8-KMaterial AgreementsExhibits & Filings

T-Mobile US, Inc. 8-K Report, Material Agreement (Mar 7, 2016)

Filed March 7, 2016For Securities:TMUSTMUSZTMUSITMUSL

Summary

T-Mobile US, Inc. (TMUS) announced on March 6, 2016, a significant financing agreement with its majority stockholder, Deutsche Telekom AG (DT). T-Mobile USA, Inc., a wholly-owned subsidiary, has agreed to issue and sell $2 billion in 5.300% Senior Notes due 2021 to DT. This transaction provides T-Mobile with substantial capital, with the proceeds earmarked for strategic initiatives such as low-band spectrum acquisitions or, alternatively, debt refinancing and general corporate purposes. The company has flexibility in determining the closing date, with a deadline of December 7, 2016. The notes will be guaranteed by the same entities that guarantee T-Mobile USA's existing senior notes, offering a similar risk profile to existing debt, though they will be effectively subordinated to secured indebtedness and structurally subordinated to certain other subsidiaries' liabilities. This agreement underscores the ongoing financial support from DT and T-Mobile's strategic focus on spectrum expansion, a critical component for improving network coverage and capacity, which is a key driver of competitive advantage in the telecommunications industry.

Key Highlights

  • 1T-Mobile USA agreed to issue $2 billion in 5.300% Senior Notes due 2021 to Deutsche Telekom AG (DT).
  • 2The proceeds are designated for strategic uses, primarily low-band spectrum acquisitions, or for debt refinancing and general corporate purposes.
  • 3The issuance of notes is a private placement to DT, relying on an exemption from Securities Act registration.
  • 4The closing date for the note issuance is at T-Mobile's discretion but no later than December 7, 2016.
  • 5The notes will have guarantees from the same entities as T-Mobile USA's existing senior notes.
  • 6The notes will be effectively subordinated to secured indebtedness and structurally subordinated to liabilities of non-guarantor subsidiaries.
  • 7The transaction highlights continued financial backing from T-Mobile's majority stockholder, DT.

Frequently Asked Questions

The primary purpose of the proceeds from the issuance of the Senior Notes is to fund acquisitions of low-band spectrum. If the proceeds are not needed for spectrum acquisitions, they can be used for refinancing debt (excluding certain debt held by DT) or for general corporate purposes.

The notes are being purchased by T-Mobile's majority stockholder, Deutsche Telekom AG (DT). The aggregate purchase price is $2 billion for $2 billion in principal amount of 5.300% Senior Notes due 2021. No commitment or underwriting fees are being paid to DT.

The Senior Notes will mature on March 15, 2021, and will bear interest at a fixed rate of 5.300% per year, payable on a semiannual basis.

These notes are being sold to DT without registration under the Securities Act of 1933, as they are being issued in a private placement to an existing major shareholder. T-Mobile is not required to file a registration statement for these notes for at least six months after the issue date.