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 September 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 October 27, 2021
Common Stock, par value $0.00001 per share	1,249,053,529

1

T-Mobile US, Inc.

Form 10-Q

For the Quarter Ended September 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	35
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	62
	Item 4.	Controls and Procedures	62
PART II. OTHER INFORMATION
	Item 1.	Legal Proceedings	64
	Item 1A.	Risk Factors	64
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	67
	Item 3.	Defaults Upon Senior Securities	67
	Item 4.	Mine Safety Disclosures	67
	Item 5.	Other Information	67
	Item 6.	Exhibits	68
		Signatures	68

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)	September 30, 2021		December 31, 2020
Assets
Current assets
Cash and cash equivalents	$	4,055	$	10,385
Accounts receivable, net of allowance for credit losses of $129 and $194	4,109		4,254
Equipment installment plan receivables, net of allowance for credit losses and imputed discount of $469 and $478	4,306		3,577
Accounts receivable from affiliates	21		22
Inventory	1,762		2,527
Prepaid expenses	943		624
Other current assets	1,576		2,496
Total current assets	16,772		23,885
Property and equipment, net	39,355		41,175
Operating lease right-of-use assets	27,446		28,021
Financing lease right-of-use assets	3,396		3,028
Goodwill	12,188		11,117
Spectrum licenses	92,589		82,828
Other intangible assets, net	5,047		5,298
Equipment installment plan receivables due after one year, net of allowance for credit losses and imputed discount of $109 and $127	2,280		2,031
Other assets	3,052		2,779
Total assets	$	202,125	$	200,162
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable and accrued liabilities	$	8,735	$	10,196
Payables to affiliates	92		157
Short-term debt	2,096		4,579
Short-term debt to affiliates	2,240		—
Deferred revenue	914		1,030
Short-term operating lease liabilities	3,077		3,868
Short-term financing lease liabilities	1,154		1,063
Other current liabilities	939		810
Total current liabilities	19,247		21,703
Long-term debt	66,645		61,830
Long-term debt to affiliates	1,494		4,716
Tower obligations	2,862		3,028
Deferred tax liabilities	10,370		9,966
Operating lease liabilities	26,279		26,719
Financing lease liabilities	1,587		1,444
Other long-term liabilities	5,214		5,412
Total long-term liabilities	114,451		113,115
Commitments and contingencies (Note 13)
Stockholders' equity
Common Stock, par value $0.00001 per share, 2,000,000,000 shares authorized; 1,250,573,992 and 1,243,345,584 shares issued, 1,249,035,065 and 1,241,805,706 shares outstanding	—		—
Additional paid-in capital	73,152		72,772
Treasury stock, at cost, 1,538,927 and 1,539,878 shares issued	(13)		(11)
Accumulated other comprehensive loss	(1,478)		(1,581)
Accumulated deficit	(3,234)		(5,836)
Total stockholders' equity	68,427		65,344
Total liabilities and stockholders' equity	$	202,125	$	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 September 30,				Nine Months Ended September 30,
(in millions, except share and per share amounts)	2021		2020		2021		2020
Revenues
Postpaid revenues	$	10,804	$	10,209	$	31,599	$	26,055
Prepaid revenues	2,481		2,383		7,259		7,067
Wholesale revenues	944		930		2,776		1,663
Other service revenues	493		617		1,772		1,430
Total service revenues	14,722		14,139		43,406		36,215
Equipment revenues	4,660		4,953		15,221		11,339
Other revenues	242		180		706		502
Total revenues	19,624		19,272		59,333		48,056
Operating expenses
Cost of services, exclusive of depreciation and amortization shown separately below	3,538		3,314		10,413		8,051
Cost of equipment sales, exclusive of depreciation and amortization shown separately below	5,145		4,367		15,740		10,563
Selling, general and administrative	5,212		4,876		14,840		14,168
Impairment expense	—		—		—		418
Depreciation and amortization	4,145		4,150		12,511		9,932
Total operating expenses	18,040		16,707		53,504		43,132
Operating income	1,584		2,565		5,829		4,924
Other income (expense)
Interest expense	(780)		(765)		(2,392)		(1,726)
Interest expense to affiliates	(58)		(44)		(136)		(206)
Interest income	2		3		7		21
Other expense, net	(60)		(99)		(186)		(304)
Total other expense, net	(896)		(905)		(2,707)		(2,215)
Income from continuing operations before income taxes	688		1,660		3,122		2,709
Income tax benefit (expense)	3		(407)		(520)		(715)
Income from continuing operations	691		1,253		2,602		1,994
Income from discontinued operations, net of tax	—		—		—		320
Net income	$	691	$	1,253	$	2,602	$	2,314
Net income	$	691	$	1,253	$	2,602	$	2,314
Other comprehensive income (loss), net of tax
Unrealized gain (loss) on cash flow hedges, net of tax effect of $12, $12, $36, and $(261)	35		33		103		(757)
Unrealized (loss) gain on foreign currency translation adjustment, net of tax effect of $0, $1, $0, and $1	(3)		4		—		4
Other comprehensive income (loss)	32		37		103		(753)
Total comprehensive income	$	723	$	1,290	$	2,705	$	1,561
Earnings per share
Basic earnings per share:
Continuing operations	$	0.55	$	1.01	$	2.09	$	1.79
Discontinued operations	—		—		—		0.29
Basic	$	0.55	$	1.01	$	2.09	$	2.08
Diluted earnings per share:
Continuing operations	$	0.55	$	1.00	$	2.07	$	1.78
Discontinued operations	—		—		—		0.28
Diluted	$	0.55	$	1.00	$	2.07	$	2.06
Weighted average shares outstanding
Basic	1,248,189,719		1,238,450,665		1,246,441,464		1,111,511,964
Diluted	1,253,661,245		1,249,798,740		1,254,391,787		1,122,040,528

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 September 30,				Nine Months Ended September 30,
(in millions)	2021		2020		2021		2020
Operating activities
Net income	$	691	$	1,253	$	2,602	$	2,314
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization	4,145		4,150		12,511		9,932
Stock-based compensation expense	131		161		403		558
Deferred income tax (benefit) expense	(27)		335		410		743
Bad debt expense	105		143		259		489
Losses (gains) from sales of receivables	4		(18)		(26)		37
Losses on redemption of debt	55		108		184		271
Impairment expense	—		—		—		418
Changes in operating assets and liabilities
Accounts receivable	(454)		(1,538)		(2,197)		(2,784)
Equipment installment plan receivables	(530)		(306)		(1,825)		(110)
Inventories	41		(549)		904		(1,613)
Operating lease right-of-use assets	1,334		1,062		3,730		2,526
Other current and long-term assets	(88)		(8)		(188)		(106)
Accounts payable and accrued liabilities	111		(964)		(1,245)		(2,630)
Short and long-term operating lease liabilities	(2,046)		(1,145)		(4,411)		(2,947)
Other current and long-term liabilities	(87)		(51)		(351)		(2,162)
Other, net	92		139		157		230
Net cash provided by operating activities	3,477		2,772		10,917		5,166
Investing activities
Purchases of property and equipment, including capitalized interest of $(46), $(108), $(187), and $(339)	(2,944)		(3,217)		(9,397)		(7,227)
(Purchases) refunds of spectrum licenses and other intangible assets, including deposits	(407)		17		(9,337)		(827)
Proceeds from sales of tower sites	—		—		31		—
Proceeds related to beneficial interests in securitization transactions	1,071		855		3,099		2,325
Net cash related to derivative contracts under collateral exchange arrangements	—		—		—		632
Acquisition of companies, net of cash and restricted cash acquired	(1,886)		—		(1,916)		(5,000)
Proceeds from the divestiture of prepaid business	—		1,238		—		1,238
Other, net	14		(25)		46		(209)
Net cash used in investing activities	(4,152)		(1,132)		(17,474)		(9,068)
Financing activities
Proceeds from issuance of long-term debt	1,989		—		11,758		26,694
Payments of consent fees related to long-term debt	—		—		—		(109)
Repayments of financing lease obligations	(266)		(246)		(822)		(764)
Repayments of short-term debt for purchases of inventory, property and equipment and other financial liabilities	(76)		(231)		(167)		(407)
Repayments of long-term debt	(4,600)		(5,678)		(9,969)		(16,207)
Issuance of common stock	—		2,550		—		19,840
Repurchases of common stock	—		(2,546)		—		(19,536)
Proceeds from issuance of short-term debt	—		—		—		18,743
Repayments of short-term debt	—		—		—		(18,929)
Tax withholdings on share-based awards	(14)		(72)		(308)		(351)
Cash payments for debt prepayment or debt extinguishment costs	(45)		(58)		(116)		(82)
Other, net	(48)		137		(139)		139
Net cash (used in) provided by financing activities	(3,060)		(6,144)		237		9,031
Change in cash and cash equivalents, including restricted cash	(3,735)		(4,504)		(6,320)		5,129
Cash and cash equivalents, including restricted cash
Beginning of period	7,878		11,161		10,463		1,528
End of period	$	4,143	$	6,657	$	4,143	$	6,657

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 June 30, 2021	1,247,920,536	$	(14)	$	72,919	$	(1,510)	$	(3,925)	$	67,470
Net income	—	—		—		—		691		691
Other comprehensive income	—	—		—		32		—		32
Stock-based compensation	—	—		147		—		—		147
Exercise of stock options	14,578	—		1		—		—		1
Stock issued for employee stock purchase plan	917,444	—		100		—		—		100
Issuance of vested restricted stock units	256,605	—		—		—		—		—
Shares withheld related to net share settlement of stock awards and stock options	(92,992)	—		(14)		—		—		(14)
Transfers with NQDC plan	18,894	1		(1)		—		—		—
Balance as of September 30, 2021	1,249,035,065	$	(13)	$	73,152	$	(1,478)	$	(3,234)	$	68,427
Balance as of December 31, 2020	1,241,805,706	$	(11)	$	72,772	$	(1,581)	$	(5,836)	$	65,344
Net income	—	—		—		—		2,602		2,602
Other comprehensive income	—	—		—		103		—		103
Stock-based compensation	—	—		451		—		—		451
Exercise of stock options	195,618	—		10		—		—		10
Stock issued for employee stock purchase plan	2,189,697	—		225		—		—		225
Issuance of vested restricted stock units	7,281,702	—		—		—		—		—
Shares withheld related to net share settlement of stock awards and stock options	(2,438,609)	—		(308)		—		—		(308)
Transfers with NQDC plan	951	(2)		2		—		—		—
Balance as of September 30, 2021	1,249,035,065	$	(13)	$	73,152	$	(1,478)	$	(3,234)	$	68,427

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 June 30, 2020	1,237,338,994	$	(12)	$	72,505	$	(1,658)	$	(7,839)	$	62,996
Net income	—	—		—		—		1,253		1,253
Other comprehensive income	—	—		—		37		—		37
Stock-based compensation	—	—		177		—		—		177
Exercise of stock options	483,266	—		27		—		—		27
Stock issued for employee stock purchase plan	897,732	—		65		—		—		65
Issuance of vested restricted stock units	2,383,098	—		—		—		—		—
Shares withheld related to net share settlement of stock awards and stock options	(648,872)	—		(72)		—		—		(72)
Transfers with NQDC plan	4,400	1		(1)		—		—		—
Shares issued in secondary offering (1)	24,750,000	—		2,550		—		—		2,550
Shares repurchased from SoftBank (2)	(24,750,000)	—		(2,546)		—		—		(2,546)
Balance as of September 30, 2020	1,240,458,618	$	(11)	$	72,705	$	(1,621)	$	(6,586)	$	64,487
Balance as of December 31, 2019	856,905,400	$	(8)	$	38,498	$	(868)	$	(8,833)	$	28,789
Net income	—	—		—		—		2,314		2,314
Other comprehensive loss	—	—		—		(753)		—		(753)
Executive put option	(342,000)	—		1		—		—		1