8-KOther EventsExhibits & Filings

T-Mobile US, Inc. 8-K Report, Corporate Update (May 1, 2023)

Filed May 1, 2023For Securities:TMUSTMUSZTMUSITMUSL

Summary

T-Mobile US, Inc. (TMUS) has officially closed the sale of its U.S. long-haul fiber network, referred to as the Wireline Business, to Cogent Infrastructure, Inc. (a subsidiary of Cogent Communications Holdings, Inc.) on May 1, 2023. The transaction, initially agreed upon in September 2022, was completed for a nominal cash consideration of approximately $61.1 million, after customary adjustments. This divestiture marks a strategic move by T-Mobile to exit a non-core asset, allowing for a sharper focus on its primary wireless operations. As part of the agreement, T-Mobile has entered into a significant IP transit services agreement with the buyer. Under this agreement, T-Mobile will pay Cogent Communications an aggregate of $700 million over a period of 43 months, commencing after the closing. This includes $350 million in the first year and $350 million over the subsequent 42 months. T-Mobile had previously accounted for an estimated pre-tax charge of approximately $1 billion related to this transaction in the third quarter of 2022, reflecting the adjustment in the carrying value of the Wireline Business and the liability for future IP transit payments. As of March 31, 2023, net losses on disposal were approximately $1 billion, with no material change expected in the second quarter.

Key Highlights

  • 1T-Mobile has completed the sale of its U.S. long-haul fiber network (Wireline Business) to Cogent Infrastructure, Inc.
  • 2The transaction closed on May 1, 2023, with a net cash consideration to T-Mobile of approximately $61.1 million after adjustments.
  • 3T-Mobile entered into an IP transit services agreement with the buyer, committing to aggregate payments of $700 million over 43 months.
  • 4The initial sale agreement was signed on September 6, 2022.
  • 5T-Mobile had previously recognized an estimated pre-tax charge of approximately $1 billion related to this transaction in Q3 2022.
  • 6As of March 31, 2023, T-Mobile has recognized net losses on disposal of approximately $1 billion.
  • 7This divestiture allows T-Mobile to streamline its operations and focus on its core wireless business.

Frequently Asked Questions

T-Mobile sold its U.S. long-haul fiber network, including any non-U.S. extensions, which is referred to as the 'Wireline Business'.

The initial agreement was for a $1 purchase price, but after customary adjustments for cash, working capital, and other items, T-Mobile received approximately $61.1 million in cash at closing.

The IP Transit Agreement is a service contract where T-Mobile will pay the buyer, Cogent Communications, an aggregate of $700 million over 43 months for IP transit services. This is a significant component of the transaction's financial impact, as it represents a substantial ongoing cost related to the divested network's future services.

T-Mobile previously recognized an estimated pre-tax charge of approximately $1 billion in Q3 2022, which included adjustments for the Wireline Business's carrying value and the liability for the $700 million IP transit payments. As of March 31, 2023, the net losses on disposal were around $1 billion, and no material change is expected in the second quarter.