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, 2022

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 20, 2022
Common Stock, par value $0.00001 per share	1,244,154,134

1

T-Mobile US, Inc.

Form 10-Q

For the Quarter Ended September 30, 2022

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	31
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	55
	Item 4.	Controls and Procedures	55
PART II. OTHER INFORMATION
	Item 1.	Legal Proceedings	55
	Item 1A.	Risk Factors	56
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	60
	Item 3.	Defaults Upon Senior Securities	60
	Item 4.	Mine Safety Disclosures	60
	Item 5.	Other Information	60
	Item 6.	Exhibits	61
		Signatures	62

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, 2022		December 31, 2021
Assets
Current assets
Cash and cash equivalents	$	6,888	$	6,631
Accounts receivable, net of allowance for credit losses of $161 and $146	4,324		4,194
Equipment installment plan receivables, net of allowance for credit losses and imputed discount of $624 and $494	5,048		4,748
Inventory	2,247		2,567
Prepaid expenses	711		746
Other current assets	2,209		2,005
Total current assets	21,427		20,891
Property and equipment, net	41,034		39,803
Operating lease right-of-use assets	29,264		26,959
Financing lease right-of-use assets	3,619		3,322
Goodwill	12,234		12,188
Spectrum licenses	95,767		92,606
Other intangible assets, net	3,763		4,733
Equipment installment plan receivables due after one year, net of allowance for credit losses and imputed discount of $125 and $136	2,514		2,829
Other assets	3,877		3,232
Total assets	$	213,499	$	206,563
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable and accrued liabilities	$	11,971	$	11,405
Short-term debt	7,398		3,378
Short-term debt to affiliates	—		2,245
Deferred revenue	777		856
Short-term operating lease liabilities	3,367		3,425
Short-term financing lease liabilities	1,239		1,120
Other current liabilities	1,610		1,070
Total current liabilities	26,362		23,499
Long-term debt	64,834		67,076
Long-term debt to affiliates	1,495		1,494
Tower obligations	3,970		2,806
Deferred tax liabilities	10,397		10,216
Operating lease liabilities	30,271		25,818
Financing lease liabilities	1,590		1,455
Other long-term liabilities	4,430		5,097
Total long-term liabilities	116,987		113,962
Commitments and contingencies (Note 14)
Stockholders' equity
Common Stock, par value $0.00001 per share, 2,000,000,000 shares authorized; 1,256,555,323 and 1,250,751,148 shares issued, 1,250,104,426 and 1,249,213,681 shares outstanding	—		—
Additional paid-in capital	73,797		73,292
Treasury stock, at cost, 6,450,896 and 1,537,468 shares issued	(685)		(13)
Accumulated other comprehensive loss	(1,263)		(1,365)
Accumulated deficit	(1,699)		(2,812)
Total stockholders' equity	70,150		69,102
Total liabilities and stockholders' equity	$	213,499	$	206,563

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)	2022		2021		2022		2021
Revenues
Postpaid revenues	$	11,548	$	10,804	$	34,194	$	31,599
Prepaid revenues	2,484		2,481		7,408		7,259
Wholesale and other service revenues	1,329		1,437		4,203		4,548
Total service revenues	15,361		14,722		45,805		43,406
Equipment revenues	3,855		4,660		12,679		15,221
Other revenues	261		242		814		706
Total revenues	19,477		19,624		59,298		59,333
Operating expenses
Cost of services, exclusive of depreciation and amortization shown separately below	3,712		3,538		11,499		10,413
Cost of equipment sales, exclusive of depreciation and amortization shown separately below	4,982		5,145		16,036		15,740
Selling, general and administrative	5,118		5,212		16,030		14,840
Impairment expense	—		—		477		—
Loss on disposal group held for sale	1,071		—		1,071		—
Depreciation and amortization	3,313		4,145		10,389		12,511
Total operating expenses	18,196		18,040		55,502		53,504
Operating income	1,281		1,584		3,796		5,829
Other expense, net
Interest expense, net	(827)		(836)		(2,542)		(2,521)
Other expense, net	(3)		(60)		(35)		(186)
Total other expense, net	(830)		(896)		(2,577)		(2,707)
Income before income taxes	451		688		1,219		3,122
Income tax benefit (expense)	57		3		(106)		(520)
Net income	$	508	$	691	$	1,113	$	2,602
Net income	$	508	$	691	$	1,113	$	2,602
Other comprehensive income, net of tax
Reclassification of loss from cash flow hedges, net of tax effect of $13, $12, $39, and $36	39		35		113		103
Unrealized loss on foreign currency translation adjustment, net of tax effect of $0, $0, $(1), and $0	(7)		(3)		(11)		—
Other comprehensive income	32		32		102		103
Total comprehensive income	$	540	$	723	$	1,215	$	2,705
Earnings per share
Basic	$	0.40	$	0.55	$	0.89	$	2.09
Diluted	$	0.40	$	0.55	$	0.88	$	2.07
Weighted-average shares outstanding
Basic	1,253,873,429		1,248,189,719		1,252,783,140		1,246,441,464
Diluted	1,259,210,271		1,253,661,245		1,258,061,478		1,254,391,787

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)	2022		2021		2022		2021
Operating activities
Net income	$	508	$	691	$	1,113	$	2,602
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization	3,313		4,145		10,389		12,511
Stock-based compensation expense	150		131		445		403
Deferred income tax (benefit) expense	(36)		(27)		73		410
Bad debt expense	239		105		760		259
Losses (gains) from sales of receivables	60		4		168		(26)
Losses on redemption of debt	—		55		—		184
Impairment expense	—		—		477		—
Loss on remeasurement of disposal group held for sale	371		—		371		—
Changes in operating assets and liabilities
Accounts receivable	(1,224)		(454)		(3,781)		(2,197)
Equipment installment plan receivables	(77)		(530)		(801)		(1,825)
Inventories	(7)		41		384		904
Operating lease right-of-use assets	1,113		1,334		4,275		3,730
Other current and long-term assets	(334)		(88)		(450)		(188)
Accounts payable and accrued liabilities	342		111		319		(1,245)
Short- and long-term operating lease liabilities	(700)		(2,046)		(2,218)		(4,411)
Other current and long-term liabilities	550		(87)		587		(351)
Other, net	123		92		334		157
Net cash provided by operating activities	4,391		3,477		12,445		10,917
Investing activities
Purchases of property and equipment, including capitalized interest of $(16), $(46), $(44), and $(187)	(3,634)		(2,944)		(10,587)		(9,397)
Purchases of spectrum licenses and other intangible assets, including deposits	(360)		(407)		(3,319)		(9,337)
Proceeds from sales of tower sites	—		—		—		31
Proceeds related to beneficial interests in securitization transactions	1,308		1,071		3,614		3,099
Acquisition of companies, net of cash and restricted cash acquired	—		(1,886)		(52)		(1,916)
Other, net	131		14		138		46
Net cash used in investing activities	(2,555)		(4,152)		(10,206)		(17,474)
Financing activities
Proceeds from issuance of long-term debt	2,972		1,989		2,972		11,758
Repayments of financing lease obligations	(311)		(266)		(901)		(822)
Repayments of short-term debt for purchases of inventory, property and equipment and other financial liabilities	—		(76)		—		(167)
Repayments of long-term debt	(132)		(4,600)		(3,145)		(9,969)
Repurchases of common stock	(557)		—		(557)		—
Tax withholdings on share-based awards	(10)		(14)		(225)		(308)
Cash payments for debt prepayment or debt extinguishment costs	—		(45)		—		(116)
Other, net	(35)		(48)		(97)		(139)
Net cash provided by (used in) financing activities	1,927		(3,060)		(1,953)		237
Change in cash and cash equivalents, including restricted cash and cash held for sale	3,763		(3,735)		286		(6,320)
Cash and cash equivalents, including restricted cash and cash held for sale
Beginning of period	3,226		7,878		6,703		10,463
End of period	$	6,989	$	4,143	$	6,989	$	4,143

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 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, 2022	1,254,010,072	1,564,549	$	(16)	$	73,552	$	(1,295)	$	(2,207)	$	70,034
Net income	—	—	—		—		—		508		508
Other comprehensive income	—	—	—		—		32		—		32
Stock-based compensation	—	—	—		165		—		—		165
Exercise of stock options	26,614	—	—		1		—		—		1
Stock issued for employee stock purchase plan	802,361	—	—		89		—		—		89
Issuance of vested restricted stock units	219,301	—	—		—		—		—		—
Forfeiture of restricted stock awards	(42)	42	—		—		—		—		—
Shares withheld related to net share settlement of stock awards and stock options	(67,575)	—	—		(10)		—		—		(10)
Repurchases of common stock	(4,892,315)	4,892,315	(669)		—		—		—		(669)
Transfers with NQDC plan	6,010	(6,010)	—		—		—		—		—
Balance as of September 30, 2022	1,250,104,426	6,450,896	$	(685)	$	73,797	$	(1,263)	$	(1,699)	$	70,150
Balance as of December 31, 2021	1,249,213,681	1,537,468	$	(13)	$	73,292	$	(1,365)	$	(2,812)	$	69,102
Net income	—	—	—		—		—		1,113		1,113
Other comprehensive income	—	—	—		—		102		—		102
Stock-based compensation	—	—	—		490		—		—		490
Exercise of stock options	116,817	—	—		5		—		—		5
Stock issued for employee stock purchase plan	2,079,086	—	—		227		—		—		227
Issuance of vested restricted stock units	5,380,712	—	—		—		—		—		—
Forfeiture of restricted stock awards	(42)	42	—		—		—		—		—
Shares withheld related to net share settlement of stock awards and stock options	(1,772,442)	—	—		(225)		—		—		(225)
Repurchases of common stock	(4,892,315)	4,892,315	(669)		—		—		—		(669)
Remeasurement of uncertain tax positions	—	—	—		5		—		—		5
Transfers with NQDC plan	(21,071)	21,071	(3)		3		—		—		—
Balance as of September 30, 2022	1,250,104,426	6,450,896	$	(685)	$	73,797	$	(1,263)	$	(1,699)	$	70,150

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 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	1,557,821	$	(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	(18,894)	1		(1)		—		—		—
Balance as of September 30, 2021	1,249,035,065	1,538,927	$	(13)	$	73,152	$	(1,478)	$	(3,234)	$	68,427
Balance as of December 31, 2020	1,241,805,706	1,539,878	$	(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	(951)	(2)		2		—		—