<PAGE>
================================================================================

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                    FORM 10-Q


(MARK ONE)

[X]     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
        EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2001

                                       OR

[ ]     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


                        VOICESTREAM WIRELESS CORPORATION
                        --------------------------------
             (Exact name of registrant as specified in its charter)


                DELAWARE                               91-1983600
                --------                               ----------
     (State or other jurisdiction of        (IRS Employer Identification No.)
      Incorporation or organization)

        12920 - 38TH STREET S.E.
          BELLEVUE, WASHINGTON                            98006
        -------------------------                         -----
 (Address of principal executive offices)              (Zip Code)

                                 (425) 378-4000
                                 --------------
              (Registrant's telephone number, including area code)


   --------------------------------------------------------------------------
   (Former name, former address and former fiscal year, if changed since last
                                    report.)

        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 [ ]

        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 November 1, 2001
              -----                    -----------------------------------------
Common Stock, $0.000001 par value                       268,862,185

================================================================================

<PAGE>

                        VOICESTREAM WIRELESS CORPORATION
                                    FORM 10-Q
                    FOR THE QUARTER ENDED SEPTEMBER 30, 2001

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                            Page
<S>                                                                                         <C>
PART I - FINANCIAL INFORMATION
  ITEM 1.  FINANCIAL STATEMENTS
  Consolidated Balance Sheets .........................................................       2
  Consolidated Statements of Operations and Comprehensive Loss ........................       3
  Consolidated Statements of Cash Flows ...............................................       4
  Notes to Consolidated Financial Statements ..........................................       5
  ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF
           FINANCIAL CONDITION AND RESULTS OF OPERATIONS ..............................      10
  ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES
           ABOUT MARKET RISK ..........................................................      18
PART II - OTHER INFORMATION ...........................................................      19
  ITEM 1.  LEGAL PROCEEDINGS ..........................................................      19
  ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS ..................................      19
  ITEM 3.  DEFAULTS UPON SENIOR SECURITIES ............................................      19
  ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS ........................      19
  ITEM 5.  OTHER INFORMATION ..........................................................      19
  ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K ...........................................      19
</TABLE>


                                       1
<PAGE>
                        VOICESTREAM WIRELESS CORPORATION
                           CONSOLIDATED BALANCE SHEETS
           (dollars in thousands, except share and per share amounts)

<TABLE>
<CAPTION>
                                                                                       September 30, 2001    |    December 31, 2001
                                                                                       ------------------    |    -----------------
                                                                                          (unaudited)        |
<S>                                                                                        <C>               |    <C>
                                     ASSETS                                                                  |
                                                                                                             |
Current assets:                                                                                              |
  Cash and cash equivalents .....................................................         $     26,474       |      $  1,154,896
  Short-term investments ........................................................                   --       |         1,175,636
  Accounts receivable, net of allowance for doubtful                                                         |
    accounts of $101,867 and $100,600, respectively .............................              544,053       |           469,475
  Inventory .....................................................................              121,576       |           340,284
  FCC license deposits and other current assets .................................              260,281       |           223,634
                                                                                          ------------       |      ------------
        Total current assets ....................................................              952,384       |         3,363,925
                                                                                                             |
Property and equipment, net of accumulated depreciation of                                                   |
   $265,302 and $740,956, respectively ..........................................            4,046,920       |         3,467,550
Goodwill, net of accumulated amortization of $264,433 and                                                    |
   $348,575, respectively .......................................................           15,618,852       |         9,075,605
Licensing costs and other intangible assets, net of accumulated                                              |
   amortization of $367,929 and $118,923, respectively ..........................           20,294,383       |         3,827,317
Investments in and advances to unconsolidated affiliates ........................              427,389       |           498,869
Other assets and investments ....................................................               36,786       |            44,477
                                                                                          ------------       |      ------------
                                                                                          $ 41,376,714       |      $ 20,277,743
                                                                                          ============       |      ============
                                                                                                             |
                      LIABILITIES AND SHAREHOLDERS' EQUITY                                                   |
                                                                                                             |
Current liabilities:                                                                                         |
  Accounts payable ..............................................................         $    138,509       |      $    150,632
  Accrued liabilities ...........................................................              516,188       |           404,621
  Deferred revenue ..............................................................               80,429       |            60,272
  Construction accounts payable .................................................               61,782       |           207,462
  Current portion of long-term debt .............................................                   --       |            32,113
                                                                                          ------------       |      ------------
       Total current liabilities ................................................              796,908       |           855,100
                                                                                                             |
Long-term debt ..................................................................            2,829,494       |         5,719,886
Long-term notes payable to affiliates ...........................................            3,453,550       |                --
Deferred tax liability ..........................................................            4,253,433       |                --
Other long-term liabilities .....................................................               22,997       |                --
Minority interest in equity of consolidated subsidiaries ........................               51,375       |            16,563
Preferred stock of consolidated subsidiary ......................................                   --       |           312,513
                                                                                                             |
VoiceStream 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                                                                                |
                                                                                                             |
Shareholders' equity:                                                                                        |
  Common stock, $0.000001 and $0.001 par value, respectively, and paid-in                                    |
     capital; 1.0 billion shares authorized, 268,862,185 and 250,791,145                                     |
     shares issued and outstanding, respectively ................................           25,859,671       |        11,572,083
  Deferred compensation .........................................................              (39,604)      |            (8,412)
  Accumulated other comprehensive income (loss) .................................                1,566       |           (45,238)
  Accumulated deficit ...........................................................             (852,676)      |        (3,144,752)
                                                                                          ------------       |      ------------
        Total shareholders' equity ..............................................           24,968,957       |         8,373,681
                                                                                          ------------       |      ------------
                                                                                          $ 41,376,714       |      $ 20,277,743
                                                                                          ============       |      ============
</TABLE>


          See accompanying notes to consolidated financial statements.


                                       2
<PAGE>
                        VOICESTREAM WIRELESS CORPORATION
          CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
                             (dollars in thousands)
                                   (unaudited)

<TABLE>
<CAPTION>
                                                                                                     Nine month periods
                                                                                       --------------------------------------------
                                                                                       June 1, 2001  |   January 1,    Nine months
                                                             Three months ended          through     | 2001 through       ended
                                                                September 30,          September 30, |    May 31,      September 30,
                                                             2001      |     2000         2001       |     2001            2000
                                                         -----------   | -----------  -------------  | -------------   -------------
<S>                                                      <C>           | <C>           <C>           | <C>            <C>
Revenues:                                                              |                             |
    Subscriber revenues ...............................  $   624,832   | $   336,247   $   808,056   | $   868,667    $   780,708
    Prepaid revenues ..................................      100,347   |      69,617       135,110   |     158,893        162,253
    Roamer revenues ...................................       42,817   |      35,844        59,667   |      73,128         74,174
    Equipment sales ...................................       82,840   |      87,357       116,482   |     150,958        177,113
    Affiliate and other revenues ......................       19,939   |      37,550        30,184   |      18,922         87,067
                                                         -----------   | -----------   -----------   | -----------    -----------
             Total revenues ...........................      870,775   |     566,615     1,149,499   |   1,270,568      1,281,315
                                                         -----------   | -----------   -----------   | -----------    -----------
                                                                       |                             |
Operating expenses:                                                    |                             |
    Cost of service (excludes stock-based                              |                             |
       compensation of $949, $1,023, $1,188, $610                      |                             |
       and $2,735, respectively) ......................      213,002   |     149,490       283,552   |     286,897        337,336
    Cost of equipment sales ...........................      188,383   |     154,507       250,544   |     265,629        317,174
    General and administrative (excludes stock-based                   |                             |
       compensation of $2,216, $19,318, $2,772,                        |                             |
       $2,298 and $25,714, respectively) ..............      305,306   |     216,760       399,981   |     466,641        443,576
    Sales and marketing (excludes stock-based                          |                             |
       compensation of $791, $853, $990, $508                          |                             |
       and $2,280, respectively) ......................      310,093   |     271,809       412,264   |     466,513        502,006
    Depreciation and amortization .....................      675,184   |     260,293       900,988   |     559,409        541,197
    Stock-based compensation ..........................        3,956   |      21,194         4,950   |       3,416         30,729
                                                         -----------   | -----------   -----------   | -----------    -----------
             Total operating expenses .................    1,695,924   |   1,074,053     2,252,279   |   2,048,505      2,172,018
                                                         -----------   | -----------   -----------   | -----------    -----------
Operating loss ........................................     (825,149)  |    (507,438)   (1,102,780)  |    (777,937)      (890,703)
                                                         -----------   | -----------   -----------   | -----------    -----------
Other income (expense):                                                |                             |
    Interest and financing expense ....................      (95,502)  |    (141,580)     (134,935)  |    (224,471)      (343,679)
    Equity in net losses of unconsolidated                             |                             |
       affiliates .....................................       (8,678)  |     (49,133)      (13,467)  |     (63,477)       (96,380)
    Interest income and other, net ....................        7,892   |      45,899         9,683   |      35,968         67,889
    T-Mobile merger related costs .....................         (971)  |          --        (1,448)  |    (118,885)            --
    Accretion of preferred stock of consolidated                       |                             |
       subsidiary .....................................           --   |      (5,073)           --   |      (4,699)       (12,006)
                                                         -----------   | -----------   -----------   | -----------    -----------
             Total other income (expense) .............      (97,259)  |    (149,887)     (140,167)  |    (375,564)      (384,176)
                                                         -----------   | -----------   -----------   | -----------    -----------
Net loss before income taxes ..........................     (922,408)  |    (657,325)   (1,242,947)  |  (1,153,501)    (1,274,879)
                                                                       |                             |
Income tax benefit ....................................      289,015   |          --       390,271   |          --             --
                                                         -----------   | -----------   -----------   | -----------    -----------
Net loss ..............................................     (633,393)  |    (657,325)     (852,676)  |  (1,153,501)    (1,274,879)
                                                                       |                             |
2.5% junior preferred stock dividends .................           --   |      (3,992)           --   |          --        (10,330)
                                                         -----------   | -----------   -----------   | -----------    -----------
Net loss attributable to common shareholders ..........     (633,393)  |    (661,317)     (852,676)  |  (1,153,501)    (1,285,209)
                                                                       |                             |
Other comprehensive income (loss):                                     |                             |
                                                                       |                             |
    Foreign currency translation adjustment ...........        1,582   |      (4,064)        1,582   |      (8,013)        (4,064)
    Equity in net unrealized income on investment                      |                             |
       in securities held by unconsolidated                            |                             |
       affiliate ......................................          146   |     (18,975)          146   |      21,727        (18,975)
    Net unrealized income (loss) on available-for-                     |                             |
       sale securities ................................         (162)  |      (7,754)         (162)  |      15,333         (7,754)
                                                         -----------   | -----------   -----------   | -----------    -----------
             Total other comprehensive income (loss) ..        1,566   |     (30,793)        1,566   |      29,047        (30,793)
                                                         -----------   | -----------   -----------   | -----------    -----------
Comprehensive loss ....................................  $  (631,827)  | $  (692,110)  $  (851,110)  | $(1,124,454)   $(1,316,002)
                                                         ===========   | ===========   ===========   | ===========    ===========
</TABLE>


          See accompanying notes to consolidated financial statements.


                                       3
<PAGE>
                        VOICESTREAM WIRELESS CORPORATION
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (dollars in thousands)
                                  (unaudited)

<TABLE>
<CAPTION>
                                                                         June 1, 2001   |  January 1, 2001        Nine months
                                                                           through      |      through               ended
                                                                        September 30,   |      May 31,           September 30,
                                                                             2001       |        2001                 2000
                                                                        -------------   |  ---------------       -------------
<S>                                                                     <C>             |  <C>                 <C>
Operating activities:                                                                   |
   Net loss .....................................................        $  (852,676)   |   $(1,153,501)        $(1,274,879)
   Adjustments to reconcile net loss to net cash used in                                |
      operating activities:                                                             |
         Depreciation and amortization ..........................            900,988    |       559,409             541,197
         Income tax benefit .....................................           (390,271)   |            --                  --
         Amortization of debt discount and premium ..............                969    |        22,783              35,013
         Equity in net losses of unconsolidated affiliates ......             13,467    |        63,477              96,380
         Stock-based compensation ...............................              4,950    |         3,416              30,729
         Allowance for bad debts ................................             (1,809)   |         1,776              11,631
         Other, net .............................................              1,576    |       (25,119)             13,024
         Changes in operating assets and liabilities, net of                            |
            effects of purchase accounting:                                             |
                Accounts receivable .............................            (66,558)   |        (6,264)           (140,914)
                Inventory .......................................            103,751    |       107,957            (148,986)
                Other current assets ............................             10,361    |         1,766             (25,016)
                Accounts payable ................................             37,832    |       (52,429)            135,415
                Accrued liabilities .............................             36,827    |        56,797             171,656
                                                                         -----------    |   -----------         -----------
      Net cash used in operating activities .....................           (200,593)   |      (419,932)           (554,750)
                                                                         -----------    |   -----------         -----------
Investing activities:                                                                   |
   Purchases of property and equipment ..........................           (449,107)   |      (809,983)           (915,608)
   Acquisitions of wireless properties, net of cash acquired ....           (253,228)   |      (299,292)           (469,366)
   Sales of short-term investments, net .........................                 --    |     1,175,636                  --
   Investments in and advances to affiliates, net ...............              1,597    |       (37,193)           (411,770)
   Refund of deposit held by FCC ................................                 --    |        49,589                  --
   Other ........................................................              6,139    |        26,863              (3,743)
                                                                         -----------    |   -----------         -----------
      Net cash provided by (used in) investing activities .......           (694,599)   |       105,620          (1,800,487)
                                                                         -----------    |   -----------         -----------
Financing activities:                                                                   |
   Net proceeds from issuance of common and preferred stock .....                 --    |        43,468           6,347,133
   Long-term debt borrowings ....................................                 --    |            --           3,540,000
   Long-term debt repayments ....................................         (3,329,582)   |       (32,113)         (3,591,669)
   Long-term debt borrowings from parent company ................          3,453,550    |            --                  --
   Other ........................................................                 --    |        27,470                  --
   Cash entitlements on conversion of preferred stock of                                |
      consolidated subsidiary ...................................                 --    |       (81,711)                 --
   Deferred financing costs .....................................                 --    |            --             (68,142)
                                                                         -----------    |   -----------         -----------
      Net cash provided by (used in) financing activities .......            123,968    |       (42,886)          6,227,322
                                                                         -----------    |   -----------         -----------
Change in cash and cash equivalents .............................           (771,224)   |      (357,198)          3,872,085
Cash and cash equivalents, beginning of period ..................            797,698    |     1,154,896             235,433
                                                                         -----------    |   -----------         -----------
Cash and cash equivalents, end of period ........................        $    26,474    |   $   797,698         $ 4,107,518
                                                                         ===========    |   ===========         ===========
</TABLE>


          See accompanying notes to consolidated financial statements.


                                       4
<PAGE>
                        VOICESTREAM WIRELESS CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (unaudited)

1.  Organization

    VoiceStream Wireless Corporation ("VoiceStream" or "we") provides personal
communication services ("PCS") in urban markets in the United States using the
Global System for Mobile Communications, or GSM, technology. VoiceStream was
incorporated in June 1999 as a Delaware corporation to act as the parent company
for business combinations involving our predecessor, now named VS Washington
Corporation ("VS Washington").

    On May 31, 2001, Deutsche Telekom AG ("Deutsche Telekom") acquired 100% of
the common shares of VoiceStream. The merger 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. Deutsche Telekom transferred all of its VoiceStream
shares to T-Mobile International AG ("T-Mobile"). T-Mobile is a wholly owned
subsidiary of Deutsche Telekom and is the holding company for Deutsche Telekom's
GSM wireless operations primarily in Europe and the United States. Upon
consummation of the merger and the transfer by Deutsche Telekom of all of its
VoiceStream common shares to T-Mobile (hereafter referred to as "the T-Mobile
merger"), VoiceStream common shares were deregistered and delisted from NASDAQ
and are no longer publicly traded.

    On February 25, 2000, pursuant to a reorganization agreement approved by the
shareholders of VS Washington and Omnipoint Corporation ("Omnipoint"),
VoiceStream, as a holding company, became the parent of VS Washington and of
Omnipoint. On May 4, 2000, VoiceStream completed the acquisition by merger of
Aerial Communications, Inc. ("Aerial"). On December 14, 2000, we acquired
controlling interests in the following entities in exchange for approximately
7.9 million VoiceStream common shares and $51 million in cash: VoiceStream PV/SS
PCS, L.P. ("VS PCS"); VoiceStream GSM I, LLC ("VS GSM"); VoiceStream GSM II
Holdings, LLC ("VS GSM II"); and VoiceStream GSM III Holdings, LLC ("VS GSM
III"). 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.

2.  Summary of Significant Accounting Policies

    Consolidation and Financial Statement Presentation

    The unaudited consolidated financial statements of VoiceStream and its
consolidated subsidiaries include the accounts of all majority and
minority-owned subsidiaries that are controlled by VoiceStream. Affiliates that
are 20 percent to 50 percent owned are generally accounted for using the equity
method. Intercompany accounts and transactions have been eliminated in
consolidation. The unaudited consolidated financial statements of VoiceStream
for the three and nine months ended September 30, 2001 and 2000 reflect all
adjustments that are, in the opinion of management, necessary for a fair
presentation of the financial position, results of operations and cash flows for
the interim periods. Such adjustments include those of a normal, recurring
nature and those related to the T-Mobile merger as described below. The
operating results for the interim periods presented herein are not necessarily
indicative of results of operations for the entire year. Reference should be
made to the consolidated financial statements included in our Annual Report on
Form 10-K for the year ended December 31, 2000.

    The T-Mobile merger was accounted for as a purchase business combination and
resulted in an adjustment of the basis of our assets, liabilities and
shareholder's equity to reflect fair value on the closing date of the merger. As
a result of this new basis, our consolidated balance sheets, results of
operations and cash flows for periods subsequent to May 31, 2001, the closing
date of the merger, are not comparable to periods prior to the merger. The
consolidated financial statements of VoiceStream for the nine months ended
September 30, 2001 are presented as two distinct periods, the five months prior
to the merger, and the period from June 1, 2001 to September 30, 2001,
subsequent to the merger.


                                       5
<PAGE>
                        VOICESTREAM WIRELESS CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                                   (unaudited)


    Loss per Common Share

    VoiceStream no longer presents loss per share information as VoiceStream's
common shares are not publicly traded.

    Recently Issued Accounting Standards

    In June 2001, the Financial Accounting Standards Board ("FASB") approved
Statement of Financial Accounting Standards ("SFAS") No. 142, "Goodwill and
Other Intangible Assets." SFAS No. 142 requires companies to cease amortizing
goodwill and other intangible assets with indefinite lives that existed at June
30, 2001. The amortization of existing goodwill will cease on December 31, 2001.
Any goodwill and other intangible assets with indefinite lives resulting from
acquisitions completed after June 30, 2001 will not be amortized. SFAS No. 142
also establishes a new method of testing goodwill for impairment on an annual
basis or on an interim basis if an event occurs or circumstances change that
would reduce the fair value of a reporting unit below its carrying value. The
test for goodwill impairment under the new standard will begin in the first
quarter of 2002, and could have an adverse non-cash effect on our future results
of operations if an impairment occurs.

    In June 2001, the FASB issued SFAS No. 143, "Accounting for Asset Retirement
Obligations". The statement provides accounting and reporting standards for
recognizing obligations related to asset retirement costs associated with the
retirement of tangible long-lived assets. Under this statement, legal
obligations associated with the retirement of long-lived assets are to be
recognized at their fair value in the period in which they are incurred if a
reasonable estimate of fair value can be made. The fair value of the asset
retirement costs is capitalized as part of the carrying amount of the long-lived
asset and expensed using a systematic and rational method over the assets'
useful life. Any subsequent changes to the fair value of the liability will be
expensed. We will be required to adopt this statement no later than January 1,
2003. We are currently assessing the impact of this statement on our results of
operations, financial position and cash flows.

    In October 2001, the FASB issued SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets", which is effective for fiscal
years beginning after December 15, 2001. This statement supersedes FASB
Statement No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of" and replaces the provisions of APB Opinion
No. 30, "Reporting the Results of Operations - Reporting the Effects of Disposal
of Segments of a Business, and Extraordinary, Unusual and Infrequently Occurring
Events and Transactions", for the disposal of segments of a business. SFAS 144
retains the fundamental provisions of SFAS No. 121 for the recognition and
measurement of the impairment of long-lived assets to be held and used and the
measurement of long-lived assets to be disposed of by sale. Impairment on
goodwill is not included in the scope of SFAS No. 144 and will be treated in
accordance with the accounting standards established in SFAS No. 142, "Goodwill
and Other Intangible Assets." Under SFAS No. 144, long-lived assets are measured
at the lower of carrying amount or fair value less cost to sell. We will be
required to adopt this statement no later than January 1, 2002. We are currently
assessing the impact of this statement on our results of operations, financial
position and cash flows.

    Reclassifications

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


                                       6
<PAGE>
                        VOICESTREAM WIRELESS CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                                   (unaudited)


3.  Business Combinations and Other Transactions

    T-Mobile Merger

    As a result of the T-Mobile merger, we adjusted the basis of our assets,
liabilities and shareholder's equity to reflect the purchase allocations
recorded by T-Mobile (see Note 2). These non-cash adjustments, which have not
been finalized and may be subject to change, resulted in the following balance
sheet allocations as of May 31, 2001, the acquisition date (dollars in
thousands):

<TABLE>
<S>                                                              <C>
                                     ASSETS
         Other current assets                                    $    (16,878)
         Licenses and other intangibles (excluding goodwill)       15,953,562
         Goodwill                                                   6,970,764
         Other long-term assets                                       (24,786)
                                                                 ------------
                                                                 $ 22,882,662
                                                                 ============

                      LIABILITIES AND SHAREHOLDER'S EQUITY
         Other current liabilities                               $     24,528
         Long-term debt                                               438,573
         Deferred tax liability                                     4,643,704
         Common stock and additional paid-in capital               13,326,758
         Deferred compensation                                        (38,686)
         Accumulated other comprehensive loss                          16,191
         Deficit                                                    4,471,594
                                                                 ------------
                                                                 $ 22,882,662
                                                                 ============
</TABLE>

    Effective June 1, 2001, we changed the amortization period for licenses from
40 to 20 years.

    Other Acquisitions and License Exchanges

    The following acquisitions and license exchanges either closed during the
nine months ended September 30, 2001 or were pending as of September 30, 2001.

            Cingular Joint Venture

    On November 1, 2001, we entered into a joint venture with Cingular Wireless
LLC ("Cingular") that will allow the companies to share urban GSM network
infrastructures in the New York Basic Trading Area ("BTA"), and the Los Angeles
and San Francisco Major Trading Areas ("MTAs"). We will each continue to hold
and control our respective licenses and certain equipment in those markets, and
independently market our services and utilize our own brand names, sales,
marketing, billing and customer care operations. We expect our services in the
Los Angeles and San Francisco MTAs to be fully launched by mid 2002.

            Verizon (Trustee)

    On June 14, 2001, we purchased licenses and operating assets located
primarily in Cincinnati and Dayton, OH (both 20 MHz of B Block spectrum) for
approximately $200 million from the Department of Justice-appointed Trustee
overseeing the operation and divestiture of the former GTE Cincinnati-Dayton PCS
properties.

            Cingular License Exchange

    On May 11, 2001, we completed the exchange of licenses covering
approximately 35 million people with Cingular. Cingular acquired from
VoiceStream 10 MHz of spectrum in the New York, NY MTA, as well as 10 MHz in
each of the St. Louis, MO and Detroit, MI BTAs. VoiceStream acquired from
Cingular 10 MHz of spectrum in the Los Angeles and San Francisco MTAs, that
cover most of California and Nevada. No gain or loss was recognized from this
transaction.


                                       7
<PAGE>
                        VOICESTREAM WIRELESS CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                                   (unaudited)


            AT&T Wireless

    On March 29, 2001, we exchanged certain D and E Block 10 MHz licenses held
by us in Detroit, MI, Flint, MI, Poplar Bluff, MO, Rolla, MO, Mt.
Vernon-Centralia, IL, St. Louis, MO and Albany, NY for portions of certain A
Block 10 MHz licenses held by AT&T Wireless PCS, LLC ("AT&T") in Phoenix, AZ,
Bloomington, IL, Little Rock, AR and Puerto Rico and $11.7 million in cash. The
licenses were recorded at $200.5 million and a gain of $11.7 million was
recorded in other income for the three months ended March 31, 2001. Neither
party assumed any liabilities related to the exchanged licenses.

            Pocket Communications and Leap Wireless

    On February 12, 2001, Cook Inlet/VS GSM IV PCS Holdings, LLC ("CIVS IV"), a
designated entity in which we hold a non-controlling interest, purchased 12 C
Block licenses in Las Vegas, NV, New Orleans, LA, Houma-Thibodaux, LA, Omaha,
NE, Sandusky, OH, Adrian, MI, Battle Creek, MI, Grand Rapids, MI, Jackson, MI,
Muskegon, MI, Toledo, OH and Pittsburg-Parsons, KS from Pocket Communications
for $195 million. In a separate agreement, 8 of these licenses were sold to Leap
Wireless, Inc. for $51 million in cash and 348,878 shares of Leap Wireless
common stock on April 5, 2001. The common shares were subsequently sold in April
2001, resulting in our recording a gain of $2.3 million.

            FCC Auction 35

    On January 26, 2001, upon completion of the FCC Auction 35 bid process, we
were the high bidder on 19 PCS licenses with bids totaling $482.7 million.
Additionally, Cook Inlet/VS GSM V PCS Holdings LLC, ("CIVS V"), a designated
entity in which we hold a non-controlling interest, was the high bidder on 22
PCS licenses with high bids totaling $506.4 million. The FCC announced on July
27, 2001 that it was prepared to grant seven of the 19 PCS licenses for which
VoiceStream was the high bidder, and one of the 22 PCS licenses for which CIVS V
was the high bidder. On August 10, 2001, VoiceStream and CIVS V paid the
balances owed on the eight licenses of $7.4 million to the FCC and were granted
the licenses.

    The ungranted licenses for which we and CIVS V were the high bidders were
originally held either by NextWave Communications, Inc. ("NextWave") or Urban
Communicators, both of which declared bankruptcy. The FCC has not granted these
remaining licenses due to pending administrative and judicial challenges related
to the auction process, including a decision issued by the United States Court
of Appeals for the District of Columbia Circuit on June 22, 2001. The court held
that the FCC had erroneously cancelled licenses previously acquired by NextWave
in earlier auctions, when NextWave, upon declaring bankruptcy, failed to make
installment payments for those licenses. On August 31, 2001, the Wireless
Telecommunications Bureau of the FCC released a Public Notice announcing that
NextWave's licenses returned to active status, although the Public Notice was
qualified by a recognition that ongoing regulatory proceedings before the FCC
could affect the status of the NextWave licenses. Further, the FCC as well as
certain Auction 35 winning bidders filed petitions with the United States
Supreme Court seeking review of the Court of Appeals' decision, which are still
pending. VoiceStream and CIVS V are part of a coalition attempting to negotiate
a settlement by which the subject licenses would be granted to the Auction 35
high bidders. It is uncertain, however, whether a settlement will be finalized
or whether the remaining Auction 35 licenses will be granted to the high
bidders.

            STPCS

    On January 22, 2001, we purchased the assets of STPCS Joint Venture, LLC
("STPCS"). Through its operating company, SOL Communications Inc., STPCS held
licenses and assets in South Texas. Pursuant to the terms of the agreement, we
purchased STPCS's licenses and related assets for $297 million in cash. In
addition, STPCS's F block licenses and certain related assets were purchased by
CIVS IV for $9 million.


                                       8
<PAGE>
                        VOICESTREAM WIRELESS CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                                   (unaudited)


    Unaudited Pro Forma Operating Results

    The following are the unaudited pro forma operating results, assuming that
VoiceStream's business combinations occurred on January 1 of each of the
respective years (dollars in thousands):

<TABLE>
<CAPTION>
                                                              For the nine months ended September 30,
                                                              ---------------------------------------
                                                                  2001                        2000
                                                              -----------                 -----------
<S>                                                           <C>                         <C>
        Total revenues ....................................   $ 2,420,000                 $ 1,641,900
        Net loss ..........................................   $(2,084,000)                $(1,845,300)
</TABLE>

4.  Long-Term Debt

    The carrying values of our long-term debt were adjusted to fair value at May
31, 2001 (see Note 2) resulting in a premium of $426 million. The premium will
be amortized to interest expense over the remaining terms of the related debt.

<TABLE>
<CAPTION>
                                                                      September 30,       December 31,
        (dollars in thousands)                                            2001                2000
                                                                      -------------       ------------
<S>                                                                   <C>                 <C>
        Credit facilities:
           Term loans .........................................        $        --        $ 2,425,000
           Vendor facility ....................................                 --            750,000
           Revolvers ..........................................                 --            150,000
        Senior Notes:
           10 3/8% Senior Notes, due in 2009 ..................          1,727,904          1,727,904
           11 7/8% Senior Discount Notes, due in 2009 .........            720,000            720,000
           11 5/8% Senior Notes, due in 2006 ..................                 --              4,582
           11 1/2% Senior Notes, due in 2009 ..................            205,000            205,000
        FCC license obligations ...............................                 --             32,113
                                                                       -----------        -----------
                                                                         2,652,904          6,014,599
        Unamortized premium and (discount), net ...............            176,590           (262,600)
        Current portion of long-term debt .....................                 --            (32,113)
                                                                       -----------        -----------
                                                                       $ 2,829,494        $ 5,719,886
                                                                       ===========        ===========
        Long-term notes payable to affiliates .................        $ 3,453,550        $        --
                                                                       ===========        ===========
</TABLE>



    During the quarter ended September 30, 2001, we repaid all outstanding
borrowings under our credit facilities and cancelled the related lending
agreements. We also repaid the $4.6 million 11 5/8% Senior Notes due in 2006.
These repayments were funded by $3.5 billion in borrowings from Deutsche
Telekom. The notes relating to these borrowings, which are due in 2010, bear
interest at 4.85% through December 15, 2001 and thereafter will bear interest at
the six-month LIBOR rate plus 0.95%.

    Maturities

    All of our long-term debt and long-term notes payable to affiliates mature
after 2005.


                                       9
<PAGE>
ITEM 2. Management's Discussion and Analysis of Financial Condition and Results
        of Operations

    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 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 in the regions in
    which VoiceStream operates; technology changes; competition; changes in
    business strategy or development plans; the high leverage of VoiceStream;
    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 VoiceStream; and
    other factors referenced in VoiceStream's filings with the Securities and
    Exchange Commission. GIVEN THESE UNCERTAINTIES, READERS ARE CAUTIONED NOT TO
    PLACE UNDUE RELIANCE ON SUCH FORWARD-LOOKING STATEMENTS. VoiceStream
    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.

       The following is a discussion and analysis of the consolidated financial
    condition and results of operations of VoiceStream and should be read in
    conjunction with our consolidated financial statements and notes thereto and
    other financial information included herein and in our Form 10-K for the
    year ended December 31, 2000. Due to the stage of development of our PCS
    operations and the significance of recent mergers, including the change of
    control due to the T-Mobile merger, and other transactions, our operating
    results for prior periods may not be indicative of future performance.

       Unless the context requires otherwise, "VoiceStream", "we", "our" and
    "us" include us and our predecessors and subsidiaries.

    Overview

       We provide PCS service in urban markets in the United States through the
    ownership and operation of PCS licenses and through our minority interests
    in entities that own and operate similar licenses. The following chronology
    highlights the key events in the periods covered by these financial
    statements:

    -  On February 25, 2000, we merged with Omnipoint, a PCS service provider
       in urban markets, including New York, NY, Detroit, MI, Boston, MA,
       Philadelphia, PA, Miami, FL, and Indianapolis, IN. Our reported results
       of operations began including Omnipoint's results in March 2000. On May
       4, 2000, we merged with Aerial, a PCS service provider in urban markets
       including Columbus, OH, Houston, TX, Kansas City, MO, Minneapolis, MN,
       Pittsburgh, PA, and Tampa-St. Petersburg, FL. Our reported results of
       operations began including Aerial's results in May 2000.

       -  In connection with its authority to regulate the sale and use of radio
       wave spectrum used to provide PCS service in the United States, the FCC
       adopted rules that granted a narrow category of entities ("Designated
       Entities") the exclusive right to bid for and own C and F Block licenses
       for the initial five year period following award of the licenses. Those
       limitations, however, have been revised by the FCC, and a limited portion
       of the spectrum previously reserved only for Designated Entities has been
       opened to non-Designated Entities. VoiceStream does not qualify as a
       Designated Entity but has owned or currently owns non-controlling
       interests in a number of Designated Entities controlled by Cook Inlet
       Region, Inc. (collectively the "CIRI Designated Entities"). In December
       2000 and February 2001, our partners in VS PCS, VS GSM, VS GSM II, and VS
       GSM III elected to exercise their respective exchange rights, whereby
       they exchanged their interests in these entities for VoiceStream common
       shares. Subsequent to the acquisition dates our consolidated operating
       results include the results of VS PCS, VS GSM, VS GSM II and VS GSM III.


                                       10
<PAGE>

    -  On May 31, 2001, Deutsche Telekom acquired 100% of the common shares of
       VoiceStream. The merger 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. Deutsche Telekom transferred all of
       its VoiceStream shares to T-Mobile. T-Mobile is a wholly owned
       subsidiary of Deutsche Telekom and is the holding company for Deutsche
       Telekom's GSM wireless operations primarily in Europe and the United
       States. Upon consummation of the merger and the transfer by Deutsche
       Telekom of all of its VoiceStream common shares to T-Mobile (hereafter
       referred to as the "T-Mobile merger"), VoiceStream common shares were
       deregistered and delisted from NASDAQ and are no longer publicly traded.

       The T-Mobile merger was accounted for as a purchase business combination
    and resulted in an adjustment of the basis of our assets, liabilities and
    shareholder's equity to reflect fair value on the closing date of the
    merger. As a result of this new basis, our consolidated balance sheets,
    results of operations and cash flows for periods subsequent to May 31, 2001,
    the closing date of the merger, are not comparable to periods prior to the
    merger. The consolidated financial statements of VoiceStream for the nine
    months ended September 30, 2001 are presented as two distinct periods, the
    five months prior to the merger, and the period from June 1, 2001 to
    September 30, 2001, subsequent to the merger. The following discussion and
    analysis refers to the results and activities for the three and nine months
    ended September 30, 2001. Where necessary, we have provided explanations to
    improve comparability between the pre-merger and post-merger activity.

    Operating Markets

       During 2001, we launched service in Chicago, Milwaukee, St. Louis and
    Cincinnati. We will be providing roaming capabilities in the fourth quarter
    of 2001, ahead of the market launch in the Los Angeles and San Francisco
    MTA's that will start in late 2001 and culminate in mid 2002. Due to the
    varying dates at which each of the markets became operational or were
    acquired, the revenues and expenses recognized during any period may not be
    comparable to another period and may not be representative of future
    operating markets.


                                       11
<PAGE>

    Results of Operations for the Three and Nine Months Ended September 30, 2001
    and 2000

        The following table sets forth certain financial data as it relates to
    our operations:

<TABLE>
<CAPTION>
                                                 Three months ended September 30,           Nine months ended September 30,
                                              --------------------------------------     --------------------------------------
                                                  2001           2000         CHANGE        2001            2000         CHANGE
                                              -----------     -----------     ------     -----------     -----------     ------
<S>                                           <C>             <C>             <C>        <C>             <C>             <C>
Revenues:
   Subscriber revenues ...................    $   624,832     $   336,247      85.8%     $ 1,676,723     $   780,708     114.8%
   Prepaid revenues ......................        100,347          69,617      44.1%         294,003         162,253      81.2%
   Roamer revenues .......................         42,817          35,844      19.5%         132,795          74,174      79.0%
   Equipment sales .......................         82,840          87,357      (5.2)%        267,440         177,113      51.0%
   Affiliate and other revenues ..........         19,939          37,550     (46.9)%         49,106          87,067     (43.6)%
                                              -----------     -----------                -----------     -----------
            Total revenues ...............        870,775         566,615      53.7%       2,420,067       1,281,315      88.9%
                                              -----------     -----------                -----------     -----------
Operating expenses:
   Cost of service .......................        213,002         149,490      42.5%         570,449         337,336      69.1%
   Cost of equipment sales ...............        188,383         154,507      21.9%         516,173         317,174      62.7%
   General and administrative ............        305,306         216,760      40.8%         866,622         443,576      95.4%
   Sales and marketing ...................        310,093         271,809      14.1%         878,777         502,006      75.1%
   Depreciation and amortization .........        675,184         260,293     159.4%       1,460,397         541,197     169.8%
   Stock-based compensation ..............          3,956          21,194     (81.3)%          8,366          30,729     (72.8)%
                                              -----------     -----------                -----------     -----------
            Total operating expenses .....      1,695,924       1,074,053      57.9%       4,300,784       2,172,018      98.0%
                                              -----------     -----------                -----------     -----------
Operating loss ...........................       (825,149)       (507,438)     62.6%      (1,880,717)       (890,703)    111.1%
Other income (expense): ..................        (97,259)       (149,887)    (35.1)%       (515,731)       (384,176)     34.2%
Income tax benefit .......................        289,015              --     100.0%         390,271              --     100.0%
                                              -----------     -----------                -----------     -----------
Net Loss .................................    $  (633,393)    $  (657,325)     (3.6)%    $(2,006,177)    $(1,274,879)     57.4%
                                              ===========     ===========                ===========     ===========
Adjusted EBITDA ..........................    $  (146,009)    $  (225,951)    (35.4)%    $  (411,954)    $  (318,777)     29.2%
                                              ===========     ===========                ===========     ===========
Cash flows provided by (used in):

   Operating activities ..................    $  (104,290)    $  (323,457)    (67.8%)    $  (620,525)    $  (554,750)     11.9%
   Investing activities ..................    $  (375,139)    $  (494,879)    (24.2%)    $  (588,979)    $(1,800,487)    (67.3%)
   Financing activities ..................    $   448,968     $ 4,854,376     (90.8%)    $    81,082     $ 6,227,322     (98.7%)
</TABLE>

    Revenues

       The overall increase in service revenues (subscriber, prepaid and roamer
    revenues) for the three and nine months ended September 30, 2001 as compared
    to the same periods in 2000 is primarily due to the acquisitions of
    Omnipoint on February 25, 2000, Aerial on May 4, 2000, and controlling
    interests in four of the CIRI Designated Entities on December 14, 2000.
    Service revenues have also grown due to the expansion of our wireless
    network in the existing and acquired markets and the launch of our services
    in new markets.

       Post pay service revenues increased $288.6 million, or 85.8%, for the
    three months ended September 30, 2001 and $896.0 million, or 114.8%, for the
    nine months ended September 30, 2001, as compared to the same periods in
    2000. The increases are primarily the result of our continued post pay
    subscriber growth. Our post pay subscribers grew to 4,012,800 at September
    30, 2001, from 2,319,700 at September 30, 2000. There were 345,800 and
    1,104,800 net post pay subscribers added during the three and nine months
    ended September 30, 2001, respectively, as compared to 438,700 and 1,474,000
    for the same periods in 2000. The post pay subscriber growth is attributable
    primarily to our new rate plans and advertising campaigns.

       Prepaid service revenues increased $30.7 million, or 44.1%, for the three
    months ended September 30, 2001, and $131.8 million, or 81.2%, for the nine
    months ended September 30, 2001, as compared to the same periods in 2000.
    Our prepaid customers grew to 1,142,000 at September 30, 2001, from 748,200
    at September 30, 2000. There were 38,100 and 171,000 net prepaid subscribers
    added during the three and nine months ended September 30, 2001,
    respectively, as compared to 62,500 and 170,100 for the same periods in
    2000. There were also 568,400 net prepaid subscribers added through
    acquisitions for the nine months ended September 30, 2000. The decline in
    the rate of prepaid subscriber growth is attributable to our new marketing
    strategy which emphasizes post pay subscriber growth through post pay
    promotions and rate plans as discussed below.

       We believe our "Get More" marketing strategy, including our advertising
    campaign featuring Jamie Lee Curtis and the associated pricing strategy that
    was initiated in the second quarter of 1998, has contributed to the rapid
    customer growth throughout all of our markets. As a result of our merger
    with T-Mobile, in the fourth quarter of 2001 we will begin to leverage our
    "Get More" marketing strategy by building equity in the T-Mobile brand name
    in the U.S. through the use of "Global Wireless by T-Mobile" as a unifying
    element of the VoiceStream brand logo. We believe the success of our "Get
    More" strategy, combined with the use of the global T-Mobile name, will
    continue to positively affect our subscriber growth.



                                       12
<PAGE>
        Total service revenue per average customer ("ARPU") was $51.58 and
    $52.26 for the three months ended September 30, 2001 and 2000, respectively,
    and $51.63 and $57.61 for the nine months ended September 30, 2001 and 2000,
    respectively. The decrease in ARPU for the nine months ended September 30,
    2001 as compared to the same period in 2000 reflects the addition of new
    customers through the acquisition of Omnipoint and Aerial in 2000 and
    converting these customers to the VoiceStream price plans which provide
    more minutes and features at a lower cost to the customer.

        Roamer revenues increased to $42.8 million and $132.8 million for the
    three and nine months ended September 30, 2001, respectively, from $35.8
    million and $74.2 million for the same periods in 2000. The increase is
    primarily due to our expanded coverage area in 2001 as compared to 2000.

        Equipment revenues decreased 5.2% for the three months ended September
    30, 2001 as compared to the same period in 2000. The decrease is primarily
    due to lower revenue per handset as a result of competitive pricing during
    the quarter. Equipment revenues increased 51.0% for the nine months ended
    September 30, 2001 as compared to the same period in 2000 primarily due to
    volume increases which are correlated to the growth in our customer base.

        Affiliate and other revenues decreased 46.9% and 43.6% in the three and
    nine months ended September 30, 2001, respectively, as compared to the same
    periods in 2000. This revenue is related to technical services agreements
    and reciprocal resale agreements with unconsolidated CIRI Designated
    Entities. The parties to these agreements are able to utilize air-time on
    each other's spectrum, and/or utilize wireless network infrastructure, in
    certain agreed upon markets. Each party acts as a reseller for the other
    with related fees charged and paid between the parties. Affiliate revenues
    decreased in 2001 because we have an interest in only one such entity during
    2001 as compared to four in 2000.

    Operating Expenses

        Cost of service expense represents network operating expenses incurred
    in operational markets. The increases in the three and nine months ended
    September 30, 2001 of $63.5 million and $233.1 million, respectively, as
    compared to the same periods in 2000, are primarily due to the growth in our
    customer base. Cost of service expense as a percentage of service revenue
    decreased to 27.7 % and 27.1 % for the three and nine months ended September
    30, 2001, respectively, from 33.8% and 33.2% for the same periods in 2000.
    Cost of service expense also includes fees related to the technical services
    agreements and reciprocal resale agreements with certain unconsolidated CIRI
    Designated Entities. Excluding the technical services and reciprocal resale
    agreements described above, cost of service as a percentage of service
    revenue were 26.3% and 26.0% for the three and nine months September 30,
    2001 as compared to 25.3% and 24.4% for the same periods in 2000. The
    increase in 2001 as compared to 2000 is due to the launch of the Chicago,
    Milwaukee and St. Louis markets in the second quarter of 2001. While cost of
    service expense is expected to increase due to continuing growth in our
    customer base, we expect cost of service as a percentage of service revenue
    to generally trend downward as more subscribers are added to the newly
    launched markets and as greater economies of scale are realized.

        Cost of equipment sales increased for both the three and nine months
    ended September 30, 2001 as compared to the same periods in 2000, primarily
    due to the increase in the number of handsets sold. The volume increase is
    correlated to the growth in our customer base. Although subscribers
    generally are responsible for purchasing or otherwise obtaining their own
    handsets, we sell handsets below cost to respond to competition for new
    subscribers. We expect handset subsidies to remain common industry practice
    for the foreseeable future.

        General and administrative costs per average customer per month was
    $20.51 and $21.27 for the three and nine months ended September 30, 2001,
    respectively, as compared to $25.65 and $24.96 for the same periods in 2000.
    The decrease is primarily attributable to improved economies of scale
    realized in our administrative functions following the integration of
    Omnipoint and Aerial. While general and administrative expenses are expected
    to increase due to continuing growth in subscribers, we expect the cost per
    customer to continue to trend downward as greater economies of scale are
    realized.


                                       13
<PAGE>
        The increase in sales and marketing costs is associated with the
    continued subscriber growth in VoiceStream's markets. Sales and marketing
    costs per gross customer added, including loss on equipment sales, totaled
    $366 and $351 for the three and nine months ended September 30, 2001,
    respectively, as compared to $388 and $368 for the same periods in 2000.
    Sales and marketing cost per net customer added, including loss on equipment
    sales, totaled $1,082 and $902 for the three and nine months ended September
    30, 2001, respectively, as compared to $675 and $646 for the same periods in
    2000. The increase in 2001 is largely due to higher customer turnover
    especially with respect to prepaid customers.

        Depreciation and amortization expense increased by approximately $118.1
    million per month starting in June 2001 primarily due to fair value
    adjustments to the cost of our intangible assets, including licenses,
    goodwill, tradename and subscriber list relating to purchase accounting for
    the T-Mobile merger. Amortization expense also increased due to the change
    in the amortization period of licenses from 40 years, prior to the T-Mobile
    merger, to 20 years subsequent to the merger. Depreciation and amortization
    charges are also trending upwards due to our increasing asset base arising
    from acquisitions and the on-going expansion of our wireless network.

        Stock-based compensation expense was $4.0 million and $8.4 million for
    the three and nine months ended September 30, 2001, respectively. In 2001, a
    non-cash accrual for stock-based compensation of $44.6 million was
    established to record the fair value of stock options as a result of the
    T-Mobile merger. The deferred compensation is being amortized over the
    vesting period of the related stock options. As of September 30, 2001,
    approximately $39.6 million remains unamortized.

    Adjusted EBITDA

        Adjusted EBITDA represents operating loss before interest, taxes,
    depreciation, amortization and non-cash stock-based compensation. We believe
    Adjusted EBITDA provides meaningful additional information on our operating
    results and on 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, and growth in Adjusted
    EBITDA is considered to be an indicator of 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 United States generally
    accepted accounting principles ("GAAP"), as an alternate to cash flows from
    operating activities (as determined in accordance with GAAP), or as a
    measure of liquidity. Because Adjusted EBITDA is not calculated in the same
    manner by all companies, our presentation may not be comparable to other
    similarly titled measures reported by other companies.

        Adjusted EBITDA loss decreased to $146.0 million for the three months
    ended September 30, 2001 as compared to $226.0 million in the same period in
    2000 due primarily to lower customer growth in the third quarter of 2001 and
    a corresponding smaller increase in sales and marketing expense, offset by
    $27.6 million in bonus expenses related to the T-Mobile merger. Adjusted
    EBITDA loss increased to $412.0 million, including $67.2 million in bonus
    expenses related to the T-Mobile merger, for the nine months ended September
    30, 2001 as compared to adjusted EBITDA loss of $318.8 million for the same
    period in 2000. This increase was primarily due to the acquisitions of
    Omnipoint and Aerial during 2000 and the inclusion of their results for a
    portion of the nine months ended September 30, 2000 while the operating
    results for these entities were included for the entire nine months ended
    September 30, 2001.

    Other Income (Expense)

        Interest and financing expense, net of capitalized interest, decreased
    to $95.5 million for the three months ended September 30, 2001 as compared
    to $141.6 million for the same period in 2000, primarily due to a decrease
    in the average interest rate of our debt in the third quarter of 2001 as we
    replaced third party debt with notes payable to Deutsche Telekom which have
    lower interest rates. Interest and financing expense, net of capitalized
    interest, increased to $359.4 million for the nine months ended September
    30, 2001 as compared to $343.7 million for the same period in 2000,
    primarily due to higher average debt balances. The weighted average
    effective interest rate before capitalized interest was 6.5% and 8.7% for
    the three and nine months ended September 30, 2001, respectively, as
    compared to 10.3% and 10.4% for the same periods in 2000.


                                       14
<PAGE>
        Also included in other income and expenses is $1.0 million and $120.3
    million in expenses related to the T-Mobile merger for the three and nine
    months ended September 30, 2001, respectively. Equity in net losses of
    unconsolidated affiliates totaled $8.7 million and $76.9 million for the
    three and nine months ended September 30, 2001, respectively, as compared to
    $49.1 million and $96.4 million for the same periods in 2000.

    Net Loss

        Our net loss was $633.4 million and $2.0 billion for the three and nine
    months ended September 30, 2001, respectively, as compared to $657.3 million
    and $1.3 billion for the same periods in 2000. The increase in 2001 is
    primarily due to the increases to the cost basis of our assets and the
    related amortization charges associated with the T-Mobile merger. These
    expenses are offset by $289.0 million and $390.3 million in income tax
    benefits for the three and nine months ended September 30, 2001,
    respectively. The incremental costs of continued high customer growth, the
    related expenditures necessary to support this growth and the costs
    associated with integrating our acquisitions were also significant.

    Liquidity and Capital Resources

        Mergers, Acquisitions, Investments and Capital Expenditures

                Cingular Joint Venture

        On November 1, 2001, we entered into a joint venture with Cingular that
    will allow the companies to share urban GSM network infrastructures in the
    New York BTA, and the Los Angeles and San Francisco MTAs. We will each
    continue to hold and control our respective licenses and certain equipment
    in those markets, and independently market our services and utilize our own
    brand names, sales, marketing, billing and customer care operations. We
    expect our services in the Los Angeles and San Francisco MTAs to be fully
    launched by mid 2002.

                Verizon (Trustee)

        On June 14, 2001, we purchased licenses and operating assets located
    primarily in Cincinnati and Dayton, OH (both 20 MHz of B Block spectrum) for
    approximately $200 million from the Department of Justice-appointed Trustee
    overseeing the operation and divestiture of the former GTE Cincinnati-Dayton
    PCS properties.

                Cingular License Exchange

        On May 11, 2001, we completed the exchange of licenses covering
    approximately 35 million people with Cingular. Cingular acquired from
    VoiceStream 10 MHz of spectrum in the New York, NY MTA, as well as 10 MHz in
    each of the St. Louis, MO and Detroit, MI BTAs. VoiceStream acquired from
    Cingular 10 MHz of spectrum in the Los Angeles and San Francisco MTAs, that
    cover most of California and Nevada. No gain or loss was recognized from
    this transaction.

                AT&T Wireless

        On March 29, 2001, we exchanged certain D and E Block 10 MHz licenses
    held by us in Detroit, MI, Flint, MI, Poplar Bluff, MO, Rolla, MO, Mt.
    Vernon-Centralia, IL, St. Louis, MO and Albany, NY for portions of certain A
    Block 10 MHz licenses held by AT&T in Phoenix, AZ, Bloomington, IL, Little
    Rock, AR and Puerto Rico and $11.7 million in cash. The licenses were
    recorded at $200.5 million and a gain of $11.7 million was recorded in other
    income for the three months ended March 31, 2001. Neither party assumed any
    liabilities related to the exchanged licenses.


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<PAGE>
                Pocket Communications and Leap Wireless

        On February 12, 2001, CIVS IV, purchased 12 C Block licenses in Las
    Vegas, NV, New Orleans, LA, Houma-Thibodaux, LA, Omaha, NE, Sandusky, OH,
    Adrian, MI, Battle Creek, MI, Grand Rapids, MI, Jackson, MI, Muskegon, MI,
    Toledo, OH and Pittsburg-Parsons, KS from Pocket Communications for $195
    million. In a separate agreement, 8 of these licenses were sold to Leap
    Wireless, Inc. for $51 million in cash and 348,878 shares of Leap Wireless
    common stock on April 5, 2001. The common shares were subsequently sold in
    April 2001, resulting in our recording a gain of $2.3 million.

                FCC Auction 35

        On January 26, 2001, upon completion of the FCC Auction 35 bid process,
    we were the high bidder on 19 PCS licenses with bids totaling $482.7
    million. Additionally, CIVS V was the high bidder on 22 PCS licenses with
    high bids totaling $506.4 million. The FCC announced on July 27, 2001 that
    it was prepared to grant seven of the 19 PCS licenses for which VoiceStream
    was the high bidder, and one of the 22 PCS licenses for which CIVS V was the
    high bidder. On August 10, 2001, VoiceStream and CIVS V paid the balances
    owed on the eight licenses of $7.4 million to the FCC and were granted the
    licenses.

        The ungranted licenses for which we and CIVS V were the high bidders
    were originally held either by NextWave or Urban Communicators, both of
    which declared bankruptcy. The FCC has not granted these remaining licenses
    due to pending administrative and judicial challenges related to the auction
    process, including a decision issued by the United States Court of Appeals
    for the District of Columbia Circuit on June 22, 2001. The court held that
    the FCC had erroneously cancelled licenses previously acquired by NextWave
    in earlier auctions, when NextWave, upon declaring bankruptcy, failed to
    make installment payments for those licenses. On August 31, 2001, the
    Wireless Telecommunications Bureau of the FCC released a Public Notice
    announcing that NextWave's licenses returned to active status, although the
    Public Notice was qualified by a recognition that ongoing regulatory
    proceedings before the FCC could affect the status of the NextWave licenses.
    Further, the FCC as well as certain Auction 35 winning bidders filed
    petitions with the United States Supreme Court seeking review of the Court
    of Appeals' decision, which are still pending. VoiceStream and CIVS V are
    part of a coalition attempting to negotiate a settlement by which the
    subject licenses would be granted to the Auction 35 high bidders. It is
    uncertain, however, whether a settlement will be finalized or whether the
    remaining Auction 35 licenses will be granted to the high bidders.

                STPCS

        On January 22, 2001, we purchased the assets of STPCS. Through its
    operating company, SOL Communications Inc., STPCS held licenses and assets
    in South Texas. Pursuant to the terms of the agreement, we purchased STPCS's
    licenses and related assets for $297 million in cash. In addition, STPCS's F
    block licenses and certain related assets were purchased by CIVS IV for $9
    million.

                Capital Expenditures

        Capital expenditures totaled $325.8 million and $1.3 billion for the
    three and nine months ended September 30, 2001, respectively, primarily for
    the continuing build out of our wireless network including the Chicago
    market, which was launched on May 1, 2001. We expect to incur significant
    additional capital expenditures through 2001, directly and through CIVS IV
    and CIVS V for license purchases, capacity expansion of operating markets
    and the development and expansion of new markets. Actual capital
    expenditures could vary considerably depending on opportunities that arise
    over the course of the year and on funding availability. We expect that
    future funding of our on-going cash requirements will be provided by
    Deutsche Telekom or its affiliates.


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<PAGE>
        Financing Activities

        In the second and third quarters of 2001, we repaid all outstanding
    borrowings, totaling approximately $3.3 billion, under our credit facilities
    and cancelled the related lending agreements. We also repaid the $4.6
    million 11 5/8% Senior Notes due in 2006. These repayments were funded by
    $3.5 billion in borrowings from Deutsche Telekom. The notes relating to
    these borrowings, which are due in 2010, bear interest at 4.85% through
    December 15, 2001 and thereafter will bear interest at the six-month LIBOR
    rate plus 0.95%.

        We expect continued use of cash in operating activities due to operating
    losses and increased working capital requirements together with continuing
    investments in network infrastructure and FCC licenses to grow and support
    our customer base. The cost of completing the build-out in any particular
    market, the magnitude of operating losses, debt service requirements and the
    funding requirements of license or operating business acquisitions could
    vary significantly from current estimates. We plan to use cash on hand and
    further borrowings from Deutsche Telekom or its affiliates to fund these
    activities and expenditures. In the past we have received borrowings from
    Deutsche Telekom. If such financing is not fully available we may be
    required to curtail our rate of growth or our service operations.

        In order to ensure adequate supply and availability of certain
    infrastructure equipment and services, VoiceStream has committed to purchase
    PCS equipment from various suppliers. These commitments total approximately
    $3.8 billion as of September 30, 2001. At September 30, 2001, VoiceStream
    has ordered approximately $1.5 billion under these agreements, of which
    approximately $93.0 million has not been delivered.

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

        Cash Flow Information

        Net cash used in operating activities was $104.3 million and $620.5
    million for the three and nine months ended September 30, 2001,
    respectively. Adjustments to the nine month $2.0 billion net loss to
    reconcile net cash used in operating activities included $1.5 billion of
    non-cash depreciation and amortization expenses related to network
    infrastructure, FCC licenses and goodwill. The T-Mobile merger resulted in
    an increase of $22.9 billion in the carrying value of our assets, most of
    which is related to licenses and goodwill. We recorded a $390.3 million
    non-cash income tax benefit based on our operating loss for the period, and
    $76.9 million of non-cash equity in net losses of unconsolidated affiliates.
    Other adjustments included changes in operating assets and liabilities,
    including: (i) an increase of $72.8 million in accounts receivable due to
    the growth in revenues; (ii) a decrease of $211.7 million in inventory, due
    primarily to reduced handset purchases during the nine month period; (iii)
    an increase of $93.6 million in accrued liabilities due primarily to the
    timing of interest payments on long term debt and increased tax liabilities
    related to the growth in revenues and property. Net cash used in operating
    activities was $323.5 million and $554.8 million for the three and nine
    months ended September 30, 2000, respectively.

        Net cash used in investing activities was $375.1 million and $589.0
    million for the three and nine months ended September 30, 2001,
    respectively. Investing activities for the nine months ended September 30,
    2001 consisted primarily of investments in property and equipment, of which
    $1.3 billion were capital expenditures and $552.5 million were licenses
    acquired through acquisitions. These activities were funded in part through
    the conversion of $1.2 billion of short-term investments into cash. Net cash
    used in investing activities was $494.9 million and $1.8 billion for the
    three and nine months ended September 30, 2000, respectively.

        Net cash provided by financing activities was $449.0 million and $81.1
    million for the three and nine months ended September 30, 2001,
    respectively. Financing activities for the nine months ended September 30,
    2001 consisted primarily of: (i) repayment of $3.3 billion of loans
    outstanding under credit facilities; (ii) repayment of $32.1 million of FCC
    debt; (iii) payment of $81.7 million in cash entitlements on conversions of
    preferred stock of a consolidated subsidiary and; (iv) proceeds of $3.5
    billion from long-term debt borrowings from Deutsche Telekom. Net cash
    provided by financing activities was $4.9 billion and $6.2 billion for the
    three and nine months ended September 30, 2000, respectively.


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<PAGE>

    Recently Issued Accounting Standards

        In June 2001, the FASB approved SFAS No. 142, "Goodwill and Other
    Intangible Assets." SFAS No. 142 requires companies to cease amortizing
    goodwill and other intangible assets with indefinite lives that existed at
    June 30, 2001. The amortization of existing goodwill will cease on December
    31, 2001. Any goodwill and other intangible assets with indefinite lives
    resulting from acquisitions completed after June 30, 2001 will not be
    amortized. SFAS No. 142 also establishes a new method of testing goodwill
    for impairment on an annual basis or on an interim basis if an event occurs
    or circumstances change that would reduce the fair value of a reporting unit
    below its carrying value. The test for goodwill impairment under the new
    standard will begin in the first quarter of 2002, and could have an adverse
    non-cash effect on our future results of operations if an impairment occurs.

        In June 2001, the FASB issued SFAS No. 143, "Accounting for Asset
    Retirement Obligations". The statement provides accounting and reporting
    standards for recognizing obligations related to asset retirement costs
    associated with the retirement of tangible long-lived assets. Under this
    statement, legal obligations associated with the retirement of long-lived
    assets are to be recognized at their fair value in the period in which they
    are incurred if a reasonable estimate of fair value can be made. The fair
    value of the asset retirement costs is capitalized as part of the carrying
    amount of the long-lived asset and expensed using a systematic and rational
    method over the assets' useful life. Any subsequent changes to the fair
    value of the liability will be expensed. We will be required to adopt this
    statement no later than January 1, 2003. We are currently assessing the
    impact of this statement on our results of operations, financial position
    and cash flows.

        In October 2001, the FASB issued SFAS No. 144, "Accounting for the
    Impairment or Disposal of Long-Lived Assets", which is effective for fiscal
    years beginning after December 15, 2001. This statement supersedes FASB
    Statement No. 121, "Accounting for the Impairment of Long-Lived Assets and
    for Long-Lived Assets to Be Disposed Of" and replaces the provisions of APB
    Opinion No. 30, "Reporting the Results of Operations - Reporting the Effects
    of Disposal of Segments of a Business, and Extraordinary, Unusual and
    Infrequently Occurring Events and Transactions", for the disposal of
    segments of a business. SFAS 144 retains the fundamental provisions of SFAS
    No. 121 for the recognition and measurement of the impairment of long-lived
    assets to be held and used and the measurement of long-lived assets to be
    disposed of by sale. Impairment on goodwill is not included in the scope of
    SFAS No. 144 and will be treated in accordance with the accounting standards
    established in SFAS No. 142, "Goodwill and Other Intangible Assets." Under
    SFAS No. 144, long-lived assets are measured at the lower of carrying amount
    or fair value less cost to sell. The statement applies to all long-lived
    assets We will be required to adopt this statement no later than January 1,
    2002. We are currently assessing the impact of this statement on our results
    of operations, financial position and cash flows.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

    Market Sensitive Financial Instrument Risk Management

        During the nine months ended September 30, 2001, there were no material
    events that have occurred that would require a change to the qualitative or
    quantitative disclosures about market risks presented in our Annual Report
    on Form 10-K for the year ended December 31, 2000.


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<PAGE>
                          PART II -- OTHER INFORMATION

     Item 1. Legal Proceedings

         Except as referenced in our Form 10-K for the year ended December 31,
     2000, there are no material, pending legal proceedings to which we or any
     of our subsidiaries or affiliates is a party or of which any of their
     property is subject which, if adversely decided, would have a material
     adverse effect on their financial position, results of operations or cash
     flows.

     Item 2. Changes in Securities and Use of Proceeds

     (a) None.

     (b) None.

     (c) None.

     Item 3. Defaults Upon Senior Securities

         None.

     Item 4. Submission of Matters to a Vote of Security Holders

         None.

     Item 5. Other Information

         None.

     Item 6. Exhibits and Reports on Form 8-K

     (a) Exhibits

         None.

     (b) Reports on Form 8-K:

        VoiceStream filed a Current Report on Form 8-K dated August 31, 2001, in
    which VoiceStream reported under Item 4 that on August 29, 2001, VoiceStream
    engaged PricewaterhouseCoopers LLP as its new independent accountant,
    replacing Arthur Andersen LLP.


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<PAGE>
                                   SIGNATURES

    Pursuant to the requirements 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.

                        VoiceStream Wireless Corporation

By /s/   BRIAN W. KIRKPATRICK               By  /s/  ALLYN P. HEBNER
   -----------------------------------          --------------------------------
Brian W. Kirkpatrick                            Allyn P. Hebner
Executive Vice President,                       Vice President and Controller
Chief Financial Officer                         (Principal Accounting Officer)
(Principal Financial Officer)

Dated: November 14, 2001


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