ANNEX I
200 West Street | New York, NY 10282-2198
Tel: 212-902-1000 | Fax: 212-902-3000
April 29, 2018
Board of Directors
T-Mobile US, Inc.
12920 SE 38th Street
Bellevue, Washington 98006
Ladies and Gentlemen:
You have requested our opinion as to the fairness from a financial point of view to T-Mobile US, Inc. (the “Company”) of the exchange ratio (the “Exchange Ratio”) of 0.10256 shares of common stock, par value $0.00001 per share (the “Company Common Stock”), of the Company to be issued in exchange for each share of common stock, par value $0.01 per share (the “Sprint Common Stock”), of Sprint Corporation (“Sprint”) pursuant to the Business Combination Agreement, dated as of April 29, 2018 (the “Agreement”), by and among the Company, Huron Merger Sub LLC, a wholly owned subsidiary of the Company (“Merger Company”), Superior Merger Sub Corporation, a wholly owned subsidiary of Merger Company, Sprint, Starburst I, Inc. and Galaxy Investment Holdings, Inc., each a holder of shares of Sprint Common Stock and an indirect wholly owned subsidiary of SoftBank (as defined below), and for the limited purposes of the covenants set forth therein that are expressly obligations of such persons, Deutsche Telekom AG, an indirect controlling stockholder of the Company (“DT”), Deutsche Telekom Holding B.V., a holder of Company Common Stock and indirect subsidiary of DT, and SoftBank Group Corp., an indirect, controlling stockholder of Sprint (“SoftBank”).
Goldman Sachs & Co. LLC and its affiliates are engaged in advisory, underwriting and financing, principal investing, sales and trading, research, investment management and other financial and non-financial activities and services for various persons and entities. Goldman Sachs & Co. LLC and its affiliates and employees, and funds or other entities they manage or in which they invest or have other economic interests or with which they co-invest, may at any time purchase, sell, hold or vote long or short positions and investments in securities, derivatives, loans, commodities, currencies, credit default swaps and other financial instruments of the Company, Sprint, DT, SoftBank and any of their respective affiliates and, as applicable, portfolio companies, and third parties, or any currency or commodity that may be involved in the transaction contemplated by the Agreement (the “Transaction”). We have acted as financial advisor to the Company and DT in connection with, and have participated in certain of the negotiations leading to, the Transaction. We expect to receive fees from the Company and DT for our services in connection with the Transaction, all of which are contingent upon consummation of the Transaction, and the Company and DT have agreed to reimburse certain of our expenses arising, and indemnify us against certain liabilities that may arise, out of our engagement. At your request, affiliates of Goldman, Sachs & Co. LLC have entered into financing commitments and agreements to provide the Company with senior secured credit facilities, a senior secured bridge loan facility, and a senior unsecured bridge loan facility in connection with the consummation of the Transaction, in each case subject to the terms of such commitments and agreements. We have provided from time to time, and are currently providing, certain financial advisory and/or underwriting services to DT and/or its affiliates for which our Investment Banking Division has received, and may receive, compensation, including having acted as dealer manager on DT’s commercial paper program since June 2011; as joint bookrunner in connection with DT’s 1.770% guaranteed notes due 2019
Securities and Investment Services Provided by Goldman Sachs & Co. LLC
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Board of Directors
T-Mobile US, Inc.
April 29, 2018
Page Two
(aggregate principal amount $250,000,000), 2.485% guaranteed notes due 2023 (aggregate principal amount $750,000,000), 1.95% guaranteed notes due 2021 (aggregate principal amount $1,000,000,000) and 1.500% guaranteed notes due 2019 (aggregate principal amount $750,000,000) in September 2016; as bookrunner in connection with DT’s 2.950% medium term notes due 2027 (aggregate principal amount HK$1,300,000,000) in April 2017; and as joint bookrunner in connection with DT’s 2.250% guaranteed medium term notes due 2029 (aggregate principal amount GBP 250,000,000) in April 2017. We also have provided from time to time, and are currently providing, certain financial advisory and/or underwriting services to Sprint and/or its affiliates for which our Investment Banking Division has received, and may receive, compensation, including having acted as joint bookrunner in connection with Sprint’s $3,500,000,000 asset securitization in October 2016; and as joint bookrunner in connection with Sprint’s $3,937,500,000 asset securitization in March 2018. We also have provided from time to time, and are currently providing, certain financial advisory and/or underwriting services to SoftBank and/or its affiliates and portfolio companies for which our Investment Banking Division has received, and may receive, compensation, including having acted as joint bookrunner in connection with Alibaba Group Holdings Limited’s (“Alibaba”), a portfolio company of SoftBank, unsecured term loan (aggregate principal amount $4,000,000,000) in May 2016; as joint bookrunner in connection with Alibaba’s $5,500,000,000 mandatory exchangeable trust offering of common stock in June 2016; financial advisor to SoftBank in connection with the formation of the approximately $100,000,000,000 SoftBank Vision Fund in May 2017; and as co-manager in connection with SoftBank’s 6.000% perpetual notes (aggregate principal amount $2,750,000,000) and 6.875% perpetual notes (aggregate principal amount $1,750,000,000) in July 2017. We may also in the future provide financial advisory and/or underwriting services to the Company, DT, Sprint, SoftBank, and their respective affiliates and, as applicable, portfolio companies for which our Investment Banking Division may receive compensation. Affiliates of Goldman Sachs & Co, LLC also may have co-invested with SoftBank and its affiliates from time to time and may have invested in limited partnership units of affiliates of SoftBank from time to time and may do so in the future. In addition, a Director on the board of Softbank is currently affiliated with The Goldman Sachs Group, Inc. as a senior director.
In connection with this opinion, we have reviewed, among other things, the Agreement; annual reports to stockholders and Annual Reports on Form 10-K of the Company and Sprint for the five fiscal years ended December 31, 2017 and March 31, 2017, respectively; certain interim reports to stockholders and Quarterly Reports on Form 10-Q of the Company and Sprint; certain other communications from the Company and Sprint to their respective stockholders; certain publicly available research analyst reports for the Company and Sprint; certain internal financial analyses and forecasts for Sprint prepared by its management; and certain internal financial analyses and forecasts for the Company on a stand-alone basis and on a pro-forma basis giving effect to the Transaction and certain financial analyses and forecasts for Sprint, in each case, as prepared by the management of the Company and approved for our use by the Company (the “Forecasts”), and certain operating synergies projected by the managements of the Company and Sprint to result from the Transaction, as approved for our use by the Company (the “Synergies”). We have also held discussions with members of the senior managements of the Company and Sprint regarding their assessment of the past and current business operations, financial condition and future prospects of Sprint and with the members of senior management of the Company regarding their assessment of the past and current business operations, financial condition and future prospects of the Company and the strategic rationale for, and the potential benefits of, the Transaction; reviewed the reported price and trading activity for the shares of Company Common Stock and the shares of Sprint Common Stock; compared certain financial and stock market information for the Company and Sprint with similar information for certain other companies the securities of which are publicly traded; reviewed the financial terms of certain recent business combinations in the telecommunications industry and in other industries; and performed such other studies and analyses, and considered such other factors, as we deemed appropriate.
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Board of Directors
T-Mobile US, Inc.
April 29, 2018
Page Three
For purposes of rendering this opinion, we have, with your consent, relied upon and assumed the accuracy and completeness of all of the financial, legal, regulatory, tax, accounting and other information provided to, discussed with or reviewed by, us, without assuming any responsibility for independent verification thereof. In that regard, we have assumed with your consent that the Forecasts and the Synergies have been reasonably prepared on a basis reflecting the best currently available estimates and judgments of the management of the Company. We have not made an independent evaluation or appraisal of the assets and liabilities (including any contingent, derivative or other off-balance-sheet assets and liabilities) of the Company or Sprint or any of their respective subsidiaries and we have not been furnished with any such evaluation or appraisal. We have assumed that all governmental, regulatory or other consents and approvals necessary for the consummation of the Transaction will be obtained without any adverse effect on the Company or Sprint or on the expected benefits of the Transaction in any way meaningful to our analysis. We also have assumed that the Transaction will be consummated on the terms set forth in the Agreement, without the waiver or modification of any term or condition the effect of which would be in any way meaningful to our analysis.
Our opinion does not address the underlying business decision of the Company to engage in the Transaction, or the relative merits of the Transaction as compared to any strategic alternatives that may be available to the Company; nor does it address any legal, regulatory, tax or accounting matters. This opinion addresses only the fairness from a financial point of view to the Company, as of the date hereof, of the Exchange Ratio pursuant to the Agreement. We do not express any view on, and our opinion does not address, any other term or aspect of the Agreement or Transaction or any term or aspect of any other agreement or instrument contemplated by the Agreement or entered into or amended in connection with the Transaction, including, those agreements contemplated by Section 2.6 of the Agreement, the fairness of the Transaction to, or any consideration received in connection therewith by, the holders of any class of securities, creditors, or other constituencies of the Company; nor as to the fairness of the amount or nature of any compensation to be paid or payable to any of the officers, directors or employees of the Company or Sprint, or any class of such persons in connection with the Transaction, whether relative to the Exchange Ratio pursuant to the Agreement or otherwise. We are not expressing any opinion as to the prices at which shares of Company Common Stock will trade at any time or as to the impact of the Transaction on the solvency or viability of the Company, DT, Sprint or SoftBank or the ability of the Company, DT, Sprint or SoftBank to pay their respective obligations when they come due. Our opinion is necessarily based on economic, monetary, market and other conditions as in effect on, and the information made available to us as of, the date hereof and we assume no responsibility for updating, revising or reaffirming this opinion based on circumstances, developments or events occurring after the date hereof. Our advisory services provided to the Company and the opinion expressed herein are provided for the information and assistance of the Board of Directors of the Company in connection with its consideration of the Transaction and such opinion does not constitute a recommendation as to how any holder of shares of Company Common Stock should vote with respect to such Transaction or any other matter. This opinion has been approved by a fairness committee of Goldman Sachs & Co. LLC.
Based upon and subject to the foregoing, it is our opinion that, as of the date hereof, the Exchange Ratio pursuant to the Agreement is fair from a financial point of view to the Company.
Very truly yours,
/s/ Goldman Sachs & Co. LLC
(GOLDMAN SACHS & CO. LLC)
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