Note 6 – Debt

The following table sets forth the debt balances and activity as of, and for the three months ended, March 31, 2017:



(in millions)	December 31, 2016		Issuances and Borrowings		Note Redemptions			Extinguishments			Principal Reclassifications			Other ⁽¹⁾			March 31, 2017
Short-term debt	$	354	$	—	$	—		$	(20	)	$	6,750		$	458		$	7,542
Long-term debt	21,832		1,495		(1,500		)	(1,960		)	(6,750		)	(12		)	$	13,105
Long-term debt to affiliates	5,600		4,000		—			—			—			—			9,600
Total debt	$	27,786	$	5,495	$	(1,500	)	$	(1,980	)	$	—		$	446		$	30,247


(1)	Other includes: $296 million issuances of short-term debt related to vendor financing arrangements, of which $288 million is related to financing of property and equipment; as well as activity associated with capital leases, and the amortization of premiums.

Issuances and Borrowings

•

On January 25, 2017, T-Mobile USA, Inc. (“T-Mobile USA”), and certain of its affiliates, as guarantors, entered into an agreement to borrow $4.0 billion under a secured term loan facility (“Incremental Term Loan Facility”) with DT, our majority stockholder, to refinance $1.98 billion of outstanding secured term loans under its Term Loan Credit Agreement dated November 9, 2015, with the remaining net proceeds from the transaction intended to be used to redeem callable high yield debt. The Incremental Term Loan Facility increased DT’s incremental term loan commitment provided to T-Mobile USA under that certain First Incremental Facility Amendment dated as of December 29, 2016, from $660 million to $2.0 billion and provided T-Mobile USA with an additional $2.0 billion incremental term loan commitment.

On January 31, 2017, the loans under the Incremental Term Loan Facility were drawn in two tranches; (i) $2.0 billion of which bears interest at a rate equal to a per annum rate of LIBOR plus a margin of 2.00% and matures on November 9, 2022, and (ii) $2.0 billion of which bears interest at a rate equal to a per annum rate of LIBOR plus a margin of 2.25% and matures on January 31, 2024.

On March 31, 2017, the Incremental Term Loan Facility was further amended to waive all interim principal payments. The outstanding principal balance will be due at maturity. No issuance costs were incurred related to this debt agreement for the three months ended March 31, 2017.

•

On March 16, 2017, T-Mobile USA and certain of its affiliates, as guarantors, (i) issued $500 million of public 4.000% Senior Notes due 2022, (ii) issued $500 million of public 5.125% Senior Notes due 2025 and (iii) issued $500 million of public 5.375% Senior Notes due 2027. We intend to use the net proceeds of $1.495 billion from the transaction to redeem callable high yield debt. Issuance costs related to the public debt issuance totaled $5 million for the three months ended March 31, 2017.

Notes Redemptions

During the three months ended, March 31, 2017, we made the following note redemptions:



(in millions)	Principal Amount		Redemption Date	Redemption Price ⁽¹⁾
6.625% Senior Notes due 2020	$	1,000	February 10, 2017	102.208	%
5.250% Senior Notes due 2018	500		March 6, 2017	101.313	%
Total note redemptions	$	1,500


(1)	The Redemption price is equal to redemption percentage of the principal amount of the notes (plus accrued and unpaid interest thereon).

Prior to March 31, 2017, we delivered a note redemption on $1.75 billion aggregate principal amount of our 6.250% Senior Notes due 2021. This balance was redeemed on April 3, 2017, at a redemption price equal to 103.125% of the principal amount of the notes (plus accrued and unpaid interest thereon). The outstanding principal amount was reclassified from Long-term debt to Short-term debt in our Condensed Consolidated Balance Sheets as of March 31, 2017.

As of March 31, 2017, the following note redemptions were delivered and the Senior Notes will be redeemed on April 28, 2017. The outstanding principal amounts were reclassified from Long-term debt to Short-term debt in our Condensed Consolidated Balance Sheets:



(in millions)	Principal Amount		Redemption Date	Redemption Price ⁽¹⁾
6.464% Senior Notes due 2019	$	1,250	April 28, 2017	100.000	%
6.542% Senior Notes due 2020	1,250		April 28, 2017	101.636	%
6.633% Senior Notes due 2021	1,250		April 28, 2017	103.317	%
6.731% Senior Notes due 2022	1,250		April 28, 2017	103.366	%
Total redemptions delivered and not yet redeemed	$	5,000


(1)	The Redemption price is equal to redemption percentage of the principal amount of the notes (plus accrued and unpaid interest thereon).

Related Party Debt Commitments

During the three months ended March 31, 2017, we entered into the following debt agreements with DT. These agreements did not have an impact on our total debt balance as of March 31, 2017; however, they will result in sources and uses of cash in subsequent periods.

•

On March 13, 2017, DT agreed to purchase $1.0 billion in aggregate principal amount of 4.000% Senior Notes due 2022, $1.25 billion in aggregate principal amount of 5.125% Senior Notes due 2025 and $1.25 billion in aggregate principal amount of 5.375% Senior Notes due 2027 (the “new DT notes”) directly from T-Mobile USA and certain of its affiliates, as guarantors, with no underwriting discount.

The closing of the issuance and sale of $3.0 billion in aggregate principal amount of the new DT notes to DT is expected to occur on April 28, 2017, and the closing of the issuance and sale of the remaining $500 million in aggregate principal amount of the 5.375% Senior Notes due 2027 to DT is expected to occur on or about September 18, 2017.

Additionally, we issued a call notice and on April 28, 2017, we will redeem through net settlement all of the $1.25 billion outstanding aggregate principal amount of the 6.288% Senior Reset Notes to affiliates due 2019 and $1.25 billion in aggregate principal amount of the 6.366% Senior Reset Notes to affiliates due 2020 for a portion of the new DT notes. The 6.288% Senior Reset Notes to affiliates due 2019 and 6.366% Senior Reset Notes to affiliates due 2020 will be redeemed at a redemption price equal to 103.144% and 103.183%, respectively, of the principal amount.

Semi-annual interest due April 28, 2017, is required to be paid in the usual manner. The Senior Reset Notes to affiliates are classified as Long-term debt to affiliates in our Condensed Consolidated Balance Sheets as of March 31, 2017, as we have the intent and ability to exchange them for a portion of the new DT notes, which will be classified as Long-term debt to affiliates.

Broadcast Incentive Auction and Related Party Debt Commitments

Subsequent to March 31, 2017, we exercised our option under existing purchase agreements and will issue the following Senior Notes to DT on May 9, 2017 and use the proceeds to fund a portion of the purchase price of spectrum licenses won in the 600 MHz spectrum auction. See Note 4 - Spectrum License Transactions for further information.



(in millions)	Principal Amount		Purchase Price
5.300% Senior Notes due 2021	$	2,000	100.000	%
6.000% Senior Notes due 2024	1,350		103.016	%
6.000% Senior Notes due 2024	650		103.678	%
Total	$	4,000