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TELEPHONE & DATA SYSTEMS INC /DE/ (TDS)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 continuing operations revenue was $308.5M (down 6% YoY) and diluted EPS from continuing operations was $0.33, a significant beat versus S&P Global consensus of -$0.02; the beat was driven primarily by large equity income, short‑term imputed spectrum lease income, and a sizable tax benefit, despite negative operating income due to license impairments at Array . Revenue modestly missed consensus by ~$1.1M (0.4%)*.
  • TDS announced a new $500M share repurchase authorization and repurchased ~1.08M shares for $40.7M in Q3, positioning buybacks as a key capital allocation pillar alongside fiber investment and potential M&A .
  • TDS Telecom delivered 42k marketable fiber addresses and 11.2k residential fiber net adds; FY25 guidance for TDS Telecom (revenue, Adjusted OIBDA/EBITDA, capex) was maintained .
  • Array (standalone tower company) showed strong underlying site‑rental growth aided by the new T‑Mobile MLA; management flagged a DISH MLA dispute and outlined “naked towers” and SG&A rationalization workstreams. Pending spectrum sales (AT&T, Verizon, further T‑Mobile) could fund additional special dividends and buybacks; AT&T timing may slip into 1H26 due to the government shutdown .

What Went Well and What Went Wrong

What Went Well

  • Material EPS beat despite operating loss: continuing diluted EPS $0.33 vs S&P Global consensus -$0.02, helped by equity in earnings ($69.8M), short‑term imputed spectrum lease income ($30.4M), and a tax benefit (-$72.8M) .
  • Fiber execution milestones: 42k marketable fiber addresses delivered and 11.2k residential fiber net adds in Q3; TDS Telecom surpassed 1 million fiber passings during the quarter .
  • Capital returns: Authorized a new $500M buyback and repurchased ~1.08M shares for $40.7M in Q3; management reiterated intent to retain the regular dividend and expects an ~“$10 per TDS share” special dividend following the AT&T spectrum transaction at Array (timing subject to close) .

Selected quotes:

  • “We crossed the 1 million fiber passings milestone… continuing to execute on our robust fiber strategy” — Walter Carlson, CEO .
  • “Array… commenced T‑Mobile MLA on August 1, 2025, helping to drive a 68% increase in Site rental revenues, excluding non‑cash amortization” .
  • “The TDS Board adopted a $500 million share repurchase program… dependent upon successful closings of the announced spectrum transactions” .

What Went Wrong

  • Operating loss and impairments: Consolidated operating income was -$68.0M; Array recorded a $47.7M license impairment, and TDS Telecom posted an -$8.3M operating loss .
  • Legacy declines and divestiture drag: TDS Telecom revenue fell 3% YoY (partly due to $6M impact from prior divestitures) and continues to face cable/copper pressure offsetting fiber growth .
  • Legal/tenant risk: DISH sent a letter asserting its MLA obligations were impacted by unforeseen FCC actions; Array disputes this and plans to enforce obligations. 2025 DISH MLA site‑rental revenue recognition expected at ~$7M, with similar levels through 2031 before tapering thereafter .

Financial Results

Note: Q3 2025 reflects TDS continuing operations post the August 1 UScellular divestiture; prior quarters may include businesses now shown in discontinued operations.

MetricQ3 2024Q2 2025Q3 2025Vs YoYVs QoQVs S&P Consensus
Revenue ($M)$327.5 $1,186.0 (includes USM pre-close) $308.5 -5.8% n/a (non‑comparable)$309.7* (estimate) → slight miss (~$1.1M, 0.4%)*
Diluted EPS – Continuing Ops$(0.88) n/a (total EPS -$0.05) $0.33 n/m n/a-$0.02* (estimate) → beat
Diluted EPS – Total$(0.73) $(0.05) $(0.84) n/m n/m n/a

S&P Global estimates marked with asterisk; Values retrieved from S&P Global.

Segment breakdown (Q3 2025 vs prior year):

Segment ($000s)Q3 2024Q3 2025YoY
TDS Telecom – Operating Revenues262,662 255,111 -3%
Array – Operating Revenues25,739 47,119 +83%
All Other – Operating Revenues39,096 6,291 -84%
Consolidated – Operating Income (Loss)(149,728) (67,974) +55%
TDS Telecom – Operating Income (Loss)10,186 (8,292) n/m
Array – Operating Income (Loss)(160,167) (53,313) +67%

Non‑GAAP profitability (Q3 2025):

Metric ($000s)TDS TelecomArray
Adjusted EBITDA80,491 85,081
Adjusted OIBDA76,972 6,107

Consolidated P&L drivers (Q3 2025):

  • Equity in earnings of unconsolidated entities: $69.8M
  • Short‑term imputed spectrum lease income: $30.4M
  • Income tax benefit: $(72.8)M
    These items more than offset the operating loss and contributed to positive continuing EPS .

KPIs

TDS Telecom operating metrics

KPIQ1 2025Q2 2025Q3 2025
Marketable fiber addresses delivered (quarter)14,000 27,000 42,000
Residential fiber net adds (quarter)8,300 10,300 11,200
Total residential broadband net adds (quarter)2,800 3,900 4,600
Residential fiber churn (avg monthly)0.9% 1.1% 1.5%
Residential revenue per connection ($/mo)$65.67 $65.85 $65.66
TDS Telecom capex ($000s, quarter)$58,870 $90,187 $102,429

Array tower metrics

KPIQ3 2025
Owned towers4,449
Colocations4,517
Tower tenancy rate1.02

Guidance Changes

FY 2025 (TDS Telecom) – guidance reiterated from Q2

MetricPeriodPrevious Guidance (Aug 11)Current Guidance (Nov 7)Change
Total operating revenuesFY 2025$1,030–$1,050M $1,030–$1,050M Maintained
Adjusted OIBDA (Non‑GAAP)FY 2025$310–$340M $310–$340M Maintained
Adjusted EBITDA (Non‑GAAP)FY 2025$320–$350M $320–$350M Maintained
Capital expendituresFY 2025$375–$425M $375–$425M Maintained

Additional policy/capital allocation commentary:

  • TDS expects to retain its regular quarterly dividend; buyback pacing depends on spectrum sale closings and market conditions .
  • Management targets gross leverage at or below ~1.4x at TDS Telecom, preserving flexibility for fiber investment (and potential edge‑out M&A) .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2 2025)Current Period (Q3 2025)Trend
Capital returnNo buybacks in Q1; in Q2, framework emerging post USM close New $500M buyback; 1.08M shares repurchased in Q3; expect Array special dividend ($10/TDS share) after AT&T closing Sharply more shareholder‑friendly
Fiber build & penetrationQ1: 14k passings; Q2: 27k passings; fiber adds improving Q3: 42k passings; 11.2k fiber adds; doubled construction crews; penetration focus Accelerating build, improving net adds
E‑ACAM/regulatory supportNoted participation; long‑term goals raised mid‑year ~$1.2B regulatory support over 15 years; ~300k new fiber addresses via E‑ACAM and along‑route builds; target copper <5% of footprint Positive structural tailwind
Array (towers) & MLAQ2: third‑party tower revenues +12%; transition to standalone tower co underway T‑Mobile MLA commenced Aug 1; site‑rental revenue +68% YoY ex non‑cash; focus on SG&A rationalization, ground‑rent resets, leasing “naked towers” Tower growth, margin work to come
Spectrum monetizationAgreements with AT&T and Verizon; additional deals pending Additional T‑Mobile spectrum deals ($178M); AT&T closing now Q4’25 or 1H’26; government shutdown affecting timelines More proceeds, timing risk
Legal/regulatory—DISH MLA dispute; Array deems claim without merit; expects ~$7M 2025 DISH MLA revenue Emerging risk
Leverage & liquidityBalance sheet restructuring post USM close TDS Telecom gross leverage ~1.4x; maintain under that; ample cash to fund fiber and obligations Conservative stance

Management Commentary

  • Strategy and optionality: “With a strong portfolio and increased financial flexibility, we see tremendous opportunities ahead for the TDS enterprise.” — Walter Carlson, CEO .
  • Capital allocation: “The Board’s $500 million share repurchase… reflects confidence in the Company’s long‑term strategy.” — Walter Carlson .
  • Fiber thesis and E‑ACAM: “E‑ACAM… will add approximately 300,000 new fiber addresses… deliver over $1.2 billion in regulatory revenue support over 15 years… penetration rates between 65–75%.” — Ken Dixon, TDS Telecom CEO .
  • Shareholder returns ahead: “Following the closing of the AT&T [spectrum] transaction, [Array’s] Board would declare a special dividend in the amount of approximately $10 per share at TDS.” — Vicki Villacrez, CFO .

Q&A Highlights

  • Fiber expansion update cadence: Management plans to provide more detailed cohort/penetration analytics with a February update; edge‑out opportunities of “several hundred thousand or more” addresses under evaluation .
  • Buyback execution: Buybacks will be balanced against fiber investment timing and proceed availability from spectrum transactions; discipline and opportunism emphasized .
  • Array cost structure: SG&A elevated through 1H26 due to wind‑down/spectrum management and legacy structural costs; opportunities to rationalize IT and other structural elements over time .
  • Naked towers strategy: Lease‑up focus, renegotiation of ground rents, and potential selective decommissioning; many land leases have short‑notice termination rights .
  • Leverage posture: Maintain TDS Telecom gross leverage at or below ~1.4x while funding fiber and meeting tax obligations tied to USM sale .

Estimates Context

  • Revenue: Actual $308.5M vs S&P Global consensus $309.7M (miss by ~$1.1M; 0.4%)* .
  • EPS (diluted, continuing): Actual $0.33 vs S&P Global consensus -$0.02 (material beat)* .
  • Estimate depth: Only 1 estimate for both revenue and EPS in Q3 2025; coverage is thin and susceptible to large surprises*.

S&P Global estimates marked with asterisk; Values retrieved from S&P Global.

Key Takeaways for Investors

  • The EPS beat was quality‑mixed: operating loss (license impairment, TDS Telecom pressure) was offset by equity income, spectrum lease accounting, and a large tax benefit; sustainability depends on continuing equity distributions and normalization of one‑offs .
  • Fiber momentum is building (42k passings; 11.2k fiber adds), and FY25 TDS Telecom guidance was maintained; watch for February’s update on expanded edge‑outs and cohort penetration targets .
  • Buyback authorization ($500M) plus potential Array special dividends (post AT&T closing) create clear capital return catalysts over the next 6–12 months; timing risk tied to regulatory approvals and the government shutdown .
  • Array’s tower growth from the T‑Mobile MLA and rising application volume is encouraging; 2026 will be key for SG&A normalization and naked‑tower strategy execution .
  • Legal exposure from DISH’s MLA assertions is a watch item; management intends to enforce obligations and expects ~$7M 2025 DISH MLA revenue .
  • For near‑term trading, buyback deployment progress and spectrum sale closings (AT&T, Verizon, additional T‑Mobile) are likely stock drivers; in the medium term, fiber penetration ramp and E‑ACAM execution underpin the telecom thesis .
  • Note the comparability caveat: Q3 is the first full quarter post UScellular divestiture in continuing operations; sequential comparisons to Q2 consolidated totals are not like‑for‑like .

S&P Global estimates marked with asterisk; Values retrieved from S&P Global.