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, 2024

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(s)	Name of each exchange on which registered
Common Stock, par value $0.00001 per share	TMUS	The NASDAQ Stock Market LLC
3.550% Senior Notes due 2029	TMUS29	The NASDAQ Stock Market LLC
3.700% Senior Notes due 2032	TMUS32	The NASDAQ Stock Market LLC
3.850% Senior Notes due 2036	TMUS36	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 26, 2024
Common Stock, par value $0.00001 per share	1,166,784,033

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T-Mobile US, Inc.

Form 10-Q

For the Quarter Ended June 30, 2024

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	53
	Item 4.	Controls and Procedures	53
PART II. OTHER INFORMATION
	Item 1.	Legal Proceedings	54
	Item 1A.	Risk Factors	54
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	54
	Item 3.	Defaults Upon Senior Securities	55
	Item 4.	Mine Safety Disclosures	55
	Item 5.	Other Information	55
	Item 6.	Exhibits	56
		Signatures	57

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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, 2024		December 31, 2023
Assets
Current assets
Cash and cash equivalents	$	6,417	$	5,135
Accounts receivable, net of allowance for credit losses of $160 and $161	4,563		4,692
Equipment installment plan receivables, net of allowance for credit losses and imputed discount of $587 and $623	3,776		4,456
Inventory	1,319		1,678
Prepaid expenses	1,059		702
Other current assets	2,163		2,352
Total current assets	19,297		19,015
Property and equipment, net	38,222		40,432
Operating lease right-of-use assets	26,240		27,135
Financing lease right-of-use assets	3,271		3,270
Goodwill	13,015		12,234
Spectrum licenses	98,661		96,707
Other intangible assets, net	2,978		2,618
Equipment installment plan receivables due after one year, net of allowance for credit losses and imputed discount of $132 and $150	1,780		2,042
Other assets	5,093		4,229
Total assets	$	208,557	$	207,682
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable and accrued liabilities	$	7,591	$	10,373
Short-term debt	5,867		3,619
Deferred revenue	1,098		825
Short-term operating lease liabilities	3,202		3,555
Short-term financing lease liabilities	1,252		1,260
Other current liabilities	4,028		1,296
Total current liabilities	23,038		20,928
Long-term debt	70,203		69,903
Long-term debt to affiliates	1,496		1,496
Tower obligations	3,725		3,777
Deferred tax liabilities	15,022		13,458
Operating lease liabilities	27,272		28,240
Financing lease liabilities	1,133		1,236
Other long-term liabilities	4,032		3,929
Total long-term liabilities	122,883		122,039
Commitments and contingencies (Note 13)
Stockholders' equity
Common stock, par value $0.00001 per share, 2,000,000,000 shares authorized; 1,269,805,042 and 1,262,904,154 shares issued, 1,166,772,891 and 1,195,807,331 shares outstanding	—		—
Additional paid-in capital	68,463		67,705
Treasury stock, at cost, 103,032,151 and 67,096,823 shares	(15,270)		(9,373)
Accumulated other comprehensive loss	(917)		(964)
Retained earnings	10,360		7,347
Total stockholders' equity	62,636		64,715
Total liabilities and stockholders' equity	$	208,557	$	207,682

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)	2024		2023		2024		2023
Revenues
Postpaid revenues	$	12,899	$	12,070	$	25,530	$	23,932
Prepaid revenues	2,592		2,444		4,995		4,861
Wholesale and other service revenues	938		1,224		2,000		2,491
Total service revenues	16,429		15,738		32,525		31,284
Equipment revenues	3,106		3,169		6,357		6,888
Other revenues	237		289		484		656
Total revenues	19,772		19,196		39,366		38,828
Operating expenses
Cost of services, exclusive of depreciation and amortization shown separately below	2,664		2,916		5,352		5,977
Cost of equipment sales, exclusive of depreciation and amortization shown separately below	4,088		4,088		8,487		8,676
Selling, general and administrative	5,142		5,272		10,280		10,697
Loss (gain) on disposal group held for sale	—		17		—		(25)
Depreciation and amortization	3,248		3,110		6,619		6,313
Total operating expenses	15,142		15,403		30,738		31,638
Operating income	4,630		3,793		8,628		7,190
Other expense, net
Interest expense, net	(854)		(861)		(1,734)		(1,696)
Other (expense) income, net	(8)		6		12		15
Total other expense, net	(862)		(855)		(1,722)		(1,681)
Income before income taxes	3,768		2,938		6,906		5,509
Income tax expense	(843)		(717)		(1,607)		(1,348)
Net income	$	2,925	$	2,221	$	5,299	$	4,161
Net income	$	2,925	$	2,221	$	5,299	$	4,161
Other comprehensive income, net of tax
Reclassification of loss from cash flow hedges, net of tax effect of $15, $13, $30 and $27	43		40		86		80
Net unrealized loss on fair value hedges, net of tax effect of $(10), $0, $(10) and $0	(30)		—		(30)		—
Unrealized gain on foreign currency translation adjustment, net of tax effect of $0, $0, $0 and $0	—		7		—		9
Amortization of actuarial gain, net of tax effect of $(1), $0, $(3) and $0	(4)		—		(9)		—
Other comprehensive income	9		47		47		89
Total comprehensive income	$	2,934	$	2,268	$	5,346	$	4,250
Earnings per share
Basic	$	2.50	$	1.86	$	4.50	$	3.45
Diluted	$	2.49	$	1.86	$	4.49	$	3.44
Weighted-average shares outstanding
Basic	1,170,025,862		1,193,078,891		1,177,662,179		1,206,270,341
Diluted	1,172,447,353		1,195,533,499		1,180,929,879		1,210,220,958

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)	2024		2023		2024		2023
Operating activities
Net income	$	2,925	$	2,221	$	5,299	$	4,161
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization	3,248		3,110		6,619		6,313
Stock-based compensation expense	164		167		304		344
Deferred income tax expense	747		703		1,462		1,314
Bad debt expense	255		213		537		435
Losses from sales of receivables	25		51		46		89
Loss on remeasurement of disposal group held for sale	—		22		—		9
Changes in operating assets and liabilities
Accounts receivable	(1,286)		(1,514)		(1,702)		(2,782)
Equipment installment plan receivables	155		246		432		398
Inventory	221		362		391		491
Operating lease right-of-use assets	872		929		1,728		1,937
Other current and long-term assets	(416)		354		(256)		212
Accounts payable and accrued liabilities	38		(864)		(1,696)		(1,746)
Short- and long-term operating lease liabilities	(1,148)		(1,183)		(2,165)		(2,192)
Other current and long-term liabilities	(360)		(466)		(532)		(649)
Other, net	81		4		138		72
Net cash provided by operating activities	5,521		4,355		10,605		8,406
Investing activities
Purchases of property and equipment, including capitalized interest of $(8), $(14), $(17) and $(28)	(2,040)		(2,789)		(4,667)		(5,790)
Purchases of spectrum licenses and other intangible assets, including deposits	(156)		(33)		(217)		(106)
Proceeds from sales of tower sites	—		2		—		8
Proceeds related to beneficial interests in securitization transactions	958		1,309		1,848		2,654
Acquisition of companies, net of cash acquired	(390)		—		(390)		—
Other, net	(50)		24		(39)		19
Net cash used in investing activities	(1,678)		(1,487)		(3,465)		(3,215)
Financing activities
Proceeds from issuance of long-term debt	2,136		3,450		5,609		6,463
Repayments of financing lease obligations	(351)		(304)		(678)		(610)
Repayments of long-term debt	(2,723)		(223)		(2,946)		(354)
Repurchases of common stock	(2,387)		(3,591)		(5,981)		(8,210)
Dividends on common stock	(759)		—		(1,528)		—
Tax withholdings on share-based awards	(16)		(70)		(208)		(257)
Other, net	(34)		(46)		(68)		(89)
Net cash used in financing activities	(4,134)		(784)		(5,800)		(3,057)
Change in cash and cash equivalents, including restricted cash and cash held for sale	(291)		2,084		1,340		2,134
Cash and cash equivalents, including restricted cash and cash held for sale
Beginning of period	6,938		4,724		5,307		4,674
End of period	$	6,647	$	6,808	$	6,647	$	6,808

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 share and per share amounts)	Common Stock Outstanding	Treasury Stock Outstanding	Treasury Shares at Cost		Par Value and Additional Paid-in Capital		Accumulated Other Comprehensive Loss		Retained Earnings		Total Stockholders' Equity
Balance as of March 31, 2024	1,177,240,110	89,053,922	$	(12,982)	$	67,786	$	(926)	$	8,196	$	62,074
Net income	—	—	—		—		—		2,925		2,925
Dividends declared ($0.65 per share)	—	—	—		—		—		(761)		(761)
Other comprehensive income	—	—	—		—		9		—		9
Stock-based compensation	—	—	—		154		—		—		154
Issuance of vested restricted stock units	291,907	—	—		—		—		—		—
Shares withheld related to net share settlement of stock awards and stock options	(91,844)	—	—		(16)		—		—		(16)
Repurchases of common stock	(13,979,843)	13,979,843	(2,289)		—		—		—		(2,289)
Ka’ena Acquisition upfront consideration	3,264,952	—	—		536		—		—		536
Other, net	47,609	(1,614)	1		3		—		—		4
Balance as of June 30, 2024	1,166,772,891	103,032,151	$	(15,270)	$	68,463	$	(917)	$	10,360	$	62,636
Balance as of December 31, 2023	1,195,807,331	67,096,823	$	(9,373)	$	67,705	$	(964)	$	7,347	$	64,715
Net income	—	—	—		—		—		5,299		5,299
Dividends declared ($1.95 per share)	—	—	—		—		—		(2,286)		(2,286)
Other comprehensive income	—	—	—		—		47		—		47
Stock-based compensation	—	—	—		306		—		—		306
Stock issued for employee stock purchase plan	950,082	—	—		112		—		—		112
Issuance of vested restricted stock units	3,817,697	—	—		—		—		—		—
Shares withheld related to net share settlement of stock awards and stock options	(1,262,899)	—	—		(208)		—		—		(208)
Repurchases of common stock	(35,913,633)	35,913,633	(5,893)		—		—		—		(5,893)
Ka’ena Acquisition upfront consideration	3,264,952	—	—		536		—		—		536
Other, net	109,361	21,695	(4)		12		—		—		8
Balance as of June 30, 2024	1,166,772,891	103,032,151	$	(15,270)	$	68,463	$	(917)	$	10,360	$	62,636

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		Retained Earnings (Accumulated Deficit)		Total Stockholders' Equity
Balance as of March 31, 2023	1,204,696,325	55,910,664	$	(7,831)	$	74,043	$	(1,004)	$	1,717	$	66,925
Net income	—	—	—		—		—		2,221		2,221
Other comprehensive income	—	—	—		—		47		—		47
Stock-based compensation	—	—	—		185		—		—		185
Issuance of vested restricted stock units	1,321,269	—	—		—		—		—		—
Shares withheld related to net share settlement of stock awards and stock options	(483,892)	—	—		(70)		—		—		(70)
Repurchases of common stock	(25,183,838)	25,183,838	(3,561)		—		—		—		(3,561)
Other, net	48,884	(3,963)	—		3		—		—		3
Balance as of June 30, 2023	1,180,398,748	81,090,539	$	(11,392)	$	74,161	$	(957)	$	3,938	$	65,750
Balance as of December 31, 2022	1,233,960,078	22,916,449	$	(3,016)	$	73,941	$	(1,046)	$	(223)	$	69,656
Net income	—	—	—		—		—		4,161		4,161
Other comprehensive income	—	—	—		—		89		—		89
Stock-based compensation	—	—	—		340		—		—		340
Stock issued for employee stock purchase plan	1,063,426	—	—		126		—		—		126
Issuance of vested restricted stock units	5,166,070	—	—		—		—		—		—
Shares withheld related to net share settlement of stock awards and stock options	(1,747,248)	—	—		(257)		—		—		(257)
Repurchases of common stock	(58,147,778)	58,147,778	(8,371)		—		—		—		(8,371)
Other, net	104,200	26,312	(5)		11		—		—		6
Balance as of June 30, 2023	1,180,398,748	81,090,539	$	(11,392)	$	74,161	$	(957)	$	3,938	$	65,750

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

7

T-Mobile US, Inc.

Index for Notes to the Condensed Consolidated Financial Statements

Note 1	Summary of Significant Accounting Policies	9
Note 2	Business Combinations	10
Note 3	Joint Ventures	13
Note 4	Receivables and Related Allowance for Credit Losses	13
Note 5	Sales of Certain Receivables	15
Note 6	Goodwill, Spectrum License Transactions and Other Intangible Assets	17
Note 7	Fair Value Measurements	19
Note 8	Debt	21
Note 9	Tower Obligations	23
Note 10	Revenue from Contracts with Customers	24
Note 11	Stockholder Return Program	26
Note 12	Earnings Per Share	26
Note 13	Commitments and Contingencies	27
Note 14	Additional Financial Information	29
Note 15	Subsequent Event	30

8

T-Mobile US, Inc.

Notes to the Condensed Consolidated Financial Statements

Note 1 – Summary of Significant Accounting Policies

Basis of Presentation

The unaudited condensed consolidated financial statements of T-Mobile US, Inc. (“T-Mobile,” “we,” “our,” “us” or the “Company”) include all adjustments of a normal recurring nature necessary for the fair presentation of the results for the interim periods presented. The results for the interim periods are not necessarily indicative of those for the full year. The condensed consolidated financial statements should be read in conjunction with our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2023.

The condensed consolidated financial statements include the balances and results of operations of T-Mobile and our consolidated subsidiaries. We consolidate majority-owned subsidiaries over which we exercise control, as well as variable interest entities (“VIEs”) for which we are deemed to be the primary beneficiary and VIEs, which cannot be deconsolidated, such as those related to our obligations to pay for the management and operation of certain of our wireless communications tower sites. Intercompany transactions and balances have been eliminated in consolidation.

The preparation of financial statements in conformity with United States (“U.S.”) generally accepted accounting principles (“GAAP”) requires our management to make estimates and assumptions that affect the financial statements and accompanying notes. Estimates are based on historical experience, where applicable, and other assumptions that management believes are reasonable under the circumstances. Estimates are inherently subject to judgment and actual results could differ from those estimates.

Foreign Currency Transactions

On May 8, 2024, we issued €2.0 billion of euro (“EUR”) denominated debt. T-Mobile’s functional currency is the U.S. dollar (“USD”). Each period, we convert activity and balances in EUR into USD using average exchange rates for the period for income statement amounts and using end-of-period or spot exchange rates for assets and liabilities. We record transaction gains and losses resulting from the conversion of transaction currency to functional currency as a component of Other (expense) income, net on our Condensed Consolidated Statements of Comprehensive Income.

Derivative and Hedging Instruments

The Company manages its exposure to foreign exchange rates and interest rates through a risk management program that includes the use of derivative financial instruments, including cross-currency swaps. We designate certain derivatives as accounting hedge relationships. We do not hold derivatives for trading or speculative purposes.

We record derivatives on our Condensed Consolidated Balance Sheets and recognize them as either assets or liabilities at fair value. Fair value is derived primarily from observable market data, and our derivatives are classified as Level 2 in the fair value hierarchy.

Cash flows associated with qualifying hedge derivative instruments are presented in the same category on our Condensed Consolidated Statements of Cash Flows as the item being hedged. For fair value hedges, other than foreign currency hedges, the change in the fair value of the derivative instruments is recognized in earnings through the same income statement line item as the change in the fair value of the hedged item. For cash flow hedges, as well as fair value foreign currency hedges, the change in the fair value of the derivative instruments is reported in Accumulated other comprehensive loss and recognized in earnings when the hedged item is recognized in earnings, again, through the same income statement line item.

Accounting Pronouncements Not Yet Adopted

Segment Reporting Disclosures

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures.” The standard expands reportable segment disclosure requirements for public business entities primarily through enhanced disclosures about significant segment expenses that are regularly provided to the chief operating decision maker and included within each reported measure of segment profit (referred to as the “significant expense principle”). The standard will become effective for

9

us for our fiscal year 2024 annual financial statements and interim financial statements thereafter and will be applied retrospectively for all prior periods presented in the financial statements, with early adoption permitted. We plan to adopt the standard when it becomes effective for us beginning in our fiscal year 2024 annual financial statements. We are currently evaluating the impact this guidance will have on the disclosures included in the Notes to the Consolidated Financial Statements.

Income Tax Disclosures

In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures.” The standard enhances income tax disclosure requirements for all entities by requiring specified categories and greater disaggregation within the rate reconciliation table, disclosure of income taxes paid by jurisdiction, and providing clarification on uncertain tax positions and related financial statement impacts. The standard will be effective for us for our fiscal year 2025 annual financial statements with early adoption permitted. We plan to adopt the standard when it becomes effective for us beginning in our fiscal year 2025 annual financial statements, and we expect the adoption of the standard will impact certain of our income tax disclosures in the Notes to the Consolidated Financial Statements.

Note 2 – Business Combinations

Acquisition of Ka’ena Corporation

On March 9, 2023, we entered into a Merger and Unit Purchase Agreement (the “Merger and Unit Purchase Agreement”) for the acquisition of 100% of the outstanding equity of Ka’ena Corporation and its subsidiaries, including, among others, Mint Mobile LLC (collectively, “Ka’ena”), for a maximum purchase price of $1.35 billion to be paid out 39% in cash and 61% in shares of T-Mobile common stock (the “Ka’ena Acquisition”). On March 13, 2024, we entered into Amendment No. 1 to the Merger and Unit Purchase Agreement, which amended, among other things, certain mechanics of the payment of the purchase consideration for the Ka’ena Acquisition, which resulted in a nominal increase in the percentage of cash compared to shares of T-Mobile common stock to be paid out as part of the total purchase price.

Upon the completion of certain customary closing conditions, including the receipt of certain regulatory approvals, on May 1, 2024 (the “Acquisition Date”), we completed the Ka’ena Acquisition, and as a result, Ka’ena became a wholly owned subsidiary of T-Mobile. Concurrently and as agreed upon through the Merger and Unit Purchase Agreement, T-Mobile and Ka’ena entered into certain separate transactions, including the effective settlement of the preexisting wholesale arrangement between T-Mobile and Ka’ena and agreements with certain of the sellers to provide services to T-Mobile during the post-acquisition period.

Ka’ena is a provider of prepaid mobile services in the U.S. through its primary brands, Mint Mobile and Ultra Mobile, and also offers a selection of wireless devices, including handsets and other mobile communication devices. Prior to the Ka’ena Acquisition, Ka’ena was a wholesale partner of the Company for which we recognized service revenues within Wholesale and other service revenues on our Condensed Consolidated Statements of Comprehensive Income, and for which Ka’ena incurred related expenses for the use of our network. On the Acquisition Date, this relationship was effectively terminated, and the Company acquired Ka’ena’s prepaid customer relationships and will recognize service revenues associated with these customers within Prepaid revenues and operating expenses primarily within Selling, general and administrative expenses on our Condensed Consolidated Statements of Comprehensive Income subsequent to the Acquisition Date. The Ka’ena Acquisition enhances the Company’s position as a leading prepaid wireless carrier by diversifying our brand identities, enhancing our distribution footprint and preserving the value of our relationship with Ka’ena through its acquisition, including the acquisition of its prepaid customer relationships.

The financial results of Ka’ena from the Acquisition Date through June 30, 2024, were not material to our Condensed Consolidated Statements of Comprehensive Income, nor were they material to our prior period consolidated results on a pro forma basis. Costs related to the Ka’ena Acquisition were not material to our Condensed Consolidated Statements of Comprehensive Income.

Consideration Transferred

In accordance with the terms of the Merger and Unit Purchase Agreement, the total purchase price is variable, dependent upon specified performance indicators of Ka’ena, and consists of an upfront payment on the Acquisition Date and an earnout payable on August 1, 2026. The amount of the upfront payment is subject to customary adjustments within a 105-day review period.

On the Acquisition Date and in satisfaction of the upfront payment, we transferred $420 million in cash and 3,264,952 shares of T-Mobile common stock valued at $536 million as determined based on its closing market price on April 30, 2024, for a total

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payment fair value of $956 million. An additional amount of the upfront payment payable to certain sellers was deferred and may be paid through January 2026. As of the Acquisition Date, we recognized a liability of $27 million for the fair value of this deferred amount, which is included in the fair value of consideration transferred in the Ka’ena Acquisition. Furthermore, a portion of the upfront payment made on the Acquisition Date was for the settlement of the preexisting wholesale relationship with Ka’ena and excluded from the fair value of consideration transferred in the Ka’ena Acquisition.

Based on the amount of the upfront payment, up to an additional $403 million in future cash and T-Mobile common stock is payable in satisfaction of the earnout, dependent upon Ka’ena’s achievement of specified performance indicators.

•$241 million of the potential earnout amount is payment for the acquired Ka’ena business. As of the Acquisition Date, we recognized a liability of $183 million for the fair value of such contingent consideration. This liability will be adjusted to fair value at each future reporting date until settled, with a corresponding offset recorded to Selling, general and administrative expenses on our Condensed Consolidated Statements of Comprehensive Income.

•$162 million of the potential earnout amount is payment for services to be provided to T-Mobile by certain of the sellers during the post-acquisition period, as well as the replacement of equity awards of certain Ka’ena employees. We will record expense as such services are provided during the post-acquisition period within Selling, general and administrative expenses on our Condensed Consolidated Statements of Comprehensive Income, with a corresponding offset to Other current liabilities and Other long-term liabilities on our Condensed Consolidated Balance Sheets.

The acquisition-date fair value of consideration transferred in the Ka’ena Acquisition totaled $1.2 billion, comprised of the following:

(in millions)	May 1, 2024
Fair value of T-Mobile common stock issued to Ka’ena stockholders on the Acquisition Date	$	527
Fair value of cash paid to Ka’ena stockholders on the Acquisition Date	413
Fair value of contingent consideration	183
Fair value of deferred consideration	27
Total fair value of consideration exchanged	$	1,150

The fair value of contingent consideration related to the earnout was estimated using the income approach, a probability-weighted discounted cash flow model, whereby a Monte Carlo simulation method estimated the probability of different outcomes. 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 approach for the contingent consideration include forecasted Ka’ena financial information, primarily revenue, marketing costs and customer metrics, the probability of achieving the forecasted financial information and the discount rate.

As of June 30, 2024, $183 million of liabilities for contingent consideration and $21 million of liabilities for post-acquisition services were presented within Other long-term liabilities on our Condensed Consolidated Balance Sheets.

Fair Value of Assets Acquired and Liabilities Assumed

We have accounted for the Ka’ena Acquisition as a business combination. The identifiable assets acquired and liabilities assumed of Ka’ena were recorded at their provisionally assigned fair values as of the Acquisition Date and consolidated with those of T-Mobile. Assigning fair values to the assets acquired and liabilities assumed at the Acquisition Date requires the use of judgment regarding estimates and assumptions. For the provisionally assigned fair values of the assets acquired and liabilities assumed, we used the cost and income approaches.

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The following table summarizes the provisionally assigned fair values for each class of assets acquired and liabilities assumed at the Acquisition Date. We retained the services of certified valuation specialists to assist with assigning values to certain acquired assets. We are in the process of finalizing the valuation of the assets acquired and liabilities assumed, including income tax-related amounts. Therefore, the provisionally assigned fair values set forth below are subject to adjustment as additional information is obtained and the valuations are completed.

(in millions)	May 1, 2024
Cash and cash equivalents	$	24
Accounts receivable	34
Inventory	3
Prepaid expenses	5
Other current assets	10
Property and equipment	1
Operating lease right-of-use assets	2
Goodwill	781
Other intangible assets	740
Other assets	50
Total assets acquired	1,650
Accounts payable and accrued liabilities	42
Deferred revenue	297
Short-term operating lease liabilities	1
Deferred tax liabilities	86
Operating lease liabilities	2
Other long-term liabilities	72
Total liabilities assumed	500
Total consideration transferred	$	1,150

Intangible Assets

Goodwill with a provisionally assigned value of $781 million represents the excess of the consideration transferred over the fair values of assets acquired and liabilities assumed. The provisionally assigned goodwill recognized includes expected growth in customers and service revenues to be achieved from the operations of the combined company, the assembled workforce of Ka’ena and intangible assets that do not qualify for separate recognition. Of the total provisionally assigned amount of goodwill resulting from the Ka’ena Acquisition of $781 million, the preliminary amount deductible for tax purposes is $90 million. All of the goodwill acquired is allocated to the Wireless reporting unit.

Other intangible assets acquired primarily include $545 million of customer relationships with an estimated weighted-average useful life of six years, $70 million of tradenames with an estimated weighted-average useful life of eight years and $125 million of other intangible assets with an estimated weighted-average useful life of four years. The customer relationships are being amortized using the sum-of-the-years digits method over their estimated useful lives, and the tradenames are being amortized on a straight-line basis over their estimated useful lives.

The preliminary fair value of customer relationships was estimated using the income approach. 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 approach include forecasted subscriber churn rates, revenue over an estimated period of time, the discount rate and estimated income taxes.

UScellular Wireless Operations

On May 24, 2024, we entered into a securities purchase agreement with United States Cellular Corporation (“UScellular”), Telephone and Data Systems, Inc., and USCC Wireless Holdings, LLC, pursuant to which, among other things, we will acquire substantially all of UScellular’s wireless operations and select spectrum assets for an aggregate purchase price of approximately $4.4 billion, payable in cash and the assumption of up to $2.0 billion of debt through an exchange offer to be made to certain UScellular debtholders prior to closing. To the extent any debtholders do not participate in the exchange, their bonds will continue as obligations of UScellular, and the cash portion of the purchase price will be correspondingly increased. The transaction is expected to close in mid-2025, subject to customary closing conditions and receipt of certain regulatory approvals. Upon closing of the transaction, we expect to account for the UScellular transaction as a business combination and to consolidate the acquired operations.

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Following the closing of the transaction, UScellular will retain ownership of its other spectrum, as well as its towers. Subject to the closing of the transaction, we will enter into a 15-year master license agreement to lease space on at least 2,100 towers being retained. Additionally, we will extend our tenancy term on approximately 600 towers where we are already leasing space from UScellular for 15 years post-closing. We estimate the incremental future minimum lease payments associated with the master license agreement will be $1.4 billion over 15 years post-closing.

Note 3 – Joint Ventures

Lumos Joint Venture

On April 24, 2024, we entered into a merger agreement with a fund operated by EQT, Infrastructure VI fund (“Fund VI”), for the joint acquisition by us and Fund VI of Lumos, a fiber-to-the-home platform (“Lumos”), from EQT’s predecessor fund, EQT Infrastructure III. The Lumos joint acquisition is expected to close in late 2024 or early 2025, subject to customary closing conditions and regulatory approvals. At closing, we expect to invest approximately $950 million in the joint venture to acquire a 50% equity interest and all existing Lumos fiber customers. The funds invested by us will be used by the joint venture to fund future fiber builds. In addition, pursuant to the merger agreement, we expect to make an additional capital contribution of approximately $500 million in 2027 or 2028. Upon closing of the transaction, we expect to account for the Lumos joint venture under the equity method of accounting and recognize service revenues for the acquired Lumos fiber customers and wholesale costs paid to the joint venture for network access reflected in Cost of services on our Condensed Consolidated Statements of Comprehensive Income.

Metronet Joint Venture

Subsequent to June 30, 2024, on July 18, 2024, we entered into a definitive agreement with KKR & Co. Inc. (“KKR”) to establish a joint venture to acquire Metronet Holdings, LLC and certain of its affiliates (collectively, “Metronet”), a fiber-to-the-home platform. This arrangement is expected to close in 2025, subject to customary closing conditions and regulatory approvals. At closing, we expect to invest approximately $4.9 billion in the joint venture to acquire a 50% equity interest and all existing residential fiber customers, as well as funding the joint venture. Upon the closing of the transaction, we expect to account for the Metronet joint venture under the equity method of accounting and recognize service revenues for the acquired Metronet fiber customers and wholesale costs paid to the joint venture for network access reflected in Cost of services on our Condensed Consolidated Statements of Comprehensive Income.

Note 4 – Receivables and Related Allowance for Credit Losses

We maintain an allowance for credit losses by applying an expected credit loss model. Each period, management assesses the appropriateness of the level of allowance for credit losses by considering credit risk inherent within each portfolio segment as of the end of the period.

We consider a receivable past due when a customer has not paid us by the contractually specified payment due date. Account balances are written off against the allowance for credit losses if collection efforts are unsuccessful and the 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.

Our portfolio of receivables is comprised of two portfolio segments: accounts receivable and equipment installment plan (“EIP”) receivables.

Accounts Receivable Portfolio Segment

Accounts receivable balances are predominately comprised of amounts currently due from customers (e.g., for wireless communications services), 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 is adjusted for asset-specific considerations, current economic conditions and reasonable and supportable forecasts.

Our approach considers a number of factors, including our overall historical credit losses and payment experience, as well as current collection trends such as write-off frequency and severity. We also consider other qualitative factors such as current and forecasted macroeconomic conditions.

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We consider the need to adjust our estimate of credit losses for reasonable and supportable forecasts of future macroeconomic conditions. To do so, we monitor external forecasts of changes in real U.S. gross domestic product and forecasts of consumer credit behavior for comparable credit exposures.

EIP Receivables Portfolio Segment

Based upon customer credit profiles at the time of customer origination, as well as subsequent credit performance, we classify the EIP receivables segment into two customer classes of “Prime” and “Subprime.” Prime customer receivables are those with lower credit risk, and Subprime customer receivables are those with higher credit risk. Customers may be required to make a down payment on their equipment 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.

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 leveraging several factors, such as credit bureau information and consumer credit risk scores, as well as service and device plan characteristics.

EIP receivables had a combined weighted-average effective interest rate of 11.3% and 10.6% as of June 30, 2024, and December 31, 2023, respectively.

The following table summarizes the EIP receivables, including imputed discounts and related allowance for credit losses:

(in millions)	June 30, 2024		December 31, 2023
EIP receivables, gross	$	6,275	$	7,271
Unamortized imputed discount	(451)		(505)
EIP receivables, net of unamortized imputed discount	5,824		6,766
Allowance for credit losses	(268)		(268)
EIP receivables, net of allowance for credit losses and imputed discount	$	5,556	$	6,498
Classified on our condensed consolidated balance sheets as:
Equipment installment plan receivables, net of allowance for credit losses and imputed discount	$	3,776	$	4,456
Equipment installment plan receivables due after one year, net of allowance for credit losses and imputed discount	1,780		2,042
EIP receivables, net of allowance for credit losses and imputed discount	$	5,556	$	6,498

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 table presents the amortized cost of our EIP receivables by delinquency status, customer credit class and year of origination as of June 30, 2024:

	Originated in 2024				Originated in 2023				Originated prior to 2023				Total EIP Receivables, Net of Unamortized Imputed Discount
(in millions)	Prime		Subprime		Prime		Subprime		Prime		Subprime		Prime		Subprime		Total
Current - 30 days past due	$	2,093	$	612	$	2,076	$	539	$	297	$	94	$	4,466	$	1,245	$	5,711
31 - 60 days past due	7		14		8		13		2		2		17		29		46
61 - 90 days past due	4		8		7		12		2		2		13		22		35
More than 90 days past due	2		4		8		14		2		2		12		20		32
EIP receivables, net of unamortized imputed discount	$