<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 MARCH 31, 2002

                                       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
     incorporation or organization)                       Identification No.)

         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)


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

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

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

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

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

<TABLE>
<CAPTION>

                 TITLE                             SHARES OUTSTANDING AS OF MAY 1, 2002
                 -----                             ------------------------------------
<S>                                                <C>
Common Stock, par value $.000001 per share                      269,738,185
</TABLE>

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


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


<PAGE>

                        VOICESTREAM WIRELESS CORPORATION
                                    FORM 10-Q
                      FOR THE QUARTER ENDED MARCH 31, 2002

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                         PAGE
                                                                                         ----
<S>                                                                                      <C>
PART I - FINANCIAL INFORMATION
      ITEM 1. FINANCIAL STATEMENTS
          Condensed Consolidated Balance Sheets as of March 31, 2002 and December 31,
             2001 .......................................................................  3
          Condensed Consolidated Statements of Operations and Comprehensive Loss for
             the three months ended March 31, 2002 and 2001 .............................  4
          Condensed Consolidated Statements of Cash Flows for the three months ended
            March 31, 2002 and 2001 .....................................................  5
          Notes to Condensed Consolidated Financial Statements ..........................  6
      ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
          OF OPERATIONS (Abbreviated pursuant to General Instruction H(2).).............. 11

PART II - OTHER INFORMATION
      ITEM 1. LEGAL PROCEEDINGS ......................................................... 18
      ITEM 2. CHANGES IN SECURITIES ..................................................... 18
      ITEM 3. DEFAULTS UPON SENIOR SECURITIES ........................................... 18
      ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS ....................... 18
      ITEM 5. OTHER INFORMATION ......................................................... 18
      ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K .......................................... 18
</TABLE>


                                       2

<PAGE>

                        VOICESTREAM WIRELESS CORPORATION
                      CONDENSED CONSOLIDATED BALANCE SHEETS
           (dollars in thousands, except share and per share amounts)


<TABLE>
<CAPTION>
                                                                                  MARCH 31,        DECEMBER 31,
                                                                                    2002               2001
                                                                                ------------       ------------
                                                                                (unaudited)
<S>                                                                            <C>                <C>
                                     ASSETS

Current assets:
     Cash and cash equivalents ...............................................    $     50,410       $         --
     Accounts receivable, net of allowance for doubtful accounts
        of $118,496 and $119,794, respectively ...............................         553,263            602,767
     Inventory ...............................................................         177,816            153,432
     FCC license deposits and other current assets ...........................         347,981            308,528
                                                                                  ------------       ------------
          Total current assets ...............................................       1,129,470          1,064,727

Property and equipment, net of accumulated depreciation of
     $569,915 and $384,372, respectively .....................................       3,436,864          3,390,103
Goodwill .....................................................................      16,271,365         16,265,790
Licensing costs and other intangible assets, net of accumulated
     amortization of $262,938 and $184,057, respectively .....................      19,411,823         19,487,269
Investments in and advances to unconsolidated affiliates .....................       1,090,676            994,976
Other assets and investments .................................................          37,953             37,055
                                                                                  ------------       ------------
                                                                                  $ 41,378,151       $ 41,239,920
                                                                                  ============       ============

                      LIABILITIES AND SHAREHOLDER'S EQUITY

Current liabilities:
     Accounts payable ........................................................    $    146,594       $    198,530
     Accrued liabilities .....................................................         630,532            647,590
     Deferred revenue ........................................................          91,412             75,996
     Construction accounts payable ...........................................         180,801            348,600
                                                                                  ------------       ------------
          Total current liabilities ..........................................       1,049,339          1,270,716

Long-term debt ...............................................................       1,687,178          1,861,518
Long-term notes payable to affiliates ........................................       4,946,928          4,110,393
Deferred tax liability .......................................................       6,869,415          3,565,286
Other long-term liabilities ..................................................          22,868             24,336
Minority interest in equity of consolidated subsidiaries .....................          51,202             51,287

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 (see Note 5)

Shareholder's equity:
     Common stock, $0.000001, and paid-in capital; 1.0 billion shares
       authorized, 269,738,185 shares issued and outstanding .................      26,851,821         26,851,821
     Deferred stock compensation .............................................         (32,178)           (35,891)
     Accumulated other comprehensive income (loss) ...........................          (2,684)               655
     Accumulated deficit .....................................................      (5,065,738)        (1,460,201)
                                                                                  ------------       ------------
          Total shareholder's equity .........................................      21,751,221         25,356,384
                                                                                  ------------       ------------
                                                                                  $ 41,378,151       $ 41,239,920
                                                                                  ============       ============
</TABLE>


     See accompanying notes to condensed consolidated financial statements.



                                       3
<PAGE>

                        VOICESTREAM WIRELESS CORPORATION
     CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
                             (dollars in thousands)
                                   (unaudited)


<TABLE>
<CAPTION>
                                                                      FOR THE THREE MONTHS ENDED
                                                                              MARCH 31,
                                                                     -----------------------------
                                                                         2002      |       2001
                                                                     -----------   |   -----------
<S>                                                                  <C>           |   <C>
Revenues                                                                           |
     Subscriber revenues ........................................... $   729,188   |   $   500,203
     Prepaid revenues ..............................................     112,217   |        93,909
     Roamer revenues ...............................................      50,318   |        44,015
     Equipment sales ...............................................     100,002   |        82,433
     Affiliate and other revenues ..................................      23,842   |        11,494
                                                                     -----------   |   -----------
          Total revenues ...........................................   1,015,567   |       732,054
                                                                     -----------   |   -----------
Operating expenses:                                                                |
     Cost of service (excludes stock-based compensation of $891                    |
       and $366, respectively) .....................................     216,203   |       164,487
     Cost of equipment sales .......................................     184,372   |       158,494
     General and administrative (excludes stock-based                              |
       compensation of $2,079 and $1,485, respectively) ............     275,279   |       275,273
     Sales and marketing (excludes stock-based compensation                        |
       of $743 and $305, respectively) .............................     296,459   |       280,966
     Depreciation and amortization .................................     264,922   |       331,171
     Stock-based compensation ......................................       3,713   |         2,156
                                                                     -----------   |   -----------
          Total operating expenses .................................   1,240,948   |     1,212,547
                                                                     -----------   |   -----------
                                                                                   |
Operating loss .....................................................    (225,381)  |      (480,493)
                                                                     -----------   |   -----------
Other income (expense):                                                            |
     Interest and financing expense ................................     (48,782)  |      (135,645)
     Equity in net losses of unconsolidated affiliates .............     (27,673)  |       (42,916)
     Interest income and other, net ................................         428   |        12,541
     Accretion of preferred stock of consolidated subsidiary .......          --   |        (4,699)
                                                                     -----------   |   -----------
          Total other income (expense) .............................     (76,027)  |      (170,719)
                                                                     -----------   |   -----------
                                                                                   |
Net loss before income taxes .......................................    (301,408)  |      (651,212)
Income tax expense .................................................  (3,304,129)  |            --
                                                                     -----------   |   -----------
Net loss ...........................................................  (3,605,537)  |      (651,212)
                                                                                   |
Other comprehensive income (loss):                                                 |
     Foreign currency translation adjustment .......................      (2,510)  |        (3,705)
     Equity in net unrealized income (loss) on investment                          |
       in securities held by unconsolidated affiliate ..............        (727)  |        20,936
     Net unrealized income (loss) on available-for-                                |
       sale securities .............................................        (102)  |        15,472
                                                                     -----------   |   -----------
          Total other comprehensive income (loss) ..................      (3,339)  |        32,703
                                                                     -----------   |   -----------
Comprehensive loss ................................................. $(3,608,876)  |   $  (618,509)
                                                                     ===========   |   ===========
</TABLE>



     See accompanying notes to condensed consolidated financial statements.



                                       4
<PAGE>


                        VOICESTREAM WIRELESS CORPORATION
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (dollars in thousands)
                                   (unaudited)


<TABLE>
<CAPTION>
                                                                     FOR THE THREE MONTHS ENDED
                                                                                MARCH 31,
                                                                    -----------------------------
                                                                        2002       |      2001
                                                                    -----------    |  -----------
<S>                                                                 <C>            |  <C>
Operating activities:                                                              |
     Net loss ....................................................  $(3,605,537)   |  $  (651,212)
     Adjustments to reconcile net loss to net cash used in                         |
       operating activities:                                                       |
          Depreciation and amortization ..........................      264,922    |      331,171
          Income tax expense .....................................    3,304,129    |           --
          Amortization of debt discount and premium ..............        4,685    |       13,538
          Equity in net losses of unconsolidated affiliates ......       27,673    |       42,916
          Stock-based compensation ...............................        3,713    |        2,156
          Allowance for bad debts ................................       (1,298)   |        3,674
          Other, net .............................................        6,266    |       (6,158)
          Changes in operating assets and liabilities,                             |
            net of effects of purchase accounting:                                 |
               Accounts receivable ...............................       50,802    |       28,524
               Inventory .........................................      (24,384)   |       64,918
               Other current assets ..............................      (46,181)   |        2,043
               Accounts payable ..................................      (51,936)   |     (101,640)
               Accrued liabilities ...............................      (14,706)   |       92,450
                                                                    -----------    |  -----------
       Net cash used in operating activities .....................      (81,852)   |     (177,620)
                                                                    -----------    |  -----------
Investing activities:                                                              |
     Purchases of property and equipment .........................     (407,031)   |     (563,617)
     Additions to licensing costs and other intangible assets ....       (5,575)   |           --
     Acquisitions of wireless properties, net of cash acquired ...         (112)   |     (297,170)
     Sales of short-term investments, net ........................           --    |    1,020,296
     Investments in and advances to unconsolidated
       affiliates, net ...........................................     (108,651)   |      (61,327)
     Refund of deposit held by FCC ...............................           --    |       49,589
     Other, net ..................................................           --    |       34,205
                                                                    -----------    |  -----------
       Net cash provided by (used in) investing activities .......     (521,369)   |      181,976
                                                                    -----------    |  -----------
Financing activities:                                                              |
     Net proceeds from issuance of common and preferred stock ....           --    |       11,345
     Long-term debt repayments ...................................     (182,904)   |      (32,113)
     Long-term debt borrowings from affiliates ...................      836,535    |           --
     Cash entitlements on conversion of preferred stock of                         |
       consolidated subsidiary ...................................           --    |      (61,258)
                                                                    -----------    |  -----------
       Net cash provided by (used in) financing activities .......      653,631    |      (82,026)
                                                                    -----------    |  -----------
Change in cash and cash equivalents ..............................       50,410    |      (77,670)
Cash and cash equivalents, beginning of period ...................           --    |    1,154,896
                                                                    -----------    |  -----------
Cash and cash equivalents, end of period .........................  $    50,410    |  $ 1,077,226
                                                                    ===========    |  ===========
</TABLE>


     See accompanying notes to condensed consolidated financial statements.



                                       5
<PAGE>

                        VOICESTREAM WIRELESS CORPORATION

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

1. ORGANIZATION

     VoiceStream Wireless Corporation ("VoiceStream," "we" or "us") provides
personal communications services ("PCS") primarily in urban markets in the
United States using the Global System for Mobile Communications, or GSM,
technology.

     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
principal GSM wireless operations 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. VoiceStream is now dependent on funding from
Deutsche Telekom and/or T-Mobile to meet its working capital and investment
requirements, debt service and other obligations.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     Consolidation and financial statement presentation

     The condensed 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 condensed consolidated financial statements of VoiceStream as
of March 31, 2002 and December 31, 2001, and for the three month periods ended
March 31, 2002 and 2001, 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. Such adjustments include those of a normal,
recurring nature and those related to the T-Mobile merger as described below.

     The T-Mobile merger was accounted for as a purchase business combination
and resulted in adjustment of the basis of our assets, liabilities and
shareholders' equity to reflect fair value on the closing date of the merger. As
a result of this new basis, our condensed consolidated financial position,
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.

     Long-lived assets

     Upon adoption of Statement of Financial Accounting Standards ("SFAS") No.
144, "Accounting for the Impairment or Disposal of Long-Lived Assets" on
January 1, 2002, we periodically evaluate whether there has been any indication
of impairment of our long-lived assets. As of March 31, 2002, there has been no
such indication of impairment.

     On January 1, 2002, we changed the useful lives of our towers and related
assets from 10 years to 20 years, which we believe more accurately represents
the economic lives of these assets. This change in estimate resulted in a
decrease in depreciation and amortization expense of approximately $42.3 million
for the three month period ended March 31, 2002.



                                       6
<PAGE>


     Intangible assets

     On January 1, 2002, we adopted SFAS No. 142 ("Goodwill and Other Intangible
Assets"). Upon adoption, we ceased amortization of goodwill. Additionally, we
ceased amortization of our spectrum licenses as we determined that these assets
meet the definition of indefinite life intangible assets under SFAS No. 142. We
completed the assessments for impairment of our goodwill and indefinite life
intangible assets required upon implementation of SFAS No. 142 and determined
that these assets were not impaired. In the future, impairment must be assessed
at least annually for these assets, or when indication of impairment exists (see
Note 3).

     SFAS No. 109 ("Accounting for Income Taxes") stipulates that a valuation
allowance must be recognized against deferred tax assets if, based on the weight
of available evidence, it is more likely than not that some portion or all of
the deferred tax assets will not be realized. Upon cessation of the amortization
of spectrum licensing costs in connection with our adoption of SFAS No. 142, the
realization of income, as defined under SFAS No. 109, from the reversal of the
related deferred tax liabilities is no longer assured within our net operating
loss ("NOL") carryforward period. Accordingly, we recorded a one-time non-cash
charge to income tax expense of approximately $3.3 billion for the three months
ended March 31, 2002 to establish a valuation allowance against our deferred tax
assets.

     Basis of Presentation

     The accompanying financial data as of March 31, 2002 and 2001, and for the
three months then ended has been prepared by VoiceStream, without audit,
pursuant to the rules and regulations of the Securities and Exchange Commission
("SEC"). Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules and
regulations. The December 31, 2001 condensed consolidated balance sheet was
derived from audited financial statements, but does not include all disclosures
required by generally accepted accounting principles. However, VoiceStream
believes that the disclosures are adequate to make the information presented not
misleading. These condensed consolidated financial statements should be read in
conjunction with the consolidated financial statements and the notes thereto
included in VoiceStream's Annual Report on Form 10-K for the fiscal year ended
December 31, 2001.

     In the opinion of management, all adjustments (which include normal
recurring adjustments except as disclosed herein) necessary for a fair
presentation of our financial position as of March 31, 2002, and the results of
operations and cash flows for the three months ended March 31, 2002 and 2001,
have been made. The results of operations for the three months ended March 31,
2002 and 2001 are not necessarily indicative of expected operating results for
the full fiscal year or any future periods.

     Reclassifications

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



                                       7
<PAGE>


3. GOODWILL AND OTHER INTANGIBLE ASSETS

     Goodwill

     Upon adoption of SFAS No. 142, as described in Note 2 above, we ceased
amortizing goodwill on January 1, 2002 resulting in a decrease in depreciation
and amortization expense of $209.4 million for the three month period ended
March 31, 2002.

     Licensing costs and other intangible assets

     Upon adoption of SFAS No. 142, as discussed in Note 2 above, we ceased
amortizing our licensing costs on January 1, 2002, resulting in a decrease in
depreciation and amortization expense of $192.3 million for the three month
period ended March 31, 2002.

<TABLE>
<CAPTION>
                                USEFUL        MARCH 31,            DECEMBER 31,
(dollars in thousands)          LIVES           2002                  2001
                               ---------     -----------           ------------
                                             (unaudited)
<S>                            <C>           <C>                   <C>
Intangible assets subject
  to amortization:
    Subscriber list..........    3 years     $  579,630            $   579,630
    Tradename................  1-4 years        300,000                300,000
                                             -----------           -----------
                                                 879,630               879,630
Accumulated amortization.....                   (262,938)             (184,057)
                                             -----------           -----------
                                                 616,692               695,573
                                             -----------           -----------
Intangible assets not subject
  to amortization:
    Licensing costs..........                 18,795,131            18,791,696
                                             -----------           -----------
                                             $19,411,823           $19,487,269
                                             ===========           ===========
</TABLE>

     Amortization Expense

     The following table presents current and expected amortization expense
for each of the following periods (dollars in thousands):

<TABLE>
<S>                                                                <C>
     Aggregate amortization expense:
         For the three months ended March 31, 2002 ........        $ 79,339

     Expected amortization expense:
         For the remainder of 2002 ........................        $236,187

         For the years ending December 31,
           2003 ...........................................        $237,210
           2004 ...........................................        $124,504
           2005 ...........................................        $ 18,333
           2006 ...........................................        $     --
           2007 ...........................................        $     --
</TABLE>


     Reconciliation of reported net loss to adjusted net loss

     The following table reconciles our net loss adjusted to exclude
depreciation and amortization expense related to goodwill and intangible assets,
assuming the adoption of SFAS No. 142 had occurred on January 1, 2001 (dollars
in thousands):

<TABLE>
<CAPTION>
                                           FOR THE THREE MONTHS ENDED MARCH 31,
                                           ------------------------------------
                                                   2002            2001
                                               -----------       ---------
<S>                                            <C>               <C>
     Reported net loss ..................      $(3,605,537)      $(651,212)
       Add back amortization, net of tax:
         Goodwill .......................               --          33,800
         License ........................               --         118,200
                                               -----------       ---------
     Adjusted net loss ..................      $(3,605,537)      $(499,212)
                                               ===========       =========
</TABLE>



                                       8
<PAGE>


4. LONG-TERM DEBT AND NOTES PAYABLE TO AFFILIATES

     During the three months ended March 31, 2002, we purchased on the open
market, and retired outstanding debt as follows: $134.5 million of our 10 3/8%
Senior Notes due in 2009, together with premiums of $18.4 million; $10.0 million
of our 11 7/8% Senior Notes due in 2009, together with discounts of $1.1
million; and $15.0 million of our 11 1/2% Senior Notes due in 2009, together
with premiums of $2.3 million. These repayments were funded by borrowings from
Deutsche Telekom. The weighted average effective interest rate was 7.9% for the
three months ended March 31, 2002, as compared with 10.3% for the same period
in 2001.

5. COMMITMENTS AND CONTINGENCIES

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

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

6. RELATED PARTY TRANSACTIONS

     VoiceStream is party to technical service agreements and reciprocal
wholesale agreements with Cook Inlet/VS GSM IV PCS Holdings, LLC ("CIVS IV") and
Cook Inlet/VS GSM V PCS Holdings, LLC ("CIVS V"), (hereafter referred to as the
"CIRI Designated Entities"), which are controlled by Cook Inlet Region, Inc.
("CIRI") through certain of it subsidiaries. The agreements entitle each party
to utilize airtime on the other's spectrum, and/or utilize wireless system
infrastructure, in certain agreed upon markets. The agreements are structured
such that each party performs as a reseller for the other and related fees are
charged and paid between the parties. For the three months ended March 31, 2002,
we earned revenues of $19.7 million and incurred expenses of $24.8 million
related to these agreements, as compared to revenues of $1.4 million and
immaterial expenses for the same period in 2001. In April 2002, we acquired the
remaining outstanding interest in CIVS IV, see Note 7 for additional discussion.

     Following the T-Mobile merger, Powertel's employees became employees of
VoiceStream and we charge Powertel directly for the compensation and benefit
costs of our employees working exclusively on Powertel business and for certain
centralized services and functions, including accounting and other
administrative functions. The cost of these centralized services and functions
are charged to Powertel in a manner that reflects the relative time and
associated costs devoted to each of the operational units. Powertel was charged
$14.8 million for the costs of these centralized services and functions for the
three months ended March 31, 2002. At March 31, 2002, we have an intercompany
receivable due from Powertel of $185.2 million, including $140.0 million related
to our repaying a credit facility on behalf of a consolidated subsidiary of
Powertel. The remainder is as a result of the charges as discussed above and
transfers of certain fixed assets, inventory and other balance sheet items. This
receivable is included on the balance sheet in investments in and advances to
unconsolidated affiliates.

7. SUBSEQUENT EVENTS

     In April 2002, we acquired the remaining outstanding interest in CIVS IV
from Cook Inlet Mobile Corporation ("Cook Inlet Mobile"), a subsidiary of CIRI,
in exchange for $6.0 million in cash and 1,277,048 Deutsche Telekom shares. The
Deutsche Telekom shares included in the transaction were provided to us through
an equity contribution from Deutsche Telekom.

     Additionally, in April 2002, certain licenses that were not able to be
transferred to us under the FCC's Designated Entity rules from CIVS IV were
assigned to a subsidiary of Cook Inlet/VS GSM VI PCS Holdings, LLC ("CIVS VI"),
a joint venture between Cook Inlet Mobile and VoiceStream which qualifies as a
Designated Entity. In connection with the assignment of these licenses to CIVS
VI, we granted Cook Inlet Mobile certain rights, but no obligation, to exchange
its ownership interest in CIVS VI for a combination of Deutsche Telekom shares
and cash. Cook Inlet Mobile's exchange rights are conditioned by the FCC's
Designated Entity rules and our legal ability to hold C and F block licenses at
the time of the exchange under such rules. The grant of the exchange rights
resulted in our recording an additional investment in CIVS VI in April 2002,
which will be amortized over the life of the exchange right, ending 2004. CIVS
VI will be accounted for under the equity method.



                                       9
<PAGE>
     On April 1, 2002, we acquired the remaining outstanding interest in PCS One
Corporation ("PCS One") for approximately $78.6 million in cash and the
assumption of outstanding liabilities. PCS One had long-term debt of $78.5
million which we repaid following the acquisition of PCS One in April 2002. PCS
One provides PCS service in urban markets in central Pennsylvania, including
Harrisburg, Lancaster and Reading.

     At March 31, 2002, Voicestream and CIVS V had FCC deposits of $195.9
million still pending with the FCC for as yet ungranted licenses from Auction 35
for which we or CIVS V were the high bidder. The ungranted licenses were
originally held by either NextWave Communications Inc. or NextWave Power
Partners Inc. ("NextWave") or Urban Comm-North Carolina, Inc., all 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. The FCC, as well as VoiceStream and other Auction
35 winning bidders, filed petitions with the United States Supreme Court seeking
review of the Court of Appeals' decision. On March 4, 2002, the Supreme Court
granted the petitions. Pending the outcome of the Supreme Court case,
VoiceStream and other Auction 35 winning bidders requested that the FCC refund
their down payments. On March 27, 2002, the FCC issued an order to refund all
but 15% of the down payment, which equals three percent of the total net winning
bids. In this order, the FCC also declared that the auction winners would be
required to pay the full amount of their winning bids if the FCC prevailed in
the pending litigation. On April 29, 2002 VoiceStream and CIVS V received
refunds of 85% of the outstanding FCC deposits totaling $81.0 million and $85.5
million, respectively. CIVS V then distributed $43.2 million to VoiceStream and
$42.3 million to a subsidiary of CIRI, the members of CIVS V.




                                       10
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

     (Abbreviated pursuant to General Instruction H (2).)

     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 regionally; technology changes; competition;
changes in business strategy or development plans; the 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.

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

     The following discussion and analysis is based upon our condensed
consolidated financial statements, which have been prepared in accordance with
accounting principles generally accepted in the United States. This discussion
and analysis 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, 2001. The preparation of our
financial statements requires management to make estimates and assumptions that
affect the reported amounts of revenue and expenses, and assets and liabilities
during the periods reported. Estimates are used when accounting for certain
items such as unbilled revenues, allowance for doubtful accounts, sales and
marketing programs and incentives, employee compensation programs, depreciation
and amortization periods, taxes, inventory values, and valuations of investments
and intangible assets. We base our estimates on historical experience, where
applicable, and other assumptions that we believe are reasonable under the
circumstances. Actual results may differ from our estimates due to changing
conditions or the validity of our assumptions.



                                       11
<PAGE>


     We believe that the following critical accounting policies affect our more
significant judgments and estimates used in the preparation of our condensed
consolidated financial statements. We recognize service revenues based upon
minutes of use processed and contracted fees, net of credits and adjustments for
service discounts. We maintain allowances for doubtful accounts for estimated
losses resulting from the inability of our customers to make required payments.
We base our estimates on the aging of our accounts receivable balances and our
historical write-off experience, net of recoveries. If the financial condition
of our customers were to deteriorate, actual write-offs may be higher than
expected. We record accruals associated with sales and marketing promotions and
incentives. These accruals are based primarily on historical take-rates of
similar promotions or offers. When recording depreciation expense associated
with our wireless communications equipment, we use estimated useful lives. As a
result of changes in technology and industry conditions, we periodically
evaluate the useful lives of our wireless communications equipment. These
evaluations could result in a change in useful lives in future periods. SFAS No.
142 requires us to cease amortizing goodwill and other intangible assets with
indefinite lives, including spectrum licenses, and establishes a new method of
testing goodwill and intangible assets with indefinite lives 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. We hold non-controlling investments in several entities for which we
apply the equity or cost method of accounting. We record impairments associated
with these investments when we determine that the market value of the investment
is below our net book value and the decline is deemed to be other than
temporary. Volatility in market prices of these investments, or poor operating
performance of these entities could result in the future values of these
investments declining below our carrying value.

OVERVIEW

     We provide PCS services using GSM technology primarily in urban markets in
the United States through the ownership and operation of PCS licenses and
through contractual relationships with entities in which we have non-controlling
ownership interests that own and operate similar licenses. We directly charge
Powertel, a subsidiary of T-Mobile, for the compensation and benefit costs of
our employees working exclusively on Powertel business. We also charge Powertel
for certain centralized services and functions including accounting and other
administrative functions. The cost of these centralized services and functions
are charged to Powertel in a manner that reflects the relative time and
associated costs devoted to it.

     The following discussion highlights the key events in the periods covered
by these financial statements:

     On May 31, 2001, Deutsche Telekom acquired 100% of the common shares of
VoiceStream in a transaction that qualified as a tax-free reorganization.
Following the closing of the merger, Deutsche Telekom transferred all of its
VoiceStream shares to T-Mobile (referred to herein as the "T-Mobile merger").
T-Mobile is a wholly-owned subsidiary of Deutsche Telekom and is the holding
company for Deutsche Telekom's principal GSM wireless operations in Europe and
the United States.

     The T-Mobile merger was accounted for as a purchase business combination
and resulted in adjustment of the basis of our assets, liabilities and
shareholders' equity to reflect fair value on the closing date of the merger. As
a result of this new basis, our condensed consolidated financial position,
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 following discussion and analysis refers to the results and activities for
the three months ended March 31, 2002 as compared to the three months ended
March 31, 2001. Where necessary, we have provided explanations to improve
comparability between the pre-merger and post-merger activity.



                                       12
<PAGE>

     Operating markets

     We commenced operations in 1996 in various markets in the western United
States and have expanded operations through the addition of numerous new markets
in subsequent years. We have added significant operational markets through
acquisitions at varying stages of maturity and have converted the acquired
markets to the VoiceStream brand and otherwise integrated the operations of the
acquired businesses. Due to these factors, revenues and expenses recognized
during any period may not be comparable to other periods and may not be
representative of future operations.

RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2002 AND 2001

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

<TABLE>
<CAPTION>
                                           THREE MONTHS ENDED MARCH 31,
                                       ---------------------------------
                                            2002      |         2001               CHANGE           % CHANGE
                                       -------------  |    -------------       -------------        --------
<S>                                    <C>            |    <C>                 <C>                     <C>
Revenues:                                             |
  Subscriber revenues ..............   $     729,188  |    $     500,203       $     228,985           45.8%
  Prepaid revenues .................         112,217  |           93,909              18,308           19.5%
  Roamer revenues ..................          50,318  |           44,015               6,303           14.3%
  Equipment sales ..................         100,002  |           82,433              17,569           21.3%
  Affiliate and other revenues .....          23,842  |           11,494              12,348          107.4%
                                       -------------  |    -------------       -------------         ------
     Total revenues ................       1,015,567  |          732,054             283,513           38.7%
                                       -------------  |    -------------       -------------         ------
Operating expenses:                                   |
  Cost of service ..................         216,203  |          164,487              51,716           31.4%
  Cost of equipment sales ..........         184,372  |          158,494              25,878           16.3%
  General and administrative .......         275,279  |          275,273                   6            0.0%
  Sales and marketing ..............         296,459  |          280,966              15,493            5.5%
  Depreciation and amortization ....         264,922  |          331,171             (66,249)         (20.0%)
  Stock-based compensation .........           3,713  |            2,156               1,557           72.2%
                                       -------------  |    -------------       -------------         ------
     Total operating expenses ......       1,240,948  |        1,212,547              28,401            2.3%
                                       -------------  |    -------------       -------------         ------
Operating Loss .....................        (225,381) |         (480,493)            255,112           53.1%
Other income (expense) .............         (76,027) |         (170,719)             94,692           55.5%
Income tax expense .................      (3,304,129) |               --          (3,304,129)          N.M.
                                       -------------  |    -------------       -------------         ------
Net loss ...........................   $  (3,605,537) |    $    (651,212)      $  (2,954,325)        (453.7%)
                                       =============  |    =============       =============         ======
                                                      |
Adjusted EBITDA(1)..................   $      43,254  |    $    (147,166)      $     190,420           N.M.
                                       =============  |     =============       =============         ======
                                                      |
Cash flows provided by (used in):                     |
  Operating activities .............   $     (81,852) |    $    (177,620)      $      95,768           53.9%
                                       =============  |    =============       =============         ======
  Investing activities .............   $    (521,369) |    $     181,976       $    (703,345)          N.M.
                                       =============  |    =============       =============         ======
  Financing activities .............   $     653,631  |    $     (82,026)      $     735,657           N.M.
                                       =============  |     =============       =============         ======

Other Data:
Licensed population ................     237,894,000         235,537,000           2,357,000            1.0%
Covered population .................     144,776,000         111,500,000          33,276,000           29.8%

Subscribers/Users:
Post pay subscribers ...............       5,078,400           3,343,500           1,734,900           51.9%
Prepaid customers ..................       1,237,100           1,046,600             190,500           18.2%
</TABLE>

----------
(1) Adjusted EBITDA represents operating income (loss) before depreciation,
amortization and non-cash stock-based compensation. Adjusted EBITDA should not
be construed as an alternative to operating income (loss) as determined in
accordance with GAAP, as an alternate to cash flows from operating activities
(as determined in accordance with GAAP) or as a measure of liquidity.

REVENUES

     The overall $253.6 million (39.7%) increase in service revenues
(subscriber, prepaid and roamer revenues) to $891.7 million for the three months
ended March 31, 2002 is due primarily to internal growth in existing VoiceStream
markets and market launches during 2001.



                                       13
<PAGE>
     Subscriber revenues increased $229.0 million (45.8%) to $729.2 million for
the three months ended March 31, 2002. The increase is primarily the result of
growth in our post pay subscriber base from 3,343,500 at March 31, 2001 to
5,078,400 at March 31, 2002. There were 520,500 net additions during the three
month period ended March 31, 2002, due to internal growth, as compared to
511,100 net additions during the three month period ended March 31, 2001, of
which 26,400 were from acquisitions. The high rate of post pay subscriber growth
is attributable primarily to our competitive rate plan offerings and the success
of our advertising campaigns.

     Prepaid service revenues increased $18.3 million (19.5 %) to $112.2 million
for the three months ended March 31, 2002, as compared to the same period in
2001. Our prepaid customer base grew to 1,237,100 at March 31, 2002 from
1,046,600 at March 31, 2001. During the three months ended March 31, 2002, our
prepaid customer base decreased by 24,000 compared to net additions of 75,700
during same period in 2001. The reduction in prepaid customers reflects the high
rate of churn in the prepaid business and our business strategy that emphasizes
post pay subscriber growth.

     We believe our "Get More" marketing strategy and the popularity of our
competitive rate plans, including our "Whenever, Wherever Get More" rate plans,
have contributed significantly to our rapid subscriber growth. In addition, in
connection with our merger with T-Mobile, we introduced "Global Wireless by
T-Mobile" as part of the VoiceStream brand logo. We plan to phase out the
VoiceStream brand name by the end of 2002, forming a cohesive international
wireless brand using the T-Mobile name. Also, our association with T-Mobile has
allowed us to offer our customers with dual band and tri band phones the ability
to roam internationally in over 80 countries at a flat rate usage fee per minute
through our WorldClass Roaming plan.

     Total service revenue per average customer ("ARPU") was $49.28 for the
three months ended March 31, 2002, as compared to $51.39 for the same period in
2001. Post pay ARPU was $50.72 and $53.26 for the three months ended March 31,
2002 and 2001, respectively. This decrease is due to continual migration of
subscribers from older rate plans during 2001, including legacy plans of
Omnipoint and Aerial, to our "Get More" offerings and the growing popularity of
those plans which include features such as pooling, free long distance and free
roaming at lower overall cost. Due to seasonal and other factors, including the
results of churn mitigation efforts late in 2001 to encourage migration to
current rate plans, we are not expecting a further decline in ARPU in the near
term. Prepaid ARPU was $30.18 and $31.03 for the three months ended March 31,
2002 and 2001, respectively.

     Roamer revenues increased $6.3 million (14.3 %) to $50.3 million for the
three months ended March 31, 2002. The increase is primarily due to the
expansion of our network and new market launches in mid 2001, which expanded our
coverage area in 2002, relative to the first quarter 2001. An additional
contributor to roamer revenues is our introduction of the T-Mobile WorldClass
Roaming plan as described above.

     Equipment sales increased $17.6 million (21.3 %) to $100.0 million for the
three months ended March 31, 2002. The increase is due to the greater number of
new subscribers added in the three months ended March 31, 2002.

     Affiliate and other revenues increased $12.3 million (107.4 %) to $23.8
million for the three months ended March 31, 2002. This revenue is primarily
related to technical service agreements and reciprocal wholesale agreements with
unconsolidated CIRI Designated Entities. The increase in 2002 is primarily due
to increased usage on our network related to these agreements. Each party acts
as a reseller for the other with related fees charged and paid between the
parties.



                                       14
<PAGE>


OPERATING EXPENSES

     Cost of service expenses represent network operating expenses incurred in
operational markets including the cost of interconnection with LEC facilities,
direct cell site costs (insurance, property taxes, repair and maintenance
expenses, site leases and utilities), third party roaming costs and long
distance toll costs. The increase of $51.7 million (31.4 %) to $216.2 million
for the three months ended March 31, 2002, is primarily due to the geographic
expansion of our network and increases in network capacity to service our
growing customer base. Cost of service as a percentage of service revenues
decreased to 24.2% for the three months ended March 31, 2002 from 25.8% for the
same period in 2001. Excluding the technical service agreements and reciprocal
wholesale agreements with certain unconsolidated CIRI Designated Entities as
discussed above, cost of service as a percentage of service revenues was 21.5%
and 25.8% for the three months ended March 31, 2002 and 2001, respectively. The
decrease is due to efficiencies gained relative to our growing subscriber base.
While cost of service expenses are expected to increase due to continuing growth
in our subscriber base, we expect cost of service as a percentage of service
revenues to generally trend downward as more subscribers are added in newly
launched markets and greater economies of scale are realized.

     Cost of equipment sales increased $25.9 million (16.3 %) to $184.4 million
for the three months ended March 31, 2002, primarily due to the increase in the
number of handsets and wireless data devices sold. The volume increase
correlates with the number of new subscribers added during 2002. We generally
offer this equipment to our customers below our cost as an incentive for new
customers and to respond to competition. We expect these subsidies to remain
common industry practice for the foreseeable future.

     General and administrative expenses did not change materially for the three
months ended March 31, 2002 as compared to the same period in 2001. On a per
average customer per month basis, general and administrative expenses decreased
to $15.21 for the three months ended March 31, 2002 from $22.17 for the same
period in 2001. The decrease in 2002 reflects improved economies of scale
realized in our administrative functions and reduced spending for integrating
various administrative functions of Powertel and of Omnipoint Corporation and
Aerial Communications, Inc., which were acquired by VoiceStream in 2000. While
general and administrative expenses are expected to increase due to continuing
growth in our customer base, we expect the cost per customer to continue
trending downward as greater economies of scale are realized and as we complete
the full integration of the acquired companies and Powertel.

     Sales and marketing costs increased $15.5 million (5.5 %) to $296.5 million
for the three months ended March 31, 2002. This increase is attributable to
higher sales commissions and other selling costs associated with our continued
subscriber growth, together with marketing costs associated with advertising in
additional markets launched in 2001. Sales and marketing costs per customer
added, commonly referred to as Cost per Gross Add ("CPGA"), which includes the
loss on equipment sales, totaled $298 for the three months ended March 31, 2002,
as compared to $335 for the same period in 2001. CPGA has been on a downward
trend since 1998 with the current year decline reflecting the economies of
marketing on a national scale, a decrease in equipment subsidies provided to the
customer and the absence of any major market launches during or immediately
preceding the 2002 period.

     Depreciation and amortization expense decreased $66.2 million (20.0 %) to
$264.9 million for the three months ended March 31, 2002. This decrease is
primarily due to the adoption of SFAS No. 142, ("Goodwill and Other Intangible
Assets") on January 1, 2002. Upon adoption, we ceased amortization of goodwill.
Additionally, we ceased amortization of our spectrum licenses as we determined
that these assets meet the definition of indefinite life intangible assets under
SFAS No. 142. We completed the assessments for impairment of our goodwill and
indefinite life intangible assets required upon implementation of SFAS No. 142
and determined that these assets were not impaired. In the future, impairment
must be assessed at least annually for these assets, or when indication of
impairment exists. Adoption of SFAS No. 142 resulted in a decrease in
depreciation and amortization expense of $401.7 million for the three month
period ended March 31, 2002. We also recognized a decrease in depreciation
expense due to changing the estimated useful lives of certain non-electronic
fixed assets from 10 years to 20 years on January 1, 2002. This resulted in a
decrease in depreciation and amortization expense of $42.3 million for the three
month period ended March 31, 2002. With the exception of the changes as
described above, our depreciation charges are trending upward due to our
increasing asset base arising from acquisitions and capital expenditures related
to the on-going expansion of our wireless network.



                                       15
<PAGE>


ADJUSTED EBITDA

     Adjusted EBITDA represents operating income (loss) before depreciation,
amortization and non-cash stock-based compensation. We believe Adjusted EBITDA
provides meaningful additional information on our operating results, our ability
to service our long-term debt and other fixed obligations and to fund our
continued growth. Adjusted EBITDA is considered by many financial analysts to be
a meaningful indicator of an entity's ability to meet its future financial
obligations, 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 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.

     Our Adjusted EBITDA was $43.3 million for the three months ended March 31,
2002, representing an improvement of $190.4 million as compared to the same
period in 2001. Adjusted EBITDA includes $8.5 million and $13.0 million in
retention and bonus expenses related to the T-Mobile merger for the three months
ended March 31, 2002 and 2001, respectively. Our Adjusted EBITDA as a percentage
of total revenue was 4.3% for the three months ended March 31, 2002, compared to
an Adjusted EBITDA loss of 20.1% of total revenue for the same period in 2001.
The increase in Adjusted EBITDA in 2002 is due to several factors including
increased economies of scale, reduced costs associated with the integration of
acquired companies and the earnings leverage achieved as the number of new
customers added becomes proportionately smaller relative to the greater size of
our customer base. This last factor results in sales and marketing costs growing
at a lower rate than revenues, increasing Adjusted EBITDA.

     The following table reconciles Adjusted EBITDA as discussed above to our
net loss (dollars in thousands):

<TABLE>
<CAPTION>
                                              FOR THE THREE MONTHS ENDED MARCH 31,
                                              ------------------------------------
                                                      2002               2001
                                                  -----------         ---------
<S>                                               <C>                 <C>
Adjusted EBITDA (loss) ......................     $    43,254         $(147,166)
  Depreciation and amortization .............        (264,922)         (331,171)
  Stock-based compensation ..................          (3,713)           (2,156)
  Other income (expense) ....................         (76,027)         (170,719)
  Income tax expense ........................      (3,304,129)               --
                                                  -----------         ---------
Net loss ....................................     $(3,605,537)        $(651,212)
                                                  ===========         =========
</TABLE>

OTHER INCOME (EXPENSE) AND INCOME TAX EXPENSE

     Interest and financing expense was $48.8 million and $135.6 million for the
three months ended March 31, 2002 and 2001, respectively, net of capitalized
interest of $44.6 million and $9.3 million for the same periods in 2002 and
2001, respectively. The increase in capitalized interest reflects the interest
capitalized related to the build out of the California market in anticipation of
the California launch in mid 2002. The overall reduction in interest expense
before capitalized interest is primarily due to a decrease in the average
interest rate of our debt beginning in the second half of 2001, as we replaced
third party debt with notes payable to Deutsche Telekom bearing interest at
lower rates. The weighted average effective interest rate, before capitalized
interest, was 7.9% for the three months ended March 31, 2002, as compared to
10.3% for the same period in 2001.

     Equity in net losses of unconsolidated affiliates decreased $15.2 million
(35.5%) to $27.7 million for the three months ended March 31, 2002, as three of
the unconsolidated entities contributing to the prior year loss were acquired
during 2001.



                                       16
<PAGE>


     SFAS No. 109 ("Accounting for Income Taxes") stipulates that a valuation
allowance must be recognized against deferred tax assets if, based on the weight
of available evidence, it is more likely than not that some portion or all of
the deferred tax assets will not be realized. Upon cessation of the amortization
of spectrum licensing costs in connection with our adoption of SFAS No. 142, the
realization of income, as defined under SFAS No. 109, from the reversal of the
related deferred tax liabilities is no longer assured within our net operating
loss ("NOL") carryforward period. Accordingly, we recorded a one-time non-cash
charge to income tax expense of approximately $3.3 billion for the three months
ended March 31, 2002 to establish a valuation allowance against our deferred tax
assets. This adjustment reflects the SFAS No. 109 tax accounting requirements
and is not based on any changes to our business model, future prospects, the
value of our licenses or any current or future cash tax payments. This valuation
allowance does not reflect any change in our assessment of the likelihood of
utilizing the tax NOL carryforwards on a cash tax basis in the future. We will
continue to evaluate the need for this valuation allowance for accounting
purposes using the more likely than not criteria contained in SFAS No. 109 to
determine if we can reverse all or part of the allowance in the future.

NET LOSS

     Our net loss increased $3.0 billion to $3.6 billion for the three months
ended March 31, 2002. The increase in 2002 is primarily due to the one-time $3.3
billion income tax expense related to the adoption of SFAS No. 142 as described
above. Excluding the one-time non-cash income tax expense charge, our net loss
was $301.4 million, representing a decrease of $349.8 million from the same
period in 2001. This decrease is primarily due to a reduction in amortization
expense of intangible assets of $401.7 million, also as a result of the adoption
of SFAS No. 142.

CAPITAL EXPENDITURES

     Capital expenditures decreased $156.6 million (27.8%) to $407.0 million for
the three months ended March 31, 2002, as compared to the same period in 2001.
The decrease is due to reduced build out activity in 2002. In the first quarter
of 2001, we were building out two major markets, Chicago and New Orleans. We are
planning to launch the California market in 2002 without major build-out
expenditures through a joint venture with Cingular Wireless LLC ("Cingular") to
share their GSM network in California and ours in New York. We expect to incur
significant additional capital expenditures in 2002, directly and through joint
ventures in which we hold interests, for license purchases, coverage and
capacity expansion of operating markets and the development and expansion of new
markets. The level of our actual capital expenditures are dependent on
opportunities that arise over the course of the year and on funding
availability. We expect that our future funding requirements will be provided by
our parent company T-Mobile, Deutsche Telekom, or its affiliates.



                                       17
<PAGE>

PART II - OTHER INFORMATION

    ITEM 1. LEGAL PROCEEDINGS

         Except as referenced in our Form 10-K for the year ended December 31,
     2001, there are no material, pending legal proceedings to which we or our
     affiliates is a party or of which any of our or their property is subject
     which, if adversely decided, would have a material adverse effect on our
     financial position, results of operations or cash flows.

    ITEM 2. CHANGES IN SECURITIES

        (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

        There were no Current Reports on Form 8-K filed during the quarter ended
    March 31, 2002.



                                       18
<PAGE>

                                   SIGNATURES

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

     May 1, 2002                         VOICESTREAM WIRELESS CORPORATION




<TABLE>
<CAPTION>
                SIGNATURES                                   TITLE                          DATE
                ----------                                   -----                          ----
<S>                                                  <C>                                  <C>
By:     /s/ BRIAN W. KIRKPATRICK                     Executive Vice President,            May 1, 2002
    ----------------------------------------         Chief Financial Officer
            Brian W. Kirkpatrick                     (Principal Financial Officer)


By:     /s/  ALLYN P. HEBNER                         Vice President and Controller        May 1, 2002
    ----------------------------------------         (Principal Accounting Officer)
             Allyn P. Hebner
</TABLE>



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