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T-Mobile Delivers Its Best Q2 Ever

August 1, 2018

BELLEVUE, Wash.--(BUSINESS WIRE)--Aug 1, 2018--T-Mobile US, Inc. (NASDAQ: TMUS):

Industry-Leading Customer Growth

1.6 million total net additions – 21st consecutive quarter with more than 1 million net additions 1.0 million total branded postpaid net additions – supported by continued strong postpaid other net additions 686,000 branded postpaid phone net additions – led industry for the 18th consecutive quarter 91,000 branded prepaid net additions – flat year-over-year despite increased competitive activity in the market Record low 0.95% branded postpaid phone churn, down 15 bps year-over-year

Strong Financial Performance ( all percentages year-over-year )

Service revenues up 7% to $7.9 billion - led industry for the 17th consecutive quarter Total revenues up 4% to $10.6 billion Net income up 35% to $782 million and diluted earnings per share (EPS) of $0.92 Adjusted EBITDA (1) up 7% to $3.2 billion Net cash provided by operating activities (3) up 14% to $1.3 billion Free Cash Flow (1)(3) up 61% to $774 million

Network Expansion Continues, Garners Industry Accolades

T-Mobile now covers 323 million people with 4G LTE - targeting 325 million people by year-end 2018 Aggressive deployment of 600 MHz in Q2 2018, augmenting existing low-band capabilities on 700 MHz Fastest LTE network according to Ookla; outright winner in 5 of 7 categories in most recent OpenSignal study

Continued Strong Outlook for 2018

Increased target for branded postpaid net customer additions of 3.0 to 3.6 million Net income is not available on a forward-looking basis (2) Increased Adjusted EBITDA target of $11.5 to $11.9 billion including leasing revenues of $0.6 to $0.7 billion (1) Cash purchases of property and equipment, excluding capitalized interest, of $4.9 to $5.3 billion, unchanged from the prior target range, now expected to come in at the high end of the range. This includes expenditures for 5G deployment Three-year compound annual growth rates (CAGRs) for Net cash provided by operating activities and Free Cash Flow from FY 2016 to FY 2019 also unchanged at 7% - 12% and 46% - 48%, respectively (1)(3)

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T-Mobile US, Inc. (NASDAQ: TMUS) reported record results in the second quarter of 2018 with industry-leading branded customer growth, record-high service revenues, record-high Q2 profitability, and record-low postpaid phone churn. The Un-carrier has changed wireless for good and proven that putting customers first is the best way to deliver sustained, industry-leading results. T-Mobile continues to balance growth and profitability - delivering records in both categories in the second quarter of 2018.

T-Mobile once again outperformed the competition as the company continues to optimize its offers for key segments of the market, expand into new geographies and set the standard for customer experience. This has resulted in growth in postpaid phone net additions both sequentially and year-over-year as the Un-carrier again leads the industry in the second quarter with nearly twice the aggregate postpaid phone net additions of Verizon, AT&T, Sprint and Comcast combined and more than three times the net additions of our next closest competitor, Comcast. In addition, the company delivered record-low postpaid phone churn of 0.95% - the best result in company history. These results have translated into record-high service revenues, which T-Mobile has now grown year-over-year for 17 quarters in a row.

“T-Mobile just recorded its best Q2 in company history,” said John Legere, CEO of T-Mobile. “That means 21 quarters with over one million net adds, record-high service revenues, industry-leading postpaid phone net additions, and record-low postpaid phone churn. Our business is strong, our strategy is working and we won’t stop!”

Industry-Leading Customer Growth

T-Mobile continues to deliver industry-leading customer growth, and Q2 2018 was no different. We once again led the industry in branded postpaid phone customer net additions, capturing about two thirds of the segment. Customers continue to choose the Un-carrier over the competition as we put all our energy and efforts into giving our customers more value and treating them right.

Total net customer additions were 1.6 million in Q2 2018, bringing our total customer count to 75.6 million. Q2 2018 marked the 21st straight quarter in which T-Mobile generated more than 1 million total net customer additions. Branded postpaid net customer additions were 1.0 million in Q2 2018, up 200,000 from Q2 2017. Strength in postpaid phone net additions and postpaid other net additions, driven by wearables, drove the year-over-year increase. Branded postpaid phone net customer additions were 686,000 in Q2 2018, up 153,000 from Q2 2017. This marks the 18th consecutive quarter in which T-Mobile has led the industry in this category. Sequentially and year-over-year, branded postpaid phone net customer additions increased due to continued growth in existing and Greenfield markets, the growing success of new customer segments such as T-Mobile for Business, T-Mobile ONE Unlimited 55+, and T-Mobile ONE Military, as well as record-low churn. Branded postpaid other net customer additions were 331,000 in Q2 2018, up 47,000 from Q2 2017. Year-over-year the increase was due to higher gross customer additions from connected devices, specifically the Apple watch, partially offset by lower DIGITS gross customer additions and higher deactivations from a growing customer base. Branded postpaid phone churn was a record-low of 0.95% in Q2 2018, down 15 basis points from Q2 2017, primarily due to increased customer satisfaction and loyalty from ongoing improvements to network quality, industry-leading customer service and the overall value of our offerings in the marketplace. Branded prepaid net customer additions were 91,000 in Q2 2018, down 3,000 from Q2 2017. Branded prepaid churn was 3.81% in Q2 2018, down 10 basis points compared to Q2 2017, primarily due to the continued impact from the optimization of our third-party distribution channels which was substantially completed during Q1 2017, partially offset by higher deactivations from a growing customer base and increased competitive activity in the marketplace.

Strong Financial Performance

Our strong customer results translated into record financial results. T-Mobile again posted record-high service revenues, and Q2 marks the 17th quarter in a row where we led the industry in year-over-year service revenue percentage growth. In addition, the company posted strong net income and record Adjusted EBITDA.

Total service revenues increased 7% year-over-year to a record-high $7.9 billion, which marked the 17th consecutive quarter of leading the industry in year-over-year service revenue percentage growth. Total revenues increased 4% year-over-year to $10.6 billion, driven primarily by growth in service revenues, partially offset by lower equipment revenues. Branded postpaid phone Average Revenue per User (ARPU) was $46.52 in Q2 2018, down 0.3% from Q1 2018 and 1.2% from Q2 2017. Sequentially, the decrease was due to the continued adoption of tax inclusive plans. Year-over-year, the decrease was primarily due to the continued adoption of tax inclusive plans, a decrease in the non-cash net benefit from Data Stash, partially offset by the positive impact from our T-Mobile ONE rate plans and a net reduction in service promotional activities. For full-year 2018, we continue to expect branded postpaid phone ARPU to be generally stable compared to full-year 2017, excluding the impact from the new revenue standard. Branded prepaid ARPU was $38.48 in Q2 2018, down 0.4% from Q2 2017, primarily due to promotional activities. Net income increased 35% year-over-year to a strong $782 million in Q2 2018. The positive impacts to net income in Q2 2018 from the adoption of the new revenue standard and hurricane related reimbursements were $62 million and $45 million, respectively. The negative impact to net income in Q2 2018 from the proposed Sprint transaction was $39 million. EPS increased by $0.25 to $0.92 in Q2 2018. The positive impacts to EPS in Q2 2018 from the adoption of the new revenue standard and hurricane related reimbursement were $0.07 and $0.06, respectively. The negative impact to EPS in Q2 2018 from the proposed Sprint transaction was $0.05. Adjusted EBITDA increased 7% year-over-year to a record-high $3.2 billion in Q2 2018. The positive impacts to Adjusted EBITDA in Q2 2018 from the adoption of the new revenue standard and hurricane related reimbursements were $84 million and $70 million, respectively. Cash purchases of property and equipment increased by 21% year-over-year to $1.6 billion primarily from continued deployment of our low band spectrum, including 600 MHz. Cash purchases of property and equipment included capitalized interest of $102 million in Q2 2018 and $34 million in Q2 2017. Net cash provided by operating activities increased 14.0% year-over-year to $1.3 billion in Q2 2018. The increase resulted from an increase in net income, partially offset by higher net cash outflows from working capital. Free Cash Flow increased 61% year-over-year to $774 million in Q2 2018 due to higher proceeds related to our deferred purchase price from securitization transactions and higher net cash provided by operating activities, partially offset by higher cash capex.

Network Expansion Continues, Garners Industry Accolades

T-Mobile continues to increase and expand the speed and capacity of our network to better serve our customers. Our advancements in network technology and our spectrum resources ensure we can continue to increase the capabilities of our network as the industry moves towards 5G.

Highlights from Q2 2018 included:

Operating America’s Fastest 4G LTE network. In Q2 2018, we were once again the nation’s fastest LTE network, realizing average 4G LTE download speeds of 31.8 Mbps, and average 4G LTE upload speeds of 11.9 Mbps. This was the 18th consecutive quarter that we have led the industry in both download and upload speeds. Leading in Ookla’s “2018 U.S. Mobile Performance Report.” In H1 2018, millions of actively initiated tests showed that T-Mobile customers receive the fastest speeds nationwide including fastest speeds in 31 states, in rural areas, and tied for first for fastest speeds in the Top 100 metropolitan areas. Winning 5 out of 7 categories outright in OpenSignal’s “State of Mobile Networks: USA” report. Based on billions of measurements, T-Mobile won in 4G download speed, 3G download speed, overall download speed, 4G upload speed, and 3G latency. T-Mobile also tied for first in 4G availability, providing customers with an LTE signal 94% of the time. Expanding our coverage breadth. T-Mobile now covers 323 million people with 4G LTE. By the end of 2018, we are targeting to cover 325 million people. Clearing and deploying 600 MHz spectrum. At the end of Q2 2018, T-Mobile owned a nationwide average of 31 MHz of 600 MHz low band spectrum covering 328 million POPs. We expect to clear spectrum covering approximately 130 million POPs by year-end 2018 and target approximately 260 million POPs by year-end 2019. 600MHz deployments continue at an accelerated pace with spectrum covering more than 950 cities and towns in 33 states already lit up. Combining 600MHz and 700MHz, we have deployed low band spectrum to nearly 289 million POPs. Introducing 5G across 600 MHz and millimeter wave spectrum. In addition to building out 5G on 600 MHz, T-Mobile intends to bring 5G to 30 cities in 2018 using both 600 MHz and millimeter wave spectrum. The network will harness 4G and 5G bandwidths simultaneously (dual connectivity) and will be ready for the introduction of the first 5G smartphones in 2019.

Continued Strong 2018 Outlook

In 2018, we expect postpaid net customer additions between 3.0 and 3.6 million, an increase from the prior target range of 2.6 to 3.3 million.

Net income is not available on a forward-looking basis.

Adjusted EBITDA is expected to be between $11.5 and $11.9 billion, an increase from the prior target range of $11.4 to $11.8 billion. Our Adjusted EBITDA target includes leasing revenues of $0.6 to $0.7 billion, unchanged from the prior guidance. Including the estimated impact of the new revenue standard, Adjusted EBITDA is expected to increase by an additional $0.2 to $0.5 billion for a total guidance range of $11.7 to $12.4 billion.

For full-year 2018, we continue to expect branded postpaid phone ARPU to be generally stable compared to full-year 2017, excluding the impact from the new revenue standard.

Cash purchases of property and equipment, excluding capitalized interest, are expected to be between $4.9 and $5.3 billion, unchanged from the prior target range, but are now expected to come in at the high end of the range. This includes expenditures for 5G deployment.

The adoption of the new cash flow accounting standard resulted in a reclassification of cash flows related to our deferred purchase price from securitization transactions from operating activities to investing activities. In addition, cash flows related to debt prepayment and extinguishment costs were reclassified from operating activities to financing activities. In Q1 2018, we redefined Free Cash Flow to reflect the above changes in classification and present cash flows on a consistent basis for investor transparency. Please see the reconciliation of non-GAAP measures in this earnings release for details on the revised definition, which was applied retroactively to 2017.

The three-year CAGR guidance (2016 - 2019) for net cash provided by operating activities and Free Cash Flow is unchanged at 7% - 12% and 46% - 48%, respectively.

In 2018, we continue to expect the following impacts from the adoption of the new revenue standard:

Service revenues $(0.2) - $(0.1) billion Total revenues $0.3 - $0.5 billion Operating expenses $(0.1) - $0.1 billion Net income $0.2 - $0.4 billion Adjusted EBITDA $0.2 - $0.5 billion We expect postpaid phone ARPU to be negatively affected by changes in revenue allocation under the new revenue standard.

Financial Results

For more details on T-Mobile’s Q2 2018 financial results, including the Investor Factbook with detailed financial tables and reconciliations of certain historical non-GAAP measures disclosed in this release to the most comparable measures under GAAP, please visit T-Mobile US, Inc.’s Investor Relations website at http://investor.t-mobile.com.

T-Mobile Social Media

Investors and others should note that we announce material financial and operational information to our investors using our investor relations website, press releases, SEC filings and public conference calls and webcasts. We also intend to use the @TMobileIR Twitter account ( https://twitter.com/TMobileIR ) and the @JohnLegere Twitter ( https://twitter.com/JohnLegere ), Facebook and Periscope accounts, which Mr. Legere also uses as a means for personal communications and observations, as means of disclosing information about the Company and its services and for complying with its disclosure obligations under Regulation FD. The information we post through these social media channels may be deemed material. Accordingly, investors should monitor these social media channels in addition to following our press releases, SEC filings and public conference calls and webcasts. The social media channels that we intend to use as a means of disclosing the information described above may be updated from time to time as listed on our investor relations website.

About T-Mobile US, Inc.

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