SecProbe.io

CORRESP
1
filename1.htm

CORRESP

 Confidential treatment requested by T-Mobile US, Inc. pursuant
to 17 CFR 200.83 (“Rule 83”)(TMUS-001)

 T-Mobile US,
Inc.

 12920 SE 38th Street

 Bellevue,
Washington 98006

 July 14, 2023

 Via EDGAR
Transmission

 Office of Technology

 Division of
Corporation Finance

 U.S. Securities and Exchange Commission

100 F Street, N.E.

 Washington, DC 20549

Attention: Kathryn Jacobson and Robert Littlepage

Re:

T-Mobile US, Inc.

Form 10-K for the Year Ended December 31, 2022

Filed February 14, 2023

Form 10-Q for the Quarter Ended March 31, 2023

Filed April 27, 2023

File No. 001-33409

 Dear Ms. Jacobson and Mr. Littlepage:

This letter responds to the letter dated June 8, 2023, from the staff of the Division of Corporation Finance (the “Staff”) of
the Securities and Exchange Commission (the “SEC”), relating to the above-referenced Form 10-K for the year ended December 31, 2022, filed with the SEC on February 14, 2023 (the “Form 10-K”), and Form 10-Q for the quarter ended March 31, 2023, filed with the SEC on April 27, 2023 (the “Form
10-Q”). The Staff’s comments are set forth below in bold, followed by the Company’s response to the comments.

Pursuant to 17 C.F.R. § 200.83 (“Rule 83”), T-Mobile requests confidential treatment
for certain portions of this letter that have been redacted from the version filed via the SEC’s EDGAR system and marked with “[***],” and that such information be maintained in confidence, not be made part of any public record and
not be disclosed to any person, including in response to any request under the Freedom of Information Act, 5 U.S.C. § 552. An unredacted version of this letter is being provided to the SEC under a separate cover along with the request for
confidential treatment under Rule 83.

 Please note that the “Company” or
“T-Mobile” refers to T-Mobile US, Inc., together with its consolidated subsidiaries, and “Cogent” refers to Cogent Infrastructure, Inc., a
wholly owned subsidiary of Cogent Communications Holdings, Inc.

 All terms used but not defined herein have the meanings assigned to such
terms in the Form 10-K and Form 10-Q.

 1

 Confidential treatment requested by T-Mobile US, Inc. pursuant to 17 CFR 200.83 (“Rule
83”)(TMUS-002)

 Form 10-Q for the Quarter Ended March 31, 2023

Note 11 - Wireline

 Sale of the Wireline Business, page
10

 Background on the Wireline Business and IP Transit Services Agreement (“IPTSA”)

In connection with the merger between the Company and Sprint Corporation (“Sprint”) on April 1, 2020 (the “Merger”), T-Mobile acquired Sprint’s legacy CDMA and LTE wireless networks, which were supported by the legacy Sprint wireline assets, comprising owned property and equipment, including land, buildings, communication
systems and data processing equipment, fiber optic cable and operating lease right-of-use assets, together with other wireline assets also acquired by the Company as
part of the Merger (the “Wireline assets”). The Wireline assets supported Sprint’s legacy CDMA and LTE wireless networks as well as wireline communication services provided by certain Sprint subsidiaries to domestic and international business-to-business customers (the “Wireline business”).

 During 2021
and 2022, the Wireline business generated significant operating losses of approximately $666 million and $866 million, respectively.

 After
determining that the Wireline assets used to support the legacy Sprint CDMA and LTE networks would be incompatible with the go-forward network strategy of the combined company,
T-Mobile began evaluating potential alternatives involving the Wireline business in 2021. Options considered by the Company included making additional investment in the Wireline business to grow it toward
profitability, winding down the Wireline business immediately, or over time, and liquidating the assets, or selling the Wireline business.

 In the third
quarter of 2022, the Company ultimately determined that selling the Wireline business would be in the best interests of the Company, its stockholders and customers.

At the end of a competitive bidding process for the sale of the Wireline business, Cogent was the bidder that provided the most favorable economics to the
Company and a feasible path forward for the Wireline business and the Wireline business customers. Pursuant to the Membership Interest Purchase Agreement (“MIPA”) entered into by the Company and Cogent on September 6, 2022, Cogent
would purchase the Wireline assets for $1, subject to customary adjustments (the “Wireline Transaction”), and pursuant to Section 9.1(g) of the MIPA and the IPTSA, which is Exhibit G to the MIPA1, T-Mobile would pay Cogent $700 million, consisting of (i) $350 million paid in equal monthly installments during the first year after closing of the
Wireline Transaction, and (ii) $350 million paid in equal monthly installments over the subsequent 42 months. Absent a material breach by Cogent, T-Mobile does not have the right to terminate the payment
obligations under the IPTSA.

1
 The IPTSA, as Exhibit G to the MIPA, was omitted, in accordance with Item 601(a)(5) of Regulation S-K, from the MIPA filed as Exhibit 2.1 to T-Mobile’s current report on Form 8-K, filed with the SEC on September 7, 2022.

 2

 Confidential treatment requested by T-Mobile US, Inc. pursuant to 17 CFR 200.83 (“Rule
83”)(TMUS-003)

 T-Mobile’s $700 million payment under the IPTSA was
required by Cogent to induce Cogent to execute the MIPA and to facilitate the Wireline Transaction. T-Mobile generally does not utilize IP transit services, which tend to be more expensive than peering,
internet exchanges and caching. However, T-Mobile requires an insignificant amount of IP transit services for limited and discrete uses in its operations. Prior to the Wireline Transaction, T-Mobile entered into existing volume-based commitment agreements with other providers for those limited IP transit services that T-Mobile does require. T-Mobile’s current and projected future demand for IP transit services can be fulfilled by these other providers, making Cogent’s IP transit services redundant and largely unnecessary. Additionally, to use
more than a de minimis amount of Cogent’s IP transit services, the Company would need to incur significant costs to connect T-Mobile’s wireless network to Cogent’s network, making Cogent’s
IP transit services cost-prohibitive.

 T-Mobile’s insignificant use of Cogent IP transit services support
certain legacy Sprint network equipment (e.g., legacy Sprint CDMA / LTE circuits) not yet decommissioned. While substantially all legacy Sprint wireless network equipment has been decommissioned, a negligible number of legacy Sprint network circuits
that utilize Cogent’s IP transit services remain in use. The Company estimates the required volume of IP transit services from Cogent is less than $1 million per year, and this amount will decline to zero over the next two years, or
sooner, as the decommissioning of legacy Sprint network equipment is completed. Historically, T-Mobile’s use of IP transit services from legacy service providers is approximately $2 million per year
or about 1.5 terabytes (“TB”) of capacity per month. The IPTSA provides for 611 TB of capacity per month for four and a half years, at a total cost of $700 million.

We note your response to prior comment 3 regarding the liability for fees payable for the IP Transit Services Agreement. Please respond to the
following:

 1. In your response, you state that through a competitive process for the sale of the wireline business, Cogent was the bidder
that provided the best economics along with a feasible path forward, and that the terms with Cogent were more attractive to you in comparison with the proposals from other potential buyers. Please discuss the nature and terms of the other
competitive bids relative to the bid from Cogent and why you determined the bid from Cogent was most attractive. For example, Cogent paid $1 for the Wireline business, and then negotiated the IP Transit Services Agreement for which you are obligated
to pay $700 million over its term even though you don’t expect to use the IP services. Explain whether the other bids received resulted in you receiving larger amounts for the Wireline business and/or resulted in you having to pay higher
cash outflows related to any potential sale.

 Response:

As part of the competitive bidding process, besides Cogent, T-Mobile received indications of interest in acquiring the
entire Wireline business from three parties. In addition to those three parties, there was minimal interest from others in purchasing discrete assets of the Wireline business or entering into a joint venture with
T-Mobile. T-Mobile received one proposal for the purchase of a minority stake in the Wireline business and one proposal for the purchase of limited discrete assets of
the Wireline business. Given T-Mobile’s desire to consummate the most financially accretive transaction(s) possible on an accelerated timeline, these proposals were
de-prioritized behind the other proposals received for a purchase of the entire Wireline business.

 3

 Confidential treatment requested by T-Mobile US, Inc. pursuant to 17 CFR 200.83 (“Rule
83”)(TMUS-004)

 T-Mobile assessed the proposals received based on a variety of
factors, including the costs to T-Mobile to divest the Wireline business, the qualifications and credibility of the bidders, their financial ability to sustain the expected losses from the Wireline business
while implementing a turnaround business plan, their ability to realize synergies, and their possession of the business knowledge needed to operate the Wireline business successfully.

The proposals received for the purchase of the entire Wireline business varied drastically:

One proposal required [***].

 A second proposal,
from a consortium of buyers, required [***]. During the negotiation process, the consortium lost a key operating partner and was unable to secure a new partner with the necessary expertise and ability to operate the Wireline business
and realize synergies.

 A third party proposed [***]. However, the party was not considered credible because, despite repeated requests for
information, it was unable to provide any proof of financing to sustain the expected losses from the Wireline business (and seemingly, lost the financial backing of a prospective partner during the sale process). The party also lacked a credible
business plan to operate the Wireline business to profitability, appeared to not have any actual operations, and, in T-Mobile’s view, demonstrated a fundamental lack of knowledge regarding the Wireline
business.

 The Company ultimately selected the bid from Cogent based on its analysis of all proposals. Several factors weighed in Cogent’s favor. Of
all credible bidders, Cogent was willing to purchase the Wireline business in its entirety with the lowest cash commitment from T-Mobile. Also, Cogent is an established player in the industry that has the
business knowledge, experience and financial capacity to operate the Wireline business successfully and generate synergies with its existing business. As a result, T-Mobile concluded that selling the Wireline
business to Cogent was in the best interests of the Company, its stockholders and customers.

 2. Please provide your accounting analysis, with cites
to the authoritative accounting guidance you relied upon, as a basis for recording the obligation for the IP Transit Services Agreement during the third quarter of 2022 even though the agreement was not entered into until May 1, 2023.

 Response:

 The accounting treatment applied
to the Wireline sale transaction, including the IPTSA obligation for the quarter ended September 30, 2022, followed the substance, rather than the form, of the overall arrangement. Given the unique set of facts and circumstances in this
arrangement T-Mobile relied on various principles within the accounting standards that arrived at an accounting outcome that T-Mobile believes is reasonable and
appropriate. Clear examples of accounting for such an arrangement whereby T-Mobile pays a counterparty to purchase a disposal group are not prevalent within the accounting literature.

 4

 Confidential treatment requested by T-Mobile US, Inc. pursuant to 17 CFR 200.83 (“Rule
83”)(TMUS-005)

 The Company signed the MIPA during the third quarter of 2022. The MIPA provides that each party may
specifically enforce the other party’s obligations under the agreement, so T-Mobile’s obligation to execute the IPTSA at closing was not cancellable absent limited exceptions outside of the
Company’s control. Similarly, T-Mobile cannot terminate its obligation to pay $700 million in accordance with the predetermined payment schedule in the IPTSA absent a material breach by Cogent.

At the time of the MIPA execution, the Company did not expect (and still does not expect) to receive anything of value for the cash payments made pursuant to
the IPTSA, because the Company has no meaningful use for the IP transit services offered under the IPTSA. As described above, the Company viewed the IPTSA and the cash payments thereunder as an inducement to Cogent to execute the MIPA. Accordingly,
the MIPA and the IPTSA were elements of one integrated arrangement to sell the Wireline business to Cogent. As a result, the Company considered the fair value of the Wireline business to be a negative amount that approximated the net present value
of the cash payments that the Company was obligated to pay under the IPTSA.

 The Company applied the accounting guidance in ASC 360 Property, Plant and
Equipment, ASC 820 Fair Value Measurements and the interpretative guidance in the SEC Staff Speech by Adam Brown, Professional Accounting Fellow, Office of the Chief Accountant, “Remarks Before the 2008 AICPA National Conference on Current SEC
and PCAOB Developments” (Dec. 8, 2008), to identify the appropriate unit of accounting, determine the timing of the adjustment, estimate the fair value of the disposal group, and determine how to account for the difference between the carrying
value of the disposal group and its estimated fair value, less costs to sell.

 For a business or a group of assets that represents a business, paragraph
ASC 360-10-15-4b(1) defines the unit of accounting as the disposal group. A disposal group is the assets to be disposed of
together as a group in a single transaction and liabilities directly associated with those assets that will be transferred in the transaction. Through the application of this guidance, T-Mobile determined that
the Wireline business represented the appropriate unit of accounting for the Wireline transaction. Paragraph ASC 360-10-35-43
requires that a disposal group classified as held for sale be recorded at the lower of its cost basis or fair value, less costs to sell, initially and subsequently until no longer classified as held for sale (e.g., sold).

As such, in the third quarter of 2022 when T-Mobile classified the Wireline business as held for sale, T-Mobile recorded the Wireline business at the lower of its cost basis or fair value, less costs to sell in accordance with ASC 360-10-35-43.

 To determine the fair value of the disposal group (Wireline business) the Company
considered ASC 820. Paragraph ASC 820-10-20 defines “fair value” as the price that would be received to sell an asset or paid to transfer a liability in an
orderly transaction between market participants at the measurement date. In applying this guidance, T-Mobile considered the terms of the MIPA, including the required closing conditions, to be an
objective, market participant based estimate of fair value, as the MIPA was the result of a negotiated transaction between unrelated parties. Accordingly, the Company concluded that the fair value of the Wireline business was negative
$641 million because the Company is obligated to make cash payments to the buyer of