UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒          QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2020

or

☐          TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 1-33409

T-MOBILE US, INC.

(Exact name of registrant as specified in its charter)

Delaware	20-0836269
(State or other jurisdiction of incorporation or organization)	(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	Trading Symbol	Name of each exchange on which registered
Common Stock, par value $0.00001 per share	TMUS	The NASDAQ Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every 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, a non-accelerated filer, a smaller 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.

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).      Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Class	Shares Outstanding as of August 3, 2020
Common Stock, par value $0.00001 per share	1,237,808,926

1

T-Mobile US, Inc.

Form 10-Q

For the Quarter Ended June 30, 2020

Table of Contents

PART I. FINANCIAL INFORMATION
	Item 1.	Financial Statements	3
		Condensed Consolidated Balance Sheets	3
		Condensed Consolidated Statements of Comprehensive Income	4
		Condensed Consolidated Statements of Cash Flows	5
		Consolidated Statement of Stockholders’ Equity	6
		Notes to the Condensed Consolidated Financial Statements	8
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	53
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	85
	Item 4.	Controls and Procedures	86
PART II. OTHER INFORMATION
	Item 1.	Legal Proceedings	87
	Item 1A.	Risk Factors	87
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	91
	Item 3.	Defaults Upon Senior Securities	92
	Item 4.	Mine Safety Disclosures	92
	Item 5.	Other Information	92
	Item 6.	Exhibits	93
		Signatures	97

2

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

T-Mobile US, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

(in millions, except share and per share amounts)	June 30, 2020		December 31, 2019
Assets
Current assets
Cash and cash equivalents	$	11,076	$	1,528
Accounts receivable, net of allowance for credit losses of $183 and $61	3,355		1,888
Equipment installment plan receivables, net of allowance for credit losses and imputed discount of $415 and $333	3,194		2,600
Accounts receivable from affiliates	24		20
Inventory	1,549		964
Prepaid expenses	627		333
Assets held for sale	1,910		—
Other current assets	2,586		1,972
Total current assets	24,321		9,305
Property and equipment, net	38,801		21,984
Operating lease right-of-use assets	17,246		10,933
Financing lease right-of-use assets	3,288		2,715
Goodwill	10,910		1,930
Spectrum licenses	82,870		36,465
Other intangible assets, net	6,038		115
Equipment installment plan receivables due after one year, net of allowance for credit losses and imputed discount of $76 and $66	1,399		1,583
Other assets	2,326		1,891
Total assets	$	187,199	$	86,921
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable and accrued liabilities	$	9,348	$	6,746
Payables to affiliates	126		187
Short-term debt	3,818		25
Short-term debt to affiliates	1,235		—
Deferred revenue	1,185		631
Short-term operating lease liabilities	4,164		2,287
Short-term financing lease liabilities	1,040		957
Liabilities held for sale	606		—
Other current liabilities	1,669		1,673
Total current liabilities	23,191		12,506
Long-term debt	62,783		10,958
Long-term debt to affiliates	4,706		13,986
Tower obligations	3,130		2,236
Deferred tax liabilities	9,996		5,607
Operating lease liabilities	15,487		10,539
Financing lease liabilities	1,416		1,346
Other long-term liabilities	3,494		954
Total long-term liabilities	101,012		45,626
Commitments and contingencies (Note 17)
Stockholders' equity
Common Stock, par value $0.00001 per share, 2,000,000,000 shares authorized; 1,238,888,085 and 858,418,615 shares issued, 1,237,338,994 and 856,905,400 shares outstanding	—		—
Additional paid-in capital	72,505		38,498
Treasury stock, at cost, 1,549,091 and 1,513,215 shares issued	(12)		(8)
Accumulated other comprehensive loss	(1,658)		(868)
Accumulated deficit	(7,839)		(8,833)
Total stockholders' equity	62,996		28,789
Total liabilities and stockholders' equity	$	187,199	$	86,921

The accompanying notes are an integral part of these condensed consolidated financial statements.

3

T-Mobile US, Inc.

Condensed Consolidated Statements of Comprehensive Income

(Unaudited)

	Three Months Ended June 30,				Six Months Ended June 30,
(in millions, except share and per share amounts)	2020		2019		2020		2019
Revenues
Postpaid revenues	$	9,959	$	5,613	$	15,846	$	11,106
Prepaid revenues	2,311		2,379		4,684		4,765
Wholesale revenues	408		313		733		617
Roaming and other service revenues	552		241		813		449
Total service revenues	13,230		8,546		22,076		16,937
Equipment revenues	4,269		2,263		6,386		4,779
Other revenues	172		170		322		343
Total revenues	17,671		10,979		28,784		22,059
Operating expenses
Cost of services, exclusive of depreciation and amortization shown separately below	3,098		1,649		4,737		3,195
Cost of equipment sales, exclusive of depreciation and amortization shown separately below	3,667		2,661		6,196		5,677
Selling, general and administrative	5,604		3,543		9,292		6,985
Impairment expense	418		—		418		—
Depreciation and amortization	4,064		1,585		5,782		3,185
Total operating expenses	16,851		9,438		26,425		19,042
Operating income	820		1,541		2,359		3,017
Other income (expense)
Interest expense	(776)		(182)		(961)		(361)
Interest expense to affiliates	(63)		(101)		(162)		(210)
Interest income	6		4		18		12
Other expense, net	(195)		(22)		(205)		(15)
Total other expense, net	(1,028)		(301)		(1,310)		(574)
(Loss) income from continuing operations before income taxes	(208)		1,240		1,049		2,443
Income tax expense	(2)		(301)		(308)		(596)
(Loss) income from continuing operations	(210)		939		741		1,847
Income from discontinued operations, net of tax	320		—		320		—
Net income	$	110	$	939	$	1,061	$	1,847
Net income	$	110	$	939	$	1,061	$	1,847
Other comprehensive loss, net of tax
Unrealized gain (loss) on cash flow hedges, net of tax effect of $3, $(102) , $(273) and $(168)	2		(292)		(790)		(481)
Total comprehensive income	$	112	$	647	$	271	$	1,366
Earnings per share
Basic earnings (loss) per share:
Continuing operations	$	(0.17)	$	1.10	$	0.71	$	2.16
Discontinued operations	0.26		—		0.30		—
Basic	$	0.09	$	1.10	$	1.01	$	2.16
Diluted earnings (loss) per share:
Continuing operations	$	(0.17)	$	1.09	$	0.70	$	2.14
Discontinued operations	0.26		—		0.30		—
Diluted	$	0.09	$	1.09	$	1.00	$	2.14
Weighted average shares outstanding
Basic	1,236,528,444		854,368,443		1,047,338,364		852,796,369
Diluted	1,236,528,444		860,135,593		1,057,120,389		860,890,870

The accompanying notes are an integral part of these condensed consolidated financial statements.

4

T-Mobile US, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

	Three Months Ended June 30,				Six Months Ended June 30,
(in millions)	2020		2019		2020		2019
Operating activities
Net income	$	110	$	939	$	1,061	$	1,847
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization	4,064		1,585		5,782		3,185
Stock-based compensation expense	259		130		397		240
Deferred income tax expense	98		267		408		555
Bad debt expense	233		71		346		144
Losses from sales of receivables	30		28		55		63
Losses on redemption of debt	163		19		163		19
Impairment expense	418		—		418		—
Changes in operating assets and liabilities
Accounts receivable	(498)		(805)		(1,246)		(1,948)
Equipment installment plan receivables	127		(150)		196		(400)
Inventories	(553)		162		(1,064)		(103)
Operating lease right-of-use assets	937		469		1,464		904
Other current and long-term assets	(104)		(83)		(98)		(170)
Accounts payable and accrued liabilities	(1,261)		43		(1,666)		56
Short and long-term operating lease liabilities	(1,077)		(521)		(1,802)		(1,043)
Other current and long-term liabilities	(2,190)		(27)		(2,111)		94
Other, net	21		20		91		96
Net cash provided by operating activities	777		2,147		2,394		3,539
Investing activities
Purchases of property and equipment, including capitalized interest of $119, $125, $231 and $243	(2,257)		(1,789)		(4,010)		(3,720)
Purchases of spectrum licenses and other intangible assets, including deposits	(745)		(665)		(844)		(850)
Proceeds related to beneficial interests in securitization transactions	602		839		1,470		1,996
Net cash related to derivative contracts under collateral exchange arrangements	1,212		—		632		—
Acquisition of companies, net of cash and restricted cash acquired	(5,000)		—		(5,000)		—
Other, net	(168)		—		(184)		(7)
Net cash used in investing activities	(6,356)		(1,615)		(7,936)		(2,581)
Financing activities
Proceeds from issuance of long-term debt	26,694		—		26,694		—
Payments of consent fees related to long-term debt	(109)		—		(109)		—
Proceeds from borrowing on revolving credit facility	—		880		—		1,765
Repayments of revolving credit facility	—		(880)		—		(1,765)
Repayments of financing lease obligations	(236)		(229)		(518)		(315)
Repayments of short-term debt for purchases of inventory, property and equipment, net	(151)		—		(176)		—
Repayments of long-term debt	(10,529)		(600)		(10,529)		(600)
Issuance of common stock	17,290		—		17,290		—
Repurchases of common stock	(16,990)		—		(16,990)		—
Proceeds from issuance of short-term debt	18,743		—		18,743		—
Repayments of short-term debt	(18,929)		—		(18,929)		—
Tax withholdings on share-based awards	(138)		(4)		(279)		(104)
Cash payments for debt prepayment or debt extinguishment costs	(24)		(28)		(24)		(28)
Other, net	7		(5)		2		(9)
Net cash provided by (used in) financing activities	15,628		(866)		15,175		(1,056)
Change in cash and cash equivalents	10,049		(334)		9,633		(98)
Cash and cash equivalents, including restricted cash
Beginning of period	1,112		1,439		1,528		1,203
End of period	$	11,161	$	1,105	$	11,161	$	1,105

The accompanying notes are an integral part of these condensed consolidated financial statements.

5

T-Mobile US, Inc.

Condensed Consolidated Statement of Stockholders’ Equity

(Unaudited)

(in millions, except shares)	Common Stock Outstanding	Treasury Shares at Cost		Par Value and Additional Paid-in Capital		Accumulated Other Comprehensive Loss		Accumulated Deficit	Total Stockholders' Equity
Balance as of March 31, 2020	861,128,106	$	(11)	$	38,597	$	(1,660)