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What changed in T-Mobile US, Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of T-Mobile US, Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+359 added−367 removedSource: 10-K (2024-02-02) vs 10-K (2023-02-14)

Top changes in T-Mobile US, Inc.'s 2023 10-K

359 paragraphs added · 367 removed · 254 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeWe expect our suppliers to share our commitment to ethical conduct and environmentally responsible business practices while they conduct business with or on behalf of us. We employ a third-party risk management (“TPRM”) process to screen for anti-corruption, global sanctions, human rights and environmental risks before engaging with a supplier.
Biggest changeWe employ a third-party risk management (“TPRM”) process to screen for anti-corruption, global sanctions, human rights and environmental risks before engaging with a supplier. Our TPRM process also continuously monitors current suppliers for policy violations and risks.
Environmental Sustainability Reducing Carbon Footprint We are working to reduce the impact of our operations on the climate by setting carbon reduction goals that are aligned with science and investing in renewable energy.
Environmental Sustainability Reducing Our Carbon Footprint We are working to reduce the impact of our operations on the climate by setting carbon reduction goals that are aligned with science and investing in renewable energy.
It is all easily accessible on our Magenta University site, which is our one-stop shop for all things career development and learning. The online learning portal is designed to put employees in the driver’s seat and give them access to mentoring, training, videos, books, job search and interview tips, and much more.
It is all easily accessible on our Magenta U site, which is our one-stop shop for all things career development and learning. The online learning portal is designed to put employees in the driver’s seat and give them access to mentoring, training, videos, books, job search and interview tips, and much more.
Our corporate governance guidelines, director selection guidelines, code of ethics for senior financial officers, code of business conduct, speak up policy, supplier code of conduct, and charters for the audit, compensation, nominating and corporate governance, executive and CEO selection committees of our Board of Directors are also posted on the investor relations section of our website at investor.t-mobile.com.
Our corporate governance guidelines, director selection guideline, code of ethics for senior financial officers, code of business conduct, speak up policy, supplier code of conduct, and charters for the audit, compensation, nominating and corporate governance, and executive committees of our Board of Directors are also posted on the investor relations section of our website at investor.t-mobile.com.
We provide services, devices and accessories across our flagship brands, T-Mobile and Metro by T-Mobile, through our owned and operated retail stores, as well as through our websites (www.t-mobile.com and www.metrobyt-mobile.com), T-Mobile app, customer care channels and through national retailers.
We provide services, devices and accessories across our flagship brands, T-Mobile and Metro by T-Mobile, through our owned and operated retail stores, as well as through our websites (www.t-mobile.com and www.metrobyt-mobile.com), T-Mobile and Metro by T-Mobile apps, customer care channels and through national retailers.
Substantially all of our revenues for the years ended December 31, 2022, 2021 and 2020, were earned in the United States, including Puerto Rico and the U.S. Virgin Islands.
Substantially all of our revenues for the years ended December 31, 2023, 2022 and 2021, were earned in the United States, including Puerto Rico and the U.S. Virgin Islands.
Currently, we have over 45 DE&I chapters across the nation that help spearhead volunteer opportunities, events and meaningful conversation with employees at a local level.
Currently, we have over 40 DE&I chapters across the nation that help spearhead volunteer opportunities, events and meaningful conversation with employees at a local level.
While a majority of our leases have contractual provisions enabling us to match offers, we may be forced to compete with others to purchase 2.5 GHz licenses on the secondary market and expend additional capital earlier than we may have anticipated.
While a majority of our leases have contractual provisions enabling us to match offers, we may be forced to compete with others to purchase 2.5 GHz licenses on the secondary market 10 Table of Contents and expend additional capital earlier than we may have anticipated.
With America’s largest, fastest, most reliable and most awarded 5G network, the Un-carrier strives to offer customers unrivaled coverage and capacity where they live, work and travel. We believe our network is the foundation of our success and powers everything we do.
With what we believe is America’s largest, fastest, most awarded and most advanced 5G network, the Un-carrier strives to offer customers unrivaled coverage and capacity where they live, work and travel. We believe our network is the foundation of our success and powers everything we do.
We are reducing our carbon footprint through several initiatives, including: • Setting a science-based net-zero target for 2040 that includes Scope 1, 2 and 3 emissions; • Investing in renewable energy, as evidenced by our RE100 pledge, a global initiative that unites businesses committed to 100% renewable electricity.
We are reducing our carbon footprint through several initiatives, including: • Making progress on our science-based net-zero target for 2040 that includes Scope 1, 2 and 3 emissions; • Investing in renewable energy, as evidenced by our RE100 pledge, a global initiative that unites businesses committed to 100% renewable electricity.
In addition, our competitors include numerous smaller and regional carriers, MVNOs, including Comcast Corporation, Charter Communications, Inc., Altice USA, Inc. and DISH, many of which offer no-contract, postpaid and prepaid service plans. Competitors also include providers who offer similar communication services, such as voice, messaging and data services, using alternative technologies.
In addition, our competitors include numerous smaller and regional providers, including Comcast Corporation, Charter Communications, Inc., Cox Communications, Inc., and Altice USA, Inc., many of which offer no-contract, postpaid and prepaid service plans. Competitors also include providers who offer similar communication services, such as voice, messaging and data services, using alternative technologies.
As a result of the Merger, we have achieved, and expect to continue to achieve, significant synergies and cost reductions by eliminating redundancies within our network, as well as through other business processes and operations. 6 Table of Contents Spectrum Position We provide wireless communications services utilizing low-band spectrum licenses covering our 600 MHz and 700 MHz spectrum, mid-band spectrum licenses, such as Advanced Wireless Services (“AWS”), Personal Communications Services (“PCS”) and 2.5 GHz spectrum, and mmWave spectrum. • We controlled, or expected to control based on previously announced auction results, an average of 388 MHz of combined low- and mid-band spectrum nationwide as of December 31, 2022.
As a result of the Merger, we have achieved significant synergies and cost reductions by eliminating redundancies within our network, as well as through other business processes and operations. 6 Table of Contents Spectrum Position We provide wireless communications services utilizing low-band spectrum licenses covering our 600 MHz and 700 MHz spectrum, mid-band spectrum licenses, such as Advanced Wireless Services (“AWS”), Personal Communications Services (“PCS”) and 2.5 GHz spectrum, and mmWave spectrum. • We controlled, or expected to control based on previously announced auction results, an average of 392 MHz of combined low- and mid-band spectrum nationwide as of December 31, 2023.
With our High Speed Internet plan, customers can access the internet without worrying about annual service contracts, data overages or hidden fees. We also provide products and services that are complementary to our wireless communications services, including device protection, financial services, advertising and wireline communication services to domestic and international customers.
With our High Speed Internet plan, customers can access the internet without worrying about annual service contracts, data overages or hidden fees. We also provide products and services that are complementary to our wireless communications services, including device protection, financial services and advertising.
For example, the FCC has rules regarding provision of 911, 988 and E-911 services, porting telephone numbers, interconnection, roaming, internet openness or net neutrality, disabilities access, privacy and cybersecurity, consumer protection and the universal service and Lifeline programs.
For example, the FCC has rules regarding provision of 911, 988 and E-911 services, porting telephone numbers, interconnection, roaming, internet openness or net neutrality, robocalling/robotexting, disabilities access, privacy and cybersecurity, digital discrimination, consumer protection and the universal service and Lifeline programs.
Item 1. Business Business Overview and Strategy Un-carrier Strategy We are America’s supercharged Un-carrier. Through our Un-carrier strategy, we have disrupted the wireless communications services industry by actively engaging with and listening to our customers and focusing on eliminating their existing pain points.
Item 1. Business Business Overview and Strategy Un-carrier Strategy As America’s supercharged Un-carrier, we have disrupted the wireless communications services industry by actively engaging with and listening to our customers and focusing on eliminating their pain points.
Network Strategy Utilizing our multi-layer spectrum portfolio, our mission is to become “Famous for Network.” We have deployed low-band, mid-band and mmWave spectrum dedicated for 5G across our dense and broad network to create what we believe is America’s largest, fastest, most reliable and most awarded 5G network. The Merger greatly enhanced our spectrum position.
Network Strategy Utilizing our multilayer spectrum portfolio, our mission is to become “Famous for Network.” We have deployed low-band, mid-band and mmWave spectrum dedicated for 5G across our dense and broad network to create what we believe is America’s largest, fastest, most awarded and most advanced 5G network. The Merger greatly enhanced our spectrum position.
See Note 6 – Goodwill, Spectrum License Transactions and Other Intangible Assets for additional details. • In September 2022, the FCC announced that we were the winning bidder of 7,156 licenses in Auction 108 (2.5 GHz spectrum) for an aggregate price of $304 million.
See Note 6 – Goodwill, Spectrum License Transactions and Other Intangible Assets of the Notes to the Consolidated Financial Statements for additional details. • In September 2022, the FCC announced that we were the winning bidder of 7,156 licenses in Auction 108 (2.5 GHz spectrum) for an aggregate price of $304 million.
Notwithstanding this federal preemption, several states are considering or have passed laws or regulations 10 Table of Contents that could potentially set prices, minimum performance standards and/or restrictions on service discontinuation that could impact our business in those states.
Notwithstanding this federal preemption, several states are considering or have passed laws or regulations that could potentially set prices, minimum performance standards and/or restrictions on service discontinuation that could impact our business in those states.
Some of our competitors have shown a willingness to use aggressive pricing or offer bundled services as a potential source of differentiation. 7 Table of Contents Human Capital Employees As of December 31, 2022, we employed approximately 71,000 full-time and part-time employees, including network, retail, administrative and customer support functions.
Some of our competitors have shown a willingness to use discounted pricing or offer bundled services as a potential source of differentiation. 7 Table of Contents Human Capital Employees As of December 31, 2023, we employed approximately 67,000 full-time and part-time employees, including network, retail, administrative and customer support functions.
The information on our website is not part of this or any other report we file with, or furnish to, the SEC.
The information on our website is not part of this or any other report we file with, or furnish to, the SEC. 11 Table of Contents
As of December 31, 2022, we have decommissioned substantially all targeted Sprint macro sites.
As of December 31, 2022, we had decommissioned substantially all targeted Sprint macro sites.
For our Educational Broadband Service (“EBS”) licenses in the 2.5 GHz band, FCC rules previously limited eligibility to hold EBS licenses to accredited educational institutions and certain governmental, religious and nonprofit entities, while permitting those license holders to lease up to 95% of their capacity for non-educational purposes.
For our Educational Broadband Service (“EBS”) licenses in the 2.5 GHz band, FCC rules previously limited eligibility to hold EBS licenses to accredited educational institutions and certain governmental, religious and nonprofit entities, while permitting those license holders to lease their licenses to commercial providers for non-educational purposes.
While most states pursuing net neutrality legislation are largely seeking to codify the repealed federal rules, there are differences in some states, notably California, which has passed separate privacy and net neutrality legislation, Colorado, Connecticut, Utah and Virginia, which have passed privacy laws; and New York, which has passed a broadband rate-setting law.
While most states pursuing net neutrality legislation are largely seeking to codify the repealed federal rules, there are differences in some states, notably California, which has passed separate privacy and net neutrality legislation, Colorado, Connecticut, Utah, Virginia, Delaware, Indiana, Iowa, Montana, Oregon, Tennessee and Texas, which have passed privacy laws; and New York, which has passed a broadband rate-setting law.
We first met this goal in 2021 and then again in 2022 by matching our electricity usage with renewable energy credits acquired through a variety of sources, including through our engagement in Virtual Power Purchasing Agreements and a Green Direct tariff agreement with nine clean energy providers for expected annual provision of approximately 3.5 million megawatt hours of renewable electricity; • Continuously testing and evaluating new, efficient equipment for our facilities, including switch stations, cell sites, retail stores and customer experience centers to reduce energy consumption; and • Promoting the circular economy through our device reuse and recycle program, which collects millions of devices for reuse, resale, and recycling annually.
We first met this goal in 2021 and have achieved it in each subsequent year so far by matching our electricity usage with renewable energy credits acquired through a variety of sources, including through our engagement in Virtual Power Purchasing Agreements and a Green Direct tariff agreement with nine clean energy providers for expected annual provision of approximately 3.5 million megawatt hours of renewable electricity; • Continuously testing and evaluating more efficient equipment for our facilities, including switch stations, cell sites, retail stores and customer experience centers to reduce energy consumption; and • Promoting a circular economy through our device reuse and recycle program, which collects millions of devices for reuse, resale, and recycling annually.
As part of T-Mobile’s Equity In Action Plan and Promises, we have established an External Diversity and Inclusion Council in connection with our civil rights memorandum of understanding. The council includes civil rights leaders representing a wide range of underrepresented communities.
As part of T-Mobile’s Equity In Action Plan and Promises, we have established two External Diversity and Inclusion Councils in connection with our civil rights memorandum of understanding. The councils include civil rights leaders representing a wide range of underrepresented communities.
Our Operations As of December 31, 2022, we provide wireless communications services to 113.6 million postpaid and prepaid customers and generate revenue by providing affordable wireless communications services to these customers, as well as a wide selection of wireless devices and accessories.
Our Operations As of December 31, 2023, we provide wireless communications services to 119.7 million postpaid and prepaid customers and generate revenue by providing affordable wireless communications services to these customers, as well as a wide selection of wireless devices and accessories.
Customers We provide wireless communications services to a variety of customers needing connectivity, but focus primarily on two categories of customers: • Postpaid customers generally are qualified to pay after receiving wireless communications services utilizing phones, High Speed Internet, tablets, wearables, DIGITS and other connected devices; and • Prepaid customers generally pay for wireless communications services, including High Speed Internet, in advance.
Customers We provide wireless communications services to a variety of customers needing connectivity, but focus primarily on two categories of customers: • Postpaid customers generally are qualified to pay after receiving wireless communications services utilizing phones, High Speed Internet modems, mobile internet devices (including tablets and hotspots), wearables, DIGITS and other connected devices, including SyncUP and internet of things (“IoT”).
Our ability to attract and retain postpaid and prepaid customers is important to our business in the generation of service revenues, equipment revenues and other revenues. In 2022, our service revenues generated by providing wireless communications services by customer category were: • 75% Postpaid customers; • 16% Prepaid customers; and • 9% Wholesale and other services.
Our ability to attract and retain postpaid and prepaid customers is important to our business in the generation of service revenues, equipment revenues and other revenues. In 2023, our service revenues generated by providing wireless communications services by customer category were: • 77% Postpaid customers; • 15% Prepaid customers; and • 8% Wholesale and other services.
Together with T-Mobile, the council will help identify ways to improve our efforts in focus areas such as corporate governance, workforce recruitment and retention, procurement, entrepreneurship, philanthropy and community investment. Since April 2020, we have achieved a significant portion of the Equity In Action Promises.
Together with T-Mobile, the councils are helping us identify ways to improve our efforts in focus areas such as corporate governance, workforce recruitment and retention, procurement, entrepreneurship, philanthropy and community investment. Since April 2020, we have achieved a significant portion of the Equity In Action Promises, currently at 80% completed.
Competition The wireless communications services industry is highly competitive. We are the second largest provider of wireless communications services in the U.S. as measured by our total postpaid and prepaid customers. Our competitors include other national carriers, such as AT&T Inc. (“AT&T”) and Verizon Communications, Inc. (“Verizon”).
Competition The wireless communications services industry remains competitive. We are the second largest provider of wireless communications services in the U.S. as measured by our total postpaid and prepaid customers. Our competitors include other carriers, such as AT&T Inc. (“AT&T”), Verizon Communications, Inc. (“Verizon”), and DISH as it continues to grow its network.
Our TPRM process also continuously monitors current suppliers for policy violations and risks. 9 Table of Contents Regulation The FCC regulates many key aspects of our business, including licensing, construction, the operation and use of our network, modifications of our network, control and ownership of our licenses and authorizations, the sale, transfer and acquisition of certain licenses, domestic roaming arrangements and interconnection agreements, pursuant to its authority under the Communications Act of 1934, as amended (“Communications Act”).
Regulation The FCC regulates many key aspects of our business, including licensing, construction, the operation and use of our network, modifications of our network, control and ownership of our licenses and authorizations, the sale, transfer and acquisition of certain licenses, domestic roaming arrangements and interconnection agreements, pursuant to its authority under the Communications Act of 1934, as amended (“Communications Act”).
Integration of the spectrum and network assets acquired in the Merger is expected to continue through 2023. Our integration strategy includes deploying the acquired spectrum on the combined network assets to supplement capacity, migrating Sprint customers to our network and optimizing the combined assets by decommissioning redundant sites.
Integration of the spectrum and network assets acquired in the Merger was substantially completed in 2023. Our integration strategy included deploying the acquired spectrum on the combined network assets to supplement capacity, migrating Sprint customers to our network and optimizing the combined assets by decommissioning redundant sites.
A significant decline in the value of our licenses could adversely affect our financial condition and results of operations. In addition, the FCC periodically reviews its policies on how to evaluate carriers’ spectrum holdings. A change in these policies could affect spectrum resources and competition among us and other carriers.
A significant decline in the value of our licenses could adversely affect our financial condition and results of operations. In addition, the FCC periodically reviews its policies on how to evaluate carriers’ spectrum holdings in the context of spectrum transactions or acquisitions.
Our prepaid customers include customers of T-Mobile and Metro by T-Mobile. Our customer base includes consumers as well as business customers, who are provided services under the T-Mobile for Business brand. We provide Machine-to-Machine (“M2M”) and Mobile Virtual Network Operator (“MVNO”) customers access to our network.
We serve consumers as well as business customers, who are provided services under the T-Mobile for Business brand. • Prepaid customers generally pay for wireless communications services in advance. We serve prepaid customers under the T-Mobile and Metro by T-Mobile brands. We provide Machine-to-Machine (“M2M”) and Mobile Virtual Network Operator (“MVNO”) customers access to our network.
In September 2022, we entered into an agreement for the sale of the Wireline Business. See Note 16 – Wireline for additional information.
In September 2022, we entered into an agreement for the sale of the Wireline Business, and on May 1, 2023, we completed the sale of the Wireline Business. See Note 14 – Wireline for additional information.
We also offer an Essentials rate plan for customers who want the basics at a lower price point, as well as specific rate plans to qualifying customers, including Business, Military and Veterans, First Responder, and Unlimited 55+.
We also offer an Essentials rate plan for customers who want the basics at a lower price point, specific rate plans to qualifying customers, including Military and Veterans, First Responder and 55+, as well as Go5G and Go5G Next plans to deliver a full suite of plans that provide customers the features that meet their lifestyle and daily needs.
Our “layer cake” of spectrum provides an unmatched 5G experience to our customers, which consists of our foundational layer of low-band, our mid-band and our millimeter-wave (“mmWave”) spectrum licenses (See “Spectrum Position” below). Our layer cake broadens and deepens our nationwide 5G network, enabling accelerated innovation and increased competition in the U.S. wireless and broadband industries.
Our “layer cake” of spectrum provides an unmatched 5G and overall network experience to our customers, which consists of our foundational layer of low-band, our mid-band and our millimeter-wave (“mmWave”) spectrum licenses (see “Spectrum Position” below).
Our most popular service plan offering is Magenta Max, which allows customers to subscribe for wireless communications services separately from the purchase of a device. This plan includes unlimited talk, text and data on our network, 5G access at no extra cost, scam protection features and more.
Our most popular service plan offering is Go5G Plus, which includes unlimited talk, text and data on our network, 5G access at no extra cost, scam protection features, access to the same device offers as new customers and more.
We are inspired by a relentless customer experience focus, consistently leading the wireless industry in customer care by delivering award-winning customer experience with our “Team of Experts,” which drives our record-high customer satisfaction levels while enabling operational efficiencies.
We are inspired by a relentless focus on customer experience, consistently delivering award-winning customer experience with our “Total Experience” approach, which drives our customer satisfaction levels while enabling operational efficiencies.
This spectrum is comprised of: • An average of 38 MHz in the 600 MHz band; • An average of 10 MHz in the 700 MHz band; • An average of 14 MHz in the 800 MHz band; • An average of 40 MHz in the 1700 MHz AWS band; • An average of 66 MHz in the 1900 MHz PCS band; • An average of 181 MHz in the 2.5 GHz band; • An average of 12 MHz in the 3.45 GHz band; and • An average of 27 MHz in the C-band. • We controlled an average of 1,157 GHz of combined mmWave spectrum licenses. • In January 2022, the FCC announced that we were the winning bidder of 199 licenses in Auction 110 (mid-band spectrum) for an aggregate purchase price of $2.9 billion.
This spectrum is comprised of: • An average of 40 MHz in the 600 MHz band; • An average of 10 MHz in the 700 MHz band; • An average of 14 MHz in the 800 MHz band; • An average of 41 MHz in the 1700 MHz AWS band; • An average of 66 MHz in the 1900 MHz PCS band; • An average of 182 MHz in the 2.5 GHz band; • An average of 12 MHz in the 3.45 GHz band; and • An average of 27 MHz in the C-band. • We controlled an average of 1,157 GHz of combined mmWave spectrum licenses. • In August 2022, we entered into license purchase agreements pursuant to which we will acquire spectrum in the 600 MHz band in exchange for total cash consideration of $3.5 billion.
The timing of when the licenses will be issued will be determined by the FCC after all post-auction procedures have been completed. • We plan to evaluate future spectrum purchases in future auctions and in the secondary market to further augment our current spectrum position. • As of December 31, 2022, we had equipment deployed on approximately 79,000 macro cell sites and 41,000 small cell/distributed antenna system sites across our network. 5G Leadership Our 5G network is America’s largest, fastest, most reliable and most awarded: • As of December 31, 2022, our Ultra Capacity 5G utilizing mid-band and mmWave spectrum covers 263 million people. • As of December 31, 2022, our total 5G coverage, including low-band spectrum, covers 325 million people, reaching 98% of Americans.
See Note 6 – Goodwill, Spectrum License Transactions and Other Intangible Assets of the Notes to the Consolidated Financial Statements for additional details. • We plan to evaluate future spectrum purchases in future auctions and in the secondary market to further augment our current spectrum position. • As of December 31, 2023, we had equipment deployed on approximately 80,000 macro cell sites and 48,000 small cell/distributed antenna system sites across our network. 5G Leadership We believe our 5G network is America’s largest, fastest, most awarded and most advanced: • As of December 31, 2023, our Ultra Capacity 5G utilizing mid-band and mmWave spectrum covers more than 300 million people. • As of December 31, 2023, our total 5G coverage, including low-band spectrum, covers more than 330 million people, reaching 98% of Americans.
Our fixed wireless product is available to millions of domestic households, providing an alternative to traditional landline internet service providers and expanding access to many people who have historically had only one choice or no access to traditional home broadband.
Our fixed wireless product is available to millions of domestic households where we currently have excess network capacity, providing, for some consumers, an alternative to traditional landline internet service providers and expanding access to and choice for some consumers.
At the time of device purchase, qualified customers can finance all or a portion of the individual device or accessory purchase price over an installment period, generally of 24 months, using an equipment installment plan (“EIP”).
At the time of device purchase, qualified customers can finance all or a portion of the individual device or accessory purchase price over an installment period, generally of 24 months, using an equipment installment plan (“EIP”). 5 Table of Contents In addition to our mobile wireless communications services, we offer High Speed Internet, which includes a fixed wireless product that utilizes the excess capacity of our nationwide 5G network.
On May 4, 2022, the FCC issued to us the licenses won in Auction 110. • In August 2022, we entered into license purchase agreements pursuant to which we will acquire spectrum in the 600 MHz band in exchange for total cash consideration of $3.5 billion.
The timing of when the licenses will be issued will be determined by the FCC after all post-auction procedures have been completed. • In September 2023, we entered into a license purchase agreement pursuant to which we will acquire spectrum in the 600 MHz band in exchange for total cash consideration of between $1.2 billion and $3.3 billion.
Removed
For certain existing customers, devices are leased over an initial period of up to 18 months and may be upgraded when eligibility requirements are met. 5 Table of Contents In addition to our mobile wireless communications services, we offer High Speed Internet, which is a fixed wireless product that utilizes the excess capacity of our nationwide 5G network.
Added
This multilayer portfolio of spectrum broadens and deepens our nationwide 5G network, enabling accelerated innovation and increased competition in the U.S. wireless and broadband industries.
Added
This year, we updated our Supplier Diversity Policy that provides the primary guidance designed to ensure that DE&I are integrated into the purchasing process of goods and services for and on behalf of T-Mobile.
Added
In addition, we published T-Mobile’s CEO Supplier Diversity Policy Statement, reenforcing our Equity In Action diversity plan that aims to increase the amount of business we do with diverse suppliers.
Added
We expect 9 Table of Contents our suppliers to share our commitment to ethical conduct and environmentally responsible business practices while they conduct business with or on behalf of us. Our Responsible Sourcing Policy further outlines T-Mobile’s expectations in this area.
Added
Most recently, for example, in September 2023, the FCC sought public comment on whether it should initiate a rulemaking proceeding to consider changes to its mobile spectrum rules and policies. A change in these rules and policies could affect our access to additional spectrum resources and competition among us and other carriers.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

79 edited+46 added−49 removed90 unchanged
Biggest changeExamples of these risks include: • physical damage, power surges or outages, equipment failure, or other service disruptions with respect to both our wireless and wireline networks, including those resulting from severe weather, storms and natural disasters, which may occur more frequently or with greater intensity as a result of global climate change, public health crises, terrorist attacks, political instability and volatility and acts of war; • chronic changes in physical conditions, such as sea-level rise or changes in temperature or precipitation patterns, which may impact the operating conditions of our infrastructure or other infrastructure we rely on; • human error, such as responding to deceptive communications or unintentionally executing malicious code; • unauthorized access to our IT and business systems or to our network and critical infrastructure and those of our suppliers and other providers; • supplier failures or delays; and • system failures or outages of our business systems or communications network.
Biggest changeExamples of these risks include: • physical damage, power surges or outages, equipment failure, or other service disruptions with respect to both our wireless and wireline networks, including those resulting from severe weather, storms, earthquakes, floods, hurricanes, wildfires and natural disasters, which may occur more frequently or with greater intensity as a result of global climate change, public health crises, terrorist attacks, political instability and volatility and acts of war; • human error due to factors such as poor change management or policy compliance; • risks to our access to and use of reliable energy and water; • hardware or software failures or outages of our business systems or communications network; • supplier failures or delays; and • potential shifts in physical conditions due to climate change, such as sea-level rise or changes in temperature or precipitation patterns, may impact the operating conditions of our infrastructure or other infrastructure we rely on.
DT’s controlling interest may have the effect of making it more difficult for a third party to acquire, or discouraging a third party from seeking to acquire, the Company and DT, as the controlling stockholder, may have strategic, financial, or other interests different from our other stockholders, including as the holder of a portion of our debt and as the counterparty in a number of commercial arrangements, and may make decisions adverse to the interests of our other stockholders.
DT’s controlling interest may have the effect of making it more difficult for a third party to acquire, or discouraging a third party from seeking to acquire, the Company and DT, as the controlling stockholder, may have strategic, financial, or other interests different from those of our other stockholders, including as the holder of a portion of our debt and as the counterparty in a number of commercial arrangements, and may make decisions adverse to the interests of our other stockholders.
We, DT and SoftBank are parties to the Second Amended and Restated Stockholders’ Agreement pursuant to which DT is free to transfer its shares in public sales without notice, as long as such transactions would not result in a third party owning more than 30% of the outstanding shares of our common stock.
We and DT are parties to the Second Amended and Restated Stockholders’ Agreement pursuant to which DT is free to transfer its shares in public sales without notice, as long as such transactions would not result in a third party owning more than 30% of the outstanding shares of our common stock.
The Second Amended and Restated Stockholders’ Agreement does not otherwise impose any other restrictions on the sales of common stock by DT or SoftBank. Moreover, the Second Amended and Restated Stockholders’ Agreement generally requires us to cooperate with DT to facilitate the resale of our common stock or debt securities held by DT under shelf registration statements we have filed.
The Second Amended and Restated Stockholders’ Agreement does not otherwise impose any other restrictions on the sales of common stock by DT. Moreover, the Second Amended and Restated Stockholders’ Agreement generally requires us to cooperate with DT to facilitate the resale of our common stock or debt securities held by DT under shelf registration statements we have filed.
In connection with the proposed class action settlement and other settlements of separate consumer claims that have been previously completed or are currently pending , we recorded a total pre-tax charge of approximately $400 million during the three months ended June 30, 2022.
In connection with the class action settlement and other settlements of separate consumer claims that have been previously completed or are currently pending , we recorded a total pre-tax charge of approximately $400 million during the three months ended June 30, 2022.
In addition, in connection with the January 2023 cyberattack, we have received notices of consumer class actions and regulatory inquires, to which we will respond to in due course.
In addition, in connection with the January 2023 cyberattack, we have received notices of consumer class actions and regulatory inquires, to which we will continue to respond in due course.
We may not be able to, at any given time, refinance our debt, sell assets, or make additional borrowings on commercially reasonable terms or at all, which could have a material adverse effect on our business, financial condition, and operating results. Changes in credit market conditions could adversely affect our ability to raise debt favorably.
We may not be able to, at any given time, refinance our debt, sell assets, or make additional borrowings on commercially reasonable terms or at all, which could have a material adverse effect on our business, financial condition, and operating results. Changes in credit market conditions and other factors could adversely affect our ability to raise debt favorably.
Ongoing legal and other costs related to these proceedings and inquiries, as well as any potential future proceedings and inquiries related to the August 2021 cyberattack and the January 2023 cyberattack, may be substantial, and losses associated with any adverse judgments, settlements, penalties or other resolutions of such proceedings and inquiries could be significant and have a material adverse impact on our business, reputation, financial condition, cash flows and operating results.
Ongoing legal and other costs related to these proceedings and inquiries, as well as any potential future proceedings and inquiries related to the August 2021 cyberattack and the January 2023 cyberattack, may be substantial, and losses associated with any adverse judgments, settlements, penalties or 20 Table of Contents other resolutions of such proceedings and inquiries could be significant and have a material adverse impact on our business, reputation, financial condition, cash flows and operating results.
We are subject to regulatory oversight by various federal, state, and local agencies, as well as judicial review and actions, on issues related to the wireless industry that include, but are not limited to, roaming, interconnection, spectrum allocation and licensing, facilities siting, pole attachments, intercarrier compensation, Universal Service Fund, 911 services, consumer protection, consumer privacy, and cybersecurity.
We are subject to regulatory oversight by various federal, state, and local agencies, as well as judicial review and actions, on issues related to the wireless industry that include, but are not limited to, roaming, interconnection, spectrum allocation and licensing, facilities siting, pole attachments, intercarrier compensation, Universal Service Fund (“USF”), 911 services, robocalling/robotexting, consumer protection, consumer privacy, and cybersecurity.
As a result of the August 2021 cyberattack and the January 2023 cyberattack, we may incur significant costs or experience other material financial impacts, which may not be covered by, or may exceed the coverage limits of, our cyber liability insurance, and such costs and impacts may have a material adverse effect on our business, reputation, financial condition, cash flows and operating results.
As a result of the August 2021 cyberattack and the January 2023 cyberattack, we have incurred and may continue to incur significant costs or experience other material financial impacts, which may not be covered by, or may exceed the coverage limits of, our cyber liability insurance, and such costs and impacts may have a material adverse effect on our business, reputation, financial condition, cash flows and operating results.
If our new services fail to retain or gain acceptance in the marketplace or if costs associated with these services are higher than anticipated, this could have a material adverse effect on our business, brand, financial condition, and operating results. 13 Table of Contents We rely on highly skilled personnel throughout all levels of our business.
If our new services fail to retain or gain acceptance in the marketplace or if costs associated with these services are higher than anticipated, this could have a material adverse effect on our business, brand, financial condition, and operating results. We rely on highly skilled personnel throughout all levels of our business.
As set forth in the MNSA, the Company will provide DISH, among other things, (a) legacy network services for certain Boost Mobile prepaid end users on the Sprint network, (b) T-Mobile network services for certain end users that have been migrated to the T-Mobile network or provisioned on the T-Mobile network by or on behalf of DISH and (c) infrastructure mobile network operator services to assist in the access and integration of the DISH network.
As set forth in the MNSA, the Company provides DISH, among other things, (a) legacy network services for certain Boost Mobile prepaid end users on the Sprint network, (b) T-Mobile network services for certain end users that have been migrated to the T-Mobile network or provisioned on the T-Mobile network by or on behalf of DISH and (c) infrastructure mobile network operator services to assist in the access and integration of the DISH network.
We cannot assure that the FCC or any other federal, state, or local agencies will not adopt regulations, implement new programs, or take enforcement or other actions that would adversely affect our business, impose new costs, or require changes in current or planned operations, including timing of the shutdown of legacy technologies.
We cannot assure that the FCC or any other federal, state, or local agencies will not adopt regulations, change or discontinue existing programs, implement new programs, or take enforcement or other actions that would adversely affect our business, impose new costs, or require changes in current or planned operations, including timing of the shutdown of legacy technologies.
We cannot provide any assurances that actions taken by us, or our third-party providers, will adequately repel a significant cyberattack or prevent or substantially mitigate the impacts of cybersecurity breaches or misuses of Confidential Information, unauthorized access to our networks or systems or exploits against third-party environments, or that we, or our third-party providers, will be able to effectively identify, investigate, and remediate such incidents in a timely manner or at all.
We cannot provide any assurances that actions taken by us, or our third-party providers, including through our cybersecurity programs or policies, will adequately repel a significant cyberattack or prevent or substantially mitigate the impacts of cybersecurity breaches or misuses of Confidential Information, unauthorized access to our networks or systems or exploits against third-party environments, or that we, or our third-party providers, will be able to effectively identify, investigate, and remediate such incidents in a timely manner or at all.
Enhancing our network, including the ongoing deployment of our 5G network, is subject to risks related to equipment changes and the migration of customers from older technologies. Negative public perception of, and regulations regarding, the perceived health risks relating to 5G networks could undermine market acceptance of our 5G services.
Enhancing our network, including the ongoing deployment of our 5G network, is subject to risks related to equipment changes and the 13 Table of Contents migration of customers from older technologies. Negative public perception of, and regulations regarding, the perceived health risks relating to 5G networks could undermine market acceptance of our 5G services.
Any such transaction would involve a number of risks and could present financial, managerial and operational challenges, including: • diversion of management attention from running our existing business; • increased costs to integrate the networks, spectrum, technology, personnel, customer base and business practices of the company involved in any such transaction with our business; • difficulties in effectively integrating the financial and operational systems of the business involved in any such transaction into (or supplanting such systems with) our financial and operational reporting infrastructure and internal control framework in an effective and timely manner; • potential exposure to material liabilities not discovered in the due diligence process or as a result of any litigation arising in connection with any such transaction; • significant transaction-related expenses in connection with any such transaction, whether consummated or not; • risks related to our ability to obtain any required regulatory approvals necessary to consummate any such transaction; and • any business, technology, service, or product involved in any such transaction may significantly under-perform relative to our expectations, and we may not achieve the benefits we expect from the transaction, which could, among other things, also result in a write-down of goodwill and other intangible assets associated with such transaction.
Any such transaction would involve a number of risks and could present financial, managerial and operational challenges, including: • diversion of management attention from running our existing business; • increased costs to integrate the networks, spectrum, technology, personnel, customer base and business practices of the company involved in any such transaction with our business; • potential loss of talent during integration due to differences in culture, locations, or other factors; • difficulties in effectively integrating the financial, operational and sustainability systems of the business involved in any such transaction into (or supplanting such systems with) our financial, operational and sustainability reporting infrastructure and internal control framework in an effective and timely manner; • potential exposure to material liabilities not discovered in the due diligence process or as a result of any litigation arising in connection with any such transaction; • significant transaction-related expenses in connection with any such transaction, whether consummated or not; • risks related to our ability to obtain any required regulatory approvals necessary to consummate any such transaction; and • any business, technology, service, or product involved in any such transaction may significantly under-perform relative to our expectations, and we may not achieve the benefits we expect from the transaction, which could, among other things, also result in a write-down of goodwill and other intangible assets associated with such transaction.
Failure to successfully manage these ongoing commercial and transition services arrangements entered into in connection with the Prepaid Transaction and liabilities arising in connection therewith may result in material unanticipated problems, including diversion of management time and energy, significant expenses and liabilities.
Failure to successfully manage these ongoing arrangements entered into in connection with the Prepaid Transaction and liabilities arising in connection therewith may result in material unanticipated problems, including diversion of management time and energy, significant expenses and liabilities.
As many of our service plans offer taxes and fees inclusive, our business results could be adversely impacted by increases in taxes and fees. In addition, we incur and pay state and local transaction taxes and fees on purchases of goods and services used in our business.
As many of our service plans offer taxes 21 Table of Contents and fees inclusive, our business results could be adversely impacted by increases in taxes and fees. In addition, we incur and pay state and local transaction taxes and fees on purchases of goods and services used in our business.
For more information, see “– Contingencies and Litigation – Litigation and Regulatory Matters” in Note 19 – Commitments and Contingencies of the Notes to the Consolidated Financial Statements.
For more information, see “– Contingencies and Litigation – Litigation and Regulatory Matters” in Note 17 – Commitments and Contingencies of the Notes to the Consolidated Financial Statements.
In connection with the closing of the Prepaid Transaction, we and DISH entered into certain commercial and transition services arrangements, including a Master Network Services Agreement (the “MNSA”) and a license purchase agreement (the “DISH License Purchase Agreement”). Pursuant to the MNSA, DISH will receive network services from the Company for a period of seven years.
In connection with the closing of the Prepaid Transaction, we and DISH entered into certain arrangements, including a Master Network Services Agreement (the “MNSA”) and a License Purchase Agreement (as amended, the “DISH License Purchase Agreement”). Pursuant to the MNSA, DISH will receive network services from the Company for a period of seven years.
Additionally, increased interest from third parties in acquiring spectrum may make it difficult to renew leases of some of our existing 2.5 GHz spectrum holdings in the future.
Additionally, increased interest from third parties in acquiring spectrum may make it difficult to 14 Table of Contents renew leases of some of our existing 2.5 GHz spectrum holdings in the future.
In addition, litigation or similar proceedings could impose restraints on our current or future manner of doing business. Such potential outcomes including judgments, awards, settlements or orders could have a material adverse effect on our business, reputation, financial condition, cash flows and operating results. We offer regulated financial services products.
In addition, litigation or similar proceedings could impose restraints on our current or future manner of doing business. Such potential outcomes including judgments, awards, settlements or orders could have a material adverse effect on our business, reputation, financial condition, cash flows and operating results.
In order to grow and remain competitive, we will need to adapt to changes in available technology, continually invest in our network, increase network capacity, enhance our existing offerings, and introduce new offerings to meet our current and potential customers’ changing service demands.
In order to grow and remain competitive, we will need to adapt to changes in available technology, including artificial intelligence and machine learning, continually invest in our network, increase network capacity, enhance our existing service offerings, and introduce new offerings to meet our current and potential customers’ changing service demands.
If we are unable to take advantage of technological developments on a timely basis, we may experience a decline in demand for our services or face challenges in implementing or evolving our business strategy. Significant technological changes continue to impact our industry.
If we are unable to take advantage of technological developments on a timely basis, we may experience a decline in demand for our services or face challenges in implementing or evolving our business strategy.
Any return on our investment in spectrum depends on our ability to attract additional customers and to provide additional services and usage to existing customers.
Any return on our investment in spectrum depends on our ability to attract additional customers, to provide additional services and usage to existing customers, and to efficiently manage network capacity.
As a result, we may experience negative impacts to our business financial condition or operating results, which would restrict our ability to access the capital markets, require the expenditure of significant resources to correct the weaknesses or deficiencies, subject us to fines, penalties, investigations, or judgments, harm our reputation, or otherwise cause a decline in trading price of our stock and investor confidence.
As a result, we may experience negative impacts to our business financial condition or operating results, which would restrict our ability to access the capital markets, require the expenditure of significant resources to correct the weaknesses or deficiencies, subject us to fines, penalties, investigations, or judgments, harm our reputation, or otherwise cause a decline in trading price of our stock and investor confidence. 18 Table of Contents Changes in regulations or in the regulatory framework under which we operate could adversely affect our business, financial condition, and operating results.
The challenges in continuing to satisfy the large number of Government Commitments in the required time frames and the cost incurred in tracking, monitoring, and complying with them could also adversely impact our business, financial condition and operating results and hinder our ability to effectively compete. 15 Table of Contents Economic, political and market conditions may adversely affect our business, financial condition, and operating results.
The challenges in continuing to satisfy the large number of Government Commitments in the required time frames and the cost incurred in tracking, monitoring, and complying with them could also adversely impact our business, financial condition, and operating results and hinder our ability to effectively compete.
We have incurred and will continue to incur significant implementation costs to ensure compliance with the CCPA, the CPRA, new privacy laws in other states, and their related regulations, including managing the complexity of laws that vary from state to state.
Further, privacy laws also limit our ability to collect and use personal information. We have incurred and will continue to incur significant implementation costs to ensure compliance with the CCPA, the CPRA, new privacy laws in other states, and their related regulations, including managing the complexity of laws that vary from state to state.
We could be subject to fines, forfeitures, and other penalties (including, in extreme cases, revocation of our spectrum licenses) for failure to comply with the FCC or other governmental regulations, even if any such noncompliance was unintentional. The loss of any licenses, or any related fines or forfeitures, could adversely affect our business, financial condition, and operating results.
Failure to comply with applicable regulations could have a material adverse effect on our business, financial condition, and operating results. We could be subject to fines, forfeitures, and other penalties (including, in extreme cases, revocation of our spectrum licenses) for failure to comply with the FCC or other governmental regulations, even if any such noncompliance was unintentional.
Additionally, the FCC may not be able to provide sufficient additional spectrum to auction or we may be unable to secure the spectrum necessary to maintain or enhance our competitive position in any auction we may elect to participate in or in the secondary market, on favorable terms or at all.
In addition, we may be unable to secure the spectrum necessary to maintain or enhance our competitive position in any auction we may elect to participate in or in the secondary market, on favorable terms or at all.
In addition, there may be an increase in competition from DISH and other third parties that DISH may enter into commercial agreements with, who are significantly larger and with greater resources and scale advantages as compared to us. Such increased competition may result in our loss of customers and other business relationships.
In addition, there may be an increase in competition from DISH and other third parties that DISH may enter into commercial agreements with, who are significantly larger and have greater resources and scale advantages as compared to us.
All of these new privacy laws and others that we expect to be developed and enacted going forward will impose additional data protection obligations and potential liability on companies such as ours doing business in those states.
Pending legislation in several other states would create similar laws elsewhere. All of these new privacy laws and others that we expect to be developed and enacted going forward will impose additional data protection obligations and 19 Table of Contents potential liability on companies such as ours doing business in those states.
Additionally, we do not have control of the cybersecurity systems, breach prevention, and response protocols of our third-party providers. While T-Mobile may have contractual rights to assess the effectiveness of many of our providers’ systems and protocols, we do not have the means to know or assess the effectiveness of all of our providers’ systems and controls at all times.
While T-Mobile may have contractual rights to assess the effectiveness of many of our providers’ systems and protocols, we do not have the means to know or assess the effectiveness of all of our providers’ systems and controls at all times.
Those matters include a wide variety of disputes, claims, government agency investigations and enforcement 20 Table of Contents actions and other proceedings. Unfavorable resolution of these matters could require making additional reimbursements and paying additional fines and penalties.
Those matters include a wide variety of disputes, claims, government agency investigations and enforcement actions and other proceedings. Unfavorable resolution of these matters could require us to make additional reimbursements and pay additional fines and penalties.
Our suppliers are also subject to their own risks, including, but not limited to, economic, financial and credit conditions, labor force disruptions, geopolitical tensions, disruptions in global supply chain and the risks of natural catastrophic events such as earthquakes, floods, hurricanes, and public health crises such as the Pandemic which may result in performance below the levels required by their contracts.
Our suppliers are also subject to their own risks, including, but not limited to, economic, financial and credit conditions, labor force disruptions, geopolitical tensions, disruptions in global supply chain and the risks of natural catastrophic events (such as earthquakes, floods, hurricanes, storms, heatwaves and fires), energy shortages, power outages, equipment failures, terrorist attacks or other hostile acts, and public health crises, such as the COVID-19 pandemic (the “Pandemic”), which may result in performance below the levels required by their contracts.
We also cannot assure that Congress will not amend the Communications Act, from which the FCC obtains its authority, and which serves to limit state authority, or enact other legislation in a manner that could be adverse to our business. Failure to comply with applicable regulations could have a material adverse effect on our business, financial condition, and operating results.
We also cannot assure that Congress will not amend the Communications Act, from which the FCC obtains its authority, and which serves to limit state authority, or enact other legislation in a manner that could be adverse to our business.
We are cooperating fully with regulators and vigorously defending against the class actions and other lawsuits. On July 22, 2022, we entered into an agreement to settle the consolidated class action lawsuit. On July 26, 2022, we received preliminary approval of the proposed settlement, which remains subject to final court approval.
We are cooperating fully with regulators and vigorously defending against the class actions and other lawsuits. On July 22, 2022, we entered into an agreement to settle the consolidated class action lawsuit. On June 29, 2023, the Court issued an order granting final approval of the settlement, which is subject to potential appeals.
Any of these could adversely impact our ability to distribute, market, or sell our products and services. Our business may be adversely impacted if we are not able to successfully manage the ongoing commercial and transition services arrangements entered into in connection with the Prepaid Transaction and known or unknown liabilities arising in connection therewith.
Our business may be adversely impacted if we are not able to successfully manage the ongoing arrangements entered into in connection with the Prepaid Transaction and known or unknown liabilities arising in connection therewith.
Failure to remain compliant with applicable regulations may increase our risk exposure in the following areas: • consumer complaints and potential examinations or enforcement actions by federal and state regulatory agencies, including, but not limited to, the Consumer Financial Protection Bureau, state attorneys general, the FCC and the FTC; and • regulatory fines, penalties, enforcement actions, civil litigation, and/or class action lawsuits. 21 Table of Contents Failure to comply with applicable regulations and the realization of any of these risks could have a material adverse effect on our business, financial condition, and operating results.
Failure to remain compliant with applicable regulations may increase our risk exposure in the following areas: • consumer complaints and potential examinations or enforcement actions by federal and state regulatory agencies, including, but not limited to, the Consumer Financial Protection Bureau, state attorneys general, the FCC and the FTC; and • regulatory fines, penalties, enforcement actions, civil litigation, and/or class action lawsuits.
Accordingly, DT controls a majority of the voting power of our common stock and therefore we are a “controlled company,” as defined in the NASDAQ Stock Market LLC (“NASDAQ”) listing rules, and we are not subject to NASDAQ requirements that would otherwise require us to have a majority of independent directors, a nominating committee composed solely of independent directors or a compensation committee composed solely of independent directors.
In addition, DT holds direct and indirect call options that give DT the right to acquire up to approximately 35 million shares of our common stock held by SoftBank. 22 Table of Contents Accordingly, DT controls a majority of the voting power of our common stock and therefore we are a “controlled company,” as defined in the NASDAQ Stock Market LLC (“NASDAQ”) listing rules, and we are not subject to NASDAQ requirements that would otherwise require us to have a majority of independent directors, a nominating committee composed solely of independent directors or a compensation committee composed solely of independent directors.
In addition to the recent cyberattacks, we have experienced other unrelated immaterial incidents involving unauthorized access to certain Confidential Information. Typically, these incidents have involved attempts to commit fraud by taking control of a customer’s phone line, often by using compromised credentials.
In addition to the August 2021 cyberattack and the January 2023 cyberattack, we have experienced other unrelated non-material incidents involving unauthorized access to certain Confidential Information and Systems. Typically, these incidents have involved attempts to commit fraud by taking control of a customer’s phone line, often by exploiting insider access or using compromised credentials.
In order to expand and differentiate from our competitors, we will continue to actively seek to make additional investment in spectrum, which could be significant. 14 Table of Contents The continued interest in, and acquisition of, spectrum by existing carriers and others, including speculators, may reduce our ability to acquire and/or increase the cost of acquiring spectrum in the secondary market, including leasing, or purchasing additional spectrum in the 2.5 GHz band, or negatively impact our ability to gain access to spectrum through other means, including government auctions.
The continued interest in, and acquisition of, spectrum by existing carriers and others, including speculators, may reduce our ability to acquire and/or increase the cost of acquiring spectrum in the secondary market, including leasing, or purchasing additional spectrum in the 2.5 GHz band, or negatively impact our ability to gain access to spectrum through other means, including government auctions.
In such instance, T-Mobile is required, unless otherwise approved under the Consent Decree, to conduct an auction of all of Sprint’s 800 MHz spectrum under the terms set forth in the Consent Decree, but would not be required to divest such spectrum for an amount less than $3.6 billion.
In such instance, absent prior approval from the U.S. Department of Justice, T-Mobile is required to conduct an auction sale of all of Sprint’s 800 MHz spectrum under the terms set forth in the Final Judgment, but would not be required to divest such spectrum for an amount less than $3.6 billion.
In some cases, these bad actors may obtain unauthorized access to Confidential Information utilizing credentials taken from our customers, employees, or third parties. Other bad actors aim to cause serious operational disruptions to our business or networks through other means, such as through ransomware or distributed denial of services attacks.
In other cases, these bad actors may obtain unauthorized access to Confidential Information by exploiting insider access or utilizing log in credentials taken from our customers, employees, or third-party providers through credential harvesting, social engineering or other means. Other bad actors aim to cause serious operational disruptions to our business and Systems through ransomware or distributed denial of services attacks.
Alternatively, if a court were to find the choice of forum provision to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such matters in other jurisdictions, which could increase our costs of litigation and adversely affect our business and financial condition. 22 Table of Contents DT controls a majority of the voting power of our common stock and the T-Mobile trademarks we utilize in our business, and may have interests that differ from the interests of our other stockholders.
Alternatively, if a court were to find the choice of forum provision to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such matters in other jurisdictions, which could increase our costs of litigation and adversely affect our business and financial condition.
Rising prices for goods, services, and labor due to inflation could adversely impact our margins and/or growth. Our services and device financing plans are available to a broad customer base, a significant segment of which may be vulnerable to weak economic conditions, particularly our subprime customers.
Our services and device financing plans are available to a broad customer base, a significant segment of which may be vulnerable to weak economic conditions, particularly our subprime customers.
Both sets of rules potentially subjected some of our initiatives and practices to more burdensome requirements and heightened scrutiny by federal and state regulators, the public, edge providers, 19 Table of Contents and private litigants regarding whether such initiatives or practices are compliant.
For example, in 2015 and 2016, the FCC established net neutrality and privacy regimes that applied to our operations. Both sets of rules potentially subjected some of our initiatives and practices to more burdensome requirements and heightened scrutiny by federal and state regulators, the public, edge providers, and private litigants regarding whether such initiatives or practices are compliant.
We believe our future success depends in substantial part on our ability to recruit, hire, motivate, develop, and retain talented personnel for all areas of our organization, including our CEO and the other members of our senior leadership team.
Our business could be harmed if we are unable to retain or motivate key personnel, hire qualified personnel, or maintain our corporate culture. Our future success depends in substantial part on our ability to recruit, hire, motivate, develop, and retain talented personnel for all areas of our organization, including our CEO and members of our senior leadership team.
Additionally, the FTC and other federal and state agencies have asserted that they have jurisdiction over some consumer protection matters, and the elimination and prevention of anticompetitive business practices with respect to the provision of wireless products and services.
Changes necessary to resolve interference issues or concerns may have a significant impact on our ability to fully utilize our spectrum. Additionally, the FTC and other federal and state agencies have asserted that they have jurisdiction over some consumer protection matters, and the elimination and prevention of anticompetitive business practices with respect to the provision of wireless products and services.
Some of these persons reside in jurisdictions where law enforcement measures to address such attacks are ineffective or unavailable, and such attacks may even be perpetrated by or at the behest of foreign governments.
Some of these persons reside in jurisdictions where law enforcement measures to address such attacks are ineffective or unavailable, and such attacks may even be perpetrated by or at the behest of foreign governments. 12 Table of Contents In addition, we routinely rely upon third-party providers whose products and services are used in our business.
System failures and business disruptions may prevent us from providing reliable service, which could materially adversely affect our reputation and financial condition. We rely upon systems and networks - those of third-party suppliers and other providers, in addition to our own - to provide and support our service offerings.
We rely upon systems and networks – those of third-party suppliers and other providers, in addition to our own – to provide and support our service offerings. System, network, or infrastructure failures resulting from a number of causes may prevent us from providing reliable service.
The result from our investigation to date indicates that the bad actor(s) obtained data from this API for approximately 37 million current postpaid and prepaid customer accounts, though many of these accounts did not include the full data set. We believe that the bad actor first retrieved data through the impacted API starting on or around November 25, 2022.
Our investigation indicated that the bad actor(s) obtained data from this API for approximately 37 million current postpaid and prepaid customer accounts, though many of these accounts did not include the full data set.
Laws and regulations relating to the handling of privacy and data protection may result in increased costs, legal claims, fines against us, or reputational damage.
The loss of any licenses, or any related fines or forfeitures, could adversely affect our business, financial condition, and operating results. Laws and regulations relating to the handling of privacy and data protection may result in increased costs, legal claims, fines against us, or reputational damage.
Cyberattacks against companies like ours have increased in frequency and potential harm over time, and the methods used to gain unauthorized access constantly evolve, making it increasingly difficult to anticipate, prevent, and/or detect incidents successfully in every instance. They are perpetrated by a variety of groups and persons, including state-sponsored parties, malicious actors, employees, contractors, or other unrelated third parties.
Cyberattacks against companies like ours have increased in frequency and scope of potential harm over time, and the methods used to gain unauthorized access constantly evolve, making it increasingly difficult to anticipate, prevent, and detect incidents successfully in every instance.
In addition, some states and other jurisdictions have enacted laws in these areas (including, for example, California and other states’ net neutrality laws, the CCPA and CPRA as discussed below) and others are considering enacting similar laws.
In addition, the current FCC updated transparency obligations to require nutrition-style broadband label disclosures in 2024 that could prompt regulatory inquiries. In addition, some states and other jurisdictions have enacted laws in these areas (including, for example, California and other states’ net neutrality laws, the CCPA and CPRA as discussed below) and others are considering enacting similar laws.
Any acquisition, divestiture, investment, or merger may subject us to significant risks, any of which may harm our business. We may pursue acquisitions of, investments in or mergers with other companies, or the acquisition of technologies, services, products or other assets, that we believe would complement or expand our business.
We may pursue acquisitions of, investments in or mergers with other companies, or the acquisition of technologies, services, products or other assets, that we believe would complement or expand our business. We may also elect to divest some of our assets to third parties.
We are subject to persistent cyberattacks and threats to our networks, systems, and supply chain from a variety of bad actors, many of whom attempt to gain access to and compromise Confidential Information by exploiting bugs, errors, misconfigurations or other vulnerabilities in our networks and other systems (including purchased and third-party systems) or by engaging in credential harvesting or social engineering.
We are subject to persistent cyberattacks and threats to our business from a variety of bad actors, many of whom attempt to gain unauthorized access to and compromise Confidential Information and Systems. In some cases, the bad actors exploit bugs, errors, misconfigurations or other vulnerabilities in our Systems to obtain Confidential Information.
We may also elect to divest some of our 16 Table of Contents assets to third parties. Some of these potential transactions could be significant relative to the size of our business and operations.
Some of these potential transactions could be significant relative to the size of our business and operations.
Our substantial level of indebtedness could have the effect of, among other things, reducing our flexibility in responding to changing business, economic, market and industry conditions and increasing the amount of cash required to service our debt. In addition, this level of indebtedness may also reduce funds available for capital expenditures, any board-approved share repurchases and other activities.
We have, and we expect that we will continue to have, a substantial amount of debt. Our substantial level of indebtedness could have the effect of, among other things, reducing our flexibility in responding to changing business, economic, market and industry conditions and increasing the amount of cash required to service our debt.
Based on our investigation to date, the impacted API is only able to provide a limited set of customer account data, including name, billing address, email, phone number, date of birth, T-Mobile account number and information such as the number of lines on the account and plan features.
In January 2023, we disclosed that a bad actor was obtaining data through a single Application Programming Interface (“API”) without authorization that was only able to provide a limited set of customer account data, including name, billing address, email, phone number, date of birth, T-Mobile account number and information such as the number of lines on the account and plan features.
We expect to continue to be the target of cyberattacks, given the nature of our business, and we expect the same with respect to our third-party providers. If we fail to protect Confidential Information or to prevent operational disruptions from future cyberattacks, there may be a material adverse effect on our business, reputation, financial condition, cash flows, and operating results.
In addition, we have acquired and continue to acquire companies with cybersecurity vulnerabilities or unsophisticated security measures, which exposes us to significant cybersecurity, operational, and financial risks. If we fail to protect Confidential Information or to prevent operational disruptions from future cyberattacks, there may be a material adverse effect on our business, reputation, financial condition, cash flows, and operating results.
In January 2020, the California Consumer Privacy Act (the “CCPA”) became effective, creating new data privacy rights for California residents and new compliance obligations for us and industry in general, in addition to private rights of action for certain types of data breaches.
Since 2020, a number of states have enacted new, comprehensive privacy laws that create new data privacy rights for residents of those states and new compliance obligations for us and the industry in general, in addition to private rights of action for certain types of data breaches.
Pursuant to the Proxy Agreements, at any meeting of our stockholders, the shares of our common stock beneficially owned by SoftBank or CM LLC will be voted in the manner as directed by DT.
DT is a party to that certain Proxy, Lock-Up and ROFR Agreement, dated as of April 1, 2020, by and between DT and SoftBank (the “SoftBank Proxy Agreement”). Pursuant to the SoftBank Proxy Agreement, at any meeting of our stockholders, the shares of our common stock beneficially owned by SoftBank will be voted in the manner as directed by DT.
We would also commit to an aggregate incremental spend of $150 million for data security and related technology in 2022 and 2023.
Under the terms of the settlement, we would pay an aggregate of $350 million to fund claims submitted by class members, the legal fees of plaintiffs’ counsel and the costs of administering the settlement. We would also commit to an aggregate incremental spend of $150 million for data security and related technology in 2022 and 2023.
Our business may be impacted by new or amended tax laws or regulations or administrative interpretations and judicial decisions affecting the scope or application of tax laws or regulations.
Failure to comply with applicable regulations and the realization of any of these risks could have a material adverse effect on our business, financial condition, and operating results. Our business may be impacted by new or amended tax laws or regulations or administrative interpretations and judicial decisions affecting the scope or application of tax laws or regulations.
Our business, financial condition and operating results are sensitive to changes in general economic conditions, including interest rates, consumer credit conditions, consumer debt levels, consumer confidence, unemployment rates, economic growth, energy costs, rates of inflation (or concerns about deflation), supply chain disruptions, impacts of current geopolitical instability caused by the war in Ukraine, and other macro-economic factors.
Our business, financial condition, and operating results are sensitive to changes in general economic conditions, including interest rates, consumer credit conditions, consumer debt levels, consumer confidence, unemployment rates, economic growth, energy costs, rates of inflation (or concerns about deflation), supply chain disruptions, impacts of current geopolitical conflict or instability, such as the Ukraine-Russia and Israel-Hamas wars and further escalations thereof, and other macroeconomic factors. 15 Table of Contents The wireless industry, broadly, is dependent on population growth, as a result, we expect the wireless industry’s customer growth rate to be moderate in comparison with historical growth rates, leading to ongoing competition for customers.
These limitations and our Certificate of Incorporation may limit our ability to attract additional equity financing outside the United States and decrease the value of our common stock. We cannot guarantee that our 2022 Stock Repurchase Program will be fully consummated or that our 2022 Stock Repurchase Program will enhance long-term stockholder value.
These limitations and our Certificate of Incorporation may limit our ability to attract additional equity financing outside the United States and decrease the value of our common stock. Item 1B. Unresolved Staff Comments None.
Those impacts may put us at a competitive disadvantage relative to other companies with lower debt levels. Further, we may need to incur substantial additional indebtedness in the future, subject to the restrictions contained in our debt instruments, if any, which could increase the risks associated with our capital structure.
Further, we may need to incur substantial additional indebtedness in the future, subject to the restrictions contained in our debt instruments, if any, which could increase the risks associated with our capital structure. Our ability to service our substantial debt obligations will depend on future performance, which will be affected by business, economic, market and industry conditions and other factors.
A further increase in the royalty rate or termination of the trademark license could have a material adverse effect on our business, financial condition, and operating results. 23 Table of Contents Future sales of our common stock by DT and SoftBank and foreign ownership limitations by the FCC could have a negative impact on our stock price and decrease the value of our stock.
Any announcement of termination of the 2023-2024 Stockholder Return Program may result in a decrease in the price of our common stock. Future sales of our common stock by DT and SoftBank and foreign ownership limitations by the FCC could have a negative impact on our stock price and decrease the value of our stock.
For more information, see “– Contingencies and Litigation – Litigation and Regulatory Matters” in Note 1 9 – Commitments and Contingencies of the Notes to the Consolidated Financial Statements. In January 2023, we disclosed that a bad actor was obtaining data through a single Application Programming Interface (“API”) without authorization.
For more information, see “– Contingencies and Litigation – Litigation and Regulatory Matters” in Note 17 – Commitments and Contingencies of the Notes to the Consolidated Financial Statements.
Our ability to service our substantial debt obligations will depend on future performance, which will be affected by business, economic, market and industry conditions and other factors, including our ability to achieve the expected benefits of the Transactions. There is no guarantee that we will be able to generate sufficient cash flow to service our debt obligations when due.
There is no guarantee that we will be able to generate sufficient cash flow to service our debt obligations when due.
If key employees depart or we are unable to recruit successfully, our business could be negatively impacted. Further, inflationary cost pressures may increase our costs, including employee compensation, and lead to increased employee attrition to the extent our compensation does not keep up with inflation, particularly if our competitors’ compensation does.
Further, employee compensation and benefit costs may increase due to inflationary pressures, and if our compensation does not keep up with inflation or that of our competitors’, we may see increased employee dissatisfaction and departures or difficulty in recruiting new employees.
In addition, refusal of our competitors and partners to provide critical access to resources and inputs, such as roaming and/or backhaul services to us, on reasonable terms could negatively impact our business. We have experienced criminal cyberattacks and could in the future be further harmed by disruption, data loss or other security breaches, whether directly or indirectly through third parties.
We have experienced criminal cyberattacks and are vulnerable to disruption, data loss and other security breaches, whether directly or indirectly through third parties whose products and services we rely on in operating our business.
Risks Related to Our Indebtedness Our substantial level of indebtedness could adversely affect our business flexibility, ability to service our debt, and increase our borrowing costs. We have, and we expect that we will continue to have, a substantial amount of debt.
The failure of our suppliers to comply with our expectations and policies could expose us to additional legal and litigation risks and lead to unexpected contract terminations. 17 Table of Contents Risks Related to Our Indebtedness Our substantial level of indebtedness could adversely affect our business flexibility and ability to service our debt, and increase our borrowing costs.
The 2022 Stock Repurchase Program may be suspended or discontinued, or the amount to be spent by the Company to repurchase shares could be reduced, at any time at the Company’s discretion.
The 2023-2024 Stockholder Return Program does not obligate the Company to acquire any particular amount of common stock or to declare and pay any particular amount of dividends, and the 2023-2024 Stockholder Return Program may be suspended or discontinued at any time at the Company’s discretion.
Risks Related to Our Business and the Wireless Industry Competition, industry consolidation, and changes in the market for wireless communications services and other forms of connectivity could negatively affect our ability to attract and retain customers and adversely affect our business, financial condition and operating results.
Risks Related to Our Business We operate in a highly competitive industry. If we are unable to attract and retain customers, our business, financial conditions, and operating results would be negatively affected. The wireless communications services industry is highly competitive.
The wireless industry, broadly, is dependent on population growth, as a result, we expect the wireless industry’s customer growth rate to be moderate in comparison with historical growth rates, leading to ongoing competition for customers. In addition, the Government Commitments place certain limitations on our ability to increase prices, which limits our ability to pass along growing costs to customers.
In addition, the Government Commitments place certain limitations on our ability to increase prices, which limits our ability to pass along growing costs to customers. Rising prices for goods, services, and labor due to inflation could adversely impact our margins and/or growth.
Pursuant to the DISH License Purchase Agreement, DISH has agreed to purchase all of Sprint’s 800 MHz spectrum (approximately 13.5 MHz of nationwide spectrum) for a total of approximately $3.6 billion in a transaction to be completed, subject to certain additional closing conditions, following an application for FCC approval to be filed three years following the closing of the Merger; provided, however, that if DISH breaches the DISH License Purchase agreement prior to the closing or fails to deliver the purchase price following the satisfaction or waiver of all closing conditions, DISH’s sole liability will be to pay us a fee of approximately $72 million.
Pursuant to the DISH License Purchase Agreement, DISH has agreed to purchase all of Sprint’s 800 MHz spectrum (approximately 13.5 MHz of nationwide spectrum) for a total of $3.6 billion.
Doing so may be difficult due to many factors, including fluctuations in economic and industry conditions, changes to U.S. immigration policy, competitors’ hiring and remote working policies and practices, employee intolerance for the significant changes within, and demands on, our Company and our industry, and the effectiveness of our compensation programs.
Both external factors, such as fluctuations in economic and industry conditions, changes in U.S. immigration policies, and the competitive landscape, and internal factors, such as employee tolerance for changes in our corporate culture, organizational changes, limited remote working opportunities, and our compensation programs, may impact our ability to effectively manage our workforce.
Removed
We have multiple competitors that possess either more or different access to wireless assets, and yet we compete for customers based principally on service/device offerings, price, network coverage, speed and quality, and customer service. We expect the wireless industry’s customer growth rate to moderate over time in comparison with historical growth rates, leading to ongoing competition for customers.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeOur property and equipment consists of the following: (percent of gross property and equipment) December 31, 2022 December 31, 2021 Wireless communication systems 68 % 66 % Land, buildings and building equipment 5 % 5 % Data processing equipment and other 27 % 29 % Total 100 % 100 % Wireless communication systems primarily consist of assets used to operate our wireless network and information technology data centers, including switching equipment, radio frequency equipment, tower assets, High Speed Internet routers, construction in progress and leasehold improvements related to the wireless network and asset retirement costs.
Biggest changeOur property and equipment consists of the following: (percent of gross property and equipment) December 31, 2023 December 31, 2022 Wireless communications systems 68 % 68 % Land, buildings and building equipment 5 % 5 % Data processing equipment and other 27 % 27 % Total 100 % 100 % Wireless communications systems primarily consist of assets used to operate our wireless network and information technology data centers, including switching equipment, radio frequency equipment, tower assets, High Speed Internet routers, construction in progress and leasehold improvements related to the wireless network and asset retirement costs.
Data processing equipment and other primarily consists of data processing equipment, office equipment, capitalized software, leased wireless devices, construction in progress and leasehold improvements. We also lease distributed antenna systems and small cell sites, as well as properties throughout the United States that contain data and switching centers, customer call centers, retail locations, warehouses and administrative spaces.
Data processing equipment and other primarily consist of data processing equipment, office equipment, capitalized software, leased wireless devices, construction in progress and leasehold improvements. We also lease distributed antenna systems and small cell sites, as well as properties throughout the United States that contain data and switching centers, customer call centers, retail locations, warehouses and administrative spaces.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeItem 3. Legal Proceedings For more information regarding the legal proceedings in which we are involved, see Note 1 9 – Commitments and Contingencies of the Notes to the Consolidated Financial Statements. Item 4. Mine Safety Disclosures Not applicable. 25 Table of Contents PART II.
Biggest changeItem 3. Legal Proceedings For more information regarding the legal proceedings in which we are involved, see Note 17 – Commitments and Contingencies of the Notes to the Consolidated Financial Statements. Item 4. Mine Safety Disclosures Not applicable. 27 Table of Contents PART II.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeIssuer Purchases of Equity Securities The table below provides information regarding our share repurchases during the three months ended December 31, 2022: (in millions, except share and per share amounts) Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares that may yet be Purchased Under the Plans or Programs (1) October 1, 2022 - October 31, 2022 8,357,758 $ 138.04 8,357,758 $ 12,178 November 1, 2022 - November 30, 2022 3,307,350 148.26 3,307,350 11,687 December 1, 2022 - December 31, 2022 4,803,986 143.09 4,803,986 11,000 Total 16,469,094 16,469,094 (1) On September 8, 2022, our Board of Directors authorized our 2022 Stock Repurchase Program for up to $14.0 billion of our common stock through September 30, 2023, with up to $3.0 billion by December 31, 2022.
Biggest changeIssuer Purchases of Equity Securities The table below provides information regarding our share repurchases during the three months ended December 31, 2023: (in millions, except share and per share amounts) Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares that may yet be Purchased Under the Plans or Programs (1) October 1, 2023 - October 31, 2023 7,980,509 $ 140.09 7,980,509 $ 17,135 November 1, 2023 - November 30, 2023 5,675,804 147.45 5,675,804 16,298 December 1, 2023 - December 31, 2023 1,807,794 158.53 1,807,794 16,012 Total 15,464,107 15,464,107 (1) On September 6, 2023, our Board of Directors authorized our 2023-2024 Stockholder Return Program for up to $19.0 billion of repurchases of our common stock and payment of dividends through December 31, 2024.
As of January 31, 2023, there were 15,719 registered stockholders of record of our common stock, but we estimate the total number of stockholders to be much higher as a number of our shares are held by brokers or dealers for their customers in street name.
As of January 31, 2024, there were 15,240 registered stockholders of record of our common stock, but we estimate the total number of stockholders to be much higher as a number of our shares are held by brokers or dealers for their customers in street name.
The graph tracks the performance of a $100 investment, with the reinvestment of all dividends, from December 31, 2017 to December 31, 2022.
The graph tracks the performance of a $100 investment, with the reinvestment of all dividends, from December 31, 2018 to December 31, 2023.
See Note 15 - Repurchases of Common Stock of the Notes to the Consolidated Financial Statements for more information about our 2022 Stock Repurchase Program. 26 Table of Contents Performance Graph The graph below compares the five-year cumulative total returns of T-Mobile, the S&P 500 index, the NASDAQ Composite index and the Dow Jones US Mobile Telecommunications TSM index.
See Note 13 - Stockholder Return Programs of the Notes to the Consolidated Financial Statements for more information about our 2023-2024 Stockholder Return Program. 28 Table of Contents Performance Graph The graph below compares the five-year cumulative total returns of T-Mobile, the S&P 500 index, the NASDAQ Composite index and the Dow Jones US Mobile Telecommunications TSM index.
The five-year cumulative total returns of T-Mobile, the S&P 500 index, the NASDAQ Composite index and the Dow Jones US Mobile Telecommunications TSM index, as illustrated in the graph above, are as follows: At December 31, (in dollars) 2017 2018 2019 2020 2021 2022 T-Mobile US, Inc. $ 100.00 $ 100.16 $ 123.48 $ 212.33 $ 182.62 $ 220.44 S&P 500 100.00 95.62 125.72 148.85 191.58 156.89 NASDAQ Composite 100.00 97.16 132.81 192.47 235.15 158.65 Dow Jones US Mobile Telecommunications TSM 100.00 119.01 134.96 147.15 134.45 121.36 The stock price performance included in this graph is not necessarily indicative of future stock price performance.
The five-year cumulative total returns of T-Mobile, the S&P 500 index, the NASDAQ Composite index and the Dow Jones US Mobile Telecommunications TSM index, as illustrated in the graph above, are as follows: At December 31, (in dollars) 2018 2019 2020 2021 2022 2023 T-Mobile US, Inc. $ 100.00 $ 123.28 $ 211.99 $ 182.33 $ 220.09 $ 253.14 S&P 500 100.00 131.49 155.68 200.37 164.08 207.21 NASDAQ Composite 100.00 136.69 198.10 242.03 163.28 236.17 Dow Jones US Mobile Telecommunications TSM 100.00 113.40 123.64 112.98 101.97 109.60 The stock price performance included in this graph is not necessarily indicative of future stock price performance.
Removed
We have never paid or declared any cash dividends on our common stock, and we do not intend to declare or pay any cash dividends on our common stock in the foreseeable future.
Added
On September 25, 2023, our Board of Directors declared a cash dividend of $0.65 per share on our issued and outstanding shares of common stock, which was paid on December 15, 2023. We intend to declare and pay approximately $3.0 billion in total additional dividends in 2024, with payments occurring each quarter during the year.
Removed
We currently intend to use future earnings, if any, to invest in our business and for general corporate purposes, including the continued build-out of our 5G network, expansion of our business, the integration of T-Mobile’s and Sprint’s businesses, and share repurchases as appropriate.
Added
The dividend amount paid per share is expected to grow by around 10% annually with the first increase expected in the fourth quarter of 2024; however, the declaration and payment of all dividends is subject to the discretion of our Board of Directors and will depend on financial and legal requirements and other considerations.
Removed
Therefore, we do not anticipate paying any cash dividends on our common stock in the foreseeable future; capital appreciation, if any, of our common stock will be the sole source of potential gain.
Added
Subsequent to December 31, 2023, on January 24, 2024, our Board of Directors declared a cash dividend of $0.65 per share on our issued and outstanding common stock, which is payable on March 14, 2024, to stockholders of record as of the close of business on March 1, 2024.
Removed
The amounts presented represent the remaining shares authorized for purchase under the 2022 Stock Repurchase Program as of the end of the period.
Added
The amounts presented represent the remaining dollar amount authorized for purchase under the 2023-2024 Stockholder Return Program as of the end of the period, which has been reduced by the amount of any cash dividends declared and paid by the Company. On December 19, 2023, the U.S.
Added
Court of Appeals for the Fifth Circuit vacated the SEC amendments to share repurchase disclosure requirements. Accordingly, we will continue to present monthly share repurchase activity in this Item.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeManagement does not expect the IRA to have a significant impact on our operating results or cash flows in 2023, and we continue to review the IRA tax provisions to assess impacts to our future consolidated financial statements. 31 Table of Contents Results of Operations Set forth below is a summary of our consolidated financial results: Year Ended December 31, 2022 Versus 2021 2021 Versus 2020 (in millions) 2022 2021 2020 $ Change % Change $ Change % Change Revenues Postpaid revenues $ 45,919 $ 42,562 $ 36,306 $ 3,357 8 % $ 6,256 17 % Prepaid revenues 9,857 9,733 9,421 124 1 % 312 3 % Wholesale and other service revenues 5,547 6,074 4,668 (527) (9) % 1,406 30 % Total service revenues 61,323 58,369 50,395 2,954 5 % 7,974 16 % Equipment revenues 17,130 20,727 17,312 (3,597) (17) % 3,415 20 % Other revenues 1,118 1,022 690 96 9 % 332 48 % Total revenues 79,571 80,118 68,397 (547) (1) % 11,721 17 % Operating expenses Cost of services, exclusive of depreciation and amortization shown separately below 14,666 13,934 11,878 732 5 % 2,056 17 % Cost of equipment sales, exclusive of depreciation and amortization shown separately below 21,540 22,671 16,388 (1,131) (5) % 6,283 38 % Selling, general and administrative 21,607 20,238 18,926 1,369 7 % 1,312 7 % Impairment expense 477 — 418 477 NM (418) (100) % Loss on disposal group held for sale 1,087 — — 1,087 NM — NM Depreciation and amortization 13,651 16,383 14,151 (2,732) (17) % 2,232 16 % Total operating expenses 73,028 73,226 61,761 (198) — % 11,465 19 % Operating income 6,543 6,892 6,636 (349) (5) % 256 4 % Other expense, net Interest expense, net (3,364) (3,342) (2,701) (22) 1 % (641) 24 % Other expense, net (33) (199) (405) 166 (83) % 206 (51) % Total other expense, net (3,397) (3,541) (3,106) 144 (4) % (435) 14 % Income before income taxes 3,146 3,351 3,530 (205) (6) % (179) (5) % Income tax expense (556) (327) (786) (229) 70 % 459 (58) % Income from continuing operations 2,590 3,024 2,744 (434) (14) % 280 10 % Income from discontinued operations, net of tax — — 320 — NM (320) (100) % Net income $ 2,590 $ 3,024 $ 3,064 $ (434) (14) % $ (40) (1) % Statement of Cash Flows Data Net cash provided by operating activities $ 16,781 $ 13,917 $ 8,640 $ 2,864 21 % $ 5,277 61 % Net cash used in investing activities (12,359) (19,386) (12,715) 7,027 (36) % (6,671) 52 % Net cash (used in) provided by financing activities (6,451) 1,709 13,010 (8,160) (477) % (11,301) (87) % Non-GAAP Financial Measures Adjusted EBITDA $ 27,821 $ 26,924 $ 24,557 $ 897 3 % $ 2,367 10 % Core Adjusted EBITDA 26,391 23,576 20,376 2,815 12 % 3,200 16 % Free Cash Flow 7,656 5,646 3,001 2,010 36 % 2,645 88 % NM - Not Meaningful 32 Table of Contents The following discussion and analysis is for the year ended December 31, 2022, compared to the same period in 2021 unless otherwise stated.
Biggest changeWe continue to monitor the impact of these trends on the payment performance of our customers. 33 Table of Contents Results of Operations Set forth below is a summary of our consolidated financial results: Year Ended December 31, 2023 Versus 2022 2022 Versus 2021 (in millions) 2023 2022 2021 $ Change % Change $ Change % Change Revenues Postpaid revenues $ 48,692 $ 45,919 $ 42,562 $ 2,773 6 % $ 3,357 8 % Prepaid revenues 9,767 9,857 9,733 (90) (1) % 124 1 % Wholesale and other service revenues 4,782 5,547 6,074 (765) (14) % (527) (9) % Total service revenues 63,241 61,323 58,369 1,918 3 % 2,954 5 % Equipment revenues 14,138 17,130 20,727 (2,992) (17) % (3,597) (17) % Other revenues 1,179 1,118 1,022 61 5 % 96 9 % Total revenues 78,558 79,571 80,118 (1,013) (1) % (547) (1) % Operating expenses Cost of services, exclusive of depreciation and amortization shown separately below 11,655 14,666 13,934 (3,011) (21) % 732 5 % Cost of equipment sales, exclusive of depreciation and amortization shown separately below 18,533 21,540 22,671 (3,007) (14) % (1,131) (5) % Selling, general and administrative 21,311 21,607 20,238 (296) (1) % 1,369 7 % Impairment expense — 477 — (477) (100) % 477 NM (Gain) loss on disposal group held for sale (25) 1,087 — (1,112) (102) % 1,087 NM Depreciation and amortization 12,818 13,651 16,383 (833) (6) % (2,732) (17) % Total operating expenses 64,292 73,028 73,226 (8,736) (12) % (198) — % Operating income 14,266 6,543 6,892 7,723 118 % (349) (5) % Other expense, net Interest expense, net (3,335) (3,364) (3,342) 29 (1) % (22) 1 % Other income (expense), net 68 (33) (199) 101 (306) % 166 (83) % Total other expense, net (3,267) (3,397) (3,541) 130 (4) % 144 (4) % Income before income taxes 10,999 3,146 3,351 7,853 250 % (205) (6) % Income tax expense (2,682) (556) (327) (2,126) 382 % (229) 70 % Net income $ 8,317 $ 2,590 $ 3,024 $ 5,727 221 % $ (434) (14) % Statement of Cash Flows Data Net cash provided by operating activities $ 18,559 $ 16,781 $ 13,917 $ 1,778 11 % $ 2,864 21 % Net cash used in investing activities (5,829) (12,359) (19,386) 6,530 (53) % 7,027 (36) % Net cash (used in) provided by financing activities (12,097) (6,451) 1,709 (5,646) 88 % (8,160) (477) % Non-GAAP Financial Measures Adjusted EBITDA $ 29,428 $ 27,821 $ 26,924 $ 1,607 6 % $ 897 3 % Core Adjusted EBITDA 29,116 26,391 23,576 2,725 10 % 2,815 12 % Adjusted Free Cash Flow 13,586 7,656 5,646 5,930 77 % 2,010 36 % NM - Not Meaningful 34 Table of Contents The following discussion and analysis is for the year ended December 31, 2023, compared to the same period in 2022, unless otherwise stated.
During the second quarter of 2022, we retired the legacy Sprint CDMA network and began the orderly shut-down of the LTE network, which was completed during the third quarter.
During the second quarter of 2022, we retired the legacy Sprint CDMA network and began the orderly shut-down of the LTE network, which was completed during the third quarter of 2022.
In September 2022, the FCC announced that we were the winning bidder of 7,156 licenses in Auction 108 (2.5 GHz spectrum) for an aggregate price of $304 million. At the inception of Auction 108 in June 2022, we deposited $65 million. We paid the FCC the remaining $239 million for the licenses won in the auction in September 2022.
In September 2022, the FCC announced that we were the winning bidder of 7,156 licenses in Auction 108 (2.5 GHz spectrum) for an aggregate price of $304 million. At inception of Auction 108 in June 2022, we deposited $65 million. We paid the FCC the remaining $239 million for the licenses won in the auction in September 2022.
Although companies in the wireless industry may not define each of these measures in precisely the same way, we believe that these measures facilitate comparisons with other companies in the wireless industry on key operating and financial measures. Total Postpaid Accounts A postpaid account is generally defined as a billing account number that generates revenue.
Although companies in the wireless industry may not define each of these measures in precisely the same way, we believe that these measures facilitate comparisons with other companies in the wireless industry on key operating and financial measures. Postpaid Accounts A postpaid account is generally defined as a billing account number that generates revenue.
As of the date of this report, we are not aware of any activity, transaction or dealing by us or any of our affiliates for the year ended December 31, 2022, that requires disclosure in this report under Section 13(r) of the Exchange Act, except as set forth below with respect to affiliates that we do not control and that are our affiliates solely due to their common control with either DT or SoftBank.
As of the date of this report, we are not aware of any activity, transaction or dealing by us or any of our affiliates for the year ended December 31, 2023, that requires disclosure in this report under Section 13(r) of the Exchange Act, except as set forth below with respect to affiliates that we do not control and that are our affiliates solely due to their common control with either DT or SoftBank.
We determine future liquidity requirements for operations, capital expenditures and share repurchases based in large part upon projected financial and operating performance, and opportunities to acquire additional spectrum or repurchase shares. We regularly review and update these projections for changes in current and projected financial and operating results, general economic conditions, the competitive landscape and other factors.
We determine future liquidity requirements for operations, capital expenditures, share repurchases and dividend payments based in large part upon projected financial and operating performance, and opportunities to acquire additional spectrum or repurchase shares. We regularly review and update these projections for changes in current and projected financial and operating results, general economic conditions, the competitive landscape and other factors.
The number of customers whose service was disconnected is presented net of customers that subsequently had their service restored within a certain period of time and excludes customers who received service for less than a certain minimum period of time. We believe that churn provides management, investors and analysts with useful information to evaluate customer retention and loyalty.
The number of customers whose service was deactivated is presented net of customers that subsequently had their service restored within a certain period of time and excludes customers who received service for less than a certain minimum period of time. We believe that churn provides management, investors and analysts with useful information to evaluate customer retention and loyalty.
Restructuring costs are disclosed in Note 20 – Restructuring Costs of the Notes to the Consolidated Financial Statements. Merger-related costs have been excluded from our calculations of Adjusted EBITDA and Core Adjusted EBITDA, which are non-GAAP financial measures, as we do not consider these costs to be reflective of our ongoing operating performance.
Restructuring costs are disclosed in Note 18 – Restructuring Costs of the Notes to the Consolidated Financial Statements. Merger-related costs have been excluded from our calculations of Adjusted EBITDA and Core Adjusted EBITDA, which are non-GAAP financial measures, as we do not consider these costs to be reflective of our ongoing operating performance.
Excluding liquidity that could be needed for spectrum acquisitions, other long-lived assets or for any potential stockholder returns, we expect our principal sources of funding to be sufficient to meet our anticipated liquidity needs for business operations for the next 12 months as well as our longer-term liquidity needs.
Excluding liquidity that could be needed for acquisitions of businesses, spectrum and other long-lived assets or for any potential stockholder returns, we expect our principal sources of funding to be sufficient to meet our anticipated liquidity needs for business operations for the next 12 months as well as our longer-term liquidity needs.
Revenue Trends In 2023, we expect Service revenues to continue to grow, primarily due to continued postpaid account and customer growth as well as Postpaid Average Revenue per Account (“postpaid ARPA”) growth driven by the execution of our strategy to continuously deepen our account relationships, including growth in High Speed Internet.
Revenue Trends In 2024, we expect Postpaid service revenues to continue to grow, primarily due to continued postpaid account and customer growth as well as Postpaid Average Revenue per Account (“postpaid ARPA”) growth driven by the execution of our strategy to continuously deepen our account relationships, including growth in High Speed Internet.
For certain contracts that include fixed volume purchase commitments and fixed prices for various products, the purchase obligations are calculated using fixed volumes and contractually fixed prices for the products that are expected to be purchased. This table does not include open purchase orders as of December 31, 2022 under normal business purposes.
For certain contracts that include fixed volume purchase commitments and fixed prices for various products, the purchase obligations are calculated using fixed volumes and contractually fixed prices for the products that are expected to be purchased. This table does not include open purchase orders as of December 31, 2023 under normal business purposes.
For the year ended December 31, 2022, gross revenues of all DT affiliates generated by roaming and interconnection traffic and telecommunications services with the Iranian parties identified herein were less than $0.1 million, and the estimated net profits were less than $0.1 million.
For the year ended December 31, 2023, gross revenues of all DT affiliates generated by roaming and interconnection traffic and telecommunications services with the Iranian parties identified herein were less than $0.1 million, and the estimated net profits were less than $0.1 million.
See Note 1 9 – Commitments and Contingencies of the Notes to the Consolidated Financial Statements for further information. (4) On August 8, 2022, we entered into License Purchase Agreements to acquire spectrum in the 600 MHz band from Channel 51 License Co LLC and LB License Co, LLC in exchange for total cash consideration of $3.5 billion.
See Note 17 – Commitments and Contingencies of the Notes to the Consolidated Financial Statements for further information. (4) On August 8, 2022, we entered into License Purchase Agreements to acquire spectrum in the 600 MHz band from Channel 51 License Co LLC and LB License Co, LLC in exchange for total cash consideration of $3.5 billion.
We believe postpaid ARPA provides management, investors and analysts with useful information to assess and evaluate our postpaid service revenue realization and assist in forecasting our future postpaid service revenues on a per account basis.
We believe postpaid ARPA provides management, investors and analysts with useful information to assess and evaluate our postpaid service revenue realization and assists in forecasting our future postpaid service revenues on a per account basis.
The major activities associated with the restructuring initiatives to date include: • Contract termination costs associated with rationalization of retail stores, distribution channels, duplicative network and backhaul services and other agreements; • Severance costs associated with the reduction of redundant processes and functions; and • The decommissioning of certain small cell sites and distributed antenna systems to achieve Merger synergies in network costs.
The major activities associated with the restructuring initiatives included: • Contract termination costs associated with rationalization of retail stores, distribution channels, duplicative network and backhaul services and other agreements; • Severance costs associated with the reduction of redundant processes and functions; and • The decommissioning of certain small cell sites and distributed antenna systems to achieve Merger synergies in network costs.
DT, through certain of its non-U.S. subsidiaries, is party to roaming and interconnect agreements with the following mobile and fixed line telecommunication providers in Iran, some of which are or may be government-controlled entities: Telecommunication Kish Company, Mobile Telecommunication Company of Iran, and Telecommunication Infrastructure Company of Iran.
DT, through certain of its non-U.S. subsidiaries, is party to roaming and interconnect agreements with the following mobile and fixed line telecommunication providers in Iran, some of which are or may be government-controlled entities: Irancell Telecommunications Services Company, Telecommunication Kish Company, Mobile Telecommunication Company of Iran, and Telecommunication Infrastructure Company of Iran.
We understand that the SoftBank subsidiary is obligated under contract and intends to continue such services. In addition, SoftBank, through one of its non-U.S. indirect subsidiaries, provides office supplies to the Embassy of Iran in Japan. SoftBank estimates that gross revenue and net profit generated by such services during the year ended December 31, 2022, were both under $0.1 million.
During the year ended December 31, 2023, SoftBank estimates that gross revenues and net profit generated by such services were both under $0.1 million. We understand that the SoftBank subsidiary is obligated under contract and intends to continue such services. In addition, SoftBank, through one of its non-U.S. indirect subsidiaries, provides office supplies to the Embassy of Iran in Japan.
We were in compliance with all restrictive debt covenants as of December 31, 2022. Financing Lease Facilities We have entered into uncommitted financing lease facilities with certain third parties that provide us with the ability to enter into financing leases for network equipment and services.
We were in compliance with all restrictive debt covenants as of December 31, 2023. Financing Lease Facilities We have uncommitted financing lease facilities with certain third parties that provide us with the ability to enter into financing leases for network equipment and services.
Department of Treasury’s Office of Foreign Assets Control: Bank Melli, Europäisch-Iranische Handelsbank, CPG Engineering & Commercial Services GmbH and Golgohar Trade and Technology GmbH. These services have been terminated or are in the process of being terminated.
Department of Treasury’s Office of Foreign Assets Control: Bank Melli, Europäisch-Iranische Handelsbank, CPG Engineering & Commercial Services GmbH, Golgohar Trade and Technology GmbH and International Trade and Industrial Technology ITRITEC GmbH. These services have been terminated or are in the process of being terminated.
For a discussion and analysis of the year ended December 31, 2021, compared to the same period in 2020, please refer to Management’s Discussion and Analysis of Financial Condition and Results of Operations included in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2021, filed with the SEC on February 11, 2022.
For a discussion and analysis of the year ended December 31, 2022, compared to the same period in 2021, please refer to Management’s Discussion and Analysis of Financial Condition and Results of Operations included in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on February 14, 2023.
If all other factors were to remain unchanged, we expect that a one-year increase in the useful lives of our in-service property and equipment, exclusive of leased devices, would have resulted in a decrease of approximately $3.1 billion in our 2022 depreciation expense and that a one-year decrease in the useful life would have resulted in an increase of approximately $4.0 billion in our 2022 depreciation expense.
If all other factors were to remain unchanged, we expect that a one-year increase in the useful lives of our in-service property and equipment, exclusive of leased devices, would have resulted in a decrease of approximately $3.0 billion in our 2023 depreciation expense and that a one-year decrease in the useful life would have resulted in an increase of approximately $4.5 billion in our 2023 depreciation expense.
Impairment expense was $477 million for the year ended December 31, 2022, due to the non-cash impairment of certain Wireline Property and equipment, Operating lease right-of-use assets and Other intangible assets. See Note 16 - Wireline of the Notes to the Consolidated Financial Statements for additional information. There was no impairment expense for the year ended December 31, 2021.
Impairment expense was $477 million for the year ended December 31, 2022, due to the non-cash impairment of certain Wireline Property and equipment, Operating lease right-of-use assets and Other intangible assets. There was no impairment expense for the year ended December 31, 2023. See Note 14 – Wireline of the Notes to the Consolidated Financial Statements for additional information.
Management and the Audit Committee of the Board of Directors have reviewed and approved the accounting policies associated with these critical estimates. Depreciation Our property and equipment balance represents a significant component of our consolidated assets.
Management and the Audit Committee of the Board of Directors have reviewed and approved the accounting policies associated with these critical estimates. 50 Table of Contents Depreciation Our property and equipment balance represents a significant component of our consolidated assets.
Our MD&A is provided as a supplement to, and should be read together with, our audited consolidated financial statements as of December 31, 2022 and 2021, and for each of the three years in the period ended December 31, 2022, included in Part I I , Item 8 of this Form 10-K.
Our MD&A is provided as a supplement to, and should be read together with, our audited consolidated financial statements as of December 31, 2023 and 2022, and for each of the three years in the period ended December 31, 2023, included in Part II, Item 8 of this Form 10-K.
Performance Measures In managing our business and assessing financial performance, we supplement the information provided by our consolidated financial statements with other operating or statistical data and non-GAAP financial measures. These operating and financial measures are utilized by our management to evaluate our operating performance and, in certain cases, our ability to meet 36 Table of Contents liquidity requirements.
Performance Measures In managing our business and assessing financial performance, we supplement the information provided by our consolidated financial statements with other operating or statistical data and non-GAAP financial measures. These operating and financial measures are utilized by our management to evaluate our operating performance and, in certain cases, our ability to meet liquidity requirements.
In addition, during the year ended December 31, 2022, DT, through certain of its non-U.S. subsidiaries, provided basic telecommunications services to four customers in Germany identified on the Specially Designated Nationals and Blocked Persons List maintained by the U.S.
In addition, during the year ended December 31, 2023, DT, through certain of its non-U.S. subsidiaries, provided basic telecommunications services to five customers in Germany identified on the Specially Designated Nationals and Blocked Persons List maintained by the U.S.
During the years ended December 31, 2022 and 2021, there were no significant net cash proceeds from securitization. 44 Table of Contents Borrowing Capacity We maintain a revolving credit facility (the “Revolving Credit Facility”) with an aggregate commitment amount of $7.5 billion. As of December 31, 2022, there was no outstanding balance under the Revolving Credit Facility.
During the years ended December 31, 2023 and 2022, there were no significant net cash proceeds from securitization. Borrowing Capacity We maintain a revolving credit facility (the “Revolving Credit Facility”) with an aggregate commitment amount of $7.5 billion. As of December 31, 2023, there was no outstanding balance under the Revolving Credit Facility.
Further, the incurrence of additional indebtedness may inhibit our ability to incur new debt in the future to finance our business strategy under the terms governing our existing and future indebtedness.
Further, the incurrence of additional indebtedness may inhibit our 43 Table of Contents ability to incur new debt in the future to finance our business strategy under the terms governing our existing and future indebtedness.
Accounting Pronouncements Not Yet Adopted For information regarding recently issued accounting standards, see Note 1 – Summary of Significant Accounting Policies of the Notes to the Consolidated Financial Statements. 49 Table of Contents
Accounting Pronouncements Not Yet Adopted For information regarding recently issued accounting standards, see Note 1 – Summary of Significant Accounting Policies of the Notes to the Consolidated Financial Statements.
We consider postpaid ARPA to be indicative of our revenue growth potential given the increase in the average number of postpaid phone customers per account and increases in postpaid other customers, including High Speed Internet, tablets, wearables, DIGITS or other connected devices.
We consider postpaid ARPA to be indicative of our revenue growth potential given the increase in the average number of postpaid phone customers per account and increases in postpaid other customers, including High Speed Internet, mobile internet devices (including tablets and hotspots), wearables, DIGITS and other connected devices, including SyncUP and IoT.
To achieve Merger synergies in network costs, we continue to perform rationalization activities to identify duplicative networks, backhaul services and other agreements, in addition to decommissioning certain small cell sites and distributed antenna systems.
Network Integration To achieve Merger synergies in network costs, we performed rationalization activities to identify duplicative networks, backhaul services and other agreements, in addition to decommissioning certain small cell sites and distributed antenna systems.
Pursuant to the applicable indentures and supplemental indentures, the Senior Notes to affiliates and third parties issued by T-Mobile USA, Inc. and the Sprint Issuers (collectively, the “Issuers”) are fully and unconditionally guaranteed, jointly and severally, on a senior unsecured basis by T-Mobile (“Parent”) and certain of Parent’s 100% owned subsidiaries (“Guarantor Subsidiaries”).
Guarantor Financial Information Pursuant to the applicable indentures and supplemental indentures, the Senior Notes to affiliates and third parties issued by T-Mobile USA, Inc., Sprint and Sprint Capital Corporation (collectively, the “Issuers”) are fully and unconditionally guaranteed, jointly and severally, on a senior unsecured basis by T-Mobile (“Parent”) and certain of Parent’s 100% owned subsidiaries (“Guarantor Subsidiaries”).
Management believes analysts and investors use Adjusted EBITDA and Core Adjusted EBITDA as supplemental measures to evaluate overall operating performance and to facilitate comparisons with other wireless communications services companies because they are indicative of our ongoing 41 Table of Contents operating performance and trends by excluding the impact of interest expense from financing, non-cash depreciation and amortization from capital investments, stock-based compensation, Merger-related costs, including network decommissioning costs, impairment expense, losses on disposal groups held for sale and certain legal-related recoveries and expenses, as well as other special income and expenses which are not reflective of our core business activities.
Management believes analysts and investors use Adjusted EBITDA and Core Adjusted EBITDA as supplemental measures to evaluate overall operating performance and to facilitate comparisons with other wireless communications services companies because they are indicative of our ongoing operating performance and trends by excluding the impact of interest expense from financing, non-cash depreciation and amortization from capital investments, stock-based compensation, Merger-related costs, including network decommissioning costs, impairment expense, loss and gain on disposal groups held for sale and certain legal-related recoveries and expenses, as well as other special income and expenses, including severance and related costs associated with the August 2023 workforce reduction, which are not reflective of our core business activities.
Net income , the components of which are discussed above, was $2.6 billion and $3.0 billion for the years ended December 31, 2022 and 2021, respectively.
Net income , the components of which are discussed above, was $8.3 billion and $2.6 billion for the years ended December 31, 2023 and 2022, respectively.
Future capital expenditure requirements will include the deployment of our recently acquired C-band and 3.45 GHz spectrum licenses. For more information regarding our spectrum licenses, see Note 6 – Goodwill, Spectrum License Transactions and Other Intan gible As s ets of the Notes to the Consolidated Financial Statements.
Future capital expenditure requirements will include the deployment of our recently acquired C-band and 3.45 GHz spectrum licenses. For more information regarding our spectrum licenses, see Note 6 - Goodwill, Spectrum License Transactions and Other Intangible Assets of the Notes to the Consolidated Financial Statements.
(4) Other, net, primarily consists of certain severance, restructuring and other expenses and income, including gains from the sale of IP addresses, not directly attributable to the Merger which are not reflective of T-Mobile’s core business activities (“special items”), and are, therefore, excluded from Adjusted EBITDA and Core Adjusted EBITDA.
(3) Other, net, primarily consists of certain severance, restructuring and other expenses and income not directly attributable to the Merger which are not reflective of T-Mobile’s core business activities (“special items”) and are, therefore, excluded from Adjusted EBITDA and Core Adjusted EBITDA.
There are a number of additional risks and uncertainties, including those due to the impact of the Pandemic, that could cause our financial and operating results and capital requirements to differ materially from our projections, which could cause future liquidity to differ materially from our assessment.
There are a number of additional risks and uncertainties that could cause our financial and operating results and capital requirements to differ materially from our projections, which could cause future liquidity to differ materially from our assessment.
Property and equipment capital expenditures primarily relate to the integration of our network and spectrum licenses, including acquired Sprint PCS and 2.5 GHz spectrum licenses, as we build out our nationwide 5G network. We expect a reduction in capital expenditures related to these efforts following 2022.
Property and equipment capital expenditures primarily relate to the integration of our network and spectrum licenses, including acquired Sprint PCS and 2.5 GHz spectrum licenses, as we build out our nationwide 47 Table of Contents 5G network. We expect a reduction in capital expenditures related to these efforts in 2024 compared to 2023.
Customers are qualified either for postpaid service utilizing phones, High Speed Internet, tablets, wearables, DIGITS or other connected devices, where they generally pay after receiving service, or prepaid service, where they generally pay in advance of receiving service.
Customers are qualified either for postpaid service utilizing phones, High Speed Internet modems, mobile internet devices (including tablets and hotspots), wearables, DIGITS and other connected devices, including SyncUP and IoT, where they generally pay after receiving service, or prepaid service, where they generally pay in advance of receiving service.
Adjusted EBITDA increased $897 million, or 3%, for the year ended December 31, 2022, primarily due to the fluctuations in Core Adjusted EBITDA, discussed above, partially offset by lower lease revenues, which decreased $1.9 billion for the year ended December 31, 2022.
Adjusted EBITDA increased $1.6 billion, or 6%, for the year ended December 31, 2023, primarily due to the fluctuations in Core Adjusted EBITDA, discussed above, partially offset by lower lease revenues, which decreased $1.1 billion for the year ended December 31, 2023.
Similarly, our exposure to the impact of rising interest rates is limited, primarily to any new debt issuances or draws on our revolving credit facility, as interest is paid on our Senior Notes at a fixed rate. We continue to monitor the impact of these trends on the payment performance of our customers.
Similarly, our exposure to the impact of rising interest rates is limited, primarily to any new debt issuances or draws on our revolving credit facility, as interest is paid on our Senior Notes at a fixed rate.
Free Cash Flow is a non-GAAP financial measure utilized by management, investors and analysts of our financial information to evaluate cash available to pay debt, repurchase shares and provide further investment in the business.
Adjusted Free Cash Flow is a non-GAAP financial measure utilized by management, investors and analysts of our financial information to evaluate cash available to pay debt, repurchase shares, pay dividends and provide further investment in the business. Starting in the first quarter of 2023, we renamed Free Cash Flow to Adjusted Free Cash Flow.
On September 8, 2022, our Board of Directors authorized our 2022 Stock Repurchase Program for up to $14.0 billion of our common stock through September 30, 2023.
Stockholder Returns On September 8, 2022, our Board of Directors authorized our 2022 Stock Repurchase Program for up to $14.0 billion of our common stock through September 30, 2023, which was utilized as of September 30, 2023.
We continue to provide Wireline services to existing Wireline customers as of December 31, 2022. For more information regarding this non-cash impairment, see Note 16 – Wireline of the Notes to the Consolidated Financial Statements. On September 6, 2022, we entered into the Wireline Sale Agreement to sell the Wireline Business for a total purchase price of $1.
For more information regarding this non-cash impairment, see Note 14 – Wireline of the Notes to the Consolidated Financial Statements. On September 6, 2022, we entered into the Wireline Sale Agreement to sell the Wireline Business for a total purchase price of $1.
Postpaid accounts generally consist of customers that are qualified for postpaid service utilizing phones, High Speed Internet, tablets, wearables, DIGITS or other connected devices, where they generally pay after receiving service.
Postpaid accounts generally consist of customers that are qualified for postpaid service utilizing phones, High Speed Internet modems, mobile internet devices (including tablets and hotspots), wearables, DIGITS and other connected devices, including SyncUP and IoT, where they generally pay after receiving service.
Our intended use of any such funds is for general corporate purposes, including for capital expenditures, spectrum purchases, opportunistic investments and acquisitions, redemption of debt, tower obligations, share repurchases and the execution of our integration plan.
Our intended use of any such funds is for general corporate purposes, including for capital expenditures, spectrum purchases, opportunistic investments and acquisitions, redemption of debt, tower obligations, workforce restructuring, share repurchases, and dividend payments.
As of December 31, 2022, we have committed to $7.5 billion of financing leases under these financing lease facilities, of which $1.2 billion was executed during the year ended December 31, 2022. We expect to enter into up to an additional $1.2 billion in financing lease commitments during the year ending December 31, 2023.
As of December 31, 2023, we have entered into $8.7 billion of financing leases under these financing lease facilities, of which $1.2 billion was executed during the year ended December 31, 2023. We expect to enter into up to a total of $1.2 billion in financing lease commitments during the year ending December 31, 2024.
The use of cash was primarily from: • $5.6 billion in Repayments of long-term debt; • $3.0 billion in Repurchases of common stock; • $1.2 billion in Repayments of financing lease obligations; and • $243 million in Tax withholdings on share-based awards; partially offset by • $3.7 billion in Proceeds from issuance of long-term debt.
The use of cash was primarily from: • $13.1 billion in Repurchases of common stock; • $5.1 billion in Repayments of long-term debt; • $1.2 billion in Repayments of financing lease obligations; • $747 million in Dividends on common stock ; and • $297 million in Tax withholdings on share-based awards; partially offset by • $8.4 billion in Proceeds from issuance of long-term debt.
Other revenues increased $96 million, or 9%, primarily from: • Higher interest income driven by higher imputed interest rates on EIPs which is recognized over the device financing term. Total operating expenses decreased $198 million. The components of this change are discussed below.
Other revenues increased $61 million, or 5%, primarily from: • Higher interest income driven by higher imputed interest rates on EIP, which is recognized over the device financing term. Total operating expenses decreased $8.7 billion, or 12%. The components of this change are discussed below.
License Purchase Agreements On August 8, 2022, we entered into License Purchase Agreements to acquire spectrum in the 600 MHz band from Channel 51 License Co LLC and LB License Co, LLC in exchange for total cash consideration of $3.5 billion. The closing of this purchase was still awaiting FCC final approval as of December 31, 2022.
License Purchase Agreements On August 8, 2022, we entered into License Purchase Agreements to acquire spectrum in the 600 MHz band from Channel 51 License Co LLC and LB License Co, LLC in exchange for total cash consideration of $3.5 billion.
Total revenues decreased $547 million, or 1%. The components of these changes are discussed below. Postpaid revenues increased $3.4 billion, or 8%, primarily from: • Higher average postpaid accounts; and • Higher postpaid ARPA. See “Postpaid ARPA” in the “ Performance Measures ” section of this MD&A. Prepaid revenues increased $124 million, or 1%, primarily from higher average prepaid customers.
Total revenues decreased $1.0 billion, or 1%. The components of these changes are discussed below. Postpaid revenues increased $2.8 billion, or 6%, primarily from: • Higher average postpaid accounts; and • Higher postpaid ARPA. See “Postpaid ARPA” in the “ Performance Measures ” section of this MD&A. Prepaid revenues decreased slightly, primarily from: • Lower prepaid ARPU.
During the year ended December 31, 2022, we issued long-term debt for net proceeds of $3.7 billion and repaid short- and long-term debt with an aggregate principal amount of $5.6 billion.
During the year ended December 31, 2023, we issued long-term debt for net proceeds of $8.4 billion and redeemed and repaid short-term debt with an aggregate principal amount of $5.1 billion.
Net income for the year ended December 31, 2022, included the following: • Merger-related costs, net of tax, of $3.7 billion for the year ended December 31, 2022, compared to $2.3 billion for the year ended December 31, 2021. • Loss on disposal group held for sale of $815 million, net of tax, for the year ended December 31, 2022, compared to no loss on disposal group held for sale for the year ended December 31, 2021. • Impairment expense of $358 million, net of tax, for the year ended December 31, 2022, compared to no impairment expense for the year ended December 31, 2021. • Certain legal-related expenses, net of recoveries, including from the impact of the settlement of certain litigation associated with the August 2021 cyberattack, of $293 million, net of tax, for the year ended December 31, 2022.
Net income included: • Merger-related costs, net of tax, of $775 million for the year ended December 31, 2023, compared to $3.7 billion for the year ended December 31, 2022. • Gain on disposal group held for sale of $19 million, net of tax, for the year ended December 31, 2023, compared to a loss on disposal group held for sale of $815 million, net of tax, for the year ended December 31, 2022. • Impairment expense of $358 million, net of tax, for the year ended December 31, 2022, compared to no impairment expense for the year ended December 31, 2023. • Severance and related costs associated with the August 2023 workforce reduction of $347 million, net of tax, for the year ended December 31, 2023. • Legal-related recoveries, net, associated with the settlement of certain litigation resulting from the August 2021 cyberattack, of $32 million for the year ended December 31, 2023, compared to $293 million in Legal-related expenses, net, for the year ended December 31, 2022.
Liquidity and Capital Resources Our principal sources of liquidity are our cash and cash equivalents and cash generated from operations, proceeds from issuance of debt, financing leases, the sale of certain receivables and the Revolving Credit Facility (as defined below).
Liquidity and Capital Resources Our principal sources of liquidity are our cash and cash equivalents and cash generated from operations, proceeds from issuance of debt, financing leases, the sale of certain receivables, the Revolving Credit Facility (as defined below) and, beginning in July 2023, an unsecured short-term commercial paper program.
Investments in and the equity in earnings of non-guarantor subsidiaries, which would otherwise be consolidated in accordance with GAAP, are excluded from the below summarized financial information pursuant to SEC Regulation S-X Rule 13-01.
The summarized financial information of each obligor group is presented on a combined basis with balances and transactions within the obligor group eliminated. Investments in and the equity in earnings of non-guarantor subsidiaries, which would otherwise be consolidated in accordance with GAAP, are excluded from the below summarized financial information pursuant to SEC Regulation S-X Rule 13-01.
Depreciation and amortization decreased $2.7 billion, or 17%, primarily from: • Lower depreciation expense on leased devices, resulting from a lower number of total customer devices under lease; • Certain 4G-related network assets becoming fully depreciated, including assets impacted by the decommissioning of the legacy Sprint CDMA and LTE networks; and • Lower amortization expense on certain intangible assets acquired in the Merger; partially offset by • Higher depreciation expense, excluding leased devices, from the continued build-out of our nationwide 5G network.
Depreciation and amortization decreased $833 million, or 6%, primarily from: • A decrease of $959 million in depreciation expense on leased devices, resulting from a lower number of total customer devices under lease; and • Certain 4G-related network assets becoming fully depreciated, including assets impacted by the decommissioning of the legacy Sprint CDMA and LTE networks in 2022; partially offset by • Higher depreciation expense, excluding leased devices, from the continued build-out of our nationwide 5G network and increased in-service internally developed and purchased software.
As of December 31, 2022 Versus 2021 2021 Versus 2020 (in thousands) 2022 2021 2020 # Change % Change # Change % Change Total postpaid customer accounts (1) (2) (3) 28,526 27,216 25,754 1,310 5 % 1,462 6 % (1) Customers impacted by the decommissioning of the legacy Sprint CDMA and LTE and T-Mobile UMTS networks have been excluded from our postpaid account base resulting in the removal of 57,000 postpaid accounts in the first quarter of 2022 and 69,000 postpaid accounts in the second quarter of 2022.
The following table sets forth the number of ending postpaid accounts: As of December 31, 2023 Versus 2022 2022 Versus 2021 (in thousands) 2023 2022 2021 # Change % Change # Change % Change Postpaid accounts (1) (2) 29,797 28,526 27,216 1,271 4 % 1,310 5 % (1) Customers impacted by the decommissioning of the legacy Sprint CDMA and LTE and T-Mobile UMTS networks have been excluded from our postpaid account base resulting in the removal of 57,000 postpaid accounts in the first quarter of 2022 and 69,000 postpaid accounts in the second quarter of 2022.
Average Revenue Per User Average Revenue per User (“ARPU”) represents the average monthly service revenue earned per customer. ARPU is calculated as service revenues for the specified period divided by the average number of customers during the period, further divided by the number of months in the period.
ARPU is calculated as service revenues for the specified period divided by the average number of customers during the period, further divided by the number of months in the period.
(2) Stock-based compensation includes payroll tax impacts and may not agree with stock-based compensation expense on the consolidated financial statements. Additionally, certain stock-based compensation expenses associated with the Transactions have been included in Merger-related costs. (3) Legal-related expenses, net, consists of the settlement of certain litigation associated with the August 2021 cyberattack and is presented net of insurance recoveries.
Additionally, certain stock-based compensation expenses associated with the Transactions have been included in Merger-related costs. (2) Legal-related (recoveries) expenses, net, consists of the settlement of certain litigation associated with the August 2021 cyberattack and is presented net of insurance recoveries.
Loss on disposal group held for sale was $1.1 billion for the year ended December 31, 2022, due to the agreement for the sale of the Wireline Business. See Note 16 - Wireline of the Notes to the Consolidated Financial Statements for additional information.
(Gain) loss on disposal group held for sale was a gain of $25 million for the year ended December 31, 2023, and a loss of $1.1 billion for the year ended December 31, 2022. See Note 14 – Wireline of the Notes to the Consolidated Financial Statements for additional information.
Spectrum Auctions In March 2021, the FCC announced that we were the winning bidder of 142 licenses in Auction 107 (C-band spectrum) for an aggregate purchase price of $9.3 billion, excluding relocation costs. We expect to incur an additional $767 million in fixed relocation costs, which will be paid through 2024.
Spectrum Auctions In March 2021, the FCC announced that we were the winning bidder of 142 licenses in Auction 107 (C-band spectrum) for an aggregate purchase price of $9.3 billion, excluding relocation costs.
The following table sets forth the number of ending customers: As of December 31, 2022 Versus 2021 2021 Versus 2020 (in thousands) 2022 2021 2020 # Change % Change # Change % Change Customers, end of period Postpaid phone customers (1) (2) (3) 72,834 70,262 66,618 2,572 4 % 3,644 5 % Postpaid other customers (1) (2) (3) 19,398 17,401 14,732 1,997 11 % 2,669 18 % Total postpaid customers 92,232 87,663 81,350 4,569 5 % 6,313 8 % Prepaid customers (1) (3) 21,366 21,056 20,714 310 1 % 342 2 % Total customers 113,598 108,719 102,064 4,879 4 % 6,655 7 % Acquired customers, net of base adjustments (1) (2) (3) (1,878) 818 29,228 (2,696) (330) % (28,410) (97) % (1) Customers impacted by the decommissioning of the legacy Sprint CDMA and LTE and T-Mobile UMTS networks have been excluded from our customer base resulting in the removal of 212,000 postpaid phone customers and 349,000 postpaid other customers in the first quarter of 2022 and 284,000 postpaid phone customers, 946,000 postpaid other customers and 28,000 prepaid customers in the second quarter of 2022.
The following table sets forth the number of ending customers: As of December 31, 2023 Versus 2022 2022 Versus 2021 (in thousands) 2023 2022 2021 # Change % Change # Change % Change Customers, end of period Postpaid phone customers (1) (2) 75,936 72,834 70,262 3,102 4 % 2,572 4 % Postpaid other customers (1) (2) 22,116 19,398 17,401 2,718 14 % 1,997 11 % Total postpaid customers 98,052 92,232 87,663 5,820 6 % 4,569 5 % Prepaid customers (1) 21,648 21,366 21,056 282 1 % 310 1 % Total customers 119,700 113,598 108,719 6,102 5 % 4,879 4 % Adjustments to customers (1) (2) 170 (1,878) 818 2,048 (109) % (2,696) (330) % (1) Customers impacted by the decommissioning of the legacy Sprint CDMA and LTE and T-Mobile UMTS networks have been excluded from our customer base resulting in the removal of 212,000 postpaid phone customers and 349,000 postpaid other customers in the first quarter of 2022 and 284,000 postpaid phone customers, 946,000 postpaid other customers and 28,000 prepaid customers in the second quarter of 2022.
Cash Flows The following is a condensed schedule of our cash flows: Year Ended December 31, 2022 Versus 2021 2021 Versus 2020 (in millions) 2022 2021 2020 $ Change % Change $ Change % Change Net cash provided by operating activities $ 16,781 $ 13,917 $ 8,640 $ 2,864 21 % $ 5,277 61 % Net cash used in investing activities (12,359) (19,386) (12,715) 7,027 (36) % (6,671) 52 % Net cash (used in) provided by financing activities (6,451) 1,709 13,010 (8,160) (477) % (11,301) (87) % Operating Activities Net cash provided by operating activities increased $2.9 billion, or 21%, primarily from: • A $4.1 billion decrease in net cash outflows from changes in working capital, primarily due to lower use of cash from Short- and long-term operating lease liabilities, including the impact of a $1.0 billion advance rent payment related to the modification of one of our master lease agreements during the year ended December 31, 2021, EIP receivables, Other current and long-term liabilities and Inventories, partially offset by higher use of cash from Accounts receivable; partially offset by • A $1.2 billion decrease in Net income, adjusted for non-cash income and expense. • Net cash provided by operating activities includes the impact of $3.4 billion and $2.2 billion in net payments for Merger-related costs for the years ended December 31, 2022 and 2021, respectively.
Cash Flows The following is a condensed schedule of our cash flows: Year Ended December 31, 2023 Versus 2022 2022 Versus 2021 (in millions) 2023 2022 2021 $ Change % Change $ Change % Change Net cash provided by operating activities $ 18,559 $ 16,781 $ 13,917 $ 1,778 11 % $ 2,864 21 % Net cash used in investing activities (5,829) (12,359) (19,386) 6,530 (53) % 7,027 (36) % Net cash (used in) provided by financing activities (12,097) (6,451) 1,709 (5,646) 88 % (8,160) (477) % Operating Activities Net cash provided by operating activities increased $1.8 billion, or 11%, primarily from: • A $5.8 billion increase in Net income, adjusted for non-cash income and expense; partially offset by • A $4.0 billion increase in net cash outflows from changes in working capital, primarily due to higher use of cash from Accounts payable and accrued liabilities, Operating lease right-of-use assets, Other current and long-term liabilities, Short- and long-term operating lease liabilities and Inventory, partially offset by lower use of cash from Equipment installment plan receivables and Other current and long-term assets. • Net cash provided by operating activities includes the impact of $2.0 billion and $3.4 billion in net payments for Merger-related costs for the years ended December 31, 2023 and 2022, respectively.
Contractual Obligations In connection with the regulatory approvals of the Transactions, we made commitments to various state and federal agencies, including the U.S. Department of Justice and FCC. For more information regarding these commitments, see Note 1 9 – Commitments and Contingencies of the Notes to the Consolidated Financial Statements.
For additional information regarding the 2022 Stock Repurchase Program and the 2023-2024 Stockholder Return Program, see Note 13 – Stockholder Return Programs of the Notes to the Consolidated Financial Statements. Contractual Obligations In connection with the regulatory approvals of the Transactions, we made commitments to various state and federal agencies, including the U.S. Department of Justice and FCC.
To date, price inflation has not had a significant impact on our operations as we have fixed rates established through long-term contracts for many of our most significant costs, including tower agreements and backhaul contracts.
Such scenarios and uncertainties may affect, among others, expected credit loss activity as well as certain fair value estimates. To date, price inflation has not had a significant impact on our operations as we have fixed rates established through long-term contracts for many of our most significant costs, including tower agreements and backhaul contracts.
In connection with the expected sale of the Wireline Business and classification of related assets and liabilities as held for sale, we recognized a pre-tax loss of $1.1 billion during the year ended December 31, 2022, which is included within Loss on disposal group held for sale on our Consolidated Statements of Comprehensive Income.
Prior to the closing of the Wireline Transaction, we recognized a pre-tax loss of $1.1 billion during the year ended December 31, 2022, which is included within (Gain) loss on disposal group held for sale on our Consolidated Statements of Comprehensive Income.
Subsequent to December 31, 2022, on February 9, 2023, we issued $1.0 billion of 4.950% Senior Notes due 2028, $1.3 billion of 5.050% Senior Notes due 2033 and $750 million of 5.650% Senior Notes due 2053. For more information regarding our debt financing transactions, see Note 8 – Debt of the Notes to the Consolidated Financial Statements.
Subsequent to December 31, 2023, on January 12, 2024, we issued $1.0 billion of 4.850% Senior Notes due 2029, $1.3 billion of 5.150% Senior Notes due 2034 and $750 million of 5.500% Senior Notes due 2055. For more information regarding our debt financing transactions, see Note 8 - Debt of the Notes to the Consolidated Financial Statements.
We understand that DT intends to continue these activities. Separately, SoftBank, through one of its non-U.S. subsidiaries, provides roaming services in Iran through Irancell Telecommunications Services Company. During the year ended December 31, 2022, SoftBank had no gross revenues from such services and no net profit was generated. We understand that the SoftBank subsidiary intends to continue such services.
Gross revenues and net profits recorded from these activities for the year ended December 31, 2023, were less than $0.1 million. We understand that DT intends to continue these activities. Separately, SoftBank, through one of its non-U.S. subsidiaries, provides roaming services in Iran through Irancell Telecommunications Services Company.
In addition, DT, through certain of its non-U.S. subsidiaries that operate a fixed-line network in their respective European home countries (in particular Germany), provides telecommunications services in the ordinary course of business to the Embassy of Iran in those European countries. Gross revenues and net profits recorded from these activities for the year ended, were less than $0.1 million.
In addition, DT, through certain of its non-U.S. subsidiaries that operate a fixed-line network in their respective European home countries (in particular Germany), provides telecommunications services in the ordinary course of business to the Embassy of Iran in those European countries.
Where we are committed to make a minimum payment to the supplier regardless of whether we take delivery, we have included only that minimum payment as a purchase obligation.
Where we are committed to make a minimum payment to the supplier regardless of whether we take delivery, we have included only that minimum payment as a purchase obligation. The acquisition of spectrum licenses is subject to regulatory approval and other customary closing conditions.
This subsidiary also provides telecommunications services in the ordinary course of business to accounts affiliated with the Embassy of Iran in Japan. During the year ended December 31, 2022, SoftBank estimates that gross revenues and net profit generated by such services were both under $0.1 million.
During the year ended December 31, 2023, SoftBank had no gross revenues from such services and no net profit was generated. We understand that the SoftBank subsidiary intends to continue such services. This subsidiary also provides telecommunications services in the ordinary course of business to accounts affiliated with the Embassy of Iran in Japan.
Net cash payments for Merger-related costs, including payments related to our restructuring plan, are included in Net cash provided by operating activities on our Consolidated Statements of Cash Flows. 28 Table of Contents Merger-related costs are presented below: (in millions) Year Ended December 31, 2022 Versus 2021 2021 Versus 2020 2022 2021 2020 $ Change % Change $ Change % Change Merger-related costs Cost of services, exclusive of depreciation and amortization $ 2,670 $ 1,015 $ 646 $ 1,655 163 % $ 369 57 % Cost of equipment sales, exclusive of depreciation and amortization 1,524 1,018 6 506 50 % 1,012 NM Selling, general and administrative 775 1,074 1,263 (299) (28) % (189) (15) % Total Merger-related costs $ 4,969 $ 3,107 $ 1,915 $ 1,862 60 % $ 1,192 62 % Net cash payments for Merger-related costs $ 3,364 $ 2,170 $ 1,493 $ 1,194 55 % $ 677 45 % NM - Not Meaningful We expect to incur substantially all of the remaining projected Merger-related costs of approximately $1.0 billion, excluding capital expenditures, by the end of 2023, with the cash expenditure for the Merger-related costs extending beyond 2023.
Net cash payments for Merger-related costs, including payments related to our restructuring plan, are included in Net cash provided by operating activities on our Consolidated Statements of Cash Flows. 30 Table of Contents Merger-related costs are presented below: (in millions) Year Ended December 31, 2023 Versus 2022 2022 Versus 2021 2023 2022 2021 $ Change % Change $ Change % Change Merger-related costs Cost of services, exclusive of depreciation and amortization $ 652 $ 2,670 $ 1,015 $ (2,018) (76) % $ 1,655 163 % Cost of equipment sales, exclusive of depreciation and amortization (12) 1,524 1,018 (1,536) (101) % 506 50 % Selling, general and administrative 394 775 1,074 (381) (49) % (299) (28) % Total Merger-related costs $ 1,034 $ 4,969 $ 3,107 $ (3,935) (79) % $ 1,862 60 % Net cash payments for Merger-related costs $ 1,973 $ 3,364 $ 2,170 $ (1,391) (41) % $ 1,194 55 % We expect to incur all of the remaining restructuring and integration costs associated with the Merger by the first half of 2024, with the cash expenditure for the Merger-related costs extending beyond 2024.
The indentures, supplemental indentures and credit agreements governing the long-term debt contain covenants that, among other things, limit the ability of the Issuers or borrowers and the Guarantor Subsidiaries to incur more debt, create liens or other encumbrances, and merge, consolidate or sell, or otherwise dispose of, substantially all of their assets.
The indentures, supplemental indentures and credit agreements governing the long-term debt contain covenants that, among other things, limit the ability of the Issuers or borrowers and the Guarantor Subsidiaries to incur more debt, create liens or other encumbrances, and merge, consolidate or sell, or otherwise dispose of, substantially all of their assets. 37 Table of Contents Basis of Presentation The following tables include summarized financial information of the obligor groups of debt issued by T-Mobile USA, Inc., Sprint and Sprint Capital Corporation.
For more information regarding these off-balance sheet arrangements, see Note 4 – Sales of Certain Receivables of the Notes to the Consolidated Financial Statements. 45 Table of Contents Future Sources and Uses of Liquidity We may seek additional sources of liquidity, including through the issuance of additional debt, to continue to opportunistically acquire spectrum licenses or other long-lived assets in private party transactions, repurchase shares, or for the refinancing of existing long-term debt on an opportunistic basis.
Future Sources and Uses of Liquidity We may seek additional sources of liquidity, including through the issuance of additional debt, to continue to opportunistically acquire spectrum licenses or other long-lived assets in private party transactions, repurchase shares, pay dividends or for the refinancing of existing long-term debt on an opportunistic basis.
During the year ended December 31, 2022, we repurchased shares of our common stock for a total purchase price of $3.0 billion, all of which were purchased under the 2022 Stock Repurchase Program and occurred during the period from September 8, 2022, through December 31, 2022.
During the nine months ended September 30, 2023, we repurchased shares of our common stock for a total purchase price of $11.0 billion, all of which were purchased under the 2022 Stock Repurchase Program.
Our receipt of these licenses was still awaiting FCC final approval of the auction results as of December 31, 2022. For more information regarding our spectrum licenses, see Note 6 – Goodwill, Spectrum License Transactions and Other Intangible Assets of the Notes to the Consolidated Financial Statements.
For more information regarding our spectrum licenses, see Note 6 – Goodwill, Spectrum License Transactions and Other Intangible Assets of the Notes to the Consolidated Financial Statements.
Free Cash Flow Free Cash Flow represents Net cash provided by operating activities less cash payments for Purchases of property and equipment, including Proceeds from sales of tower sites and Proceeds related to beneficial interests in securitization transactions and less Cash payments for debt prepayment or debt extinguishment costs.
Cash and Cash Equivalents As of December 31, 2023, our Cash and cash equivalents were $5.1 billion compared to $4.5 billion at December 31, 2022. 44 Table of Contents Adjusted Free Cash Flow Adjusted Free Cash Flow represents Net cash provided by operating activities less cash payments for Purchases of property and equipment, plus Proceeds from sales of tower sites and Proceeds related to beneficial interests in securitization transactions and less Cash payments for debt prepayment or debt extinguishment costs.
We believe ARPU provides management, investors and analysts with useful information to assess and evaluate our service revenue per customer and assist in forecasting our future service revenues generated from our customer base. Postpaid phone ARPU excludes postpaid other customers and related revenues, which include High Speed Internet, tablets, wearables, DIGITS and other connected devices.
We believe ARPU provides management, investors and analysts with useful information to assess and evaluate our service revenue per customer and assist in forecasting our future service revenues generated from our customer base.
(2) In the first quarter of 2021, we acquired 4,000 postpaid accounts through our acquisition of an affiliate. In the third quarter of 2021, we acquired 270,000 postpaid accounts through our acquisition of the Wireless Assets of Shentel. (3) Includes accounts acquired in connection with the Merger and certain account base adjustments. See Sprint Merger Account Base Adjustments table below.
(2) In the first quarter of 2021, we acquired 4,000 postpaid accounts through our acquisition of an affiliate. In the third quarter of 2021, we acquired 270,000 postpaid accounts through our acquisition of the Wireless Assets of Shentel.
The following table sets forth our operating measure ARPA: (in dollars) Year Ended December 31, 2022 Versus 2021 2021 Versus 2020 2022 2021 2020 $ Change % Change $ Change % Change Postpaid ARPA $ 137.43 $ 134.03 $ 131.78 $ 3.40 3 % $ 2.25 2 % 40 Table of Contents Postpaid ARPA increased $3.40, or 3%, primarily from: • Higher premium services, including Magenta Max; • Higher non-recurring charges relative to muted Pandemic levels in 2021; and • An increase in customers per account, including continued adoption of High Speed Internet from existing accounts; partially offset by • An increase in High Speed Internet only accounts and increased promotional activity, including growth in rate plans for specific customer cohorts such as Business, Military, and First Responder.
The following table sets forth our operating measure ARPA: (in dollars) Year Ended December 31, 2023 Versus 2022 2022 Versus 2021 2023 2022 2021 $ Change % Change $ Change % Change Postpaid ARPA $ 139.27 $ 137.43 $ 134.03 $ 1.84 1 % $ 3.40 3 % Postpaid ARPA increased slightly, primarily from: • Higher premium services, primarily high-end rate plans, net of contra-revenue for content included in such plans, and discounts for specific affinity groups, such as 55+, Military and First Responder; and • An increase in customers per account, including growth in Enterprise business and continued adoption of High Speed Internet; partially offset by • Increased promotional activity; and • An increase in High Speed Internet only accounts. 41 Table of Contents Average Revenue Per User Average Revenue per User (“ARPU”) represents the average monthly service revenue earned per customer.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

2 edited+0 added−0 removed2 unchanged
Biggest changeWe do not foresee significant changes in the strategies used to manage market risk in the near future. Certain potential sources of financing available to us, including our Revolving Credit Facility, bear interest that is indexed to a benchmark rate plus a fixed margin. As of December 31, 2022, we did not have outstanding balances under these facilities.
Biggest changeWe do not foresee significant changes in the strategies used to manage market risk in the near future. Certain potential sources of financing available to us, including our Revolving Credit Facility, bear interest that is indexed to a benchmark rate plus a fixed margin. As of December 31, 2023, we did not have outstanding balances under these facilities.
See Note 8 – Debt of the Notes to the Consolidated Financial Statements for additional information. 50 Index for Notes to the Consolidated Financial Statements
See Note 8 – Debt of the Notes to the Consolidated Financial Statements for additional information. 51 Index for Notes to the Consolidated Financial Statements

Other TMUSZ 10-K year-over-year comparisons