T-Mobile Agrees to Sell $3.5 Billion of Senior Notes

Rhea-AI Summary

T-Mobile US (NASDAQ: TMUS) has announced a significant debt offering through its subsidiary T-Mobile USA, consisting of $3.5 billion in senior notes across three tranches:

• $1.25 billion of 5.125% Senior Notes due 2032
• $1 billion of 5.300% Senior Notes due 2035
• $1.25 billion of 5.875% Senior Notes due 2055

The offering is scheduled to close on March 27, 2025. The company plans to use the proceeds for general corporate purposes, including potential share repurchases, dividend payments, and refinancing existing debt. The offering is being managed by a consortium of major financial institutions, led by Barclays Capital, Deutsche Bank Securities, Morgan Stanley, and UBS Investment Bank.

Positive

• Large-scale financing secured at fixed interest rates provides long-term financial flexibility
• Potential for shareholder returns through share repurchases and dividends
• Opportunity to refinance existing debt potentially at more favorable terms

Negative

• Significant increase in long-term debt obligations
• Higher interest expenses due to new debt service requirements
• Long-term debt commitment extends up to 30 years (2055)

Insights

Corporate Finance Analyst

T-Mobile's $3.5 billion senior notes offering represents a strategic capital structure move with several noteworthy elements. The company has structured this debt across three distinct tranches with progressively higher yields: $1.25 billion of 2032 notes at 5.125%, $1 billion of 2035 notes at 5.300%, and $1.25 billion of 2055 notes at 5.875%.

The relatively modest 0.75% spread between the 7-year and 30-year notes suggests strong market confidence in T-Mobile's long-term creditworthiness. This $3.5 billion issuance represents just 1.2% of the company's $295 billion market capitalization, indicating a measured approach to leverage that shouldn't materially impact the balance sheet strength.

The proceeds flexibility is particularly significant, with three potential uses explicitly mentioned: share repurchases, dividends, and refinancing existing debt. This multi-purpose approach maximizes financial optionality - T-Mobile can opportunistically reduce higher-cost debt to optimize interest expenses, return capital to shareholders, or balance both objectives based on market conditions.

The participation of 26 financial institutions as underwriters indicates robust market demand for this offering, confirming the debt market's positive view of T-Mobile's financial trajectory. The company's willingness to issue 30-year debt through 2055 further demonstrates long-term confidence in their business model and competitive positioning in the telecommunications sector.

Investment Strategist

The explicit inclusion of share repurchases and potential dividends in T-Mobile's use of proceeds language sends an important signal to investors about capital return priorities. With shares currently trading at $258.96, any repurchase program would reduce the outstanding float and potentially enhance per-share metrics like EPS, supporting valuation multiples.

What's particularly notable is the timing of this debt issuance relative to the current interest rate environment. T-Mobile appears to be strategically locking in these rates (5.125%-5.875%) now, potentially anticipating future shifts in the debt markets. The multi-tranche approach with maturities spanning from 2032 to 2055 creates a well-structured debt ladder that minimizes refinancing risk.

The deliberate ambiguity in "general corporate purposes" language maintains maximum flexibility for management while highlighting shareholder returns as a key consideration. This balanced approach allows T-Mobile to remain opportunistic in capital allocation without committing to specific amounts for each potential use.

For investors, the key metric to watch following this issuance will be the actual deployment between debt refinancing (which impacts interest expenses) versus shareholder returns (affecting capital structure and EPS). The company's ability to secure these rates on long-dated maturities reflects institutional investors' confidence in T-Mobile's competitive positioning and long-term business model sustainability within the telecommunications sector.

BELLEVUE, Wash.--(BUSINESS WIRE)-- T-Mobile US, Inc. (NASDAQ: TMUS) (“T-Mobile”) announced today that T-Mobile USA, Inc., its direct wholly-owned subsidiary (“T-Mobile USA” or the “Issuer”), has agreed to sell $1,250,000,000 aggregate principal amount of its 5.125% Senior Notes due 2032 (the “2032 Notes”), $1,000,000,000 aggregate principal amount of its 5.300% Senior Notes due 2035 (the “2035 Notes”) and $1,250,000,000 aggregate principal amount of its 5.875% Senior Notes due 2055 (the “2055 Notes,” and collectively with the 2032 Notes and the 2035 Notes, the “notes”) in a registered public offering.

The offering of the notes is scheduled to close on March 27, 2025, subject to satisfaction of customary closing conditions. T-Mobile USA intends to use the net proceeds from the offering for general corporate purposes, which may include among other things, share repurchases, any dividends declared by T-Mobile’s Board of Directors and refinancing of existing indebtedness on an ongoing basis.

Barclays Capital Inc., Deutsche Bank Securities Inc., Morgan Stanley & Co. LLC, UBS Investment Bank, BNP Paribas Securities Corp., Citigroup Global Markets Inc., Commerz Markets LLC, Credit Agricole Securities (USA) Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Mizuho Securities USA LLC, MUFG Securities Americas Inc., RBC Capital Markets, LLC, Santander US Capital Markets LLC, SG Americas Securities, LLC, SMBC Nikko Securities America, Inc., TD Securities (USA) LLC, Truist Securities, Inc., U.S. Bancorp Investments, Inc. and Wells Fargo Securities, LLC are the joint book-running managers for the offering of the notes. ING Financial Markets LLC, NatWest Markets Securities Inc., PNC Capital Markets LLC, Scotia Capital (USA) Inc., R. Seelaus & Co., LLC and Samuel A. Ramirez & Company, Inc. are acting as co-managers.

The Issuer has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (“SEC”) for the offering of notes to which this communication relates. Before you invest, you should read the prospectus in that registration statement and the related prospectus supplement and other documents the Issuer has filed with the SEC for more complete information about the Issuer and the offering of notes. You may get these documents for free by visiting EDGAR on the SEC Web site at http://www.sec.gov. Alternatively, the Issuer, any underwriter or any dealer participating in the notes offering will arrange to send you the prospectus and related prospectus supplement if you request it by contacting Barclays Capital Inc., c/o Broadridge Financial Solutions, 1155 Long Island Avenue, Edgewood, NY 11717, by telephone at: +1 (888) 603-5847 or by email at Barclaysprospectus@broadridge.com; Deutsche Bank Securities Inc., 1 Columbus Circle, New York, New York 10019, by telephone at +1 (800) 503-4611 or by email at prospectus.CPDG@db.com; Morgan Stanley & Co. LLC, 180 Varick Street, 2nd Floor, New York, NY 10014, by telephone at +1 (866) 718-1649 or by email at Prospectus@morganstanley.com; and UBS Investment Bank, 1285 Avenue of the Americas, New York, New York 10019, Attention: Prospectus Department, by telephone at +1 (833) 481-0269.

This press release shall not constitute an offer to sell or the solicitation of an offer to buy the notes, the related guarantees or any other securities, nor shall it constitute an offer, solicitation or sale in any jurisdiction in which such offer, solicitation or sale is unlawful.

Cautionary Statement Regarding Forward-Looking Statements

This press release contains forward-looking statements that are based on T-Mobile management’s current expectations. Such statements include, without limitation, statements about the expected closing of the offering of the notes and statements regarding the intended use of proceeds from the offering of the notes. Such forward-looking statements are subject to certain risks, uncertainties and assumptions, including, without limitation, prevailing market conditions and other factors. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those expected. More information about potential risk factors that could affect T-Mobile and its results is included in T-Mobile’s filings with the SEC, which are available at http://www.sec.gov.

View source version on businesswire.com: https://www.businesswire.com/news/home/20250324388443/en/

T-Mobile US Media Relations

MediaRelations@T-Mobile.com

or

Investor Relations

investor.relations@t-mobile.com

Source: T-Mobile US, Inc.

FAQ

What is the total value of T-Mobile's (TMUS) new senior notes offering?

T-Mobile is offering $3.5 billion in senior notes across three tranches with different maturities and interest rates.

When will T-Mobile's (TMUS) 2025 senior notes offering close?

The senior notes offering is scheduled to close on March 27, 2025, subject to customary closing conditions.

What are the interest rates for T-Mobile's (TMUS) new senior notes?

The notes have three different rates: 5.125% for 2032 notes, 5.300% for 2035 notes, and 5.875% for 2055 notes.

How does T-Mobile (TMUS) plan to use the proceeds from the senior notes?

The proceeds will be used for general corporate purposes, including potential share repurchases, dividend payments, and refinancing existing debt.