Telephone and Data Systems (NYSE:TDS) executives used the company’s fourth-quarter 2025 operating results call to outline what management described as a “transformative” year, highlighted by the divestiture of the company’s wireless operations and a series of spectrum monetization transactions at subsidiary Array Digital Infrastructure.
CEO Walter Carlson said the wireless divestiture “significantly strengthened our balance sheet” and positioned Array as a growing tower company, while also giving the company financial capacity to support TDS Telecom’s fiber expansion. Looking to 2026, Carlson said the enterprise is focused on five objectives: strengthening the corporate and capital structure; expanding TDS Telecom’s fiber footprint and customer experience; supporting Array’s tower strategy and further spectrum monetization; and strengthening company culture while delivering operational and financial results.
AT&T spectrum transaction closes; special dividend paid
Also in January, Villacrez said TDS repaid its remaining term loan debt of $150 million. She said the debt reduction and cash from transaction proceeds increased the company’s flexibility to execute on its capital allocation plan.
Villacrez reiterated three elements of TDS’s capital allocation approach:
- Continued investment in fiber, including higher fiber goals enabled by proceeds from the AT&T-related special dividend.
- Disciplined, accretive M&A evaluation focused on fiber opportunities.
- Shareholder returns, including share repurchases.
On buybacks, Villacrez said TDS repurchased 1.8 million common shares for $67 million during the quarter, bringing total 2025 repurchases to 2.8 million shares. She noted the board had authorized a $500 million increase to the repurchase program in November and that $524 million remained under the authorization at year-end 2025. Management said it intends to remain “disciplined” on repurchase timing based on business needs and market conditions.
TDS Telecom lifts long-term fiber target to 2.1 million addresses
TDS Telecom CEO Ken Dixon said the company improved fiber execution during 2025 but acknowledged it did not reach its 150,000 marketable fiber address goal. For the fourth quarter, Dixon reported 58,000 new marketable fiber addresses, up sequentially and up 39% year over year. For the full year, he said TDS Telecom delivered 140,000 new marketable fiber addresses, with production skewing to the back half of the year: 40,000 in the first half and 100,000 in the second half. Dixon said the fourth quarter was the strongest build quarter since 2023, supported by record construction crew counts.
On customer growth, Dixon said residential fiber net adds increased sequentially each quarter, ending the fourth quarter at approximately 15,000 net adds, up 11% from the prior-year quarter, and totaling roughly 45,000 residential fiber net adds for 2025.
Dixon also said the company continued portfolio optimization via divestitures, citing the mid-year sale of Colorado and the December sale of its Oklahoma ILEC, which management said concentrated the footprint in markets with an economic path to fiber.
With incremental capital available, management raised its long-term fiber ambition. Dixon said the company identified 300,000 additional “edge-out” service address opportunities in about 50 new communities, where it believes it can be first to market and achieve returns in the mid-teens. As a result, management increased its long-term goal from 1.8 million to 2.1 million fiber addresses.
During Q&A, finance executive Kris Bothfelt said the additional 300,000 addresses are tied to edge-out communities adjacent to existing expansion markets and do not change EA-CAM address expectations. Bothfelt said the company continues to view a roughly five-year horizon to substantially complete its multi-year programs, pointing to a 2029–2030 timeframe, while aiming to accelerate where possible to capture “first to fiber” opportunities.
Telecom guidance calls for higher CapEx and fiber builds in 2026
Bothfelt said average residential revenue per connection increased 2% year over year, but noted industry-wide bundling trends—specifically fewer broadband customers choosing video bundles—have created downward pressure on the metric. Dixon emphasized in Q&A that TDS Telecom views video as an important part of its value proposition and said the company remains “very happy” with its video business and margins, adding that some customers would not have chosen TDS broadband without a video bundle.
For financial performance, Bothfelt said total operating revenues decreased 1% in the quarter and 2% for the full year. Excluding divestitures, revenues were flat year over year in both periods. Cash expenses declined 4% in the quarter but increased 1% for the full year, which management attributed to transformation efforts that improved costs in the second half of the year. Adjusted EBITDA improved 6% in the fourth quarter but declined 6% for the full year, primarily due to divestitures and a first-quarter non-cash adjustment related to stock-based compensation.
For 2026, TDS Telecom guided to:
- Total telecom revenues of $1.015 billion to $1.055 billion, reflecting fiber growth offset by declines in video, voice, and wholesale, plus the full-year impact of 2025 divestitures.
- Adjusted EBITDA of $310 million to $350 million, with divestitures and legacy revenue declines pressuring results but partially mitigated by fiber progress and transformation benefits.
- New marketable fiber addresses of 200,000 to 250,000.
- Capital expenditures of $550 million to $600 million, up from $406 million in 2025, driven by EA-CAM, growth markets, and edge-out opportunities.
Dixon said lessons from prior years include maintaining construction crew counts through winter months to avoid losing momentum. He also cited strategic investments in internal construction capacity and equipment. Management reiterated it remains on track to deliver $100 million in savings by year-end 2028 through its transformation program.
Array outlines tower growth, spectrum monetization, and DISH dispute
Array CEO Anthony Carlson said Array’s value drivers include a portfolio of more than 4,400 towers, retained wireless spectrum (principally C-band), and minority interests in wireless partnerships that generate investment income and distributions. He said about one-third of Array’s towers have no competing site within a two-mile radius.
On spectrum, Carlson said Array has agreements in place to monetize roughly 70% of its spectrum holdings. He reviewed previously disclosed transactions, including the conveyance of 30% of spectrum to T-Mobile as part of the wireless operations sale, and agreements to sell spectrum to Verizon and AT&T for roughly $1 billion each, as well as additional T-Mobile agreements signed in August and October 2025 totaling $178 million in gross proceeds. He said remaining pending spectrum transactions require regulatory approval and other closing conditions.
Carlson said Array’s retained spectrum is principally C-band, which he described as attractive and deployable for 5G with build-out requirements that do not begin until 2029. In Q&A, he said Array is not a “forced seller” and believes the carrying costs of holding the spectrum are manageable relative to potential value, while continuing to pursue monetization opportunities.
Operationally, Carlson said the T-Mobile master lease agreement (MLA) materially increased revenue, and Array made progress in the integration process in the fourth quarter by processing over 2,000 applications and completing structural analyses on over 95% of them. He also said colocation revenue outside of the T-Mobile MLA remains a priority; cash site rental revenue increased 64% year over year from all customers and increased 8% excluding T-Mobile MLA-committed sites. Including interim site revenue, he said cash site rental revenue increased 96% year over year.
Array also addressed an ongoing dispute with DISH. Carlson said Array received a September 2025 letter from DISH asserting it is relieved of obligations under its master lease agreement, an assertion Array disputes. He said DISH has generally failed to make required payments since early December. Array recognized approximately $7 million of site rental revenue from the DISH MLA in 2025. Management emphasized that Array’s 2026 guidance excludes DISH revenue due to uncertainty; in Q&A, Carlson confirmed any settlement would be upside.
For 2026, Array guided to total operating revenue of $200 million to $215 million and Adjusted EBITDA of $200 million to $215 million, with Adjusted OIBDA of $50 million to $65 million. Capital expenditures are expected to be $25 million to $35 million, including about $6 million in one-time tower light monitoring migration costs in the first half of 2026. Management said guidance ranges are wider than typical due to uncertainty in interim site terminations and incremental activity under the T-Mobile MLA, as well as the wind down of elevated SG&A expenses tied to the legacy wireless operation shutdown.
On “naked towers” that could remain after T-Mobile selects committed sites by January 2028, Carlson said Array could have 800 to 1,800 tenantless towers and is focused on optimizing ground leases and reducing the cash burden of negative cash flow towers while marketing the portfolio to reduce the tenantless count over time.
About Telephone and Data Systems (NYSE:TDS)
Telephone and Data Systems, Inc (NYSE: TDS) is a diversified telecommunications company headquartered in Chicago, Illinois. Through its subsidiaries, the company provides a broad array of communications services, including wireless voice and data, wireline broadband and voice, cable television, and managed IT and cloud solutions. Its two primary operating units—TDS Telecom and U.S. Cellular—serve residential, business and wholesale customers across the United States.
TDS Telecom focuses on delivering broadband internet, digital voice, video and data communications services in primarily rural and suburban markets.
