment to data privacy and protection. We also coordinated with law enforcem view of the data compromised. r, and prospective customers beginning on or about August 3, 2021. With the assistance of our outside ent. Our forensic investigation is complete, and we believe we have a full March 18, 2021, but only gained access to and took data of r and a ff ff ff As a result of the August 2021 cyberattack, we have become subject to numerous lawsuits, including multiple class action lawsuits, that have been filff ed in numerous jurisdictions seeking unspecified monetary damages, costs and attorneys’ fees arising out of the August 2021 cyberattack. In December 2021, the Judicial Panel on Multidistrict Litigation consolidated the federal class action lawsuits in the U.S. District Court for the Western District of Missouri. In addition, in November 2021, a purported Company shareholder fileff d a derivative action in the U.S. District Court for the Western District of Washington, Litwin v. Sievert et al., No. 2:21-cv-01599, against our current directors, alleging several claims concerning the Company’s cybersecurity practices. We are also named as a nominal defendant in the lawsuit. We are unablea to predict at this time the potential outcome of any of these claims or whether we may be subject to further private litigation. We intend to vigorously defend all of these lawsuits. In addition, the Company has received inquiries fromff various governme authorities related to the August 2021 cyberattack, which could result in fines or penalties. We are responding to these inquiries and cooperating fully with regulators. However, we cannot predict the timing or outcome of any of these inquiries, or whether we may be subject to furthe nt agencies, law enforcement and other governmental r regulatory inquiries. ff r In light of the inherent uncertainties involved in such matters and based on the information currently available to us, as of the date of this Annual Report, we have not recorded any accruals forff such amounts (or ranges of amounts) are not probablea could incur losses associated with these proceedings and inquiries, and the Company will continue to evaluate information as it and will record an estimate for losses at the time or times when it is both probable that a loss has been incurred becomes known and the amount of the loss is reasonably estimable. Ongoing legal and other costs related to these proceedings and inquiries, as losses related to the above proceedings and inquiries, as any or estimable at this time. We believe it is reasonablya possible that we k 112 well as any potential futff uret settlements, penalties or other resolutions of such proceedings and inquiries could be material to our business, reputation, financial condition, cash flows and operating results. proceedings and inquiries, may be substantial, and losses associated with any adverse judgments, Note 18 – Restructuring Costs activities associated with the restructuring Upon close of the Merger, we began implementing restructuring initiatives to realize cost efficff t The majora rationalization of retail stores, distribution channels, duplicative network and backhaul services and other agreements, severance costs associated with the integration of redundant processes and functions and the decommissioning of certain small cell sites and distributed antenna systems to achieve synergies in network costs. initiatives to date include contract termination costs associated with the iencies and reduce redundancies. The following tablea summarizes the expenses incurred in connection with our restructuring t initiatives: (in millions) Contract termination costs Severance costs Network decommissioning Total restructuring plan expenses Year Ended December 31, 2020 Year Ended December 31, 2021 Incurred to Date $ $ $ 178 385 497 1,060 $ 14 17 184 215 $ $ 192 402 681 1,275 The expenses associated with the restructuring initiatives are included in Costs of services and Selling, general and administrative on our Consolidated Statements of Comprehe nsive Income. m Our restructuring initiatives also include the acceleration or termination of certain of our operating and financing leases for cell sites, switch sites, retail stores, network equipment and office facilities. Incremental expenses associated with accelerating amortization of the right-of-use assets on lease contracts were $873 million and $153 million for the years ended December 31, 2021 and 2020, respectively, and are included in Costs of services and Selling, general and administrative on our Consolidated Statements of Comprehensive Income. The changes in the liabila follows: ities associated with our restructuring t initiatives, including expenses incurred and cash payments, are as (in millions) Contract termination costs Severance costs Network decommissioning Total December 31, 2020 Expenses Incurred Cash Payments Adjustments for Non-Cash Items (1) December 31, 2021 $ $ $ 81 52 30 163 $ 14 17 184 215 $ $ (80) $ (1) $ (65) (106) (3) (37) (251) $ (41) $ 14 1 71 86 (1) Non-cash items consist of non-cash stock-based compensation included within Severance costs and the write-off of assets within Network decommissioning. The liabilities accrued in connection with our restructuring initiatives are presented in Accounts payable and accrued liabia lities on our Consolidated Balance Sheets. t activities are expected to occur over the next two years with substantially all costs incurred by the end of Our restructuring fiscal year 2023. We are evaluating additional restructuring initiatives, which are dependent on consultations and negotiation with certain counterparties and the expected impact on our business operations, which could affect the amount or timing of the restructuring costs and related payments. 113 Note 19 – Additional Financial Information Accounts Payabl a e all nd Accrued Liabil itll iett s i Accounts payable and accrued liabia lities are summarized as folff lows: (in millions) Accounts payable Payroll and related benefits Property and other taxes, including payroll Accrued interest Commissions Toll and interconnect Advertising Other December 31, 2021 December 31, 2020 $ 6,499 $ 1,343 1,830 710 348 248 59 368 5,564 1,163 1,540 771 399 217 135 407 Accounts payable and accrued liabilities $ 11,405 $ 10,196 Book overdrafts included in accounts payable and accrued liabia lities were $378 million and $628 million as of December 31, 2021 and 2020, respectively. Relatell d PartyPP 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. On August 23, 2021, we redeemed $1.0 billion aggregate principal amount of our 4.500% Senior Notes to affiliates due 2026. See Note 8 – Debt for further information. The following tablea in the Consolidated Statements of Comprehensive Income: summarizes the impact of significant transactions with DT or its affiliates included in Operating expenses (in millions) Discount related to roaming expenses Fees incurred for use of the T-Mobile brand International long distance agreement Year Ended December 31, 2021 2020 2019 $ (2) $ (5) $ 80 37 83 47 (9) 88 39 We have an agreement with DT in which we receive reimbursement of certain administrative expenses, which was $5 million, $6 million and $11 million for the years ended December 31, 2021, 2020 and 2019, respectively. Amounts dued from and to DT related to these agreements are included in Accounts receivable fromff Consolidated Balance Sheets. iates and Payables to affilff iates, respectively, in the affilff 114 Supplemental Consolidated Statements of Cash Flows Information The following table summarizes T-Mobile’s supplemental cash flow information: millions) Interest payments, net of amounts capitalized Operating lease payments Income tax payments Non-cash investing and financing activities Year Ended December 31, 2021 2020 2019 $ $ 3,723 6,248 167 $ 2,733 4,619 218 Non-cash beneficial interest obtained in exchange for securitized receivables Non-cash consideration for the acquisition of Sprint Change in accounts payable and accrued liabilities forff 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 4,237 — 366 1,198 (1,437) — 3,773 1,261 6,194 33,533 589 2,795 (1,460) 38 14,129 1,273 1,128 2,783 88 6,509 — (935) 1,006 (267) 800 3,621 1,041 Note 20 – Subsequent Events Subsequent to December 31, 2021, on January 3, 2022, we entered into an agreement with CCI to amend terms related to our tower leases, Tower obligations and non-dedicated transportation lines. See Note 9 - Tower Obligations, Note 16 – Leases and Note 17 – Commitments and Contingencies forff further information. Subsequent to December 31, 2021, on January 6, 2022, the FCC announced that we were the winning bidder of 199 licenses in Auction 110 (mid-band spectrumr further information. ). See Note 6 - Goodwill, Spectrum License Transactions and Other Intangible Assets for 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 (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) designed to ensure information required to be disclosed in our 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 finff ancial 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. 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. Changes in Internal Control over Financial Reporting There were no changes in our internal control over finaff Exchange Act, during our most recently completed fisca affect our internal control over financial reporting. ff ncial reporting, as defined in RuleRR s 13a-15(f) and 15d-15(f) of the l quarter that materially affecff ted or are reasonably likely to materially 115 Management’s Annual Report on Internal Control over Financial Reporting establia shing and maintaining adequate internal control over financial reporting. Internal ncial reporting is a process to provide reasonable assurance regarding the reliabia lity of our financial reporting external purposes in accordance with generally accepted accounting principles. ncial reporting includes maintaining records that in reasonable detail accurately and fairly reflect our Our management is responsible forff control over finaff and the preparation of financial statements forff Internal control over finaff 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 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 finaff prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subjeu controls may become inadequate because of changes in conditions, or that the degree of compliance with policies and procedures may deteriorate. are made in accordance with management authorization, and providing reasonable assurance that unauthorized ncial reporting may not t ct to the risk that Management conducted an evaluation of the effectiveness of our internal control over finaff 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, 2021. ncial reporting based on the The effectiveness of our internal control over finaff PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report herein. ncial reporting as of December 31, 2021 has been audited by Item 9B. Other Information None. Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections Not applicable. PART III. OTHER INFORMATION Item 10. Directors, Executive Officff ers 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 applicablea This code is publicly availablea technical, administrative or other non-substantive amendments, or grant any waivers, including implicit waivers, from a provision of this code we will disclose the naturet website at investor.t-mobile.com or in a Current Report on Form 8-K filed with the SEC. on our website at investor.t-mobile.com. If we make any amendments to this code other than of the amendment or waiver, its effective date and to whom it applies on our rules of 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. 116 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 Accountant 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. Exhibit and 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 (PCAOB ID: 238) 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. 117 INDEX TO EXHIBITS Exhibit No. Exhibit Description 2.1 2.2 2.3 2.4 2.5 2.6 2.7 3.1 3.2 4.1 4.2 4.3 4.4 4.5 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 Cu Amendment No. 2, dated as of February 20, 2020, 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. orp. Asset Purchase Agreement, dated as of July 26, 2019, by and among T-Mobile US, Inc., Sprint Corporation and DISH Network Corporation. First Amendment, dated as of June 17, 2020, to the Asset Purchase Agreement, dated as of July 26, 2019, by and among T-Mobile US, Inc., Sprint Corporation and DISH Network Corporation. Asset Purchase Agreement, dated as of May 28, 2021, by and between T-Mobile USA, Inc. and Shenandoah Telecommunications Company. Amendment No. 1 to Asset Purchase Agreement, dated as of July 1, 2021, by and between T-Mobile USA, Inc. and Shenandoah Telecommunications Company. Fifth Amended and Restated Certificate of Incorporation of T- Mobile US, Inc. Seventh Amended and Restated Bylaws of T-Mobile US, Inc. dated as of April 28, 2013 among T-Mobile USA, Indenture, t Inc., the guarantors party thereto, and Deutsche Bank Trust Company Americas, as trustee. rr t Eleventh Supplemental Indenture, among T-Mobile USA, Inc., the guarantors party thereto, and Deutsche Bank Trust Company Americas, as trustee. dated as of May 1, 2013 r 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, r as truste e. t e. 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 truste r 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. t Incorporated by Reference Form 8-K Date of Filing 04/30/2018 Exhibit Number 2.1 Filed Herewith 8-K 7/26/2019 2.2 8-K 2/20/2020 2.1 8-K 7/26/2019 2.1 8-K 6/17/2020 2.1 8-K 6/1/2021 2.1 10-Q 8/3/2021 2.2 8-K 8-K 8-K 4/1/2020 4/1/2020 5/2/2013 3.1 3.2 4.1 8-K 5/2/2013 4.12 10-Q 10/28/2014 4.3 10-Q 10/27/2015 4.3 8-K 3/16/2017 4.1 118 Incorporated by Reference Form 8-K Date of Filing 3/16/2017 Exhibit Number 4.3 Filed Herewith 8-K 4/28/2017 4.1 8-K 4/28/2017 4.3 8-K 1/25/2018 4.2 10-Q 5/1/2018 4.5 8-K 5/4/2018 4.2 8-K 5/21/2018 4.1 8-K 12/21/2018 4.1 10-Q 10/28/2019 4.1 10-Q/A 8/10/2020 4.12 8-K 1/14/2021 4.2 8-K 1/14/2021 4.3 8-K 1/14/2021 4.4 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 4.18 t r rr Company ghth Supplemental Indenture, hereto and Deutsche Bank Trust h Supplemental Indenture, dated as of April 27, Twenty-Fifth Supplemental Indenture, dated as of March 16, 2017, by and among T-Mobile USA, Inc., the other guarantors party t Americas, as trustee, including the Form of 5.375% Senior Note due 2027. Twenty-Sixt t 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-Ei dated as of April 28, t 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. 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. Thirty-Fourth Supplemental Indenture, 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. dated as of April 26, rr rr rr t t t t dated as of April 30, Thirty-Sixth Supplemental Indenture, 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. r rr 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. r 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. rr t r tee, including the Form of 2.250% Forty-First Supplemental Indenture, dated as of April 1, 2020, by and among T-Mobile USA, Inc., T-Mobile US, Inc., the other guarantors party thereto, and Deutsche Bank Trust Company Americas, as trustee. Forty-Third Supplemental Indenture, dated as of January 14, 2021, by and among T-Mobile USA, Inc., T-Mobile US, Inc., the other guarantors party thereto and Deutsche Bank Trust Company Americas, as trusr Senior Note due 2026. Forty-Fourth Supplemental Indenture, dated as of January 14, 2021, by and among T-Mobile USA, Inc., T-Mobile US, Inc., the other guarantors party thereto and Deutsche Bank Trust Company Americas, as trusr Senior Note due 2029. Forty-Fifth Supplemental Indenture, dated as of January 14, 2021, by and among T-Mobile USA, Inc., T-Mobile US, Inc., the other guarantors party thereto and Deutsche Bank Trust Company Americas, as trusr Senior Note due 2031. tee, including the Form of 2.875% tee, including the Form of 2.625% rr rr rr t 119 Incorporated by Reference Form 8-K Date of Filing 3/23/2021 Exhibit Number 4.2 Filed Herewith 8-K 3/23/2021 4.3 8-K 3/23/2021 4.4 10-Q 8/3/2021 4.3 8-K 4/13/2020 4.1 8-K 4/13/2020 4.2 8-K 4/13/2020 4.3 8-K 4/13/2020 4.4 8-K 4/13/2020 4.5 8-K 4/13/2020 4.6 8-K 6/26/2020 4.2 8-K 6/26/2020 4.3 Exhibit No. Exhibit Description 4.19 4.20 4.21 4.22 4.23 4.24 4.25 4.26 4.27 4.28 4.29 4.30 t t hereto and Deutsche Bank Trust Forty-Sixth Supplemental Indenture, dated as of March 23, 2021, by and among T-Mobile USA, Inc., T-Mobile US, Inc., the other guarantors party t Company Americas, as trustee, including the Form of 2.625% Senior Note due 2026. Forty-Seventh Supplemental Indenture, dated as of March 23, 2021, 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 3.375% Senior Note due 2029. Forty-Eighth Supplemental Indenture, dated as of March 23, 2021, 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 3.500% Senior Note due 2031. Forty-Ninth Supplemental Indenture, dated as of March 30, 2021, by and among T-Mobile USA, Inc., the guarantors party thereto, and Deutsche Bank Trust as trustee. Company Americas, r rr rr Indenture, t USA, Inc., the Company and Deutsche Bank Trust Americas, as trustee. dated as of April 9, 2020 by and among T-Mobile Company rr t t Companym Companym Companym Americas, as Americas, as Americas, as mental Indenture, dated as of April 9, 2020, by dated as of April 9, 2020, by First Supplemental Indenture, and among T-Mobile USA, Inc., the Guarantors (as defined therein) and Deutsche Bank Trust r trustee, including the Form of 3.500% Senior Secured Note due 2025. u Second Supple and among T-Mobile USA, Inc., the Guarantors (as defined therein) and Deutsche Bank Trust r trustee, including the Form of 3.750% Senior Secured Note due 2027. Third Supplemental Indenture, dated as of April 9, 2020, by and among T-Mobile USA, Inc., the Guarantors (as defined therein) and Deutsche Bank Trust r trustee, including the Form of 3.875% Senior Secured Note due 2030. Fourth Supplemental Indenture, dated as of April 9, 2020, by and among T-Mobile USA, Inc., the Guarantors (as defined therein) and Deutsche Bank Trust r trustee, including the Form of 4.375% Senior Secured Note due 2040. Fifth Supplemental Indenture, dated as of April 9, 2020, by and among T-Mobile USA, Inc., the Guarantors (as defined therein) and Deutsche Bank Trust r trustee, including the Form of 4.500% Senior Secured Note due 2050. Seventh Supplemental Indenture, dated as of June 24, 2020 by and among T-Mobile USA, Inc., the Guarantors (as defined therein) and Deutsche Bank Trust r trustee, including the Form of 1.500% Senior Secured Note due 2026. Eighth Supplemental Indenture, and among T-Mobile USA, Inc., the Guarantors (as defined therein) and Deutsche Bank Trust r trustee, including the Form of 2.050% Senior Secured Note due 2028. dated as of June 24, 2020, by Company Americas, as Company Americas, as Company Americas, as Americas, as Companym t t 120 Incorporated by Reference Form 8-K Date of Filing 6/26/2020 Exhibit Number 4.4 Filed Herewith 8-K 10/6/2020 4.4 8-K 10/6/2020 4.5 8-K 10/6/2020 4.6 8-K 10/6/2020 4.7 8-K 10/28/2020 4.4 8-K 10/28/2020 4.5 8-K 10/28/2020 4.6 8-K 10/28/2020 4.7 S-4 3/30/2021 4.19 8-K 8/13/2021 4.3 8-K 8/13/2021 4.4 8-K 12/6/2021 4.3 Exhibit No. Exhibit Description 4.31 4.32 4.33 4.34 4.35 4.36 4.37 4.38 4.39 4.40 4.41 4.42 4.43 t dated as of June 24, 2020, by Ninth Supplemental Indenture, and among T-Mobile USA, Inc., the Guarantors (as defined therein) and Deutsche Bank Trust r trustee, including the Form of 2.550% Senior Secured Note due 2031. Tenth Supplemental Indenture, t by and among T-Mobile USA, Inc., the Guarantors (as defined therein) and Deutsche Bank Trust Company Americas, as trustee. dated as of October 6, 2020, Company Americas, as t Eleventh Supplemental Indenture, 2020, by and among T-Mobile USA, Inc., the Guarantors (as defined therein) and Deutsche Bank Trust Company Americas, as trustee. dated as of October 6, t r dated as of October 6, 2020, r , including the Form of 3.300% Senior Twelfth Supplemental Indenture, by and among T-Mobile USA, Inc., the Guarantors (as defined therein) and Deutsche Bank Trust Company Americas, as trustee, including the Form of 3.000% Senior Secured Note due 2041. Thirteenth Supplemental Indenture, dated as of October 6, 2020, by and among T-Mobile USA, Inc., the Guarantors (as defined therein) and Deutsche Bank Trust Americas, as trustee Secured Note due 2051. Fourteenth Supplemental Indenture, dated as of October 28, 2020, by and among T Mobile USA, Inc., the Guarantors (as defined therein) and Deutsche Bank Trust Americas, as trustee Secured Note due 2031. Fifteenth Supplemental Indenture, dated as of October 28, 2020, by and among T Mobile USA, Inc., the Guarantors (as defined therein) and Deutsche Bank Trust . Americas, as trustee r , including the Form of 2.250% Senior Company Company Company r r r t Sixteenth Supplemental Indenture, t 2020, by and among T‑Mobile USA, Inc., the Guarantors (as defined therein) and Deutsche Bank Trust . Americas, as trustee dated as of October 28, Company r r r r , including the Form of 3.600% Senior Seventeenth Supplemental Indenture, dated as of October 28, 2020, by and among T Mobile USA, Inc., the Guarantors (as defined therein) and Deutsche Bank Trust Americas, as trustee Secured Note due 2060. Eighteenth Supplemental Indenture, 2021, by and among T-Mobile USA, Inc., the guarantors party thereto, and Deutsche Bank Trust as trustee. dated as of March 30, Company Americas, Company r t t r dated as of August 13, r , including the Form of 3.400% Senior Nineteenth Supplemental Indenture, 2021, by and among T-Mobile USA, Inc., the Guarantors (as defined therein) and Deutsche Bank Trust Americas, as trustee Secured Note due 2052. Twentieth Supplemental Indenture, dated as of August 13, 2021, by and among T-Mobile USA, Inc., the Guarantors (as defined therein) and Deutsche Bank Trust . Americas, as trustee Company Company r r Supplemental Indenture, dated as of December t Twenty-First 6, 2021, by and among T‑Mobile USA, Inc., the Guarantors (as defined therein) and Deutsche Bank Trust Americas, as trustee Secured Note due 2029. , including the Form of 2.400% Senior Company r rr t 121 Exhibit No. Exhibit Description 4.44 4.45 4.46 4.47 4.48 4.49 4.50 4.51 4.52 4.53 4.54 Twenty-Second Supplemental Indenture, dated as of December 6, 2021, by and among T‑Mobile USA, Inc., the Guarantors (as defined therein) and Deutsche Bank Trust Company Americas, as trustee, including the Form of 2.700% Senior Secured Note due 2032. Twenty-Third Supplemental Indenture, dated as of December 6, 2021, by and among T‑Mobile USA, Inc., the Guarantors (as defined therein) and Deutsche Bank Trust Americas, as trustee. Companym r rr Registration Rights Agreement, dated as of May 13, 2021, by and among T-Mobile USA, Inc., the Initial Guarantors (as defined therein) and J.P. Morgan Securities LLC, as representative of the Initial Purchasers (as defined therein). Registration Rights Agreement, dated as of August 13, 2021, by and among T-Mobile USA, Inc., the Initial Guarantors (as defined therein) and Citigroup Global Markets Inc., Deutsche Bank Securities Inc. and J.P. Morgan Securities LLC, as representatives of the Initial Purchasers (as defined therein). Registration Rights Agreement, dated as of December 6, 2021, by and among T‑Mobile USA, Inc., the Initial Guarantors (as defined therein) and Barclays Capital Inc., Credit Suisse Securities (USA) LLC and Goldman Sachs & Co. LLC, as representatives of the Initial Purchasers (as defined therein). dated as of October 1, 1998, by and among Sprint Indenture, t Capital Corporation, Sprint Corporation and The Bank of New York Mellon Trust Company, N.A. (as successor to Bank One, N.A.) First Supplemental Indenture, by and among Sprint Capia tal Corporation, Sprint Corporation and The Bank of New York Mellon Trust Company, N.A. (as successor to Bank One, N.A.) dated as of January 15, 1999, t Second Supplemental Indenture, dated as of October 15, 2001, by and among Sprint Capia tal Corporation, Sprint Corporation and The Bank of New York Mellon Trust Company, N.A. (as successor to Bank One, N.A.) Third Supplemental Indenture, dated as of September 11, 2013, by and among Sprint Corporation, Sprint Capia tal Corporation, Sprint Communications, Inc. and The Bank of New York Mellon Trust Company, N.A. (as successor to Bank One, N.A.) Fourth Supplemental Indenture, dated as of May 18, 2018, by and among Sprint Capia tal Corporation, Sprint Communications, Inc., and The Bank of New York Mellon Trust Company, N.A. (as successor to Bank One, N.A.) Fifth Supplemental Indenture, dated as of April 1, 2020, by and among Sprint Capia tal Corporation, Sprint Communications, Inc., Sprint Corporation, T-Mobile US, Inc., T-Mobile USA, Inc. and The Bank of New York Mellon Trust Company, N.A. (as successor to Bank One, N.A.), as trustee. 4.55 dated as of November 20, 2006, by and between Indenture, t Sprint Nextel Corporation and The Bank of New York Mellon Trust Company, N.A. 122 Incorporated by Reference Form 8-K Date of Filing 12/6/2021 Exhibit Number 4.4 Filed Herewith 8-K 12/6/2021 4.5 8-K 5/13/2021 4.5 8-K 8/13/2021 4.5 8-K 12/6/2021 4.6 11/2/1998 4(b) 2/3/1999 4(b) 10/29/2001 99 9/11/2013 4.5 5/18/2018 4.1 8/10/2020 4.19 11/9/2011 4.1 10-Q (SEC File No. 001-0472 1) 8-K (SEC File No. 001-0472 1) 8-K (SEC File No. 001-0472 1) 8-K (SEC File No. 001-0472 1) 8-K (SEC File No. 001-0472 1) 10-Q/A 8-K (SEC File No. 001-0472 1) Incorporated by Reference Form 8-K (SEC File No. 001-0472 1) 8-K (SEC File No. 001-0472 1) 8-K (SEC File No. 001-0472 1) 8-K (SEC File No. 001-0472 1) 10-Q/A 8-K (SEC File No. 001-0472 1) 8-K (SEC File No. 001-0472 1) 8-K (SEC File No. 001-0472 1) 8-K (SEC File No. 001-0472 1) 8-K (SEC File No. 001-0472 1) 8-K (SEC File No. 001-0472 1) 10-Q/A Date of Filing 11/14/2012 Exhibit Number 4.1 Filed Herewith 11/20/2012 4.1 9/11/2013 4.4 5/14/2018 4.2 8/10/2020 4.27 9/11/2013 4.1 9/11/2013 4.3 12/12/2013 4.1 2/24/2015 4.1 2/22/2018 4.1 5/14/2018 4.1 8/10/2020 4.36 Exhibit No. Exhibit Description 4.56 4.57 4.58 4.59 4.60 4.61 4.62 4.63 4.64 4.65 4.66 4.67 Sixth Supplemental Indenture, dated as of November 14, 2012, by and between Sprint Nextel Corporation and The Bank of New York Mellon Trust Company, N.A. Seventh Supplemental Indenture, dated as of November 20, 2012, by and between Sprint Nextel Corporation and The Bank of New York Mellon Trust Company, N.A. Eighth Supplemental Indenture, 2013, by and among Sprint Corporation, Sprint Communications, Inc. and The Bank of New York Mellon Trust Company, N.A. dated as of September 11, t Thirteenth Supplemental Indenture, dated as of May 14, 2018, by and between Sprint Communications, Inc. and The Bank of New York Mellon Trust Company, N.A., as trustee. Sixteenth Supplemental Indenture, t by and among Sprint Communications, Inc., T-Mobile US, Inc., T-Mobile USA, Inc. and The Bank of New York Mellon Trust Company, N.A., as trustee. dated as of April 1, 2020, dated as of September 11, 2013, by and between Indenture, t Sprint Corporation and The Bank of New York Mellon Trust Company, N.A. u mental Indenture, dated as of September 11, Second Supple 2013, by and among Sprint Corporation, Sprint Communications, Inc. and The Bank of New York Mellon Trust Company, N.A. Third Supplemental Indenture, 2013, by and among Sprint Corporation, Sprint Communications, Inc. and The Bank of New York Mellon Trust Company, N.A. dated as of December 12, t Fourth Supplemental Indenture, 2015, by and among Sprint Corporation, Sprint Communications, Inc. and The Bank of New York Mellon Trust Company, N.A. dated as of February 24, t u mental Indenture, dated as of February 22, 2018, Fifth Supple by and among Sprint Corporation, Sprint Communications, Inc., and The Bank of New York Mellon Trust Company, N.A. u Sixth Supple mental Indenture, dated as of May 14, 2018, by and between Sprint Corporation and The Bank of New York Mellon Trust Company, N.A. Eighth Supplemental Indenture, dated as of April 1, 2020, by and among Sprint Corporation, Sprint Communications, Inc., T-Mobile US, Inc., T-Mobile USA, Inc. and The Bank of New York Mellon Trust Company, N.A., as trustee. 123 Incorporated by Reference Form 8-K (SEC File No. 001-0472 1) 8-K (SEC File No. 001-0472 1) 8-K (SEC File No. 001-0472 1) 10-Q (SEC File No. 001-0472 1) 8-K (SEC File No. 001-0472 1) 13D Date of Filing 11/2/2016 Exhibit Number 4.1 Filed Herewith 3/12/2018 4.1 6/6/2018 4.1 1/31/2019 4.1 3/21/2018 10.1 4/2/2020 6 13D/A 6/24/2020 49 10-Q 8/8/2013 10.1 X 10-Q 8/8/2013 10.2 10-K 2/7/2019 10.3 10-Q 8/8/2013 10.3 10-Q 8/8/2013 10.4 Exhibit No. Exhibit Description 4.68 4.69 4.70 4.71 4.72 4.73 4.74 4.75 10.1 10.2 10.3 10.4 10.5 dated as of October 27, 2016, by and among Sprint t Indenture, Spectrum Co LLC, Sprint Spectrum Co II LLC, Sprint Spectrum Co III LLC and Deutsche Bank Trust Americas, as Trustee and Securities Intermediary. Company r First Supplemental Indenture, dated as of March 12, 2018, by and among Sprint Spectrum Co LLC, Sprint Spectrum Co II LLC, Sprint Spectrum Co III LLC and Deutsche Bank Trust Company Americas, as trustee and securities intermediary. r t t r Company dated as of October 27, 2016, by and among Second Supplemental Indenture, dated as of June 6, 2018, to the Indenture, Sprint Spectrum Co LLC, Sprint Spectrum Co II LLC, Sprint Spectrum Co III LLC and Deutsche Bank Trust Americas as trustee. Third Supplemental Indenture, dated as of December 10, 2018, by and among Sprint Spectrum Co LLC, Sprint Spectrum Co II LLC, Sprint Spectrum Co III LLC and Deutsche Bank Trust securities intermediary. Series 2018-1 Supplement, dated as of March 21, 2018 by and among Sprint Spectrum Co LLC, Sprint Spectrum Co II LLC, Sprint Spectrum Co III LLC and Deutsche Bank Trust Company Americas, as trustee and securities intermediary. Company Americas, as trustee and r r Proxy, Lock-Up and ROFR Agreement, dated as of April 1, 2020, by and between Deutsche Telekom AG and SoftBank Group Corp. Proxy, Lock-Up and ROFR Agreement, dated as of June 22, 2020, among Deutsche Telekom AG, Claure Mobile LLC and Raul Marcelo Claure. 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. 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. 124 Exhibit No. Exhibit Description 10.6 10.7 10.8 10.9 10.10 10.11 10.12 10.13 10.14 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/VStt 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. GSM IV PCS Holdings, LLC, T-Mobile Second Amended and Restated Stockholders’ Agreement, dated as of June 22, 2020, by and among T-Mobile US, Inc., Deutsche Telekom AG and SoftBank Group Corp. 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. Incorporated by Reference Form 10-Q Date of Filing 8/8/2013 Exhibit Number 10.5 Filed Herewith 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 S-3ASR 6/22/2020 4.2 8-K 04/30/2018 10.1 10.15 Financing Matters Agreement, dated as of April 29, 2018, by and between T-Mobile USA, Inc. and Deutsche Telekom AG. 8-K 04/30/2018 10.3 125 Exhibit No. Exhibit Description 10.16 10.17 10.18 10.19 Letter Agreement, dated as of February 20, 2020, by and among T-Mobile US, Inc., Deutsche Telekom AG and SoftBank Group Corp. License Agreement dated as of April 30, 2013 by and between T-Mobile US, Inc. and Deutsche Telekom AG. Supplemental Agreement, effecff License Agreement, dated as of April 30, 2013, by and between T-Mobile US, Inc. and Deutsche Telekom AG. tive as of June 3, 2019, to the Amendment No. 1, dated as of April 1, 2020, to the License Agreement, dated as of April 30, 2013, by and between T- Mobile US, Inc. and Deutsche Telekom AG. Incorporated by Reference Form 8-K Date of Filing 2/20/2020 Exhibit Number 10.1 Filed Herewith 8-K 5/2/2013 10.2 10-Q 7/26/2019 10.5 8-K 4/1/2020 10.3 10.20* Master Network Services Agreement, dated as of July 1, 10-Q 11/5/2020 10.1 10.21* 10.22 10.23 10.24 10.25 10.26 10.27 10.28 2020, between T-Mobile USA, Inc., DISH Purchasing Corporation and solely forff Network Corporation. the purposes of Section 13, DISH License Purchase Agreement, dated as of July 1, 2020, by and between T-Mobile USA, Inc. and DISH Network Corporation. s Sale and First Amended and Restated Receivablea Conveyancing Agreement, dated as of March 2, 2021, by and 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. First Amended and Restated Receivablea Contribution Agreement, dated as of March 2, 2021, by and between T-Mobile PCS Holdings LLCS, as seller, and T- Mobile Airtime Funding LLC, as purchaser. s Sale and ons party thereto. Fifth Amended and Restated Master Receivables Purchase Agreement, dated as of March 2, 2021, among T-Mobile Airtime Funding LLC, as transferor, T-Mobile PCS Holdings LLC, in its individual capacity and as servicer, T-Mobile US, Inc. and T-Mobile USA, Inc., as performance guarantors, Billing Gate One LLC, as outgoing purchaser, Landesbank Hessen-Thüringen Girozentrale, as outgoing bank purchasing agent, MUFG Bank (Europe) N.V., Germany Branch, as outgoing bank collections agent, The Toronto-Dominion Bank, as administrative agent, and certain financial instituti t First Amendment to Fifth Amended and Restated Master Receivablea s Purchase Agreement, dated as of June 18, 2021, by and among T-Mobile Airtime Funding LLC, as transferor, T-Mobile PCS Holdings LLC, in its individual capac ity and as servicer, T-Mobile US, Inc. and T-Mobile USA, Inc., as performance guarantors, The Toronto-Dominion Bank, as administrative agent, and certain finaff thereto. Performance Guaranty,t dated as of March 2, 2021, by T- Mobile US, Inc. and T-Mobile USA, Inc. Receivablea November 10, 2021, by and among Sprint Spectrum LLC and SprintCom, Inc., each as a seller, and T-Mobile Financial LLC, as purchaser. s Sale and Conveyancing Agreement, dated as of ncial instituti ons party a t 10-Q 11/5/2020 10.2 10-Q 5/4/2021 10.5 10-Q 5/4/2021 10.6 10-Q 5/4/2021 10.7 10-Q 8/3/2021 10.4 10-Q 5/4/2021 10.8 X Third Amended and Restated Receivablea dated as of October 23, 2018, by and between T-Mobile Financial LLC, as seller, and T-Mobile Handset Funding LLC, as purchaser. s Sale Agreement, 10-Q 10/30/2018 10.2 126 Incorporated by Reference Form 10-K Date of Filing 2/23/2021 Exhibit Number 10.32 Filed Herewith 10-Q 10/30/2018 10.1 10-K 2/7/2019 10.45 10-Q 5/6/2020 10.1 10-Q/A 8/10/2020 10.15 10-K 2/23/2021 10.37 10-Q 11/2/2021 10.1 X X Exhibit No. Exhibit Description 10.29 10.30 10.31 10.32 10.33 10.34 10.35 10.36 10.37 s Sale Agreement, dated as First Amendment, dated as of November 2, 2020, to Third Amended and Restated Receivablea of October 23, 2018, by and between T-Mobile Financial LLC, as seller, and T-Mobile Handset Funding LLC, as purchaser. Second Amendment, dated as of November 10, 2021, to 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. and T- Mobile USA, Inc., jointly and severally as performance guarantors, Royal Bank of Canada, as administrative agent, and certain finaff ncial institutions party t hereto. t t t hereto. hereto. ncial institutions party t 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. and T- Mobile USA, Inc., jointly and severally as performance guarantors, Royal Bank of Canada, as administrative agent, and certain finaff Second Amendment, dated as of February 14, 2020, 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. and T- Mobile USA, Inc., jointly and severally as guarantors, Royal Bank of Canada, as Administrative Agent, and certain financial institutions party t Third Amendment, dated as of April 30, 2020, 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. and T- Mobile USA, Inc., jointly and severally as guarantors, Royal Bank of Canada, as Administrative Agent, and certain financial institutions party t hereto. Fourth Amendment, dated as of November 2, 2020, 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. and T- Mobile USA, Inc., jointly and severally as guarantors, Royal Bank of Canada, as Administrative Agent, and certain financial institutions party t Fifth Amendment, dated as of August 16, 2021, 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, and T-Mobile Financial LLC, individually and as servicer. Sixth Amendment, dated as of November 10, 2021, 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, individually and as servicer, T-Mobile US, Inc. and T-Mobile USA, Inc., jointly and severally as guarantors, Royal Bank of Canada, as Administrative Agent, and certain finaff ncial institutions party t hereto. hereto. t t t 127 Incorporated by Reference Form Date of Filing Exhibit Number Filed Herewith X 8-K 3/16/2017 10.1 8-K 1/25/2018 10.1 10-Q/A 8/10/2020 10.3 8-K 9/17/2020 10.1 X 10-Q/A 8/10/2020 10.4 10-Q/A 8/10/2020 10.7 10-Q/A 8/10/2020 10.8 11/2/2016 10.1 11/2/2016 10.2 3/12/2018 10.1 8-K (SEC File No. 001-0472 1) 8-K (SEC File No. 001-0472 1) 8-K (SEC File No. 001-0472 1) Exhibit No. Exhibit Description 10.38 10.39 10.40 10.41 10.42 10.43 10.44 10.45 10.46 10.47 10.48 10.49 Amended and Restated Performance Guaranty, dated as of November 10, 2021, by T-Mobile US, Inc. and T-Mobile USA, Inc. 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. Credit Agreement, dated as of April 1, 2020, by and among T-Mobile USA, Inc., the issuing banks and lenders party thereto, and Deutsche Bank AG New York Branch, as administrative agent. First Incremental Facility Amendment, dated as of September 16, 2020, to the Credit Agreement, dated as of April 1, 2020, among T-Mobile USA, Inc., Deutsche Bank AG New York Branch, as administrative agent and each Incremental Revolving Lender as defined therein. Second Amendment, dated as of October 29, 2021, to the Credit Agreement, dated as of April 1, 2020, among T-Mobile USA, Inc., the lenders party thereto, and Deutsche Bank AG New York Branch, as administrative agent. Guarantee Agreement, dated as of April 1, 2020, by and among T-Mobile US, Inc., T-Mobile USA, Inc. and the other guarantors party thereto in favor of Deutsche Bank AG New York Branch, as administrative agent. Collateral Agreement, dated as of April 1, 2020, by and among T-Mobile US, Inc., T-Mobile USA, Inc. and the other grantors party thereto in favor of Deutsche Bank Trust Company Americas, as collateral trustee. Collateral Trust and Intercreditor Agreement, dated as of April 1, 2020, by and among T-Mobile US, Inc., T-Mobile USA, Inc., the other grantors party thereto, Deutsche Bank AG New York Branch, as first priority agent, the holder representatives party thereto and Deutsche Bank Trust Company Americas, as collateral trustee. rr Guarantee and Collateral Agreement, dated October 27, 2016, among Deutsche Bank Trust Company Americas, Sprint Spectrum PledgeCo LLC, Sprint Spectrum PledgeCo II LLC, Sprint Spectrum PledgeCo III LLC, Sprint Spectrum License Holder LLC, Sprint Spectrum License Holder II LLC and Sprint Spectrum License Holder III LLC. Intra-Company Spectrum Lease Agreement, dated as of October 27, 2016, among Sprint Spectrum License Holder LLC, Sprint Spectrum License Holder II LLC and Sprint Spectrum License Holder III LLC, Sprint Communications, Inc., Sprint Intermediate HoldCo LLC, Sprint Intermediate HoldCo II LLC, Sprint Intermediate HoldCo III LLC and the guarantors. First Amendment to Intra-Company Spectrum Lease Agreement, dated as of March 12, 2018, among Sprint Spectrum License Holder, LLC, Sprint Spectrum License Holder II LLC and Sprint Spectrum License Holder III LLC, Sprint Communications, Inc., Sprint Intermediate HoldCo LLC, Sprint Intermediate HoldCo II LLC, Sprint Intermediate HoldCo III LLC. 128 Exhibit No. Exhibit Description 10.50 10.51 10.52 10.53 10.54 10.55 Second Amendment to Intra-Company Spectrum Lease Agreement, dated as of June 6, 2018, among Sprint Spectrum License Holder, LLC, Sprint Spectrum License Holder II LLC and Sprint Spectrum License Holder III LLC, Sprint Communications, Inc., Sprint Intermediate HoldCo LLC, Sprint Intermediate HoldCo II LLC, Sprint Intermediate HoldCo III LLC, Sprint Corporation and the subsidiary guarantors. Guarantee Assumption Agreement, dated as of April 1, 2020, by and among Sprint Spectrum License Holder, LLC, Sprint Spectrum License Holder II LLC, Sprint Spectrum License Holder III LLC, T-Mobile, T-Mobile USA and certain subsidiary guarantors. Guarantee Assumption Agreement, dated as of March 30, 2021, by and among Sprint Spectrum License Holder, LLC, Sprint Spectrum License Holder II LLC, Sprint Spectrum License Holder III LLC and certain subsidiary guarantors. Master Framework Agreement, dated as of June 22, 2020, by and among SoftBank Group Corp., SoftBank Group Capia tal Ltd, Delaware Project 4 L.L.C., Delaware Project 6 L.L.C., Claure Mobile LLC, Deutsche Telekom AG, T-Mobile US, Inc. and T-Mobile Agent LLC. Share Repurchase Agreement, dated as of June 22, 2020, between SoftBank Group Capia tal Ltd and T-Mobile US, Inc. Share Purchase Agreement, dated as of June 22, 2020, among Raul Marcelo Claure, Claure Mobile LLC and T-Mobile US, Inc. Incorporated by Reference Date of Filing 6/6/2018 Exhibit Number 10.1 Filed Herewith Form 8-K (SEC File No. 001-0472 1) 10-Q/A 8/10/2020 10.13 10-Q 8/3/2021 10.3 8-K 6/26/2020 10.1 8-K 6/26/2020 10.2 13D/A 6/25/2020 15 10.56** MetroPCS Communications, Inc. 2010 Equity Incentive 10.57** Compensation Plan. Employment Agreement, effective November 15, 2019, between T-Mobile US, Inc. and Michael Sievert. Schedule 14A 10-K 4/19/2010 Annex A 2/9/2020 10.61 10.58** Amendment No. 1, dated as of March 26, 2020, to the 10-Q 5/6/2020 10.6 Amended and Restated Employment Agreement, dated as of November 15, 2019, by and between the Company and G. Michael Sievert. 10.59** Compensation Term Sheet between Neville Ray and T- 10-K 2/6/2020 10.65 10.60** 10.61** 10.62** 10.63** 10.64** 10.65** 10.66** 10.67** Mobile US, Inc., effective as of November 15, 2019. PRSU Agreement, dated as of April 1, 2020, by and between the Company and Neville R. Ray. 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 Second 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). 10-Q 5/6/2020 10.4 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 10-K 2/23/2021 10.70 8-K 10/25/2013 10.1 10-Q 8/8/2013 10.20 10.68** Amendment to T-Mobile US, Inc. 2013 Omnibus Incentive 10.69** Plan (as amended and restated on August 7, 2013). T-Mobile USA, Inc. 2011 Long-Term Incentive Plan. Schedule 14A 10-Q 4/26/2018 Annex A 8/8/2013 10.21 129 Exhibit No. Exhibit Description 10.70** Annual Incentive Award Notice under the 2013 Omnibus Form 10-Q Date of Filing 5/4/2021 Exhibit Number 10.4 Filed Herewith Incorporated by Reference 10.71** 10.72** Incentive Plan. T-Mobile US, Inc. 2014 Employee Stock Purchase Plan. Sprint Corporation 2007 Omnibus Incentive Plan. 10.73** Sprint Corporation Amended and Restated 2015 Omnibus Incentive Plan. 10.74** Form of Sprint Corporation Evidence of Award 2014 Long- term Incentive Plan Stock Options. 10.75** Form of Sprint Corporation Award Agreement (awarding stock options) under the Sprint Corporation 2015 Amended and Restated Omnibus Incentive Plan. 10.76** 10.77** 10.78** 10.79** Form of Restricted Stock Unit Award Agreement (Time- Vesting) for Executive Officers under the Sprint Corporation 2015 Amended and Restated Omnibus Incentive Plan. Form of Restricted Stock Unit Award Agreement (Performance-Vesting) for Executive Officers under the Sprint Corporation 2015 Amended and Restated Omnibus Incentive Plan. 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) (Stock Settled) for Executive Officers under the T-Mobile US, Inc. 2013 Omnibus Incentive Plan. S-8 8-K (SEC File No. 001-0472 1) 10-Q (SEC File No. 001-0472 1) 10-Q (SEC File No. 001-0472 1) 10-Q (SEC File No. 001-0472 1) 10-Q 2/19/2015 9/20/2013 99.1 10.2 2/6/2017 10.1 8/8/2014 10.12 8/3/2017 10.3 5/4/2021 10.1 10-Q 5/4/2021 10.2 10-Q 5/6/2020 10.7 10-Q 5/6/2020 10.8 10.80** Amended Director Compensation Program effecff tive as of 10-Q/A 8/10/2020 10.30 10.81** 10.82** 10.83** 10.84** 21.1 22.1 23.1 24.1 May 1, 2013 (amended June 4, 2014 and further amended on June 1, 2015, June 16, 2016, June 13, 2017, June 13, 2019 and June 4, 2020). Form of Restricted Stock Unit Award Agreement for Non- Employee Directors under the T-Mobile US, Inc. 2013 Omnibus Incentive Plan. Form of Restricted Stock Unit Award Agreement (Performance-Vesting) (Cash Settled) for Executive Officers under the T-Mobile US, Inc. 2013 Omnibus Incentive Plan. Letter Agreement, dated as of March 25, 2019, by and between the Company and David A. Miller. Letter Agreement, dated as of April 8, 2021, by and between the Company and David A. Miller. Subsidiaries of Registrant. List of Guarantor Subsidiaries. Consent of PricewaterhouseCoopers LLP. Power of Attorney, pursuant to which amendments to this Form 10-K may be filff ed (included on the signature page contained in Part IV of the Form 10-K). 130 8-K 6/4/2013 10.2 10-Q 5/4/2021 10.3 10-Q 8/3/2021 10-Q 8/3/2021 10.1 10.2 X X X X Exhibit No. Exhibit Description 31.1 31.2 Certifications of Chief Executive Officer 302 of the Sarbanes-Oxley Act of 2002. Certifications of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Pursuant to Section ff 32.1*** Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbane r s-Oxley Act of 2002. 32.2*** Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbane r s-Oxley Act of 2002. 101.INS XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. 101.SCH XBRL Taxonomy Extension Schema Document. 101.CAL XBRL Taxonomy Extension Calculation Linkbase Document. 101.DEF XBRL Taxonomy Extension Definition Linkbase Document. 101.LAB XBRL Taxonomy Extension Labea 101.PRE XBRL Taxonomy Extension Presentation Linkbase l Linkbase Document. 104 Document. Cover Page Interactive Data File (the cover page XBRL tags are embedded within the Inline XBRL document). Incorporated by Reference Form Date of Filing Exhibit Number Filed Herewith X X X X X X X X X X * ** *** Certain confidential information contained in this exhibit has been omitted because it is both (i) not material and (ii) would likely cause competm itive harm if publicly disclosed. Indicates a management contract or compensatory plan or arrangement. Furnished herewith. 131 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 dulyd authorized. SIGNATURES February 11, 2022 T-MOBILE US, INC. /s/ G. Michael Sievert G. Michael Sievert Chief Executive Offiff cer attorney-in-fact and agent, each acting alone, with full Each person whose signature appears below constitutes and appoints G. Michael Sievert and Peter Osvaldik, and each or any of them, his or her true and lawfulff on, for him or her and in his or her name, place and stead, in any and all capaa (including post-effective amendments) to this Report, and to file the same, with all exhibits thereto, and all documents in power connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent, full 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 substit s, may lawfully do or cause to be done by virtue hereof. cities, to sign any or all amendments or supplements power of substituti on and resubstituti or substitutet utet u ff ff t t 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 capac ities indicated as of February 11, 2022. a /s/ G. Michael Sievert G. Michael Sievert /s/ Peter Osvaldik Peter Osvaldik /s/ Dara Bazzano Dara Bazzano /s/ Timotheus Höttges Timotheus Höttges /s/ Marcelo Claure Marcelo Claure /s/ Srikant M. Datar Srikant M. Datar /s/ Bavan Holloway Bavan Holloway /s/ Christian P. Illek Christian P. Illek Signature g Title Chief Executive Offiff cer and Director (Principal Executive Officer) ff Executive Vice President and Chief Financial Officer (Principal Financial Officer) Senior Vice President, Finance and Chief Accounting Officer (Principal Accounting Officff er) Chairman of the Board Director Director Director Director 132 /s/ Raphael KübKK ler Raphae a l KüblKK er /s/ Thorsten Langheim Thorsten Langheim /s/ Dominique Leroy Dominique Leroy /s/ Letitia A. Long Letitia A. Long /s/ Teresa A. Taylor Teresa A. Taylor /s/ Omar Tazi Omar Tazi /s/ Kelvin R. Westbrook Kelvin R. Westbrook /s/ Michael Wilkens Michael Wilkens Director Director Director Director Director Director Director Director 133 [THIS PAGE INTENTIONALLY LEFT BLANK] [THIS PAGE INTENTIONALLY LEFT BLANK] [THIS PAGE INTENTIONALLY LEFT BLANK] #WEWONTSTOP SENIOR LEADERSHIP TEAM, DIRECTORS AND BOARD COMMITTEES* SENIOR LEADERSHIP TEAM Mike Sievert** President and Chief Executive Officer Néstor Cano Executive Vice President, Integration and Transformation, and Strategic Advisor to the CEO Marcus East Chief Digital Officer Ulf Ewaldsson Executive Vice President and Chief Network Officer Peter A. Ewens** Executive Vice President, Corporate Strategy and Development Callie Field** President, Business Group Jon Freier** President, Consumer Group Janice V. Kapner Executive Vice President and Chief Communications Officer Mike Katz** Chief Marketing Officer Brian King Executive Vice President and Chief Information Officer Deeanne King** Executive Vice President and Chief Human Resources Officer Susan Loosmore Executive Vice President, Financial Planning and Analysis Mark W. Nelson** Executive Vice President and General Counsel Peter Osvaldik** Executive Vice President and Chief Financial Officer Neville Ray** President of Technology Abdul Saad Executive Vice President and Chief Technology Officer John Saw Executive Vice President, Advanced and Emerging Technologies DIRECTORS Timotheus Höttges, Chair Chief Executive Officer, Deutsche Telekom AG Marcelo Claure Entrepreneur & Investor, Former CEO, SoftBank Group International Srikant M. Datar George F. Baker Professor of Administration and Dean of the Faculty, The Graduate School of Business Administration at Harvard University Bavan Holloway Former Vice President, Corporate Audit, The Boeing Company Christian P. Illek Chief Finance Officer, Deutsche Telekom AG Raphael Kübler Senior Vice President of the Corporate Operating Office, Deutsche Telekom AG Thorsten Langheim Member of the Deutsche Telekom AG Board of Management, USA and Group Development Dominique Leroy Member of the Deutsche Telekom AG Board of Management, Europe Letitia A. Long Rector, Virginia Tech Board of Visitors, Chair of Board of Intelligence & National Security Alliance Mike Sievert President and Chief Executive Officer, T-Mobile US, Inc. Teresa A. Taylor Chief Executive Officer, Blue Valley Advisors, LLC Omar Tazi Senior Vice President of Group Innovation, Products, Design & Customer Experience, and Global Partnerships and Devices, Deutsche Telekom AG Kelvin R. Westbrook President and Chief Executive Officer, KRW Advisors, LLC Michael Wilkens Senior Vice President Group Controlling (FP&A), Deutsche Telekom AG BOARD COMMITTEES Audit Committee Srikant M. Datar (Chair) Bavan Holloway Teresa A. Taylor Compensation Committee Kelvin R. Westbrook (Chair) Marcelo Claure Christian P. Illek Raphael Kübler Michael Wilkens Nominating and Corporate Governance Committee Teresa A. Taylor (Chair) Dominique Leroy Letitia A. Long Executive Committee Timotheus Höttges (Chair) Marcelo Claure Christian P. Illek Raphael Kübler Thorsten Langheim Mike Sievert CEO Selection Committee Timotheus Höttges (Chair) Marcelo Claure Christian P. Illek Thorsten Langheim Teresa A. Taylor Transaction Committee Thorsten Langheim (Chair) Christian P. Illek Kelvin R. Westbrook STOCKHOLDER INFORMATION Corporate Headquarters 12920 SE 38th St. Bellevue, WA 98006 Phone: 1−800−318−9270 Website www.T-Mobile.com Transfer Agent American Stock Transfer and Trust Company, LLC 6201 15th Ave. Brooklyn, NY 11219 Phone: 1−800−499−8410 Stock Exchange T-Mobile US, Inc. Common stock trades on the NASDAQ Global Select Market T-Mobile US, Investor Relations 3655 131st Ave. SE Bellevue, WA 98006 investor.relations@T-Mobile.com Annual Report The 2021 Annual Report is available online at investor.T-Mobile.com. Stockholders may receive copies without charge by contacting Investor Relations. *As of April 8, 2022 **Executive Officer 

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