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Section 1: S-4 (S-4)

S-4
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As filed with the Securities and Exchange Commission on July 30, 2018

Registration No. 333-          

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM S-4

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

 

 

T-MOBILE US, INC.

(Exact name of registrant as specified in its charter)

 

 

 

Delaware   4812   20-0836269

(State or Other Jurisdiction of

Incorporation or Organization)

  (Primary Standard Industrial
Classification Code Number)
  (I.R.S. Employer
Identification Number)

12920 SE 38th Street

Bellevue, Washington 98006-1350

(425) 378-4000

(Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant’s Principal Executive Offices)

 

 

J. Braxton Carter

Chief Financial Officer

T-Mobile US, Inc.

12920 SE 38th Street

Bellevue, Washington 98006-1350

(425) 378-4000

(Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent for Service)

 

 

Copies to:

 

Adam O. Emmerich

David K. Lam

Wachtell, Lipton, Rosen & Katz

51 West 52nd Street

New York, New York 10019

(212) 403-1000

 

Stefan K. Schnopp

Vice President and Corporate Secretary

Sprint Corporation

6200 Sprint Parkway

Overland Park, Kansas 66251

(877) 564-3166

 

Robert S. Townsend

Brandon C. Parris

Morrison & Foerster LLP

425 Market Street

San Francisco, California 94105

(415) 268-7000

 

 

Approximate date of commencement of proposed sale of the securities to the public: As soon as practicable after this Registration Statement becomes effective and upon completion of the merger transactions described in the enclosed joint consent solicitation statement/prospectus.

If the securities being registered on this Form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box:  ☐

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

 

Large accelerated filer      Accelerated filer  
Non-accelerated filer   ☐ (Do not check if a smaller reporting company)    Smaller reporting company  
     Emerging growth company  

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act.  ☐

If applicable, place an ☒ in the box to designate the appropriate rule provision relied upon in conducting this transaction:

Exchange Act Rule 13e-4(i) (Cross-Border Issuer Tender Offer)  ☐

Exchange Act Rule 14d-1(d) (Cross-Border Third-Party Tender Offer)  ☐

 

 

CALCULATION OF REGISTRATION FEE

 

 

Title of Each Class of

Securities to be Registered

 

Amount

to be

Registered(1)

 

Proposed

Maximum

Offering Price

per Share

 

Proposed

Maximum
Aggregate

Offering Price(2)

 

Amount of

Registration Fee(3)

Common Stock, par value $0.00001 per share

  438,518,091 shares   N/A   $23,259,929,971   $2,895,862

 

 

 

(1) Represents the maximum number of shares of common stock, par value $0.00001 per share (“T-Mobile common stock”), of T-Mobile US, Inc. (“T-Mobile”) estimated to be issuable, or subject to options or other equity-based awards that are to be assumed, by T-Mobile upon the completion of the merger transactions described herein. The number of shares of T-Mobile common stock being registered is based upon the product of (A) 4,275,722,421 shares of common stock, par value $0.01 per share (“Sprint common stock”), of Sprint Corporation (“Sprint”) outstanding as of July 13, 2018 or subject to options, other equity-based awards and warrants of Sprint outstanding as of July 13, 2018 or that may be granted after such date and prior to completion of the merger transactions multiplied by (B) 0.10256, the exchange ratio for the merger transactions.
(2) Estimated solely for the purpose of calculating the registration fee required by Section 6(b) of the Securities Act and calculated in accordance with Rule 457(c) and 457(f)(1) of the Securities Act. The proposed maximum aggregate offering price of the T-Mobile common stock to be registered is based on the product of (A) the average of the high and low sale prices of Sprint common stock as reported on the New York Stock Exchange on July 25, 2018 ($5.44) multiplied by (B) the maximum number of shares of Sprint common stock expected to be exchanged in connection with the merger transactions described herein (4,275,722,421).
(3) Determined in accordance with Section 6(b) of the Securities Act at a rate equal to $124.50 per $1,000,000 of the proposed maximum aggregate offering price.

 

 

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until this registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

 

 

 


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Information contained herein is subject to completion or amendment. A registration statement relating to the securities to be issued in the merger transactions has been filed with the Securities and Exchange Commission. These securities may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective. This joint consent solicitation statement/prospectus shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of these securities in any jurisdiction in which such offer, solicitation or sale is not permitted or would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.

 

PRELIMINARY JOINT CONSENT SOLICITATION STATEMENT/PROSPECTUS

DATED JULY 30, 2018, SUBJECT TO COMPLETION

 

LOGO    LOGO

To Our Stockholders:

As previously announced, on April 29, 2018, T-Mobile US, Inc. (which we refer to as “T-Mobile”) and Sprint Corporation (which we refer to as “Sprint”) entered into a business combination agreement (which, as it may be amended or supplemented from time to time, we refer to as the “business combination agreement”), pursuant to which T-Mobile and Sprint agreed to combine their respective businesses (which we refer to as the “merger transactions”). The combined company will be named “T-Mobile” and, as a result of the merger, is expected to be able to rapidly launch a broad and deep nationwide 5G network, accelerate innovation and increase competition in the U.S. wireless, video and broadband industries. Neither T-Mobile nor Sprint on its own could generate comparable benefits to consumers.

If the merger transactions are completed, each share of Sprint common stock (other than certain shares described in the business combination agreement) will be automatically converted into the right to receive 0.10256 shares (which we refer to as the “exchange ratio”) of T-Mobile common stock, the common stock of the combined company. We expect that the T-Mobile common stock will continue to be listed on the NASDAQ Global Select Market (which we refer to as “NASDAQ”) under the ticker symbol “TMUS.” Based on the closing price of a share of T-Mobile common stock on NASDAQ on April 27, 2018, the last trading day before public announcement of the merger transactions, the implied value of the exchange ratio to Sprint stockholders was approximately $6.62 per share. As of [                ], 2018, and assuming that each share of T-Mobile common stock will have a value equal to the closing price of a share of T-Mobile common stock on NASDAQ on such date, the implied value of the exchange ratio to Sprint stockholders is approximately $[                ] per share. Because T-Mobile’s share price will fluctuate between now and the completion of the merger transactions, and because the exchange ratio is fixed and will not be adjusted to reflect changes in T-Mobile’s or Sprint’s share price, the value of the T-Mobile common stock received by Sprint stockholders in the merger transactions may differ from the implied value based on the share price on the date of the business combination agreement or on [                ], 2018. We urge you to obtain current share price quotations for T-Mobile common stock and Sprint common stock.

Following the merger transactions, it is anticipated that Deutsche Telekom AG (which we refer to as “Deutsche Telekom”) and SoftBank Group Corp. (which we refer to as “SoftBank”) will hold, directly or indirectly, on a fully diluted basis, approximately [     ]% and [    ]%, respectively, of the outstanding T-Mobile common stock, with the remaining approximately [        ]% of the outstanding T-Mobile common stock held by other stockholders, based on closing share prices and certain other assumptions as of [    ], 2018. In connection with the closing of the merger transactions, Deutsche Telekom, SoftBank and T-Mobile will enter into an amended and restated stockholders’ agreement, and Deutsche Telekom and SoftBank will enter into a proxy, lock-up and ROFR agreement, each of which will provide for certain rights and restrictions in respect of the T-Mobile common stock that will be held by Deutsche Telekom and SoftBank from and after the closing of the merger transactions. Descriptions of these agreements can be found under the section of this joint consent solicitation statement/prospectus entitled “Stockholders and Proxy Agreements.”

The T-Mobile board of directors has carefully considered the terms of the business combination agreement and, following the determination by an independent committee of the T-Mobile board of directors that the merger transactions are fair to and in the best interests of all of T-Mobile’s stockholders (including such stockholders other than Deutsche Telekom) and the recommendation of the independent committee, has determined that the business combination agreement and the transactions contemplated thereby are fair to, and in the best interests of, T-Mobile and its stockholders. Accordingly, the T-Mobile board of directors has unanimously approved the business combination agreement and the transactions contemplated thereby. However, the approval of a proposal to amend and restate the T-Mobile certificate of incorporation, including three sub-proposals to (1) approve an increase in the number of authorized shares of T-Mobile common stock from one billion to two billion, (2) amend the director designation rights of Deutsche Telekom and add director designation rights of SoftBank and (3) add approval rights of SoftBank, in each case, including other amendments incidental or related to the


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foregoing (which we refer to, collectively, as the “T-Mobile charter amendment”) and the approval of the issuance of shares of T-Mobile common stock in the merger transactions (which we refer to as the “T-Mobile share issuance” and, together with the T-Mobile charter amendment, the “T-Mobile proposals”) by holders of a majority of the outstanding shares of T-Mobile common stock (which we refer to as the “T-Mobile stockholder approval”) are required for the merger transactions to close.

T-Mobile is sending this document to its stockholders to request that they approve the T-Mobile proposals by executing and returning the written consent furnished with this joint consent solicitation statement/prospectus. The T-Mobile board of directors has set [                ], 2018 as the record date (which we refer to as the “T-Mobile record date”) for determining the holders of T-Mobile common stock entitled to execute and deliver written consents with respect to this solicitation.

Subsequent to the execution of the business combination agreement, Deutsche Telekom and Deutsche Telekom Holding B.V. (which we refer to as “Deutsche Telekom Holding”) entered into a support agreement (which we refer to as the “Deutsche Telekom support agreement”) under which they agreed, promptly (and in any event within two business days) following their receipt of this joint consent solicitation statement/prospectus, to execute and deliver a written consent with respect to all of the outstanding shares of T-Mobile common stock held by Deutsche Telekom Holding, representing approximately [    ]% of the outstanding shares of T-Mobile common stock as of the T-Mobile record date, approving the T-Mobile proposals (which we refer to as the “Deutsche Telekom written consent”). Because the T-Mobile proposals require the approval of at least a majority of the outstanding shares of T-Mobile common stock and Deutsche Telekom Holding is the beneficial holder of a majority of the outstanding shares of T-Mobile common stock as of the T-Mobile record date, the delivery of the Deutsche Telekom written consent will constitute receipt by T-Mobile of the T-Mobile stockholder approval.

The Sprint board of directors has carefully considered the terms of the business combination agreement and, following the determination by an independent committee of the Sprint board of directors that the merger transactions are fair to and in the best interests of all of Sprint’s stockholders (including such stockholders other than SoftBank) and the recommendation of the independent committee, has determined that the business combination agreement and the transactions contemplated thereby are fair to, and in the best interests of, Sprint and its stockholders. Accordingly, the Sprint board of directors has unanimously approved the business combination agreement and the transactions contemplated thereby. However, the approval of the adoption of the business combination agreement (which we refer to as the “Sprint merger approval”) by the holders of a majority of the outstanding shares of Sprint common stock is required for the merger transactions to close. In addition, Sprint is submitting to its stockholders a proposal for the approval (which, together with the Sprint merger approval, we refer to as the “Sprint stockholder approval”), on a nonbinding, advisory basis, of an amended and restated T-Mobile certificate of incorporation, including three sub-proposals to (1) approve an increase in the number of authorized shares of T-Mobile common stock from one billion to two billion, (2) amend the director designation rights of Deutsche Telekom and add director designation rights of SoftBank and (3) add approval rights of SoftBank, in each case, including other amendments incidental or related to the foregoing (which we refer to, collectively, as the “Sprint advisory T-Mobile charter amendment” and, together with the Sprint merger approval, the “Sprint proposals”).

Sprint is sending this document to its stockholders to request that they approve the Sprint proposals by executing and returning the written consent furnished with this joint consent solicitation statement/prospectus. The Sprint board of directors has set [                ], 2018 as the record date (which we refer to as the “Sprint record date”) for determining the holders of Sprint common stock entitled to execute and deliver written consents with respect to this solicitation.

Subsequent to the execution of the business combination agreement, SoftBank, SoftBank Group Capital Limited, Starburst I, Inc. (which we refer to as “Starburst”) and Galaxy Investment Holdings, Inc. (which we refer to as “Galaxy”) entered into a support agreement (which we refer to as the “SoftBank support agreement”) under which they agreed, promptly (and in any event within two business days) following their receipt of this joint consent solicitation statement/prospectus, to execute and deliver a written consent with respect to all of the outstanding shares of Sprint common stock held by Starburst and Galaxy, representing approximately [        ]% of the outstanding shares of Sprint common stock as of the Sprint record date, approving the Sprint proposals


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(which we refer to as the “SoftBank written consent”). Because the Sprint proposals require the approval of a majority of the outstanding shares of Sprint common stock and Starburst and Galaxy are, collectively, the beneficial holders of a majority of the outstanding shares of Sprint common stock as of the Sprint record date, the delivery of the SoftBank written consent will constitute receipt by Sprint of the Sprint stockholder approval.

Neither T-Mobile nor Sprint will be holding a stockholders’ meeting to consider the T-Mobile proposals or the Sprint proposals, as applicable.

The obligations of the parties to the business combination agreement to complete the merger transactions are subject to the satisfaction or waiver of several conditions set forth in the business combination agreement, a copy of which is included as Annex A to the accompanying joint consent solicitation statement/prospectus. The accompanying joint consent solicitation statement/prospectus provides you with detailed information about the business combination agreement and the merger transactions. It also contains or references information about T-Mobile and Sprint and certain related matters. You are encouraged to read the accompanying joint consent solicitation statement/prospectus, including the Annexes and the documents incorporated by reference in the accompanying joint consent solicitation statement/prospectus, carefully and in their entirety. In particular, you should read the “Risk Factors” section beginning on page 34 of the accompanying joint consent solicitation statement/prospectus for a discussion of the risks you should consider in evaluating the proposed transactions and how they will affect you.

We look forward to the successful combination of T-Mobile and Sprint.

 

[                    ]

John J. Legere

Chief Executive Officer

T-Mobile US, Inc.

  

[                    ]

Michel Combes

President and Chief Executive Officer

Sprint Corporation

Neither the U.S. Securities and Exchange Commission nor any state securities commission has approved or disapproved of the merger transactions or the securities to be issued in connection with the merger transactions or passed upon the adequacy or accuracy of the disclosure in this document. Any representation to the contrary is a criminal offense.

The accompanying joint consent solicitation statement/prospectus is dated [                ], 2018, and is first being mailed to the stockholders of T-Mobile and Sprint on or about [                ], 2018.

 


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LOGO

T-MOBILE US, INC.

12920 SE 38th Street

Bellevue, Washington 98006-1350

NOTICE OF SOLICITATION OF WRITTEN CONSENT

To Stockholders of T-Mobile US, Inc.:

Pursuant to a Business Combination Agreement, dated as of April 29, 2018 (which we refer to as the “business combination agreement”), by and among T-Mobile US, Inc. (which we refer to as “T-Mobile”), Sprint Corporation (which we refer to as “Sprint”), Huron Merger Sub LLC, a wholly owned subsidiary of T-Mobile (which we refer to as “Merger Company”), Superior Merger Sub Corporation, a wholly owned subsidiary of Merger Company (which we refer to as “Merger Sub”), Starburst I, Inc. (which we refer to as “Starburst”), Galaxy Investment Holdings, Inc. (which, together with Starburst, we refer to as the “SoftBank US HoldCos”), and for the limited purposes set forth therein, Deutsche Telekom AG, Deutsche Telekom Holding B.V. and SoftBank Group Corp., the SoftBank US HoldCos will merge with and into Merger Company, with Merger Company continuing as the surviving entity and as a wholly owned subsidiary of T-Mobile, and Merger Sub will merge with and into Sprint, with Sprint continuing as the surviving corporation and as a wholly owned subsidiary of T-Mobile, in each case on the terms and subject to the satisfaction or waiver of the conditions described in the business combination agreement (which we refer to, collectively, as the “merger transactions”).

This joint consent solicitation statement/prospectus is being delivered to you on behalf of the T-Mobile board of directors to request that holders of T-Mobile common stock as of the record date of [                    ], 2018 (which we refer to as the “T-Mobile record date”) execute and return written consents to approve the amendment and restatement of the T-Mobile certificate of incorporation in connection with the merger transactions, including three sub-proposals to (1) approve an increase in the number of authorized shares of T-Mobile common stock from one billion to two billion, (2) amend the director designation rights of Deutsche Telekom and add director designation rights of SoftBank and (3) add approval rights of SoftBank, in each case, including other amendments incidental or related to the foregoing (which we refer to as the “T-Mobile charter amendment”), and approve of the issuance of shares of T-Mobile common stock in the merger transactions (which we refer to as the “T-Mobile share issuance” and, together with the T-Mobile charter amendment, the “T-Mobile proposals”).

This joint consent solicitation statement/prospectus describes the merger transactions and the T-Mobile proposals and the actions to be taken in connection with the merger transactions and the T-Mobile proposals and provides additional information about the parties involved. Please give this information your careful attention. A copy of the business combination agreement is attached as Annex A to this joint consent solicitation statement/prospectus.

The T-Mobile board of directors has carefully considered the terms of the business combination agreement and, following the determination by an independent committee of the T-Mobile board of directors that the merger transactions are fair to and in the best interests of all of T-Mobile’s stockholders (including such stockholders other than Deutsche Telekom) and the recommendation of the independent committee, has determined that the business combination agreement and the transactions contemplated thereby are fair to, and in the best interests of, T-Mobile and its stockholders.

Please complete, date and sign the written consent furnished with this joint consent solicitation statement/prospectus and return it promptly to T-Mobile by one of the means described in “Solicitation of T-Mobile Written Consents.”

By Order of the Board of Directors,

[                    ]

Timotheus Höttges

Chairman of the Board of Directors

[                ], 2018


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LOGO

SPRINT CORPORATION

6200 Sprint Parkway

Overland Park, Kansas 66251

NOTICE OF SOLICITATION OF WRITTEN CONSENT

To Stockholders of Sprint Corporation:

Pursuant to a Business Combination Agreement, dated as of April 29, 2018 (which we refer to as the “business combination agreement”), by and among T-Mobile US, Inc. (which we refer to as “T-Mobile”), Sprint Corporation (which we refer to as “Sprint”), Huron Merger Sub LLC, a wholly owned subsidiary of T-Mobile (which we refer to as “Merger Company”), Superior Merger Sub Corporation, a wholly owned subsidiary of Merger Company (which we refer to as “Merger Sub”), Starburst I, Inc. (which we refer to as “Starburst”), Galaxy Investment Holdings, Inc. (which, together with Starburst, we refer to as the “SoftBank US HoldCos”), and for the limited purposes set forth therein, Deutsche Telekom AG, Deutsche Telekom Holding B.V. and SoftBank Group Corp., the SoftBank US HoldCos will merge with and into Merger Company, with Merger Company continuing as the surviving entity and as a wholly owned subsidiary of T-Mobile, and Merger Sub will merge with and into Sprint, with Sprint continuing as the surviving corporation and as a wholly owned subsidiary of T-Mobile, in each case on the terms and subject to the satisfaction or waiver of the conditions described in the business combination agreement (which we refer to, collectively, as the “merger transactions”).

This joint consent solicitation statement/prospectus is being delivered to you on behalf of the Sprint board of directors to request that holders of Sprint common stock as of the record date of [                    ], 2018 (which we refer to as the “Sprint record date”) execute and return written consents to approve the adoption of the business combination agreement (which we refer to as the “Sprint merger approval”). You are also being requested to approve, on a nonbinding, advisory basis, the amendment and restatement of the T-Mobile certificate of incorporation in connection with the merger transactions, including three sub-proposals to (1) approve an increase in the number of authorized shares of T-Mobile common stock from one billion to two billion, (2) amend the director designation rights of Deutsche Telekom and add director designation rights of SoftBank and (3) add approval rights of SoftBank, in each case, including other amendments incidental or related to the foregoing (which we refer to, collectively, as the “Sprint advisory T-Mobile charter amendment” and, together with the Sprint merger approval, the “Sprint proposals”).

This joint consent solicitation statement/prospectus describes the merger transactions and the Sprint proposals and the actions to be taken in connection with the merger transactions and the Sprint proposals and provides additional information about the parties involved. Please give this information your careful attention. A copy of the business combination agreement is attached as Annex A to this joint consent solicitation statement/prospectus.

The Sprint board of directors has carefully considered the terms of the business combination agreement and, following the determination by an independent committee of the Sprint board of directors that the merger transactions are fair to and in the best interests of all of Sprint’s stockholders (including such stockholders other than SoftBank) and the recommendation of the independent committee, has determined that the business combination agreement and the transactions contemplated thereby are fair to, and in the best interests of, Sprint and its stockholders.


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Please complete, date and sign the written consent furnished with this joint consent solicitation statement/prospectus and return it promptly to Sprint by one of the means described in “Solicitation of Sprint Written Consents.”

By Order of the Board of Directors,

[                    ]

Stefan K. Schnopp

Vice President and Corporate Secretary

[            ], 2018

 


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TABLE OF CONTENTS

 

ADDITIONAL INFORMATION

     1  

ABOUT THIS JOINT CONSENT SOLICITATION STATEMENT/PROSPECTUS

     2  

QUESTIONS AND ANSWERS

     5  

SUMMARY

     15  

The Merger Transactions

     15  

Consideration to Sprint Stockholders

     15  

Treatment of Sprint Equity-Based Awards

     16  

T-Mobile’s Reasons for the Merger and Recommendation of the T-Mobile Board of Directors

     17  

Opinions of T-Mobile’s Financial Advisors

     17  

Sprint’s Reasons for the Merger and Recommendation of the Sprint Board of Directors

     19  

Opinions of Sprint’s Financial Advisors

     19  

Solicitation of T-Mobile Written Consents

     21  

Solicitation of Sprint Written Consents

     22  

Interests of Certain Executive Officers and Directors of T-Mobile in the Merger Transactions

     22  

Interests of Certain Executive Officers and Directors of Sprint in the Merger Transactions

     23  

Board of Directors and Management of the Combined Company

     23  

Stockholders’ and Proxy Agreements

     24  

Financing of the Merger Transactions

     24  

Regulatory Approvals Required for the Merger Transactions

     25  

No Appraisal Rights

     25  

No Solicitation; Third-Party Acquisition Proposals

     25  

Change of Recommendation

     26  

Conditions to the Completion of the Merger Transactions

     27  

Termination of the Business Combination Agreement; Payment Amount

     28  

Transaction-Related Costs

     30  

Accounting Treatment

     30  

Certain U.S. Federal Income Tax Consequences of the Merger

     30  

Comparison of Stockholders’ Rights

     30  

Risk Factors

     31  

Information about the Companies

     31  

RISK FACTORS

     34  

Risks Related to the Merger Transactions

     34  

Risks Related to the Business of the Combined Company

     41  

Risks Related to T-Mobile’s Business

     45  

Risks Related to Sprint’s Business

     45  

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

     46  

SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF T-MOBILE

     47  

SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF SPRINT

     49  

SELECTED UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL DATA

     51  

COMPARATIVE HISTORICAL AND PRO FORMA PER SHARE FINANCIAL DATA

     52  

INFORMATION ABOUT THE COMPANIES

     53  

T-Mobile

     53  

Merger Company

     53  

Merger Sub

     53  

Sprint

     54  

Starburst

     54  

Galaxy

     54  

Deutsche Telekom

     54  

Deutsche Telekom Holding

     55  

SoftBank

     55  

 

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SOLICITATION OF T-MOBILE WRITTEN CONSENTS

     56  

Consents

     56  

Shares Entitled to Consent and Consent Required

     56  

Submission of Consents

     56  

Executing Consents; Revocation of Consents

     57  

Solicitation of Consents; Expenses

     57  

Recommendation of the T-Mobile Board of Directors

     57  

SOLICITATION OF SPRINT WRITTEN CONSENTS

     58  

Consents

     58  

Shares Entitled to Consent and Consent Required

     58  

Submission of Consents

     58  

Executing Consents; Revocation of Consents

     59  

Solicitation of Consents; Expenses

     59  

Recommendation of the Sprint Board of Directors

     59  

THE MERGER TRANSACTIONS

     60  

The Merger Transactions

     60  

Consideration to Sprint Stockholders

     60  

Treatment of Sprint Equity-Based Awards

     61  

Background of the Merger Transactions

     62  

T-Mobile’s Reasons for the Merger and Recommendation of the T-Mobile Board of Directors

     77  

Opinions of T-Mobile’s Financial Advisors

     81  

Sprint’s Reasons for the Merger and Recommendation of the Sprint Board of Directors

     116  

Opinions of Sprint’s Financial Advisors

     121  

T-Mobile Unaudited Prospective Financial Information

     153  

Sprint Unaudited Prospective Financial Information

     158  

Interests of Certain Executive Officers and Directors of T-Mobile in the Merger Transactions

     163  

Interests of Certain Executive Officers and Directors of Sprint in the Merger Transactions

     168  

Board of Directors and Management of the Combined Company

     176  

Regulatory Approvals Required for the Merger Transactions

     176  

Listing of T-Mobile Common Stock

     178  

Delisting and Deregistration of Sprint Common Stock

     178  

Transaction-Related Costs

     178  

Accounting Treatment

     179  

Support Agreements

     179  

Stockholders’ and Proxy Agreements

     179  

Other Agreements

     180  

THE BUSINESS COMBINATION AGREEMENT

     182  

Explanatory Note Regarding the Business Combination Agreement

     182  

The Merger Transactions

     182  

Closing and Effective Time of the Merger Transactions

     183  

Consideration to Sprint Stockholders

     184  

Treatment of Sprint Equity-Based Awards

     185  

No Appraisal Rights

     186  

Withholding

     187  

No Fractional Shares

     187  

Certain Governance Matters Following the Merger Transactions

     187  

Representations and Warranties

     188  

Nonsurvival of Representations and Warranties

     191  

Covenants and Agreements

     191  

Conditions to the Completion of the Merger Transactions

     204  

Termination of the Business Combination Agreement; Payment Amount

     207  

 

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Limitation on Remedies

     209  

Fees and Expenses

     209  

Indemnification of Directors and Officers; Directors’ and Officers’ Insurance

     209  

Certain Indemnification Obligations of SoftBank

     210  

Amendment and Waiver

     210  

Governing Law

     211  

Assignment

     211  

Specific Performance

     211  

SUPPORT AGREEMENTS

     212  

Deutsche Telekom Support Agreement

     212  

SoftBank Support Agreement

     212  

STOCKHOLDERS’ AND PROXY AGREEMENTS

     214  

Amended and Restated Stockholders’ Agreement

     214  

Proxy Agreement

     223  

DESCRIPTION OF FINANCING

     227  

DESCRIPTION OF T-MOBILE CAPITAL STOCK

     230  

NO APPRAISAL RIGHTS

     235  

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

     236  

NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

     240  

COMPARATIVE PER SHARE MARKET PRICE INFORMATION

     252  

PRINCIPAL STOCKHOLDERS OF T-MOBILE

     254  

PRINCIPAL STOCKHOLDERS OF SPRINT

     256  

COMPARISON OF STOCKHOLDERS’ RIGHTS

     258  

MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER

     281  

HOUSEHOLDING INFORMATION

     284  

EXPERTS

     285  

LEGAL MATTERS

     285  

WHERE YOU CAN FIND MORE INFORMATION

     286  

ANNEX A Business Combination Agreement

     A-1  

ANNEX B Deutsche Telekom Support Agreement

     B-1  

ANNEX C SoftBank Support Agreement

     C-1  

ANNEX D Form of Amended and Restated Certificate of Incorporation

     D-1  

ANNEX E Form of Amended and Restated Bylaws

     E-1  

ANNEX F Form of Amended and Restated Stockholders’ Agreement

     F-1  

ANNEX G Form of Proxy, Lock-up and ROFR Agreement

     G-1  

ANNEX H Opinion of PJT Partners LP

     H-1  

ANNEX I Opinion of Goldman, Sachs & Co. LLC

     I-1  

ANNEX J Opinion of Evercore Group LLC

     J-1  

ANNEX K Opinion of Raine Securities LLC

     K-1  

ANNEX L Opinion of J.P. Morgan Securities LLC

     L-1  

ANNEX M Opinion of Centerview Partners LLC

     M-1  

 

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ADDITIONAL INFORMATION

The accompanying joint consent solicitation statement/prospectus incorporates by reference important business and financial information about T-Mobile and Sprint from documents that are not included in or delivered with the accompanying joint consent solicitation statement/prospectus. This information is available without charge to you upon written or oral request. You can obtain the documents incorporated by reference in the accompanying joint consent solicitation statement/prospectus by requesting them in writing, by email or by telephone from T-Mobile or Sprint at their respective addresses and telephone numbers listed below or by accessing such documents on the websites listed below. Any other information provided on the websites listed below is not a part of the accompanying joint consent solicitation statement/prospectus and therefore is not incorporated by reference into the accompanying joint consent solicitation statement/prospectus.

 

For T-Mobile Stockholders:

 

Investor Relations

T-Mobile US, Inc.

1 Park Avenue, 14th Floor

New York, New York 10016
Telephone: (212) 358-3210
investor.relations@t-mobile.com
www.t-mobile.com

  

For Sprint Stockholders:

 

Sprint Shareholder Relations
6200 Sprint Parkway

Mailstop KSOPHF0302-3B679

Overland Park, Kansas 66251

Telephone: (913) 794-1091
shareholder.relations@sprint.com
www.sprint.com

In addition, if you have questions about the merger transactions, the solicitation of T-Mobile written consents or the solicitation of Sprint written consents, or if you need to obtain copies of the accompanying joint consent solicitation statement/prospectus or other documents incorporated by reference in the accompanying joint consent solicitation statement/prospectus, you may contact the appropriate contact listed above. You will not be charged for any of the documents you request.

To ensure timely delivery, any request should be made no later than [                ], 2018.

For a more detailed description of the information incorporated by reference in the accompanying joint consent solicitation statement/prospectus and how you may obtain it, see “Where You Can Find More Information.

 

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ABOUT THIS JOINT CONSENT SOLICITATION STATEMENT/PROSPECTUS

This joint consent solicitation statement/prospectus, which forms part of a registration statement on Form S-4 filed with the U.S. Securities and Exchange Commission (which we refer to as the “SEC”) by T-Mobile (File No. 333-[                ]), constitutes a prospectus of T-Mobile under Section 5 of the U.S. Securities Act of 1933, as amended (which we refer to as the “Securities Act”), with respect to the T-Mobile common stock to be issued to Sprint stockholders pursuant to the business combination agreement. This joint consent solicitation statement/prospectus also constitutes a consent solicitation statement under Section 14(a) of the U.S. Securities Exchange Act of 1934, as amended (which we refer to as the “Exchange Act”), of T-Mobile with respect to the proposals to approve each of the T-Mobile charter amendment and the T-Mobile share issuance, and a consent solicitation statement under Section 14(a) of the Exchange Act of Sprint with respect to the proposals to approve each of the adoption of the business combination agreement and, on a nonbinding, advisory basis, the Sprint advisory T-Mobile charter amendment.

Neither T-Mobile nor Sprint has authorized anyone to give any information or make any representation about the merger transactions or any of the other transactions contemplated by the business combination agreement, T-Mobile or Sprint that is different from, or in addition to, that contained in this joint consent solicitation statement/prospectus or in any of the materials that have been incorporated by reference. Therefore, neither T-Mobile nor Sprint takes any responsibility for, or can provide any assurance as to the reliability of, any information other than the information contained in or incorporated by reference into this joint consent solicitation statement/prospectus. This joint consent solicitation statement/prospectus is dated [                ], 2018. The information contained in this joint consent solicitation statement/prospectus is accurate only as of that date or, in the case of information in a document incorporated by reference, as of the date of such document, unless the information specifically indicates that another date applies. Neither the mailing of this joint consent solicitation statement/prospectus to T-Mobile or Sprint stockholders nor the issuance by T-Mobile of common stock pursuant to the business combination agreement will create any implication to the contrary.

This joint consent solicitation statement/prospectus does not constitute an offer to sell, or the solicitation of an offer to buy, any securities, or the solicitation of a proxy, in any jurisdiction in which or from any person to whom it is unlawful to make any such offer or solicitation in such jurisdiction.

The information concerning T-Mobile contained in or incorporated by reference into this joint consent solicitation statement/prospectus has been provided by T-Mobile, and the information concerning Sprint contained in this joint consent solicitation statement/prospectus has been provided by Sprint.

Unless otherwise indicated or as the context otherwise requires, all references in this joint consent solicitation statement/prospectus to:

 

    “closing” refers to the closing of the merger transactions;

 

    “combined company” refers to T-Mobile following the completion of the merger transactions;

 

    “DGCL” refers to the General Corporation Law of the State of Delaware;

 

    “Deutsche Telekom” refers to Deutsche Telekom AG, an Aktiengesellschaft organized and existing under the laws of the Federal Republic of Germany;

 

    “Deutsche Telekom Holding” refers to Deutsche Telekom Holding B.V., a besloten vennootschap met beperkte aansprakelijkheid organized and existing under the laws of the Netherlands;

 

    “Deutsche Telekom Parties” refers to Deutsche Telekom and Deutsche Telekom Holding, collectively;

 

    “effective time” refers to the effective time of the merger pursuant to the business combination agreement;

 

    “exchange ratio” refers to 0.10256 shares of T-Mobile common stock per share of Sprint common stock;

 

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    “Galaxy” refers to Galaxy Investment Holdings, Inc., a Delaware corporation;

 

    “Galaxy common stock” refers to the shares of common stock, par value $0.01 per share, of Galaxy;

 

    “HoldCo mergers” refers to, collectively, the merger of each SoftBank US HoldCo with and into Merger Company, in each case with Merger Company continuing as the surviving entity and as a wholly owned subsidiary of T-Mobile;

 

    “HoldCo mergers effective time” refers to the effective time of the HoldCo mergers pursuant to the business combination agreement;

 

    “merger” refers to the merger of Merger Sub with and into Sprint, with Sprint continuing as the surviving corporation and as a wholly owned subsidiary of T-Mobile;

 

    “Merger Company” refers to Huron Merger Sub LLC, a Delaware limited liability company and a wholly owned subsidiary of T-Mobile;

 

    “merger consideration” refers to the right of holders of Sprint common stock to receive the exchange ratio;

 

    “Merger Sub” refers to Superior Merger Sub Corporation, a Delaware corporation and a wholly owned subsidiary of Merger Company;

 

    “merger transactions” refers to (i) if the revised structure notice has not been delivered in accordance with the business combination agreement, the HoldCo mergers and the merger, or (ii) if the revised structure notice has been delivered in accordance with the business combination agreement, the merger;

 

    “SEC” refers to the U.S. Securities and Exchange Commission;

 

    “SoftBank” refers to SoftBank Group Corp., a Japanese kabushiki kaisha;

 

    “SoftBank Parties” refers to SoftBank and the SoftBank US HoldCos, collectively;

 

    “SoftBank UK” refers to SoftBank Group Capital Limited, a private limited company incorporated in England and Wales and a wholly owned subsidiary of SoftBank;

 

    “SoftBank US HoldCos” refers to Galaxy and Starburst, collectively;

 

    “Sprint” refers to Sprint Corporation, a Delaware corporation;

 

    “Sprint board of directors” refers to the board of directors of Sprint;

 

    “Sprint common stock” refers to the shares of common stock, par value $0.01 per share, of Sprint;

 

    “Sprint independent committee” refers to the committee of the Sprint board of directors consisting solely of the independent directors of Sprint, which the Sprint board of directors established for the purpose of analyzing and evaluating a possible business combination transaction with T-Mobile and, in coordination with the rest of the Sprint board of directors and Sprint management, interacting with SoftBank, Deutsche Telekom or T-Mobile with respect to such a possible business combination;

 

    “Sprint proposals” refers to the Sprint merger approval and, on a nonbinding, advisory basis, the Sprint advisory T-Mobile charter amendment (which includes three sub-proposals to (1) approve an increase in the number of authorized shares of T-Mobile common stock from one billion to two billion, (2) amend the director designation rights of Deutsche Telekom and add director designation rights of SoftBank and (3) add approval rights of SoftBank, in each case, including other amendments incidental or related to the foregoing), collectively;

 

    “Sprint stockholders” refers to the holders of Sprint common stock;

 

    “Starburst” refers to Starburst I, Inc., a Delaware corporation;

 

    “Starburst common stock” refers to the shares of common stock, par value $0.01 per share, of Starburst;

 

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“T-Mobile” refers to T-Mobile US, Inc., a Delaware corporation;

 

   

“T-Mobile board of directors” refers to the board of directors of T-Mobile or, following the completion of the merger, the combined company;

 

   

“T-Mobile common stock” refers to the shares of common stock, par value $0.00001 per share, of T-Mobile or, following the completion of the merger, the combined company;

 

   

“T-Mobile independent committee” refers to the committee of the T-Mobile board of directors consisting solely of independent directors of T-Mobile, which the T-Mobile board of directors established for the purpose of reviewing and monitoring a possible business combination transaction with Sprint and negotiating on behalf of T-Mobile the terms and conditions of any agreements or arrangements proposed to be entered into between T-Mobile or the combined company and Deutsche Telekom related to the transaction;

 

   

“T-Mobile proposals” refers to the proposal to approve the T-Mobile charter amendment (which includes three sub-proposals to (1) approve an increase in the number of authorized shares of T-Mobile common stock from one billion to two billion, (2) amend the director designation rights of Deutsche Telekom and add director designation rights of SoftBank and (3) add approval rights of SoftBank, in each case, including other amendments incidental or related to the foregoing) and the proposal to approve the T-Mobile share issuance, collectively;

 

   

“T-Mobile stockholders” refers to the holders of T-Mobile common stock;

 

   

“T-Mobile USA” refers to T-Mobile USA, Inc., a Delaware corporation; and

 

   

“we,” “our” and “us” refer to T-Mobile and Sprint, collectively.

 

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QUESTIONS AND ANSWERS

The following are answers to certain questions you may have regarding the merger transactions, the other transactions contemplated by the business combination agreement, the solicitation of T-Mobile written consents and the solicitation of Sprint written consents. You are urged to read this joint consent solicitation statement/prospectus carefully and in its entirety, because the information in this section may not provide all of the information that might be important to you. Additional important information is also contained in the Annexes to, and the documents incorporated by reference into, this joint consent solicitation statement/prospectus. See “Where You Can Find More Information.

 

Q: WHAT IS THE PROPOSED TRANSACTION?

 

A: On April 29, 2018, T-Mobile and Sprint entered into a business combination agreement (together with the other parties to the agreement) pursuant to which T-Mobile and Sprint agreed to combine their respective businesses. The combined company will be named “T-Mobile” and, as a result of the merger, is expected to be able to rapidly launch a broad and deep nationwide 5G network, accelerate innovation and increase competition in the U.S. wireless, video and broadband industries. Neither T-Mobile nor Sprint on its own could generate comparable benefits to consumers.

A copy of the business combination agreement is attached as Annex A to this joint consent solicitation statement/prospectus. The business combination agreement contains the terms and conditions of the proposed transaction between T-Mobile and Sprint. Under the business combination agreement, if certain conditions are met, each SoftBank US HoldCo will merge with and into Merger Company (which we refer to, collectively, as the “HoldCo mergers”), with Merger Company continuing as the surviving entity (which we sometimes refer to as the “SoftBank surviving entity”) and as a wholly owned subsidiary of T-Mobile. Irrespective of whether the HoldCo mergers occur, subject to the satisfaction or waiver of the conditions in the business combination agreement, Merger Sub will merge with and into Sprint (which we refer to as the “merger”), with Sprint continuing as the surviving corporation (which we sometimes refer to as the “surviving corporation”) and as a wholly owned indirect subsidiary of T-Mobile. Following the merger transactions, the Sprint common stock will be delisted from the New York Stock Exchange (which we refer to as the “NYSE”) and deregistered under the Exchange Act and cease to be publicly traded.

 

Q: WHO IS SOLICITING MY WRITTEN CONSENT?

 

A: The T-Mobile board of directors is providing these consent solicitation materials to the stockholders of T-Mobile.

The Sprint board of directors is providing these consent solicitation materials to the stockholders of Sprint.    

These materials also constitute a prospectus of T-Mobile with respect to the T-Mobile common stock to be issued to Sprint stockholders pursuant to the business combination agreement.

 

Q: WHAT ARE T-MOBILE STOCKHOLDERS BEING ASKED TO APPROVE?

 

A: T-Mobile stockholders are being asked to approve each of the T-Mobile charter amendment, including three sub-proposals to (1) approve an increase in the number of authorized shares of T-Mobile common stock from one billion to two billion, (2) amend the director designation rights of Deutsche Telekom and add director designation rights of SoftBank and (3) add approval rights of SoftBank, in each case, including other amendments incidental or related to the foregoing, and the T-Mobile share issuance (which we refer to as the “T-Mobile proposals”).

 

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Q: WHAT ARE SPRINT STOCKHOLDERS BEING ASKED TO APPROVE?

 

A: Sprint stockholders are being asked to approve each of the adoption of the business combination agreement and, on a nonbinding, advisory basis, the Sprint advisory T-Mobile charter amendment, including three sub-proposals to (1) approve an increase in the number of authorized shares of T-Mobile common stock from one billion to two billion, (2) amend the director designation rights of Deutsche Telekom and add director designation rights of SoftBank and (3) add approval rights of SoftBank, in each case, including other amendments incidental or related to the foregoing (which we refer to as the “Sprint proposals”).

 

Q: WHO IS ENTITLED TO GIVE A WRITTEN CONSENT?

 

A: The T-Mobile board of directors has set [                ], 2018 as the record date for determining the holders of shares of T-Mobile common stock entitled to execute and deliver written consents with respect to the T-Mobile proposals (which we refer to as the “T-Mobile record date”). Holders of T-Mobile common stock at the close of business on the T-Mobile record date will be entitled to give or withhold consent with respect to the T-Mobile proposals using the written consent furnished with this joint consent solicitation statement/prospectus.

The Sprint board of directors has set [                ], 2018 as the record date for determining the holders of shares of Sprint common stock entitled to execute and deliver written consents with respect to the Sprint proposals (which we refer to as the “Sprint record date”). Holders of Sprint common stock at the close of business on the Sprint record date will be entitled to give or withhold consent with respect to the Sprint proposals using the written consent furnished with this joint consent solicitation statement/prospectus.

 

Q: WHAT WILL STOCKHOLDERS RECEIVE IN THE MERGER TRANSACTIONS?

 

A: In the HoldCo mergers, the shares of Galaxy common stock and Starburst common stock issued and outstanding immediately prior to the HoldCo mergers effective time, all of which are currently held by SoftBank UK, will be automatically converted into the right to receive an aggregate number of shares of T-Mobile common stock equal to the product of (x) 0.10256 (which we refer to as the “exchange ratio”) and (y) the aggregate number of shares of Sprint common stock then held collectively by Galaxy and Starburst (which we refer to as the “HoldCo merger consideration”).

In the merger, each share of Sprint common stock issued and outstanding immediately prior to the effective time (other than shares held directly by Sprint as treasury stock and shares held by the SoftBank surviving entity) will be automatically converted into the right to receive 0.10256 shares of T-Mobile common stock (which we refer to as the “merger consideration”).

Accordingly, SoftBank and its affiliates will receive the same amount of T-Mobile common stock per share of Sprint common stock in the merger transactions as all other Sprint stockholders.

No holder of Sprint common stock will be issued a fraction of a share of T-Mobile common stock in the merger transactions. Each holder of Sprint common stock converted pursuant to the merger transactions who would otherwise have been entitled to receive a fraction of a share of T-Mobile common stock (after taking into account all shares represented by the certificates and book-entry shares delivered by such holder) will receive the T-Mobile fractional share consideration as described in “The Business Combination Agreement—No Fractional Shares.

The merger will not result in an exchange of outstanding shares of T-Mobile common stock. Accordingly, holders of shares of T-Mobile common stock immediately prior to the effective time will continue to hold their respective shares of T-Mobile common stock immediately following the effective time.

 

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Q: WHAT IS THE VALUE OF THE MERGER CONSIDERATION?

 

A: The exact value of the consideration to Sprint stockholders will depend on the price per share of T-Mobile common stock at the completion of the merger transactions, which may be greater than, less than or the same as the price per share of T-Mobile common stock at the time of entry into the business combination agreement or the date of this joint consent solicitation statement/prospectus.

Based on the closing price of a share of T-Mobile common stock on NASDAQ on April 27, 2018, the last trading day before public announcement of the merger transactions, the implied value of the exchange ratio to Sprint stockholders was approximately $6.62 per share. As of [                ], and assuming that each share of T-Mobile common stock will have a value equal to the closing price of a share of T-Mobile common stock on NASDAQ on such date, the implied value of the exchange ratio to Sprint stockholders is approximately $[        ] per share. You should obtain current market price quotations for T-Mobile common stock; however, as noted above, the prices at the effective time may be greater than, the same as or less than such price quotations.

 

Q: WHAT WILL BE THE RESPECTIVE OWNERSHIP PERCENTAGES OF FORMER SPRINT STOCKHOLDERS AND T-MOBILE STOCKHOLDERS IN THE COMBINED COMPANY?

 

A: Following the merger transactions, it is anticipated that Deutsche Telekom and SoftBank will hold, directly or indirectly, on a fully diluted basis, approximately [    ]% and [    ]%, respectively, of the outstanding T-Mobile common stock, with the remaining approximately [    ]% of the outstanding T-Mobile common stock held by other stockholders, based on closing share prices and certain other assumptions as of [            ], 2018. In connection with the closing of the merger transactions, Deutsche Telekom, SoftBank and T-Mobile will enter into an amended and restated stockholders’ agreement, and Deutsche Telekom and SoftBank will enter into a proxy lock-up and ROFR agreement, each of which will provide for certain rights and restrictions in respect of the T-Mobile common stock that will be held by Deutsche Telekom and SoftBank from and after the closing of the merger transactions. Descriptions of these agreements can be found under the section of this joint consent solicitation statement/prospectus entitled “Stockholders’ and Proxy Agreements.”

 

Q: WHAT WILL HOLDERS OF SPRINT EQUITY-BASED AWARDS RECEIVE IN THE MERGER?

 

A: Stock Options. Each option to purchase shares of Sprint common stock (other than under the Sprint Employees Stock Purchase Plan), whether vested or unvested, that is outstanding immediately prior to the effective time, as of the effective time, will be automatically converted into an option to purchase, on the same terms and conditions (including, if applicable, any continuing vesting requirements) under the applicable plan and award agreement in effect immediately prior to the effective time, a number of shares of T-Mobile common stock, rounded down to the nearest whole share, equal to the product determined by multiplying (a) the total number of shares of Sprint common stock subject to such Sprint option immediately prior to the effective time, by (b) 0.10256, at an exercise price per share equal to the quotient (rounded up to the nearest whole cent) of (x) the per share exercise price for the Sprint common stock subject to such option as of immediately prior to the effective time, divided by (y) 0.10256.

Time-Based Restricted Stock Units. Each award of time-based restricted stock units in respect of shares of Sprint common stock, whether vested or unvested, that is outstanding as of immediately prior to the effective time, as of the effective time, will be automatically converted into a restricted stock unit award, on the same terms and conditions (including, if applicable, any continuing vesting requirements) under the applicable plan and award agreement in effect immediately prior to the effective time, in respect of a number of shares of T-Mobile common stock equal to the product (rounded up to the nearest whole share) of (a) the number of shares of Sprint common stock subject to such restricted stock unit as of immediately prior to the effective time multiplied by (b) 0.10256. Any accrued but unpaid dividend equivalents with respect to any award of time-based restricted stock units in respect of shares of Sprint common stock will be assumed and become an obligation with respect to the applicable award of restricted stock units in respect of shares of T-Mobile common stock.

 

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Performance-Based Restricted Stock Units. Each award of performance-based restricted stock units in respect of shares of Sprint common stock, whether vested or unvested, that is outstanding as of immediately prior to the effective time, as of the effective time, will be automatically converted into a restricted stock unit, on the same terms and conditions (including, if applicable, any continuing vesting requirements, but not the performance-based vesting conditions applicable to such performance-based restricted stock unit in respect of Sprint common stock immediately prior to the effective time) under the applicable plan and award agreement in effect immediately prior to the effective time, in respect of a number of shares of T-Mobile common stock equal to the product (rounded up to the nearest whole share) of (a) the number of shares of Sprint common stock subject to such restricted stock unit as of immediately prior to the effective time, multiplied by (b) 0.10256. Any accrued but unpaid dividend equivalents with respect to any award of performance-based restricted stock units in respect of shares of Sprint common stock will be assumed and become an obligation with respect to the applicable award of restricted stock units in respect of shares of T-Mobile common stock. The number of shares of Sprint common stock subject to each award of performance-based restricted stock units as of immediately prior to the effective time will be based on the assumed level of performance equal to (x) in the case of a “turnaround incentive award” issued in respect of Sprint common stock, the greatest of (1) the volume-weighted average price of Sprint common stock over any 150-calendar day period as specified in the applicable award agreement as of the effective time, (2) the volume-weighted average price of Sprint common stock over the five consecutive trading day period ending with the second complete trading day prior to the effective time, and (3) the volume-weighted average price of Sprint common stock equal to 100% of the target award; and (y) in the case of an award of performance-based restricted stock units issued in respect of shares of Sprint common stock that is not a “turnaround incentive award,” in respect of outstanding performance periods as of the effective time, the target number of shares of Sprint common stock underlying such award of performance-based restricted stock units, and in respect of completed performance periods as of the effective time, the actual number of shares of Sprint common stock underlying such award of performance-based restricted stock units.

Employees Stock Purchase Plan. Prior to the effective time, Sprint will, contingent on the completion of the merger transactions, (a) cause the purchase period then underway under the Sprint Employees Stock Purchase Plan (the “final purchase period”), to the extent it would otherwise be outstanding at the effective time, to be terminated no later than five business days prior to the effective time; (b) make any pro rata adjustments that may be necessary to reflect the final purchase period, but otherwise treat the final purchase period as a fully effective and completed purchase period; and (c) cause the exercise (as of no later than five business days prior to the effective time) of each outstanding purchase right pursuant to the Sprint Employees Stock Purchase Plan. On such exercise date, Sprint will apply the funds credited to each participant’s payroll withholding account as of such date to the purchase of whole shares of Sprint common stock in accordance with the terms of the Sprint Employees Stock Purchase Plan, and such shares of Sprint common stock will be entitled to receive the merger consideration as of the effective time.

Cash will be payable in lieu of any fractional share of T-Mobile common stock resulting from application of the 0.10256 equity award adjustment ratio.

 

Q: WHEN WILL THE MERGER TRANSACTIONS BE COMPLETED?

 

A: The parties currently expect that the merger transactions will be completed in the first half of 2019, subject to certain conditions. Neither T-Mobile nor Sprint can predict, however, the actual date on which the merger transactions will be completed, or whether they will be completed, because the merger transactions are subject to factors beyond each company’s control, including whether or when the required regulatory and other governmental consents will be received. See “The Business Combination Agreement—Conditions to the Completion of the Merger Transactions” and “The Merger Transactions—Regulatory Approvals Required for the Merger Transactions.”

 

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Q: WHAT ARE THE CONDITIONS TO THE COMPLETION OF THE MERGER?

 

A: In addition to the T-Mobile stockholder approval and the Sprint merger approval, completion of the merger and the other transactions contemplated by the business combination agreement is subject to the satisfaction or waiver of a number of other conditions, including the receipt of required regulatory and other governmental consents and specified minimum credit ratings for T-Mobile USA on the closing date of the merger transactions (after giving effect to the merger) from at least two of three specified credit rating agencies, subject to certain qualifications. See “The Business Combination Agreement—Conditions to the Completion of the Merger Transactions.”

 

Q: WHAT EFFECT WILL THE MERGER TRANSACTIONS HAVE ON T-MOBILE AND SPRINT?

 

A: Upon completion of the merger transactions, Sprint will cease to be a publicly traded company. Whether or not the HoldCo mergers occur, Merger Sub will merge with and into Sprint, with Sprint surviving the merger as a wholly owned indirect subsidiary of T-Mobile. Following the merger transactions, the Sprint common stock will no longer be listed on the NYSE or any other stock exchange or quotation system and the registration of Sprint common stock and the related reporting obligations under the Exchange Act will be terminated. If you are a Sprint stockholder, you will no longer be a stockholder of Sprint immediately following the merger transactions, but you will have an interest in the businesses and assets of both T-Mobile and Sprint through your ownership of T-Mobile common stock.

Following the merger transactions, the T-Mobile common stock will be the common stock of the combined company, and it is expected that the T-Mobile common stock will continue to be listed on NASDAQ under the ticker symbol “TMUS.” If you are a T-Mobile stockholder, you will continue to be a stockholder of T-Mobile immediately following the merger transactions, but you will have an interest in the businesses and assets of both T-Mobile and Sprint through your ownership of T-Mobile common stock.

 

Q: WHAT IS THE RECOMMENDATION OF THE T-MOBILE BOARD OF DIRECTORS?

 

A: The T-Mobile board of directors has carefully considered the terms of the business combination agreement and, following the determination by the T-Mobile independent committee that the business combination agreement and the transactions contemplated thereby are fair to and in the best interests of all of T-Mobile’s stockholders (including such stockholders other than Deutsche Telekom) and the recommendation of the T-Mobile independent committee, has determined that the business combination agreement and the transactions contemplated thereby are fair to, and in the best interests of, T-Mobile and its stockholders. Accordingly, the T-Mobile board of directors has unanimously approved the business combination agreement and the transactions contemplated thereby. The T-Mobile board of directors unanimously recommends that T-Mobile stockholders approve the T-Mobile proposals by executing and returning the written consent furnished with this joint consent solicitation statement/prospectus.

 

Q: WHAT T-MOBILE STOCKHOLDER APPROVAL IS REQUIRED TO APPROVE THE MERGER TRANSACTIONS?

 

A: The approval of the T-Mobile proposals by the holders of a majority of the outstanding shares of T-Mobile common stock (which we refer to as the “T-Mobile stockholder approval”) is required for the merger transactions to be completed. As of the T-Mobile record date, there were [                ] shares of T-Mobile common stock outstanding and entitled to consent with respect to the T-Mobile proposals, and directors and executive officers of T-Mobile and their affiliates owned and were entitled to consent with respect to [                ] shares of T-Mobile common stock, representing approximately [                ]% of the shares of T-Mobile common stock outstanding on that date. T-Mobile currently expects that its directors and executive officers will deliver written consents in favor of the T-Mobile proposal, although none of them has entered into any agreements obligating him or her to do so.

 

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Subsequent to the execution of the business combination agreement, Deutsche Telekom and Deutsche Telekom Holding entered into a support agreement (which we refer to as the “Deutsche Telekom support agreement”) under which they agreed, promptly (and in any event within two business days) following their receipt of this joint consent solicitation statement/prospectus, to execute and deliver a written consent with respect to all of the outstanding shares of T-Mobile common stock held by Deutsche Telekom Holding, representing approximately [    ]% of the outstanding shares of T-Mobile common stock as of the T-Mobile record date, approving the T-Mobile proposals. Because Deutsche Telekom Holding is the beneficial holder of a majority of the T-Mobile common stock outstanding as of the T-Mobile record date, the delivery of the Deutsche Telekom written consent will constitute receipt by T-Mobile of the T-Mobile stockholder approval, regardless of the delivery or withholding of consent by any other T-Mobile stockholder. Therefore, T-Mobile expects to receive a number of consents sufficient to constitute the T-Mobile stockholder approval.

 

Q: ARE THERE ANY RISKS RELATING TO THE MERGER TRANSACTIONS, SPRINT’S BUSINESS OR THE COMBINED COMPANY THAT T-MOBILE STOCKHOLDERS SHOULD CONSIDER IN DECIDING WHETHER TO APPROVE THE T-MOBILE PROPOSALS?

 

A: Yes. Before making any decision on whether to give or withhold consent, T-Mobile stockholders are urged to read the information contained in “Risk Factors” carefully and in its entirety. T-Mobile stockholders should also read and carefully consider the risk factors of T-Mobile and Sprint that are incorporated by reference into this joint consent solicitation statement/prospectus.

 

Q: DO ANY OF THE T-MOBILE DIRECTORS OR EXECUTIVE OFFICERS HAVE INTERESTS IN THE MERGER TRANSACTIONS THAT MAY DIFFER FROM THOSE OF T-MOBILE STOCKHOLDERS?

 

A: Yes. The T-Mobile directors and executive officers have interests in the merger that are different from, or in addition to, their interests as T-Mobile stockholders. See “The Merger Transactions—Interests of Certain Executive Officers and Directors of T-Mobile in the Merger Transactions.” The members of the T-Mobile board of directors and the T-Mobile independent committee were aware of and considered these interests, among other matters, in evaluating the business combination agreement and the transactions contemplated thereby, and in making the T-Mobile board of directors’ recommendation that T-Mobile stockholders approve the T-Mobile proposals.

 

Q: WHAT IS THE RECOMMENDATION OF THE SPRINT BOARD OF DIRECTORS?

 

A: The Sprint board of directors has carefully considered the terms of the business combination agreement and, following the determination by the Sprint independent committee that the business combination agreement and the transactions contemplated thereby are fair to and in the best interests of all of Sprint’s stockholders (including such stockholders other than SoftBank) and the recommendation of the Sprint independent committee, has determined that the business combination agreement and the transactions contemplated thereby are fair to, and in the best interests of, Sprint and its stockholders. Accordingly, the Sprint board of directors has unanimously approved the business combination agreement and the transactions contemplated thereby. The Sprint board of directors unanimously recommends that Sprint stockholders approve the Sprint proposals by executing and returning the written consent furnished with this joint consent solicitation statement/prospectus.

 

Q: WHAT SPRINT STOCKHOLDER APPROVAL IS REQUIRED TO APPROVE THE MERGER TRANSACTIONS?

 

A:

The approval of the adoption of the business combination agreement by the holders of a majority of the outstanding shares of Sprint common stock (which we refer to as the “Sprint merger approval”) is required

 

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  for the merger transactions to be completed. As of the Sprint record date, there were [                ] shares of Sprint common stock outstanding and entitled to consent with respect to the Sprint proposals, and directors and executive officers of Sprint and their affiliates owned and were entitled to consent with respect to [                ] shares of Sprint common stock, representing approximately [                ]% of the shares of Sprint common stock outstanding on that date. Sprint currently expects that its directors and executive officers will deliver written consents in favor of the Sprint proposals, although none of them has entered into any agreements obligating him or her to do so.

Subsequent to the execution of the business combination agreement, SoftBank, SoftBank UK, Starburst and Galaxy entered into a support agreement (which we refer to as the “SoftBank support agreement”) under which they agreed, promptly (and in any event within two business days) following their receipt of this joint consent solicitation statement/prospectus, to execute and deliver a written consent with respect to all of the outstanding shares of Sprint common stock held by Starburst and Galaxy, representing approximately [    ]% of the outstanding shares of Sprint common stock as of the Sprint record date, approving the Sprint proposals (which we refer to as the “SoftBank written consent”). Because Starburst and Galaxy are, collectively, the beneficial holder of a majority of the Sprint common stock outstanding as of the Sprint record date, the delivery of the SoftBank written consent will constitute receipt by Sprint of the Sprint stockholder approval, regardless of the delivery or withholding of consent by any other Sprint stockholder. Therefore, Sprint expects to receive a number of consents sufficient to constitute the Sprint stockholder approval.

 

Q:

ARE THERE ANY RISKS RELATING TO THE MERGER TRANSACTIONS, T-MOBILE’S BUSINESS OR THE COMBINED COMPANY THAT SPRINT STOCKHOLDERS SHOULD CONSIDER IN DECIDING WHETHER TO APPROVE THE SPRINT PROPOSALS?

 

A:

Yes. Before making any decision on whether to give or withhold consent, Sprint stockholders are urged to read the information contained in “Risk Factors” carefully and in its entirety. Sprint stockholders should also read and carefully consider the risk factors of T-Mobile and Sprint that are incorporated by reference into this joint consent solicitation statement/prospectus.

 

Q:

DO ANY OF THE SPRINT DIRECTORS OR EXECUTIVE OFFICERS HAVE INTERESTS IN THE MERGER TRANSACTIONS THAT MAY DIFFER FROM THOSE OF SPRINT STOCKHOLDERS?

 

A:

Yes. The Sprint directors and executive officers have interests in the merger that are different from, or in addition to, their interests as Sprint stockholders. See “The Merger Transactions—Interests of Certain Executive Officers and Directors of Sprint in the Merger Transactions.” The members of the Sprint board of directors and the Sprint independent committee were aware of and considered these interests, among other matters, in evaluating the business combination agreement and the transactions contemplated thereby, and in making the Sprint board of directors’ recommendation that Sprint stockholders approve the Sprint proposals.

 

Q:

HOW DO I RETURN MY WRITTEN CONSENT?

 

A:

If you are a T-Mobile stockholder at the close of business on the T-Mobile record date, or a Sprint stockholder at the close of business on the Sprint record date, and after carefully reading and considering the information contained in this joint consent solicitation statement/prospectus you wish to return your written consent, please complete, date and sign the enclosed written consent and promptly return it to T-Mobile or

 

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  Sprint, as applicable, at the addresses below, or email a .pdf copy of your signed and dated written consent to T-Mobile or Sprint, as applicable, to the email addresses below.

 

To T-Mobile:

 

T-Mobile US, Inc.

Corporate Secretary

12920 SE 38th Street

Bellevue, Washington 98006
investor.relations@t-mobile.com

  

To Sprint:

 

Corporate Secretary

6200 Sprint Parkway

Mailstop KSOPHF0302-3B679

Overland Park, Kansas 66251

shareholder.relations@sprint.com

Neither T-Mobile nor Sprint will be holding a stockholders’ meeting to consider the T-Mobile proposals or the Sprint proposals, as applicable, and therefore you will be unable to vote in person by attending a stockholders’ meeting.

 

Q:

WHAT HAPPENS IF I DO NOT RETURN MY WRITTEN CONSENT?

 

A:

If you are a T-Mobile stockholder at the close of business on the T-Mobile record date and you do not return your written consent, that will have the same effect as a vote against the T-Mobile proposals. However, because Deutsche Telekom Holding is required to deliver a written consent approving the T-Mobile proposals under the Deutsche Telekom support agreement, and Deutsche Telekom Holding is the beneficial holder of a majority of the T-Mobile common stock outstanding as of the T-Mobile record date, a failure of any other T-Mobile stockholder to deliver a written consent is not expected to have any effect on the approval of the T-Mobile proposals.

If you are a Sprint stockholder at the close of business on the Sprint record date and you do not return your written consent, that will have the same effect as a vote against the Sprint proposals. However, because Starburst and Galaxy are required to deliver a written consent approving the Sprint proposals under the SoftBank support agreement, and Starburst and Galaxy are, collectively, the beneficial holders of a majority of the Sprint common stock outstanding as of the Sprint record date, a failure of any other Sprint stockholder to deliver a written consent is not expected to have any effect on the approval of the Sprint proposals.

 

Q:

WHAT IF I AM A RECORD HOLDER AND I RETURN A SIGNED WRITTEN CONSENT WITHOUT INDICATING A DECISION WITH RESPECT TO THE T-MOBILE PROPOSALS OR THE SPRINT PROPOSALS?

 

A:

If you are a T-Mobile stockholder at the close of business on the T-Mobile record date, or a Sprint stockholder at the close of business on the Sprint record date, and you return a signed written consent without indicating a decision with respect to the T-Mobile proposals or the Sprint proposals, as applicable, that will have the same effect as a vote for the T-Mobile proposals or the Sprint proposals, as applicable.

 

Q:

WHAT IS THE DEADLINE FOR SUBMISSION OF WRITTEN CONSENTS?

 

A:

T-Mobile has set [                ], 2018 as the targeted final date for the receipt of written consents (which date, as it may be extended in accordance with the next sentence, we refer to as the “T-Mobile consent deadline”). T-Mobile reserves the right to extend the T-Mobile consent deadline beyond [                ], 2018. Any such extension may be made without notice to T-Mobile stockholders. Under the Deutsche Telekom support agreement, Deutsche Telekom Holding has agreed to deliver its written consent promptly, and in any event within two business days, following its receipt of this joint consent solicitation statement/prospectus. Therefore, a failure of any other T-Mobile stockholder to deliver a written consent is not expected to have any effect on the approval of the T-Mobile proposals.

Sprint has set [                ], 2018 as the targeted final date for the receipt of written consents (which date, as it may be extended in accordance with the next sentence, we refer to as the “Sprint consent deadline”).

 

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Sprint reserves the right to extend the Sprint consent deadline beyond [                ], 2018. Any such extension may be made without notice to Sprint stockholders. Under the SoftBank support agreement, Starburst and Galaxy have agreed to deliver their written consents promptly, and in any event within two business days, following their receipt of this joint consent solicitation statement/prospectus. Therefore, a failure of any other Sprint stockholder to deliver a written consent is not expected to have any effect on the approval of the Sprint proposals.

 

Q: CAN I CHANGE OR REVOKE MY WRITTEN CONSENT?

 

A: Yes. If you are a T-Mobile stockholder at the close of business on the T-Mobile record date, you may change or revoke your consent to the T-Mobile proposals at any time before the T-Mobile consent deadline; however, such change or revocation may not have any effect, as the delivery of the Deutsche Telekom written consent will constitute receipt by T-Mobile of the T-Mobile stockholder approval. If you wish to change or revoke your consent before the T-Mobile consent deadline, T-Mobile stockholders may do so by sending in a new written consent with a later date by one of the means described in “Solicitation of T-Mobile Written Consents—Submission of Consents” or by delivering a notice of revocation to the corporate secretary of T-Mobile. If you are a Sprint stockholder at the close of business on the Sprint record date, you may change or revoke your consent to the Sprint proposals at any time before the Sprint consent deadline; however, such change or revocation may not have any effect, as the delivery of the SoftBank written consent will constitute receipt by Sprint of the Sprint stockholder approval. If you wish to change or revoke your consent before the Sprint consent deadline, Sprint stockholders may do so by sending in a new written consent with a later date by one of the means described in “Solicitation of Sprint Written Consents—Submission of Consents” or by delivering a notice of revocation to the corporate secretary of Sprint.

 

Q: SHOULD I SEND IN MY SPRINT STOCK CERTIFICATES NOW?

 

A: No. To the extent you are a Sprint stockholder with certificated shares, you should keep your existing stock certificates at this time. After the merger transactions are completed, Sprint stockholders will receive from the exchange agent a letter of transmittal and written instructions for exchanging their stock certificates for the merger consideration. To the extent you are a T-Mobile stockholder with certificated shares, your shares will not be exchanged in connection with the merger transactions. In either case, do not send in your certificates now.

 

Q: WHAT IF I HOLD SHARES IN BOTH T-MOBILE AND SPRINT?

 

A: If you are both a stockholder of T-Mobile and a stockholder of Sprint, you will receive two separate packages of consent solicitation materials. A written consent with respect to the T-Mobile proposals will not count as a written consent with respect to the Sprint proposals, and a written consent with respect to the Sprint proposals will not count as a written consent with respect to the T-Mobile proposals. Therefore, please separately return a written consent for each of your shares of T-Mobile common stock and your shares of Sprint common stock.

 

Q: ARE STOCKHOLDERS ENTITLED TO APPRAISAL RIGHTS?

 

A: No. Sprint stockholders and T-Mobile stockholders are not entitled to appraisal rights in connection with the merger transactions or the other transactions contemplated by the business combination agreement.

 

Q: WHAT ARE THE U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER TO U.S. HOLDERS OF SPRINT COMMON STOCK?

 

A:

It is intended that the merger will qualify as a “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (which we refer to as the “Code”), and that U.S. holders (as defined under “Material U.S. Federal Income Tax Consequences of the Merger”) of Sprint common stock

 

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  will not recognize gain or loss for United States federal income tax purposes, except with respect to the receipt of cash in lieu of fractional shares of T-Mobile common stock. Only in the event that the HoldCo mergers are consummated is the closing of the merger conditioned upon receipt of an opinion of counsel to the effect that the merger will qualify as a “reorganization”. Otherwise, the merger will be completed without the receipt of any tax opinion from counsel. Furthermore, neither T-Mobile nor Sprint intends to request a ruling from the Internal Revenue Service (which we refer to as the “IRS”) regarding the United States federal income tax consequences of the merger. Accordingly, there can be no assurance that the merger will so qualify. See “Material U.S. Federal Income Tax Consequences of the Merger.” Sprint stockholders should consult their own tax advisors.

 

Q:

WHAT HAPPENS IF THE MERGER IS NOT COMPLETED?

 

A:

If the merger is not completed, Sprint stockholders will retain their shares of Sprint common stock and will not receive any consideration for their shares of Sprint common stock. Instead, T-Mobile and Sprint will remain independent public companies and their shares of common stock will continue to be listed and traded separately on NASDAQ and the NYSE, respectively.

 

Q:

WHOM SHOULD I CONTACT IF I HAVE ANY QUESTIONS?

 

A:

If you have questions about the merger transactions, the solicitation of T-Mobile written consents or the solicitation of Sprint written consents, or if you need to obtain copies of this joint consent solicitation statement/prospectus or other documents incorporated by reference in this joint consent solicitation statement/prospectus, you may contact the appropriate contact listed below. You will not be charged for any of the documents you request.

 

For T-Mobile Stockholders:

 

Investor Relations

T-Mobile US, Inc.

1 Park Avenue, 14th Floor

New York, New York 10016
Telephone: (212) 358-3210
investor.relations@t-mobile.com

  

For Sprint Stockholders:

 

Sprint Shareholder Relations
6200 Sprint Parkway

Mailstop KSOPHF0302-3B679

Overland Park, Kansas 66251

Telephone: (913) 794-1091

shareholder.relations@sprint.com

To ensure timely delivery, any request should be made no later than [                ], 2018.

 

Q:

WHERE CAN I FIND MORE INFORMATION ABOUT T-MOBILE AND SPRINT?

 

A:

You can find more information about T-Mobile and Sprint from the sources described under “Where You Can Find More Information.”

 

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SUMMARY

This summary highlights selected material information included in this joint consent solicitation statement/prospectus. You should read this joint consent solicitation statement/prospectus and its Annexes and the other documents referred to in this joint consent solicitation statement/prospectus carefully and in their entirety, because the information in this section may not provide all of the information that might be important to you. Additional important information about T-Mobile and Sprint is also contained in the Annexes to, and the documents incorporated by reference into, this joint consent solicitation statement/prospectus. For a description of, and instructions as to how to obtain, this information, see “Where You Can Find More Information” on page 286 of this joint consent solicitation statement/prospectus. Each item in this summary includes a page reference directing you to a more complete description of that item.

The Merger Transactions (page 60)

The terms and conditions of the merger transactions are contained in the business combination agreement, which is attached to this joint consent solicitation statement/prospectus as Annex A. You should read the business combination agreement carefully as it is the legal document that governs the merger transactions.

Pursuant to the business combination agreement, if certain conditions are met, each SoftBank US HoldCo will merge with and into Merger Company, with Merger Company continuing as the surviving entity and as a wholly owned subsidiary of T-Mobile. Irrespective of whether the HoldCo mergers occur, subject to the satisfaction or waiver of the conditions in the business combination agreement, Merger Sub will merge with and into Sprint, with Sprint continuing as the surviving corporation and as a wholly owned indirect subsidiary of T-Mobile. Following the merger transactions, the Sprint common stock will be delisted from the NYSE and deregistered under the Exchange Act and cease to be publicly traded.

Consideration to Sprint Stockholders (page 60)

Sprint Common Stock

In the HoldCo mergers, the shares of Galaxy common stock and Starburst common stock issued and outstanding immediately prior to the HoldCo mergers effective time, all of which are currently held by SoftBank UK, will be automatically converted into the right to receive an aggregate number of shares of T-Mobile common stock equal to the product of (x) 0.10256 and (y) the aggregate number of shares of Sprint common stock then held collectively by Galaxy and Starburst.

In the merger, each share of Sprint common stock issued and outstanding immediately prior to the effective time (other than shares held directly by Sprint as treasury stock and shares held by the SoftBank surviving entity) will be automatically converted into the right to receive 0.10256 shares of T-Mobile common stock.

SoftBank and its affiliates will receive the same amount of T-Mobile common stock per share of Sprint common stock in the merger transactions as all other Sprint stockholders.

No holder of Sprint common stock will be issued a fraction of a share of T-Mobile common stock in the merger transactions. Each holder of Sprint common stock converted pursuant to the merger transactions who would otherwise have been entitled to receive a fraction of a share of T-Mobile common stock (after taking into account all shares represented by the certificates and book-entry shares delivered by such holder) will receive the T-Mobile fractional share consideration as described in “The Business Combination Agreement—No Fractional Shares.”



 

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Sprint Warrants

The business combination agreement provides that, except as described below, each warrant to purchase shares of Sprint common stock outstanding immediately prior to the effective time (which we refer to as a “Sprint warrant”) and all rights in respect thereof will automatically be canceled and retired and will cease to exist, and no consideration will be payable in respect of such Sprint warrant. However, the warrant to purchase 7,288,630 shares of Sprint common stock issued by Sprint to a non-affiliate of Sprint on May 16, 2016 (which we refer to as the “specified Sprint warrant”) will be assumed by T-Mobile in connection with the transactions contemplated by the business combination agreement, unless exercised prior to the closing. As of April 29, 2018, a warrant to purchase 54,579,924 shares of Sprint common stock issued by Sprint to Starburst on July 10, 2013 (which we refer to as the “SoftBank Sprint warrant”) was outstanding. On July 10, 2018, Starburst exercised the SoftBank Sprint warrant and received 54,579,924 shares of Sprint common stock at a purchase price of $5.25 per share.

Treatment of Sprint Equity-Based Awards (page 61)

Stock Options. Each option to purchase shares of Sprint common stock (other than under the Sprint Employees Stock Purchase Plan), whether vested or unvested, that is outstanding immediately prior to the effective time, as of the effective time, will be automatically converted into an option to purchase, on the same terms and conditions (including, if applicable, any continuing vesting requirements) under the applicable plan and award agreement in effect immediately prior to the effective time, a number of shares of T-Mobile common stock, rounded down to the nearest whole share, equal to the product determined by multiplying (a) the total number of shares of Sprint common stock subject to such Sprint option immediately prior to the effective time, by (b) 0.10256, at an exercise price per share equal to the quotient (rounded up to the nearest whole cent) of (x) the per share exercise price for the Sprint common stock subject to such option as of immediately prior to the effective time, divided by (y) 0.10256.

Time-Based Restricted Stock Units. Each award of time-based restricted stock units in respect of shares of Sprint common stock, whether vested or unvested, that is outstanding as of immediately prior to the effective time, as of the effective time, will be automatically converted into a restricted stock unit award, on the same terms and conditions (including, if applicable, any continuing vesting requirements) under the applicable plan and award agreement in effect immediately prior to the effective time, in respect of a number of shares of T-Mobile common stock equal to the product (rounded up to the nearest whole share) of (a) the number of shares of Sprint common stock subject to such restricted stock unit as of immediately prior to the effective time multiplied by (b) 0.10256. Any accrued but unpaid dividend equivalents with respect to any award of time-based restricted stock units in respect of shares of Sprint common stock will be assumed and become an obligation with respect to the applicable award of restricted stock units in respect of shares of T-Mobile common stock.

Performance-Based Restricted Stock Units. Each award of performance-based restricted stock units in respect of shares of Sprint common stock, whether vested or unvested, that is outstanding as of immediately prior to the effective time, as of the effective time, will be automatically converted into a restricted stock unit, on the same terms and conditions (including, if applicable, any continuing vesting requirements, but not the performance-based vesting conditions applicable to such performance-based restricted stock unit in respect of Sprint common stock immediately prior to the effective time) under the applicable plan and award agreement in effect immediately prior to the effective time, in respect of a number of shares of T-Mobile common stock equal to the product (rounded up to the nearest whole share) of (a) the number of shares of Sprint common stock subject to such restricted stock unit as of immediately prior to the effective time, multiplied by (b) 0.10256. Any accrued but unpaid dividend equivalents with respect to any award of performance-based restricted stock units in respect of shares of Sprint common stock will be assumed and become an obligation with respect to the applicable award of restricted stock units in respect of shares of T-Mobile common stock. The number of shares



 

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of Sprint common stock subject to each award of performance-based restricted stock units as of immediately prior to the effective time will be based on the assumed level of performance equal to (x) in the case of a “turnaround incentive award” issued in respect of Sprint common stock, the greatest of (1) the volume-weighted average price of Sprint common stock over any 150-calendar day period as specified in the applicable award agreement as of the effective time, (2) the volume-weighted average price of Sprint common stock over the five consecutive trading day period ending with the second complete trading day prior to the effective time, and (3) the volume-weighted average price of Sprint common stock equal to 100% of the target award; and (y) in the case of an award of performance-based restricted stock units issued in respect of shares of Sprint common stock that is not a “turnaround incentive award,” in respect of outstanding performance periods as of the effective time, the target number of shares of Sprint common stock underlying such award of performance-based restricted stock units, and in respect of completed performance periods as of the effective time, the actual number of shares of Sprint common stock underlying such award of performance-based restricted stock units.

Employees Stock Purchase Plan. Prior to the effective time, Sprint will, contingent on the completion of the merger transactions, (a) cause the final purchase period, to the extent it would otherwise be outstanding at the effective time, to be terminated no later than five business days prior to the effective time; (b) make any pro rata adjustments that may be necessary to reflect the final purchase period, but otherwise treat the final purchase period as a fully effective and completed purchase period; and (c) cause the exercise (as of no later than five business days prior to the effective time) of each outstanding purchase right pursuant to the Sprint Employees Stock Purchase Plan. On such exercise date, Sprint will apply the funds credited to each participant’s payroll withholding account as of such date to the purchase of whole shares of Sprint common stock in accordance with the terms of the Sprint Employees Stock Purchase Plan, and such shares of Sprint common stock will be entitled to receive the merger consideration as of the effective time.

Cash will be payable in lieu of any fractional share of T-Mobile common stock resulting from application of the 0.10256 equity award adjustment ratio.

T-Mobile’s Reasons for the Merger and Recommendation of the T-Mobile Board of Directors (page 77)

At a meeting held on April 27, 2018, the T-Mobile board of directors unanimously determined that the business combination agreement and the transactions contemplated by the agreement are fair to, and in the best interests of, T-Mobile and its stockholders, and unanimously approved and declared advisable the business combination agreement and the transactions contemplated by the agreement. For factors considered by the T-Mobile board of directors in approving the business combination agreement, see “The Merger Transactions—T-Mobile’s Reasons for the Merger and Recommendation of the T-Mobile Board of Directors.” The T-Mobile board of directors recommends that T-Mobile stockholders approve the T-Mobile proposals by executing and returning the written consent furnished with this joint consent solicitation statement/prospectus.

Opinions of T-Mobile’s Financial Advisors (page 81)

Opinion of PJT Partners LP (see page 81)

At a meeting of the T-Mobile board of directors, PJT Partners LP (which we refer to as “PJT Partners”) rendered its oral opinion, subsequently confirmed in its written opinion dated April 29, 2018, to the T-Mobile board of directors that, as of the date of such opinion and based upon and subject to the qualifications, limitations and assumptions stated in its written opinion, the exchange ratio pursuant to the business combination agreement was fair to T-Mobile from a financial point of view.

The full text of the written opinion of PJT Partners, dated April 29, 2018, which sets forth the assumptions made, procedures followed, factors considered and limitations upon the review undertaken by



 

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PJT Partners in rendering its opinion, is attached to this joint consent solicitation statement/prospectus as Annex H and incorporated by reference herein. The summary of the PJT Partners opinion contained in this joint consent solicitation statement/prospectus is qualified in its entirety by reference to the full text of PJT Partners’ written opinion. PJT Partners’ advisory services and opinion were provided solely for the information and assistance of the T-Mobile board of directors in connection with its consideration of the merger transactions and the opinion does not constitute a recommendation as to any action the T-Mobile board of directors should take with respect to the merger transactions or how any holder of T-Mobile common stock or Sprint common stock should vote with respect to the merger transactions or any other matter.

PJT Partners was retained by T-Mobile to act as its financial advisor in connection with the merger transactions and to provide financial advisory services and, upon T-Mobile’s request, to render its fairness opinion to the T-Mobile board of directors in connection therewith. For further information, see the section of this joint consent solicitation statement/prospectus entitled “The Merger Transactions—Opinions of T-Mobile’s Financial Advisors—Opinion of PJT Partners” and Annex H.

Opinion of Goldman Sachs & Co. LLC (see page 93)

At a meeting of the T-Mobile board of directors, Goldman, Sachs & Co. LLC (which we refer to as “Goldman Sachs”) rendered its oral opinion, subsequently confirmed in its written opinion dated April 29, 2018, to the T-Mobile board of directors that, as of the date of its written opinion and based upon and subject to the factors and assumptions set forth in Goldman Sachs’ written opinion, the exchange ratio pursuant to the business combination agreement was fair from a financial point of view to T-Mobile.

The full text of the written opinion of Goldman Sachs, dated April 29, 2018, which sets forth assumptions made, procedures followed, matters considered, qualifications and limitations on the review undertaken in connection with the opinion, is attached to this joint consent solicitation statement/prospectus as Annex I and incorporated by reference herein. The summary of the Goldman Sachs opinion contained in this joint consent solicitation statement/prospectus is qualified in its entirety by reference to the full text of Goldman Sachs’ written opinion. Goldman Sachs’ advisory services provided to T-Mobile and opinion were provided for the information and assistance of the T-Mobile board of directors in connection with its consideration of the merger transactions and the opinion does not constitute a recommendation as to how any holder of T-Mobile common stock should vote with respect to the merger transactions or any other matter.

Goldman Sachs was jointly engaged by T-Mobile and Deutsche Telekom to serve as a financial advisor in connection with the merger transactions. For further information, see the section of this joint consent solicitation statement/prospectus entitled “The Merger Transactions—Opinions of T-Mobile’s Financial Advisors—Opinion of Goldman Sachs” and Annex I.

Opinion of Evercore Group L.L.C. to the T-Mobile Independent Committee (see page 106)

In connection with the merger transactions, the T-Mobile independent committee retained Evercore Group L.L.C. (which we refer to as “Evercore”) to act as financial advisor to the T-Mobile independent committee in connection with evaluating the merger transactions. At a meeting of the T-Mobile independent committee, Evercore rendered its oral opinion, subsequently confirmed in writing, that, as of April 29, 2018 and based upon and subject to the factors, procedures, assumptions, qualifications and limitations set forth in its opinion, the exchange ratio is fair, from a financial point of view, to the holders of shares of T-Mobile common stock (including such holders of shares of T-Mobile common stock other than Deutsche Telekom and its affiliates).



 

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The full text of the written opinion of Evercore, dated as of April 29, 2018, which sets forth, among other things, the procedures followed, assumptions made, matters considered and qualifications and limitations on the scope of review undertaken in rendering its opinion, is attached as Annex J to this joint consent solicitation statement/prospectus and is incorporated by reference herein. The summary of the Evercore opinion contained in this joint consent solicitation statement/prospectus is qualified in its entirety by reference to the full text of Evercore’s written opinion. Evercore’s advisory services and opinion were provided for the use and benefit of the T-Mobile independent committee in connection with its consideration of the merger transactions and the opinion does not constitute a recommendation as to how any holder of T-Mobile common stock or Sprint common stock should vote with respect to the merger transactions or any other matter.

Evercore was retained by the T-Mobile independent committee to act as its financial advisor in connection with the merger transactions and to provide financial advisory services and, upon the T-Mobile independent committee’s request, to render its financial opinion to the T-Mobile independent committee in connection therewith. For further information, see the section of this joint consent solicitation statement/prospectus entitled “The Merger Transactions—Opinions of T-Mobile’s Financial Advisors—Opinion of Evercore to the T-Mobile Independent Committee” and Annex J.

Sprint’s Reasons for the Merger and Recommendation of the Sprint Board of Directors (page 116)

At a meeting held on April 29, 2018, the Sprint board of directors unanimously determined that the business combination agreement and the transactions contemplated thereby, including the merger transactions, are fair to, and in the best interests of, Sprint and its stockholders, and approved and declared advisable the business combination agreement and the transactions contemplated thereby, including the merger transactions. For factors considered by the Sprint board of directors in approving the business combination agreement, see “The Merger Transactions—Sprint’s Reasons for the Merger and Recommendation of the Sprint Board of Directors.” The Sprint board of directors recommends that the stockholders of Sprint approve the Sprint proposals by executing and returning the written consent furnished with this joint consent solicitation statement/prospectus.

Opinions of Sprint’s Financial Advisors (page 121)

Opinion of Raine Securities LLC (see page 121)

At the meeting of the Sprint board of directors on April 29, 2018, Raine Securities LLC (which we refer to as “Raine”) rendered its oral opinion to the Sprint board of directors to the effect that, as of such date, based upon and subject to the assumptions, limitations, qualifications, conditions and other matters set forth in its opinion, the exchange ratio pursuant to the business combination agreement was fair, from a financial point of view, to the holders of Sprint common stock as of immediately prior to the HoldCo mergers. Raine has confirmed its oral opinion by delivering its written opinion to the Sprint board of directors, dated April 29, 2018, to the effect that, as of such date, the exchange ratio pursuant to the business combination agreement was fair, from a financial point of view, to the holders of Sprint common stock as of immediately prior to the HoldCo mergers, taking into account the merger.

The full text of the written opinion of Raine, dated April 29, 2018, which sets forth assumptions made, procedures followed, matters considered and limitations on the review undertaken in connection with the opinion, is attached as Annex K to this joint consent solicitation statement/prospectus. Raine’s opinion is directed only to the fairness, from a financial point of view, of the exchange ratio to the holders of Sprint common stock as of immediately prior to the HoldCo mergers, taking into account the merger, and does not address any other terms or aspects of the merger transactions including, without limitation, the HoldCo mergers or the form or structure of the merger transactions or any terms or aspects of any voting, support, stockholder or other agreements, arrangements or understandings contemplated or entered into



 

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in connection with the merger transactions, the HoldCo mergers or otherwise. The opinion does not address the underlying business decision of the Sprint board of directors or any other person to proceed with the merger or any other action. The opinion does not constitute a recommendation to the Sprint board of directors, Sprint or to any stockholder of Sprint or T-Mobile or to any other person as to how to vote or act with respect to the merger transactions or any other matter. Holders of Sprint common stock are encouraged to read Raine’s opinion carefully in its entirety.

Raine was retained by Sprint to act as its lead financial advisor in connection with the merger transactions. For further information, see the section of this joint consent solicitation statement/prospectus entitled “The Merger Transactions–Opinions of Sprint’s Financial Advisors–Opinion of Raine” and Annex K.

Opinion of J.P. Morgan Securities LLC (see page 131)

At the meeting of the Sprint board of directors on April 29, 2018, J.P. Morgan Securities LLC (which we refer to as “J.P. Morgan”) rendered its oral opinion to the Sprint board of directors to the effect that, as of such date, based upon and subject to the assumptions, limitations, qualifications, conditions and other matters set forth in its opinion, the exchange ratio in the merger was fair, from a financial point of view, to the holders of Sprint common stock as of immediately prior to the HoldCo mergers. J.P. Morgan has confirmed its oral opinion by delivering its written opinion to the Sprint board of directors, dated April 29, 2018, to the effect that, as of such date, the exchange ratio in the merger was fair, from a financial point of view, to the holders of Sprint common stock as of immediately prior to the HoldCo mergers.

The full text of the written opinion of J.P. Morgan, dated as of April 29, 2018, which sets forth the assumptions made, matters considered and limitations and qualifications on the review undertaken, is attached as Annex L to this joint consent solicitation statement/prospectus and is incorporated herein by reference. The summary of the opinion of J.P. Morgan set forth in this joint consent solicitation statement/prospectus is qualified in its entirety by reference to the full text of such opinion. Sprint stockholders are urged to read the opinion in its entirety. J.P. Morgan’s written opinion was addressed to the Sprint board of directors (in its capacity as such) in connection with and for the purposes of its evaluation of the merger, was directed only to the exchange ratio in the merger and did not address any other aspect of the merger. The issuance of J.P. Morgan’s opinion was approved by a fairness committee of J.P. Morgan. The opinion does not constitute a recommendation to any stockholder of Sprint or T-Mobile as to how such stockholder should vote with respect to the merger or any other matter.

J.P. Morgan was retained by Sprint to act as its financial advisor in connection with the merger transactions. For further information, see the section of this joint consent solicitation statement/prospectus entitled “The Merger Transactions—Opinions of Sprint’s Financial Advisors—Opinion of J.P. Morgan” and Annex L.

Opinion of Centerview Partners LLC to the Sprint Independent Committee (see page 143)

Centerview Partners LLC (which we refer to as “Centerview”) was retained by the Sprint independent committee as its financial advisor in connection with the merger and the other transactions contemplated by the business combination agreement. In connection with this engagement, the Sprint independent committee requested that Centerview evaluate the fairness, from a financial point of view, to the holders of Sprint common stock (other than Sprint common stock held by the SoftBank Parties, the Deutsche Telekom Parties or any affiliate of Sprint or T-Mobile, Sprint common stock held by Sprint as treasury stock and any Sprint common stock held by Merger Company (which we refer to as “excluded shares”)) of the exchange ratio provided for pursuant to the business combination agreement. On April 29, 2018, Centerview rendered to the Sprint independent committee its oral opinion, which was subsequently confirmed by delivery of a written opinion



 

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dated such date that, as of such date and based upon and subject to the assumptions made, procedures followed, matters considered, and qualifications and limitations upon the review undertaken by Centerview in preparing its opinion, the exchange ratio provided for pursuant to the business combination agreement was fair, from a financial point of view, to the holders of Sprint common stock (other than holders of excluded shares).

The full text of Centerview’s written opinion, dated April 29, 2018, which describes the assumptions made, procedures followed, matters considered, and qualifications and limitations upon the review undertaken by Centerview in preparing its opinion, is attached as Annex M and is incorporated herein by reference. Centerview’s financial advisory services and opinion were provided for the information and assistance of the Sprint independent committee (in their capacity as directors and not in any other capacity) in connection with and for purposes of its consideration of the merger transactions and Centerview’s opinion addressed only the fairness, from a financial point of view, as of the date thereof, to the holders of Sprint common stock (other than holders of excluded shares) of the exchange ratio provided for pursuant to the business combination agreement. Centerview’s opinion did not address any other term or aspect of the business combination agreement or the merger transactions and does not constitute a recommendation to any stockholder of Sprint or any other person as to how such stockholder or other person should vote with respect to the merger or otherwise act with respect to the merger transactions or any other matter. The full text of Centerview’s written opinion should be read carefully in its entirety for a description of the assumptions made, procedures followed, matters considered, and qualifications and limitations upon the review undertaken by Centerview in preparing its opinion.

Centerview was retained by the Sprint independent committee to act as its financial advisor in connection with the merger transactions. For further information, see the section of this joint consent solicitation statement/prospectus entitled “The Merger Transactions—Opinions of Sprint’s Financial Advisors—Opinion of Centerview to the Sprint Independent Committee” and Annex M.

Solicitation of T-Mobile Written Consents (page 56)

The business combination agreement provides that T-Mobile will seek the T-Mobile stockholder approval pursuant to this joint consent solicitation statement/prospectus, and T-Mobile will not call or convene any meeting of its stockholders in connection with the T-Mobile stockholder approval. T-Mobile stockholders are being asked to approve each of the T-Mobile charter amendment and the T-Mobile share issuance by executing and delivering the written consent furnished with this joint consent solicitation statement/prospectus.

Only T-Mobile stockholders of record at the close of business on [                ], the T-Mobile record date, will be notified of and be entitled to execute and deliver a written consent. Under the T-Mobile certificate of incorporation and the DGCL, each holder of T-Mobile common stock is entitled to one vote for each share of T-Mobile common stock held as of the T-Mobile record date. Approval of each of the T-Mobile proposals requires the execution and delivery to T-Mobile of one or more written consents approving the T-Mobile proposals by the holders of a majority of the outstanding shares of T-Mobile common stock entitled to vote thereon.

Subsequent to the execution of the business combination agreement, Deutsche Telekom and Deutsche Telekom Holding entered into the Deutsche Telekom support agreement under which they agreed, promptly (and in any event within two business days) following their receipt of this joint consent solicitation statement/prospectus, to execute and deliver a written consent with respect to all of the outstanding shares of T-Mobile common stock held by Deutsche Telekom Holding, representing approximately [    ]% of the outstanding shares of T-Mobile common stock as of the T-Mobile record date, approving the T-Mobile proposals. The delivery of the Deutsche Telekom written consent by Deutsche Telekom Holding will constitute receipt by T-Mobile of the T-Mobile stockholder approval. Therefore, T-Mobile expects to receive a number of consents sufficient to constitute the T-Mobile stockholder approval.



 

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You may consent to the T-Mobile proposals with respect to your shares of T-Mobile common stock by completing and signing the written consent furnished with this joint consent solicitation statement/prospectus and returning it to T-Mobile by the T-Mobile consent deadline. Your consent to the T-Mobile proposals may be changed or revoked at any time before the T-Mobile consent deadline; however, such change or revocation is not expected to have any effect, as the delivery of the Deutsche Telekom written consent will constitute receipt by T-Mobile of the T-Mobile stockholder approval. Due to the obligations of Deutsche Telekom and Deutsche Telekom Holding under the Deutsche Telekom support agreement, a failure of any other T-Mobile stockholder to deliver a written consent is not expected to have any effect on the approval of the T-Mobile proposals.

Solicitation of Sprint Written Consents (page 58)

The business combination agreement provides that Sprint will seek the Sprint merger approval pursuant to this joint consent solicitation statement/prospectus, and Sprint will not call or convene any meeting of its stockholders in connection with the Sprint stockholder approval. Sprint stockholders are being asked to approve the adoption of the business combination agreement and, on a nonbinding, advisory basis, the Sprint advisory T-Mobile charter amendment by executing and delivering the written consent furnished with this joint consent solicitation statement/prospectus.

Only Sprint stockholders of record at the close of business on [                ], the Sprint record date, will be notified of and be entitled to execute and deliver a written consent. Under the Sprint certificate of incorporation and the DGCL, each holder of Sprint common stock is entitled to one vote for each share of Sprint common stock held as of the Sprint record date. Approval of the Sprint proposals requires the execution and delivery to Sprint of one or more written consents approving the Sprint proposals by the holders of a majority of the outstanding shares of Sprint common stock entitled to vote thereon.

Subsequent to the execution of the business combination agreement, SoftBank, SoftBank UK, Starburst and Galaxy entered into the SoftBank support agreement under which they agreed, promptly (and in any event within two business days) following their receipt of this joint consent solicitation statement/prospectus, to execute and deliver a written consent with respect to all of the outstanding shares of Sprint common stock held by Starburst and Galaxy, representing approximately [    ]% of the outstanding shares of Sprint common stock as of the Sprint record date, approving the Sprint proposals. The delivery of the SoftBank written consent will constitute receipt of the Sprint stockholder approval. Therefore, Sprint expects to receive a number of consents sufficient to constitute the Sprint stockholder approval.

You may consent to the Sprint proposals with respect to your shares of Sprint common stock by completing and signing the written consent furnished with this joint consent solicitation statement/prospectus and returning it to Sprint by the Sprint consent deadline. Your consent to the Sprint proposals may be changed or revoked at any time before the Sprint consent deadline; however, such change or revocation is not expected to have any effect, as the delivery of the SoftBank written consent will constitute receipt by Sprint of the Sprint stockholder approval. Due to the obligations of SoftBank, SoftBank UK, Starburst and Galaxy under the SoftBank support agreement, a failure of any other Sprint stockholder to deliver a written consent is not expected to have any effect on the approval of the Sprint proposals.

Interests of Certain Executive Officers and Directors of T-Mobile in the Merger Transactions (page 163)

In considering the recommendation of the T-Mobile board of directors with respect to the merger transactions, T-Mobile stockholders should be aware that the directors and executive officers of T-Mobile have certain interests in the merger transactions that may be different from, or in addition to, the interests of T-Mobile stockholders generally. The T-Mobile board of directors and the T-Mobile independent committee were aware of these interests and considered them, among other matters, in approving the business combination agreement and



 

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the transactions contemplated thereby and making the T-Mobile board of directors’ recommendation that T-Mobile stockholders approve the T-Mobile proposals.

Interests of Certain Executive Officers and Directors of Sprint in the Merger Transactions (page 168)

In considering the recommendation of the Sprint board of directors with respect to the merger transactions, Sprint stockholders should be aware that the directors and executive officers of Sprint have certain interests in the merger transactions that may be different from, or in addition to, the interests of Sprint stockholders generally. The Sprint board of directors and the Sprint independent committee were aware of these interests and considered them, among other matters, in approving the business combination agreement and the transactions contemplated thereby and making the Sprint board of directors’ recommendation that Sprint stockholders approve the Sprint proposals.

Board of Directors and Management of the Combined Company (page 176)

Board of Directors of the Combined Company

Under the business combination agreement, T-Mobile, Sprint, Deutsche Telekom and SoftBank have agreed to cooperate to take all actions necessary to cause the T-Mobile board of directors as of immediately following the effective time to consist of a total of 14 directors as follows:

 

   

Deutsche Telekom will designate nine of such 14 directors prior to the effective time. Of the nine designees, (1) at least two of the designees will be designated following consultation with SoftBank and the independent directors of T-Mobile and will qualify as an “independent director” under the listing standards of NASDAQ and the applicable rules of the SEC and (2) one of the designees will be the chief executive officer of Deutsche Telekom as of immediately prior to the effective time;

 

   

SoftBank will designate four of such 14 directors prior to the effective time. Of the four designees, (1) at least two of the designees will be designated following consultation with Deutsche Telekom and the independent directors of Sprint and will qualify as an “independent director” under the listing standards of NASDAQ and the applicable rules of the SEC, one of whom will also qualify as the “security director” (or equivalent) to the extent required by the national security agreement among Sprint, SoftBank, the Department of Justice, the Department of Homeland Security and the Department of Defense, or any successor or replacement agreement or arrangement that may be entered into, and (2) one of the designees will be the chief executive officer of SoftBank as of the date of the business combination agreement (or, if such person is unable to serve, another person designated by SoftBank); and

 

   

the remaining director will be the chief executive officer of the combined company.

In addition, immediately following the effective time, the chairperson of the T-Mobile board of directors will be the chief executive officer of Deutsche Telekom as of immediately prior to the effective time.

Management of the Combined Company

Following the completion of the merger transactions, the executive officers of T-Mobile will include John J. Legere, chief executive officer of T-Mobile, who will continue as the chief executive officer of the combined company, and G. Michael Sievert, president and chief operating officer of T-Mobile, who will continue as president and chief operating officer of the combined company. The remaining executive officers of the combined company have not yet been determined but will be individuals agreed upon before the effective time by T-Mobile and Sprint, through a process overseen by their respective chief executive officers and in consultation with Deutsche Telekom and SoftBank, cooperating in good faith.



 

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Stockholders’ and Proxy Agreements (page 179)

Pursuant to the business combination agreement, prior to the closing, T-Mobile, Deutsche Telekom and SoftBank will enter into the amended and restated stockholders’ agreement. The amended and restated stockholders’ agreement includes, among other things, provisions setting forth the rights of Deutsche Telekom and SoftBank to designate a number of individuals to be nominees for election to the T-Mobile board of directors and any committees thereof and specified actions that the combined company may not take without the prior written consent of Deutsche Telekom or SoftBank, as applicable. The amended and restated stockholders’ agreement is described in more detail in the section of this joint consent solicitation statement/prospectus entitled “Stockholders’ and Proxy Agreements—Amended and Restated Stockholders’ Agreement.”

In addition, pursuant to the business combination agreement, prior to the closing, Deutsche Telekom and SoftBank will enter into the proxy agreement. The proxy agreement will establish between Deutsche Telekom and SoftBank certain rights and obligations in respect of the shares of T-Mobile common stock that will be owned by each of Deutsche Telekom, SoftBank and their respective affiliates following the completion of the merger transactions. The proxy agreement is described in more detail in the section of this joint consent solicitation statement/prospectus entitled “Stockholders’ and Proxy Agreements—Proxy Agreement.”

Financing of the Merger Transactions (page 227)

The completion of the merger transactions is not conditioned on T-Mobile’s ability to obtain financing.

T-Mobile currently intends to repay or redeem approximately $10.3 billion of Sprint’s outstanding debt and to assume approximately $30.0 billion of Sprint’s outstanding debt in connection with the merger transactions. T-Mobile also has agreed to repay or redeem approximately $8.5 billion of existing debt provided by Deutsche Telekom. Such debt includes T-Mobile’s secured and unsecured revolving credit facilities provided by Deutsche Telekom, which are assumed to have an aggregate outstanding balance of $500 million at closing. T-Mobile expects to fund the foregoing repayment and redemptions and fees and expenses relating to the merger transactions through a combination of T-Mobile’s and Sprint’s cash on hand and the proceeds of additional debt financing. Such additional debt financing could take any of several forms or any combination of them, including borrowing under the senior secured credit facilities (as defined below) or the issuance of secured or unsecured notes by T-Mobile USA in lieu of or in addition to borrowing under the bridge facilities (as defined under “Description of Financing”).

Pursuant to the amended and restated commitment letter (as defined under “Description of Financing”), certain financial institutions party thereto have committed to provide up to $38.0 billion in debt financing to T-Mobile USA in connection with the merger transactions. On June 6, 2018, T-Mobile USA reduced the commitments under the amended and restated commitment letter by $8.0 billion, such that the remaining size of the commitments is $30.0 billion, including a $4.0 billion secured revolving credit facility (which we refer to as the “revolving credit facility”), a $7.0 billion secured term loan facility (which we refer to as the “term loan facility” and, together with the revolving credit facility, the “senior secured credit facilities”), and a $19.0 billion secured bridge loan facility (which we refer to as the “secured bridge facility”).

In addition, Deutsche Telekom and T-Mobile USA have entered into a financing matters agreement pursuant to which, among other things, T-Mobile USA has agreed to repay and terminate certain of its existing debt provided by Deutsche Telekom, including the $4.0 billion term loan facility, $2.0 billion of T-Mobile USA’s 5.300% senior notes due 2021 and $2.0 billion of T-Mobile USA’s 6.000% senior notes due 2024, as well as the $1.5 billion secured revolving credit facility of which $445 million is drawn as of March 31, 2018, and $1.0 billion unsecured revolving credit facility of which $0 is drawn as of March 31, 2018. T-Mobile USA and Deutsche Telekom have also agreed, upon the closing of the merger transactions, to amend the $1.25 billion of T-Mobile USA’s 5.125% senior notes due 2025 and $1.25 billion of T-Mobile USA’s 5.375% senior notes due 2027 to change the maturity dates thereof to April 15, 2021 and April 15, 2022, respectively.



 

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For a more complete description of the financing of the merger transactions, see “Description of Financing.”

Regulatory Approvals Required for the Merger Transactions (page 176)

Required Regulatory Consents

Under the business combination agreement, it is a condition to each party’s obligation to effect the merger transactions that (1) the waiting period (and any extension thereof) applicable to the merger transactions under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (which we refer to as the “HSR Act”) has been terminated or has expired and (2) all consents required to be obtained from the Federal Communications Commission (which we refer to as the “FCC”) in connection with the transactions contemplated by the business combination agreement are obtained. On May 24, 2018, each of T-Mobile and Sprint filed a Pre-Merger Notification and Report Form pursuant to the HSR Act with the U.S. Federal Trade Commission and the Antitrust Division of the Department of Justice, and on June 18, 2018, T-Mobile and Sprint filed the required applications with the FCC.

Other Governmental Consents

Under the business combination agreement, it is a condition to each party’s obligation to effect the merger transactions that (1) all consents required to be obtained from any state and territorial public utility commissions (which we refer to as “PUCs”) or similar state and foreign regulatory bodies in connection with the transactions contemplated by the business combination agreement are obtained, (2) the Committee on Foreign Investment in the United States (which we refer to as “CFIUS”) has completed its review and, where applicable, investigation under the Defense Production Act of 1950, as amended, including amendments made by the Foreign Investment and National Security Act of 2007, and the regulations promulgated by CFIUS thereunder (which we refer to collectively as “Section 721”) without unresolved national security concerns with respect to the transactions contemplated by the business combination agreement, and (3) the Defense Security Service (which we refer to as “DSS”) has approved a plan to operate pursuant to a foreign ownership, control or influence requirements (“FOCI”) mitigation agreement those National Industrial Security Program Operating Manual covered activities of T-Mobile, Sprint and their respective subsidiaries that DSS determines are necessary to be operated pursuant to such an agreement, or has accepted a commitment from the parties to implement such FOCI mitigation agreement following the closing.

T-Mobile and Sprint can provide no assurance that the required regulatory and other governmental consents will be obtained. In addition, even if all required regulatory and other governmental consents are obtained and the closing conditions are satisfied, no assurance can be given as to the terms, conditions and timing of the approvals or clearances.

The required regulatory and other governmental consents are discussed under “The Merger Transactions—Regulatory Approvals Required for the Merger Transactions.

No Appraisal Rights (page 186)

Stockholders are not entitled to appraisal rights under Delaware law in connection with the merger transactions. See “No Appraisal Rights.”

No Solicitation; Third-Party Acquisition Proposals (page 198)

Under the business combination agreement, each of T-Mobile, Deutsche Telekom, Sprint and SoftBank has agreed that it will not (and will cause its controlled affiliates and its officers and directors not to), and that it will



 

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use reasonable best efforts to cause its other employees and representatives retained by it or any of its controlled affiliates not to, directly or indirectly:

 

    solicit, initiate or knowingly encourage, or knowingly take any other action designed to facilitate, any inquiries regarding, or the making of, any proposal the consummation of which would constitute an alternative transaction (as defined under “The Business Combination Agreement—Covenants and Agreements—No Solicitation; Third-Party Acquisition Proposals”);

 

    participate in any discussions or negotiations, or cooperate in any way with any person, with respect to any inquiries regarding, or the making of, any proposal the consummation of which would constitute an alternative transaction; or

 

    approve, endorse or recommend any proposal the consummation of which would constitute, or enter into any agreement, commitment, arrangement or understanding providing for, contemplating or otherwise in connection with, an alternative transaction.

T-Mobile and Deutsche Telekom are required to promptly (and in no event later than 48 hours after receipt) advise Sprint, and Sprint and SoftBank are required to promptly (and in no event later than 48 hours after receipt) advise T-Mobile, in writing of the receipt of any inquiry regarding, or the making of, any proposal the consummation of which would constitute an alternative transaction, including the identity of the person making or submitting such inquiry or proposal, a summary of all of the material terms thereof and copies of all written materials relating thereto, and to keep Sprint or T-Mobile, as applicable, informed on a reasonably prompt basis regarding the status and material details of any such inquiry or proposal. In addition, to the extent any material non-public information, documents or materials are made available by or on behalf of T-Mobile or Sprint, as applicable, to any third party in response to any alternative transaction pursuant to the fiduciary duties of the T-Mobile board of directors or the Sprint board of directors, as applicable, all such information, documents and materials must promptly (and in any event within 48 hours) be made available to Sprint and SoftBank, or T-Mobile and Deutsche Telekom, as applicable.

Change of Recommendation (page 200)

Change of Recommendation of the T-Mobile Board of Directors

T-Mobile has agreed to include the recommendation of the T-Mobile board of directors to T-Mobile stockholders in favor of the approval of the T-Mobile charter amendment and the T-Mobile share issuance in this joint consent solicitation statement/prospectus, subject to the fiduciary duties of the T-Mobile board of directors under applicable law.

Notwithstanding the foregoing, prior to obtaining the T-Mobile stockholder approval, the T-Mobile board of directors is permitted to (1) disclose to T-Mobile stockholders a position contemplated by Rules 14d-9 and 14e-2(a) under the Exchange Act or issue a “stop, look and listen” statement to T-Mobile stockholders pursuant to Rule 14d-9(f) under the Exchange Act, (2) make any disclosure to T-Mobile stockholders and (3) change or withdraw the T-Mobile board recommendation, but, in the case of (2) or (3), solely to the extent any such disclosure, change or withdrawal is required for the T-Mobile board of directors to carry out its fiduciary duties under applicable law. However, in no event will any such disclosure, change or withdrawal affect the validity and enforceability of the business combination agreement or the Deutsche Telekom support agreement, including the applicable parties’ obligations to complete the transactions contemplated by the business combination agreement or deliver (or cause to be delivered) the Deutsche Telekom written consent. Therefore, Deutsche Telekom Holding will be required to deliver the Deutsche Telekom written consent, which will constitute the T-Mobile stockholder approval, even if the T-Mobile board of directors changes or withdraws the T-Mobile board recommendation.



 

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Change of Recommendation of the Sprint Board of Directors

Sprint has agreed to include the recommendation of the Sprint board of directors to Sprint stockholders in favor of the adoption of the business combination agreement in this joint consent solicitation statement/prospectus, subject to the fiduciary duties of the Sprint board of directors under applicable law.

Notwithstanding the foregoing, prior to obtaining the Sprint stockholder approval, the Sprint board of directors is permitted to (1) disclose to Sprint stockholders a position contemplated by Rules 14d-9 and 14e-2(a) under the Exchange Act or issue a “stop, look and listen” statement to Sprint stockholders pursuant to Rule 14d-9(f) under the Exchange Act, (2) make any disclosure to Sprint stockholders and (3) change or withdraw the Sprint board recommendation, but, in the case of (2) or (3), solely to the extent any such disclosure, change or withdrawal is required for the Sprint board of directors to carry out its fiduciary duties under applicable law. However, in no event will any such disclosure, change or withdrawal affect the validity and enforceability of the business combination agreement or the SoftBank support agreement, including the applicable parties’ obligations to complete the transactions contemplated by the business combination agreement or deliver (or cause to be delivered) the SoftBank written consent. Therefore, Starburst and Galaxy will be required to deliver the SoftBank written consent, which will constitute the Sprint stockholder approval, even if the Sprint board of directors changes or withdraws the Sprint board recommendation.

Conditions to the Completion of the Merger Transactions (page 204)

Under the business combination agreement, the respective obligations of each party to effect the merger transactions are subject to the satisfaction or, to the extent permitted by applicable law, waiver on or prior to the closing date of each of the following conditions:

 

   

approval by T-Mobile stockholders of the T-Mobile proposals and by Sprint stockholders of the adoption of the business combination agreement;

 

   

receipt of the required regulatory consents and other governmental consents as described under “The Merger TransactionsRegulatory Approvals Required for the Merger Transactions”;

 

   

the absence of any law, order or injunction entered, enacted, promulgated, enforced or issued by a court or other governmental entity of competent jurisdiction preventing the completion of the merger (each of which we refer to as a “restraint”);

 

   

the effectiveness of the registration statement on Form S-4 of which this joint consent solicitation statement/prospectus forms a part;

 

   

the approval for listing on NASDAQ of the shares of T-Mobile common stock to be issued in the merger transactions, subject to official notice of issuance; and

 

   

specified minimum credit ratings for T-Mobile USA on the closing date of the merger transactions (after giving effect to the merger) from at least two of three specified credit rating agencies, subject to certain qualifications.

Under the business combination agreement, the respective obligations of T-Mobile, Merger Sub, Merger Company and the Deutsche Telekom Parties to effect the merger transactions are also subject to the satisfaction or, to the extent permitted by applicable law, waiver of the following additional conditions:

 

   

the accuracy of the representations and warranties of Sprint and the SoftBank Parties, subject to specified materiality standards;

 

   

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the receipt by T-Mobile of an officer’s certificate from Sprint to the effect that the conditions in the preceding two bullet points are satisfied;

 

   

the execution and delivery by SoftBank of (1) the amended and restated stockholders’ agreement and (2) the proxy agreement; and

 

   

if the HoldCo mergers are to be completed, the receipt by T-Mobile of the applicable tax opinion described under “The Business Combination Agreement—Conditions to the Completion of the Merger Transactions.

Under the business combination agreement, the respective obligations of Sprint and the SoftBank Parties to effect the merger transactions are also subject to the satisfaction or, to the extent permitted by applicable law, waiver of the following additional conditions:

 

   

the accuracy of the representations and warranties of T-Mobile, Merger Sub, Merger Company and the Deutsche Telekom Parties, subject to specified materiality standards;

 

   

the performance by each of T-Mobile, Merger Sub, Merger Company and the Deutsche Telekom Parties in all material respects of all obligations required to be performed by it under the business combination agreement at or prior to the closing date;

 

   

the receipt by Sprint of an officer’s certificate from T-Mobile to the effect that the conditions in the preceding two bullet points are satisfied;

 

   

the execution and delivery by T-Mobile and Deutsche Telekom (as applicable) of (1) the amended and restated stockholders’ agreement, (2) the proxy agreement and (3) the license agreement amendment (as defined under “The Merger Transactions—Other Agreements—Trademark License”); and

 

   

if the HoldCo mergers are to be completed, the receipt by Sprint of the applicable tax opinion described under “The Business Combination Agreement—Conditions to the Completion of the Merger Transactions.”

Termination of the Business Combination Agreement; Payment Amount (page 207)

Termination of the Business Combination Agreement

The business combination agreement may be terminated at any time prior to the HoldCo mergers effective time as follows:

 

   

by mutual written consent of T-Mobile and Sprint;

 

   

by either T-Mobile or Sprint, if the merger transactions have not been completed by April 29, 2019 (subject to extension to July 29, 2019, and further extension to October 29, 2019, if the only conditions not satisfied or waived (other than those conditions that by their terms are to be satisfied at the closing, which conditions are then capable of being satisfied) are conditions relating to the required regulatory and other governmental consents and the absence of restraints, and subject to a marketing period as described under “The Business Combination Agreement—Closing and Effective Time of the Merger Transactions”);

 

   

by either T-Mobile or Sprint, if (1) any restraint is in effect and has become final and nonappealable or (2) any authorization or consent from a governmental entity that must be obtained to satisfy the conditions regarding required regulatory and other governmental consents (a) has been denied and such denial has become final and nonappealable or (b) requires as a final and nonappealable condition to such authorization or consent that Sprint, T-Mobile, SoftBank or Deutsche Telekom take any action that would or would reasonably be expected to result in a regulatory material adverse condition (provided, in each case, that the business combination agreement may not be so terminated by a party whose material breach of its obligations under the provisions of the business combination agreement



 

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described under “The Business Combination Agreement—Covenants and Agreements—Reasonable Best Efforts; Regulatory Filings and Other Actions” has been the principal cause of, or principally resulted in, such restraint or denial); and

 

   

by either T-Mobile or Sprint, if there has been a breach or failure to perform in any material respect by Sprint, on the one hand, or T-Mobile, on the other hand, of its representations, warranties, covenants or other agreements contained in the business combination agreement, which breach or failure to perform would result in the conditions to the other parties’ obligation to complete the merger transactions not being satisfied (and such breach is incapable of being cured or is not cured within 60 days of written notice thereof), so long as the terminating party is not then in material breach of any representation, warranty, covenant or other agreement contained in the business combination agreement.

The business combination agreement also provides for the following termination rights:

 

   

termination by T-Mobile, if any of the SoftBank Parties or SoftBank UK fails to execute and deliver to T-Mobile the SoftBank support agreement within one business day following the execution of the business combination agreement; and

 

   

termination by Sprint, if either Deutsche Telekom Party fails to execute and deliver to Sprint the Deutsche Telekom support agreement within one business day following the execution of the business combination agreement.

However, subsequent to the execution of the business combination agreement, the SoftBank Parties and SoftBank UK executed and delivered to T-Mobile the SoftBank support agreement, and the Deutsche Telekom Parties executed and delivered to Sprint the Deutsche Telekom support agreement, in each case within one business day following the execution of the business combination agreement.

Payment Amount

The business combination agreement requires T-Mobile to pay Sprint an amount equal to $600 million (which we refer to as the “payment amount”) if all of the following occur: (1) T-Mobile terminates the business combination agreement because the merger transactions have not been completed by the outside date; (2) at the time of such termination, all of the conditions to the respective obligations of each party to effect the merger transactions have been satisfied or waived, except for the condition related to the specified minimum credit ratings of T-Mobile USA on the closing date of the merger (after giving effect to the merger), and all of the conditions to the obligations of T-Mobile, Merger Sub, Merger Company and the Deutsche Telekom Parties to effect the merger transactions would be satisfied at the time of such termination if the closing were held at such time; and (3) Sprint has provided a written certification to T-Mobile that it is ready, willing and able to complete the merger on the date required by the business combination agreement at the time of such termination.

Notwithstanding the foregoing, T-Mobile will have no obligation to pay the payment amount if (1) on the date of the termination of the business combination agreement as described above, Sprint does not have the following three credit ratings: (A) a corporate family rating (CFR) of at least “B2” from Moody’s, (B) a long-term issuer credit rating of at least “B” from S&P, and (C) a long-term issuer credit rating of at least “B+” from Fitch (unless Sprint does not have any such credit rating due to a change in credit ratings or credit outlook generally affecting the industry in which Sprint operates); or (2) Sprint or any of the SoftBank Parties has breached in any material respect any of its representations, warranties, covenants or agreements set forth in the business combination agreement and such breach has impacted any of the credit ratings described in the bullet point above or the ability of T-Mobile to obtain the specified minimum credit ratings.



 

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Transaction-Related Costs (page 178)

T-Mobile and Sprint currently estimate that, upon the effective time, transaction-related costs incurred by the combined company, including fees and expenses relating to the merger transactions, will be approximately $[    ]. The business combination agreement provides for the allocation of such costs as described under “The Business Combination Agreement—Fees and Expenses.”

Accounting Treatment (page 179)

T-Mobile and Sprint prepare their financial statements in accordance with generally accepted accounting principles in the United States (which we refer to as “GAAP”). The merger transactions will be accounted for in accordance with Financial Accounting Standards Board (which we refer to as “FASB”) Accounting Standards Codification (which we refer to as “ASC”) Topic 805, Business Combinations, with T-Mobile considered as the accounting acquirer and Sprint as the accounting acquiree. Accordingly, T-Mobile will measure the assets acquired and liabilities assumed at their fair values, including net tangible and identifiable intangible assets acquired and liabilities assumed as of the closing, with any excess purchase price over those fair values being recorded as goodwill.

The accounting policies used in the preparation of the unaudited pro forma condensed combined financial information included in this joint consent solicitation statement/prospectus are those set out in T-Mobile’s audited consolidated financial statements as of and for the year ended December 31, 2017 and interim condensed consolidated financial statements for the quarter ended March 31, 2018. Certain adjustments are necessary to conform Sprint’s financial statements to the accounting policies used by T-Mobile, which are described in the pro forma condensed combined financial information. T-Mobile is still in the process of evaluating the pro forma adjustments necessary to conform the accounting policies of Sprint to those of T-Mobile and expects further adjustments may be necessary as T-Mobile conducts a more detailed review of Sprint’s accounting policies.

Certain U.S. Federal Income Tax Consequences of the Merger (page 281)

It is intended that the merger will qualify as a “reorganization” within the meaning of Section 368(a) of the Code, and that U.S. holders (as defined under “Material U.S. Federal Income Tax Consequences of the Merger”) of Sprint common stock will not recognize gain or loss, except with respect to the receipt of cash in lieu of fractional shares of T-Mobile common stock. Only in the event that the HoldCo mergers are consummated is the closing of the merger conditioned upon receipt of an opinion of counsel to the effect that the merger will qualify as a “reorganization”. Otherwise, the merger will be completed without the receipt of any tax opinion from counsel. Furthermore, neither T-Mobile nor Sprint intends to request a ruling from the IRS regarding the United States federal income tax consequences of the merger. Accordingly, there can be no assurance that the merger will so qualify. See “Material U.S. Federal Income Tax Consequences of the Merger.” Sprint stockholders should consult their own tax advisors.

Comparison of Stockholders’ Rights (page 258)

Upon completion of the merger transactions, Sprint stockholders will become stockholders of T-Mobile, as the combined company, and their rights will be governed by Delaware law and the governing corporate documents of the combined company as amended and restated in connection with the completion of the merger transactions, the forms of which are attached as Annex D and Annex E to this joint consent solicitation statement/prospectus, as well as the amended and restated stockholders’ agreement in effect at the effective time, the form of which is attached as Annex F to this joint consent solicitation statement/prospectus. The differences between the governing corporate documents of Sprint and T-Mobile that are currently in effect and the governing documents of T-Mobile that will be in effect immediately following the completion of the merger transactions are described in detail in “Comparison of Stockholders’ Rights.”



 

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Risk Factors (page 34)

In deciding whether to approve the T-Mobile proposals or the Sprint proposals, as applicable, you should read carefully this entire joint consent solicitation statement/prospectus, including the documents incorporated by reference herein and the Annexes hereto, and in particular, you should read the “Risk Factors” section.

Information about the Companies (page 53)

T-Mobile

T-Mobile US, Inc.

12920 SE 38th Street

Bellevue, Washington 98006-1350

Phone: (425) 378-4000

T-Mobile is a Delaware corporation formed in 2013 through the combination of T-Mobile USA and MetroPCS Communications, Inc. (which we refer to as “MetroPCS”). T-Mobile USA was a Delaware corporation formed in 1994 as VoiceStream Wireless PCS, a subsidiary of Western Wireless Corporation that was spun off in 1999, acquired by Deutsche Telekom in 2001 and renamed T-Mobile USA in 2002. T-Mobile is redefining the way consumers and businesses buy wireless services through leading product and service innovation. T-Mobile introduced its Un-carrier strategy in 2013 and has since announced 14 signature initiatives that have disrupted the wireless communication services industry by ending annual service contracts, overages, unpredictable international roaming fees, data buckets and more. T-Mobile’s advanced nationwide 4G LTE network provides wireless services to 74.0 million customers as of March 31, 2018. T-Mobile provides service, devices and accessories across its flagship brands, T-Mobile and MetroPCS, and through its owned and operated retail stores, third-party distributors and websites.

Merger Company

Huron Merger Sub LLC

c/o T-Mobile US, Inc.

12920 SE 38th Street

Bellevue, Washington 98006-1350

Phone: (425) 378-4000

Merger Company is a Delaware limited liability company and a direct wholly owned subsidiary of T-Mobile. Merger Company was formed on April 26, 2018 for the purpose of entering into the business combination agreement and effecting the transactions contemplated by the agreement. As of the date of the business combination agreement, Merger Company has not carried on any business, conducted any operations or incurred any liabilities or obligations other than the execution of the business combination agreement, the performance of its obligations thereunder and matters ancillary thereto.

Merger Sub

Superior Merger Sub Corporation

c/o T-Mobile US, Inc.

12920 SE 38th Street

Bellevue, Washington 98006-1350

Phone: (425) 378-4000

Merger Sub is a Delaware corporation, a direct wholly owned subsidiary of Merger Company and an indirect wholly owned subsidiary of T-Mobile. Merger Sub was incorporated on April 26, 2018 for the purpose of entering into the business combination agreement and effecting the transactions contemplated by the agreement. As of the date of the business combination agreement, Merger Sub has not carried on any business,



 

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conducted any operations or incurred any liabilities or obligations other than the execution of the business combination agreement, the performance of its obligations thereunder and matters ancillary thereto.

Sprint

Sprint Corporation

6200 Sprint Parkway

Overland Park, Kansas 66251

Phone: (877) 564-3166

Sprint, originally named Starburst II, Inc. (which we refer to as “Starburst II” in certain contexts), was incorporated in 2012 under the laws of Delaware and is a holding company with operations conducted by its subsidiaries. In 2013, SoftBank and certain of its wholly owned subsidiaries completed a merger with Sprint Nextel Corporation (which we refer to as the “SoftBank-Sprint merger”). As a result of the SoftBank-Sprint merger, Sprint became the parent company of Sprint Nextel Corporation, which was renamed Sprint Communications, Inc. (which we refer to as “Sprint Communications”). Sprint is a communications company that offers a comprehensive range of wireless and wireline communications products and services designed to meet the needs of not only individual consumers, but also businesses, government subscribers, and resellers. Its services are provided through its ownership of extensive wireless networks, an all-digital global wireline network and a Tier 1 internet backbone. Sprint offers wireless and wireline services to subscribers in all 50 states, Puerto Rico and the United States Virgin Islands under the Sprint corporate brand, which includes its retail brands of Sprint®, Boost Mobile®, Virgin Mobile® and Assurance Wireless® on Sprint’s wireless networks utilizing various technologies including 3G CDMA and 4G LTE. Sprint is headquartered in Overland Park, Kansas.

Starburst

Starburst I, Inc.

One Circle Star Way

San Carlos, CA 94070

Phone: (650) 562-8100

Starburst, incorporated in Delaware, is an indirect wholly owned subsidiary of SoftBank and a direct wholly owned subsidiary of SoftBank UK. It was formed in connection with SoftBank’s acquisition of Sprint Nextel Corporation for the purpose of holding SoftBank’s interest in Sprint.

Galaxy

Galaxy Investment Holdings, Inc.

One Circle Star Way

San Carlos, CA 94070

Phone: (650) 562-8100

Galaxy, incorporated in Delaware, is an indirect wholly owned subsidiary of SoftBank and a direct wholly owned subsidiary of SoftBank UK. It was formed for the purpose of holding SoftBank’s indirect interest in Sprint not held by Starburst.

Deutsche Telekom

Deutsche Telekom AG

Friedrich-Ebert-Allee 140

53113 Bonn, Germany

Phone: +49-228-181-0



 

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Deutsche Telekom is one of the world’s leading telecommunications companies, with approximately 170 million mobile customers, 28 million fixed-network lines and 19 million broadband lines. Deutsche Telekom provides fixed-network/broadband, mobile communications, internet and internet protocol television products and services for consumers, and information and communication technology solutions for business and corporate customers. Deutsche Telekom is headquartered in Bonn, Germany, with a presence in more than 50 countries, including Germany and the United States.

Deutsche Telekom Holding

Deutsche Telekom Holding B.V.

Stationsplein 8K, 6221 BT

Maastricht, The Netherlands

Phone: +31 437999032

Deutsche Telekom Holding is a limited liability company (besloten vennootschap met beperkte aansprakelijkheid) organized and existing under the laws of the Netherlands and an indirect wholly owned subsidiary of Deutsche Telekom. As a result of an internal reorganization of Deutsche Telekom’s subsidiaries on December 31, 2013, Deutsche Telekom Holding directly holds the T-Mobile common stock beneficially owned by Deutsche Telekom. Deutsche Telekom Holding’s principal business purpose is to incorporate, participate and supervise companies belonging to the Deutsche Telekom group and their relevant businesses.

SoftBank

SoftBank Group Corp.

1-9-1, Higashi-Shimbashi Minato-ku

Tokyo 105-7303 Japan

+81-3-6889-2000

SoftBank is a Japanese kabushiki kaisha, originally organized in 1981. SoftBank is a pure holding company that engages in a range of businesses in the information industry, including mobile communications, broadband infrastructure, fixed-line telecommunications and internet culture. SoftBank is headquartered in Tokyo, Japan, where it seeks to use the information revolution to contribute to the wellbeing of people and society.



 

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RISK FACTORS

In addition to the other information contained in or incorporated by reference into this joint consent solicitation statement/prospectus, including the matters addressed under the caption “Cautionary Statement Regarding Forward-Looking Statements,” T-Mobile stockholders should carefully consider the following risks in deciding whether to approve the T-Mobile proposals, and Sprint stockholders should carefully consider the following risk factors in deciding whether to approve the Sprint proposals. You should read this joint consent solicitation statement/prospectus and its Annexes and the other documents incorporated by reference into this joint consent solicitation statement/prospectus carefully and in their entirety. See “Where You Can Find More Information.”

Risks Related to the Merger Transactions

Because the market price of T-Mobile common stock will fluctuate, Sprint stockholders cannot be sure of the value of the shares of T-Mobile common stock they will receive in the merger transactions. In addition, because the exchange ratio is fixed, the number of shares of T-Mobile common stock to be received by holders of Sprint common stock in the merger transactions will not change between now and the time the merger transactions are completed to reflect changes in the trading prices of T-Mobile common stock or Sprint common stock.

As a result of the merger transactions, each share of Sprint common stock issued and outstanding immediately prior to the effective time (other than shares held directly by Sprint as treasury stock and shares held by the SoftBank surviving entity) will be automatically converted into the right to receive 0.10256 shares of T-Mobile common stock. The exchange ratio is fixed and will not be adjusted prior to the completion of the merger transactions to account for changes in the trading prices of T-Mobile common stock or Sprint common stock or, except as otherwise set forth in the business combination agreement, other factors. The exact value of the consideration to Sprint stockholders will therefore depend on the price per share of T-Mobile common stock at the completion of the merger transactions, which may be greater than, less than or the same as the price per share of T-Mobile common stock at the time of entry into the business combination agreement or the date of this joint consent solicitation statement/prospectus.

As of [                ], 2018, and assuming that each share of T-Mobile common stock will have a value equal to the closing price of a share of T-Mobile common stock on NASDAQ on such date, the implied value of the exchange ratio to Sprint stockholders is approximately $[                ] per share. The market price of T-Mobile common stock is subject to general price fluctuations in the market for publicly traded equity securities and has experienced volatility in the past. Stock price changes may result from a variety of factors, including general market and economic conditions, changes in the businesses, operations and prospects of T-Mobile, and an evolving regulatory landscape. Market assessments of the benefits of the merger transactions and the likelihood that the merger transactions will be completed, as well as general and industry specific market and economic conditions, may also impact the market price of T-Mobile common stock. Many of these factors are beyond T-Mobile’s and Sprint’s control. You should obtain current market price quotations for T-Mobile common stock; however, as noted above, the prices at the effective time may be greater than, the same as or less than such price quotations.

The market price for T-Mobile common stock following the closing may be affected by factors different from those that historically have affected or currently affect T-Mobile common stock and Sprint common stock.

Upon completion of the merger transactions, holders of shares of Sprint common stock will receive shares of T-Mobile common stock. The combined company’s business and financial position will differ from the business and financial position of T-Mobile and Sprint before the completion of the merger and, accordingly, the results of operations of the combined company will be affected by some factors that are different from those currently affecting the results of operations of T-Mobile and those currently affecting the results of operations of

 

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Sprint. Accordingly, the market price and performance of T-Mobile common stock is likely to be different from the performance of Sprint common stock in the absence of the merger transactions. In addition, general fluctuations in stock markets could have a material adverse effect on the market for, or liquidity of, T-Mobile common stock, regardless of T-Mobile’s actual operating performance. For a discussion of the businesses of T-Mobile and Sprint and some important factors to consider in connection with those businesses, see the documents incorporated by reference in this joint consent solicitation statement/prospectus and referred to under “Where You Can Find More Information.”

The closing of the merger transactions is subject to a number of conditions, including the receipt of approvals from various governmental entities, which may not approve the merger transactions, may delay the approvals for, or may impose conditions or restrictions on, jeopardize or delay completion of, or reduce or delay the anticipated benefits of, the merger transactions, and if these conditions are not satisfied or waived, the merger transactions will not be completed.

The completion of the merger transactions is subject to a number of conditions, including, among others, obtaining certain governmental authorizations, consents, orders or other approvals, including the expiration or termination of applicable waiting periods under the HSR Act, the receipt of required approvals from the FCC and any PUCs or similar state and foreign regulatory bodies, clearance by CFIUS and approval by DSS, and the absence of any injunction prohibiting the merger transactions or any legal requirements enacted by a court or other governmental entity preventing the completion of the merger transactions. See “The Merger Transactions—Regulatory Approvals Required for the Merger Transactions.” There is no assurance that these required authorizations, consents, orders or other approvals will be obtained or that they will be obtained in a timely manner, or whether they will be subject to required actions, conditions, limitations or restrictions on the combined company’s business, operations or assets. If any such required actions, conditions, limitations or restrictions are imposed, they may jeopardize or delay completion of the merger transactions, reduce or delay the anticipated benefits of the merger transactions or allow the parties to terminate the business combination agreement, which could result in a material adverse effect on T-Mobile’s, Sprint’s or the combined company’s business, financial condition or operating results. In addition, the completion of the merger transactions is also subject to T-Mobile USA having specified minimum credit ratings on the closing date of the merger transactions (after giving effect to the merger) from at least two of three specified credit rating agencies, subject to certain qualifications. In the event that T-Mobile terminates the business combination agreement in connection with a failure to satisfy the closing condition related to the specified minimum credit ratings, then in certain circumstances, T-Mobile may be required to pay Sprint an amount equal to $600 million. If the merger transactions are not completed by April 29, 2019 (subject to extension to July 29, 2019, and further extension to October 29, 2019, if the only conditions not satisfied or waived (other than those conditions that by their terms are to be satisfied at the closing, which conditions are then capable of being satisfied) are conditions relating to the required regulatory and other governmental consents and the absence of restraints, and subject to the marketing period), either T-Mobile or Sprint may terminate the business combination agreement. The business combination agreement may also be terminated if the other conditions to closing are not satisfied, and T-Mobile and Sprint may also mutually decide to terminate the business combination agreement at any time prior to the HoldCo mergers effective time.

The financing of the merger transactions is not assured.

Although T-Mobile has received debt financing commitments from lenders to provide various bridge and other credit facilities to finance the merger transactions, the obligation of the lenders to provide these facilities is subject to a number of conditions. Furthermore, each of T-Mobile and Sprint may seek to modify its existing financing arrangements in connection with the merger transactions, subject to the terms of the business combination agreement, and T-Mobile and Sprint do not currently have commitments from lenders providing their existing financing arrangements for these modifications. Even if T-Mobile and Sprint are able to obtain financing or modify their existing financing arrangements, the terms of such new or modified financing arrangements may not be available to T-Mobile or Sprint on favorable terms, and T-Mobile and Sprint may incur significant costs in connection with entering into such financing. Accordingly, financing for the merger transactions may not be obtained on the expected terms or at all.

 

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In particular, T-Mobile has received commitments for a $19.0 billion secured bridge loan facility. T-Mobile expects to conduct one or more secured notes offerings to reduce commitments under the secured bridge facility. However, there can be no assurance that T-Mobile will be able to issue the secured notes or other long-term financing on terms it finds acceptable or at all, in which case T-Mobile may choose to borrow under the secured bridge facility. Accordingly, the costs of financing for the merger transactions may be higher than expected.

Credit rating downgrades could adversely affect the businesses, cash flows, financial condition and operating results of T-Mobile, Sprint and the combined company.

The credit ratings of T-Mobile and Sprint impact the cost and availability of future borrowings, and, as a result, cost of capital. T-Mobile’s and Sprint’s current ratings reflect each rating agency’s opinion of the company’s financial strength, operating performance and ability to meet its debt obligations or, following the completion of the merger transactions, obligations to the combined company’s obligors. Each rating agency reviews these ratings periodically and there can be no assurance that such ratings will be maintained in the future. A downgrade in the rating of either or both companies could adversely affect the businesses, cash flows, financial condition and operating results of T-Mobile, Sprint and, following the merger transactions, the combined company.

T-Mobile and Sprint directors and officers may have interests in the merger transactions different from the interests of T-Mobile stockholders and Sprint stockholders.

Certain of the directors and executive officers of T-Mobile and Sprint negotiated the terms of the business combination agreement. T-Mobile and Sprint directors and executive officers may have interests in the merger transactions that are different from, or in addition to, those of T-Mobile stockholders and Sprint stockholders, respectively. These interests include, but are not limited to, the continued service of certain directors of T-Mobile and Sprint as directors of the combined company, the continued employment of certain executive officers of T-Mobile and Sprint by the combined company, the treatment in the merger transactions of Sprint stock options, Sprint time-based restricted stock units, Sprint performance-based restricted stock units, the treatment of the Sprint Employees Stock Purchase Plan and severance and other rights held by Sprint directors and executive officers, severance agreements and amended employment terms and other rights held by T-Mobile directors and executive officers, and provisions in the business combination agreement regarding continued indemnification of and advancement of expenses to T-Mobile and Sprint directors and officers. T-Mobile stockholders and Sprint stockholders should be aware of these interests when they consider the recommendation of the T-Mobile board of directors in favor of the T-Mobile proposals and the recommendation of the Sprint board of directors in favor of the Sprint proposals, respectively.

The members of the T-Mobile board of directors and the T-Mobile independent committee were aware of and considered these interests, among other matters, in evaluating the business combination agreement and the transactions contemplated thereby, and in making the T-Mobile board of directors’ recommendation that that T-Mobile stockholders approve the T-Mobile proposals. The interests of T-Mobile directors and executive officers are described in more detail in the section of this joint consent solicitation statement/prospectus entitled “The Merger Transactions—Interests of Certain Executive Officers and Directors of T-Mobile in the Merger Transactions.”

The members of the Sprint board of directors and the Sprint independent committee were aware of and considered these interests, among other matters, in evaluating the business combination agreement and the transactions contemplated thereby, and in making the Sprint board of directors’ recommendation that Sprint stockholders approve the Sprint proposals. The interests of Sprint directors and executive officers are described in more detail in the section of this joint consent solicitation statement/prospectus entitled “The Merger Transactions—Interests of Certain Executive Officers and Directors of Sprint in the Merger Transactions.”

 

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The governance arrangements of the combined company will be different from the current governance arrangements of each of T-Mobile and Sprint.

Upon completion of the merger transactions, the rights of former Sprint stockholders who receive shares of T-Mobile common stock, and the rights of T-Mobile stockholders who continue to hold shares of T-Mobile common stock, will be governed by the T-Mobile certificate of incorporation and the bylaws of T-Mobile, in each case as amended and restated in accordance with the business combination agreement, and by Delaware law. You should carefully review the forms of the T-Mobile certificate of incorporation and the bylaws of T-Mobile to be in effect at the effective time, copies of the forms of which are attached as Annex D and Annex E, respectively, to this joint consent solicitation statement/prospectus. By becoming a stockholder in T-Mobile, former holders of Sprint common stock are deemed to have notice of and to have consented to the provisions of the T-Mobile certificate of incorporation and the bylaws of T-Mobile, including with respect to the provisions that are described elsewhere in this joint consent solicitation statement/prospectus. See “Comparison of Stockholders’ Rights.”

The governance arrangements of the combined company are different from the existing governance arrangements of each of T-Mobile and Sprint. Deutsche Telekom is currently the controlling stockholder of T-Mobile, and SoftBank is currently the controlling stockholder of Sprint. Following the completion of the merger transactions, Deutsche Telekom will retain the power to vote a majority of the T-Mobile common stock, and T-Mobile will therefore continue to be a “controlled company” for purposes of NASDAQ rules; however, the combined company will have the governance arrangements set forth in the business combination agreement and the other agreements described elsewhere in this joint consent solicitation statement/prospectus, and the combined company will be governed by the T-Mobile certificate of incorporation and the bylaws of T-Mobile, in each case as amended and restated in accordance with the business combination agreement, copies of the forms of which are attached as Annex D and Annex E, respectively, to this joint consent solicitation statement/prospectus, and T-Mobile, Deutsche Telekom and SoftBank will enter into the amended and restated stockholders’ agreement, a copy of the form of which is attached as Annex F to this joint consent solicitations statement/prospectus. See “Comparison of Stockholders Rights” and “Stockholders and Proxy Agreements.”

Following the merger transactions, the composition of the combined company board of directors will be different than the composition of the current T-Mobile board of directors or the current Sprint board of directors.

The T-Mobile board of directors currently consists of 12 directors and the Sprint board of directors currently consists of ten directors. Upon completion of the merger transactions, the T-Mobile board of directors, which will be the board of directors of the combined company, will consist of 14 directors, including nine directors designated by Deutsche Telekom, four directors designated by SoftBank and the chief executive officer of the combined company. See “The Merger Transactions—Board of Directors and Management of the Combined Company” and “Stockholders’ and Proxy Agreements.” This new composition of the T-Mobile board of directors may affect the future decisions of the combined company.

Stockholders will not be entitled to appraisal rights in connection with the merger transactions.

Appraisal rights are statutory rights that, if applicable under law, enable stockholders to dissent from an extraordinary transaction, such as a merger, and to demand that the corporation pay the fair value for their shares as determined by a court in a judicial proceeding instead of receiving the consideration offered to stockholders in connection with the extraordinary transaction. Under the DGCL, stockholders do not have appraisal rights if the shares of stock they hold, as of the record date for determination of stockholders entitled to vote at the meeting of stockholders to act upon a merger, are either (i) listed on a national securities exchange or (ii) held of record by more than 2,000 holders, unless the stockholders receive in exchange for their shares anything other than shares of stock of the surviving or resulting corporation (or depositary receipts in respect thereof), or of any other corporation that is publicly listed or held by more than 2,000 holders of record, cash in lieu of fractional shares or

 

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fractional depositary receipts described above or any combination of the foregoing. Because T-Mobile common stock is listed on NASDAQ, a national securities exchange, and because Sprint stockholders will receive in the merger transactions only shares of T-Mobile common stock, which will be publicly listed on NASDAQ upon the effective time, and cash in lieu of fractional shares, stockholders will not be entitled to appraisal rights in connection with the merger transactions.

The opinions of T-Mobile’s and Sprint’s respective financial advisors do not reflect changes in circumstances that may have occurred or that may occur between the signing of the business combination agreement and the completion of the merger transactions.

Neither the T-Mobile board of directors or the T-Mobile independent committee, nor the Sprint board of directors or the Sprint independent committee, has obtained updated opinions from their respective financial advisors as of the date of this joint consent solicitation statement/prospectus, nor do any of them expect to receive updated, revised or reaffirmed opinions prior to the completion of the merger transactions. Changes in the operations and prospects of T-Mobile or Sprint, general market and economic conditions and other factors that may be beyond the control of T-Mobile or Sprint, and on which T-Mobile’s and Sprint’s financial advisors’ opinions were based, may significantly alter the value of T-Mobile or Sprint or the share prices of T-Mobile common stock or Sprint common stock by the time the merger transactions are completed. The opinions do not speak as of the time the merger transactions will be completed or as of any date other than the date of such opinions. Because T-Mobile’s and Sprint’s financial advisors will not be updating their opinions, the opinions will not address the fairness of the merger consideration from a financial point of view at the time the merger transactions are completed. The T-Mobile board of directors’ recommendation that T-Mobile stockholders approve the T-Mobile proposals and the Sprint board of directors’ recommendation that Sprint stockholders approve the Sprint proposals, however, are made as of the date of this joint consent solicitation statement/prospectus. For a description of the opinions that the T-Mobile board of directors, the T-Mobile independent committee, the Sprint board of directors and the Sprint independent committee received from their respective financial advisors, see “The Merger Transactions—Opinions of T-Mobile’s Financial Advisors” and “The Merger Transactions—Opinions of Sprint’s Financial Advisors.”

The business combination agreement contains provisions that restrict the ability of each of the T-Mobile board of directors and the Sprint board of directors to pursue alternatives to the merger transactions.

The business combination agreement contains non-solicitation provisions that restrict the ability of each of T-Mobile and Sprint to solicit, initiate, knowingly encourage or knowingly take any other action designed to facilitate, any inquiries regarding, or the making of, any proposal the completion of which would constitute an alternative transaction for purposes of the business combination agreement. In addition, the business combination agreement does not permit T-Mobile or Sprint to terminate the business combination agreement in order to enter into an agreement providing for, or to complete, such an alternative transaction, even if the alternative transaction provides for the payment of consideration with a higher per share cash or market value than the market value proposed to be received or realized in the merger transactions. See “The Business Combination Agreement—Covenants and Agreements—No Solicitation; Third-Party Acquisition Proposals.”

A significant stockholder of each of T-Mobile and Sprint has executed a support agreement that requires such stockholder to deliver a written consent in favor of the T-Mobile proposals and the Sprint proposals, as applicable, which will constitute approval of the merger transactions by T-Mobile stockholders and Sprint stockholders, respectively, even if the T-Mobile board of directors or the Sprint board of directors changes its recommendation.

Subsequent to the execution of the business combination agreement, Deutsche Telekom and Deutsche Telekom Holding entered into the Deutsche Telekom support agreement under which they agreed, promptly (and in any event within two business days) following their receipt of this joint consent solicitation statement/prospectus, to execute and deliver a written consent with respect to all of the outstanding shares of T-Mobile

 

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common stock held by Deutsche Telekom Holding, representing approximately [    ]% of the outstanding shares of T-Mobile common stock as of the T-Mobile record date, approving the T-Mobile proposals. The delivery of the Deutsche Telekom written consent will constitute receipt by T-Mobile of the T-Mobile stockholder approval, and Deutsche Telkom Holding is required to deliver the Deutsche Telekom written consent even if the T-Mobile board of directors changes its recommendation to the stockholders of T-Mobile. Therefore, T-Mobile expects to receive a number of consents sufficient to constitute the T-Mobile stockholder approval.

Subsequent to the execution of the business combination agreement, SoftBank, SoftBank UK, Starburst and Galaxy entered into the SoftBank support agreement under which they agreed, promptly (and in any event within two business days) following their receipt of this joint consent solicitation statement/prospectus, to execute and deliver a written consent with respect to all of the outstanding shares of Sprint common stock held by Starburst and Galaxy, representing approximately [        ]% of the outstanding shares of Sprint common stock as of the Sprint record date, approving the Sprint proposals. The delivery of the SoftBank written consent will constitute receipt by Sprint of the Sprint stockholder approval, and Starburst and Galaxy are required to deliver the SoftBank written consent even if the Sprint board of directors changes its recommendation to the stockholders of Sprint. Therefore, Sprint expects to receive a number of consents sufficient to constitute the Sprint stockholder approval.

T-Mobile and Sprint are subject to various uncertainties, including litigation and contractual restrictions and requirements while the merger transactions are pending that could disrupt T-Mobile’s, Sprint’s or the combined company’s business and adversely affect T-Mobile’s, Sprint’s or the combined company’s business, assets, liabilities, prospects, outlook, financial condition and results of operations.

Uncertainty about the effect of the merger transactions on employees, customers, suppliers, vendors, distributors, dealers and retailers may have an adverse effect on T-Mobile, Sprint or the combined company. These uncertainties may impair the ability to attract, retain and motivate key personnel during the pendency of the merger transactions and, if the merger transactions are completed, for a period of time thereafter, as existing and prospective employees may experience uncertainty about their future roles with the combined company. If key employees depart because of issues related to the uncertainty and difficulty of integration or a desire not to remain with the combined company, the combined company’s business following the completion of the merger transactions could be negatively impacted. T-Mobile, Sprint or the combined company may have to incur significant costs in identifying, hiring and retaining replacements for departing employees and may lose significant expertise and talent. Additionally, these uncertainties could cause customers, suppliers, distributors, dealers, retailers and others to seek to change or cancel existing business relationships with T-Mobile, Sprint or the combined company or fail to renew existing relationships. Suppliers, distributors and content and application providers may also delay or cease developing for T-Mobile, Sprint or the combined company new products that are necessary for the operations of its business due to the uncertainty created by the merger transactions. Competitors may also target T-Mobile’s or Sprint’s existing customers by highlighting potential uncertainties and integration difficulties that may result from the merger transactions.

The business combination agreement also restricts each of T-Mobile and Sprint, without the other’s consent, from taking certain actions outside of the ordinary course of business while the merger transactions are pending, including, among other things, certain acquisitions or dispositions of businesses and assets, entering into or amending certain contracts, repurchasing or issuing securities, making capital expenditures and incurring indebtedness, in each case subject to certain exceptions. See “The Business Combination Agreement—Covenants and Agreements” for a description of certain restrictive covenants applicable to T-Mobile and Sprint. These restrictions may have a significant negative impact on T-Mobile’s or Sprint’s business, results of operations and financial condition.

Management and financial resources have been diverted and will continue to be diverted toward the completion of the merger transactions. T-Mobile and Sprint have incurred, and expect to incur, significant costs,

 

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expenses and fees for professional services and other transaction costs in connection with the merger transactions. These costs could adversely affect T-Mobile’s, Sprint’s or the combined company’s financial condition and results of operations.

In addition, T-Mobile, Sprint and their respective affiliates are involved in various disputes, governmental and/or regulatory inspections, investigations and proceedings and litigation matters that arise from time to time, and it is possible that an unfavorable resolution of these matters could adversely affect T-Mobile or Sprint and their respective results of operations, financial condition and cash flows and the results of operations, financial condition and cash flows of the combined company.

Failure to complete the merger could negatively impact T-Mobile and Sprint and their respective businesses, assets, liabilities, prospects, outlook, financial condition or results of operations.

If the merger is not completed for any reason, T-Mobile and Sprint may be subject to a number of material risks. The price of T-Mobile common stock and of Sprint common stock may decline to the extent that their current market prices reflect a market assumption that the merger will be completed. In addition, some costs related to the merger transactions must be paid by T-Mobile and Sprint whether or not the merger transactions are completed. Furthermore, T-Mobile and Sprint may experience negative reactions from their respective stockholders, customers, employees, suppliers, distributors, retailers, dealers and others who deal with T-Mobile and Sprint, which could have an adverse effect on their respective businesses, financial condition and results of operations.

In addition, it is expected that if the merger is not completed, T-Mobile and Sprint will continue to lack the network, scale and financial resources of the current market share leaders in, and other companies that have more recently begun providing, wireless services. Further, if the merger is not completed, it is expected that T-Mobile and Sprint will not be able to deploy a nationwide 5G network on the same scale and on the same timeline as the combined company, and therefore will continue to be limited in their respective abilities to compete effectively in the 5G era.

Only in the event that the HoldCo mergers are completed is the closing of the merger conditioned upon the receipt of an opinion of counsel to the effect that the merger will qualify as a “reorganization” within the meaning of Section 368(a) of the Code, and neither T-Mobile nor Sprint intends to request a ruling from the IRS regarding the U.S. federal income tax consequences of the merger.

It is intended that the merger will qualify as a “reorganization” within the meaning of Section 368(a) of the Code, and that U.S. holders of Sprint common stock will not recognize gain or loss, except with respect to the receipt of cash in lieu of fractional shares of T-Mobile common stock. Only in the event that the HoldCo mergers are consummated is the closing of the merger conditioned upon receipt of an opinion of counsel to the effect that the merger will qualify as a “reorganization”. Otherwise, the merger will be completed without the receipt of any tax opinion from counsel. Furthermore, neither T-Mobile nor Sprint intends to request a ruling from the IRS regarding the United States federal income tax consequences of the merger. Accordingly, there can be no assurance that the merger will so qualify. See “Material U.S. Federal Income Tax Consequences of the Merger.” Sprint stockholders should consult their own tax advisors.

Litigation relating to the merger transactions may be filed against the T-Mobile board of directors and/or the Sprint board of directors that could prevent or delay the completion of the merger transactions and/or result in the payment of damages following the completion of the merger transactions.

In connection with the merger transactions, it is possible that stockholders of T-Mobile and/or Sprint may file putative class action lawsuits against the T-Mobile board of directors and/or the Sprint board of directors. Among other remedies, these stockholders could seek damages and/or to enjoin the merger transactions. The outcome of any litigation is uncertain and any such potential lawsuits could prevent or delay the completion of

 

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the merger transactions and/or result in substantial costs to T-Mobile and/or Sprint. Any such actions may create uncertainty relating to the merger transactions and may be costly and distracting to management. Further, the defense or settlement of any lawsuit or claim that remains unresolved at the time the merger transactions are completed may adversely affect the combined company’s business, financial condition, results of operations and cash flows.

Risks Related to the Business of the Combined Company

Although T-Mobile and Sprint expect that the merger transactions will result in synergies and other benefits, those synergies and benefits may not be realized or may not be realized within the expected time frame.

The ability of T-Mobile and Sprint to realize the anticipated benefits of the merger transactions will depend, to a large extent, on the combined company’s ability to integrate T-Mobile’s and Sprint’s businesses in a manner that facilitates growth opportunities and achieves the projected standalone cost savings and revenue growth trends identified by each company without adversely affecting current revenues and investments in future growth. In addition, some of the anticipated synergies are not expected to occur for a significant time period following the completion of the merger transactions and will require substantial capital expenditures in the near term to be fully realized. Even if the combined company is able to integrate the two companies successfully, the anticipated benefits of the merger transactions, including the expected synergies and network benefits, may not be realized fully or at all or may take longer to realize than expected.

T-Mobile’s business and Sprint’s business may not be integrated successfully or such integration may be more difficult, time consuming or costly than expected. Operating costs, customer loss and business disruption, including difficulties in maintaining relationships with employees, customers, suppliers or vendors, may be greater than expected following the merger transactions. Revenues following the merger transactions may be lower than expected.

The combination of two independent businesses is complex, costly and time-consuming and may divert significant management attention and resources to combining T-Mobile’s and Sprint’s business practices and operations. This process may disrupt T-Mobile’s and Sprint’s businesses. The failure to meet the challenges involved in combining the two businesses and to realize the anticipated benefits of the merger transactions could cause an interruption of, or a loss of momentum in, the activities of the combined company and could adversely affect the results of operations of the combined company. The overall combination of T-Mobile’s and Sprint’s businesses may also result in material unanticipated problems, expenses, liabilities, competitive responses, and loss of customer and other business relationships. The difficulties of combining the operations of the companies include, among others:

 

    the diversion of management attention to integration matters;

 

    difficulties in integrating operations and systems, including intellectual property and communications systems, administrative and information technology infrastructure and financial reporting and internal control systems;

 

    challenges in conforming standards, controls, procedures and accounting and other policies, business cultures and compensation structures between the two companies;

 

    difficulties in integrating employees and attracting and retaining key personnel;

 

    challenges in retaining existing customers and obtaining new customers;

 

    difficulties in achieving anticipated cost savings, synergies, accretion targets, business opportunities, financing plans and growth prospects from the combination;

 

    difficulties in managing the expanded operations of a significantly larger and more complex company;

 

    the impact of the additional debt financing expected to be incurred in connection with the merger transactions;

 

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    the transition of management to the combined company management team, and the need to address possible differences in corporate cultures and management philosophies;

 

    contingent liabilities that are larger than expected; and

 

    potential unknown liabilities, adverse consequences and unforeseen increased expenses associated with the merger transactions.

Many of these factors are outside of the control of T-Mobile and Sprint and/or will be outside the control of the combined company, and any one of them could result in lower revenues, higher costs and diversion of management time and energy, which could materially impact the business, financial condition and results of operations of the combined company. In addition, even if the operations of the businesses of T-Mobile and Sprint are integrated successfully, the full benefits of the merger may not be realized, including, among others, the synergies, cost savings or sales or growth opportunities that are expected. These benefits may not be achieved within the anticipated time frame or at all. Further, additional unanticipated costs may be incurred in the integration of the businesses of T-Mobile and Sprint. All of these factors could cause dilution to the earnings per share of the combined company, decrease or delay the projected accretive effect of the merger, and negatively impact the price of T-Mobile common stock following the merger. As a result, it cannot be assured that the combination of T-Mobile and Sprint will result in the realization of the full benefits expected from the merger transactions within the anticipated time frames or at all.

The financial analyses, estimates and forecasts considered by T-Mobile and Sprint and their respective financial advisors may not be realized, which may adversely affect the market price of T-Mobile common stock following the merger.

In performing their financial analyses and rendering their opinions regarding the fairness, from a financial point of view, of the exchange ratio to T-Mobile, holders of T-Mobile common stock and holders of Sprint common stock, as applicable, each of the respective financial advisors to T-Mobile and Sprint relied on, among other things, internal financial analyses, estimates and forecasts relating to T-Mobile and Sprint prepared by or at the direction of the managements of T-Mobile and Sprint, as applicable. See “The Merger Transactions—T-Mobile Unaudited Prospective Financial Information” and “The Merger Transactions—Sprint Unaudited Prospective Financial Information.” The unaudited prospective financial information of T-Mobile and Sprint was not prepared with a view toward public disclosure, and the unaudited prospective financial information and the estimated synergies were not prepared with a view toward compliance with published guidelines of the SEC or the guidelines established by the American Institute of Certified Public Accountants for preparation and presentation of prospective financial information. These projections are inherently uncertain and based on various assumptions and estimates that are subject to the judgment of those preparing them. These projections are also subject to significant economic, competitive, industry and other uncertainties and contingencies, all of which are difficult or impossible to predict and many of which are beyond the control of T-Mobile and Sprint. There can be no assurance that T-Mobile’s, Sprint’s or the combined company’s financial condition or results of operations will be consistent with those set forth in such projections, which could have a material impact on the market price of T-Mobile common stock following the merger.

The indebtedness of the combined company following the completion of the merger transactions will be substantially greater than the indebtedness of each of T-Mobile and Sprint on a standalone basis prior to the execution of the business combination agreement. This increased level of indebtedness could adversely affect the combined company’s business flexibility and increase its borrowing costs.

In connection with the merger transactions, T-Mobile and Sprint have conducted, and expect to conduct, certain pre-merger financing transactions, which will be used in part to prepay a portion of T-Mobile’s and Sprint’s existing indebtedness and to fund liquidity needs. After giving effect to the pre-merger financing transactions, the merger transactions and the other transactions contemplated by the business combination agreement, T-Mobile and Sprint anticipate that the combined company will have consolidated indebtedness of approximately $75.0 billion to $77.0 billion, based on estimated December 31, 2018 debt and cash balances and excluding tower obligations.

 

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T-Mobile’s substantially increased indebtedness following the merger transactions will have the effect, among other things, of reducing its flexibility to respond to changing business, economic, market and industry conditions and increasing the amount of cash required to meet interest payments. In addition, this increased level of indebtedness following the merger transactions may reduce funds available to support efforts to combine the businesses of T-Mobile and Sprint and realize the expected benefits of the merger transactions, and may also reduce funds available for capital expenditures, share repurchases and other activities that may put the combined company at a competitive disadvantage relative to other companies with lower debt levels. Further, it may be necessary for the combined company to incur substantial additional indebtedness in the future, subject to the restrictions contained in its debt instruments, which could increase the risks associated with the capital structure of the combined company.

Because of the substantial indebtedness of the combined company following the completion of the merger transactions, there is a risk that the combined company may not be able to service its debt obligations in accordance with their terms.

The ability of the combined company to service its substantial debt obligations following the merger transactions will depend in part on future performance, which will be affected by business, economic, market and industry conditions and other factors, including the ability of the combined company to achieve the expected benefits of the merger transactions. There is no guarantee that the combined company will be able to generate sufficient cash flow to service its debt obligations when due. If the combined company is unable to meet such obligations or fails to comply with the financial and other restrictive covenants contained in the agreements governing such debt obligations, it may be required to refinance all or part of its debt, sell important strategic assets at unfavorable prices or make additional borrowings. The combined company may not be able to, at any given time, refinance its debt, sell assets or make additional borrowings on commercially reasonable terms or at all, which could have a material adverse effect on its business, financial condition and results of operations after the merger transactions.

In addition, some or all of the combined company’s variable-rate indebtedness may use the London Inter-Bank Offered Rate or similar rates (which we refer to as “LIBOR”) as a benchmark for establishing the rate. LIBOR is the subject of recent national, international and other regulatory guidance and proposals for reform. These reforms and other pressures may cause LIBOR to disappear entirely or to perform differently than in the past. The consequence of these developments cannot be entirely predicted, but could include an increase in the cost of the combined company’s variable rate indebtedness.

The agreements governing the combined company’s indebtedness and other financings will include restrictive covenants that limit the combined company’s operating flexibility.

The agreements governing the combined company’s indebtedness and other financings will impose material operating and financial restrictions on the combined company. These restrictions, subject in certain cases to customary baskets, exceptions and maintenance and incurrence-based financial tests, may limit the combined company’s ability to engage in transactions and pursue strategic business opportunities, including the following:

 

    incurring additional indebtedness and issuing preferred stock;

 

    paying dividends, redeeming capital stock or making other restricted payments or investments;

 

    selling or buying assets, properties or licenses;

 

    developing assets, properties or licenses which the combined company has or in the future may procure;

 

    creating liens on assets securing indebtedness or other obligations;

 

    participating in future FCC auctions of spectrum or private sales of spectrum;

 

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    engaging in mergers, acquisitions, business combinations or other transactions;

 

    entering into transactions with affiliates; and

 

    placing restrictions on the ability of subsidiaries to pay dividends or make other payments.

These restrictions could limit the combined company’s ability to obtain debt financing, make share repurchases, refinance or pay principal on its outstanding indebtedness, complete acquisitions for cash or indebtedness or react to business, economic, market and industry conditions and other changes in its operating environment or the economy. Any future indebtedness that the combined company incurs may contain similar or more restrictive covenants. Any failure to comply with the restrictions of the combined company’s debt agreements may result in an event of default under these agreements, which in turn may result in defaults or acceleration of obligations under these and other agreements, giving the combined company’s lenders the right to terminate any commitments they had made to provide it with further funds and to require the combined company to repay all amounts then outstanding.

T-Mobile and Sprint have incurred, and will incur, direct and indirect costs as a result of the merger transactions.

T-Mobile and Sprint have incurred, and will incur, substantial expenses in connection with and as a result of completing the merger transactions, and over a period of time following the completion of the merger transactions, the combined company also expects to incur substantial expenses in connection with integrating and coordinating the businesses, operations, policies and procedures of T-Mobile and Sprint. A portion of the transaction costs related to the merger transactions will be incurred regardless of whether the merger transactions are completed. While T-Mobile and Sprint have assumed that a certain level of transaction expenses will be incurred, factors beyond T-Mobile’s and Sprint’s control could affect the total amount or the timing of these expenses. Many of the expenses that will be incurred, by their nature, are difficult to estimate accurately. These expenses will exceed the costs historically borne by T-Mobile and Sprint. These costs could adversely affect the financial condition and results of operations of T-Mobile and Sprint prior to the merger transactions and of the combined company following the merger transactions.

The combined company’s actual financial position and results of operations may differ materially from the unaudited pro forma financial data included in this joint consent solicitation statement/prospectus.

The pro forma financial information contained in this joint consent solicitation statement/prospectus is presented for illustrative purposes only and may not be an accurate indication of what the combined company’s financial position or results of operations would have been had the merger been completed on the dates assumed. The pro forma financial information has been derived from the audited and unaudited historical financial statements of T-Mobile and Sprint, and certain adjustments and assumptions have been made regarding the combined company after giving effect to the merger transactions. The pro forma financial statements do not include, among other things, estimated cost or growth synergies, adjustments related to restructuring or integration activities, future acquisitions or disposals not yet known or probable, including those that may be required by regulatory or governmental authorities in connection with the merger transactions, or impacts of merger-related change in control provisions that are currently not factually supportable and/or probable of occurring. Certain assets and liabilities of Sprint have been measured at fair value based on various preliminary estimates using assumptions that T-Mobile’s management and Sprint’s management believe are reasonable, utilizing information currently available, including the use of benchmarking to similar transactions. The process for estimating the fair value of acquired assets and assumed liabilities requires the use of judgment in determining the appropriate assumptions and estimates. These estimates may be revised and may include additional assets acquired or liabilities assumed as additional information becomes available and as additional analyses are performed. Differences between preliminary estimates in the pro forma financial information and the final acquisition accounting will occur and could have a material impact on the pro forma financial information and the combined company’s financial position and future results of operations.

 

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In addition, the assumptions used in preparing the pro forma financial information may not prove to be accurate. Such assumptions can be adversely affected by known or unknown facts, risks and uncertainties, many of which are beyond T-Mobile’s or Sprint’s control. Other factors may also affect the combined company’s financial condition or results of operations following the closing. In addition, following the merger transactions, certain adjustments to the accounting policies applied by Sprint to its financial information are expected to be made in order to conform the treatment of such financial information to the accounting policies of the combined company. In certain cases, the information necessary to determine the appropriate adjustments may not be available until after the completion of the merger transactions, and therefore, when conformed, the financial information of the combined company may vary materially from the pro forma financial information contained in this joint consent solicitation statement/prospectus, including, for example, adjustments with respect to revenue recognition, expenses and depreciation.    Any material variance from the pro forma financial information may cause significant variations in the market price of the T-Mobile common stock following the merger transactions. In view of these uncertainties, the inclusion of pro forma financial information in this joint consent solicitation statement/prospectus is for illustrative purposes and does not purport to project the future consolidated results of operations or consolidated financial condition for any future period or as of any future date. The pro forma financial information represents historical results as if T-Mobile and Sprint had operated as a combined entity and does not include future benefits from the merger transactions, such as those resulting from estimated synergies, and related costs, such as those costs expected to achieve certain benefits. See “Unaudited Pro Forma Condensed Financial Information.”

The merger transactions may not be accretive and may cause dilution to the earnings per share of the combined company, which may negatively affect the market price of the T-Mobile common stock.

As a result of the merger transactions, it is currently estimated that T-Mobile will issue or reserve for issuance approximately [                ] shares of T-Mobile common stock. The issuance of these new shares could have the effect of depressing the market price of the T-Mobile common stock. In addition, T-Mobile or Sprint (or the combined company after the merger transactions) could encounter other transaction-related costs, such as the failure to realize all of the benefits anticipated in the merger transactions, which could cause dilution to the combined company’s earnings per share or decrease or delay the expected accretive effect of the merger transactions and cause a decrease in the market price of the T-Mobile common stock.

Risks Related to T-Mobile’s Business

You should read and consider the risk factors specific to T-Mobile’s business that will also affect the combined company after the merger transactions. These risks are described in Part I, Item 1A of T-Mobile’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017, and in other documents that are incorporated by reference into this joint consent solicitation statement/prospectus. See “Where You Can Find More Information” for the location of information incorporated by reference in this joint consent solicitation statement/prospectus.

Risks Related to Sprint’s Business

You should read and consider the risk factors specific to Sprint’s business that will also affect the combined company after the merger transactions. These risks are described in Part I, Item 1A of Sprint’s Annual Report on Form 10-K for the fiscal year ended March 31, 2018, and in other documents that are incorporated by reference into this joint consent solicitation statement/prospectus. See “Where You Can Find More Information” for the location of information incorporated by reference in this joint consent solicitation statement/prospectus.

 

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This joint consent solicitation statement/prospectus contains certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 concerning T-Mobile, Sprint, the merger transactions and the other transactions contemplated by the business combination agreement. All statements other than statements of fact, including information concerning future results, are forward-looking statements. These forward-looking statements are generally identified by the words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “could” or similar expressions. Such forward-looking statements include, but are not limited to, statements about the benefits of the merger transactions, including anticipated future financial and operating results, synergies, accretion and growth rates, T-Mobile’s, Sprint’s and the combined company’s plans, objectives, expectations and intentions, and the expected timing of completion of the merger transactions. There are several factors which could cause actual plans and results to differ materially from those expressed or implied in forward-looking statements. Such factors include, but are not limited to, the failure to obtain, or delays in obtaining, required regulatory approvals, and the risk that such approvals may result in the imposition of conditions that could adversely affect the combined company or the expected benefits of the merger transactions, or the failure to satisfy any of the other conditions to the merger transactions on a timely basis or at all; the occurrence of events that may give rise to a right of one or both of the parties to terminate the business combination agreement; adverse effects on the market price of T-Mobile’s or Sprint’s common stock and on T-Mobile’s or Sprint’s operating results because of a failure to complete the merger transactions in the anticipated time frame or at all; inability to obtain the financing contemplated to be obtained in connection with the merger transactions on the expected terms or timing or at all; the ability of T-Mobile, Sprint and the combined company to make payments on debt or to repay existing or future indebtedness when due or to comply with the covenants contained therein; adverse changes in the ratings of T-Mobile’s or Sprint’s debt securities or adverse conditions in the credit markets; negative effects of the announcement, pendency or completion of the merger transactions on the market price of T-Mobile’s or Sprint’s common stock and on T-Mobile’s or Sprint’s operating results, including as a result of changes in key customer, supplier, employee or other business relationships; significant transaction costs, including financing costs, and unknown liabilities; failure to realize the expected benefits and synergies of the merger transactions in the expected time frames or at all; costs or difficulties related to the integration of Sprint’s network and operations into T-Mobile; the risk of litigation or regulatory actions; the inability of T-Mobile, Sprint or the combined company to retain and hire key personnel; the risk that certain contractual restrictions contained in the business combination agreement during the pendency of the merger transactions could adversely affect T-Mobile’s or Sprint’s ability to pursue business opportunities or strategic transactions; effects of changes in the regulatory environment in which T-Mobile and Sprint operate; changes in global, political, economic, business, competitive and market conditions; changes in tax and other laws and regulations; and other risks and uncertainties detailed in T-Mobile’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017 and in its subsequent reports on Form 10-Q, including in the sections thereof captioned “Risk Factors” and “Cautionary Statement Regarding Forward-Looking Statements,” as well as in its subsequent reports on Form 8-K, all of which are filed with the SEC and available at www.sec.gov and www.t-mobile.com, and in Sprint’s Annual Report on Form 10-K for the fiscal year ended March 31, 2018 and in its subsequent reports on Form 10-Q, including in the sections thereof captioned “Risk Factors” and “MD&A—Forward-Looking Statements,” as well as in its subsequent reports on Form 8-K, all of which are filed with the SEC and available at www.sec.gov and www.sprint.com. Forward-looking statements are based on current expectations and assumptions, which are subject to risks and uncertainties that may cause actual results to differ materially from those expressed in or implied by such forward-looking statements. Given these risks and uncertainties, readers of this joint consent solicitation statement/prospectus are cautioned not to place undue reliance on such forward-looking statements. T-Mobile and Sprint assume no obligation to update or revise the information contained in this communication (whether as a result of new information, future events or otherwise), except as required by applicable law.

 

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SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF T-MOBILE

The following selected historical consolidated financial data is derived from T-Mobile’s audited consolidated financial statements as of and for each of the years ended December 31, 2017, 2016, 2015, 2014 and 2013 and unaudited condensed consolidated financial statements as of and for the three months ended March 31, 2018 and 2017. In the opinion of T-Mobile’s management, the interim financial data includes all adjustments, consisting only of normal recurring adjustments, necessary for the fair presentation of the results for the interim periods. In connection with the business combination with MetroPCS Communications, Inc. (which we refer to as “MetroPCS”), the selected financial data prior to May 1, 2013 represents T-Mobile USA’s historical financial data. The information set forth below is only a summary that you should read together with the historical audited consolidated financial statements of T-Mobile and the related notes, as well as the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained in T-Mobile’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017, as updated by the Current Report on Form 8-K filed with the SEC on June 18, 2018, along with the unaudited condensed consolidated financial statements of T-Mobile for the three month period ended March 31, 2018 contained in T-Mobile’s Quarterly Report on Form 10-Q that T-Mobile previously filed with the SEC and that are incorporated by reference into this joint consent solicitation statement/prospectus. Historical results are not necessarily indicative of any results to be expected in the future. See “Where You Can Find More Information.”

 

(in millions, except per share and customer amounts)

  As of and for the
Quarter Ended
March 31,
    As of and for the Year Ended December 31,  
  2018     2017     2017     2016     2015     2014     2013  

Statement of Operations Data

             

Total service revenues

  $ 7,806     $ 7,329     $ 30,160     $ 27,844     $ 24,821     $ 22,375     $ 19,068  

Total revenues(1)

    10,455       9,613       40,604       37,490       32,467       29,920       24,605  

Operating income(1)

    1,282       1,037       4,888       4,050       2,479       1,772       1,181  

Total other expense, net(1)

    (401     (430     (1,727     (1,723     (1,501     (1,359     (1,130

Income tax benefit (expense)

    (210     91       1,375       (867     (245     (166     (16

Net income

    671       698       4,536       1,460       733       247       35  

Net income attributable to common stockholders

    671       684       4,481       1,405       678       247       35  

Earnings per share:

             

Basic

  $ 0.78     $ 0.83     $ 5.39     $ 1.71     $ 0.83     $ 0.31     $ 0.05  

Diluted

  $ 0.78     $ 0.80     $ 5.20     $ 1.69     $ 0.82     $ 0.30     $ 0.05  

Balance Sheet Data

             

Cash and cash equivalents

  $ 2,527     $ 7,501     $ 1,219     $ 5,500     $ 4,582     $ 5,315     $ 5,891  

Property and equipment, net

    22,308       21,235       22,196       20,943       20,000       16,245       15,349  

Spectrum licenses

    35,504       27,150       35,366       27,014       23,955       21,955       18,122  

Total assets

    72,004       68,048       70,563       65,891       62,413       56,639       49,946  

Total debt, excluding tower obligations

    30,478       30,247       28,319       27,786       26,243       21,946       20,182  

Stockholders’ equity

    22,876       18,963       22,559       18,236       16,557       15,663       14,245  

Statement of Cash Flows and Operational Data

             

Net cash provided by operating activities(3)

  $ 770     $ 608     $ 3,831     $ 2,779     $ 1,877     $ 1,957     $ 3,545  

Purchases of property and equipment

    (1,366     (1,528     (5,237     (4,702     (4,724     (4,317     (4,025

Purchases of spectrum licenses and other intangible assets, including deposits

    (51     (14     (5,828     (3,968     (1,935     (2,900     (381

Proceeds related to beneficial interests in securitization transactions(3)

    1,295       1,134       4,319       3,356       3,537       2,228       —    

Net cash (used in) provided by financing activities(3)

    1,000       1,809       (1,367     463       3,413       2,485       4,044  

Total customers (in thousands)(2)

    74,040       72,597       72,585       71,455       63,282       55,018       46,684  

 

(1)

Effective January 1, 2017, T-Mobile changed an accounting principle. The imputed discount on Equipment Installment Plan (“EIP”) receivables, which is amortized over the financed installment term using the

 

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  effective interest method, and was previously presented within Interest income in T-Mobile’s Consolidated Statements of Comprehensive Income, is now presented within Other revenues in T-Mobile’s Consolidated Statements of Comprehensive Income. T-Mobile has applied this change retrospectively and presented the effect of $280 million, $248 million, $414 million, $356 million and $185 million on the years ended December 31, 2017, 2016, 2015, 2014 and 2013, respectively, in the table above. See Note 1—Summary of Significant Accounting Policies of the Notes to the Consolidated Financial Statements included in Part II, Item 8 of T-Mobile’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017 for further information.
(2) T-Mobile believes current and future regulatory changes have made the Lifeline program offered by its wholesale partners uneconomical. T-Mobile will continue to support its wholesale partners offering the Lifeline program, but has excluded the Lifeline customers from its reported wholesale subscriber base resulting in the removal of 4,528,000 reported wholesale customers in 2017 and the beginning of the second quarter of 2017.
(3) On January 1, 2018, T-Mobile adopted the new cash flow standard which impacted the presentation of its cash flows related to its beneficial interests in securitization transactions, which is the deferred purchase price, resulting in a reclassification of cash inflows from Operating activities to Investing activities in its Consolidated Statements of Cash Flows. T-Mobile has applied this change retrospectively and presented the effect of $1.1 billion, $4.3 billion, $3.4 billion, $3.5 billion, $2.2 billion and $0 for the three months ended March 31, 2017 and the years ended December 31, 2017, 2016, 2015, 2014 and 2013, respectively, in the table above. The new cash flow standard also impacted the presentation of T-Mobile’s cash payments for debt prepayment and extinguishment costs, resulting in a reclassification of cash outflows from Operating activities to Financing activities in its Consolidated Statements of Cash Flows. T-Mobile has applied this change retrospectively and presented the effect of $29 million, $188 million, $0, $0, $39 million and $0 for the three months ended March 31, 2017 and the years ended December 31, 2017, 2016, 2015, 2014 and 2013, respectively, in the table above. See Note 1—Summary of Significant Accounting Policies of the Notes to Consolidated Financial Statements included in Part II, Item 8 of Exhibit 99.1 to T-Mobile’s Current Report on Form 8-K filed June 18, 2018 for further information.

 

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SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF SPRINT

Sprint’s selected financial data presented below distinguishes between the predecessor period (which we indicate in the table below by the heading “Predecessor”) relating to Sprint Communications (formerly known as Sprint Nextel Corporation) for periods prior to the SoftBank-Sprint merger and the successor period (which we indicate in the table below by the heading “Successor”) relating to Sprint (formerly known as Starburst II) for periods subsequent to the incorporation of Starburst II on October 5, 2012. The Successor financial information represents the activity and accounts of Sprint, which includes the activity and accounts of Starburst II prior to the close of the SoftBank-Sprint merger on July 10, 2013 and Sprint Communications, inclusive of the consolidation of Clearwire Corporation, prospectively following completion of the SoftBank-Sprint merger, beginning on July 11, 2013. The accounts and operating activity of Starburst II prior to the close of the SoftBank-Sprint merger primarily related to merger expenses that were incurred in connection with the SoftBank-Sprint merger (recognized in selling, general and administrative expense) and interest related to the $3.1 billion convertible bond Sprint Communications issued to Starburst II. The Predecessor financial information represents the historical basis of presentation for Sprint Communications for all periods prior to the SoftBank-Sprint merger.

On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (which we refer to as the “Tax Act”). The Tax Act included changes in tax laws that had a material impact on the financial statements of Sprint. Based on currently available information, Sprint recorded, as a provisional estimate, a $7.1 billion non-cash tax benefit through income for continuing operations to re-measure the carrying values of its deferred tax assets and liabilities. The re-measurement of deferred taxes had no impact on cash flows. See Note 10. Income Taxes in Notes to the Consolidated Financial Statements in Sprint’s Annual Report on Form 10-K for the year ended March 31, 2018, which is incorporated by reference into this joint consent solicitation statement/prospectus, for additional information.

On January 1, 2018, Sprint adopted authoritative guidance regarding Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments. Sprint adopted this standard with retrospective application to the consolidated statements of cash flows including the impacted cash flow data in the table below. See Note 2. Summary of Significant Accounting Policies and Other Information in Notes to the Consolidated Financial Statements in Sprint’s Annual Report on Form 10-K for the year ended March 31, 2018, which is incorporated by reference into this joint consent solicitation statement/prospectus, for additional information related to the adoption of this standard.

The selected financial data presented below is not comparable for all periods presented primarily as a result of transactions such as the SoftBank-Sprint merger and acquisitions of Clearwire Corporation and certain assets of United States Cellular Corporation in 2013. All acquired companies’ results of operations subsequent to their acquisition dates are included in Sprint’s consolidated financial statements.

 

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    Successor     Predecessor  
    Year Ended March 31,     Three Months
Ended

March 31,
    Year Ended
December 31,
    191 Days
Ended

July 10,
    Three Months
Ended

March 31,
 
    2018     2017     2016     2015     2014     2013     2013     2013     2013  
    (in millions, except per share amounts)  

Results of Operations

                 

Service revenue

  $ 23,834     $ 25,368     $ 27,174     $ 29,542     $ 7,876     $ —       $ 15,094     $ 16,895     $ 7,980  

Equipment sales

    4,524       4,684       3,168       4,826       999       —         1,797       1,707       813  

Equipment rentals

    4,048       3,295       1,838       164       —         —         —         —         —    
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net operating revenues

    32,406       33,347       32,180       34,532       8,875       —         16,891       18,602       8,793  

Depreciation—network and other

    3,976       3,982       4,013       3,591       868       —         2,026       3,098       1,422  

Depreciation— equipment rentals

    3,792       3,116       1,781       206       —         —         —         —         —    

Amortization

    812       1,052       1,294       1,552       429       —         908       147       70  

Operating income (loss)

    2,727       1,764       310       (1,895     420       (14     (970     (885     29  

Net income (loss)

    7,377       (1,206     (1,995     (3,345     (151     (9     (1,860     (1,158     (643

Net income (loss) attributable to Sprint Corporation

    7,389       (1,206     (1,995     (3,345     (151     (9     (1,860     (1,158     (643

Earnings (Loss) per Share

                 

Basic net income (loss) per common share

  $ 1.85     $ (0.30   $ (0.50   $ (0.85   $ (0.04     $ (0.54   $ (0.38   $ (0.21

Diluted net income (loss) per common share

    1.81       (0.30     (0.50     (0.85     (0.04       (0.54     (0.38     (0.21

Financial Position

                 

Total assets

  $ 85,459     $ 85,123     $ 78,975     $ 82,841     $ 84,549     $ 3,122     $ 85,953       N/A     $ 50,474  

Property, plant and equipment, net

    19,925       19,209       20,297       19,721       16,299       —         16,164       N/A       14,025  

Intangible assets, net

    50,360       50,484       51,117       52,455       55,919       —         56,272       N/A       22,352  

Total debt, capital lease and financing obligations (including equity unit notes)

    40,892       40,914       33,958       33,642       32,638       —         32,869       N/A       24,217  

Total stockholders’ equity

    26,356       18,808     $ 19,783       21,710       25,312       3,122       25,584       N/A       6,474  

Noncontrolling interests

    63       —         —         —         —         —         —         —         —    

Cash Flow Data

                 

Net cash provided by (used in) operating activities

  $ 10,062     $ (3,290   $ (423   $ 3,749     $ 522     $ (2   $ 119     $ 2,669     $ 939  

Capital expenditures—network and other

    3,319       1,950       4,680       5,422       1,488       —         3,847       3,140       1,381  

Capital expenditures—leased devices

    7,461       4,976       5,898       1,885       —         —         —         —         —    

 

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SELECTED UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL DATA

The following selected unaudited pro forma condensed combined financial information presents the unaudited pro forma condensed combined balance sheet as of March 31, 2018 and the unaudited pro forma condensed combined statements of operations for the year ended December 31, 2017 and the three months ended March 31, 2018. The unaudited pro forma condensed combined balance sheet as of March 31, 2018 combines the historical unaudited condensed consolidated balance sheet of T-Mobile as of March 31, 2018 and historical audited consolidated balance sheet of Sprint as of March 31, 2018, giving effect to (1) the merger transactions as if they had been completed on March 31, 2018 and (2) the assumptions and adjustments described in the notes to the unaudited pro forma condensed combined financial information included in this joint consent solicitation statement/prospectus. The unaudited pro forma condensed combined statements of operations for the three months ended March 31, 2018 and the fiscal year ended December 31, 2017 give effect to (1) the merger transactions as if they been completed on January 1, 2017, the beginning of T-Mobile’s most recently completed fiscal year and (2) the assumptions and adjustments described in the notes to the unaudited pro forma condensed combined financial information included in this joint consent solicitation statement/prospectus. The selected unaudited pro forma condensed combined financial information is provided for illustrative purposes only and does not purport to represent what the actual consolidated results of operations or consolidated financial condition would have been had the merger actually occurred on the dates indicated, nor do they purport to project the future consolidated results of operations or consolidated financial condition for any future period or as of any future date. Actual results may differ materially from the assumptions within the accompanying selected unaudited pro forma condensed combined financial information. The following selected unaudited pro forma condensed combined financial data should be read in conjunction with the section entitled “Unaudited Pro Forma Condensed Combined Financial Data” and related notes included in this joint consent solicitation statement/prospectus.

 

     Three Months
Ended
March 31, 2018
     Year Ended
December 31,

2017
 
     (in millions, except
share and
per share amounts)
     (in millions, except
share and
per share amounts)
 

Pro Forma Condensed Combined Statement of Operations Data

     

Total revenues

   $ 18,467      $ 72,734  

Operating income

     2,098        9,368  

Net income

     1,009        12,530  

Earnings per share

     

Basic

   $ 0.79      $ 9.98  

Diluted

   $ 0.78      $ 9.63  

Weighted-average shares outstanding

     

Basic

     1,280,535,910        1,257,163,319  

Diluted

     1,293,805,365        1,301,900,576  

 

     As of
March 31, 2018
 
     (in millions)  

Pro Forma Condensed Combined Balance Sheet Data

  

Cash and cash equivalents

   $ 15,195  

Total assets

     159,881  

Debt

     78,471  

Total stockholders’ equity

     48,040  

 

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COMPARATIVE HISTORICAL AND PRO FORMA PER SHARE FINANCIAL DATA

The following table sets forth selected historical per share information of T-Mobile and Sprint and unaudited pro forma combined per share information after giving effect to the merger transactions and the other transactions contemplated by the business combination agreement. The pro forma per share information gives effect to the merger transactions as if they had been completed on January 1, 2017, in the case of diluted net income per share data, and March 31, 2018, in the case of book value per share data. The pro forma per share financial information is provided for illustrative purposes only and does not purport to represent what the actual consolidated results of operations or consolidated financial condition would have been had the merger actually occurred on the dates indicated, nor do they purport to project the future consolidated results of operations or consolidated financial condition for any future period or as of any future date. Actual results may differ materially from the assumptions within the accompanying unaudited pro forma per share financial information. The following historical and unaudited pro forma per share financial data should be read in conjunction with the audited financial statements as of and for the year ended December 31, 2017 of T-Mobile, the audited financial statements as of and for the year ended March 31, 2018 of Sprint, and the section entitled “Unaudited Pro Forma Condensed Combined Financial Data” and related notes included in this joint consent solicitation statement/prospectus.

 

     Three Months
Ended
March 31, 2018
     Year Ended
December 31,
2017
 

T-Mobile Historical Data

     

Basic net income per share

   $ 0.78      $ 5.39  

Diluted net income per share

   $ 0.78      $ 5.20  

Book value per share

   $ 26.82      $ 26.26  

Sprint Historical Data

     

Basic net income per share

   $ 0.02      $ 1.85  

Diluted net income per share

   $ 0.02      $ 1.81  

Book value per share

   $ 6.60      $ 6.60  

Combined Company Unaudited Pro Forma Data

     

Basic net income per share

   $ 0.79      $ 9.98  

Diluted net income per share

   $ 0.78      $ 9.63  

Book value per share

   $ 37.58      $ 37.19  

Sprint Unaudited Pro Forma Equivalent Data(1)

     

Basic net income per share

   $ 0.08      $ 1.02  

Diluted net income per share

   $ 0.08      $ 0.99  

Book value per share

   $ 3.85      $ 3.81  

 

(1) The Sprint unaudited pro forma equivalent data was calculated by multiplying the combined company unaudited pro forma data by the exchange ratio of 0.10256.

 

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INFORMATION ABOUT THE COMPANIES

T-Mobile

T-Mobile US, Inc.

12920 SE 38th Street

Bellevue, Washington 98006-1350

Phone: (425) 378-4000

T-Mobile is a Delaware corporation formed in 2013 through the combination of T-Mobile USA and MetroPCS. T-Mobile USA was a Delaware corporation formed in 1994 as VoiceStream Wireless PCS, a subsidiary of Western Wireless Corporation that was spun off in 1999, acquired by Deutsche Telekom in 2001 and renamed T-Mobile USA in 2002. T-Mobile is redefining the way consumers and businesses buy wireless services through leading product and service innovation. T-Mobile introduced its Un-carrier strategy in 2013 and has since announced 14 signature initiatives that have disrupted the wireless communication services industry by ending annual service contracts, overages, unpredictable international roaming fees, data buckets and more. T-Mobile’s advanced nationwide 4G LTE network provides wireless services to 74.0 million customers as of March 31, 2018. T-Mobile provides service, devices and accessories across its flagship brands, T-Mobile and MetroPCS, and through its owned and operated retail stores, third-party distributors and websites.

Merger Company

Huron Merger Sub LLC

c/o T-Mobile US, Inc.

12920 SE 38th Street

Bellevue, Washington 98006-1350

Phone: (425) 378-4000

Merger Company is a Delaware limited liability company and a direct wholly owned subsidiary of T-Mobile. Merger Company was formed on April 26, 2018 for the purpose of entering into the business combination agreement and effecting the transactions contemplated by the agreement. As of the date of the business combination agreement, Merger Company has not carried on any business, conducted any operations or incurred any liabilities or obligations other than the execution of the business combination agreement, the performance of its obligations thereunder and matters ancillary thereto.

Merger Sub

Superior Merger Sub Corporation

c/o T-Mobile US, Inc.

12920 SE 38th Street

Bellevue, Washington 98006-1350

Phone: (425) 378-4000

Merger Sub is a Delaware corporation, a direct wholly owned subsidiary of Merger Company and an indirect wholly owned subsidiary of T-Mobile. Merger Sub was incorporated on April 26, 2018 for the purpose of entering into the business combination agreement and effecting the transactions contemplated by the agreement. As of the date of the business combination agreement, Merger Sub has not carried on any business, conducted any operations or incurred any liabilities or obligations other than the execution of the business combination agreement, the performance of its obligations thereunder and matters ancillary thereto.

 

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Sprint

Sprint Corporation

6200 Sprint Parkway

Overland Park, Kansas 66251

Phone: (877) 564-3166

Sprint, originally named Starburst II, was incorporated in 2012 under the laws of Delaware and is a holding company with operations conducted by its subsidiaries. In 2013, SoftBank and certain of its wholly owned subsidiaries completed the SoftBank-Sprint merger. As a result of the SoftBank-Sprint merger, Sprint became the parent company of Sprint Nextel Corporation, which was renamed Sprint Communications. Sprint is a communications company that offers a comprehensive range of wireless and wireline communications products and services designed to meet the needs of not only individual consumers, but also businesses, government subscribers, and resellers. Its services are provided through its ownership of extensive wireless networks, an all-digital global wireline network and a Tier 1 internet backbone. Sprint offers wireless and wireline services to subscribers in all 50 states, Puerto Rico and the United States Virgin Islands under the Sprint corporate brand, which includes its retail brands of Sprint®, Boost Mobile®, Virgin Mobile® and Assurance Wireless® on Sprint’s wireless networks utilizing various technologies including 3G CDMA and 4G LTE. Sprint is headquartered in Overland Park, Kansas.

Starburst

Starburst I, Inc.

One Circle Star Way

San Carlos, CA 94070

Phone: (650) 562-8100

Starburst, incorporated in Delaware, is an indirect wholly owned subsidiary of SoftBank and a direct wholly owned subsidiary of SoftBank UK. It was formed in connection with SoftBank’s acquisition of Sprint Nextel Corporation for the purpose of holding SoftBank’s interest in Sprint.

Galaxy

Galaxy Investment Holdings, Inc.

One Circle Star Way

San Carlos, CA 94070

Phone: (650) 562-8100

Galaxy, incorporated in Delaware, is an indirect wholly owned subsidiary of SoftBank and a direct wholly owned subsidiary of SoftBank UK. It was formed for the purpose of holding SoftBank’s indirect interest in Sprint not held by Starburst.

Deutsche Telekom

Deutsche Telekom AG

Friedrich-Ebert-Allee 140

53113 Bonn, Germany

Phone: +49-228-181-0

Deutsche Telekom is one of the world’s leading telecommunications companies, with approximately 170 million mobile customers, 28 million fixed-network lines and 19 million broadband lines. Deutsche Telekom provides fixed-network/broadband, mobile communications, internet and internet protocol television products

 

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and services for consumers, and information and communication technology solutions for business and corporate customers. Deutsche Telekom is headquartered in Bonn, Germany, with a presence in more than 50 countries, including Germany and the United States.

Deutsche Telekom Holding

Deutsche Telekom Holding B.V.

Stationsplein 8K, 6221 BT

Maastricht, The Netherlands

Phone: +31 437999032

Deutsche Telekom Holding is a limited liability company (besloten vennootschap met beperkte aansprakelijkheid) organized and existing under the laws of the Netherlands and an indirect wholly owned subsidiary of Deutsche Telekom. As a result of an internal reorganization of Deutsche Telekom’s subsidiaries on December 31, 2013, Deutsche Telekom Holding directly holds the T-Mobile common stock beneficially owned by Deutsche Telekom. Deutsche Telekom Holding’s principal business purpose is to incorporate, participate and supervise companies belonging to the Deutsche Telekom group and their relevant businesses.

SoftBank

SoftBank Group Corp.

1-9-1, Higashi-Shimbashi Minato-ku

Tokyo 105-7303 Japan

+81-3-6889-2000

SoftBank is a Japanese kabushiki kaisha, originally organized in 1981. SoftBank is a pure holding company that engages in a range of businesses in the information industry, including mobile communications, broadband infrastructure, fixed-line telecommunications and internet culture. SoftBank is headquartered in Tokyo, Japan, where it seeks to use the information revolution to contribute to the wellbeing of people and society.

 

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SOLICITATION OF T-MOBILE WRITTEN CONSENTS

Consents

The T-Mobile board of directors is providing these consent solicitation materials to the stockholders of T-Mobile. T-Mobile stockholders are being asked to approve each of the T-Mobile charter amendment, including three sub-proposals to (1) approve an increase in the number of authorized shares of T-Mobile common stock from one billion to two billion, (2) amend the director designation rights of Deutsche Telekom and add director designation rights of SoftBank and (3) add approval rights of SoftBank, in each case, including other amendments incidental or related to the foregoing, and the T-Mobile share issuance by executing and delivering the written consent furnished with this joint consent solicitation statement/prospectus.

Shares Entitled to Consent and Consent Required

Only T-Mobile stockholders of record at the close of business on [                ] (which we refer to as the “T-Mobile record date”) will be notified of and be entitled to execute and deliver a written consent. As of the T-Mobile record date, only shares of T-Mobile common stock are eligible to consent with respect to the T-Mobile proposals. Under the T-Mobile certificate of incorporation and the DGCL, each holder of T-Mobile common stock is entitled to one vote for each share of T-Mobile common stock held as of the T-Mobile record date.

Approval of each of the T-Mobile proposals, including each of the sub-proposals included in the proposal to approve the T-Mobile charter amendment, requires the execution and delivery to T-Mobile of one or more written consents by the holders of a majority of the outstanding shares of T-Mobile common stock entitled to vote thereon. By approving each of the sub-proposals included in the proposal to approve the T-Mobile charter amendment, T-Mobile stockholders will be approving the T-Mobile charter amendment in its entirety. As of the T-Mobile record date, there were [                ] shares of T-Mobile common stock outstanding and entitled to consent with respect to the T-Mobile proposals, and directors and executive officers of T-Mobile and their affiliates owned and were entitled to consent with respect to [                ] shares of T-Mobile common stock, representing approximately [                ]% of the shares of T-Mobile common stock outstanding on that date. T-Mobile currently expects that its directors and executive officers will deliver written consents in favor of the T-Mobile proposal, although none of them has entered into any agreements obligating him or her to do so.

Subsequent to the execution of the business combination agreement, Deutsche Telekom and Deutsche Telekom Holding entered into the Deutsche Telekom support agreement under which they agreed, promptly (and in any event within two business days) following their receipt of this joint consent solicitation statement/prospectus, to execute and deliver a written consent with respect to all of the outstanding shares of T-Mobile common stock held by Deutsche Telekom Holding, representing approximately [        ]% of the outstanding shares of T-Mobile common stock as of the T-Mobile record date, approving the T-Mobile proposals. The delivery of the Deutsche Telekom written consent by Deutsche Telekom Holding will constitute receipt by T-Mobile of the T-Mobile stockholder approval. Therefore, T-Mobile expects to receive a number of consents sufficient to constitute the T-Mobile stockholder approval. For additional information, see “Support Agreements—Deutsche Telekom Support Agreement.”

Submission of Consents

You may consent to the T-Mobile proposals with respect to your shares of T-Mobile common stock by completing and signing the written consent furnished with this joint consent solicitation statement/prospectus and returning it to T-Mobile by the T-Mobile consent deadline.

If you hold shares of T-Mobile common stock at the close of business on the T-Mobile record date and you wish to give your written consent, you must fill out the enclosed written consent, date and sign it, and promptly

 

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return it to T-Mobile. Once you have completed, dated and signed the written consent, you may deliver it to T-Mobile by emailing a .pdf copy of your written consent to investor.relations@t-mobile.com, or by mailing your written consent to T-Mobile US, Inc., Corporate Secretary, 12920 SE 38th Street, Bellevue, Washington 98006.

The delivery of the Deutsche Telekom written consent will constitute receipt by T-Mobile of the T-Mobile stockholder approval, and a failure of any other T-Mobile stockholder to deliver a written consent is not expected to have any effect on the approval of the T-Mobile proposals.

Executing Consents; Revocation of Consents

You may execute a written consent to approve the T-Mobile proposals (which is equivalent to a vote FOR the T-Mobile proposals) or disapprove, or abstain from consenting with respect to, the T-Mobile proposals (which is equivalent to a vote AGAINST the T-Mobile proposals). If you do not return your written consent, it will have the same effect as a vote against the T-Mobile proposals. If you are a T-Mobile stockholder at the close of business on the T-Mobile record date and you return a signed written consent without indicating your decision on the T-Mobile proposals, you will have given your consent to approve the T-Mobile proposals.

Your consent to the T-Mobile proposals may be changed or revoked at any time before the T-Mobile consent deadline; however, such change or revocation is not expected to have any effect, as the delivery of the Deutsche Telekom written consent will constitute receipt by T-Mobile of the T-Mobile stockholder approval. If you wish to change or revoke a previously given consent before the T-Mobile consent deadline, you may do so by delivering a notice of revocation to the corporate secretary of T-Mobile or by delivering a new written consent with a later date.

Solicitation of Consents; Expenses

The expense of preparing, printing and mailing these consent solicitation materials is being borne 50% by T-Mobile and 50% by Sprint. Officers and employees of T-Mobile may solicit consents by telephone and personally, in addition to solicitation by mail. These persons will receive their regular compensation but no special compensation for soliciting consents.

Recommendation of the T-Mobile Board of Directors

The T-Mobile board of directors recommends that T-Mobile stockholders approve the T-Mobile charter amendment, including each of the related sub-proposals, and the T-Mobile share issuance by executing and delivering the written consent furnished with this joint consent solicitation statement/prospectus. See “The Merger Transactions—T-Mobile’s Reasons for the Merger and Recommendation of the T-Mobile Board of Directors.”

 

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SOLICITATION OF SPRINT WRITTEN CONSENTS

Consents

The Sprint board of directors is providing these consent solicitation materials to the stockholders of Sprint. Sprint stockholders are being asked to approve each of the adoption of the business combination agreement and, on a nonbinding, advisory basis, the Sprint advisory T-Mobile charter amendment proposal, including three sub-proposals to (1) approve an increase in the number of authorized shares of T-Mobile common stock from one billion to two billion, (2) amend the director designation rights of Deutsche Telekom and add director designation rights of SoftBank and (3) add approval rights of SoftBank, in each case, including other amendments incidental or related to the foregoing (which we refer to as the “Sprint proposals”), by executing and delivering the written consent furnished with this joint consent solicitation statement/prospectus.

Shares Entitled to Consent and Consent Required

Only Sprint stockholders of record at the close of business on [                ] (which we refer to as the “Sprint record date”) will be notified of and be entitled to execute and deliver a written consent. As of the Sprint record date, only shares of Sprint common stock are eligible to consent with respect to the Sprint proposals. Under the Sprint certificate of incorporation and the DGCL, each holder of Sprint common stock is entitled to one vote for each share of Sprint common stock held as of the Sprint record date.

Approval of each of the Sprint proposals, including each of the related sub-proposals included in the Sprint advisory T-Mobile charter amendment proposal, requires the execution and delivery to Sprint of one or more written consents by the holders of a majority of the outstanding shares of Sprint common stock entitled to vote thereon. As of the Sprint record date, there were [                ] shares of Sprint common stock outstanding and entitled to consent with respect to the Sprint proposals, and directors and executive officers of Sprint and their affiliates owned and were entitled to consent with respect to [                ] shares of Sprint common stock, representing approximately [    ]% of the shares of Sprint common stock outstanding on that date. Sprint currently expects that its directors and executive officers will deliver written consents in favor of the Sprint proposals, although none of them has entered into any agreements obligating him or her to do so.

Subsequent to the execution of the business combination agreement, SoftBank, SoftBank UK, Starburst and Galaxy entered into the SoftBank support agreement under which they agreed, promptly (and in any event within two business days) following their receipt of this joint consent solicitation statement/prospectus, to execute and deliver a written consent with respect to all of the outstanding shares of Sprint common stock held by Starburst and Galaxy, representing approximately [        ]% of the outstanding shares of Sprint common stock as of the Sprint record date, approving the Sprint proposals. The delivery of the SoftBank written consent will constitute receipt of the Sprint stockholder approval. Therefore, Sprint expects to receive a number of consents sufficient to constitute the Sprint stockholder approval. For additional information, see “Support Agreements—SoftBank Support Agreement.”

Submission of Consents

You may consent to the Sprint proposals with respect to your shares of Sprint common stock by completing and signing the written consent furnished with this joint consent solicitation statement/prospectus and returning it to Sprint by the Sprint consent deadline.

If you hold shares of Sprint common stock as of the Sprint record date and you wish to give your written consent, you must fill out the enclosed written consent, date and sign it, and promptly return it to Sprint. Once you have completed, dated and signed the written consent, you may deliver it to Sprint by emailing a .pdf copy of your written consent to shareholder.relations@sprint.com, or by mailing your written consent to Corporate Secretary, 6200 Sprint Parkway, Mailstop KSOPHF0302-3B679, Overland Park, KS 66251.

 

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The delivery of the SoftBank written consent will constitute receipt by Sprint of the Sprint stockholder approval, and a failure of any other Sprint stockholder to deliver a written consent is not expected to have any effect on the approval of the Sprint proposals.

Executing Consents; Revocation of Consents

You may execute a written consent to approve the Sprint proposals (which is equivalent to a vote FOR the Sprint proposals) or disapprove, or abstain from consenting with respect to, the Sprint proposals (which is equivalent to a vote AGAINST the Sprint proposals). If you do not return your written consent, it will have the same effect as a vote against the Sprint proposals. If you are a record holder at the close of business on the Sprint record date and you return a signed written consent without indicating your decision on the Sprint proposals, you will have given your consent to approve the Sprint proposals.

Your consent to the Sprint proposals may be changed or revoked at any time before the Sprint consent deadline; however, such change or revocation is not expected to have any effect, as the delivery of the SoftBank written consent will constitute receipt by Sprint of the Sprint stockholder approval. If you wish to change or revoke a previously given consent before the Sprint consent deadline, you may do so by delivering a notice of revocation to the corporate secretary of Sprint or by delivering a new written consent with a later date.

Solicitation of Consents; Expenses

The expense of preparing, printing and mailing these consent solicitation materials is being borne 50% by Sprint and 50% by T-Mobile. Officers and employees of Sprint may solicit consents by telephone and personally, in addition to solicitation by mail. These persons will receive their regular compensation but no special compensation for soliciting consents.

Recommendation of the Sprint Board of Directors

The Sprint board of directors recommends that Sprint stockholders approve the adoption of the business combination agreement and, on a nonbinding, advisory basis, the Sprint advisory T-Mobile charter amendment proposal, including each of the related sub-proposals, by executing and delivering the written consent furnished with this joint consent solicitation statement/prospectus. See “The Merger Transactions—Sprint’s Reasons for the Merger and Recommendation of the Sprint Board of Directors.”

 

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THE MERGER TRANSACTIONS

This discussion of the merger transactions is qualified in its entirety by reference to the business combination agreement, which is attached to this joint consent solicitation statement/prospectus as Annex A and is incorporated by reference into this joint consent solicitation statement/prospectus. This summary does not purport to be complete and may not contain all of the information about the merger transactions that is important to you. You should read the business combination agreement carefully and in its entirety as it is the legal document that governs the merger transactions. This section is not intended to provide you with any factual information about T-Mobile or Sprint. Such information can be found elsewhere in this joint consent solicitation statement/prospectus and in the public filings T-Mobile and Sprint make with the SEC that are incorporated by reference into this joint consent solicitation statement/prospectus, as described in “Where You Can Find More Information.”

The Merger Transactions

Pursuant to the business combination agreement, if certain conditions are met, each SoftBank US HoldCo will merge with and into Merger Company (which we refer to, collectively, as the “HoldCo mergers”), with Merger Company continuing as the surviving entity (which we sometimes refer to as the “SoftBank surviving entity”) and as a wholly owned subsidiary of T-Mobile. Irrespective of whether the HoldCo mergers occur, subject to the satisfaction or waiver of the conditions in the business combination agreement, Merger Sub will merge with and into Sprint (which we refer to as the “merger”), with Sprint continuing as the surviving corporation (which we sometimes refer to as the “surviving corporation”) and as a wholly owned indirect subsidiary of T-Mobile. Following the merger transactions, the Sprint common stock will be delisted from the New York Stock Exchange (which we refer to as the “NYSE”) and deregistered under the Exchange Act and cease to be publicly traded.

Consideration to Sprint Stockholders

Sprint Common Stock

In the HoldCo mergers, the shares of Galaxy common stock and Starburst common stock issued and outstanding immediately prior to the HoldCo mergers effective time, all of which are currently held by SoftBank UK, will be automatically converted into the right to receive an aggregate number of shares of T-Mobile common stock equal to the product of (x) 0.10256 (which we refer to as the “exchange ratio”) and (y) the aggregate number of shares of Sprint common stock then held collectively by Galaxy and Starburst (which we refer to as the “HoldCo merger consideration”).

In the merger, each share of Sprint common stock issued and outstanding immediately prior to the effective time (other than shares held directly by Sprint as treasury stock and shares held by the SoftBank surviving entity) will be automatically converted into the right to receive 0.10256 shares of T-Mobile common stock (which we refer to as the “merger consideration”).

SoftBank and its affiliates will receive the same amount of T-Mobile common stock per share of Sprint common stock in the merger transactions as all other Sprint stockholders.

No holder of Sprint common stock will be issued a fraction of a share of T-Mobile common stock in the merger transactions. Each holder of Sprint common stock converted pursuant to the merger transactions who would otherwise have been entitled to receive a fraction of a share of T-Mobile common stock (after taking into account all shares represented by the certificates and book-entry shares delivered by such holder) will receive the T-Mobile fractional share consideration as described in “The Business Combination Agreement—No Fractional Shares.”

 

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Sprint Warrants

The business combination agreement provides that, except as described below, each warrant to purchase shares of Sprint common stock outstanding immediately prior to the effective time (which we refer to as a “Sprint warrant”) and all rights in respect thereof will automatically be canceled and retired and will cease to exist, and no consideration will be payable in respect of such Sprint warrant. However, the warrant to purchase 7,288,630 shares of Sprint common stock issued by Sprint to a non-affiliate of Sprint on May 16, 2016 (which we refer to as the “specified Sprint warrant”) will be assumed by T-Mobile in connection with the transactions contemplated by the business combination agreement, unless exercised prior to the closing. As of April 29, 2018, a warrant to purchase 54,579,924 shares of Sprint common stock issued by Sprint to Starburst on July 10, 2013 (which we refer to as the “SoftBank Sprint warrant”) was outstanding. On July 10, 2018, Starburst exercised the SoftBank Sprint warrant and received 54,579,924 shares of Sprint common stock at a purchase price of $5.25 per share.

Treatment of Sprint Equity-Based Awards

Stock Options. Each option to purchase shares of Sprint common stock (other than under the Sprint Employees Stock Purchase Plan), whether vested or unvested, that is outstanding immediately prior to the effective time, as of the effective time, will be automatically converted into an option to purchase, on the same terms and conditions (including, if applicable, any continuing vesting requirements) under the applicable plan and award agreement in effect immediately prior to the effective time, a number of shares of T-Mobile common stock, rounded down to the nearest whole share, equal to the product determined by multiplying (a) the total number of shares of Sprint common stock subject to such Sprint option immediately prior to the effective time, by (b) 0.10256, at an exercise price per share equal to the quotient (rounded up to the nearest whole cent) of (x) the per share exercise price for the Sprint common stock subject to such option as of immediately prior to the effective time, divided by (y) 0.10256.

Time-Based Restricted Stock Units. Each award of time-based restricted stock units in respect of shares of Sprint common stock, whether vested or unvested, that is outstanding as of immediately prior to the effective time, as of the effective time, will be automatically converted into a restricted stock unit award, on the same terms and conditions (including, if applicable, any continuing vesting requirements) under the applicable plan and award agreement in effect immediately prior to the effective time, in respect of a number of shares of T-Mobile common stock equal to the product (rounded up to the nearest whole share) of (a) the number of shares of Sprint common stock subject to such restricted stock unit as of immediately prior to the effective time multiplied by (b) 0.10256. Any accrued but unpaid dividend equivalents with respect to any award of time-based restricted stock units in respect of shares of Sprint common stock will be assumed and become an obligation with respect to the applicable award of restricted stock units in respect of shares of T-Mobile common stock.

Performance-Based Restricted Stock Units. Each award of performance-based restricted stock units in respect of shares of Sprint common stock, whether vested or unvested, that is outstanding as of immediately prior to the effective time, as of the effective time, will be automatically converted into a restricted stock unit, on the same terms and conditions (including, if applicable, any continuing vesting requirements, but not the performance-based vesting conditions applicable to such performance-based restricted stock unit in respect of Sprint common stock immediately prior to the effective time) under the applicable plan and award agreement in effect immediately prior to the effective time, in respect of a number of shares of T-Mobile common stock equal to the product (rounded up to the nearest whole share) of (a) the number of shares of Sprint common stock subject to such restricted stock unit as of immediately prior to the effective time, multiplied by (b) 0.10256. Any accrued but unpaid dividend equivalents with respect to any award of performance-based restricted stock units in respect of shares of Sprint common stock will be assumed and become an obligation with respect to the applicable award of restricted stock units in respect of shares of T-Mobile common stock. The number of shares of Sprint common stock subject to each award of performance-based restricted stock units outstanding as of immediately prior to the effective time will be based on the assumed level of performance equal to (x) in the case of a “turnaround incentive award” issued in respect of Sprint common stock, the greatest of (1) the volume-

 

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weighted average price of Sprint common stock over any 150-calendar day period as specified in the applicable award agreement as of the effective time, (2) the volume-weighted average price of Sprint common stock over the five consecutive trading day period ending with the second complete trading day prior to the effective time, and (3) the volume-weighted average price of Sprint common stock equal to 100% of the target award; and (y) in the case of an award of performance-based restricted stock units issued in respect of shares of Sprint common stock that is not a “turnaround incentive award,” in respect of outstanding performance periods as of the effective time, the target number of shares of Sprint common stock underlying such award of performance-based restricted stock units, and in respect of completed performance periods as of the effective time, the actual number of shares of Sprint common stock underlying such award of performance-based restricted stock units.

Employees Stock Purchase Plan. Prior to the effective time, Sprint will, contingent on the completion of the merger transactions, (a) cause the final purchase period, to the extent it would otherwise be outstanding at the effective time, to be terminated no later than five business days prior to the effective time; (b) make any pro rata adjustments that may be necessary to reflect the final purchase period, but otherwise treat the final purchase period as a fully effective and completed purchase period; and (c) cause the exercise (as of no later than five business days prior to the effective time) of each outstanding purchase right pursuant to the Sprint Employees Stock Purchase Plan. On such exercise date, Sprint will apply the funds credited to each participant’s payroll withholding account as of such date to the purchase of whole shares of Sprint common stock in accordance with the terms of the Sprint Employees Stock Purchase Plan, and such shares of Sprint common stock will be entitled to receive the merger consideration as of the effective time.

Cash will be payable in lieu of any fractional share of T-Mobile common stock resulting from application of the 0.10256 equity award adjustment ratio.

Background of the Merger Transactions

The management and board of directors of each of T-Mobile and Sprint, together with representatives of their majority stockholders—Deutsche Telekom and SoftBank, respectively—regularly review the performance, strategy, competitive position, opportunities and prospects of their respective companies in light of the then-current business and economic environments, as well as developments in the industries that provide and use wireless communications and related services, and the opportunities and challenges facing participants in those industries. These reviews have included consideration of, and discussions with other companies from time to time regarding, potential strategic alternatives, including business combinations and other strategic transactions, as well as remaining independent standalone companies.

In connection with those reviews, representatives of T-Mobile and Deutsche Telekom, on the one hand, and representatives of Sprint and SoftBank, on the other hand, have held discussions from time to time regarding a possible business combination between T-Mobile and Sprint. To facilitate such discussions, T-Mobile, Deutsche Telekom, Sprint and SoftBank entered into a nondisclosure agreement in connection with such discussions.

Following the closing of the FCC’s 600 MHz spectrum auction in April 2017, representatives of Sprint, SoftBank, T-Mobile and Deutsche Telekom held discussions from time to time regarding a possible business combination between Sprint and T-Mobile.

In April 2017, the members of the Sprint board of directors who were deemed to be independent and not affiliated with SoftBank (Gordon M. Bethune, Patrick Doyle, Julius Genachowski, Admiral Michael G. Mullen and Sara Martinez Tucker) (whom we refer to as the “independent Sprint directors”) held a meeting at which Sprint internal counsel and Shearman & Sterling LLP (which we refer to as “Shearman & Sterling”), which had been engaged as legal counsel to the independent Sprint directors, were present. The independent Sprint directors discussed a possible business combination transaction between Sprint and T-Mobile. Representatives of Sprint management described the deliberations among Sprint management regarding potential transaction terms and workstreams for such a transaction.

 

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In mid-May 2017, media stories reported that Sprint and T-Mobile were engaging in discussions regarding a possible business combination.

On May 23, 2017, representatives of T-Mobile, Deutsche Telekom, Sprint and SoftBank met to discuss a possible transaction. The parties noted that a combination of T-Mobile and Sprint would be expected to create a company that would be capable of developing a leading 5G platform and other innovation opportunities, and that the transaction would potentially result in significant synergies. At the meeting, representatives of T-Mobile and Deutsche Telekom proposed that, given the market rumors of a possible transaction and the potential impact of such rumors on each company’s stock price, the parties consider a stock-for-stock merger with a fixed exchange ratio reflecting the intrinsic valuations of each of Sprint and T-Mobile. The representatives of T-Mobile and Deutsche Telekom suggested that such exchange ratio could be a number of shares in the combined company that would imply a discount to Sprint’s then current market price given their belief that the market rumors of a potential transaction with T-Mobile had resulted in a higher trading price for Sprint common stock as compared to its fundamental value. Representatives of Sprint and SoftBank responded that they believed that the exchange ratio should be set such that the Sprint stockholders would receive consideration with a value at least equal to the then current market price. At the time of the meeting, the market prices of the companies’ respective common stock implied an exchange ratio equivalent to approximately 8.18 shares of Sprint common stock for each share of T-Mobile common stock (or approximately 0.12225 of a share of T-Mobile common stock for each share of Sprint common stock). Deutsche Telekom also communicated that, as a controlling stockholder of T-Mobile, its willingness to consent to a merger transaction between T-Mobile and Sprint was conditioned on Deutsche Telekom continuing to have governance rights consistent with the rights of a controlling stockholder, including for purposes of consolidating the financial statements of the combined company into the financial statements of Deutsche Telekom. SoftBank indicated that it was willing to consider providing Deutsche Telekom with the right to vote some of its shares in the combined company so that Deutsche Telekom could consolidate the combined company into its financial statements, but SoftBank proposed, among other things, that SoftBank would have substantially equivalent governance rights as Deutsche Telekom in the combined company. The parties discussed their respective views on terms, but did not reach any agreement.

From time to time during the period from May 2017 through September 2017, representatives of SoftBank and Sprint met with representatives of a public company that we refer to as “Company A” and representatives of one of Company A’s largest shareholders (which we refer to as “Shareholder X”) in order to discuss a possible business combination between Sprint and Company A.

In late May 2017, the Sprint board of directors held a regularly scheduled meeting. Representatives from management, SoftBank, Raine, Morrison & Foerster LLP (which we refer to as “Morrison & Foerster”), and McKinsey & Company (which we refer to as “McKinsey”), consultant to Sprint, were in attendance. In connection with the consideration of a possible strategic transaction, including a possible transaction with T-Mobile, Morrison & Foerster and Raine had been retained as legal advisor and financial advisor, respectively, to each of Sprint and SoftBank. Among other business matters, the Sprint board of directors discussed the overall strategy of Sprint, including a potential business combination with T-Mobile and a potential business combination with Company A. The Sprint board of directors was provided with further information on the state of discussions with T-Mobile and Deutsche Telekom and with Company A. Representatives of McKinsey and Raine discussed possible synergies that may be realized in a transaction with T-Mobile and provided a preliminary analysis of a possible business combination with Company A. Representatives from Skadden, Arps, Slate, Meagher & Flom LLP (which we refer to as “Skadden”), regulatory co-counsel to Sprint, presented a preliminary regulatory analysis for both the possible transaction with T-Mobile and the possible transaction with Company A.

In June 2017, the members of the T-Mobile board of directors who were deemed to be independent and not affiliated with Deutsche Telekom (W. Michael Barnes, Srikant M. Datar, Lawrence H. Guffey, Teresa A. Taylor and Kelvin R. Westbrook) (whom we refer to as the “independent T-Mobile directors”) met with counsel from Latham & Watkins LLP (which we refer to as “Latham & Watkins”) as part of a regular corporate governance

 

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update and discussed the fiduciary duties of independent directors in the context of related party transactions, the corporate governance of controlled companies and transactions involving potential conflicts of interest.

In late June 2017, SoftBank, Sprint, Company A and a public company that we refer to as “Company B” entered into a nondisclosure agreement in connection with discussions of a potential strategic transaction. In July 2017, SoftBank and Shareholder X entered into a nondisclosure agreement in connection with discussions of a possible business combination between Sprint and Company A, and Sprint subsequently became a party to such nondisclosure agreement.

In late July 2017, representatives of Sprint, SoftBank, Raine, McKinsey, Company A and Shareholder X met to discuss a possible business combination between Sprint and Company A.

In late July and early August 2017, representatives of T-Mobile and Deutsche Telekom, on the one hand, and representatives of Sprint and SoftBank, on the other hand, re-engaged in discussions regarding a possible business combination transaction between T-Mobile and Sprint. During these discussions, representatives of T-Mobile and Deutsche Telekom reiterated their view that the exchange ratio should be determined based in part on the intrinsic value of the businesses of each of T-Mobile and Sprint as opposed to the then current market value, because T-Mobile and Deutsche Telekom believed that market rumors regarding possible transactions between Sprint and T-Mobile and other parties continued to cause the trading price of Sprint common stock to exceed its intrinsic value. Representatives of Sprint and SoftBank again responded that any exchange ratio should be based on, or provide Sprint stockholders with a premium compared to, the then current market value of Sprint common stock. At the time of the July 2017 discussions, the market prices of the companies’ respective common stock implied an exchange ratio equivalent to approximately 7.52 shares of Sprint common stock for each share of T-Mobile common stock (or approximately 0.13298 of a share of T-Mobile common stock for each share of Sprint common stock). The parties did not reach agreement on the exchange ratio during these discussions, but representatives from the parties agreed to engage in further discussions to determine whether they could align on terms for a transaction and to conduct due diligence. Subsequently, each of T-Mobile and Sprint made available to representatives of the other party due diligence materials in an electronic data room and the parties held meetings in connection with their due diligence investigations.

In early August 2017, the Sprint board of directors held a regularly scheduled meeting which included representatives from Sprint management, SoftBank, Raine, McKinsey, Morrison & Foerster and Skadden in attendance. Among other business matters, the Sprint board of directors held a broad discussion with Sprint management and Raine regarding recent discussions with T-Mobile and Deutsche Telekom, Company A and Company B.

In August 2017, representatives from Morrison & Foerster and Raine held a telephonic meeting with legal representatives of Shareholder X, during which Morrison & Foerster presented potential transaction structures and governance arrangements for a business combination between Sprint and Company A. On the same day, representatives of Raine and McKinsey were requested to, and did, meet with Shareholder X’s financial advisor to discuss other aspects of a possible business combination.

From time to time during the period from May 2017 to early November 2017, T-Mobile, Deutsche Telekom, Sprint and SoftBank engaged in discussions, negotiations and diligence regarding the terms of a possible business combination transaction. During this period, the T-Mobile board of directors, and a transaction committee of the T-Mobile board of directors (which we refer to as the “T-Mobile transaction committee”), which the T-Mobile board of directors formed to facilitate its evaluation of potential strategic transactions involving T-Mobile, the members of which were Thomas Dannenfeldt, Lawrence H. Guffey, Thorsten Langheim, John J. Legere and Kelvin R. Westbrook, met telephonically or in person on multiple occasions. During these meetings, the T-Mobile board of directors and the T-Mobile transaction committee received regular updates regarding discussions and planning relating to a possible transaction involving T-Mobile and Sprint. The T-Mobile board of directors and the T-Mobile transaction committee also considered possible terms for such a

 

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transaction, in addition to industry and market developments and possible strategic alternatives, including remaining a standalone company, and reviewed and evaluated the current regulatory environment and the regulatory approval process for a possible business combination transaction with Sprint, other risks related to deal certainty, projected transaction synergies, the proposed financing for the transaction and due diligence matters. In addition, during this period, Wachtell, Lipton, Rosen & Katz (which we refer to as “Wachtell Lipton”) and Goldman Sachs assisted T-Mobile and Deutsche Telekom in connection with their review and evaluation of a possible transaction, and in August 2017, the T-Mobile board of directors approved the engagement of Goldman Sachs and Wachtell Lipton to serve as joint financial advisor and joint legal counsel, respectively, to T-Mobile and Deutsche Telekom. In addition, in connection with their evaluation of a possible transaction with Sprint, from June through early August 2017, PJT Partners assisted the independent T-Mobile directors, and in August 2017, the T-Mobile board of directors approved the engagement of PJT Partners as financial advisor to T-Mobile. In connection with the engagement of PJT Partners and Goldman Sachs, the T-Mobile board of directors reviewed disclosures of certain relationships made by each of PJT Partners and Goldman Sachs, including certain fees received from T-Mobile, Deutsche Telekom, Sprint and SoftBank and their respective affiliates. During these meetings, the T-Mobile board of directors authorized T-Mobile’s representatives to continue to engage in discussions with representatives of Sprint to determine whether it would be possible to reach an agreement on acceptable terms.

In August 2017, the T-Mobile board of directors also established the T-Mobile independent committee, which consisted solely of all of the independent T-Mobile directors, each of whom was deemed to be independent and not affiliated with Deutsche Telekom, in light of Deutsche Telekom’s ownership of a majority of the T-Mobile common stock, the potential impact of the possible transaction on existing related party transactions and the potential for additional agreements or arrangements to be entered into between T-Mobile or the combined company and Deutsche Telekom in connection with the proposed transaction. The T-Mobile board of directors resolved that T-Mobile would not enter into a business combination transaction with Sprint unless the T-Mobile independent committee determined that the transaction was fair to and in the best interests of all of T-Mobile’s stockholders (including such stockholders other than Deutsche Telekom) and recommended to the full T-Mobile board of directors to approve the transaction. In addition, the T-Mobile board of directors authorized the T-Mobile independent committee to review and monitor negotiations related to the transaction, and to review, direct the negotiation of and approve the terms and conditions of any related-party agreements or arrangements proposed to be entered into between T-Mobile or the combined company and Deutsche Telekom in connection with or relating to the transaction. In connection with its review and evaluation of a possible transaction with Sprint, in August 2017, the T-Mobile independent committee retained Evercore as its financial advisor and Latham & Watkins and Richards Layton & Finger P.A. (which we refer to as “RLF”), each of which had been assisting and advising the independent T-Mobile directors since June 2017, as legal counsel. During the course of the discussions between the parties in 2017, the T-Mobile independent committee met telephonically or in person on multiple occasions, during which the T-Mobile independent committee consulted with Latham & Watkins and RLF regarding the duties and responsibilities of the T-Mobile independent committee, reviewed and evaluated the terms under discussion between the parties, communicated its views on such terms to T-Mobile’s management team and Deutsche Telekom, and authorized its representatives and advisors and T-Mobile’s management to participate in negotiations with respect to the possible transaction. During these meetings, the T-Mobile independent committee also separately reviewed and evaluated the current regulatory environment and the regulatory approval process, other risks related to deal certainty, projected transaction synergies and the ability of the combined company to realize such synergies, the potential impact of the proposed transaction on existing related party transactions with Deutsche Telekom, the proposed governance of the combined company, the proposed financing for the transaction and due diligence matters. In addition, representatives of the T-Mobile independent committee and its advisors regularly participated in discussions with the T-Mobile board of directors, management and Deutsche Telekom with respect to the proposed transaction and the terms thereof.

During the period from May 2017 to September 2017, the Sprint board of directors met, and the independent Sprint directors separately met, on multiple occasions. During these meetings, the Sprint board of directors and the independent Sprint directors received regular updates from representatives of Sprint management, SoftBank

 

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and Sprint’s outside advisors (including the outside advisors to the independent Sprint directors) regarding their discussions with Deutsche Telekom and T-Mobile, as well as Company A and Company B, and discussed possible transactions with T-Mobile, Company A and Company B. The Sprint board of directors and the independent Sprint directors, both separately and together with the Sprint board of directors, considered possible terms for such transactions, overall strategy matters, regulatory and other legal matters, financial analyses of the possible transactions, and other matters related to the possible transactions.

In late September 2017, at the direction of Sprint and SoftBank, representatives from Raine and McKinsey met with representatives from Company A to discuss a possible business combination between Sprint and Company A. No agreement on a business combination was reached at this meeting, and there were no subsequent discussions between Sprint and Company A regarding a possible business combination.

Also in September 2017, the Sprint board of directors established the Sprint independent committee, which consisted solely of all of the independent Sprint directors, each of whom was deemed to be independent and not affiliated with SoftBank, in light of SoftBank’s ownership of a majority of the outstanding Sprint common stock and the potential for related party transactions between Sprint and SoftBank in connection with the proposed transaction. The Sprint board of directors resolved that the Sprint board would not approve a business combination transaction with T-Mobile unless the Sprint independent committee recommended a business combination transaction with T-Mobile. In addition, the Sprint board of directors authorized the Sprint independent committee to review and participate in negotiations related to the transaction and to determine whether any possible transaction was advisable, fair to, and in the best interests of Sprint and the Sprint stockholders, other than SoftBank and certain of its affiliates (which we refer to as the “Sprint minority stockholders”). The Sprint independent committee was also empowered to reject any and all potential transactions if it determined any such potential transaction was not fair to or otherwise not in the best interests of Sprint and the Sprint minority stockholders. In connection with its review and evaluation of possible transactions with T-Mobile and other parties, the Sprint independent committee retained Centerview to act as its financial advisor. During the course of the discussions between the parties from September 2017 through early November 2017, the Sprint independent committee met on multiple occasions, during which the Sprint independent committee reviewed and evaluated the terms under discussion between the parties, as well as the current regulatory environment and the regulatory approval process, other risks related to deal certainty and diligence matters. In addition, representatives of the Sprint independent committee and its advisors regularly participated in discussions with the Sprint board of directors, representatives of Sprint management, SoftBank and their advisors with respect to the proposed transaction and the terms thereof. The Sprint board of directors also met on multiple occasions during this period to discuss the potential transactions.

On September 26, 2017, representatives of T-Mobile, Deutsche Telekom, Sprint and SoftBank and the respective legal and financial advisors of each held a meeting to discuss various matters in connection with a possible business combination between T-Mobile and Sprint, including matters related to timing of a transaction, transaction structure, what exchange ratio should be used in a possible transaction, due diligence, the regulatory environment, communications, tax matters, employee retention and transaction documentation.

On November 1, 2017, following extensive discussions and negotiations between the parties, at the direction of the T-Mobile board of directors, representatives of T-Mobile and Deutsche Telekom sent a proposal to Sprint and SoftBank to seek to determine whether it would be possible to reach agreement on the principal terms for a stock-for-stock business combination of T-Mobile and Sprint, which remained subject to the approval of the T-Mobile independent committee and the T-Mobile board of directors. T-Mobile and Deutsche Telekom believed that the terms of the proposal would provide Sprint stockholders with a premium relative to the intrinsic value of Sprint. The proposal also set forth governance terms, including board composition and the initial chief executive officer of the combined company, terms of a proposed amended and restated stockholders’ agreement and voting and proxy agreement. In addition, the proposal contemplated that T-Mobile and Sprint would enter into a roaming agreement pursuant to which T-Mobile would provide Sprint with access to roaming LTE data services on T-Mobile’s network concurrently with entering into a definitive agreement providing for the business combination transaction.

 

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The following day, representatives of Sprint and SoftBank sent a revised proposal that included a revised exchange ratio and revisions to certain of the governance proposals, capital structure terms and other terms outlined by T-Mobile and Deutsche Telekom that were more favorable to Sprint and SoftBank.

The parties discussed the transaction terms reflected in these proposals, but ultimately were unable to reach agreement, including with respect to the exchange ratio, certain governance matters and financing for the proposed transaction. As a result, the parties mutually determined to cease discussions at that time. On November 4, 2017, T-Mobile and Sprint issued a joint press release announcing that they had ended merger discussions at that time.

Later in November 2017, representatives of T-Mobile, Deutsche Telekom, Sprint and SoftBank communicated as to the reasons discussions regarding a possible business combination between T-Mobile and Sprint had broken off, and whether it would be productive to re-engage in such discussions, but no further discussions ensued at that time.

During the period from November 2017 to February 2018, representatives of Sprint and Raine (acting at the direction of Sprint), on the one hand, and representatives of a public company that we refer to as “Company C”, on the other hand, met from time to time to discuss a possible business combination between Sprint and Company C, and in December 2017, Sprint and Company C entered into a nondisclosure agreement in connection with these discussions.

In late January and early February 2018, representatives of Sprint and SoftBank and representatives of T-Mobile and Deutsche Telekom again discussed the possibility of re-engaging in discussions regarding a possible business combination between Sprint and T-Mobile.

On January 30 and 31, 2018, the Sprint board of directors held a regularly scheduled meeting, which included representatives of Sprint management. Representatives of Sprint management discussed with the Sprint board of directors the potential reopening of discussions with T-Mobile and Deutsche Telekom, Sprint’s long-term outlook and financial projections, general strategic issues, and the regulatory outlook for a business combination with T-Mobile.

On February 15, 2018, representatives of T-Mobile and Deutsche Telekom and advisors to Sprint and SoftBank held a meeting during which they discussed developments since the parties ended their prior discussions in November 2017 and determined to hold an additional meeting, subsequently scheduled for February 23, 2018, to discuss a possible business combination transaction.

On February 23, 2018, representatives of T-Mobile and Deutsche Telekom met in person with representatives of Sprint and SoftBank to discuss a possible business combination transaction. During the meeting, the parties discussed their respective perspectives on the exchange ratio for a stock-for-stock business combination transaction. The representatives of T-Mobile and Deutsche Telekom initially indicated that they believed that an exchange ratio equivalent to 10.5 shares of Sprint common stock for each share of T-Mobile common stock (or approximately 0.09524 of a share of T-Mobile common stock for each share of Sprint common stock) was appropriate. Representatives of Sprint and SoftBank expressed their view that an exchange ratio equivalent to 9 shares of Sprint common stock for each share of T-Mobile common stock (or approximately 0.11111 of a share of T-Mobile common stock for each share of Sprint common stock) was appropriate. The representatives of T-Mobile and Deutsche Telekom agreed to further examine and discuss the exchange ratio and indicated that they would provide Sprint and SoftBank with a proposal after undertaking such examination and discussion.

On February 25, 2018, representatives of Sprint and representatives of Company C met to discuss a possible business combination between Sprint and Company C. The parties did not reach any agreement with respect to such a transaction.

 

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On March 9, 2018, the Sprint independent committee held a telephonic meeting with representatives of Centerview and Goodwin Procter LLP (which we refer to as “Goodwin”) in attendance. Goodwin had been retained by the Sprint independent committee to act as its legal counsel in connection with the renewed consideration of any potential transaction. The Sprint independent committee discussed with its advisors Sprint’s recent performance, Sprint’s budget and financial forecasts approved by the Sprint board of directors during the fall of 2017 and potential value enhancement alternatives for Sprint, including potential alternatives for enhancing value for Sprint on a standalone basis as well as potential strategic alternatives involving SoftBank and other parties. Goodwin then reviewed with the Sprint independent committee their fiduciary duties and responsibilities in the context of a variety of potential strategic scenarios.

On March 26 and 27, 2018, representatives of T-Mobile, Deutsche Telekom, Sprint and SoftBank met in person to discuss a possible business combination transaction. During the period between the November 4, 2017 announcement by the parties that they had ended merger discussions and the March 27, 2018 meeting, the price per share of T-Mobile common stock had increased by approximately 3%, while the price per share of Sprint common stock had decreased by approximately 26%, in each case based on the last closing prices prior to such dates. At the meeting, representatives of T-Mobile and Deutsche Telekom indicated that they would be prepared to proceed with negotiations at an exchange ratio equivalent to 10 shares of Sprint common stock for each share of T-Mobile common stock (or 0.10000 of a share of T-Mobile common stock for each share of Sprint common stock). Representatives of Sprint and SoftBank indicated that they would not continue discussions with T-Mobile and Deutsche Telekom on that basis. After further discussions, the parties agreed, subject to further due diligence, to engage in further negotiations and planning for a stock-for-stock merger on the proposed basis of an exchange ratio equivalent to 9.75 shares of Sprint common stock for each share of T-Mobile common stock (or 0.10256 of a share of T-Mobile common stock for each share of Sprint common stock), which implied that approximately 67% of the combined company resulting from a possible transaction would have been held by T-Mobile stockholders and approximately 33% of the combined company would have been held by Sprint stockholders. As previously discussed between the parties, Deutsche Telekom also reiterated that, as the controlling stockholder of T-Mobile, its willingness to consent to a merger transaction between T-Mobile and Sprint was conditioned on Deutsche Telekom continuing to have governance rights consistent with the rights of a controlling stockholder, including for purposes of consolidating the financial statements of the combined company into the financial statements of Deutsche Telekom. The parties therefore continued their discussions on the basis that SoftBank would enter into a voting and proxy agreement pursuant to which it would provide Deutsche Telekom with the right to vote some or all of SoftBank’s shares in the combined company. The parties also reached a preliminary understanding, subject to the review, consideration and approval of the T-Mobile board of directors, the T-Mobile independent committee, the Sprint board of directors and the Sprint independent committee, on certain governance provisions, including that the chief executive officer of T-Mobile and the chief executive officer of Deutsche Telekom would serve as the initial chief executive officer of the combined company and initial chairman of the board of directors of the combined company, respectively. In addition, the parties discussed the terms of an amended and restated stockholders’ agreement that would generally retain Deutsche Telekom’s rights under the existing stockholder’s agreement between T-Mobile and Deutsche Telekom and provide certain approval, information, registration and other rights to SoftBank as a significant stockholder of the combined company, and which would provide Deutsche Telekom with the right to designate nine directors (including two independent directors) and SoftBank with the right to designate four directors (including two independent directors) for the initial combined company board of directors, with one additional director who would be the chief executive officer of the combined company.

Following the March 27, 2018 meeting, representatives of T-Mobile and Deutsche Telekom contacted members of the T-Mobile board of directors to provide an update regarding the discussions between the parties at the meeting.

On March 29, 2018, on behalf of T-Mobile and Deutsche Telekom, Wachtell Lipton sent a term sheet setting forth certain proposed key transaction terms to Morrison & Foerster. The proposed terms included an exchange ratio equivalent to 9.75 shares of Sprint common stock for each share of T-Mobile common stock (or

 

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0.10256 of a share of T-Mobile common stock for each share of Sprint common stock), as discussed between the parties previously. The term sheet also set forth the proposed terms of a roaming agreement between T-Mobile and Sprint to be entered into concurrently with the business combination agreement, as well as governance, capital structure and other proposed terms for the possible transaction.

On March 30, 2018, the T-Mobile independent committee held a telephonic meeting with representatives of Latham & Watkins present at the meeting. At the meeting, the T-Mobile independent committee received an update regarding the renewed discussions between representatives of T-Mobile and Deutsche Telekom, on the one hand, and Sprint and SoftBank, on the other hand, including the proposed terms under discussion among the parties, as well as market developments since discussions terminated in 2017. The members of the T-Mobile independent committee directed their representatives and advisors to communicate their preliminary views on such terms to Deutsche Telekom and T-Mobile’s management, and authorized their representatives and advisors to participate in discussions and negotiations with respect to the transaction.

On April 2, 2018, the Sprint independent committee held a telephonic meeting with representatives of Sprint management in attendance. The representatives of Sprint management provided an update of ongoing due diligence, discussions and negotiations with T-Mobile and Deutsche Telekom. The Sprint independent committee asked questions of, and had a detailed discussion with, representatives of Sprint management on these and other matters in connection with the potential transaction, including regulatory and process matters.

On April 2 and 3, 2018, representatives of T-Mobile and Sprint held in-person meetings to conduct due diligence and engage in discussions regarding, among other topics, a preliminary proposed business plan, network plan and capital structure for the combined company, due diligence matters, regulatory planning and a roaming agreement proposed to be entered into in connection with the possible transaction. Subsequently, while the parties continued to engage in planning for the combined company and in negotiations regarding open transaction terms, each of T-Mobile and Sprint made available to representatives of the other party due diligence materials in an electronic data room.

On April 3, 2018, Wachtell Lipton sent a draft business combination agreement and other draft agreements to Morrison & Foerster.

On April 4, 2018, the Sprint independent committee held a telephonic meeting, with representatives of Sprint management, Raine, Morrison & Foerster, Centerview and Goodwin in attendance. Representatives from Sprint management presented an overview of financial forecasts for Sprint, which were subsequently submitted to the Sprint board of directors for approval on April 8, 2018. Representatives from Sprint management also updated the Sprint independent committee on recent discussions between representatives of Sprint management and representatives of T-Mobile management. The Sprint independent committee then engaged in a detailed discussion with representatives of Sprint management on several matters, including further clarification on the financial forecasts for Sprint, ramifications of any public leak of the potential transaction, potential synergies and job impacts and various regulatory matters. The roaming agreement, which would continue to provide benefits to Sprint if the proposed transaction did not occur and mitigate Sprint’s potentially foregone development opportunities, was also discussed. The Sprint independent committee met separately with Goodwin and Centerview and discussed topics to be covered at future meetings.

On April 5, 2018, the T-Mobile board of directors held a telephonic meeting with representatives of T-Mobile management, Wachtell Lipton and Latham & Watkins in attendance. At the meeting, the T-Mobile board of directors received an update regarding the renewed discussions between representatives of T-Mobile and Deutsche Telekom, on the one hand, and Sprint and SoftBank, on the other hand, as well as recent market developments, and reviewed and considered the proposed transaction terms under discussion between the parties and preliminary due diligence findings and regulatory, capital structure and other transaction planning. Members of T-Mobile management reviewed with the T-Mobile board of directors the strategic rationale for the transaction, including the opportunity for the combined company to develop a leading 5G platform. In addition,

 

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members of the T-Mobile independent committee provided certain of their preliminary views regarding a possible transaction and the proposed terms. At the meeting, the T-Mobile board of directors determined that T-Mobile should continue discussions and negotiations regarding a possible business combination with Sprint on the basis of the terms discussed between the parties.

In addition, on April 5, 2018, the T-Mobile independent committee held a telephonic meeting with representatives of Latham & Watkins, RLF and Evercore present. At the meeting, the T-Mobile independent committee reviewed the duties and responsibilities of, and the independence of members of, the T-Mobile independent committee, received an update from Latham & Watkins regarding developments in the discussions between the parties and the proposed terms set forth in the most recent draft transaction documents, and discussed preliminary due diligence findings. In addition, representatives of Evercore reviewed its preliminary financial analyses relating to the proposed transaction, including an analysis of potential synergies, and also discussed recent market developments. At the meeting, the T-Mobile independent committee directed its representatives and advisors to continue to participate in negotiations related to the terms of the business combination agreement and agreements between T-Mobile and Deutsche Telekom in connection with the transaction, including the amended and restated stockholders’ agreement, the trademark license pursuant to which T-Mobile licensed the right to use the T-Mobile trademark from Deutsche Telekom and the treatment of outstanding debt owed by T-Mobile to Deutsche Telekom. The T-Mobile independent committee also authorized its representatives and advisors to continue to discuss its views with T-Mobile’s management, the T-Mobile board of directors and Deutsche Telekom.

Later on April 5, 2018, Morrison & Foerster sent a revised term sheet to Wachtell Lipton, which proposed revised transaction terms reflecting the positions of Sprint and SoftBank, including terms relating to covenants, closing conditions and expense sharing relating to financing for the transaction, communications by T-Mobile and Sprint with their business counterparties in connection with a transaction and interim operating covenants to which T-Mobile and Sprint would be subject prior to the closing of a transaction.

On April 8, 2018, the Sprint board of directors held a telephonic meeting with representatives of Sprint management, Raine, Morrison & Foerster, Centerview and Goodwin. During the meeting, the Sprint board of directors received an update on the business combination transaction from Sprint management, Raine and Morrison & Foerster. Representatives of Sprint management presented to the Sprint board of directors a proposed budget for the fiscal year ending March 31, 2019 as well as financial forecasts for Sprint, which were prepared by Sprint management. Following a detailed discussion, the Sprint board of directors approved the proposed budget for the fiscal year ending March 31, 2019 and the financial forecasts for Sprint presented by representatives of Sprint management. Representatives of Sprint management also presented to the Sprint board of directors an adjusted set of financial forecasts. The adjusted financial forecasts were initially developed by Sprint management and discussed with the Sprint board of directors beginning in January of 2018, and were developed in order to take into account certain Sprint-specific and overall industry challenges. The adjusted Sprint forecasts were further refined by Sprint management before they were presented to the Sprint board of directors and its financial advisors at the April 8 meeting.

On April 9 and 10, 2018, representatives of T-Mobile, Deutsche Telekom and Wachtell Lipton, and representatives of Sprint, SoftBank and Morrison & Foerster, discussed the open transaction terms, and on April 10, 2018, Morrison & Foerster sent revised drafts of the business combination agreement and other draft agreements reflecting the position of Sprint and SoftBank to Wachtell Lipton. During the course of these and subsequent discussions, representatives of Deutsche Telekom and management of T-Mobile also discussed the open transaction terms with the members of the T-Mobile independent committee and Latham & Watkins, and Latham & Watkins provided revisions to the draft transaction documents reflecting the positions of the T-Mobile independent committee to Wachtell Lipton.

In addition, on April 10, 2018, media reports indicated that T-Mobile and Sprint were re-engaging in discussions regarding a possible business combination transaction.

 

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On April 11, 2018, the T-Mobile independent committee held a telephonic meeting with representatives of Latham & Watkins, RLF and Evercore present, during which it received an update on discussions and negotiations regarding a transaction with Sprint, due diligence findings and regulatory planning in connection with the transaction. In addition, representatives of Evercore reviewed its further preliminary financial analyses relating to the proposed transaction with the T-Mobile independent committee, including an analysis of potential synergies. The T-Mobile independent committee also reviewed with its advisors the proposed financing for the transaction, the proposed capital structure for the combined company and the proposed governance terms for the combined company.

On April 12, 2018, the T-Mobile board of directors held a telephonic meeting with representatives of T-Mobile management, Wachtell Lipton and Latham & Watkins present, during which it received an update on recent market developments and the discussions between the parties regarding a business combination transaction, including proposed transaction terms. The T-Mobile board of directors also reviewed and considered the combined company capital structure and financing process, proposed combined company business and network plans, due diligence findings and regulatory planning in connection with the transaction. In addition, members of the T-Mobile independent committee provided an update regarding their deliberations and negotiations related to the proposed transaction. Following the meeting, representatives of the T-Mobile independent committee and its advisors coordinated with Wachtell Lipton to provide further comments on the proposed transaction terms.

Also on April 12, 2018, the Sprint independent committee held a telephonic meeting, with representatives of Sprint management, Morrison & Foerster, Goodwin and Centerview in attendance for all or part of the meeting. Representatives of Sprint management provided an update on discussions with T-Mobile and Deutsche Telekom. Representatives of Sprint management also presented an overview of a proposed communications plan regarding the potential transaction. After the presentations by representatives of Sprint management, the representatives of Sprint management and Morrison & Foerster left the meeting. Goodwin then presented to the Sprint independent committee an overview of the Sprint independent committee’s fiduciary duties and responsibilities in connection with the potential transaction with T-Mobile. Goodwin then presented the key terms of the potential transaction, highlighting the key transaction terms related only to SoftBank, including, among other things, the treatment of current related-party agreements between Sprint and SoftBank, board and committee designation rights at the combined company, veto rights for certain actions, a matching right for a sale of the combined company, a right to acquire stock of the combined company and a right of first refusal for sales of combined company common stock by Deutsche Telekom. The members of the Sprint independent committee had a detailed discussion on these topics.

On April 13, 2018, the Sprint independent committee held a telephonic meeting with representatives of Goodwin and Centerview in attendance. At the meeting, Centerview presented to the Sprint independent committee its preliminary standalone financial analysis of Sprint based on Sprint’s budget and financial forecasts approved by the Sprint board of directors on April 8, 2018 and Sprint management’s adjusted financial forecasts also presented at the April 8th meeting. Centerview also reviewed Sprint’s historical performance and provided an illustrative analysis of the present value of Sprint’s stock price under a number of scenarios. Throughout the meeting, the members of the Sprint independent committee discussed potential risks that could impact Sprint’s actual performance versus the financial forecasts.

On April 13, 2018, representatives of T-Mobile and Deutsche Telekom began negotiating the terms of a commitment letter with certain financial institutions, pursuant to which such financial institutions would commit to provide debt financing to T-Mobile in connection with the transaction, the proceeds of which would be used to refinance certain existing debt of T-Mobile, Sprint and their respective subsidiaries and for working capital needs of the combined company.

On April 15, 2018, Wachtell Lipton sent a revised version of the term sheet to Morrison & Foerster, and the next day, Wachtell Lipton and Morrison & Foerster discussed the open transaction terms.

 

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On April 16, 2018, representatives of the T-Mobile independent committee, including Latham & Watkins and T-Mobile management, participated in discussions and negotiations with representatives of Deutsche Telekom on various transaction terms, including governance of the combined company, the trademark license and the treatment of outstanding debt owed by T-Mobile to Deutsche Telekom in connection with the transaction. In addition, on April 16, 2018, members of the T-Mobile board of directors held a telephonic meeting to review additional financing matters related to the transaction with T-Mobile management and representatives of Deutsche Telekom, Wachtell Lipton, Latham & Watkins and PJT Partners.

On April 17, 2018, the T-Mobile independent committee held a telephonic meeting with representatives of Latham & Watkins, RLF and Evercore present, during which it received an update on discussions between the parties regarding a possible transaction. In addition, the T-Mobile independent committee reviewed the proposed financing process for the transaction, combined company capital structure and treatment of outstanding debt owed by T-Mobile to Deutsche Telekom, and certain transaction terms discussed and negotiated with representatives of Deutsche Telekom.

From April 18 to April 20, 2018, representatives of T-Mobile and Deutsche Telekom, together with Wachtell Lipton, and representatives of Sprint and SoftBank, together with Morrison & Foerster and Raine, held in-person meetings to negotiate the open transaction terms, including covenants, closing conditions and expense sharing relating to financing for the transaction, certain regulatory provisions to be included in the business combination agreement, interim operating covenants to which T-Mobile and Sprint would be subject prior to the closing of a transaction, and certain governance arrangements for the combined company. During these meetings, a number of open points were resolved, subject to approvals by the T-Mobile board of directors, the T-Mobile independent committee and Deutsche Telekom, as well as the Sprint board of directors, the Sprint independent committee and SoftBank; however, the parties were not able to reach an agreement on certain terms, including provisions relating to financing for the transaction. In addition, during this period, representatives of the T-Mobile independent committee and its advisors and T-Mobile management held various telephonic meetings with representatives of Deutsche Telekom to discuss and negotiate certain open transaction terms.

On April 19, 2018, the T-Mobile independent committee held a telephonic meeting with representatives of Latham & Watkins, RLF and Evercore present, during which it received an update on negotiations between the parties and discussed the proposed combined company capital structure and treatment of outstanding debt owed by T-Mobile to Deutsche Telekom.

Also on April 19, 2018, the Sprint independent committee held a telephonic meeting. Representatives from Sprint management, Morrison & Foerster, Skadden, Lawler Metzger, Keeney & Logan LLC (which we call “Lawler”), FCC regulatory counsel to Sprint, Goodwin and Centerview attended all or part of the meeting. Morrison & Foerster, Skadden, Lawler and Goodwin discussed with the Sprint independent committee various regulatory matters in connection with the potential transaction with T-Mobile. Members of the committee engaged in a discussion with these advisors. After the representatives from Sprint management, Morrison & Foerster, Skadden and Lawler had left the meeting, Goodwin discussed further the regulatory considerations of the potential transaction. Goodwin also discussed with the committee the current status of discussions with T-Mobile and Deutsche Telekom, as well as certain key transaction terms for the potential transaction, including terms related to a termination under certain regulatory conditions, financing matters and closing conditions and termination rights tied to Sprint’s and the combined company’s credit ratings. Goodwin also highlighted the current status of discussions on certain transaction terms that related only to SoftBank, including, among other things, the treatment of current related-party agreements between Sprint and SoftBank, veto rights for certain actions, a right to acquire combined company common stock and a right of first refusal for sales of combined company common stock by Deutsche Telekom.

On April 20, 2018, the T-Mobile board of directors held a telephonic meeting with representatives of T-Mobile management, Wachtell Lipton and Latham & Watkins in attendance, during which it received an update on the negotiations between the parties and reviewed the proposed transaction terms, as well as remaining

 

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open points. In addition, the T-Mobile board of directors reviewed and considered the combined company capital structure and financing process and regulatory planning, and members of T-Mobile management reviewed with the directors due diligence findings.

On April 21, 2018, representatives of the T-Mobile independent committee, members of T-Mobile management and representatives of Deutsche Telekom discussed and negotiated terms relating to governance of the combined company, the trademark license and the treatment of outstanding debt owed by T-Mobile to Deutsche Telekom.

On April 22, 2018, Wachtell Lipton sent revised drafts of the business combination agreement and other draft agreements to Morrison & Foerster.

Also on April 22, 2018, the T-Mobile board of directors held a telephonic meeting, attended by representatives of PJT Partners, Goldman Sachs, Evercore, Wachtell Lipton, Latham & Watkins and T-Mobile’s regulatory advisors. During the meeting, the T-Mobile board of directors received an update on the negotiations between the parties and the proposed transaction terms. T-Mobile management engaged in a detailed review with the directors of the proposed business plan for the combined company, an operating model for the combined company, the network integration plan, financial forecasts for the combined company and projected transaction synergies, as well as findings of the due diligence review of Sprint. In addition, T-Mobile management and representatives of PJT Partners and Goldman Sachs reviewed with the directors the proposed financing for the transaction and the proposed capital structure for the combined company, including risks and considerations relating thereto. Representatives of PJT Partners and Goldman Sachs also presented their respective preliminary financial analyses in connection with the transaction, and reviewed with the directors matters relating to current market dynamics, precedent mergers and acquisitions and potential synergies in connection with the transaction. In connection with the presentations of PJT Partners and Goldman Sachs, the T-Mobile board of directors reviewed disclosures of certain relationships made by each of PJT Partners and Goldman Sachs, including certain fees received from T-Mobile, Deutsche Telekom, Sprint and SoftBank and their respective affiliates. In addition, the regulatory advisors to T-Mobile and Deutsche Telekom reviewed with the directors the current regulatory environment and considerations relating to regulatory approvals for a business combination transaction with Sprint, and representatives of Wachtell Lipton reviewed with the directors their fiduciary duties in connection with their consideration of a possible business combination transaction. T-Mobile management also reviewed with the T-Mobile board of directors the proposed communications and outreach plan in connection with the transaction. Finally, members of the T-Mobile independent committee provided an update regarding the committee’s views on the proposed terms of the transaction.

On April 23, 2018, the Sprint independent committee held a telephonic meeting, at which representatives of Goodwin and Centerview were present. Centerview presented its preliminary financial analysis of the proposed business combination between Sprint and T-Mobile, including a discussion of Sprint’s standalone valuation, T-Mobile’s standalone valuation and relative valuation. The Sprint independent committee, Centerview and Goodwin discussed Centerview’s presentation. In addition, Goodwin provided an update on the status of negotiations and reviewed with the Sprint independent committee certain transaction terms, and the Sprint independent committee and Goodwin discussed the transaction terms.

On April 24, 2018, the T-Mobile independent committee held a telephonic meeting with representatives of Latham & Watkins, RLF and Evercore present, during which it reviewed and discussed the duties and responsibilities of the T-Mobile independent committee. The T-Mobile independent committee received an update on negotiations and reviewed and considered the proposed transaction terms, with a focus on the terms of agreements and transactions proposed to be entered into between T-Mobile and Deutsche Telekom in connection with the transaction and the governance of the combined company. Latham & Watkins also provided analysis with respect to the current regulatory environment and considerations relating to regulatory approvals for a business combination transaction with Sprint. In addition, representatives of Evercore reviewed Evercore’s preliminary financial analyses relating to the transaction, including an analysis of the potential synergies.

 

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In addition, on April 24, 2018, the Sprint independent committee held a telephonic meeting. In attendance for all or part of the meeting were representatives of Sprint management, Morrison & Foerster, Skadden, Lawler, J.P. Morgan, Goodwin and Centerview. J.P. Morgan had been engaged in April 2017 as a financial advisor to Sprint in connection with a potential strategic transaction with T-Mobile. At the meeting, Skadden and Lawler gave a presentation regarding certain regulatory considerations in connection with the proposed transaction between Sprint and T-Mobile. The representatives of J.P. Morgan then presented J.P. Morgan’s preliminary financial analysis of the financial terms of the proposed transaction. Members of the committee engaged in a discussion with the representatives of J.P. Morgan regarding their presentation. In addition, representatives of Sprint management provided an overview of the status of negotiations between the parties and reviewed the proposed transaction terms, highlighting the status of discussions on financing and capital structure matters and termination rights. Representatives of Sprint management also engaged in a discussion with the Sprint independent committee on potential synergies from the proposed transaction.

Also, on April 24, 2018, Morrison & Foerster sent revised drafts of the business combination agreement and other draft agreements to Wachtell Lipton. Beginning later that day and continuing through April 27, 2018, representatives of T-Mobile and Deutsche Telekom, together with Wachtell Lipton, Latham & Watkins, and representatives of Sprint and SoftBank, together with Morrison & Foerster and Raine, held in-person meetings to negotiate and seek to resolve the remaining open points and finalize the transaction documentation, including the business combination agreement, the amended and restated stockholders’ agreement and related amendments to the certificate of incorporation and bylaws of T-Mobile reflected in the amended and restated certificate of incorporation and amended and restated bylaws, respectively, and the proxy agreement. In addition, during this period, representatives of Deutsche Telekom and management of T-Mobile provided updates to the T-Mobile independent committee and its representatives, including Latham & Watkins, and representatives of Deutsche Telekom, T-Mobile management and the T-Mobile independent committee, including Latham & Watkins, negotiated and finalized the proposed terms of the treatment of outstanding debt owed by T-Mobile to Deutsche Telekom in connection with the transaction, including the terms of the financing matters agreement, which, among other things, would provide for Deutsche Telekom to consent to the incurrence by T-Mobile USA of secured debt in connection with and after the completion of the merger and for the repayment and termination by T-Mobile USA of certain facilities provided by and debt owed to Deutsche Telekom upon closing of the merger, as well as the terms of an amendment to the trademark license, which would provide for a cap on the fee that would otherwise have been payable by the combined company to Deutsche Telekom thereunder, and the terms of the amended and restated stockholders’ agreement. At the conclusion of these meetings, the parties finalized the proposed terms for the proposed transaction, subject to approvals by the T-Mobile board of directors, T-Mobile independent committee and Deutsche Telekom, as well as the Sprint board of directors, Sprint independent committee and SoftBank.

On April 26, 2018, the Sprint board of directors held an in-person meeting, with representatives of Sprint management, Raine, J.P. Morgan, Centerview, Morrison & Foerster, Skadden and Goodwin in attendance. Prior to the meeting, the Sprint directors, including the members of the Sprint independent committee, reviewed disclosures of certain relationships made by each of Raine, J.P. Morgan and Centerview, including disclosure with respect to certain fees which may have been received from Sprint, SoftBank, T-Mobile and Deutsche Telekom. At the meeting, representatives of Morrison & Forester reviewed with the Sprint board of directors the proposed transaction terms, including terms relating to governance, regulatory matters and financing. Representatives of Morrison & Foerster also reviewed with the directors their fiduciary duties in connection with their consideration of the transaction with T-Mobile. Representatives of Sprint management reviewed the synergies expected to be achieved in the proposed transaction with T-Mobile, and noted that management believed that the proposed transaction with T-Mobile was the best path forward for Sprint. Representatives of Sprint management also reviewed with the directors the proposed communications and outreach plan relating to the transaction and the transaction approval process and timeline, and discussed the final findings of the due diligence review of T-Mobile. In addition, representatives of Raine, J.P. Morgan and Centerview presented their respective firms’ updated preliminary financial analyses of the financial terms of the proposed transaction.

 

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On April 27, 2018, the T-Mobile independent committee held an in-person meeting with representatives of Latham & Watkins, RLF and Evercore present. At the meeting, representatives of Latham & Watkins reviewed and discussed with the T-Mobile independent committee the duties and responsibilities of the T-Mobile independent committee. The T-Mobile independent committee received an update on the negotiations between the parties and discussed and considered the proposed transaction terms. In addition, the T-Mobile independent committee reviewed and considered the proposed financing for the transaction, as well as the proposed agreements and transactions proposed to be entered into between T-Mobile and Deutsche Telekom in connection with the transaction, including the business combination agreement, the license agreement amendment, the financing matters agreement and the amended and restated stockholders’ agreement. Representatives of Evercore reviewed Evercore’s financial analyses relating to the proposed transaction and the projected transaction synergies. Evercore rendered its oral opinion, subsequently confirmed in its written opinion dated April 29, 2018, to the T-Mobile independent committee that, as of such date and based upon and subject to the factors, procedures, assumptions, qualifications and limitations set forth in its opinion, the exchange ratio pursuant to the business combination agreement was fair from a financial point of view to the holders of shares of T-Mobile common stock (including such holders of T-Mobile common stock other than Deutsche Telekom and its affiliates). Following a discussion regarding the proposed transaction, including the terms of the agreements and transactions to be entered into between T-Mobile and Deutsche Telekom in connection with the transaction, the T-Mobile independent committee determined that the business combination agreement and the transactions contemplated by the agreement were fair to, and in the best interests of, T-Mobile’s stockholders (including such stockholders other than Deutsche Telekom), and unanimously resolved to (1) recommend that the T-Mobile board of directors approve and declare advisable the business combination agreement and the transactions contemplated by the agreement and (2) approve the related party transactions contemplated by the transaction.

Later on April 27, 2018, following the meeting of the T-Mobile independent committee, the T-Mobile board of directors held an in-person meeting, with representatives of PJT Partners, Goldman Sachs, Wachtell Lipton and Latham & Watkins in attendance. At the meeting, representatives of Wachtell Lipton reviewed with the T-Mobile board of directors the proposed transaction terms. T-Mobile management and Wachtell Lipton reviewed with the directors the final proposed capital structure for the combined company as well as the proposed financing for the transaction, including the terms of proposed committed financing for the transaction. T-Mobile management also reviewed with the directors the proposed communications and outreach plan relating to the transaction and the transaction approval process and timeline, and discussed the final findings of the due diligence review of Sprint. Representatives of Wachtell Lipton reviewed with the directors their fiduciary duties in connection with their consideration of the transaction with Sprint. In addition, representatives of PJT Partners and Goldman Sachs provided their respective financial presentations regarding the final proposed transaction terms and their respective financial analyses. At the meeting, PJT Partners rendered its oral opinion, subsequently confirmed in its written opinion dated April 29, 2018, to the T-Mobile board of directors that, as of the date of such opinion and based upon and subject to the qualifications, limitations and assumptions stated in its written opinion, the exchange ratio pursuant to the business combination agreement was fair to T-Mobile from a financial point of view. In addition, at the meeting, Goldman Sachs delivered its oral opinion to the T-Mobile board of directors, which opinion was subsequently confirmed in its written opinion dated April 29, 2018, to the effect that, as of such date and based upon and subject to the factors and assumptions set forth in Goldman Sachs’ written opinion, the exchange ratio pursuant to the business combination agreement was fair from a financial point of view to T-Mobile. Following discussion, and upon consideration of the recommendation of the T-Mobile independent committee, the T-Mobile board of directors unanimously determined that the business combination agreement and the transactions contemplated by the agreement were fair to, and in the best interests of, T-Mobile and its stockholders, approved and declared advisable the business combination agreement and the transactions contemplated by the agreement, and resolved to recommend that the T-Mobile stockholders approve the T-Mobile charter amendment and the T-Mobile share issuance in connection with the transactions contemplated by the business combination agreement.

On April 29, 2018, the Sprint board of directors, including all of the members of the Sprint independent committee, held a meeting. Representatives of Sprint management, Morrison & Foerster, Raine, J.P. Morgan,

 

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Goodwin and Centerview attended the meeting. At the meeting, representatives of Morrison & Foerster reviewed and discussed with the Sprint board of directors the final transaction terms, and the Sprint board of directors considered final drafts of the business combination agreement and the other agreements to be entered into in connection with the business combination transaction. Representatives of Centerview presented Centerview’s financial analyses in connection with the transaction and rendered Centerview’s oral opinion to the Sprint independent committee, which was subsequently confirmed by delivery of a written opinion dated as of April 29, 2018, that as of such date and based upon and subject to the assumptions made, procedures followed, matters considered, and qualifications and limitations upon the review undertaken by Centerview in preparing its opinion, the exchange ratio provided for pursuant to the business combination agreement was fair, from a financial point of view, to the holders of Sprint common stock (other than Sprint common stock held in treasury or held by Merger Company, the SoftBank parties, the Deutsche Telekom parties or any affiliate of Sprint or T-Mobile). Representatives of Goodwin reviewed the Sprint independent committee’s duties and responsibilities as well as the approvals required from the Sprint independent committee. The Sprint independent committee then determined that the business combination agreement and the transactions contemplated by the agreement were fair to, and in the best interests of, Sprint and the Sprint minority stockholders, and unanimously resolved to recommend that (1) the business combination agreement be submitted to the Sprint board of directors, (2) the Sprint board of directors approve and declare advisable the business combination agreement and the transactions contemplated thereby, (3) the Sprint board of directors submit the business combination agreement to Sprint’s stockholders for adoption and (4) the Sprint board of directors recommend adoption of the business combination agreement to Sprint’s stockholders. In addition, representatives of Raine and J.P. Morgan provided their respective firms’ updated financial analyses of the final financial terms of the proposed transaction. At the meeting, Raine rendered its oral opinion, subsequently confirmed by a written opinion dated April 29, 2018, to the Sprint board of directors to the effect that, as of such date, based upon and subject to the assumptions, limitations, qualifications, conditions and other matters set forth in its opinion, the exchange ratio pursuant to the business combination agreement was fair, from a financial point of view, to the holders of Sprint common stock as of immediately prior to the HoldCo mergers, taking into account the merger. In addition, at the meeting, J.P. Morgan rendered its oral opinion to the Sprint board of directors, subsequently confirmed by delivery of a written opinion dated April 29, 2018, to the effect that, as of such date, based upon and subject to the assumptions, limitations, qualifications, conditions and other matters set forth in its opinion, the exchange ratio in the proposed merger was fair, from a financial point of view, to the holders of Sprint common stock as of immediately prior to the HoldCo mergers. Upon consideration of the recommendation of the Sprint independent committee, the Sprint board of directors unanimously determined that the business combination agreement and the transactions contemplated by the agreement were fair to, and in the best interests of, Sprint and its stockholders, approved and declared advisable the business combination agreement and the transactions contemplated thereby, resolved to submit the business combination agreement to Sprint’s stockholders for adoption and resolved to recommend adoption of the business combination agreement to Sprint’s stockholders.

On April 29, 2018, the Deutsche Telekom board of management and, later, the Deutsche Telekom supervisory board approved entry by Deutsche Telekom into the transactions contemplated by the business combination agreement, as well as the other agreements to be entered into by Deutsche Telekom in connection with the transaction.

Later on April 29, 2018, T-Mobile USA entered into the original commitment letter pursuant to which the financial institutions party thereto committed to provide up to $38.0 billion in secured and unsecured debt financing in connection with the transaction, as further described in the section entitled “Description of Financing—Commitment Letter”, and T-Mobile, Sprint, Deutsche Telekom, SoftBank and certain of their affiliates executed the business combination agreement. Following the execution of the business combination agreement, T-Mobile and Sprint issued a joint press release announcing entry into the business combination agreement.

 

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T-Mobile’s Reasons for the Merger and Recommendation of the T-Mobile Board of Directors

At a meeting held on April 27, 2018, the T-Mobile board of directors unanimously determined that the business combination agreement and the transactions contemplated by the agreement are fair to, and in the best interests of, T-Mobile and its stockholders, and unanimously approved and declared advisable the business combination agreement and the transactions contemplated by the agreement. The T-Mobile board of directors recommends that the T-Mobile stockholders approve the T-Mobile charter amendment and the T-Mobile share issuance.

In arriving at this determination and recommendation, the T-Mobile board of directors reviewed and discussed a significant amount of information and consulted with T-Mobile’s management, legal advisors and financial advisors. The following are some of the significant factors that supported its decision to approve the business combination agreement:

 

    the belief that the combined company will be able to use the respective strengths of each of T-Mobile and Sprint to position itself as a leading wireless communications services provider with the network capacity to rapidly launch a nationwide 5G network with the breadth and depth critical to extend U.S. global internet and technology leadership;

 

    the belief that the transaction will accelerate the growth potential of T-Mobile through the addition of Sprint’s spectrum and network resources, which will enable the combined company to supercharge the Un-carrier strategy and deliver lower prices, greater value and greater competition in wireless, video and broadband services;

 

    the belief that the combined company’s spectrum resources and network capacity will allow it to expand product and service offerings and offer improved services to Americans in rural areas, create greater competition for business and government customers and result in expanded choice for broadband services;

 

    the view that the combination could result in potential aggregate annual run rate cost synergies of $6 billion or more, representing a net present value of $43 billion or more, net of expected costs to achieve such cost synergies, with the potential for additional possible synergies to be identified during integration, and the fact that T-Mobile stockholders will participate in the expected synergies and such synergies will allow the combined company to make a substantial investment in its business and next-generation network;

 

    the belief that the nature of the business strategies and networks of T-Mobile and Sprint, together with T-Mobile’s experience with integrating the business of MetroPCS, will allow for a successful integration of the two companies and rapid deployment of a nationwide 5G network;

 

    the fact that the terms of the combination provide for Sprint stockholders to receive 0.10256 of a share of T-Mobile common stock for each share of Sprint common stock and all T-Mobile stockholders to retain their T-Mobile common stock, and that, upon completion of the merger, T-Mobile stockholders will own approximately 67% of the common stock of the combined company (based on the outstanding shares of T-Mobile common stock and Sprint common stock as of the date of the business combination agreement), which will provide T-Mobile stockholders with an opportunity to participate in the equity value of the combined company, including potential future growth and expected synergies resulting from the business combination transaction;

 

    the belief that the combined company will have an appropriate capital structure and credit profile that will enable it to pursue its growth strategy; and

 

    the view that the combination of T-Mobile and Sprint will enable the combined company to take advantage of greater strategic and innovation opportunities with its significant spectrum and network resources and the integration of the capabilities of each company.

 

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These beliefs are based in part on the following factors that the T-Mobile board of directors considered:

 

    its knowledge and understanding of the T-Mobile business, operations, assets and liabilities, financial condition, earnings, strategy and future prospects;

 

    information and discussions with T-Mobile’s management, in consultation with T-Mobile’s advisors, regarding Sprint’s business, operations, assets and liabilities, financial condition, earnings, strategy and future prospects, and the results of T-Mobile’s due diligence review of Sprint;

 

    the current and prospective economic climate generally and competitive developments in the wireless communications services industry and related industries that have been converging in recent years;

 

    the fact that the board of directors of the combined company following the completion of the merger transactions will consist of 14 directors, nine of whom will be designated by Deutsche Telekom, T-Mobile’s current controlling stockholder, one of whom will be John Legere, chief executive officer of T-Mobile, and one of whom will be Masayoshi Son, chairman and chief executive officer of SoftBank;

 

    the fact that John Legere, chief executive officer of T-Mobile, will serve as chief executive officer of the combined company, and the fact that Timotheus Höttges, chairman of the T-Mobile board of directors, will serve as chairman of the board of directors of the combined company;

 

    the fixed exchange ratio in the business combination agreement, which will not be reduced or increased in the event of a change in the price of T-Mobile common stock or Sprint common stock;

 

    the potential strategic alternatives available to T-Mobile, including the possibility of remaining a stand-alone entity, and the T-Mobile board of directors’ short- and long-term assessment of the wireless communications services industry;

 

    the benefits that T-Mobile was able to obtain as a result of its negotiations with Sprint and SoftBank and the T-Mobile board of directors’ belief that this was the most favorable exchange ratio and terms, taken as a whole, to which Sprint and SoftBank would be willing to agree;

 

    the likelihood that the merger transactions would be completed based on, among other things, the conditions to closing and the assessment of the T-Mobile board of directors, after consulting with counsel, regarding the likelihood of obtaining all required regulatory approvals, and the termination and remedy provisions under the business combination agreement in the event that the transaction is not completed due to the failure to obtain required regulatory approvals without the imposition of a regulatory material adverse condition or otherwise;

 

    the determination by the T-Mobile independent committee that the business combination agreement and the transactions contemplated by the agreement are fair to and in the best interests of all of T-Mobile’s stockholders (including such stockholders other than Deutsche Telekom) and the recommendation of the T-Mobile independent committee that the T-Mobile board of directors approve the business combination agreement and the transactions contemplated by the agreement, which determination and recommendation were based upon, among other factors, the following (in addition to the factors considered by the T-Mobile board of directors):

 

    the fact that the terms of the combination provide for Sprint stockholders to receive 0.10256 of a share of T-Mobile common stock for each share of Sprint common stock and all T-Mobile stockholders to retain their shares of T-Mobile common stock;

 

    the fact that, upon completion of the merger, T-Mobile stockholders will own approximately 67% of the common stock of the combined company (based on the outstanding shares of T-Mobile common stock and Sprint common stock as of the date of the business combination agreement), and that all T-Mobile stockholders will have the opportunity to participate, proportionate to their ownership of the combined company, in the equity value of the combined company and the expected synergies resulting from the transaction;

 

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    the procedural safeguards and process implemented to enable the T-Mobile independent committee to determine the fairness of the proposed transaction for all of T-Mobile’s stockholders (including such stockholders other than Deutsche Telekom), including the independence of its members, its delegated power and responsibilities, the retention and advice of its own legal and financial advisors, and its deliberations, access to information and participation in connection with its evaluation of the proposed transaction;

 

    the frequency and extent of the T-Mobile independent committee’s deliberations, and its access to T-Mobile’s management and advisors in connection with its evaluation of the proposed transaction;

 

    the participation by representatives of the T-Mobile independent committee in the negotiation and review, with the advice of Latham & Watkins and RLF, of the governance arrangements for the combined company and the agreements and transactions entered or to be entered into between T-Mobile and Deutsche Telekom in connection with the transaction, including the license agreement amendment, which, among other things, would provide for a cap on the fee that would otherwise have been payable by the combined company to Deutsche Telekom thereunder, the financing matters agreement, which, among other things, would allow T-Mobile USA to incur secured debt in connection with and after completion of the merger and for the repayment and termination by T-Mobile USA of certain facilities provided by and debt owed to Deutsche Telekom upon closing of the merger, and the amended and restated stockholders’ agreement;

 

    the fact that the terms of the transaction provide that Deutsche Telekom, T-Mobile’s current controlling stockholder, will continue to control the combined company; John Legere, chief executive officer of T-Mobile, will continue to serve as the initial chief executive officer of the combined company; and the combined company will continue to be named “T-Mobile,” which gave the T-Mobile independent committee greater confidence in the ability of the combined company to achieve the estimated synergies;

 

    the financial analyses of Evercore reviewed with the T-Mobile independent committee on April 27, 2018 in connection with the rendering of its opinion and the opinion of Evercore to the T-Mobile independent committee, dated April 29, 2018, to the effect that, as of such date and based upon and subject to the various assumptions and limitations set forth in such opinion, the exchange ratio pursuant to the business combination agreement was fair from a financial point of view to the holders of shares of T-Mobile common stock (including such holders of T-Mobile common stock other than Deutsche Telekom and its affiliates), as more fully described in the section entitled “—Opinions of T-Mobile’s Financial Advisors”; and

 

    the T-Mobile independent committee’s determination that the potential synergies and other benefits that it anticipates T-Mobile and T-Mobile stockholders could achieve as a result of the merger transactions outweigh the uncertainties, risks and potentially negative factors relevant to the business combination considered by the T-Mobile board of directors (as described below), in addition to other uncertainties, risks and potentially negative factors considered by the T-Mobile independent committee;

 

    the financial analyses presented to the T-Mobile board of directors by PJT Partners on April 27, 2018 and the oral opinion of PJT Partners rendered to the T-Mobile board of directors, subsequently confirmed in its written opinion dated April 29, 2018, that, as of the date of such opinion and based upon and subject to the qualifications, limitations and assumptions stated in its written opinion, the exchange ratio pursuant to the business combination agreement was fair to T-Mobile from a financial point of view, as more fully described in the section entitled “—Opinions of T-Mobile’s Financial Advisors”;

 

   

the financial analyses presented to the T-Mobile board of directors by Goldman Sachs on April 27, 2018 and the oral opinion of Goldman Sachs delivered to the T-Mobile board of directors, which

 

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opinion was subsequently confirmed in its written opinion dated April 29, 2018, to the effect that, as of such date and based upon and subject to the factors and assumptions set forth in Goldman Sachs’ written opinion, the exchange ratio pursuant to the business combination agreement was fair from a financial point of view to T-Mobile, as more fully described in the section entitled “—Opinions of T-Mobile’s Financial Advisors”; and

 

    the fact that Sprint is not permitted to terminate the business combination agreement notwithstanding receipt of a proposal for a Sprint alternative transaction, even in the event that the Sprint board of directors changes or withdraws its recommendation that the Sprint stockholders vote their shares in favor of the adoption of the business combination agreement, and the fact that subsequent to the execution of the business combination agreement, SoftBank was expected to execute a support agreement requiring it to deliver a written consent in respect of its shares of Sprint common stock in favor of the adoption of the business combination agreement, which written consent would result in adoption of the business combination agreement by Sprint (which support agreement SoftBank subsequently executed).

The T-Mobile board of directors weighed these factors against a number of uncertainties, risks and potentially negative factors relevant to the business combination, including the following:

 

    the substantial risk that regulatory authorities might seek to impose conditions on or otherwise prevent or delay the merger, or impose restrictions or requirements on the operation of the businesses of the combined company after completion of the merger, and that as a result the transaction might not be completed in a timely manner, without the imposition of restrictions or requirements, or at all;

 

    the substantial indebtedness of Sprint and the anticipated substantial indebtedness of the combined company following the closing of the transaction, as well as the type and terms of such indebtedness, and the risk that the combined company will be constrained by its need to, and may not be able to, meet its debt service obligations, as well as the financial and other restrictive covenants contained in the agreements governing the combined company’s indebtedness, which could limit the combined company’s ability to grow its business and deploy a next-generation network;

 

    the challenges inherent in the combination of two business enterprises of the size and scope of T-Mobile and Sprint, including the possibility that anticipated synergies and other benefits of the transaction might not be achieved in the time frame contemplated or at all, and the other numerous risks and uncertainties that could adversely affect the combined company’s operating performance and financial results;

 

    the risk that T-Mobile may incur significant expenses in connection with the transaction and may become obligated to reimburse certain of Sprint’s expenses and/or pay Sprint $600 million in connection with a termination of the business combination agreement under certain circumstances, as more fully described in the section entitled “The Business Combination Agreement—Termination of the Business Combination Agreement”;

 

    the risk that announcing the transaction or the failure to complete the transaction could lead to negative perceptions of T-Mobile among investors, customers, employees and other stakeholders;

 

    the adverse impact that business uncertainty prior to the closing of the transaction and during the post-closing integration period could have on the ability of both T-Mobile and Sprint to attract, retain and motivate key personnel, retain customers and maintain business relationships;

 

    the risk that the transaction may divert management focus and resources from operating T-Mobile’s business, as well as other strategic opportunities, and that combining and integrating T-Mobile and Sprint may result in potential disruption;

 

   

the risk that the unaudited prospective financial information of T-Mobile and Sprint, and the estimated synergies, as further described under “—T-Mobile Unaudited Prospective Financial Information” and

 

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“—Sprint Unaudited Prospective Financial Information,” may not be achieved in the amounts or at the times anticipated;

 

    the fact that during the term of the business combination agreement, T-Mobile is prohibited from soliciting, initiating or knowingly encouraging any inquiry with respect to a T-Mobile alternative transaction, or participating in any discussions or negotiations regarding a T-Mobile alternative transaction;

 

    the fact that T-Mobile is not permitted to terminate the business combination agreement notwithstanding receipt of a proposal for a T-Mobile alternative transaction, even in the event that the T-Mobile board of directors changes or withdraws its recommendation that the T-Mobile stockholders vote their shares in favor of the T-Mobile charter amendment and the T-Mobile share issuance, and the fact that subsequent to the execution of the business combination agreement, Deutsche Telekom was expected to execute a support agreement requiring it to deliver a written consent in respect of its shares of T-Mobile common stock in favor of the T-Mobile charter amendment and the T-Mobile share issuance, which written consent would result in approval of the T-Mobile charter amendment and the T-Mobile share issuance (which support agreement Deutsche Telekom subsequently executed); and

 

    the risks of the type and nature described under the sections entitled “Risk Factors” and “Cautionary Statement Regarding Forward-Looking Statements.”

The T-Mobile board of directors concluded that the uncertainties, risks and potentially negative factors relevant to the transaction were outweighed by the potential benefits that it expected T-Mobile and T-Mobile stockholders would achieve as a result of the merger transactions.

In considering the recommendation of the T-Mobile board of directors, T-Mobile stockholders should be aware that directors and executive officers of T-Mobile have interests in the transaction that are different from, or in addition to, any interests they might have solely as stockholders. See “—Interests of the T-Mobile Directors and Executive Officers in the Merger Transactions.”

This discussion of the information and factors considered by the T-Mobile board of directors (including the T-Mobile independent committee) includes the principal positive and negative factors, but is not intended to be exhaustive and may not include all of the factors considered by the T-Mobile board of directors. In view of the wide variety of factors considered in connection with its evaluation of the transaction, and the complexity of these matters, the T-Mobile board of directors did not find it useful and did not attempt to quantify or assign any relative or specific weights to the various factors that the T-Mobile board of directors considered in reaching its determination to approve the business combination agreement and the transactions contemplated thereby and to make its recommendations to T-Mobile stockholders. Rather, the T-Mobile board of directors viewed their respective decisions as being based on the totality of the information presented to them and the factors they considered. In addition, individual members of the T-Mobile board of directors may have given differing weights to different factors. It should be noted that this explanation of the reasoning of T-Mobile’s board of directors and certain information presented in this section is forward-looking in nature and, therefore, that information should be read in light of the factors discussed in the section entitled “Cautionary Statement Regarding Forward-Looking Statements.”

Opinions of T-Mobile’s Financial Advisors

Opinion of PJT Partners

At a meeting of the T-Mobile board of directors, PJT Partners rendered its oral opinion, subsequently confirmed in its written opinion dated April 29, 2018, to the T-Mobile board of directors that, as of the date of such opinion and based upon and subject to the qualifications, limitations and assumptions stated in its written opinion, the exchange ratio pursuant to the business combination agreement was fair to T-Mobile from a financial point of view.

 

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The full text of the written opinion of PJT Partners, dated April 29, 2018, which sets forth the assumptions made, procedures followed, factors considered and limitations upon the review undertaken by PJT Partners in rendering its opinion, is attached to this joint consent solicitation statement/prospectus as Annex H and incorporated by reference herein. The summary of the PJT Partners opinion contained in this joint consent solicitation statement/prospectus is qualified in its entirety by reference to the full text of PJT Partners’ written opinion. PJT Partners’ advisory services and opinion were provided solely for the information and assistance of the T-Mobile board of directors in connection with its consideration of the merger transactions and the opinion does not constitute a recommendation as to any action the T-Mobile board of directors should take with respect to the merger transactions or how any holder of T-Mobile common stock or Sprint common stock should vote with respect to the merger transactions or any other matter.

In arriving at its opinion, PJT Partners, among other things:

 

    reviewed certain publicly available information concerning the business, financial condition and operations of Sprint and T-Mobile;

 

    reviewed certain internal information concerning the business, financial condition and operations of Sprint and T-Mobile prepared by the management of Sprint and T-Mobile, respectively, and approved for PJT Partners’ use and furnished to PJT Partners by the management of T-Mobile;

 

    reviewed certain internal financial analyses, estimates and forecasts relating to T-Mobile, including projections for T-Mobile’s fiscal years 2018 through 2026, that were prepared by or at the direction of and approved and furnished to PJT Partners by the management of T-Mobile (which we refer to as the T-Mobile management T-Mobile forecasts and which are summarized under “The Merger Transactions—T-Mobile Unaudited Prospective Financial Information”);

 

    reviewed certain financial analyses, estimates and forecasts relating to Sprint, including projections for calendar years 2018 through 2022, that were prepared by the management of Sprint and approved for PJT Partners’ use and furnished to PJT Partners by the management of T-Mobile, and projections for calendar years 2018 through 2026 that were prepared by or at the direction of and approved and furnished to PJT Partners by the management of T-Mobile (which we refer to as the Sprint management Sprint forecasts and the T-Mobile management Sprint forecasts, respectively, and which are summarized under “The Merger Transactions—Sprint Unaudited Prospective Financial Information”);

 

    reviewed certain financial analyses, estimates and forecasts relating to the combined company, including projections for calendar years 2019 through 2026 that were prepared by or at the direction of and approved and furnished to PJT Partners by the management of T-Mobile (which we refer to as the combined company forecasts and, together with T-Mobile management T-Mobile forecasts, the Sprint management Sprint forecasts and the T-Mobile management Sprint forecasts, we refer to collectively in this section entitled “—Opinion of PJT Partners” as the “forecasts,” and which are summarized under “The Merger Transactions—T-Mobile Unaudited Prospective Financial Information”);

 

    held discussions with members of senior management of T-Mobile concerning, among other things, their evaluations of the merger transactions and T-Mobile’s and Sprint’s respective businesses, operating and regulatory environment, financial condition, prospects and strategic objectives;

 

    reviewed the expectations of the management of T-Mobile with respect to the pro forma impact of the merger transactions on the future financial performance of the combined company, including the estimated synergies (which are summarized under “The Merger Transactions—T-Mobile Unaudited Prospective Financial Information”), and other strategic benefits expected by the management of T-Mobile to result from the merger transactions;

 

   

reviewed the net operating loss projections for T-Mobile, Sprint and the combined company that were prepared by or at the direction of and approved and furnished to PJT Partners by the management of

 

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T-Mobile (which we refer to in this section entitled “—Opinion of PJT Partners” as the “NOL forecasts”);

 

    reviewed certain estimates relating to the capitalization of Sprint, T-Mobile and the combined company as of March 31, 2018 and December 31, 2018 that were prepared by the management of Sprint or T-Mobile, as applicable, and approved for PJT Partners’ use and furnished to PJT Partners by the management of T-Mobile (which, with respect to the estimates relating to the capitalization of Sprint, T-Mobile and the combined company as of December 31, 2018, we refer to in this section entitled “—Opinion of PJT Partners” as the “estimated capitalization”);

 

    reviewed certain estimates relating to transaction and financing fees and expenses to be incurred in connection with the merger transactions that were prepared by and approved for PJT Partners’ use and furnished to PJT Partners by the management of T-Mobile (which we refer to in this section entitled “—Opinion of PJT Partners” as the “estimated transaction expenses”);

 

    compared certain financial information for Sprint and T-Mobile with similar publicly available financial and stock market data for certain other companies that PJT Partners deemed to be relevant;

 

    reviewed the publicly available financial terms of certain other business combinations that PJT Partners deemed to be relevant;

 

    reviewed the business combination agreement; and

 

    performed such other financial studies, analyses and investigations, and considered such other matters, as PJT Partners deemed necessary or appropriate for purposes of rendering its opinion.

In preparing its opinion, with the consent of T-Mobile, PJT Partners relied upon and assumed the accuracy and completeness of the foregoing information and all other information discussed with or reviewed by it, without independent verification thereof. PJT Partners assumed, with the consent of T-Mobile, that the forecasts and the estimated capitalization and the underlying assumptions therefor, and all other financial analyses, estimates and forecasts provided to PJT Partners by T-Mobile’s or Sprint’s management, were reasonably prepared in accordance with industry practice and represented T-Mobile or Sprint, as applicable, management’s best then available estimates and judgments as to the business, financial condition and operations and future financial performance of T-Mobile, Sprint and/or the combined company, as applicable. PJT Partners assumed, with the consent of T-Mobile, that the amounts and timing of the estimated synergies were reasonable and that the estimated synergies would be realized in accordance with such estimates, and estimates of the tax effects set forth in the NOL forecasts were reasonable and that the net operating losses described therein would be utilized in accordance with such estimates. PJT Partners also assumed, at the direction of T-Mobile, that for purposes of its analysis the estimated transaction expenses represented the aggregate amount of transaction and financing fees and expenses that would be incurred in connection with the merger transactions.

With the consent of T-Mobile, PJT Partners assumed no responsibility for and expressed no opinion as to any of the forecasts, the estimated synergies, the NOL forecasts, the estimated capitalization or the estimated transaction expenses, the assumptions upon which any of the foregoing were based or any other financial analyses, estimates and forecasts provided to PJT Partners by the management of T-Mobile or Sprint. PJT Partners also assumed that there were no material changes in the assets, financial condition, results of operations, business or prospects of each of T-Mobile and Sprint since the respective dates of the last financial statements made available to PJT Partners. PJT Partners further relied, with the consent of T-Mobile, upon the assurances of the management of T-Mobile that they were not aware of any facts that would make the information and projections provided by them inaccurate, incomplete or misleading.

PJT Partners was not asked to undertake, and did not undertake, an independent verification of any information provided to or reviewed by it, nor was it furnished with any such verification and it did not assume any responsibility or liability for the accuracy or completeness thereof. PJT Partners did not conduct a physical inspection of any of the properties or assets of T-Mobile or Sprint. PJT Partners did not make an independent

 

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evaluation or appraisal of the assets or the liabilities (contingent or otherwise) of T-Mobile or Sprint, nor was it furnished with any such evaluations or appraisals, nor did it evaluate the solvency of T-Mobile or Sprint (or the impact of the merger transactions thereon) under any applicable laws.

PJT Partners also assumed, with the consent of T-Mobile, that the completion of the merger transactions would be effected in accordance with the terms and conditions of the business combination agreement, without waiver, modification or amendment of any material term, condition or agreement, and that, in the course of obtaining the necessary regulatory or third party consents and approvals (contractual or otherwise, including any consent or waiver under T-Mobile’s, Sprint’s or any of their affiliates’ debt instruments or securities) for the merger transactions and related transactions, no delay, limitation, restriction or condition would be imposed that would have an adverse effect on T-Mobile or the contemplated benefits of the merger transactions in any way that would affect PJT Partners’ analysis. PJT Partners further assumed, with the consent of T-Mobile, that the merger transactions would qualify as a “reorganization” within the meaning of Section 368(a) of the Code. PJT Partners did not express any opinion as to any tax or other consequences that might result from the merger transactions, nor did its opinion address any legal, tax, regulatory or accounting matters, as to which PJT Partners understood that T-Mobile obtained such advice as it deemed necessary from qualified professionals. PJT Partners is not a legal, tax or regulatory advisor and relied upon, with the consent of T-Mobile and without independent verification, the assessment of T-Mobile and its legal, tax and regulatory advisors with respect to such matters.

PJT Partners did not consider the relative merits of the merger transactions as compared to any other business plan or opportunity that might be available to T-Mobile or the effect of any other arrangement in which T-Mobile might engage and PJT Partners’ opinion did not address the underlying decision by T-Mobile to engage in the merger transactions. PJT Partners’ opinion was limited to the fairness as of the date of the opinion, from a financial point of view, to T-Mobile of the exchange ratio pursuant to the business combination agreement, and PJT Partners’ opinion did not address any other aspect or implication of the merger transactions, the business combination agreement, or any other agreement or understanding entered into or to be entered into in connection with the merger transactions or otherwise. PJT Partners further expressed no opinion or view as to the fairness of the merger transactions or any related transaction to the holders of any class of securities, creditors or other constituencies of any party, including, without limitation, the treatment of any debt provided by Deutsche Telekom to T-Mobile in connection with the merger transactions, or as to the underlying decision by T-Mobile to engage in the merger transactions. PJT Partners also expressed no opinion as to the fairness (financial or otherwise) of the amount or nature of the compensation to any officers, directors or employees, or any class of such persons or any party to the merger transactions, whether relative to the exchange ratio or otherwise. PJT Partners’ opinion does not constitute a recommendation to any stockholder of T-Mobile or Sprint as to how any such stockholder should vote or act with respect to the merger transactions or any other matter.

PJT Partners’ opinion was necessarily based upon economic, market, monetary, regulatory and other conditions as they existed and could be evaluated, and the information made available to PJT Partners, as of the date thereof. PJT Partners expressed no opinion as to the prices or trading ranges at which the shares of T-Mobile common stock or Sprint common stock would trade at any time. PJT Partners assumed no responsibility for updating or revising its opinion based on circumstances or events occurring after the date thereof. The issuance of PJT Partners’ opinion was approved by a fairness committee of PJT Partners in accordance with established procedures.

PJT Partners’ advisory services and opinion were provided solely for the information and assistance of the T-Mobile board of directors in connection with its consideration of the merger transactions and the opinion does not constitute a recommendation as to any action the T-Mobile board of directors should take with respect to the merger transactions or how any holder of T-Mobile common stock or Sprint common stock should vote with respect to the merger transactions or any other matter.

 

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Summary of Financial Analyses

In connection with rendering its opinion, PJT Partners performed certain financial, comparative and other analyses as summarized below. In arriving at its opinion, PJT Partners did not ascribe a specific range of values to the shares of T-Mobile common stock but rather made its determination that, from a financial point of view, the exchange ratio pursuant to the business combination agreement was fair to T-Mobile on the basis of various financial and comparative analyses. The preparation of a fairness opinion is a complex process and involves various determinations as to the most appropriate and relevant methods of financial and comparative analyses and the application of those methods to the particular circumstances. Therefore, a fairness opinion is not readily susceptible to summary description.

In arriving at its opinion, PJT Partners did not attribute any particular weight to any single analysis or factor considered by it but rather made qualitative judgments as to the significance and relevance of each analysis and factor relative to all other analyses and factors performed and considered by it and in the context of the circumstances of the merger transactions. Accordingly, PJT Partners believes that its analyses must be considered as a whole, as considering any portion of such analyses and factors, without considering all analyses and factors as a whole, could create a misleading or incomplete view of the process underlying its opinion.

The following is a summary of the material financial analyses used by PJT Partners in preparing its opinion to the T-Mobile board of directors. Certain financial analyses summarized below include information presented in tabular format. In order to fully understand the financial analyses used by PJT Partners, the tables must be read together with the text of each summary, as the tables alone do not constitute a complete description of the financial analyses. In performing its analyses, PJT Partners made numerous assumptions with respect to industry performance, general business and economic conditions and other matters, many of which are beyond the control of T-Mobile or any other parties to the merger transactions. None of T-Mobile, PJT Partners, or any other person assumes responsibility if future results are materially different from those discussed. Any estimates contained in these analyses are not necessarily indicative of actual values or predictive of future results or values, which may be significantly more or less favorable than as set forth below. In addition, analyses relating to the value of the businesses do not purport to be appraisals or reflect the prices at which the businesses may actually be sold. The financial analyses summarized below were based on the forecasts, the estimated synergies, the NOL forecasts, the estimated capitalization, the estimated transaction expenses and other financial information prepared and furnished to PJT Partners by or on behalf of the management of T-Mobile. The following summary does not purport to be a complete description of the financial analyses performed by PJT Partners. The following quantitative information, to the extent that it is based on market data, is based on market data as it existed, for T-Mobile and Sprint, on April 26, 2018 (and with respect to market data for the last “unaffected” trading day for shares of T-Mobile common stock and Sprint common stock, April 9, 2018, prior to an article published in The Wall Street Journal on April 10, 2018 reporting that T-Mobile and Sprint had recommenced negotiations regarding a possible business combination transaction ), and is not necessarily indicative of current or future market conditions. Fully diluted share numbers for T-Mobile and Sprint used below were provided by, and used at the direction of, the management of T-Mobile.

Selected Comparable Company Analysis

In order to assess how the public market values shares of similar publicly traded companies and to provide a range of relative implied equity values per share of Sprint common stock and T-Mobile common stock by reference to these companies, which could then be used to calculate implied exchange ratio ranges, PJT Partners reviewed and compared specific financial and operating data relating to Sprint and T-Mobile with selected companies that PJT Partners deemed comparable to Sprint and T-Mobile. The selected comparable companies were AT&T Inc. (which we refer to as “AT&T”) and Verizon Communications Inc. (which we refer to as “Verizon”).

PJT Partners calculated and compared various implied financial multiples and ratios of Sprint, T-Mobile and the selected comparable companies. As part of its selected comparable company analysis, PJT Partners calculated

 

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and analyzed total adjusted enterprise value (calculated as the equity value based on fully diluted shares outstanding using the treasury stock method, assuming, in the case of Sprint, the cash settlement of warrants owned by SoftBank, (1) plus debt and less cash, each as of March 31, 2018, after giving effect to certain adjustments, (2) less the present value of net operating losses discounted to March 31, 2018, (3) plus tax-affected unfunded pension and other post-retirement liabilities, (4) plus certain adjustments for minority interests and investments in affiliates) (which we refer to in this section entitled “—Opinion of PJT Partners” as “adjusted TEV”) as a multiple of 2018 calendar year estimated (which we refer to in this section entitled “—Opinion of PJT Partners” as “2018E”) cash adjusted EBITDA (post-SBC). “Cash adjusted EBITDA (post-SBC)” is calculated as (a) EBITDA (as described in “The Merger Transactions—T-Mobile Unaudited Prospective Financial Information” and “The Merger Transactions—Sprint Unaudited Prospective Financial Information”) less (b) leasing revenue. All of these calculations were performed and based on publicly available financial data and (i) for T-Mobile, on T-Mobile’s closing unaffected share price as of April 9, 2018 and closing share price as of April 26, 2018, (ii) for Sprint, on Sprint’s closing unaffected share price as of April 9, 2018 and closing share price as of April 26, 2018, and at the exchange ratio pursuant to the business combination agreement as of April 9, 2018 and April 26, 2018, (iii) for AT&T, on AT&T’s closing share price as of April 26, 2018 (reflecting the pro forma impact of the pending Time Warner Inc. acquisition) and (iv) for Verizon, on Verizon’s closing share price as of April 26, 2018. The results of this selected comparable company analysis are summarized below:

Selected Comparable Companies

    T-Mobile1     Sprint2     Verizon     AT&T  
    Unaffected
as of 4/9/18
    At Market
as of 4/26/18
    Unaffected
as of 4/9/18
    At Market
as of 4/26/18
    At 0.10256x
exchange ratio
    At Market
as of 4/26/18
    At Market
as of 4/26/18
 
            as of 4/9/18     as of 4/26/18      

Adjusted TEV/2018E cash adjusted EBITDA (post-SBC)

    7.8x       8.1x       6.7x       7.2x       7.3x       7.5x       7.3x       7.2x  

 

1 Based on T-Mobile management T-Mobile forecasts.
2 Based on T-Mobile management Sprint forecasts.

PJT Partners, based on its professional judgment, selected the comparable companies listed above because PJT Partners believed their businesses and operating profiles are reasonably similar to that of Sprint and T-Mobile, as applicable. However, because of the inherent differences between the businesses, operations and prospects of Sprint and T-Mobile, as applicable, and those of the selected comparable companies, PJT Partners believed that it was inappropriate to, and therefore did not, rely solely on the quantitative results of the selected comparable company analysis. Accordingly, PJT Partners also made qualitative judgments concerning the differences between the businesses, financial and operating characteristics and prospects of Sprint, T-Mobile and the selected comparable companies that could affect the public trading values of each in order to provide a context in which to consider the results of the quantitative analysis. These qualitative judgments related primarily to the differing sizes, growth prospects, profitability levels and degree of operational risk between Sprint, T-Mobile and the companies included in the selected company analysis.

Selected Comparable Company Analysis—Sprint

With respect to Sprint, based upon these judgments, PJT Partners selected an adjusted TEV to 2018E cash adjusted EBITDA (post-SBC) multiple range of 6.75x to 7.25x and applied such range to Sprint’s 2018E cash adjusted EBITDA (post-SBC) based on the T-Mobile management Sprint forecasts to calculate a range of implied prices per share of Sprint common stock based on the fully diluted number of shares of Sprint common stock as of April 26, 2018. The following summarizes the results of these calculations:

 

     Implied Prices per Share
of Sprint Common Stock

T-Mobile management Sprint forecasts

   $5.20 – $6.08

 

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PJT Partners then compared this range to (1) the implied value per share of Sprint common stock of $6.57 based on the closing share price of T-Mobile common stock of $64.10 as of April 26, 2018 and the exchange ratio pursuant to the business combination agreement and (2) the unaffected closing share price of Sprint common stock of $5.14 as of April 9, 2018.

Selected Comparable Company Analysis—T-Mobile

With respect to T-Mobile, based upon these judgments, PJT Partners selected an adjusted TEV to 2018E cash adjusted EBITDA (post-SBC) multiple range of 7.5x to 8.0x and applied such range to T-Mobile’s 2018E cash adjusted EBITDA (post-SBC) based on the T-Mobile management T-Mobile forecasts to calculate a range of implied prices per share of T-Mobile common stock based on the fully diluted number of shares of T-Mobile common stock as of April 26, 2018. The following summarizes the results of these calculations:

 

     Implied Prices per Share
of T-Mobile Common
Stock

T-Mobile management T-Mobile forecasts

   $56.59 – $62.57

PJT Partners then compared this range to (1) the closing share price of T-Mobile common stock of $64.10 as of April 26, 2018 and (2) the unaffected closing share price of T-Mobile common stock of $59.74 as of April 9, 2018.

Implied Exchange Ratio

Based on the range of implied equity value per share for Sprint and the range of implied equity value per share for T-Mobile that were calculated by PJT Partners in its comparable company analyses, PJT Partners calculated a range of implied exchange ratios for T-Mobile common stock per share of Sprint common stock. PJT Partners calculated the high end of the implied exchange ratio range by dividing the high value of the Sprint implied equity values per share reference range by the high value of the T-Mobile implied equity values per share reference range. PJT Partners calculated the low end of the implied exchange ratio range by dividing the low value of the Sprint implied equity values per share reference range by the low value of the T-Mobile implied equity values per share reference range. The result of this analysis, as compared to the exchange ratio pursuant to the business combination agreement, was an implied exchange ratio range of 0.09192x – 0.09715x.

 

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Selected Precedent Transaction Analysis

PJT Partners reviewed, to the extent publicly available, and analyzed the valuation and financial metrics relating to the following fourteen selected transactions since 2004 involving companies in the U.S. wireless industry, which PJT Partners, in its professional judgment, considered generally relevant for comparative purposes. For each precedent transaction, PJT Partners reviewed the transaction total enterprise value implied for each target company based on the consideration payable in the applicable selected transaction as a multiple of the target company’s trailing EBITDA and the target company’s forward EBITDA. The following summarizes the results of these calculations:

 

Month and Year Announced

 

Acquirer

 

Target

  Transaction
Total
Enterprise
Value
($ in billions)
    Transaction
Total Enterprise
Value / EBITDA
 
        Trailing     Forward  

September 2013

  Verizon Communications Inc.   Vodafone Group Plc’s 45% stake in Cellco Partnership, Inc.   $ 130.0       8.9x       8.4x  

July 2013

  AT&T Inc.   Leap Wireless International, Inc.     4.1       8.7x       8.7x  

June 2013

  SoftBank Corp.   Sprint Corporation     47.3       8.9x       6.9x  

October 2012

  T-Mobile US, Inc.   MetroPCS Communications, Inc.     8.3       6.3x       6.1x  

March 2011

  AT&T Inc.   T-Mobile US, Inc.     39.0       7.1x       7.0x  

November 2008

  AT&T Inc.   Centennial Communications Corp.     2.8       7.0x       6.9x  

June 2008

  Verizon Wireless Inc.   Alltel Corporation     28.1       8.7x       8.3x  

September 2007

  T-Mobile US, Inc.   SunCom Wireless Holdings, Inc.     2.4       14.2x       11.9x  

July 2007

  Verizon Wireless Inc.   Rural Cellular Corporation     2.7       11.4x       10.1x  

June 2007

  AT&T Inc.   Dobson Communications Corporation     5.1       10.4x       9.8x  

May 2007

  TPG Partners V, L.P. and Goldman Sachs Capital Partners VI, L.P.   Alltel Corporation     27.2       9.9x       9.1x  

January 2005

  Alltel Corporation   Western Wireless Corporation     5.8       9.4x       8.6x  

December 2004

  Sprint Corporation   Nextel Communications, Inc.     42.3       8.5x       7.5x  

February 2004

  Cingular Wireless LLC   AT&T Wireless Services, Inc.     47.3       9.9x       9.9x  

The reasons for and the circumstances surrounding each of the selected precedent transactions analyzed were diverse and there are inherent differences in the business, operations, financial conditions and prospects of Sprint and the companies included in the selected precedent transaction analysis. Accordingly, PJT Partners believed that a purely quantitative selected precedent transaction analysis would not be particularly meaningful in the context of considering the merger transactions. PJT Partners therefore made qualitative judgments concerning the differences between the characteristics of the selected precedent transactions and the merger transaction that would affect the acquisition values of the selected target companies and Sprint.

Based upon these judgments, after reviewing the above analysis, PJT Partners selected an adjusted TEV to 2018E cash adjusted EBITDA (post-SBC) multiple range of 7.5x to 8.5x and applied such range to Sprint’s 2018E cash adjusted EBITDA (post-SBC) based on the T-Mobile management Sprint forecasts to calculate a range of implied enterprise values for Sprint. PJT Partners then calculated a range of implied prices per share of Sprint common stock. The following summarizes the result of these calculations:

 

Precedent M&A Transactions

   Implied Prices per Share
of Sprint Common Stock

T-Mobile management Sprint forecasts

   $6.52 – $8.27

PJT Partners then compared this range to (1) the implied value per share of Sprint common stock of $6.57 based on the closing share price of T-Mobile common stock of $64.10 as of April 26, 2018 and the exchange

 

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ratio pursuant to the business combination agreement and (2) the unaffected closing share price of Sprint common stock of $5.14 as of April 9, 2018.

Discounted Cash Flow Analysis

Sprint Standalone

In order to estimate the present value of Sprint common stock as of March 31, 2018, PJT Partners performed discounted cash flow (which we refer to in this section entitled “—Opinion of PJT Partners” as “DCF”) analyses of Sprint using both the T-Mobile management Sprint forecasts and the Sprint management Sprint forecasts. A discounted cash flow analysis is a traditional valuation methodology used to derive a valuation of an asset by calculating the “present value” of estimated future cash flows generated by the asset. “Present value” refers to the current value of future cash flows or amounts and is obtained by discounting those future cash flows or amounts by a discount rate that takes into account macroeconomic assumptions and estimates of risk, the opportunity cost of capital, expected returns and other appropriate factors.

8.75 Year DCF Analysis—T-Mobile Management Sprint Forecasts

With respect to the discounted cash flow analysis based on the T-Mobile management Sprint forecasts, to calculate the estimated enterprise value of Sprint using the discounted cash flow method, PJT Partners added (1) Sprint’s projected after-tax unlevered free cash flows for the nine months ended December 31, 2018 and the calendar years 2019 through 2026 (which we refer to in this section entitled “—Opinion of PJT Partners” as the “8.75 year DCF analysis”) based on the T-Mobile management Sprint forecasts to (2) ranges of “terminal values” of Sprint as of December 31, 2026, and discounted such amount to its present value as of March 31, 2018 using a range of selected discount rates. The residual value of Sprint at the end of the projection period, or “terminal value,” was estimated by applying the exit multiple range of 6.5x to 7.5x to Sprint’s 2026 calendar year estimated (which we refer to in this section entitled “—Opinion of PJT Partners” as “2026E”) cash adjusted EBITDA (post-SBC) from the T-Mobile management Sprint projections. The after-tax unlevered free cash flows and terminal values were then discounted to present value as of March 31, 2018 using discount rates ranging from 6.75% to 7.75%. This range of discount rates was selected based on PJT Partners’ analysis of Sprint’s weighted average cost of capital. PJT Partners then calculated a range of implied equity values per share of Sprint common stock by subtracting debt, as of March 31, 2018, from, and adding cash, as of March 31, 2018, and the present value of certain net operating losses of approximately $4.5 billion as of March 31, 2018 based on the NOL forecasts as calculated by PJT Partners using a discount rate of 7.875% to, the estimated enterprise value derived using the discounted cash flow method and dividing such amounts by the fully diluted number of shares of Sprint common stock as of April 26, 2018. The following summarizes the results of these calculations:

 

Sprint Standalone 8.75 Year DCF Analysis

   Implied Prices per Share of
Sprint Common Stock

T-Mobile management Sprint forecasts

   $5.92 – $8.21

PJT Partners then compared this range to (1) the implied value per share of Sprint common stock of $6.57 based on the closing share price of T-Mobile common stock of $64.10 as of April 26, 2018 and the exchange ratio pursuant to the business combination agreement and (2) the unaffected closing share price of Sprint common stock of $5.14 as of April 9, 2018.

4.75 Year DCF Analysis—Sprint Management Sprint Forecasts

With respect to the discounted cash flow analysis based on the Sprint management Sprint forecasts, to calculate the estimated enterprise value of Sprint using the discounted cash flow method, PJT Partners added (1) Sprint’s projected after-tax unlevered free cash flows for the nine months ended December 31, 2018 and the calendar years 2019 through 2022 (which we refer to in this section entitled “—Opinion of PJT Partners” as the “4.75 year DCF analysis”) based on the Sprint management Sprint forecasts to (2) ranges of “terminal values” of

 

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Sprint as of December 31, 2022, and discounted such amount to its present value as of March 31, 2018 using a range of selected discount rates. PJT Partners applied the same exit multiple range of 6.5x to 7.5x to Sprint’s 2022 calendar year estimated cash adjusted EBITDA (post-SBC) from the Sprint management Sprint forecasts. The after-tax unlevered free cash flows and terminal values were similarly discounted to present value as of March 31, 2018 using discount rates ranging from 6.75% to 7.75%, determined based on PJT Partners’ analysis of Sprint’s weighted average cost of capital. The following summarizes the results of these calculations:

 

Sprint Standalone 4.75 Year DCF Analysis

   Implied Prices per Share of
Sprint Common Stock

Sprint management Sprint forecasts

   $7.52 – $10.07

PJT Partners then compared this range to (1) the implied value per share of Sprint common stock of $6.57 based on the closing share price of T-Mobile common stock of $64.10 as of April 26, 2018 and the exchange ratio pursuant to the business combination agreement and (2) the unaffected closing share price of Sprint common stock of $5.14 as of April 9, 2018.

T-Mobile Standalone—8.75 Year DCF Analysis, T-Mobile Management T-Mobile Forecasts

In order to estimate the present value of T-Mobile common stock as of March 31, 2018, PJT Partners performed a discounted cash flow analysis of T-Mobile.

To calculate the estimated enterprise value of T-Mobile on a standalone basis using the discounted cash flow method, PJT Partners added (1) T-Mobile’s projected after-tax unlevered free cash flows for the 8.75 year DCF analysis period based on the T-Mobile management T-Mobile forecasts to (2) ranges of “terminal values” of T-Mobile as of December 31, 2026, and discounted such amount to its present value as of March 31, 2018 using a range of selected discount rates. The residual value of T-Mobile at the end of the projection period, or “terminal value,” was estimated by applying the exit multiple range of 7.0x to 8.0x to T-Mobile’s 2026E cash adjusted EBITDA (post-SBC) from the T-Mobile management T-Mobile forecasts. The after-tax unlevered free cash flows and terminal values were then discounted to present value as of March 31, 2018 using discount rates ranging from 6.25% to 7.25%. This range of discount rates was selected based on PJT Partners’ analysis of T-Mobile’s weighted average cost of capital. PJT Partners then calculated a range of implied equity values per share of T-Mobile common stock by subtracting debt, as of March 31, 2018, from, and adding cash, as of March 31, 2018, and the present value of certain net operating losses of approximately $1.8 billion as of March 31, 2018 based on the NOL forecasts as calculated by PJT Partners using a discount rate of 5.75% to, the estimated enterprise value derived using the discounted cash flow method and dividing such amounts by the fully diluted number of shares of T-Mobile common stock as of April 26, 2018. The following summarizes the results of these calculations:

 

T-Mobile Standalone 8.75 Year DCF Analysis

   Implied Prices per Share of
T-Mobile Common Stock

T-Mobile management T-Mobile forecasts

   $67.96 – $84.70

PJT Partners then compared this range to (1) the closing share price of T-Mobile common stock of $64.10 as of April 26, 2018 and (2) the unaffected closing share price of T-Mobile common stock of $59.74 as of April 9, 2018.

Implied Exchange Ratio Without and With Synergies—8.75 Year DCF Analysis

Based on the range of implied equity values per share for Sprint and the range of implied equity values per share for T-Mobile that were calculated by PJT Partners in its respective 8.75 year DCF analyses, PJT Partners calculated a range of implied exchange ratios for T-Mobile common stock per share of Sprint common stock. PJT Partners calculated the high end of the implied exchange ratio range by dividing the high value of the Sprint implied equity values per share from the 8.75 year DCF analysis by the high value of the T-Mobile implied

 

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equity values per share from the 8.75 year DCF analysis. PJT Partners calculated the low end of the implied exchange ratio range by dividing the low value of the Sprint implied equity values per share from the 8.75 year DCF analysis by the low value of the T-Mobile implied equity values per share from the 8.75 year DCF analysis. The result of this analysis, as compared to the exchange ratio pursuant to the business combination agreement, was an implied exchange ratio range of 0.08716x – 0.09687x.

In respect of the 8.75 year DCF analyses for T-Mobile and Sprint, PJT also calculated a range of implied exchange ratios for Sprint common stock per share of T-Mobile common stock, for purposes of which the value of Sprint based on a merger with T-Mobile included a net present value of $43.6 billion of net synergies based upon the estimated synergies (net of any costs to achieve the estimated synergies), as directed by T-Mobile’s management. The result of this analysis, as compared to the exchange ratio pursuant to the business combination agreement, was an implied exchange ratio range of 0.22018x – 0.24083x.

Contribution Analysis

PJT Partners also performed a contribution analysis in which it reviewed and compared Sprint’s and T-Mobile’s respective cumulative levered free cash flows in terms of their contribution to the combined company. PJT Partners calculated Sprint’s and T-Mobile’s respective cumulative levered free cash flows (after giving effect to stock-based compensation expense) for the 2019 through 2023 calendar years (which we refer to in this section entitled “—Opinion of PJT Partners” as “2019E–2023E cumulative levered FCF (post-SBC)”) and for the 2019 through 2026 calendar years (which we refer to in this section entitled “—Opinion of PJT Partners” as “2019E–2026E cumulative levered FCF (post-SBC)”) based on the T-Mobile management Sprint forecasts and the T-Mobile management T-Mobile forecasts, as applicable, to derive Sprint’s and T-Mobile’s implied equity ownership split in the combined company. Based on the implied ownership percentages for Sprint stockholders and T-Mobile stockholders, PJT Partners then calculated an implied exchange ratio for T-Mobile common stock per share of Sprint common stock of (1) 0.06692x based on 2019E–2023E cumulative levered FCF (post-SBC) and (2) 0.08829x based on 2019E–2026E cumulative levered FCF (post-SBC).

“Has / Gets” Analysis

PJT Partners performed a “Has / Gets” analysis in order to compare (1) the standalone DCF-based per share value of T-Mobile to (2) the DCF-based per share value of the combined company, giving effect to the completion of the merger transactions, in each case from the perspective of the holders of T-Mobile common stock. For purposes of the “Has / Gets” analysis, PJT Partners calculated the DCF-based standalone value of T-Mobile based on PJT Partners’ 8.75 year DCF analysis for T-Mobile at the mid-point of the discount rates and exit multiples used in such analysis. For purposes of the “Has / Gets” analysis, PJT Partners calculated the DCF-based value of the combined company, giving effect to the completion of the merger transactions, to the holders of shares of T-Mobile common stock based on (a) their implied ownership percentage in the combined company at the exchange ratio pursuant to the business combination agreement and (b) the DCF-based value of the combined company calculated based on PJT Partners’ discounted cash flow analysis for the combined company, as described below, at the mid-points of discount rates and exit multiples used in such analysis. PJT Partners calculated the estimated enterprise value of the combined company on a pro forma basis using the discounted cash flow method utilized by PJT Partners with respect to Sprint and T-Mobile described above (i) based on (A) each of Sprint’s and T-Mobile’s projected after-tax unlevered free cash flows for the nine months ended December 31, 2018 based on the T-Mobile management Sprint forecasts and the T-Mobile management T-Mobile forecasts, respectively, and (B) the combined company’s projected after-tax unlevered free cash flows for the calendar years 2019 through 2026 based on the combined company forecasts (which reflected the estimated synergies, as directed by T-Mobile’s management) and (ii) (A) applying an exit multiple range of 7.0x to 8.0x to the combined company’s 2026E cash adjusted EBITDA (post-SBC) from the combined company projections and (B) discount rates ranging from 6.50% to 7.50%. PJT Partners then calculated a range of implied equity values per share of T-Mobile common stock, giving effect to the completion of the merger transactions, by subtracting estimated debt for the combined company (including estimated transaction expenses,

 

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as directed by T-Mobile’s management), as of March 31, 2018, from and adding estimated cash for the combined company, as of March 31, 2018, and the present value of certain estimated net operating losses of the combined company of approximately $7.2 billion as of March 31, 2018 based on the NOL forecasts as calculated by PJT Partners using a discount rate of 7.00% to, the estimated enterprise value derived using the discounted cash flow method and dividing such amounts by the pro forma share count of T-Mobile common stock, giving effect to the completion of the merger transactions, at the exchange ratio pursuant to the business combination agreement. The result of PJT Partners’ analysis for the DCF-based standalone value of T-Mobile was an implied price of $76.06 per share of T-Mobile common stock. The result of PJT Partners’ analysis for the DCF-based value of the combined company was an implied price of $107.98 per share of T-Mobile common stock, giving effect to the completion of the merger transactions, representing an increase in DCF-based value of approximately 42% in respect of a share of T-Mobile common stock.

Other Information

PJT Partners also observed the additional factors described below, which were not considered part of its financial analyses in connection with rendering its opinion, but were referenced solely for informational purposes:

 

    Historical Stock Price Trading Analysis: PJT Partners reviewed the historical trading prices of Sprint common stock and T-Mobile common stock during the 52-week period ending April 26, 2018, which indicated (1) low and high prices of Sprint common stock during such 52-week period of $4.81 to $9.22 and (2) low and high prices of T-Mobile common stock during such period of $54.60 to $68.88;

 

    Discounted Analyst Price Target Analysis: PJT Partners reviewed publicly available Wall Street research analysts’ standalone share price targets in the next 12 months for each of Sprint common stock and T-Mobile common stock. After excluding each of the highest and lowest standalone share price targets for each of Sprint common stock and T-Mobile common stock, the remaining share price targets indicated (1) a target share price range for Sprint common stock of $4.20 to $6.40 (reflecting the discounting of such price targets to March 31, 2018 using Sprint’s estimated cost of equity of 9.25% and rounding to the nearest $0.05) and (2) a target share price range for T-Mobile common stock of $64.85 to $71.15 (reflecting the discounting of such price targets to March 31, 2018 using T-Mobile’s estimated cost of equity of 8.00% and rounding to the nearest $0.05); and

 

    Discounted Analyst Price Target Analysis—Implied Exchange Ratio: Based on the publicly available Wall Street research analysts’ target share price range of implied equity values per share for Sprint and T-Mobile that were reviewed by PJT Partners, PJT Partners calculated a range of implied exchange ratios for T-Mobile common stock per share of Sprint common stock. PJT Partners calculated the high end of the implied exchange ratio range by dividing the high value of the Sprint implied equity values per share from the discounted analyst price targets by the high value of the T-Mobile implied equity values per share from the discounted analyst price targets. PJT Partners calculated the low end of the implied exchange ratio range by dividing the low value of the Sprint implied equity values per share from the discounted analyst price targets by the low value of the T-Mobile implied equity values per share from the discounted analyst price targets. The result of this analysis, as compared to the exchange ratio pursuant to the business combination agreement, was an implied exchange ratio range of 0.06476x – 0.08995x.

General

The preparation of a fairness opinion is a complex process and is not necessarily susceptible to partial analysis or summary description. Selecting portions of the analyses or of the summary set forth above, without considering the analyses as a whole, could create an incomplete view of the processes underlying PJT Partners’ opinion. In arriving at its fairness determination, PJT Partners considered the results of all of its analyses and did not attribute any particular weight to any factor or analysis considered by it. Rather, PJT Partners made its

 

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determination as to fairness on the basis of its experience and professional judgment after considering the results of all of its analyses. No company or transaction used in the above analyses as a comparison is directly comparable to T-Mobile or Sprint or the contemplated transaction.

PJT Partners prepared these analyses for purposes of PJT Partners providing its opinion to the T-Mobile board of directors as to the fairness, as of the date of the opinion, of the exchange ratio pursuant to the business combination agreement to T-Mobile from a financial point of view. These analyses do not purport to be appraisals nor do they necessarily reflect the prices at which businesses or securities actually may be sold. Analyses based upon forecasts of future results are not necessarily indicative of actual future results, which may be significantly more or less favorable than suggested by these analyses. Because these analyses are inherently subject to uncertainty, being based upon numerous factors or events beyond the control of the parties or their respective advisors, none of T-Mobile, Sprint, PJT Partners or any other person assumes responsibility if future results are materially different from those forecast.

PJT Partners is an internationally recognized investment banking firm and, as part of its investment banking activities, is regularly engaged in the valuation of businesses and their securities in connection with mergers and acquisitions, investments for passive and control purposes, negotiated underwritings, competitive bids, secondary distributions of listed and unlisted securities, private placements and valuations for estate, corporate and other purposes. The T-Mobile board of directors selected PJT Partners because of its qualifications, reputation and experience in the valuation of businesses and securities in connection with mergers and acquisitions generally and in the U.S. wireless industry specifically.

PJT Partners is acting as financial advisor to T-Mobile with respect to the merger transactions. As compensation for its services in connection with the merger transactions, T-Mobile paid PJT Partners $3.0 million upon the delivery of PJT Partners’ opinion. Compensation of $20.0 million, less the amount of the opinion fee previously paid, will be payable by T-Mobile to PJT Partners upon the closing of the merger. In addition, at the sole discretion of T-Mobile, a discretionary fee of up to $10.0 million may be payable to PJT Partners upon the closing of the merger. Furthermore, T-Mobile has agreed to reimburse PJT Partners for out-of-pocket expenses and to indemnify PJT Partners for certain liabilities arising out of the performance of such services (including the rendering of its opinion).

In the ordinary course of its and its affiliates’ businesses, PJT Partners and its affiliates may provide investment banking and other financial services to T-Mobile, Sprint or their respective affiliates and may receive compensation for the rendering of these services. During the two years preceding the date of PJT Partners’ opinion, PJT Partners and certain of its affiliated entities were advising or have advised (1) the audit committee of T-Mobile in connection with certain financings by Deutsche Telekom, for which PJT Partners received customary compensation, (2) SoftBank in connection with an investment unrelated to the merger transactions, for which PJT Partners received customary compensation, (3) OneWeb, in which SoftBank owns a non-controlling equity stake, in connection with a potential transaction unrelated to the merger transactions, for which PJT Partners may in the future receive customary compensation, and (4) Ligado Networks LLC, in which Fortress Investment Group LLC, which has become a subsidiary of SoftBank subsequent to PJT Partners’ mandate, owns a significant investment, on matters unrelated to the merger transactions, for which PJT Partners may in the future receive customary compensation. For its financial advisory services to T-Mobile during the two years preceding the date of the PJT Partners’ opinion, PJT Partners has received compensation in an aggregate amount of $500,000. For its financial advisory services to SoftBank during the two years preceding the date of PJT Partners’ opinion, PJT Partners has received compensation in an aggregate amount of $5,000,000. PJT Partners may also in the future provide investment banking and other financial services to T-Mobile, Deutsche Telekom and SoftBank and their respective affiliates for which it may receive compensation.

Opinion of Goldman Sachs

At a meeting of the T-Mobile board of directors, Goldman Sachs rendered its oral opinion, subsequently confirmed in its written opinion dated April 29, 2018, that, as of the date of its written opinion and based upon

 

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and subject to the factors and assumptions set forth in Goldman Sachs’ written opinion, the exchange ratio pursuant to the business combination agreement was fair from a financial point of view to T-Mobile.

The full text of the written opinion of Goldman Sachs, dated April 29, 2018, which sets forth assumptions made, procedures followed, matters considered, qualifications and limitations on the review undertaken in connection with the opinion, is attached to this joint consent solicitation statement/prospectus as Annex I and incorporated by reference herein. The summary of the Goldman Sachs opinion contained in this joint consent solicitation statement/prospectus is qualified in its entirety by reference to the full text of Goldman Sachs’ written opinion. Goldman Sachs’ advisory services provided to T-Mobile and opinion were provided for the information and assistance of the T-Mobile board of directors in connection with its consideration of the merger transactions and the opinion does not constitute a recommendation as to how any holder of T-Mobile common stock should vote with respect to the merger transactions or any other matter.

In connection with rendering the opinion described above and performing its related financial analyses, Goldman Sachs reviewed, among other things:

 

    the business combination agreement;

 

    annual reports to stockholders and Annual Reports on Form 10-K of T-Mobile and Sprint for the five fiscal years ended December 31, 2017 and March 31, 2017, respectively;

 

    certain interim reports to stockholders and Quarterly Reports on Form 10-Q of T-Mobile and Sprint;

 

    certain other communications from T-Mobile and Sprint to their respective stockholders;

 

    certain publicly available research analyst reports for T-Mobile and Sprint;

 

    certain internal financial analyses and forecasts for Sprint prepared by its management (which we refer to as the Sprint management Sprint forecasts and which are summarized under “—Sprint Unaudited Prospective Financial Information”); and

 

    certain internal financial analyses and forecasts for T-Mobile on a standalone basis (which we refer to as the T-Mobile management T-Mobile forecasts), and for the combined company on a pro forma basis giving effect to the completion of the merger transactions (which we refer to as the combined company forecasts), and certain financial analyses and forecasts for Sprint (which we refer to as the T-Mobile management Sprint forecasts), in each case, as prepared by the management of T-Mobile and approved for Goldman Sachs’ use by T-Mobile (which we refer to in this section entitled “—Opinion of Goldman Sachs,” collectively, as the “T-Mobile forecasts”) and which are summarized under “—T-Mobile Unaudited Prospective Financial Information” and “—Sprint Unaudited Prospective Financial Information,” and certain operating synergies projected by the management of T-Mobile based in part on inputs from and discussions with Sprint management to result from the merger (which we refer to as the estimated synergies), as approved for Goldman Sachs’ use by T-Mobile.

Goldman Sachs also held discussions with members of the senior managements of T-Mobile and Sprint regarding their assessment of the past and current business operations, financial condition and future prospects of Sprint and with the members of senior management of T-Mobile regarding their assessment of the past and current business operations, financial condition and future prospects of T-Mobile and the strategic rationale for, and the potential benefits of, the merger transactions; reviewed the reported price and trading activity for the shares of T-Mobile common stock and the shares of Sprint common stock; compared certain financial and stock market information for T-Mobile and Sprint with similar information for certain other companies the securities of which are publicly traded; reviewed the financial terms of certain recent business combinations in the telecommunications industry and in other industries; and performed such other studies and analyses, and considered such other factors, as Goldman Sachs deemed appropriate.

For purposes of rendering its opinion, Goldman Sachs, with the consent of the T-Mobile board of directors, relied upon and assumed the accuracy and completeness of all of the financial, legal, regulatory, tax, accounting

 

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and other information provided to, discussed with or reviewed by Goldman Sachs, without assuming any responsibility for independent verification thereof. In that regard, Goldman Sachs assumed with the consent of the T-Mobile board of directors that the T-Mobile forecasts and the estimated synergies were reasonably prepared on a basis reflecting the best then available estimates and judgments of the management of T-Mobile. Goldman Sachs did not make an independent evaluation or appraisal of the assets and liabilities (including any contingent, derivative or other off-balance-sheet assets and liabilities) of T-Mobile or Sprint or any of their respective subsidiaries and Goldman Sachs was not furnished with any such evaluation or appraisal. Goldman Sachs assumed that all governmental, regulatory or other consents and approvals necessary for the completion of the merger transactions would be obtained without any adverse effect on T-Mobile or Sprint or on the expected benefits of the merger transactions in any way meaningful to Goldman Sachs’ analysis. Goldman Sachs also assumed that the merger transactions would be completed on the terms set forth in the business combination agreement, without the waiver or modification of any term or condition the effect of which would be in any way meaningful to its analysis.

Goldman Sachs’ opinion does not address the underlying business decision of T-Mobile to engage in the merger transactions, or the relative merits of the merger transactions as compared to any strategic alternatives that may be available to T-Mobile; nor does it address any legal, regulatory, tax or accounting matters. Goldman Sachs’ opinion addresses only the fairness from a financial point of view to T-Mobile, as of the date of the opinion, of the exchange ratio pursuant to the business combination agreement. Goldman Sachs did not express any view on, and its opinion does not address, any other term or aspect of the business combination agreement, or the merger transactions or any term or aspect of any other agreement or instrument contemplated by the business combination agreement or entered into or amended in connection with the merger transactions, including those agreements contemplated by section 2.6 of the business combination agreement, the fairness of the merger transactions to, or any consideration received in connection therewith by, the holders of any class of securities, creditors, or other constituencies of T-Mobile; nor as to the fairness of the amount or nature of any compensation to be paid or payable to any of the officers, directors or employees of T-Mobile or Sprint, or any class of such persons in connection with the merger transactions, whether relative to the exchange ratio pursuant to the business combination agreement or otherwise. Goldman Sachs did not express any opinion as to the prices at which shares of T-Mobile common stock would trade at any time or as to the impact of the merger transactions on the solvency or viability of T-Mobile, Deutsche Telekom, Sprint or SoftBank or the ability of T-Mobile, Deutsche Telekom, Sprint or SoftBank to pay their respective obligations when they come due. Goldman Sachs’ opinion was necessarily based on economic, monetary, market and other conditions as in effect on, and the information made available to Goldman Sachs as of, the date of its opinion, and Goldman Sachs assumed no responsibility for updating, revising or reaffirming its opinion based on circumstances, developments or events occurring after the date of its opinion. Goldman Sachs’ advisory services provided to T-Mobile and its opinion were provided for the information and assistance of the T-Mobile board of directors in connection with its consideration of the merger transactions and the opinion does not constitute a recommendation as to how any holder of shares of T-Mobile common stock should vote with respect to the merger transactions or any other matter. Goldman Sachs’ opinion was approved by a fairness committee of Goldman Sachs.

Summary of Financial Analyses

The following is a summary of the material financial analyses delivered by Goldman Sachs to the T-Mobile board of directors in connection with rendering the opinion described above. The following summary, however, does not purport to be a complete description of the financial analyses performed by Goldman Sachs, nor does the order of analyses described represent relative importance or weight given to those analyses by Goldman Sachs. Some of the summaries of the financial analyses include information presented in tabular format. The tables must be read together with the full text of each summary and are alone not a complete description of Goldman Sachs’ financial analyses. Except as otherwise noted, the following quantitative information, to the extent that it is based on market data, is based on market data as it existed on or before April 26, 2018 and is not necessarily indicative of current market conditions.

 

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Illustrative Sprint Financial Analysis

Implied Premia and Multiples Analysis

Goldman Sachs calculated and compared certain premia and multiples using various prices per share of T-Mobile common stock and Sprint common stock and various implied values for the 0.10256 of a share of T-Mobile common stock to be paid by T-Mobile for each share of Sprint common stock based on various prices per share of T-Mobile common stock.

Goldman Sachs calculated implied values for the 0.10256 of a share of T-Mobile common stock to be paid by T-Mobile for each share of Sprint common stock (which we refer to in this section entitled “—Opinion of Goldman Sachs” as an “implied price per Sprint share”) by multiplying the exchange ratio by:

 

    $59.74, the closing price for the shares of T-Mobile common stock on April 9, 2018, the last completed trading day before The Wall Street Journal reported on April 10, 2018 that T-Mobile and Sprint had recommenced negotiations regarding a possible business combination transaction (which we refer to in this section entitled “—Opinion of Goldman Sachs” as the “T-Mobile undisturbed share price”);

 

    $64.10, the closing price for shares of T-Mobile common stock on April 26, 2018, the last completed trading day before Goldman Sachs delivered its opinion to the T-Mobile board of directors (which we refer to in this section entitled “—Opinion of Goldman Sachs” as the “T-Mobile at-market share price”);

 

    $61.89, the volume-weighted average trading price (which we refer to in this section entitled “—Opinion of Goldman Sachs” as the “VWAP”) of the shares of T-Mobile common stock over the 30-calendar day period ended April 9, 2018;

 

    $61.99, the VWAP of the shares of T-Mobile common stock over the 90-calendar day period ended April 9, 2018; and

 

    $62.36, the VWAP of the shares of T-Mobile common stock over the 12-month period ended April 9, 2018.

The results of these calculations were as follows:

 

T-Mobile Reference Share Price

   Implied Price per Sprint Share
at 0.10256x Exchange Ratio
 

T-Mobile undisturbed share price

   $ 6.13  

T-Mobile at-market share price

   $ 6.57  

30-day VWAP

   $ 6.35  

90-day VWAP

   $ 6.36  

12-month VWAP

   $ 6.40  

Goldman Sachs calculated and compared the implied premia (discounts) represented by:

 

    $6.13, the implied price per Sprint share calculated based on the T-Mobile undisturbed share price, compared to $5.14, the closing price for shares of Sprint common stock as of April 9, 2018, the last completed trading day before The Wall Street Journal reported that T-Mobile and Sprint had recommenced negotiations regarding a possible business combination transaction (which we refer to in this section entitled “—Opinion of Goldman Sachs” as the “Sprint undisturbed share price”);

 

    $6.57, the implied price per Sprint share calculated based on the T-Mobile at-market share price, compared to $6.00, the closing price for shares of Sprint common stock on April 26, 2018, the last completed trading day before Goldman Sachs delivered its opinion to the T-Mobile board of directors (which we refer to in this section entitled “—Opinion of Goldman Sachs” as the “Sprint at-market share price”);

 

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    $6.35, the implied price per Sprint share calculated based on the VWAP of the shares of T-Mobile common stock over the 30-calendar day period ended April 9, 2018, compared to $5.12, the VWAP of the shares of Sprint common stock over the same 30-calendar day period;

 

    $6.36, the implied price per Sprint share calculated based on the VWAP of the shares of T-Mobile common stock over the 90-calendar day period ended April 9, 2018, compared to $5.30, the VWAP of the shares of Sprint common stock over the same 90-calendar day period; and

 

    $6.40, the implied price per Sprint share calculated based on the VWAP of the shares of T-Mobile common stock over the 12-month period ended April 9, 2018, compared to $6.86, the VWAP of the shares of Sprint common stock over the same 12-month period.

The results of these calculations and comparisons are as follows:

 

Reference Share Prices

   Implied Premium
(Discount)
 

T-Mobile undisturbed share price and Sprint undisturbed share price

     19.2

T-Mobile at-market share price and Sprint at-market share price

     9.6

30-day VWAP of T-Mobile common Stock and of Sprint common stock

     24.0

90-day VWAP of T-Mobile common Stock and of Sprint common stock

     20.1

12-month VWAP of T-Mobile common Stock and of Sprint common stock

     (6.8 )% 

Goldman Sachs calculated the expected relative ownership of shares of T-Mobile common stock as the common stock of the combined company (after giving effect to the completion of the merger transactions) held by each of Deutsche Telekom, the stockholders of T-Mobile prior to the completion of the merger transactions other than Deutsche Telekom, SoftBank and the stockholders of Sprint prior to the completion of the merger transactions other than SoftBank, based on capitalization information provided by T-Mobile management for each of T-Mobile and Sprint and the number of shares of T-Mobile common stock expected to be outstanding upon completion of the merger transactions, based on the exchange ratio, calculated using information provided by T-Mobile management. The results of these calculations are as follows:

 

Stockholder

   Ownership
Percentage in
Combined
Company
 

Deutsche Telekom

     41.7

Other T-Mobile stockholders

     25.3

All T-Mobile stockholders

     67.0

SoftBank

     27.4

Other Sprint stockholders

     5.6

All Sprint stockholders

     33.0

All stockholders, other than Deutsche Telekom and SoftBank

     30.9

In addition, Goldman Sachs calculated implied equity values for Sprint on a standalone basis by multiplying each of the Sprint undisturbed share price, the Sprint at-market share price, and each of the implied prices per Sprint share calculated by Goldman Sachs based on the exchange ratio as described above, by the number of fully diluted shares of Sprint common stock outstanding as of April 25, 2018, calculated using information provided by Sprint management and approved for Goldman Sachs’ use by T-Mobile. Goldman Sachs then

 

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calculated implied enterprise values for Sprint on a standalone basis by adding to the equity values calculated as described above Sprint’s net debt (calculated as debt plus tower obligations less cash and cash equivalents, which, with respect to Sprint, T-Mobile and the combined company, we refer to in this section entitled “—Opinion of Goldman Sachs” as “net debt”) as of March 31, 2018 as provided by Sprint management and approved for Goldman Sachs’ use by T-Mobile, and subtracting the illustrative net present value of approximately $4.2 billion calculated by Goldman Sachs as of March 31, 2018 of Sprint’s net operating losses and tax asset utilization, as provided by T-Mobile management and reflected in the T-Mobile management Sprint forecasts (derived using a discount rate of 9.0% at the direction of T-Mobile management).

Goldman Sachs also calculated implied equity values for T-Mobile on a standalone basis by multiplying the T-Mobile undisturbed share price and the T-Mobile at-market share price by the number of fully diluted shares of T-Mobile common stock outstanding as of April 25, 2018, calculated using information provided by T-Mobile management. Goldman Sachs then calculated implied enterprise value for T-Mobile on a standalone basis by adding to the equity values calculated as described above T-Mobile’s net debt as of March 31, 2018 provided by T-Mobile management and subtracting the illustrative net present value of approximately $1.6 billion calculated by Goldman Sachs as of March 31, 2018 of T-Mobile’s net operating losses and tax asset utilization, as provided by T-Mobile management and reflected in the T-Mobile management T-Mobile forecasts (derived using a discount rate of 8.0% at the direction of T-Mobile management).

Using the foregoing, Goldman Sachs calculated the following multiples:

 

    each of the foregoing implied enterprise values of Sprint on a standalone basis, as a multiple of estimated earnings before interest, taxes, depreciation and amortization, less leasing revenue (taking into account stock based compensation costs) (which we refer to in this section entitled “—Opinion of Goldman Sachs” as “core EBITDA”) of Sprint for calendar years 2018 and 2019, as reflected in the T-Mobile forecasts;

 

    each of the foregoing implied enterprise values of T-Mobile on a standalone basis, as a multiple of core EBITDA of T-Mobile for fiscal years 2018 and 2019, as reflected in the T-Mobile forecasts;

 

    each of the foregoing implied enterprise values of Sprint on a standalone basis, as a multiple of core EBITDA minus network capital expenditures of Sprint for calendar years 2018 and 2019, as reflected in the T-Mobile forecasts; and

 

    each of the foregoing implied enterprise values of T-Mobile on a standalone basis, as a multiple of core EBITDA minus network capital expenditures of T-Mobile for fiscal years 2018 and 2019, as reflected in the T-Mobile forecasts.

The results of these calculations were as follows:

 

Reference Price Per Share:

  2018E
EV/Core
EBITDA
    2018E
EV/Core
EBITDA—Capex
    2019E
EV/Core
EBITDA
    2019E
EV/Core
EBITDA—Capex
 

T-Mobile and Sprint Prices Per Share

       

T-Mobile undisturbed share price

    7.8x       15.9x       7.3x       14.0x  

Sprint undisturbed share price

    6.7x       22.5x       6.4x       16.7x  

T-Mobile at-market share price

    8.1x       16.7x       7.6x       14.7x  

Sprint at-market share price

    7.2x       24.2x       6.8x       17.9x  

Sprint Implied Price Per Share at 0.10256x Exchange Ratio

       

Based on T-Mobile undisturbed share price

    7.2x       24.4x       6.9x       18.1x  

Based on T-Mobile at-market share price

    7.5x       25.3x       7.1x       18.8x  

Based on T-Mobile 30-day VWAP

    7.4x       24.9x       7.0x       18.4x  

Based on T-Mobile 90-day VWAP

    7.4x       24.9x       7.0x       18.5x  

Based on T-Mobile 12-month VWAP

    7.4x       25.0x       7.0x       18.5x  

 

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Illustrative Discounted Cash Flow Analysis

Using the T-Mobile forecasts, Goldman Sachs performed an illustrative discounted cash flow analysis on Sprint on a standalone basis to derive a range of illustrative present values per share of Sprint common stock on a standalone basis, excluding estimated synergies.

Using discount rates ranging from 8.5% to 9.5%, reflecting estimates of Sprint’s weighted average cost of capital, Goldman Sachs derived a range of implied enterprise values for Sprint by discounting to present value, as of March 31, 2018, (1) estimates of the unlevered free cash flow, excluding estimated synergies, to be generated by Sprint for the period from March 31, 2018 to December 31, 2026 derived from the T-Mobile forecasts and (2) a range of implied terminal values for Sprint as of December 31, 2026, calculated by applying perpetuity growth rates ranging from 1.5% to 2.5% to the estimate of the terminal year unlevered free cash flow of Sprint, derived from the T-Mobile forecasts (which analysis implied multiples of the implied terminal values derived for Sprint to core EBITDA of Sprint for the four quarter period ended December 31, 2026 ranging from 6.0x to 8.1x and multiples of the implied enterprise values derived for Sprint to core EBITDA of Sprint for the four quarter period ended December 31, 2018 ranging from 6.1x to 8.0x). Goldman Sachs derived the range of discount rates by application of the capital asset pricing model, which requires certain company-specific inputs, including a beta for the company, as well as certain financial metrics for the United States financial markets generally (which we refer to in this section entitled “—Opinion of Goldman Sachs” as the “CAPM”). The range of perpetuity growth rates was estimated by Goldman Sachs utilizing its professional judgment and experience, taking into account the T-Mobile forecasts and market expectations regarding long-term real growth of gross domestic product and inflation. Goldman Sachs derived a range of illustrative enterprise values for Sprint by adding the ranges of present values it derived as described above. Goldman Sachs subtracted from the range of implied enterprise values Sprint’s net debt as of March 31, 2018 as provided by Sprint management, and added the illustrative net present value of approximately $4.2 billion calculated by Goldman Sachs as of March 31, 2018 (derived using a discount rate of 9.0% at the direction of T-Mobile management) of net operating losses and tax asset utilization of Sprint as provided by T-Mobile management, to derive a range of illustrative equity values for Sprint. Goldman Sachs divided the range of illustrative equity values by the total number of fully diluted shares of Sprint common stock outstanding as of April 25, 2018, calculated using information provided by Sprint management, to derive a range of implied present values per share of Sprint common stock of $4.15 to $7.51.

Selected Publicly Traded Companies Analysis

Using publicly available information, Goldman Sachs compared certain ratios with respect to the implied enterprise values of Sprint and T-Mobile derived as described under the heading “—Implied Premia and Multiples Analysis” above, as well as financial and operating information for Sprint and T-Mobile, with corresponding information for the following selected group of publicly traded companies in the U.S. wireless communications industry:

 

    AT&T Inc. (pro forma for the Time Warner transaction); and

 

    Verizon Communications Inc.

Goldman Sachs calculated an implied enterprise value for AT&T and Verizon by multiplying their respective closing share prices as of April 26, 2018 by the number of fully diluted shares of each to derive an implied equity value for each of AT&T and Verizon, as applicable, and adding to the resulting equity values the amount of each company’s (1) net debt, (2) post-tax unfunded pension liability as of December 31, 2017 at a 25% tax rate, and (3) minority interest and investments in affiliates. All such numbers and amounts were calculated based on information in AT&T and Verizon’s respective publicly available SEC filings.

Using estimates of core EBITDA and network capital expenditures for 2018 and 2019 for each of AT&T and Verizon derived from Wall Street research analyst consensus estimates and the implied enterprise values it calculated for each company as described above, Goldman Sachs calculated implied enterprise value as a

 

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multiple of (1) estimated core EBITDA for 2018 and 2019, respectively, and (2) estimated core EBITDA minus network capital expenditures for 2018 and 2019, respectively. Goldman Sachs also calculated the implied levered free cash flow yield for 2019 for each of AT&T and Verizon by dividing estimates of the levered free cash flow (defined as cash flow from operations less network capital expenditures) for 2019 for each of AT&T and Verizon derived from Wall Street research analyst consensus estimates by the implied equity values it calculated for each company as described above.

The results of these calculations were as follows:

 

    

AT&T

  

Verizon

2018E EV/Core EBITDA

   7.1x    7.2x

2019E EV/Core EBITDA

   6.9x    7.1x

2018E EV/Core EBITDA—Capex

   11.3x    11.5x

2019E EV/Core EBITDA—Capex

   11.1x    11.2x

2019E Levered Free Cash Flow Yield

   11.4%    9.1%

Although neither of the selected companies is directly comparable to Sprint or T-Mobile, Goldman Sachs selected these companies because they are publicly traded companies that operate in the U.S. wireless communications industry with certain operations that for purposes of analysis may be considered similar to certain operations of Sprint and T-Mobile.

Using the information in the table above and the 2018E enterprise value to core EBITDA multiples it calculated for Sprint and T-Mobile based on their respective undisturbed share prices as described above under “—Implied Premia and Multiples Analysis,” and its professional judgment and experience, Goldman Sachs applied a reference range of 2018E enterprise value to core EBITDA multiples of 7.1x (reflecting the 2018E enterprise value to core EBITDA multiple calculated for AT&T) to 7.8x (reflecting the 2018E enterprise value to core EBITDA multiple calculated for T-Mobile based on the T-Mobile undisturbed share price) to the estimate of Sprint’s 2018 core EBITDA reflected in the T-Mobile forecasts to derive a range of implied enterprise values for Sprint. Goldman Sachs subtracted from the range of implied enterprise values Sprint’s net debt as of March 31, 2018 as provided by Sprint management and added the illustrative net present value of approximately $4.2 billion calculated by Goldman Sachs as of March 31, 2018 (derived using a discount rate of 9.0% at the direction of T-Mobile management) of Sprint’s net operating losses and tax asset utilization, as provided by T-Mobile management and reflected in the T-Mobile forecasts, to derive a range of illustrative equity values for Sprint. Goldman Sachs divided the result by the total number of fully diluted shares of Sprint common stock outstanding as of April 25, 2018, calculated using information provided by Sprint management, to derive a range of implied values per share of Sprint common stock of $5.92 to $7.10.

Selected Precedent Transactions Analysis

Goldman Sachs analyzed certain publicly available information relating to the selected acquisition transactions listed below announced since February 2004 involving target companies in the U.S. wireless communications industry.

Based on information in public filings, press releases and financial media reports relating to the applicable transaction, for each of the selected transactions, Goldman Sachs calculated and compared the implied enterprise value of the applicable target company based on the consideration paid in the transaction as a multiple of:

 

    the target company’s core EBITDA (excluding synergies) over the last four quarter period ended prior to the announcement of the applicable transaction (which we refer to in this section entitled “—Opinion of Goldman Sachs” as “trailing core EBITDA”);

 

    the target company’s core EBITDA (excluding synergies) over the next completed four quarter period after the announcement of the applicable transaction (which we refer to in this section entitled “—Opinion of Goldman Sachs” as “forward core EBITDA”);

 

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    the target company’s core EBITDA (including run-rate synergies) over the last four quarter period ended prior to the announcement of the applicable transaction (which we refer to in this section entitled “—Opinion of Goldman Sachs” as “trailing synergized core EBITDA”); and

 

    the target company’s core EBITDA (including run-rate synergies) over the next completed four quarter period after the announcement of the applicable transaction (which we refer to in this section entitled “—Opinion of Goldman Sachs” as “forward synergized core EBITDA”).

The results of these calculations for each transaction are set forth below:

 

Date

 

Acquirer

 

Target

  EV/Trailing
Core
EBITDA
    EV/Forward
Core
EBITDA
   

EV/
Trailing
Synergized

EBITDA

 

EV/
Forward
Synergized

EBITDA

9/2013

  Verizon Communications Inc.   Cellco Partnership, Inc. (d/b/a Verizon Wireless Inc.)     8.9x       8.4x     NM   NM

7/2013

  AT&T Inc.   Leap Wireless International, Inc.     8.7x       8.7x     NM   NM

6/2013

  SoftBank Corp.   Sprint Corporation     8.9x       6.9x     5.7x   4.8x

6/2013

  SoftBank Corp.   Sprint Corporation     8.0x       6.7x     4.9x   4.4x

10/2012

  T-Mobile US, Inc.   MetroPCS Communications, Inc.     6.3x       6.1x     3.7x   3.7x

3/2011

  AT&T Inc.   T-Mobile US, Inc.     7.1x       7.0x     5.0x   5.0x

11/2008

  AT&T Inc.   Centennial Communications Corp.     7.0x       6.9x     NM   NM

6/2008

  Cellco Partnership, Inc. (d/b/a Verizon Wireless Inc.)   Alltel Corporation     8.7x       8.3x     6.4x   6.2x

9/2007

  T-Mobile US, Inc.   SunCom Wireless Holdings, Inc.     14.2x       11.9x     NM   NM

7/2007

  Cellco Partnership, Inc. (d/b/a Verizon Wireless Inc.)   Rural Cellular Corporation     11.4x       10.1x     NM   NM

6/2007

  AT&T Inc.   Dobson Communications Corporation     10.4x       9.8x     NM   NM

5/2007

  TPG Partners V, L.P., Goldman Sachs Capital Partners VI, L.P.   Alltel Corporation     9.9x       9.1x     NM   NM

1/2005

  Alltel Corporation   Western Wireless Corporation     9.4x       8.6x     8.3x   7.7x

12/2004

  Sprint Corporation   Nextel Communications, Inc.     8.5x       7.5x     NM   NM

2/2004

  Cingular Wireless LLC   AT&T Wireless Services, Inc.     9.9x       9.9x     7.0x   7.0x

Maximum

        14.2x       11.9x     8.3x   7.7x

Median

        8.9x       8.4x     5.7x   5.0x

Average

        9.2x       8.4x     5.9x   5.5x

Minimum

        6.3x       6.1x     3.7x   3.7x

While none of the selected transactions or companies that participated in the selected transactions are directly comparable to the merger transactions or Sprint, the selected transactions are all of the transactions since February 2004 that, in Goldman Sachs’ professional judgment, involved target companies with operations that, for the purposes of analysis, may be considered similar to certain of Sprint’s results, market size and services profile.

Based on the results of the foregoing calculations and Goldman Sachs’ analyses of the various transactions and its professional judgment, Goldman Sachs applied a reference range of enterprise value to forward core

 

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EBITDA multiples of 6.1x (reflecting the minimum enterprise value to forward core EBITDA multiple referenced above) to 8.4x (reflecting the median enterprise value to forward core EBITDA multiple referenced above) to the estimate of Sprint’s 2018 core EBITDA reflected in the T-Mobile forecasts, to derive a range of implied enterprise values for Sprint. Goldman Sachs subtracted from the range of implied enterprise values Sprint’s net debt as of March 31, 2018 as provided by Sprint management and added the illustrative net present value of approximately $4.2 billion calculated by Goldman Sachs as of March 31, 2018 (derived using a discount rate of 9.0% at the direction of T-Mobile management) of Sprint’s net operating losses and tax asset utilization, as provided by T-Mobile management, to derive a range of illustrative equity values for Sprint. Goldman Sachs divided the results by the total number of fully diluted shares of Sprint common stock outstanding as of April 25, 2018, calculated using information provided by Sprint management, to derive a range of implied values per share of Sprint common stock of $4.17 to $8.26.

Premia Paid Analysis

Based on publicly available information, Goldman Sachs analyzed the premia paid in pending or completed U.S. transactions since 2000 in which the target company had an equity value based on the transaction consideration that was greater than $10 billion, including pending transactions but excluding acquisitions of financial institutions and real estate investment trusts, related party transactions and mergers of equals (defined as transactions announced as mergers of equals or where stockholders of the target company would own 40% or greater of the pro forma entity). Goldman Sachs performed such analysis for all such transactions and separately for such transactions that were all-stock transactions. With respect to each of these transactions, Goldman Sachs reviewed the implied median premium of the price paid in the transaction to the closing stock price of the target company on the following days:

 

    one day prior to the day on which the pendency of the transaction became publicly known due to a leak or an announcement of the transaction (which we refer to in this section entitled “—Opinion of Goldman Sachs” as the “disturbed date”);

 

    five trading days prior to the disturbed date;

 

    30 trading days prior to the disturbed date; and

 

    90 trading days prior to the disturbed date.

With respect to the merger transactions, Goldman calculated implied premia based on an implied price per Sprint share of $6.13, calculated by multiplying the exchange ratio by $59.74, the closing price for the shares of T-Mobile common stock on April 9, 2018, the last completed trading day before The Wall Street Journal reported on April 10, 2018 that T-Mobile and Sprint had recommenced negotiations regarding a possible business combination transaction, compared to the closing share price for the Sprint common stock on each of one, five, 30 and 90 trading days prior to April 9, 2018. The following table presents the results of this review:

 

           Greater than $10 billion
Equity Value Deals
 

Trading Days Before Disturbed Date

   Implied Sprint Premium at $6.13
(Exchange Ratio Multiplied by
T-Mobile Undisturbed Share
Price)
    All
Transactions
    All Stock
Transactions
 

One day

     19.2     29.6     22.0

Five days

     23.5     30.3     25.3

30 days

     14.5     34.1     24.3

90 days

     0.9     37.6     28.0

Although none of the selected transactions is directly comparable to the merger transactions, the target companies in the selected transactions were companies with operations, geography and size, and other factors that, for the purposes of analysis, may be considered similar to Sprint, and as such, for purposes of analysis, the selected transactions may be considered similar to the merger transactions.

 

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Based on its review of the implied premia for the selected transactions and its professional judgment and experience, Goldman Sachs applied a range of illustrative premia of 22.0% to 29.6%, representing the median premium to the price one trading day prior to the disturbed date of the all-stock selected transactions and the median premium to the price one trading day prior to the disturbed date of all the selected transactions, respectively, to the Sprint undisturbed share price, to derive a range of implied values per share of Sprint common stock of $6.27 to $6.66.

Illustrative Transaction Impact to T-Mobile

Illustrative Discounted Cash Flow Analysis.

Using the forecasts, Goldman Sachs performed an illustrative discounted cash flow analysis on T-Mobile on a standalone basis and on the combined company to derive a range of illustrative present values per share of T-Mobile common stock on a standalone basis and per share of T-Mobile common stock giving effect to the completion of the merger transactions.

T-Mobile. Using discount rates ranging from 7.5% to 8.5%, reflecting estimates of T-Mobile’s weighted average cost of capital on a standalone basis, Goldman Sachs derived a range of implied enterprise values for T-Mobile on a standalone basis by discounting to present value, as of March 31, 2018, (1) estimates of the unlevered free cash flow to be generated by T-Mobile on a standalone basis for the period from March 31, 2018 to December 31, 2026 derived from the T-Mobile forecasts and (2) a range of illustrative terminal values for T-Mobile on a standalone basis as of December 31, 2026, calculated by applying illustrative perpetuity growth rates ranging from 1.5% to 2.5% to the estimate of the terminal year unlevered free cash flow of T-Mobile on a standalone basis, derived from the T-Mobile forecasts (which analysis implied multiples of the implied terminal values derived for T-Mobile on a standalone basis to core EBITDA of T-Mobile on a standalone basis for the four quarter period ended December 31, 2026 ranging from 6.3x to 8.8x and multiples of the implied enterprise values derived for T-Mobile on a standalone basis to core EBITDA of T-Mobile on a standalone basis for the four quarter period ended December 31, 2018 ranging from 7.5x to 9.9x). Goldman Sachs derived the range of discount rates by application of the CAPM. The range of perpetuity growth rates was estimated by Goldman Sachs utilizing its professional judgment and experience, taking into account the T-Mobile forecasts and market expectations regarding long-term real growth of gross domestic product and inflation. Goldman Sachs derived a range of illustrative enterprise values for T-Mobile on a standalone basis by adding the ranges of present values it derived as described above. Goldman Sachs then subtracted from the range of illustrative enterprise values T-Mobile’s net debt as of March 31, 2018 as provided by T-Mobile management, and added the illustrative net present value of approximately $1.6 billion calculated by Goldman Sachs as of March 31, 2018 (derived using a discount rate of 8.0% at the direction of T-Mobile management) of net operating losses and tax asset utilization of T-Mobile on a standalone basis as provided by T-Mobile management, to derive a range of illustrative equity values for T-Mobile on a standalone basis. Goldman Sachs divided the range of illustrative equity values by the total number of fully diluted shares of T-Mobile common stock outstanding as of April 25, 2018, calculated using information provided by T-Mobile management, to derive a range of implied present values per share of T-Mobile common stock on a standalone basis of $55.79 to $85.24.

Combined Company. Using discount rates ranging from 7.5% to 8.5%, reflecting estimates of the combined company’s weighted average cost of capital, Goldm