Note 9 – Debt

The following table sets forth the debt balances and activity as of, and for the three months ended, March 31, 2018:



(in millions)	December 31, 2017		Issuances and Borrowings ⁽¹⁾		Note Redemptions ⁽¹⁾			Repayments			Reclassifications ⁽¹⁾			Other ⁽²⁾			March 31, 2018
Short-term debt	$	1,612	$	—	$	(999	)	$	—		$	2,425		$	282		$	3,320
Long-term debt	12,121		2,494		—			—			(2,425		)	(63		)	12,127
Total debt to third parties	13,733		2,494		(999		)	—			—			219			15,447
Short-term debt to affiliates	—		2,170		—			(1,725		)	—			—			445
Long-term debt to affiliates	14,586		—		—			—			—			—			14,586
Total debt	$	28,319	$	4,664	$	(999	)	$	(1,725	)	$	—		$	219		$	30,478


(1)	Issuances and borrowings, note redemptions, and reclassifications are recorded net of related issuance costs, discounts and premiums. Issuances and borrowings and repayments for Short-term debt to affiliates represent net outstanding borrowings and net repayments on our senior secured revolving credit facility.

(2)

Other includes: $246 million of issuances of short-term debt related to vendor financing arrangements, of which $237 million related to financing of property and equipment. During the three months ended March 31, 2018, we did not have any repayments under the vendor financing arrangements. Vendor financing arrangements are included in Short-term debt within Total current liabilities in our Condensed Consolidated Balance Sheets. Other also includes capital leases and the amortization of discounts and premiums. Capital lease liabilities totaled $1.8 billion at both March 31, 2018 and December 31, 2017.

Debt to Third Parties

Issuances and Borrowings

During the three months ended March 31, 2018, we issued the following Senior Notes:



(in millions)	Principal Issuances		Issuance Costs		Net Proceeds from Issuance of Long-Term Debt
4.500% Senior Notes due 2026	$	1,000	$	2	$	998
4.750% Senior Notes due 2028	1,500		4		1,496
Total of Senior Notes issued	$	2,500	$	6	$	2,494

On January 25, 2018, T-Mobile USA, Inc. (“T-Mobile USA”) and certain of its affiliates, as guarantors, issued (i) $1.0 billion of public 4.500% Senior Notes due 2026 and (ii) $1.5 billion of public 4.750% Senior Notes due 2028. Issuance costs related to the public debt issuance totaled approximately $6 million.

Subsequent to March 31, 2018, we used the net proceeds of $2.494 billion from the transaction to redeem our $1.75 billion of 6.625% Senior Notes due 2023, on April 1, 2018, and to redeem our $600 million of 6.836% Senior Notes due 2023 on April 28, 2018, as further discussed below, and for general corporate purposes, including the partial repayment of borrowings under our revolving credit facility with DT.

Notes Redemptions

During the three months ended March 31, 2018, we made the following note redemption:



(in millions)	Principal Amount		Write-off of Premiums, Discounts and Issuance Costs ⁽¹⁾		Call Penalties^{(1) (2)}		Redemption Date	Redemption Price
6.125% Senior Notes due 2022	$	1,000	$	1	$	31	January 15, 2018	103.063	%


(1)	Write-off of premiums, discounts, issuance costs and call penalties are included in Other income, net in our Condensed Consolidated Statements of Comprehensive Income. Write-off of premiums, discounts and issuance costs are included in Other, net within Net cash provided by operating activities in our Condensed Consolidated Statements of Cash Flows.


(2)	The call penalty is the excess paid over the principal amount. Call penalties are included within Net cash provided by financing activities in our Condensed Consolidated Statements of Cash Flows.

Prior to March 31, 2018, we delivered a notice of redemption on $1.75 billion aggregate principal amount of our 6.625% Senior Notes due 2023. The notes were redeemed on April 1, 2018 at a redemption price equal to 103.313% of the principal amount of the notes (plus accrued and unpaid interest thereon), payable on April 2, 2018. The redemption premium was approximately $58 million, the write-off of issuance costs was less than $1 million, and the write-off of premiums was approximately $75 million. The outstanding principal amount was reclassified from Long-term debt to Short-term debt in our Condensed Consolidated Balance Sheets as of March 31, 2018.

Prior to March 31, 2018, we delivered a notice of redemption on $600 million aggregate principal amount of our 6.836% Senior Notes due 2023. The notes were redeemed on April 28, 2018 at a redemption price equal to 103.418% of the principal amount of the notes (plus accrued and unpaid interest thereon), payable on April 30, 2018. The redemption premium was approximately $21 million and the write-off of issuance costs was less than $1 million. The outstanding principal amount was reclassified from Long-term debt to Short-term debt in our Condensed Consolidated Balance Sheets as of March 31, 2018.

Debt to Affiliates

Issuances and Borrowings

On January 22, 2018, DT agreed to purchase (i) $1.0 billion in aggregate principal amount of 4.500% Senior Notes due 2026 and (ii) $1.5 billion in aggregate principal amount of 4.750% Senior Notes due 2028 directly from T-Mobile USA and certain of its affiliates, as guarantors, with no underwriting discount (the “DT Notes”). As of March 31, 2018, there were no outstanding balances on the DT Notes.

Prior to March 31, 2018, we delivered a notice of redemption on (i) $1.25 billion in aggregate principal amount of 8.097% Senior Reset Notes due 2021 and (ii) $1.25 billion in aggregate principal amount of 8.195% Senior Reset Notes due 2022 (collectively, the “DT Senior Reset Notes”) held by DT. Subsequent to March 31, 2018, through net settlement on April 30, 2018, we issued to DT a total of $2.5 billion in aggregate principal amount of DT Notes and redeemed the DT Senior Reset Notes. The 8.097% Senior Reset Notes due 2021 were redeemed on April 28, 2018 at a redemption price equal to 104.0485% of the principal amount of the notes (plus accrued and unpaid interest thereon), payable on April 30, 2018. The 8.195% Senior Reset Notes due 2022 were redeemed on April 28, 2018 at a redemption price equal to 104.0975% of the principal amount of the notes (plus accrued and unpaid interest thereon), payable on April 30, 2018. In connection with the net settlement, we paid DT $102 million in cash for the premium portion of the redemption price set forth in the indenture governing the DT Senior Reset Notes, plus accrued but unpaid interest on the DT Senior Reset Notes to, but not including, the exchange date.

Incremental Term Loan Facility

In March 2018, we amended the terms of the Incremental Term Loan Facility. Following this amendment, the applicable margin payable on LIBOR indexed loans is 1.50% under the $2.0 billion Incremental Term Loan Facility maturing on November 9, 2022 and 1.75% under the $2.0 billion Incremental Term Loan Facility maturing on January 31, 2024. The amendment also modified the Incremental Term Loan Facility to (i) include a soft-call prepayment premium of 1.00% of the outstanding principal amount of the loans under the Incremental Term Loan Facility payable to DT upon certain refinancings of such loans by us with lower priced debt prior to a date that is six months after March 29, 2018 and (ii) update certain covenants and other provisions to make them substantially consistent, subject to certain additional carve outs, with our most recently publicly issued notes. No issuance fees were incurred related to this debt agreement for the three months ended March 31, 2018.

Revolving Credit Facility

In January 2018, we utilized proceeds under our revolving credit facility with DT to redeem $1.0 billion in aggregate principal amount of our 6.125% Senior Notes due 2022 and for general corporate purposes. On January 29, 2018, the proceeds utilized under our revolving credit facility with DT were repaid. The proceeds and borrowings from the revolving credit facility are presented in Proceeds from borrowing on revolving credit facility and Repayments of revolving credit facility within Net cash provided by financing activities in our Condensed Consolidated Statements of Cash Flows. As of March 31, 2018, there was $445 million in outstanding borrowings under the revolving credit facility. As of December 31, 2017, there were no outstanding borrowings under the revolving credit facility.

In March 2018, we amended the terms of (a) our Secured Revolving Credit Facility and (b) our Unsecured Revolving Credit Facility. Following these amendments, (i) the range of applicable margin payable under the Secured Revolving Credit Facility is 1.05% to 1.80%, (ii) the range of the applicable margin payable under the Unsecured Revolving Credit Facility is 2.05% to 3.05%, (iii) the range of the undrawn commitment fee applicable to the Secured Revolving Credit Facility is 0.25% to 0.45%, (iv) the range of the undrawn commitment fee applicable to the Unsecured Revolving Credit Facility is 0.20% to 0.575% and (v) the maturity date of the revolving credit facility with DT is December 29, 2020. The amendments also modify the facility to update certain covenants and other provisions to make them substantially consistent, subject to certain additional carve outs, with our most recently publicly issued notes.