Array (AD) Q3 2026 earnings review
Array's tower profit rises, but new tenant additions stall
Array, the cell tower owner formed after selling its wireless carrier business last year, lifted tower operating profit while tenant additions nearly stopped. Revenue rose 14% from a year ago as the company lapped last August's T-Mobile lease deal, while lower overhead lifted tower operating profit to $18 million. Chief executive Anthony Carlson kept the full-year outlook unchanged, which by our math leaves fourth-quarter revenue falling 17% from a year ago.
| Total operating revenue | $53.9M +14% from a year ago; -0.4% from last quarter |
|---|---|
| Tower operating profit (Adjusted OIBDA) | $18.3M $15.1M last quarter; $6.1M a year ago |
| Tower tenancy rate (ex-DISH) | 0.98 flat from last quarter (+10 net colocations) |
| Full-year 2026 outlook | Unchanged implies Q4 revenue down 17% from a year ago |
⚖️ Verdict: ⚪ Neutral
The story is unchanged because removing the buyout risk from majority owner TDS balanced out a sharp slowdown in new tower leases. Having TDS walk away from its all-stock offer protects minority shareholders from getting bought out before Array sells its remaining $1.58 billion of wireless airwaves. The bad news: Array added just 10 net tower leases this quarter, keeping its tenancy rate flat at 0.98 while temporary T-Mobile leases continue to wind down.
The question now is whether cost cuts and new tenants can offset T-Mobile's temporary lease cancellations and cover the ground rent on empty towers. Either overhead falls fast enough to hold tower operating profit near $17 million a quarter, or expiring T-Mobile leases pull profit down. The fourth-quarter results and the initial 2027 outlook will tell.
🐂 Bull Case
TDS Walked Away From Its Buyout Offer
Telephone and Data Systems (TDS), the majority owner that holds 81.9% of Array, had offered in May to buy the remaining shares in an all-stock deal. That offer created a risk that minority investors would get locked into a fixed exchange ratio before the wireless tower company sold its remaining airwaves.
"On September 1, 2026, TDS announced that it is no longer pursuing the Array Proposal," the company stated in its release. Meanwhile, Array's review of strategic options cost $5.9 million this quarter, and regulators approved its remaining $30 million of airwave sales to T-Mobile in October. Because TDS dropped the bid, minority shareholders keep their direct stake in the $1.58 billion of unsold airwaves on the balance sheet.
What to watch: the quarterly expenses for the strategic alternatives review in the fourth quarter. A drop toward zero would show that legal and advisory work on the cancelled buyout has ended, leaving only routine spectrum sale closings.
Lower Overhead Lifted Tower Operating Profit
Array measures the profit from its core tower business using Adjusted OIBDA, which is operating income before depreciation, spectrum gains, and income from passive wireless investments. Chief executive Anthony Carlson said his team is focused on "enhancing operational efficiency" as the business completes its first year after selling its wireless carrier operations.
Adjusted OIBDA rose to $18.3 million, or 33.9% of revenue, up from $15.1 million last quarter and $6.1 million a year ago. Selling, general and administrative expenses — corporate overhead and sales costs — drove the gain, falling by 9.8 percentage points of revenue from a year ago to 33.8%. Cost of operations, which covers tower ground leases and maintenance, also dipped by 1.2 percentage points of revenue to 43.3%.
What to watch: fourth-quarter Adjusted OIBDA against the $16.3 million implied by the middle of the full-year outlook. Beating that figure while temporary T-Mobile revenue shrinks would prove overhead cuts are outrunning lease cancellations.
Investment Income Beat the Run Rate
Alongside its cell towers, Array holds minority stakes in wireless partnerships run by other carriers. The profit from these stakes, recorded as equity in earnings of unconsolidated entities, provides most of the company's total Adjusted EBITDA — earnings before interest, taxes, depreciation, and one-offs.
Income from these partnerships reached $41.0 million in the third quarter, up 18.1% from $34.7 million in the second quarter. Even though the figure fell 41.3% from a year ago due to a one-time partnership sale last year, it brought the nine-month total to $116.1 million. Management still left its full-year estimate at $145 million, which by our math implies just $28.9 million for the fourth quarter.
What to watch: fourth-quarter partnership distributions in the cash flow statement. Cash distributions trailed reported earnings through nine months at $89.6 million versus $116.1 million, and the fourth quarter will show how much cash Array actually collects.
🐻 Bear Case
Tenant Additions Nearly Stalled in the Quarter
"As Array marks its first year as a tower company, we continue to make meaningful progress against our 2026 strategic priorities," Carlson said, pointing to "driving tenant growth" across the portfolio. Array tracks this through colocations — instances where a carrier rents space on its towers — and the tenancy rate, which is colocations divided by total towers, both excluding bankrupt carrier DISH Wireless.
The numbers show that leasing momentum slowed sharply. Array added just 10 net colocations from the prior quarter, reaching 4,372 across 4,455 towers, down from 72 additions in the second quarter and 62 in the first, by our math. Because additions were so small, the tower tenancy rate stood still at 0.98. A tower business with fewer than one permanent tenant per structure struggles to cover ground rent on empty towers.
What to watch: the tower tenancy rate and net colocation additions in the fourth quarter. A second straight quarter near 0.98 would show that carrier demand is not strong enough to fill empty towers before temporary T-Mobile leases expire.
The Unchanged Outlook Points to a Fourth-Quarter Drop
Array's year-over-year revenue growth dropped to 14.3% in the third quarter from 89.5% in the second quarter. That happened because the company lapped the August 2025 start of its master lease agreement with T-Mobile, which added 2,015 committed tower leases and up to 1,800 temporary interim sites that T-Mobile can cancel over 30 months.
- Third-quarter operating revenue: $53.9 million, down 0.4% from last quarter
- Nine-month operating revenue: $160.0 million
- Implied fourth-quarter revenue at the middle of the outlook: $50.0 million by our math, down 7.1% from the third quarter and down 17.0% from a year ago
Now that a full year of T-Mobile rent sits in the comparison base, T-Mobile's ongoing cancellation of temporary interim sites pulls total revenue down. Leaving the full-year outlook unchanged confirms that new leases from other carriers are not yet large enough to offset that runoff.
What to watch: the initial 2027 revenue outlook next quarter. It will show whether T-Mobile's temporary lease cancellations will push full-year revenue down in 2027.
Risks this quarter didn't answer
Five standing risks around spectrum sales, tenant concentration, and leasing disclosures received no update in the earnings release.
- Unsold C-band airwaves: licenses carry a $1.58 billion book value on the balance sheet; any sale announcement or timetable on the conference call would move the case.
- T-Mobile temporary site runoff: the release did not split site rental revenue between permanent and temporary T-Mobile sites; the quarterly 10-Q filing will show how fast temporary rent fell from $6.7 million in the second quarter.
- DISH Wireless bankruptcy: DISH remains excluded from tenant counts; the 10-Q legal footnote will show if Array expects any recovery on unpaid lease claims.
- Standard tower leasing metrics: management again omitted tenant churn, price escalators, and new lease additions; disclosing these on the call would clarify underlying demand.
- Satellite direct-to-device competition: no commentary in the release; any carrier remarks on rural tower demand over the next year will test this long-term risk.
💲 Other KPIs
Cash fell by $182.9 million from $416.4 million in the second quarter, pushing net debt up by $181.1 million to $439.6 million by our math. Tax payments on earlier airwave sales caused the drop: Array paid $274.3 million in cash income taxes over the first nine months, which pushed nine-month Adjusted Free Cash Flow (cash from operations and partnerships after maintenance capex) to negative $162.0 million.
Fell for a third straight quarter, down from $27.5 million in the second quarter, $45.2 million in the first, and $85.9 million at the end of 2025 — a 76.7% drop over nine months by our math. Customer deposits and deferred revenues represent cash collected upfront for future tower rent or spectrum leases, so the drawdown drains operating cash flow as Array works off prepaid balances.
Unchanged from $3.9 million in the second quarter and down from $8.6 million in the first quarter and $7.9 million a year ago. Spending on tower builds, land purchases, and maintenance took 7.3% of revenue this quarter, bringing nine-month capital spending to $16.5 million.
🔮 Guidance
Unchanged. The plan calls for $210 million at the middle of the range, or 28.9% growth for the full year. By our math, subtracting $160.0 million of nine-month revenue leaves $50.0 million for the fourth quarter — a 7.1% drop from the third quarter and a 17.0% drop from a year ago as temporary T-Mobile leases expire. Management had raised the bottom of the range by $5 million last quarter.
Unchanged. The outlook for tower operating profit excluding one-offs sits at $67.5 million at the middle of the range, up from $1.5 million in 2025. By our math, with $51.2 million earned in the first nine months, the fourth quarter needs $16.3 million, or a 32.7% margin, down from $18.3 million in the third quarter and $22.2 million a year ago. Management raised this range by $10 million in the second quarter.
Unchanged. Total profit before interest, taxes, depreciation, and one-offs — including passive wireless partnership income — is planned at $227.5 million at the middle of the range. By our math, that leaves $45.1 million for the fourth quarter, down from $63.7 million in the third quarter and $52.1 million a year ago because the full-year table keeps partnership income at $145 million, leaving just $28.9 million for the fourth quarter.
Unchanged. Array still plans $30 million of capital spending at the middle of the range, unchanged since it first issued the target four quarters ago. Because the wireless tower group spent only $16.5 million across the first three quarters, hitting the middle of the range requires $13.5 million in the fourth quarter by our math — more than triple the third quarter's $3.9 million pace.
❓ Key Questions
How much did T-Mobile temporary tower rent fall this quarter?
T-Mobile's temporary leases brought in $6.7 million in the second quarter, down from $8.1 million in the first. Because the earnings release did not break out the third-quarter figure, investors cannot yet see how fast T-Mobile is cancelling temporary sites.
Why did net new tower colocations slow to just ten?
Excluding DISH, Array added only 10 net colocations in the third quarter after adding 72 in the second and 62 in the first. Management needs to explain whether new carrier leasing slowed or whether cancellations on existing towers offset new leases.
What is the plan for the remaining $1.58 billion of airwaves?
Now that majority owner TDS has dropped its buyout offer and the remaining $30 million of T-Mobile spectrum sales have regulatory approval, the unsold C-band licenses represent the largest asset on Array's balance sheet.
How much more cash tax is due on completed spectrum sales?
Array paid $274.3 million in cash income taxes over the first nine months, mostly from airwave sales, while accrued taxes on the balance sheet still rose to $93.2 million from $16.9 million at year-end.