Detailed Narrative
TDS Telecom Fiber Expansion and Strategy
TDS Telecom achieved a record 66,000 marketable fiber service addresses delivered in Q2, contributing to a total of 106,000 in the first half of FY26. This strong performance led to an upward revision of the full-year guidance for fiber service address delivery to 250,000-300,000. The company is strategically leveraging federal ACAM program support to accelerate fiber expansion in rural areas, targeting over 300,000 addresses in 22 states over the next two years. The fiber network now covers nearly 1.2 million addresses, representing 60% of the total footprint, with 80% capable of gig speeds.
TDS Telecom Sales and Operational Transformation
Residential fiber net adds increased by 47% year-over-year to 15,100 in Q2, driven by footprint expansion and copper-to-fiber conversions. The company is intensely focused on converting new service addresses into customers by expanding sales teams, including door-to-door capacity, and enhancing the dot-com channel. Operational transformation initiatives are underway to modernize systems, aiming to improve efficiency and customer experience, with several key enhancements scheduled for completion in the second half of FY26.
TDS Telecom Financial Performance and Headwinds
Total operating revenues for TDS Telecom declined 6% in Q2, or 4% excluding divestitures, primarily due to ongoing pressures from legacy copper and cable revenue streams. This decline, coupled with a roughly 10% decrease in cable revenues compared to Q2 FY25 and faster copper declines, led to a $6 million reduction in total residential revenue year-over-year. The adjusted EBITDA guidance was narrowed to reflect these legacy challenges impacting the bottom line, despite a 13% growth in fiber revenue.
Array Digital Infrastructure Tower Operations
Array continued to demonstrate sequential improvement in its tenancy ratio, which increased from 0.98 to 0.96 at the end of the prior quarter (excluding the impact of DISH). Cash site rental revenue saw a significant increase of 65% year-over-year when normalized for📎 DISH. The company is actively engaged in ground lease optimization and continuously evaluating the economic viability of its tower portfolio, with 1,000-1,700 projected tenantless towers remaining post T-Mobile integration.
Array Digital Infrastructure Spectrum Monetization
Array successfully closed multiple significant spectrum transactions in Q2, including a $168 million sale of 600 MHz, 700 MHz, and AWS licenses to T-Mobile in May, and a $1 billion transaction with Verizon in June. These transactions mean Array has monetized approximately 70% of its spectrum holdings. The company continues to pursue opportunistic monetization of its remaining C-band spectrum, which is considered a highly compelling 5G asset with a mature ecosystem for carrier deployment.
Capital Allocation and M&A Strategy
TDS's balance sheet has been strengthened by recent transactions, including Array's spectrum sales, providing significant capital flexibility. The company remains committed to M&A, focusing on small- to medium-sized opportunities that align with its clustering strategy and have an accretive path to all-fiber, exemplified by the acquisition of Granite State Communications for $25 million. While TDS was restricted from share repurchases in Q2 due to the ongoing offer for Array, it maintains a $520 million authorization and commitment to its buyback program.