<PAGE>   1



                                  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 JUNE 30, 2000

                                       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)

<TABLE>
<CAPTION>
            DELAWARE                                      91-1983600
---------------------------------             ----------------------------------
<S>                                           <C>
(State or other jurisdiction of               (IRS Employer Identification No.)
incorporation or organization)
</TABLE>

<TABLE>
<CAPTION>
      3650 131ST AVENUE S.E.,
      BELLEVUE, WASHINGTON                                   98006
---------------------------------             ----------------------------------
<S>                                           <C>
 (Address of principal executive                           (Zip Code)
           offices)
</TABLE>

                                 (425) 653-4600
--------------------------------------------------------------------------------
              (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.

<TABLE>
<CAPTION>
                  Title                        Shares Outstanding as of July 31, 2000
                  -----                        --------------------------------------
<S>                                            <C>
       Common Stock, $0.001 par value                       214,617,441
</TABLE>


<PAGE>   2

                        VOICESTREAM WIRELESS CORPORATION
                                    FORM 10-Q
                       FOR THE QUARTER ENDED JUNE 30, 2000


                                TABLE OF CONTENTS
<TABLE>
<CAPTION>
                                                                                                       Page
                                                                                                       ----
<S>                                                                                                    <C>
PART I - FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

        Consolidated Balance Sheets
        as of June 30, 2000, and December 31, 1999.................................................        3

        Consolidated Statements of Operations
        for the Three and Six Months Ended June 30, 2000, and June 30, 1999........................        4

        Consolidated Statements of Cash Flows
        for the Six Months Ended June 30, 2000, and June 30, 1999..................................        5

        Notes to Consolidated Financial Statements.................................................        6

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF
        FINANCIAL CONDITION AND RESULTS OF OPERATIONS .............................................       15


PART II - OTHER INFORMATION........................................................................       23

ITEM 1.  LEGAL PROCEEDINGS.........................................................................       23

ITEM 2.  CHANGES IN SECURITIES.....................................................................       23

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES...........................................................       23

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.......................................       23

ITEM 5.  OTHER INFORMATION.........................................................................       23

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K..........................................................       23
</TABLE>



                                        2
<PAGE>   3

                        VOICESTREAM WIRELESS CORPORATION
                           CONSOLIDATED BALANCE SHEETS
                             (Dollars in thousands)


<TABLE>
<CAPTION>
                                                                                 June 30,         December 31,
                                                                                   2000              1999
                                                                               ------------       ------------
                                                                                (Unaudited)
<S>                                                                            <C>                <C>
                                     ASSETS

Current assets:
  Cash and cash equivalents                                                    $     71,478       $    235,433
  Accounts receivable, net of allowance for doubtful accounts of
   $45,352 and $17,482, respectively                                                219,504             97,739
  Inventory                                                                         185,366             63,072
  Prepaid expenses and other current assets                                          47,852             14,332
                                                                               ------------       ------------
     Total current assets                                                           524,200            410,576

Property and equipment, net of accumulated depreciation
  of $432,012 and $284,670, respectively                                          2,086,105            931,792
Goodwill, net of accumulated amortization
  of $112,539 and $0, respectively                                                9,035,152
Licensing costs and other intangible assets, net of accumulated
  amortization of $43,998 and $21,815, respectively                               1,994,645            450,261
Investments in and advances to unconsolidated affiliates                          1,244,298            409,721
Other assets and investments                                                         63,352             19,563
                                                                               ------------       ------------
                                                                               $ 14,947,752       $  2,221,913
                                                                               ============       ============

                      LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
  Accounts payable                                                             $    130,263       $     22,878
  Accrued liabilities                                                               321,007            114,534
  Deferred revenue                                                                   42,240              4,275
  Construction accounts payable                                                     105,890             61,398
  Current portion of long-term debt                                                  94,520
                                                                               ------------       ------------
     Total current liabilities                                                      693,920            203,085

Long-term debt                                                                    5,082,567          2,011,451

Commitments (Note 7)

Preferred stock of consolidated subsidiary                                          302,416

2.5% convertible junior preferred stock; $0.001 par value;
  100,000,000 shares authorized; 7,606 shares issued and outstanding                766,938

Shareholders' equity:
  Common stock, $0.001 par value, and paid in capital; 1.0 billion
     shares authorized; 213,824,311 and 96,305,360 shares issued
     and outstanding, respectively                                                9,804,976          1,095,539
  Deferred compensation                                                             (22,613)           (25,264)
  Deficit                                                                        (1,680,452)        (1,062,898)
                                                                               ------------       ------------
     Total shareholders' equity                                                   8,101,911              7,377
                                                                               ------------       ------------
                                                                               $ 14,947,752       $  2,221,913
                                                                               ============       ============
</TABLE>







           See accompanying notes to consolidated financial statements



                                       3
<PAGE>   4

                        VOICESTREAM WIRELESS CORPORATION
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                  (Dollars in thousands, except per share data)
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                 Three months ended June 30,              Six months ended June 30,
                                              ---------------------------------       ---------------------------------
                                                   2000               1999                2000                1999
                                              -------------       -------------       -------------       -------------
<S>                                           <C>                 <C>                 <C>                 <C>
Revenues:
    Subscriber revenues                       $     273,711       $      83,292       $     444,461       $     136,538
    Prepaid revenues                                 67,434                 529              92,636               1,433
    Roamer revenues                                  28,146               1,818              38,330               3,560
    Equipment sales                                  55,846              19,432              89,756              30,351
    Affiliate and other revenues                     28,420               3,979              45,372               4,879
                                              -------------       -------------       -------------       -------------
         Total revenues                             453,557             109,050             710,555             176,761
                                              -------------       -------------       -------------       -------------

Operating expenses:
    Cost of service                                 121,384              24,580             183,701              42,348
    Cost of equipment sales                         103,765              35,662             162,667              60,908
    Cost of engineering and R&D                       2,289                                   2,867
    General and administrative                      144,900              27,004             223,949              48,396
    Sales and marketing                             142,617              50,784             230,197              85,806
    Depreciation and amortization                   198,812              29,650             280,904              55,414
    Stock based compensation                          3,939              47,303               9,535              47,303
                                              -------------       -------------       -------------       -------------
         Total operating expenses                   717,706             214,983           1,093,820             340,175
                                              -------------       -------------       -------------       -------------

Operating loss                                     (264,149)           (105,933)           (383,265)           (163,414)
                                              -------------       -------------       -------------       -------------

Other income (expense):
    Interest and financing expense                 (120,868)            (20,276)           (202,099)            (31,881)
    Equity in net losses of unconsolidated
      affiliates                                    (35,373)             (4,511)            (47,247)            (12,799)
    Interest income and other, net                   11,356              (2,097)             21,990              (1,909)
    Accretion of preferred stock of
      consolidated subsidiary                        (5,190)                                 (6,933)
                                              -------------       -------------       -------------       -------------
         Total other income (expense)              (150,075)            (26,884)           (234,289)            (46,589)
                                              -------------       -------------       -------------       -------------

Net loss                                           (414,224)           (132,817)           (617,554)           (210,003)
Preferred dividends attributable to
    2.5% junior preferred stock                      (5,463)                                 (6,338)
                                              -------------       -------------       -------------       -------------
Net loss attributable to common
    shareholders                              $    (419,687)      $    (132,817)      $    (623,892)      $    (210,003)
                                              =============       =============       =============       =============
Basic and diluted loss per common share       $       (2.16)      $       (1.39)      $       (3.95)      $       (2.20)
                                              =============       =============       =============       =============
Weighted average common shares used in
    computing basic and diluted loss per
    common share                                193,972,000          95,548,000         157,883,000          95,545,000
                                              =============       =============       =============       =============
</TABLE>




           See accompanying notes to consolidated financial statements



                                       4
<PAGE>   5

                        VOICESTREAM WIRELESS CORPORATION
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (Dollars in thousands)
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                   Six months ended June 30,
                                                                 -----------------------------
                                                                    2000              1999
                                                                 -----------       -----------
<S>                                                              <C>               <C>
Operating activities:
  Net loss                                                       $  (617,554)      $  (210,003)
  Adjustments to reconcile net loss to net cash
    used in operating activities:
      Depreciation and amortization                                  280,904            55,414
      Amortization of debt discount and premium                       20,240
      Equity in net loss of unconsolidated affiliates                 47,247            12,799
      Stock-based compensation                                         9,535            47,303
      Allowance for bad debts                                         (1,681)            3,314
      Other, net                                                       6,742               466
      Changes in operating assets and liabilities, net of
        effects from consolidating acquired interests:
          Accounts receivable                                        (23,078)          (30,180)
          Inventory                                                 (102,319)            2,114
          Prepaid expenses and other current assets                   (5,238)             (190)
          Accounts payable                                            92,712            11,402
          Accrued liabilities                                         61,197            32,444
                                                                 -----------       -----------
     Net cash used in operating activities                          (231,293)          (75,117)
                                                                 -----------       -----------

Investing activities:
  Purchases of property and equipment                               (469,305)         (128,537)
  Additions to licensing costs and
     other intangible assets                                            (527)           (2,228)
  Acquisitions of wireless properties, net of cash acquired         (469,366)
  Investments in and advances to unconsolidated affiliates          (364,158)         (150,892)
  Other                                                               (2,252)          (13,473)
                                                                 -----------       -----------
     Net cash used in investing activities                        (1,305,608)         (295,130)
                                                                 -----------       -----------

Financing activities:
  Net proceeds from issuance of common and preferred stock         1,331,099               116
  Long-term debt borrowings                                        2,740,000           755,000
  Long-term debt repayments                                       (2,668,688)         (270,000)
  Net receipts from (payments) to Western Wireless                    38,677           (30,570)
  Deferred financing costs                                           (68,142)          (12,500)
                                                                 -----------       -----------
     Net cash provided by financing activities                     1,372,946           442,046
                                                                 -----------       -----------

Change in cash and cash equivalents                                 (163,955)           71,799

Cash and cash equivalents, beginning of period                       235,433             8,057
                                                                 -----------       -----------

Cash and cash equivalents, end of period                         $    71,478       $    79,856
                                                                 ===========       ===========
</TABLE>







           See accompanying notes to consolidated financial statements



                                       5
<PAGE>   6
                        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 July 24, 2000, we announced  a definitive merger agreement (the
"Agreement") with Deutsche Telekom AG, a German telecommunication provider.
Pursuant to the Agreement, which was approved by the Boards of Directors of both
companies, each VoiceStream shareholder will receive 3.2 Deutsche Telekom shares
and $30 in cash for each share of VoiceStream common stock, subject to certain
adjustments. VoiceStream shareholders are able to elect either an all-stock or
all-cash option, subject to the proration terms of the Agreement. In connection
with the merger, Deutsche Telekom will assume all of our outstanding debt,
currently totalling $5.2 billion. Deutsche Telekom will make a $5.0 billion
investment in VoiceStream, which is expected to occur during the third quarter
of 2000 in exchange for preferred stock convertible into common stock at a price
of $160 per share. Deutsche Telekom's investment is not contingent upon the
closing of the merger. The merger is expected to qualify as a tax-free
reorganization for VoiceStream shareholders receiving Deutsche Telekom stock.
The merger is subject to the customary closing conditions, including approval by
VoiceStream's shareholders and legal and regulatory approvals. The merger is
expected to be completed in the first half of 2001.

        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"). VoiceStream's current business
activities consist of the combined businesses of VS Washington, Omnipoint and
Aerial.

        Prior to May 3, 1999, VS Washington was an 80.1% owned subsidiary of
Western Wireless Corporation ("Western Wireless"). The remaining 19.9% was owned
by Hutchison Telecommunications PCS (USA) Limited ("Hutchison"), a subsidiary of
Hutchison Whampoa Limited, a Hong Kong company. On May 3, 1999, VS Washington
was formally separated in a spin-off transaction from Western Wireless' other
operations.


2.      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:


        The accompanying interim consolidated financial statements and the
financial information included herein are unaudited, but reflect all adjustments
which are, in our opinion, necessary for a fair presentation of the financial
position, results of operations and cash flows for the periods presented. All
such adjustments are of a normal, recurring nature. Results of operations for
interim periods presented herein are not necessarily indicative of results of
operations for the entire year.


        Capitalized interest

        Our PCS licenses and wireless communications systems represent qualified
assets pursuant to Statement of Financial Accounting Standards ("SFAS") No. 34,
"Capitalization of Interest Cost." Our policy is to capitalize interest in new
markets during the build-out phase until service is initiated for customers. We
had no capitalized interest during the three months ended June 30, 2000 and $0.1
million during the six months ended June 30, 2000. We had no capitalized
interest for the three months ended June 30, 1999 and $1.6 million during the
six months ended June 30, 1999.

        Intangible assets and amortization

        Goodwill consists of the excess of the purchase price over the fair
value of assets acquired in the Aerial and Omnipoint mergers (see Note 3) and is
being amortized over a useful life of 20 years. Licensing costs, including those
acquired from Aerial and Omnipoint, are amortized over a useful life of 40
years.



                                       6
<PAGE>   7
                        VOICESTREAM WIRELESS CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (Unaudited)

2.      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED:

        Revenue recognition

        Service revenues based on customer usage are recognized at the time the
service is provided. Access and special feature service revenue are recognized
when earned. Sales of equipment, primarily handsets, are recognized upon
delivery to the customer. Prepaid coupon sales are deferred until service is
provided.

        Supplemental cash flow disclosure

        Cash paid for interest (net of any amounts capitalized) was $149.1
million for the six months ended June 30, 2000 and $25.8 million for the same
period in 1999.

        Reclassifications

        Certain amounts in the prior period financial statements have been
reclassified to conform to the 2000 presentation.


        Recently issued accounting pronouncements

        In June 1998, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities." It
requires the recognition of all derivatives as either assets or liabilities and
the measurement of those instruments at fair value. The implementation of SFAS
No. 133 is not expected to have a material impact on our financial position or
results of operations. SFAS No. 137, "Accounting for Derivative Instruments and
Hedging Activities - Deferral of the Effective Date of FASB Statement No. 133",
issued in August 1999, postpones for one year the mandatory effective date for
adoption of SFAS No. 133 to January 1, 2001.

        In December 1999, the Securities and Exchange Commission ("SEC") issued
Staff Accounting Bulletin Number 101, "Revenue Recognition in Financial
Statements." This bulletin is effective for the quarter ended December 31, 2000,
with retroactive adoption to January 1, 2000. This bulletin establishes more
clearly defined revenue recognition criteria than previously existing accounting
pronouncements, and specifically addresses revenue recognition requirements for
non-refundable fees, such as activation fees collected by a company upon
entering into a contractual arrangement with a customer, such as an arrangement
to provide telecommunication services. We are in the process of evaluating the
impact of adoption of this bulletin.

        In March 2000, the FASB released Interpretation No. 44, "Accounting for
Certain Transactions involving Stock Compensation, an interpretation of APB
Opinion No. 25," which provides clarification of APB No. 25 for certain issues
such as the determination of an employee, the criteria for determining whether a
plan qualifies as a non-compensatory plan and the accounting consequences of
various modifications to the terms of a previously fixed stock option or award.
We believe that our practices are in conformity with this guidance, and
therefore Interpretation No. 44 will have no impact on the our financial
statements.

3.      AERIAL AND OMNIPOINT MERGERS:

        On May 4, 2000, we completed the merger with Aerial and accordingly,
subsequent to this date, Aerial results are included in VoiceStream's
consolidated results. Aerial provides PCS services in urban United States
markets including Columbus, OH, Houston, TX, Kansas City, MO, Minneapolis, MN,
Pittsburg, PA, and Tampa-St. Petersburg, FL. The merger was accounted for using
the purchase method. Pursuant to the agreement, we exchanged 0.455 of a share of
VoiceStream common stock for each share of outstanding Aerial common stock.

        In connection with the Aerial merger agreement, prior to closing of the
merger, Telephone and Data Systems, Inc ("TDS") replaced $420.0 million of
Aerial debt owed to TDS with equity of Aerial at $22 per Aerial common share. In
addition, Sonera, Ltd, ("Sonera") a Finnish telecommunications company, which
held an investment in Aerial Operating Company ("AOC"), a subsidiary of Aerial,
invested $230.0 million in Aerial equity, also at $22 per Aerial common share.
Prior to the closing of the Aerial merger, Sonera converted its interest in AOC
into Aerial common stock.



                                       7
<PAGE>   8
                        VOICESTREAM WIRELESS CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (Unaudited)

3.      AERIAL AND OMNIPOINT MERGERS - CONTINUED:

        On February 25, 2000, we completed the merger with Omnipoint and
accordingly, subsequent to this date, Omnipoint results are included in
VoiceStream's consolidated results. Omnipoint, directly and through joint
ventures in which it has interests, provides PCS services in urban markets
including New York, NY, Detroit, MI, Boston, MA, Philadelphia, PA, Miami, FL,
and Indianapolis, IN. The merger was accounted for using the purchase method.
Pursuant to the agreement, we exchanged 0.825 of a share of VoiceStream common
stock plus $8.00 in cash for each share of outstanding Omnipoint common stock.
In conjunction with the merger agreement, VoiceStream committed to invest a
total of $150.0 million in Omnipoint, of which $102.5 million was invested in
Omnipoint preferred stock upon signing of the merger agreement in June 1999. The
remaining $47.5 million was invested in Omnipoint preferred stock on October 1,
1999.

        In connection with the Omnipoint merger agreement, Hutchison made an
investment of $957.0 million into the combined company for common and redeemable
convertible preferred securities. $102.5 million was invested directly in
Omnipoint preferred stock subsequent to finalizing the merger agreement in June
1999. Hutchinson invested an additional $47.5 million in Omnipoint preferred
stock in October 1999. The remaining $807.0 million was invested in VoiceStream
upon the closing of the merger. Upon completion of the merger, Hutchison
exchanged its $150.0 million investment in Omnipoint preferred stock for
VoiceStream common stock at $29 per share. Additionally, Sonera invested $500.0
million in VoiceStream at the closing of the Omnipoint merger, purchasing
VoiceStream common shares at $57 per share.

        The components of the purchase price of these merger transactions and
the preliminary allocations are as follows (in thousands, except share data):

<TABLE>
<CAPTION>
                                                        AERIAL         OMNIPOINT
                                                      ----------      ----------
<S>                                                   <C>             <C>
Consideration and merger costs:
    Total value of shares issued in mergers (a)       $5,703,500      $1,538,000
    Cash payments                                        113,900         627,000
    Fair value of options and warrants converted           6,100         859,000
    Fair value of liabilities assumed inclusive
          of minority interest                           459,500       3,133,800
    Merger related costs                                  20,500          19,000
    Cook Inlet exchange rights (See Note 5)                               28,000
                                                      ----------      ----------
                Total consideration                    6,303,500       6,204,800
Preliminary allocation of purchase price:
    Current assets                                        94,800         171,000
    Property, plant and equipment                        384,800         473,000
    Investments in unconsolidated affiliates               3,500         714,700
    Licenses and other intangibles                       550,900         939,000
                                                      ----------      ----------
                Preliminary goodwill                  $5,269,500      $3,907,100
                                                      ==========      ==========
</TABLE>

        (a) VoiceStream issued 52,325,301 and 52,952,399 shares, respectively,
in conjunction with the Aerial and Omnipoint mergers.

        The above allocations reflect the estimated fair value of assets and
liabilities acquired. Some allocations are based on valuations which are
currently being finalized. VoiceStream does not believe that the final purchase
price allocations will produce materially different results than those reflected
above.

        Unaudited pro forma operating results, assuming both the Aerial and
Omnipoint mergers occurred on January 1 of each of the respective years are as
follows (in thousands, except per share data):

<TABLE>
<CAPTION>
                                              SIX MONTHS ENDED JUNE 30
                                                2000            1999
                                             ---------       ---------
<S>                                          <C>             <C>
Total revenues                               $ 900,000       $ 420,000
Net loss                                     $(895,000)      $(595,000)
Basic and diluted loss per common share      $   (4.21)      $   (2.82)
</TABLE>



                                       8
<PAGE>   9
                        VOICESTREAM WIRELESS CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (Unaudited)

4.      PROPERTY AND EQUIPMENT:



<TABLE>
<CAPTION>
                                         JUNE 30,        DECEMBER 31,
(in thousands)                             2000              1999
                                       -----------       -----------
<S>                                    <C>               <C>
Land, buildings, and improvements      $    57,179       $    24,590
Wireless communications systems          1,562,299           849,148
Furniture and equipment                    231,854           109,576
                                       -----------       -----------
                                         1,851,332           983,314
Less accumulated depreciation             (432,012)         (284,670)
                                       -----------       -----------
                                         1,419,320           698,644
Construction in progress                   666,785           233,148
                                       -----------       -----------
                                       $ 2,086,105       $   931,792
                                       ===========       ===========
</TABLE>

        Depreciation expense was $91.6 million and $27.9 million for the three
months ended June 30, 2000 and 1999, respectively, and $149.8 million and $52.0
million during the six months ended June 30, 2000 and 1999, respectively.


5.      INVESTMENTS IN AND ADVANCES TO UNCONSOLIDATED AFFILIATES:

        Cook Inlet VoiceStream PV/SS PCS, LP

        A subsidiary of VoiceStream holds a 49.9% interest in Cook Inlet
VoiceStream PV/SS PCS, LP ("Cook Inlet PCS"). VoiceStream funded the operations
of Cook Inlet PCS during the six months ended June 30, 2000 through loans
evidenced by promissory notes which are due 180 days after the date of issuance.
The weighted average interest rate was 15% for the second quarter 2000. All
promissory notes that have come due were replaced with new promissory notes. The
total investment in Cook Inlet PCS, including advances under such promissory
notes, was $64.8 million at June 30, 2000 and $61.9 million at December 31,
1999.

        Cook Inlet/VoiceStream PCS, LLC

        A subsidiary of VoiceStream holds a 49.9% interest in Cook
Inlet/VoiceStream PCS, LLC ("CIVS"). This entity owns, among others, the Dallas
and Chicago FCC BTA licenses. In January 2000, CIVS reached an agreement with an
infrastructure equipment vendor to provide CIVS with credit facilities of up to
$735 million, composed of a $160 million revolving credit agreement, term loans
of $325 million, consisting of $125 million in Tranche A and $200 million in
Tranche B, $100 million of 13% Series A Senior Discount Notes, and up to $150
million of 13% Series A Subordinated Notes. These facilities are not guaranteed
by VoiceStream but are secured by certain assets of CIVS. The net proceeds will
be used to finance capital expenditures, permitted investments, and for working
capital. The amount available for borrowing pursuant to the senior credit
facilities, consisting of the revolving credit agreement and term loans, is
based upon certain equipment purchases by CIVS up to the maximum $485 million
available. The total investment in CIVS including advances under promissory
notes, was $204.4 million at June 30, 2000 and $181.4 million at December 31,
1999.

        Cook Inlet/VoiceStream PCS II and III, LLC

        Under the Designated Entity rules set forth by the FCC, VoiceStream can
not own C and F Block licenses. Omnipoint's C and F Block licenses, assets and
liabilities associated with these licenses and operations were transferred to
two new joint venture entities controlled by Cook Inlet Region, Inc. ("Cook
Inlet"). We have accounted for this transfer of non-monetary assets as an
investment at VoiceStream's historical cost, which equates to the fair value of
these assets and liabilities as determined in the purchase price allocation
performed for the merger with Omnipoint. The excess purchase price attributed to
these assets has been allocated between license costs and goodwill and is being
amortized into the loss of unconsolidated affiliates over 40 and 20 years,
respectively. Each of these joint venture entities, Cook Inlet/VoiceStream GSM
II PCS, LLC ("CIVS II") and Cook Inlet/VoiceStream GSM III PCS, LLC ("CIVS
III"), qualify as a Designated Entity.

        Cook Inlet contributed a total of $75 million in cash to these joint
venture entities for its 50.1% ownership and



                                       9
<PAGE>   10
                        VOICESTREAM WIRELESS CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (Unaudited)

5.      INVESTMENTS IN AND ADVANCES TO UNCONSOLIDATED AFFILIATES - CONTINUED:

exchange rights. Immediately prior to the merger, Omnipoint contributed a
combination of non-cash assets and liabilities for its 49.9% ownership. Cook
Inlet holds the majority of voting power in each of these joint venture
entities. The total investment in CIVS II and III, including advances under
promissory notes, was $656.5 million and $53.8 million, respectively, as of June
30, 2000.

        Cook Inlet has certain rights, but not the obligation, to exchange their
joint venture interests in Cook Inlet PCS, CIVS, CIVS II and CIVS III for
approximately 12.6 million shares of VoiceStream common stock for a 30 day
period beginning after the FCC regulatory holding period has expired (currently
five years after the issuance date of the licenses held by the joint ventures).
For Cook Inlet PCS, CIVS and CIVS II this date is in the second quarter of 2002,
and for CIVS III in the fourth quarter of 2004. These rights are conditioned
upon the FCC's Designated Entity rules and VoiceStream's legal ability to own
the C and F Block licenses at the time of the exchange under such rules. The
initial fair value of these exchange rights of $58.6 million has been recorded
as an increase to investments in and advances to unconsolidated affiliates and
additional paid-in capital. The exchange rights are being amortized over the
remaining FCC regulatory holding periods for the respective licenses. For the
three and six months ended June 30, 2000, $5.5 million and $9.0 million,
respectively, in amortization expense was recognized for these rights.

        Microcell investment

        On February 28, 2000, VoiceStream completed the purchase of 9,590,000
newly issued Class A shares of Microcell Telecommunications Inc. ("Microcell"),
a Canadian GSM operator for approximately $275 million. The per share
transaction price was equal to the closing market price of Microcell's publicly
traded Class B Non-Voting shares on the Nasdaq National Market System on January
6, 2000.

        The Class A shares constitute approximately 15% of the issued and
outstanding equity securities of Microcell. Class A shares are non-voting but
are convertible at any time into common shares, which are voting (subject to
Canadian foreign ownership restrictions). If fully converted, these common
shares would represent a 22.6% voting interest in Microcell. Additionally,
VoiceStream is entitled to designate two members of Microcell's Board of
Directors. The investment is being accounted for using the equity method. The
total consideration paid by VoiceStream in excess of Microcell's assets, net of
liabilities, amounted to $287 million and is allocated primarily to licenses and
goodwill. Amortization expense recognized since February 28, 2000 was $4.1
million and is included in equity losses of unconsolidated affiliates.



                                       10
<PAGE>   11
                        VOICESTREAM WIRELESS CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (Unaudited)

6.      LONG-TERM DEBT:

<TABLE>
<CAPTION>
                                                      JUNE 30,       DECEMBER 31,
(in thousands)                                          2000             1999
                                                    -----------      ------------
<S>                                                 <C>              <C>
Previous credit facility:
    Revolver                                                          $   250,000
    Term loan                                                             250,000
New credit facility:
    Revolver                                        $   340,000
    Vendor facility                                     500,000
    Term loans                                        1,900,000
10 3/8 % Senior Notes                                 1,249,654         1,100,000
11 7/8 % Senior Discount Notes                          720,000           720,000
11 5/8% Senior Notes and Series A Senior Notes          449,654
14% Senior Notes
11 1/2% Senior Notes                                    205,000
FCC license obligations                                  94,520
                                                    -----------       -----------
                                                      5,458,828         2,320,000
Less unamortized discount and premium, net             (281,741)         (308,549)
Less current portion of long-term debt                  (94,520)
                                                    -----------       -----------
                                                    $ 5,082,567       $ 2,011,451
                                                    ===========       ===========
</TABLE>

        On February 25, 2000, immediately following the completion of the
Omnipoint merger, VoiceStream entered into a new credit facility with a
consortium of lenders. Pursuant to the new credit facility, the lenders have
made available revolving credit loans and term loans in an aggregate principal
amount totaling $3.25 billion. The revolving credit portion of the new credit
facility is a $1.35 billion reducing revolving credit. Immediately following the
completion of the Omnipoint merger, VoiceStream used the proceeds of draws on
the new credit facility to repay certain long-term debt of Omnipoint.
Additionally, a portion of the cash equity investments received from Hutchison
and Sonera, described in Note (3), were used to pay off the remaining balance on
the previous credit facility.

        The new credit facility permits up to $1.5 billion of additional
indebtedness, including up to $1 billion for a vendor facility, which would
become part of the new credit facility, by amendment, subject to the same
covenants and secured by the same collateral. On April 28, 2000, we entered into
a vendor facility with an infrastructure equipment vendor and a bank that
provides up to $1 billion in senior credit facilities and VoiceStream has agreed
to acquire certain equipment, software and services from the vendor. The vendor
facility has a maturity of 9.25 years and is available in multiple draws,
including $500 million that was drawn on April 28, 2000, $250 million that was
drawn in July 2000, and $250 million that can be drawn by October 31, 2000. Net
proceeds of the vendor facilities will be used for the same purposes as other
proceeds under the new credit facility.

        The availability of the revolving credit portion of the new credit
facility declines over the period commencing three years after the closing date
through the eighth anniversary of the closing date in the following percentages:
10% in year four, 15% in year five, 20% in year six, 20% in year seven and 35%
in year eight. The term loan portion of the new credit facility is comprised of
a $900 million Tranche A and a $1 billion Tranche B. Tranche A is required to be
amortized at the same rate that the availability under the revolving credit
portion of the new credit facility reduces with a final maturity on the eighth
anniversary of the closing date. Tranche B is required to be amortized in the
following amounts during the period commencing three years after the closing
date through the ninth anniversary: $10 million in each of years four through
eight and the remaining balance in year nine.

        Borrowings under Tranche A bear interest, at VoiceStream's option, at an
annual rate of interest equal to either (1) the greater of (a) the prime rate,
or (b) the Federal Funds rate plus 1/2%, or (2) a Eurodollar rate, in each
instance plus an applicable margin. Such applicable margin will range to a
maximum of 1.50%, in the case of loans based on the prime rate or Federal Funds
rate, and to a maximum of 2.75%, in the case of loans based on a Eurodollar
rate, in each case based upon certain factors including the ratio of total
indebtedness to operating cash flow, as defined in the new credit facility.



                                       11
<PAGE>   12
                        VOICESTREAM WIRELESS CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (Unaudited)

6.      LONG-TERM DEBT - CONTINUED:

        The $1 billion Tranche B and the vendor facility tranches bear interest,
at VoiceStream's option, at an annual rate of interest equal to either (1) the
greater of (a) the prime rate, or (b) the Federal Funds rate plus 1/2%, or (2) a
Eurodollar rate, plus an applicable margin. Such applicable margin is a fixed
percentage of 1.75%, in the case of loans based on the prime rate or Federal
Funds rate, and 3.0% in the case of loans based on a Eurodollar rate. The
applicable margin on the final $250 million vendor facility tranche, which must
be drawn prior to October 31, 2000, may be subject to adjustment at any time
before disbursement of the funds.

        The credit facility requires VoiceStream to enter into interest rate
hedging agreements to manage the interest rate exposure pertaining to borrowings
under the credit facility. VoiceStream had entered into interest rate caps,
collars and swaps with a total notional amount of $325.0 million at June 30,
2000. Generally these instruments have initial terms ranging from 1 to 4 years
and effectively convert variable rate debt to fixed rate. The amount of
unrealized gain or loss attributable to changing interest rates at June 30, 2000
was not material.


        The new credit facility contains affirmative and negative covenants,
with which VoiceStream must comply, including financial covenants, and provides
for various events of default. The repayment of the loans is secured by, among
other things, the grant of a security interest in the capital stock and assets
of VoiceStream and certain of its subsidiaries. As of June 30, 2000, we were in
compliance with respect to these affirmative and negative covenants.


        During the second quarter of 2000, VoiceStream exchanged $142.8 million
of Omnipoint's 14% Senior Notes for $149.7 million of VoiceStream's 10-3/8%
Senior Notes, and exchanged $102.3 million of Omnipoint's 11-1/2% Senior Notes
for a like amount of VoiceStream's 11-1/2% Senior Notes. In July 2000,
VoiceStream exchanged $193.5 million of the 11.625% Senior Notes due 2006 and
$249.3 million of the 11.625% Series A Senior Notes due 2006 for $476.1 million
of VoiceStream's 10-3/8% Senior Notes. Subsequent to these exchanges, $6.8
million of the Omnipoint 11.625% Senior Notes and Series A Senior Notes and
$102.7 million of the Omnipoint 11-1/2% Senior Notes remain outstanding. The
differences in the total value of debt exchanged represented an adjustment to
fair value of debt assumed in the Omnipoint merger and therefore were treated as
adjustments to the total purchase price of Omnipoint and are reflected in
additional goodwill recorded.

        The aggregate amounts of principal maturities of long-term debt at June
30, 2000 are as follows (in thousands):

<TABLE>
<CAPTION>
<S>                                      <C>
Twelve months ending June 30, 2001          $   94,520
    Remainder of 2001                                -
    Year ending December 31,
    2002                                             -
    2003                                       100,000
    2004                                       145,000
    Thereafter                               5,119,308
                                            ----------
                                            $5,458,828
                                            ==========
</TABLE>



                                       12
<PAGE>   13
                        VOICESTREAM WIRELESS CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (Unaudited)

7.      COMMITMENTS AND CONTINGENCIES:

        Future minimum payments required under operating leases and agreements
that have initial or remaining non-cancelable terms in excess of one year as of
June 30, 2000, are summarized below (in thousands):

<TABLE>
<CAPTION>
<S>                                      <C>
Six months ending December 31, 2000      $ 80,346
Year ending December 31,
    2001                                  157,633
    2002                                  145,684
    2003                                  138,183
    2004                                  128,788
    Thereafter                            270,690
                                         --------
                                         $921,324
                                         ========
</TABLE>

        Aggregate rental expense for all operating leases was approximately
$25.3 million and $7.7 million for the three months ended June 30, 2000 and
1999, respectively, and $52.8 million and $14.5 million during the six months
ended June 30, 2000 and 1999, respectively.

        In order to ensure adequate supply and availability of certain
infrastructure equipment requirements and service needs, VoiceStream has
committed to purchase PCS equipment from various suppliers. These commitments
total approximately $1.5 billion. At June 30, 2000, VoiceStream has ordered
approximately $1.0 billion under these agreements, of which approximately $300
million is undelivered.

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

        Contingencies:

        As a result of the Aerial and Omnipoint mergers, VoiceStream may have to
make substantial tax indemnity payments to Western Wireless. In the spin-off
transaction effected on May 3, 1999, Western Wireless distributed its entire
80.1% interest in VS Washington's common stock to its shareholders. Western
Wireless will recognize gain as a result of the spin-off, if the spin-off is
considered to be part of a plan or series of related transactions pursuant to
which one or more persons acquire, directly or indirectly, 50% or more of
VS Washington's common stock, considered under IRS rules a "prohibited
transaction". 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 VS Washington common stock at the
time of the spin-off and Western Wireless' adjusted tax basis in such stock at
that time.

        In the absence of direct authority, and although the issue is not free
from doubt, we believe that we should be able to establish that the spin-off and
VoiceStream's acquisition of VS Washington's stock pursuant to the mergers, in
conjunction with the related transactions and Hutchison's original investment in
VS Washington stock within two years prior to the spin-off, are not pursuant to
a prohibited plan. However, if the IRS were to take the position that a
prohibited plan did occur, the estimated range of possible liability of
VoiceStream, not including interest and penalties, if any, is from zero to $400
million.

        Fourteen of the C Block licenses owned by CIVS were issued subject to
the outcome of the bankruptcy proceedings of the original licensee. Pursuant to
an FCC order, the bankruptcy debtors elected to relinquish certain licenses,
which were subsequently reauctioned. A secured creditor of the debtors, filed
with the court a motion for reconsideration of the election order, which was
denied. An appeal of this denial is currently before the U. S. District Court of
Northern Maryland. Because the appeal of the election order is still pending,
there is uncertainty as to these C Block licenses of CIVS. In the event that
these licenses are returned to the jurisdiction of the bankruptcy court, it is
unlikely that CIVS will be able to recoup any or all of the costs incurred
by it in connection with the construction and development of systems related
to such licenses.



                                       13
<PAGE>   14
                        VOICESTREAM WIRELESS CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (Unaudited)

 8.     SALE OF OMNIPOINT TECHNOLOGIES INC.:

        On June 27, 2000 we sold a wholly-owned subsidiary, Omnipoint
Technologies ("OTI"), to Xircom, Inc. ("Xircom"). Pursuant to the terms of the
sales agreement, we exchanged all of the outstanding common shares of OTI for
approximately 1.2 million common shares of Xircom. The sale was accounted for as
a tax-free reorganization and VoiceStream did not recognize any gain or loss on
the transaction. The Xircom shares received were valued at approximately $40.4
million, representing the market price per share at the time of the sale, after
discounting for trading restrictions. The operations of OTI were immaterial to
the consolidated operations of VoiceStream for the three month and six month
periods ended June 30, 2000.

 9.     RELATED PARTY TRANSACTIONS:

        VoiceStream and the Cook Inlet joint ventures have entered into
reciprocal technical services agreements which allow each 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 performs as a
reseller for the other and related fees are charged and paid between the
parties. During the three months ended June 30, 2000, we earned revenues of
$26.8 million and incurred expenses of $31.8 million related to these
agreements. During the three months ended June 30, 1999, we earned revenues of
$4.0 million and incurred expenses of $4.7 million. For the six months ended
June 30, 2000, we earned revenues of $43.7 million and incurred expenses of
$51.3 million, as compared to revenues of $4.9 million and expenses of $5.7
million during the comparable period in 1999.


                                       14
<PAGE>   15

        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, constitutes "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, 1999. Due to the phase of the business cycle of VoiceStream's
PCS operations, our operating results for prior periods may not be indicative of
future performance.

        Overview

        We provide wireless communications services in urban markets in the
United States through the ownership and operation of PCS licenses and through
our minority interests in joint ventures that own and operate similar licenses.
We also hold a minority investment in a Canadian PCS operator.

        We were formed in 1994 as Western PCS Corporation. Prior to May 3, 1999,
we were an 80.1% owned subsidiary of Western Wireless Corporation. The remaining
19.9% was owned by Hutchison, a subsidiary of Hutchison Whampoa Limited, a Hong
Kong company. As the result of a spin-off transaction affected May 3, 1999, we
formally separated from Western Wireless' other operations.

        On February 25, 2000, we merged with Omnipoint. Omnipoint, directly and
through joint ventures in which it has interests, provides PCS services in urban
markets, including New York, NY, Detroit, MI, Boston, MA, Philadelphia, PA,
Miami, FL, and Indianapolis, IN.

        On May 4, 2000, we completed our merger with Aerial. Aerial provides PCS
services in urban markets including Columbus, OH, Houston, TX, Kansas City, MO,
Minneapolis, MN, Pittsburgh, PA, and Tampa-St. Petersburg, FL. As a result, the
reported results of operations for the three and six months ended June 30, 2000,
include the results of Aerial's operations for the period of May 4, 2000 through
June 30, 2000.

        On July 24, 2000, we announced that we had entered into a definitive
merger agreement with Deutsche Telekom AG, a German telecommunications provider.
In connection with the merger, Deutsche Telekom will assume all of our
outstanding debt which currently totals approximately $5.2 billion. Deutsche
Telekom will make a $5.0 billion investment in VoiceStream convertible preferred
stock, which is expected to occur during the third quarter of 2000. Deutsche
Telekom's investment is not contingent upon the closing of the merger. The
merger is expected to qualify as a tax-free reorganization for VoiceStream
shareholders receiving Deutsche Telekom stock. The merger is subject to the
customary closing conditions, including VoiceStream shareholder approval and
legal and regulatory approvals. The merger is expected to be completed in the
first half of 2001.



                                       15
<PAGE>   16

        We did not commence operations in any of our markets until February
1996. From that date on we have launched service in a variety of our markets as
follows:

<TABLE>
<CAPTION>
1996                      1997                     1998                    1999
----                      ----                     ----                    ----
<S>                       <C>                      <C>                     <C>
Honolulu                  El Paso                  Phoenix/Tucson          Seattle/Tacoma
Portland                  Boise                                            San Antonio/Austin
Salt Lake City            Denver                                           Washington DC/Baltimore

Albuquerque
Oklahoma City
Des Moines
</TABLE>

The following operational markets were acquired as a result of the Omnipoint
merger in February of 2000:

<TABLE>
<CAPTION>
<S>                                    <C>
  New York                             Indianapolis
  Detroit                              Hartford
  Boston/Providence                    Albany
  Miami/Ft. Lauderdale                 New Haven
</TABLE>

Additionally, the following operational markets were acquired as a result of the
Aerial merger in May of 2000:

<TABLE>
<CAPTION>
<S>                                    <C>
  Minneapolis                          Kansas City
  Tampa/St. Petersburg                 Columbus
  Pittsburgh                           Houston
</TABLE>

        Due to the varying dates at which each of the markets became
operational, the expenses and revenues incurred during any period may not be
comparable to another period and may not be representative of future operations.
Additionally, during each period being discussed, a portion of the operating
expenses were start-up costs incurred before the commencement of operations in
each of the markets. Exclusive of depreciation and amortization expense, which
was not material, approximately $0.4 million and $0.5 million of start-up costs
were incurred during the three months ended June 30, 2000 and 1999,
respectively, and $1.2 million of start-up costs were incurred during both six
month periods ended June 30, 2000 and 1999.

        We hold minority interests in joint ventures that have operations in
five markets. Our financial accounting for these minority interests differs from
that for markets we own because we account for them as investments using the
equity method of accounting. Our net share of the revenues and expenses of
markets operated by joint ventures are reflected on a single line in our
consolidated statements of operations. Additionally, our portion of the assets
and liabilities of each joint venture are reflected, net of our portion of each
joint ventures' cumulative net income or loss, in one line on our balance sheet.



                                       16
<PAGE>   17

RESULTS OF OPERATIONS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2000 AND 1999

        We had 2,566,700 subscribers at June 30, 2000, representing an increase
of 755,100 or 41.7% from March 31, 2000, and a 203.5% increase from December
31, 1999. At June 30, 1999, we had 553,200 subscribers, representing an increase
of 135,900 or 32.6% from March 31, 1999, and a 71.6% increase from December 31,
1998.

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

<TABLE>
<CAPTION>
(Dollars in thousands)                         THREE MONTHS ENDED JUNE 30,                     SIX MONTHS ENDED JUNE 30,
                                     -------------------------------------------     -------------------------------------------
                                                          %                                               %
                                        2000           CHANGE           1999            2000           CHANGE           1999
                                     -----------     -----------     -----------     -----------     -----------     -----------
<S>                                  <C>             <C>             <C>             <C>             <C>             <C>
Revenues:
  Subscriber revenues                $   273,711             229     $    83,292     $   444,461             226     $   136,538
  Prepaid revenues                        67,434          12,647             529          92,636           6,365           1,433
  Roamer revenues                         28,146           1,448           1,818          38,330             977           3,560
  Equipment revenues                      55,846             187          19,432          89,756             196          30,351
  Affiliate and other
   revenues                               28,420             614           3,979          45,372             830           4,879
                                     -----------                     -----------     -----------                     -----------
         Total revenues                  453,557             316         109,050         710,555             302         176,761
                                     -----------                     -----------     -----------                     -----------

Operating expenses:
  Cost of service                        121,384             394          24,580         183,701             334          42,348
  Cost of equipment
    sales                                103,765             191          35,662         162,667             167          60,908
  Cost of engineering
    services, research
    and development                        2,289            N.M.                           2,867            N.M.
  General and
    administrative                       144,900             437          27,004         223,949             363          48,396
  Sales and marketing                    142,617             181          50,784         230,197             168          85,806
  Depreciation and
    amortization                         198,812             571          29,650         280,904             407          55,414
  Stock based
    compensation                           3,939             (92)         47,303           9,535             (80)         47,303
                                     -----------                     -----------     -----------                     -----------
         Total operating
           expenses                      717,706             234         214,983       1,093,820             222         340,175
                                     -----------                     -----------     -----------                     -----------

Other income (expense)                  (150,075)            458         (26,884)       (234,289)            403         (46,589)
                                     -----------                     -----------     -----------                     -----------

Net Loss                             $  (414,224)            211     $  (132,817)    $  (617,554)            194     $  (210,003)
                                     ===========                     ===========     ===========                     ===========

Adjusted EBITDA                      $   (61,398)            112     $   (28,980)    $   (92,826)             53     $   (60,697)
                                     ===========                     ===========     ===========                     ===========

Cash flows provided by (used in):
     Operating activities            $  (130,570)                    $   (29,865)    $  (231,293)                    $   (75,117)
                                     ===========                     ===========     ===========                     ===========
     Investing activities            $  (428,849)                    $  (193,250)    $(1,305,608)                    $  (295,130)
                                     ===========                     ===========     ===========                     ===========
     Financing activities            $   454,639                     $   292,046     $ 1,372,946                     $   442,046
                                     ===========                     ===========     ===========                     ===========
</TABLE>


        REVENUES

        The increase in service revenues (subscriber, prepaid and roamer
revenues) is due to the growth in the number of subscribers and the Aerial and
Omnipoint mergers. Included in the results for the three months and six months
ended June 30, 2000 was $180.6 million and $230.0 million, respectively, in
service revenues generated by the acquired markets.

        The increase in subscribers is due primarily to subscribers acquired as
a result of the Omnipoint and Aerial mergers and continuing growth in the eleven
markets operating during the three months ended June 30, 2000, which were also
operating during the entire three months of June 30, 1999. In addition, second
quarter 2000 results included subscribers in the San Antonio/Austin and
Washington DC/Baltimore markets that became operational subsequent to the second
quarter of 1999. We believe our "Get More" marketing strategy, featuring Jamie
Lee Curtis in our advertising, that was initiated in the second quarter of 1998,
has contributed to the rapid subscriber growth throughout all of our markets. We
intend to continue the "Get More" marketing strategy and expect a continued
positive effect on subscriber growth.

        Subscriber revenue per average subscriber ("ARPU") was $50.17 and $57.58
for the three months ended June 30, 2000 and 1999, respectively, and $52.47 and
$53.78 for the six months ended June 30, 2000 and 1999,


                                       17
<PAGE>   18
respectively. The decline in ARPU is largely the result of the lower ARPU
prepaid business acquired in the Aerial and Omnipoint mergers. The addition of
the Omnipoint and Aerial markets did not have a significant impact on ARPU for
the three and six month periods ended June 30, 2000.

        The substantial increase in prepaid revenues is largely due to the
acquisition of Omnipoint and Aerial, which had more mature prepaid programs than
VoiceStream. We expect to continue the prepaid program, with certain
modifications to the supporting systems and marketing plan, and expect continued
revenue growth through the remainder of 2000.

        Roamer revenues are primarily the result of adding the Omnipoint and
Aerial markets. These markets contributed $20.2 million and $24.3 million to the
increase for the three months and six months ended June 30, 2000, respectively.
The remaining increase is a result of our continuing effort to procure domestic
and international roaming agreements with other carriers. We expect roamer
revenues to continue to increase during 2000 due to increased wireless
subscribers and our expanded network coverage.

        Equipment revenues increased as a result of more handsets sold. The
increase in handsets sold is due to the increase in the number of new
operational markets between years and continuing subscriber growth in the
markets that were operational in both periods. The addition of the Omnipoint and
Aerial markets contributed $29.8 million to equipment sales in the second
quarter of 2000, and $36.2 million during the first six months of 2000. We
anticipate continued growth in equipment sales as a result of continued growth
in subscriber additions and the commencement of the "Get More" marketing
strategy in the Omnipoint and Aerial markets.

        Other revenues consist primarily of revenue earned as part of the
reciprocal technical services agreements and resale agreements we have entered
into during 1999 with the Cook Inlet joint venture entities. These agreements
allow each of VoiceStream and the Cook Inlet joint venture entities to utilize
air time on the others' spectrum and/or wireless system infrastructure, in
certain agreed upon markets. The agreements are structured such that each
performs as a reseller for the other and related fees are charged and paid
between the parties. With the addition of the Omnipoint and Aerial markets, the
number of these agreements has increased. We expect to see revenues related to
these agreements continue to increase as a result of this and the continual
growth in the number of customers in 2000.

        OPERATING EXPENSES

        Cost of service expenses represent expenses incurred only by operational
markets. The Omnipoint and Aerial mergers contributed $58.6 million to the
increase in cost of service for the second quarter, and $70.7 million for the
first six months of 2000. The remaining increase in cost of service is primarily
attributable to the increased costs of maintaining the expanding wireless
network and supporting a growing customer base. Cost of service as a percentage
of total revenue less equipment sales increased to 30.5% from 27.4% in the three
months ended June 30, 2000 and 1999, respectively and 29.6% from 28.9% in the
six months ended June 30, 2000 and 1999, respectively. The increase is due to
the higher costs of serving customers in the markets acquired in the Omnipoint
and Aerial mergers. While cost of service expenses are expected to grow in 2000
due to the growth in subscribers and operating markets, we expect the cost of
service as a percentage of service revenue to decline as greater economies of
scale are realized.

        Cost of equipment sales increased primarily due to the increase in
handsets sold. The Omnipoint and Aerial mergers contributed approximately $64.6
million and $80.0 million to the increase in the second quarter and the first
six months of 2000, respectively. Although subscribers generally are responsible
for purchasing or otherwise obtaining their own handsets, we have
historically sold handsets below cost to respond to competition and general
industry practice, and we expect to continue to do so in the future.

        The increase in general and administrative expenses is primarily
attributable to the increased costs associated with supporting a larger
subscriber base. The Omnipoint and Aerial mergers increased second quarter and
year to date 2000 general and administrative expenses by $64.0 million and $83.3
million, respectively. General and administrative costs per average subscriber
were $21.31 and $18.55 for the three months ended June 30, 2000 and 1999,
respectively, and $21.88 and $18.86 for the six months ended June 30, 2000 and
1999, respectively. This increase is largely due to the Omnipoint and Aerial
mergers and the timing of when the synergies will be realized from consolidating
administrative functions, as well as the costs incurred to integrate the
operations of Omnipoint and Aerial. While general and administrative expenses
are expected to grow in 2000 due to the growth in subscribers and operating
markets, and the addition of new operating markets, we expect the cost per
average subscriber to decline as greater economies of scale are realized. The


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<PAGE>   19

efficiencies we expect to gain due to the increased subscriber base may be
partially offset during the remainder of 2000 by the costs associated with
integrating our back-end operations with those of Omnipoint and Aerial.

        Sales and marketing costs increased as a result of the increase in net
subscriber additions and the effort to promote VoiceStream's brand name in a
greater number of markets. The Omnipoint and Aerial mergers contributed
approximately $67.1 million and $81.5 million to the increases in the second
quarter and the first six months of 2000, respectively. Sales and marketing cost
per net subscriber added, including the loss on equipment sales, increased to
$659 from $493 for the three months ended June 30, 2000 and 1999, respectively,
and to $615 from $504 for the six months ended June 30, 2000 and 1999,
respectively. This increase is largely due to higher subscriber turnover or
churn rates for the prepaid businesses acquired in the Aerial and Omnipoint
mergers. The cost per gross subscriber added has remained relatively flat for
the comparative periods at approximately $350. We expect sales and marketing
cost per net subscriber added to begin to decline during 2000 due to the
anticipated growth in subscriber additions.

        The increase in depreciation and amortization expense is attributable to
the continued expansion of our wireless systems and the tangible and intangible
assets acquired in the Omnipoint and Aerial mergers. These mergers contributed
$43.8 million to depreciation and $102.9 million to amortization for the second
quarter of 2000. The additional merger related depreciation and amortization was
$51.0 and $122.6 for the six months ended June 30, 2000. FCC licenses are not
amortized until the related market is operational. These expenses will increase,
as new markets become operational.

        A non-cash charge for stock based compensation of $47.3 million was
recognized during the second quarter of 1999, as a result of restructuring stock
options in connection with the spin-off from Western Wireless. The remaining
$22.6 million of deferred compensation as of June 30, 2000, is being recognized
as expense over the future periods in which the remaining unvested options vest.
In the second quarter of 2000 and for the period to date, $3.9 million and $9.5
million of deferred compensation expense was recorded, respectively.

        PCS TECHNOLOGY

        Cost of engineering services and research and development are
directly attributable to the costs incurred by a technology subsidiary acquired
in the Omnipoint merger in the first quarter of 2000. This subsidiary was sold
to Xircom in the second quarter of 2000 (see Note 8 to the financial
statements).

        ADJUSTED EBITDA

        Adjusted EBITDA represents operating loss before depreciation,
amortization and 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 of other companies.

        Adjusted EBITDA loss for VoiceStream increased to $61.4 million for the
three months ended June 30, 2000, from a loss of $29.0 for the three months
ended June 30, 1999. This increase is due to the Aerial and Omnipoint mergers.
We are experiencing continued subscriber growth in the acquired markets and are
incurring the associated customer acquisition costs. In addition we are
incurring costs to integrate these operations into VoiceStream while having not
yet achieved all the expected synergies from consolidating administrative,
customer care and other similar functions. The increase in Adjusted EBITDA loss
to $92.8 million for the six months ended June 30, 2000 compared to $60.7
million for the six months ended June 30, 1999 and is attributable to the same
factors. We expect Adjusted EBITDA to improve during the remainder of 2000 in
the operational markets; however, the commencement of operations in new markets
will slow and could curtail this improvement.



                                       19
<PAGE>   20
        OTHER INCOME (EXPENSE)

        Interest and financing expense increased to $120.9 million from $20.3
million for the three months ended June 30, 2000 compared with 1999 and to
$202.1 million from $31.9 million for the six months ended June 30, 2000
compared with 1999, due to the increase in debt. We acquired $3.1 billion of
debt in the Omnipoint and Aerial mergers and have incurred additional debt
primarily to fund the capital expenditures associated with the build-out of the
wireless systems and to fund operating losses. The weighted average interest
rate, before the effect of capitalized interest, was 9.6% and 9.1% for the three
months ended June 30, 2000 and 1999, respectively, and 10.6% and 9.0% for the
six months ended June 30, 2000 and 1999, respectively.

        NET LOSS

        The increase in net loss to $414.2 million from $132.8 million for the
quarter ended June 30, 2000, compared with the same period in 1999, is
attributable primarily to the increase in depreciation and amortization and the
increase in interest expense, associated with the increase in tangible and
intangible assets, and debt acquired and additional debt incurred for the
Omnipoint and Aerial mergers. Additionally, equity in the net losses of
unconsolidated affiliates has increased due to the growth of the operating
markets in our joint ventures and to the loss associated with the Microcell
investment, which totaled $7.6 million in the second quarter of 2000.

        LIQUIDITY AND CAPITAL RESOURCES

        Financing and Merger Activities

        During the third quarter of 2000 we expect to receive the $5.0 billion
in proceeds from the sale of convertible preferred stock to Deutsche Telekom.
The proceeds from this investment will be used to pay down the revolving credit
portion of the new credit facility, to fund expenditures to expand our wireless
network, to fund the acquisition of additional spectrum and for general
corporate purposes.

        On February 25, 2000, immediately following the completion of the
Omnipoint merger, we entered into a new credit facility with a consortium of
lenders. Pursuant to the new credit facility, the lenders have made available
revolving credit loans and term loans in an aggregate principal amount totalling
$3.25 billion. The revolving credit portion of the new credit facility is a
$1.35 billion reducing revolving credit. Immediately following the completion of
the Omnipoint merger, we used the proceeds of draws on the new credit facility
to repay certain long-term debt of Omnipoint. Additionally, portions of the cash
equity investments received from Hutchison and Sonera, described below, were
used to pay off the remaining balance on the previous credit facility.

        The new credit facility permits up to $1.5 billion of additional
indebtedness, including up to $1 billion for a vendor facility, which would
become part of the new credit facility, by amendment, subject to the same
covenants and secured by the same collateral. On April 28, 2000, we entered into
a new vendor facility with an infrastructure equipment vendor and a bank that
provides up to $1 billion in senior credit facilities and we have agreed to
acquire certain equipment, software and services from the vendor. The vendor
facility has a maturity of 9.25 years and is available in multiple draws,
including $500 million that was drawn on April 28, 2000, $250 million that was
drawn in July 2000, and $250 million that can be drawn by October 31, 2000. Net
proceeds of the vendor facility will be used for the same purposes as other
proceeds under the new credit facility.

        The availability of the revolving credit portion of the new credit
facility declines over the period commencing three years after the closing date
through the eighth anniversary of the closing date in the following percentages:
10% in year four, 15% in year five, 20% in year six, 20% in year seven and 35%
in year eight. The term loan portion of the new credit facility is comprised of
a $900 million tranche and a $1 billion tranche. The $900 million tranche is
required to be amortized at the same rate that the availability under the
revolving credit portion of the new credit facility reduces with a final
maturity on the eighth anniversary of the closing date. The $1 billion is
required to be amortized in the following amounts during the period commencing
three years after the closing date through the ninth anniversary: $10 million in
each of years four through eight and the remaining balance in year nine.

        Borrowings under the $900 million Tranche A bear interest, at our
option, at an annual rate of interest equal to either (1) the greater of (a) the
prime rate, or (b) the Federal Funds rate plus 1/2%, or (2) a Eurodollar rate,
in each instance plus an applicable margin. Such applicable margin will range to
a maximum of 1.50%, in the case of loans based on the prime rate or Federal
Funds rate, and to a maximum of 2.75%, in the case of loans based on a
Eurodollar rate, in each case based upon certain factors including the ratio of
total indebtedness to operating cash flow, as defined in the new credit
facility.

        The $1 billion Tranche B and the vendor facility bear interest, at our
option, at an annual rate of interest equal to either (1) the greater of (a) the
prime rate, or (b) the Federal Funds rate plus 1/2%, or (2) a Eurodollar rate,
plus an applicable margin. Such applicable margin is a fixed percentage of
1.75%, in the case of loans based on the prime rate or Federal Funds rate, and
3.0% in the case of loans based on a Eurodollar rate. The applicable margin on
the final $250 million vendor facility tranche, which must be drawn prior to
October 31, 2000 may be subject to adjustment at any time before disbursement of
the funds.

        The new credit facility contains affirmative and negative covenants of
the borrowers, including financial covenants, and will provide for various
events of default. The repayment of the loans is secured by, among other things,
the grant

                                       20
<PAGE>   21

of a security interest in the capital stock and assets of VoiceStream and
certain of its subsidiaries. As of June 30, 2000 we were in compliance
with these affirmative and negative covenants.

        During the second quarter of 2000, we exchanged $142.8 million of
Omnipoint's 14% Senior Notes for $149.7 million of VoiceStream's 10 3/8% Senior
Notes, and exchanged $102.3 million of Omnipoint's 11 1/2% Senior Notes for a
like amount of VoiceStream's 11 1/2% Senior Notes. In July 2000, we exchanged
$193.5 million of the 11.625% Senior Notes due 2006 and $249.3 million of the
11.625% Series A Senior Notes due 2006 for $476.1 million of VoiceStream's 10
3/8% Senior Notes. Subsequent to these exchanges, $6.8 million of the Omnipoint
11.625% Senior Notes and Series A Senior Notes and $102.7 million of the
Omnipoint 11 1/2% Senior Notes remain outstanding. The differences in the total
value of debt exchanged represented an adjustment to fair value of debt assumed
in the Omnipoint merger and therefore were treated as adjustments to the total
purchase price of Omnipoint and are reflected in additional goodwill recorded.


        On February 25, 2000, we completed our merger with Omnipoint. Pursuant
to the merger agreement, 0.825 of a share of our common stock plus $8.00 in cash
were exchanged for each outstanding share of Omnipoint common stock. There was a
cash or share election option available to shareholders of Omnipoint subject to
proration. In conjunction with the merger agreement signed on June 23, 1999, we
invested a total of $150 million in Omnipoint, of which $102.5 million was
invested in Omnipoint preferred stock upon signing of the merger agreement, and
the remaining $47.5 million was invested in Omnipoint preferred stock on October
1, 1999.

        In connection with the Omnipoint merger agreement, Hutchison made an
investment of $957 million into the combined company for common and convertible
preferred securities. Upon signing of the merger agreement on June 23, 1999,
$102.5 million of this investment was invested directly in Omnipoint preferred
stock. An additional $47.5 million was invested in Omnipoint preferred stock
in October 1999. The remaining $807.0 million was invested in VoiceStream 2.5%
convertible junior preferred stock upon closing of the merger.

        Our merger with Aerial was completed on May 4, 2000. Under the terms of
the agreement, 0.455 of a share of VoiceStream common stock was exchanged for
each share of Aerial Series A common shares outstanding. In connection with the
Aerial merger agreement, immediately prior to the merger, TDS replaced $420
million of Aerial debt owed to TDS with equity of Aerial at $22 per share.
Sonera invested an additional $230 million in Aerial equity, also at $22 per
Aerial share.

        We expect a significant increase in future interest expense and
depreciation and amortization expense. Interest expense is expected to increase
due to the acquisition of Omnipoint and Aerial's existing debt, the cash
consideration in the mergers, and the addition of our $1.5 billion in senior
notes and senior discount notes issued during November 1999. This increase in
long-term debt is expected to result in a significant interest expense increase
during 2000. Future interest rates may be more or less favorable which could
significantly impact future interest expense. Additional debt may be incurred to
fund continuing expansion of our wireless networks and future operating losses.
Depreciation and amortization expense is expected to increase due to the
depreciation of fixed assets and the amortization of intangible assets acquired
in the Omnipoint and Aerial mergers. These increases in expenses are expected to
significantly impact the results of future operations.


                                       21
<PAGE>   22

Investments and Capital Expenditures

        For the remainder of 2000, we anticipate spending approximately $700
million for capacity expansion of operating markets and the development and
expansion of new markets (amounts include anticipated spending by us and our
Cook Inlet joint ventures). In addition we plan to participate in the upcoming
1900 mhz spectrum reauction later this year. We will use cash on hand,
including the $5 billion proceeds from the Deutsche Telekom investment, and
amounts available for borrowing under the new credit facility for such purposes.
The joint ventures will use cash on hand and amounts available under their
various credit agreements to fund capital activity. Further funds (which may be
significant) will be required to finance the continued growth of operations,
working capital and debt service. The capital cost of completing the build-out
in any particular market, and overall, could vary materially from current
estimates. If adequate funds are not available from our existing capital
resources, we may be required to curtail our service operations or to obtain
additional funds. The terms of any additional funds may be less favorable than
those contained in current arrangements. In addition to the aforementioned
capital expenditures we expect to make in 2000, we have non-cancelable lease
agreements for various facilities, including cell-site locations, of
approximately $80.3 million for the remainder of 2000. The sources of funding
for such expenditures will come from the same sources as discussed above.

        A subsidiary of VoiceStream holds a 49.9% interest in Cook Inlet PCS.
We funded the operations of Cook Inlet PCS during the three months ended June
30, 2000 through loans evidenced by promissory notes which are due 180 days
after the date of issuance. The weighted average interest rate was 15% for the
second quarter of 2000. All promissory notes that have come due were replaced
with new promissory notes. The total investment in Cook Inlet PCS, including
advances under such promissory notes, was $64.8 million at June 30, 2000 and
$61.9 million at December 31, 1999.

        In July 1997, and subsequently amended in June 1999 and thereafter,
Omnipoint through its wholly-owned subsidiary OPCS Philadelphia Holdings LLC
("Philadelphia Holdings") entered into a credit facility agreement with a
telecommunications equipment manufacturer to provide financing to Philadelphia
Holdings up to $150 million for the purpose of financing the build out of
networks in the Philadelphia and Dover markets. On May 4, 2000 CIVS II through
Philadelphia Operating Company ("Philadelphia Operating"), a wholly-owned
subsidiary of Philadelphia Holdings, entered into an agreement to refinance this
$350 million facility with the same lender ("New CIVS Credit Facility") for the
purpose of financing the continued build out of networks and the operations of
the Philadelphia, Atlantic City and Dover markets. Under the terms of the New
Ericsson Credit Facility, Philadelphia Operating is subject to certain financial
and operational covenants, including restrictions on levels of indebtedness,
minimum annualized revenues and cash flows and certain other financial
maintenance requirements. Additionally, the New CIVS Credit Facility provides
that, among other events, failure to pay amounts due to the FCC shall constitute
an event of default. The New CIVS Credit Facility is collateralized by
substantially all of the assets of Philadelphia Operating and its license
subsidiaries, including a pledge of all capital stock of each license
subsidiary.

        The New CIVS Credit Facility consists of a revolving credit facility of
up to $150 million and a $200 million term loan. The principal amount of the New
CIVS Credit Facility is payable in quarterly installments beginning in 2004,
with a final payment for the revolving portion of the facility due on March 31,
2008 and the final payment for the term loan due on March 31, 2009. Interest on
the New CIVS Credit Facility is payable at varying interest rates at a base rate
or LIBOR plus, in each case, a set margin and commitment fee based on
Philadelphia Operating's revolver utilization rate.

        A subsidiary of VoiceStream holds a 49.9% interest in CIVS. This entity
owns, among others, the Dallas and Chicago FCC BTA licenses. In January 2000,
CIVS reached an agreement with an infrastructure equipment vendor providing CIVS
with credit facilities up to $735 million, composed of a $160 million revolving
credit agreement, term loans of $325 million, consisting of $125 million in
Tranche A and $200 million in Tranche B, $100 million of 13% Series A Senior
Discount Notes, and up to $150 million 13% Series A Subordinated Notes. These
facilities are not guaranteed by VoiceStream but are secured by certain assets
of CIVS. The net proceeds will be used to finance capital expenditures,
permitted investments, and for working capital. The amount available for
borrowing pursuant to the senior credit facilities, consisting of the revolver
and term loans, is based upon certain equipment purchases by CIVS up to a
maximum $485 million available. Prior to obtaining this credit facility,
VoiceStream had funded the initial operations of CIVS in a similar manner to
that described above for Cook Inlet PCS with the same rates and terms. The total
investment in CIVS, including advances under such promissory notes, was $204.4
million at June 30, 2000, and $181.4 million at December 31, 1999, respectively.

        In February 2000, VoiceStream announced the investment of approximately
$275 million in newly issued Class A shares of Microcell Telecommunications,
Inc., a Canadian GSM operator. The per share transaction price was equal to the
closing market price of Microcell's publicly traded Class B Non-Voting shares on
the Nasdaq National Market System on January 6, 2000, the date the agreement in
principle was reached.

        Cash Flow Information

        Net cash used in operating activities was $231.3 million for the six
months ended June 30, 2000. Adjustments to the $617.6 million net loss to
reconcile to net cash used in operating activities included $280.9 million of
depreciation and amortization and $47.2 million of equity in the net loss of
unconsolidated subsidiaries. Other adjustments included changes in operating
assets and liabilities, including: (i) an increase of $61.2 million in accrued
liabilities due to the increase in accrued interest on long-term debt; (ii) an
increase of $102.3 million in inventory, due to anticipated increased sales and
the number of operating markets; (iii) an accounts receivable increase of $23.1
million due to the growth in sales, and (iv) an increase in accounts payable of
$92.7 million due to the increase in equipment purchases and other operating
expenses. Net cash


                                       22
<PAGE>   23

used in operating activities was $75.1 million for the six months ended June 30,
1999.

        Net cash used in investing activities was $1.3 billion in the six months
ended June 30, 2000. Investing activities consisted primarily of: (i) the
acquisition of Omnipoint and Aerial for $469.4 million; (ii) investments in and
advances to unconsolidated affiliates of $364.2 million, primarily attributable
to our $275 million investment in Microcell, and (iii) purchases of property and
equipment of $469.3 million, largely related to the continuing build-out of the
wireless network. Net cash used in investing activities was $295.1 million for
the comparable period of 1999.

        Net cash provided by financing activities was $1.4 billion for the first
six months of 2000. Financing activities consisted primarily of net proceeds
from the issuance of preferred and common stock in private placements, totaling
$1.3 billion, and from net additions to long-term debt of $71.3 million.
Long-term debt borrowings were $2.7 billion for the six months ended June 30,
2000, of which $2.3 billion was used to refinance Omnipoint and Aerial debt. Net
cash provided by financing activities was $442.0 million in the first six months
of 1999.

        In the ordinary course of business, we continue to evaluate
acquisitions, joint ventures and other potential business transactions. Any such
transactions would be financed with cash on hand, the expected proceeds from the
$5 billion Deutsche Telekom investment, borrowings under the new credit
facility, or through the issuance of additional debt or the sale of additional
equity. There can be no assurance that such additional funds will be available
to us on acceptable or favorable terms.

        Recently issued accounting pronouncements

        In June 1998, the Financial Accounting Standards Board issued SFAS No.
133, "Accounting for Derivative Instruments and Hedging Activities." It requires
the recognition of all derivatives as either assets or liabilities and the
measurement of those instruments at fair value. The implementation of SFAS No.
133 is not expected to have a material impact on our financial position or
results of operations. SFAS No. 137, "Accounting for Derivative Instruments and
Hedging Activities - Deferral of the Effective Date of FASB Statement No. 133",
issued in August 1999, postpones for one year the mandatory effective date for
adoption of SFAS No. 133 to January 1, 2001.

        In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin Number 101, "Revenue Recognition in Financial Statements."
This bulletin is effective for the quarter ended December 31, 2000, with
retroactive adoption to January 1, 2000. This bulletin establishes more clearly
defined revenue recognition criteria than previously existing accounting
pronouncements, and specifically addresses revenue recognition requirements for
non-refundable fees, such as activation fees collected by a company upon
entering into a contractual arrangement with a customer, such as an arrangement
to provide telecommunication services. We are in the process of evaluating the
impact of adoption of this bulletin.

        In March 2000, the FASB released Interpretation No. 44, "Accounting for
Certain Transactions involving Stock Compensation, an interpretation of APB
Opinion No. 25," which provides clarification of APB No. 25 for certain issues
such as the determination of an employee, the criteria for determining whether a
plan qualifies as a non-compensatory plan and the accounting consequences of
various modifications to the terms of a previously fixed stock option or award.
We believe that our practices are in conformity with this guidance, and
therefore Interpretation No. 44 will have no impact on the our financial
statements.

        Seasonality

        VoiceStream, and the wireless communications industry in general, have
historically experienced significant subscriber growth during the fourth
calendar quarter. Accordingly, during such quarter we experienced greater losses
on equipment sales and increases in sales and marketing expenses. We expect this
trend to continue.



                                       23
<PAGE>   24

PART II - OTHER INFORMATION


ITEM 1. LEGAL PROCEEDINGS

             There are no material, pending legal proceedings to which
        VoiceStream or any of its 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 VoiceStream.


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.


        (a)    3.1 Bylaws of VoiceStream Wireless Corporation

               27.1 Financial Data Schedule

        (b)    Reports on Form 8-K

           A Form 8-K/A was filed on May 15, 2000, reporting financial
           statements of Aerial Communications, Inc.

           A Form 8-K was filed on July 28, 2000, announcing that VoiceStream
           Wireless Corporation has entered into a definitive merger agreement
           with Deutsche Telekom AG ("DT") providing for the merger of
           VoiceStream and DT.



                                       24
<PAGE>   25

                                   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/ Cregg Baumbaugh                            By /s/ Patricia L. Miller
   ---------------------                             ------------------------
Cregg Baumbaugh                                   Patricia L. Miller
Executive V.P. - Finance/Corporate                Vice President, Controller and
Development (Principal Financial Officer)         Principal Accounting Officer


                             Dated: August 14, 2000


                                       25