8-KMaterial AgreementsExhibits & Filings

T-Mobile US, Inc. 8-K Report, Material Agreement (Mar 4, 2014)

Filed March 4, 2014For Securities:TMUSTMUSZTMUSITMUSL

Summary

T-Mobile US, Inc. (TMUS) has entered into a significant two-year wireless phone bill receivables factoring arrangement with a maximum funding limit of $500 million. This arrangement, effective February 26, 2014, involves T-Mobile US and its subsidiaries selling wireless phone bill receivables to financial institutions, specifically Landesbank Hessen-Thüringen Girozentrale (Helaba) and The Bank of Tokyo Mitsubishi UFJ, Ltd. The primary goal of this factoring arrangement is to provide T-Mobile with an additional source of liquidity by monetizing its outstanding customer receivables. While the transaction is treated as a sale for accounting and legal purposes, it will not be considered a sale for federal and state tax purposes. T-Mobile PCS Holdings LLC will act as the servicer for these receivables, earning a monthly fee, and T-Mobile US, Inc. is providing a performance guarantee. The revolving period for this arrangement is set to conclude on March 14, 2016. As of the filing date, T-Mobile had already sold approximately $571.8 million in receivables under this facility.

Key Highlights

  • 1T-Mobile US, Inc. entered into a $500 million wireless phone bill receivables factoring arrangement.
  • 2The factoring arrangement has a two-year term, with a revolving period ending March 14, 2016.
  • 3The arrangement aims to enhance T-Mobile's liquidity by selling customer receivables.
  • 4The transaction involves a series of subsidiary entities to facilitate the sale and funding of receivables.
  • 5T-Mobile PCS Holdings LLC will service the receivables for a fee.
  • 6T-Mobile US, Inc. has provided a performance guarantee for certain obligations.
  • 7As of March 3, 2014, over $571 million in receivables had already been sold under the facility.

Frequently Asked Questions

A receivables factoring arrangement is a financial transaction where a company sells its accounts receivable (money owed by customers) to a third party (a factor) at a discount. T-Mobile US is entering into this arrangement to obtain immediate cash by selling its future phone bill payments to the bank purchasers, thereby improving its liquidity and access to capital.

The maximum funding limit for this factoring arrangement is $500,000,000 by the Bank Purchasers at any given time.

For accounting and legal purposes, the transaction is treated as a sale of receivables. This means the receivables will be removed from T-Mobile's balance sheet. However, for federal and state tax purposes, it will not be treated as a sale, which may have implications for tax reporting.

The main parties include T-Mobile US, Inc. (the parent guarantor), its subsidiaries T-Mobile West LLC, T-Mobile Northeast LLC, T-Mobile Central LLC, T-Mobile South LLC (as originators), T-Mobile PCS Holdings LLC (as servicer), T-Mobile Airtime Funding LLC (a special purpose entity), Billing Gate One LLC, and the Bank Purchasers, Landesbank Hessen-Thüringen Girozentrale (Helaba) and The Bank of Tokyo Mitsubishi UFJ, Ltd. KfW IPEX-Bank GmbH is also involved by providing a guarantee facility.