Telephone and Data Systems, Inc. provides high quality communications services through its wholly owned subsidiary TDS Telecom which had 1,100,000 broadband video voice and wireless connections as of December 31, 2025. The company also leases tower space and offers ancillary services holds noncontrolling interests in wireless operating companies and holds certain wireless spectrum licenses through its majority owned subsidiary Array Digital Infrastructure, Inc. As of the…
Telephone and Data Systems, Inc. provides high quality communications services through its wholly owned subsidiary TDS Telecom which had 1,100,000 broadband video voice and wireless connections as of December 31, 2025. The company also leases tower space and offers ancillary services holds noncontrolling interests in wireless operating companies and holds certain wireless spectrum licenses through its majority owned subsidiary Array Digital Infrastructure, Inc. As of the same date Telephone and Data Systems, Inc. owned 82.0% of Array’s total outstanding shares and controlled 95.9% of its voting power. TDS common shares trade on the NYSE under the ticker TDS while Array trades under the ticker AD. The company is classified as a controlled company under NYSE rules because over half of the voting power for director elections is held by the trustees of the TDS Voting Trust. All of Telephone and Data Systems, Inc.'s segments operate entirely within the United States.
Telephone and Data Systems, Inc. generates revenue primarily from the sale of broadband video voice and wireless services provided by TDS Telecom to residential commercial and wholesale customers. The company also earns revenue from leasing tower space and providing ancillary services through its Array segment. Additional revenue comes from the sale of wireless spectrum licenses and from noncontrolling interests in wireless operating companies. Wholesale operations of TDS Telecom contribute revenue by carrying data and voice traffic for other carriers and by receiving federal Connect America Fund and state Universal Service Fund payments. Array’s direct tower operations produce income from ground rent tower maintenance utilities property tax and property insurance while its selling general and administrative expenses include employee costs bad debts consulting fees and other general overhead.
The company operates through the following segments: TDS Telecom and Array.
• TDS Telecom: This segment delivers high speed internet video voice and wireless services to about 1,100,000 connections across 30 states using fiber coaxial and copper networks. It offers fiber internet with speeds up to 8 gigabits per second for residential and up to 10 gigabits per second for select business connections. In non fiber areas it uses fiber to the node and copper based vectoring or pair bonding to reach speeds up to 100 megabits per second and employs DOCSIS 3.1 technology for up to 1 gigabit per second. The segment provides whole home WiFi security and support services video offerings through an integrated cloud TV platform known as TDS TV+ and voice plans that include local and long distance calling Voice over Internet Protocol and enhanced services such as Find Me Follow Me. Wholesale operations carry data and voice traffic for other carriers and receive Connect America Fund and Universal Service Fund support. The segment continually invests in fiber to the home projects to expand its footprint and improve broadband availability in rural and suburban markets.
• Array: This segment owns 4,450 towers in 19 states and leases space on those structures to tenants such as T-Mobile AT&T and Verizon while also providing ancillary services. It holds noncontrolling interests in wireless operating companies and retains certain wireless spectrum licenses. The average tower height is 260 feet with a range from 60 feet to 600 feet and the portfolio includes monopole self support and guyed tower structures. Over 65% of towers located on leased land have lease expiration dates ten years or more in the future. Array’s strategy focuses on increasing colocation revenue through long term Master License Agreements with major carriers optimizing ground lease agreements and evaluating towers without tenants for potential leasing or divestiture. The segment expects to have between 800 and 1,800 towers without tenants after the T-Mobile integration and seeks to unlock value through increased leasing ground rent rationalization or, if necessary, decommissioning. Array also pursues ground lease optimization to increase ownership of the land under its towers and to monetize its spectrum assets through negotiated sales or leases.
In the communications services market TDS Telecom competes with wireline providers cable companies fiber overbuilders VoIP providers satellite companies and wireless carriers. It differentiates itself by emphasizing network reliability high speed broadband a diverse product portfolio and high quality customer service backed by a strong community focus. The company also highlights its investments in fiber to the home infrastructure as a way to future proof its network and meet growing bandwidth demand. In the tower infrastructure sector Array ranks as the fifth largest tower owner and operator in the United States and faces competition from American Tower Corporation Crown Castle Inc SBA Communications Corporation regional tower operators build to suit providers rooftop owners and wireless companies that own their own infrastructure. Array’s competitive advantages stem from its strategic tower locations long term agreements with major tenants such as T-Mobile AT&T and Verizon low tenant churn high lease renewal rates and substantial available vertical space on its towers for additional colocation. The company benefits from its deep expertise in the end to end leasing process developed over more than forty years of tower ownership and operation.
TDS Telecom serves residential households small and medium sized businesses and wholesale carrier customers while also receiving support from federal and state universal service programs for underserved areas. Its wholesale customers include interexchange carriers that purchase data and voice transport capacity on the TDS Telecom network. Array’s primary customers are major wireless carriers including T-Mobile AT&T and Verizon that lease tower space on its sites as well as other tenants such as regional carriers and private operators that require tower infrastructure for their equipment. The company also holds noncontrolling interests in various wireless operating companies which provide additional revenue streams through dividend distributions.
Sectors:Communication Services · Real EstateSector rationaleThe primary revenue driver is TDS Telecom, which provides broadband, video, voice, and wireless services to residential and commercial customers. The company also operates a substantial second business line through Array, which owns and leases tower space to major wireless carriers, a business model that falls under Tower REITs/Billboard REITs in the Real Estate sector.Industries:Broadband and CableCommunication ServicesPrimaryThe company's primary revenue is generated through TDS Telecom, which provides fixed-line broadband internet, video, and voice services to residential and commercial customers using fiber, coaxial, and copper networks.Tower REITsReal EstateSecondaryThrough its Array segment, the company owns 4,450 towers and leases space on these structures to wireless carriers such as T-Mobile, AT&T, and Verizon.Wireless CarriersCommunication ServicesSecondaryTDS Telecom provides wireless connections to its customers, and the company holds noncontrolling interests in wireless operating companies and wireless spectrum licenses.Classified using BQ-MICSCIK: 0001051512
Investment Thesis
▲ Bull case
TDS Telecom's fiber expansion is accelerating with 40,000 marketable fiber service addresses delivered in Q1 2026, nearly triple the prior year's figure and the highest first-quarter total in company history, driven by record internal and external construction crew counts and a robust pipeline of addresses under construction, positioning the company well for the spring and summer build season and supporting its long-term goal of reaching 2.1 million marketable fiber service addresses; this execution momentum, combined with investments in internal construction teams and upgraded tools, provides greater control over build quality and long-term efficiency, while the Fiber Deeper program and federal A-CAM program enable fiber upgrades in existing markets and economical deployment in underserved areas, helping to drive copper out of the network and improve overall network economics.
Array's spectrum monetization strategy is progressing as planned, with the sale of certain 100 MHz licenses to T-Mobile closing earlier in the week and FCC approvals secured for the sale of 600 MHz and AWS licenses to T-Mobile and Verizon, expected to close in Q2 or Q3 2026, while the company continues to pursue opportunistic monetization of its remaining C-band spectrum, viewed as a highly compelling 5G asset with a mature ecosystem and no near-term buildout requirements, allowing ample time to realize value; the previously announced spectrum license sales, assuming closure prior to the Array merger transaction, will generate approximately $900 million in net proceeds to be distributed as $10.40 per share dividends to Array stockholders, providing immediate shareholder returns and strengthening the combined company's capital structure post-merger.
TDS Telecom's residential fiber revenue grew 13% year-over-year in Q1 2026, an uplift of approximately $11 million, helping to offset legacy revenue stream pressures from copper and cable declines, while residential fiber net adds increased 32% year-over-year to approximately 11,000, driven by footprint expansion and ongoing copper-to-fiber conversions, with 79% of fiber addresses now capable of gig speeds and the company now able to launch multi-gig speeds in its cable footprint, reflecting successful operational transformation through billing conversion in cable markets and introduction of a new Field Force platform that simplifies back-office processes and improves customer experience.
The proposed all-stock acquisition of Array's remaining shares at an exchange ratio of 0.86 TDS shares per Array share (subject to spectrum sale closures and $10.40 per share Array dividends) will eliminate duplicative corporate costs, streamline governance, increase share liquidity, and strengthen the capital structure of the enterprise, providing greater flexibility to pursue strategic investments across towers and fiber; TDS currently owns 81.9% of Array, and the transaction will position the combined company for long-term growth by combining Array's tower-focused fundamentals with TDS Telecom's growing fiber business, allowing Array stockholders to retain a significant interest in the tower business while gaining exposure to TDS Telecom's fiber growth prospects.
TDS Telecom's operational transformation is yielding tangible benefits, including the completion of billing conversion in cable markets and the rollout of a new Field Force platform, which simplify back-office processes and improve customer experience, while investments in internal construction teams and equipment are improving long-term build efficiency and providing a strategic advantage; the company remains on track with its transformation roadmap, with leadership strengthened in key sales and customer-experience roles to support fiber sales and conversion, and presales velocity showing excellent results in the low-20% range, indicating strong demand capture as new addresses become marketable.
TDS Telecom's fiber expansion is accelerating with 40,000 marketable fiber service addresses delivered in Q1 2026, nearly triple the prior year's figure and the highest first-quarter total in company history, driven by record internal and external construction crew counts and a robust pipeline of addresses under construction, positioning the company well for the spring and summer build season and supporting its long-term goal of reaching 2.1 million marketable fiber service addresses; this execution momentum, combined with investments in internal construction teams and upgraded tools, provides greater control over build quality and long-term efficiency, while the Fiber Deeper program and federal A-CAM program enable fiber upgrades in existing markets and economical deployment in underserved areas, helping to drive copper out of the network and improve overall network economics.
Array's spectrum monetization strategy is progressing as planned, with the sale of certain 100 MHz licenses to T-Mobile closing earlier in the week and FCC approvals secured for the sale of 600 MHz and AWS licenses to T-Mobile and Verizon, expected to close in Q2 or Q3 2026, while the company continues to pursue opportunistic monetization of its remaining C-band spectrum, viewed as a highly compelling 5G asset with a mature ecosystem and no near-term buildout requirements, allowing ample time to realize value; the previously announced spectrum license sales, assuming closure prior to the Array merger transaction, will generate approximately $900 million in net proceeds to be distributed as $10.40 per share dividends to Array stockholders, providing immediate shareholder returns and strengthening the combined company's capital structure post-merger.
TDS Telecom's residential fiber revenue grew 13% year-over-year in Q1 2026, an uplift of approximately $11 million, helping to offset legacy revenue stream pressures from copper and cable declines, while residential fiber net adds increased 32% year-over-year to approximately 11,000, driven by footprint expansion and ongoing copper-to-fiber conversions, with 79% of fiber addresses now capable of gig speeds and the company now able to launch multi-gig speeds in its cable footprint, reflecting successful operational transformation through billing conversion in cable markets and introduction of a new Field Force platform that simplifies back-office processes and improves customer experience.
The proposed all-stock acquisition of Array's remaining shares at an exchange ratio of 0.86 TDS shares per Array share (subject to spectrum sale closures and $10.40 per share Array dividends) will eliminate duplicative corporate costs, streamline governance, increase share liquidity, and strengthen the capital structure of the enterprise, providing greater flexibility to pursue strategic investments across towers and fiber; TDS currently owns 81.9% of Array, and the transaction will position the combined company for long-term growth by combining Array's tower-focused fundamentals with TDS Telecom's growing fiber business, allowing Array stockholders to retain a significant interest in the tower business while gaining exposure to TDS Telecom's fiber growth prospects.
TDS Telecom's operational transformation is yielding tangible benefits, including the completion of billing conversion in cable markets and the rollout of a new Field Force platform, which simplify back-office processes and improve customer experience, while investments in internal construction teams and equipment are improving long-term build efficiency and providing a strategic advantage; the company remains on track with its transformation roadmap, with leadership strengthened in key sales and customer-experience roles to support fiber sales and conversion, and presales velocity showing excellent results in the low-20% range, indicating strong demand capture as new addresses become marketable.
TDS Telecom's total operating revenues declined 3% year-over-year in Q1 2026, or 1% excluding divestitures, reflecting continued legacy revenue-stream pressures from copper and cable markets that are only partially offset by fiber growth, with cable revenues down roughly 10% versus 2025 and residential revenue per connection increasing just 1% year-over-year, indicating limited pricing power and ongoing challenges in offsetting declines through fiber revenue alone, despite the 13% fiber revenue uplift.
Array's operating expenses in Q1 2026 were significantly distorted by a $156.6 million gain on license sales and exchanges, net, which drove operating income to $160.8 million versus a $29.6 million loss in the prior year, masking underlying operational challenges; excluding this one-time gain, Array's core tower business continues to face pressure from transition and wind-down costs, with SG&A expenses still including costs to support the wind-down of legacy wireless operations, and adjusted EBITDA guidance for 2026 remains unchanged at $200-$215 million, suggesting limited near-term margin expansion potential despite cost-saving initiatives.
TDS Telecom's capital expenditures totaled $126 million in Q1 2026, reflecting higher construction activity and accelerated investments in internal construction crews and equipment, but the company is guiding toward the lower half of its 2026 total Telecom revenue range of $1.015-$1.055 billion due to current headwinds in copper and cable markets, and adjusted EBITDA guidance remains between $310-$350 million, indicating that fiber growth is not yet sufficient to fully offset legacy declines and transformation costs, with free cash flow from continuing operations negative at $81.1 million in Q1 2026.
Array's tower tenancy rate excludes DISH Wireless due to the low probability of collection on outstanding amounts, and while the normalized tenancy ratio showed sequential growth from 0.95 to 0.96, the company ceased recognizing DISH revenue in Q1 2026 and has fully reserved all unpaid 2025 amounts, highlighting a material and ongoing revenue headwind from a major tenant that is not expected to resume payments, with DISH having until January 2028 to finalize its 2,015 committed sites under the new MLA, after which Array anticipates 800 to 1,800 tenantless towers following integration completion and interim site termination.
TDS Telecom's residential fiber churn increased to 1.3% in Q1 2026 from 0.9% in Q1 2025, signaling potential challenges in customer retention despite network expansion, and while the company is investing in sales and customer-experience roles, the increase in churn could reflect early-stage issues in newly built areas or inadequate support for converting fiber addresses to paying customers, undermining the effectiveness of the build-out strategy if not addressed.
TDS Telecom's total operating revenues declined 3% year-over-year in Q1 2026, or 1% excluding divestitures, reflecting continued legacy revenue-stream pressures from copper and cable markets that are only partially offset by fiber growth, with cable revenues down roughly 10% versus 2025 and residential revenue per connection increasing just 1% year-over-year, indicating limited pricing power and ongoing challenges in offsetting declines through fiber revenue alone, despite the 13% fiber revenue uplift.
Array's operating expenses in Q1 2026 were significantly distorted by a $156.6 million gain on license sales and exchanges, net, which drove operating income to $160.8 million versus a $29.6 million loss in the prior year, masking underlying operational challenges; excluding this one-time gain, Array's core tower business continues to face pressure from transition and wind-down costs, with SG&A expenses still including costs to support the wind-down of legacy wireless operations, and adjusted EBITDA guidance for 2026 remains unchanged at $200-$215 million, suggesting limited near-term margin expansion potential despite cost-saving initiatives.
TDS Telecom's capital expenditures totaled $126 million in Q1 2026, reflecting higher construction activity and accelerated investments in internal construction crews and equipment, but the company is guiding toward the lower half of its 2026 total Telecom revenue range of $1.015-$1.055 billion due to current headwinds in copper and cable markets, and adjusted EBITDA guidance remains between $310-$350 million, indicating that fiber growth is not yet sufficient to fully offset legacy declines and transformation costs, with free cash flow from continuing operations negative at $81.1 million in Q1 2026.
Array's tower tenancy rate excludes DISH Wireless due to the low probability of collection on outstanding amounts, and while the normalized tenancy ratio showed sequential growth from 0.95 to 0.96, the company ceased recognizing DISH revenue in Q1 2026 and has fully reserved all unpaid 2025 amounts, highlighting a material and ongoing revenue headwind from a major tenant that is not expected to resume payments, with DISH having until January 2028 to finalize its 2,015 committed sites under the new MLA, after which Array anticipates 800 to 1,800 tenantless towers following integration completion and interim site termination.
TDS Telecom's residential fiber churn increased to 1.3% in Q1 2026 from 0.9% in Q1 2025, signaling potential challenges in customer retention despite network expansion, and while the company is investing in sales and customer-experience roles, the increase in churn could reflect early-stage issues in newly built areas or inadequate support for converting fiber addresses to paying customers, undermining the effectiveness of the build-out strategy if not addressed.