We maintain an allowance for credit losses by applying an expected credit loss model. Each period, management assesses the appropriateness of the level of allowance for credit losses by considering credit risk inherent within each portfolio segment as of the end of the period.

We consider a receivable past due when a customer has not paid us by the contractually specified payment due date. Account balances are written off against the allowance for credit losses if collection efforts are unsuccessful and the receivable balance is deemed uncollectible (customer default), based on factors such as customer credit ratings, as well as the length of time the amounts are past due.

Accounts receivable balances are predominately comprised of amounts currently due from customers (e.g., for wireless communications services), device insurance administrators, wholesale partners, other carriers and third-party retail channels.

We estimate credit losses associated with our accounts receivable portfolio segment using an expected credit loss model, which utilizes an aging schedule methodology based on historical information and is adjusted for asset-specific considerations, current economic conditions and reasonable and supportable forecasts.

Our approach considers a number of factors, including our overall historical credit losses and payment experience, as well as current collection trends, such as write-off frequency and severity. We also consider other qualitative factors such as current and forecasted macroeconomic conditions.

We consider the need to adjust our estimate of credit losses for reasonable and supportable forecasts of future macroeconomic conditions. To do so, we monitor external forecasts of changes in real U.S. gross domestic product and forecasts of consumer credit behavior for comparable credit exposures.

Based upon customer credit profiles at the time of customer origination, as well as subsequent credit performance, we designate the EIP receivables segment into two customer classes of “Prime” and “Subprime.” Prime customer receivables are those with lower credit risk, and Subprime customer receivables are those with higher credit risk. Customers may be required to make a down payment on their equipment purchases if their assessed credit risk exceeds established underwriting thresholds. In addition, certain customers within the Subprime category may be required to pay a deposit.

To determine a customer’s credit profile and assist in determining their credit class, we use a proprietary credit scoring model that measures the credit quality of a customer leveraging several factors, such as credit bureau information and consumer credit risk scores, as well as service and device plan characteristics.

Installment loans acquired in the UScellular Acquisition are included in EIP receivables and generally have an initial term of 36 months. We applied our proprietary credit scoring model to the customers acquired in the UScellular Acquisition with an outstanding EIP receivable balance. Based on tenure, consumer credit risk score and credit profile, these acquired customers were classified into our customer classes of Prime or Subprime. Our proprietary credit scoring model is applied to all EIP arrangements originated after the UScellular Acquisition Date.

For EIP receivables acquired in the UScellular Acquisition, the difference between the fair value and unpaid principal balance of the loan at the acquisition date is accreted to interest income over the contractual life of the loan using the effective interest method. EIP receivables had a combined weighted-average effective interest rate of 10.3% and 11.1% as of December 31, 2025 and 2024, respectively.

The following table summarizes the EIP receivables, including imputed discounts and related allowance for credit losses:


(in millions)	December 31, 2025		December 31, 2024


EIP receivables, gross	$	8,626	$	7,402
Unamortized imputed discount	(566)		(524)
EIP receivables, net of unamortized imputed discount	8,060		6,878
Allowance for credit losses	(380)		(290)
EIP receivables, net of allowance for credit losses and imputed discount (1)	$	7,680	$	6,588
Classified on our consolidated balance sheets as:
Equipment installment plan receivables, net of allowance for credit losses and imputed discount	$	4,997	$	4,379
Equipment installment plan receivables due after one year, net of allowance for credit losses and imputed discount	2,683		2,209
EIP receivables, net of allowance for credit losses and imputed discount	$	7,680	$	6,588

Many of our loss estimation techniques rely on delinquency-based models categorized by customer credit class; therefore, delinquency is an important indicator of credit quality in the establishment of our allowance for credit losses for EIP receivables. We manage our EIP receivables portfolio segment using delinquency and customer credit class as key credit quality indicators.

The following table presents the amortized cost of our EIP receivables, including EIP receivables acquired through the UScellular Acquisition, by delinquency status, customer credit class and year of origination as of December 31, 2025:


	Originated in 2025				Originated in 2024				Originated prior to 2024				Total EIP Receivables, Net of Unamortized Imputed Discount
(in millions)	Prime		Subprime		Prime		Subprime		Prime		Subprime		Prime		Subprime		Total
Current - 30 days past due	$	4,936	$	1,011	$	1,499	$	319	$	102	$	8	$	6,537	$	1,338	$	7,875
31 - 60 days past due	35		31		9		10		1		—		45		41		86
61 - 90 days past due	17		19		7		8		1		1		25		28		53
More than 90 days past due	10		17		7		10		1		1		18		28		46
EIP receivables, net of unamortized imputed discount	$	4,998	$	1,078	$	1,522	$	347	$	105	$	10	$	6,625	$	1,435	$	8,060

We estimate credit losses on our EIP receivables segment by applying an expected credit loss model, which relies on historical loss data adjusted for current conditions to calculate default probabilities or an estimate for the frequency of customer default. Our assessment of default probabilities or frequency includes receivables delinquency status, historical loss experience, how long the receivables have been outstanding and customer credit ratings, as well as customer tenure. We multiply these estimated default probabilities by our estimated loss given default, which is the estimated amount of default or the severity of loss.

As we do for our accounts receivable portfolio segment, we consider the need to adjust our estimate of credit losses on EIP receivables for reasonable and supportable forecasts of economic conditions through monitoring external forecasts and periodic internal statistical analyses.

Activity for the years ended December 31, 2025, 2024 and 2023 in the allowance for credit losses and unamortized imputed discount balances for the accounts receivable and EIP receivables segments were as follows:


	December 31, 2025						December 31, 2024						December 31, 2023
(in millions)	Accounts Receivable Allowance		EIP Receivables Allowance		Total		Accounts Receivable Allowance		EIP Receivables Allowance		Total		Accounts Receivable Allowance		EIP Receivables Allowance		Total
Allowance for credit losses and imputed discount, beginning of period	$	176	$	814	$	990	$	161	$	773	$	934	$	167	$	811	$	978
Bad debt expense	694		676		1,370		592		600		1,192		440		458		898
Write-offs	(654)		(664)		(1,318)		(577)		(578)		(1,155)		(446)		(518)		(964)
Allowance for credit losses for acquired credit deteriorated receivables	10		78		88		—		—		—		—		—		—
Change in imputed discount on short-term and long-term EIP receivables	N/A		225		225		N/A		199		199		N/A		220		220
Impact on the imputed discount from sales of EIP receivables	N/A		(183)		(183)		N/A		(180)		(180)		N/A		(198)		(198)
Allowance for credit losses and imputed discount, end of period	$	226	$	946	$	1,172	$	176	$	814	$	990	$	161	$	773	$	934

We do not have material off-balance-sheet credit exposures as of December 31, 2025. In connection with the sales of certain service accounts receivable and EIP receivables pursuant to the sale arrangements, we provide guarantees of credit performance included on our Consolidated Balance Sheets measured at fair value that are based on a discounted cash flow model using Level 3 inputs, including estimated customer default rates and credit worthiness, dilutions and recoveries. See Note 5 – Sales of Certain Receivables for further information.