Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington,WASHINGTON, D.C. 20549
Form
FORM 10-Q

þxQUARTERLY REPORT PURSUANT TO SECTION 13 orOR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31,June 30, 2013

or
OR
o¨TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to

Commission File Number
Number: 1-33409
METROPCS COMMUNICATIONS,
T-MOBILE US, INC.
(Exact name of registrant as specified in its charter)

DelawareDELAWARE 20-0836269
(State or other jurisdiction(I.R.S. Employer
of incorporation or organization) (I.R.S. Employer Identification No.)
  
2250 Lakeside Boulevard 
Richardson, Texas12920 SE 38th Street, Bellevue, Washington 75082-4304
98006-1350

(Address of principal executive offices) (Zip Code)
(214) 570-5800
(Registrant’s(425) 378-4000(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þx No o¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þx No o¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “largelarge accelerated filer,” “accelerated filer” accelerated filer and “smallersmaller reporting company”company in Rule 12b-2 of the Exchange Act.
Large accelerated filer þ
Accelerated filer o
Non-accelerated filer o (Do not check if a smaller reporting company)
Smaller reporting company o

Large accelerated filer x                            Accelerated filer ¨
Non-accelerated filer ¨(Do not check if a smaller reporting company)         Smaller reporting company ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes o¨ No þx
On April 19, 2013, there were 370,274,013
Indicate the number of shares outstanding of each of the registrant’sissuer's classes of common stock, $0.0001 par value, outstanding.

Tableas of Contents

METROPCS COMMUNICATIONS, INC.
Quarterly Report on Form 10-Q
Table of Contentsthe latest practicable date.
Class PageShares Outstanding as of July 31, 2013
Common Stock, $0.00001 par value per share

726,716,596


T-Mobile US, Inc.
Form 10-Q
For the Quarter Ended June 30, 2013

Table of Contents

PART I. FINANCIAL INFORMATION
 
Item 1. Financial Statements (Unaudited)
Financial Statements
3
Condensed Consolidated Balance Sheets as of March 31, 2013 and December 31, 2012
13
Condensed Consolidated Statements of Income and Comprehensive Income for the Three Months Ended March 31, 2013 and 2012(Loss)
24
Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2013 and 2012
35
Condensed Consolidated Statement of Stockholders' Equity
6
Notes to the Condensed Consolidated Interim Financial Statements
47
Item 2. Management’s
Management's Discussion and Analysis of Financial Condition and Results of Operations
2532
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
3947
Item 4.
Controls and Procedures
3947
PART II. OTHER INFORMATION
 
Item 1.
Legal Proceedings
4048
Item 1A.
Risk Factors
4248
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
4257
Item 3.
Defaults Upon Senior Securities
*
57
Item 4.
Mine Safety Disclosures
*
57
Item 5.
Other Information
*
58
Item 6.
Exhibits
4358
SIGNATURESSIGNATURE
4462
 ———————————— 
*No reportable information under this item.


2
Table of Contents

PartPART I.
FINANCIAL INFORMATION

Item 1. Financial Statements

MetroPCS Communications,T-Mobile US, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(in thousands, except share and per share information)(Unaudited)
(Unaudited)
  March 31,
2013		 December 31,
2012
CURRENT ASSETS:    
Cash and cash equivalents $2,701,281
 $2,368,302
Short-term investments —
 244,990
Restricted cash 3,475,417
 —
Inventories 254,871
 259,157
Accounts receivable (net of allowance for uncollectible accounts of $331 and $476 at March 31, 2013 and December 31, 2012, respectively) 87,810
 98,653
Prepaid expenses 97,361
 65,069
Deferred charges 82,233
 78,181
Deferred tax assets 3,493
 3,493
Other current assets 70,238
 69,458
Total current assets 6,772,704
 3,187,303
Property and equipment, net 4,177,500
 4,292,061
Restricted cash and investments 4,929
 4,929
Long-term investments 1,679
 1,679
FCC licenses 2,564,495
 2,562,407
Other assets 141,239
 141,036
Total assets $13,662,546
 $10,189,415
CURRENT LIABILITIES:    
Accounts payable and accrued expenses $473,674
 $501,929
Current maturities of long-term debt 2,450,240
 36,640
Deferred revenue 241,341
 237,635
Other current liabilities 23,870
 71,599
Total current liabilities 3,189,125
 847,803
Long-term debt, net 5,807,170
 4,724,112
Deferred tax liabilities 1,044,503
 1,031,374
Deferred rents 139,291
 136,456
Other long-term liabilities 90,516
 90,763
Total liabilities 10,270,605
 6,830,508
COMMITMENTS AND CONTINGENCIES (See Note 12) 
 
STOCKHOLDERS’ EQUITY:    
Preferred stock, par value $0.0001 per share, 100,000,000 shares authorized; no shares of preferred stock issued and outstanding at March 31, 2013 and December 31, 2012 —
 —
Common stock, par value $0.0001 per share, 1,000,000,000 shares authorized, 365,644,106 and 364,492,637 shares issued and outstanding at March 31, 2013 and December 31, 2012, respectively 37
 37
Additional paid-in capital 1,839,870
 1,826,044
Retained earnings 1,572,986
 1,553,590
Accumulated other comprehensive loss (7,571) (9,602)
Less treasury stock, at cost, 1,282,141 and 1,057,237 treasury shares at March 31, 2013 and December 31, 2012, respectively (13,381) (11,162)
Total stockholders’ equity 3,391,941
 3,358,907
Total liabilities and stockholders’ equity $13,662,546
 $10,189,415
The accompanying notes are an integral part of these condensed consolidated financial statements.

1
Table of Contents

MetroPCS Communications, Inc. and Subsidiaries
Condensed Consolidated Statements of Income and Comprehensive Income
(in thousands, except share and per share information)
(Unaudited)
  For the Three Months Ended March 31,
  
  2013 2012
REVENUES:    
Service revenues $1,101,031
 $1,158,779
Equipment revenues 186,030
 117,811
Total revenues 1,287,061
 1,276,590
OPERATING EXPENSES:    
Cost of service (excluding depreciation and amortization expense of $149,569 and $132,223 shown separately below) 372,978
 388,927
Cost of equipment 437,969
 458,864
Selling, general and administrative expenses (excluding depreciation and amortization expense of $23,598 and $20,596 shown separately below) 194,611
 176,593
Depreciation and amortization 173,167
 152,819
Loss on disposal of assets 508
 1,120
Total operating expenses 1,179,233
 1,178,323
Income from operations 107,828
 98,267
OTHER EXPENSE (INCOME):    
Interest expense 76,346
 70,083
Interest income (373) (375)
Other (income) expense, net (84) (103)
Total other expense 75,889
 69,605
Income before provision for income taxes 31,939
 28,662
Provision for income taxes (12,543) (7,658)
Net income $19,396
 $21,004
Other comprehensive income (loss):    
Unrealized gains on available-for-sale securities, net of tax of $4 and $9, respectively 6
 17
Unrealized losses on cash flow hedging derivatives, net of tax benefit of $71 and $1,572, respectively (115) (3,133)
Reclassification adjustment for gains on available-for-sale securities included in net income, net of tax of $53 and $12, respectively (85) (25)
Reclassification adjustment for losses on cash flow hedging derivatives included in net income, net of tax benefit of $1,378 and $1,448, respectively 2,225
 2,887
Total other comprehensive income (loss) 2,031
 (254)
Comprehensive income $21,427
 $20,750
Net income per common share:    
Basic $0.05
 $0.06
Diluted $0.05
 $0.06
Weighted average shares:    
Basic 364,999,137
 362,718,613
Diluted 366,556,369
 364,283,160

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

2
Table of Contents

MetroPCS Communications, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
  For the Three Months Ended March 31,
  
  2013 2012
CASH FLOWS FROM OPERATING ACTIVITIES:    
Net income $19,396
 $21,004
Adjustments to reconcile net income to net cash provided by operating activities:    
Depreciation and amortization 173,167
 152,819
Recovery of uncollectible accounts receivable (111) (107)
Deferred rent expense 2,930
 4,792
Cost of abandoned cell sites 360
 423
Stock-based compensation expense 9,573
 10,156
Non-cash interest expense 2,195
 1,831
Loss on disposal of assets 508
 1,120
Gain on maturity or sale of investments (138) (37)
Accretion of asset retirement obligations 1,778
 1,588
Deferred income taxes 11,505
 14,357
Changes in assets and liabilities:    
Inventories 4,285
 (12,510)
Accounts receivable, net 10,953
 (2,844)
Prepaid expenses (32,312) (14,904)
Deferred charges (4,052) (29,808)
Other assets 11,171
 10,423
Accounts payable and accrued expenses 15,155
 (39,803)
Deferred revenue 3,706
 15,950
Other liabilities (6,618) 2,454
Net cash provided by operating activities 223,451
 136,904
CASH FLOWS FROM INVESTING ACTIVITIES:    
Purchases of property and equipment (154,608) (144,016)
Change in prepaid purchases of property and equipment 13,831
 (7,352)
Proceeds from sale of and grants received for property and equipment 3,323
 477
Purchases of investments —
 (192,415)
Proceeds from maturity of investments 245,000
 162,500
Change in restricted cash and investments (3,475,417) 500
Acquisitions of FCC licenses and microwave clearing costs (2,066) (2,584)
Net cash used in investing activities (3,369,937) (182,890)
CASH FLOWS FROM FINANCING ACTIVITIES:    
Change in book overdraft 11,660
 (2,830)
Proceeds from debt issuance 3,500,000
 —
Debt issuance costs (25,821) —
Repayment of debt (6,347) (6,347)
Payments on capital lease obligations (2,752) (1,558)
Purchase of treasury stock (2,219) (1,888)
Proceeds from exercise of stock options 4,944
 1,565
Net cash provided by (used in) financing activities 3,479,465
 (11,058)
INCREASE (DECREASE) CASH AND CASH EQUIVALENTS 332,979
 (57,044)
CASH AND CASH EQUIVALENTS, beginning of period 2,368,302
 1,943,282
CASH AND CASH EQUIVALENTS, end of period $2,701,281
 $1,886,238
(in millions, except share and per share amounts)6/30/2013 12/31/2012
Assets   
Current assets   
Cash and cash equivalents$2,362
 $394
Accounts receivable, net of allowances for uncollectible accounts of $322 and $2893,000
 2,678
Accounts receivable from affiliates33
 682
Inventory819
 457
Current portion of deferred tax assets, net501
 655
Other current assets598
 675
Total current assets7,313
 5,541
Property and equipment, net of accumulated depreciation of $18,787 and $17,74415,185
 12,807
Goodwill1,683
 —
Spectrum licenses18,415
 14,550
Other intangible assets, net of accumulated amortization of $313 and $2431,390
 79
Investments in unconsolidated affiliates49
 63
Long-term investments38
 31
Other assets661
 551
Total assets$44,734
 $33,622
Liabilities and Stockholders' Equity   
Current liabilities   
Accounts payable and accrued liabilities$4,305
 $3,475
Current payables to affiliates226
 1,619
Short-term debt210
 —
Deferred revenue459
 290
Other current liabilities198
 208
Total current liabilities5,398
 5,592
Long-term payables to affiliates11,200
 13,655
Long-term debt6,276
 —
Long-term financial obligation2,479
 2,461
Deferred tax liabilities4,386
 3,618
Deferred rents2,000
 1,884
Other long-term liabilities636
 297
Total long-term liabilities26,977
 21,915
Commitments and contingencies

 

Stockholders' equity   
Preferred stock, par value $0.00001 per share, 100,000,000 shares authorized; no shares issued and outstanding—
 —
Common stock, par value $0.00001 per share, 1,000,000,000 shares authorized; 727,401,814 and 535,286,077 shares issued, 726,019,309 and 535,286,077 shares outstanding—
 —
Additional paid-in capital35,389
 29,197
Treasury stock, at cost, 1,382,505 and 0 shares issued—
 —
Accumulated other comprehensive income2
 41
Accumulated deficit(23,032) (23,123)
Total stockholders' equity12,359
 6,115
Total liabilities and stockholders' equity$44,734
 $33,622

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

3
MetroPCS Communications,Table of Contents

T-Mobile US, Inc. and Subsidiaries
Condensed Consolidated Statements of Comprehensive Income (Loss)
(Unaudited)

 Three Months Ended June 30, Six Months Ended June 30,
(in millions, except shares and per share amounts)2013 2012 2013 2012
Revenues       
Branded postpaid revenues$3,284
 $3,713
 $6,547
 $7,534
Branded prepaid revenues1,242
 414
 1,745
 791
Wholesale revenues143
 143
 293
 273
Roaming and other service revenues87
 111
 177
 227
Total service revenues4,756
 4,381
 8,762
 8,825
Equipment sales1,379
 435
 1,984
 970
Other revenues93
 67
 159
 122
Total revenues6,228
 4,883
 10,905
 9,917
Operating expenses       
Network costs1,327
 1,178
 2,436
 2,374
Cost of equipment sales1,936
 745
 2,822
 1,590
Customer acquisition1,028
 751
 1,765
 1,500
General and administrative819
 871
 1,588
 1,841
Depreciation and amortization888
 819
 1,643
 1,566
MetroPCS transaction-related costs26
 —
 39
 —
Restructuring costs23
 48
 54
 54
Other, net—
 19
 (2) 43
Total operating expenses6,047
 4,431
 10,345
 8,968
Operating income181
 452
 560
 949
Other income (expense)       
Interest expense to affiliates(225) (151) (403) (322)
Interest expense(109) —
 (160) —
Interest income40
 18
 75
 32
Other income, net118
 23
 112
 8
Total other expense, net(176) (110) (376) (282)
Income before income taxes5
 342
 184
 667
Income tax expense21
 135
 93
 260
Net income (loss)$(16) $207
 $91
 $407
Other comprehensive income (loss), net of tax       
Net gain (loss) on cross currency interest rate swaps, net of tax effect of $39, ($68), $13 and ($26)66
 (114) 23
 (43)
Net gain (loss) on foreign currency translation, net of tax effect of ($62), $50, ($37) and $23(104) 84
 (62) 39
Unrealized gain (loss) on available-for-sale securities, net of tax effect of $0, $0, $0 and $0—
 (2) —
 (1)
Other comprehensive loss, net of tax(38) (32) (39) (5)
Total comprehensive income (loss)$(54) $175
 $52
 $402
Earnings (loss) per share       
Basic$(0.02) $0.39
 $0.15
 $0.76
Diluted(0.02) 0.39
 0.15
 0.76
Weighted average shares outstanding       
Basic664,603,682
 535,286,077
 600,302,111
 535,286,077
Diluted664,603,682
 535,286,077
 601,694,911
 535,286,077

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


4
Table of Contents

T-Mobile US, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)

 Six Months Ended June 30,
(in millions)2013 2012
Operating activities   
Net cash provided by operating activities$1,715
 $1,909
    
Investing activities   
Purchases of property and equipment(2,126) (1,286)
Purchases of intangible assets(51) (10)
Short term affiliate loan receivable, net300
 (577)
Cash and cash equivalents acquired in MetroPCS business combination2,144
 —
Other, net(5) (4)
Net cash provided by (used in) investing activities262
 (1,877)
    
Financing activities   
Repayments related to a variable interest entity(40) —
Distribution to affiliate as a result of debt recapitalization(41) —
Proceeds from exercise of stock options72
 —
Excess tax benefit from stock-based compensation3
 —
Other, net(3) 1
Net cash provided by (used in) financing activities(9) 1
    
Change in cash and cash equivalents1,968
 33
Cash and cash equivalents   
Beginning of period394
 390
End of period$2,362
 $423

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

5
Table of Contents

T-Mobile US, Inc.
Condensed Consolidated Statement of Stockholders' Equity
(Unaudited)

 Shares Par Value and Additional
Paid-in Capital		 Accumulated
Other
Comprehensive
Income		 Accumulated
Deficit		 Total Stockholders' Equity
(in millions, except shares)Common Stock Treasury Stock    
Balances as of December 31, 2012535,286,077
 —
 $29,197
 $41
 $(23,123) $6,115
Net income—
 —
 —
 —
 91
 91
Other comprehensive loss—
 —
 —
 (39) —
 (39)
Effects of debt recapitalization—
 —
 3,143
 —
 —
 3,143
MetroPCS shares converted upon reverse merger, net of treasury stock withheld for taxes184,487,309
 1,382,505
 2,971
 —
 —
 2,971
Stock-based compensation—
 —
 6
 —
 —
 6
Exercise of stock options6,245,923
 —
 72
 —
 —
 72
Balances as of June 30, 2013726,019,309
 1,382,505
 $35,389
 $2
 $(23,032) $12,359

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


6
Table of Contents

T-Mobile US, Inc.
Notes to the Condensed Consolidated Interim Financial Statements
(Unaudited)


1.Basis of Presentation:
1.Consolidation and Basis of Presentation

The accompanying unaudited condensed consolidated interim financial statements include the balances and results of operations of MetroPCS Communications,T-Mobile US, Inc. (“MetroPCS”) and its consolidated subsidiaries, (collectively,collectively “T-Mobile” or the “Company”). T-Mobile consolidates all majority-owned subsidiaries over which it exercises control, as well as variable interest entities where it is deemed to be the primary beneficiary and variable interest entities which cannot be deconsolidated. Intercompany transactions and balances have been eliminated in consolidation.

The condensed consolidated balance sheets asfinancial statements fairly present the financial position and results of March 31, 2013 and December 31, 2012, the condensed consolidated statements of income and comprehensive income and cash flows for the periods ended March 31, 2013 and 2012, and the related footnotes are preparedoperations in accordance with accounting principles generally accepted in the United States of America (“GAAP”).
The unaudited condensed consolidated financial statements included herein reflect all adjustments (consisting of normal, recurring adjustments) which are, and, in the opinion of management, reflect all adjustments of a normal recurring nature necessary to state fairlyfor a fair presentation of the Company's results for the interim periods presented. The results of operationscondensed consolidated financial statements are unaudited and should be read in conjunction with the audited consolidated financial statements and notes thereto for the interim periods presented are not necessarily indicative of the operating results to be expected for any subsequent interim period or for the fiscal year.three years ended December 31, 2012 filed with its Current Report on Form 8-K filed June 18, 2013.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported amounts of certain assets and liabilities and disclosure of contingent assets and liabilities at the date ofin the financial statements and the reported amountsaccompanying notes, including estimates of revenuesprobable losses and expenses during the reporting period.expenses. Actual results could differ from those estimates.

The Company has thirteen operating segments based on geographic regions withinOn April 30, 2013, the United States: Atlanta, Boston, Dallas/Ft. Worth, Detroit, Las Vegas, Los Angeles, Miami, New York, Orlando/Jacksonville, Philadelphia, Sacramento, San Franciscobusiness combination involving T-Mobile USA, Inc. (“T-Mobile USA”) and Tampa/Sarasota.MetroPCS Communications, Inc. (“MetroPCS”) was completed. In accordance with the provisions of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 280 (Topic 280, “Segment Reporting”), the Company aggregates its thirteen operating segments into one reportable segment.
Federal Universal Service Fund (“FUSF”), E-911 and various other fees are assessed by various governmental authorities in connection with the services that the Company provides to its customers. The Company offers a family of service plans, which includebusiness combination, MetroPCS acquired all applicable taxes and regulatory fees (“tax inclusive plans”). The Company reports regulatory fees for the tax inclusive plans in cost of service on the accompanying condensed consolidated statements of income and comprehensive income. When the Company separately assesses these regulatory fees on its customers for those service plans that do not include taxes or regulatory fees, the Company reports these regulatory fees on a gross basis in service revenues and cost of service on the accompanying condensed consolidated statements of income and comprehensive income. For the three months endedMarch 31, 2013 and 2012, the Company recorded approximately $6.0 million and $12.9 million, respectively, of FUSF, E-911 and other fees on a gross basis. Sales, use and excise taxes for all service plans are reported on a net basis in selling, general and administrative expenses on the accompanying condensed consolidated statements of income and comprehensive income.

Recent Accounting Pronouncements

In July 2012, the FASB issued Accounting Standards Update ("ASU") 2012-02, "Intangibles - Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment," allowing entities to make a qualitative evaluation about the likelihood of impairment of an indefinite-lived intangible asset to determine whether the quantitative test is required, as opposed to required annual quantitative impairment testing.  The amendment was effective for interim and annual impairment tests performed for fiscal years beginning after September 15, 2012.  Early adoption was permitted. The Company did not elect to utilize a qualitative assessment and has performed the most recent annual quantitative impairment test as of September 30, 2012 consistent with prior years.  The implementation of this standard did not affect the Company's financial condition, results of operations or cash flows.
In February 2013, the FASB issued ASU 2013-02 "Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income," which added new disclosure requirements for items reclassified out of accumulated other comprehensive income ("AOCI") to help entities improve the transparency of changes in other comprehensive income and items reclassified out of AOCI in financial statements. The amendment is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2012. The implementation of this standard did affect the Company's disclosures but did not affect the Company's financial condition, results of operations or cash flows.


4
MetroPCS Communications, Inc. and Subsidiaries
Notes to Condensed Consolidated Interim Financial Statements
(Unaudited)

In February 2013, the FASB issued ASU 2013-04 "Liabilities (Topic 405): "Obligations Resulting from Joint and Several Liability Arrangements for Which the Total Amount of the Obligation Is Fixed at the Reporting Date," which added new disclosure requirements to measure obligations resulting from joint and several liability arrangements for which the total amountoutstanding capital stock of the obligation within the scope of this guidance is fixed at the reporting date and disclose the arrangements and the total outstanding amount of the obligation for all joint parties. These disclosure requirements are incremental to the existing related-party disclosure requirements. The amendment is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2013. Early adoption is permitted. The implementation of this standard is not expected to affect the Company's financial condition, results of operations or cash flows.
2.T-Mobile Transaction:

On October 3, 2012, the Company entered into the Business Combination Agreement (as previously amended, the "Business Combination Agreement") withT-Mobile USA beneficially owned by Deutsche Telekom AG ("(“Deutsche Telekom"Telekom”), in consideration for the issuance of shares of common stock representing approximately 74% of the fully diluted shares of the combined entity. MetroPCS was subsequently renamed T-Mobile US, Inc. and is the consolidated parent of the Company's subsidiaries, including T-Mobile USA. The business combination was accounted for as a reverse acquisition with T-Mobile USA as the accounting acquirer. Accordingly, T-Mobile USA's historical financial statements became the historical financial statements of the combined company. The common shares outstanding and earnings (loss) per share presented for periods up to April 30, 2013 reflect the common shares issued to T-Mobile Global a directHolding GmbH (“T-Mobile Holding”), an indirect wholly-owned subsidiary of Deutsche Telekom, ("T-Mobile Global"), T-Mobile Global Holding,a direct wholly-owned subsidiary of Global ("T-Mobile Holding") and T-Mobile USA, Inc., a Delaware corporation and a direct wholly-owned subsidiary of T-Mobile Holding ("T-Mobile").
Pursuant to the terms and subject to the conditions set forth in the Business Combination Agreement, the following transactions, among others, are proposed to occur (collectively referred to as the "Proposed Transaction" or the "T-Mobile Transaction"): (1) the Company has agreed to effect a recapitalization that includes a (i) reverse stock split (the “Reverse Stock Split”) of the Company's common stock, par value $0.0001 per share (the “Common Stock”) prior to the completion of the Proposed Transaction and will have a par value $0.00001 per share ("New Common Stock") following the completion of the Proposed Transaction, pursuant to which each share of Common Stock outstanding as of the effective time of the Reverse Stock Split (the “Effective Time”) will thereafter represent one-half of a share of New Common Stock and (ii) a payment in cash (the “Cash Payment”) in an amount equal to $1.5 billion, without interest, in the aggregate to the Company's stockholders of record immediately following the Effective Time; (2) immediately following the Cash Payment, T-Mobile Holding will deliver to the Company all of its interest in T-Mobile (the "T-Mobile Stock Acquisition") and the Company will issue and deliver to T-Mobile Holding, or its designee, shares of New Common Stock equal to 74% of the fully-diluted shares of New Common Stock outstanding immediately following the Cash Payment (with the percentage ownership of fully diluted shares of New Common Stock being calculated pursuant to the Business Combination Agreement (i) under the treasury method based on the average closing price of a share of Common Stock on the New York Stock Exchange for the five trading days immediately preceding the date of the closing under the Business Combination Agreement after taking into account the Reverse Stock Split, the Cash Payment and before taking into account subsequent cash-out of stock options, if any, in connection with the Proposedreverse acquisition. See Note 2 – Transaction and (ii) on a grossed up basis to take into account the number of shares of New Common Stock so issued to T-Mobile Holding or its designee) (the “Stock Issuance”); and (3) on the business day immediately following the closing of the Proposed Transaction (the “Closing”),with MetroPCS Inc., a wholly-owned subsidiary of the Company (“HoldCo”), will merge with and into MetroPCS Wireless, Inc., a wholly-owned subsidiary of HoldCo (“Wireless”), with Wireless continuing as the surviving entity. Immediately thereafter, Wireless will merge with and into T-Mobile, with T-Mobile continuing as the surviving entity.for further information.

Completion of the Proposed Transaction is subject to certain conditions, including, among other things: (i) obtaining the requisite approvals from the Company's stockholders to the Stock Issuance and the amended and restated articles of incorporation effecting the Reverse Stock Split ("Required Approvals"), (ii) obtaining listing approvals from the New York Stock Exchange in connection with the Stock Issuance, (iii) the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, (iv) receipt of Federal Communications Commission and other material governmental consents and approvals required to consummate the Proposed Transaction, (v) the termination of any review by the Committee on Foreign Investment in the United States with respect to the Proposed Transaction, and (vi) the absence of any statute, rule, executive order, regulation, order or injunction prohibiting the consummation of the Proposed Transaction. The obligation of each of the parties to consummate the Proposed Transaction is also conditioned upon the accuracy of the other party's representations and warranties, the other party having performed in all material respects its obligations under the Business Combination Agreement and no circumstances occurring that would reasonably be expected to have a material adverse effect on the other party.Segments

The Business Combination Agreement grants both the CompanyT-Mobile operates as a single operating segment and Deutsche Telekom the right to terminate the Business Combination Agreement under certain circumstances. Pursuant to the Business Combination Agreement, the Company will be obligated to pay Deutsche Telekom a termination feesingle reporting unit. As of $150.0 millionJune 30, 2013 if (a) Deutsche Telekom terminates the Business Combination Agreement because there has been a change in the MetroPCS board of directors recommendation

5
MetroPCS Communications, Inc. and Subsidiaries
Notes to Condensed Consolidated Interim Financial Statements
(Unaudited)

("Recommendation Change"), (b) the Company or Deutsche Telekom terminates the Business Combination Agreement because the Required Approvals are not obtained following (i) a material breach by the Company of the covenants requiring the Company to file the proxy statement, call and hold the stockholders meeting, not solicit alternative transaction proposals or continue to recommend that its stockholders deliver the Required Approvals or (ii) a Recommendation Change, and (c) the Company or Deutsche Telekom terminates the Business Combination Agreement because the Required Approvals are not obtained (other than under the circumstances described in the immediately preceding sentence) or because the outside date has passed, and (i) an alternative transaction proposal has been made and is pending at the time of termination and, within twelve months after such termination, the Company enters into, publicly approves or submits to its stockholders for approval, an agreement with respect to an alternative transaction, or it consummates an alternative transaction (which in each case need not be the same proposal or with the same party that made the earlier proposal), or (ii) an alternative transaction proposal has been made but was withdrawn prior to the stockholder meeting at which the Company's stockholders voted not to grant the Required Approvals and, within twelve months after such termination, the Company enters into, publicly approves or submits to its stockholders for approval, an agreement with respect to an alternative transaction with the same party that made the earlier proposal that had been withdrawn. If the Business Combination Agreement is terminated due solely to a failure to obtain the necessary regulatory approvals, Deutsche Telekom must pay the Company a $250.0 million termination fee.

On March 21, 2013, the Company announced that it had received all regulatory approvals in connection with the Proposed Transaction (See Note 16).
3.Short-term Investments:

The Company’s short-term investments consist of securities classified as available-for-sale, which are stated at fair value. The securities include U.S. Treasury securities with an original maturity of over 90 days. Unrealized gains, net of related income taxes, for available-for-sale securities are reported in accumulated other comprehensive loss, a component of stockholders’ equity, until realized. The estimated fair values of investments are based on quoted market prices as of the end of the reporting period. The Company's U.S. Treasury securities matured during the three months endedMarch 31, 2013, therefore, the Company had no short-term investments as of March 31, 2013. The U.S. Treasury securities reported as of December 31, 2012 had contractual, and for the three and six months endedJune 30, 2013 and 2012, all of T-Mobile's revenues and long-lived assets related to operations in the United States, Puerto Rico and the U.S. Virgin Islands.

Cash and Cash Equivalents

Cash equivalents, including those acquired through the business combination with MetroPCS, consist of highly liquid interest-earning investments with remaining maturities of three months or less than one year.at the date of purchase. Cash equivalents are stated at cost, which approximates fair value.
Short-term investments, with an original maturity of over 90 days, consisted
Goodwill

Goodwill consists of the following (in thousands):
  As of December 31, 2012
  
Amortized
Cost
 
Unrealized
Gain in
Accumulated
OCI
 
Unrealized
Loss in
Accumulated
OCI
 
Aggregate
Fair
Value
U.S. Treasury securities $244,862
 $128
 $—
 $244,990
Total short-term investments $244,862
 $128
 $—
 $244,990
4.Restricted Cash:

In March 2013, Wireless issued $1.75 billion of principal amount of its 6 1/4% Senior Notes due 2021 (the “6 1/4% Senior Notes”), and $1.75 billion of principal amount of its 6 5/8% Senior Notes due 2023 (the “New 6 5/8% Senior Notes,” and, together with the 6 1/4% Senior Notes, the “2013 Notes”). If the Proposed Transaction in connection with the Business Combination Agreement has not been consummated on or before 11:59 p.m., New York City time on January 17, 2014, or if the Business Combination Agreement is terminated prior to that time, allexcess of the 2013 Notes will be subject to a special mandatory redemption. Accordingly, Wireless is required to keeppurchase price over the$3.48 billion in net proceeds of the 2013 Notes offering in a segregated account and keep such net proceeds on hand in cash or cash equivalents pending the consummation of the Proposed Transaction.
5.Derivative Instruments and Hedging Activities:
In October 2010, Wireless entered into three separate two-year interest rate protection agreements to manage its interest rate risk exposure under Wireless’ senior secured credit facility, as amended (the “Senior Secured Credit Facility”). These agreements were effective on February 1, 2012 and cover a notional amount of $950.0 million and effectively convert this portion of Wireless’ variable rate debt to fixed rate debt at a weighted average annual rate of 4.908%. These agreements expire on February 1, 2014.

6
MetroPCS Communications, Inc. and Subsidiaries
Notes to Condensed Consolidated Interim Financial Statements
(Unaudited)

In April 2011, Wireless entered into three separate three-year interest rate protection agreements to manage its interest rate risk exposure under its Senior Secured Credit Facility. These agreements were effective on April 15, 2011 and cover a notional amount of $450.0 million and effectively convert this portion of Wireless’ variable rate debt to fixed rate debt at a weighted average annual rate of 5.242%. These agreements expire on April 15, 2014.
Interest rate protection agreements are entered into to manage interest rate risk associated with Wireless’ variable-rate borrowings under the Senior Secured Credit Facility. The interest rate protection agreements have been designated as cash flow hedges. If a derivative is designated as a cash flow hedge and the hedging relationship qualifies for hedge accounting under the provisions of ASC 815 (Topic 815, “Derivatives and Hedging”), the effective portion of the change in fair value of the derivative is recordednet identifiable assets acquired in accumulated other comprehensive loss and reclassified to interest expense in the period in which the hedged transaction affects earnings. The ineffective portion of the change in fair value of a derivative qualifying for hedge accounting is recognized in earnings in the period of the change. For the three months endedMarch 31, 2013, the change in fair value did not result in ineffectiveness.
At the inception of the cash flow hedges and quarterly thereafter, the Company performs an assessment to determine whether changes in the fair values or cash flows of the derivatives are deemed highly effective in offsetting changes in the fair values or cash flows of the hedged transaction. If at any time subsequent to the inception of the cash flow hedges, the assessment indicates that the derivative is no longer highly effective as a hedge, the Company will discontinue hedge accounting and recognize all subsequent derivative gains and losses in results of operations.business combination. The Company estimates that approximately $12.6 million of net losses that are reported in accumulated other comprehensive loss at March 31, 2013 are expected to be reclassified into earnings within the next 12 months.
Cross-default Provisions

Wireless’ interest rate protection agreements contain cross-default provisions to its Senior Secured Credit Facility. Wireless’ Senior Secured Credit Facility allows interest rate protection agreements to become secured if the counterparty to the agreement is a current lender under the Senior Secured Credit Facility. If Wireless were to default on the Senior Secured Credit Facility, it would trigger these provisions, and the counterparties to the interest rate protection agreements could request immediate payment on interest rate protection agreements in net liability positions, similar to their existing rights as a lender. There are no collateral requirements in the interest rate protection agreements. The aggregate fair value of interest rate protection agreements with cross-default provisions that are in a net liability position as of March 31, 2013 is $12.6 million.

Fair Values of Derivative Instruments
(in thousands) Liability Derivatives
  As of March 31, 2013 As of December 31, 2012
  Balance Sheet Location Fair Value Balance Sheet Location Fair Value
Derivatives designated as hedging
instruments under ASC 815
        
Interest rate protection agreements Other current liabilities $(12,594) Other current liabilities $(13,656)
Interest rate protection agreements Other long-term liabilities —
 Other long-term liabilities (2,355)
Total derivatives designated as
hedging instruments under ASC
815
   $(12,594)   $(16,011)

The Effect of Derivative Instruments on the Condensed Consolidated Statement of Income and Comprehensive Income
For the Three Months Ended March 31,
Derivatives in ASC 815 Cash
Flow Hedging Relationships
 
Amount of Gain (Loss)
Recognized in OCI on Derivative
(Effective Portion)
 
Location of Gain (Loss) Reclassified from
Accumulated OCI into
Income (Effective Portion)
 
Amount of Gain (Loss)
Reclassified from
Accumulated OCI into
Income (Effective Portion)
 2013 2012 2013 2012
Interest rate protection agreements $(186) $(4,705) Interest expense $(3,603) $(4,336)
6.Intangible Assets:

The Company operates wireless broadband mobile networks under licenses granted by the FCC for a particular geographic area on spectrum allocated by the FCC for terrestrial wireless broadband services. The Company holds personal communications services (“PCS”) licenses, advanced wireless services (“AWS”) licenses, 700 MHz licenses and microwave

7
MetroPCS Communications, Inc. and Subsidiaries
Notes to Condensed Consolidated Interim Financial Statements
(Unaudited)

licenses granted or acquired on various dates. The PCS licenses previously included, and the AWS licenses currently include, the obligation and resulting costs to relocate existing fixed microwave users of the Company's licensed spectrum if the Company's use of its spectrum interferes with their systems and/or reimburse other carriers (according to FCC rules) that relocated prior users if the relocation benefits the Company's system. Accordingly, the Company incurs costs related to microwave relocation in constructing its PCS and AWS networks. FCC Licenses and relocated microwave relocation costs are recorded at cost.
The change inassesses the carrying value of intangible assets during the three months endedMarch 31, 2013 is as follows (in thousands):
  FCC Licenses 
Microwave
Relocation
Costs
Balance at January 1, 2013 $2,535,808
 $26,599
Additions 2,000
 88
Disposals —
 —
Balance at March 31, 2013 $2,537,808
 $26,687

Although PCS, AWS, 700 MHz and microwave licenses are issued with a stated term between ten and fifteen years, the renewal of PCS, AWS, 700 MHz and microwave licenses is generally a routine matter without substantial cost and the Company has determined that no legal, regulatory, contractual, competitive, economic, or other factors currently exist that limit the useful life of its PCS, AWS, 700 MHz and microwave licenses. As such, under the provisions of ASC 350, (Topic 350, “Intangibles-Goodwill and Other”), the Company's PCS, AWS, 700 MHz and microwave licenses and microwave relocation costs (collectively, the "indefinite-lived intangible assets") are not amortized because they are considered to have indefinite lives, but are tested at leastgoodwill for potential impairment annually for impairment.

In accordance with the requirements of ASC 350, the Company performs its annual indefinite-lived intangible assets impairment test as of each September 30December 31 or more frequently if events or changes in circumstances indicate that the carrying value of the indefinite-lived intangiblesuch assets might be impaired. 

Other Intangible Assets

Intangible assets that have finite useful lives are amortized over their useful lives. Customer lists are primarily amortized using the sum-of-the-years-digits method over the expected period in which the relationship is expected to contribute to future cash flows. The impairment test consistsremaining finite-lived intangible assets are generally amortized using the straight-line method.


7
Table of a comparison of estimatedContents

Stock-Based Compensation

Stock-based compensation cost for stock awards is measured at fair value on the grant date and recognized as expense, net of expected forfeitures, over the related service period. The fair value of stock awards is based on the closing price of T-Mobile common stock on the date of grant. Restricted stock units (“RSUs”) are recognized as expense using the straight-line method. Performance stock units (“PSUs”) are recognized as expense following a graded vesting schedule.

Earnings (Loss) Per Share

Basic earnings (loss) per share is computed based on the weighted-average number of common shares outstanding for the period. Diluted earnings (loss) per share is computed based on the weighted-average number of common shares outstanding for the period plus the effect of dilutive potential common shares outstanding during the period, calculated using the treasury stock method. Dilutive potential common shares consist of outstanding stock options.

2.Transaction with MetroPCS

Transaction Overview

On October 3, 2012, Deutsche Telekom, T-Mobile Global Zwischenholding GmbH, a direct wholly-owned subsidiary of Deutsche Telekom (“T-Mobile Global”), T-Mobile Holding, a direct wholly-owned subsidiary of T-Mobile Global, T-Mobile USA and MetroPCS entered into a Business Combination Agreement (“BCA”) for the carrying value. An impairment loss would be recordedbusiness combination of T-Mobile USA and MetroPCS, which was subsequently amended on April 14, 2013. The business combination was intended to provide the Company with expanded scale, spectrum, and financial resources to compete aggressively with other larger U.S. wireless carriers. The stockholders of MetroPCS approved the business combination on April 24, 2013, and the transaction closed on April 30, 2013 (“Acquisition Date”).

The transaction was accounted for as a reductionreverse acquisition under the acquisition method of accounting with T-Mobile USA considered to be the accounting acquirer based upon the terms and conditions set forth in the carrying valueBCA, including the ability of T-Mobile USA's stockholder, Deutsche Telekom, to nominate a majority of the related indefinite-lived intangible assets and charged to resultsboard of operations. No impairment was recognized as a resultdirectors of the test performed at September 30, 2012 asCompany and Deutsche Telekom's receipt of shares representing a majority of the outstanding voting power of the Company. Based on the determination that T-Mobile USA was the accounting acquirer in the transaction, the Company has allocated the preliminary purchase price to the fair value of the indefinite-lived intangibleMetroPCS's assets was in excessand liabilities as of the carrying value.Acquisition Date, with the excess preliminary purchase price recorded as goodwill.

Furthermore, if anyAccordingly, the acquired assets and liabilities of the indefinite-lived intangible assetsMetroPCS are subsequently determined to have a finite useful life, such assets would be tested for impairment in accordance with ASC 360 (Topic 360, “Property, Plant, and Equipment”), and the intangible assets would then be amortized prospectively over the estimated remaining useful life. There have been no subsequent indicators of impairment including those indicated in ASC 360. Accordingly, no subsequent interim impairment tests were performed.

Other Spectrum Acquisitions

During the three months endedMarch 31, 2013 and 2012, the Company closed on the acquisition of microwave spectrum including a net aggregate amount of $2.0 million and $2.1 million, respectively, in cash consideration paid.
7.Supplemental Balance Sheet Information:

Other current liabilities consisted of the following (in thousands):

  March 31,
2013		 December 31, 2012
Deferred vendor credits (1)
 $—
 $40,111
Derivative liabilities 12,594
 13,656
Other 11,276
 17,832
  $23,870
 $71,599
 ————————————
(1)Deferred vendor credits consists of credit memos received from a vendor that were earned upon the return of certain network equipment.

8
MetroPCS Communications, Inc. and Subsidiaries
Notes to Condensed Consolidated Interim Financial Statements
(Unaudited)

8.Long-term Debt:
Long-term debt consisted of the following (in thousands):
  March 31,
2013		 December 31,
2012
Senior Secured Credit Facility $2,440,179
 $2,446,526
7 7/8% Senior Notes due 2018
 1,000,000
 1,000,000
6 5/8% Senior Notes due 2020
 1,000,000
 1,000,000
6 1/4% Senior Notes due 2021
 1,750,000
 —
6 5/8% Senior Notes due 2023
 1,750,000
 —
Capital Lease Obligations 324,463
 321,740
Total long-term debt 8,264,642
 4,768,266
Add: unamortized discount on debt (7,232) (7,514)
Total debt 8,257,410
 4,760,752
Less: current maturities (2,450,240) (36,640)
Total long-term debt $5,807,170
 $4,724,112
7 7/8% Senior Notes due 2018
In September 2010, Wireless completed the sale of $1.0 billion of principal amount of 7 7/8% Senior Notes due 2018 (“7 7/8% Senior Notes”). The terms of the 7 7/8% Senior Notes are governed by the indenture, the first supplemental indenture, dated September 21, 2010, and the third supplemental indenture, dated December 23, 2010, among Wireless, the guarantors party thereto and the trustee. The net proceeds of the sale of the 7 7/8% Senior Notes were $974.0 million after underwriter fees, discounts and other debt issuance costs of $26.0 million.
6 5/8% Senior Notes due 2020
In November 2010, Wireless completed the sale of $1.0 billion of principal amount of 6 5/8% Senior Notes due 2020 (“6 5/8% Senior Notes”). The terms of the 6 5/8% Senior Notes are governed by the indenture, the second supplemental indenture, dated November 17, 2010, and the fourth supplemental indenture, dated December 23, 2010, among Wireless, the guarantors party thereto and the trustee. The net proceeds of the sale of the 6 5/8% Senior Notes were $988.1 million after underwriter fees and other debt issuance costs of approximately $11.9 million.
Consent Solicitation
In December 2012, Wireless commenced a consent solicitation, seeking to amend the indentures governing its 7 7/8% Senior Notes and 6 5/8% Senior Notes, (collectively, the "Notes"). Following the receipt of the requisite consentsincluded in the consent solicitation, Wireless, the guarantors named therein and the trustee entered into a fifth supplemental indenture, dated December 14, 2012, which will govern the 7 7/8% Senior Notes and a sixth supplemental indenture, dated December 14, 2012, which will govern the 6 5/8% Senior Notes, (the fifth and sixth supplemental indentures, the "Supplemental Indentures"). Among other things, the Supplemental Indentures modified the definition of “Change in Control” in such indentures so that the consummation of the Proposed Transaction will not be considered a change in control under the indentures governing the Notes. Upon consummation of the Proposed Transaction, the Supplemental Indentures conform the covenants, events of default and other non-economic terms previously applicable to the Notes to certain covenants, events of default and other non-economic terms that are anticipated to apply to certain notes to be sold by T-Mobile to Deutsche Telekom. Further, the Supplemental Indentures also made certain other changes to the covenants, events of default and other non-economic terms of the Notes that will apply only until such time, if any, as the Notes are assumed by T-Mobile upon the consummation of the Proposed Transaction, but that will be permanent if the Proposed Transaction is not consummated. In connection with the consent solicitation, the Company incurred $10.0 million in fees that were treated as deferred debt issuance costs.
6 1/4% Senior Notes due 2021 and 6 5/8% Senior Notes due 2023
In March 2013, Wireless completed the sale of $1.75 billion of principal amount of 6 1/4%Senior Notes. The terms of the 6 1/4% Senior Notes are governed by the indenture and the first supplemental indenture, dated March 19, 2013, among Wireless, MetroPCS, MetroPCS, Inc., all of Wireless' direct and indirect subsidiaries and Deutsche Bank Trust Company Americas, as the trustee. The net proceeds from the sale of the 6 1/4% Senior Notes were $1.74 billion after underwriter fees and

9
MetroPCS Communications, Inc. and Subsidiaries
Notes to Condensed Consolidated Interim Financial Statements
(Unaudited)

other debt issuance costs of approximately $14.9 million, which includes approximately $2.0 million in accounts payable and accrued expenses on the accompanyingCompany's condensed consolidated balance sheet as of June 30, 2013 and the results of its operations and cash flows are included in the Company's condensed consolidated statement of comprehensive income and cash flows for the period from May 1, 2013 through June 30, 2013.

Pursuant to the terms and the conditions as set forth in the BCA:

Deutsche Telekom recapitalized T-Mobile USA by retiring T-Mobile USA's notes payable to affiliates principal balance of March 31,$14.5 billion and all related derivative instruments in exchange for $11.2 billion in new notes payable to affiliates and additional paid-in capital prior to the closing of the business combination.
Deutsche Telekom provided T-Mobile USA with a $500 million unsecured revolving credit facility.
MetroPCS effected a recapitalization which consisted of a reverse stock split of the MetroPCS common stock and an aggregate cash payment of $1.5 billion to the MetroPCS stockholders on the Acquisition Date.
Thereafter, MetroPCS acquired all of T-Mobile USA's capital stock from T-Mobile Holding in exchange for common stock representing approximately 74% of the fully diluted shares of the combined entity's common stock on the Acquisition Date.

Debt Recapitalization

In connection with the recapitalization of T-Mobile USA, certain outstanding balances with Deutsche Telekom were settled prior to the closing of the business combination. The debt recapitalization was accounted for as a debt extinguishment with the effects being treated as a capital transaction. 

8
Table of Contents

The effects on additional paid-in capital as a result of the debt recapitalization are presented in the following table:
(in millions)Debt Recapitalization
Retirement of notes payable to affiliates$14,450
Elimination of net unamortized discounts and premiums on notes payable to affiliates434
Issuance of new notes payable to affiliates(11,200)
Settlement of accounts receivable from affiliates and other outstanding balances(363)
Income tax effect(178)
Total$3,143

Reverse Stock Split

On April 30, 2013, as contemplated by the BCA, the Company amended and restated its existing certificate of incorporation in its entirety in the form of the Fourth Amended and Restated Certificate of Incorporation to, among other things, effect a reverse stock split of MetroPCS' common stock, and change its name to T-Mobile US, Inc. On the Acquisition Date, the Company issued to T-Mobile Holding 535,286,077 shares of common stock in exchange for T-Mobile Holding transferring to the Company all of its rights, title and interest in and to all the equity interests of T-Mobile USA. After giving effect to this transaction, the shares of the Company's common stock issued to T-Mobile Holding represented approximately 74% of the fully diluted shares of the Company's common stock on the Acquisition Date. Immediately prior to the Acquisition Date, each issued share of MetroPCS was reverse split, and at consummation of the business combination each issued share was canceled and converted into shares of the Company's stock totaling 184,487,309 shares of common stock, exclusive of 1,382,505 shares in treasury.

Consideration Transferred

The fair value of the consideration transferred in a reverse acquisition was determined based on the number of shares the accounting acquirer (T-Mobile USA, the legal acquiree) would have had to issue to the stockholders of the accounting acquiree (MetroPCS, the legal acquirer) in order to provide the same ratio of ownership in the combined entity (approximately 26%) as a result of the transaction. The fair value of the consideration transferred was based on the most reliable measure, which was determined to be the market price of MetroPCS shares as of Acquisition Date.  The fair value of the consideration transferred, based on the market price of MetroPCS shares on the Acquisition Date, consisted of the following:
(in millions)Purchase Consideration
Fair value of MetroPCS shares$2,886
Fair value of MetroPCS stock options84
Cash consideration paid to MetroPCS stock option holders1
Total purchase consideration$2,971

The fair value of the MetroPCS shares was determined by using the closing price of MetroPCS common stock on the New York Stock Exchange on the Acquisition Date, prior to giving effect to the reverse stock split, of $11.84 per share, adjusted by the $4.05 per share impact of the $1.5 billion cash payment, which was a return of capital to the MetroPCS stockholders made as part of the recapitalization prior to the stock issuance to T-Mobile Holding. This resulted in an adjusted price of $7.79 per share unadjusted for the effects of the reverse stock split.

Pursuant to the BCA, unvested MetroPCS' stock options and shares of restricted stock immediately vested as of the closing of the business combination and were adjusted to give effect to the recapitalization. Holders of stock options for which the exercise price was less than the average closing price of MetroPCS's common stock for the five days preceding the closing (“in-the-money options”) had the right to receive, at their election, a cash payment based on the amount by which the average closing price exceeded the exercise price of the options. In-the-money options held by holders who made this election were canceled. Finally, stock options with low exercise prices, as defined in the BCA, were canceled in exchange for cash consideration.

Preliminary Purchase Price Allocation

As T-Mobile USA was the accounting acquirer in the business combination, it has allocated the preliminary purchase price to the MetroPCS individually identifiable assets acquired and liabilities assumed based on their estimated fair values on the

9
Table of Contents

Acquisition Date. The excess of the preliminary purchase price over those fair values was recorded as goodwill. The determination of the preliminary fair values of the acquired assets and assumed liabilities requires significant judgment, including estimates relating to the decommissioning of network cell sites, the determination of estimated lives of depreciable and intangible assets and the calculation of the value of spectrum licenses, customer lists, and trademarks. Accordingly, should additional information become available, the preliminary purchase price allocation is subject to further adjustment.

The following table summarizes the allocation of the preliminary purchase price:
(in millions)Preliminary Fair Value
Assets 
Cash and cash equivalents$2,144
Accounts receivable, net98
Inventory171
Other current assets240
Property and equipment1,475
Spectrum licenses3,818
Other intangible assets1,376
Other assets10
Total assets acquired9,332
  
Liabilities and Stockholders' Equity 
Accounts payable and accrued liabilities475
Deferred revenues187
Other current liabilities15
Deferred tax liabilities735
Long-term debt6,277
Other long-term liabilities355
Total liabilities assumed8,044
Net identifiable assets acquired1,288
Goodwill1,683
Net assets acquired$2,971

The goodwill recognized was attributable primarily to expected synergies from combining the businesses of T-Mobile USA and MetroPCS, including, but not limited to, the following:

Expected cost synergies from reduced network-related expenses through the elimination of redundant assets.
Enhanced spectrum position which will provide greater network coverage and improved 4G LTE coverage in key markets across the country and the ability to offer a wider array of products, plans and services to the Company's customers.

None of the goodwill is deductible for income tax purposes.

The Company recognized acquisition-related costs of $26 million and $39 million for the three and six months endedJune 30, 2013, respectively. These costs are included in MetroPCS transaction-related costs in the condensed consolidated statements of comprehensive income (loss).

Consolidated Statement of Comprehensive Income (Loss) for the period from May 1, 2013 through June 30, 2013

The following supplemental information presents the financial results of MetroPCS operations included in the condensed consolidated statement of comprehensive income (loss) for the period from May 1, 2013 through June 30, 2013:
(in millions)Six Months Ended
June 30, 2013
Total revenues$799
Net income16


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Table of Contents

Pro Forma Financial Information

The following pro forma consolidated results of net income for the six months endedJune 30, 2013 and 2012 assume the business combination was completed as of January 1, 2012, respectively:
 Six Months Ended June 30,
(in millions, except per share amounts)2013 2012
Pro forma revenues$12,642
 $12,542
Pro forma net income80
 323
Pro forma basic earnings per share$0.13
 $0.45
Pro forma diluted earnings per share0.13
 0.45

The pro forma amounts include the historical operating results of T-Mobile USA and MetroPCS prior to the business combination, with adjustments directly attributable to the business combination relating to purchase accounting adjustments to conform to accounting policies that affect total revenues, total operating expenses, interest expense, other income (expense), income taxes expense, and eliminate intercompany activities.

As the pro forma amounts assumed the business combination was completed as of January 1, 2012, pro forma earnings for the six months endedJune 30, 2013 excluded $197 million of acquisition-related costs and these costs were included in the pro forma earnings for the six months endedJune 30, 2012.
In March 2013, Wireless completed
The pro forma results include the salefollowing:

Increase in tax expenses based on the inclusion of approximatelyMetroPCS in the combined company of $1.7546 million for the six months endedJune 30, 2013 and a decrease of $155 million for the six months endedJune 30, 2012;
Net increase to amortization and depreciation expense related to the fair value of the intangible assets and fixed assets acquired of $13 million and $98 million for the six months endedJune 30, 2013 and 2012, respectively; and
The impact of financing agreements entered into whereby an aggregate of $14.7 billion of principal amount of New 6 5/8% Senior Notes. The terms of the New 6 5/8% Senior Notes are governed by the indenture and the second supplemental indenture, dated March 19, 2013, among Wireless, MetroPCS, MetroPCS, Inc., all of Wireless' direct and indirect subsidiaries and Deutsche Bank Trust Company Americas, as the trustee. The net proceeds from the sale of the New 6 5/8% Senior Notes were $1.74 billion after underwriter fees and other debt issuance costs of approximately $14.9 million, which includes approximately $2.0 million in accounts payable and accrued expenses on the accompanying condensed consolidated balance sheet as of March 31, 2013.
The 2013 Notes are senior unsecured obligations and are guaranteed by MetroPCS, MetroPCS, Inc., and all of Wireless’ current and future direct and indirect subsidiaries. Interest on the 2013 Notes is payable semiannually in arrears on April 1 and October 1 of each year, commencing on October 1, 2013.
If the Proposed Transactionnotes were issued in connection with the Business Combination Agreement hasbusiness combination for an increase to interest and other income (expense) of $91 million and $71 million for the six months endedJune 30, 2013 and 2012, respectively.

3.Equipment Installment Plan Receivables

T-Mobile offers certain retail customers the option to pay for their devices and other purchases in installments over a period of up to 24 months. At the time of sale, T-Mobile imputes risk adjusted interest on the installment receivables and records the deferred interest as a reduction to equipment revenues and the related accounts receivable. Interest income was recognized over the financed installment term. The current portion of T-Mobile's equipment installment plan receivables was included in accounts receivable, net and was $824 million and $475 million as of June 30, 2013 and December 31, 2012, respectively. The long-term portion of the equipment installment plan receivables was included in other assets and was $468 million and $216 million as of June 30, 2013 and December 31, 2012, respectively.

Credit Quality

T-Mobile assesses the collectability of the equipment installment plan receivables based upon a variety of factors, including aging of the accounts receivable portfolio, credit quality of the customer base, historical write-off experience, payment trends and other qualitative factors such as macro-economic conditions.

Based upon customer credit profiles, T-Mobile classifies customer receivables into the categories of “Prime” and “Subprime”. Prime customer receivables are those with lower delinquency risk and Subprime customer receivables are those with higher delinquency risk. Some customers within the Subprime category are required to pay an advance deposit for equipment financed under the equipment installment plan or may be required to pay a higher down payment on the equipment purchase. Equipment sales that are not been consummatedreasonably assured to be collectible are recorded on a cash basis as payments are received.


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The balance and aging of the equipment installment plan receivables on a gross basis by credit category were as follows:
 June 30, 2013 December 31, 2012
 Credit Category Credit Category
(in millions)Prime Subprime Total Prime Subprime Total
Unbilled$746
 $656
 $1,402
 $337
 $432
 $769
Billed - Current21
 24
 45
 13
 21
 34
Billed - Past due7
 22
 29
 3
 10
 13
Total equipment installment plan receivables$774
 $702
 $1,476
 $353
 $463
 $816

T-Mobile records equipment installment bad debt expense based on an estimate of the percentage of equipment revenue that will not be collected. This estimate was based on a number of factors including historical write-off experience, credit quality of the customer base, and other factors such as macro-economic conditions. T-Mobile monitors the aging of its equipment installment plan receivables and writes off account balances if collection efforts were unsuccessful and future collection was unlikely based on customer credit ratings and the length of time from the original billing date.

Activity in the allowance for credit losses for the equipment installment plan receivables was as follows:
(in millions)June 30,
2013
Allowance, December 31, 2012$125
Change in deferred interest on short-term and long-term installment receivables41
Bad debt expense68
Write-offs(50)
Allowance, June 30, 2013$184

The allowances for credit losses include deferred interest of $151 million and $110 million as of June 30, 2013 and December 31, 2012, respectively.

4.    Property and Equipment

The components of property and equipment were as follows:
(in millions)Useful Lives 6/30/2013 12/31/2012
Buildings and improvementsUp to 40 years $695
 $676
Wireless communications systems3 - 20 years 23,267
 21,147
Capitalized software3 - 7 years 5,753
 5,078
Equipment and furniture3 - 5 years 2,265
 1,991
Construction in progress  1,992
 1,659
Accumulated depreciation and amortization  (18,787) (17,744)
Property and equipment, net  $15,185
 $12,807

Buildings and improvements, wireless communication systems, capitalized software, equipment and furniture, including assets with retirement obligations, and construction-in-progress include $14 million, $960 million, $162 million, $268 million, and $71 million, respectively, based on preliminary fair values, acquired through the business combination with MetroPCS. See Note 2 – Transaction with MetroPCS for further information.

5.    Goodwill, Spectrum Licenses and Intangible Assets

Goodwill and Spectrum Licenses

Carrying values of goodwill and spectrum licenses were as follows:
(in millions)June 30,
2013		 December 31,
2012
Goodwill$1,683
 $—
Spectrum licenses18,415
 14,550

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Goodwill and spectrum licenses include $1.7 billion and $3.8 billion, respectively, based on preliminary fair values, acquired through the business combination with MetroPCS. See Note 2 – Transaction with MetroPCS for further information.
Other Intangible Assets

The components of intangible assets were as follows:
(in millions)Useful Lives June 30,
2013		 December 31,
2012
Customer lists1 - 6 years $1,315
 $209
Trademarks1 - 8 years 291
 55
OtherUp to 28 years 97
 58
Accumulated amortization  (313) (243)
Other intangible assets, net  $1,390
 $79

Customer lists, trademarks and other intangible assets include $1.1 billion, $233 million and $39 million respectively, based on preliminary fair values, related to the business combination with MetroPCS. See Note 2 – Transaction with MetroPCS for further information. Estimated aggregate future amortization expense for intangible assets subject to amortization was $185 million for the six months ended December 31, 2013, $332 million in 2014, $278 million in 2015, $222 million in 2016, $163 million in 2017 and $210 million thereafter.

6.Fair Value Measurements and Derivative Instruments

T-Mobile accounts for certain assets and liabilities at fair value. Fair value is a market-based measurement which is determined based on assumptions that market participants would use in pricing an asset or before 11:59 p.m.liability. As a basis for considering such assumptions, T-Mobile uses the three-tiered fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

Level 1Observable inputs that reflect quoted prices in active markets for identical assets or liabilities;
Level 2Inputs other than the quoted prices in active markets that are observable either directly or indirectly; and
Level 3Unobservable inputs for which there is little or no market data, which require T-Mobile to develop its own assumptions.

T-Mobile uses observable market data, when available. Assets and liabilities measured at fair value included interest rate swaps, cross currency interest rate swaps designated as cash flow hedges, and investments and obligations related to T-Mobile's nonqualified deferred compensation plan.

Interest Rate Swaps

Prior to the closing of the business combination, T-Mobile managed interest rate risk related to its notes payable to affiliates by entering into interest rate swap agreements. T-Mobile held seven interest rate swaps with a total notional amount of $3.6 billion as of December 31, 2012. These interest rate swap agreements were not designated as hedging instruments and changes in fair value related to such agreements were recognized in interest expense to affiliates.

Interest rate swaps were valued using discounted cash flow techniques. These techniques incorporated market-based observable inputs such as interest rates and credit spreads, considering each instrument's term, notional amount, discount rate and credit risk. T-Mobile's interest rate swaps were classified as Level 2 in the fair value hierarchy.

Prior to the closing of the business combination with MetroPCS, Deutsche Telekom recapitalized T-Mobile by retiring the existing T-Mobile notes payable to affiliates and all related derivative instruments, which included the interest rate swaps. As of June 30, 2013, New York City time, on January 17, 2014,there were no outstanding interest rate swaps.

Cross Currency Interest Rate Swaps

Prior to the closing of the business combination, T-Mobile managed foreign currency risk along with interest rate risk through cross currency interest rate swap agreements related to its intercompany Euro denominated notes payable to affiliates, which were entered into upon assumption of the notes to fix the future interest and principal payments in U.S. dollars, as well as to mitigate the impact of foreign currency transaction gains or iflosses over the Business Combination Agreement is terminatedterms of the notes payable to affiliates extending to 2025. T-Mobile had three cross currency interest rate swaps with a total notional amount of $2.3 billion as of December 31,

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2012. These cross currency interest rate swaps were designated as cash flow hedges and met the criteria for hedge accounting. As a result, the change in fair value was recorded in other comprehensive income (loss) and reclassified to interest expense to affiliates in the period in which the hedged transaction affected earnings. T-Mobile evaluated hedge effectiveness at the inception of the hedge prospectively, as well as retrospectively, and at the end of each reporting period. The hedges were evaluated as highly effective prior to that time, allthe closing of the business combination with MetroPCS, thus no gain (loss) has been recognized due to hedge ineffectiveness.

Cross currency interest rate swaps were valued using discounted cash flow techniques. These techniques incorporated market-based observable inputs such as interest rates and credit spreads, considering each instrument's term, notional amount, discount rate and credit risk. T-Mobile's cross currency interest rate swaps were classified as Level 2 in the fair value hierarchy.

Prior to the closing of the business combination with MetroPCS, Deutsche Telekom recapitalized T-Mobile by retiring the existing T-Mobile notes payable to affiliates and all related derivative instruments, which included cross currency interest rate swaps. The related balance in other accumulated comprehensive income was reclassified into net income. As of June 30, 2013, there were no outstanding cross currency interest rate swaps.

Nonqualified Deferred Compensation Plan

T-Mobile's nonqualified deferred compensation plan includes available for sale securities and obligations, which are valued using quoted market prices in active markets or broker-dealer quotations. The nonqualified deferred compensation plan assets and liabilities are classified as Level 1 in the three‑tier value hierarchy.

Fair Value of Financial Instruments

Fair value of financial instruments measured on a recurring basis by level were as follows:
 Balance Sheet Location June 30, 2013
(in millions) Level 1 Level 2 Level 3 Total
Assets         
Nonqualified deferred compensationLong-term investments $37
 $—
 $—
 $37
Liabilities         
Nonqualified deferred compensationOther long-term liabilities 37
 —
 —
 37

 Balance Sheet Location December 31, 2012
(in millions) Level 1 Level 2 Level 3 Total
Assets         
Interest rate swapsOther current assets $—
 $106
 $—
 $106
Cross currency interest rate swapsOther assets —
 144
 —
 144
Nonqualified deferred compensationLong-term investments 31
 —
 —
 31
Liabilities         
Nonqualified deferred compensationOther long-term liabilities 31
 —
 —
 31

During the three and six months ended June 30, 2013, T-Mobile did not have any transfers between Levels 1, 2 or 3 in the fair value hierarchy.

The following table summarizes the activity related to derivatives instruments:
 Three Months Ended June 30, Six Months Ended June 30,
(in millions)2013 2012 2013 2012
Gain (loss) recognized in other comprehensive income (loss):       
Cross currency interest rate swaps$57
 $(190) $(17) $(77)
Gain (loss) recognized in interest expense to affiliates:       
Interest rate swaps6
 31
 8
 46
Cross currency interest rate swaps48
 7
 53
 7


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Notes willPayable to Affiliates and Long-term Debt

See Note 7 – Notes Payable to Affiliates and Debt for the fair value of T-Mobile's notes payable to affiliates and long-term debt.

7.Notes Payable to Affiliates and Debt

Notes Payable to Affiliates

Prior to the closing of the business combination with MetroPCS, Deutsche Telekom recapitalized T-Mobile by retiring its notes payable to affiliates principal balance of $14.5 billion in exchange for $11.2 billion in new unsecured senior notes.

Notes payable to affiliates as of June 30, 2013 were as follows:
(in millions)June 30, 2013
6.464% Senior Note due 2019$1,250
5.578% Senior Reset Note due 2019 (reset date in April 2015 )1,250
6.542% Senior Note due 20201,250
5.656% Senior Reset Note due 2020 (reset date in April 2015)1,250
6.633% Senior Note due 20211,250
5.747% Senior Reset Note due 2021 (reset date in October 2015)1,250
6.731% Senior Note due 20221,250
5.845% Senior Reset Note due 2022 (reset date in October 2015)1,250
6.836% Senior Note due 2023600
5.950% Senior Reset Note due 2023 (reset date in April 2016)600
Total notes payables to affiliates$11,200

Interest on the Senior Notes and Senior Reset Notes, collectively the notes payable to affiliates, is accrued from the date of issuance at stated interest rates and paid semi-annually. The interest rates on the Senior Reset Notes are adjusted at the reset dates to rates defined in the applicable indenture. The notes payable to affiliates may be redeemed, in whole, or from time to time in part, subject to a special mandatory redemption. If the special mandatory redemption occurs,conditions and an early termination fee as set forth in the special mandatory redemption priceapplicable indentures agreements.

Notes payable to affiliates as of December 31, 2012 were as follows:
(in millions)December 31,
2012
Notes payable to affiliates, due 2013 (1.772% - 7.099%)$1,273
Notes payable to affiliates, due 2014 (2.696% - 3.532%)2,348
Notes payable to affiliates, due 2015 (2.843%)1,905
Notes payable to affiliates, due 2016 (2.739%)1,000
Notes payable to affiliates, thereafter (3.652% - 8.195%)7,956
Unamortized discount and premium, net463
Total notes payable to affiliates14,945
Less: Current portion of long-term notes payable to affiliates1,290
Long-term payables to affiliates$13,655

The notes payable to affiliates accrued interest from the date of issuance at stated interest rates or LIBOR plus an applicable margin, with accrued interest paid semi-annually, quarterly or monthly. The applicable interest rate on certain notes payable was subject to periodic change based on changes in the credit rating of Deutsche Telekom.

Long-term Debt

In connection with the business combination with MetroPCS, T-Mobile assumed debt held by MetroPCS of $6.3 billion, including capital leases in the amount of $333 million. In addition, certain subsidiaries of T-Mobile became guarantors of the long-term debt. See Note 12 – Guarantor Financial Information for each seriesthe condensed consolidating financial information of 2013 Notes would be (i) if the special mandatory redemption occurs on or prior to SeptemberT-Mobile's guarantor subsidiaries.


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Long-term debt as of June 30, 2013100% ofwas as follows:
(in millions)June 30, 2013
7.785% Senior Notes due 2018$1,000
6.625% Senior Notes due 20201,000
6.250% Senior Notes due 20211,750
6.625% Senior Notes due 20231,750
Unamortized premium from purchase price allocation fair value adjustment434
Capital leases359
Total long-term debt6,293
Less: Current portion of capital leases17
Long-term debt$6,276

Interest on the principal amount of the 2013 Notes, and (ii) if the special mandatory redemption occurs after September 30, 2013, 101% of the principal amount of the 2013 Notes, in each case pluslong-term debt, excluding capital leases, is accrued and unpaid interest to, but not including, the redemption date. If the Proposed Transaction is consummated, the 2013 Notes will be assumed by, and become the obligations of, T-Mobile, as the surviving corporation. Wireless intends to use the net proceeds from the saledate of issuance at stated interest rates and paid semi-annually. The long-term debt, excluding capital leases, may be redeemed, in whole, or from time to time in part, subject to the 2013conditions and an early termination fee as set forth in the applicable indenture agreements.

6.25% Senior Notes to repay the outstanding amounts owed under thedue 2021 and 6.625% Senior Secured Credit Facility, to pay liabilities under related interest rate protection agreements and to pay related fees and expenses, and the remainder of which Wireless intends to use for general corporate purposes, if the Proposed Transaction is consummated. The 2013 Notes will thereafter be guaranteed by MetroPCS, T-Mobile's wholly-owned domestic restricted subsidiaries (excluding certain designated special purpose entities, a certain reinsurance subsidiary and immaterial subsidiaries), all of T-Mobile's restricted subsidiaries that guarantee certain of its indebtedness, and any future subsidiary of MetroPCS that directly or indirectly owns any equity interests of T-Mobile.due 2023

In March 2013, Wirelessconnection with the business combination with MetroPCS, T-Mobile and the guarantors also entered intoassumed the obligations under a Registration Rights Agreement (“Registration Rights Agreement”) with Deutsche Bank Securities Inc., as representative of the initial purchasers inof the 6.25% Senior Notes due 2021 and 6.625% Senior Notes due 2023 (“2013 Notes offering (the “Initial Purchasers”Notes”).

Under the terms of the Registration Rights Agreement, Wirelessthe Company and the subsidiary guarantors agreehave agreed to use commercially reasonable efforts to file a registration statement covering an offer to exchange the 2013 Notes for Exchange Securities (as defined in the Registration Rights Agreement). WirelessThe Company has also agreed to use commercially reasonable efforts to have such registration statement declared effective and to consummate the Exchange Offer (as defined in the Registration Rights Agreement) not later than 60 days after the date such registration statement becomes effective. Alternatively, if Wirelessthe Company is unable to consummate the Exchange Offer under certain conditions, or if holders of the 2013 Notes cannot participate in, or cannot obtain freely transferable Exchange Securities in connection with the Exchange Offer for certain specified reasons, then Wirelessthe Company and the Guarantorssubsidiary guarantors will use commercially reasonable efforts to file a shelf registration statement within the times specified in the Registration Rights Agreement to facilitate resale of the 2013 Notes. All registration expenses (subject to limitations specified in the Registration Rights Agreement) will be paid by Wireless and the guarantors.Company.

Should Wirelessthe Company fail to consummate the Exchange Offer within 360 days after of the effective date Wireless’ mergerof the business combination with T-Mobile is effective;MetroPCS; or, if a shelf registration statement is required, fail to have the shelf registration statement declared effective, or, if a shelf registration statement has become effective, fail to maintain the effectiveness thereof or the usability of the related prospectus (subject to certain exceptions) for more than 120 days in any twelve-month period, Wirelessthe Company will be required to pay certain additional interest as provided in the Registration Rights Agreement.
The 2013 Notes and related deferred debt issuance costs are classified as long-term on the accompanying condensed consolidated balance sheet as of March 31, 2013 since the Company has determined that it is probable that the consummation of the Proposed Transaction will occur based on the outcome of the special meeting of stockholders held on April 24, 2013 to vote on matters relating to the Proposed Transaction (See Note 16).



10
MetroPCS Communications, Inc. and Subsidiaries
Notes to Condensed Consolidated Interim Financial Statements
(Unaudited)

Senior Secured Credit Facility
In November 2006, Wireless entered into the senior secured credit facility, which consisted of a $1.6 billion term loan facility and a $100.0 million revolving credit facility. The term loan facility was repayable in quarterly installments in annual aggregate amounts equal to 1% of the initial aggregate principal amount of $1.6 billion.
In July 2010, Wireless entered into an Amendment and Restatement and Resignation and Appointment Agreement (the “Amendment”) which amended and restated the senior secured credit facility to, among other things, extend the maturity of $1.0 billion of existing term loans (“Tranche B-2 Term Loans”) under the senior secured credit facility to November 2016, increase the interest rate to LIBOR plus 3.50% on the extended portion only and reduce the revolving credit facility from $100.0 million to $67.5 million. The remaining term loans (“Tranche B-1 Term Loans”) under the senior secured credit facility were to mature in November 2013 and the interest rate continued to be LIBOR plus 2.25%. This modification did not result in a loss on extinguishment of debt.
In March 2011, Wireless entered into an Amendment and Restatement Agreement (the “New Amendment”) which further amended and restated the Senior Secured Credit Facility. The New Amendment amended the Senior Secured Credit Facility to, among other things, provide for a new tranche of term loans in the amount of $500.0 million (“Tranche B-3 Term Loans”), with an interest rate of LIBOR plus 3.75% which will mature in March 2018, and increase the interest rate to LIBOR plus 3.821% on the existing Tranche B-1 Term Loans and Tranche B-2 Term Loans. The Tranche B-3 Term Loans are repayable in quarterly installments of $1.25 million. In addition, the aggregate amount of the revolving credit facility was increased from $67.5 million to $100.0 million and the maturity of the revolving credit facility was extended to March 2016. The net proceeds from the Tranche B-3 Term Loans were $490.2 million after underwriter fees, discounts and other debt issuance costs of approximately $9.8 million.
The New Amendment also modified certain limitations under the Senior Secured Credit Facility, including limitations on Wireless' ability to incur additional debt, make certain restricted payments, sell assets, make certain investments or acquisitions, grant liens and pay dividends. In addition, Wireless is no longer subject to certain financial covenants, including maintaining a maximum senior secured consolidated leverage ratio, except under certain circumstances.Capital Leases

In May 2011, Wireless entered into an Incremental Commitment Agreement (the “Incremental Agreement”) which supplements the Senior Secured Credit Facility to provide for an additional $1.0 billion of Tranche B-3 Term Loans (the “Incremental Tranche B-3 Terms Loans”). The Incremental Tranche B-3 Term Loans have an interest rate of LIBOR plus 3.75% and will mature in March 2018. The Incremental Tranche B-3 Term Loans are repayable in quarterly installments of $2.5 million. A portion of the proceeds from the Incremental Tranche B-3 Term Loans was used to prepay the $535.8 million in outstanding principal under the Tranche B-1 Term Loans, with the remaining proceeds to be used for general corporate purposes, including opportunistic spectrum acquisitions. The net proceeds from the Incremental Tranche B-3 Term Loans were $455.5 million after prepayment of the Tranche B-1 Term Loans, underwriter fees, and other debt issuance costs of approximately $7.9 million. The prepayment of the Tranche B-1 Term Loans resulted in a loss on extinguishment of debt in the amount of $9.5 million. The Incremental Agreement did not modify the interest rate, maturity date or any of the other terms of the Senior Secured Credit Facility applicable to the Tranche B-2 Term Loans or the existing Tranche B-3 Term Loans.
The facilities under the Senior Secured Credit Facility are guaranteed by MetroPCS, MetroPCS, Inc. and each of Wireless’ direct and indirect present and future wholly-owned domestic subsidiaries. The Senior Secured Credit Facility contains customary events of default, including cross-defaults. The obligations under the Senior Secured Credit Facility are also secured by the capital stock of Wireless as well as substantially all of Wireless’ present and future assets and the capital stock and substantially all of the assets of each of its direct and indirect present and future wholly-owned subsidiaries (except as prohibited by law and certain permitted exceptions).

The interest rate on the outstanding debt under the Senior Secured Credit Facility is variable. The weighted average rate as of March 31, 2013 was 4.631%, which includes the impact of the interest rate protection agreements (See Note 5).

The Senior Secured Credit Facility, related deferred debt issuance costs and liabilities under related interest rate protectionCapital lease agreements are classified as short-term on the accompanying condensed consolidated balance sheet as of March 31, 2013 since the Company has determined that it is probable that the consummation of the Proposed Transaction will occur based on the outcome of the special meeting of stockholders held on April 24, 2013 to vote on matters relating to the Proposed Transaction (See Note 16). In addition, under the terms of the Senior Secured Credit Facility, all amounts outstanding under the Senior Secured Credit Facility become due and payable upon the occurrence of a change in control.

11
MetroPCS Communications, Inc. and Subsidiaries
Notes to Condensed Consolidated Interim Financial Statements
(Unaudited)


Capital Lease Obligations

The Company has entered into various non-cancelable capital lease agreements,primarily for distributed antenna systems, with varying expiration terms through 2028.2028. Assets and future obligations related to capital leases are included in the accompanying condensed consolidated balance sheets in property and equipment, short-term debt and long-term debt, respectively. Depreciation of assets held under capital leases is included in depreciation and amortization expense. As of MarchDecember 31, 2012, capital lease obligations were not significant. Future minimum payments required under capital leases, including interest over their remaining terms for the twelve months ended June 30 were $40 million in 2014, $41 million in 2015, $42 million in 2016, $42 million in 2017, $43 million in 2018, and $315 million thereafter, for a total of $523 million, including $164 million in interest.

Short-term Debt

The Company maintains a vendor financing arrangement with one of its primary network equipment suppliers. Under the amended agreement, the Company can obtain extended financing terms with a maximum balance outstanding under the facility of $750 million. The interest rate on the vendor financing arrangement is determined based on the difference between LIBOR and a specified margin per the agreement. Obligations under the vendor financing arrangement are included in short-term debt. As of June 30, 2013, the Company hadoutstanding balance was $11.9193 million and. As of $312.6 millionDecember 31, 2012, there was no of capital lease obligations recorded in current maturities of long-term debt and long-term debt, respectively.outstanding balance.
9.Accumulated Other Comprehensive Loss:
The following table sets forth the changes in accumulated other comprehensive loss (in thousands):
  Losses on Cash Flow Hedging Derivatives (1) Unrealized Gains on Available-for-Sale Securities (1) Total (1)
Balance at December 31, 2012 $(9,812) $210
 $(9,602)
  Other comprehensive (loss) income before reclassifications (115) 6
 (109)
  Amounts reclassified from accumulated other comprehensive income (loss) 2,225
 (85) 2,140
  Net current-period other comprehensive income (loss) 2,110
 (79) 2,031
Balance at March 31, 2013 (7,702) 131
 (7,571)
 ————————————
(1)All amounts are net of income tax.
Reclassifications out of accumulated other comprehensive loss for the three months endedMarch 31, 2013 are as follows (in thousands):
Details about Accumulated Other Comprehensive Income Components Amount Reclassified from Accumulated Other Comprehensive Income Affected Line Item in the Statement Where Net Income Is Presented
     
Losses on cash flow hedging derivatives    
  Interest rate protection agreements $3,603
 Interest expense
  3,603
 Total before tax
  (1,378) Tax benefit
  2,225
 Net of tax
     
Unrealized gains on available-for-sale securities    
  $(138) Interest income
  (138) Total before tax
  53
 Tax expense
  $(85) Net of tax
     
Total reclassifications for the period $2,140
  
10.Fair Value Measurements:
The Company follows the provisions of ASC 820 (Topic 820, “Fair Value Measurements and Disclosures”) which establishes a three-tiered fair value hierarchy that prioritizes inputs to valuation techniques used in fair value calculations. The three levels of inputs are defined as follows:

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MetroPCS Communications, Inc. and Subsidiaries
Notes to Condensed Consolidated Interim Financial Statements
(Unaudited)Table of Contents


Fair Value of Long-term Notes Payable to Affiliates and Debt

The fair value of the Company's notes payable to affiliates was determined based on a discounted cash flow approach which considers the future cash flows discounted at current rates. The approach includes an estimate for the stand-alone credit risk of T-Mobile. The Company's notes payable to affiliates are classified as Level 1 - Unadjusted2 in the fair value hierarchy. The fair value of the Company's long-term debt was determined based on quoted market prices for identical assets or liabilities in active markets, that the Company has the ability to access.
Level 2 - Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in inactive markets; or valuations based on models where the significant inputs are observable (e.g., interest rates, yield curves, prepayment speeds, default rates, loss severities, etc.) or can be corroborated by observable market data.
Level 3 - Valuations based on models where significant inputs are not observable. The unobservable inputs reflect the Company’s own assumptions about the assumptions that market participants would use.
ASC 820 requires the Company to maximize the use of observable inputs and minimize the use of unobservable inputs. If a financial instrument uses inputs that fall in different levels of the hierarchy, the instrument will be categorized based upon the lowest level of input that is significant to the fair value calculation. The Company’s financial assets and liabilities measured at fair value on a recurring basis include cash and cash equivalents, short and long-term investments securities and derivative financial instruments.
Included in the Company’s cash equivalents and restricted cash are investments in money market funds consisting of U.S. Treasury securities with an original maturity of 90 days or less. Included in the Company’s short-term investments are securities classified as available-for-sale, which are stated at fair value. These securities include U.S. Treasury securities with an original maturity of over 90 days. Fair value is determined based on observable quotes from banks and unadjusted quoted market prices from identical securities in an active market at the reporting date. Quoted market prices for identical assets are observable in the active markets andtherefore are classified as Level 1 in the fair value hierarchy. The fair value hierarchy is described in Note 6 – Fair Value Measurements and Derivative Instruments.
Included in the Company’s long-term investments are certain auction rate securities, some of which are secured by collateralized debt obligations with a portion
The carrying amounts and fair values of the underlying collateral being mortgage securities or relatedCompany's notes payable to mortgage securities. Due to the lack of availability of observable market quotes on the Company’s investment portfolio of auction rate securities, the fair value was estimated based on valuation models that rely exclusively on unobservable Level 3 inputs including those that are based on expected cash flow streamsaffiliates and collateral values, including assessments of counterparty credit quality, default risk underlying the security, discount rates and overall capital market liquidity. The valuation of the Company’s investment portfolio is subject to uncertainties that are difficult to predict. Factors that may impact the Company’s valuation include changes to credit ratings of the securitieslong-term debt were as well as the underlying assets supporting those securities, rates of default of the underlying assets, underlying collateral values, discount rates, counterparty risk and ongoing strength and quality of market credit and liquidity. Significant inputs to the investments valuation are unobservable in the active markets and are classified as Level 3 in the hierarchy.
Included in the Company’s derivative financial instruments are interest rate swaps. Derivative financial instruments are valued in the market using discounted cash flow techniques. These techniques incorporate inputs such as interest rates. These market inputs are utilized in the discounted cash flow calculation considering the instrument’s term, notional amount, discount rate and credit risk. Significant inputs to the derivative valuation for interest rate swaps are observable in the active markets and are classified as Level 2 in the hierarchy.
The following table summarizes assets and liabilities measured at fair value on a recurring basis at March 31, 2013, as required by ASC 820 (in thousands):follows:
  Fair Value Measurements
  Level 1 Level 2 Level 3 Total
Assets        
Cash equivalents $2,695,894
 $—
 $—
 $2,695,894
Short-term restricted cash 3,475,417
 —
 —
 3,475,417
Long-term restricted cash and investments 4,929
 —
 —
 4,929
Long-term investments —
 —
 1,679
 1,679
Total assets measured at fair value $6,176,240
 $—
 $1,679
 $6,177,919
Liabilities 
 
 
 
Derivative liabilities $—
 $12,594
 $—
 $12,594
Total liabilities measured at fair value $—
 $12,594
 $—
 $12,594

13
MetroPCS Communications, Inc. and Subsidiaries
Notes to Condensed Consolidated Interim Financial Statements
(Unaudited)

The following table summarizes assets and liabilities measured at fair value on a recurring basis at December 31, 2012, as required by ASC 820 (in thousands):
  Fair Value Measurements
  Level 1 Level 2 Level 3 Total
Assets        
Cash equivalents $2,364,391
 $—
 $—
 $2,364,391
Short-term investments 244,990
 —
 —
 244,990
Long-term restricted cash and investments 4,929
 —
 —
 4,929
Long-term investments —
 —
 1,679
 1,679
Total assets measured at fair value $2,614,310
 $—
 $1,679
 $2,615,989
Liabilities 
 
 
 
Derivative liabilities $—
 $16,011
 $—
 $16,011
Total liabilities measured at fair value $—
 $16,011
 $—
 $16,011
 June 30, 2013 December 31, 2012
(in millions)Carrying Amount Fair Value Carrying Amount Fair Value
Notes payables to affiliates$11,200
 $10,764
 $14,945
 $14,721
Long-term debt excluding capital leases5,934
 5,661
 —
 —

The following table summarizes the changes in fair value of the Company’s net derivative liabilities included in Level 2 assets (in thousands):
Fair Value Measurements of Net Derivative Liabilities Using Level 2 Inputs Net Derivative Liabilities
  Three Months Ended March 31,
  2013 2012
Beginning balance $16,011
 $21,015
Total losses (realized or unrealized): 
 
Included in earnings (1) 3,603
 4,336
Included in accumulated other comprehensive loss (186) (4,705)
Transfers in and/or out of Level 2 —
 —
Purchases, sales, issuances and settlements —
 —
Ending balance $12,594
 $21,384
 ————————————
(1)Losses included in earnings that are attributable to the reclassification of the effective portion of those derivative liabilities still held at the reporting date as reported in interest expense in the condensed consolidated statements of income and comprehensive income.
The following table summarizes the changes in fair value of the Company’s Level 3 assets (in thousands):
Fair Value Measurements of Assets Using Level 3 Inputs Investments
  Three Months Ended March 31,
  2013 2012
Beginning balance $1,679
 $6,319
Total losses (realized or unrealized): 
 
Included in earnings —
 —
Included in accumulated other comprehensive loss —
 —
Transfers in and/or out of Level 3 —
 —
Purchases, sales, issuances and settlements —
 —
Ending balance $1,679
 $6,319

The carrying value of the Company’s financial instruments, with the exception of long-term debt including current maturities, reasonably approximate the related fair values as of March 31, 2013 and December 31, 2012. The fair value of the Company’s long-term debt, excluding capital lease obligations, is estimated based on the quoted market prices for the same or similar issues or on the current rates offered to the Company for debt of the same remaining maturities. As of March 31, 2013, the carrying value and fair value of long-term debt, including current maturities, were approximately $7.9 billion and $8.1 billion, respectively. As of December 31, 2012, the carrying value and fair value of long-term debt, including current maturities, were approximately $4.4 billion and $4.6 billion, respectively.

14
MetroPCS Communications, Inc. and Subsidiaries
Notes to Condensed Consolidated Interim Financial Statements
(Unaudited)

Although the Company has determined the estimated fair value amounts using available market information and commonly accepted valuation methodologies, considerable judgment is required in interpreting market data to develop fair value estimates. The fair value estimates are generally based on information available at March 31,June 30, 2013 and December 31, 2012. As such, the Company’sCompany's estimates are not necessarily indicative of the amount that the Company or holders of the instruments, could realize in a current market exchange and current estimates of fair value could differ significantly.exchange.

11.8.Net Income Per Common Share:Stock-Based Compensation

Stock Awards

During the second quarter of 2013, the Company's Board of Directors and stockholders approved the 2013 Omnibus Incentive Plan, which authorized the issuance of up to 63 million shares of common stock. Under the incentive plan, the Company may grant stock options, stock appreciation rights, restricted stock, restricted stock units, and performance awards to employees, consultants, advisors and non-employee directors. As of June 30, 2013, there were 40 million shares of common stock available for future grants under the incentive plan.

In June 2013, the Company granted restricted stock units (“RSUs”) to eligible employees and certain non-employee directors. RSUs entitle the grantee to receive shares of T-Mobile common stock at the end of a vesting period of one to four years. The following table sets forth the computationCompany recognized stock-based compensation expense of basic$6 million and diluted netrelated income per common sharetax benefits of $3 million for the periods indicated (in thousands, except sharethree and per share data):
  Three Months Ended March 31,
  2013 2012
Basic EPS:    
Net income applicable to common stock $19,396
 $21,004
Amount allocable to common shareholders 99.6% 99.2%
Rights to undistributed earnings $19,309
 $20,844
Weighted average shares outstanding—basic 364,999,137
 362,718,613
Net income per common share—basic $0.05
 $0.06
Diluted EPS: 
 
Rights to undistributed earnings $19,309
 $20,844
Weighted average shares outstanding—basic 364,999,137
 362,718,613
Effect of dilutive securities: 
 
Stock options 1,557,232
 1,564,547
Weighted average shares outstanding—diluted 366,556,369
 364,283,160
Net income per common share—diluted $0.05
 $0.06
In accordance with ASC 260 (Topic 260, “Earnings Per Share”), unvested share-based payment awards that contain rights to receive non-forfeitable dividends or dividend equivalents, whether paid or unpaid, are considered a “participating security” for purposes of computing earnings or loss per common share and the two-class method of computing earnings per share is required for all periods presented. Under certain of the Company's restricted stock award agreements, unvested shares of restricted stock have rights to receive non-forfeitable dividends. In accordance with ASC 260, those unvested restricted stock awards are considered a “participating security” for purposes of computing earnings per common share and are therefore included in the computation of basic and diluted earnings per common share.
For the threesix months ended March 31, 2013 and 2012, the Company has calculated diluted earnings per share under both the treasury stock method and the two-class method. There was not a significant difference in the per share amounts calculated under the two methods, and the two-class method is disclosed. For the three months endedMarch 31, 2013 and 2012, approximately 1.6 million and 2.8 million of restricted common shares issued to employees have been excluded from the computation of basic net income per common share since the shares are not vested and remain subject to forfeiture.
For the three months endedMarch 31, 2013 and 2012, 27.4 million and 24.2 million, respectively, of stock options were excluded from the calculation of diluted net income per common share since the effect was anti-dilutive.
12.Commitments and Contingencies:

The Company has entered into a broadband services agreement with a carrier for backhaul and interconnect facilities at specified prices. The term of this agreement expires on various dates through March 31, 2018. The minimum commitment under this pricing agreement is approximately $161.2 million as of March 31, 2013.
The Company has entered into sponsorship agreements with several vendors. The terms of these agreements expire on various dates through SeptemberJune 30, 2017. The total aggregate commitment outstanding under these agreements is approximately $23.5 million as of March 31, 2013.

15
MetroPCS Communications, Inc. and Subsidiaries
Notes to Condensed Consolidated Interim Financial Statements
(Unaudited)

The Company has entered into managed service agreements with several vendors. The terms of these agreements expire on various dates through September 30, 2017. The total aggregate commitment outstanding under these agreements is approximately $16.6 million as of March 31, 2013.

Pricing AgreementsThe following activity occurred under our stock-based compensation plans:
 Shares Weighted Average Grant-Date Fair Value
Nonvested, December 31, 2012—
 $—
Granted23,138,717
 21.20
Vested—
 —
Forfeited(227,226) 21.20
Nonvested, June 30, 201322,911,491
 $21.20

As of June 30, 2013, total unrecognized stock-based compensation expense related to nonvested RSUs, net of estimated forfeitures, was $378 million, before income taxes, and is expected to be recognized over a weighted-average period of 2.7 years.

In June 2013, the Company also granted performance stock units (“PSUs”) to eligible key executives of the Company. PSUs entitle the holder to receive shares of T-Mobile common stock at the end of a vesting period if certain performance goals are achieved. However, as the performance goals were not yet specified as of June 30, 2013, the PSUs were not considered granted for accounting purposes. Accordingly, no activity for the PSUs were included in the stock-based compensation disclosures.


17
Table of Contents

Stock Options

Prior to the business combination, MetroPCS, had established the MetroPCS Communications, Inc. 2010 Equity Incentive Compensation Plan, the MetroPCS Communications, Inc. Amended and Restated 2004 Equity Incentive Compensation Plan and the Second Amended and Restated 1995 Stock Option Plan (“Predecessor Plans”). The MetroPCS stock options were adjusted in connection with the business combination. See Note 2 – Transaction with MetroPCS for further information. Following stockholder approval of the Company's 2013 Omnibus Incentive Plan, no new awards will be granted under the Predecessor Plans.

For the period from May 1, 2013 through June 30, 2013, 6,245,923 stock options with a weighted-average exercise price of $11.61 were exercised under the Predecessor Plans, generating proceeds of approximately $72 million and tax expense of $1 million. At June 30, 2013, 10,350,598 stock options with a weighted-average exercise price of $24.63 and weighted-average contractual life of 4.3 years remain outstanding and exercisable under the Predecessor Plans.

9.Income Taxes

The Company entered into a pricing agreement with a handset manufacturereffective income tax rate was 395.2% and 39.7% for the purchasethree months endedJune 30, 2013 and 2012, respectively, and 50.5% and 39.0% for the six months endedJune 30, 2013 and 2012, respectively. For the three and six months endedJune 30, 2013, T-Mobile's effective income tax rate differs from the statutory federal rate of wireless handsets at specified prices. This agreement expires35% primarily due to non-deductible costs recorded in 2013 and the cumulative impact of 2013 Puerto Rico statutory rate changes retroactive to the beginning of the year. For the three and six months endedJune 30, 2012, the effective income tax rate differed from the statutory federal rate of 35% primarily due to state and foreign taxes.

Income tax expense was $21 million and $135 million for the three months endedJune 30, 2013 and 2012, respectively, and $93 million and $260 million for the six months endedJune 30, 2013 and 2012, respectively. The decrease in income tax expense for the three and six months endedJune 30, 2013 compared to the same period in 2012 was primarily due to lower pre-tax book income.

10.Related Party Transactions

T-Mobile has obtained funding from Deutsche Telekom or its affiliates to meet certain capital expenditure and other obligations. Prior to the closing of the business combination, Deutsche Telekom recapitalized T-Mobile by retiring T-Mobile's notes payable to affiliates principal balance and all related derivative instruments in exchange for new unsecured senior notes and additional paid-in capital provided by Deutsche Telekom. In connection with the debt recapitalization, other outstanding balances with Deutsche Telekom were settled. See Note 2 – Transaction with MetroPCS for further information regarding the business combination and the effects on additional paid-in capital as a result of the debt recapitalization and the settlement of the other outstanding balances with Deutsche Telekom.

Additionally, T-Mobile has related party transactions associated with Deutsche Telekom or its affiliates in the ordinary course of business, which are included in various line items in the condensed consolidated financial statements.

The following table summarizes the significant balances with Deutsche Telekom or its affiliates in the condensed consolidated balance sheets:
(in millions)June 30,
2013		 December 31,
2012
Assets   
Accounts receivable from affiliates$33
 $682
Interest rate swaps—
 106
Cross currency interest rate swaps—
 144
    
Liabilities   
Current payables to affiliates$226
 $1,619
Long-term payables to affiliates11,200
 13,655


18
Table of Contents

The following table summarizes the impact of significant transactions with Deutsche Telekom or its affiliates on the condensed consolidated statements of comprehensive income (loss):
 Three Months Ended June 30, Six Months Ended June 30,
(in millions)2013 2012 2013 2012
Fees incurred for use of the T-Mobile brand$12
 $12
 $25
 $25
Expenses for telecommunications and IT services23
 36
 50
 71
Interest expense to affiliates225
 151
 403
 322
Net loss recorded in other comprehensive income (loss)(38) (30) (39) (4)

Lines of Credit

T-Mobile has an unsecured revolving credit facility with Deutsche Telekom that allows for up to $500 million in borrowings. T-Mobile had no borrowings outstanding under this facility as of June 30, 2013. The totalOn March 29, 2013, T-Mobile amended and restated its credit agreement with U.S. Bank National Association that allows for the issuance of letters of credit in the aggregate commitment outstanding under this pricing agreement is approximatelyamount of $14.8100 million asthrough June 30, 2014.  For the purposes of securing T-Mobile's obligation under the credit agreement, Deutsche Telekom issued a letter of credit on T-Mobile's behalf.

11.March 31, 2013.Commitments and Contingencies

Operating Leases

T-Mobile has operating leases with local exchange carriers for dedicated transportation lines with varying expiration terms through 2021.

T-Mobile has other operating leases for cell sites, switch sites, retail stores and office facilities with contractual terms expiring between 2013 and 2028. The majority of cell site leases have an initial term of five years to 10 years, with renewal options for several additional five-year periods. The Company considers unexercised renewal options on leases as being reasonably assured of exercise, and thus included in future minimum lease payments for a total term of approximately 15 years from inception or acquisition of the lease.

Future minimum payments for dedicated transportation lines and other operating leases over their remaining terms, including reasonably assured renewals, are summarized below:
(in millions)Dedicated Transportation Lines Other Operating Leases
Twelve months ending June 30,   
2014$257
 $1,942
2015173
 1,914
201692
 1,865
201748
 1,796
201821
 1,653
Thereafter5
 5,881
Total$596
 $15,051

Aggregate rental expense for transportation lines under operating leases was $144 million and $143 million for the three months endedJune 30, 2013 and 2012, respectively, and $266 million and $291 million for the six months endedJune 30, 2013 and 2012, respectively. Aggregate rental expense for cell sites, switch sites, retail stores and office facilities, including accounting for lease expense on a straight line basis, was $533 million and $447 million for the three months endedJune 30, 2013 and 2012, respectively, and $1.0 billion and $883 million for the six months endedJune 30, 2013 and 2012, respectively.

Other Commitments

T-Mobile has commitments with local exchange carriers for non-dedicated transportation lines with varying expiration terms through 2021. The original terms of these commitments vary from five years up to ten years. Additionally, the Company has entered into various other commitments with a variety of suppliers primarily to purchase handsets, network services, equipment, software, marketing sponsorship agreements and other items in the ordinary course of business, with various terms,

19
Table of Contents

through 2018. These amounts are not reflective of the Company's entire anticipated purchases under the related agreements, but are determined based on the non-cancelable quantities or termination amounts to which the Company was contractually obligated. Additionally, in the second quarter of 2013, T-Mobile entered into a purchase agreement with United States Cellular Corporation (“U.S. Cellular”) for the transfer of Advanced Wireless Spectrum (“AWS”) spectrum for $308 million in cash, which was included in Other Purchase Commitments below.

Future minimum payments for non-dedicated transportation lines and other purchase commitments over their remaining terms, are summarized below:
(in millions)Non-Dedicated Transportation Lines Other Purchase Commitments
Twelve months ending June 30,   
2014$609
 $1,336
2015583
 330
2016554
 137
2017466
 2,345
2018240
 40
Thereafter195
 —
Total$2,647
 $4,188

Contingencies and Litigation

The CompanyT-Mobile is involved in litigation from time to time, including litigation regarding intellectual property claims, that it considers to be in the normal course of business. Legal proceedings are inherently unpredictable, and the legal proceedings in which the Company is involved often present complex legal and factual issues. The Company intends to vigorously defend against litigation in which it is involved and, where appropriate, engage in discussions to resolve these legal proceedings on terms favorable to the Company. The Company believes that any amounts which parties to such litigation allege it is liable for are not necessarily meaningful indicators of potential liability or any relief, such as injunctive relief, which parties to such litigation seek, are not necessarily meaningful indicators whether such relief will be granted. The Company determines whether it should accrue an estimated loss for a contingency in a particular legal proceeding by assessing whether a loss is probable and can be reasonably estimated. The Company reassesses its views on estimated losses on a quarterly basis to reflect the impact of any developments in the legal proceedings in which it is involved. It is possible, however, that the business, financial condition, results of operations, and liquidity in future periods could be materially adversely affected by increased expenses, including legal and litigation expenses, significant settlement costs, relief granted or agreed to, and/or unfavorable damage awards relating to such legal proceedings. Other than the matters listed below the Company is not currently party to any pending legal proceedings that it believes could, individually or in the aggregate, have a material adverse effect on the business, financial condition, results of operations or liquidity.

Since the announcement on October 3, 2012 of the execution of the Business Combination Agreement, MetroPCS, Deutsche Telekom, T-Mobile Global, T-Mobile Holding, T-Mobile (Deutsche Telekom, T-Mobile Global, T-Mobile Holding and T-Mobile, collectively, referred to herein as the T-Mobile defendants) and the members of the MetroPCS board, referred to as the MetroPCS board members, including an officer of MetroPCS and in some cases, Deutsche Telekom and its affilitates, have been named as defendants in multiplesix putative stockholder derivative and class action complaintslawsuits challenging the Proposed Transaction. Thebusiness combination with MetroPCS. These lawsuits include:

a putative class action lawsuit filed by Paul Benn, an alleged MetroPCS stockholder, on October 11, 2012 in the Delaware Court of Chancery, Paul Benn v. MetroPCS Communications, Inc. et al., Case No. C.A. 7938-CS referred to as the Benn action;

a putative class action lawsuit filed by Joseph Marino, an alleged MetroPCS stockholder, on October 11, 2012 in the Delaware Court of Chancery, Chancery;
Joseph Marino v. MetroPCS Communications, Inc. et al., Case No. C.A. 7940-CS referred to as the Marino action;

a putative class action lawsuit filed by Robert Picheny, an alleged MetroPCS stockholder, on October 22,11, 2012 in the Delaware Court of Chancery, Chancery;
Robert Picheny v. MetroPCS Communications, Inc. et al., Case No. C.A. 7971-CS referred to as the Picheny action;

a putative class action filed by James S. McLearie, an alleged MetroPCS stockholder, on November 5,October 22, 2012 in the Delaware Court of Chancery, Chancery;
James McLearie v. MetroPCS Communications, Inc. et al., Case No. C.A. 8009-CS referred to as the McLearie action, and together with the Benn action, the Marino action and the Picheny action, the Delaware actions;

a putative class action and shareholder derivative action filed by Adam Golovoy, an alleged MetroPCS stockholder, on October 10,November 5, 2012 in the Dallas, Texas CountyDelaware Court at Law, of Chancery;
Adam Golovoy et al. v. Deutsche Telekom et al., Cause No. CC-12-06144-A referred to as the Golovoy action; and


16
MetroPCS Communications, Inc. and Subsidiaries
Notes to Condensed Consolidated Interim Financial Statements
(Unaudited)

a putative class action and shareholder derivative action filed by Nagendra Polu and Fred Lorquet, who are alleged MetroPCS stockholders, on October 10, 2012 in the Dallas, Texas County Court at Law, Law; and
Nagendra Polu et al. v. Deutsche Telekom et al., Cause No. CC-12-06170-E referred to asfiled on October 10, 2012 in the Polu action, and together with the Golovoy action, theDallas, Texas actions.County Court at Law.

The various plaintiffs in the lawsuits allege that the individualvarious defendants breached their fiduciary duties, by, among other things, failingor aided and abetted in the alleged breach of fiduciary duties, to (i) obtain sufficient value for the MetroPCS stockholders inby entering into the Proposed Transaction, (ii) establish a process that adequately protected the interests of the MetroPCS stockholders, and (iii) adequately ensure that no conflicts of interest occurred. The plaintiffs also allege that the individual defendants breached their fiduciary duties by agreeing to certain terms in the Business Combination Agreement that allegedly restricted the defendants' ability to obtain a more favorable offer from a competing bidder and that such provisions, together with including certain of the provisions together with the voting support agreement and the rights agreement amendment constitute breaches of the individual defendants' fiduciary duties. The plaintiffs seek injunctive relief, unspecified damages, an order rescinding the Business Combination Agreement, unspecified punitive damages, attorney's fees, other expenses, and costs. All of the plaintiffs seek a determination that their alleged claims may be asserted on a class-wide basis.transaction. In addition, the plaintiffs in the Texas actions assert putative derivative claims, as stockholders on behalf of MetroPCS, against the individually named defendants for breach of fiduciary duty, abuse of control, gross mismanagement, unjust enrichment and corporate waste in connection with the Proposed Transaction.

In addition, an action was filed on March 28, 2013, by The Merger Fund, The Merger Fund VL, GS Master Trust, MLIS Westchester merger Arbitrage UCITS Fund,another lawsuit challenging the transaction and Dunham Monthly Distribution Fund, allegedrelated disclosures, and alleging breaches of fiduciary duty to MetroPCS stockholders,shareholders was filed in the United StatesU.S. District Court infor the Southern District of New York entitled The Merger Fund et al. v. MetroPCS Communications, Inc. et al., Civil Action No. 13-CV-2066 (AJN), which the Company refersT-Mobile intends to as the New York Action, alleging: (a) violationsdefend these lawsuits vigorously and does not expect resolution of Sections 14(a) and 20(a)these matters to have a material adverse effect on T-Mobile's financial position, results of the Exchange Act and SEC Rule 14a-9 by misstatingoperations or omitting material facts from the MetroPCS proxy statement; and (b) that certain members of the Company's board of directors breached their fiduciary duties. The plaintiffs seek injunctive relief, an order rescinding the Proposed Transaction if it is consummated, unspecified damages, and costs of the litigation.

On November 5, 2012, the plaintiff in the Golovoy action filed a motion seeking to restrain and enjoin MetroPCS and the MetroPCS board members, referred to collectively as the MetroPCS defendants, from complying with the “force-the-vote” provision in the Business Combination Agreement and from declaring a distribution date under, or issuing rights certificates in conjunction with, MetroPCS' rights agreement, referred to as the Texas TRO motion. On November 12, 2012, the MetroPCS defendants filed a motion to dismiss or stay the Texas actions based on a mandatory forum selection provision in the MetroPCS bylaws, which requires that all derivative claims and all claims for breach of fiduciary duty against the MetroPCS board members must be filed and litigated only in the Delaware Court of Chancery, and sought dismissal for failure to plead standing to pursue derivative claims on behalf of MetroPCS.

On November 16, 2012, the trial court in the Golovoy action, referred to as the Texas trial court, issued a temporary restraining order, which the Company refers to as the TRO order, restraining the MetroPCS defendants from complying with the “force the vote” provision in the Business Combination Agreement and from declaring a distribution date under, or issuing rights certificates in conjunction with, MetroPCS' rights agreement, and set a temporary injunction hearing for November 29, 2012.

On November 19, 2012, the MetroPCS defendants and the T-Mobile defendants filed a petition for writ of mandamus and a motion to stay, referred to as the Texas mandamus petition, with the Court of Appeals for the Fifth District at Dallas, referred to as the Texas appellate court, to stay and overturn the TRO order based on the mandatory forum selection provision in the MetroPCS bylaws, which requires that the claims in the Texas actions must be dismissed and pursued only in the Delaware Court of Chancery, and on a lack of evidence supporting the findings in the TRO order or establishing a basis for such TRO order, and to stay the temporary injunction hearing. On November 20, 2012, the Texas appellate court stayed the Texas trial court's ruling, canceled the scheduled temporary injunction hearing, and ordered briefing on the issues raised in the petition for writ of mandamus.

On November 28, 2012, the plaintiff in the Marino action filed an amended class action complaint alleging breach of fiduciary duty by the MetroPCS board members in connection with the terms of the Business Combination Agreement, as well as alleging that MetroPCS has failed to make full and fair disclosure in the Company's preliminary proxy, for the special meeting of its stockholders to approve the Proposed Transaction, of all information and analyses presented to and considered by the MetroPCS board members, and alleging that the T-Mobile defendants aided and abetted such claimed breaches of fiduciary duty, and motions seeking expedited proceeding and discovery and to enjoin the defendants from taking any action to

17
MetroPCS Communications, Inc. and Subsidiaries
Notes to Condensed Consolidated Interim Financial Statements
(Unaudited)

consummate the business combination between MetroPCS and the T-Mobile defendants. No hearing has been set on these motions. On November 30, 2012, all of the Delaware actions were consolidated into a single action, now captioned MetroPCS Communications, Inc. Shareholder Litigation, Consolidated C.A. No. 7938-CS. The Company and the plaintiffs in the Marino action entered into a discovery stipulation under which the Company produced certain documents by January 25, 2013 and the plaintiff conducted depositions of a corporate representative of Evercore Group, L.L.C., or Evercore, the Chairman of the Special Committee and our Chief Executive Officer, which depositions were completed by February 14, 2013.  The Delaware Court of Chancery had set the preliminary injunction hearing on February 28, 2013, with plaintiffs' brief due on February 15, 2013.  On February 15, 2013, rather than file their brief, plaintiffs sent a letter to the Delaware Court of Chancery notifying the Court that plaintiffs did not intend to file a brief, that their disclosure claims had become moot based on revised proxy materials MetroPCS had filed with the SEC which contained additional disclosure, and that the preliminary injunction hearing should be removed from the Court's docket. cash flows.

On January 8, 2013,T-Mobile and its subsidiaries are involved in numerous lawsuits, regulatory proceedings, and other similar matters, including class actions and intellectual property claims, that arise in the Texas appellate court conditionally grantedordinary course of business. Legal proceedings are inherently unpredictable, and often present complex legal and factual issues and can include claims for large amounts of damages.  In T-Mobile's opinion at this time, these proceedings (individually and in the Texas mandamus petitionaggregate) should not have a material adverse effect on T-Mobile's financial position, results of operations or cash flows. These statements are based on T-Mobile's current understanding and orderedassessment of relevant facts and circumstances. As such, T-Mobile's view of these matters is subject to inherent uncertainties and may change in the Texas trial court to vacate the TRO order, render an order denying the Texas TRO motion, and render an order granting the MetroPCS defendants' and T-Mobile defendants' motion to stay the action until MetroPCS defendants' and T-Mobile defendants' motion to dismiss or stay the action is decided by the Texas trial court. A hearing is currently set on such motion for May 3, 2013.future.

On March 4, 2013, the trial court in the Polu action set a non-jury trial date of July 24, 2013. The Company has set a hearing on the Company's motion to dismiss the Polu action for June 7, 2013.

On April 15, 2013, the trial court in the New York action entered an order requiring plaintiffs to submit a status letter by May 12, 2013. On April 18, 2013, Defendants, while not admitting proper service, moved the Court to extend the deadline to answer, plead or otherwise respond to the Complaint from April 19, 2013 to May 20, 2013. That motion was granted on April 19, 2013.

The MetroPCS defendants plan to defend vigorously against the claims made in the Delaware actions, New York actions and the Texas actions.
13.Supplemental Cash Flow Information:
  Three Months Ended March 31,
  2013 2012
  (in thousands)
Cash paid for interest $67,914
 $72,117
Cash paid for income taxes 678
 147
Non-cash investing and financing activities

The Company’s accrued purchases of property and equipment were $58.6 million and $72.3 million as of March 31, 2013 and 2012, respectively. Included within the Company’s accrued purchases are estimates by management for construction services received based on a percentage of completion.

Assets acquired under capital lease obligations were $5.5 million and $24.6 million for the three months endedMarch 31, 2013 and 2012, respectively.

During the three months endedMarch 31, 2012, the Company returned obsolete network infrastructure assets to one of its vendors in exchange for $6.5 million in credits towards the purchase of additional network infrastructure assets with the vendor.

During the three months endedMarch 31, 2013, the Company returned certain network infrastructure assets to one of its vendors in exchange for $40.1 million in credits towards the purchase of additional network infrastructure assets with the vendor.

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MetroPCS Communications, Inc. and Subsidiaries
Notes to Condensed Consolidated Interim Financial Statements
(Unaudited)Table of Contents

14.12.Related-Party Transactions:Guarantor Financial Information

A private equity fund affiliatedOn April 28, 2013, T-Mobile USA, Inc. (“Issuer”) issued new unsecured senior notes in an aggregate principal amount of $11.2 billion to Deutsche Telekom (“Deutsche Telekom Notes”). As described in more detail in Note 2 – Transaction with oneMetroPCS, on April 30, 2013, the transactions contemplated by the BCA, were consummated, as a result of which MetroPCS Communications, Inc. (the legal acquirer) acquired all of the Company's greater than 5% stockholders owns:
A less than 20% interestoutstanding shares of the Issuer. Also on April 30, 2013, the name of MetroPCS Communications, Inc. was changed to T-Mobile US, Inc. In addition, unsecured senior notes of $5.9 billion, including the effects of purchase accounting, were assumed by the Issuer in a company that provides services toconnection with the Company's customers, including handset insurance programs.closing of the business combination. Pursuant to the Company's agreement with this related-party,indenture and the Company bills its customers directly for these services and remitsindenture supplements governing the fees collected from its customers for these services to the related-party. In addition, the Company receives compensation for selling handsets to the related-party;
A less than 20% equity interest in a company that provides advertising services to the Company; and
A less than 60% interest in a company that provides distributed antenna systems ("DAS") leases and maintenance to wireless carriers, including the Company. These DAS leases are accounted for as capital or operating leases in the Company's financial statements. This company was no longer a related party as of April 2012 because it was no longer owned by the affiliated fund.
Transactions associated with related-parties are included in various line items in the accompanying condensed consolidated balance sheets, condensed consolidated statements of income and comprehensive income, and condensed consolidated statements of cash flows. The following tables summarize the transactions with related-parties (in millions):
  March 31,
2013		 December 31,
2012
Receivables from related-party included in other current assets $2.3
 $3.1
Payments due to related-party included in accounts payable and accrued expenses 7.6
 13.1
  Three Months Ended March 31,
  2013 2012
Fees received by the Company as compensation included in service revenues $3.6
 $2.8
Fees received by the Company as compensation included in equipment revenues 11.9
 4.6
Fees paid by the Company for services and related expenses included in cost of service —
 3.6
Fees paid by the Company for services included in selling, general and administrative expenses 2.5
 2.2
DAS equipment depreciation included in depreciation expense —
 9.6
Capital lease interest included in interest expense —
 5.2
Capital lease payments included in financing activities —
 1.4
15.Guarantor Subsidiaries:
In connection with Wireless’ 7 7/8% Senior Notes, 6 5/8% Senior Notes, 6 1/4% Senior Notes, New 6 5/8% SeniorDeutsche Telekom Notes and the Senior Secured Credit Facility, MetroPCS, together with itsMetro Notes (together the "Notes"), the Notes are fully and unconditionally guaranteed, jointly and severally, on a senior unsecured basis by T-Mobile US, Inc. (“Parent”) and certain of the Issuer's wholly owned subsidiaries MetroPCS, Inc.,(“Guarantor Subsidiaries”). The Notes are described in further detail in Note 7 – Notes Payable to Affiliates and eachDebt.

The guarantees of Wireless’ directthe Guarantor Subsidiaries are subject to release in limited circumstances only upon the occurrence of certain customary conditions. The indenture governing the Deutsche Telekom Notes contains covenants that, among other things, limit the ability of the Issuer and indirect presentthe Guarantor Subsidiaries to: incur more debt; pay dividends and future wholly-owned domestic subsidiaries (the “guarantor subsidiaries”), provided guarantees which are fullmake distributions; make certain investments; repurchase stock; create liens or other encumbrances; enter transactions with affiliates; enter into transactions that restrict dividends or distributions from subsidiaries; and unconditional as well as joint and several.merge, consolidate, or sell, or otherwise dispose of, substantially all of their assets. Certain provisions of the Senior Secured Credit Facility, and each of the indentures and the supplemental indentures relating to the 7 7/8% Senior Notes, 6 5/8% Senior Notes, 6 1/4% Senior Notes, New 6 5/8% SeniorMetro Notes restrict the ability of Wirelessthe Issuer to loan funds or make payments to MetroPCS or MetroPCS, Inc.Parent. However, Wirelessthe Issuer is allowed to make certain permitted payments to MetroPCSParent under the terms of the Senior Secured Credit Facility, and each of the indentures and the supplemental indentures relating to the 7 7/8% Senior Notes, 6 5/8% Senior Notes, 6 1/4% Senior Notes, and New 6 5/8% SeniorMetro Notes.

The following information presentsPresented below is the condensed consolidating balance sheetfinancial information as of March 31,June 30, 2013 and December 31, 2012, condensed consolidating statement of income and comprehensive income information for the three and six months ended March 31,June 30, 2013 and 2012,. As the business combination was treated as a “reverse acquisition” and the Issuer was treated as the accounting acquirer, the Issuer's historical financial statements are the historical financial statements of Parent for comparative purposes. As a result the Parent column only reflects activity in the condensed consolidating statement of cash flows informationfinancial statements presented below for periods subsequent to the three months endedMarch 31, 2013 and 2012consummation of the parent company (MetroPCS), the issuer (Wireless), and the guarantor subsidiaries. Investments in subsidiaries held by the parent company and the issuer have been presented using thebusiness combination on April 30, 2013. The equity method of accounting.accounting is used to account for ownership interests in subsidiaries, where applicable.


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Notes to Condensed Consolidated Interim Financial Statements
(Unaudited)Table of Contents

Condensed Consolidating Balance Sheet Information
As of March 31,June 30, 2013
  Parent Issuer 
Guarantor
Subsidiaries
 Eliminations Consolidated
  (in thousands)
CURRENT ASSETS:          
Cash and cash equivalents $1,032,779
 $1,667,797
 $705
 $—
 $2,701,281
Restricted cash —
 3,475,417
 —
 —
 3,475,417
Prepaid expenses 259
 1,456
 95,646
 —
 97,361
Advances to subsidiaries 712,436
 —
 —
 (712,436) —
Other current assets 60
 445,760
 52,825
 —
 498,645
Total current assets 1,745,534
 5,590,430
 149,176
 (712,436) 6,772,704
Property and equipment, net —
 933
 4,176,567
 —
 4,177,500
Investment in subsidiaries 1,653,960
 5,631,641
 —
 (7,285,601) —
FCC licenses —
 3,800
 2,560,695
 —
 2,564,495
Other assets 1,679
 115,714
 30,454
 —
 147,847
Total assets $3,401,173
 $11,342,518
 $6,916,892
 $(7,998,037) $13,662,546
CURRENT LIABILITIES:          
Advances from subsidiaries $—
 $456,868
 $255,568
 $(712,436) $—
Current maturities of long-term debt —
 2,438,355
 11,885
 —
 2,450,240
Other current liabilities —
 255,588
 483,297
 —
 738,885
Total current liabilities —
 3,150,811
 750,750
 (712,436) 3,189,125
Long-term debt, net —
 5,494,592
 312,578
 —
 5,807,170
Other long-term liabilities 9,232
 1,043,155
 221,923
 —
 1,274,310
Total liabilities 9,232
 9,688,558
 1,285,251
 (712,436) 10,270,605
STOCKHOLDERS’ EQUITY:          
Common stock 37
 —
 —
 —
 37
Other stockholders’ equity 3,391,904
 1,653,960
 5,631,641
 (7,285,601) 3,391,904
Total stockholders’ equity 3,391,941
 1,653,960
 5,631,641
 (7,285,601) 3,391,941
Total liabilities and stockholders’ equity $3,401,173
 $11,342,518
 $6,916,892
 $(7,998,037) $13,662,546
(in millions)Parent Issuer Guarantor Subsidiaries Non-Guarantor Subsidiaries Consolidating and Eliminating Adjustments Consolidated
Assets           
Current assets           
Cash and cash equivalents$1,107
 $1,021
 $93
 $141
 $—
 $2,362
Accounts receivable, net of allowances for uncollectible accounts—
 —
 2,914
 86
 —
 3,000
Accounts receivable from affiliates—
 —
 33
 —
 —
 33
Inventory—
 —
 819
 —
 —
 819
Current portion of deferred tax assets, net—
 —
 486
 15
 —
 501
Other current assets—
 4
 589
 5
 ���
 598
Total current assets1,107
 1,025
 4,934
 247
 —
 7,313
Property and equipment, net of accumulated depreciation—
 —
 14,549
 636
 —
 15,185
Goodwill—
 —
 1,683
 —
 —
 1,683
Spectrum licenses—
 —
 18,195
 220
 —
 18,415
Other intangible assets, net of accumulated amortization—
 —
 1,390
 —
 —
 1,390
Investments in unconsolidated affiliates—
 6
 43
 —
 —
 49
Investments in subsidiaries, net9,315
 25,170
 —
 —
 (34,485) —
Intercompany receivables1,937
 666
 —
 47
 (2,650) —
Long-term investments—
 —
 38
 —
 —
 38
Other assets—
 33
 578
 65
 (15) 661
Total assets$12,359
 $26,900
 $41,410
 $1,215
 $(37,150) $44,734
Liabilities and Stockholders' Equity           
Current liabilities           
Accounts payable and accrued liabilities$—
 $131
 $4,060
 $114
 $—
 $4,305
Current payables to affiliates—
 121
 105
 —
 —
 226
Short-term debt—
 193
 17
 —
 —
 210
Deferred revenue—
 —
 459
 —
 —
 459
Other current liabilities—
 —
 158
 40
 —
 198
Total current liabilities—
 445
 4,799
 154
 —
 5,398
Long-term payables to affiliates—
 11,200
 —
 —
 —
 11,200
Long-term debt—
 5,935
 341
 —
 —
 6,276
Long-term financial obligation—
 —
 363
 2,116
 —
 2,479
Deferred tax liabilities—
 —
 4,401
 —
 (15) 4,386
Deferred rents—
 —
 2,000
 —
 —
 2,000
Negative carrying value of subsidiaries, net—
 —
 518
 —
 (518) —
Intercompany payables—
 —
 2,650
 —
 (2,650) —
Other long-term liabilities—
 5
 631
 —
 —
 636
 Total long-term liabilities—
 17,140
 10,904
 2,116
 (3,183) 26,977
Total stockholders' equity12,359
 9,315
 25,707
 (1,055) (33,967) 12,359
Total liabilities and stockholders' equity$12,359
 $26,900
 $41,410
 $1,215
 $(37,150) $44,734


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Notes to Condensed Consolidated Interim Financial Statements
(Unaudited)Table of Contents

Condensed Consolidating Balance Sheet Information
As of December 31, 2012
  Parent Issuer 
Guarantor
Subsidiaries
 Eliminations Consolidated
  (in thousands)
CURRENT ASSETS:          
Cash and cash equivalents $781,987
 $1,585,588
 $727
 $—
 $2,368,302
Short-term investments 244,990
 —
 —
 —
 244,990
Prepaid expenses —
 1,867
 63,202
 —
 65,069
Advances to subsidiaries 705,909
 —
 —
 (705,909) —
Other current assets 61
 452,906
 55,975
 —
 508,942
Total current assets 1,732,947
 2,040,361
 119,904
 (705,909) 3,187,303
Property and equipment, net —
 960
 4,291,101
 —
 4,292,061
Investment in subsidiaries 1,632,822
 5,530,165
 —
 (7,162,987) —
FCC licenses —
 3,800
 2,558,607
 —
 2,562,407
Other assets 1,679
 120,874
 25,091
 —
 147,644
Total assets $3,367,448
 $7,696,160
 $6,994,703
 $(7,868,896) $10,189,415
CURRENT LIABILITIES:          
Advances from subsidiaries $—
 $373,343
 $332,566
 $(705,909) $—
Current maturities of long-term debt —
 25,389
 11,251
 —
 36,640
Other current liabilities —
 218,035
 593,128
 —
 811,163
Total current liabilities —
 616,767
 936,945
 (705,909) 847,803
Long-term debt, net —
 4,413,623
 310,489
 —
 4,724,112
Other long-term liabilities 8,541
 1,032,948
 217,104
 —
 1,258,593
Total liabilities 8,541
 6,063,338
 1,464,538
 (705,909) 6,830,508
STOCKHOLDERS’ EQUITY:          
Common stock 37
 —
 —
 —
 37
Other stockholders’ equity 3,358,870
 1,632,822
 5,530,165
 (7,162,987) 3,358,870
Total stockholders’ equity 3,358,907
 1,632,822
 5,530,165
 (7,162,987) 3,358,907
Total liabilities and stockholders’ equity $3,367,448
 $7,696,160
 $6,994,703
 $(7,868,896) $10,189,415
(in millions)Parent Issuer Guarantor Subsidiaries Non-Guarantor Subsidiaries Consolidating and Eliminating Adjustments Consolidated
Assets           
Current assets           
Cash and cash equivalents$—
 $—
 $287
 $107
 $—
 $394
Accounts receivable, net of allowances for uncollectible accounts—
 —
 2,607
 71
 —
 2,678
Accounts receivable from affiliates—
 —
 682
 —
 —
 682
Inventory—
 —
 457
 —
 —
 457
Current portion of deferred tax assets, net—
 —
 640
 15
 —
 655
Other current assets—
 106
 565
 4
 —
 675
Total current assets—
 106
 5,238
 197
 —
 5,541
Property and equipment, net of accumulated depreciation—
 —
 12,129
 678
 —
 12,807
Spectrum licenses—
 —
 14,330
 220
 —
 14,550
Other intangible assets, net of accumulated amortization—
 —
 79
 —
 —
 79
Investments in unconsolidated affiliates—
 19
 44
 —
 —
 63
Investments in subsidiaries, net—
 24,823
 —
 —
 (24,823) —
Intercompany receivables—
 —
 3,760
 71
 (3,831) —
Long-term investments—
 —
 31
 —
 —
 31
Other assets—
 147
 352
 52
 —
 551
Total assets$—
 $25,095
 $35,963
 $1,218
 $(28,654) $33,622
Liabilities and Stockholder’s Equity           
Current liabilities           
Accounts payable and accrued liabilities$—
 $—
 $3,382
 $93
 $—
 $3,475
Current payables to affiliates—
 1,494
 125
 —
 —
 1,619
Deferred revenue—
 —
 290
 —
 —
 290
Other current liabilities—
 —
 168
 40
 —
 208
Total current liabilities—
 1,494
 3,965
 133
 —
 5,592
Long-term payables to affiliates—
 13,655
 —
 —
 —
 13,655
Long-term financial obligation—
 —
 360
 2,101
 —
 2,461
Deferred tax liabilities—
 —
 3,603
 15
 —
 3,618
Deferred rents—
 —
 1,884
 —
 —
 1,884
Negative carrying value of subsidiaries, net—
 —
 489
 —
 (489) —
Intercompany payables—
 3,831
 —
 —
 (3,831) —
Other long-term liabilities—
 —
 297
 —
 —
 297
 Total long-term liabilities—
 17,486
 6,633
 2,116
 (4,320) 21,915
Total stockholder’s equity—
 6,115
 25,365
 (1,031) (24,334) 6,115
Total liabilities and stockholder’s equity$—
 $25,095
 $35,963
 $1,218
 $(28,654) $33,622


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Condensed Consolidating Statement of Comprehensive Income Information
For the Three Months Ended March 31,June 30, 2013
  Parent Issuer 
Guarantor
Subsidiaries
 Eliminations Consolidated
  (in thousands)
REVENUES:          
Total Revenues $—
 $11,784
 $1,282,617
 $(7,340) $1,287,061
OPERATING EXPENSES:          
Cost of revenues —
 11,514
 806,773
 (7,340) 810,947
Selling, general and administrative expenses —
 270
 194,341
 —
 194,611
Other operating expenses —
 (16) 173,691
 —
 173,675
Total operating expenses —
 11,768
 1,174,805
 (7,340) 1,179,233
Income from operations —
 16
 107,812
 —
 107,828
OTHER EXPENSE (INCOME):          
Interest expense —
 69,924
 6,422
 —
 76,346
Non-operating (income) expense (369) (2) (86) —
 (457)
Earnings from consolidated subsidiaries (19,027) (101,476) —
 120,503
 —
Total other (income) expense (19,396) (31,554) 6,336
 120,503
 75,889
Income (loss) before provision for income taxes 19,396
 31,570
 101,476
 (120,503) 31,939
Provision for income taxes —
 (12,543) —
 —
 (12,543)
Net income (loss) $19,396
 $19,027
 $101,476
 $(120,503) $19,396
Total other comprehensive income (loss) 2,031
 2,110
 —
 (2,110) 2,031
Comprehensive income (loss) $21,427
 $21,137
 $101,476
 $(122,613) $21,427
(in millions)Parent Issuer Guarantor Subsidiaries Non-Guarantor Subsidiaries Consolidating and Eliminating Adjustments Consolidated
Revenues           
Service revenues$—
 $—
 $4,591
 $191
 $(26) $4,756
Equipment sales—
 —
 1,542
 —
 (163) 1,379
Other revenues—
 —
 85
 44
 (36) 93
Total revenues—
 —
 6,218
 235
 (225) 6,228
Operating expenses           
Network costs—
 —
 1,342
 21
 (36) 1,327
Cost of equipment sales—
 —
 1,994
 122
 (180) 1,936
Customer acquisition—
 —
 1,028
 —
 —
 1,028
General and administrative—
 —
 793
 35
 (9) 819
Depreciation and amortization—
 —
 867
 21
 —
 888
MetroPCS transaction-related costs—
 —
 26
 —
 —
 26
Restructuring costs—
 —
 23
 —
 —
 23
Total operating expenses—
 —
 6,073
 199
 (225) 6,047
Operating income—
 —
 145
 36
 —
 181
Other income (expense)           
Interest expense to affiliates—
 (225) —
 —
 —
 (225)
Interest expense—
 (53) (13) (43) —
 (109)
Interest income—
 —
 40
 —
 —
 40
Other income (expense), net—
 120
 (2) —
 —
 118
Total other income (expense), net—
 (158) 25
 (43) —
 (176)
Income (loss) before income taxes—
 (158) 170
 (7) —
 5
Income tax expense (benefit)—
 —
 28
 (7) —
 21
Earnings (loss) of subsidiaries(47) 142
 (15) —
 (80) —
Net income (loss)(47) (16) 127
 —
 (80) (16)
Other comprehensive income (loss), net of tax—
 (38) 23
 —
 (23) (38)
Total comprehensive income (loss)$(47) $(54) $150
 $—
 $(103) $(54)


24
Table of Contents

Condensed Consolidating Statement of Comprehensive Income Information
For the Three Months Ended March 31,June 30, 2012
  Parent Issuer 
Guarantor
Subsidiaries
 Eliminations Consolidated
  (in thousands)
REVENUES:          
Total Revenues $—
 $4,179
 $1,279,751
 $(7,340) $1,276,590
OPERATING EXPENSES:          
Cost of revenues —
 4,010
 851,121
 (7,340) 847,791
Selling, general and administrative expenses —
 169
 176,424
 —
 176,593
Other operating expenses —
 54
 153,885
 —
 153,939
Total operating expenses —
 4,233
 1,181,430
 (7,340) 1,178,323
(Loss) income from operations —
 (54) 98,321
 —
 98,267
OTHER EXPENSE (INCOME):          
Interest expense —
 64,735
 5,348
 —
 70,083
Non-operating (income) expense (372) (2) (104) —
 (478)
Earnings from consolidated subsidiaries (20,632) (93,077) —
 113,709
 —
Total other (income) expense (21,004) (28,344) 5,244
 113,709
 69,605
Income (loss) before provision for income taxes 21,004
 28,290
 93,077
 (113,709) 28,662
Provision for income taxes —
 (7,658) —
 —
 (7,658)
Net income (loss) $21,004
 $20,632
 $93,077
 $(113,709) $21,004
Total other comprehensive (loss) income (8) (246) —
 —
 (254)
Comprehensive income (loss) $20,996
 $20,386
 $93,077
 $(113,709) $20,750

(in millions)Parent Issuer Guarantor Subsidiaries Non-Guarantor Subsidiaries Consolidating and Eliminating Adjustments Consolidated
Revenues           
Service revenues$—
 $—
 $4,228
 $180
 $(27) $4,381
Equipment sales—
 —
 567
 —
 (132) 435
Other revenues—
 —
 84
 18
 (35) 67
Total revenues—
 —
 4,879
 198
 (194) 4,883
Operating expenses           
Network costs—
 —
 1,195
 18
 (35) 1,178
Cost of equipment sales—
 —
 786
 107
 (148) 745
Customer acquisition—
 —
 751
 —
 —
 751
General and administrative—
 —
 842
 40
 (11) 871
Depreciation and amortization—
 —
 819
 —
 —
 819
Restructuring costs—
 —
 48
 —
 —
 48
Other, net—
 —
 19
 —
 —
 19
Total operating expenses—
 —
 4,460
 165
 (194) 4,431
Operating income—
 —
 419
 33
 —
 452
Other income (expense)           
Interest expense to affiliates—
 (149) (2) —
 —
 (151)
Interest income—
 —
 18
 —
 —
 18
Other income, net—
 19
 4
 —
 —
 23
Total other income (expense), net—
 (130) 20
 —
 —
 (110)
Income (loss) before income taxes—
 (130) 439
 33
 —
 342
Income tax expense—
 —
 122
 13
 —
 135
Earnings of subsidiaries—
 337
 —
 —
 (337) —
Net income—
 207
 317
 20
 (337) 207
Other comprehensive income (loss), net of tax—
 (32) 16
 —
 (16) (32)
Total comprehensive income$—
 $175
 $333
 $20
 $(353) $175



2225
MetroPCS Communications, Inc. and SubsidiariesTable of Contents

Condensed Consolidating Statement of Comprehensive Income Information
Notes to For the Six Months Ended June 30, 2013
(in millions)Parent Issuer Guarantor Subsidiaries Non-Guarantor Subsidiaries Consolidating and Eliminating Adjustments Consolidated
Revenues           
Service revenues$—
 $—
 $8,447
 $367
 $(52) $8,762
Equipment sales—
 —
 2,308
 —
 (324) 1,984
Other revenues—
 —
 141
 86
 (68) 159
Total revenues—
 —
 10,896
 453
 (444) 10,905
Operating expenses           
Network costs—
 —
 2,464
 40
 (68) 2,436
Cost of equipment sales—
 —
 2,926
 251
 (355) 2,822
Customer acquisition—
 —
 1,765
 —
 —
 1,765
General and administrative—
 —
 1,538
 71
 (21) 1,588
Depreciation and amortization—
 —
 1,602
 41
 —
 1,643
MetroPCS transaction-related costs—
 —
 39
 —
 —
 39
Restructuring costs—
 —
 54
 —
 —
 54
Other, net—
 —
 (2) —
 —
 (2)
Total operating expenses—
 —
 10,386
 403
 (444) 10,345
Operating income—
 —
 510
 50
 —
 560
Other income (expense)           
Interest expense to affiliates—
 (403) —
 —
 —
 (403)
Interest expense—
 (54) (20) (86) —
 (160)
Interest income—
 —
 75
 —
 —
 75
Other income (expense), net—
 114
 (2) —
 —
 112
Total other income (expense), net—
 (343) 53
 (86) —
 (376)
Income (loss) before income taxes—
 (343) 563
 (36) —
 184
Income tax expense (benefit)—
 —
 109
 (16) —
 93
Earnings (loss) of subsidiaries(47) 434
 (29) —
 (358) —
Net income (loss)(47) 91
 425
 (20) (358) 91
Other comprehensive income (loss), net of tax—
 (39) 24
 —
 (24) (39)
Total comprehensive income (loss)$(47) $52
 $449
 $(20) $(382) $52



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Condensed Consolidated Interim Financial StatementsConsolidating Statement of Comprehensive Income Information
(Unaudited)For the Six Months Ended June 30, 2012
(in millions)Parent Issuer Guarantor Subsidiaries Non-Guarantor Subsidiaries Consolidating and Eliminating Adjustments Consolidated
Revenues           
Service revenues$—
 $—
 $8,520
 $357
 $(52) $8,825
Equipment sales—
 —
 1,235
 —
 (265) 970
Other revenues—
 —
 158
 35
 (71) 122
Total revenues—
 —
 9,913
 392
 (388) 9,917
Operating expenses           
Network costs—
 —
 2,410
 35
 (71) 2,374
Cost of equipment sales—
 —
 1,666
 219
 (295) 1,590
Customer acquisition—
 —
 1,500
 —
 —
 1,500
General and administrative—
 —
 1,783
 80
 (22) 1,841
Depreciation and amortization—
 —
 1,566
 —
 —
 1,566
Restructuring costs—
 —
 54
 —
 —
 54
Other, net—
 —
 43
 —
 —
 43
Total operating expenses—
 —
 9,022
 334
 (388) 8,968
Operating income—
 —
 891
 58
 —
 949
Other income (expense)           
Interest expense to affiliates—
 (320) (2) —
 —
 (322)
Interest income—
 —
 32
 —
 —
 32
Other income, net—
 8
 —
 —
 —
 8
Total other income (expense), net—
 (312) 30
 —
 —
 (282)
Income (loss) before income taxes—
 (312) 921
 58
 —
 667
Income tax expense—
 —
 238
 22
 —
 260
Earnings of subsidiaries—
 719
 —
 —
 (719) —
Net income—
 407
 683
 36
 (719) 407
Other comprehensive income (loss), net of tax—
 (5) 2
 —
 (2) (5)
Total comprehensive income$—
 $402
 $685
 $36
 $(721) $402


27
Table of Contents

Condensed Consolidating Statement of Cash Flows Information
ThreeFor the Six Months Ended March 31,June 30, 2013
  Parent Issuer 
Guarantor
Subsidiaries
 Eliminations Consolidated
  (in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:          
Net cash (used in) provided by operating activities $(29) $16,112
 $207,368
 $—
 $223,451
CASH FLOWS FROM INVESTING ACTIVITIES:          
Purchases of property and equipment —
 (85) (154,523) —
 (154,608)
Proceeds from maturity of investments 245,000
 —
 —
 —
 245,000
Change in restricted cash and investments —
 (3,475,417) —
 —
 (3,475,417)
Change in advances – affiliates 3,096
 —
 —
 (3,096) —
Other investing activities, net —
 17,816
 (2,728) —
 15,088
Net cash provided by (used in) by investing activities 248,096
 (3,457,686) (157,251) (3,096) (3,369,937)
CASH FLOWS FROM FINANCING ACTIVITIES:          
Change in advances – affiliates —
 44,291
 (47,387) 3,096
 —
Change in book overdraft —
 11,660
 —
 —
 11,660
Proceeds from debt issuance —
 3,500,000
 —
 —
 3,500,000
Debt issuance costs —
 (25,821) —
 —
 (25,821)
Other financing activities, net 2,725
 (6,347) (2,752) —
 (6,374)
Net cash provided by (used in) financing activities 2,725
 3,523,783
 (50,139) 3,096
 3,479,465
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 250,792
 82,209
 (22) —
 332,979
CASH AND CASH EQUIVALENTS, beginning of period 781,987
 1,585,588
 727
 —
 2,368,302
CASH AND CASH EQUIVALENTS, end of period $1,032,779
 $1,667,797
 $705
 $—
 $2,701,281
(in millions)Parent Issuer Guarantor Subsidiaries Non-Guarantor Subsidiaries Consolidating and Eliminating Adjustments Consolidated
Operating activities           
Net cash provided by (used in) operating activities$298
 $(386) $1,769
 $34
 $—
 $1,715
            
Investing activities           
Purchases of property and equipment—
 —
 (2,126) —
 —
 (2,126)
Purchases of intangible assets—
 —
 (51) —
 —
 (51)
Short term affiliate loan receivable, net—
 —
 300
 —
 —
 300
Cash and cash equivalents acquired in MetroPCS business combination737
 1,407
 —
 —
 —
 2,144
Other, net—
 —
 (5) —
 —
 (5)
Net cash provided by (used in) investing activities737
 1,407
 (1,882) —
 —
 262
            
Financing activities           
Repayments related to a variable interest entity—
 —
 (40) —
 —
 (40)
Distribution to affiliate as a result of debt recapitalization—
 —
 (41) —
 —
 (41)
Proceeds from exercise of stock options72
 —
 —
 —
 —
 72
Excess tax benefit from stock-based compensation—
 —
 3
 —
 —
 3
Other, net—
 —
 (3) —
 —
 (3)
Net cash provided by (used in) financing activities72
 —
 (81) —
 —
 (9)
            
Change in cash and cash equivalents1,107
 1,021
 (194) 34
 —
 1,968
Cash and cash equivalents           
Beginning of period—
 —
 287
 107
 —
 394
End of period$1,107
 $1,021
 $93
 $141
 $—
 $2,362


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Table of Contents

Condensed Consolidating Statement of Cash Flows Information
ThreeFor the Six Months Ended MarchJune 30, 2012
(in millions)Parent Issuer Guarantor Subsidiaries Non-Guarantor Subsidiaries Consolidating and Eliminating Adjustments Consolidated
Operating activities           
Net cash provided by operating activities$—
 $—
 $1,838
 $71
 $—
 $1,909
            
Investing activities           
Purchases of property and equipment—
 —
 (1,286) —
 —
 (1,286)
Purchases of intangible assets—
 —
 (10) —
 —
 (10)
Short term affiliate loan receivable, net—
 —
 (577) —
 —
 (577)
Other, net—
 —
 (4) —
 —
 (4)
Net cash used in investing activities—
 —
 (1,877) —
 —
 (1,877)
            
Financing activities           
Other, net—
 —
 1
 —
 —
 1
Net cash provided by financing activities—
 —
 1
 —
 —
 1
            
Change in cash and cash equivalents—
 —
 (38) 71
 —
 33
Cash and cash equivalents           
Beginning of period—
 —
 339
 51
 —
 390
End of period$—
 $—
 $301
 $122
 $—
 $423

13.Additional Financial Information

Supplemental Balance Sheet Information

Variable Interest Entities

Cook Inlet/VoiceStream GSM VII PCS Holdings LLC, (“CIVS VII”) was a joint venture funded by contributions from T-Mobile and Cook Inlet Voice and Data Services, Inc. (“Cook Inlet”). CIVS VII was managed by Cook Inlet and owned spectrum licenses. T-Mobile utilized these spectrum licenses under certain operating agreements and compensated CIVS VII based on minutes of use. As T-Mobile was deemed to be the primary beneficiary, the results of CIVS VII were consolidated in the Company's financial statements, which included $236 million in assets held by the joint venture as of June 30, 2013 and December 31, 2012.

  Parent Issuer 
Guarantor
Subsidiaries
 Eliminations Consolidated
  (in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:          
Net cash provided by (used in) operating activities $72
 $(103,395) $240,227
 $—
 $136,904
CASH FLOWS FROM INVESTING ACTIVITIES:          
Purchases of property and equipment —
 (251) (143,765) —
 (144,016)
Purchase of investments (192,415) —
 —
 —
 (192,415)
Proceeds from maturity of investments 162,500
 —
 —
 —
 162,500
Change in restricted cash and investments —
 500
 —
 —
 500
Change in advances - affiliates 2,634
 86,266
 —
 (88,900) —
Other investing activities, net —
 (3,457) (6,002) —
 (9,459)
Net cash (used in) provided by investing activities (27,281) 83,058
 (149,767) (88,900) (182,890)
CASH FLOWS FROM FINANCING ACTIVITIES:          
Change in advances - affiliates —
 —
 (88,900) 88,900
 —
Change in book overdraft —
 (2,830) —
 —
 (2,830)
Other financing activities, net (323) (6,347) (1,558) —
 (8,228)
Net cash (used in) provided by financing activities (323) (9,177) (90,458) 88,900
 (11,058)
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (27,532) (29,514) 2
 —
 (57,044)
CASH AND CASH EQUIVALENTS,
beginning of period
 657,289
 1,285,266
 727
 —
 1,943,282
CASH AND CASH EQUIVALENTS, end of period $629,757
 $1,255,752
 $729
 $—
 $1,886,238

23
MetroPCS Communications, Inc. and Subsidiaries
NotesIn conjunction with the joint venture agreement for CIVS VII, T-Mobile entered into an Exchange Rights Agreement with Cook Inlet. The existing agreement allowed Cook Inlet, with advance notice, to Condensed Consolidated Interim Financial Statementsexchange its ownership interest in the joint venture for cash equal to the sum of Cook Inlet's original contribution to the joint venture plus accrued interest. The exchange right did not meet the definition of a derivative instrument. The terms of the Exchange Rights Agreement were accounted for as a financing of T-Mobile's purchase of Cook Inlet's interest in the joint venture.
(Unaudited)

16.Subsequent Events:

On April 14,February 28, 2013, the parties to the Business Combination AgreementCook Inlet and T-Mobile entered into an amendmentAmended and Restated Exchange Rights Agreement in which T-Mobile agreed to pay Cook Inlet approximately $94 million in exchange for all of Cook Inlet's interest in CIVS VII. On April 1, 2013, T-Mobile paid Cook Inlet $40 million as a down payment for its equity interest, and the Business Combination Agreement to: (i) reduce the principal amountparties filed for FCC regulatory approval of the debt of the combined companycontemplated equity transfer. The transaction was completed in July 2013. See Note 14 – Subsequent Events for further information.

Accumulated Other Comprehensive Income    

Prior to be issued to Deutsche Telekom at the closing of the Proposed Transactionbusiness combination with MetroPCS, Deutsche Telekom recapitalized T-Mobile by $3.8 billion; (ii) reduceretiring T-Mobile's notes payable to affiliates principal balance and all related derivative instruments, which included the interest rate swaps and cross currency interest rate swaps.

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Table of Contents

The following table summarizes the changes in accumulated other comprehensive income (“AOCI”), net of tax, by component:
(in millions)Cross Currency Interest Rate Swaps Foreign Currency Translation Available-for-Sale Securities Total
Balance as of December 31, 2012$(23) $62
 $2
 $41
Unrealized gains (losses) arising during the period
(10) 42
 —
 32
Reclassification adjustments recognized in net income
33
 (104) —
 (71)
Net gain (loss) in other comprehensive income (loss)23
 (62) —
 (39)
Balance as of June 30, 2013$—
 $—
 $2
 $2

The following table presents the effects on net income of amounts reclassified from AOCI:
    Amount Reclassified from AOCI to Income
AOCI Component Location Three Months Ended
June 30, 2013		 Six Months Ended
June 30, 2013
Cross Currency Interest Rate Swaps Interest expense to affiliates 48
 53
  Income tax effect (18) (20)
  Net of tax 30
 33
       
Foreign Currency Translation Other income, net (166) (166)
  Income tax effect 62
 62
  Net of tax (104) (104)
       
Total reclassifications, net of tax   (74) (71)

Supplemental Statements of Comprehensive Income (Loss) Information

Earnings (Loss) Per Share
The computation of basic and diluted earnings (loss) per share was as follows:
 Three Months Ended June 30, Six Months Ended June 30,
(in millions, except shares and per share amounts)2013 2012 2013 2012
Basic and Diluted Earnings (Loss) Per Share:       
Net income (loss)$(16) $207
 $91
 $407
        
Weighted average shares outstanding - basic664,603,682
 535,286,077
 600,302,111
 535,286,077
Dilutive effect of outstanding stock options—
 —
 1,392,800
 —
Weighted average shares outstanding - diluted664,603,682
 535,286,077
 601,694,911
 535,286,077
        
Earnings (loss) per share - basic$(0.02) $0.39
 $0.15
 $0.76
Earnings (loss) per share - diluted(0.02) 0.39
 0.15
 0.76

Outstanding stock options and RSUs, which were not included in the computation of diluted earnings (loss) per share because to do so would have been anti-dilutive, included 34,230,760 and 31,372,369 shares for the three and six months ended June 30, 2013. As the Company incurred a net loss for the three months ended June 30, 2013, the impact of all outstanding stock awards were excluded from the computation of diluted loss per share as their inclusion would have been anti-dilutive.

Restructuring Costs

In 2013, T-Mobile initiated a cost restructuring program in order to reduce its overall cost structure to align with its Un-carrier strategy and position T-Mobile for growth. Restructuring costs were $23 million and $54 million for the three and six months endedJune 30, 2013, respectively.


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Table of Contents

In 2012, T-Mobile consolidated its call center operations and restructured operations in other parts of the debtbusiness to strengthen T-Mobile's competiveness. Major costs incurred primarily related to lease buyout costs, severance payments and other personnel-related restructuring costs. Lease buyout costs included in accrued liabilities related to the 2012 restructuring program are being relieved over the remaining lease terms through 2022. Restructuring costs were $48 million and $54 million for the three and six months endedJune 30, 2012, respectively.

Activities associated with T-Mobile's restructuring plans and respective accrued liabilities were as follows:
(in millions)2013 Restructuring Program 2012 Restructuring Program Total Restructuring
Balance as of December 31, 2012$—
 $32
 $32
Restructuring costs54
 —
 54
Cash payments(53) (7) (60)
Balance as of June 30, 2013$1
 $25
 $26

Supplemental Statements of Cash Flows Information

The following table summarizes T-Mobile's supplemental cash flows information:
 Six Months Ended June 30,
(in millions)2013 2012
Interest and income tax payments:   
Interest payments$583
 $426
Income tax payments (refunds), net14
 15
Noncash investing and financing activities:   
Increase in accounts payable for purchases of property and equipment173
 24
Short-term debt for financing of purchases of property and equipment193
 —
Relinquishment of accounts receivable from affiliates in satisfaction of notes payable to affiliates—
 644
Noncash portion of spectrum license swap transactions8
 1,163
Retirement of notes payable to affiliates14,450
 —
Elimination of net unamortized discounts and premiums on notes payable to affiliates434
 —
Issuance of new notes payable to affiliates11,200
 —
Settlement of accounts receivable from affiliates and other outstanding balances363
 —
Income tax benefit from debt recapitalization178
 —
Net assets acquired in MetroPCS business combination, excluding cash acquired827
 —

14.Subsequent Events

On July 15, 2013, T-Mobile paid Cook Inlet $54 million for the remaining payment due in connection with the Amended Exchange Right Agreement discussed in Note 13 - Additional Financial Information, at which time Cook Inlet transferred all of its interest in CIVS VII to T-Mobile, and T-Mobile now holds all of the combined company to be issued to Deutsche Telekom at the closing of the Proposed Transaction by 50 basis points, and (iii) extend the lock-up period on sales to the public following the closing of the Proposed Transaction of shares of common stock of the combined company held by Deutsche Telekom from six months to eighteen months, subject to certain exceptions.outstanding equity in CIVS VII.
On April 24, 2013, MetroPCS held its special meeting of stockholders to vote on matters relating to the Proposed Transaction. A quorum of MetroPCS stockholders was represented by proxy or in person. The stockholders voted and approved the proposals presented at the special meeting. The Company anticipates the closing of the Proposed Transaction will occur after the close of business on April 30, 2013.


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Item 2. Management’sManagement's Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements
AnyCertain statements made in this quarterly annual report that are notinclude forward-looking statements of historical fact, including statements about our beliefs, opinions and expectations, are “forward-looking statements” within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, Section 27A1995. All statements, other than statements of the Securities Acthistorical fact, including information concerning our possible or assumed future results of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, and should be evaluated as such. Forward-looking statements include our expectations of customer growth, the causes of churn, the effect of seasonality on our business, the importance of our key non-GAAP financial measures and their use to compare companies in the industry, the effects, cost saving, future benefits or synergies of the Proposed Transaction, uses of CPU and EBITDA as a measure to compare performance, whether existing cash, cash equivalents and short-term investments and anticipated cash flows from operations, will be sufficient to fully fund planned operations and planned expansion, the challenges and opportunities facing our business including competitive pricing and increased promotional activity, competitive differentiators, our strategy and business plans, prospects, customer expectations, our projections of capital expenditures for 2013, continued wireline displacements, the effect of future inflation on our operations, the effect of changes in aggregate fair value of financial assets and liabilities and other statements that may relate to our plans, objectives, beliefs, strategies, goals, opinions, beliefs, future events, future revenues or performance, future capital expenditures, financing needs, outcomes of litigation and other information that is not historical information.are forward-looking statements. These forward-looking statements are generally can be identified by the fact that they do not disclose or relate strictly to historical or current facts and include, without limitation, words such as “anticipate,“anticipates,” “expect,” “suggests,” “plan,” “believe,” “intend,“believes,” “estimates,” “predict,“expects,” “targets,” “views,” “becomes,” “project,” “assume,” “should,” “would,” “could,” “may,” “will,” “suggest,” “forecast,” “potential,” and otheror similar expressions and variations. Forward-looking statements are contained throughout this quarterly report, including in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Company Overview,” "Seasonality," "Performance Measures," "Liquidity and Capital Resources," "Qualitative and Quantitative Disclosure About Market Risk," "Legal Proceedings," and "Risk Factors" sections of this report.expressions.

We base the forward-looking statements or projections made in this report on our current intent, expectations, plans, strategies, objectives, goals, beliefs, opinions, projections and assumptions as of the date of this quarterly report that have been made in light of our experience in the industry, as well as our perceptions of historical trends, current conditions, expected future events and developments and other factors we believe are appropriate under the circumstances and at the time such statements are made. As you read and consider this quarterly report, you should understand that these forward-looking statements are not guarantees of future performance or results, are made as of the date of this quarterly report, and no assurances can be given that such statements or results will be obtained. Although we believe that these forward-lookingForward-looking statements are based on reasonable intent,current expectations beliefs, opinions and assumptions atwhich are subject to risks and uncertainties which may cause actual results to differ materially from the time they are made, you should be aware that manyforward-looking statements. The following important factors, along with the “Risk Factors” included in Risk Factors in Part II, Item 1A of these factors are beyond our control and that many factorsthis Form 10-Q, could affect our actual financialfuture results performance or results of operations and could cause actualthose results to differ materially from those expressed in the forward-looking statements. Factors that may materially affect such forward-looking statements include, but are not limited, to:statements:

adverse conditions in the highly competitive nature ofU.S. and international economies or disruptions to the credit and financial markets;
competition in the wireless broadband mobile industryservices market;
the ability to complete and changes in the competitive landscape;
ours and our competitors' current and planned promotions and advertising, marketing, salesrealize expected synergies and other initiatives, including pricing decisions, entry into consolidation and alliance activities, and our ability to respond to and support them;
the effectsbenefits of the Proposed Transaction on dealers, retailers, vendors, suppliers, customers, content and application providers, our equity and debt holders and our employees;
the diversion of management's time and attention while the Proposed Transaction is pending;
our ability to operate our business in light of the Proposed Transaction and the covenants contained in the Business Combination Agreement;acquisitions;
the inability to have developedimplement our business strategies or to obtain handsets, equipment or software that our customers want, demand and expect, or to have handsets, equipment or software serviced, updated, revised or maintained in a timely and cost-effective manner for the prices and the features our customers want, expect or demand;
our ability to construct, operatefund our wireless operations, including payment for additional spectrum, network upgrades, and technological advancements;
the ability to renew our spectrum licenses on attractive terms;
the ability to manage ourgrowth in wireless data services including network to deliver the services, content, applications, service quality and speed our customers want, expectacquisition of adequate spectrum licenses at reasonable costs and demand,terms;
material changes in available technology;
the timing, scope and to provide, maintain and increase the capacityfinancial impact of our network and business systems to satisfy the expectations and demandsdeployment of our customers and the demands placed by devices on our network;

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our plans and expectations relating to, without limitation, (i) our growth opportunities and competitive position; (ii) our products and services; (iii) our customer experience; (iv) our results of operations, including projected synergies from the Proposed Transaction, earnings and cash flows; (v) the impact of the Proposed Transaction on our credit rating; and (vi) integration matters;
the federal income tax consequences of the Proposed Transaction and the enactment of additional state, federal, and/or foreign tax and/or other laws and regulations;
expectations, intentions and outcomes relating to, and diversion of management's time and attention to, and our ability to successfully defend against, litigation, including securities, class action, derivative, intellectual property (including patents), and product safety claims, by or against third parties, related to the Proposed Transaction or otherwise;
the possibility that the Proposed Transaction is delayed or does not close, including due to the failure to satisfy or waive the closing conditions, pursuant to the Business Combination Agreement;
alternative acquisition proposals that could delay completion of the Proposed Transaction;
our ability to successfully integrate our business with T-Mobile's business and realize the expected spectrum, cost and capital expenditure savings and synergies and other expected benefits from the Proposed Transaction;
changes in economic, business, competitive, technological and/or regulatory factors, including the passage of legislation or action by governmental or regulatory entities;
any changes in the regulatory environment in which we operate, including any change or increase in restrictions on our ability to operate our network;
terminations of, or limitations imposed on MetroPCS' or T-Mobile's business by, contracts entered into by either MetroPCS or T-Mobile, or the effect of provisions with respect to change in control, exclusivity, commitments or minimum purchase amounts contained in such contracts;
the impact of economic conditions on our business plan, strategy and stock price;
delays in, or changes in policies related to, income tax refunds or other governmental payments;4G Long-Term Evolution (“LTE”) technology;
the impact on our networknetworks and business from major technology equipment failures, denialfailures;
breaches of service attacks, and security breaches related to the network or customer information;
the ability to obtain financing on terms favorable to us, or at all;
the impact of public and private regulations;
possible disruptions, cyber attacks, denial of service, or intrusions of our network, billing, operational support and customer care systems that may limit or disrupt our ability to provide service, customer care, or bill our customers, or which may cause disclosure or improper use of customers' information and associated harm to our customers, systems, reputation and goodwill;
our continued ability to offer a diverse portfolio of wireless devices;
our ability to obtain and continue to obtain roaming on terms that are reasonable;
severe weather conditions,technology security, natural disasters energy shortages, wars or terrorist attacks or existing or future litigation and any resulting financial impact not covered by insurance;
disruptionsany changes in the regulatory environments in which we operate, including any increase in restrictions on the ability to operate our networks;
any disruption of our key suppliers' provisioning of products services, content or applications;
fluctuations in interest and exchange rates;
significant increases in benefit plan costs or lower investment returns on plan assets;services;
material adverse changes in labor matters, including labor negotiations or additional organizing activity, and any resulting financial and/or operational impact;
write-offs, including write-offs in connection with the Proposed Transaction, or changes in MetroPCS' and/or T-Mobile's accounting assumptions that regulatory agencies, including the SEC, may require or that result from changes in the accounting rules or their application, which could result in an impact on earnings; and,
the significant capital commitments of MetroPCSchanges in tax laws, regulations and T-Mobile;
our ability to remain focused and keep all employees focused on the business during the pendency of the Proposed Transaction;
the current economic environment in the United States; disruptions to the credit and financial markets in the United States;existing standards and the impactresolution of the economy on consumer demand and fluctuations in consumer demand generally for the products and services provided;

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our ability to manage our growth, achieve planned growth, manage churn rates, maintain our cost structure and achieve additional economies of scale;
our ability to negotiate and maintain acceptable agreements with our suppliers and vendors, including obtaining roaming on reasonable terms;
the seasonality of our business and any failure to have strong customer growth in the first and fourth quarters;
the rates, nature, collectability and applicability of taxes and regulatory fees on the services we provide and increases or changes in taxes and regulatory fees or the services to, or the manner in, which such taxes and fees are applied, calculated, or collected;
the rapid technological changes in our industry, and our ability to adapt, respond and deploy new technologies, and successfully offer new services using such new technology;
our ability to fulfill the demands and expectations of our customers, provide the customer care our customers want, expect, or demand, secure the products, services, applications, content and network infrastructure equipment we need, or which our customers or potential customers want, expect or demand;
the availability of additional spectrum, our ability to secure additional spectrum, or secure it at acceptable prices, when we need it;
our ability to enforce or protect our intellectual property rights;
our capital structure, including our indebtedness amount, the limitations imposed by the covenants in the documents governing our indebtedness and the maintenance of our financial and disclosure controls and procedures;
our ability to attract and retain key members of management and train personnel;
our ability to retain and grow our indirect distribution channels for our products and services;
our reliance on third parties to provide distribution, products, software content and services that are integral to or used or sold by our business and the ability of our suppliers to perform, develop and timely provide us with technological developments, products and services we need to remain competitive;
governmental regulation affecting our services and changes in government regulation, and the costs of compliance and our failure to comply with such regulations; and
other factors described under “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2012 as updated or supplemented under “Part II, Item 1A. Risk Factors” in each of our subsequent Quarterly Reports on Form 10-Q as filed with the SEC, including this Quarterly Report on Form 10-Q for the quarter ended March 31, 2013.
The foregoing list of factors is not exclusive. All subsequent written and oral forward-looking statements concerning us and the Proposed Transaction or other matters attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements above. Forward-looking statements herein speak only as of the date of this quarterly report and are based on current assumptions and expectations, and are subject to the factors above, among other things, and involve risks, uncertainties, events, circumstances, uncertainties and assumptions, many of which are beyond our ability to control or predict. You should not place undue reliance on these forward-looking statements. We do not intend to, and do not undertake an obligation to, update these forward-looking statements in the future to reflect future events or circumstances, except as required by applicable securities laws and regulations. The business, financial condition, and results of operations presented for any period, including the three months ended March 31, 2013, may not be indicative of the business, financial condition or results of operations for any subsequent period or the fiscal year.

You should carefully read and consider the cautionary statements contained or referred to in this section in connectiondisputes with any subsequent written or oral forward-looking statements that may be issued by us or persons acting on our behalf, and all future written and oral forward-looking statements attributable to us or the Proposed Transaction or any other matters, are expressly qualified in their entirety by the foregoing cautionary statements.taxing jurisdictions.     
Company Overview
Except as expressly stated, the financial condition and results of operations discussed throughout Management'sManagement’s Discussion and Analysis of Financial Condition and Results of Operations are those of MetroPCS Communications,T-Mobile US, Inc. and its consolidated subsidiaries including MetroPCS Wireless, Inc., or Wireless, and unless the context indicates otherwise, references to “MetroPCS,” “MetroPCS Communications,” “our Company,” “the Company,” “we,” “our,” “ours” and “us” refer to MetroPCS Communications, Inc., a Delaware corporation, and its wholly-owned subsidiaries.

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We are a wireless telecommunications carrier that currently offers wireless broadband mobile services primarily in selected major metropolitan areas in the United States, including the Atlanta, Boston, Dallas/Fort Worth, Detroit, Las Vegas, Los Angeles, Miami, New York, Orlando/Jacksonville, Philadelphia, Sacramento, San Francisco and Tampa/Sarasota metropolitan areas. As of March 31, 2013, we held licenses for wireless spectrum suitable for wireless broadband mobile services covering a total population of 144 million people in and around many of the largest metropolitan areas in the United States. In addition, we have roaming agreements with other wireless broadband mobile carriers that allow us to offer our customers service in many areas when they are outside our service area. These roaming agreements, together with the area we serve with our own networks, allow our customers to receive service in an area covering over 280 million in total population under the Metro USA® brand. We provide our services using code division multiple access (CDMA) networks using 1xRTT technology and evolution data optimized (EVDO) and fourth generation long term evolution (4G LTE)(“T-Mobile”).
As a result of the significant growth we have experienced since we launched operations, our results of operations to date are not necessarily indicative of the results that can be expected in future periods. If our number of customers increase over time, they will continue to contribute to increases in our revenues and operating expenses.
Overview

We sell products and services to customers through our Company-owned retail stores as well as indirectly through relationships with independent retailers and third party dealers. Our service allows our customers to place unlimited local calls from within our local service area and to receive unlimited calls from any area while in our service area, for a flat-rate monthly service fee. Since January 2010, we have offered service under service plans which include all applicable taxes and regulatory fees and offering nationwide voice, text and web access services on an unlimited, no long-term contract, paid-in-advance, flat-rate basis beginning at $40 per month. For an additional $5 to $30 per month, our customers may select alternative service plans that offer additional features predominately on an unlimited basis. We also offer discounts to customers who purchase services for additional handsets on the same account. In January 2011, we introduced new 4G LTE service plans that allow customers to enjoy voice, text and web access services at fixed monthly rates starting as low as $40 per month. In 2012, we introduced a nationwide 4G LTE data, talk and text service plan for $25 per month, including all applicable taxes and regulatory fees. For additional usage fees, we also provide certain other value-added services. All of these plans require payment in advance for one month of service. If no payment is made in advance for the following month of service, service is suspended at the end of the month that was paid for by the customer and, if the customer does not pay within 30 days, the customer is terminated. We believe our service plans differentiate us from the more complex plans and long-term contract requirements of traditional wireless carriers.

T-Mobile Transaction

On October 3, 2012, we announced we had entered into the Business Combination Agreement, as amended, with Deutsche Telekom, T-Mobile Global, T-Mobile Holding, and T-Mobile. Upon completion of the Proposed Transaction, MetroPCS and T-Mobile will combine their respective businesses, will rename MetroPCS as T-Mobile US, and will operate T-Mobile and MetroPCS as separate customer units. The Business Combination Agreement is structured as a recapitalization, in which MetroPCS will declare a reverse stock split, make a cash payment of $1.5 billion in the aggregate to our stockholders of record immediately following the reverse stock split and acquire all of T-Mobile's capital stock by issuing T-Mobile Holding 74% of MetroPCS' common stock outstanding following the cash payment on a pro forma basis. Upon completion of the Proposed Transaction, MetroPCS stockholders will own 26% of the combined company.
On April 14, 2013, the parties to the Business Combination Agreement entered into an amendment to the Business Combination Agreement to: (i) reduce the principal amount of the debt of the combined company to be issued to Deutsche Telekom at the closing of the Proposed Transaction by $3.8 billion; (ii) reduce the interest rate of the debt of the combined company to be issued to Deutsche Telekom at the closing of the Proposed Transaction by 50 basis points, and (iii) extend the lock-up period on sales to the public following the closing of the Proposed Transaction of shares of common stock of the combined company held by Deutsche Telekom from six months to eighteen months, subject to certain exceptions.
On April 24, 2013, MetroPCS held its special meeting of stockholders to vote on matters relating to the Proposed Transaction. A quorum of MetroPCS stockholders was represented by proxy or in person. The stockholders voted and approved the proposals presented at the special meeting. We anticipate the closing of the Proposed Transaction will occur after the close of business on April 30, 2013.

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Critical Accounting Policies and Estimates
The preparation of financial statements in accordance with accounting principles generally accepted in the United States, or GAAP, requires management to make estimates and assumptions that affect the reported amounts of certain assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities at the date of the financial statements. We have discussed those estimates that we believe are critical and require the use of complex judgment in their application in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – (“MD&A”) is intended to provide a reader of our financial statements with a narrative explanation from the perspective of management of our financial condition, results of operations, liquidity and certain other factors that may affect future results. The MD&A is provided as a supplement to, and should be read in conjunction with, our audited Consolidated Financial Statements for the three years ended December 31, 2012, included in the Current Report on Form 8-K filed on June 18, 2013 and our unaudited Condensed Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q. Unless expressly stated otherwise, the comparisons presented in this MD&A refer to the same period in the prior year. T-Mobile's MD&A is presented in the following sections:

Results of Operations
Performance Measures
Reconciliation of Financial Measures
Liquidity and Capital Resources
Off-Balance Sheet Arrangements
Related Party Transactions
Restructuring Costs
Critical Accounting Policies and Estimates” of our annual report on Form 10-K for the year ended December 31, 2012 filed with the United States Securities and Exchange Commission, or SEC, on March 1, 2013.Estimates

Our accounting policies and the methodologies and assumptions we apply under them have not changed from our annual report on Form 10-K for the year ended December 31, 2012.
Revenues
We derive our revenues from the following sources:
Service. We sell wireless broadband mobile services. The various types of service revenues associated with wireless broadband mobile for our customers include monthly recurring charges for airtime, one-time or monthly recurring charges for optional features (including nationwide long distance, unlimited international long distance, unlimited text messaging, international text messaging, voicemail, downloads, ringtones, games and content applications, unlimited directory assistance, enhanced directory assistance, ring back tones, mobile Internet browsing, location based services, mobile instant messaging, navigation, video streaming, video on demand, push e-mail and nationwide roaming) and charges for long distance service. Service revenues also include intercarrier compensation and nonrecurring service charges to customers.

Equipment. We sell wireless broadband mobile handsets and accessories that are used by our customers in connection with our wireless broadband mobile services. This equipment is also sold to our independent retailers to facilitate distribution to our customers.
Costs and Expenses
Our costs and expenses include:
Cost of Service. The major components of our cost of service are:
Cell Site Costs. We incur expenses for the rent of cell sites, network facilities, engineering operations, field technicians and related utility and maintenance charges.
Interconnection Costs. We pay other communications companies and third-party providers for leased facilities and usage-based charges for transporting and terminating network traffic from our cell sites and switching centers. We have pre-negotiated rates for transport and termination of calls originated by our customers, including negotiated interconnection agreements with relevant exchange carriers in each of our service areas.
Variable Long Distance. We pay charges to other communications companies for long distance service provided to our customers. These variable charges are based on our customers' usage, applied at pre-negotiated rates with the long distance carriers.
Roaming Costs. We pay charges to other wireless broadband mobile carriers for roaming services so our customers can receive wireless broadband mobile service when they travel outside our own network service area.
Customer Support. We pay charges to nationally recognized third-party providers for customer care, billing and payment processing services.
Cost of Equipment. Cost of equipment primarily includes the cost of handsets and accessories purchased from third-party vendors to resell to our customers and independent retailers in connection with our services. We do not manufacture any of this equipment.
Selling, General and Administrative Expenses. Our selling expenses include advertising and promotional costs associated with marketing and selling to new customers and fixed charges such as retail store rent and retail associates' salaries. General and administrative expenses include support functions including technical operations, finance, accounting, human resources, information technology and legal services. We record stock-based compensation expense in cost of service and in selling,

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general and administrative expenses for expense associated with employee stock options and restricted stock awards, which is measured at the date of grant, based on the estimated fair value of the award.
Depreciation and Amortization. Depreciation is applied using the straight-line method over the estimated useful lives of the assets once the assets are placed in service, which are five to ten years for network infrastructure assets, three to ten years for capitalized interest, up to fifteen years for capital leases, approximately one to eight years for office equipment, which includes software and computer equipment, approximately three to seven years for furniture and fixtures and five years for vehicles. Leasehold improvements are amortized over the shorter of the remaining term of the lease and any renewal periods reasonably assured or the estimated useful life of the improvement.
Interest Expense and Interest Income. Interest expense includes interest incurred on our borrowings and capital lease obligations, amortization of debt issuance costs and amortization of discounts and premiums on long-term debt. Interest income is earned primarily on our cash, cash equivalents and short-term investments.
Income Taxes. For the three months endedMarch 31, 2013 and 2012 we paid no federal income taxes. For the three months endedMarch 31, 2013 and 2012 we paid $0.7 million and $0.1 million, respectively, of state income taxes.
Seasonality

Our customer activity is influenced by seasonal effects related to traditional retail selling periods and other factors that arise from our target customer base. Based on historical results, we generally expect the net customer additions to be strongest in the first and fourth quarters. Softening of sales and increased customer turnover, or churn, in the second and third calendar quarters of the year usually combine to result in fewer net customer additions or in net customer losses. However, sales activity and churn can be strongly affected by the launch of new metropolitan areas, introduction of new price plans, competition, delays in tax refunds and other government benefits, general economic conditions and by promotional activity, which could reduce, accentuate, increase or outweigh certain seasonal effects.
Results of Operations
Three Months Ended March 31, 2013 Compared to Three Months Ended March 31, 2012
Operating Items
Set forth below is a summary of certain financial information for the periods indicated:
  Three Months Ended March 31,  
  2013 2012 Change
  (in thousands)  
REVENUES:      
Service revenues $1,101,031
 $1,158,779
 (5%)
Equipment revenues 186,030
 117,811
 58%
Total revenues 1,287,061
 1,276,590
 1%
OPERATING EXPENSES: 
 
 

Cost of service (excluding depreciation and amortization disclosed separately below)(1)
 372,978
 388,927
 (4%)
Cost of equipment 437,969
 458,864
 (5%)
Selling, general and administrative expenses (excluding depreciation and amortization disclosed separately below)(1)
 194,611
 176,593
 10%
Depreciation and amortization 173,167
 152,819
 13%
Loss on disposal of assets 508
 1,120
 (55%)
Total operating expenses 1,179,233
 1,178,323
 —%
Income from operations $107,828
 $98,267
 10%
 ————————————
(1)
Cost of service and selling, general and administrative expenses include stock-based compensation expense. For the three months endedMarch 31, 2013, cost of service includes $0.7 million and selling, general and administrative expenses includes $8.9 million of stock-based compensation expense. For the three months endedMarch 31, 2012, cost of service includes $0.8 million and selling, general and administrative expenses includes $9.3 million of stock-based compensation expense.

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Service Revenues.T-Mobile is a national provider of mobile communications services capable of reaching over 280 million Service revenues decreased $57.7 million, or 5%,Americans. Our objective is to approximately $1.1 billion forbe the three months ended March 31, 2013 from approximately $1.2 billion for the three months ended March 31, 2012. The decrease in service revenues is primarily attributable to a net loss of 482,922 customers during the twelve months ended March 31, 2013, partially offset by a $0.40 increase in average revenue per customer for the three months ended March 31, 2013 as compared to the three months ended March 31, 2012.
Equipment Revenues. Equipment revenues increased $68.2 million, or 58%, to $186.0 million for the three months ended March 31, 2013 from $117.8 million for the three months ended March 31, 2012. The increase is primarily attributable to a higher average price of handsets sold, accountingsimpler choice for a $76.5 million increasebetter mobile experience. Our intent is to bring this proposition to life across all our brands, including T-Mobile, MetroPCS, and GoSmart, and across our major customer base of retail consumers and B2B.

We generate revenue by offering affordable postpaid and prepaid wireless voice, messaging and data services, as well as a $24.7mobile broadband and wholesale wireless services. We provided service to approximately 44 million increase in equipment revenues associated with a decrease in commissions paid to independent retailers due to a lower volume customers through our nationwide network as of handsets sold. These items were partially offset by a 12% decrease in gross customer additions which led to a $6.6 million decrease, as well as a decrease in upgrade handset sales to existing customers, which led to a $26.6 million decrease.
Cost of ServiceJune 30, 2013. CostWe also generate revenues by offering a wide selection of service decreased $15.9 million, or 4%,wireless handsets and accessories, including smartphones, wireless-enabled computers such as notebooks and tablets, and data cards which are manufactured by various suppliers. Our most significant expenses are related to $373.0 million for the three months ended March 31, 2013 from $388.9 million for the three months ended March 31, 2012. The decrease in cost of service is primarily attributable to a decrease in taxesacquiring and regulatory fees as well as a decrease in long distance cost during the three months ended March 31, 2013 as compared to the three months ended March 31, 2012. These decreases were partially offset by expenses associated with the deployment of additionalretaining customers, maintaining and expanding our network, infrastructure, including network infrastructure for 4G LTE.and compensating employees.

CostBusiness Combination with MetroPCS

On April 30, 2013, the business combination of Equipment. CostT-Mobile USA and MetroPCS was completed. Under the terms of equipment decreased $20.9 million, or 5%,the business combination agreement, Deutsche Telekom received approximately 74% of the fully-diluted shares of common stock of the combined company in exchange for its transfer of all of T-Mobile USA's common stock. This transaction was consummated to $438.0 millionprovide us with expanded scale, spectrum, and financial resources to compete aggressively with other larger U.S. wireless carriers. The acquired assets and liabilities of MetroPCS are included in the Company's condensed consolidated balance sheet as of June 30, 2013 and MetroPCS' results of operations and cash flows for the period from May 1, 2013 through June 30, 2013 are included in the Company's condensed consolidated statement of income and comprehensive income and cash flows for the period from May 1, 2013 through June 30, 2013. Customer and revenue results of MetroPCS are included in the branded prepaid category. See Note 2 – Transaction with MetroPCS of the Notes to the Condensed Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q for further information regarding the business combination.

Customers

T-Mobile generates revenue from three primary categories of customers: branded postpaid, branded prepaid and wholesale. Branded postpaid customers generally include customers that are qualified to pay after incurring service and branded prepaid customers include customers who pay in advance. Our branded prepaid customers include customers from the T-Mobile, MetroPCS and GoSmart brands. Wholesale customers include Machine-to-Machine (“M2M”) customers and Mobile Virtual Network Operator (“MVNO”) customers that operate on the T-Mobile network, but are managed by wholesale partners. We generate the majority of our revenues by providing wireless communication services to branded postpaid customers. Therefore, our ability to acquire and retain branded postpaid customers is significant to our business, including the generation of service revenues, equipment sales and other revenues.
During the three months ended March 31,June 30, 2013 from $458.9 million, 69% of our service revenues were generated by providing wireless communication services to branded postpaid customers, compared to 26% for the three months ended March 31, 2012. The decrease is primarily attributable to a decrease in handset upgrades by existingbranded prepaid customers, which led to a $57.4 million decrease, as well as a 12% decrease in gross customer additions which accountedand 5% for a $17.1 million decrease. These decreases were partially offset by a higher average cost of handsets accounting for a $55.2 million increase.wholesale customers, roaming and other services.

Selling, GeneralServices and Administrative Expenses. Selling, generalProducts

T-Mobile provides affordable wireless communication services nationwide through a variety of service plan options including our Value and administrative expensesSimple Choice plans, which allow customers to subscribe for wireless services separately from, or without purchase of, or payment for, a bundled handset.

As part of our Un-carrier value proposition, we introduced our Simple Choice plans in the first quarter of 2013. The Simple Choice plans eliminate annual service contracts and simplify the lineup of consumer rate plans to one affordable plan for unlimited talk, text and web service with options to add data services. Depending on their credit profiles, customers are qualified either for postpaid service, where they pay after incurring service, or prepaid service, where they pay in advance.

Customers on our Simple Choice or similar plans benefit from reduced monthly service charges and can choose whether to use their own compatible handset on our network or purchase a handset from us or one of our dealers. Depending on their credit profiles, qualifying customers who purchase their handset from us have the option of financing a portion of the purchase price at the point-of-sale over an installment period. Our Value and Simple Choice plans result in increased $18.0 million, or 10%, to $194.6 millionequipment revenue for the three months ended March 31, 2013 from $176.6 million for the three months ended March 31, 2012. Selling expenses increased by $7.0 million, or 7%, for the three months ended March 31, 2013each handset sold, compared to the three months ended March 31, 2012. The increase is primarily attributable totraditional bundled price plans that typically offer a $6.7 million increasesignificant handset discount, but involve higher monthly service charges. Our Value and Simple Choice plans result in marketing and advertising expenses. General and administrative expenses increased $11.5 million, or 16%, for the three months ended March 31, 2013 as compared to the three months ended March 31, 2012, primarily due to an increase in commissions paid to independent retailers for customer reactivations, coupled with an increase in legal and professional service fees which includes $4.3 million in expenses incurred in connection with the T-Mobile Transaction.
Depreciation and Amortization. Depreciation and amortization expense increased $20.4 million, or 13%, to $173.2 million for the three months ended March 31, 2013 from $152.8 million for the three months ended March 31, 2012. The increase related primarily to network infrastructure assets placed into servicenet income during the twelve months ended March 31, 2013 to supportperiod of sale while monthly service revenues are lower over the continued growth and expansionservice period as further described in “Results of our network.
Loss on Disposal of Assets. Loss on disposal of assets decreased $0.6 million, or 55%, to $0.5 million for the three months ended March 31, 2013 from $1.1 million for the three months ended March 31, 2012. The loss on disposal of assets during the three months ended March 31, 2013 and 2012 was due primarily to the disposal of assets related to certain network technology that was retired and replaced with newer technology.
Non-Operating Items
  Three Months Ended March 31,  
  2013 2012 Change
  (in thousands)  
Interest expense $76,346
 $70,083
 9%
Provision for income taxes 12,543
 7,658
 64%
Net income 19,396
 21,004
 (8%)
Interest Expense. Interest expense increased $6.2 million, or 9%, to $76.3 million for the three months ended March 31, 2013 from $70.1 million for the three months ended March 31, 2012.  The increase was primarily attributable to an $8.1 million increase in interest expense due to the issuance of the 6 1/4% Senior Notes due 2021, or the 6 1/4% Senior Notes, and the 6 5/8% Senior Notes due 2023, or the New 6 5/8% Senior Notes, on March 19, 2013. This increase was partially offset by an additional $1.4 million in capitalized interest expense during the three months ended March 31, 2013 when compared to the same period in 2012. Our weighted average interest rate decreased to 5.88% for the three months ended March 31, 2013 compared to 5.91% for the three months ended March 31, 2012.Operations - Equipment Sales.”

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ProvisionWe sell services, handsets and accessories through our owned and operated retail stores, independent third party retail outlets and over the Internet through our websites (www.T-Mobile.com and www.MetroPCS.com) and a variety of third party web locations. The information on our website is not part of this report or any other report furnished to or filed with the SEC. We offer a wide selection of wireless handsets and accessories, including smartphones, wirelessly enabled computers (i.e., notebooks and tablets), and data cards which are manufactured by various suppliers. We sell handsets directly to consumers, as well as to dealers and other third party distributors for Income Taxes. Income tax expense increased $4.8 million, or 64%,resale.

Business Strategy

We continue to $12.5 millionaggressively pursue our strategy developed to reposition T-Mobile and return the company to growth. In the first half of 2013, we introduced Simple Choice plans as part of our “Un-carrier” value proposition. Our strategy focuses on the following elements:

•
Un-carrier Value Proposition – We plan to extend our position as the leader in delivering distinctive value for consumers in all customer segments. Our Simple Choice plans have brought flexibility and value to customers by providing the option to pay for handsets over an installment period or to bring their own device. Simple Choice plans also eliminate annual service contracts and provide customers with a single, affordable rate plan without the complexity of caps and overage charges. Customers on Simple Choice plans can purchase the most popular smartphones, pay for them, if qualified, in affordable, interest-free monthly installments and upgrade any time they like without restrictive annual service contract cycles. Modernization of the network and introduction of the Apple® iPhone® in the second quarter of 2013 further repositioned T-Mobile as a provider of dependable high-speed service with a full range of desirable handsets and devices. Customers are able to purchase or, if qualified, finance handsets from a competitive device lineup including of popular devices. Additionally, the MetroPCS brand has been a value leader in the prepaid market and we expect to continue to accelerate its growth by expanding the brand into new geographic regions, beginning in the second half of 2013 through 2014.

Network Modernization – We are currently in the process of upgrading our network with a $4 billion investment designed to modernize the 4G network, improve coverage, align spectrum bands with other key players in the U.S. market and deploy nationwide 4G LTE services in 2013. The timing for the launch of 4G LTE allows us to take advantage of the latest and most advanced 4G LTE technology infrastructure, improving the overall capacity and performance of our 4G network, while optimizing spectrum resources. We remain on target to deliver nationwide 4G LTE network coverage by the end of 2013, reaching 200 million people in more than 200 metropolitan areas. The migration of MetroPCS customers onto T-Mobile's 4G HSPA+ and LTE network is also ahead of schedule, providing faster network performance for MetroPCS customers with compatible handsets. We expect the migration of MetroPCS's customers to our 4G HSPA+ and LTE network to be complete by the end of 2015.

Multi-segment Focus – T-Mobile plans to continue to operate in multiple customer market segments to accelerate growth. The combination of T-Mobile USA and MetroPCS added another flagship brand to the T-Mobile portfolio and increased our ability to serve the full breadth of the wireless market. In B2B, T-Mobile has made significant investments in software and systems. Additionally, T-Mobile expects to continue to expand its wholesale business through MVNOs and other wholesale relationships where its spectrum depth, available network capacity and GSM technology base help secure profitable wholesale customers.

Aligned Cost Structure – We continue to pursue a low-cost business operating model to drive cost savings, which can be reinvested in the business. These cost programs are on-going as we continue to work to simplify our business and drive operational efficiencies in areas such as network optimization, customer roaming, improved customer collection rates and better management of customer acquisition and retention costs. A portion of savings have been, and will continue to be, reinvested into customer acquisition programs.

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Results of Operations

Set forth below is a summary of consolidated results for the periods indicated:

Three Months Ended June 30, Six Months Ended June 30,
(in millions)2013 2012 Change 2013 2012 Change
Revenues           
Branded postpaid revenues$3,284
 $3,713
 (12)% $6,547
 $7,534
 (13)%
Branded prepaid revenues1,242
 414
 NM
 1,745
 791
 NM
Wholesale revenues143
 143
 — % 293
 273
 7 %
Roaming and other service revenues87
 111
 (22)% 177
 227
 (22)%
Total service revenues4,756
 4,381
 9 % 8,762
 8,825
 (1)%
Equipment sales1,379
 435
 NM
 1,984
 970
 NM
Other revenues93
 67
 39 % 159
 122
 30 %
Total revenues6,228
 4,883
 28 % 10,905
 9,917
 10 %
Operating expenses           
Network costs1,327
 1,178
 13 % 2,436
 2,374
 3 %
Cost of equipment sales1,936
 745
 NM
 2,822
 1,590
 77 %
Customer acquisition1,028
 751
 37 % 1,765
 1,500
 18 %
General and administrative819
 871
 (6)% 1,588
 1,841
 (14)%
Depreciation and amortization888
 819
 8 % 1,643
 1,566
 5 %
MetroPCS transaction-related costs26
 —
 NM
 39
 —
 NM
Restructuring costs23
 48
 (52)% 54
 54
 — %
Other, net—
 19
 NM
 (2) 43
 NM
Total operating expenses6,047
 4,431
 36 % 10,345
 8,968
 15 %
Operating income181
 452
 (60)% 560
 949
 (41)%
Other income (expense)           
Interest expense to affiliates(225) (151) 49 % (403) (322) 25 %
Interest expense(109) —
 NM
 (160) —
 NM
Interest income40
 18
 NM
 75
 32
 NM
Other income, net118
 23
 NM
 112
 8
 NM
Total other expense, net(176) (110) 60 % (376) (282) 33 %
Income before income taxes5
 342
 (99)% 184
 667
 (72)%
Income tax expense21
 135
 (84)% 93
 260
 (64)%
Net income (loss)$(16) $207
 NM
 $91
 $407
 (78)%
NM – Not Meaningful

Revenues

Branded postpaid revenuesdecreased$429 million, or 12%, for the three months ended March 31, 2013 from $7.7 million and $1.0 billion, or 13%, for the six months endedJune 30, 2013, compared to the same periods in 2012. The decreases were primarily attributable to lower average revenue per user (“ARPU”) and a 5% year-over-year decline in the number of average branded postpaid customers. Branded postpaid ARPU was negatively impacted by the growth of our Value and Simple Choice plans which have lower priced rate plans than other branded postpaid rate plans. Compared to other traditional bundled price plans, Value and Simple Choice plans result in lower service revenues but higher equipment revenues at the time of the sale as the plans do not include a bundled sale of a heavily discounted handset. Branded postpaid customers on Value and Simple Choice plans more than doubled over the past twelve months and comprised 50% of the branded postpaid customer base at June 30, 2013, compared to only 19% at June 30, 2012.

Branded prepaid revenues increased$828 million for the three months ended March 31, 2012.  The effective tax rate was 39.3% and 26.7%$954 million for the threesix months ended March 31,June 30, 2013 and 2012, respectively. For, compared to the three months ended March 31, 2013, our effective tax rate differs fromsame periods in 2012. Of the statutory federal rateincreases, $717 million was due to the inclusion of 35.0%the operating results of MetroPCS since May 1, 2013. The remaining increase was primarily due to net state and local taxes, non-deductible expenses, federal and state income tax credits and a net change in uncertain tax positions.  Fororganic growth of our branded prepaid customer base. Branded prepaid revenues, excluding MetroPCS increased by 30% for the threesix months ended March 31, 2012, our effective tax rate differs from the statutory federal rate of 35.0% primarily due to net state and local taxes, non-deductible expenses, and a net change in uncertain tax positions. For the three months ended March 31,June 30, 2013 the increase in the effective tax rate when compared to the same period in 2012 is primarily dueas a result of an increase in average branded prepaid customers for the six months endedJune 30, 2013 driven by the success of T-Mobile's monthly prepaid service plans, including data.

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Wholesale revenues were consistent for the three months ended and increased$20 million, or 7%, for the six months endedJune 30, 2013, compared to the impact of a settlement agreement with a state taxing authority to resolve a disputed tax position which resultedsame periods in an income tax benefit of $3.7 million during the three months ended March 31, 2012.

Net Income2012. Net income decreased $1.6 million, or 8%, to $19.4 millionThe increase for the threesix months ended March 31,June 30, 2013 compared to $21.0 million for the three months ended March 31, 2012. The decrease was primarily attributable to a 9%22% growth of the average number of MVNO customers for the period. However, a significant portion of our MVNO partners' recent customer growth has been in lower ARPU products that result in revenues that do not increase in proportion with customer growth.

Roaming and other service revenuesdecreased$24 million, or 22%, for the three months ended and $50 million, or 22%, for the six months endedJune 30, 2013, compared to the same periods in 2012. The decreases were primarily attributable to lower data roaming revenues due to rate reductions entered into with certain international roaming partners in the second half of 2012.

Equipment salesincreased$944 million for the three months ended and $1.0 billion for the six months endedJune 30, 2013, compared to the same periods in 2012. The increases were primarily attributed to significant growth in the number of handsets sold and an increase in the rate of customers upgrading their handset. This was driven by our introduction of both the Apple iPhone 5 and the Samsung Galaxy S®4 in the second quarter of 2013, comprising of 26% and 18%, respectively, of smartphones sold, excluding MetroPCS. The inclusion of MetroPCS' operating results since May 1, 2013 contributed $73 million to the increase in equipment sales. Additionally, handsets sold during the second quarter had higher revenue per unit sold due to growth in the sales of smartphones, which have a higher average revenue per unit sold as compared to other handsets.

We financed $811 million of the equipment revenues through equipment installment plans during the three months endedJune 30, 2013 an increase from $150 million in the three months endedJune 30, 2012. Additionally, customers had associated equipment installment plan billings of $314 million in the three months endedJune 30, 2013 compared to $96 million in the three months endedJune 30, 2012. During the six months endedJune 30, 2013, we financed $1.1 billion of the equipment revenues through equipment installment plans, an increase from $336 million in the six months endedJune 30, 2012. Additionally, customers had associated equipment installment plan billings of $508 million in the six months endedJune 30, 2013, compared to $172 million in the six months endedJune 30, 2012.

Other revenuesincreased$26 million, or 39%, for the three months ended and $37 million, or 30%, for the six months endedJune 30, 2013, compared to the same periods in 2012. The increases were primarily due to higher rental income from leasing space on our owned wireless communication towers to third parties.

Operating Expenses

Network costsincreased$149 million, or 13%, for the three months ended and $62 million, or 3%, for the six months endedJune 30, 2013, compared to the same periods in 2012. Of the increase, $216 million was due to the inclusion of the operating results of MetroPCS since May 1, 2013. Excluding network costs attributable to the MetroPCS operations, network costs decreased due to lower roaming expenses related to a decrease in average branded customers and associated usage compared to the prior year. Additionally, due to the network transition to enhanced telecommunication lines with higher capacity, we were able to accommodate higher data volumes at a lower cost, resulting in lower network costs in the three and six months endedJune 30, 2013, compared to the same periods in 2012.

Cost of equipment salesincreased$1.2 billion for the three months ended and $1.2 billion for the six months endedJune 30, 2013, compared to the same periods in 2012. The increase in cost of equipment sales was primarily attributable to the significant increase in the volume of handsets sold during the second quarter of 2013, driven by our launch of the Apple iPhone 5 and the Samsung Galaxy S4 as well as additional phones sold through our expanded distribution channel as a result of acquiring MetroPCS. Of the increase, $204 million was attributable to the inclusion of operating results of MetroPCS since May 1, 2013. Additionally, cost of equipment sales increased during the three and six months endedJune 30, 2013 due to an increase in the average cost per unit of each handset sold resulting from the growth in the sale of smartphones.

Customer acquisition increased$277 million, or 37%, for the three months ended and $265 million, or 18%, for the six months endedJune 30, 2013, compared to the same periods in 2012. Of the increase, $95 million of the increases was attributable to the inclusion of operating results of MetroPCS since May 1, 2013. The remaining increase in customer acquisition expenses were primarily attributable to higher commissions costs driven by increased sales volumes and an increase in advertising expenses to promote our Un-carrier message and promote the launch of the iPhone 5 in April 2013.

General and administrative expensedecreased$52 million, or 6%, for the three months ended and $253 million, or 14%, for the six months endedJune 30, 2013, compared to the same periods in 2012. Excluding general and administrative costs attributable to the MetroPCS operations, general and administrative expenses decreased during the three and six months ended

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June 30, 2013 primarily due to lower bad debt expense of $87 million and $196 million, respectively, driven by improved credit quality of our customer portfolio and the shift in the customer base towards branded prepaid customers. This decrease was offset by an additional $59 million of general and administrative expenses from the inclusion of operating results of MetroPCS since May 1, 2013. Additionally, lower employee-related expenses in the three and six months endedJune 30, 2013, as a result of restructuring initiatives implemented in the first half of 2012, which contributed to the year-over-year decreases.

Depreciation and amortizationincreased$69 million, or 8%, for the three months ended and $77 million, or 5%, for the six months endedJune 30, 2013, compared to the same periods in 2012. Depreciation and amortization expense attributable to MetroPCS was $137 million for the months of May and June 2013. Excluding MetroPCS's operating results, depreciation and amortization expenses decreased during the three and six months endedJune 30, 2013 as 2012 included increased depreciation expense due to changes in useful life of certain network equipment to be replaced in connection with network modernization efforts.

MetroPCS transaction-related costs were $26 million and $39 million in the three and six months endedJune 30, 2013, respectively, primarily related to professional services costs associated with the business combination between T-Mobile USA and MetroPCS.

Restructuring costs of $23 million and $54 million for the three and six months endedJune 30, 2013, respectively, were related to our 2013 cost restructuring program to align our operations to our new strategy and position the company for future growth. Costs associated with the 2013 restructuring program primarily related to severance and other personnel-related costs. Restructuring costs of $48 million and $54 million for the three and six months endedJune 30, 2012 related primarily to the consolidation of our call center operations in 2012.

Other, net for the six months endedJune 30, 2013 reflects a $2 million gain on a spectrum license transaction. Other, net of $19 million and $43 million for the three and six months endedJune 30, 2012, respectively, primarily related to employee retention costs associated with the terminated AT&T acquisition of T-Mobile.

Other Income (Expense)

Interest expenseincreased$109 million for the three months ended and $160 million for the six months endedJune 30, 2013, compared to the same periods in 2012. The addition of MetroPCS long-term debt assumed during the second quarter of 2013, resulted in a $56 million increase in interest expense as wellover the prior year. Additionally, interest expense of $54 million and $105 million for the three and six months ended June 30, 2013 related to the long-term financial obligation recorded as a result of the Tower Transaction that closed on November 30, 2012 contributed to the increase. The Tower Transaction and related impacts are further described in Note 4 of the audited Consolidated Financial Statements for the year ended December 31, 2012 included in the Current Report on Form 8-K filed on June 18, 2013.

Income Taxes

Income tax expensedecreased$114 million, or 84%, for the three months ended and $167 million, or 64%, for the six months endedJune 30, 2013, compared to the same periods in 2012. The decrease in income tax expense was primarily due to lower pre-tax book income. The effective income tax rate was 395.2% and 39.7% for the three months endedJune 30, 2013 and June 30, 2012, respectively. The increase in provisionthe effective tax rate for the three months endedJune 30, 2013 compared to the same period in 2012 was primarily due to non-deductible costs recorded in 2013 and the cumulative impact of 2013 Puerto Rico statutory rate changes retroactive to the beginning of the year. The effective income taxes, partiallytax rate was 50.5% and 39.0% for the six months endedJune 30, 2013 and 2012, respectively. The increase in the effective tax rate for the six months endedJune 30, 2013 compared to the same period in 2012 was primarily due to non-deductible costs recorded in 2013.
Guarantor Subsidiaries

Pursuant to the indenture and the indenture supplements governing the notes payable to affiliates and long-term debt (together the "Notes"), the Notes are fully and unconditionally guaranteed, jointly and severally, on a senior unsecured basis by T-Mobile US, Inc. (“Parent”) and certain of T-Mobile USA, Inc.'s (“Issuer”) 100% owned subsidiaries (“Guarantor Subsidiaries”).

The financial condition of the Parent, Issuer and Guarantor Subsidiaries is substantially similar to the Company's consolidated financial condition. Similarly, the results of operations of the Parent, Issuer and Guarantor Subsidiaries are substantially similar to the Company's consolidated results of operations. As of June 30, 2013 and December 31, 2012, the most significant components of the financial condition of the Non-Guarantor Subsidiaries were property and equipment of $636 million and $678 million, respectively, spectrum licenses of $220 million and $220 million, respectively, long-term financial obligations of

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$2.1 billion and $2.1 billion, respectively, and stockholders' equity of $1.1 billion and $1.0 billion, respectively. The most significant components of the results of operations of our Non-Guarantor Subsidiaries for the three and six months endedJune 30, 2013 were services revenues of $191 million and $367 million, respectively, offset by costs of equipment sales of $122 million and $251 million, respectively, resulting in a 10% increasenet comprehensive loss of none and $20 million, respectively. Similarly, for the three and six months endedJune 30, 2012, services revenues of $180 million and $357 million, respectively, offset by costs of equipment sales of $107 million and $219 million, respectively, resulting in a net comprehensive income from operations.of $20 million and $36 million, respectively. See Note 12 - Guarantor Financial Information of the Notes to the Condensed Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q for the condensed, consolidated financial information.

Performance Measures

In managing our business and assessing our financial performance, we supplement the information provided by financial statement measures (“GAAP measures”), such as operating income (loss), with non-GAAP measures, including Adjusted EBITDA, Branded Cost Per Gross Addition (“Branded CPGA”) and Branded Cost Per User (“Branded CPU”), which measure the financial performance of operations, and several customer-focusedcustomer focused performance metrics that we believe are widely used in the wireless communications industry. TheseIn addition to metrics involving the numbers of customers, these metrics also include average revenue per user per month, or ARPU, which measures service revenue per customer; cost per gross customer, addition, or CPGA, which measures the average cost of acquiring a new customer; cost per user per month, or CPU, which measures the non-selling cash cost of operating our business on a per customer basis;and churn, which measures turnover in our customer base; and Adjusted EBITDA, which measures the financial performance of our operations.base. For a reconciliation of non-GAAP performance measures and a further discussion of thethese measures, please read “— Reconciliationsee “Reconciliation of non-GAAP Financial Measures” below..

The following table sets forth the number of ending customers:
(in thousands)June 30,
2013		 March 31,
2013		 December 31, 2012 June 30,
2012
Customers, end of period       
Branded postpaid customers20,783
 20,094
 20,293
 21,300
Branded prepaid customers14,935
 6,028
 5,826
 5,295
Total branded customers35,718
 26,122
 26,119
 26,595
M2M customers3,423
 3,290
 3,090
 2,786
MVNO customers4,875
 4,556
 4,180
 3,787
Total wholesale customers8,298
 7,846
 7,270
 6,573
Total T-Mobile customers, end of period44,016
 33,968
 33,389
 33,168

The following table sets forth the number of net customer additions (losses):
 Three Months Ended June 30, Six Months Ended June 30,
(in thousands)2013 2012 2013 2012
Net customer additions (losses)       
Branded postpaid customers688
 (557) 490
 (1,067)
Branded prepaid customers(10) 227
 191
 476
Total branded customers678
 (330) 681
 (591)
M2M customers133
 95
 333
 357
MVNO customers319
 30
 695
 217
Total wholesale customers452
 125
 1,028
 574
Total T-Mobile net customer additions (losses)1,130
 (205) 1,709
 (18)
Acquired Customers8,918
 —
 8,918
 —
Note: certain customer numbers may not add due to rounding.

Total Customers

A customer is generally defined as a SIM card with a unique T-Mobile identity number which generates revenue. Branded postpaid customers include customers that are qualified to pay after incurring a month of service whether on an annual service contract or not, and branded prepaid customers include customers who generally pay in advance. Wholesale customers include M2M and MVNO customers that operate on the T-Mobile network, but are managed by wholesale partners.

The following table shows metric informationExcluding customers of MetroPCS acquired as a result of the business combination, net customer additions were 1,130,000 for the three months endedMarch 31, 2013 and 2012.June 30, 2013
  Three Months Ended March 31,
  2013 2012
Customers:    
End of period 8,995,391
 9,478,313
Net additions 108,668
 131,654
Churn: 
 
Average monthly rate 2.9% 3.1%
ARPU $40.96
 $40.56
CPGA $236.14
 $235.45
CPU $22.21
 $22.87
Adjusted EBITDA (in thousands) $291,076
 $262,362
Customers, compared to net customer losses of 205,000 for the same period in 2012. Net customer additions were 108,6681,709,000 for the six months endedJune 30, 2013, compared to net customer losses of 18,000 in the same

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period in 2012. At June 30, 2013, we had approximately 44.0 million customers, a 33% increase from the customer total as of June 30, 2012. The increase was primarily driven by the addition of MetroPCS's customer base due to the completion of the business combination during the second quarter of 2013, which increased the branded prepaid customer base by 8,918,000.

Branded Customers

Branded postpaid net customer additions improved to 688,000 for the three months ended March 31,June 30, 2013, compared to branded postpaid net customer losses of 131,654557,000 for the same period in 2012. Branded postpaid net customer additions improved to 490,000 for the six months endedJune 30, 2013, compared to branded postpaid net customer losses of 1,067,000 for the same period in 2012. T-Mobile reported positive branded net postpaid additions in the second quarter of 2013 for the first time since the first quarter of 2009. The significant improvements in customer development were attributable to both improved branded postpaid churn and increased new customer activations. T-Mobile sales benefited from the launch of the Simple Choice plans as a component of the Un-carrier strategy. We also began offering the iPhone 5 in April 2013, which comprised 26% of smartphones sold during the second quarter, excluding MetroPCS. We also launched the Samsung Galaxy S4, which comprised 18% of smartphones sold during in the second quarter of 2013, excluding MetroPCS. This improved churn and drove incremental gross additions for branded postpaid customers and improved churn as further described below.

Excluding customers of MetroPCS acquired as a result of the business combination, branded prepaid net customer losses were 10,000 for the three months ended March 31, June 30, 2013, compared to branded prepaid net customer additions of 227,000 for the same period in 2012, while branded prepaid net customer additions were 191,000 for the six months endedJune 30, 2013, compared to branded prepaid net customer additions of 476,000 for the same period in 2012. The decreasedecreases were primarily a result of qualified upgrades of branded prepaid customers to branded postpaid plans as the Un-carrier strategy provides no annual service contract options to credit worthy customers that have historically been utilizing prepaid products. In addition, the robust competitive environment in the prepaid market resulted in higher branded prepaid customer deactivations partially offset by higher branded prepaid customer gross additions.

Wholesale

Wholesale net customer additions wewere 452,000 for the three months endedJune 30, 2013, compared to wholesale net customer additions of 125,000 for the same period in 2012. Wholesale net customer additions were 1,028,000 for the six months endedJune 30, 2013, compared to wholesale net customer additions of 574,000 for the same period in 2012. The increases were primarily due to higher MVNO gross customer additions, including new MVNO partnerships entered into during the second half of 2012. The growth in MVNO customers was due in part to the continued popularity of government subsidized Lifeline programs offered by our MVNO partners along with ongoing growth from new MVNO partnerships launched in the fourth quarter of 2012.MVNO partners often have relationships with multiple carriers and through steering their business towards carriers offering promotions can impact specific carriers' results.

Churn
 Three Months Ended June 30, Six Months Ended June 30,
2013 2012 2013 2012
Branded churn3.0% 2.9% 3.0% 3.0%
Branded postpaid churn1.6% 2.1% 1.8% 2.3%
Branded prepaid churn5.4% 6.0% 6.0% 6.2%

Churn is defined as the number of customers whose service was discontinued, expressed as a percentage of the average number of customers during the specified period. The number of customers whose service was discontinued is presented net of customers that subsequently have their service restored. We believe that churn, which is a measure of customer retention and loyalty, provides relevant and useful information and is used by management to evaluate the operating performance of our business.

Branded postpaid churn was approximately 1.6% for the three months endedJune 30, 2013, compared to 2.1% for the same period in 2012. Branded postpaid churn was 1.8% for the six months endedJune 30, 2013, compared to 2.3% for the six months endedJune 30, 2012. At 1.6% in the second quarter, branded postpaid churn was the lowest level ever reported by T-Mobile. The significant improvements were due in part to the continued focus on churn reduction initiatives, such as improving network quality and customer sales experience. Additionally, our no annual service contract Un-carrier strategy announced in the first quarter of 2013 continued to gain positive traction with customers. We also began offering the iPhone 5
during the second quarter of 2013, which improved customer retention compared to the same periods in 2012. These factors

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contributed to improved branded postpaid customer retention in 2013 compared to the same periods of the prior year.
Branded prepaid churn was 5.4% for the three months endedJune 30, 2013, compared to 6.0% for the same period in 2012. Branded prepaid churn was 6.0% for the six months endedJune 30, 2013, compared to 6.2% for the same period in 2012. The decreases were primarily a result of the completion of the business combination with MetroPCS during the second quarter of 2013. MetroPCS customers are now the largest portion of the branded prepaid customer base and have historically had lower rates of churn. Consequently, branded prepaid churn was impacted positively by the inclusion of MetroPCS customers.

Average Revenue Per User
 Three Months Ended June 30, Six Months Ended June 30,
2013 2012 2013 2012
ARPU (branded)$46.67
 $51.45
 $47.34
 $51.61
ARPU (branded postpaid)53.60
 57.35
 53.83
 57.51
ARPU (branded prepaid)34.78
 26.81
 32.61
 26.11

ARPU represents the average monthly service revenue earned from customers. Each of the branded ARPU metrics are calculated by dividing the corresponding branded (total branded, branded postpaid, branded prepaid) service revenues for the specified period by the corresponding average customers during the period, and further dividing by the number of months in the period. We believe ARPU provides management with useful information to evaluate the service revenues generated from our customer base.

Branded ARPU decreased $4.78 for the three months ended and $4.27 for the six months endedJune 30, 2013, compared to the same periods in 2012. The decreases were primarily attributable to our focus on generating Adjusted EBITDAthe change in customer portfolio mix towards Value and cash flow versus customer growth, competitive pressures, continued economic pressuresSimple Choice plans, branded prepaid and lackwholesale customers, all of economic recoverywhich have lower ARPU than customers under traditional service plans bundled with a discounted handset.

Branded postpaid ARPU decreased $3.75 for the three months ended and customer expectations$3.68 for high speed 4G data service. Total customers werethe 8,995,391six months ended as of March 31,June 30, 2013, compared to the same periods in 2012. The decreases were primarily due to the continued migration of the branded postpaid customer base towards Value and Simple Choice plans, which have lower ARPU than customers under traditional service plans bundled with a decrease of 5%discounted handset. Branded postpaid customers on Simple Choice plans more than doubled over the customer totalpast twelve months, and at June 30, 2013, represented 50% of branded postpaid customers compared to only 9,478,31319% as of branded postpaid customers at March 31,June 30, 2012.

Churn.Branded prepaid ARPU increased $7.97 As we do not requirefor the three months ended and $6.50 for the six months endedJune 30, 2013, compared to the same periods in 2012. The increases were primarily due to the inclusion of MetroPCS customers which have higher ARPU than T-Mobile's branded prepaid customers, as well as the growth of monthly prepaid service plans, which include data services and have higher ARPU than other T-Mobile pay-as-you-go prepaid plans.

Branded Cost Per Gross Addition and Branded Cost Per User
 Three Months Ended June 30, Six Months Ended June 30,
2013 2012 2013 2012
Branded CPGA$326
 $420
 $332
 $391
Branded CPU26
 28
 26
 29

Branded CPGA is determined by dividing the costs of acquiring new customers, consisting of customer acquisition expenses plus the loss on equipment sales related to acquiring new customers for the specified period, by gross branded customer additions during the period. The loss on equipment sales related to acquiring new customers consists primarily of the excess of handset and accessory costs over related revenues incurred to acquire new customers. Additionally, the loss on equipment sales associated with retaining existing customers is excluded from this measure as Branded CPGA is intended to reflect only the acquisition costs to acquire new customers.

Branded CPGA was $326 for the three months endedJune 30, 2013, compared to $420 for the three months endedJune 30, 2012. Branded CPGA was $332 for the six months endedJune 30, 2013, compared to $391 for the six months endedJune 30, 2012. Branded CPGA was lower in 2013 compared to the same periods of the prior year due primarily to the significant increase in branded customer gross additions which resulted in fixed acquisition costs such as employee salaries and lease expense being applied over a long-term service contract, we expect our churn percentage to be higher than traditional wireless carriers that require customers to sign a one- to two-year contract with significant early termination fees. Average monthly churn represents (a) thegreater number of customers who have been disconnected from our systemcustomer gross additions. This decrease was partially offset by an increase in

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the loss on equipment sales related to customer acquisition to $142 million and $228 million during the measurement period lessthree and six months ended June 30, 2013 from $82 million and $190 million during the numberthree and six months ended June 30, 2012, due to the increased volume of customers who have reactivated service, dividedhandset sales and higher per unit costs due to an increasing mix of higher cost smartphones being sold.
Branded CPU is determined by (b)dividing network costs and general and administrative expenses plus the loss on equipment sales related to customer retention, by the sum of the average monthly number of branded customers during such period. We classify delinquentAdditionally, the cost of serving customers as churn after they have been delinquent for 30 days. In addition, when an existing customer establishes a new account in connection withincludes the purchasecosts of an upgraded or replacement phone and does not identify themselves as an existing customer, we count the phone leaving service as a churn and the new phone entering service as a gross customer addition (“false churn”). Churn for the providing handset insurance services.

three months endedMarch 31, 2013Branded CPU was 2.9%, compared to 3.1%$26 for the three months ended March 31, 2012. The decrease in churn was primarily driven by continued investments in our network and lower subscriber growth. Our customer activity is influenced by seasonal effects related to traditional retail selling periods and other factors that arise from our target customer base. Based on historical results, we

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generally expect the net customer additions to be strongest in the first and fourth quarters. Softening of sales and increased customer turnover, or churn, in the second and third calendar quarters of the year usually combine to result in fewer net customer additions or in net customer losses. See - “Seasonality.”
Average Revenue Per User. ARPU represents (a) service revenues less pass through charges for the measurement period, divided by (b) the sum of the average monthly number of customers during such period. ARPU was $40.96 and $40.56 for three months endedMarch 31, 2013 and 2012, respectively, an increase of $0.40. The increase in ARPU for the three months endedMarch 31,June 30, 2013, when compared to the same period in 2012, was primarily attributable to continued demand for our 4G LTE service plans partially offset by promotional service plans.
Cost Per Gross Addition. CPGA is determined by dividing (a) selling expenses plus the total cost of equipment associated with transactions with new customers less equipment revenues associated with transactions with new customers during the measurement period by (b) gross customer additions during such period. Retail customer service expenses and equipment margin on handsets sold to existing customers when they are identified, including handset upgrade transactions, are excluded, as these costs are incurred specifically for existing customers. CPGA costs increased to $236.1428 for the three months ended March 31,June 30, 2012.
Branded CPU was $26 for the six months endedJune 30, 2013 from, compared to $235.4529 for the six months endedJune 30, 2012. The decreases in branded CPU for the three and six months ended June 30, 2013, compared to the same periods in 2012, were primarily attributable to operating costs being applied over greater average branded customers due to the acquisition of MetroPCS customers in the second quarter of 2013 in connection with the completion of the business combination. Operating costs increased in 2013 but at a lesser rate than the increase in average branded customers. Network costs increased primarily due to the inclusion of the operating results of MetroPCS since May 1, 2013 and the higher loss on equipment sales related to customer retention due to higher volumes of smartphone sales in 2013. For the six months endedJune 30, 2013 compared to the same period of the prior year, general and administrative expenses decreased due to improvements in bad debt expense as described in “Result of Operations” and lower employee related costs as a result of restructuring initiatives implemented in the first half of 2012.

Adjusted EBITDA
 Three Months Ended June 30, Six Months Ended June 30,
(in millions)2013 2012 2013 2012
Adjusted EBITDA$1,124
 $1,338
 $2,302
 $2,612
Adjusted EBITDA margin24% 31% 26% 30%

We define Adjusted EBITDA as earnings before interest expense (net of interest income), tax, depreciation, amortization and stock-based compensation and exclude transactions that are not reflective of T-Mobile's ongoing operating performance. Adjusted EBITDA is detailed in the section entitled “Reconciliation of Financial Measures”. Adjusted EBITDA margin, expressed as a percentage, is calculated as Adjusted EBITDA divided by total service revenues.

Adjusted EBITDA decreased 16% for the three months endedMarch 31, 2012 and . The increase in CPGA12% for the threesix months ended March 31,June 30, 2013, was primarily driven by a 12% decrease in gross additions partially offset by decreased promotional activities as compared to the three months ended March 31, 2012.
Cost Per User. CPU is determined by dividing (a) cost of service and general and administrative costs (excluding applicable stock-based compensation expense included in cost of service and general and administrative expense) plus net loss on handset equipment transactions unrelated to initial customer acquisition, divided by (b) the sum of the average monthly number of customers during such period. CPU for the three months endedMarch 31, 2013 and 2012 was $22.21 and $22.87, respectively. The decrease in CPU for the three months endedMarch 31, 2013, when compared to the same periodperiods in 2012,. The inclusion of MetroPCS results for the months of May and June 2013 increased revenues and operating expenses in 2013 and contributed $225 million in Adjusted EBITDA. Excluding MetroPCS results, service revenues declined primarily due to losses in the average branded postpaid customer base and impacts from customers migrating to Value and Simple Choice plans, which result in lower ARPU. Additionally, Adjusted EBITDA was primarily drivenimpacted by a decreaseincreases in retention expense for existing customers, a decrease in long distance cost and a decrease in taxes and regulatory fees. These items wereof equipment sales from higher sales volumes, partially offset by an increaseincreases in equipment revenues. Increases in costs associated with our 4G LTE network upgradeof equipment sales and an increase in commissions paid to independent retailers for customer reactivations. Duringequipment revenues were driven by the three months ended March 31, 2013 we experienced $5.45 in CPU directly related to handset upgrades compared to $7.13launch of the Apple iPhone 5 and Samsung Galaxy S4 during the three months ended March 31, 2012.second quarter of 2013. In addition, equipment revenues increased in 2013 due to a higher proportion of customers choosing Value and Simple Choice plans for which we do not offer subsidies (discounts) on devices.

Adjusted EBITDA. Adjusted EBITDA is defined as consolidated net income plus depreciation and amortization; gain (loss) on disposal of assets; less stock-based compensation expense; gain (loss) on extinguishment of debt; provision for income taxes; interest expense; minus interest and other income and non-cash items increasing consolidated net income. Adjusted EBITDA for the three months endedMarch 31, 2013 increased to $291.1 million from $262.4 million for the three months endedMarch 31, 2012.
Reconciliation of non-GAAP Financial Measures
We utilize certain financial measures and key performance indicators that are not calculated in accordance with GAAP to assess our financial and operating performance.
A non-GAAP financial measure is defined as a numerical measure of a company's financial performance that (i) excludes amounts, or is subject to adjustments that have the effect of excluding amounts, that are included in the comparable measure calculated and presented in accordance with GAAP in the statement of income or statement of cash flows, or (ii) includes amounts, or is subject to adjustments that have the effect of including amounts, that are excluded from the comparable measure so calculated and presented.
ARPU,
Branded CPGA, Branded CPU and Adjusted EBITDA are non-GAAP financial measures utilized by our management to judgeevaluate our operating performance, and in the case of Adjusted EBITDA, our ability to meet our liquidity requirements and to evaluate our operating performance.requirements. We believe these measures are important in understanding the performance of our operations from period to period, and although every company in the wireless industry doesmay not define each of these measures in precisely the same way, we believe that these measures, (whichwhich are common in the wireless industry)industry, facilitate key liquidity and operating performance comparisons with other companies in the wireless industry. The following tables reconcile our non-GAAP financial measures with ourthe financial statements presented in accordance with GAAP.
ARPU -

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Average Revenue Per User

We utilize ARPU to evaluate our per-customer service revenue realization and to assist in forecasting our future service revenues. We believe ARPU is calculated exclusive of pass through charges that we collectprovides management with useful information to evaluate the service revenues generated from our customers and remit to the appropriate government agencies.customer base.
Average number of customers for any measurement period is determined by dividing (a) the sum of the average monthly number of customers for the measurement period by (b) the number of months in such period. Average monthly number of customers for any month represents the sum of the number of customers on the first day of the month and the last day of the month divided by two. We believe investors use ARPU primarily as a tool to track changes in our average revenue per

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customer and to compare our per customer service revenues to those of other wireless broadband mobile providers, although other providers may calculate this measure differently. The following table reconciles total revenues used intables illustrate the calculation of ARPU and reconciles these measures to the related service revenues, which we consider to be the most directly comparable GAAP financial measure to ARPU.ARPU:
  Three Months Ended March 31,
  2013 2012
  (in thousands, except average number of customers and ARPU)
Calculation of Average Revenue Per User (ARPU):    
Service revenues $1,101,031
 $1,158,779
Less: Pass through charges (8,439) (16,504)
Net service revenues $1,092,592
 $1,142,275
Divided by: Average number of customers 8,891,298
 9,388,465
ARPU $40.96
 $40.56
 Three Months Ended June 30, Six Months Ended June 30,
(in millions, except average number of customers and ARPU)2013 2012 2013 2012
Calculation of Branded ARPU:       
Branded postpaid service revenues$3,284
 $3,713
 $6,547
 $7,534
Branded prepaid service revenues1,242
 414
 1,745
 791
Branded Service revenues$4,526
 $4,381
 $8,292
 $8,325
Divided by: Average number of branded customers (in thousands) and number of months in period32,327
 26,736
 29,190
 26,886
Branded ARPU$46.67
 $51.45
 $47.34
 $51.61
        
Calculation of Branded Postpaid ARPU:       
Branded postpaid service revenues$3,284
 $3,713
 $6,547
 $7,534
Divided by: Average number of branded postpaid customers (in thousands) and number of months in period20,425
 21,580
 20,271
 21,832
Branded Postpaid ARPU$53.60
 $57.35
 $53.83
 $57.51
        
Calculation of Branded Prepaid ARPU:       
Branded prepaid service revenues$1,242
 $414
 $1,745
 $791
Divided by: Average number of branded prepaid customers (in thousands) and number of months in period11,902
 5,156
 8,919
 5,054
Branded Prepaid ARPU$34.78
 $26.81
 $32.61
 $26.11
CPGA -
Branded Cost Per Gross Addition and Branded Cost Per User

We utilize Branded CPGA to assess the efficiency of our distribution strategy, validate the initial capital investedfinancial investment in ournew customers and determine the number of months to recover our customer acquisition costs. This measure also allows us to compare our average acquisition costs per new customer to those of other wireless broadband mobiletelecommunications providers, although other providers may calculate this measure differently. Equipment revenues related to new customers are deducted from sellingcustomer acquisition expenses in this calculation as they represent amounts paid by customers at the time their service is activated that reduce ourthe acquisition cost of those customers. Additionally, equipment costs associated with retaining existing customers net of related revenues, are excluded as this measure is intended to reflect only the acquisition costs related to new customers. We believe investors use CPGA primarily as a tool to track changes in our average cost of acquiring new customers and to compare our per customer acquisition costs to those of other wireless broadband mobile providers, although other providers may calculate this measure differently. The following table reconciles total costs used in the calculation of Branded CPGA to sellingcustomer acquisition expenses, which we consider to be the most directly comparable GAAP financial measure to CPGA.Branded CPGA:
  Three Months Ended March 31,
  2013 2012
  (in thousands, except gross customer additions and CPGA)
Calculation of Cost Per Gross Addition (CPGA):    
Selling expenses $102,526
 $95,541
Less: Equipment revenues (186,030) (117,811)
Add: Equipment revenue not associated with new customers 131,543
 94,069
Add: Cost of equipment 437,969
 458,864
Less: Equipment costs not associated with new customers (276,813) (294,829)
Gross addition expenses $209,195
 $235,834
Divided by: Gross customer additions 885,893
 1,001,636
CPGA $236.14
 $235.45
 Three Months Ended June 30, Six Months Ended June 30,
(in millions, except gross customer additions and CPGA)2013 2012 2013 2012
Calculation of CPGA:       
Customer acquisition expenses$1,028
 $751
 $1,765
 $1,500
Add: Loss on equipment sales       
Equipment sales(1,379) (435) (1,984) (970)
Cost of equipment sales1,936
 745
 2,822
 1,590
Total loss on equipment sales557
 310
 838
 620
Less: Loss on equipment sales related to customer retention(415) (228) (610) (430)
Loss on equipment sales related to customer acquisition142
 82
 228
 190
Cost of acquiring new branded customers$1,170
 $833
 $1,993
 $1,690
Divided by: Gross branded customer additions (in thousands)3,590
 1,985
 6,001
 4,319
Branded CPGA$326
 $420
 $332
 $391
CPU - 

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We utilize Branded CPU as a tool to evaluate the non-sellingnon-acquisition related cash expenses associated with ongoing business operations on a per customer basis, to track changes in these non-selling cashnon-acquisition related costs over time, and to help evaluate how changes in our business operations affect non-selling cashnon-acquisition related costs per customer. In addition, Branded CPU provides management with a useful measure to compare our non-selling cashnon-acquisition related costs per customer with those of other wireless broadband mobiletelecommunications providers. We believe investors use CPU primarily as a tool to track changes in our non-selling cash costs over time and to compare our non-selling cash costs to those of other wireless broadband mobile providers, although other providers may calculate this measure differently. The following table reconciles total costs used in the calculation of Branded CPU to cost of service,network costs, which we consider to be the most directly comparable GAAP financial measure to CPU.CPU:

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  Three Months Ended March 31,
  2013 2012
  (in thousands, except average number of customers and CPU)
Calculation of Cost Per User (CPU):    
Cost of service $372,978
 $388,927
Add: General and administrative expense 92,085
 81,052
Add: Net loss on equipment transactions unrelated to initial customer acquisition 145,270
 200,760
Less: Stock-based compensation expense included in cost of service and general and administrative expense (9,573) (10,156)
Less: Pass through charges (8,439) (16,504)
Total costs used in the calculation of CPU $592,321
 $644,079
Divided by: Average number of customers 8,891,298
 9,388,465
CPU $22.21
 $22.87
 Three Months Ended June 30, Six Months Ended June 30,
(in millions, except average number of customers and CPU)2013 2012 2013 2012
Calculation of CPU:       
Network costs$1,327
 $1,178
 $2,436
 $2,374
Add: General and administrative expenses819
 871
 1,588
 1,841
Add: Loss on equipment sales related to customer retention415
 228
 610
 430
Total cost of serving customers$2,561
 $2,277
 $4,634
 $4,645
Divided by: Average number of branded customers (in thousands)32,327
 26,736
 29,190
 26,886
Branded CPU$26
 $28
 $26
 $29

Adjusted EBITDA
Adjusted EBITDA - We utilize Adjusted EBITDAis a non-GAAP financial measure utilized by our management to monitor the financial performance of our operations. This measurement, together with GAAP measures such as revenue and operating income, from operations, assists management in its decision-making process related to the operation of our business. Adjusted EBITDA has limitations as an analytical tool and should not be considered in isolation or as a substitute for income from operations, net income, or any other measure of financial performance reported in accordance with GAAP. In addition, other providers may calculate this measure differently.

We believe that analysts and investors use Adjusted EBITDA as a supplemental measure to evaluate our overall operating performance and that this metric facilitates comparisons with other wireless communications companies. We use Adjusted EBITDA internally as a metric to evaluate and compensate our employeespersonnel and management for their performance, and as a benchmark to evaluate our operating performance in comparison to our competitors. Management also uses Adjusted EBITDA to measure, from period-to-period, our ability to provide cash flows to meet future debt services, capital expenditures and working capital requirements and fund future growth. We believe that analysts and investors use Adjusted EBITDA as a supplemental measure to evaluate overall operating performance and that this metric facilitates comparisons with other wireless communications companies. Adjusted EBITDA has limitations as an analytical tool and should not be considered in isolation or as a substitute for income from operations, net income, or any other measure of financial performance reported in accordance with GAAP. In addition, other wireless carriers may calculate this measure differently. Adjusted EBITDA excludes transactions that are not reflective of our ongoing operating performance and is detailed in the tables below. The following tables illustratetable illustrates the calculation of Adjusted EBITDA and reconcilereconciles Adjusted EBITDA to net income and cash flows from operating activities, which we consider to be the most directly comparable GAAP financial measuresmeasure to Adjusted EBITDA.EBITDA:
 Three Months Ended March 31,Three Months Ended June 30, Six Months Ended June 30,
 2013 2012
 (in thousands)
(in millions)2013 2012 2013 2012
Calculation of Adjusted EBITDA:           
Net income $19,396
 $21,004
Net income (loss)$(16) $207
 $91
 $407
Adjustments: 
 
       
Depreciation and amortization 173,167
 152,819
Loss on disposal of assets 508
 1,120
Stock-based compensation expense 9,573
 10,156
Interest expense to affiliates225
 151
 403
 322
Interest expense 76,346
 70,083
109
 —
 160
 —
Interest income (373) (375)(40) (18) (75) (32)
Other (income) expense, net (84) (103)(118) (23) (112) (8)
Provision for income taxes 12,543
 7,658
Income tax expense21
 135
 93
 260
Operating income181
 452
 560
 949
Depreciation and amortization888
 819
 1,643
 1,566
MetroPCS transaction-related costs26
 —
 39
 —
Restructuring costs23
 48
 54
 54
Stock-based compensation6
 —
 6
 —
Other, net (1)—
 19
 —
 43
Adjusted EBITDA $291,076
 $262,362
$1,124
 $1,338
 $2,302
 $2,612

(1)
Other, net of $19 million and $43 million for the three and six months endedJune 30, 2012 primarily related to employee retention costs associated with the terminated AT&T acquisition of T-Mobile USA. Other, net transactions may not agree in total to the other, net classification in the Consolidated Statements of Income and Comprehensive Income due to certain routine operating activities, such as insignificant routine spectrum license exchanges that would be expected to reoccur, and are therefore not excluded from the calculation of Adjusted EBITDA.

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  Three Months Ended March 31,
  2013 2012
  (in thousands)
Reconciliation of Net Cash Provided by Operating Activities to Adjusted EBITDA:    
Net cash provided by operating activities $223,451
 $136,904
Adjustments: 
 
Interest expense 76,346
 70,083
Non-cash interest expense (2,195) (1,831)
Interest income (373) (375)
Other (income) expense, net (84) (103)
Recovery of uncollectible accounts receivable 111
 107
Deferred rent expense (2,930) (4,792)
Cost of abandoned cell sites (360) (423)
Gain on sale and maturity of investments 138
 37
Accretion of asset retirement obligations (1,778) (1,588)
Provision for income taxes 12,543
 7,658
Deferred income taxes (11,505) (14,357)
Changes in working capital (2,288) 71,042
Adjusted EBITDA $291,076
 $262,362
Liquidity and Capital Resources

Our principal sources of liquidity are our existing cash and cash equivalents, and cash generated from operations. AtAs of June 30, 2013, our cash and cash equivalents were March$2.4 billion. In addition, we have entered into an unsecured revolving credit facility with Deutsche Telekom that allows for up to $500 million in borrowings. We expect our current sources of funding to be sufficient to meet the anticipated liquidity requirements of the company in the next 12 months. We determine future liquidity requirements, for both operations and capital expenditures, based in large part upon projected financial and operating performance. 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. There are a number of 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.

Prior to the completion of the business combination on April 30, 2013, our sources of liquidity were cash and cash equivalents and short-term investments with Deutsche Telekom included in accounts receivable from affiliates, and cash generated from operations. As of December 31, 2012, our cash and cash equivalents were $394 million and short-term investments with Deutsche Telekom were $650 million.

As of June 30, 2013, our total capital consists of notes payable to affiliates of $11.2 billion, we hadthird-party long-term debt of $6.3 billion, and stockholders' equity of $12.4 billion. Prior to the closing of the business combination with MetroPCS, Deutsche Telekom effected a recapitalization of T-Mobile. Our existing notes payable to affiliates, with a total principal balance of$14.5 billion, were extinguished, interest rate and cross currency interest rate swaps related to the extinguished notes were settled, and $11.2 billion of new unsecured senior notes were issued to Deutsche Telekom. The new unsecured senior notes are divided equally between reset and non-reset notes with weighted average interest rates of 5.578% and 6.836%, respectively, and ratable annual maturities ranging from 2019 through 2023. See Note 7 – Notes Payable of Affiliates and Debt of the Notes to the Condensed Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q.

Stockholders' equity increased $6.2 billion from December 31, 2012 due to the effects of the recapitalization, the issuance of stock to MetroPCS stockholders, and net income for the six months ended June 30, 2013. As part of the recapitalization, Deutsche Telekom contributed to T-Mobile approximately $2.73.1 billion in cash and cash equivalents. We believe that, based on our current leveladditional equity. In connection with the business combination with MetroPCS, common stock representing approximately 74% of the total shares outstanding was issued to Deutsche Telekom. However, as the transaction was accounted for as a reverse acquisition, stockholders' equity reflects a $3.0 billion increase for shares deemed issued to MetroPCS stockholders in consideration for their minority share. Additionally, as part of the business combination, we acquired $2.1 billion of cash and cash equivalents and our anticipated cash flows from operations, we have adequate liquidity, cash flow and financial flexibility to fund our operations in the near-term. In addition we had a totalassumed long-term debt of MetroPCS with an aggregate fair value amount of $3.486.3 billion in net proceeds from the issuance of the 6 1/4% Senior Notes and New 6 5/8% Senior Notes, or collectively the 2013 Notes, that was classified as restricted cash on the condensed consolidated balance sheet as of March 31, 2013.

As of March 31, 2013, we owed an aggregate of approximately $7.9 billion under our Senior Secured Credit Facility,
7 7/8% Senior Notes due 2018, or the 7 7/8% Senior Notes, 6 5/8% Senior Notes due 2020, or the 6 5/8% Senior Notes, 6 1/4% Senior Notes and New 6 5/8% Senior Notes, as well as $324.5 million under our capital lease obligations.
Senior Notes Offering
In March 2013, Wireless completed the sale of $1.75 billion of principal amount of 6 1/4% Senior Notes. The net proceeds from the sale of the 6 1/4% Senior Notes were $1.74 billion after underwriter fees and other debt issuance costs of approximately $14.9 million.
In March 2013, Wireless completed the sale of $1.75 billion of principal amount of New 6 5/8% Senior Notes. The net proceeds from the sale of the New 6 5/8% Senior Notes were $1.74 billion after underwriter fees and other debt issuance costs of approximately $14.9 million.

IfThe indentures governing the Proposed Transaction in connectionnotes payables to affiliates and long-term debt contain covenants that, among other things, limit the ability of the Company and subsidiary guarantors to: incur more debt; pay dividends and make distributions; make certain investments; repurchase stock; create liens or other encumbrances; enter transactions with the Business Combination Agreement has not been consummated onaffiliates; enter into transactions that restrict dividends or before 11:59 p.m., New York City time, on January 17, 2014,distributions from subsidiaries; and merge, consolidate, or if the Business Combination Agreement is terminated prior to that time,sell, or otherwise dispose of, substantially all of the 2013 Notes will be subject to a special mandatory redemption. Accordingly, Wireless is required to keep the $3.48 billiontheir assets. Certain provisions of net proceeds from the 2013 Notes offering in a segregated account and keep the net proceeds on hand in cash or cash equivalents pending the consummationeach of the Proposed Transaction (See Note 4). If a special mandatory redemption occurs,indentures and the special mandatory redemption price for each series of 2013supplemental indentures relating to the Metro Notes would be (i) ifrestrict the special mandatory redemption occurs on or prior to September 30, 2013, 100%ability of the principal amount ofIssuer to loan funds or make payments to the 2013 Notes, and (ii) ifParent. However, the special mandatory redemption occurs after September 30, 2013, 101% ofIssuer is allowed to make certain permitted payments to the principal amount of the 2013 Notes, in each case plus accrued and unpaid interest to, but not including, the redemption date. If the Proposed Transaction is consummated, the 2013 Notes will be assumed by, and become the obligations of, T-Mobile, as the surviving corporation. Wireless intends to use the net proceeds from the sale of the 2013 Notes to repay the outstanding amounts owedParent under the Senior Secured Credit Facility, to pay liabilities under related interest rate protection agreements and to pay related fees and expenses, and the remainder of which

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Wireless intends to use for general corporate purposes, if the Proposed Transaction is consummated. The 2013 Notes will thereafter be guaranteed by the MetroPCS, T-Mobile's wholly-owned domestic restricted subsidiaries (excluding certain designated special purpose entities, a certain reinsurance subsidiary and immaterial subsidiaries), all of T-Mobile's restricted subsidiaries that guarantee certain of its indebtedness, and any future subsidiary of MetroPCS that directly or indirectly owns any equity interests of T-Mobile.

In March 2013, Wireless and the guarantors also entered into a Registration Rights Agreement with Deutsche Bank Securities Inc., as representative of the initial purchasers in the 2013 Notes offering, or the Initial Purchasers.

Under the terms of each of the Registration Rights Agreement, Wirelessindentures and the guarantors agreesupplemental indentures relating to use commercially reasonable efforts to file a registration statement covering an offer to exchange the 2013 Notes for Exchange Securities (as defined in the Registration Rights Agreement). Wireless also agreed to use commercially reasonable efforts to have such registration statement declared effective and to consummate the Exchange Offer (as defined in the Registration Rights Agreement) not later than 60 days after the date such registration statement becomes effective. Alternatively, if Wireless is unable to consummate the Exchange Offer under certain conditions, or if holders of the 2013 Notes cannot participate in, or cannot obtain freely transferable Exchange Securities in connection with, the Exchange Offer for certain specified reasons, then Wireless and the Guarantors will use commercially reasonable efforts to file a shelf registration statement within the times specified in the Registration Rights Agreement to facilitate resale of the 2013Metro Notes. All registration expenses (subject to limitations specified in the Registration Rights Agreement) will be paid by Wireless and the guarantors.

Should Wireless fail to consummate the Exchange Offer within 360 days after the date Wireless’ merger with T-Mobile is effective; or, if a shelf registration statement is required, fail to have the shelf registration statement declared effective, or if a shelf registration statement has become effective, fail to maintain the effectiveness thereof or the usability of the related prospectus (subject to certain exceptions) for more than 120 days in any twelve-month period, Wireless will be required to pay certain additional interest as provided in the Registration Rights Agreement.Capital Expenditures

Our strategy has been to offer our services in major metropolitan areas and their surrounding areas, which we refer to as operating segments. We are seeking opportunities to enhance our current operating segments and to provide service in new geographic areas generally adjacent to existing coverage areas. From time to time, we may purchase spectrum and related assets from third parties or the FCC. We believe that our existing cash and cash equivalents and our anticipated cash flows from operations will be sufficient to fully fund planned capital investments including geographical expansion.

The construction of our network and the marketing and distribution of our wireless communications products and services have required, and will continue to require, substantial capital investment. Capital outlaysamounts of liquidity. Our liquidity requirements have included license acquisition costs,been driven primarily by capital expenditures for spectrum licenses and the construction, or increasing the capacityexpansion and upgrade of or upgrading our network infrastructure, including network infrastructure for 4G LTE, costs associated with clearinginfrastructure.
The property and relocating non-governmental incumbent licenses, funding of operating cash flow losses incurred as we launch services in new metropolitan areas and other working capital costs, debt service and financing fees and expenses. Ourequipment capital expenditures for the threesix months ended March 31,June 30, 2013 were $154.6 million, primarily relate to T-Mobile's network modernization and deployment of 4G LTE in 2013. The capital expenditures for the year ended December 31, 2012 were $845.9 million. The expenditures for the threesix months ended March 31, 2013June 30, 2012, were primarily associated with our efforts to increase the service area and capacity of our existing network and the continued upgradeexpansion of our network coverage. During the first half of 2012, we were developing plans to deploy 4G LTE. LTE in 2013 after the terminated AT&T transaction. As such, capital spending was lower in the first half of 2012 than in subsequent periods.

We believeexpect cash capital expenditures for property and equipment and spectrum licenses to be in the increased service arearange of $4.0 billion to $4.2 billion for the year ending December 31, 2013.


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Cash Flows of T-Mobile

The following table shows cash flow information for the six months endedJune 30, 2013 and capacity in existing markets will improve our service offerings, helping us to attract additional customers and retain existing customers2012:

Six Months Ended June 30,
(in millions)2013 2012
Net cash provided by operating activities$1,715
 $1,909
Net cash provided by (used in) investing activities262
 (1,877)
Net cash provided by (used in) financing activities(9) 1

The historical cash flows of T-Mobile USA should not be considered representative of the anticipated cash flows of T-Mobile US, Inc., the combined company resulting in increased revenues.from the business combination.

Operating Activities

Cash provided by operating activities increased $86.6was $1,715 million to $223.5 million during for the threesix months ended March 31,June 30, 2013 from $136.9, compared to $1,909 million for the same period three months endedMarch 31,June 30, 2012. The increase is$194 million decrease in cash flow provided by operating activities was driven by several factors. Our operating income before non-cash items, such as depreciation and amortization, declined compared to the similar period in the prior year primarily attributable toas a $73.3 million increaseresult of decreases in branded postpaid revenues. This decrease was partially offset by improvement in cash flows provided byfrom changes in working capital during the three months ended March 31, 2013 compared to the same period in 2012.year-over-year.

Investing Activities

Cash used inprovided by investing activities increased approximately $3.2 billion to approximately $3.4 billionwas $262 million during the threesix months ended March 31,June 30, 2013 from $182.9, compared to $1,877 million used during the same period in 2012. The change was primarily due to the $2.1 billion of cash and cash equivalents we acquired in connection with the business combination with MetroPCS. The increase was partially offset by higher purchases of property and equipment during the threesix months ended March 31, 2012June 30, 2013. The increase in cash used in investing activities is due primarily to approximately $3.5 billion in restricted cash as a result of T-Mobile's network modernization and deployment of 4G LTE in 2013 described above.

Financing Activities

Cash used in financing activities was $9 million for the issuance of thesix months endedJune 30, 2013 Notes, partially offset by an increase in cash flows, compared to $1 million provided by net maturities of short-term investments of $274.9 millionfinancing activities for the three months ended March 31, 2013 compared to the same period in 2012.2012. The $10 million decrease was primarily due to proceeds of $72 million from the exercises of stock options issued under the Predecessor Plans acquired as part of the business combination with MetroPCS. The increase was offset by a distribution to Deutsche Telekom of $41 million in connection with the debt recapitalization and a $40 million down payment relating to a VIE as described in Note 13 – Additional Financial Information of the Notes to the Condensed Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q.

Contractual Obligations

Current accounting standards require disclosure of material obligations and commitments to making future payments under contracts, such as debt, lease agreements, and purchase obligations. See Note 7 – Notes Payable of Affiliates and Debt and Note 11 – Commitments and Contingencies of the Notes to the Condensed Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q.


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Financing ActivitiesThe following table provides aggregate information about T-Mobile's contractual obligations as of June 30, 2013:
(in millions) Less Than 1 Year 1 - 3 Years 3 - 5 Years More Than 5 Years Total
Long-term debt, including current portion (1) $—
 $—
 $1,000
 $15,700
 $16,700
Interest expense on long-term debt
 446
 2,124
 2,124
 3,727
 8,421
Financial obligation (2) 162
 324
 324
 1,532
 2,342
Non-dedicated transportation lines 609
 1,137
 706
 195
 2,647
Operating leases, including dedicated transportation lines 2,199
 4,044
 3,518
 5,886
 15,647
Capital lease obligations, including interest 40
 83
 85
 315
 523
Purchase obligations (3) 1,336
 467
 2,385
 —
 4,188
Total contractual obligations $4,792
 $8,179
 $10,142
 $27,355
 $50,468
(1)Represents principal amounts of payables to affiliates and long-term debt at maturity, excluding unamortized premium from purchase price allocation fair value adjustment.
(2)Future minimum payments, including principal and interest payments and imputed lease rental income related to the financial obligation recorded in connection with the Tower Transaction. See Note 4 – Tower Transaction to the audited consolidated financial statements for the three years ended December 31, 2012, included in the Current Report on Form 8-K filed on June 18, 2013 for further information regarding the Tower Transaction.
(3)T-Mobile calculated the minimum obligation for certain agreements to purchase goods or services based on termination fees that can be paid to exit the contract. Termination penalties are included in the above table as payments due in less than one year, as this is the earliest T-Mobile could exit these contracts. This table does not include open purchase orders as of June 30, 2013 under normal business purposes.

Cash provided by financing activities was approximately $3.5 billion during the three months endedMarch 31, 2013 compared to cash used in financing activities of $11.1 million during the three months endedMarch 31, 2012. The increase is primarily attributable to approximately $3.5 billion in net proceeds from the issuance of the 2013 Notes.

Capital Lease Obligations
We have entered into various non-cancelable capital lease agreements with expirations through 2028. AssetsCertain commitments and future obligations related to capital leases are included in the accompanying condensed consolidated balance sheets in property and equipment and long-term debt, respectively. Depreciationtable based on the year of assets held under capital leaserequired payment or an estimate of the year of payment. Other non-current liabilities have been excluded from the tables due to the uncertainty of the timing of payments, combined with the absence of historical trending to be used as a predictor of such payments.

The purchase obligations is included in depreciation and amortization expense. As of March 31, 2013, we had $324.5 million of capital lease obligations, with $11.9 million and $312.6 million recorded in current maturities of long-term debt and long-term debt, respectively.
Capital Expenditures and Other Asset Acquisitions
Capital Expenditures. We currently expect to incur capital expendituresreflected in the range of $800.0 milliontable above are primarily commitments to $900.0 million on a consolidated basis for the year ending December 31, 2013.
During the three months endedMarch 31, 2013, we incurred $154.6 million in capital expenditures. During the year ended December 31, 2012, we incurred $845.9 million in capital expenditures. The capital expenditures for the three months ended March 31, 2013purchase handsets and the year ended December 31, 2012 were primarily associated with our efforts to increase the service areaaccessories, equipment, software, programming and capacity of our existing network services, and the continued upgrade of our network to 4G LTE.

Other Asset Acquisitions. During the three months ended March 31, 2012, we closed on the acquisition of microwave spectrummarketing activities, which will be used or sold in the net aggregate amountordinary course of $2.1 millionbusiness. These amounts do not represent T-Mobile's entire anticipated purchases in cash consideration paid.the future, but represent only those items for which T-Mobile is contractually committed. Where T-Mobile is committed to make a minimum payment to the supplier regardless of whether it takes delivery, T-Mobile has included only that minimum payment as a purchase obligation.
During the three months ended March 31, 2013, we closed on the acquisition of microwave spectrum including a net aggregate amount of $2.0 million in cash consideration paid.
Off-Balance Sheet Arrangements
We
T-Mobile does not participate in or secure financing for any unconsolidated entities.

Related Party Transactions

See Note 10 – Related Party Transactions of the Notes to the Condensed Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q for information regarding related party transactions.

Disclosure of Iranian Activities under Section 13(r) of the Securities Exchange Act of 1934

Section 219 of the Iran Threat Reduction and Syria Human Rights Act of 2012 added Section 13(r) to the Exchange Act.  Section 13(r) requires an issuer to disclose in its annual or quarterly reports, as applicable, whether it or any of its affiliates knowingly engaged in certain activities, transactions or dealings relating to Iran or with designated natural persons or entities involved in terrorism or the proliferation of weapons of mass destruction.  Disclosure is required even where the activities, transactions or dealings are conducted outside the U.S. by non-U.S. affiliates in compliance with applicable law, and whether or not the activities are sanctionable under U.S. law.

As of the date of this report, we are not aware of any activity, transaction or dealing by us or any of our affiliates during the quarter ended June 30, 2013 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 Deutsche Telekom AG. We have any off-balance sheet arrangements.
Inflation
We believe that inflation has not materially affected our operations.
Effect of New Accounting Standardsrelied upon Deutsche Telekom AG for information regarding their activities, transactions and dealings.

In July 2012, the FASB issued Accounting Standards Update ("ASU") 2012-02, "Intangibles - Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment," allowing entities to make a qualitative evaluation about the likelihood of impairment of an indefinite-lived intangible asset to determine whether the quantitative test is required, as opposed to required annual quantitative impairment testing.  The amendment was effective for interim and annual impairment tests performed for fiscal years beginning after September 15, 2012.  Early adoption is permitted. We did not elect to utilize a qualitative assessment and have performed the most recent annual quantitative impairment test as of September 30, 2012 consistent with prior years.  The implementation of this standard did not affect our financial condition, results of operations, or cash flows.

In February 2013, the FASB issued ASU 2013-02 "Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income," which added new disclosure requirements for items reclassified out of accumulated other comprehensive income ("AOCI") to help entities improve the transparency of changes in other comprehensive income and items reclassified out of AOCI in financial statements. The amendment is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2012. The implementation of this standard did affect our disclosures but did not affect our financial condition, results of operations, or cash flows.

In February 2013, the FASB issued ASU 2013-04 "Liabilities (Topic 405): "Obligations Resulting from Joint and Several Liability Arrangements for Which the Total Amount of the Obligation Is Fixed at the Reporting Date," which added new disclosure requirements to measure obligations resulting from joint and several liability arrangements for which the total amount of the obligation within the scope of this guidance is fixed at the reporting date and disclose the arrangements and the total outstanding amount of the obligation for all joint parties. These disclosure requirements are incremental to the existing

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related-party disclosure requirements. The amendmentDeutsche Telekom AG, through certain of its non-U.S. subsidiaries, is effective for fiscal years,party to roaming and interim periods withininterconnect agreements with the following mobile and fixed line telecommunication providers in Iran, some of which are or may be government-controlled entities: Gostaresh Ertebatat Taliya, Irancell Telecommunications Services Company (MTN Irancell), Telecommunication Kish Company, Mobile Telecommunication Company of Iran, and Telecommunication Infrastructure Company of Iran. During the quarter ended June 30, 2013, gross revenues of all Deutsche Telekom AG affiliates generated by roaming and interconnection traffic with Iran were less than $3 million and estimated net profits were less than $1 million.

In addition, Deutsche Telekom AG, through certain of its non-U.S. subsidiaries, operating 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 fiscal years, beginning after December 15, 2013. Early adoption is permitted. The implementationEuropean countries. Gross revenues and net profits recorded from these during the quarter ended June 30, 2013 were less than $0.1 million. We understand that Deutsche Telekom AG intends to continue these activities.

Restructuring Costs

See Note 13 – Additional Financial Information of the Notes to the Condensed Consolidated Financial Statements included in Part I, Item 1 of this standardForm 10-Q for information regarding restructuring costs.

Critical Accounting Policies and Estimates

Preparation of our consolidated financial statements in accordance with GAAP requires us to make estimates and assumptions that affect the reported amounts of certain assets, liabilities, revenues and expenses, as well as related disclosure of contingent assets and liabilities. There have been no material changes to the critical accounting policies and estimates previously disclosed in our consolidated financial statements for the three years ended December 31, 2012 on the Current Report on Form 8-K filed on June 18, 2013, except for the addition of the following:

Stock-based Compensation

Stock-based compensation cost for stock awards is notmeasured at fair value on the grant date and recognized as an expense, net of expected forfeitures, over the related service period. The fair value of stock awards is based on the closing price of T-Mobile common stock on the date of grant. RSUs are recognized as expense using the straight-line method. PSUs are recognized as expense following a graded vesting schedule. Judgment is required in estimating the amount of stock awards which are expected to affect thebe forfeited. If actual results differ significantly from our financial condition,expected forfeitures, stock-based compensation expense and our results of operations or cash flows.could be impacted.
Fair Value Measurements
We do not expect changes in the aggregate fair value of our financial assets and liabilities to have a material adverse impact on the condensed consolidated financial statements. See Note 10 to the financial statements included in this report.
Item 3. Quantitative and Qualitative Disclosures About Market Risk

Market riskT-Mobile is exposed to economic risks in the potential loss arisingnormal course of business, primarily from adverse changes in market pricesinterest rates. These risks, along with other business risks, impact our cost of capital. Our policy is to manage exposure related to fluctuations in interest rates in order to manage capital costs, control financial risks and rates, includingmaintain financial flexibility over the long term. We have established interest rates.rate risk limits that are closely monitored by measuring interest rate sensitivities of its debt and interest rate derivatives portfolios. We do not routinely enter into derivatives or other financial instruments for trading, speculative or hedging purposes, unless it is hedgingforesee significant changes in the strategies used to manage market risk in the near future.

Interest Rate Risk

We are exposed to changes in interest rates, primarily on its variable-rate notes payable to affiliates. As of June 30, 2013, we had $11.2 billion in notes payable with Deutsche Telekom. Changes in interest rates can lead to significant fluctuations in the fair value of our variable-rate debt instruments.

To perform the sensitivity analysis on its notes payable to affiliates, we assessed the risk of a change in the fair value from the effect of a hypothetical interest rate risk exposure under, orchange of 100 basis points. As of June 30, 2013, the change in the fair value of our notes payable to affiliates, based on this hypothetical change, is required by, our Senior Secured Credit Facility. We do not currently conduct business internationally, so we are generally not subject to foreign currency exchange rate risk.shown in the table below:
   Fair Value Assuming
(in millions)Fair Value +100 Basis Point Shift -100 Basis Point Shift
Variable-rate notes payable to affiliates$5,456
 $5,354
 $5,556

As

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Table of March 31, 2013, we had approximately $2.4 billion in outstanding indebtedness under our Senior Secured Credit Facility that bears interest at floating rates based on LIBOR plus 3.821% for the Tranche B-2 Term Loans and LIBOR plus 3.75% for the Tranche B-3 Term Loans and Incremental Tranche B-3 Term Loans. The interest rate on the outstanding debt under our Senior Secured Credit Facility as of March 31, 2013 was 4.631%, which includes the impact of our interest rate protection agreements. In October 2010, Wireless entered into three separate two-year interest rate protection agreements to manage its interest rate risk exposure. These agreements were effective on February 1, 2012, cover a notional amount of $950.0 million and effectively converted this portion of its variable rate debt to fixed rate debt at a weighted average annual rate of 4.908%. These agreements expire on February 1, 2014.  In April 2011, Wireless entered into three separate three-year interest rate protection agreements to manage its interest rate risk exposure under our Senior Secured Credit Facility.  These agreements were effective on April 15, 2011, cover a notional amount of $450.0 million and effectively convert this portion of its variable rate debt to fixed rate debt at a weighted average annual rate of 5.242%.  These agreements expire on April 15, 2014.  If market LIBOR rates increase 100 basis points over the rates in effect at March 31, 2013, annual interest expense on the approximately $1.0 billion in variable rate debt that is not subject to interest rate protection agreements would increase $10.4 million.Contents

Item 4. Controls and Procedures
Evaluation of
Disclosure Controls and Procedures

We maintain disclosure controls and procedures that aredesigned to ensure information required to be disclosed in our reports filed or submitted under the Securities Exchange Act of 1934, as amended ("Exchange Act"), is recorded, processed, summarized and reported with the time period specified in the Securities and Exchange Commission's rules and forms. Our disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our Exchange Actthe reports is recorded, processed, summarized and reported as required by the SEC and that such informationwe file or submit is accumulated and communicated to our management, including our CEOChief Executive Officer and CFO,Chief Financial Officer, as appropriate to allow for appropriate and timely decisions regarding required disclosure.

Our management, with participation by our CEO and CFO, has designed the Company’s disclosure controls and procedures to provide reasonable assurance of achieving these desired objectives. As required by SEC Rule 13a-15(b), we conducted an evaluation, with the participation of our CEOChief Executive Officer and CFO, ofChief Financial Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures as ofMarch 31, 2013, the end of the period covered by this report. In designing and evaluating the disclosure controls and procedures (as defined by SEC Rule 13a – 15(e)), our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is necessarily required to apply judgment in evaluating the cost-benefit relationship of possible controls and objectives. Based uponon that evaluation, our CEOthe Chief Executive Officer and CFO haveChief Financial Officer concluded that our disclosure controls and procedures arewere effective as of March 31, 2013.June 30, 2013.
Changes in
Internal Control OverControls over Financial Reporting
There were no changes
Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in the Company’saccordance with generally accepted accounting principles. Internal control over financial reporting includes policies and procedures for maintaining records that in reasonable detail accurately and fairly reflect our transactions; providing reasonable assurance that transactions are recorded as necessary for preparation of our financial statements; providing reasonable assurance that receipts and expenditures are made in accordance with management authorization; and providing reasonable assurance of prevention or timely detection of unauthorized acquisition, use or disposition of company assets that could have a material effect on our financial statements. Because of its inherent limitations, internal control over financial reporting is not intended to provide absolute assurance that occurred duringa misstatement of our financial statements would be prevented or detected. The business combination of MetroPCS and T-Mobile USA, which was completed on April 30, 2013, had a material impact on the quarter ended March 31, 2013 that have materially affected, orfinancial position, results of operations and cash flows of the combined entity from the date of acquisition through June 30, 2013. The business combination also resulted in significant changes to the combined entity's internal control environment over financial reporting. We are reasonably likely to materially affect,in the Company’sprocess of integrating the systems of internal control over financial reporting for T-Mobile and MetroPCS and will report on our assessment of our internal controls over financial reporting for the combined entity in our next annual report.

During the three months ended June 30, 2013, we implemented a new accounting consolidation system. In connection with this implementation, we modified various procedures, including but not limited to, business processes such as user access security, data conversion, standardization and automation of system reporting. We monitored and continue to monitor these changes as they relate to our internal control over financial reporting.

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PART II
II. OTHER INFORMATION

Item 1. Legal Proceedings

We are involvedSee Note 11 – Commitments and Contingencies of the Notes to the Condensed Consolidated Financial Statements included in litigation from time to time, including litigationPart I, Item 1 of this Form 10-Q for information regarding intellectual property claims, that we consider to be in the normal course of business. Legal proceedings are inherently unpredictable, and thecertain legal proceedings in which we are involved often present complex legal and factual issues. We intend to vigorously defend against litigation in which we are involved and, where appropriate, engage in discussions to resolve these legal proceedings on terms favorable to us. We believe that any amounts which parties to such litigation allege we are liable for are not necessarily meaningful indicators of our potential liability or any relief, such as injunctive relief, which parties to such litigation seek are not necessarily meaningful indicators whether such relief will be granted. We determine whether we should accrue an estimated loss for a contingency in a particular legal proceeding by assessing whether a loss is probable and can be reasonably estimated. We reassess our views on estimated losses on a quarterly basis to reflect the impact of any developments in the legal proceedings in which we are involved. It is possible, however, that our business, financial condition, results of operations, and liquidity in future periods could be materially adversely affected by increased expenses, including legal and litigation expenses, significant settlement costs, relief granted or agreed to, and/or unfavorable damage awards relating to such legal proceedings. Other than the matters listed below we are not currently party to any pending legal proceedings that we believe could, individually or in the aggregate, have a material adverse effect on our business, financial condition, results of operations or liquidity.
Since the announcement on October 3, 2012 of the execution of the business combination agreement, MetroPCS, Deutsche Telekom, T-Mobile Global, T-Mobile Holding, T-Mobile (Deutsche Telekom, T-Mobile Global, T-Mobile Holding and T-Mobile, collectively, referred to herein as the T-Mobile defendants) and the members of the MetroPCS board, referred to as the MetroPCS board members, including an officer of MetroPCS and in some cases, Deutsche Telekom and its affiliates, have been named as defendants in multiple putative stockholder derivative and class action complaints challenging the Proposed Transaction. The lawsuits include:

a putative class action lawsuit filed by Paul Benn, an alleged MetroPCS stockholder, on October 11, 2012 in the Delaware Court of Chancery, Paul Benn v. MetroPCS Communications, Inc. et al., Case No. C.A. 7938-CS, referred to as the Benn action;
a putative class action lawsuit filed by Joseph Marino, an alleged MetroPCS stockholder, on October 11, 2012 in the Delaware Court of Chancery, Joseph Marino v. MetroPCS Communications, Inc. et al., Case No. C.A. 7940-CS, referred to as the Marino action;
a putative class action lawsuit filed by Robert Picheny, an alleged MetroPCS stockholder, on October 22, 2012 in the Delaware Court of Chancery, Robert Picheny v. MetroPCS Communications, Inc. et al., Case No. C.A. 7971-CS, referred to as the Picheny action;
a putative class action filed by James S. McLearie, an alleged MetroPCS stockholder, on November 5, 2012 in the Delaware Court of Chancery, James McLearie v. MetroPCS Communications, Inc. et al., Case No. C.A. 8009-CS, referred to as the McLearie action, and together with the Benn action, the Marino action and the Picheny action, the Delaware actions;
a putative class action and shareholder derivative action filed by Adam Golovoy, an alleged MetroPCS stockholder, on October 10, 2012 in the Dallas, Texas County Court at Law, Adam Golovoy et al. v. Deutsche Telekom et al., Cause No. CC-12-06144-A, referred to as the Golovoy action; and
a putative class action and shareholder derivative action filed by Nagendra Polu and Fred Lorquet, who are alleged MetroPCS stockholders, on October 10, 2012 in the Dallas, Texas County Court at Law, Nagendra Polu et al. v. Deutsche Telekom et al., Cause No. CC-12-06170-E, referred to as the Polu action, and together with the Golovoy action, the Texas actions.

The various plaintiffs in the lawsuits allege that the individual defendants breached their fiduciary duties by, among other things, failing to (i) obtain sufficient value for the MetroPCS stockholders in the transaction, (ii) establish a process that adequately protected the interests of the MetroPCS stockholders, and (iii) adequately ensure that no conflicts of interest occurred. The plaintiffs also allege that the individual defendants breached their fiduciary duties by agreeing to certain terms in the business combination agreement that allegedly restricted the defendants' ability to obtain a more favorable offer from a competing bidder and that such provisions, together with the voting support agreement and the rights agreement amendment constitute breaches of the individual defendants' fiduciary duties. The plaintiffs seek injunctive relief, unspecified damages, an order rescinding the business combination agreement, unspecified punitive damages, attorney's fees, other expenses, and costs. All of the plaintiffs seek a determination that their alleged claims may be asserted on a class-wide basis. In addition, the plaintiffs in the Texas actions assert putative derivative claims, as stockholders on behalf of MetroPCS, against the individually

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named defendants for breach of fiduciary duty, abuse of control, gross mismanagement, unjust enrichment and corporate waste in connection with the Proposed Transaction.

In addition, an action was filed on March 28, 2013 by The Merger Fund, The Merger Fund VL, GS Master Trust, MLIS Westchester merger Arbitrage UCITS Fund, and Dunham Monthly Distribution Fund, alleged MetroPCS stockholders, in the United States District Court in New York, The Merger Fund, et al. v. MetroPCS Communications, Inc. et al., Civil Action No. 13-CV-2066 (AJN), which the we refer to as the New York Action, alleging: (a) violations of Sections 14(a) and 20(a) of the Exchange Act and SEC Rule 14a-9 by misstating or omitting material facts from the MetroPCS proxy statement; and (b) that certain members of our board of directors breached their fiduciary duties. The plaintiffs seek injunctive relief, an order rescinding the Proposed Transaction if it is consummated, unspecified damages, and costs of the litigation.

On November 5, 2012, the plaintiff in the Golovoy action filed a motion seeking to restrain and enjoin the MetroPCS and the MetroPCS board members, referred to collectively as the MetroPCS defendants, from complying with the “force-the-vote” provision in the business combination agreement and from declaring a distribution date under, or issuing rights certificates in conjunction with, MetroPCS' rights agreement, referred to as the Texas TRO motion. On November 12, 2012, the MetroPCS defendants filed a motion to dismiss or stay the Texas actions based on a mandatory forum selection provision in the MetroPCS bylaws, which requires that all derivative claims and all claims for breach of fiduciary duty against the MetroPCS board members must be filed and litigated only in the Delaware Court of Chancery, and sought dismissal for failure to plead standing to pursue derivative claims on behalf of MetroPCS.

On November 16, 2012, the trial court in the Golovoy action, referred to as the Texas trial court, issued a temporary restraining order, which we refer to as the TRO order, restraining the MetroPCS defendants from complying with the “force the vote” provision in the business combination agreement and from declaring a distribution date under, or issuing rights certificates in conjunction with, MetroPCS' rights agreement, and set a temporary injunction hearing for November 29, 2012.

On November 19, 2012, the MetroPCS defendants and the T-Mobile defendants filed a petition for writ of mandamus and a motion to stay, referred to as the Texas mandamus petition, with the Court of Appeals for the Fifth District at Dallas, referred to as the Texas appellate court, to stay and overturn the TRO order based on the mandatory forum selection provision in the MetroPCS bylaws, which requires that the claims in the Texas actions must be dismissed and pursued only in the Delaware Court of Chancery, and on a lack of evidence supporting the findings in the TRO order or establishing a basis for such TRO order, and to stay the temporary injunction hearing. On November 20, 2012, the Texas appellate court stayed the Texas trial court's ruling, canceled the scheduled temporary injunction hearing, and ordered briefing on the issues raised in the petition for writ of mandamus.

On November 28, 2012, the plaintiff in the Marino action filed an amended class action complaint alleging breach of fiduciary duty by the MetroPCS board members in connection with the terms of the business combination agreement, as well as alleging that MetroPCS has failed to make full and fair disclosure in our preliminary proxy, for the special meeting of our stockholders to approve the Transaction, of all information and analyses presented to and considered by the MetroPCS board members, and alleging that the T-Mobile defendants aided and abetted such claimed breaches of fiduciary duty, and motions seeking expedited proceeding and discovery and to enjoin the defendants from taking any action to consummate the business combination between MetroPCS and the T-Mobile defendants. No hearing has been set on these motions. On November 30, 2012, all of Delaware actions were consolidated into a single action, now captioned MetroPCS Communications, Inc. Shareholder Litigation, Consolidated C.A. No. 7938-CS. We and the plaintiffs in the Marino action entered into a discovery stipulation under which the Company produced certain documents by January 25, 2013 and the plaintiff conducted depositions of a corporate representative of Evercore Group, L.L.C., or Evercore, the Chairman of the Special Committee and our Chief Executive Officer, which depositions were completed by February 14, 2013.  The Delaware Court of Chancery had set the preliminary injunction hearing on February 28, 2013, with plaintiffs' brief due on February 15, 2013.  On February 15, 2013, rather than file their brief, plaintiffs sent a letter to the Delaware Court of Chancery notifying the Court that plaintiffs did not intend to file a brief, that their disclosure claims had become moot based on revised proxy materials MetroPCS had filed with the SEC which contained additional disclosure, and that the preliminary injunction hearing should be removed from the Court's docket. 

On January 8, 2013, the Texas appellate court conditionally granted the Texas mandamus petition and ordered the Texas trial court to vacate the TRO order, render an order denying the Texas TRO motion, and render an order granting the MetroPCS defendants' and T-Mobile defendants' motion to stay the action until MetroPCS defendants' and T-Mobile defendants' motion to dismiss or stay the action is decided by the Texas trial court. A hearing is currently set on such motion for May 3, 2013.

On March 4, 2013, the trial court in the Polu action set a non-jury trial date of July 24, 2013. The Company has set a hearing on the Company's motion to dismiss the Polu action for June 7, 2013.

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On April 15, 2013, the trial court in the New York action entered an order requiring plaintiffs to submit a status letter by May 12, 2013. On April 18, 2013, Defendants, while not admitting proper service, moved the Court to extend the deadline to answer, plead or otherwise respond to the Complaint from April 19, 2013 to May 20, 2013. That motion was granted on April 19, 2013.

The MetroPCS defendants plan to defend vigorously against the claims made in the Delaware actions, New York actions and the Texas actions.
Item 1A. Risk Factors

Except as expressly stated, the risks related to our business and the wireless industry are those of T-Mobile US, Inc. and its consolidated subsidiaries, and “our Company,” “the Company,” “we,” “our,” “ours” and “us” refer to T-Mobile US, Inc., a Delaware corporation, and its wholly-owned subsidiaries.

Risks Related to Our Business and the Wireless Industry

Increasing competition for wireless customers could adversely affect our operating results.

We have multiple wireless competitors in each of our service areas, some of which have greater resources than us, and compete for customers based principally on service/device offerings, price, call quality, data use experience, coverage area, and customer service. In addition, we are facing growing competition from providers offering services using alternative wireless

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technologies and IP-based networks, as well as traditional wireline networks. We expect market saturation to continue to cause the wireless industry's customer growth rate to be moderate in comparison with historical growth rates or possibly negative, leading to increased competition for customers. We also expect that our customers' growing demand for data services will place constraints on our network capacity. These competition and our capacity issues will continue to put pressure on pricing and margins as companies compete for potential customers. Our ability to respond will depend on, among other things, continued absolute and relative improvement in network quality and customer services, effective marketing and selling of products and services, attractive pricing, and cost management, all of which will involve significant expenses.

Consolidation in the wireless industry through mergers, acquisitions and joint ventures could create increased competition.
Joint ventures, mergers, acquisitions and strategic alliances in the wireless industry have resulted in and are expected to result in larger competitors competing for a limited number of customers. The two largest national wireless broadband mobile carriers currently serve a significant percentage of all wireless customers, and hold significant spectrum and other resources. Our largest competitors may be able to enter into exclusive handset or content arrangements, execute pervasive advertising and marketing campaigns, or otherwise improve their cost position relative to ours. In addition, the refusal of our large competitors to provide critical access to resources and inputs, such as roaming services on reasonable terms, may improve their position within the wireless broadband mobile services industry. These factors, together with the effects of the increasing aggregate penetration of wireless services in all metropolitan areas, and the ability of our larger competitors to use resources to build out their networks and to quickly deploy advanced technologies, which have made it more difficult for smaller carriers like us to attract and retain customers, may adversely affect our competitive position and ability to grow, which would have a material adverse effect on our business, financial condition, and operating results.
The failure to successfully integrate the T-Mobile and MetroPCS businesses in the expected time frame could adversely affect our future operating results. Many of the anticipated benefits of the combination may not be realized for a significant period of time, if at all.
Our success will depend, in large part, on our ability to realize the anticipated benefits, including projected synergies and cost savings, from combining the T-Mobile business with the MetroPCS business. This integration will be complex, time-consuming, require significant capital expenditures, and may divert management's time and attention from the business. The failure to successfully integrate and manage the challenges presented by the integration process may prevent us from achieving the anticipated benefits of the business combination of T-Mobile and MetroPCS and have a material adverse effect on our business, financial condition and operating results.
Potential difficulties in the integration process include, among others, the following:
unexpected costs incurred in integrating the T-Mobile and MetroPCS businesses or inability to achieve the cost savings anticipated to result from the business combination;
migrating customers from the legacy MetroPCS network to our global system for mobile communications, which we refer to as GSM, evolved high speed packet access, which we refer to as HSPA+, and LTE networks;
decommissioning the legacy MetroPCS network;
integrating existing back office and customer facing information and billing systems, cell sites and network infrastructure, customer service programs, and distributed antenna systems;
combining or coordinating product and service offerings, subscriber plans, customer services, and sales and marketing approaches;
addressing the effects of the business combination on our business and the previously established relationships between each of T-Mobile and MetroPCS and their employees, customers, suppliers, content providers, distributors, dealers, retailers, regulators, affiliates, joint venture partners, and the communities in which they operated; and
difficulties in consolidating and preparing the Company's financial statements, or having to restate the financial statements of the Company.
Many of the anticipated synergies are not expected to occur for a significant time period and will require substantial capital expenditures in the near term to be fully realized. Even if we are able to integrate the two businesses successfully, we may not realize the full anticipated benefits of the merger, including anticipated synergies expected from the integration, or achieve such benefits within the anticipated time frame or at all.
If we are unable to attract and retain wireless subscribers our financial performance will be impaired.
Customer demand for our products and services is impacted by numerous factors including, but not limited to, our service offerings, pricing, network performance, customer perceptions, competitive offers, sales and distribution channels, economic

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conditions and customer service. Managing these factors, and customers' expectations of these factors, is essential in attracting and retaining customers.
We continuously incur capital expenditures and operating expenses in order to improve and enhance our products, services, applications, and content to remain competitive and to keep up with our customer demand. If we fail to improve and enhance our products and services or expand the capacity of, or make upgrades to, our network to remain competitive, or if we fail to keep up with customer demand, including by maintaining access to desired handsets, content and features, our ability to attract and retain customers would be adversely affected. In particular, our gross new subscriber activations may decrease and our subscriber churn may increase, leaving us unable to meet the assumptions of our business plan. Even if we effectively manage the factors listed above that are within our control, there can be no assurance that our existing customers will not switch to another wireless provider or that we will be able to attract new customers. There would be a material adverse impact on our business, financial condition, and operating results if we are unable to grow our customer base at the levels we project, or achieve the aggregate levels of customer penetration that we currently believe are possible with our business model.
We no longer require consumers to sign annual service contracts for post-paid services and offer consumers equipment financing, and this strategy may not succeed in the long term.
With the launch of our 'Simple Choice Plans', we no longer require consumers to sign annual service contracts to obtain post-paid service, while offering Equipment Installment Plans (EIP) to permit customers to finance handsets which they purchase from us. While we anticipate that we will continue to employ similar “Un-Carrier” tactics as part of our business strategy, our service plans and EIP offerings may not meet our customers' or potential customers' needs, expectations, or demands. In addition, with this reduction in long-term service contracts, our customers may have residual commitments to us for device financing, but can discontinue their service at any time without penalty or advance notice to us. We cannot assure you that our strategies to address customer churn will be successful. In addition, we may not be able to profitably replace customers who leave our service or replace them at all. We could experience reduced revenues and increased marketing costs to attract replacement customers if we experience a churn rate higher than we expect, which could reduce our profit margin and profitability. Our operational and financial performance may be adversely affected if we are unable to grow our customer base and achieve the customer penetration levels that we anticipate with this business model.

Certain retail customers have the option to pay for their devices in installments over a period of up to 24 months under our EIP. These EIP offerings subject us to increased risks relating to consumer credit issues, which could result in increases to our bad debt expense and potential write-offs of account balances under the EIPs. These arrangements may be particularly sensitive to changes in general economic conditions, as discussed below, and any declines in the credit quality of our customer base could have a material adverse effect on our operating results and financial condition.

We record EIP bad debt expense based on an estimate of the percentage of equipment revenue that will not be collected. This estimate is based on a number of factors including historical write-off experience, credit quality of the customer base, and other factors such as macro-economic conditions. We monitor the aging of our EIP receivables and write-off account balances if collection efforts are unsuccessful and future collection is unlikely based on customer credit ratings and the length of time from the original billing date. Equipment sales that are not reasonably assured to be collectible are recorded on a cash basis as payments are received.

If our Company is unable to take advantage of technological developments on a timely basis, then we may experience a decline in demand for our services or face challenges in implementing our business strategy.
In order to grow and remain competitive, we will need to adapt to future changes in technology, enhance our existing offerings, and introduce new offerings to address our current and potential customers' changing demands. For example, we are in the process of transforming and upgrading our network to be the first in the United States to deploy LTE Release 10 and the first to use multimode integrated radios that can handle GSM, HSPA+ and LTE. As part of the network upgrade, we will install new equipment in approximately 35,000 cell sites and refarm our Personal Communications Service in the PCS 1900 MHz spectrum band from second generation GSM services to HSPA+. Modernizing the network is subject to risk from equipment changes, refarming of spectrum, and migration of customers from existing spectrum bands. Scheduling and supplier delays, unexpected or increased costs, technological constraints, regulatory permitting issues, subscriber dissatisfaction, and other risks could cause delays in launching the new network, which could result in significant costs, or reduce the anticipated benefits of the upgrades. In addition, we recently entered into an agreement with Apple, Inc. to carry the iPhone 5 and other Apple products. This new agreement may result in a decrease in free cash flow, and there is no assurance that the agreement will be economically advantageous for us in the long-term.

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In general, the development of new services in the wireless telecommunications industry will require us to anticipate and respond to the continuously changing demands of our customers, which we may not be able to do accurately or timely. We could experience a material adverse effect on our business, operations, financial position, 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.
The scarcity and cost of additional wireless spectrum, and regulations relating to spectrum use, may adversely affect our business strategy and financial planning.
Based on industry trends, we believe that the average data usage of our customers will continue to rise. Therefore, at some point in the future we will need to acquire additional spectrum in order to continue our customer growth, expand into new metropolitan areas, maintain our quality of service, meet increasing customer demands, and deploy new technologies. We will be at a competitive disadvantage and possibly experience erosion in the quality of service in certain markets if we fail to gain access to necessary spectrum before reaching capacity, especially below 1 GHz - low band spectrum.
The continued interest in, and aggregation of, spectrum by the largest national carriers may reduce our ability to acquire spectrum from other carriers or otherwise negatively impact our ability to gain access to spectrum through other means. As a result, we may need to acquire spectrum through government auctions and/or enter into spectrum sharing arrangements, which are subject to certain risks and uncertainties. For example, the Federal Communications Commission (FCC) has encountered resistance to its plans to make additional spectrum available, which has created uncertainty about the timing and availability of spectrum through government auctions.

In addition, the FCC may impose conditions on the use of new wireless broadband mobile spectrum, including new restrictions or rules governing the use or access to current or future spectrum. This could increase pressure on capacity. Additional conditions that may be imposed by the FCC include heightened build-out requirements, limited renewal rights, clearing obligations, or open access or net neutrality requirements that may make it less attractive or less economical to acquire spectrum. The FCC has a pending notice of proposed rulemaking to examine whether the current spectrum screen used in acquisitions of spectrum should be changed or whether a spectrum cap should be imposed. In addition, rules may be established for future government spectrum auctions that may negatively impact our ability to obtain spectrum economically or in appropriate configurations or coverage areas.

If we cannot acquire needed spectrum from the government or otherwise, if new competitors acquire spectrum that will allow them to provide services competitive with our services, or if we cannot deploy services on a timely basis without burdensome conditions, at adequate cost, and while maintaining network quality levels, then our ability to attract and retain customers and our associated financial performance could be materially adversely affected.

Economic and market conditions may adversely affect our business and financial performance, as well as our access to financing on favorable terms or at all.
Our business and financial performance are sensitive to changes in general economic conditions, including changes in interest rates, consumer credit conditions, consumer debt levels, consumer confidence, rates of inflation (or concerns about deflation), unemployment rates, energy costs and other macro-economic factors. Market and economic conditions have been unprecedented and challenging in recent years. Continued concerns about the systemic impact of a long-term downturn, high underemployment and unemployment, high energy costs, the availability and cost of credit and unstable housing and credit markets have contributed to increased market volatility and economic uncertainty.
Continued or renewed market turbulence and weak economic conditions may materially adversely affect our business and financial performance in a number of ways. Our services are available to a broad customer base, a significant segment of which may be more vulnerable to weak economic conditions. We may have greater difficulty in gaining new customers within this segment and existing customers may be more likely to terminate service due to an inability to pay. Competing for customers within this segment also puts pressure on our pricing structure and margins. In addition, the continued instability in the global financial markets has resulted in periodic volatility in the credit, equity, and fixed income markets. This volatility could limit our access to the credit markets, leading to higher borrowing costs or, in some cases, the inability to obtain financing on terms that are acceptable to us, or at all.
Continued weak economic conditions and tight credit conditions may also adversely impact our suppliers and dealers, some of which have filed for or may be considering bankruptcy, or may experience cash flow or liquidity problems or are unable to obtain or refinance credit such that they may no longer be able to operate. Any of these could adversely impact our ability to distribute, market, or sell our products and services. Sustained difficult, or worsening, general economic conditions could have a material adverse effect on our business, financial condition and results of operations.

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Our reputation and financial condition could be materially adversely affected by system failures, security or data breaches, business disruptions, and unauthorized use or interference with our network and other systems.
To be successful, we must provide our customers with reliable, trustworthy service and protect the communications, location, and personal information shared or generated by our customers. We rely upon our systems and networks, and the systems and networks of other providers and suppliers, to provide and support our services and, in some cases, to protect our customers' and our information. Failure of our or others' systems, networks and infrastructure may prevent us from providing reliable service, or may allow for the unauthorized interception, destruction, use or dissemination of our customers' or our Company's information. Examples of these risks include:
denial of service and other malicious or abusive attacks by third parties, including cyber-attacks or other breaches of network or information technology security;
human error;
physical damage, power surges or outages, or equipment failure, including those as a result of severe weather, natural disasters, terrorist attacks, and acts of war;
theft of customer/proprietary information: intrusion and theft of data offered for sale, competitive (dis)advantage, and/or corporate extortion;
unauthorized access to our information technology, billing, customer care and provisioning systems and networks, and those of our suppliers and other providers;
supplier failures or delays; and
other systems failures or outages.

Such failures could cause us to lose customers, lose revenue, incur expenses, suffer reputational and goodwill damages, and subject us to litigation or governmental investigation. Remediation costs could include liability for information loss, repairing infrastructure and systems, and/or incentives offered to customers. Our insurance may not cover, or be adequate to fully reimburse us for, costs and losses associated with such events.

We rely on third-parties to provide specialized products or services for the operation of our business, and a failure or inability by such parties to provide these products or services could adversely affect our business, results of operations, and financial condition.
We depend heavily on suppliers and other third parties in order for us to efficiently operate our business. Our business is complex, and it is not unusual for multiple vendors located in multiple locations to help us to develop, maintain, and troubleshoot products and services, such as network components, software development services, and billing and customer service support. Our suppliers often provide services outside of the United States, which carries associated additional regulatory and legal obligations. We generally rely upon the suppliers to provide contractual assurances and accurate information regarding risks associated with their provision of products or services in accordance with our expectations and standards, and they may fail to do so.
Generally, there are multiple sources for the types of products and services we purchase or use. However, we currently rely on one key supplier for billing services, a limited number of suppliers for voice and data communications transport services, network infrastructure, equipment, handsets, and other devices, and, and payment processing services, among other products and services we rely on. Disruptions with respect to such suppliers, or failure of such suppliers to adequately perform, could have a material adverse on our financial performance.
In the past, our suppliers, contractors and third-party retailers have not always performed at the levels we expect or at the levels required by their contracts. Our business could be severely disrupted if key suppliers, contractors, service providers, or third-party retailers fail to comply with their contracts or become unable to continue the supply due to patent or other intellectual property infringement actions, or other disruptions. Our business could also be disrupted if we experience delays or service degradation during any transition to a new outsourcing provider or other supplier, or we were required to replace the supplied products or services with those from another source, especially if the replacement became necessary on short notice. Any such disruptions could have a material adverse effect on our business, results of operations and financial condition.
Our financial performance will be impaired if we experience high fraud rates related to device financing, credit cards, dealers, or subscriptions.
Our operating costs could increase substantially as a result of fraud, including device financing, customer credit card, subscription or dealer fraud. If our fraud detection strategies and processes are not successful in detecting and controlling fraud, whether directly or by way of the systems, processes, and operations of third parties such as national retailers, dealers

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and others, the resulting loss of revenue or increased expenses could have a materially adverse impact on our financial condition and results of operations.
Our significant indebtedness could adversely affect our business, financial condition and operating results.
Our ability to make payments on our debt, to repay our existing indebtedness when due, and to fund operations and significant planned capital expenditures will depend on our ability to generate cash in the future, which is in turn subject to the operational risks described elsewhere in this section. Our debt service obligations could have material adverse effects on our operations and financial results, including by:
limiting our ability to borrow money or sell stock to fund our operational, financing or strategic needs;
limiting our flexibility in planning for, or reacting to, changes in our risk factors from those previously disclosed in “Item 1A. Risk Factors”business or the communications industry or pursuing growth opportunities;
reducing the amount of cash available for other operational or strategic needs; and
placing us at a competitive disadvantage to competitors who are less leveraged than we are.
In addition, a substantial portion of our Annual Report on Form 10-K fordebt, including $5.6 billion in principal amount of the year ended December 31, 2012 filednotes we issued to Deutsche Telekom in connection with the SEC on March 1, 2013. You also should be aware thatbusiness combination between T-Mobile and MetroPCS and borrowings under our $500 million credit facility with Deutsche Telekom, bears interest at variable rates. If market interest rates increase, variable-rate debt will create higher debt service requirements, which could adversely affect our cash flow. While we have and may enter into agreements limiting our exposure to higher interest rates in the risk factors disclosed in all our filings with the SEC and other information contained in our filings with the SECfuture, any such agreements may not describe everyoffer complete protection from this risk, facing or thatand any portion not subject to such agreements would have full exposure to higher interest rates. Any of these risks could have a material adverse effect on our Company and the business, financial condition, and operating results.
The agreements governing our indebtedness include restrictive covenants that limit our operating flexibility.
The agreements governing our indebtedness impose significant operating and financial restrictions on us. These restrictions, subject in certain cases to customary baskets, exceptions and incurrence-based ratio tests, may limit our ability to engage in some transactions, including the following:
incurring additional indebtedness and issuing preferred stock;
paying dividends, redeeming capital stock or making other restricted payments or investments;
selling or buying assets, properties or licenses;
developing assets, properties or licenses which we have or in the future may procure;
creating liens on assets;
participating in future FCC auctions of spectrum or private sales of spectrum;
engaging in mergers, acquisitions, business combinations, or other transactions;
entering into transactions with affiliates; and
placing restrictions on the ability of subsidiaries to pay dividends or make other payments.
These restrictions could limit our ability to react to changes in our operating environment or the economy. Any future indebtedness that we incur may contain similar or more restrictive covenants. Any failure to comply with the restrictions of our debt agreements may result in an event of default under these agreements, which in turn may result in defaults or acceleration of obligations under these agreements and other agreements, giving our lenders the right to terminate any commitments they had made to provide us with further funds and to require us to repay all amounts then outstanding. Any of these events would have a material adverse effect on our financial position and performance.
Our business and stock price may be adversely affected if our internal controls are not effective.
Section 404 of the Sarbanes-Oxley Act of 2002, as amended, and the SEC rules and regulations promulgated thereunder, require companies to conduct a comprehensive evaluation of their internal control over financial reporting. To comply with this statute, each year we are required to document and test our internal control over financial reporting; our management is required to assess and issue a report concerning our internal control over financial reporting; and our independent registered public accounting firm is required to report on the effectiveness of our internal control over financial reporting.
We cannot assure you that we will not discover material weaknesses in the future, including material weaknesses resulting from difficulties, errors, delays, or disruptions while we integrate the T-Mobile and MetroPCS businesses. The existence of one or more material weaknesses could result in errors in our financial statements, and substantial costs and resources may be required to rectify these or other internal control deficiencies. If we are unable to comply with the requirements of Section 404 in a timely manner or assert that our internal control over financial reporting is effective, investors may lose confidence in the

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accuracy and completeness of our financial reports and the trading price of our common stock could be negatively affected, and we could become subject to investigations by the stock exchange on which our securities are listed, the SEC, or other regulatory authorities, which could require additional financial and management resources.
We have made significant changes to our corporate structure, strategy, and operations in effort to revitalize the business and effect change in our market position.
Over the last few years, our Company has made significant corporate changes including: new executive leadership and changes in executive leadership responsibilities; new governance structures; call center consolidation; organizational restructuring, and changed methods of funding. Although these are designed to improve company performance, in some cases they insert additional business complexity, and thus are accompanied by associated risks to effective operations. For example, our management and other personnel may devote a substantial amount of time to these new initiatives, and such corporate changes may increase our legal and compliance costs and may make some activities more time-consuming and costly.
We rely on highly-skilled personnel throughout all levels of our business. Our business could be harmed if we are unable to retain or motivate key personnel, hire qualified personnel, or maintain our corporate culture.
We believe that our future success depends in substantial part on our ability to recruit, hire, motivate, develop, and retain talented and highly-skilled personnel. Achieving this objective may be difficult due to many factors, including fluctuations in economic and industry conditions, competitors' hiring practices, employee tolerance for the significant amount of change within and demands on our company and our industry, and the effectiveness of our compensation programs. If we do not succeed in retaining and motivating our existing key employees and in attracting new key personnel, we may be unable to meet our business plan and, as a result, our revenue growth and profitability may be materially adversely affected.
Risk related to Legal and Regulatory Matters
We operate throughout the United States, Puerto Rico, and the U.S. Virgin Islands, and as such are subject to regulatory and legislative action by applicable local, state and federal governmental entities, which may increase our costs of providing products or services, or require us to change our business operations, products, or services or subject us to material adverse impacts if we fail to comply with such regulations.
The FCC regulates the licensing, construction, modification, operation, ownership, sale, and interconnection of wireless communications systems, as do some state and local regulatory agencies. We cannot assure you that the FCC or any state or local agencies having jurisdiction over our business will not adopt regulations or take other enforcement or other actions that would adversely affect our business, impose new costs, or require changes in current or planned operations. We are subject to regulatory action by the FCC and other federal agencies, as well as judicial review and actions, on issues related to the wireless industry that include, but are not limited to: roaming, spectrum allocation and licensing, pole attachments, intercarrier compensation, Universal Service Fund (USF), net neutrality, special access, 911 services, consumer protection including cramming, bill shock, and handset unlocking, network back-up power, consumer privacy, and cybersecurity. We are also subject to regulations in connection with other aspects of our business, including handset financing activities.
In addition, states are increasingly focused on the quality of service and support that wireless carriers provide to their customers and several agencies have proposed or enacted new and potentially burdensome regulations in this area. A number of state Public Utility Commissions and state legislatures have introduced proposals in recent years seeking to regulate carriers' business practices. We also face potential investigations by, and inquiries from or actions by state Public Utility Commissions, and state Attorneys General, including recent renewed interest in regulating third-party billing, or “cramming”. We also cannot assure you 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. Enactment of additional state or federal regulations may increase our costs of providing services (including, through universal service programs, requiring us to subsidize wireline competitors) or require us to change our services. Failure to comply with applicable regulations could have a material adverse effect on our business, financial condition and results of operations.

Unfavorable outcomes of legal proceedings may adversely affect our business and financial condition.
We are regularly involved in a number of legal proceedings before various state and federal courts, the FCC, and state and local regulatory agencies. Such legal proceedings can be complex, costly, and highly disruptive to business operations by diverting the attention and energies of management and other key personnel. The assessment of the outcome of legal proceedings, including our potential liability, if any, is a highly subjective process that requires judgments about future events that are not within our control. The outcome of litigation or other legal proceedings, including amounts ultimately received or paid upon settlement, may differ materially from amounts accrued in the financial statements. In addition, litigation or similar

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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, financial condition, operating results, or ability to do business.
We may be unable to protect our intellectual property.
We rely on a combination of patent, service mark, trademark, and trade secret laws and contractual restrictions to establish and protect our proprietary rights, all of which offer only limited protection. The steps we have taken to protect our intellectual property may not prevent the misappropriation of our proprietary rights. Moreover, others may independently develop processes and technologies that are competitive to ours. We cannot be sure that any legal actions against such infringers will be successful, even when our rights have been infringed. We cannot assure you that our pending or patent applications will be granted or enforceable, or that the rights granted under any patent that may be issued will provide us with any competitive advantages. In addition, we cannot assure you that any trademark or service mark registrations will be issued with respect to pending or future applications or will provide adequate protection of our brands. We do not have insurance coverage for intellectual property losses, and as such, a charge for an anticipated settlement, or an adverse ruling awarding damages, represents unplanned loss events. Any of these factors could have a material adverse effect on our business, financial condition and results of operations.
We use equipment, software, technology, and content in the operation of our business, which may subject us to third-party intellectual property claims and we may be adversely affected by litigation involving our suppliers.
We are a defendant in numerous intellectual property lawsuits, including patent infringement lawsuits, which exposes us to the risk of adverse financial impact either by way of significant settlement amounts or damage awards. As we adopt new technologies and new business systems, and provide customers with new products and/or services, we may face additional infringement claims. These claims could require us to cease certain activities or to cease selling relevant products and services. These claims can be time-consuming and costly to defend, and divert management resources. In addition to litigation directly involving our Company, our vendors and suppliers can be threatened with patent litigation and/or subjected to the threat of disruption or blockage of sale, use, or importation of products, posing the risk of supply chain interruption to particular products and associated services exposing us to material adverse operational and financial impacts.
Our business may be impacted by new or changing tax regulations and actions by federal, state or local agencies, or how judicial authorities apply tax laws.
We calculate and remit surcharges, taxes and fees to numerous federal, state and local jurisdictions in connection with the products and services we provide. These fees include federal USF fees and common carrier regulatory fees. In addition, many state and local governments impose various surcharges, taxes and fees on our sales and to our purchases of telecommunications services from various carriers. In many cases, the applicability and method of calculating these surcharges, taxes and fees may be uncertain, and our calculation, assessment and remittance of these amounts may be contested. In the event that we have incorrectly assessed and remitted amounts that were due, we could be subject to fines and penalties, which could materially impact our financial condition. In the event that federal, state and/or local municipalities were to significantly increase taxes and regulatory fees on our services or seek to impose new ones, it could have a material adverse effect on our margins and financial and operational results.
Our wireless licenses are subject to renewal and may be revoked in the event that we violate applicable laws.
Our existing wireless licenses are subject to renewal upon the expiration of the 10-year or 15-year period for which they are granted. Historically, the FCC has approved our license renewal applications. However, the Communications Act provides that licenses may be revoked for cause and license renewal applications denied if the FCC determines that a renewal would not serve the public interest. In addition, our licenses are subject to our compliance with the terms set forth in the agreement pertaining to national security among Deutsche Telekom, the Federal Bureau of Investigation, the Department of Justice, the Department of Homeland Security and the Company. If we fail to timely file to renew any wireless license, or fail to meet any regulatory requirements for renewal, including construction and substantial service requirements, we could be denied a license renewal. Many of our wireless licenses are subject to interim or final construction requirements and there is no guarantee that the FCC will find our construction, or the construction of prior licensees, sufficient to meet the build-out or renewal requirements. The FCC has pending a rulemaking proceeding to reevaluate, among other things, its wireless license renewal showings and standards and may in this or other proceedings promulgate changes or additional substantial requirements or conditions to its renewal rules, including revising license build out requirements. Accordingly, we cannot assure you that the FCC will renew our wireless licenses upon their expiration. If any of our wireless licenses were to be revoked or not renewed upon expiration, we would not be permitted to provide services under that license, which could have a material adverse effect on our business, results of operations, and financial condition.

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Our business could be adversely affected by findings of product liability for health/safety risks from wireless devices and transmission equipment, as well as by changes to regulations/RF emission standards.
We do not manufacture devices or other equipment sold by us, and we depend on our suppliers to provide defect-free and safe equipment. Suppliers are required by applicable law to manufacture their devices to meet certain governmentally imposed safety criteria. However, even if the devices we sell meet the regulatory safety criteria, we could be held liable with the equipment manufacturers and suppliers for any harm caused by products we sell if such products are later found to have design or manufacturing defects. We generally seek to enter into indemnification agreements with the manufacturers who supply us with devices to protect us from losses associated with product liability, but we cannot guarantee that we will be fully protected against all losses associated with a product that is found to be defective.
Allegations have been made that the use of wireless handsets and wireless transmission equipment, such as cell towers, may be linked to various health concerns, including cancer and brain tumors. Lawsuits have been filed against manufacturers and carriers in the industry claiming damages for alleged health problems arising from the use of wireless handsets. In addition, the FCC recently indicated that it plans to gather additional data regarding wireless handset emissions to update its assessment of this issue. The media has also reported incidents of handset battery malfunction, including reports of batteries that have overheated. These allegations may lead to changes in regulatory standards. There have also been other allegations regarding wireless technology, including allegations that wireless handset emissions may interfere with various electronic medical devices (including hearing aids and pacemakers), airbags, and anti-lock brakes.
Additionally, there are safety risks associated with the use of wireless devices while operating vehicles or equipment. Concerns over any of these risks and the effect of any legislation, rules or regulations that have been and may be adopted in response to these risks could limit our ability to sell our wireless services.
Related to Ownership of our Common Stock
We are controlled by Deutsche Telekom, whose interests may differ from the interests of our other stockholders.
Deutsche Telekom beneficially owns and possesses voting power over approximately 74% of the fully diluted shares of our common stock. Through its control of the voting power of our common stock and the rights granted to Deutsche Telekom in our certificate of incorporation and the Stockholder's Agreement, Deutsche Telekom controls the election of a majority of our directors and all other matters requiring the approval of our stockholders. By virtue of Deutsche Telekom's voting control, we are a “controlled company”, as defined in the New York Stock Exchange, or NYSE, listing rules, and are not subject to NYSE 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, our certificate of incorporation and the Stockholder's Agreement restrict us from taking certain actions without Deutsche Telekom's prior written consent as long as Deutsche Telekom beneficially owns 30% or more of the outstanding shares of our common stock, including the acquisition of any business, debt or equity interests, operations or assets of any person for consideration in excess of $1 billion, the sale of any of our or our subsidiaries' divisions, businesses, operations or equity interests for consideration in excess of $1 billion, any change in the size of our board of directors, the issuances of equity securities in excess of 10% of our outstanding shares or to repurchase debt held by Deutsche Telekom, the repurchase or redemption of equity securities or the declaration of extraordinary or in-kind dividends or distributions other than on a pro rata basis, or the termination or hiring of our chief executive officer. These restrictions could prevent us from taking actions that our board of directors may otherwise determine are in the best interests of the Company and our stockholders or that you should considermay be in investingthe best interests of our other stockholders.
Deutsche Telekom effectively has control over all matters submitted to our stockholders for approval, including the election or holdingremoval of directors, changes to our certificate of incorporation, a sale or merger of our company and other transactions requiring stockholder approval under Delaware law. Deutsche Telekom may have strategic, financial, or other interests different from our other stockholders, including as the holder of a substantial amount of our indebtedness, and may make decisions adverse to the interests of our other stockholders.
Deutsche Telekom is subject to a six month lock-up period with respect to its shares of our common stock, after which, subject to limited restrictions, it will be permitted to transfer freely its shares, which could have a negative impact on our stock price.
Deutsche Telekom will be prohibited from transferring any shares of our common stock for six months after the closing of the business combination transaction, which occurred on April 30, 2013. However, following such six month period and subject to certain limitations, Deutsche Telekom will be permitted to transfer its shares of our common stock in non-public

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sales and following the expiration of an eighteen month lock-up period beginning April 30, 2013, DT will be free to transfer its shares in public sales without notice, as long as such transactions would not result in the transferee owning 30% or more of the outstanding shares of our common stock. (If a transfer would exceed the 30% threshold, it is prohibited unless the transferee makes a binding offer to purchase all of the other outstanding shares on the same price and terms.) The sale of shares of our common stock by Deutsche Telekom (other than in transactions involving the purchase of all of our outstanding shares) could significantly increase the number of shares available in the market, which could cause a decrease in our stock price. In addition, even if Deutsche Telekom does not sell a large number of its shares into the market, its right to transfer a large number of shares into the market may depress our stock price.
Our stock price may be volatile, and may fluctuate based upon factors that have little or nothing to do with our business, financial condition, and operating results.
The trading prices of the securities of communications companies historically have been highly volatile, and the trading price of our Company.common stock may be subject to wide fluctuations. Our stock price may fluctuate in reaction to a number of events and factors that may include, among other things:
our or our competitors' actual or anticipated operating and financial results; introduction of new products and services by us or our competitors or changes in service plans or pricing by us or our competitors;
analyst projections, predictions and forecasts, analyst target prices for our securities and changes in, or our failure to meet, securities analysts' expectations;
Deutsche Telekom's financial performance, results of operation, or actions implied or taken by Deutsche Telekom;
entry of new competitors into our markets or perceptions of increased price competition, including a price war;
our performance, including subscriber growth, and our financial and operational metric performance;
market perceptions relating to our services, network, handsets and deployment of our 4G LTE platform and our access to iconic handsets, services, applications or content;
market perceptions of the wireless communications industry and valuation models for us and the industry;
changes in our credit rating or future prospects;
the availability or perceived availability of additional capital in general and our access to such capital;
actual or anticipated consolidation, or other strategic mergers or acquisition activities involving us or our competitors;
disruptions of our operations or service providers or other vendors necessary to our network operations; the general state of the U.S. and world economies; and
availability of additional spectrum, whether by the announcement, commencement, bidding and closing of auctions for new spectrum or the acquisition of companies that own spectrum.
In addition, the stock market has been volatile in the recent past and has experienced significant price and volume fluctuations, which may continue for the foreseeable future. This volatility has had a significant impact on the trading price of securities issued by many companies, including companies in the communications industry. These changes frequently occur irrespective of the operating performance of the affected companies. Hence, the trading price of our common stock could fluctuate based upon factors that have little or nothing to do with our business, financial condition and operating results.
Our stockholder rights plan could prevent a change in control of our Company in instances in which some stockholders may believe a change in control is in their best interests.
We have a stockholder rights plan (the “Rights Plan”) in effect. The Rights Plan will cause substantial dilution to a person or group that attempts to acquire our Company on terms that our board of directors does not believe are in our and our stockholders' best interest. The Rights Plan is intended to protect stockholders in the event of an unfair or coercive offer to acquire the Company and to provide our board of directors with adequate time to evaluate unsolicited offers. The Rights Plan may prevent or make takeovers or unsolicited corporate transactions with respect to our Company more difficult, even if stockholders may consider such transactions favorable, possibly including transactions in which stockholders might otherwise receive a premium for their shares.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Share Repurchases
The following table provides information about shares acquired from employees during the first quarter of 2013 as payment of withholding taxes in connection with the vesting of restricted stock:
None.
Issuer Purchases of Equity Securities
         
Period 
Total Number of
Shares Purchased
During Period
 
    Average Price Paid
Per Share
 
Total Number of
Shares Purchased as
Part of Publicly
Announced Plans or
Programs
 
Maximum Number
of Shares That May
Yet Be Purchased
Under the Plans or
Programs
January 1 – January 31 8,421
 $9.73
 —
 —
February 1 - February 28 172,231
 $9.80
 —
 —
March 1 – March 31 44,252
 $10.15
 —
 —
Total 224,904
 $9.87
 —
 —

Item 3. Defaults Upon Senior Securities

None.



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Item 4. Mine Safety Disclosures

None.

Item 5. Other Information
None.
On August 7, 2013, the 2013 Omnibus Incentive Plan and performance-vesting restricted stock unit awards granted to executive officers were amended to provide for vesting in connection with a change in control at the greater of actual performance or target, rather than at target as previously provided. These amendments are reflected in Exhibits 10.20, 10.24 and 10.25, respectively, to this Form 10-Q.

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Item 6. Exhibits
    Incorporated by Reference  
Exhibit No. Exhibit Description Form Date of First Filing Exhibit Number Filed Herein
2.1 Amendment No. 1 to the Business Combination Agreement by and among Deutsche Telekom AG, T-Mobile USA, Inc., T-Mobile Global Zwischenholding GmbH, T-Mobile Global Holding GmbH and MetroPCS Communications, Inc., dated April 14, 2013. 8-K 4/15/2013 2.1  
3.1 Fourth Amended and Restated Certificate of Incorporation. 8-K 5/2/2013 3.1  
3.2 Fifth Amended and Restated Bylaws. 8-K 5/2/2013 3.2  
4.1 Indenture, dated as of April 28, 2013 among T-Mobile USA, Inc., the guarantors party thereto, and Deutsche Bank Trust Company Americas, as trustee. 8-K 5/2/2013 4.1  
4.2 First Supplemental Indenture, dated as of April 28, 2013 among T-Mobile USA, Inc., the guarantors party thereto, and Deutsche Bank Trust Company Americas, as trustee. 8-K 5/2/2013 4.2  
4.3 Second Supplemental Indenture, dated as of April 28, 2013 among T-Mobile USA, Inc., the guarantors party thereto, and Deutsche Bank Trust Company Americas, as trustee. 8-K 5/2/2013 4.3  
4.4 Third Supplemental Indenture, dated as of April 28, 2013 among T-Mobile USA, Inc., the guarantors party thereto, and Deutsche Bank Trust Company Americas, as trustee. 8-K 5/2/2013 4.4  
4.5 Fourth Supplemental Indenture, dated as of April 28, 2013 among T-Mobile USA, Inc., the guarantors party thereto, and Deutsche Bank Trust Company Americas, as trustee. 8-K 5/2/2013 4.5  
4.6 Fifth Supplemental Indenture, dated as of April 28, 2013 among T-Mobile USA, Inc., the guarantors party thereto, and Deutsche Bank Trust Company Americas, as trustee. 8-K 5/2/2013 4.6  
4.7 Sixth Supplemental Indenture, dated as of April 28, 2013 among T-Mobile USA, Inc., the guarantors party thereto, and Deutsche Bank Trust Company Americas, as trustee. 8-K 5/2/2013 4.7  
4.8 Seventh Supplemental Indenture, dated as of April 28, 2013 among T-Mobile USA, Inc., the guarantors party thereto, and Deutsche Bank Trust Company Americas, as trustee. 8-K 5/2/2013 4.8  
4.9 Eighth Supplemental Indenture, dated as of April 28, 2013 among T-Mobile USA, Inc., the guarantors party thereto, and Deutsche Bank Trust Company Americas, as trustee. 8-K 5/2/2013 4.9  
4.10 Ninth Supplemental Indenture, dated as of April 28, 2013 among T-Mobile USA, Inc., the guarantors party thereto, and Deutsche Bank Trust Company Americas, as trustee. 8-K 5/2/2013 4.1  
4.11 Tenth Supplemental Indenture, dated as of April 28, 2013 among T-Mobile USA, Inc., the guarantors party thereto, and Deutsche Bank Trust Company Americas, as trustee. 8-K 5/2/2013 4.11  
4.12 Eleventh Supplemental Indenture, dated as of May 1, 2013 among T-Mobile USA, Inc., the guarantors party thereto, and Deutsche Bank Trust Company Americas, as trustee. 8-K 5/2/2013 4.12  

58

    Incorporated by Reference  
Exhibit No. Exhibit Description Form Date of First Filing Exhibit Number Filed Herein
4.13 Noteholder Agreement dated as of April 28, 2013, by and between Deutsche Telekom AG and T-Mobile USA, Inc. 8-K 5/2/2013 4.13  
4.14 Credit Agreement, dated as of May 1, 2013, among T-Mobile USA, Inc., as Borrower, Deutsche Telekom AG, as Lender, the other lenders party thereto from time to time, and JPMorgan Chase Bank, N.A., as Administrative Agent. 8-K 5/2/2013 4.14  
4.15 Seventh Supplemental Indenture, dated as of May 1, 2013, among T-Mobile USA, Inc., the guarantors party thereto, and Wells Fargo Bank, N.A., as trustee. 8-K 5/2/2013 4.15  
4.16 Fourth Supplemental Indenture, dated as of May 1, 2013, among T-Mobile USA, Inc., the guarantors party thereto, and Deutsche Bank Trust Company Americas, as trustee. 8-K 5/2/2013 4.16  
4.17 Third Supplemental Indenture, dated as of April 29, 2013, among T-Mobile USA, Inc., the guarantors party thereto, and Deutsche Bank Trust Company Americas, as trustee.       X
4.18 Twelfth Supplemental Indenture, dated as of July 15, 2013, among T-Mobile USA, Inc., the guarantors party thereto, and Deutsche Bank Trust Company Americas, as trustee.       X
4.19 Eighth Supplemental Indenture, dated as of July 15, 2013, among T-Mobile USA, Inc., the guarantors party thereto, and Wells Fargo Bank, N.A., as trustee.       X
4.20 Fifth Supplemental Indenture, dated as of July 15, 2013, among T-Mobile USA, Inc., the guarantors party thereto, and Deutsche Bank Trust Company Americas, as trustee.       X
10.1 Master Agreement, dated as of September 28, 2012, among T-Mobile USA, Inc., Crown Castle International Corp., and certain T-Mobile and Crown subsidiaries.       X
10.2 Amendment No. 1, to Master Agreement, dated as of November 30, 2012, among Crown Castle International Corp., and certain T-Mobile and Crown subsidiaries.       X
10.3 Master Prepaid Lease, dated as of November 30, 2012, by and among T-Mobile USA Tower LLC, T-Mobile West Tower LLC, T-Mobile USA, Inc. and CCTMO LLC.       X
10.4 MPL Site Master Lease Agreement, dated as of November 30, 2012, by and among Cook Inlet/VS GSM IV PCS Holdings, LLC, T-Mobile Central LLC, T-Mobile South LLC, Powertel/Memphis, Inc., Voicestream Pittsburgh, L.P., T-Mobile West LLC, T-Mobile Northeast LLC, Wireless Alliance, LLC, Suncom Wireless Operating Company, L.L.C., T-Mobile USA, Inc. and CCTMO LLC.       X
10.5 First Amendment to MPL Site Master Lease Agreement, dated as of November 30, 2012, by and among Cook Inlet/VS GSM IV PCS Holdings, LLC, T-Mobile Central LLC, T-Mobile South LLC, Powertel/Memphis, Inc., Voicestream Pittsburgh, L.P., T-Mobile West LLC, T-Mobile Northeast LLC, Wireless Alliance, LLC, Suncom Wireless Operating Company, L.L.C., T-Mobile USA, Inc. and CCTMO LLC.       X
10.6 Sale Site Master Lease Agreement, dated as of November 30, 2012, by and among Cook Inlet/VS GSM IV PCS Holdings, LLC, T-Mobile Central LLC, T-Mobile South LLC, Powertel/Memphis, Inc., Voicestream Pittsburgh, L.P., T-Mobile West LLC, T-Mobile Northeast LLC, Wireless Alliance, LLC, Suncom Wireless Operating Company, L.L.C., T-Mobile USA, Inc., T3 Tower 1 LLC and T3 Tower 2 LLC.       X

59

    Incorporated by Reference  
Exhibit No. Exhibit Description Form Date of First Filing Exhibit Number Filed Herein
10.7 First Amendment to Sale Site Master Lease Agreement, dated as of November 30, 2012, by and Cook Inlet/VS GSM IV PCS Holdings, LLC, T-Mobile Central LLC, T-Mobile South LLC, Powertel/Memphis, Inc., Voicestream Pittsburgh, L.P., T-Mobile West LLC, T-Mobile Northeast LLC, Wireless Alliance, LLC, Suncom Wireless Operating Company, L.L.C., T-Mobile USA, Inc., T3 Tower 1 LLC and T3 Tower 2 LLC.       X
10.8 Management Agreement, dated as of November 30, 2012, by and among Suncom Wireless Operating Company, L.L.C., Cook Inlet/VS GSM IV PCS Holdings, LLC, T-Mobile Central LLC, T-Mobile South LLC, Powertel/Memphis, Inc., Voicestream Pittsburgh, L.P., T-Mobile West LLC, T-Mobile Northeast LLC, Wireless Alliance, LLC, Suncom Wireless Property Company, L.L.C., T-Mobile USA Tower LLC, T-Mobile West Tower LLC, CCTMO LLC, T3 Tower 1 LLC and T3 Tower 2 LLC.       X
10.9 Stockholder’s Agreement dated as of April 30, 2013 by and between MetroPCS Communications, Inc. and Deutsche Telekom AG. 8-K 5/2/2013 10.1  
10.10 Waiver of Required Approval Under Section 3.6(a) of the Stockholder's Agreement, dated August 7, 2013, between T-Mobile US, Inc. and Deutsche Telekom AG. 
 
 
 X
10.11 License Agreement dated as of April 30, 2013 by and between T-Mobile US, Inc. and Deutsche Telekom AG. 8-K 5/2/2013 10.2  
10.12‡ Employment Agreement of J. Braxton Carter dated as of January 25, 2013. 8-K 5/2/2013 10.3  
10.13‡ Employment Agreement of Thomas C. Keys dated as of January 25, 2013. 8-K 5/2/2013 10.4  
10.14‡ Employment Agreement of Dennis T. Currier dated as of April 30, 2013. 8-K 5/2/2013 10.5  
10.15‡ Form of Indemnification Agreement. 8-K 5/2/2013 10.6  
10.16‡ Company’s Director Compensation Program dated as of May 1, 2013. 8-K 5/2/2013 10.7  
10.17‡ Employment Agreement of John J. Legere dated as of September 22, 2012.       X
10.18‡ T-Mobile USA, Inc. Executive Deferred Compensation Plan.       X
10.19‡ T-Mobile USA, Inc. 2003 Executive Continuity Bonus Plan.       X
10.20‡ T-Mobile US, Inc. 2013 Omnibus Incentive Plan (as amended and restated on August 7, 2013).       X
10.21‡ T-Mobile USA, Inc. 2011 Long-Term Incentive Plan.       X
10.22‡ T-Mobile USA, Inc. 2013 Annual Corporate Bonus Plan.       X
10.23‡ Form of Restricted Stock Unit Award Agreement for Non-Employee Directors under the T-Mobile US, Inc. 2013 Omnibus Incentive Plan. 8-K 6/4/2013 10.2  
10.24‡ Form of Restricted Stock Unit Award Agreement (Time-Vesting) for Executive Officers under the T-Mobile US, Inc. 2013 Omnibus Incentive Plan. 
 
 
 X
10.25‡ Form of Restricted Stock Unit Award Agreement (Performance-Vesting) for Executive Officers under the T-Mobile US, Inc. 2013 Omnibus Incentive Plan.       X
31.1 Certifications of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.       X
31.2 Certifications of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.       X

60

Exhibit
Number
 DescriptionIncorporated by Reference
31.1Exhibit No.Exhibit DescriptionFormDate of First FilingExhibit NumberFiled Herein
32.1* Certification of Chief Executive Officer Pursuant to Section 302906 of the Sarbanes-Oxley Act of 2002.
   
31.232.1* Certification of Chief Financial Officer Pursuant to Section 302906 of the Sarbanes-Oxley Act of 2002.
   
32.1Certification of Chief Executive Officer pursuant to 18 U.S.C., Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Pursuant to SEC Release 34-47551, this Exhibit is furnished to the SEC and shall not be deemed to be “filed.”
32.2Certification of Chief Financial Officer pursuant to 18 U.S.C., Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Pursuant to SEC Release 34-47551, this Exhibit is furnished to the SEC and shall not be deemed to be “filed.”
101101.INS XBRL Instance Document.X
101.SCHXBRL Taxonomy Extension Schema Document.X
101.CALXBRL Taxonomy Extension Calculation Linkbase Document.X
101.DEFXBRL Taxonomy Extension Definition Linkbase DocumentX
101.LABXBRL Taxonomy Extension Label Linkbase Document.X
101.PREXBRL Taxonomy Extension Presentation Linkbase Document.X
————————————
*    Incorporated by ReferenceFurnished herein.

4361

SIGNATURESSIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 
METROPCS COMMUNICATIONS, INC.
Date: April 25, 2013By:  /s/ Roger D. Linquist

Roger D. LinquistT-MOBILE US, INC.
Chief Executive Officer and
Chairman of the Board
   
Date: April 25,August 8, 2013By:   /s/ J. Braxton Carter
  
J. Braxton Carter
Executive Vice President and Chief Financial Officer and Vice Chairman(Duly Authorized Officer)

44

INDEX TO EXHIBITS
Exhibit
Number
Description
31.1Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1Certification of Chief Executive Officer pursuant to 18 U.S.C., Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Pursuant to SEC Release 34-47551, this Exhibit is furnished to the SEC and shall not be deemed to be “filed.”
32.2Certification of Chief Financial Officer pursuant to 18 U.S.C., Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Pursuant to SEC Release 34-47551, this Exhibit is furnished to the SEC and shall not be deemed to be “filed.”
101XBRL Instance Document.
————————————
* Incorporated by Reference


62