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, 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

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 July 28, 2021
Common Stock, par value $0.00001 per share	1,247,966,318

1

T-Mobile US, Inc.

Form 10-Q

For the Quarter Ended June 30, 2021

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
		Condensed Consolidated Statement of Stockholders’ Equity	6
		Notes to the Condensed Consolidated Financial Statements	9
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	34
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	59
	Item 4.	Controls and Procedures	59
PART II. OTHER INFORMATION
	Item 1.	Legal Proceedings	60
	Item 1A.	Risk Factors	60
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	61
	Item 3.	Defaults Upon Senior Securities	61
	Item 4.	Mine Safety Disclosures	61
	Item 5.	Other Information	61
	Item 6.	Exhibits	62
		Signatures	63

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, 2021		December 31, 2020
Assets
Current assets
Cash and cash equivalents	$	7,793	$	10,385
Accounts receivable, net of allowance for credit losses of $123 and $194	4,528		4,254
Equipment installment plan receivables, net of allowance for credit losses and imputed discount of $482 and $478	4,064		3,577
Accounts receivable from affiliates	18		22
Inventory	1,707		2,527
Prepaid expenses	818		624
Other current assets	1,642		2,496
Total current assets	20,570		23,885
Property and equipment, net	39,752		41,175
Operating lease right-of-use assets	27,511		28,021
Financing lease right-of-use assets	3,072		3,028
Goodwill	11,152		11,117
Spectrum licenses	82,917		82,828
Other intangible assets, net	4,600		5,298
Equipment installment plan receivables due after one year, net of allowance for credit losses and imputed discount of $115 and $127	2,284		2,031
Other assets	12,266		2,779
Total assets	$	204,124	$	200,162
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable and accrued liabilities	$	8,411	$	10,196
Payables to affiliates	105		157
Short-term debt	4,648		4,579
Short-term debt to affiliates	2,235		—
Deferred revenue	939		1,030
Short-term operating lease liabilities	3,577		3,868
Short-term financing lease liabilities	1,045		1,063
Other current liabilities	877		810
Total current liabilities	21,837		21,703
Long-term debt	65,897		61,830
Long-term debt to affiliates	2,490		4,716
Tower obligations	2,919		3,028
Deferred tax liabilities	10,391		9,966
Operating lease liabilities	26,515		26,719
Financing lease liabilities	1,376		1,444
Other long-term liabilities	5,229		5,412
Total long-term liabilities	114,817		113,115
Commitments and contingencies (Note 11)
Stockholders' equity
Common Stock, par value $0.00001 per share, 2,000,000,000 shares authorized; 1,249,478,357 and 1,243,345,584 shares issued, 1,247,920,536 and 1,241,805,706 shares outstanding	—		—
Additional paid-in capital	72,919		72,772
Treasury stock, at cost, 1,557,821 and 1,539,878 shares issued	(14)		(11)
Accumulated other comprehensive loss	(1,510)		(1,581)
Accumulated deficit	(3,925)		(5,836)
Total stockholders' equity	67,470		65,344
Total liabilities and stockholders' equity	$	204,124	$	200,162

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)	2021		2020		2021		2020
Revenues
Postpaid revenues	$	10,492	$	9,959	$	20,795	$	15,846
Prepaid revenues	2,427		2,311		4,778		4,684
Wholesale revenues	935		408		1,832		733
Other service revenues	638		552		1,279		813
Total service revenues	14,492		13,230		28,684		22,076
Equipment revenues	5,215		4,269		10,561		6,386
Other revenues	243		172		464		322
Total revenues	19,950		17,671		39,709		28,784
Operating expenses
Cost of services, exclusive of depreciation and amortization shown separately below	3,491		3,098		6,875		4,737
Cost of equipment sales, exclusive of depreciation and amortization shown separately below	5,453		3,667		10,595		6,196
Selling, general and administrative	4,823		5,604		9,628		9,292
Impairment expense	—		418		—		418
Depreciation and amortization	4,077		4,064		8,366		5,782
Total operating expenses	17,844		16,851		35,464		26,425
Operating income	2,106		820		4,245		2,359
Other income (expense)
Interest expense	(820)		(776)		(1,612)		(961)
Interest expense to affiliates	(32)		(63)		(78)		(162)
Interest income	2		6		5		18
Other expense, net	(1)		(195)		(126)		(205)
Total other expense, net	(851)		(1,028)		(1,811)		(1,310)
Income (loss) from continuing operations before income taxes	1,255		(208)		2,434		1,049
Income tax expense	(277)		(2)		(523)		(308)
Income (loss) from continuing operations	978		(210)		1,911		741
Income from discontinued operations, net of tax	—		320		—		320
Net income	$	978	$	110	$	1,911	$	1,061
Net income	$	978	$	110	$	1,911	$	1,061
Other comprehensive income (loss), net of tax
Unrealized gain (loss) on cash flow hedges, net of tax effect of $12, $3, $24, and $(273)	34		2		68		(790)
Unrealized gain on foreign currency translation adjustment, net of tax effect of $0, $0, $0, and $0	1		—		3		—
Other comprehensive income (loss)	35		2		71		(790)
Total comprehensive income	$	1,013	$	112	$	1,982	$	271
Earnings (loss) per share
Basic earnings (loss) per share:
Continuing operations	$	0.78	$	(0.17)	$	1.53	$	0.71
Discontinued operations	—		0.26		—		0.30
Basic	$	0.78	$	0.09	$	1.53	$	1.01
Diluted earnings (loss) per share:
Continuing operations	$	0.78	$	(0.17)	$	1.52	$	0.70
Discontinued operations	—		0.26		—		0.30
Diluted	$	0.78	$	0.09	$	1.52	$	1.00
Weighted average shares outstanding
Basic	1,247,563,331		1,236,528,444		1,245,552,847		1,047,338,364
Diluted	1,253,718,122		1,236,528,444		1,254,264,464		1,057,120,389

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)	2021		2020		2021		2020
Operating activities
Net income	$	978	$	110	$	1,911	$	1,061
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization	4,077		4,064		8,366		5,782
Stock-based compensation expense	134		259		272		397
Deferred income tax expense	226		98		437		408
Bad debt expense	72		233		154		346
(Gains) losses from sales of receivables	(12)		30		(30)		55
Losses on redemption of debt	28		163		129		163
Impairment expense	—		418		—		418
Changes in operating assets and liabilities
Accounts receivable	(1,839)		(498)		(1,743)		(1,246)
Equipment installment plan receivables	(568)		127		(1,295)		196
Inventories	584		(553)		863		(1,064)
Operating lease right-of-use assets	1,272		937		2,396		1,464
Other current and long-term assets	(154)		(104)		(100)		(98)
Accounts payable and accrued liabilities	28		(1,261)		(1,356)		(1,666)
Short and long-term operating lease liabilities	(996)		(1,077)		(2,365)		(1,802)
Other current and long-term liabilities	(47)		(2,190)		(264)		(2,111)
Other, net	(4)		21		65		91
Net cash provided by operating activities	3,779		777		7,440		2,394
Investing activities
Purchases of property and equipment, including capitalized interest of $57, $119, $141, and $231	(3,270)		(2,257)		(6,453)		(4,010)
Purchases of spectrum licenses and other intangible assets, including deposits	(8)		(745)		(8,930)		(844)
Proceeds from sales of tower sites	31		—		31		—
Proceeds related to beneficial interests in securitization transactions	1,137		602		2,028		1,470
Net cash related to derivative contracts under collateral exchange arrangements	—		1,212		—		632
Acquisition of companies, net of cash and restricted cash acquired	(1)		(5,000)		(30)		(5,000)
Other, net	28		(168)		32		(184)
Net cash used in investing activities	(2,083)		(6,356)		(13,322)		(7,936)
Financing activities
Proceeds from issuance of long-term debt	3,006		26,694		9,769		26,694
Payments of consent fees related to long-term debt	—		(109)		—		(109)
Repayments of financing lease obligations	(269)		(236)		(556)		(518)
Repayments of short-term debt for purchases of inventory, property and equipment and other financial liabilities	(36)		(151)		(91)		(176)
Repayments of long-term debt	(3,150)		(10,529)		(5,369)		(10,529)
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	(76)		(138)		(294)		(279)
Cash payments for debt prepayment or debt extinguishment costs	(6)		(24)		(71)		(24)
Other, net	(46)		7		(91)		2
Net cash (used in) provided by financing activities	(577)		15,628		3,297		15,175
Change in cash and cash equivalents, including restricted cash	1,119		10,049		(2,585)		9,633
Cash and cash equivalents, including restricted cash
Beginning of period	6,759		1,112		10,463		1,528
End of period	$	7,878	$	11,161	$	7,878	$	11,161

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, 2021	1,246,773,175	$	(14)	$	72,839	$	(1,545)	$	(4,903)	$	66,377
Net income	—	—		—		—		978		978
Other comprehensive income	—	—		—		35		—		35
Stock-based compensation	—	—		150		—		—		150
Exercise of stock options	100,238	—		6		—		—		6
Issuance of vested restricted stock units	1,603,258	—		—		—		—		—
Shares withheld related to net share settlement of stock awards and stock options	(559,630)	—		(76)		—		—		(76)
Transfers with NQDC plan	3,495	—		—		—		—		—
Balance as of June 30, 2021	1,247,920,536	$	(14)	$	72,919	$	(1,510)	$	(3,925)	$	67,470
Balance as of December 31, 2020	1,241,805,706	$	(11)	$	72,772	$	(1,581)	$	(5,836)	$	65,344
Net income	—	—		—		—		1,911		1,911
Other comprehensive income	—	—		—		71		—		71
Stock-based compensation	—	—		304		—		—		304
Exercise of stock options	181,040	—		9		—		—		9
Stock issued for employee stock purchase plan	1,272,253	—		125		—		—		125
Issuance of vested restricted stock units	7,025,097	—		—		—		—		—
Shares withheld related to net share settlement of stock awards and stock options	(2,345,617)	—		(294)		—		—		(294)
Transfers with NQDC plan	(17,943)	(3)		3		—		—		—
Balance as of June 30, 2021	1,247,920,536	$	(14)	$	72,919	$	(1,510)	$	(3,925)	$	67,470

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

6

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)	$	(7,949)	$	28,977
Net income	—	—		—		—		110		110
Other comprehensive income	—	—		—		2		—		2
Stock-based compensation	—	—		272		—		—		272
Exercise of stock options	262,394	—		14		—		—		14
Stock issued for employee stock purchase plan	(13)	—		—		—		—		—
Issuance of vested restricted stock units	4,157,095	—		—		—		—		—
Shares withheld related to net share settlement of stock awards and stock options	(1,564,635)	—		(138)		—		—		(138)
Transfers with NQDC plan	(40,263)	(1)		1		—		—		—
Shares issued in secondary offering	173,564,426	—		17,216		—		—		17,216
Shares repurchased from SoftBank (1)	(173,564,426)	—		(16,990)		—		—		(16,990)
Merger consideration	373,396,310	—		33,533		—		—		33,533
Balance as of June 30, 2020	1,237,338,994	$	(12)	$	72,505	$	(1,658)	$	(7,839)	$	62,996
Balance as of December 31, 2019	856,905,400	$	(8)	$	38,498	$	(868)	$	(8,833)	$	28,789
Net income	—	—		—		—		1,061		1,061
Other comprehensive loss	—	—		—		(790)		—		(790)
Executive put option	(342,000)	—		1		—		—		1
Stock-based compensation	—	—		424		—		—		424
Exercise of stock options	311,587	—		15		—		—		15
Stock issued for employee stock purchase plan	1,246,304	—		83		—		—		83
Issuance of vested restricted stock units	8,912,304	—		—		—		—		—
Shares withheld related to net share settlement of stock awards and stock options	(3,055,034)	—		(279)		—		—		(279)
Transfers with NQDC plan	(35,877)	(4)		4		—		—		—
Shares issued in secondary offering	173,564,426	—