T-Mobile has been targeted in an investor complaint, served last Wednesday (Nov. 23), tied to accounting and disclosure by the firm, Fortune reported.
The investor, CtW Investment Group, an activist firm that is also union-backed, has requested that the Securities and Exchange Commission investigate the reporting behind T-Mobile’s nonstandard accounting efforts and also how it records and presents info tied to customers who have defaulted on phone installment payment plans.
According to Fortune, CtW said that T-Mobile has presented financial results that do not offer information about reconciliation of those results to standard GAAP reporting. In this case, the measures, said the complaint, relate to a rough of measure of cash flow known as EBITDA. Information that is not illustrated and which would impact cash flow, according to the activist investor, includes shifting customers from installment plans to phone leases. In addition, the firm did not include $4 billion spent on spectrum licenses, an exclusion that helps boost presented free cash flow. Finally, the complaint alleges that T-Mobile last year freed up reserves set aside previously to cover defaults on phone payment plans, an action that helped to increase stated net income.
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