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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549


FORM 10-K

(MARK ONE)



|  |                                                                                                                                  
|- | ---------------------------------------------------------------------------------------------------------------------------------
|x | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT
OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2002.

OR



|  |                                                                                         
|- | ----------------------------------------------------------------------------------------
|o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT
OF 1934

FOR THE TRANSITION PERIOD FROM ____________ TO
____________.

COMMISSION FILE NUMBER 000-29667

T-MOBILE USA, INC.




(Exact name of registrant as specified in its charter)


|                                                               |  |                                  
|-------------------------------------------------------------- |  | ---------------------------------
|DELAWARE                                                       |  | 91-1983600                       
|                                                               |  |                                  
|(State or other jurisdiction of
incorporation or organization) |  | (IRS Employer Identification No.)
|                                                               |  |                                  
|12920 - S.E. 38TH STREET
BELLEVUE, WASHINGTON                  |  | 98006                            
|                                                               |  |                                  
|(Address of principal executive offices)                       |  | (Zip Code)                       

(425) 378-4000




(Registrants telephone number, including area code)


Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes x No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrants knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. x

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act).
Yes o No x

Indicate the number of shares outstanding of each of the issuers classes
of common stock, as of the latest practicable date.

|                                           |  |                                         |             | 
|------------------------------------------ |  | --------------------------------------- | ----------- | 
|Title                                      |  | Shares Outstanding as of March 10, 2003
|                                           |  |                                        
|Common Stock, par value $.000001 per share |  |                                         | 269,738,185 | 

This registrant meets the conditions set forth in General Instruction I
(1) (a) and (b) of Form 10-K and is therefore filing this Form with the reduced
disclosure format.



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TABLE OF CONTENTS



|                                           |                                                                                                         |  |  |  |  |  |  | 
|------------------------------------------ | ------------------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|PART I                                    
|                                           | ITEM 1. BUSINESS                                                                                       
|                                           | ITEM 2. PROPERTIES                                                                                     
|                                           | ITEM 3. LEGAL PROCEEDINGS                                                                              
|                                           | ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                                            
|PART II                                   
|                                           | ITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY AND RELATED STOCKHOLDER MATTERS                          
|                                           | ITEM 6. SELECTED FINANCIAL DATA                                                                        
|                                           | ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS          
|                                           | ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                                    
|                                           | ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA                                                    
|                                           | ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE           
|PART III                                  
|                                           | ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT                                            
|                                           | ITEM 11. EXECUTIVE COMPENSATION                                                                        
|                                           | ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
|                                           | ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                                                
|                                           | ITEM 14. CONTROLS AND PROCEDURES                                                                       
|PART IV                                   
|                                           | ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K                              
|INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
|                                           | Schedule II  Valuation and Qualifying Accounts                                                        
|SIGNATURES                                
|CERTIFICATIONS                            



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##### Table of Contents



T-MOBILE USA, INC.

FORM 10-K
FOR THE YEAR ENDED DECEMBER 31, 2002

TABLE OF CONTENTS

|                                                                                                         |                                                                                                                                                      |  |      |      |  | 
|-------------------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- | ---- |  | 
|                                                                                                         |                                                                                                                                                      |  |      | Page
|                                                                                                         |                                                                                                                                                      |  |      |     
|PART I                                                                                                   |                                                                                                                                                      |  |      |     
|                                                                                                         | ITEM 1.
BUSINESS (Abbreviated pursuant to General Instruction I)                                                                                     |  |      | 3    | 
|                                                                                                         | ITEM 2.
PROPERTIES (Abbreviated pursuant to General Instruction I)                                                                                   |  |      | 29   | 
|                                                                                                         | ITEM 3. LEGAL PROCEEDINGS                                                                                                                            |  |      | 29   | 
|                                                                                                         | ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(Omitted pursuant to General Instruction I)                                              |  |      | 29   | 
|PART II                                                                                                  |                                                                                                                                                      |  |      |     
|                                                                                                         | ITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY AND RELATED STOCKHOLDER MATTERS                                                                        |  |      | 30   | 
|                                                                                                         | ITEM 6.
SELECTED FINANCIAL DATA (Omitted pursuant to General Instruction I)                                                                          |  |      | 30   | 
|                                                                                                         | ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (Abbreviated pursuant to General Instruction I)        |  |      | 30   | 
|                                                                                                         | ITEM 7A QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                                                                                   |  |      | 40   | 
|                                                                                                         | ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA                                                                                                  |  |      | 40   | 
|                                                                                                         | ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE                                                         |  |      | 40   | 
|PART III                                                                                                 |                                                                                                                                                      |  |      |     
|                                                                                                         | ITEM 10.
DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT (Omitted pursuant
to General Instruction I):                                             |  |      | 41   | 
|                                                                                                         | ITEM 11.
EXECUTIVE COMPENSATION (Omitted pursuant to General Instruction I):                                                                         |  |      | 41   | 
|                                                                                                         | ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS (Omitted pursuant to General Instruction I): |  |      | 41   | 
|                                                                                                         | ITEM 13.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS (Omitted pursuant to
General Instruction I):                                                 |  |      | 41   | 
|                                                                                                         | ITEM 14. CONTROLS AND PROCEDURES                                                                                                                     |  |      | 41   | 
|PART IV                                                                                                  |                                                                                                                                                      |  |      |     
|                                                                                                         | ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K                                                                            |  |      | 42   | 
|INDEX TO CONSOLIDATED FINANCIAL STATEMENTS                                                               |                                                                                                                                                      |  | F-1  |     
|REPORT OF INDEPENDENT ACCOUNTANTS ON FINANCIAL STATEMENT SCHEDULE II  VALUATION AND QUALIFYING ACCOUNTS |                                                                                                                                                      |  | F-27 |     
|FINANCIAL STATEMENT SCHEDULE II  VALUATION AND QUALIFYING ACCOUNTS                                      |                                                                                                                                                      |  | F-27 |     
|SIGNATURES                                                                                               |                                                                                                                                                      |  | F-28 |     
|CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002                                  |                                                                                                                                                      |  | F-29 |     

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CAUTIONARY STATEMENT FOR PURPOSES OF THE SAFE HARBOR PROVISIONS OF THE PRIVATE LITIGATION REFORM ACT OF 1995.

Information contained or incorporated by reference herein that is
not based on historical fact, including without limitation, statements
containing the words believes, may, will, estimate, continue,
anticipates, intends, expects and words of similar import,
constitute forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. Such forward-looking
statements involve known and unknown risks, uncertainties and other
factors, including those identified under the caption Risk Factors
below and elsewhere in this Form 10-K, that may cause the actual
results, events or developments to be materially different from any
future results, events or developments expressed or implied by such
forward-looking statements. Such factors include, among others, the
following: general economic and business conditions, both nationally
and regionally; technology changes; competition; changes in business
strategy or development plans; the leverage of T-Mobile USA, Inc.
(T-Mobile); the availability of funding from Deutsche Telekom AG
(Deutsche Telekom), its wholly-owned subsidiary, T-Mobile
International AG (T-Mobile International), or their affiliates; the
ability to attract and retain qualified personnel; existing
governmental regulations and changes in, or the failure to comply with,
governmental regulations; liability and other claims asserted against
T-Mobile; industry consolidation; ability to acquire and cost of
acquiring additional spectrum licenses; and other factors referenced in
T-Mobiles filings with the Securities and Exchange Commission (SEC).
GIVEN THESE UNCERTAINTIES, READERS ARE CAUTIONED NOT TO PLACE UNDUE
RELIANCE ON SUCH FORWARD-LOOKING STATEMENTS.T-Mobile disclaims any
obligation to update any such factors or to publicly announce the
result of any revisions to any of the forward-looking statements
contained herein to reflect future results, events or developments.

Unless
the context requires otherwise, T-Mobile, we, our and
us includes us, our predecessors and consolidated subsidiaries.




PART I




ITEM 1. BUSINESS(Abbreviated pursuant to General Instruction I.)

INTRODUCTION

T-Mobile, formerly known as VoiceStream Wireless Corporation
(VoiceStream), provides personal communications services (PCS)
primarily in major urban markets in the United States using the Global
System for Mobile Communications, or GSM, technology. Our GSM network,
including the GSM Facilities, LLC (GSM Facilities) networks in the
New York City area and California and Nevada as discussed below, covers
198.9 million people with service in 41 of the top 50 United States
markets, and we own licenses that cover over 86% of the United States
population. Our entire network has been enhanced to provide 2.5G data
services with General Packet Radio Service (GPRS), an extension of
the GSM architecture, which permits wireless Internet access and other
non-voice data transmissions through a variety of integrated devices at speeds of up to 40 kilobytes per second (Kbps). Additionally,
we operate a Wi-Fi or 802.11b broadband wireless local area network
(WLAN), which delivers broadband at speeds 40 to 50 times faster than
the typical 28Kbps dial-up connection. Our Wi-Fi service operates under the name
T-Mobile HotSpot and is available through over 2,200 Wi-Fi access
points in 23 states in the United States.

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On May 31, 2001, Deutsche Telekom acquired 100% of the common shares of VoiceStream in a transaction that qualified as a tax-free
reorganization. Following the closing of the merger, Deutsche Telekom
transferred all of its VoiceStream shares to T-Mobile International and
VoiceStream common shares were deregistered and delisted from NASDAQ
and are no longer publicly traded. The merger and related transfer are
hereafter referred to as the T-Mobile merger. During the third
quarter of 2002, as part of Deutsche Telekoms plan to develop a global
brand for its wireless operations, all of the VoiceStream markets were
rebranded to T-Mobile. We now operate under the T-Mobile brand name,
along with most of Deutsche Telekoms and T-Mobile Internationals
wireless subsidiaries. We introduced our new global spokesperson,
Catherine Zeta-Jones, as part of the brand change.

Powertel Inc. (Powertel), also a wholly-owned subsidiary of
T-Mobile International, provides the same services under the T-Mobile
brand in the southeastern United States. While Powertels results are
not consolidated with ours, we provide management and other services to
Powertel. All Powertel employees became employees of T-Mobile following
Powertels acquisition by T-Mobile International and we are directly
reimbursed by Powertel for the compensation and benefit costs of our
employees working on Powertel business. We also perform centralized
services and functions for Powertel including accounting and other
administrative functions and we are reimbursed for these services in a
manner that is intended to reflect the relative time and associated
costs devoted to Powertel activities. Including the Powertel markets,
the national footprint for the T-Mobile brand covers 217.9 million
people in 24 of the top 25 markets and 46 of the top 50 markets.

We are a member of 3G Americas, LLC (3G Americas), a group of
digital wireless carriers and vendors from North, Central and South
America as well as the Caribbean. 3G Americas helps provide seamless
GSM wireless communications for its members. 3G Americas also sponsors
working standards groups for GSM North America, which is a regional
body of the GSM Association. The members of the GSM Association provide
digital GSM wireless services to over 800 million customers in
approximately 192 countries. GSM systems account for more than
two-thirds of the worldwide digital wireless communications market. We
have international roaming agreements with approximately 210 GSM
operators worldwide, providing service in approximately 100 countries,
and we anticipate that we will enter into roaming agreements with
operators in additional countries to increase world coverage and
convenience for our customers.

STRATEGY

Our business strategy continues to be focused on capturing an
increasing share of the United States market for wireless services in
order to become one of the leading United States providers of such
services over the long term, and a key part of T-Mobile Internationals
operations. To accomplish this we will seek to:



| |  | Establish the T-Mobile brand in the United States and penetrate
the broad consumer market segments:T-Mobiles strategy is
executed around the Get More strategy to provide customers with
more minutes, more features and more service so they can enjoy the
benefits of mobile communications to Get More From Life. We will
seek to continue to build equity in the T-Mobile brand in the
United States by seeking to deliver customers the best value in
their wireless communications, including more features and
services to enhance their wireless communications experience.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
| |  | Establish a leadership position in the mobile data market:We
operate the largest all digital, nationwide network in the United
States based on the globally dominant GSM technology. Our entire
network has been enhanced to provide 2.5G data services with GPRS,
providing wireless Internet access and other non-voice data
transmissions through a variety of integrated devices at speeds of up to 40Kbps. Additionally, we operate the largest
carrier owned Wi-Fi network of its kind in the world with service
in over 2,200 locations under the name T-Mobile HotSpot. We will
seek to build on the technical advantages of GSM/GPRS and the
timing advantage of our early nationwide rollout of 2.5G services
and increase adoption of these services by: (1) delivering a range
of unique, integrated voice and data devices including handsets,
Palm and Windows-based personal digital assistants (PDAs) and
data cards, (2) providing enhanced content and functionality that
is relevant to the general consumer and business consumer, and (3)
effectively reaching targeted market segments through our
extensive and diverse distribution network.

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| |  | Operate high quality networks with nationwide coverage:We have
essentially completed the initial GSM/GPRS network build-out of
the major population centers for which we hold licenses, and are
now primarily focused on improving network coverage, quality and
capacity within and around the urban markets we currently serve.
In addition, we plan to deploy Enhanced Data rates for GSM
Evolution (EDGE) technology in selected areas to increase data
transmission rates beyond those available through our existing
GPRS network. Still in the early stages of deployment, our Wi-Fi
network is the largest of its kind in the United States with over
2,200 T-Mobile HotSpot locations in Starbucks coffeehouses,
American Airlines Admirals Clubs and airports, and we plan to
continue the rapid expansion of the network. Plans for 2003
include additional Starbucks locations, over 400 Borders Books and
Music locations and 100 of the most frequented American Airlines,
Inc., Delta Air Lines, Inc. and United Air Lines, Inc. airline
clubs and lounges, with expansion to the boarding gates as airport
approvals are secured. We will continue to seek opportunities to
expand the service into quality locations where people already
visit and are prone to want high-speed data services when they are
away from their home or office.
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
| |  | Expand our distribution network:We plan to continue to expand
the distribution network for our services and products as we
expand our presence in existing markets. This distribution network
features a mix of company-owned stores, exclusive and
non-exclusive dealers, national retailers, Internet based
retailers, including T-Mobiles on-line store, value-added
resellers, and a direct sales force targeting general business and national and strategic accounts.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| 
| |  | Increase our spectrum holdings:We will continue to seek
opportunities where appropriate to acquire additional spectrum
licenses, systems and/or operators, which will add to our current
footprint or increase our spectrum capacity in our existing
markets.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| 
| |  | Achieve cost efficiencies through centralization and size:Our
centralized key business functions such as marketing and customer
care, as well our administrative functions such as accounting and
human resources, allow us to realize economies of scale as we
continue to grow our customer base. We plan to continue to refine
our key processes to realize additional cost efficiencies in the
future. Our size and relationship with Deutsche Telekom will
enable us to continue to negotiate more favorable pricing and
financing terms for the purchase of services, handsets, wireless
data devices and network equipment.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

SALES, MARKETING AND CUSTOMER SERVICE

Our sales, marketing and customer service strategy is centered
around the Get More strategy as the means to capture an increasing share
of the United States market for wireless services. We target market segments with the potential to be moderate to high-end users of our
voice, data and messaging services. We bundle our features and services
in a variety of ways at various price points that we believe represent
the best value in meeting the communications needs of these targeted segments.



| |  | Marketing:In addition to continuing to leverage the success of
our Get More strategy in the United States, we are now operating
and marketing our services under the international T-Mobile
wireless brand and have introduced a new global spokesperson,
Catherine Zeta-Jones. We believe all of these factors contributed
to the success of our launch of commercial service in California
and Nevada during the third quarter of 2002 and the overall high
rate of customer growth we experienced in the second half of 2002.
We believe these factors will continue to positively affect our
customer growth.
|- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Our marketing efforts are focused primarily on the general
consumer market. We are expanding these efforts to also target
business consumers with an emphasis on our integrated voice and
wireless data services. We market the Get More philosophy to both
general consumers and businesses by emphasizing that customers get
more value for their money from our competitive pricing, enhanced
features, functionality and applications, and by promoting the
benefits of integrated voice, data and messaging services.
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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| |  | Sales:We sell our products and services through an extensive
and diverse distribution network featuring company-owned stores,
exclusive and non-exclusive dealers, national retailers, on-line
retailers including T-Mobiles on-line store, value-added
resellers, and through a direct sales force targeting general
business and national and strategic accounts.                                                                                                                                                                                   
|- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
|  |  | We believe that our local sales offices and retail stores
provide the physical presence in local markets necessary to position
T-Mobile as a quality wireless services provider, and give us
greater control over both our costs and the sales process. Our
training programs provide our sales employees with an understanding
of our systems, products and services so that they, in turn, can
provide information to prospective customers. Sales commissions are
generally linked to the type of service, activation levels and
customer retention.
| 
|  |  | We are both a retail and wholesale distributor of handsets and
other wireless data devices, and we maintain inventories of these
items. Although customers are generally responsible for purchasing
or otherwise obtaining their own handsets or wireless data devices,
we generally sell handsets and other devices below cost to respond
to competition for new customers and to retain existing customers.
We expect these handset subsidies to remain common industry practice
for the foreseeable future.                                         



| |  | Customer service:Quality customer service is a significant
element of our operating philosophy. We are committed to
attracting and retaining customers by seeking to provide quality
customer service. We maintain a customer service and technical
assistance system staffed to handle both routine and complex
questions as they arise, 24 hours a day, 7 days a week. Customers
can also manage their accounts on-line, adding features to their
service, and viewing and paying their bills through our web site.                                                                                                                                                                            
|- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
|  |  | We continuously monitor customer churn (the rate of customer
attrition) as a key indicator of customer satisfaction. We manage
our churn rate in part through a program implemented by our sales
force and customer service personnel that is intended to enhance
customer loyalty and increase add-on sales and customer referrals.
The program allows the sales staff to check customer satisfaction,
as well as offer additional calling features and incentives to
achieve customer satisfaction. We also have an in-depth customer
relationship marketing program that reaches customers at critical
times during their life-cycle, rewarding them for their loyalty as a
T-Mobile customer.



| |  | Intellectual property:We hold several federal trademark
registrations, including the following principal trademarks:                        
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------
| 
|  |  | FAMILYTIME®
     GET MORE®
     GET MORE FROM LIFE®
     GET MORE MAX®
     GET MORE PLUS®
     THE GET MORE PROMISE®
     WHENEVER MINUTES®



| |  | We have pending applications to register other trademarks and
service marks with the United States Patent and Trademark Office.
Deutsche Telekom holds federal trademark registrations for the mark
T-Mobile and numerous other trademarks and service marks, which we
are licensed to use.
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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PRODUCTS AND SERVICES

We provide a variety of wireless products and services designed to
match a wide range of needs for business and personal use, including
wireless voice, data and messaging services. As part of our Get
More value proposition, we include an array of features with every
voice service plan. These features include voicemail, message alert,
caller ID, call waiting, short message service (SMS), call hold and
conference calling. Our data services provide customers with Internet
access enabling them to access a variety of content and other
services. Additionally, a hands-free device is included with
every T-Mobile handset we package for sale. Through our GSM/GPRS and
Wi-Fi networks, we offer a variety of services, features and
benefits including:



| |  | Voice Services:We offer a variety of rate plans and handsets
aimed at both the general consumer and business market segments,
consistent with the Get More strategy. The devices we offer change
continually as new models or devices become available with greater
and more refined content and increased functionality, applications
and integration options. We will continue to bring a wide range of
new integrated voice and data devices to market including
handsets, Palm and Windows-based PDAs and data cards that will
allow customers to take advantage of both our nationwide voice and
wireless data networks.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
| |  | T-Mobile Internet:We were the first United States carrier to
launch 2.5G wireless data services across our entire network. Our
data service, called T-Mobile Internet, is based on GPRS
technology, an extension of GSM, and provides customers with an
always-on connection to the Internet at speeds of up to
40Kbps when using appropriate wireless data devices and applications. Available in over 8,000 cities, consistent with our GSM
voice network, T-Mobile Internet delivers wide area coverage at
speeds comparable to typical dial-up connections, making it a
practical solution for data transmission services. Customers are
able to have constant access to items such as corporate and
personal e-mail, contacts and calendar. With appropriate wireless data devices and applications, the need to log on or
dial-up to a data session is eliminated, and customers pay for the
amount of data sent and received, not the length of their session.
Customers can access the GPRS network through a variety of
integrated voice and data devices.                                                         
| 
| |  | T-Mobile HotSpot:Through the acquisition of the assets of
MobileStar Service Communications, Inc. (MobileStar) in January
2002, we have entered into the Wi-Fi wireless broadband
communications business and commercially market these services
under the name T-Mobile HotSpot. This service allows customers to
access the Internet and their corporate intranet remotely, using
Wi-Fi enabled laptops or PDAs, in public locations such as
airports and coffee houses at speeds 40 to
50 times faster than the typical 28Kbps dial-up connection. T-Mobile
HotSpots are located where people are likely to spend time away from
their home or office and are prone to want high-speed data
services. Our Wi-Fi network is fast enough to accommodate the full
spectrum of applications from accessing e-mail with large
attachments to multi-media video conferencing or Internet surfing.
The service is priced based on access to the network, versus the
amount of data that is transferred over the network. Pricing plans
are based on either a pay-as-you-go or a fixed-fee basis for
unlimited nationwide usage.
| 
|  |  | In the future, we will seek to offer integrated GPRS and Wi-Fi
handheld devices, enabling customers to seamlessly transfer between
the two networks. As a national carrier, we intend to utilize our
scalable infrastructure such as billing and customer care to offer
the dependability of carrier-class equipment, the operational
effectiveness of a central national operations center (NOC),
security protocols and technology, and customer service. With one
bill, one service provider and a bundled voice and data plan, we
intend to offer customers a comprehensive, seamless experience at a
cost-effective price and further deliver on the Get More strategy to
offer customers the best value in their wireless service.                                                                                                                                                                                                                                                                                                                                                                                    

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| |  | Messaging Services:Our advanced two-way text messaging service
gives customers the ability to send and receive text messages and
e-mail to and from their wireless data devices as well as personal
computers. Customers can filter, forward and reply to home or
office e-mails via their wireless data devices.                               
|- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
| |  | My T-Mobile:Through a personal portal called My T-Mobile we
offer a variety of services. The portal was built to fully
integrate Internet functionality with wireless service in a manner
that complements both technologies and provides a superior
customer experience. Services offered through My T-Mobile include
but are not limited to:



| |  |  | AOL Instant MessengerTM Service Customers can
sign up for AOL Instant Messenger TMand create Buddy
Lists®. With this service customers can see when their
buddies are on-line, and have text conversations in real
time via their handsets or wireless data devices.                                                                                        
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Alerts Customers can choose from a broad array of
Internet news and information services to be delivered to
their handsets or wireless data devices. Message alerts can
include stock prices, sports scores, daily horoscopes,
weather and other news services. Customers personally select
what information they want and schedule delivery when they
want.
|
| |  |  | Handset customization Customers can choose from a
large variety of personal ring tones, screen savers,
backgrounds, and caller ID pictures to be downloaded to
certain models of handsets. Custom faceplates and
accessories are also available, allowing personalization of
T-Mobile services that can be seen and heard.                                  
|
| |  |  | On-line account management Customers can manage
their T-Mobile account via the Internet. They can update
their phone directory, view their bill, pay online and add
features and services to their account.                                                                                                                                                 



| |  | Roaming:Our customers are able to roam in certain areas of the
United States and internationally on other GSM systems. GSM
communications technology is the dominant world standard for
digital wireless communications, which allows T-Mobile customers
to enjoy one-handset, one-number worldwide service using a
multi-band handset or wireless data device. As part of T-Mobile
International, our customers are able to roam internationally in
over 90 countries at favorable pricing based on location
through our WorldClass Roaming plan, while other T-Mobile
International customers can roam on our network on similar terms.
We also have international roaming agreements with 210 GSM
operators worldwide, providing service in 100 countries. We offer
the only trans-Atlantic GPRS wireless data network, with coverage
in many European countries. We plan to continue to expand
international roaming coverage for our customers through new
roaming agreements with additional international GSM providers.
|- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
| |  | Smart Card:We provide a Smart Card to each customer that can
be used with every T-Mobile handset and wireless data device. Each
Smart Card is a microchip programmed with the customers billing
information, phonebook and personalized service information. This
allows customers to obtain PCS connectivity automatically using a
variety of devices simply by inserting their Smart Card microchip
into compatible PCS devices.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          

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| |  | Call security and privacy:The T-Mobile Smart Card, in
association with GSM technology, provides increased security
against fraud and eavesdropping by encoding every voice and data
transmission. Each time a T-Mobile handset or wireless data device
is turned on, information on the T-Mobile Smart Card is checked to
ensure that it is a valid subscription card. A Personal
Identification Number (PIN) can be stored on the Smart Card to
prevent the use of stolen or lost cards. In addition, each
transmission is sent using a random code, making eavesdropping and
over-the-air theft of phone and identification numbers extremely
difficult. Only T-Mobile switches can read the encoded
information, and therefore attempts to break into the system are
more likely to be detected and eliminated.                                                                                                                                                    
|- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
| |  | Over-the-air activation and over-the-air customer profile
management:We are able to transmit changes in the customers
feature package, including mobile number assignment and personal
directory numbers, directly to the customers handset or wireless
data device.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| 
| |  | Handsets and wireless data devices:We do not manufacture the
handsets or wireless data devices used in our operations. While
the high degree of compatibility among different manufacturers
handsets and wireless data devices allows us to operate without
being heavily dependent upon any single source of such devices, we
are still exposed to the potential impact of a vendor not being
able to meet our supply needs. In order to minimize this impact
and to provide a wide range of devices to meet customers needs and preferences, we purchase handsets and
wireless data devices from multiple vendors including, but not
limited to, Motorola Inc., Samsung Electronics Co., Ltd., Nokia
Mobile Phones, Inc. and Sony Ericsson Mobile Communications. Other
suppliers include a growing number of new vendors that manufacture
specialized mobile data transmission devices including Palm and
Windows-based PDAs, laptop data cards and other devices.

We offer the range of services described above to our post pay
customers who meet certain credit requirements. We also offer plans to
customers with lower credit scores and/or with different payment
preferences as follows:



| |  | We offer plans with the same features and services discussed
above to customers with established credit, but who do not have
credit sufficient to meet our requirements of our traditional post pay
plans. These plans require an up front non-refundable fee, and
provide spending limits that the customer cannot exceed without
their account being suspended until payment is made. This
minimizes our risk of loss with these customers, but allows the
customer access to all other features and services under certain
of our post pay plans.                                  
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
| |  | We also offer prepaid service that requires advance payment for
service in specific dollar denominations. We offer prepaid
customers discounted calling rates based on a customers previous
purchases with T-Mobile. The range of services and features we
offer to our prepaid customers is not as broad as those offered to
our post pay customers. While we offer SMS services, we do not
currently offer GPRS services to our prepaid customers. Our
prepaid customers access to our web-based services is limited and
there are certain restrictions over roaming capabilities.

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MARKETS AND SYSTEMS

We currently own or operate spectrum licenses allowing us to
provide wireless services in areas of the United States inhabited by
248.3 million people. Together with Powertel, and through joint
ventures in which we have non-controlling ownership interests, we have
access to licenses in areas inhabited by an additional 29.1 million
people for a total of 277.4 million people or 95% of the United States
population.

We are one of the six largest, nationwide providers of wireless
voice and data services, currently operating in 23 of the top 25
markets and 41 of the top 50 markets in the United States, and
including Powertel, in 24 of the top 25 markets and 46 of the top 50
markets in the United States. Through our ownership of spectrum
licenses as noted above, our GSM/GPRS network, including the GSM
Facilities networks in the New York City area, California and parts of Nevada, we
currently market our brand and provide wireless services in markets
covering 198.9 million people. Together with Powertel, we market and
provide wireless services in markets covering an additional 19.0
million people for a total of 217.9 million people or 75.8% of the
United States population. We have essentially completed the initial
GSM/GPRS network build-out of the major population centers for which we
hold licenses, and are now primarily focused on improving network
coverage, quality and capacity within and around the urban markets we
currently serve.

Joint ventures and other entities in which we hold interests

We have entered into joint venture agreements and made other
equity investments in operating companies primarily to obtain coverage
for our customers in geographic areas where we ourselves could not
otherwise obtain spectrum licenses, to share the cost of building and
operating wireless networks and to promote the continued growth and
expansion of GSM networks in North America. Entities that are 20
percent to 50 percent owned by us are generally accounted for under the
equity method and entities that are less than 20 percent owned are
generally accounted for under the cost method. Where control exists
through voting rights or other means or where accounting principles
generally accepted in the United States (GAAP) require, we
consolidate such entities results with our own.

Network Infrastructure Venture with Cingular (GSM Facilities)

We entered into an agreement with Cingular Wireless LLC
(Cingular) in November 2001 to share in the ownership and operation
of GSM network infrastructures in specified markets. We contributed our
network assets in the New York Basic Trading Area (BTA) (the New
York City market), and Cingular contributed its network assets in the
Los Angeles and San Francisco Major Trading Areas (MTAs), which cover
most of California and parts of Nevada (the California/Nevada
market), to a newly formed joint venture entity, GSM Facilities.
Concurrent with its formation, GSM Facilities entered into operating
agreements with T-Mobile and Cingular to manage and maintain the assets
previously owned by each company on behalf of the joint venture. In
July 2002 we began marketing our commercial service in and around the
major population centers of the California/Nevada market, including San
Francisco, Los Angeles and Las Vegas, and Cingular began marketing its
commercial service in the New York City market. The monthly cash
operating expenses of GSM Facilities are charged to T-Mobile and
Cingular based on each partys proportionate share of spectrum in each
market. Through a separate reciprocal home roaming agreement, Cingular
and T-Mobile charge each other for usage that differs from the
spectrum-based expense allocations in each market. GSM Facilities also
incurs non-cash expenses including depreciation on assets in the joint
venture and interest charges on certain capitalized tower leases, which
are allocated to T-Mobile and Cingular based on their relative economic
interests in GSM Facilities.

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The capital expenditure requirements of the joint venture are
funded through capital contributions from T-Mobile and Cingular.
Pursuant to the operating agreements, T-Mobile and Cingular procure
services and network equipment on behalf of GSM Facilities in the
respective markets they operate and resell them to GSM Facilities. Capital contributions to fund the
expenditures by GSM Facilities are
then allocated to each party based on the nature
of the expenditures. Contributions to fund network capacity increases
are allocated based on each partys incremental growth in network
usage, while contributions to fund technology upgrades and network
footprint expansion are generally allocated evenly. Under the terms of
the infrastructure sharing agreement, Cingular is obligated to
contribute $450.0 million for GSM Facilities capital expenditures in
addition to their share of capital expenditures over two years from
inception.

Contractual termination provisions provide for an orderly unwind
of GSM Facilities over a two year period in the event of a change in
control of a member, material breach or at the discretion of either
member. In an unwind, the New York City market network assets would be
returned to T-Mobile and the California/Nevada market network assets
would be returned to Cingular, with a settlement between the members to
adjust for contribution differences. Under some circumstances, an
unwind would also include the exchange of certain predetermined
spectrum licenses between Cingular and T-Mobile, although the spectrum licenses are not
held by GSM Facilities. Additionally, an unwind caused by certain
actions of either party may result in substantial cash termination
payments by that party. In the event of such termination, T-Mobile
would incur substantial capital expenditures for the subsequent
build-out of a wireless network in the California/Nevada market and to
enhance the network in the New York City market.

Designated Entities

The Federal Communications Commission (FCC), which regulates the
sale and use of radio spectrum by which PCS service is provided in the
United States, has granted a narrow category of entities (Designated
Entities) the exclusive right to bid for and own certain C and F Block
licenses. We do not qualify as a Designated Entity, and so in order to
continue expanding service to our customers, we currently hold
non-controlling ownership interests in two companies that qualify as
Designated Entities, Cook Inlet/VS GSM V PCS Holdings, LLC (CIVS V)
and Cook Inlet/VS GSM VI PCS Holdings, LLC (CIVS VI). These two
companies (hereafter referred to as the CIRI Designated Entities) are
controlled by an affiliate of Cook Inlet Region, Inc. (CIRI). Through
wholesale reseller and other contractual arrangements, T-Mobile
customers can obtain service in territories covered by the C and F
Block spectrum licenses that are owned and operated by the CIRI
Designated Entities. Under exchange rights agreements, our partners in
these entities have the option to put their ownership interest to us in
exchange for cash and/or Deutsche Telekom stock provided that certain
FCC requirements are met. On December 31, 2002, CIRIs affiliate
formally notified us of its intent to put its ownership interest in
CIVS VI to us. The exchange is pending approval by the FCC and is
expected to close in the first half of 2003. If approved, the exchange
is not expected to have a material impact on our financial position,
results of operations or cash flows.

Other entities in which we hold interests

We hold non-controlling interests in the following entities that
provide PCS service using GSM technology: Iowa Wireless Services, L.P.;
NPI-Omnipoint Wireless, LLC; Wireless Alliance, L.L.C.; SBC
International Puerto Rico Inc.; and Microcell Telecommunications Inc.
(Microcell), a publicly traded Canadian wireless service provider. We
do not expect these entities to generate income from their operations
in the foreseeable future due to the high level of capital expenditures
and high costs associated with expansion and operation of their
networks. We have not guaranteed the obligations or otherwise committed
to provide further financial support for these entities.

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THE WIRELESS COMMUNICATIONS INDUSTRY

Overview

Since its introduction in 1983, wireless service in the United
States has grown dramatically. The Cellular Telecommunications &
Internet Association (CTIA) reports that there were 134.6 million
PCS, cellular and enhanced specialized mobile radio (SMR) customers
in the United States as of June 30, 2002. This represents a nationwide
penetration rate of wireless services of more than 46%. The wireless
communications industry generally includes one-way radio applications,
such as paging or beeper services, and two-way radio applications, such
as cellular, PCS and SMR. Wireless communications systems use
a variety of radio frequencies to transmit voice and data signals,
referred to as spectrum, which is licensed in distinct frequency
blocks.

PCS service was commercially launched in 1996 utilizing the 1900
MHz frequency band specifically set aside for PCS service. PCS uses
digital technology, which converts voice or data signals into a stream
of digits that are compressed before transmission. A single radio
channel may carry multiple simultaneous signal transmissions, enhancing
capacity and allowing digital-based wireless carriers to offer new and
enhanced wireless services. Such services include data transmission
features that allow mobile office applications such as facsimile,
e-mail, wireless connections to computer/data networks, basic Internet
capabilities and improved conversation privacy. Packet-switched digital
technology, which underlies GPRS, further provides for substantially
higher data transmission rates and continuous connectivity to data
networks and more robust Internet capabilities.

As further discussed below, PCS competes directly with cellular
telephone and data services, paging and SMR services. Cellular service
was commercially launched in 1983, initially using only analog-based
technology on the 824 to 896 MHz frequency band set aside for cellular
service. Analog cellular service continues to be more widely deployed
geographically than digital service; however, all major carriers with
cellular spectrum now provide both digital-based voice and wireless
data services utilizing the cellular frequency band. Analog cellular
service generally offers a more limited number of voice features and
does not offer the data transmission features available with digital
technologies. PCS is also increasingly competing with wired local
communications services as PCS costs decline and the quality and range
of services increases.

Operation of wireless communications systems

Wireless communications system service areas, whether cellular or
PCS, are divided into multiple cells. In both cellular and PCS
systems, each cell contains a transmitter, a receiver and signaling
equipment (collectively referred to as the cell site). The cell site
is connected by microwave or landline telephone lines to a switch that
uses computers to control the operation of the wireless communications
system for the entire service area. The signal strength of a
transmission between a handset or wireless data device and a cell site
declines as the handset or wireless data device moves away from that
cell site. The system coordinates all aspects of call transmission to
and from handsets and wireless data devices and ensures the hand off
of calls to other cell sites, which is designed to prevent calls from
being dropped as customers travel between overlapping coverage areas of
individual cell sites. Wireless communications providers also establish
interconnection agreements with local exchange carriers (LECs) and
interexchange carriers in order to allow a call to or from a wireless
customer to be routed over the facilities of these other carriers.

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Wireless system operators often enter into roaming agreements by
which the operators will provide service to customers of other wireless
service providers with compatible wireless systems who are temporarily
located in or traveling through their service areas and where the
customers provider does not have service. Although PCS and cellular
systems utilize similar technologies and hardware, they generally
operate on different frequencies and use different technical and
network standards. PCS systems operate under one of three principal
digital signal transmission standards that have been deployed by
various operators and vendors: GSM, Time Division Multiple Access
(TDMA), or Code Division Multiple Access (CDMA). An additional
standard, Integrated Digital Enhanced Network (iDEN), is used on
enhanced SMR systems. Some, but not all, PCS service providers offer
dual-mode handsets, which make it possible for their customers to roam
on analog systems, and more recently multi-mode handsets that enable
roaming on certain other digital systems, including GSM, outside of their service
area. We do not currently sell or support such multi-mode GSM handsets.

GSM is the most widely used wireless technology in the world,
serving over 800 million customers. It offers an open system
architecture, is supported by a variety of vendors and allows GSM
operators to achieve cost efficiencies in infrastructure and mobile
terminal equipment. GSM provides the benefit of a single phone number
and transparent services on a global roaming basis. GSM also has high
capacity, high voice quality and utilizes industry-leading encryption
and authentication technology that provides customers with a high level
of conversation privacy and protection against unauthorized
subscription usage. GSM has always supported wireless data and
currently supports wireless packet-based data transmission through
GPRS. This allows GSM operators to provide customers with enhanced
Internet and mobile data services.

CDMA has been widely deployed in North America and parts of Asia
and has interoperability with North American analog cellular systems,
permitting CDMA customers with dual-mode handsets to roam on analog
wireless systems. Because CDMA uses a closed architecture and is
dependent upon intellectual property rights owned by a few
manufacturers, the cost of network equipment, handsets and wireless
data devices is generally higher than GSM. CDMA has limited global
deployment, thus limiting the customers ability to use services based
upon CDMA technology outside of the United States.

GSM and TDMA are both based upon time-division of spectrum and are
currently incompatible with each other and with CDMA. TDMA, like CDMA,
has interoperability with analog cellular systems, enabling customers
with dual-mode handsets to roam on analog networks. GSM utilizes a
digital protocol that is incompatible with CDMA, TDMA, iDEN and analog
systems, which historically has made the development of dual-mode
handsets impractical. Accordingly, customers utilizing GSM handsets
have historically been unable to roam on analog or other digital
systems when traveling in an area not served by a GSM operator. During
2002, multi-mode handsets offering interoperability among GSM, TDMA and
analog systems became commercially available and are being sold by some
wireless service providers.

Competition

We operate in highly competitive markets. Competition for
customers among wireless spectrum licensees is principally based upon
the selection of services and features offered, the technical quality
of the wireless systems, customer service, system coverage, capacity
and price. The FCCs allocation of spectrum currently provides for at
least six PCS spectrum licenses in each geographic area and two
cellular spectrum licenses in each market. There was formerly a
spectrum cap that limited the amount of PCS, cellular and covered SMR
spectrum that a licensee could hold in overlapping markets to 55 MHz.
There was also a cross-interest restriction that limited the ability of
an entity to have ownership or other attributable interests in cellular
licensees on different channel blocks in overlapping markets. These
regulations combined to limit the minimum number of licensees in a
given geographic area to five, three PCS and two unaffiliated cellular
licensees in each market. The spectrum cap was removed effective
January 1, 2003, as was the cellular cross-interest restriction in the
larger, urban cellular markets, known as Metropolitan Statistical Areas
(MSAs). The FCC retained the cross-interest restriction in the
smaller, rural cellular markets, known as Rural Service Areas. The FCC
indicated that it would engage in a case-by-case review of any
anticompetitive effects of spectrum acquisitions. Although it is not
clear what criteria the FCC will use in reviewing spectrum
acquisitions, the elimination of the spectrum cap and the
cross-interest restriction in MSAs may lead to further consolidation
among PCS and cellular service providers.

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Our principal competitors are the national PCS and cellular
providers, and the national specialized radio licensee in our markets,
many of which have been operational for a number of years. Earlier
market entry by these competitors often provided them the opportunity
to gain greater coverage within individual markets, larger customer
bases and the ability to offer no or low cost roaming and toll calls in
wider areas. Many of our competitors in the national market provide
services comparable to our PCS services and continue to have the
advantages of greater geographical coverage and more customers. These
competitors include Verizon Wireless, Inc. (Verizon); Cingular; AT&T
Wireless Services, Inc. (AT&T Wireless); Sprint Spectrum L.P.
(Sprint PCS); and Nextel Communications, Inc. (Nextel). We also
compete with local or regional PCS providers, paging, dispatch,
cellular, wireless service resellers and landline telephone service
providers. We also face increased competition from entities providing
similar services in particular situations using other currently
operational technologies such as WLANs or other unlicensed applications
or developing new technologies for use in the future.

GSM technology has not historically been widely deployed by North
American wireless operators. Our principal PCS competitors generally
have used standards other than GSM. For example, Verizon and Sprint PCS
use the CDMA standard. AT&T Wireless, until it began the rollout
of the GSM standard in 2001, has used the
TDMA standard exclusively and Cingular has used TDMA in most of its
service areas and GSM in other limited service areas. The different PCS
technologies utilized by our principal competitors combined with the
historical absence of practical multi-mode handsets supporting the GSM
standard have precluded our customers from roaming on other carriers
digital and analog networks, in most cases, when they are traveling in
North America outside our service areas.

AT&T Wireless and Cingular have begun overlaying
their TDMA networks with GSM networks in many markets, while continuing
to provide services on their TDMA networks. AT&T Wireless recently
indicated that its total combined TDMA and GSM footprint would cover
221.0 million people by the end of 2003. Cingular and AT&T Wireless
also entered into a joint venture in 2002 to further expand their GSM
networks. The expansion of the GSM networks by these competitors may
make it possible for our customers to have expanded roaming
capabilities. At the same time, however, multi-mode handsets offered by
our competitors using the CDMA, TDMA and GSM standards will allow their
customers to roam onto systems of other carriers operating on other
standards, effectively increasing areas of coverage available to their
customers.

The FCC formerly required all cellular and PCS spectrum licensees
to provide service to resellers. A reseller of wireless service is
allocated blocks of telephone numbers and capacity from licensed
wireless carriers and then resells those services to its own customers.
Thus, a reseller is both a customer of a wireless spectrum licensees
services and also a competitor of that spectrum licensee. Several small
resellers currently operate in competition with us. The obligation of
spectrum licensees to provide service to resellers terminated on
November 24, 2002.

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Competition may increase as a result of several recent
federal government
actions that will increase the amount of available spectrum for the
provision of commercial mobile radio service (CMRS),
which includes PCS, cellular and enhanced SMR services.
In 2002, the federal
government reallocated 90 MHz of spectrum in the 1.7 and 2.1 GHz
bands for advanced wireless (2.5G+) services. In January 2003, the FCC
reallocated 30 MHz of mobile satellite service (MSS) spectrum in the
1.9 and 2.1 GHz bands for fixed and mobile uses. The FCC also plans to
auction spectrum in the 700 MHz band for CMRS and other uses that has become
available as a
result of the migration from analog to digital television broadcasting.
Additionally, the Supreme Court recently ruled that the FCC improperly
cancelled PCS spectrum licenses previously won at auction by NextWave
Personal Communications Inc., NextWave Power Partners Inc. and Urban-Comm
North Carolina, Inc. (NextWave-Urban Comm). This ruling is expected to result in
commercial operation of this spectrum by NextWave-Urban Comm or other carriers to
whom this spectrum or portions thereof may be transferred. These
developments may increase competition and therefore
negatively impact our business.

Competition in the emerging Wi-Fi market is extremely fragmented
due to the nature of Wi-Fi technology and its use of unlicensed
spectrum. The initial competitors in this market such as Boingo
Wireless, Inc., iPASS Inc.
and GRIC Communications, Inc. have elected to purchase and resell access on existing Wi-Fi
systems of smaller third parties, thus creating aggregated networks. We
intend to continue expanding our HotSpot Wi-Fi service through the
build-out of additional access points of our own and integrating Wi-Fi
into broader wireless voice and data service offerings. Other CMRS
carriers have recently announced plans to enter the Wi-Fi market. These
other carriers and other Wi-Fi service providers are bidding to
construct access points at airports and other venues in competition
with our service.

GOVERNMENTAL REGULATION

Our telecommunications systems and operations are regulated by the
FCC pursuant to the Communications Act of 1934 (the Communications
Act) and the Telecommunications Act of 1996 (the Telecommunications
Act) (collectively, the Acts) and by various other federal, state
and local government bodies.

The FCC allocates spectrum licenses for radio frequency spectrum
through competitive bidding, or auctions. The FCC generally allows all
qualified applicants to bid on spectrum licenses, with the exception of
certain spectrum licenses that are reserved for Designated Entities.
The FCC has divided the United States into separate PCS geographic
markets, with six or more spectrum licenses on separate frequencies in
each market. Spectrum licensees are generally allowed to divide their
licenses further, either spectrally (disaggregation), geographically
(partitioning), or both, in private transactions after an auction,
subject to certain restrictions. Spectrum licensees are also subject to
other FCC and other regulatory rules and various recent industry
developments that may affect our business operations as follows:



| |  | Renewal and construction requirements of spectrum licenses:
Spectrum licenses have a ten-year term, after which they must be
renewed with the FCC. The renewal generally will be granted to a
spectrum licensee that has: (1) provided substantial service
during its past spectrum license term and (2) substantially
complied with applicable FCC rules and policies and the Acts. The
FCC also mandates that spectrum licensees construct facilities
that provide adequate service to a certain percentage of the
population of their spectrum licensed service areas within five,
and in some cases, ten years of the initial spectrum license
grant. Failure to meet these construction deadlines may result in
forfeiture of the spectrum license.
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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| |  | Compliance with antenna structure and other technical
requirements:PCS systems are subject to certain Federal Aviation
Administration regulations with respect to location, lighting and
construction of transmitter towers and antennas and are subject to
regulation under the National Environmental Policy Act and
environmental regulations of the FCC. The FCC also mandates
various technical parameters, and state or local zoning and land
use regulations also apply to wireless systems.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
| |  | Transfers and assignments of spectrum licenses:Subject to
certain exceptions, the FCCs approval must be obtained prior to
assigning or transferring control of a spectrum license. Any
acquisition or sale of spectrum licenses may also require prior
review by the Federal Trade Commission and the Department of
Justice if the transaction is over a certain size, as well as
state or local regulatory authorities having jurisdiction.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| 
|  |  | FCC rules restrict the voluntary assignment or transfer of
control of Designated Entity spectrum licenses. During the first
five years of the spectrum license term, assignments or transfers
affecting control are permitted only to assignees or transferees
that meet the FCCs Designated Entity eligibility criteria for
holding such spectrum licenses. However, a spectrum licensee may
assign or transfer control of a Designated Entity spectrum license
to a non-Designated Entity within the five year restricted period if
it has satisfied the first construction benchmark for the spectrum
license, although such transfers may be subject to unjust enrichment
payments. Upon transfer or assignment of a Designated Entity
spectrum license to a non-Designated Entity during the initial
spectrum license term, any installment payment plans are
accelerated, and during the first five years of the initial spectrum
license term, all or a portion of any bidding credits received by
the Designated Entity must be forfeited. The FCC has authority to
conduct random audits to ensure that spectrum licensees are in
compliance with the FCCs Designated Entity eligibility rules, and
any violations could result in spectrum license revocations,
forfeitures or fines.



| |  | FCC wireless spectrum cap:As discussed above, previously a
single person or entity (or related group) could hold an
attributable interest in PCS, cellular and covered SMR spectrum
licenses totaling no more than 55 MHz in all markets where there
was a significant overlap in a particular geographic area. The FCC
eliminated the restriction effective January 1, 2003. However, the
FCC indicated that it would engage in a case-by-case review of any
anticompetitive effects of spectrum acquisitions. It is not clear
at this time what criteria the FCC will use in reviewing spectrum
acquisitions.                                                                                                                                                                                                                                                                                                                                                                                                                                           
|- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
| |  | Relocation of microwave incumbents:The spectrum acquired by a
spectrum licensee may be encumbered by the fixed microwave systems
of existing spectrum licensees. In order for the spectrum
licensees to operate their PCS systems, they may need to relocate
these incumbent microwave spectrum licensees to other spectrum.
The FCC has adopted transition and cost sharing plans to
facilitate the relocation of incumbents and to ensure that
subsequent spectrum licensees that benefit from the earlier
relocation by another carrier share the cost of the relocation.
The transition and cost sharing plans expire in April 2005, after
which any remaining incumbents in the spectrum band will be
responsible for their own relocation costs.                                                                                                                                                                                                                                                                                                    
| 
| |  | Foreign ownership: The Communications Act limits direct foreign
ownership in an FCC spectrum license to 20 percent. The
Communications Act also mandates that no more than 25 percent of a
FCC spectrum licensees capital stock may be indirectly owned or
voted by non-United States citizens or their representatives, by a
foreign government, or by a foreign corporation, absent an FCC
finding that a higher level of foreign ownership is not
inconsistent with the public interest. Indirect ownership in
excess of 25 percent by persons or entities from countries that
are signatories to the World Trade Basic Telecom Organization
Agreement are presumed to be in the public interest. However, the
FCC has the right to attach additional conditions to a grant of
authority, and, in the exceptional case in which an application
poses a very high risk to competition, to deny an application. In
connection with the T-Mobile merger, the FCC authorized T-Mobile
to have 100 percent indirect foreign ownership of spectrum
licenses.

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| |  | Enhanced 911: The FCC has established timetables for making
emergency 911 services available by cellular, PCS, and other
CMRS providers, including enhanced 911
(E911) services that provide the callers telephone number,
location and other useful information. Fundamentally, such
carriers have an ongoing obligation to comply with various
implementation standards and deadlines imposed by the FCC relating
to E911. Although we have various requests and petitions pending
at the FCC to modify and clarify our E911 obligations, we are
partially out of compliance with certain current E911
requirements. The FCC has proposed a $1.25 million penalty against
us for alleged non-compliance, and we may be subject to additional
fines in the future. Any such monetary penalties are not expected
to have a material impact on our financial position, results of
operations or cash flows.                                                                                                                                                                                                                             
|- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
| |  | LEC/CMRS interconnection:FCC rules require LECs to provide
CMRS carriers interconnection within a
reasonable time after it is requested, unless such interconnection
is not technically feasible or not economically reasonable.
Interconnection allows the completion of calls between wireless
and wireline phones. CMRS providers are entitled to reciprocal
compensation arrangements with LECs, in which CMRS providers can
collect the same charges for terminating wireline-to-wireless
traffic on their systems that the LECs charge for terminating
wireless-to-wireline calls, and prohibits LECs from charging CMRS
providers for terminating LEC-originated traffic. There is an
on-going FCC rulemaking proceeding to reexamine all of its
currently regulated forms of intercarrier compensation, including
the existing reciprocal compensation mechanism for LEC-CMRS
interconnection, which may result in substantial modification of
the FCCs interconnection rules. We do not believe the impact of
any such modifications to be determined by the FCC in this proceeding
will have a material impact on our business.
| 
| |  | Universal service: The goal of universal service is to ensure
the provision of basic and enhanced telecommunications services to
all areas in the United States, including schools, libraries, rural
health care, high-cost and low-income
areas. The Federal government, along with all 50 states, have created
such programs although the goals of such programs vary by
jurisdiction. Wireless service providers are eligible to receive
universal service subsidies, but are also required to contribute
to the federal universal service fund and to certain state programs.
Contributions to the Federal program
are based primarily on a percentage of interstate end-user revenues as
determined on a quarterly basis by the FCC. Contributions to the
state programs vary, but are generally based on intrastate revenues.                                                                                                                                                                                                                                                                                                       
| 
| |  | Wireless local number portability: CMRS carriers are required
under FCC rules to provide local number portability
(LNP), which enables customers to migrate their landline
telephone numbers to a CMRS carrier and vice versa, and to migrate
their CMRS telephone numbers from one CMRS carrier to another CMRS
carrier. CMRS carriers are required to implement LNP in the top
100 MSAs by November 24, 2003. Legislation has recently been
introduced in the United States House of Representatives, which if
enacted into law, may require LNP in all markets by an earlier
date. Verizon and CTIA currently have pending before the United
States Court of Appeals for the District of Columbia Circuit a
challenge to the FCCs LNP rules which, if successful, would
indefinitely delay implementation of the FCCs LNP rules. We may
incur substantial costs in complying with this requirement and we
are unable to determine the impact on our business of the
increased ability of customers to change their wireless service
providers.                                                                                     
| 
| |  | CALEA: The Communications Assistance for Law Enforcement Act
(CALEA) requires telecommunications carriers to ensure that
their facilities are technically capable of assisting law
enforcement officials use of wiretaps and like devices to
intercept or isolate customer communications. All CMRS carriers
must comply with CALEA. In addition, T-Mobile is subject to an
agreement with the Federal Bureau of Investigation and Department
of Justice, which imposes on us certain operational and other
requirements designed to ensure that we can effectively respond
to, and implement, such wiretap and other information requests by
law enforcement agencies.                                                                                                                                                                                                                                                                                                                                                                                                                                                                

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| |  | CMRS automatic roaming: The FCC is currently considering
whether it should adopt automatic roaming rules for CMRS
carriers and phase out the current manual roaming requirement.
Manual roaming requires the customer to take additional action to
establish a contractual relationship with a host carrier to carry
a call that is placed outside the customers home area. The FCC
has not yet issued a decision on this matter. Even though there is
not a current requirement that carriers enter into agreements with
one another to enable automatic roaming, most wireless carriers
have already entered into voluntary automatic roaming agreements
with other carriers so that their customers do not have to take
such additional steps relating to manual roaming.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
| |  | Health effects of wireless handsets, wireless data devices and
cell sites: A number of studies have been conducted to examine the
health effects of wireless phone use, and some of the studies have
been construed as indicating that wireless phone use causes
adverse health effects. Media reports have suggested that radio
frequency emissions from handsets, wireless data devices and cell
sites may raise various health concerns, including cancer, and may
interfere with various electronic medical devices, including
hearing aids and pacemakers. We are subject to current and
potential future litigation relating to these health concerns.
Several lawsuits have been filed against us, other wireless
carriers and other participants in the wireless industry,
asserting product liability, breach of warranty, adverse health
effects and other claims relating to radio frequency transmissions
to and from handsets and wireless data devices. Some of these
lawsuits allege other related claims, including negligence, strict
liability, conspiracy and the misrepresentation of or failure to
disclose these alleged health risks. The complaints seek
substantial monetary damages as well as injunctive relief. The
defense of these lawsuits may divert our managements attention,
we may incur significant expenses in defending these lawsuits, and
we may be required to pay significant awards or settlements.
| 
|  |  | Additional studies of health effects of wireless services are
ongoing and new studies are anticipated. If such further research
establishes any link between the use of handsets and health
problems, such as brain cancer, then usage of and demand for our
services may be significantly reduced, and we could be required to
pay significant expenses in defending lawsuits and significant
awards or settlements, any or all of which could have a material
adverse effect on our business, operations and financial condition.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| 
|  |  | We may be subject to potential litigation relating to the use
of handsets and wireless data devices while driving.Some studies
have indicated that using these devices while driving may impair
drivers attention. Legislation has been proposed in the United
States Congress and many state and local legislative bodies to
restrict or prohibit the use of wireless phones while driving motor
vehicles. To date, New York State and some localities in the United
States have passed laws restricting the use of handsets, and similar
laws have been enacted in other countries. Additionally, some
jurisdictions have passed laws restricting the use of handsets by
persons such as school bus drivers and novice drivers. These
laws or, if passed, other laws prohibiting or restricting the use of
handsets while driving, could reduce sales, usage and revenues, any
or all of which could have a material adverse effect on our
operations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       



| |  | Regulation on the state and local level: Some states, through
their public service or utility commissions, or through other
means, have taken, or are seeking to take actions to regulate
various aspects of wireless operations, including customer
billing, termination of service arrangements, advertising, the
filing of informational tariffs and certification of operations.
For example, the California Public Utilities Commission (PUC)
has proposed extensive consumer protection and privacy regulations
for all telecommunications carriers. If adopted, the rules will
significantly alter our business practices in California with
respect to nearly every aspect of the carrier-customer
relationship, including solicitations, marketing, activations,
billing and customer care. The California PUC is also
contemplating rules to address other service quality issues,
including service repair, service outages and toll operator
answering time that could apply to CMRS providers. Such
regulations, if approved, could expose carriers to increased risk
of litigation and may materially impact our operating costs. At
the local level, wireless facilities typically are also subject to
zoning and land use regulation, and may be subject to fees for use
of public rights-of-way.
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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| |  | Leasing of spectrum: The FCC initiated a proceeding in late
2000 examining whether it should allow the leasing of spectrum to
third parties either on a temporary or long-term basis to ease
the current spectrum shortage faced by many carriers. The FCCs
proposal on leasing of spectrum would allow certain wireless
spectrum licensees to enter into a variety of arrangements with
third parties that would not require the FCCs prior approval for
assigning or transferring control of a spectrum license. The FCC
has not yet issued a decision on this matter.
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

EMPLOYEES AND LABOR RELATIONS

We consider our labor relations to be good. None of our employees
are covered by collective bargaining agreements. At December 31, 2002,
we had 20,185 employees. This includes former employees of Powertel who
became T-Mobile employees in 2001. Of these employees, approximately
2,600 perform services exclusively for Powertel, and their compensation
and benefits costs are being charged directly to Powertel. Our
employees are working in the following areas:

|                           |  |           |        | 
|-------------------------- |  | --------- | ------ | 
|                           |  | Number of
|Category                   |  | employees
|                           |  |          
|Customer care              |  |           | 9,324  | 
|Customer acquisition       |  |           | 6,753  | 
|Network administration     |  |           | 2,306  | 
|General and
administrative |  |           | 1,802  | 
|                           |  |           |        | 
|                           |  |           | 20,185 | 
|                           |  |           |        | 

AVAILABLE INFORMATION

T-Mobile is a reporting company under the Securities Exchange Act
of 1934, as amended, and files reports and other information with the
SEC. The public may read and copy any of our filings at the SECs
Public Reference Room at 450 Fifth Street N.W., Washington, D.C. 20549.
You may obtain information on the operation of the Public Reference
Room by calling the SEC at 1-800-SEC-0330. Because we make filings to
the SEC electronically, access to this information is available at the
SECs Internet website (www.sec.gov). This site contains reports and
other information regarding issuers that file electronically with the
SEC. We make available, free of charge through our website, our Annual
Report on Form 10-K, quarterly reports on Form 10-Q and current reports
on Form 8-K, and amendments to these reports, as soon as reasonably
practicable after we have electronically filed such material with, or
furnished such material to, the SEC. Our Internet website is
www.t-mobile.com.

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RISK FACTORS

WE HAVE SUBSTANTIAL NET LOSSES AND NEGATIVE CASH FLOW AND WE MAY NOT BECOME PROFITABLE IN THE FUTURE.

We sustained net losses of approximately $16.6 billion in fiscal
2002 ($15.2 billion of which were non-cash charges associated with the
adoption of SFAS No. 142 and subsequent impairment of goodwill and
spectrum licenses during the year), $2.6 billion in 2001 and $2.1
billion in 2000. At December 31, 2002, we had an accumulated
deficit of $18.1 billion and shareholders equity, net of accumulated
deficit, of $8.7 billion. We expect to incur significant operating
losses and to generate negative cash flows during the next several years
while we continue to develop our systems and grow our customer base. We
might not be able to achieve profitability or positive cash flow.

AS A WHOLLY-OWNED SUBSIDIARY OF DEUTSCHE TELEKOM, WE RELY ON T-MOBILE INTERNATIONAL, DEUTSCHE TELEKOM, OR ITS AFFILIATES FOR OUR FUTURE FUNDING REQUIREMENTS. UNAVAILABILITY OF SUCH FUNDING COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS, OPERATIONS AND FINANCIAL CONDITION.

Since the T-Mobile Merger, we have relied on funding from T-Mobile
International, Deutsche Telekom, or its affiliates to meet our working
capital, capital expenditure, debt service and other obligations. The
continued growth and operation of our business will require substantial
additional funding for working capital, debt service, the enhancement
and upgrade of our network, the build-out of infrastructure to expand
our coverage (including the need to provide funding to our
infrastructure venture with Cingular) and possible acquisitions of
spectrum licenses. Additionally, competitive factors, unforeseen
construction delays, cost overruns, regulatory changes, engineering and
technological changes and other factors may result in funding
requirements in excess of current estimates. If such funding is not
available from these sources in the future, there can be no assurance
that such funding would be available on reasonable terms, if at all,
from other sources. The unavailability of such funding on reasonable
terms from any sources would have a material adverse effect on our
business, strategy, operations and financial condition. At December 31,
2002, our aggregate indebtedness, including that of our consolidated
subsidiaries, was $8.3 billion, of which $7.1 billion was owed to
T-Mobile International, Deutsche Telekom, or its affiliates.

Deutsche Telekom is an international telecommunications operator
and an SEC registrant. As such, Deutsche Telekom makes periodic filings
with the SEC which include its financial condition, operating results
and disclosures regarding the specific risks it faces on a global
basis, including, among other risks, certain risks similar to those
described in this Risk Factor section.

WE FACE SUBSTANTIAL COMPETITION IN ALL ASPECTS OF OUR BUSINESS.

We operate in highly competitive markets and there is substantial
and increasing competition in all aspects of the wireless
communications business. Our principal competitors are the national PCS
and cellular providers (Verizon, Sprint PCS, AT&T Wireless and Cingular),
and the national specialized radio licensee in our markets (Nextel).
Many of these competitors have been operational for a number of years
and some have substantially greater financial, technical, marketing,
distribution and other resources than we do. Additionally, several
operate in multiple segments of the industry. We currently have the
smallest customer base of the six national wireless carriers. Many of
our competitors in the national market provide services comparable to
our PCS services and continue to have the advantages of greater
geographical coverage, more customers and the ability to offer no or
low cost roaming and toll calls in wider areas. We also compete with
local or regional PCS providers, paging, dispatch, cellular, wireless
service resellers and landline telephone service providers. With so
many companies targeting many of the same customers, we may not be able
to successfully attract and retain customers and grow our customer base
and revenues, and as a result, our operating results may decrease.

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GSM technology has not historically been widely deployed by North
American wireless operators. Our principal PCS competitors generally
have used standards other than GSM. In many cases our customers are not
able to roam conveniently or at all on other carriers systems while
traveling in areas of North America outside our service area given that
our customers handsets currently operate on a single technology (GSM)
and a single frequency band (1900 MHz) in the United States. At the
same time, however, dual and multi-mode handsets allow many of our
competitors customers to roam onto systems of other carriers operating
on other standards, effectively increasing the areas of available
coverage. Our ability to expand coverage is limited to those markets
where we have obtained or can obtain licenses with sufficient spectrum
to provide voice, data and other services, or where we economically can
become resellers of these services or enter into roaming arrangements
with other GSM carriers.

Competition in the emerging Wi-Fi market is extremely fragmented
due to the nature of Wi-Fi technology and its use of unlicensed
spectrum. The initial competitors in this market such as Boingo, iPASS,
and GRIC have elected to purchase and resell access on existing Wi-Fi
systems of smaller third parties, thus creating aggregated networks. We
intend to continue expanding our HotSpot Wi-Fi service through the
build-out of additional access points of our own and integrating Wi-Fi
into broader wireless voice and data service offerings. Other CMRS
carriers have recently announced plans to enter the Wi-Fi market. These
other carriers and other Wi-Fi service providers are bidding to
construct access points at airports and other venues in competition
with our service.

A HIGH RATE OF CHURN WOULD NEGATIVELY IMPACT OUR BUSINESS.

Wireless communications services providers, including us,
experience varying rates of customer attrition, referred to as churn.
We believe that customers change wireless providers for the following
principal reasons: service offerings, price, call quality, coverage area and
customer service. We also expect churn to increase generally for the
industry as a result of the introduction of LNP. A high rate of churn
would adversely affect our operating results because of the potential
revenue loss and the cost of adding new customers to replace those
lost, which generally includes commissions and handset subsidies. We
intend to incur significant expenses to improve customer retention and
minimize churn. We may also be required to subsidize product upgrades
and/or reduce pricing to match competitors initiatives in order to
retain customers.

WE NEED TO CONTINUE TO IMPROVE NETWORK COVERAGE, QUALITY AND CAPACITY WITHIN AND AROUND THE URBAN MARKETS THAT WE CURRENTLY SERVE AND THE FAILURE TO COMPLETE THE IMPROVEMENTS IN NETWORK COVERAGE, QUALITY AND CAPACITY ON A TIMELY BASIS AND AT THE COST WE EXPECT COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR OPERATIONS AND FINANCIAL CONDITION.

We have essentially completed the initial GSM/GPRS network
build-out of the major population centers for which we hold licenses,
and are now primarily focused on improving network coverage, quality
and capacity within and around the urban markets we currently serve.
Although, including Powertel, we have access to licenses covering 95% of the United States
population, our network currently only covers roughly 75.8% of the
population. Our network does not currently cover many of the less populated
areas; however, we will continue to seek roaming agreements, enter into
joint ventures or build infrastructure to expand our network coverage
in these areas as appropriate. We cannot guarantee that we will be able
to do so in a time frame that will permit us to remain competitive at
the cost we expect, or at all. Failure or delay in improving network
coverage, quality and capacity on a timely basis or at all, or
increased costs to accomplish such improvements could have a material
adverse effect on our business, strategy, operations and financial
condition.

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In addition, we plan to deploy EDGE technology in selected areas
to increase data transmission rates beyond those available through our
existing GPRS network. A number of factors beyond our control could
disrupt a timely and cost-effective transition to EDGE technology. We
depend on suppliers to deliver the required hardware, software and
terminal devices (handsets or wireless data devices) on schedule and in
accordance with our specifications, and on the availability of skilled
personnel to assist us in the installation of the hardware and
software. Furthermore, significant components, such as EDGE software
and certain required hardware components, are not yet commercially
available and may delay our ability to deploy EDGE technology on our
anticipated schedule. Supplier delays and the failure of the necessary
equipment to be commercially available on a timely basis, could have a
material adverse effect on our business, strategy, operations and
financial condition.

SYSTEM FAILURES COULD RESULT IN REDUCED USER TRAFFIC AND REDUCED REVENUE AND COULD HARM OUR REPUTATION.

Our technical infrastructure (including our network infrastructure
for mobile telecommunications services and our internal network
infrastructure supporting functions such as billing and customer care)
is vulnerable to damage or interruption from information and
telecommunication technology failures, power loss, floods, windstorms,
fires, terrorism, intentional wrongdoing and similar events.
Unanticipated problems at our facilities, system failures, hardware or
software failures, computer viruses or hacker attacks could affect the
quality of our services and cause service interruptions. Any of these
occurrences could result in reduced user traffic, higher churn, reduced
revenues, and increased costs, and could harm our reputation and have
a material adverse effect on our business.

OUR ABILITY TO EXPAND AND PROVIDE SERVICE IS LIMITED BY OUR ABILITY TO OBTAIN FCC LICENSES, WHICH ARE LIMITED IN NUMBER.

We do not have licenses covering the entire United States and in
many cases our customers are not able to roam conveniently or at all on
other PCS or cellular systems while traveling in areas of North America
outside our service area given that our customers handsets and
wireless data devices currently operate on a single technology (GSM)
and a single frequency band (1900 MHz) in the United States. At the
same time, however, dual and multi-mode handsets allow many of our
competitors customers to roam onto systems of other carriers operating
on other standards, effectively increasing the areas of available
coverage. Our ability to expand coverage and provide additional
capacity to handle our growing customer base and new service offerings
is limited to those markets where we have obtained or can obtain
licenses with sufficient spectrum to provide voice, data and other
services, or where we economically can become resellers of these
services or enter into roaming arrangements with other GSM carriers. We
could fail to obtain sufficient spectrum capacity through FCC auctions
or other transactions required to meet the expanded demands for our
existing services in both new and existing markets, as well as to
enable development of next generation services. The failure of having
sufficient spectrum would have a material adverse impact on the quality
of our services or our ability to roll out such future services in some
markets.

We will continue to seek opportunities where appropriate to
acquire additional spectrum licenses, systems and/or operators, or
enter into joint ventures, which will add to our current footprint or
increase the spectrum capacity available to us. The FCC periodically allocates spectrum
licenses for radio frequency spectrum through competitive bidding, or
auctions available to qualified applicants. The decision to conduct
auctions, and the determination of what spectrum frequencies will be
made available for auction, are provided for by laws administered by
the FCC. The FCC may not allocate spectrum sufficient to meet the
demands of all those wishing to obtain licenses. We may not be able to
acquire sufficient spectrum necessary to implement our business and
technology strategy through these types of transactions, and we may not
be able to complete any of these transactions on favorable terms.

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OUR FCC LICENSES ARE SUBJECT TO RENEWAL AND POTENTIAL REVOCATION IN THE EVENT THAT WE VIOLATE APPLICABLE LAWS. THE LOSS OF ANY OF SUCH LICENSES COULD MATERIALLY AND ADVERSELY AFFECT OUR ABILITY TO SERVICE OUR CUSTOMERS.

Our licenses are subject to renewal upon the expiration of the
10-year period for which they are granted. Although the FCC has
routinely renewed wireless licenses in the past, we cannot assure
that no challenges will be brought against our license renewals in the future.
In addition, FCC rules require all wireless licensees to meet specified
build-out requirements, and failure to comply with these and other
requirements in a given license area could result in termination,
cancellation or non-renewal of our license for that license area or the
imposition of fines by the FCC. If any of our licenses are forfeited,
revoked, or not renewed, we would not be able to provide service in
that area unless we contract to resell wireless services of another
provider or enter into roaming agreements.

OUR NETWORK INFRASTRUCTURE VENTURE WITH CINGULAR MAY IMPEDE OUR ABILITY TO OPERATE EFFECTIVELY IN THE COVERED MARKETS.

We entered into an agreement with Cingular to share in the
ownership and operation of GSM network infrastructures in specified
markets through a joint venture, GSM Facilities. We contributed our
network assets in the New York City market and Cingular contributed its
network assets in the California/Nevada market. Actual combined demand
for network capacity for our customers and Cingulars customers could
exceed expected network capacity. We may also experience disagreements
with Cingular over the operation of the venture which could impact the
quality of service to our customers and our ability to compete
effectively in the covered markets.

Contractual termination provisions provide for an orderly unwind
of GSM Facilities over a two year period in the event of a change in
control of a member, material breach or at the discretion of either
member. In an unwind, the New York City market network assets would be
returned to T-Mobile and the California/Nevada market network assets
would be returned to Cingular, with a settlement between the members to
adjust for contribution differences. Under some circumstances, an
unwind would also include the exchange of certain predetermined
spectrum licenses between Cingular and T-Mobile although the spectrum
licenses are not
held by GSM Facilities. Additionally, an unwind caused by certain
actions of either party may result in substantial cash termination
payments by that party. In the event of such termination, there can be
no assurance that our remaining spectrum in the New York City market
and in the California/Nevada market would be sufficient to meet our
needs to provide service to our customers. In addition, we would incur
substantial capital expenditures for the subsequent build-out of a
wireless network in the California/Nevada market and to enhance the
network in the New York City market.

FAILURE OF CERTAIN OF OUR KEY SUPPLIERS TO DELIVER EQUIPMENT AND SERVICES COULD ADVERSELY AFFECT OUR BUSINESS.

We depend upon various key suppliers to provide us with equipment
and services that we need to continue expanding and upgrading our
network and to operate our business. The failure of these suppliers to
meet our equipment and service needs in a timely manner might have a
significant adverse effect on our revenues and market position. The
construction and operation of our networks and the provision of our
services are dependent on our ability to obtain adequate supplies of a
number of items on a timely and cost-efficient basis. These include
handsets and wireless data devices and transmission, switching and
other network equipment. Mobile handsets in particular have been
subject to supply constraints from time to time. Some of these
suppliers are experiencing financial and business difficulties. If
these key suppliers were unable to honor, or otherwise fail to honor,
their obligations to us on a timely basis, we could be unable to
provide services to our customers in a competitive manner or experience
other disruptions of our business which could have an adverse effect on
our revenues and results of operations. Further, if we are unable to
obtain the hardware and software we need to build out licensed areas,
our licenses may be at risk of termination for failure to satisfy the
network construction requirements contained in such licenses.
Additionally, we are dependent on various suppliers to comply with
various regulatory requirements such as those related to E911. Failure of
these suppliers to provide equipment or services sufficient to meet
such regulatory requirements may expose us to significant penalties
and may otherwise adversely affect our business.

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WE MUST BE ABLE TO MAINTAIN FAVORABLE ROAMING ARRANGEMENTS IN ORDER TO MAINTAIN OUR COMPETITIVE POSITION AND EXPAND.

Our customers are currently able to roam in certain areas of the
United States and internationally on other GSM-based PCS systems and we
plan to continue to expand our international roaming ability through
new roaming agreements with international GSM providers. We believe
that this ability to provide international service to our customers is
important to maintaining our competitive position. We may not be able
to obtain or maintain roaming agreements with other wireless providers
on terms that are acceptable to us. Further, some competitors may be
able to obtain roaming rates and terms that are more favorable than
those obtained by us. If we are not able to maintain and expand our
roaming footprint or maintain favorable roaming arrangements with other
wireless carriers, our services may become less profitable or the
coverage area or pricing we offer relative to our competitors may not
be as attractive.

Further, we derive substantial revenues for providing roaming
services to customers of other carriers, including numerous
international carriers. Cingular, AT&T Wireless and others now provide
GSM service in the United States and have roaming agreements with many
of the same carriers with which we have such agreements. Customers of
these carriers may elect to roam on the networks of our competitors or
we may be forced to lower our roaming rates to avoid losing roaming
traffic, either of which may reduce the revenues we derive from
providing such roaming services.

MARKET PRICES FOR WIRELESS SERVICES MAY DECLINE IN THE FUTURE AS A RESULT OF COMPETITION.

We anticipate that prices for two-way wireless services generally
will decline in the future due to increased competition. As a result,
our revenues, profit margins and financial performance may be
materially adversely affected. We also expect that there will be
increases in advertising and promotional spending, along with increased
demands for access to distribution channels. All of this may lead to
greater choices for customers, possible consumer confusion, and
increasing movement of customers between competitors or away from
wireless altogether, which we refer to as churn. Our ability to
compete successfully also will depend on marketing, and on our ability
to anticipate and respond to various competitive factors affecting the
industry, including new services, changes in consumer preferences,
demographic trends, economic conditions and pricing strategies by
competitors.

OUR INDUSTRY WILL CONTINUE TO BE ADVERSELY AFFECTED IF THE ECONOMIC SLOWDOWN PERSISTS.

Our business depends on, among other things, general economic
conditions in the United States. In 2001 and 2002 there was a downturn
in United States as well as global economic conditions in general and
in the telecommunications industry in particular. This downturn has
continued into 2003 and is expected to continue for the balance of the
year and possibly beyond, which may cause significantly reduced demand
for our services. A continued downturn or cautious or negative business
outlook may cause our customers or suppliers to delay or cancel
investments in information technology and telecommunications systems
and services, which may adversely affect revenues directly and in turn
slow the development of new services and applications that could become
future revenue sources for us. If the global, national or regional
economies do not improve, we may continue to experience material
adverse effects on our business, operating results and financial
condition.

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VALUATION OF OUR INTANGIBLE ASSETS COULD BE FURTHER IMPAIRED WHICH COULD HAVE A MATERIAL ADVERSE IMPACT ON OUR FINANCIAL POSITION AND RESULTS OF OPERATIONS.

During 2002 we incurred significant impairment charges relative to
goodwill and spectrum licenses due to changes in current competitive
conditions, future expectations of growth in the wireless industry,
increased cost of capital and changes in future funding commitments
from Deutsche Telekom. Annually, or when indications of impairment
exist, we will assess these assets for further impairment by
determining their fair values using a discounted cash flow approach. We
will assess the reasonableness of our valuations by considering
information such as the market capitalization of other United States
wireless carriers and associated implied enterprise fair values,
projected industry trends and investment analyst reports on us and
other United States wireless carriers, and information regarding recent
acquisitions in the industry. In the future, should the conditions or
prospects for us deteriorate, we may record additional impairment
charges. Factors which could result in further impairment charges
include the impacts of significant adverse changes in legal factors,
market and economic conditions; the results of our operational
performance and strategic plans; adverse actions by regulators;
unanticipated changes in competition and market share; the potential
for the sale or disposal of all or a significant portion of our
business; and the cost and continued availability of funding from
T-Mobile International, Deutsche Telekom or its affiliates for the
expansion and enhancement of our wireless network and funding of our
operations.

CONSOLIDATION IN THE WIRELESS COMMUNICATIONS INDUSTRY MAY ADVERSELY AFFECT US.

The wireless communications industry has experienced significant
consolidation and we expect that this consolidation will continue. This
consolidation has resulted in large, well-capitalized competitors with
substantial financial, technical, marketing and other resources.
Additionally, the FCC eliminated, effective January 1, 2003, the
spectrum cap and the cellular cross-interest restriction in the larger,
urban cellular markets. This may produce larger and more formidable
competitors with the financial capacity to offer more attractive
services while continuing to reduce prices, which would adversely
impact our ability to attract and retain customers and our operating
margins.

We have had in the past, and we may have in the future,
discussions with other companies in the wireless communications
industry relating to various possible transactions or business
combinations. While there is no assurance that any such discussions
will result in any transaction, if we were to engage in such a
transaction, it could have a significant impact on our business,
financial condition and results of operations. In addition, if the
wireless communications industry continues to consolidate and we do not
participate in that consolidation, the consolidation may create even
stronger competitors and adversely affect us and our competitive
position.

GOVERNMENT REGULATIONS DETERMINE
HOW WE OPERATE, WHICH COULD INCREASE OUR COSTS AND LIMIT OUR GROWTH,
REVENUE AND STRATEGY PLANS.

The FCC regulates the licensing, operation, acquisition and sale
of our business, and we are subject to laws and regulations of other
federal, state and local government bodies. Future changes in
regulation or legislation could impose significant additional costs on
us, either in the form of direct out of pocket costs or additional
compliance obligations, or subject us to sanctions, which may have a
material adverse effect on our business. Additionally, Congress and
the FCCs continued allocation of additional spectrum for CMRS, which
includes cellular and personal communication services and specialized
mobile radio, could significantly increase competition.

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Some states, through their public service or utility commissions,
or through other means, have taken, or are seeking to take actions to
regulate various aspects of wireless operations, including customer
billing, termination of service arrangements, advertising, the filing
of informational tariffs and certification of operations. For
example, the California PUC has proposed extensive consumer protection
and privacy regulations for all telecommunications carriers. If
adopted, the rules will significantly alter our business practices in
California with respect to nearly every aspect of the carrier-customer
relationship, including solicitations, marketing, activations, billing
and customer care. The California PUC is also contemplating rules to
address other service quality issues, including service repair, service
outages and toll operator answering time that could apply to CMRS
providers. Such regulations, if approved, could expose carriers to
increased risk of litigation and may materially impact our operating
costs. At the local level, wireless facilities typically are also
subject to zoning and land use regulation, and may be subject to fees
for use of public rights-of-way.

CMRS carriers are required under FCC rules to provide LNP, which
enables customers to migrate their landline telephone numbers to a CMRS
carrier and vice versa, and to migrate their CMRS telephone numbers
from one CMRS carrier to another CMRS carrier. CMRS carriers are
required to implement LNP in the top 100 MSAs by November 24, 2003.
Legislation has recently been introduced in the United States House of
Representatives, which if enacted into law, may require LNP in all
markets by an earlier date. Verizon and CTIA currently have pending
before the United States Court of Appeals for the District of Columbia
Circuit a challenge to the FCCs LNP rules which, if successful, would
indefinitely delay implementation of the FCCs LNP rules. We may incur
substantial costs in complying with this requirement and we are unable
to determine the impact on our business of the increased ability of
customers to change their wireless service providers.

CONCERNS ABOUT HEALTH AND SAFETY RISKS MAY DISCOURAGE USE OF WIRELESS SERVICES, RESULT IN LIABILITY ISSUES AND MATERIALLY ADVERSELY AFFECT OUR BUSINESS.

A number of studies have been conducted to examine the health
effects of wireless phone use, and some of the studies have been
construed as indicating that wireless phone use causes adverse health
effects. Media reports have suggested that radio frequency emissions
from handsets, wireless data devices and cell sites may raise various
health concerns, including cancer, and may interfere with various
electronic medical devices, including hearing aids and pacemakers. We
are subject to current and potential future litigation relating to
these health concerns. Several lawsuits have been filed against us,
other wireless carriers and other participants in the wireless
industry, asserting product liability, breach of warranty, adverse
health effects and other claims relating to radio frequency
transmissions to and from handsets and wireless data devices. Some of
these lawsuits allege other related claims, including negligence,
strict liability, conspiracy and the misrepresentation of or failure to
disclose these alleged health risks. The complaints seek substantial
monetary damages as well as injunctive relief. The defense of these
lawsuits may divert our managements attention, we may incur
significant expenses in defending these lawsuits, and we may be
required to pay significant awards or settlements.

Additional studies of health effects of wireless services are
ongoing and new studies are anticipated. If such further research
establishes any link between the use of handsets and health problems,
such as brain cancer, then usage of, and demand for our services may be
significantly reduced, and we could be required to pay significant
expenses in defending lawsuits and significant awards or settlements,
any or all of which could have a material adverse effect on our
business, operations and financial condition.

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We may be subject to potential litigation relating to the use of
handsets and wireless data devices while driving. Some studies have
indicated that using these devices while driving may impair drivers
attention. Legislation has been proposed in the United States Congress
and many state and local legislative bodies to restrict or prohibit the
use of wireless phones while driving motor vehicles. To date, New York
State and some localities in the United States have passed laws
restricting the use of handsets, and similar laws have been enacted in
other countries. Additionally, some jurisdictions have passed laws
restricting the use of handsets by persons such as school bus
drivers and novice drivers. These laws or, if passed, other laws
prohibiting or restricting the use of wireless handsets while driving,
could reduce sales, usage and revenues, any or all of which could have
a material adverse effect on our operations.

Finally, we cannot be certain that we or the wireless industry in
general may not be subject to litigation should a situation arise in
which damage or harm occurs as a result of interference between a CMRS
carrier such as us and a public safety licensee, such as a 911
emergency operator, or any failure of any such 911 emergency call
while using our network.

THERE IS A RISK THAT WE MAY HAVE TO MAKE SUBSTANTIAL TAX INDEMNITY PAYMENTS TO WESTERN WIRELESS.

On May 3, 1999, Western Wireless Corporation (Western Wireless)
distributed its entire 80.1% interest in our common shares to its
stockholders. Prior to this spin-off, Western Wireless obtained a
favorable ruling from the IRS indicating that the spin-off would not
result in the recognition of a gain or taxable income to Western
Wireless or its stockholders. However, Western Wireless could still
recognize a gain upon the spin-off, notwithstanding the favorable IRS
ruling, if it is determined that the spin-off was part of a prohibited
plan, that is, a plan or series of related transactions in which one
or more persons acquire, directly or indirectly, 50% or more of our
stock. Acquisitions of 50% or more of our stock occurring during the
four-year period beginning two years before the spin-off could give
rise to a rebuttable presumption that the spin-off was part of a
prohibited plan. Although it is not assured, we believe that the
spin-off, subsequent mergers, including the T-Mobile merger in 2001,
and certain investments by Hutchison Telecommunications PCS (USA)
Limited and Sonera Corporation in 2000 were not pursuant to a
prohibited plan.

We have agreed to indemnify Western Wireless on an after-tax
basis for any taxes, penalties, interest and various other expenses
incurred by Western Wireless if it is required to recognize such a
gain. The amount of such gain that Western Wireless would recognize
would be equal to the difference between the fair market value of our
common shares at the time of the spin-off and Western Wireless
adjusted tax basis in such shares at the time. The estimated range of
our possible liability, not including interest and penalties, if any,
is from zero to $400 million.

THE RESTRICTED SUPPLY OF NEW TELEPHONE NUMBERS COULD LIMIT OR DELAY OUR GROWTH.

The supply of new telephone numbers in some areas of the United
States is near exhaustion due, in large part, to competitive wireline
carriers having obtained large blocks of numbers and rapidly growing
customer demand for additional numbers for wireless handsets and pagers
as well as for second voice lines, Internet access and private branch
exchange systems, or private telephone networks used within
enterprises. Many states have imposed restrictions on carriers access
to additional numbers, creating shortages and delay in obtaining needed
number resources. If we are unable to obtain a sufficient supply of new
telephone numbers, our ability to increase our customer base would be
adversely affected.

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ADVANCES IN TECHNOLOGY COULD IMPACT OUR ABILITY TO COMPETE.

The wireless communications industry is experiencing significant
technological changes. These changes include the increasing pace of
upgrades in existing wireless systems, evolving industry standards,
ongoing improvements in the capacity and quality of digital technology,
shorter development cycles for new products, enhancements and changes
in end-user needs and preferences, increased importance of data and
broadband capabilities, and migration to next-generation services.
These changes cause uncertainty about future customer demand for our
services and the prices we will be able to charge for those services.
The rapid change in technology may lead to the development of wireless
telecommunications services or alternative services that consumers
prefer over PCS. These technological changes could increase
competition, render existing technologies obsolete or shorten their
economic lives such that we are required to write-down the book values
of investments we have made in existing technologies, or require us to
make substantial additional investments to remain competitive.

We and other service providers have announced the planned
introduction of EDGE in our networks in the United States. We expect
that EDGE will provide faster data speeds, improved spectral efficiency
and an improved end-user experience when compared with current GPRS and
other 2.5G networks. In addition, we believe that there will be
multiple competing technological standards, several options within
each standard, vendor-proprietary variations and rapid technological
innovation. Other technologies could emerge as preferred data networks
for some services and, if those technologies are widely accepted, we
may miss the opportunity to offer those services because of our
technology decision. There is a risk that EDGE could be inadequate or
become obsolete. In addition, EDGE could receive less active support
from equipment vendors and/or be less commercially accepted by users,
which could be detrimental to our competitive position, financial
condition and results of operations. In addition, the pace and extent
of customer demand may not continue to increase, and airtime and
monthly recurring charges may continue to decline. As a result, our
future prospects and the success of our competitive services remain
uncertain.

FAILURE TO DEVELOP FUTURE BUSINESS OPPORTUNITIES, SUCH AS WIRELESS DATA SERVICES, MAY LIMIT OUR ABILITY TO COMPETE EFFECTIVELY AND GROW OUR BUSINESS.

An important element of our strategy is to develop and offer new
services for which there are no proven markets in the United States,
many of which are related to wireless data services. In general, the
development of new services in our industry requires us to anticipate
and respond to varied and rapidly changing customer demand. In order to
compete successfully against the other major participants in the United
States wireless industry, we will need to commercialize and introduce
on a large scale new services on a timely basis. The ability to deploy
and deliver these services relies, in many instances, on new and
unproven technology that will demand substantial capital outlays and
spectrum capacity. Our available capital and spectrum may not be
sufficient to support these services. We cannot guarantee that devices
for such new services or applications for such devices will be
commercially available or accepted in the marketplace, and we cannot
assure that we will be able to offer these new services profitably. In
addition, there could be legal or regulatory restraints on wireless
data services as the applicable laws and rules evolve. If these
services are not successful or if costs associated with implementation
and completion of the introduction of these services materially exceed
those currently estimated, our ability to retain and attract customers
and our operations and financial condition could be materially
adversely affected.

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ITEM 2. PROPERTIES

(Abbreviated pursuant to General Instruction I.)

Our properties are generally leased with terms expiring between
2003 and 2018. The majority of our cell and switching equipment site
leases have five-year terms with renewal options for up to five
additional five-year periods. The following table presents the number
of properties held by type, as of December 31, 2002, by us and
Powertel.

|                                              |  |          |        |          |  |  |       | 
|--------------------------------------------- |  | -------- | ------ | -------- |  |  | ----- | 
|Description                                   |  | T-Mobile |        | Powertel
|                                              |  |          |        |         
|Microwave, cell and switching equipment sites |  |          | 14,727 |          |  |  | 2,873 | 
|Retail stores                                 |  |          | 615    |          |  |  | 129   | 
|Sales and administrative offices              |  |          | 99     |          |  |  | 15    | 
|Warehouse and distribution centers            |  |          | 26     |          |  |  | 4     | 
|Customer service centers                      |  |          | 11     |          |  |  | 2     | 

Our corporate headquarters consists of leased office space in five
buildings in Bellevue, Washington, occupying approximately 450,000
combined square feet. The leases expire between 2005 and 2010.




ITEM 3. LEGAL PROCEEDINGS

Several putative class action or representative lawsuits have been
filed against us that allege, depending on the case, breach of
contract, misrepresentation or unfair practice claims relating to our
billing practices, allegedly erroneous bills, advertising and rebate
policies. Plaintiffs in these cases have not specified alleged damages.

Several putative class actions have been filed against us, other
wireless carriers and other participants in the wireless industry,
asserting products liability, breach of warranty and other claims
relating to radio frequency transmissions to and from wireless phones.
The complaints seek unspecified damages for the costs of headsets for
wireless phone users as well as injunctive relief. In addition, we have
been named as a defendant, among other wireless carriers and other
participants in the wireless industry, in one case in which the
plaintiff alleges that he developed brain cancer as a result of
exposure to radio frequency transmissions, and in which he seeks
unspecified monetary damages. These cases have been consolidated in the
United States District Court for the District of Maryland for pretrial
purposes. This court recently issued a ruling dismissing the putative
class actions on grounds that they were preempted by federal law,
which ruling is subject to appeal. The individual case in that court
is still pending and in its preliminary stages.

Several putative class actions have been filed against us and four
other national wireless carriers in federal district courts alleging
that we have unlawfully tied the sale of handsets to the sale of our
wireless service and monopolized the purported market for sales of
handsets for use on our wireless service network. Plaintiffs in these
cases seek unspecified damages and injunctive relief.

We are subject to other claims and legal actions that arise in the
ordinary course of our business.




ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

(Omitted pursuant to General Instruction I.)

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PART II




ITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

(Not applicable)




ITEM 6. SELECTED FINANCIAL DATA

(Omitted pursuant to General Instruction I.)




ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

(Abbreviated pursuant to General Instruction I as all of our
equity securities are owned indirectly by Deutsche Telekom, which is a
registered filer under the Securities Exchange Act of 1934.)

The following discussion and analysis is based upon our
consolidated financial statements (financial statements), which have
been prepared in accordance with GAAP. As discussed in Note 2 to the
consolidated financial statements included herein, effective May 31,
2001, we were acquired and adopted a new basis of accounting whereby
all assets and liabilities were adjusted to their estimated fair
values. Accordingly, the consolidated financial statements for periods
prior to June 1, 2001 are not comparable in certain respects to
consolidated financial statements for periods presented on or
subsequent to June 1, 2001. For purposes of the following discussion
and analysis, the seven month period ended December 31, 2001 and the
five month period ended May 31, 2001(the period prior to the T-Mobile
merger) have been combined because we believe the full year comparisons
are generally more meaningful.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The preparation of our financial statements requires management to
make estimates and assumptions that affect the reported amounts of
revenues, expenses, assets and liabilities and the disclosure of
contingencies at the date of the financial statements. We base our
estimates on historical experience, where applicable, and other
assumptions that we believe are reasonable under the circumstances.
Actual results may differ from our estimates due to changing conditions
or the validity of our assumptions. The critical accounting policies
and estimates used in the preparation of our financial statements
include the following:



| |  |  | We recognize service revenues based upon minutes of use
processed and contracted fees, net of credits and adjustments
for service discounts. Because our customer billings are
cycle-based with cut-offs throughout each month, we make
estimates for service revenues earned but not yet billed at the
end of each period.                                                                                                                                                                                                                                                                                                       
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | We maintain allowances for doubtful accounts for
estimated losses resulting from our inability to collect
balances due from our customers. We base our estimates on the
aging of our accounts receivable balances and our historical
write-off experience, net of recoveries. If collections are
lower or more customers elect to terminate their service than
we expect, actual write-offs may be different than expected.                                                                                                                                                                                                       
|
| |  |  | When recording depreciation and amortization expense
associated with our wireless communications equipment and other
long-lived assets, we use estimated useful lives. Changes in
technology and industry conditions may cause us to periodically
re-evaluate the useful lives of our wireless communications
equipment, and/or review these assets for impairment in
accordance with Statement of Financial Accounting Standards
(SFAS) No. 144, Accounting for the Impairment or Disposal of
Long-Lived Assets. These evaluations could result in changes
in estimated useful lives or impairment charges in future
periods.

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| |  |  | We do not amortize our goodwill and intangible assets
with indefinite lives, but review them for impairment in
accordance with SFAS No. 142 Goodwill and Other Intangible
Assets. This review is performed on an annual basis, or when
an event occurs or circumstances change that could likely
reduce the fair value of a reporting unit below its carrying
value. The determination of fair values, generally based on
either appraised values or discounted estimated future cash
flows, is critical to assessing impairment under SFAS No. 142
and requires the use of significant assumptions and estimates.
The determination of fair values is sensitive to the
assumptions and estimates used. Accordingly, any changes in
such assumptions or estimates could have a material impact on
the resulting fair values and thus the assessment of
impairment. Likewise, any decrease in appraised values or
discounted estimated future cash flows resulting from future
events or performance could result in future impairment
charges.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | We hold non-controlling investments in several entities
for which we apply the equity method or cost method of
accounting. We record impairment charges associated with these
investments if we determine that the fair value of the
investment is below our net book value and the decline is
deemed to be other than temporary.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|
| |  |  | We record accruals associated with customer acquisition
promotions and incentives. These accruals are based primarily
on historical take-rates of similar promotions or offers.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|
| |  |  | Deferred tax assets and liabilities are recognized based
on the temporary differences between the financial statement
and tax bases of assets and liabilities using enacted tax rates
expected to be in effect when they are realized. A valuation
allowance against deferred tax assets is recorded if the
realization of income, as defined under SFAS No. 109
(Accounting for Income Taxes), from the
reversal of deferred tax liabilities is no longer assured
within the carryforward periods of our existing deferred tax
assets. Such determination includes estimates of expected
taxable income and the timing of the reversal of deferred tax
liabilities. In the event that actual results differ materially
from managements expectations, the valuation allowance could
materially change, directly impacting our financial position
and results of operations.                                                                                                                                                                 
|
| |  |  | We account for acquisitions in accordance with SFAS No.
141, Business Combinations which requires the purchase price
to be allocated to the identifiable net assets based upon their
fair values. The allocation of the purchase price is highly
judgmental and requires extensive use of estimates and fair
value assumptions. Our historical acquisitions have had
substantial intangible assets. The allocation of the purchase
price to intangible assets can have a significant impact on
operating results, as indefinite lived intangible assets are no
longer amortized, but rather subject to periodic future
impairment assessments under SFAS No. 142.                                                                                                                                                                                                                                                                                                                                                                             
|
| |  |  | We account for our stock-based compensation plans under
Accounting Principles Board (APB) Opinion No. 25, Accounting
for Stock Issued to Employees and related interpretations. See
Note 2 to the consolidated financial statements included herein
for discussion of the effect on net loss and other related
disclosures had we accounted for these plans under SFAS No.
123, Accounting for Stock-Based Compensation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  

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OVERVIEW

We provide PCS service using GSM technology primarily in major
urban markets in the United States. We commenced operations in 1996 in
various markets in the western United States and have expanded
operations through the addition of numerous new markets in subsequent
years. We acquired significant operational markets at varying stages of
maturity, primarily in 2000, and converted the acquired markets to our
brand and otherwise integrated the operations of the acquired
businesses. We launched major markets at various times in 2001,
including Chicago, St. Louis, Cincinnati-Dayton, Milwaukee and New
Orleans. In July 2002, we began marketing our commercial service in the
California/Nevada market through the GSM Facilities network with a
covered population of approximately 35 million people. We also launched
the Cleveland, Richmond and Buffalo/Rochester markets during the third
quarter of 2002. With the addition of these markets, we now provide
service in 23 of the top 25 markets and 41 of the top 50 markets in the
United States.

On May 31, 2001, we were acquired by Deutsche Telekom, who
subsequently transferred its ownership in us to its wholly-owned
subsidiary T-Mobile International. The merger was accounted for as a
purchase business combination and resulted in adjustment of the basis of
our assets, liabilities and shareholders equity to reflect fair value
on the closing date of the merger. During the third quarter of 2002, as
part of Deutsche Telekoms plan to develop a global brand for its
wireless operations, all of the VoiceStream markets were rebranded to
T-Mobile. T-Mobile is the brand under which most of Deutsche Telekoms
and T-Mobile Internationals wireless subsidiaries operate.

As a result of significant growth in our business including
significant acquisitions, as well as the change in the basis of our
assets due to the T-Mobile merger, our financial position, results of
operations and cash flows may not be comparable between periods, and
may not be representative of future operations.

Powertel, also a wholly-owned subsidiary of T-Mobile
International, provides the same services under the T-Mobile brand in
the southeastern United States. While Powertels results are not
consolidated with ours, we provide management and other services to
Powertel. All Powertel employees became employees of T-Mobile following
Powertels acquisition by T-Mobile International and we are directly
reimbursed by Powertel for the compensation and benefit costs of our
employees working on Powertel business. We also perform centralized
services and functions for Powertel including accounting and other
administrative functions and we are reimbursed for these services in a
manner that is intended to reflect the relative time and associated
costs devoted to Powertel activities. Including the Powertel markets,
the national footprint for the T-Mobile brand covers 217.9 million
people in 24 of the top 25 markets and 46 of the top 50 markets.

We rely on funding from T-Mobile International, Deutsche Telekom
or its affiliates to meet our working capital, capital expenditure,
debt service and other obligations.

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RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001

The following table sets forth certain financial data as it relates to our
operations (dollars in thousands):

|                                  |                                         |                          |             |            |                          |            |            |            |             |           |             |            |            |            |        |       |       |       |  
|--------------------------------- | --------------------------------------- | ------------------------ | ----------- | ---------- | ------------------------ | ---------- | ---------- | ---------- | ----------- | --------- | ----------- | ---------- | ---------- | ---------- | ------ | ----- | ----- | ----- | -
|                                  |                                         |                          |             |            | Years ended December 31, |            |            |            |             |           |             |            |           
|                                  |                                         |                          |             |            |                          |            |            |            |             |           |             |            |           
|                                  |                                         |                          |             |            | 2002                     |            | 2001 (1)   |            | Change      |           | % Change   
|                                  |                                         |                          |             |            |                          |            |            |            |             |           |            
|Revenues:                         |                                         |                          |             |            |                          |            |            |            |             |           |             |            |            |            |        |      
|                                  | Post pay revenues                       |                          | $           | 3,629,052  |                          |            | $          | 2,346,471  |             |           | $           | 1,282,581  |            |            |        | 54.7  | %    
|                                  | Prepaid revenues                        |                          |             | 386,871    |                          |            |            | 404,109    |             |           |             | (17,238    | )          |            |        | (4.3  | %)   
|                                  | Roaming revenues                        |                          |             | 229,312    |                          |            |            | 175,229    |             |           |             | 54,083     |            |            |        | 30.9  | %    
|                                  | Equipment sales                         |                          |             | 690,174    |                          |            |            | 386,559    |             |           |             | 303,615    |            |            |        | 78.5  | %    
|                                  | Affiliate and other revenues            |                          |             | 68,436     |                          |            |            | 66,933     |             |           |             | 1,503      |            |            |        | 2.2   | %    
|                                  |                                         |                          |             |            |                          |            |            |            |             |           |             |            |            |            |        |       |      
|                                  |                                         | Total revenues           |             |            |                          | 5,003,845  |            |            |             | 3,379,301 |             |            |            | 1,624,544  |        |       |       | 48.1  | %
|                                  |                                         |                          |             |            |                          |            |            |            |             |           |             |            |            |            |        |       |      
|Operating expenses:               |                                         |                          |             |            |                          |            |            |            |             |           |             |            |            |            |        |      
|                                  | Network costs                           |                          |             | 913,509    |                          |            |            | 757,705    |             |           |             | 155,804    |            |            |        | 20.6  | %    
|                                  | Cost of equipment sales                 |                          |             | 1,078,582  |                          |            |            | 739,337    |             |           |             | 339,245    |            |            |        | 45.9  | %    
|                                  | General and administrative              |                          |             | 1,029,906  |                          |            |            | 1,137,408  |             |           |             | (107,502   | )          |            |        | (9.5  | %)   
|                                  | Customer acquisition                    |                          |             | 1,657,722  |                          |            |            | 1,242,012  |             |           |             | 415,710    |            |            |        | 33.5  | %    
|                                  | Depreciation and amortization           |                          |             | 1,079,965  |                          |            |            | 2,091,345  |             |           |             | (1,011,380 | )          |            |        | (48.4 | %)   
|                                  | Impairment charges                      |                          |             | 15,628,000 |                          |            |            |           |             |           |             | 15,628,000 |            |            |        | N.M   |      
|                                  | Stock-based compensation                |                          |             | 14,852     |                          |            |            | 12,080     |             |           |             | 2,772      |            |            |        | 22.9  | %    
|                                  |                                         |                          |             |            |                          |            |            |            |             |           |             |            |            |            |        |       |      
|                                  |                                         | Total operating expenses |             |            |                          | 21,402,536 |            |            |             | 5,979,887 |             |            |            | 15,422,649 |        |       |       | 257.9 | %
|                                  |                                         |                          |             |            |                          |            |            |            |             |           |             |            |            |            |        |       |      
|Operating loss                    |                                         |                          | (16,398,691 | )          |                          |            | (2,600,586 | )          |             |           | (13,798,105 | )          |            |            | (530.6 | %)   
|Other expenses, net               |                                         |                          | (501,143    | )          |                          |            | (600,947   | )          |             |           | 99,804      |            |            |            | 16.6   | %    
|Income tax benefit                |                                         |                          | 272,489     |            |                          |            | 587,831    |            |             |           | (315,342    | )          |            |            | (53.6  | %)   
|                                  |                                         |                          |             |            |                          |            |            |            |             |           |             |            |            |            |        |       |      
|Net loss                          |                                         | $                        | (16,627,345 | )          |                          | $          | (2,613,702 | )          |             | $         | (14,013,643 | )          |            |            | (536.2 | %)   
|                                  |                                         |                          |             |            |                          |            |            |            |             |           |             |            |            |            |        |      
|Adjusted EBITDA (loss) (2)        |                                         | $                        | 324,126     |            |                          | $          | (497,161   | )          |             | $         | 821,287     |            |            |            | N.M.   |      
|                                  |                                         |                          |             |            |                          |            |            |            |             |           |             |            |            |            |        |      
|Cash flows provided by (used in): |                                         |                          |             |            |                          |            |            |            |             |           |             |            |            |            |        |      
|                                  | Operating activities                    |                          | $           | (254,647   | )                        |            | $          | (895,154   | )           |           | $           | 640,507    |            |            |        | 71.6  | %    
|                                  | Investing activities                    |                          | $           | (2,015,835 | )                        |            | $          | (1,065,734 | )           |           | $           | (950,101   | )          |            |        | (89.1 | %)   
|                                  | Financing activities                    |                          | $           | 2,306,992  |                          |            | $          | 805,992    |             |           | $           | 1,501,000  |            |            |        | 186.2 | %    
|Other data:                       |                                         |                          |             |            |                          |            |            |            |             |           |             |            |            |            |        |      
|                                  | Population covered by spectrum licenses |                          |             |            | 248,338,000              |            |            |            | 237,894,000 |           |             |            | 10,444,000 |            |        |       | 4.4   | %    
|                                  | Population covered by network           |                          |             |            | 198,945,000              |            |            |            | 133,500,000 |           |             |            | 65,445,000 |            |        |       | 49.0  | %    
|Customers:                        |                                         |                          |             |            |                          |            |            |            |             |           |             |            |            |            |        |      
|                                  | Post pay                                |                          |             |            | 7,689,400                |            |            |            | 4,557,900   |           |             |            | 3,131,500  |            |        |       | 68.7  | %    
|                                  | Prepaid                                 |                          |             |            | 1,002,500                |            |            |            | 1,261,100   |           |             |            | (258,600   | )          |        |       | (20.5 | %)   
|                                  |                                         |                          |             |            |                          |            |            |            |             |           |             |            |            |            |        |      
|                                  |                                         |                          | 8,691,900   |            |                          |            | 5,819,000  |            |             |           | 2,872,900   |            |            |            | 49.4   | %    
|                                  |                                         |                          |             |            |                          |            |            |            |             |           |             |            |            |            |        |      

---

N.M. Not Meaningful.


|   
|---
|   
|   
|   
|(1)
|   
|   
|   
|   
|(2)

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REVENUES

Our
customer base grew 49.4% from 5.8 million in 2001 to
8.7 million
in 2002. In the same period, and primarily as a result of this growth,
service revenues (post pay, prepaid and roaming revenues) increased
$1.3 billion (45.1%) to $4.2 billion in 2002.

Post pay revenues increased $1.3 billion (54.7%) to $3.6 billion
in 2002. The increase is primarily the result of growth in our post pay
customer base from 4.6 million at December 31, 2001 to
7.7 million at
December 31, 2002. This net increase of 3.1 million customers in 2002, of
which 45,000 were through acquisitions, compares to 1.7 million net
customers added in 2001, due almost entirely to internal growth. We
launched several new markets during 2002, most significantly the
California/Nevada market, which included promotional rate plan offers
that contributed to the high number of customers added during the year.
The high rate of net post pay customer growth also reflects higher
growth in the number of new customers in existing markets due to our
competitive rate plan offerings, the success of our advertising
campaigns and lower customer churn rates as compared to 2001.

Historically, our Get More marketing strategy and competitive rate
plans have contributed to our success and rapid post pay customer
growth. In the third quarter of 2002, while continuing our Get More
strategy, we changed our marketing focus with a change in our brand
name from VoiceStream to T-Mobile. Along with our new brand name, we
introduced our new global spokesperson, Catherine Zeta-Jones. We have
continued to experience strong customer growth since our brand
transition to T-Mobile.

Prepaid revenues decreased $17.2 million (4.3%) to $386.9 million
in 2002. Our prepaid customer base was 1.0 million at December 31, 2002
and 1.3 million at December 31, 2001. The decrease in our prepaid
customer base reflects the impact of our prepaid business strategy to
encourage longer duration customer relationships through a combination
of higher up front costs to acquire service and incentive programs,
such as our Gold Rewards program, which offers prepaid customers
discounted calling rates based on a customers previous airtime
purchases and their tenure with T-Mobile. Our prepaid customer base may
continue to decline in the short-term as the composition of our
customer base changes in response to this strategy.

Total service revenue per average customer (ARPU) was $50.48 in
2002, as compared to $50.17 in 2001. The 2002 increase in total service
revenue ARPU is due to the continued shift in the mix of our customers
towards post pay. Post pay customers represented 88.5% and 78.3% of our
customer base at the end of 2002 and 2001, respectively. Post pay ARPU
was $51.38 and $52.23 in 2002 and 2001, respectively. The decrease in
post pay ARPU is due primarily to the migration of customers from older
higher priced rate plans to our current offerings and the continuing
popularity of the Family Time pooling plans that allow multiple users
to share minutes under one plan. The ARPU decrease is partially offset
by increased data and short message service revenues. Prepaid ARPU was
$28.74 in 2002 and $30.17 in 2001.

Roaming revenues represent revenues from customers
of other carriers roaming on our network. Roaming revenues increased $54.1 million
(30.9%) to $229.3 million in 2002. This increase is due primarily to
the expansion of our network coverage area and an increase in the
number of international roaming partners. As part of a global company
utilizing GSM technology, we offer our affiliates customers the
ability to roam on our network at favorable rates.

Equipment sales increased $303.6 million (78.5%) to $690.2 million
in 2002. This increase is due to reduced subsidies to our dealers and
higher unit sales volumes associated with the higher growth in new
customers in 2002 compared to 2001. During the latter part of 2002,
upgrade sales of new devices to our existing customers increased, and
we expect this trend to continue as we introduce more new devices with
new data features and functionality.

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Affiliate and other revenues increased $1.5 million (2.2%) to
$68.4 million in 2002. Included in affiliate and other revenues in 2002
are $24.2 million of revenues from technical service, system access and
reciprocal wholesale agreements with certain of our unconsolidated
affiliates (affiliate revenues). Under these agreements, each party
re-sells airtime purchased from the other, and related fees are charged
and paid between the parties. Affiliate revenues decreased $10.3
million in 2002 as we acquired the remaining outstanding interest in
Cook Inlet/VS GSM IV PCS Holdings, LLC (CIVS IV) in April 2002 and
currently we have no affiliates generating significant revenues under
such agreements. Other miscellaneous items within affiliate and other
revenues include co-location and phone repair revenue. Overall revenue
from these items increased by $12.0 million, or 34.8% in 2002.

OPERATING EXPENSES

Network costs represent expenses incurred in operational markets
including the cost of interconnection with local exchange carrier
facilities, direct cell site costs (leases, utilities, property taxes,
and repair and maintenance expenses), third party roaming costs and
long distance toll costs. The increase of $155.8 million (20.6%) to
$913.5 million in 2002 is due primarily to the geographic expansion of
our network, increased customer usage and an increase in network
capacity to service our growing customer base. Network costs as a
percentage of service revenues decreased to 21.5% in 2002 compared to
25.9% in 2001. Excluding technical service, system access and
reciprocal wholesale agreements with certain of our unconsolidated
affiliates, as discussed above, network costs as a percentage of
service revenues were 20.8% in 2002 as compared to 24.5% in 2001. This
decrease is due to economies of scale and other efficiencies gained
relative to our growing customer base. While overall network costs are
expected to increase as our customer base continues to grow, we expect
network costs as a percentage of service revenues to generally trend
downward as we leverage our existing infrastructure to yield further
economies of scale.

Cost of equipment sales increased $339.2 million (45.9%) to $1.1
billion in 2002. This increase is primarily due to an increase in the
number of handsets and wireless data devices sold, partially offset by
a decrease in our average cost per device sold. We generally offer
equipment to our customers at prices below our cost as an incentive and
to respond to competition. While the level of subsidization varies, we
expect equipment subsidies to remain common industry practice for the
foreseeable future.

General and administrative expenses decreased $107.5 million
(9.5%) to $1.0 billion in 2002. On a monthly average cost per customer
basis, general and administrative expenses decreased to $12.25 in 2002
from $19.50 in 2001. The decrease in 2002 reflects reductions in
customer bad debt expense due to improvements in our credit, billing
and collection processes and identification and reporting of customer
fraud, along with increased economies of scale realized in our
administrative functions. While general and administrative expenses are
generally expected to increase due to continuing growth in our customer
base, we expect the average cost per customer to continue trending
downward as additional economies of scale are realized.

Customer acquisition costs increased $415.7 million (33.5%) to
$1.7 billion in 2002. This increase includes a higher volume of sales
commissions and other selling costs associated with our continued
customer growth, and significant marketing costs related to the July
2002 launch of commercial service in the California/Nevada market. We
were reimbursed $85.5 million by Deutsche Telekom and T-Mobile
International for substantially all of the direct sales and marketing
expenses related to the rebranding of the former VoiceStream markets
and thus these expenses are not included in our customer acquisition
costs. Customer acquisition costs per new customer added, commonly
referred to as cost per gross add (CPGA), which includes the subsidy
loss on equipment sales, was $321 in 2002 compared to $344 in 2001. The
decrease in CPGA primarily reflects the increasing efficiencies
realized from marketing on a national scale to a larger covered
population. Also contributing to the decreased CPGA are lower equipment
subsidies provided to new customers.

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Depreciation and amortization expense decreased $1.0 billion
(48.4%) to $1.1 billion in 2002. This decrease is primarily due to the
discontinuance of goodwill and spectrum license amortization related to
our adoption of SFAS No. 142 on January 1, 2002. A further decrease in
depreciation of approximately $70.0 million resulted from the
contribution of our New York City market network assets to GSM
Facilities, the joint venture with Cingular. In addition, we changed
the estimated useful lives of certain of our non-electronic fixed
assets from 10 years to 20 years on January 1, 2002. These decreases
were partially offset by increased depreciation charges arising from
our growing asset base. In the future, we expect to continue to expand
our network and expect related depreciation to increase accordingly.

The following table reconciles our reported depreciation and
amortization expense assuming the adoption of SFAS No. 142 and the
change in useful lives of certain of our non-electronic fixed assets
from 10 years to 20 years, as described above, had occurred on January 1 of each of the years presented (dollars in thousands):

|                                               |                                        |   |                          |   |      |   |           |            |  
|---------------------------------------------- | -------------------------------------- | - | ------------------------ | - | ---- | - | --------- | ---------- | -
|                                               |                                        |   | Years ended December 31,
|                                               |                                        |   |                         
|                                               |                                        |   | 2002                     |   | 2001
|                                               |                                        |   |                          |   |     
|Reported depreciation and amortization
expense |                                        | $ | 1,079,965                |   |      | $ | 2,091,345 |           
|                                               | Effect of the adoption of SFAS No. 142 |   |                          |  |      |   |           | (1,284,700 | )
|                                               | Effect of the change in useful lives   |   |                          |  |      |   |           | (160,800   | )
|                                               |                                        |   |                          |   |      |   |           |           
|Adjusted depreciation and amortization
expense |                                        | $ | 1,079,965                |   |      | $ | 645,845   |           
|                                               |                                        |   |                          |   |      |   |           |           

At September 30, 2002, we completed our annual tests for
impairment of our goodwill and indefinite life intangible assets as
required under SFAS No. 142 and recorded non-cash pretax impairment
charges of $6.4 billion and $9.2 billion for goodwill and spectrum
licenses, respectively. We also recorded a non-cash deferred income tax
benefit of $3.7 billion to reduce our deferred tax liability due to the
reduced book to tax basis differential of our spectrum licenses
resulting from the impairment. The charges reflect changes in current
competitive conditions and future expectations of growth in the
wireless industry, increased cost of capital and changes in future
funding commitments from Deutsche Telekom.

In our annual tests for impairment, we determined the fair value
of our goodwill and spectrum licenses in order to assess the carrying
value of these assets. We assessed the reasonableness of our valuations
by considering information such as the market capitalization of other
United States wireless carriers and associated implied enterprise fair
values, projected industry trends and investment analyst reports on us
and other United States wireless carriers, and information regarding
recent acquisitions in the industry. In the future, should the market
conditions or prospects for us deteriorate, we may record additional
impairment charges. Factors we would consider as possible indications
of impairment would include significant adverse changes in legal
factors, market and economic conditions; the results of our operational
performance and strategic plans; adverse actions by regulators;
unanticipated changes in competition and market share; the potential
for the sale or disposal of all or a significant portion of our
business; and the cost and continued availability of funding from
T-Mobile International, Deutsche Telekom or its affiliates for the
expansion and enhancement of our wireless network and funding of our
operations.

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OTHER EXPENSES, NET AND INCOME TAX EXPENSE

Interest and financing expense decreased $77.9 million (17.4%) to
$371.0 million in 2002. Interest and financing expense is net of
capitalized interest of $118.0 million and $37.5 million in 2002 and
2001, respectively. Our policy is to capitalize interest related to
spectrum licenses and other qualifying assets during the period the
assets are being actively prepared to be placed in service. The
increase in capitalized interest in 2002 is primarily due to interest
capitalization on our spectrum licenses in the California/Nevada market
prior to the July 2002 launch of commercial service. The carrying
values of spectrum licenses in this market were relatively high when
compared to other markets and therefore capitalized interest was also
higher. Interest expense before capitalized interest was $489.0 million
and $486.0 million in 2002 and 2001, respectively. Although our overall
debt levels increased, the average interest rate of our debt decreased.
Our weighted average interest rate has generally declined since the
T-Mobile merger when we began to replace higher interest rate third
party debt with lower interest rate notes payable to Deutsche Telekom.
The weighted average effective interest rate, before capitalized
interest, was 6.9% in 2002, as compared to 7.9% in 2001.

Equity in net losses of unconsolidated affiliates increased $63.4
million (58.9%) to $170.9 million in 2002. The increase is primarily
due to our share of losses from the network infrastructure sharing
agreement with Cingular, entered into in November 2001, and the write
down of our investment in Microcell, a Canadian GSM provider, by $65.1
million, based on our assessment that the decline in value of the
investment was other than temporary. We stopped recording our share of
losses from Microcell when the investment balance was reduced to zero
in the third quarter of 2002. We have not guaranteed Microcells
obligations or otherwise committed to provide further financial
support. A financial restructuring plan has been proposed for Microcell
that, if accepted, will significantly dilute our percentage ownership
in Microcell.

In the first quarter of 2002, the discontinuance of amortization
of our spectrum licenses upon adoption of SFAS No. 142 required us to
establish a valuation allowance related to our deferred tax assets. The
realization of income, as defined under SFAS No. 109, from the reversal of deferred tax liabilities
associated with the spectrum licenses is no longer assured within the
carryforward periods of our net operating losses (NOLs). As a
result, these deferred tax liabilities cannot be treated as a
realization of income and applied against the deferred tax assets
arising from our NOLs. Accordingly, we recorded a $3.3 billion
non-cash income tax expense in the first quarter of 2002 to establish a
valuation allowance against our deferred tax assets. The valuation
allowance does not affect our NOLs for tax purposes and does not
reflect a change in our expectations regarding the ability to utilize
them in the future. Additionally, in the third quarter of 2002, in
connection with the impairment charges discussed above, we recorded a
non-cash deferred income tax benefit of $3.7 billion to reduce the
deferred tax liability due to the reduced book to tax basis
differential of our spectrum licenses.

NET LOSS

Our net loss increased $14.0 billion to $16.6 billion in 2002.
Comparability of the net losses in 2001 and 2002 is limited due to the
adoption of SFAS No. 142 on January 1, 2002. Upon adoption of the
standard, we recorded a tax charge of $3.3 billion and discontinued
amortizing goodwill and spectrum licenses. Subsequently, we recorded
goodwill and spectrum license impairment charges, net of tax, of $11.9
billion. Had SFAS No. 142 been adopted as of January 1, 2001, such that
no amortization charges or tax benefits were recorded in 2001, and
excluding our 2002 SFAS No. 142 related impairment charges, net of tax,
our net loss for 2002 would have been $1.3 billion as compared to $1.9
billion in 2001.

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ADJUSTED EBITDA AND OPERATING CASH FLOW

Adjusted EBITDA represents operating income before depreciation,
amortization, impairment charges and non-cash stock-based compensation.
We believe Adjusted EBITDA provides meaningful additional information
regarding our operating results, our ability to service our long-term
debt and other fixed obligations and to fund our continued growth.
Adjusted EBITDA is considered by many financial analysts to be a
meaningful indicator of an entitys ability to meet its future
financial obligations. Growth in Adjusted EBITDA is considered to be an
indicator of the potential for future profitability, especially in a
capital-intensive industry such as wireless telecommunications.
Adjusted EBITDA should not be construed as an alternative to operating
income (loss) as determined in accordance with GAAP, as an alternative
to cash flows from operating activities as determined in accordance
with GAAP, or as a measure of liquidity. Because all companies do not
calculate Adjusted EBITDA in the same manner, our presentation may not
be comparable to other similarly titled measures reported by other
companies.

Our Adjusted EBITDA was $324.1 million in 2002, representing an
improvement of $821.3 million as compared to 2001. Our Adjusted EBITDA
as a percentage of revenue was 6.5% in 2002, compared to Adjusted
EBITDA loss as a percentage of revenue of 14.7% in 2001. Adjusted
EBITDA includes $28.6 million in retention and bonus expenses in 2002
related to the T-Mobile merger as compared to $73.2 million in 2001.
This improvement in Adjusted EBITDA is due to several factors including
a decrease in CPGA, decreases in customer bad debt expense and
increasing economies of scale throughout our operations due to
significant growth.

The following table reconciles Adjusted EBITDA (loss) as
discussed above, to our net loss as determined in accordance with
GAAP (dollars in thousands):

|                       |                               |   |                          |             |      |   |            |            |  
|---------------------- | ----------------------------- | - | ------------------------ | ----------- | ---- | - | ---------- | ---------- | -
|                       |                               |   | Years ended December 31,
|                       |                               |   |                         
|                       |                               |   | 2002                     |             | 2001
|                       |                               |   |                          |             |     
|Adjusted EBITDA (loss) |                               | $ | 324,126                  |             |      | $ | (497,161   | )         
|                       | Depreciation and amortization |   |                          | (1,079,965  | )    |   |            | (2,091,345 | )
|                       | Impairment charges            |   |                          | (15,628,000 | )    |   |            |           |  
|                       | Stock-based compensation      |   |                          | (14,852     | )    |   |            | (12,080    | )
|                       | Other expenses, net           |   |                          | (501,143    | )    |   |            | (600,947   | )
|                       | Income tax benefit            |   |                          | 272,489     |      |   |            | 587,831    |  
|                       |                               |   |                          |             |      |   |            |           
|Net loss               |                               | $ | (16,627,345              | )           |      | $ | (2,613,702 | )         
|                       |                               |   |                          |             |      |   |            |           

Net cash used in operating activities was $254.6 million in 2002,
as compared to $895.2 million in 2001. This is due to the Adjusted
EBITDA improvements discussed above, partially offset by higher
growth-related working capital requirements.

CAPITAL EXPENDITURES

Capital expenditures increased $279.8 million (19.0%) to $1.7
billion in 2002. The increase is primarily due to increased
expenditures for network capacity, network performance and technology
upgrades in existing markets. In 2001, capital expenditures included
significant costs for the Chicago and New Orleans build-outs. In 2002,
new market launches included Cleveland, Richmond, Buffalo and
California/Nevada. Capital expenditures related to the markets served by GSM
Facilities in California, Nevada and New York are reported as
increases to our investment in GSM Facilities rather than as
capital expenditures. Because of the infrastructure sharing agreement
with Cingular, our cash outlay to launch the California/Nevada market
was significantly less than it would have been had we built our own
network. We would likely have to undertake significant capital
expenditures to build our own network in California and Nevada if the
GSM Facilities venture terminates. As we have completed the initial
network build-out of the major population centers in which we hold
spectrum licenses,  in 2003 we expect our capital expenditures to focus primarily
on improving network coverage, quality and capacity in existing
markets.

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In addition, we are deploying EDGE technology in selected areas to
increase data transmission rates beyond those available through our
existing GPRS network. The level of our actual capital expenditures and
acquisitions of spectrum licenses and wireless properties are dependent
on opportunities that arise over the course of the year and on funding
availability. We expect to continue to rely on T-Mobile International,
Deutsche Telekom or its affiliates for our future funding requirements.

RECENTLY ISSUED ACCOUNTING STANDARDS

In June 2001, the Financial Accounting Standards Board (FASB)
issued SFAS No. 143, Accounting for Asset Retirement Obligations.
This statement requires entities to record the fair value of future
liabilities for asset retirement obligations as an increase in the
carrying amount of the related long-lived asset if a reasonable
estimate of fair value can be made. Over time, the liability is
accreted to its present value, and the capitalized cost is depreciated
over the useful life of the related asset. We plan to adopt this
statement effective January 1, 2003 and do not believe that it will
have a material impact on our financial position, results of operations
or cash flows.

On April 30, 2002, we adopted SFAS No. 145, Rescission of FASB
Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13 and
Technical Corrections. SFAS No. 145 eliminates the requirement in SFAS
No. 4 that gains and losses from the extinguishment of debt be
aggregated and classified as extraordinary items, net of the related
income tax effect. Adoption of SFAS No. 145 did not have a material
impact on our financial position, results of operations or cash flows.

In November 2002, FASB Interpretation (FIN) No. 45, Guarantors
Accounting and Disclosure Requirements for Guarantees, Including
Indirect Guarantees of Indebtedness of Others was issued. The
interpretation provides guidance on the guarantors accounting and
disclosure requirements for guarantees, including indirect guarantees of
indebtedness of others. We have adopted the disclosure requirements of
the interpretation as of December 31, 2002. The accounting guidelines
are applicable to guarantees issued after December 31, 2002 and require
that we record a liability for the fair value of such guarantees in the
balance sheet. Adoption of FIN No. 45 did not have a material impact on
our financial position, results of operations or cash flows.

We currently apply the provisions of Staff Accounting Bulletin No.
101, Revenue Recognition in Financial Statements, to account for
revenue arrangements with multiple deliverables, which we adopted
during 2000. These types of arrangements include such transactions as
the sale of wireless service with an accompanying handset. In November
2002, the Emerging Issues Task Force (EITF) reached a consensus on
Issue No. 00-21, Revenue Arrangements with Multiple Deliverables,
which affects revenue arrangements entered into by us after
June 30, 2003. The issue requires that revenue arrangements with
multiple deliverables be divided into separate units of accounting if
the deliverables in the arrangement meet specific criteria and
generally requires that arrangement consideration be allocated among
the separate units of accounting based on their relative fair values.
Revenue recognition is then considered separately for each unit of
accounting. We are currently assessing the impact of this issue on our
financial statements, but do not believe that its adoption will have a
material impact on our financial position, results of operations or
cash flows.

In
January 2003, the FASB issued FIN No. 46, Consolidation of Variable Interest Entities, an Interpretation
of ARB No. 51. FIN No. 46 requires certain variable interest entities to
be consolidated by the primary beneficiary of the entity if the equity
investors in the entity do not have the characteristics of a
controlling financial interest or do not have sufficient equity at risk
for the entity to finance its activities without additional
subordinated financial support from other parties. FIN No. 46 is effective
immediately for all new variable interest entities created or acquired
after January 31, 2003. For variable interest entities created or
acquired prior to February 1, 2003, the provisions of FIN
No. 46 must be
applied for the first interim or annual period beginning after June 15,
2003. We are evaluating the impact that the adoption of this
interpretation will have on our financial statements.

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ITEM 7A.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our discussion below provides information about our market
sensitive financial instruments and constitutes forward looking
statements, which involve risks and uncertainties. Actual results
could differ materially from those projected in the forward-looking
statements.

All of our third-party long-term debt is fixed rate, and therefore
we are not affected by fluctuations in interest rates relative to this
debt. We are, however, subject to gains or losses resulting from
changes in the fair value of the fixed rate long-term debt if we
purchase the debt on the open market before the maturity date. We have
approximately $1.2 billion of third-party fixed rate debt with a
weighted average interest rate of 10.8%. At December 31, 2002, we have
$5.8 billion and $1.3 billion in fixed rate and variable rate long-term
debt payable to affiliates, respectively. A ten percent increase in
interest rates would cause an approximate $127.7 million increase in
our annual interest expense related to the variable rate affiliate
debt. At December 31, 2002, we had not entered into any significant
derivative instrument transactions for hedging, trading or speculative
purposes, but we may enter into agreements to hedge our variable rate
affiliate debt in the future.

The table below presents principal cash flows and the related
average interest rates by expected maturity dates for certain financial
instruments sensitive to interest rate fluctuations that we held at
December 31, 2002.

|                                                  |  |                          |           |      |  |      |         |      |  |      |           |            |  |       |   |            |  |   |   |  |  |   |           |   |  |   |           |   |  |    |           | 
|------------------------------------------------- |  | ------------------------ | --------- | ---- |  | ---- | ------- | ---- |  | ---- | --------- | ---------- |  | ----- | - | ---------- |  | - | - |  |  | - | --------- | - |  | - | --------- | - |  | -- | --------- | 
|(dollars in
thousands)                            |  | Years ended December 31,
|                                                  |  |                         
|                                                  |  | 2003                     |           | 2004 |  | 2005 |         | 2006 |  | 2007 |           | Thereafter |  | Total |   | Fair Value
|                                                  |  |                          |           |      |  |      |         |      |  |      |           |            |  |       |   |           
|Liabilities                                       |  |                          |           |      |  |      |         |      |  |      |           |            |  |       |   |            |  |   |   |  |  |   |           |   |  |   |           |   |  |    |           | 
|Long-term debt fixed rate                         |  | $                        |          |      |  | $    |        |      |  | $    |          |            |  | $     |  |            |  | $ |  |  |  | $ | 1,172,999 |   |  | $ | 1,172,999 |   |  | $  | 1,521,591 | 
|Avg. interest rate                                |  |                          |          |      |  |      |        |      |  |      |          |            |  |       |  |            |  |   |  |  |  |   | 10.8      | % |  |   |          |   |  |    |          | 
|Long-term debt payable
to affiliate fixed rate    |  | $                        |          |      |  | $    | 130,000 |      |  | $    | 2,074,425 |            |  | $     |  |            |  | $ |  |  |  | $ | 3,615,000 |   |  | $ | 5,819,425 |   |  | NA
|Avg. interest rate                                |  |                          |          |      |  |      | 6.3     | %    |  |      | 6.4       | %          |  |       |  |            |  |   |  |  |  |   | 7.7       | % |  |   | 7.2       | % |  |    |          | 
|Long-term debt payable
to affiliate variable
rate |  | $                        | 1,187,146 |      |  | $    |        |      |  | $    |          |            |  | $     |  |            |  | $ |  |  |  | $ | 90,000    |   |  | $ | 1,277,146 |   |  | NA
|Avg. interest rate                                |  |                          | 3.6       | %    |  |      |        |      |  |      |          |            |  |       |  |            |  |   |  |  |  |   | 7.1       | % |  |   | 3.8       | % |  |    |          | 




ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The financial statements required by this item are set forth on pages
F-1 through F-26.




ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

40



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##### Table of Contents






PART III




ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

(Omitted pursuant to General Instruction I.)




ITEM 11. EXECUTIVE COMPENSATION

(Omitted pursuant to General Instruction I.)






ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS


(Omitted pursuant to General Instruction I.)




ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

(Omitted pursuant to General Instruction I.)




ITEM 14. CONTROLS AND PROCEDURES



Evaluation of disclosure controls and procedures

Within 90 days prior to the date of this report (the Evaluation
Date), our Principal Executive Officer and Principal Financial Officer
carried out an evaluation of the effectiveness of our disclosure
controls and procedures (as defined in the Securities Exchange Act of
1934 Rules 13(a)-14(c) and 15(d)-14(c)). Based on that evaluation,
these officers have concluded that as of the Evaluation Date, our
disclosure controls and procedures were effective and designed to
ensure that material information relating to T-Mobile and its
consolidated subsidiaries would be made known to them by others within
these entities.

Changes in internal controls

There were no significant changes in our internal controls or in
other factors that could significantly affect these controls subsequent
to the Evaluation Date.

41



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##### Table of Contents






PART IV




ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K



|(A)(1) |  | Financial Statements and Financial Statement Schedules
|------ |  | ------------------------------------------------------

The financial statements and schedule listed in the Index to
Consolidated Financial Statements on page F-1, which is incorporated
herein by reference, are filed as part of this Form 10-K.



|(2) |  | Exhibits
|--- |  | --------

|        |  |                                                                                                                                                                                                                                                                                                                   
|------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                                                                                                                                                                                                                                   
|Numbers |  | Description                                                                                                                                                                                                                                                                                                       
|        |  |                                                                                                                                                                                                                                                                                                                   
|3.1     |  | Amended and Restated Certificate of Incorporation of Bega, Inc.
(became Amended and Restated Certificate of Incorporation of
T-Mobile USA, Inc. as a result of the T-Mobile merger)
(incorporated herein by reference to Exhibit 3.1 of T-Mobile USA,
Inc.s Form 10-Q filed for the quarter ended June 30, 2001).
|        |  |                                                                                                                                                                                                                                                                                                                   
|3.2     |  | Amended and Restated Bylaws of Bega, Inc. (became Amended and
Restated Bylaws of T-Mobile as a result of the T-Mobile merger)
(incorporated herein by reference to Exhibit 3.2 of T-Mobile USA,
Inc.s Form 10-Q filed for the quarter ended June 30, 2001).                                                      
|        |  |                                                                                                                                                                                                                                                                                                                   
|4.1     |  | Certificate of Designation for the T-Mobile Convertible Voting
Preferred Stock (incorporated herein by reference to Exhibit 4.1
to T-Mobile USA, Inc.s Current Report on Form 8-K (File No.
000-29667), dated October 11, 2000).                                                                                 
|        |  |                                                                                                                                                                                                                                                                                                                   
|4.2     |  | Indenture dated as of November 9, 1999 between T-Mobile USA, Inc.
and Harris Trust, as Trustee, relating to the 10 and 3/8% Senior
Discount Notes Due 2009 of T-Mobile USA, Inc. (incorporated herein
by reference to Exhibit 4.2 of T-Mobile USA Inc.s Form 10-K filed
for the year ended December 31, 2001).   
|        |  |                                                                                                                                                                                                                                                                                                                   
|4.3     |  | Indenture dated as of November 9, 1999 between T-Mobile USA, Inc.
and Harris Trust, as Trustee, relating to the 11 and 7/8% Senior
Discount Notes Due 2009 of T-Mobile USA, Inc. (incorporated herein
by reference to Exhibit 4.3 of T-Mobile USA, Inc.s Form 10-K
filed for the year ended December 31, 2001).  
|        |  |                                                                                                                                                                                                                                                                                                                   
|4.4     |  | Form of Indenture between T-Mobile USA, Inc. and HSBC Bank USA, as
Trustee, relating to the 11 and 1/2% Senior Notes Due 2009 of
T-Mobile USA, Inc. (incorporated herein by reference to Exhibit
4.1 to Registration Statement on Form S-4, File No. 333-34438,
filed on April 10, 2000).                         



|(B) |  | Reports on Form 8-K
|--- |  | -------------------

We filed a current report on Form 8-K dated November 14, 2002, in
which we reported under Item 9 that on November 14, 2002, we filed with
the SEC our Quarterly Report on Form 10-Q for the quarter ended
September 30, 2002 accompanied, as correspondence, by a transmittal
letter and certifications pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002.

42



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INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

T-MOBILE USA, INC.
CONSOLIDATED FINANCIAL STATEMENTS

|                                                                        |  |      |      | 
|----------------------------------------------------------------------- |  | ---- | ---- | 
|                                                                        |  | Page
|                                                                        |  |     
|Reports of Independent Accountants                                      |  |      | F-2  | 
|Consolidated Balance Sheets                                             |  |      | F-5  | 
|Consolidated Statements of Operations and Comprehensive Loss            |  |      | F-6  | 
|Consolidated Statements of Shareholders Equity                         |  |      | F-7  | 
|Consolidated Statements of Cash Flows                                   |  |      | F-8  | 
|Notes to Consolidated Financial Statements                              |  |      | F-9  | 
|Report of Independent Accountants on Financial Statement Schedule II    |  |      | F-27 | 
|Financial Statement Schedule II  Valuation and Qualifying Accounts     |  |      | F-27 | 
|Signatures                                                              |  |      | F-28 | 
|Certification Pursuant To Section 302 of the Sarbanes-Oxley Act of 2002 |  |      | F-29 | 

F-1



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##### Table of Contents



REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and
Shareholder of T-Mobile USA, Inc.:

In our opinion, the consolidated financial statements listed in
the accompanying index present fairly, in all material respects, the
financial position of T-Mobile USA, Inc. and its subsidiaries (the
Company) (formerly known as VoiceStream Wireless Corporation) at December
31, 2002 and 2001, and the results of their operations, cash flows
and shareholders equity for the year ended December 31, 2002 and
for the period from June 1, 2001 through December 31, 2001 in
conformity with accounting principles generally accepted in the
United States of America. In addition, in our opinion, the financial
statement schedule listed in the accompanying index presents fairly,
in all material respects, the information set forth therein when
read in conjunction with the related consolidated financial
statements. These consolidated financial statements and the
financial statement schedule are the responsibility of the Companys
management; our responsibility is to express an opinion on these
consolidated financial statements and the financial statement
schedule based on our audits. We conducted our audits of these
statements in accordance with auditing standards generally accepted
in the United States of America, which require that we plan and
perform the audit to obtain reasonable assurance about whether the
consolidated financial statements are free of material misstatement.
An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the consolidated financial
statements, assessing the accounting principles used and significant
estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits provide a
reasonable basis for our opinion. The consolidated statements of
operations and comprehensive loss, shareholders equity and cash
flows of T-Mobile USA, Inc. for the year ended December 31, 2000
were audited by other independent accountants who have ceased
operations. Those independent accountants expressed an unqualified
opinion on those statements, before the revision described in Note 3
to the consolidated financial statements, in their report dated
February 7, 2001.

As discussed in the following paragraph, the Company adopted
Statement of Financial Accounting Standards (SFAS) No. 142,
Goodwill and Intangible Assets effective January 1, 2002 and ceased
amortizing goodwill and spectrum licenses. Also, as discussed in
Note 2, effective May 31, 2001, the Company was acquired and adopted
a new basis of accounting whereby all assets and liabilities were
adjusted to their estimated fair values. Accordingly, the
consolidated financial statements for periods prior to June 1, 2001
are not comparable to consolidated financial statements presented on
or subsequent to June 1, 2001.

As discussed above, the consolidated financial statements of
the Company as of December 31, 2000, and for the year then ended,
were audited by other auditors who have ceased operations. As
described in Notes 2 and 3, these financial statements have been
revised to include the transitional disclosures required by SFAS No.
142, Goodwill and Other Intangible Assets, which was adopted by
the Company as of January 1, 2002. We audited the transitional
disclosures described in Note 3. In our opinion the transitional
disclosures for 2002 in Note 3 are appropriate. However, we were not
engaged to audit, review, or apply any procedures to the 2000
financial statements of the Company other than with respect to such
disclosures and, accordingly, we do not express an opinion or any
other form of assurance on the 2000 financial statements taken as a
whole.

/s/ PricewaterhouseCoopers LLP

Seattle, Washington
February 5, 2003

F-2



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REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and
Shareholder of T-Mobile USA, Inc.:

In our opinion, the consolidated financial statements listed in
the accompanying index present fairly, in all material respects, the
results of operations, cash flows and shareholders equity of
T-Mobile USA, Inc. and its subsidiaries (the Company) (formerly
known as VoiceStream Wireless Corporation) for the period from January 1,
2001 through May 31, 2001 in conformity with accounting principles
generally accepted in the United States of America. In addition, the
financial statement schedule listed in the accompanying index
presents fairly, in all material respects, the information set forth
therein when read in conjunction with the related consolidated
financial statements. These consolidated financial statements and
the financial statement schedule are the responsibility of the
Companys management; our responsibility is to express an opinion on
these consolidated financial statements and the financial statement
schedule based on our audit. We conducted our audit of these
statements in accordance with auditing standards generally accepted
in the United States of America, which require that we plan and
perform the audit to obtain reasonable assurance about whether the
consolidated financial statements are free of material misstatement.
An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the consolidated financial
statements, assessing the accounting principles used and significant
estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audit provides a
reasonable basis for the opinion expressed above.

As discussed in Note 2, effective May 31, 2001, the Company was
acquired and adopted a new basis of accounting whereby all assets
and liabilities were adjusted to their estimated fair values.
Accordingly, the consolidated financial statements for periods prior
to June 1, 2001 are not comparable to consolidated financial
statements presented on or subsequent to June 1, 2001.

/s/ PricewaterhouseCoopers LLP

Seattle, Washington
January 18, 2002

F-3



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##### Table of Contents



The following is a copy of the previously issued report of Arthur
Andersen LLP dated February 7, 2001 on their audit of the
consolidated financial statements of T-Mobile USA, Inc. and
subsidiaries (the Company) (formerly known as VoiceStream Wireless
Corporation) for December 31, 2000 and each of the two years in the
period ended December 31, 2000 and has not been reissued by Arthur
Andersen LLP. Arthur Andersen LLP has ceased operations. As
discussed in Note 3 to the consolidated financial statements,
Goodwill, Spectrum Licenses and Other Intangible Assets, the Company
has revised its financial statements to present the transitional
disclosures for 2000 required by SFAS No. 142. The Arthur Andersen
LLP report does not extend to these changes made to the 2000
consolidated financial statements. The adjustments to the 2000
consolidated financial statements were reported on by
PricewaterhouseCoopers LLP as stated in their report appearing
herein.

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To VoiceStream Wireless Corporation:

We have audited the accompanying consolidated balance sheet of
VoiceStream Wireless Corporation (a Delaware corporation) and
subsidiaries as of December 31, 2000* and the related consolidated
statements of operations, shareholders equity and cash flows for
each of the two years in the period ended December 31, 2000*. These
financial statements are the responsibility of the Companys
management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.

We conducted our audits in accordance with auditing standards
generally accepted in the United States. Those standards require
that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of
VoiceStream Wireless Corporation and subsidiaries as of December 31,
2000* and the results of their operations and their cash flows for
each of the two years in the period ended December 31, 2000, in
conformity with accounting principles generally accepted in the
United States.

/s/ ARTHUR ANDERSEN LLP

Seattle, Washington
February 7, 2001



|* |  | The consolidated balance sheet as of December 31, 2000, and the
consolidated statements of operations, shareholders equity and cash
flows for the year ended December 31, 1999 are not required to be
presented in the 2002 annual report.
|- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

F-4



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##### Table of Contents



T-MOBILE USA, INC.
CONSOLIDATED BALANCE SHEETS(dollars in thousands, except per share amounts)

|                                                                                                                 |  |                                                                                                                                  |            |                                      |             |              |            |              |            |   |            | 
|---------------------------------------------------------------------------------------------------------------- |  | -------------------------------------------------------------------------------------------------------------------------------- | ---------- | ------------------------------------ | ----------- | ------------ | ---------- | ------------ | ---------- | - | ---------- | 
|                                                                                                                 |  |                                                                                                                                  |            |                                      |             | December 31, |            | December 31,
|                                                                                                                 |  |                                                                                                                                  |            |                                      |             | 2002         |            | 2001        
|                                                                                                                 |  |                                                                                                                                  |            |                                      |             |              |            |             
|                                                                                                                 |  |                                                                                                                                  | ASSETS     |                                      |             |              |            |              |            |   |           
|Current assets:                                                                                                  |  |                                                                                                                                  |            |                                      |             |              |            |             
|                                                                                                                 |  | Cash and cash equivalents                                                                                                        |            | $                                    | 36,510      |              |            | $            |           |  
|                                                                                                                 |  | Accounts receivable, net of allowance for doubtful accounts
of $125,251 and $119,794, respectively                               |            |                                      | 911,726     |              |            |              | 602,767    |  
|                                                                                                                 |  | Inventory                                                                                                                        |            |                                      | 299,237     |              |            |              | 153,432    |  
|                                                                                                                 |  | Other current assets                                                                                                             |            |                                      | 226,070     |              |            |              | 308,528    |  
|                                                                                                                 |  |                                                                                                                                  |            |                                      |             |              |            |             
|                                                                                                                 |  |                                                                                                                                  |            | Total current assets                 |             |              | 1,473,543  |              |            |   | 1,064,727  | 
|Property and equipment, net of accumulated depreciation of
$1,163,547 and $384,372, respectively                 |  |                                                                                                                                  | 4,427,115  |                                      |             |              | 3,390,103  |             
|Goodwill                                                                                                         |  |                                                                                                                                  | 9,868,082  |                                      |             |              | 16,265,790 |             
|Spectrum licenses                                                                                                |  |                                                                                                                                  | 9,951,288  |                                      |             |              | 18,791,696 |             
|Other intangible assets, net of accumulated amortization
of $375,583 and $184,057, respectively                  |  |                                                                                                                                  | 380,047    |                                      |             |              | 695,573    |             
|Investments in and advances to unconsolidated affiliates                                                         |  |                                                                                                                                  | 885,470    |                                      |             |              | 994,976    |             
|Other assets and investments                                                                                     |  |                                                                                                                                  | 135,666    |                                      |             |              | 37,055     |             
|                                                                                                                 |  |                                                                                                                                  |            |                                      |             |              |            |             
|                                                                                                                 |  | $                                                                                                                                | 27,121,211 |                                      |             | $            | 41,239,920 |             
|                                                                                                                 |  |                                                                                                                                  |            |                                      |             |              |            |             
|                                                                                                                 |  |                                                                                                                                  |            | LIABILITIES AND SHAREHOLDERS EQUITY |             |              |            |              |            |   |            | 
|Current liabilities:                                                                                             |  |                                                                                                                                  |            |                                      |             |              |            |             
|                                                                                                                 |  | Accounts payable                                                                                                                 |            | $                                    | 336,440     |              |            | $            | 198,530    |  
|                                                                                                                 |  | Accrued liabilities                                                                                                              |            |                                      | 856,281     |              |            |              | 633,069    |  
|                                                                                                                 |  | Construction accounts payable                                                                                                    |            |                                      | 344,953     |              |            |              | 348,600    |  
|                                                                                                                 |  | Deferred revenue                                                                                                                 |            |                                      | 157,190     |              |            |              | 75,996     |  
|                                                                                                                 |  |                                                                                                                                  |            |                                      |             |              |            |             
|                                                                                                                 |  |                                                                                                                                  |            | Total current liabilities            |             |              | 1,694,864  |              |            |   | 1,256,195  | 
|Long-term debt                                                                                                   |  |                                                                                                                                  | 1,274,638  |                                      |             |              | 1,861,518  |             
|Long-term notes payable to affiliates                                                                            |  |                                                                                                                                  | 7,041,944  |                                      |             |              | 4,115,433  |             
|Deferred tax liabilities                                                                                         |  |                                                                                                                                  | 3,259,452  |                                      |             |              | 3,565,286  |             
|Other long-term liabilities                                                                                      |  |                                                                                                                                  | 98,861     |                                      |             |              | 33,817     |             
|                                                                                                                 |  |                                                                                                                                  |            |                                      |             |              |            |             
|                                                                                                                 |  |                                                                                                                                  |            | Total long-term liabilities          |             |              | 11,674,895 |              |            |   | 9,576,054  | 
|Minority interest in equity of consolidated subsidiaries                                                         |  |                                                                                                                                  | 8,480      |                                      |             |              | 51,287     |             
|Voting preferred stock; $0.001 par value;
100,000,000 shares authorized; 3,906,250 shares issued and outstanding |  |                                                                                                                                  | 5,000,000  |                                      |             |              | 5,000,000  |             
|Commitments
and contingencies (see Note 8)                                                                       |  |                                                                                                                                  |            |                                      |             |              |            |             
|Shareholders equity:                                                                                            |  |                                                                                                                                  |            |                                      |             |              |            |             
|                                                                                                                 |  | Common stock, $0.000001 par value, and paid-in capital; 1.0 billion shares
authorized, 269,738,185 shares issued and outstanding |            |                                      | 26,851,821  |              |            |              | 26,851,821 |  
|                                                                                                                 |  | Deferred stock compensation                                                                                                      |            |                                      | (21,039     | )            |            |              | (35,891    | )
|                                                                                                                 |  | Accumulated other comprehensive income (loss)                                                                                    |            |                                      | (264        | )            |            |              | 655        |  
|                                                                                                                 |  | Accumulated deficit                                                                                                              |            |                                      | (18,087,546 | )            |            |              | (1,460,201 | )
|                                                                                                                 |  |                                                                                                                                  |            |                                      |             |              |            |             
|                                                                                                                 |  |                                                                                                                                  |            | Total shareholders equity           |             |              | 8,742,972  |              |            |   | 25,356,384 | 
|                                                                                                                 |  |                                                                                                                                  |            |                                      |             |              |            |              |            |  
|                                                                                                                 |  | $                                                                                                                                | 27,121,211 |                                      |             | $            | 41,239,920 |             
|                                                                                                                 |  |                                                                                                                                  |            |                                      |             |              |            |             

See accompanying notes to consolidated financial statements.

F-5



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##### Table of Contents



T-MOBILE USA, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS(dollars in thousands)

|                                             |  |   |                                                                                                                     |                                         |   |                   |            |                   |   |              |             |                   |               |          |            |   |   |           |           |   | 
|-------------------------------------------- |  | - | ------------------------------------------------------------------------------------------------------------------- | --------------------------------------- | - | ----------------- | ---------- | ----------------- | - | ------------ | ----------- | ----------------- | ------------- | -------- | ---------- | - | - | --------- | --------- | - | 
|                                             |  |   |                                                                                                                     |                                         |   | Twelve
months     |            | Seven
months      |   |              | Five months |                   | Twelve months
|                                             |  |   |                                                                                                                     |                                         |   | ended             |            | ended             |   | ended        |             | ended            
|                                             |  |   |                                                                                                                     |                                         |   | December 31, 2002 |            | December 31, 2001 |   | May 31, 2001 |             | December 31, 2000
|                                             |  |   |                                                                                                                     |                                         |   |                   |            |                   |   |              |             |                  
|Revenues:                                    |  |   |                                                                                                                     |                                         |   |                   |            |                   |   |              |             |                   |               |          |            |  
|                                             |  |   | Post pay revenues                                                                                                   |                                         | $ | 3,629,052         |            |                   | $ | 1,477,804    |             |                   | $             | 868,667  |            |   | $ | 1,172,748 |          
|                                             |  |   | Prepaid revenues                                                                                                    |                                         |   | 386,871           |            |                   |   | 245,216      |             |                   |               | 158,893  |            |   |   | 237,079   |          
|                                             |  |   | Roaming revenues                                                                                                    |                                         |   | 229,312           |            |                   |   | 102,101      |             |                   |               | 73,128   |            |   |   | 110,245   |          
|                                             |  |   | Equipment sales                                                                                                     |                                         |   | 690,174           |            |                   |   | 235,601      |             |                   |               | 150,958  |            |   |   | 281,130   |          
|                                             |  |   | Affiliate and other revenues                                                                                        |                                         |   | 68,436            |            |                   |   | 48,011       |             |                   |               | 18,922   |            |   |   | 133,871   |          
|                                             |  |   |                                                                                                                     |                                         |   |                   |            |                   |   |              |             |                   |               |          |            |  
|                                             |  |   |                                                                                                                     | Total revenues                          |   |                   | 5,003,845  |                   |   |              | 2,108,733   |                   |               |          | 1,270,568  |   |   |           | 1,935,073 |  
|                                             |  |   |                                                                                                                     |                                         |   |                   |            |                   |   |              |             |                   |               |          |            |   |   |          
|Operating expenses:                          |  |   |                                                                                                                     |                                         |   |                   |            |                   |   |              |             |                   |               |          |            |  
|                                             |  |   | Network costs (excludes stock-based
compensation of $3,564, $2,079, $610,
and $3,758, respectively)                 |                                         |   | 913,509           |            |                   |   | 470,808      |             |                   |               | 286,897  |            |   |   | 526,493   |          
|                                             |  |   | Cost of equipment sales                                                                                             |                                         |   | 1,078,582         |            |                   |   | 473,708      |             |                   |               | 265,629  |            |   |   | 513,955   |          
|                                             |  |   | General and administrative (excludes stock-based compensation of $8,316, $4,853,
$2,298, and $44,138, respectively) |                                         |   | 1,029,906         |            |                   |   | 670,767      |             |                   |               | 466,641  |            |   |   | 689,994   |          
|                                             |  |   | Customer acquisition (excludes stock-based
compensation of $2,972, $1,732, $508,
and $3,133, respectively)          |                                         |   | 1,657,722         |            |                   |   | 775,499      |             |                   |               | 466,513  |            |   |   | 796,272   |          
|                                             |  |   | Depreciation and amortization                                                                                       |                                         |   | 1,079,965         |            |                   |   | 1,531,936    |             |                   |               | 559,409  |            |   |   | 810,827   |          
|                                             |  |   | Impairment charges                                                                                                  |                                         |   | 15,628,000        |            |                   |   |             |             |                   |               |         |            |   |   |          |          
|                                             |  |   | Stock-based compensation                                                                                            |                                         |   | 14,852            |            |                   |   | 8,664        |             |                   |               | 3,416    |            |   |   | 51,029    |          
|                                             |  |   |                                                                                                                     |                                         |   |                   |            |                   |   |              |             |                   |               |          |            |   |   |           |          
|                                             |  |   |                                                                                                                     | Total operating expenses                |   |                   | 21,402,536 |                   |   |              | 3,931,382   |                   |               |          | 2,048,505  |   |   |           | 3,388,570 |  
|                                             |  |   |                                                                                                                     |                                         |   |                   |            |                   |   |              |             |                   |               |          |            |   |  
|Operating loss                               |  |   | (16,398,691                                                                                                         | )                                       |   |                   | (1,822,649 | )                 |   |              | (777,937    | )                 |               |          | (1,453,497 | )
|                                             |  |   |                                                                                                                     |                                         |   |                   |            |                   |   |              |             |                   |               |          |            |  
|Other income (expense):                      |  |   |                                                                                                                     |                                         |   |                   |            |                   |   |              |             |                   |               |          |            |  
|                                             |  |   | Interest and financing expense                                                                                      |                                         |   | (371,035          | )          |                   |   | (224,493     | )           |                   |               | (224,471 | )          |   |   | (477,613  | )        
|                                             |  |   | Equity in net losses of unconsolidated affiliates                                                                   |                                         |   | (170,903          | )          |                   |   | (44,046      | )           |                   |               | (63,477  | )          |   |   | (233,565  | )        
|                                             |  |   | Interest income and other, net                                                                                      |                                         |   | 40,795            |            |                   |   | 44,695       |             |                   |               | 35,968   |            |   |   | 99,939    |          
|                                             |  |   | T-Mobile merger-related costs                                                                                       |                                         |   |                  |            |                   |   | (1,539       | )           |                   |               | (118,885 | )          |   |   |          |          
|                                             |  |   | Accretion of preferred stock of consolidated subsidiary                                                             |                                         |   |                  |            |                   |   |             |             |                   |               | (4,699   | )          |   |   | (17,118   | )        
|                                             |  |   |                                                                                                                     |                                         |   |                   |            |                   |   |              |             |                   |               |          |            |   |   |           |          
|                                             |  |   |                                                                                                                     | Total other income (expense)            |   |                   | (501,143   | )                 |   |              | (225,383    | )                 |               |          | (375,564   | ) |   |           | (628,357  | )
|                                             |  |   |                                                                                                                     |                                         |   |                   |            |                   |   |              |             |                   |               |          |            |  
|Net loss before income taxes                 |  |   | (16,899,834                                                                                                         | )                                       |   |                   | (2,048,032 | )                 |   |              | (1,153,501  | )                 |               |          | (2,081,854 | )
|Income tax benefit                           |  |   | 272,489                                                                                                             |                                         |   |                   | 587,831    |                   |   |              |            |                   |               |          |           |  
|                                             |  |   |                                                                                                                     |                                         |   |                   |            |                   |   |              |             |                   |               |          |            |  
|Net loss                                     |  |   | (16,627,345                                                                                                         | )                                       |   |                   | (1,460,201 | )                 |   |              | (1,153,501  | )                 |               |          | (2,081,854 | )
|2.5% junior preferred stock dividends        |  |   |                                                                                                                    |                                         |   |                   |           |                   |   |              |            |                   |               |          | (12,535    | )
|                                             |  |   |                                                                                                                     |                                         |   |                   |            |                   |   |              |             |                   |               |          |            |  
|Net loss attributable to common shareholders |  |   | (16,627,345                                                                                                         | )                                       |   |                   | (1,460,201 | )                 |   |              | (1,153,501  | )                 |               |          | (2,094,389 | )
|Other comprehensive income (loss):           |  |   |                                                                                                                     |                                         |   |                   |            |                   |   |              |             |                   |               |          |            |  
|                                             |  |   | Foreign currency translation adjustment                                                                             |                                         |   | (444              | )          |                   |   | 444          |             |                   |               | (8,013   | )          |   |   | (7,474    | )        
|                                             |  |   | Equity in net unrealized income (loss) on investment in securities held
by unconsolidated affiliate                 |                                         |   | (243              | )          |                   |   | 243          |             |                   |               | 21,727   |            |   |   | (21,026   | )        
|                                             |  |   | Net unrealized income (loss) on available-for-sale securities                                                       |                                         |   | (232              | )          |                   |   | (32          | )           |                   |               | 15,333   |            |   |   | (16,738   | )        
|                                             |  |   |                                                                                                                     |                                         |   |                   |            |                   |   |              |             |                   |               |          |            |   |   |           |          
|                                             |  |   |                                                                                                                     | Total other comprehensive
income (loss) |   |                   | (919       | )                 |   |              | 655         |                   |               |          | 29,047     |   |   |           | (45,238   | )
|                                             |  |   |                                                                                                                     |                                         |   |                   |            |                   |   |              |             |                   |               |          |            |   |   |           |          
|Comprehensive loss                           |  | $ | (16,628,264                                                                                                         | )                                       |   | $                 | (1,459,546 | )                 |   | $            | (1,124,454  | )                 |               | $        | (2,139,627 | )
|                                             |  |   |                                                                                                                     |                                         |   |                   |            |                   |   |              |             |                   |               |          |            |   |   |           |          

See accompanying notes to consolidated financial statements.

F-6



---



##### Table of Contents



T-MOBILE USA, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY(dollars in thousands)

|                           |                                                                                     |                                                          |             |         |            |         |            |                |           |               |         |             |         |             |         |         |   |   |             |             |          |   |            |             |           | 
|-------------------------- | ----------------------------------------------------------------------------------- | -------------------------------------------------------- | ----------- | ------- | ---------- | ------- | ---------- | -------------- | --------- | ------------- | ------- | ----------- | ------- | ----------- | ------- | ------- | - | - | ----------- | ----------- | -------- | - | ---------- | ----------- | --------- | 
|                           |                                                                                     |                                                          |             |         |            |         |            | Par value      |           |               |         |             |         | Accumulated |         |         |   |   |             |             |          |  
|                           |                                                                                     |                                                          |             |         |            |         |            | and            |           |               |         |             |         | other       |         |         |   |   |             |             |          |  
|                           |                                                                                     |                                                          |             | Common  |            | paid-in |            | Deferred stock |           | comprehensive |         | Accumulated |         |             |         |        
|                           |                                                                                     |                                                          |             | stock   |            | capital |            | compensation   |           | income (loss) |         | deficit     |         | Total      
|                           |                                                                                     |                                                          |             |         |            |         |            |                |           |               |         |             |         |            
|Balance, January 1, 2000   |                                                                                     |                                                          | 96,305,360  |         |            | $       | 1,095,539  |                |           | $             | (25,264 | )           |         | $           |        |         |   | $ | (1,062,898  | )           |          | $ | 7,377      |            
|                           | Shares issued:                                                                      |                                                          |             |         |            |         |            |                |           |               |         |             |         |             |         |         |   |   |             |             |          |   |            |             |          
|                           |                                                                                     | Stock-based compensation plans                           |             |         | 3,909,652  |         |            |                | 61,832    |               |         |             |        |             |         |         |  |   |             |             |         |   |            |             | 61,832    | 
|                           |                                                                                     | Private placements, net                                  |             |         | 10,390,723 |         |            |                | 686,380   |               |         |             |        |             |         |         |  |   |             |             |         |   |            |             | 686,380   | 
|                           |                                                                                     | Omnipoint acquisition                                    |             |         | 52,952,399 |         |            |                | 2,247,115 |               |         |             |        |             |         |         |  |   |             |             |         |   |            |             | 2,247,115 | 
|                           |                                                                                     | Aerial acquisition                                       |             |         | 52,325,301 |         |            |                | 5,709,549 |               |         |             |        |             |         |         |  |   |             |             |         |   |            |             | 5,709,549 | 
|                           |                                                                                     | Exercise of warrants                                     |             |         | 328,762    |         |            |                | 55        |               |         |             |        |             |         |         |  |   |             |             |         |   |            |             | 55        | 
|                           |                                                                                     | Restricted stock                                         |             |         | 292,119    |         |            |                | 34,177    |               |         |             | (34,177 | )           |         |         |  |   |             |             |         |   |            |             |          | 
|                           |                                                                                     | Conversion of 2.5% junior preferred                      |             |         | 26,227,586 |         |            |                | 773,135   |               |         |             |        |             |         |         |  |   |             |             |         |   |            |             | 773,135   | 
|                           |                                                                                     | Conversion of preferred stock of
consolidated subsidiary |             |         | 146,376    |         |            |                | 3,779     |               |         |             |        |             |         |         |  |   |             |             |         |   |            |             | 3,779     | 
|                           |                                                                                     | Exercise of exchange rights                              |             |         | 7,912,867  |         |            |                | 930,100   |               |         |             |        |             |         |         |  |   |             |             |         |   |            |             | 930,100   | 
|                           | Amortization
of deferred stock-based compensation                                   |                                                          |             |        |            |         |            |               |           |               |         | 51,029      |         |             |         |        |   |   |             |            |          |   |            | 51,029      |          
|                           | Exchange rights granted                                                             |                                                          |             |        |            |         |            | 42,957         |           |               |         |            |         |             |         |        |   |   |             |            |          |   |            | 42,957      |          
|                           | Accretion of 2.5% junior preferred dividends                                        |                                                          |             |        |            |         |            | (12,535        | )         |               |         |            |         |             |         |        |   |   |             |            |          |   |            | (12,535     | )        
|                           | Net unrealized loss on investment securities                                        |                                                          |             |        |            |         |            |               |           |               |         |            |         |             |         | (16,738 | ) |   |             |            |          |   |            | (16,738     | )        
|                           | Equity in unrealized loss on investment
securities held by unconsolidated affiliate |                                                          |             |        |            |         |            |               |           |               |         |            |         |             |         | (21,026 | ) |   |             |            |          |   |            | (21,026     | )        
|                           | Foreign currency translation adjustment                                             |                                                          |             |        |            |         |            |               |           |               |         |            |         |             |         | (7,474  | ) |   |             |            |          |   |            | (7,474      | )        
|                           | Net loss                                                                            |                                                          |             |        |            |         |            |               |           |               |         |            |         |             |         |        |   |   |             | (2,081,854  | )        |   |            | (2,081,854  | )        
|                           |                                                                                     |                                                          |             |         |            |         |            |                |           |               |         |             |         |             |         |         |   |   |             |             |          |   |            |            
|Balance, December 31, 2000 |                                                                                     |                                                          | 250,791,145 |         |            |         | 11,572,083 |                |           |               | (8,412  | )           |         |             | (45,238 | )       |   |   | (3,144,752  | )           |          |   | 8,373,681  |            
|                           | Shares issued:                                                                      |                                                          |             |         |            |         |            |                |           |               |         |             |         |             |         |         |   |   |             |             |          |   |            |             |          
|                           |                                                                                     | Stock-based compensation plans                           |             |         | 3,082,973  |         |            |                | 42,587    |               |         |             |        |             |         |         |  |   |             |             |         |   |            |             | 42,587    | 
|                           |                                                                                     | Stock dividend                                           |             |         | 1,969,152  |         |            |                | 173,341   |               |         |             |        |             |         |         |  |   |             |             | (173,341 | ) |            |             |          | 
|                           |                                                                                     | Conversion of preferred stock of consolidated
subsidiary |             |         | 8,422,737  |         |            |                | 235,905   |               |         |             |        |             |         |         |  |   |             |             |         |   |            |             | 235,905   | 
|                           |                                                                                     | Exercise of warrants                                     |             |         | 274,844    |         |            |                | 441       |               |         |             |        |             |         |         |  |   |             |             |         |   |            |             | 441       | 
|                           |                                                                                     | Exercise of exchange rights                              |             |         | 4,321,334  |         |            |                | 463,696   |               |         |             |        |             |         |         |  |   |             |             |         |   |            |             | 463,696   | 
|                           | Return of capital from Western Wireless                                             |                                                          |             |        |            |         |            | 24,500         |           |               |         |            |         |             |         |        |   |   |             |            |          |   |            | 24,500      |          
|                           | Return of cash from Omnipoint                                                       |                                                          |             |        |            |         |            | 2,970          |           |               |         |            |         |             |         |        |   |   |             |            |          |   |            | 2,970       |          
|                           | Other                                                                               |                                                          |             |        |            |         |            | 17,377         |           |               |         | 2,543       |         |             |         | 29,047  |   |   |             |            |          |   |            | 48,967      |          
|                           | Net loss                                                                            |                                                          |             |        |            |         |            |               |           |               |         |            |         |             |         |        |   |   |             | (1,153,501  | )        |   |            | (1,153,501  | )        
|                           |                                                                                     |                                                          |             |         |            |         |            |                |           |               |         |             |         |             |         |         |   |   |             |             |          |   |            |            
|Balance, May 31, 2001      |                                                                                     |                                                          | 268,862,185 |         |            |         | 12,532,900 |                |           |               | (5,869  | )           |         |             | (16,191 | )       |   |   | (4,471,594  | )           |          |   | 8,039,246  |            
|                          
|                           | Elimination of historical equity on acquisition                                     |                                                          |             |        |            |         |            | (12,532,900    | )         |               |         | 5,869       |         |             |         | 16,191  |   |   |             | 4,471,594   |          |   |            | (8,039,246  | )        
|                           | Application of purchase accounting-
T-Mobile acquisition                            |                                                          |             |        |            |         |            | 25,859,658     |           |               |         | (44,555     | )       |             |         |        |   |   |             |            |          |   |            | 25,815,103  |          
|                           | Shares issued (private issuance)                                                    |                                                          |             | 876,000 |            |         |            | 876,000        |           |               |         |            |         |             |         |        |   |   |             |            |          |   |            | 876,000     |          
|                           | Tax effect on the exercise of stock options                                         |                                                          |             |        |            |         |            | 116,163        |           |               |         |            |         |             |         |        |   |   |             |            |          |   |            | 116,163     |          
|                           | Amortization of deferred stock-based compensation                                   |                                                          |             |        |            |         |            |               |           |               |         | 8,664       |         |             |         |        |   |   |             |            |          |   |            | 8,664       |          
|                           | Other                                                                               |                                                          |             |        |            |         |            |               |           |               |         |            |         |             |         | 655     |   |   |             |            |          |   |            | 655         |          
|                           | Net loss                                                                            |                                                          |             |        |            |         |            |               |           |               |         |            |         |             |         |        |   |   |             | (1,460,201  | )        |   |            | (1,460,201  | )        
|                           |                                                                                     |                                                          |             |         |            |         |            |                |           |               |         |             |         |             |         |         |   |   |             |             |          |   |            |            
|Balance, December 31, 2001 |                                                                                     |                                                          | 269,738,185 |         |            |         | 26,851,821 |                |           |               | (35,891 | )           |         |             | 655     |         |   |   | (1,460,201  | )           |          |   | 25,356,384 |            
|                           | Amortization of deferred stock compensation                                         |                                                          |             |        |            |         |            |               |           |               |         | 14,852      |         |             |         |        |   |   |             |            |          |   |            | 14,852      |          
|                           | Other                                                                               |                                                          |             |        |            |         |            |               |           |               |         |            |         |             |         | (919    | ) |   |             |            |          |   |            | (919        | )        
|                           | Net loss                                                                            |                                                          |             |        |            |         |            |               |           |               |         |            |         |             |         |        |   |   |             | (16,627,345 | )        |   |            | (16,627,345 | )        
|                           |                                                                                     |                                                          |             |         |            |         |            |                |           |               |         |             |         |             |         |         |   |   |             |             |          |   |            |            
|Balance, December 31, 2002 |                                                                                     |                                                          | 269,738,185 |         |            | $       | 26,851,821 |                |           | $             | (21,039 | )           |         | $           | (264    | )       |   | $ | (18,087,546 | )           |          | $ | 8,742,972  |            
|                           |                                                                                     |                                                          |             |         |            |         |            |                |           |               |         |             |         |             |         |         |   |   |             |             |          |   |            |            

See accompanying notes to consolidated financial statements.

F-7



---



##### Table of Contents



T-MOBILE USA, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS(dollars in thousands)

|                                               |                                                                               |                                                     |                                                                                     |                      |            |                    |          |                   |            |             |                  |                  |                    |         |           |            |            |         |          |   | 
|---------------------------------------------- | ----------------------------------------------------------------------------- | --------------------------------------------------- | ----------------------------------------------------------------------------------- | -------------------- | ---------- | ------------------ | -------- | ----------------- | ---------- | ----------- | ---------------- | ---------------- | ------------------ | ------- | --------- | ---------- | ---------- | ------- | -------- | - | 
|                                               |                                                                               |                                                     |                                                                                     |                      |            | Twelve monthsended |          | Seven monthsended |            |             | Five monthsended |                  | Twelve monthsended
|                                               |                                                                               |                                                     |                                                                                     |                      |            | December
31,2002   |          | December
31,2001  |            | May
31,2001 |                  | December
31,2000
|                                               |                                                                               |                                                     |                                                                                     |                      |            |                    |          |                   |            |             |                  |                 
|Operating activities:                          |                                                                               |                                                     |                                                                                     |                      |            |                    |          |                   |            |             |                  |                  |                    |         |           |           
|                                               | Net loss                                                                      |                                                     | $                                                                                   | (16,627,345          | )          |                    | $        | (1,460,201        | )          |             | $                | (1,153,501       | )                  |         | $         | (2,081,854 | )         
|                                               | Adjustments to reconcile net loss to net cash used in operating activities:   |                                                     |                                                                                     |                      |            |                    |          |                   |            |             |                  |                  |                    |         |           |            |           
|                                               |                                                                               |                                                     | Depreciation and amortization                                                       |                      |            | 1,079,965          |          |                   |            | 1,531,936   |                  |                  |                    | 559,409 |           |            |            | 810,827 |         
|                                               |                                                                               |                                                     | Impairment charges                                                                  |                      |            | 15,628,000         |          |                   |            |            |                  |                  |                    |        |           |            |            |        |         
|                                               |                                                                               |                                                     | Income tax benefit                                                                  |                      |            | (272,489           | )        |                   |            | (587,831    | )                |                  |                    |        |           |            |            |        |         
|                                               |                                                                               |                                                     | Amortization of debt discount and premium, net                                      |                      |            | 15,310             |          |                   |            | 14,527      |                  |                  |                    | 22,783  |           |            |            | 48,166  |         
|                                               |                                                                               |                                                     | Equity in net losses of unconsolidated affiliates                                   |                      |            | 170,903            |          |                   |            | 44,046      |                  |                  |                    | 63,477  |           |            |            | 233,565 |         
|                                               |                                                                               |                                                     | Stock-based compensation                                                            |                      |            | 14,852             |          |                   |            | 8,664       |                  |                  |                    | 3,416   |           |            |            | 51,029  |         
|                                               |                                                                               |                                                     | Allowance for bad debts                                                             |                      |            | 5,457              |          |                   |            | 16,118      |                  |                  |                    | 1,776   |           |            |            | 49,182  |         
|                                               |                                                                               |                                                     | Other, net                                                                          |                      |            | (19,617            | )        |                   |            | (34,084     | )                |                  |                    | (25,119 | )         |            |            | 28,458  |         
|                                               |                                                                               |                                                     | Changes in operating assets and liabilities, net of
effects of purchase accounting: |                      |            |                    |          |                   |            |             |                  |                  |                    |         |           |            |            |         |         
|                                               |                                                                               |                                                     |                                                                                     | Accounts receivable  |            |                    | (310,180 | )                 |            |             | (143,199         | )                |                    |         | (6,264    | )          |            |         | (309,330 | )
|                                               |                                                                               |                                                     |                                                                                     | Inventory            |            |                    | (144,845 | )                 |            |             | 64,441           |                  |                    |         | 107,957   |            |            |         | (254,498 | )
|                                               |                                                                               |                                                     |                                                                                     | Other current assets |            |                    | (77,028  | )                 |            |             | (38,831          | )                |                    |         | 1,766     |            |            |         | (26,727  | )
|                                               |                                                                               |                                                     |                                                                                     | Accounts payable     |            |                    | 123,486  |                   |            |             | 94,250           |                  |                    |         | (52,429   | )          |            |         | 110,081  |  
|                                               |                                                                               |                                                     |                                                                                     | Accrued liabilities  |            |                    | 158,884  |                   |            |             | 14,942           |                  |                    |         | 56,797    |            |            |         | 126,675  |  
|                                               |                                                                               |                                                     |                                                                                     |                      |            |                    |          |                   |            |             |                  |                  |                    |         |           |            |           
|                                               |                                                                               | Net cash used in operating activities               |                                                                                     |                      | (254,647   | )                  |          |                   | (475,222   | )           |                  |                  | (419,932           | )       |           |            | (1,214,426 | )      
|                                               |                                                                               |                                                     |                                                                                     |                      |            |                    |          |                   |            |             |                  |                  |                    |         |           |           
|Investing activities:                          |                                                                               |                                                     |                                                                                     |                      |            |                    |          |                   |            |             |                  |                  |                    |         |           |           
|                                               | Purchases of property and equipment                                           |                                                     |                                                                                     | (1,749,084           | )          |                    |          | (659,276          | )          |             |                  | (809,983         | )                  |         |           | (1,418,068 | )         
|                                               | Acquisitions of wireless properties, net of cash acquired                     |                                                     |                                                                                     | (80,147              | )          |                    |          | (383,829          | )          |             |                  | (299,292         | )                  |         |           | (589,631   | )         
|                                               | Sales (purchases) of short-term investments, net                              |                                                     |                                                                                     |                     |            |                    |          |                  |            |             |                  | 1,175,636        |                    |         |           | (1,175,636 | )         
|                                               | Investments in and advances to unconsolidated affiliates, net                 |                                                     |                                                                                     | (383,093             | )          |                    |          | (134,927          | )          |             |                  | (37,193          | )                  |         |           | (729,847   | )         
|                                               | Refund (payment) of deposits held by FCC                                      |                                                     |                                                                                     | 195,956              |            |                    |          |                  |            |             |                  | 49,589           |                    |         |           | (150,758   | )         
|                                               | Other, net                                                                    |                                                     |                                                                                     | 533                  |            |                    |          | 6,678             |            |             |                  | 26,863           |                    |         |           | (9,721     | )         
|                                               |                                                                               |                                                     |                                                                                     |                      |            |                    |          |                   |            |             |                  |                  |                    |         |           |            |           
|                                               |                                                                               | Net cash provided by (used in) investing activities |                                                                                     |                      | (2,015,835 | )                  |          |                   | (1,171,354 | )           |                  |                  | 105,620            |         |           |            | (4,073,661 | )      
|                                               |                                                                               |                                                     |                                                                                     |                      |            |                    |          |                   |            |             |                  |                  |                    |         |           |           
|Financing activities:                          |                                                                               |                                                     |                                                                                     |                      |            |                    |          |                   |            |             |                  |                  |                    |         |           |           
|                                               | Net proceeds from issuance of common and preferred stock                      |                                                     |                                                                                     |                     |            |                    |          | 876,000           |            |             |                  | 43,468           |                    |         |           | 6,358,865  |           
|                                               | Long-term debt borrowings                                                     |                                                     |                                                                                     |                     |            |                    |          |                  |            |             |                  |                 |                    |         |           | 3,540,000  |           
|                                               | Long-term debt repayments                                                     |                                                     |                                                                                     | (651,312             | )          |                    |          | (4,271,357        | )          |             |                  | (32,113          | )                  |         |           | (3,623,173 | )         
|                                               | Long-term debt borrowings from affiliates, net                                |                                                     |                                                                                     | 2,908,007            |            |                    |          | 4,108,550         |            |             |                  |                 |                    |         |           |           |           
|                                               | Outstanding checks in excess of bank balance                                  |                                                     |                                                                                     | 92,596               |            |                    |          | 135,685           |            |             |                  |                 |                    |         |           |           |           
|                                               | Cash entitlements on conversion of preferred stock of
consolidated subsidiary |                                                     |                                                                                     |                     |            |                    |          |                  |            |             |                  | (81,711          | )                  |         |           |           |           
|                                               | Deferred financing costs                                                      |                                                     |                                                                                     |                     |            |                    |          |                  |            |             |                  |                 |                    |         |           | (68,142    | )         
|                                               | Other, net                                                                    |                                                     |                                                                                     | (42,299              | )          |                    |          |                  |            |             |                  | 27,470           |                    |         |           |           |           
|                                               |                                                                               |                                                     |                                                                                     |                      |            |                    |          |                   |            |             |                  |                  |                    |         |           |            |           
|                                               |                                                                               | Net cash provided by (used in) financing activities |                                                                                     |                      | 2,306,992  |                    |          |                   | 848,878    |             |                  |                  | (42,886            | )       |           |            | 6,207,550  |        
|                                               |                                                                               |                                                     |                                                                                     |                      |            |                    |          |                   |            |             |                  |                  |                    |         |           |           
|Change in cash and cash equivalents            |                                                                               |                                                     | 36,510                                                                              |                      |            |                    | (797,698 | )                 |            |             | (357,198         | )                |                    |         | 919,463   |           
|Cash and cash equivalents, beginning of period |                                                                               |                                                     |                                                                                    |                      |            |                    | 797,698  |                   |            |             | 1,154,896        |                  |                    |         | 235,433   |           
|                                               |                                                                               |                                                     |                                                                                     |                      |            |                    |          |                   |            |             |                  |                  |                    |         |           |            |           
|Cash and cash equivalents, end of period       |                                                                               | $                                                   | 36,510                                                                              |                      |            | $                  |         |                   |            | $           | 797,698          |                  |                    | $       | 1,154,896 |           
|                                               |                                                                               |                                                     |                                                                                     |                      |            |                    |          |                   |            |             |                  |                  |                    |         |           |           

See accompanying notes to consolidated financial statements.

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##### Table of Contents



T-MOBILE USA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. ORGANIZATION

T-Mobile
USA, Inc. (T-Mobile, we or us), formerly known as
VoiceStream Wireless Corporation (VoiceStream), provides personal
communications services (PCS) under the T-Mobile brand primarily in
urban markets in the United States using the Global System for Mobile
Communications, or GSM, technology. T-Mobile is the brand name under
which most of Deutsche Telekom AGs (Deutsche Telekom) principal
wireless subsidiaries operate.

On May 31, 2001, Deutsche Telekom acquired 100% of the common
 shares of VoiceStream in a transaction that qualified as a tax-free
reorganization. VoiceStream shareholders received for each VoiceStream
common share either 3.6693 shares of Deutsche Telekom stock and
$15.7262 in cash, 3.6683 shares of Deutsche Telekom stock and $15.9062
in cash or 3.7647 shares of Deutsche Telekom stock. Following the
closing of the merger, Deutsche Telekom transferred all of its
VoiceStream common shares to T-Mobile International AG (T-Mobile
International). The merger and related transfer are hereafter referred
to as the T-Mobile merger. T-Mobile International is a wholly-owned
subsidiary of Deutsche Telekom and is the holding company for Deutsche
Telekoms principal GSM wireless operations in Europe and the United
States.

Upon
consummation of the T-Mobile merger, VoiceStream common shares were deregistered and delisted
from NASDAQ and are no longer publicly traded. We are now relying on
funding from T-Mobile International, Deutsche Telekom or its affiliates
to meet our working capital, capital expenditure, debt service and
other obligations.

Simultaneous with the T-Mobile merger, Deutsche Telekom also
acquired 100% of the common shares of Powertel, Inc. (Powertel), a
GSM service provider in the southeastern United States. Following the
closing of the Powertel merger, Deutsche Telekom transferred all of its
Powertel common shares to T-Mobile International. Powertel now provides
and bills for its services under the T-Mobile brand name. Powertels
wireless network is fully integrated with ours such that, from a
customers perspective, its services are indistinguishable from ours
(see Note 12 for a description of certain cost sharing agreements).

On February 25, 2000 and May 4, 2000, respectively, we completed
the acquisitions by merger of Omnipoint Corporation (Omnipoint) and
Aerial Communications, Inc. (Aerial). Total consideration paid for
the acquisitions, including liabilities assumed, was $6.2 billion and
$6.3 billion, respectively. On December 14, 2000, we acquired
VoiceStream GSM II Holdings, LLC and VoiceStream GSM III
Holdings, LLC and controlling interests in VoiceStream
PV/SS PCS, L.P. (VS PCS) and VoiceStream GSM I, LLC (VS GSM) in
exchange for approximately 7.9 million VoiceStream common shares and
$51.0 million in cash. On February 14, 2001 we acquired the remaining
minority interests in VS PCS and VS GSM in exchange for approximately
4.3 million VoiceStream common shares.

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2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Consolidation and basis of presentation

The consolidated financial statements (financial statements) of
T-Mobile include the accounts of all majority and minority-owned
subsidiaries that are either controlled by T-Mobile or for which
accounting principles generally accepted in the United States (GAAP)
require consolidation. Affiliates that are 20 percent to 50 percent
owned are generally accounted for using the equity method. Affiliates
that are less than 20 percent owned and for which control does not
otherwise exist are accounted for under the cost method. The financial
statements of T-Mobile for the year ended December 31, 2002, the seven
months ended December 31, 2001, the five months ended May 31, 2001 and
the year ended December 31, 2000, reflect all adjustments necessary for
a fair presentation of our financial position, results of operations
and cash flows. Such adjustments include those of a normal, recurring
nature and those related to the T-Mobile merger as described below.

The T-Mobile merger was accounted for as a purchase business
combination and resulted in adjustment of the basis of our assets,
liabilities and shareholders equity to reflect fair value on the
closing date of the merger. As a result of this new basis, our
financial position, results of operations and cash flows for periods
subsequent to May 31, 2001, the closing date of the merger, are not
necessarily comparable to periods prior to the merger.

Cash and cash equivalents

As of December 31, 2002 and 2001, outstanding checks in excess of
bank balances of $228.3 million and $135.7 million, respectively, are
included in accrued liabilities. Cash equivalents are stated at cost,
which approximates market value. We include highly liquid,
interest-earning investments with original maturities of three months
or less as cash equivalents.

Capitalized interest

We capitalize interest related to spectrum licenses and the
construction of additions to property and equipment while the assets
are being actively prepared to be placed in service pursuant to
Statement of Financial Accounting Standards (SFAS) No. 34,
Capitalization of Interest Cost. We capitalized interest of $118.0
million in 2002, $37.5 million in 2001 ($16.9 million from January 1,
2001 through May 31, 2001 and $20.6 million from June 1, 2001 through
December 31, 2001) and $2.5 million in 2000.

Goodwill and indefinite life intangible assets

Goodwill consists of the excess of the purchase price over the
fair value of net assets acquired in purchase business combinations. At
December 31, 2002 and 2001, substantially all goodwill is related to
the T-Mobile merger. Spectrum licenses primarily represent costs
incurred to acquire spectrum licenses issued by the Federal
Communications Commission (FCC).

On January 1, 2002, we adopted SFAS No. 142 Goodwill and Other
Intangible Assets. Upon adoption, we discontinued amortizing goodwill.
Prior to January 1, 2002, we amortized goodwill over 20 years. Upon
adoption, we also discontinued amortizing our spectrum licenses as we
determined that these assets meet the definition of indefinite life
intangible assets under SFAS No. 142. We amortized licenses over a
period of 20 years from June 1, 2001 through December 31, 2001 and over
a period of 40 years prior to June 1, 2001.

The standard requires that we assess the carrying value of our
goodwill and spectrum licenses for potential impairment annually, or
when indications of impairment exist. We will perform the annual
assessment for impairment in the third quarter of each year. Under SFAS
No. 142, goodwill impairment is deemed to exist if the net book value
of a reporting unit exceeds its fair value. Similarly, other indefinite
life intangible assets are deemed to be impaired if the net book value
of the assets exceeds fair value. See Note 3 for more information
regarding the impact of adopting SFAS No. 142.

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Long-lived assets

Long-lived assets include assets such as property and equipment
and intangible assets other than those with indefinite lives. On
January 1, 2002, we adopted SFAS No. 144, Accounting for the
Impairment or Disposal of Long-Lived Assets. This statement replaces
SFAS No. 121, Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets to Be Disposed Of. SFAS No. 144 retains the
fundamental provisions of SFAS No. 121 for recognition and measurement
of the impairment of long-lived assets to be held and used. This
statement requires recognition of an impairment loss only if the
carrying amount of a long-lived asset is not recoverable and exceeds
its fair value. The carrying value of an asset is not recoverable if it
exceeds the sum of the undiscounted cash flows expected to result from
the use and eventual disposition of the asset. The adoption of SFAS No.
144 did not have a material impact on our financial position, results
of operations or cash flows.

Additions to property and equipment are recorded at cost. Major
replacements and improvements are capitalized while general repairs and
maintenance are expensed as incurred. Depreciation commences once the
assets have been placed in service and is computed using the
straight-line method over the estimated useful lives of the assets,
which primarily range from three to forty years. On January 1, 2002, we
changed the useful lives of certain of our non-electronic fixed assets
from 10 years to 20 years, which we believe more accurately represents
the economic lives of these assets. This change in estimate resulted in
a decrease in depreciation and amortization expense of $160.8 million
for the year ended December 31, 2002.

Inventory

Inventory consists primarily of handsets, wireless data devices
and accessories, which are carried at the lower of cost or market. Cost
represents average cost and market is considered to be replacement
cost, which is consistent with industry practice.

Revenue recognition

Service revenues are based on customer usage and recognized at the
time the service is provided, net of credits and adjustments for
service discounts. Sales of equipment, primarily handsets and wireless
data devices, are recognized upon delivery to the customer. Prepaid
coupon sales are deferred until service is provided. Customer
activation fees are deferred and recognized over the average life of
the customer relationship.

Accounts
receivable

Accounts
receivable consists of amounts billed and currently due from
customers as well as revenues earned but not yet billed at the end of
each period. We maintain an allowance for estimated losses resulting
from uncollectible balances based on the aging of our accounts
receivable balances and our historical write-off experience. We
write-off account balances if further collection efforts are
unsuccessful and we determine, based on customer credit ratings and
length of time from original billing date, that future collection is
unlikely.

Income taxes

Deferred tax assets and liabilities are recognized based on
temporary differences between the financial statement and tax bases of
assets and liabilities using enacted tax rates expected to be in effect
when they are realized. A valuation allowance against deferred tax
assets is recorded if the realization of income, as defined under SFAS
No. 109 (Accounting for Income Taxes), is no longer assured within the carryforward periods of our
existing deferred tax assets. We had valuation allowances of $3.9
billion and zero at December 31, 2002 and 2001, respectively.

Advertising expense

We expense costs of advertising and other promotional expenditures
as incurred. Advertising expense was $234.9 million in 2002, $171.3
million in 2001 ($53.4 million from January 1, 2001 through May 31,
2001 and $117.9 million from June 1, 2001 through December 31, 2001),
and $123.8 million in 2000. We were reimbursed by Deutsche Telekom and
T-Mobile International for substantially all of the direct advertising
expenses related to the rebranding of the former VoiceStream markets.
These expenses are therefore not included in our advertising expense
for 2002.

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Loss per common share

T-Mobile no longer presents loss per share information as our
common shares are not publicly traded.

Stock-based compensation plans

We account for our stock-based compensation plans under Accounting
Principles Board (APB) Opinion No. 25, Accounting for Stock Issued
to Employees and related interpretations. See Note 11 for discussion
of the effect on net loss and other related disclosures had we
accounted for these plans under SFAS No. 123, Accounting for
Stock-Based Compensation.

The following table illustrates the effect on net income if we had
applied the fair value recognition provisions of SFAS No. 123 to
stock-based employee compensation using the assumptions in Note 11
(dollars in thousands):

|          |                                                           |                                                                                                                                                 |   |                     |         |                    |   |              |                   |                   |                     |            |         |   |   |            |         |   | 
|--------- | --------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------- | - | ------------------- | ------- | ------------------ | - | ------------ | ----------------- | ----------------- | ------------------- | ---------- | ------- | - | - | ---------- | ------- | - | 
|          |                                                           |                                                                                                                                                 |   | Twelve months ended |         | Seven months ended |   |              | Five months ended |                   | Twelve months ended
|          |                                                           |                                                                                                                                                 |   | December 31, 2002   |         | December 31, 2001  |   | May 31, 2001 |                   | December 31, 2000
|          |                                                           |                                                                                                                                                 |   |                     |         |                    |   |              |                   |                  
|Net loss: |                                                           |                                                                                                                                                 |   |                     |         |                    |   |              |                   |                   |                     |            |         |   |   |           
|          | Net
loss attributable to common shareholders, as reported |                                                                                                                                                 | $ | (16,627,345         | )       |                    | $ | (1,460,201   | )                 |                   | $                   | (1,153,501 | )       |   | $ | (2,094,389 | )      
|          |                                                           | Add:
Total stock-based employee compensation included in reported net
loss, net of related tax effects                                          |   |                     | 14,852  |                    |   |              | 8,664             |                   |                     |            | 3,416   |   |   |            | 15,665  |  
|          |                                                           | Deduct: Total stock-based employee compensation
expense determined under the fair value based method for all awards, net of related tax effects |   |                     | (57,112 | )                  |   |              | (38,942           | )                 |                     |            | (27,815 | ) |   |            | (89,854 | )
|          |                                                           |                                                                                                                                                 |   |                     |         |                    |   |              |                   |                   |                     |            |         |   |   |           
|          | Pro forma net loss                                        |                                                                                                                                                 | $ | (16,669,605         | )       |                    | $ | (1,490,479   | )                 |                   | $                   | (1,177,900 | )       |   | $ | (2,168,578 | )      
|          |                                                           |                                                                                                                                                 |   |                     |         |                    |   |              |                   |                   |                     |            |         |   |   |           

Fair value of financial instruments

At December 31, 2002 and 2001, the carrying values of cash, cash
equivalents, short-term investments, receivables and accounts payable
approximated fair value due to the short-term maturities of these
instruments. The estimated fair values of other financial instruments
with a carrying value materially different from their fair value, based
on quoted market prices or rates for the same or similar instruments,
and the related carrying amounts are as follows (dollars in thousands):

|               |  |                         |           |                         |  |          |           |       |  |   |           |  |  |   |           | 
|-------------- |  | ----------------------- | --------- | ----------------------- |  | -------- | --------- | ----- |  | - | --------- |  |  | - | --------- | 
|               |  | As of December 31, 2002 |           | As of December 31, 2001
|               |  |                         |           |                        
|               |  | Carrying                |           | Fair                    |  | Carrying |           | Fair 
|               |  | amount                  |           | value                   |  | amount   |           | value
|               |  |                         |           |                         |  |          |           |      
|Long-term debt |  | $                       | 1,274,638 |                         |  | $        | 1,521,591 |       |  | $ | 1,861,518 |  |  | $ | 1,823,243 | 

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Supplemental cash flow disclosure

Cash paid for interest (net of any amounts capitalized) was $511.7
million in 2002, $417.1 million in 2001 ($221.8 million from January 1,
2001 through May 31, 2001 and $195.3 million from June 1, 2001 through
December 31, 2001), and $401.8 million in 2000. Non-cash investing and
financing activities were as follows (dollars in thousands):

|                                                                                   |  |                     |        |                    |  |              |                   |                   |                     |   |         |  |  |   |         |  | 
|---------------------------------------------------------------------------------- |  | ------------------- | ------ | ------------------ |  | ------------ | ----------------- | ----------------- | ------------------- | - | ------- |  |  | - | ------- |  | 
|                                                                                   |  | Twelve months ended |        | Seven months ended |  |              | Five months ended |                   | Twelve months ended
|                                                                                   |  | December 31, 2002   |        | December 31, 2001  |  | May 31, 2001 |                   | December 31, 2000
|                                                                                   |  |                     |        |                    |  |              |                   |                  
|Capital
contributions of spectrum licenses to
unconsolidated affiliates            |  | $                   | 41,800 |                    |  | $            | 1,400             |                   |                     | $ | 7,500   |  |  | $ |        | 
|Capital contributions of property and equipment to
GSM Facilities                  |  | $                   | 1,500  |                    |  | $            | 465,800           |                   |                     | $ |        |  |  | $ |        | 
|Capital contributions to CIVS IV (See Note 5)                                      |  | $                   |       |                    |  | $            | 189,200           |                   |                     | $ | 38,000  |  |  | $ |        | 
|Debt exchanges                                                                     |  | $                   |       |                    |  | $            |                  |                   |                     | $ |        |  |  | $ | 35,900  | 
|Exchange rights granted from additional paid-in
capital (See Note 5)               |  | $                   |       |                    |  | $            |                  |                   |                     | $ | 17,400  |  |  | $ | 14,900  | 
|Tax effect of the exercise of stock options included in
additional paid-in capital |  | $                   |        |                    |  | $            | 116,200           |                   |                     | $ |        |  |  | $ |        | 
|Stock dividend issued from additional paid-in capital                              |  | $                   |       |                    |  | $            |                  |                   |                     | $ | 173,300 |  |  | $ | 12,600  | 
|Conversion of preferred stock of consolidated subsidiary                           |  | $                   |       |                    |  | $            |                  |                   |                     | $ | 235,900 |  |  | $ | 777,000 | 
|Other                                                                              |  | $                   | 1,500  |                    |  | $            | 5,100             |                   |                     | $ |        |  |  | $ |        | 

Derivative instruments and hedging activities

SFAS No.133, Accounting for Derivative Instruments and Hedging
Activities, as amended by SFAS No. 137 and SFAS No. 138, requires
that all derivative instruments be recorded on the balance sheet at
their fair values. Changes in the fair value of derivatives are
recorded each period in current earnings or other comprehensive
income, depending on whether a derivative is designated as part of a
hedge transaction, and if so, the type of hedging transaction. As of
December 31, 2002 we are not party to any derivative instruments or
hedging activities that we believe will have a significant impact on
our financial position or results of operations.

Concentration of credit risk

Financial instruments that subject T-Mobile to concentrations of
credit risk consist primarily of accounts receivable. We have limited
concentration of credit risk in accounts receivable as a result of the
sale of handsets, wireless data devices and prepaid cards to our
dealer network. Our policy is to limit the amount of accounts
receivable any one dealer carries and to continuously monitor the
dealer account balances and aging reports.

Deferred compensation plan

We have a deferred compensation plan (the Plan) under Section
401(k) of the Internal Revenue Code of 1986, as amended. Substantially
all full-time employees are eligible to participate. We match the
participants contributions to the Plan, subject to certain limits. We
made matching contributions to the Plan of $13.0 million in 2002, $7.0
million in 2001 ($2.9 million from January 1, 2001 through May 31, 2001
and $4.1 million from June 1, 2001 through December 31, 2001), and $3.1
million in 2000.

Segment reporting

We operate solely in one segment, wireless communication services.
As of December 31, 2002 and 2001, essentially all of our assets are
located in the United States. Our sales to international customers are
currently not significant.

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Recently issued accounting standards

In June 2001, the Financial Accounting Standards Board (FASB)
issued SFAS No. 143, Accounting for Asset Retirement Obligations.
This statement requires entities to record the fair value of future
liabilities for asset retirement obligations as an increase in the
carrying amount of the related long-lived asset if a reasonable
estimate of fair value can be made. Over time, the liability is
accreted to its present value, and the capitalized cost is depreciated
over the useful life of the related asset. We plan to adopt this
statement effective January 1, 2003 and do not believe that it will
have a material impact on our financial position, results of operations
or cash flows.

On April 30, 2002, we adopted SFAS No. 145, Rescission of FASB
Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13 and
Technical Corrections. SFAS No. 145 eliminates the requirement in SFAS
No. 4 that gains and losses from the extinguishment of debt be
aggregated and classified as extraordinary items, net of the related
income tax effect. Adoption of SFAS No. 145 did not have a material
impact on our financial position, results of operations or cash flows.

In November 2002, FASB Interpretation (FIN) No. 45, Guarantors
Accounting and Disclosure Requirements for Guarantees, Including
Indirect Guarantees of Indebtedness of Others was issued. The
interpretation provides guidance on the guarantors accounting and
disclosure requirements for guarantees, including indirect guarantees of
indebtedness of others. We have adopted the disclosure requirements of
the interpretation as of December 31, 2002. The accounting guidelines
are applicable to guarantees issued after December 31, 2002 and require
that we record a liability for the fair value of such guarantees in the
balance sheet. Adoption of FIN No. 45 did not have a material impact on
our financial position, results of operations or cash flows.

We currently apply the provisions of Staff Accounting Bulletin No.
101, Revenue Recognition in Financial Statements, to account for
revenue arrangements with multiple deliverables, which we adopted
during 2000. These types of arrangements include such transactions as
the sale of wireless service with an accompanying handset. In November
2002, the Emerging Issues Task Force (EITF) reached a consensus on
Issue No. 00-21, Revenue Arrangements with Multiple Deliverables,
which affects revenue arrangements entered into by us after
June 30, 2003. The issue requires that revenue arrangements with
multiple deliverables be divided into separate units of accounting if
the deliverables in the arrangement meet specific criteria and
generally requires that arrangement consideration be allocated among
the separate units of accounting based on their relative fair values.
Revenue recognition is then considered separately for each unit of
accounting. We are currently assessing the impact of this issue on our
financial statements, but do not believe that its adoption will have a
material impact on our financial position, results of operations or
cash flows.

In
January 2003, the FASB issued FIN
No. 46, Consolidation of Variable Interest Entities, an Interpretation
of ARB No. 51. FIN No. 46 requires certain variable interest entities to
be consolidated by the primary beneficiary of the entity if the equity
investors in the entity do not have the characteristics of a
controlling financial interest or do not have sufficient equity at risk
for the entity to finance its activities without additional
subordinated financial support from other parties. FIN No. 46 is effective
immediately for all new variable interest entities created or acquired
after January 31, 2003. For variable interest entities created or
acquired prior to February 1, 2003, the provisions of FIN No. 46 must be
applied for the first interim or annual period beginning after June 15,
2003. We are evaluating the impact that the adoption of this
interpretation will have on our financial statements.

Reclassifications

Certain of the comparative figures in the prior period financial
statements have been reclassified to conform to the current period
presentation.

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##### Table of Contents



Use of Estimates

The preparation of the accompanying financial statements requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities, revenues and expenses and the
disclosure of contingencies at the date of the financial statements.
The more significant estimates include service revenues earned but not
yet billed, the allowance for doubtful accounts, the estimated useful
lives of our wireless communications equipment and other long-lived
assets, fair value measurements related to goodwill, intangible assets,
impairment charges and stock-based compensation. We base our estimates
on historical experience, where applicable, and other assumptions that
we believe are reasonable under the circumstances. Actual results may
differ from such estimates if our assumptions prove invalid or
conditions change.

3. GOODWILL, SPECTRUM LICENSES AND OTHER INTANGIBLE ASSETS

In the first quarter of 2002, we completed the transitional
impairment test required upon adoption of SFAS No. 142 and determined
that there was no indication of impairment. However, the discontinuance
of amortization of our spectrum licenses upon adoption of SFAS No. 142
required us to establish a valuation allowance related to our deferred
tax assets. The realization of income, as defined under SFAS No. 109, from the reversal of the spectrum
license-related deferred tax liabilities is no longer assured within
the carryforward periods of our existing net operating losses
(NOLs). As a result, these deferred tax liabilities cannot be
treated as a realization of income and applied against the deferred tax
assets arising from our NOLs. Accordingly, we recorded a non-cash
charge to income tax expense of $3.3 billion in the first quarter of
2002 to establish a valuation allowance against our deferred tax
assets. The valuation allowance does not affect our NOLs for tax
purposes and does not reflect a change in our expectations regarding
the ability to utilize them in the future.

We completed the annual tests for impairment of our goodwill and
indefinite life intangible assets based on the carrying values at
September 30, 2002 and recorded non-cash pretax impairment charges of
$6.4 billion and $9.2 billion for goodwill and spectrum licenses,
respectively. As a result, we also recorded a related non-cash deferred
income tax benefit of $3.7 billion to reduce our deferred tax liability
due to the reduced book to tax basis differential of our spectrum
licenses. The impairment tests were completed using fair value
measurement techniques as required under SFAS No. 142. In testing
goodwill, we used a discounted cash flow approach to determine
enterprise fair value. We assessed the reasonableness of our valuations
by considering other information available such as the market
capitalization of other United States wireless carriers and associated
implied enterprise fair values, projected industry trends and
investment analyst reports on us and other United States wireless
carriers, and information regarding recent acquisitions in the
industry. The charges reflect changes in current competitive conditions
and future expectations of growth in the wireless industry, increased
cost of capital and changes in future funding commitments from Deutsche
Telekom.

We also used a discounted cash flow approach to estimate the fair
value of spectrum licenses. This represents a change in valuation
methodology since the adoption of SFAS No. 142, as previously we used a
market approach based primarily on the prices for spectrum licenses
established in the FCCs Auction 35 held in January 2001. Due to
changes in market conditions since 2001, there have been an
insufficient number of recent transactions to support our continued use
of a market-based approach at this time.

In the future, we will complete the annual assessment for
impairment of the value of our goodwill and indefinite life intangible
assets at the end of the third quarter of each fiscal year, or when
indications of impairment exist. Such indications of impairment would
include the impacts of significant adverse changes in legal factors,
market and economic conditions, the results of our operational
performance and strategic plans; adverse actions by regulators;
unanticipated changes in competition and market share; the potential
for the sale or disposal of all or a significant portion of our
business; and the cost and continued availability of funding from
T-Mobile International, Deutsche Telekom or its affiliates for the
expansion and enhancement of our wireless network and funding of our
operations.

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Adjusted net loss

The following table reconciles our reported net loss to adjusted
net loss, which excludes depreciation and amortization expense related
to goodwill and spectrum licenses, assuming the adoption of SFAS No.
142 had occurred on January 1 of each of the years presented:

|                                                          |                        |                  |                     |                   |                    |              |            |                   |   |                     |            |         |  |   |            |         |  | 
|--------------------------------------------------------- | ---------------------- | ---------------- | ------------------- | ----------------- | ------------------ | ------------ | ---------- | ----------------- | - | ------------------- | ---------- | ------- |  | - | ---------- | ------- |  | 
|                                                          |                        |                  | Twelve months ended |                   | Seven months ended |              |            | Five months ended |   | Twelve months ended
|(dollars in thousands)                                    |                        | December 31,2002 |                     | December 31, 2001 |                    | May 31, 2001 |            | December 31, 2000
|                                                          |                        |                  |                     |                   |                    |              |            |                  
|Net
loss attributable to common shareholders, as reported |                        | $                | (16,627,345         | )                 |                    | $            | (1,460,201 | )                 |   | $                   | (1,153,501 | )       |  | $ | (2,094,389 | )      
|                                                          | Add back amortization: |                  |                     |                   |                    |              |            |                   |   |                     |            |         |  |   |            |         | 
|                                                          | Goodwill               |                  |                     |                  |                    |              |            | 488,529           |   |                     |            | 196,300 |  |   |            | 339,700 | 
|                                                          | Spectrum licenses      |                  |                     |                  |                    |              |            | 514,571           |   |                     |            | 85,300  |  |   |            | 81,100  | 
|                                                          | Tax related impacts    |                  |                     |                  |                    |              |            | (587,831          | ) |                     |            |        |  |   |            |        | 
|                                                          |                        |                  |                     |                   |                    |              |            |                   |   |                     |            |         |  |   |            |        
|Adjusted net loss                                         |                        | $                | (16,627,345         | )                 |                    | $            | (1,044,932 | )                 |   | $                   | (871,901   | )       |  | $ | (1,673,589 | )      
|                                                          |                        |                  |                     |                   |                    |              |            |                   |   |                     |            |         |  |   |            |        

The 2002 net loss includes impairment charges related to SFAS No.
142 of $11.9 billion, net of tax, related to goodwill and spectrum
licenses and a tax charge of $3.3 billion related to adoption of SFAS
No. 142 on January 1, 2002.

The changes in the carrying amount of goodwill for the year ended
December 31, 2002 are as follows (dollars in thousands):

|                             |                    |   |            |            |  
|---------------------------- | ------------------ | - | ---------- | ---------- | -
|Balance at December 31, 2001 |                    | $ | 16,265,790 |           
|                             | Impairment charges |   |            | (6,421,000 | )
|                             | Other              |   |            | 23,292     |  
|                             |                    |   |            |           
|Balance at December 31, 2002 |                    | $ | 9,868,082  |           
|                             |                    |   |            |           

Other intangible assets

|                                           |               |              |           |      |   |         |              |   |              |         |          |   | 
|------------------------------------------ | ------------- | ------------ | --------- | ---- | - | ------- | ------------ | - | ------------ | ------- | -------- | - | 
|                                           |               |              |           |      |   |         | December 31, |   | December 31,
|(dollars in thousands)                     |               | Useful Lives |           | 2002 |   | 2001   
|                                           |               |              |           |      |   |        
|Intangible assets subject to amortization: |               |              |           |      |   |         |              |   |              |         |          |  
|                                           | Customer list |              | 3 years   |      | $ | 579,630 |              |   | $            | 579,630 |         
|                                           | Tradenames    |              | 1-4 years |      |   | 176,000 |              |   |              | 300,000 |         
|                                           |               |              |           |      |   |         |              |   |              |         |          |  
|                                           |               |              |           |      |   |         | 755,630      |   |              |         | 879,630  |  
|Accumulated amortization                   |               |              |           |      |   |         | (375,583     | ) |              |         | (184,057 | )
|                                           |               |              |           |      |   |         |              |   |              |         |          |  
|                                           |               |              |           |      |   | $       | 380,047      |   |              | $       | 695,573  |  
|                                           |               |              |           |      |   |         |              |   |              |         |          |   | 

During 2002, in connection with the rebranding of all our markets
to T-Mobile, we retired the fully amortized VoiceStream Wireless
tradename. The tradename was initially recorded at a cost of $124.0
million in conjunction with the T-Mobile merger at May 31, 2001.

Amortization expense

The following table presents current and expected amortization
expense for other identifiable intangible assets for the current year
and the subsequent five years:

|                                |                                               |      |   |         |         | 
|------------------------------- | --------------------------------------------- | ---- | - | ------- | ------- | 
|(dollars in thousands)          |                                               |      |   |        
|Aggregate amortization expense: |                                               |      |   |        
|                                | For the twelve months ended December 31, 2002 |      | $ | 315,526 |        
|Expected amortization expense:  |                                               |      |   |        
|                                | For the years ending December 31,
2003        |      | $ | 237,210 |        
|                                |                                               | 2004 |   | $       | 124,504 | 
|                                |                                               | 2005 |   | $       | 18,333  | 
|                                |                                               | 2006 |   | $       |        | 
|                                |                                               | 2007 |   | $       |        | 

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4. PROPERTY AND EQUIPMENT

Our property and equipment was adjusted to fair value at May 31,
2001 as a result of our acquisition by Deutsche Telekom. The
accumulated depreciation balances at the respective balance sheet dates
reflect depreciation expense subsequent to the T-Mobile merger.

|                                |  |            |  |                    |           |      |            |   |           |   |           |  
|------------------------------- |  | ---------- |  | ------------------ | --------- | ---- | ---------- | - | --------- | - | --------- | -
|                                |  | Useful     |  | As of December 31,
|(dollars in thousands)          |  | lives      |  | 2002               |           | 2001
|                                |  |            |  |                    |           |     
|Buildings and improvements      |  | 540 years |  | $                  | 179,667   |      |            | $ | 140,713   |  
|Wireless communications systems |  | 520 years |  |                    | 3,732,745 |      |            |   | 2,523,796 |  
|Furniture and equipment         |  | 35 years  |  |                    | 835,124   |      |            |   | 637,800   |  
|                                |  |            |  |                    |           |      |            |   |           |   |           |  
|                                |  |            |  |                    |           |      | 4,747,536  |   |           |   | 3,302,309 |  
|Accumulated depreciation        |  |            |  |                    |           |      | (1,163,547 | ) |           |   | (384,372  | )
|                                |  |            |  |                    |           |      |            |   |           |   |           |  
|                                |  |            |  |                    |           |      | 3,583,989  |   |           |   | 2,917,937 |  
|Construction in progress        |  |            |  |                    |           |      | 843,126    |   |           |   | 472,166   |  
|                                |  |            |  |                    |           |      |            |   |           |   |           |  
|                                |  |            |  |                    |           | $    | 4,427,115  |   |           | $ | 3,390,103 |  
|                                |  |            |  |                    |           |      |            |   |           |   |           |  

Depreciation expense was $764.4 million in 2002, $713.4 million in
2001 ($305.8 million from January 1, 2001 through May 31, 2001 and
$407.6 million from June 1, 2001 through December 31, 2001), and $390.0
million in 2000.

5. BUSINESS COMBINATIONS AND INVESTMENTS

We have entered into joint venture agreements and made other
equity investments in operating companies primarily to obtain coverage
for our customers in geographic areas where we could not otherwise
obtain spectrum licenses, to share the cost of building and operating
wireless networks and to promote the continued growth and expansion of
GSM networks in North America. The entities are typically funded
initially with investments by the partners, but in some cases, may also
incur substantial third party debt to acquire spectrum licenses and
build networks.

Our investments in and advances to unconsolidated affiliates were
adjusted to fair value at May 31, 2001 and are as follows:

|                       |  |                    |         |      |  |   |         | 
|---------------------- |  | ------------------ | ------- | ---- |  | - | ------- | 
|                       |  | As of December 31,
|                       |  |                   
|(dollars in thousands) |  | 2002               |         | 2001
|                       |  |                    |         |     
|GSM Facilities         |  | $                  | 519,843 |      |  | $ | 475,405 | 
|CIVS IV                |  |                    |        |      |  |   | 350,394 | 
|Microcell              |  |                    |        |      |  |   | 92,144  | 
|Powertel               |  |                    | 349,418 |      |  |   | 71,200  | 
|Other                  |  |                    | 16,209  |      |  |   | 5,833   | 
|                       |  |                    |         |      |  |   |         | 
|                       |  | $                  | 885,470 |      |  | $ | 994,976 | 
|                       |  |                    |         |      |  |   |         | 

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Network Infrastructure Venture with Cingular (GSM Facilities)

We entered into an agreement with Cingular Wireless LLC
(Cingular) in November 2001 to share in the ownership and operation
of GSM network infrastructures in specified markets. We contributed our
network assets in the New York Basic Trading Area (BTA) (the New
York City market), and Cingular contributed its network assets in the
Los Angeles and San Francisco Major Trading Areas (MTAs), which cover
most of California and parts of Nevada (the California/Nevada
market), to a newly formed joint venture entity, GSM Facilities, LLC
(GSM Facilities). Concurrent with its formation, GSM Facilities
entered into operating agreements with T-Mobile and Cingular to manage
and maintain the assets previously owned by each company on behalf of
the joint venture. In July 2002 we began marketing our commercial
service in and around the major population centers of the
California/Nevada market, including San Francisco, Los Angeles and Las
Vegas, and Cingular began marketing its commercial service in the New
York City market. The monthly cash operating expenses of GSM Facilities
are charged to T-Mobile and Cingular based on each partys
proportionate share of spectrum in each market. Through a separate
reciprocal home roaming agreement, Cingular and T-Mobile charge each
other for usage that differs from the spectrum-based expense
allocations in each market. The charges for network services are
included in network costs in our consolidated statements of
operations. GSM Facilities also incurs non-cash
expenses including depreciation on assets in the venture and interest
charges on certain capitalized tower leases, which are allocated to
T-Mobile and Cingular based on their relative economic interests in GSM
Facilities. Our economic interest in the joint venture at December 31,
2002 was approximately 25%. For the years ended December 31,
2002 and 2001, we
recorded equity in net losses of unconsolidated affiliates of
$62.4 million and $10.1 million, respectively, related principally to our share of the unreimbursed non-cash
expenses of GSM Facilities.

The capital expenditure requirements of the joint venture are
funded through capital contributions from T-Mobile and Cingular.
Pursuant to the operating agreements, T-Mobile and Cingular procure
services and network equipment on behalf of GSM Facilities in the
respective markets they operate and resell them to GSM Facilities.
We are charged by GSM Facilities for certain types
of network equipment at predetermined prices rather than actual cost.
We defer any resulting gains or losses and record them as part of our
investments in and advances to unconsolidated affiliates. We amortize
the deferred amounts over the estimated useful lives of the related
assets and include the amortization charges as a component of equity in
net losses of unconsolidated affiliates.

Capital
contributions to fund expenditures by GSM Facilities are then allocated to
each party based on the nature of the
expenditures. Contributions to fund network capacity increases are
allocated based on each partys incremental growth in network usage,
while contributions to fund technology upgrades and network footprint
expansion are generally allocated evenly. We record our capital
contributions to GSM Facilities as a result of these allocations as
part of our investments in and advances to unconsolidated affiliates.
Also under the terms of the operating agreement, Cingular
is obligated to contribute $450.0 million for GSM Facilities capital
expenditures in addition to their share of capital expenditures over
the two years from inception.

In 2002, T-Mobiles allocation of GSM Facilities capital
expenditures totaled $503.6 million of which Cingular paid $225 million
from its additional $450 million obligation. T-Mobiles net capital
obligations in 2002 were $278.6 million of which $151.9 million was
owed at December 31, 2002. Our investment in GSM Facilities is
reported net of this future funding obligation.

CIVS IV and PCS One

In April 2002, we acquired the 49.9% remaining outstanding voting
interest in Cook Inlet/VS GSM IV PCS Holdings, LLC (CIVS IV) and the
50.0% remaining outstanding voting interest in D&E/Omnipoint Wireless
Joint Venture, LP d.b.a. PCS One (PCS One). We have accounted for the
acquisitions in accordance with SFAS No. 141, Business Combinations.
The aggregate purchase price of the remaining interests in these
entities consisted of $87.6 million in cash and 1,277,048 Deutsche
Telekom shares with a fair market value of $18.5 million. The Deutsche
Telekom shares were issued on our behalf in return for a note payable
of $18.5 million to Deutsche Telekom. Additionally, we assumed $78.5
million in long-term debt in connection with the purchase of PCS One,
which we repaid immediately following the acquisition. These
acquisitions resulted in our recording $22.9 million of goodwill. The
results of CIVS IV and PCS One are included in our results on a
consolidated basis since their respective dates of acquisition.

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Prior to acquiring these entities, we accounted for our ownership
interests in CIVS IV and PCS One using the equity method. As of the
acquisition dates, our combined investment in the two entities totaled
$306.1 million. In performing the purchase price allocations, the
consideration, including the existing investment balances, was
principally allocated to spectrum licenses.

Microcell

In June 2002, we wrote down our investment in Microcell
Telecommunications Inc. (Microcell), a Canadian GSM
provider, by $65.1
million, based on our assessment that the decline in value of the
investment was other than temporary. The non-cash charge is included in
equity in net losses of unconsolidated affiliates in our consolidated
statement of operations and comprehensive loss. As of December 31,
2002, our investment in Microcell is zero. We no longer recognize
additional losses related to this investment as we have not guaranteed
its obligations or otherwise committed to provide further financial
support for Microcell.

Powertel

Investments in and advances to unconsolidated affiliates include a
receivable from Powertel, a wholly-owned subsidiary of T-Mobile
International (see Note 12).

6. ACCRUED LIABILITIES

|                                             |  |                    |         |      |  |   |         | 
|-------------------------------------------- |  | ------------------ | ------- | ---- |  | - | ------- | 
|                                             |  | As of December 31,
|                                             |  |                   
|                                             |  | 2002               |         | 2001
|                                             |  |                    |         |     
|(dollars in thousands)                       |  |                   
|Accrued payroll and benefits                 |  | $                  | 147,964 |      |  | $ | 115,984 | 
|Accrued dealer commissions                   |  |                    | 141,234 |      |  |   | 91,086  | 
|Accrued interest payable                     |  |                    | 37,003  |      |  |   | 79,204  | 
|Accrued property and other taxes             |  |                    | 159,820 |      |  |   | 116,922 | 
|Outstanding checks in excess of cash balance |  |                    | 228,277 |      |  |   | 135,685 | 
|Other                                        |  |                    | 141,983 |      |  |   | 94,188  | 
|                                             |  |                    |         |      |  |   |         | 
|                                             |  | $                  | 856,281 |      |  | $ | 633,069 | 
|                                             |  |                    |         |      |  |   |         | 

7. LONG-TERM DEBT AND NOTES PAYABLE TO AFFILIATES

The carrying value of our long-term debt was adjusted to fair
value at May 31, 2001 (see Note 2). The adjustment resulted in a
premium of $415.4 million. The premium is being amortized to interest
expense over the remaining terms of the related debt instruments.

|                                      |                                            |                    |           |         |      |   |           |           | 
|------------------------------------- | ------------------------------------------ | ------------------ | --------- | ------- | ---- | - | --------- | --------- | 
|                                      |                                            | As of December 31,
|                                      |                                            |                   
|                                      |                                            |                    | 2002      |         | 2001
|                                      |                                            |                    |           |         |     
|(dollars in thousands)                |                                            |                   
|Senior Notes:                         |                                            |                    |           |         |      |   |           |          
|                                      | 10 3/8% Senior Notes, due in 2009          |                    | $         | 800,867 |      |   | $         | 1,123,137 | 
|                                      | 11 7/8% Senior Discount Notes, due in 2009 |                    |           | 285,992 |      |   |           | 468,000   | 
|                                      | 11 1/2% Senior Notes, due in 2009          |                    |           | 86,140  |      |   |           | 144,900   | 
|                                      |                                            |                    |           |         |      |   |           |          
|                                      |                                            |                    | 1,172,999 |         |      |   | 1,736,037 |          
|Unamortized premium, net              |                                            |                    | 101,639   |         |      |   | 125,481   |          
|                                      |                                            |                    |           |         |      |   |           |          
|                                      |                                            | $                  | 1,274,638 |         |      | $ | 1,861,518 |          
|                                      |                                            |                    |           |         |      |   |           |          
|Long-term notes payable to affiliates |                                            | $                  | 7,041,944 |         |      | $ | 4,115,433 |          
|                                      |                                            |                    |           |         |      |   |           |          

During 2002, we purchased on the open market and retired
outstanding debt as follows: $322.3 million of our 10 3/8% Senior Notes
due in 2009, $182.0 million of our 11 7/8% Senior Notes due in 2009,
and $58.8 million of our 11 1/2% Senior Notes due in 2009, together
with premiums of $9.7 million. These repayments were funded by
borrowings from Deutsche Telekom.

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Our 10 3/8% Senior Notes, which mature on November 15, 2009,
accrue interest that is payable semiannually. Our 11 7/8% Senior
Discount Notes, which mature on November 15, 2009, accrete to their
face amount through November 15, 2004, with interest accruing
thereafter that will be payable semiannually commencing on May 15,
2005. Our 11 1/2% Senior Notes, which mature on September 15, 2009,
accrue interest that is payable semiannually. The Senior Note
indentures contain affirmative and negative covenants, including
financial covenants, and provide for various events of default. As of
December 31, 2002, we were in compliance with these covenants. Interest
related to our long-term notes payable to affiliates is typically due
on a quarterly or bi-annual basis.

The weighted average effective interest rate for third party
outstanding long-term debt was 8.1% and 8.9% for the years ended
December 31, 2002 and 2001, respectively. The weighted average
effective interest rate for all long-term notes payable to affiliates
was 6.7% and 4.4% for the years ended December 31, 2002 and 2001,
respectively. The weighted average effective interest rate for all
outstanding long-term debt and long-term notes payable to affiliates
was 6.9% for the year ended December 31, 2002, as compared with 7.9% in
2001.

Maturities

At December 31, 2002, there were no principal maturities of
long-term debt, other than to affiliates, due prior to 2009. Our
long-term notes payable to affiliates have maturity dates ranging from
2003 through 2030.

8. COMMITMENTS AND CONTINGENCIES

Commitments

Future minimum payments required under operating lease obligations
that have initial or remaining non-cancelable terms in excess of one
year as of December 31, 2002, are summarized below (dollars in
thousands):

|                          |            |      |           |         |         | 
|------------------------- | ---------- | ---- | --------- | ------- | ------- | 
|Years
ending December 31, |            |      |           |        
|                          |            | 2003 |           | $       | 239,105 | 
|                          |            | 2004 |           |         | 239,201 | 
|                          |            | 2005 |           |         | 238,801 | 
|                          |            | 2006 |           |         | 239,236 | 
|                          |            | 2007 |           |         | 237,930 | 
|                          | Thereafter |      |           | 144,192 |        
|                          |            |      |           |        
|                          |            | $    | 1,338,465 |        
|                          |            |      |           |        

Aggregate rental expense for all operating leases was $350.0
million in 2002, $270.3 million in 2001 ($105.1 million from January
1, 2001 through May 31, 2001 and $165.2 million from June 1, 2001
through December 31, 2001), and $142.8 million in 2000.

In order to minimize the impact of inadequate supply and
availability of certain infrastructure equipment and services, we have
committed to purchase PCS equipment from various suppliers. At
December 31, 2002, there is approximately $144.6 million remaining
under these commitments that has not yet been delivered. We expect to
fulfill these purchase commitments by December 31, 2004.

T-Mobile and its affiliates have various other purchase
commitments for materials, supplies and other items incidental to the
ordinary course of business which are neither significant individually
nor in the aggregate. Such commitments are not at prices in excess of
current market value.

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Contingencies

Western Wireless

On May 3, 1999, Western Wireless Corporation (Western Wireless)
distributed its entire 80.1% interest in our common shares to its
stockholders. Prior to this spin-off, Western Wireless obtained a
favorable ruling from the IRS indicating that the spin-off would not
result in the recognition of a gain or taxable income to Western
Wireless or its stockholders. However, Western Wireless could still
recognize a gain upon the spin-off, notwithstanding the favorable IRS
ruling, if it is determined that the spin-off was part of a prohibited
plan, that is, a plan or series of related transactions in which one
or more persons acquire, directly or indirectly, 50% or more of our
stock. Acquisitions of 50% or more of our stock occurring during the
four-year period beginning two years before the spin-off could give
rise to a rebuttable presumption that the spin-off was part of a
prohibited plan. Although it is not assured, we believe that the
spin-off, subsequent mergers, including the T-Mobile merger in 2001,
and certain investments by Hutchison Telecommunications PCS (USA)
Limited and Sonera Corporation in 2000 were not pursuant to a
prohibited plan.

We have agreed to indemnify Western Wireless on an after-tax
basis for any taxes, penalties, interest and various other expenses
incurred by Western Wireless if it is required to recognize such a
gain. The amount of such gain that Western Wireless would recognize
would be equal to the difference between the fair market value of our
common shares at the time of the spin-off and Western Wireless
adjusted tax basis in such shares at the time. The estimated range of
our possible liability, not including interest and penalties, if any,
is from zero to $400 million.

FCC Auction 35

During 2001, we and CIVS V, a consolidated affiliate in which we
hold a non-controlling interest, participated in FCC Auction 35.
Together, we had total winning bids of $989.0 million and paid the FCC
deposits totaling $197.8 million. We were both subsequently released
from the obligation to purchase certain of these spectrum licenses
during 2002. We received refunds totaling $196.0 million and $1.8
million was retained by the FCC for payments on licenses which were
granted. During 2002 CIVS V distributed $42.3 million of these refunds
to Cook Inlet Region, Inc. (CIRI), a subsidiary of which is a member
of CIVS V. Because we consolidate CIVS V for accounting purposes, the
distribution to CIRI is included in other financing activities in our
statement of cash flows and is a reduction of minority interest on our
balance sheet. In January 2003, CIVS V distributed the remaining $7.6
million of the refunds received in December 2002 to CIRI.

9. VOTING PREFERRED STOCK

On September 6, 2000, we issued and sold to Deutsche Telekom
3,906,250 shares of our Voting Preferred Stock, par value $0.001 per
share, for an aggregate purchase price of $5.0 billion. Each share has
a liquidation preference of $1,280 per share. T-Mobile has the option
of redeeming these shares beginning December 31, 2020. The shares are
redeemable at the option of the holder beginning December 31, 2030.

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10. INCOME TAXES

Significant components of deferred income tax assets and
liabilities, net of tax, are as follows (dollars in thousands):

|                               |                                                    |   |                    |           |      |   |           |           | 
|------------------------------ | -------------------------------------------------- | - | ------------------ | --------- | ---- | - | --------- | --------- | 
|                               |                                                    |   | As of December 31,
|                               |                                                    |   |                   
|                               |                                                    |   | 2002               |           | 2001
|                               |                                                    |   |                    |           |     
|Deferred tax assets:           |                                                    |   |                    |           |      |   |           |          
|                               | Property and equipment                             |   | $                  |          |      |   | $         | 103,770   | 
|                               | Start-up expenditures capitalized for tax purposes |   |                    |          |      |   |           | 20,081    | 
|                               | Interest expense related to foreign party          |   |                    | 152,272   |      |   |           |          | 
|                               | Allowance for doubtful accounts                    |   |                    | 45,252    |      |   |           | 45,791    | 
|                               | NOL carryforwards                                  |   |                    | 3,833,453 |      |   |           | 3,293,545 | 
|                               |                                                    |   |                    |           |      |   |           |          
|Total deferred tax assets      |                                                    | $ | 4,030,977          |           |      | $ | 3,463,187 |          
|                               |                                                    |   |                    |           |      |   |           |          
|Deferred tax liabilities:      |                                                    |   |                    |           |      |   |           |          
|                               | Property and equipment                             |   | $                  | 33,593    |      |   | $         |          | 
|                               | Intangible assets                                  |   |                    | 3,301,360 |      |   |           | 6,987,665 | 
|                               | Bond premium                                       |   |                    |          |      |   |           | 21,904    | 
|                               | Other                                              |   |                    | 28,936    |      |   |           | 18,904    | 
|                               |                                                    |   |                    |           |      |   |           |          
|Total deferred tax liabilities |                                                    | $ | 3,363,889          |           |      | $ | 7,028,473 |          
|                               |                                                    |   |                    |           |      |   |           |          
|                               | Valuation reserve                                  |   |                    | 3,926,540 |      |   |           |          | 
|                               |                                                    |   |                    |           |      |   |           |          
|Net deferred tax liabilities   |                                                    | $ | 3,259,452          |           |      | $ | 3,565,286 |          
|                               |                                                    |   |                    |           |      |   |           |          

We have approximately $9.6 billion in NOL carryforwards at
December 31, 2002. The NOL carryforwards will expire between 2008 and
2022. The valuation allowance was established during 2002 as a result
of our adoption of SFAS No. 142 as described below, and at December 31,
2002 was $3.9 billion. In 2001, the valuation allowance was reduced to
zero through purchase accounting adjustments related to the T-Mobile
merger. Our ability to utilize the NOLs in any given year may be
limited by certain events, including a significant change in ownership
interest.

In the first quarter of 2002, the discontinuance of amortization
of our spectrum licenses upon adoption of SFAS No. 142 required us to
establish a valuation allowance related to our deferred tax assets. The
realization of income, as defined under SFAS No. 109, from the reversal of deferred tax liabilities
associated with spectrum licenses is no longer assured within the
carryforward periods of our NOLs. As a result, these deferred tax
liabilities cannot be treated as a realization of income and applied
against the deferred tax assets arising from our NOLs. Accordingly, we
recorded a $3.3 billion income tax expense in the first quarter of 2002
to establish a valuation allowance against our deferred tax assets. The
valuation allowance does not affect our NOLs for tax purposes and does
not reflect a change in our expectations regarding the ability to
utilize them in the future. Additionally, in the third quarter of 2002,
in connection with the impairment charges discussed above, we recorded
a non-cash deferred income tax benefit of $3.7 billion to reduce the
deferred tax liability due to the reduced book to tax basis
differential of our spectrum licenses.

The reconciliation between our effective tax rate and the United
States federal income tax rate is as follows:

|                                       |  |                                    |        |                                   |  |  |                             |    |  |  |        |    | 
|-------------------------------------- |  | ---------------------------------- | ------ | --------------------------------- |  |  | --------------------------- | -- |  |  | ------ | -- | 
|                                       |  | Twelve
monthsendedDecember 31,2002 |        | Seven
monthsendedDecember 31,2001 |  |  | Five
monthsendedMay 31,2001
|                                       |  |                                    |        |                                   |  | 
|Federal income tax rate                |  |                                    | 35.00  | %                                 |  |  | 35.00                       | %  |  |  | 35.00  | % 
|State taxes, net of federal benefit    |  |                                    | 3.05   | %                                 |  |  | 3.51                        | %  |  |  | 3.67   | % 
|Goodwill                               |  |                                    | (13.30 | %)                                |  |  | (9.28                       | %) |  |  | (4.91  | %)
|Preferred stock                        |  |                                    |       |                                   |  |  |                            |    |  |  | (0.14  | %)
|Valuation allowance                    |  |                                    | (23.32 | %)                                |  |  |                            |    |  |  | (29.98 | %)
|Other                                  |  |                                    | 0.04   | %                                 |  |  | (0.50                       | %) |  |  | (0.03  | %)
|                                       |  |                                    |        |                                   |  |  |                             |    |  |  |        |   
|Effective tax rate before merger
costs |  |                                    | 1.47   | %                                 |  |  | 28.73                       | %  |  |  | 3.61   | % 
|Merger charges                         |  |                                    | 0.14   | %                                 |  |  | (0.03                       | %) |  |  | (3.61  | %)
|                                       |  |                                    |        |                                   |  |  |                             |    |  |  |        |   
|Effective tax rate                     |  |                                    | 1.61   | %                                 |  |  | 28.70                       | %  |  |  |       |   
|                                       |  |                                    |        |                                   |  |  |                             |    |  |  |        |   

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For the year ended December 31, 2002, the difference between the
statutory tax rate of 35% and the effective tax rate of 1.61% is due to
the implementation of SFAS No. 142 as discussed above. For the seven
months ended December 31, 2001, the difference between the statutory
rate of 35% and the effective tax rate of 28.7% is related to goodwill
amortization and state income taxes. For this period, there was no
valuation allowance due to the overall deferred tax liability position
related to purchase accounting entries recorded in the Deutsche Telekom
acquisition. For the five months ended May 31, 2001 and the year ended
December 31, 2000, the difference between the statutory rate of 35% and
the effective tax rate of zero percent relates primarily to the
valuation allowance against deferred tax assets because of the
uncertainty, as defined in SFAS No. 109, surrounding the ultimate
realization of these deferred tax assets.

11. STOCK-BASED COMPENSATION PLANS

Stock-based compensation plans

At December 31, 2002, 24,979,619 shares were subject to options
outstanding under the Management Incentive Stock Option Plan (the
Option Plan), dated 1999, and amended as a result of the T-Mobile
merger on May 31, 2001. The Option Plan provides for the issuance of up
to 8.0 million shares of Deutsche Telekom common stock as either
Non-qualified Stock Options or as Incentive Stock Options, plus that
number of ordinary shares or American Depository Receipts (ADRs), as
applicable, deliverable upon the exercise of the VoiceStream rollover
options, as defined in the Agreement and Plan of Merger between
Deutsche Telekom and VoiceStream. Options typically vest over a
four-year period and have a term of up to 10 years.

On May 31, 2001, as a result of the T-Mobile merger, each
VoiceStream stock option was converted into an option to acquire, from
a trust established for the benefit of holders of VoiceStream stock
options, 3.7647 Deutsche Telekom ADRs for each VoiceStream common share
subject to that VoiceStream option. The exercise price per Deutsche
Telekom ADR for each of these options is the exercise price per
VoiceStream common share applicable to that option before the
completion of the merger, divided by 3.7647. We recorded deferred
compensation of $44.6 million related to unvested options due to the
T-Mobile merger, of which $14.9 million and $8.7 million were recorded
as stock-based compensation expense in 2002 and for the period from
June 1, 2001 through December 31, 2001, respectively.

On May 3, 1999, as a result of the Western Wireless spin-off, all
unvested outstanding options held by VoiceStream employees were
converted from Western Wireless options to VoiceStream options.
Additionally, all VoiceStream employees with vested, outstanding
options were issued an additional option in VoiceStream for each
vested, outstanding option they held as well as maintaining the
existing option in Western Wireless. The number of options and related
strike prices varied to maintain the original economic value to the
employee. In accordance with EITF 90-9 (Changes to Fixed
Employee Stock Option Plans as a Result of Equity Restructuring), we
recorded stock-based compensation of $69.0 million, of which $2.5
million, $15.6 million and $50.4 million was recognized as compensation
expense from January 1, 2001 through May 31, 2001 and for the years
ended December 31, 2000 and 1999, respectively. The remaining balance
of deferred compensation of $0.5 million was eliminated in the purchase
accounting for the T-Mobile merger in 2001.

Under T-Mobiles 1999 Restricted Stock Plan (Restricted Stock
Plan), 292,119 shares had been awarded to key executives through
December 31, 2000. The Board of Directors determined not to issue any
additional awards under the Restricted Stock Plan after December 31,
2000. The restricted stock awards vested upon meeting specific
performance goals. The compensation associated with the restricted
grants (i.e. the difference between the market price of T-Mobiles
common stock on the date of grant and as subsequently adjusted for fair
market value adjustments and the exercise price) was amortized over the
vesting periods. We recorded deferred compensation of $34.2 million and
$17.0 million pursuant to fair market value adjustments for the
underlying shares in the Restricted Stock Plan in 2000 and 1999,
respectively. We recognized stock-based compensation expense of $35.4
million and $10.3 million related to this plan in 2000 and 1999,
respectively. The remaining balance of deferred compensation of $5.5
million was eliminated in the purchase accounting for the T-Mobile
merger in 2001.

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T-Mobile accounts for its stock compensation plans under the
recognition and measurement principles of APB Opinion No. 25. No
stock-based compensation cost related to stock options granted is
reflected in net loss, as all options granted had an exercise price
equal to the market value of the underlying common stock on the date of
grant. Had compensation cost been determined based upon the fair value
at the grant dates for awards under these plans consistent with the
fair value recognition provisions of SFAS No. 123, T-Mobiles net loss
would have increased to the pro forma amounts indicated below (dollars
in thousands):

|          |                                                           |  |                    |             |                    |  |               |             |                    |               |   |            |   |  |   |            |   | 
|--------- | --------------------------------------------------------- |  | ------------------ | ----------- | ------------------ |  | ------------- | ----------- | ------------------ | ------------- | - | ---------- | - |  | - | ---------- | - | 
|          |                                                           |  | Twelve months      |             | Seven months       |  |               | Five months |                    | Twelve months
|          |                                                           |  | ended December 31, |             | ended December 31, |  | ended May 31, |             | ended December 31,
|          |                                                           |  | 2002               |             | 2001               |  | 2001          |             | 2000              
|          |                                                           |  |                    |             |                    |  |               |             |                   
|Net loss: |                                                           |  |                    |             |                    |  |               |             |                    |               |   |            |   |  |   |           
|          | Net
loss attributable to common shareholders, as reported |  | $                  | (16,627,345 | )                  |  | $             | (1,460,201  | )                  |               | $ | (1,153,501 | ) |  | $ | (2,094,389 | )
|          | Pro forma net loss                                        |  | $                  | (16,669,605 | )                  |  | $             | (1,490,479  | )                  |               | $ | (1,177,900 | ) |  | $ | (2,168,578 | )

For the purpose of this pro forma calculation, the fair value of
each option grant is estimated on the date of grant using the
Black-Scholes option-pricing model with the following weighted-average
assumptions:

|                                         |  |                                  |    |                |      |                |    |   |   |   |    |  
|---------------------------------------- |  | -------------------------------- | -- | -------------- | ---- | -------------- | -- | - | - | - | -- | -
|                                         |  | For the years ended December 31,
|                                         |  |                                 
|                                         |  | 2002                             |    | 2001           |      | 2000          
|                                         |  |                                  |    |                |      |               
|Weighted average risk
free interest rate |  | 4.11% to 5.15%                   |    | 5.50% to 5.98% |      | 5.56% to 6.48%
|Expected dividend yield                  |  | 2.60% to 3.85%                   |    |                | 3.25 | %              |    |   | 0 | %
|Expected volatility                      |  |                                  | 60 | %              |      |                | 47 | % |   |   | 47 | %
|Expected lives                           |  | 7.1 years                        |    | 7.5 years      |      | 7.1 years     

The Black-Scholes option-pricing model requires the input of
highly subjective assumptions to determine the fair value of stock
options. While the Black-Scholes option-pricing model is commonly
accepted, it does not necessarily provide a reliable measure of fair
value.

Options granted, exercised and canceled are summarized as follows
(in thousands, except per share data):

|                                          |  |                     |        |                    |  |                   |                   |                   |                     |        |        |                   |  |        |        |       |  |                   |        |   |  |   |       |                   |  |  |        |   |  |   |        |  | 
|----------------------------------------- |  | ------------------- | ------ | ------------------ |  | ----------------- | ----------------- | ----------------- | ------------------- | ------ | ------ | ----------------- |  | ------ | ------ | ----- |  | ----------------- | ------ | - |  | - | ----- | ----------------- |  |  | ------ | - |  | - | ------ |  | 
|                                          |  | Twelve months ended |        | Seven months ended |  |                   | Five months ended |                   | Twelve months ended
|                                          |  | December 31, 2002   |        | December 31, 2001  |  | May 31, 2001      |                   | December 31, 2000
|                                          |  |                     |        |                    |  |                   |                   |                  
|                                          |  |                     |        |                    |  | Weighted          |                   |                   |                     |        |        | Weighted          |  |        |        |       |  | Weighted          |        |   |  |   |       | Weighted         
|                                          |  |                     |        |                    |  | average price per |                   |                   |                     |        |        | average price per |  |        |        |       |  | average price per |        |   |  |   |       | average price per
|                                          |  | Shares              |        | share              |  | Shares            |                   | share             |                     | Shares |        | share             |  | Shares |        | share
|                                          |  |                     |        |                    |  |                   |                   |                   |                     |        |        |                   |  |        |        |      
|Outstanding, beginning of period          |  |                     | 22,090 |                    |  | $                 | 16.21             |                   |                     |        | 6,444  |                   |  | $      | 58.27  |       |  |                   | 7,663  |   |  | $ | 34.02 |                   |  |  | 4,135  |   |  | $ | 8.52   | 
|Adjustment for .075% stock
dividend       |  |                     |       |                    |  |                   |                  |                   |                     |        |       |                   |  |        |       |       |  |                   | 65     |   |  |   |      |                   |  |  |       |   |  |   |       | 
|Conversion of historical
T-Mobile options |  |                     |       |                    |  |                   |                  |                   |                     |        | (6,444 | )                 |  |        | (58.27 | )     |  |                   |       |   |  |   |      |                   |  |  |       |   |  |   |       | 
|Adjustment
for T-Mobile merger            |  |                     |       |                    |  |                   |                  |                   |                     |        | 24,278 |                   |  |        | 15.36  |       |  |                   |       |   |  |   |      |                   |  |  |       |   |  |   |       | 
|Options granted                           |  |                     | 5,964  |                    |  |                   | 13.35             |                   |                     |        |       |                   |  |        |       |       |  |                   | 1,914  |   |  |   | 83.89 |                   |  |  | 1,399  |   |  |   | 112.75 | 
|Options assumed                           |  |                     |       |                    |  |                   |                  |                   |                     |        |       |                   |  |        |       |       |  |                   |       |   |  |   |      |                   |  |  | 6,289  |   |  |   | 19.32  | 
|Options exercised                         |  |                     | (2,133 | )                  |  |                   | 3.35              |                   |                     |        | (1,639 | )                 |  |        | 3.21   |       |  |                   | (3,069 | ) |  |   | 14.03 |                   |  |  | (3,910 | ) |  |   | 15.39  | 
|Options cancelled                         |  |                     | (941   | )                  |  |                   | 19.51             |                   |                     |        | (549   | )                 |  |        | 17.47  |       |  |                   | (129   | ) |  |   | 53.53 |                   |  |  | (250   | ) |  |   | 29.16  | 
|                                          |  |                     |        |                    |  |                   |                   |                   |                     |        |        |                   |  |        |        |       |  |                   |        |   |  |   |       |                   |  |  |        |   |  |   |        | 
|Outstanding, end of period                |  |                     | 24,980 |                    |  |                   | 16.42             |                   |                     |        | 22,090 |                   |  |        | 16.21  |       |  |                   | 6,444  |   |  |   | 58.27 |                   |  |  | 7,663  |   |  |   | 34.02  | 
|                                          |  |                     |        |                    |  |                   |                   |                   |                     |        |        |                   |  |        |        |       |  |                   |        |   |  |   |       |                   |  |  |        |   |  |   |        | 
|Exercisable, end of period                |  |                     | 10,028 |                    |  |                   | 13.95             |                   |                     |        | 6,299  |                   |  |        | 9.88   |       |  |                   | 1,888  |   |  |   | 32.01 |                   |  |  | 3,758  |   |  |   | 13.57  | 
|                                          |  |                     |        |                    |  |                   |                   |                   |                     |        |        |                   |  |        |        |       |  |                   |        |   |  |   |       |                   |  |  |        |   |  |   |        | 

The weighted average fair value of stock options granted per share
was $23.04 in 2002, $35.57 in 2001 ($35.57 from January 1, 2001 through
May 31, 2001 and $0 from June 1, 2001 through December 31, 2001), and
$92.10 in 2000.

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##### Table of Contents



The following table summarizes information about stock options
outstanding and exercisable at December 31, 2002 (in thousands, except
per share data):

|                    |  |                     |        |                     |  |                |     |          |  |                |       |  |  |          |        |  |  |   |       | 
|------------------- |  | ------------------- | ------ | ------------------- |  | -------------- | --- | -------- |  | -------------- | ----- |  |  | -------- | ------ |  |  | - | ----- | 
|                    |  | Options outstanding |        | Options exercisable
|                    |  |                     |        |                    
|                    |  |                     |        |                     |  | Weighted       |     | Weighted |  |                |       |  |  |          |        | 
|                    |  |                     |        |                     |  | average        |     | average  |  |                |       |  |  | Weighted
|Range of            |  |                     |        |                     |  | remaining life |     | exercise |  |                |       |  |  | average 
|exercise prices     |  | Number              |        | (years)             |  | price          |     | Number   |  | exercise price
|                    |  |                     |        |                     |  |                |     |          |  |               
|$  0.00    $  7.60 |  |                     | 5,631  |                     |  |                | 5.1 |          |  | $              | 2.68  |  |  |          | 4,460  |  |  | $ | 2.56  | 
|7.61      15.20    |  |                     | 8,351  |                     |  |                | 8.0 |          |  |                | 11.98 |  |  |          | 1,359  |  |  |   | 8.75  | 
|15.21      22.80   |  |                     | 73     |                     |  |                | 6.5 |          |  |                | 17.62 |  |  |          | 53     |  |  |   | 17.62 | 
|22.81      30.39   |  |                     | 9,504  |                     |  |                | 7.5 |          |  |                | 26.25 |  |  |          | 3,447  |  |  |   | 27.17 | 
|30.40      37.99   |  |                     | 1,421  |                     |  |                | 7.1 |          |  |                | 30.98 |  |  |          | 709    |  |  |   | 30.98 | 
|$  0.00    $37.99  |  |                     | 24,980 |                     |  |                | 7.1 |          |  | $              | 16.42 |  |  |          | 10,028 |  |  | $ | 13.95 | 

12. RELATED PARTY TRANSACTIONS

After our spin-off from Western Wireless, the appropriate NOL
carryforwards resulting from our cumulative tax losses were transferred
to us from Western Wireless. In 1999, pursuant to a tax sharing
agreement, we paid Western Wireless $20.0 million for the estimated tax
benefit of NOLs funded by Western Wireless when we were their
subsidiary. This was accounted for as a capital adjustment to Western
Wireless. In 2001, Western Wireless paid us $24.5 million as a final
settlement of the tax sharing agreement. This was also accounted for as
a capital adjustment.

Following the T-Mobile merger, employees of Powertel, a
wholly-owned subsidiary of T-Mobile International, became employees of
T-Mobile. While Powertels results are not consolidated with ours, we
provide management and other services to Powertel. We are reimbursed by
Powertel for the compensation and benefit costs of our employees
working on Powertel business. We perform centralized services and
functions for Powertel including accounting and other administrative
functions and we are reimbursed for these services in a manner that
intends to reflect the relative time and associated costs devoted to
Powertel activities. Powertel was charged $52.5 million and $19.1
million for the costs of these centralized services and functions for
the year ended December 31, 2002 and for the period from June 1, 2001
to December 31, 2001, respectively. At December 31, 2002 and 2001, we
have long-term receivables from Powertel of $349.4 million and $71.2
million, respectively, including $140.0 million related to our funding
of a credit facility repayment on behalf of Powertel in the first
quarter of 2002. The remainder of the receivable is a result of the
charges, as discussed above, and transfers in the ordinary course of
business, including fixed assets and inventory. The receivable is
included in investments in and advances to unconsolidated affiliates in
our consolidated balance sheet.

During 2002, Deutsche Telekom and T-Mobile International
reimbursed us $85.5 million in direct expenses that we incurred in
connection with the rebranding of the VoiceStream markets to T-Mobile.
T-Mobile International will charge us royalties for our use of the
T-Mobile brand in the future. We rely on funding from T-Mobile
International, Deutsche Telekom or its affiliates to meet our working
capital, capital expenditure, debt service and other obligations. At
December 31, 2002 and 2001, we have long-term notes payable to T-Mobile
International and Deutsche Telekom of $7.1 billion and $4.1 billion,
respectively.

T-Mobile is party to agreements with Cingular and GSM Facilities
related to the sharing of network operations expenses (see Note 5). We
were charged net operating expenses based on our network usage of $90.8
million for the year ended December 31, 2002.

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T-Mobile is party to technical service, system access and
reciprocal wholesale agreements with certain affiliates that are controlled by
CIRI, through its subsidiaries. The agreements entitle each party to
utilize airtime on the others system, and/or utilize wireless system
infrastructure in certain agreed upon markets. The agreements are
structured such that each party re-sells airtime purchased from the
other, and related fees are charged and paid between the parties. The
revenues and expenses related to these agreements during 2002 were
primarily related to CIVS IV in the first half of 2002. We acquired the
remaining outstanding interest in this entity in April 2002, and there
were no material revenues or expenses related to these agreements
following our acquisition of CIVS IV. We earned revenues and incurred
expenses relative to these agreements as follows (dollars in
thousands):

|         |  |                    |        |                    |  |               |             |                    |               |   |       |  |  |   |         |  | 
|-------- |  | ------------------ | ------ | ------------------ |  | ------------- | ----------- | ------------------ | ------------- | - | ----- |  |  | - | ------- |  | 
|         |  | Twelve months      |        | Seven months       |  |               | Five months |                    | Twelve months
|         |  | ended December 31, |        | ended December 31, |  | ended May 31, |             | ended December 31,
|         |  | 2002               |        | 2001               |  | 2001          |             | 2000              
|         |  |                    |        |                    |  |               |             |                   
|Revenues |  | $                  | 24,248 |                    |  | $             | 30,958      |                    |               | $ | 3,625 |  |  | $ | 113,778 | 
|Expenses |  | $                  | 30,872 |                    |  | $             | 35,982      |                    |               | $ | 3,804 |  |  | $ | 138,067 | 

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##### Table of Contents



The following is a copy of the previously issued report of
Arthur Andersen LLP dated February 7, 2001 related to their audit of
the financial statements of T-Mobile USA, Inc. and subsidiaries (formerly known as VoiceStream Wireless Corporation) and
has not been reissued by Arthur Andersen LLP. This report applies to
Schedule II  Valuation and Qualifying Account for the year ended
December 31, 2000.

REPORT OF INDEPENDENT ACCOUNTANTS ON SCHEDULE

To VoiceStream Wireless Corporation:

We have audited in accordance with generally accepted auditing
standards in the United States, the financial statements of
VoiceStream Wireless Corporation and subsidiaries as of December 31,
2000* and for each of the two years in the period ended December 31,
2000* included in this Form 10-K, and have issued our report thereon
dated February 7, 2001. Our audits were made for the purpose of
forming an opinion on those statements taken as a whole. The
accompanying schedule is presented for purposes of complying with
the Securities and Exchange Commissions rules and is not part of
the basic financial statements. This schedule has been subjected to
the auditing procedures applied in the audits of the basic financial
statements and, in our opinion, fairly states in all material
respects the financial data required to be set forth therein in
relation to the basic financial statements taken as a whole for the
periods discussed above.

/s/ ARTHUR ANDERSEN LLP
Seattle, Washington,
February 7, 2001

*The amounts related to the year ended December 31, 1999 are not
required to be presented in the 2002 annual report.




Schedule II  Valuation and Qualifying Accounts

ACCOUNTS RECEIVABLE ALLOWANCE FOR
DOUBTFUL ACCOUNTS

|                             |  |            |         |              |  |                |         |           |  |        |          |   |  |            |        |  |  |   |         | 
|---------------------------- |  | ---------- | ------- | ------------ |  | -------------- | ------- | --------- |  | ------ | -------- | - |  | ---------- | ------ |  |  | - | ------- | 
|(dollars in thousands)       |  | Balance at |         | Charged to   |  |                |         |           |  |        |          |   |  | Balance at
|                             |  | beginning  |         | costs and    |  |                |         |           |  |        |          |   |  | end of    
|                             |  | of period  |         | expenses (1) |  | Deductions (2) |         | Other (3) |  | period
|                             |  |            |         |              |  |                |         |           |  |       
|Year ended December 31, 2000 |  | $          | 17,482  |              |  | $              | 162,800 |           |  | $      | (113,618 | ) |  | $          | 33,936 |  |  | $ | 100,600 | 
|                             |  |            |         |              |  |                |         |           |  |        |          |   |  |            |        |  |  |   |         | 
|Year ended December 31, 2001 |  | $          | 100,600 |              |  | $              | 252,793 |           |  | $      | (241,498 | ) |  | $          | 7,899  |  |  | $ | 119,794 | 
|                             |  |            |         |              |  |                |         |           |  |        |          |   |  |            |        |  |  |   |         | 
|Year ended December 31, 2002 |  | $          | 119,794 |              |  | $              | 224,135 |           |  | $      | (218,678 | ) |  | $          |       |  |  | $ | 125,251 | 
|                             |  |            |         |              |  |                |         |           |  |        |          |   |  |            |        |  |  |   |         | 



---

|(1) |  | For the year ended December 31, 2001, amounts charged to
costs and expenses were $91.5 million from January 1, 2001
through May 31, 2001 and $161.3 million from June 1, 2001
through December 31, 2001.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | Write-offs, net of bad debt recoveries.                                                                                                                                                                 
|   
|(3) |  | Recorded in purchase accounting adjustments.                                                                                                                                                            

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##### Table of Contents






SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.

|               |  |                              
|-------------- |  | -----------------------------
|               |  | T-MOBILE USA, INC.           
|March 10, 2003 |  | By:   /s/   JOHN
W. STANTON  
|               |  | John W. Stanton              
|               |  | Chairman of the Board        
|               |  | (Principal Executive Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.

|           |  |                           |  |                                                                                 |  |               
|---------- |  | ------------------------- |  | ------------------------------------------------------------------------------- |  | --------------
|Signatures |  | Title                     |  | Date                                                                           
|           |  |                           |  |                                                                                
|           |  |                           |  |                                                                                 |  |               
|By:        |  | /s/ JOHN W.
STANTON       |  | Chairman of the Board and Director(Principal Executive
Officer)                 |  | March 10, 2003
|           |  |                           |  |                                                                                
|           |  | John W. Stanton           |  |                                                                                 |  |               
|           |  |                           |  |                                                                                 |  |               
|By:        |  | /s/ ROBERT DOTSON         |  | President and Chief Operating Officer                                           |  | March 10, 2003
|           |  |                           |  |                                                                                
|           |  | Robert Dotson             |  |                                                                                 |  |               
|           |  |                           |  |                                                                                 |  |               
|By:        |  | /s/ BRIAN W. KIRKPATRICK  |  | Executive Vice President, Chief Financial Officer(Principal
Accounting Officer) |  | March 10, 2003
|           |  |                           |  |                                                                                
|           |  | Brian W. Kirkpatrick      |  |                                                                                 |  |               
|           |  |                           |  |                                                                                 |  |               
|By:        |  | /s/ ALLYN P. HEBNER       |  | Vice President and Controller(Principal Financial Officer)                      |  | March 10, 2003
|           |  |                           |  |                                                                                 | 
|           |  | Allyn P. Hebner           |  |                                                                                 |  |               
|           |  |                           |  |                                                                                 |  |               
|By:        |  | /s/ JEFFREY A. HEDBERG    |  | Vice Chairman and Director                                                      |  | March 10, 2003
|           |  |                           |  |                                                                                
|           |  | Jeffrey Hedberg           |  |                                                                                 |  |               
|           |  |                           |  |                                                                                 |  |               
|By:        |  | /s/ DR. KARL-GERHARD EICK |  | Director                                                                        |  | March 10, 2003
|           |  |                           |  |                                                                                 | 
|           |  | Dr. Karl-Gerhard Eick     |  |                                                                                 |  |               
|           |  |                           |  |                                                                                 |  |               
|By:        |  | /s/ KAI-UWE RICKE         |  | Director                                                                        |  | March 10, 2003
|           |  |                           |  |                                                                                 | 
|           |  | Kai-Uwe Ricke             |  |                                                                                 |  |               

F-28



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##### Table of Contents






CERTIFICATION PURSUANT TO
SECTION 302 OF
THE SARBANES-OXLEY ACT OF 2002

I, John W. Stanton, certify that:



|1. |  | I have reviewed this annual report on Form 10-K of T-Mobile USA, Inc.;                                                                                                                                                                                                                                                  
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this annual report;
|  
|3. |  | Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this annual
report;                   
|  
|4. |  | The registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
have:                                                                                                  



| | a) |  | designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this annual report
is being prepared;
| | -- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | evaluated the effectiveness of the registrants disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this annual report (the Evaluation Date); and                                                                                                  
|
| | c) |  | presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;                                                                                                                        



|5. |  | The registrants other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrants auditors and the audit
committee of registrants board of directors (or persons performing the
equivalent functions):
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a) |  | all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrants
ability to record, process, summarize and report financial data and
have identified for the registrants auditors any material weaknesses
in internal controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrants
internal controls; and                                                                                                                                        



|6. |  | The registrants other certifying officers and I have indicated in this
annual report whether there were significant changes in internal controls
or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any
corrective actions with regard to significant deficiencies and material
weaknesses.
|-- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|Dated: March 10, 2003 | By: /s/ John W. StantonName: John W. Stanton
Title: Chairman
|--------------------- | ------------------------------------------------------------

F-29



---



##### Table of Contents



CERTIFICATION PURSUANT TO
SECTION 302 OF
THE SARBANES-OXLEY ACT OF 2002

I, Brian W. Kirkpatrick, certify that:



|1. |  | I have reviewed this annual report on Form 10-K of T-Mobile USA, Inc.;                                                                                                                                                                                                                                                  
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this annual report;
|  
|3. |  | Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this annual
report;                   
|  
|4. |  | The registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
have:                                                                                                  



| | a) |  | designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this annual report
is being prepared;
| | -- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | evaluated the effectiveness of the registrants disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this annual report (the Evaluation Date); and                                                                                                  
|
| | c) |  | presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;                                                                                                                        



|5. |  | The registrants other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrants auditors and the audit
committee of registrants board of directors (or persons performing the
equivalent functions):
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a) |  | all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrants
ability to record, process, summarize and report financial data and
have identified for the registrants auditors any material weaknesses
in internal controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrants
internal controls; and                                                                                                                                        



|6. |  | The registrants other certifying officers and I have indicated in this
annual report whether there were significant changes in internal controls
or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any
corrective actions with regard to significant deficiencies and material
weaknesses.
|-- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|Dated: March 10, 2003 | By: /s/ Brian W. KirkpatrickName: Brian W. Kirkpatrick
Title: Executive Vice President
and Chief Financial
Officer
|--------------------- | ------------------------------------------------------------------------------------------------------------------

F-30