Telephone and Data Systems (TDS) Q4 2025 earnings review
Transformation Complete, But Fiber Ambitions Demand Heavy Capital
TDS has successfully closed the book on its wireless era, pivoting entirely to its tower (Array) and broadband (TDS Telecom) assets. Q4 results reflect this clean slate: continuing operations net income reversed to a positive $37.2 million from just $1.0 million a year ago. Array is already monetizing its remaining spectrum, closing a $1.018 billion sale to AT&T in early 2026 and issuing a $10.25 special dividend. Meanwhile, TDS Telecom achieved a major structural milestone in Q4 as its fiber broadband connections finally surpassed its legacy copper and cable base. However, the cost of this transition is steep. Management increased the long-term fiber address goal to 2.1 million, which will drive a massive 41% acceleration in 2026 capital expenditures, severely pressuring free cash flow while segment earnings remain flat.
🐂 Bull Case
Array's site rental revenues surged 51% YoY for FY25, heavily bolstered by the new T-Mobile Master Lease Agreement. With Q4 site revenue hitting $55.0M, the newly independent tower segment is proving its cash-generation capability.
TDS is actively returning capital from its asset sales. The company repurchased $67.4 million of its shares in Q4 alone, and Array followed up with a $10.25 special dividend in February 2026 after closing its AT&T spectrum sale.
🐻 Bear Case
The price of expanding the fiber footprint is a massive spike in CapEx. FY26 guidance projects $550-$600 million in CapEx against just $310-$350 million in Adjusted EBITDA, guaranteeing heavy cash burn for the segment.
Despite adding 44,900 net fiber connections in 2025, total TDS Telecom connections actually declined by ~47,000 YoY due to steep attrition in legacy voice and copper segments.
⚖️ Verdict: ⚪
Neutral. The strategic pivot is officially executed, and the balance sheet is flush with spectrum sale cash. However, TDS Telecom's flat EBITDA guidance combined with a massive CapEx ramp means the core operating turnaround will be expensive and protracted.
Key Themes
Fiber Finally Eclipses Legacy Broadband
A historic crossover occurred in Q4: TDS Telecom's fiber broadband connections (287,900) surpassed its legacy incumbent copper and cable connections (274,000) for the first time. This accelerating mix shift is stabilizing residential revenue per connection ($65.95 in Q4) and validates the company's aggressive deployment strategy, which added 140,000 new marketable fiber addresses in 2025.
Array's Post-Transaction Revenue Surge
Array is hitting its stride as a standalone tower operator. Q4 site rental revenues accelerated to $55.0 million, up more than 100% from $26.0 million a year ago. This step-function increase is primarily driven by the activation of the T-Mobile Master Lease Agreement following the August 2025 wireless divestiture. FY26 guidance projects $200-$215 million in total operating revenue, setting a stable, recurring floor for the segment.
Spectrum Monetization and Capital Returns
Management is successfully executing on its promise to monetize retained assets. The $1.018 billion spectrum sale to AT&T successfully closed on January 13, 2026. This immediate cash infusion enabled a $10.25 per share special dividend from Array and allowed TDS to retire $150 million of Export Development Canada debt. Additionally, TDS repurchased 1.76 million shares for $67.4 million in Q4.
Massive CapEx Squeeze at TDS Telecom
TDS Telecom increased its long-term fiber address target by 300,000 to 2.1 million. However, this comes with a punishing price tag. FY26 CapEx is guided to an accelerating $550-$600 million (up ~41% from $406 million in 2025). With Adjusted EBITDA guided completely flat at a midpoint of $330 million, the broadband unit will operate at a significant free cash flow deficit throughout 2026.
Legacy Voice and Copper Attrition
The narrative of fiber growth masks persistent weakness in the legacy base. Despite the impressive addition of 44,900 fiber net adds in 2025, total TDS Telecom connections decelerated from 1.126 million to 1.079 million. The primary drag is the legacy voice segment, which lost nearly 33,000 connections (a 12% drop), and incumbent copper, which fell by 25,700 connections. Fiber growth is currently a replacement cycle, not an additive one.
Array's Earnings Quality Relies on Equity Investments
While Array guides for a seemingly healthy $200-$215 million in FY26 Adjusted EBITDA, investors should note the composition of those earnings. The Adjusted OIBDA guidance (which strips out non-operating investment activities) is only $50-$65 million. This massive ~$150 million gap means the vast majority of Array's EBITDA is derived from equity in earnings of unconsolidated entities, not from its core organic tower leasing operations.
Other KPIs
Reversing sharply from a mere $1.0 million in the same period last year. For the full year 2025, net income from continuing operations swung to a positive $48.2 million compared to a massive loss of $141.4 million in 2024, reflecting the cleaner operating profile post-UScellular divestiture.
Total residential broadband churn remained relatively stable at 1.6% in Q4 (vs 1.4% a year ago). However, residential fiber churn ticked up slightly to 1.2% in Q4 from 1.0% last year. While still healthy, retaining the newly acquired fiber base will be critical as the legacy copper base continues to erode.
While an improvement from -$70.9 million in FY24, the core operations are still burning cash when backing out the billions in one-time spectrum and divestiture proceeds. Operating cash flow of $338.3 million was entirely consumed by $390.5 million in capital expenditures.
Guidance
Stable. The $1.035 billion midpoint implies roughly flat performance compared to $1.038 billion in FY25. This underscores the core concern: massive fiber capital investments are currently only offsetting legacy revenue declines, not generating absolute top-line growth.
Stable. The midpoint of $330 million is identical to the $330 million achieved in FY25. With revenue and EBITDA flat, the return on the new $550M+ CapEx plan will be delayed into 2027 or beyond.
Accelerating. Implies roughly 27% growth at the midpoint compared to $163 million in FY25. This will be the first full fiscal year of Array operating purely as a standalone tower entity with the T-Mobile MLA active for all 12 months.
Accelerating. Implies growth from $194 million in FY25. As noted, the vast majority of this profitability will stem from equity in unconsolidated entities rather than direct operating income.
Key Questions
Timeline for Peak CapEx
With TDS Telecom's CapEx guidance jumping to $550-$600 million for FY26 to chase the expanded 2.1 million address goal, what year do you anticipate CapEx peaking, and when will segment free cash flow turn positive?
Status of 'Naked Towers'
Following the T-Mobile site selection process, Array previously projected having up to 1,800 'tenantless' towers. Can you provide an update on the strategy to lease, renegotiate, or decommission these specific sites in 2026?
Verizon Spectrum Sale Timing
With the AT&T spectrum sale successfully closed in January 2026, what is the latest expected timeline and regulatory status for the remaining $1.0 billion Verizon spectrum transaction?