Business Combination (Tables)

6 Months Ended

Jun. 30, 2020

Schedule of Components of Consideration Transferred

The acquisition-date fair value of consideration transferred in the Merger totaled $40.8 billion, comprised of the following:


(in millions)	April 1, 2020
Fair value of T-Mobile common stock issued to Sprint stockholders⁽¹⁾	$	31,328
Fair value of T-Mobile replacement equity awards attributable to pre-combination service⁽²⁾	323
Repayment of Sprint’s debt (including accrued interest, prepayment penalties)⁽³⁾	7,396

Value of contingent consideration⁽⁴⁾	1,882
Payment received from selling stockholder⁽⁵⁾	(102)
Total consideration exchanged	$	40,827

(1) Represents the fair value of T-Mobile common stock issued to Sprint stockholders pursuant to the Business Combination Agreement, less shares surrendered by SoftBank pursuant to the Letter Agreement. The fair value is based on 373,396,310 shares of Sprint common stock issued and outstanding as of March 31, 2020, an exchange ratio of 0.10256 shares of T-Mobile common stock per share of Sprint common stock, less 48,751,557 T-Mobile shares surrendered by SoftBank which are treated as contingent consideration, and the closing price per share of T-Mobile common stock on NASDAQ on March 31, 2020, of $83.90, as shares were transferred to Sprint stockholders prior to the opening of markets on April 1, 2020.

(2) Equity-based awards held by Sprint employees prior to the acquisition date have been replaced with T-Mobile equity-based awards. The portion of the equity-based awards that relates to services performed by the employee prior to the acquisition date is included within consideration transferred, and includes stock options, restricted stock units and performance-based restricted stock units.

(3) Represents the cash consideration paid concurrent with the close of the Merger to retire certain Sprint debt, as required by change in control provisions of the debt, plus interest and prepayment penalties.

(4) Represents the fair value of the SoftBank Specified Shares Amount contingent consideration that may be issued as set forth in the Letter Agreement.

(5) Represents receipt of a cash payment from SoftBank for certain expenses associated with the Merger and is presented in Cash paid for acquisition of companies, net of cash acquired within our Condensed Consolidated Statements of Cash Flows.

Schedule of Amounts Recognized as of Acquisition Date

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


(in millions)	April 1, 2020
Cash and cash equivalents	$	2,214
Accounts receivable	1,610
Equipment installment plan receivables	1,024
Inventory	658
Prepaid expenses	140
Assets held for sale	1,948
Other current assets	388
Property and equipment	17,228
Operating lease right-of-use assets	6,583
Financing lease right-of-use assets	291
Goodwill	9,198
Spectrum licenses	45,400
Other intangible assets	6,325
Equipment installment plan receivables due after one year, net	247
Other assets ⁽¹⁾	541
Total assets acquired	$	93,795
Accounts payable and accrued liabilities	$	4,684
Short-term debt	2,760
Deferred revenue	508
Short-term operating lease liabilities	1,818
Short-term financing lease liabilities	8
Liabilities held for sale	475
Other current liabilities	284
Long-term debt	29,037
Tower obligations	950
Deferred tax liabilities	4,203
Operating lease liabilities	5,615
Financing lease liabilities	12

Other long-term liabilities	2,614
Total liabilities assumed	$	52,968

Total consideration transferred	$	40,827

(1) Included in Other assets acquired is $80 million in restricted cash.

Schedule of Pro Forma Information

The following unaudited pro forma financial information gives effect to the Merger transactions as if they had been completed on January 1, 2019. The unaudited pro forma information was prepared in accordance with the requirements of ASC 805, which is a different basis than pro forma information prepared under Article 11 of Regulation S-X (“Article 11”). As such, they are not directly comparable with historical results for stand-alone T-Mobile prior to April 1, 2020, historical results for T-Mobile from April 1, 2020 that reflect the Merger transactions and are inclusive of the results and operations of Sprint, nor our previously provided pro forma financials prepared in accordance with Article 11. The pro forma results for the three and six months ended June 30, 2020 and 2019, include the impact of several adjustments to previously reported operating results. The pro forma adjustments are based on historically reported transactions by the respective companies. The pro forma results do not include any anticipated synergies or other expected benefits of the acquisition.


	Three Months Ended June 30,						Six Months Ended June 30,
(in millions, except per share amounts)	2020		2019		2020		2019
Total revenues	$	17,665	$	17,460	$	35,073	$	35,079
Income (loss) from continuing operations	(35)		728		1,070		(1,071)
Income from discontinued operations, net of tax	320		423		677		846
Net income (loss)	285		1,154		1,747		(218)