What Array Digital Infrastructure (AD) Said on Its Q3 Earnings Call

Key Points

• Array maintained its 2026 outlook as third-quarter cash site rental revenue grew, while it manages expected T-Mobile interim-site departures by optimizing towers and reducing costs at potentially vacant sites.
• Array expects a spectrum-license sale to close by year-end and continues seeking buyers for its remaining holdings. TDS’s proposal to acquire Array’s minority interest was withdrawn after the parties failed to agree on transaction value or consideration.
• TDS Telecom cut its 2026 revenue and adjusted EBITDA forecasts and raised its capital expenditure outlook, despite record fiber address and customer additions, as fiber growth has not yet offset declines in legacy services. TDS also approved an additional $250 million share-repurchase authorization.

Array Digital Infrastructure NYSE: AD reported third-quarter revenue growth driven primarily by its T-Mobile agreement and maintained its full-year outlook, while its parent, TDS, lowered revenue and profit guidance for its fiber business despite record construction and customer additions.

The joint earnings call also addressed the companies’ abandoned merger proposal. TDS President and CEO Walter Carlson said the parties could not agree on the value or form of consideration for an all-stock transaction to acquire Array’s minority interest. TDS withdrew its offer in September.

Array President and CEO Anthony Carlson said the company continues to optimize its tower portfolio as T-Mobile integrates its network, while pursuing opportunities to monetize its remaining spectrum holdings.

Array Maintains Outlook as Tower Portfolio Shifts

Array’s cash site rental revenue rose 20% year over year after adjusting for DISH and excluding T-Mobile interim site revenue. After also fully excluding the impact of the T-Mobile master lease agreement, cash site rental revenue increased 7%, Anthony Carlson said.

Revenue from T-Mobile interim sites is expected to decline as the carrier terminates those sites, though Carlson said Array’s leasing pipeline and application activity should partially offset the impact over time. Array has refined its estimate of the number of towers that could be left without tenants following the integration to between 1,200 and 1,600. T-Mobile has until January 2028 to designate its committed sites under the agreement.

Array is working to reduce ground lease costs at towers likely to become tenant-less and identify uneconomic sites for decommissioning. The company is also accelerating ground lease buyouts to improve tower-level margins and reduce portfolio risk, Carlson said.

Asked about DISH, Carlson said Array had approximately 330 DISH sites. He said DISH is no longer paying for those sites and is in the process of abandoning its equipment. He declined to discuss specific satellite companies but said additional terrestrial wireless carriers would be positive for Array’s tower-leasing business.

Array left its 2026 outlook unchanged, including:

• Total operating revenue of $205 million to $215 million.
• Adjusted OIBDA of $60 million to $75 million and adjusted EBITDA of $220 million to $235 million.
• Capital expenditures of $25 million to $35 million, including an expected increase in ground lease buyout activity.

Spectrum Sale Nears Closing

Array received regulatory approval to sell certain 600 MHz and 700 MHz spectrum licenses and expects the transaction to close by year-end, subject to FCC finality and customary closing conditions, Anthony Carlson said.

The company continues to seek buyers for its remaining spectrum, primarily its C-band holdings. Carlson said the spectrum is ready for deployment and has no near-term build-out requirements, allowing Array to avoid being a forced seller. He did not provide a specific update on discussions with potential buyers.

Array’s third-quarter selling, general and administrative expenses included costs related to evaluating TDS’s acquisition proposal. Carlson said those strategic-alternatives costs are excluded from adjusted OIBDA and are not expected to recur in the fourth quarter following the offer’s withdrawal.

TDS Telecom Cuts Guidance Despite Fiber Growth

TDS Telecom added approximately 76,000 marketable fiber service addresses during the third quarter, a company record for the period and an 82% increase from a year earlier, said Chris Bothfeld, TDS vice president of financial analysis and strategic planning. The business added approximately 17,000 residential fiber connections, also a quarterly record.

Fiber served 63% of TDS Telecom’s more than 2 million service addresses at quarter-end. The company remains on track to add 250,000 to 300,000 fiber service addresses for the full year, Bothfeld said.

Even so, gains in fiber have not yet fully offset pressure on legacy services. Third-quarter fiber revenue rose 14%, or $12 million, year over year, while cable revenue fell 7%. Total telecom operating revenue declined 3%, or 1% excluding the impact of divestitures. Cash expenses increased 4%, reflecting expansion costs and inflation, among other factors.

TDS lowered its 2026 telecom revenue outlook to $990 million to $1.01 billion and its adjusted EBITDA forecast to $290 million to $310 million. It also raised its capital expenditure forecast to approximately $750 million, an increase of $100 million from the prior midpoint. Nearly half of that increase reflects future spending pulled forward to support 2027 address delivery, Bothfeld said.

Bothfeld said TDS had expected fiber revenue growth to more than offset legacy declines in the second half of 2026, but is still working toward that point. He described the revenue inflection as “around the corner” rather than years away.

TDS Telecom President and CEO Ken Dixon said the company is expanding sales capacity, including door-to-door vendors and teams serving multi-dwelling units. He added that the company is beginning work to convert another 30,000 coaxial cable addresses to fiber.

TDS Adds Buyback Authorization

TDS Chief Financial Officer Vicki Villacrez said the company had virtually exhausted its prior $520 million share repurchase authorization after returning to the market following the withdrawal of its Array offer. The TDS board approved an additional $250 million authorization that is not time-bound.

Walter Carlson said a combination with Array could still provide meaningful benefits, but declined to predict whether or when TDS might make another offer. For now, he said, the company is focused on building both businesses.

About Array Digital Infrastructure (NYSE:AD)

United States Cellular Corporation provides wireless telecommunications services in the United States. The company offers wireless services, including voice, messaging, and data services. It also provides devices, such as smartphones and other handsets, tablets, wearables, mobile hotspots, routers, and internet of things devices. In addition, the company offers various accessories, such as cases, screen protectors, chargers, and memory cards; and consumer electronics, including audio, home automation, and networking products; as well as offers option to purchase devices and accessories under installment contracts.

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