T-Mobile USA, Inc. Investor Quarterly

Transcription

1 T-Mbile USA, Inc. Investr Quarterly Pursuant t the terms f the Business Cmbinatin Agreement dated as f Octber 3,, as amended n April 30, the business cmbinatin f MetrPCS and T-Mbile was cmpleted, resulting in T-Mbile US, Inc. (NYSE: TMUS). This Investr Quarterly presents first quarter results f T-Mbile n a standalne basis. T-Mbile's first quarter f results were highlighted by an increase in net branded custmers, cntinued imprvement in branded pstpaid churn, the launch f n annual service cntract Simple Chice rate plans, the launch f 4G LTE in seven majr metrplitan areas, and the annuncement f the launch f the iphne 5. T-Mbile ended the first quarter f with apprximately 34 millin custmers, a net increase f 579,000 custmers cmpared t the furth quarter f ; including 3,000 branded net custmer additins. The sequential imprvement was driven primarily by the nging reductin in branded pstpaid churn, the cntinued grwth f branded prepaid custmers, and strng grwth in whlesale custmers (M2M and MVNO). In the quarter, T-Mbile reprted adjusted EBITDA f $1.2 billin and an adjusted EBITDA margin f 29%. Adjusted EBITDA margin increased frm 25% in the furth quarter f as the furth quarter included significant spend fr seasnal prmtinal activities and imprving brand awareness. Custmer and Churn Results (in thusands) Custmers, end f perid Fr the three mnths ended December 31, Y--Y Change Branded pstpaid custmers 20,094 20,293 21,857 (8 )% Branded prepaid custmers 6,028 5,826 5, % Ttal branded custmers 26,122 26,119 26,925 (3 )% M2M custmers 3,290 3,090 2, % MVNO custmers 4,556 4,180 3, % Ttal whlesale custmers 7,846 7,270 6, % Ttal T-Mbile custmers, end f perid 33,968 33,389 33,373 2 % Net custmer additins (lsses) Branded pstpaid custmers (199) (515) (510) 61 % Branded prepaid custmers (19)% Ttal branded custmers 3 (349) (262) ** M2M custmers (24)% MVNO custmers ** Ttal whlesale custmers % Ttal T-Mbile net custmer additins ** Nte: Certain custmer numbers may nt add due t runding. ** Nt Meaningful. 1

2 Fr the three mnths ended December 31, Y--Y Change Blended churn 3.3 % 3.7% 3.3% 0 bps Branded churn 3.1 % 3.5% 3.2% -10 bps Branded pstpaid churn 1.9 % 2.5% 2.5% -60 bps Branded prepaid churn 7.0 % 7.0% 6.4% +60 bps Branded Custmers Branded pstpaid net custmer lsses ttaled 199,000 in the first quarter f, cmpared t 515,000 net custmer lsses in the furth quarter f and 510,000 net custmer lsses in the first quarter f. Branded pstpaid churn was 1.9% in the first quarter f, dwn 60 basis pints frm the furth quarter f and the first quarter f. Sequentially and year-ver-year, T-Mbile's cntinued fcus n churn reductin effrts such as imprving netwrk quality and custmer sales experience has resulted in a significant imprvement t the branded pstpaid churn perfrmance. Imprvements in branded pstpaid churn were partially ffset by a decrease in branded pstpaid grss custmer additins f 6% cmpared t the furth quarter f and 16% cmpared t the first quarter f. During the first quarter f, there were fewer launches f new handsets and prmtinal activity by T-Mbile's cmpetitrs. These factrs cntributed t imprved branded pstpaid custmer retentin in the first quarter f, cmpared t the furth quarter f and the first quarter f. Branded prepaid net custmer additins were 202,000 in the first quarter f ; up frm the furth quarter f branded prepaid net custmer additins f 166,000 but dwn frm 249,000 in the first quarter f. Branded prepaid churn was 7.0% in the first quarter f, unchanged frm the furth quarter f and up 60 basis pints frm the first quarter f. The sequential increase f the branded prepaid base was due t higher grss custmer additins frm the cntinued ppularity f mnthly prepaid plans that include data fferings and the launch f GSmart Mbile, a secnd T-Mbile prepaid brand. Year-ver-year, the decrease in branded prepaid custmer additins is the result f higher branded prepaid custmer churn partially ffset by higher branded prepaid custmer grss additins. The increase in branded prepaid custmer deactivatins in the first quarter f was the result f an increasing churn rate driven primarily by rbust cmpetitive pressures cmpunded by a grwing prepaid custmer base. Whlesale T-Mbile's whlesale base, which includes Machine t Machine (M2M) and Mbile Virtual Netwrk Operatr (MVNO) custmers increased 576,000 in the first quarter f, cmpared t net additins f 410,000 in the furth quarter f and 449,000 in the first quarter f. The M2M segment had net custmer additins f 200,000 in the first quarter f, increasing M2M ttal custmers t 3.3 millin. MVNO partners delivered net custmer additins f 376,000 in the first quarter f, an increase frm 275,000 in the furth quarter f and 187,000 in the first quarter f. This grwth was due in part t the cntinued ppularity f gvernment subsidized Lifeline prgrams ffered by ur MVNO partners, alng with increasing net additins frm new MVNO partners which were launched in the furth quarter f. 2

3 Value and Simple Chice Plans T-Mbile prvides affrdable wireless cmmunicatin services natinwide thrugh a variety f service plan ptins including its Value plan and its Simple Chice plan, which was annunced in the first quarter f. Cmpared t traditinal bundled price plans, Value and Simple Chice plans allw custmers t subscribe t wireless service withut the purchase f a handset. Depending n their credit prfile, custmers are qualified either fr pstpaid service, where they pay after a mnth f service, r prepaid service, where they pay in advance. Custmers n T-Mbile's Value r Simple Chice plans benefit frm reduced mnthly service charges and can chse whether t use their wn cmpatible handset n T-Mbile's netwrk r purchase a handset frm T-Mbile r ne f its dealers. Qualifying custmers wh purchase their handset frm T-Mbile have the chice f either paying fr a handset at the pint-f-sale r financing a prtin f the purchase price ver an installment perid. Fr each handset sld, T-Mbile's Value and Simple Chice plans result in increased equipment revenue, cmpared t traditinal bundled price plans that typically ffer a handset discunt, but invlve higher service charges. As a result, T-Mbile Value and Simple Chice plans result in increased EBITDA during the perid f equipment sale while mnthly service revenues are lwer ver the service perid with a crrespnding adverse impact n EBITDA. In the first quarter f, Value and Simple Chice custmers accunted fr ver 57% f the branded pstpaid grss custmer additins and at the end f the first quarter f and made up 36% f the branded pstpaid custmer base, an increase frm 30% at the end f the furth quarter f. Custmers n Value and Simple Chice plans had assciated equipment installment plan billings f $194 millin in the first quarter f cmpared t $153 millin in the furth quarter f and $76 millin in the first quarter f. T-Mbile financed $298 millin f equipment sales n installment plans during the first quarter f, a decrease frm $393 millin in the furth quarter f and an increase frm $186 millin in the first quarter f. Ttal installment receivables, net f allwances fr credit lsses, were $774 millin as f the end f the first quarter f cmpared t $691 millin at the end f the furth quarter f. Financial Results (dllars in millins) Fr the three mnths ended December 31, Y--Y Change Service revenues 4,005 4,127 4,444 (9.9 )% Branded revenues 3,766 3,890 4,198 (10.3 )% Theref, branded pstpaid revenues 3,263 3,416 3,821 (14.6 )% Theref, branded prepaid revenues % Ttal revenues 4,677 4,909 5,034 (7.1 )% Adjusted EBITDA 1,178 1,048 1,274 (7.5 )% Adjusted EBITDA margin 29% 25% 29% +0 bps Cash capital expenditures 1, % Revenue Service revenues were $4.0 billin in the first quarter f, dwn 3.0% frm the furth quarter f and dwn 9.9% frm the first quarter f. 3

4 Sequentially and year-ver-year, quarterly service revenues decreased due t branded pstpaid custmer lsses, but were partially ffset by increased data revenues. Additinally, branded prepaid revenues increased cmpared t the furth quarter f and the first quarter f, a result f the cntinued success f mnthly service plans that include data. Branded pstpaid service revenues were als negatively impacted by custmers adpting Value and Simple Chice plans, which have lwer service revenues but d nt include subsidized handset equipment and therefre, result in higher equipment revenues than traditinal bundled price plans. Ttal revenues, including service, equipment sales, and ther revenues, were $4.7 billin in the first quarter f, dwn frm $4.9 billin in the furth quarter f and dwn frm $5.0 billin in the first quarter f. Cmpared t the first quarter f, ttal revenues decreased primarily frm lwer service revenues, as described abve. The decrease in service revenue was partially ffset by increases in equipment revenue. As a result, ttal revenues, cmpared t the first quarter f, declined less than service revenues. Equipment revenues increased year-ver-year, despite lwer verall handset sales vlumes as the cmpetitive lineup f smartphnes led t a higher sales mix f smartphne units cmbined with lwer equipment sales lsses due t the significant grwth in Value and Simple Chice plan mix. Adjusted EBITDA T-Mbile had adjusted EBITDA f $1.2 billin in the first quarter f, up 12.4% frm the furth quarter f but dwn 7.5% frm the first quarter f. Adjusted EBITDA in the first quarter f excludes nn-recurring expenses f $44 millin, primarily related t cst restructuring initiatives and acquisitin-related activities incurred in cnnectin with the business cmbinatin f T-Mbile and MetrPCS. Adjusted EBITDA in the first quarter f excludes transactin-related charges f $30 millin cnsisting primarily f emplyee retentin expenses frm the terminated AT&T transactin. Sequentially, adjusted EBITDA increased as a result f lwer perating expenses primarily frm lwer prmtinal activity and emplyee-related csts partially ffset by lwer service revenues. Year-ver-year, adjusted EBITDA decreased as a result f lwer service revenues ffset partially by lwer general and administrative expenses, as described belw. Adjusted EBITDA margin was 29% in the first quarter f, up frm 25% in furth quarter f but cnsistent cmpared t the first quarter f, as the furth quarter f included significant prmtinal activities frm re-branding initiatives. Operating Expenses Ttal perating expenses were $4.3 billin in the first quarter f, including $44 millin in restructuring charges and transactin csts assciated with the business cmbinatin f T-Mbile and MetrPCS. Excluding these nn-recurring items fr cmparative purpses, ttal perating expenses in the first quarter f were dwn 8.7% frm the furth quarter f and dwn 5.6% frm the first quarter f. Lsses frm equipment sales in the first quarter f were $280 millin (equipment revenues f $606 millin, less cst f equipment sales f $886 millin), up 6.5% frm the furth quarter f and dwn 9.7% frm the first quarter f. Sequentially, the increase in lsses frm equipment sales was due t a seasnal decrease in vendr credits. The year-ver-year decrease in net equipment sales lss was due primarily t reduced handset subsidies related t Value and Simple Chice plans. 4

5 Netwrk expenses f $1.1 billin in the first quarter f decreased 3.2% frm the furth quarter f and decreased 7.3% frm the first quarter f. The year-ver-year decrease was attributable t lwer raming expenses related t a decline in custmer base and assciated usage. Additinally, due t the transitin in t enhanced cmmunicatin lines, primarily fiber, T-Mbile was able t accmmdate higher data vlumes year-ver-year withut increases in assciated netwrk csts. Custmer acquisitin expenses in the first quarter f f $737 millin decreased 23.5% frm the furth quarter f and decreased 1.6% frm the first quarter f. Cmpared t the furth quarter f, the decrease was primarily due t lwer prmtinal activities assciated with the T-Mbile s rebranding initiatives in the furth quarter f. Additinally, prmtinal expenses were lwer in the first quarter f as T-Mbile planned fr increased expenses related t the iphne launch and Uncarrier prmtinal campaign in the secnd quarter f. The year-ver-year decrease was primarily attributable t lwer emplyee related expenses due t fewer custmer acquisitin emplyees and lwer prmtinal csts. General and administrative expenses f $769 millin in the first quarter f decreased 7.2% frm the furth quarter f and decreased 20.7% frm the first quarter f. The sequential decrease was driven by lwer dealer renewal cmmissins and emplyee-related csts. Year-ver-year, the decrease was due primarily t lwer bad debt expenses driven by imprved credit quality f T-Mbile's custmer prtfli and the shift in the custmer base twards branded prepaid. In additin, lwer emplyeerelated csts as a result f the call center cnslidatin and restructuring initiatives during cntributed t the year-ver-year decrease. Depreciatin and amrtizatin expenses f $755 millin in the first quarter f were dwn 5.2% sequentially, but were cnsistent with the first quarter f. Sequentially, depreciatin expense was lwer as the furth quarter f included increased depreciatin related t T-Mbile's nging netwrk mdernizatin effrts. In the first quarter f, T-Mbile re-evaluated the Cmpany's cst structure and eliminated initiatives which did nt fit with the Un-carrier value prpsitin and business mdel - implementing a set f changes which are targeted t deliver mre than $1 billin in grss cst savings in. Capital Expenditures Cash capital expenditures fr purchases f prperty and equipment were $1.1 billin in the first quarter f, an increase f 20% frm the furth quarter f and an increase f 44% frm the first quarter f. Sequentially and year-ver-year, higher cash capital expenditures were a result f the netwrk mdernizatin transfrmatin and 4G LTE deplyment. In less than 10 mnths T-Mbile has mdernized apprximately 16,000 cell sites fr HSPA+ n 1900 MHz spectrum. T-Mbile has als launched 4G LTE in seven majr metrplitan areas, cvering 20 millin peple, and is well n track t exceed the target f reaching 100 millin peple by mid- and 200 millin peple by the end f. 5

6 Financial Metrics Fr the three mnths ended December 31, Y--Y Change ARPU (blended) $ $ $ (10.8 )% ARPU (branded pstpaid) $ $ $ (6.3 )% ARPU (branded prepaid) $ $ $ % Branded CPGA $ 341 $ 411 $ 367 (7.1 )% Branded CPU $ 26 $ 28 $ 29 (10.3 )% ARPU Branded pstpaid Average Revenue Per User ( ARPU ) was $54.07 in the first quarter f, dwn frm $55.47 in the furth quarter f and dwn frm $57.68 in the first quarter f. Sequentially and year-ver-year, branded pstpaid ARPU decreased due in part t the shift t Value and Simple Chice plans, which result in lwer mnthly service revenues while recgnizing higher equipment revenues at the time f sale. Additinally, branded pstpaid ARPU decreased due t lwer regulatry and custmer fees but was partially ffset by increased data revenues. At the end f the first quarter f, ttal 3G/4G smartphnes, excluding iphnes, used by branded pstpaid custmers accunted fr 12.5 millin r 62% f ttal branded pstpaid custmers, cmpared t 12.4 millin r 61% in the furth quarter f and 11.6 millin r 53% in the first quarter f. In additin t branded custmers using smartphnes, T-Mbile's netwrk supprted 2.1 millin iphne custmers at the end f the first quarter f, f which, 1.0 millin were branded pstpaid custmers using the bring yur wn device (BYOD) prgram. The ttal number f iphnes at the end f the first quarter f includes custmers within T-Mbile's MVNO base. When the 1.0 millin branded pstpaid custmers using BYOD iphnes are included, ver 67% f branded pstpaid custmers are using smartphnes as f the end f the first quarter f. 3G/4G smartphne sales were 2.2 millin units in the first quarter f, seasnally dwn 21.4% frm 2.8 millin units in the prir quarter and a 12% decrease frm 2.5 millin units sld in the first quarter f. Smartphne sales accunted fr 75% f units sld, and 93% f handset sales revenues in the first quarter f, dwn frm 79% f units sld and 95% f handset sales revenues in the prir quarter but up frm 73% f units sld and cnsistent at 93% f handset sales revenues in the first quarter f. Branded prepaid ARPU was $28.25 in the first quarter f, an increase f 2.0% frm the furth quarter f and up 11.3% frm the first quarter f. Year-ver-year, branded prepaid ARPU increased primarily due t the cntinued success f mnthly plans, which include data services and have higher ARPU than ther T-Mbile pay-as-yu-g prepaid plans. Blended ARPU was $39.71 in the first quarter f, dwn frm $41.31 in the furth quarter f and dwn frm $44.52 in the first quarter f primarily due t a change in custmer mix twards Value and Simple Chice plans, branded prepaid custmers and whlesale custmers, which traditinally all have lwer ARPU. Branded Cst Per Grss Additin Branded CPGA fr the first quarter f was $341 cmpared t $411 fr the furth quarter f and $367 fr the first quarter f. Sequentially, branded CPGA was lwer in the first quarter f due primarily t lwer advertising csts partially ffset by an increase in the lss n equipment sales related t custmer acquisitin as described abve. Year-ver-year, branded CPGA was lwer in the first quarter f due primarily t the decrease in 6

7 the lss n equipment sales related t custmer acquisitin as custmers cntinue t adpt Value and Simple Chice plans. In additin, branded CPGA decreased frm lwer emplyee-related expenses n fewer grss custmer activatins and lwer prmtinal csts during the first quarter f. Branded Cst Per User Branded CPU was $26 fr the first quarter f, cmpared t $28 fr the furth quarter f and $29 fr the first quarter f. Sequentially and year-ver-year, the decrease in branded CPU was driven by lwer general and administrative and netwrk expenses, as described in perating expenses. Additinally, T- Mbile had a decrease in the lss n equipment sales related t custmer retentin due t the decrease in upgrade handset sales vlumes by 27% and 15%, respectively. Fr mre details n T-Mbile's first quarter financial results please visit T-Mbile US, Inc.'s IR website at 7

8 (dllars in millins, except share and per share amunts) Assets Current assets T-Mbile USA, Inc. Cnslidated Balance Sheets (Unaudited) December 31, Cash and cash equivalents $ 449 $ 394 Accunts receivable, net f allwances fr uncllectible accunts f $262 and $289, respectively 2,599 2,678 Accunts receivable frm affiliates Inventry Current prtin f deferred tax assets, net Other current assets Ttal current assets 5,059 5,541 Prperty and equipment, net f accumulated depreciatin f $18,236 and $17,744, respectively 13,236 12,807 Spectrum licenses 14,596 14,550 Other intangible assets, net f accumulated amrtizatin f $249 and $243, respectively Investments in uncnslidated affiliates Lng-term investments Other assets Ttal assets $ 33,610 $ 33,622 Liabilities and Stckhlder s Equity Current liabilities Accunts payable $ 2,186 $ 2,161 Accrued liabilities 1,064 1,314 Current payables t affiliates 2,295 1,619 Deferred revenue Other current liabilities Ttal current liabilities 6,059 5,592 Lng-term payables t affiliates 12,933 13,655 Lng-term financial bligatin 2,470 2,461 Deferred tax liabilities 3,678 3,618 Deferred rents 1,945 1,884 Other lng-term liabilities Ttal lng-term liabilities 21,330 21,915 Stckhlder's equity Cmmn stck, par value $ per share, and paid-in capital; 500,000,000 shares authrized, 292,669,971 shares issued and utstanding 29,197 29,197 Accumulated ther cmprehensive incme Accumulated deficit (23,016 ) (23,123 ) Ttal stckhlder s equity 6,221 6,115 Ttal liabilities and stckhlder s equity $ 33,610 $ 33,622 8

9 T-Mbile USA, Inc. Cnslidated Statements f Incme and Cmprehensive Incme (Unaudited) (dllars in millins) Revenues Fr the three mnths ended December 31, Branded pstpaid revenue $ 3,263 $ 3,416 $ 3,821 Branded prepaid revenue Ttal branded revenues 3,766 3,890 4,198 Whlesale revenues Raming and ther services Ttal service revenues 4,005 4,127 4,444 Equipment sales Other revenues Ttal revenues 4,677 4,909 5,034 Operating expenses Netwrk, excluding depreciatin and amrtizatin 1,109 1,146 1,196 Cst f equipment sales Custmer acquisitin, excluding depreciatin and amrtizatin General and administrative, excluding depreciatin and amrtizatin Depreciatin and amrtizatin MetrPCS transactin-related csts 13 7 Restructuring csts 31 (5 ) 6 Other, net (2 ) (55 ) 24 Ttal perating expenses 4,298 4,662 4,537 Operating incme Other (expense) incme Interest expense t affiliates (178 ) (185 ) (171 ) Interest expense (51 ) Interest incme Other (expense) incme, net (6 ) (16 ) (16 ) Ttal ther expense, net (200 ) (177 ) (172 ) Incme befre incme taxes Incme tax expense (72 ) (78 ) (125 ) Net incme (lss) 107 (8 ) 200 Other cmprehensive (lss) incme, net f tax: Unrealized (lss) gain n derivatives held as cash flw hedges, net f tax f $26, $47 and $42, respectively (43) Unrealized gain (lss) n freign currency translatin, net f tax f $25, $18 and $27, respectively 42 (29) (45) Unrealized gain (lss) n available-fr-sale securities, net f tax f $0, $0 and $0, respectively 1 1 Ttal cmprehensive incme $ 106 $ 42 $ 227 9

10 T-Mbile USA, Inc. Cnslidated Statements f Cash Flws (Unaudited) (dllars in millins) Operating activities Fr the three mnths ended December 31, Net incme $ 107 $ (8) $ 200 Adjustments t recncile net incme t net cash prvided by perating activities Depreciatin and amrtizatin Incme tax expense Amrtizatin f debt discunt and premium, net (21) (20) (20) Bad debt expense Deferred rent expense Lsses (gains) and ther, net 39 (33) (5) Changes in perating assets and liabilities Accunts receivable (33) (70) (90) Inventry Other current and lng-term assets 14 (189) (89) Accunts payable (74) 223 (169) Other current and accrued liabilities (169) 247 (3) Net cash prvided by perating activities 909 1,155 1,030 Investing activities Purchases f prperty and equipment (1,076) (898) (747) Purchases f intangible assets (49) (8) (4) Shrt term affiliate lan receivable, net 275 (354) (279) Prceeds frm dispsals f prperty and equipment and intangible assets 48 2 Payments t acquire financial assets, net (4) 2 (7) Investments in uncnslidated affiliates, net (38) (6) Net cash used in investing activities (854) (1,248) (1,041) Financing activities Other, net 57 Net cash prvided by financing activities 57 Change in cash and cash equivalents 55 (36) (11) Cash and cash equivalents Beginning f perid End f perid $ 449 $ 394 $

11 T-Mbile Supplementary Operating and Financial Data US GAAP (in thusands) Q Q Q Q Q1 Q2 Q3 Q4 Q1 Branded pstpaid custmers 23,999 23,463 23,074 22,367 21,857 21,300 20,809 20,293 20,094 Branded prepaid custmers 4,416 4,345 4,599 4,819 5,068 5,295 5,659 5,826 6,028 Ending M2M custmers 2,065 2,321 2,525 2,429 2,691 2,786 2,954 3,090 3,290 Ending MVNO custmers 3,154 3,456 3,514 3,569 3,756 3,787 3,905 4,180 4,556 Custmers, end f perid 33,635 33,585 33,711 33,185 33,373 33,168 33,327 33,389 33,968 Branded pstpaid net custmer additins (574) (536) (389) (706) (510) (557) (492) (515) (199) Branded prepaid net custmer additins (82) (71) M2M net custmer additins (95) MVNO net custmer additins Net custmer additins (99) (50) 126 (526) 187 (205) Branded pstpaid churn 2.6% 2.6% 2.6% 3.0% 2.5% 2.1% 2.3% 2.5% 1.9% Branded prepaid churn 7.0% 6.6% 6.5% 6.7% 6.4% 6.0% 6.2% 7.0% 7.0% Branded churn 3.3% 3.2% 3.2% 3.6% 3.2% 2.9% 3.1% 3.5% 3.1% Blended churn 3.4% 3.3% 3.5% 4.0% 3.3% 3.2% 3.4% 3.7% 3.3% (dllars in millins) Q Q Q Q Q1 Q2 Q3 Q4 Q1 Service revenues $4,630 $4,620 $4,666 $4,565 $4,444 $4,381 $4,261 $4,127 $4,005 Ttal revenues $5,161 $5,050 $5,228 $5,179 $5,034 $4,883 $4,893 $4,909 $4,677 Adjusted EBITDA $1,188 $1,277 $1,445 $1,400 $1,274 $1,338 $1,226 $1,048 $1,178 Adjusted EBITDA margin 26% 28% 31% 31% 29% 31% 29% 25% 29% Net Incme $135 $212 $332 $(5,397) $200 $207 $(7,735) $(8) $107 Cash Capex - Prperty & Equipment $749 $688 $741 $551 $747 $539 $717 $898 $1,076 ARPU (branded pstpaid) $56.34 $57.26 $58.50 $58.23 $57.68 $57.35 $56.59 $55.47 $54.07 ARPU (branded prepaid) $24.23 $23.60 $24.31 $24.90 $25.39 $26.81 $27.35 $27.69 $28.25 ARPU (blended) $45.82 $45.86 $46.22 $45.52 $44.52 $43.88 $42.78 $41.31 $39.71 Branded CPGA $460 $508 $374 $374 $367 $420 $382 $411 $341 Branded CPU $29 $28 $28 $28 $29 $28 $28 $28 $26 11

12 Frward-Lking Statements This Investr Quarterly includes frward-lking statements within the meaning f the U.S. federal securities laws. Any statements made herein that are nt statements f histrical fact, including statements abut T-Mbile's plans, utlk, beliefs, pinins, prjectins, and expectatins are frward-lking statements. Generally, frward-lking statements may be identified by wrds such as anticipate, expect, suggests, plan, believe, intend, estimates, targets, views, may, will, frecast, and ther similar expressins. The frward-lking statements speak nly as f the date made, are based n current assumptins and expectatins, and invlve a number f risks and uncertainties. Imprtant factrs that culd affect future results and cause thse results t differ materially frm thse expressed in the frward-lking statements include risks discussed in ur filings with the Securities and Exchange Cmmissin, including thse described in ur Current Reprt n Frm 8-K filed with the Securities and Exchange Cmmissin n May 8,. Yu shuld nt place undue reliance n these frward-lking statements. We d nt undertake t update frward-lking statements, whether as a result f new infrmatin, future events r therwise, except as required by law. Abut T-Mbile US, Inc. As America's Un-carrier, T-Mbile US, Inc. (NYSE: TMUS ) is redefining the way cnsumers and businesses buy wireless services thrugh leading prduct and service innvatin. The cmpany's advanced natinwide 4G and 4G LTE netwrk delivers utstanding wireless experiences fr custmers wh are unwilling t cmprmise n quality and value. Based in Bellevue, Wash., T-Mbile US, Inc. perates its flagship brands, T-Mbile and MetrPCS. It currently serves apprximately 43 millin wireless subscribers and prvides prducts and services thrugh 70,000 pints f distributin. Fr mre infrmatin, please visit: Press Cntact: Investr Relatins Cntact: Media Relatins Nils Paellmann T-Mbile US, Inc. T-Mbile US, Inc mediarelatins@t-mbile.cm investr.relatins@t-mbile.cm 12

13 T-MOBILE USA Recnciliatin f Nn-GAAP Financial Measures t GAAP Financial Measures (Unaudited) This Investr Quarterly includes nn-gaap financial measures. The nn-gaap financial measures shuld be cnsidered in additin t, but nt as a substitute fr, the infrmatin prvided in accrdance with GAAP. Recnciliatins fr the nn-gaap financial measures t the mst directly cmparable GAAP financial measures are prvided belw. Adjusted EBITDA is recnciled t net incme as fllws: (dllars in millins) Calculatin f Adjusted EBITDA: Q1 Net incme (7,735) (8) 107 Adjustments: Interest expense t affiliates Interest expense 51 Interest incme (15 ) (18) (20) (24) (35 ) Other (incme) expense, net 16 (23) (15) 27 6 Incme tax expense (benefit) Operating (lss) incme (7,593) Depreciatin and amrtizatin MetrPCS transactin related csts 7 13 Restructuring csts (5) 31 Impairment Charges 8,134 Other, net (1) (176) 3 Adjusted EBITDA $ 1,274 $ 1,338 $ 1,226 $ 1,048 $ 1,178 Q2 Q3 Q4 Q1 (1) Other, net fr the year ended December 31, represents transactin related retentin csts frm the terminated AT&T acquisitin f T-Mbile, gains/lsses n intangible assets, and ther material transactins. Other, net transactins may nt agree in ttal t the ther, net classificatin in the Cnslidated Statements f Incme and Cmprehensive Incme due t certain rutine perating activities that are nt excluded frm Adjusted EBITDA. 13

14 The fllwing schedule reflects the Branded CPGA calculatin and prvides a recnciliatin f cst f acquiring branded custmers used fr the Branded CPGA calculatin t custmer acquisitin csts reprting n ur cndensed cnslidated statements f incme: (dllars in millins, except grss custmer additins and CPGA) Calculatin f Cst Per Branded Grss Additin (CPGA): Q1 Custmer acquisitin expenses $ 749 $ 751 $ 823 $ 963 $ 737 Add: Lss n equipment sales Equipment sales (535) (435 ) (554) (718) (606) Cst f equipment sales Ttal lss n equipment sales Q2 Q3 Q4 Q1 Less: Lss n equipment sales related t custmer retentin Lss n equipment sales related t custmer acquisitin Cst f acquiring new branded custmers $ 856 $ 833 $ 903 $ 986 $ 822 Divided by: Grss branded custmer additins (in thusands) 2,334 1,985 2,365 2,399 2,411 Branded CPGA $ 367 $ 420 $ 382 $ 411 $ 341 The fllwing schedule reflects the Branded CPU calculatin and prvides a recnciliatin f the cst f serving custmers used fr the Branded CPU calculatin t ttal netwrk csts plus general and administrative csts reprted n ur cndensed cnslidated statements f incme: (dllars in millins, except average number f custmers and CPU) Calculatin f Cst Per Branded User (CPU): Q1 Netwrk csts $ 1,196 $ 1,178 $ 1,141 $ 1,146 $ 1,109 Add: General and administrative expenses Add: Lss n equipment sales related t custmer retentin Ttal cst f serving custmers $ 2,369 $ 2,277 $ 2,213 $ 2,215 $ 2,073 Divided by: Average number f branded custmers (in thusands) 27,038 26,736 26,517 26,234 26,053 Branded CPU $ 29 $ 28 $ 28 $ 28 $ 26 Q2 Q3 Q4 Q1 14

15 Definitins f Terms Since all cmpanies d nt calculate these figures in the same manner, the infrmatin cntained in this press release may nt be cmparable t similarly titled measures reprted by ther cmpanies. 1. A custmer is defined as a SIM card with a unique T-Mbile mbile identity number which generates revenue. Branded pstpaid custmers include custmers that are qualified t pay after incurring a mnth f service whether n a cntract r nt, and branded prepaid custmers include custmers wh generally pay in advance. Whlesale custmers include Machine-t-Machine ( M2M ) and Mbile Virtual Netwrk Operatr ( MVNO ) custmers that perate n the T-Mbile netwrk, but are managed by whlesale partners. 2. Churn is defined as the number f custmers whse service was discntinued percentage f the average number f custmers during the specified perid, runded t the tenth percentage. We believe that churn, which is a measure f custmer retentin and lyalty, prvides relevant and useful infrmatin and is used by ur management t evaluate the perating perfrmance f ur business. 3. Average Revenue Per User ( ARPU ) represents the average mnthly service revenue earned frm custmers. ARPU is calculated by dividing service revenues fr the specified perid by the average custmers during the perid, and further dividing by the number f mnths in the perid and runding t the nearest dllar. We believe ARPU prvides management with useful infrmatin t evaluate the revenues generated frm ur custmer base. Service revenues include pstpaid, prepaid, and raming and ther service revenues, and d nt include equipment sales and ther revenues. Handset insurance revenues are included in pstpaid service revenues. Branded revenues include pstpaid and prepaid revenues, and d nt include whlesale (M2M and MVNO), raming, ther service revenues, equipment sales, and ther revenues. 4. Adjusted EBITDA is a nn-gaap financial measure, which is defined as earnings befre interest expense (net f interest incme), tax, depreciatin, amrtizatin and excludes transactins that are nt reflective f T-Mbile's nging perating perfrmance. In a capitalintensive industry such as wireless telecmmunicatins, T-Mbile believes Adjusted EBITDA, as well as the assciated percentage margin calculatin, t be meaningful measures f its perating perfrmance. Adjusted EBITDA shuld nt be cnstrued as an alternative t perating incme r net incme as determined in accrdance with GAAP, as an alternative t cash flws frm perating activities as determined in accrdance with GAAP r as a measure f liquidity. T-Mbile uses Adjusted EBITDA as an integral part f ur planning and internal financial reprting prcesses, t evaluate the perfrmance f ur business by senir management and t cmpare its perfrmance with that f many f ur cmpetitrs. T-Mbile believes that net incme (lss) is the financial measure calculated and presented in accrdance with GAAP that is the mst directly cmparable t Adjusted EBITDA. Adjusted EBITDA excludes transactins that are nt reflective f T-Mbile's nging perating perfrmance and is detailed in the Recnciliatin f Nn- GAAP Financial Measures t GAAP Financial Measures schedule. 5. Adjusted EBITDA margin is a nn-gaap financial measure, which is defined as Adjusted EBITDA (as described in Nte 4 abve) divided by service revenues expressed as a percentage. 6. Capital expenditures cnsist f amunts paid fr cnstructin and the purchase f prperty and equipment. 7. High speed packet access plus (HSPA+ 21 and HSPA+ 42 technlgies) ffers custmers a 4G experience, including data speeds cmparable t ther 4G netwrk speeds currently available t mbile device users in the United States. 8. Smartphnes are defined as UMTS/HSPA/HSPA+ 21/HSPA+ 42/4G LTE enabled cnverged devices, which integrate vice and data services. 9. Branded Cst Per Grss Additin ( Branded CPGA ) is determined by dividing the csts f acquiring new custmers, cnsisting f custmer acquisitin expenses plus the lss n equipment sales t acquiring new custmers fr the specified perid, by grss branded custmer additins during the perid. The lss n equipment sales related t acquiring new custmers cnsists primarily f the excess f handset and accessry csts ver related revenues incurred t acquire new custmers. Additinally, the lss n equipment assciated with retaining existing custmers, is excluded frm this measure as Branded CPGA is intended t reflect nly the acquisitin csts t acquire new custmers. 10. Branded Cst Per User (CPU) is determined by dividing netwrk csts and general and administrative expenses plus the lss n equipment sales unrelated t custmer acquisitin, by the sum f the average mnthly number f branded custmers during such perid. Additinally, the cst f serving custmers includes the csts f prviding handset insurance services. 15