What Telephone and Data Systems (TDS) Said on Its Q3 Earnings Call

Key Points

• TDS Telecom lowered its 2026 revenue and adjusted EBITDA outlook and raised its capital spending forecast by $100 million from the prior range’s midpoint to about $750 million, citing pulled-forward fiber investment and higher construction costs.
• Fiber expansion hit records, with roughly 76,000 service addresses added and 17,000 residential fiber connections in the quarter. Fiber revenue rose 14%, but legacy-service declines and higher expenses continued to weigh on results.
• TDS withdrew its offer to buy Array Digital Infrastructure’s minority interest after the sides couldn’t agree on value or consideration, then authorized an additional $250 million in share repurchases. Array kept its 2026 outlook unchanged.

Telephone and Data Systems NYSE: TDS lowered its 2026 revenue and adjusted EBITDA outlook for its telecom business and raised its capital spending forecast, as record fiber construction and customer growth have yet to fully offset pressure on legacy services.

On the company’s third-quarter earnings call, executives said TDS Telecom added approximately 76,000 marketable fiber service addresses and 17,000 residential fiber connections during the quarter, both company records. But declines in older copper and coax services, along with higher costs, continued to weigh on results.

“We were anticipating fiber revenues to more than offset legacy declines during the second half of 2026, but continue to work toward that inflection point,” said Kris Bothfeld, TDS vice president of financial analysis and strategic planning.

Telecom guidance lowered as spending rises

TDS Telecom now expects 2026 revenue of $990 million to $1.01 billion and adjusted EBITDA of $290 million to $310 million, both below its prior guidance. It raised its capital expenditure forecast to approximately $750 million, an increase of $100 million from the midpoint of its previous range.

Bothfeld said nearly half of the spending increase reflects future investment being pulled forward to support address deliveries in 2027. Much of the rest is tied to higher E-ACAM construction costs and a shift toward more buried construction in expansion markets.

Third-quarter capital expenditures totaled $251 million. Bothfeld said costs rose in some E-ACAM areas because of more expensive construction techniques and additional fiber mileage, though the company still considers the program’s economics attractive.

Total telecom operating revenue declined 3% in the quarter, or 1% excluding divestitures. Cash expenses rose 4%, reflecting expansion-related costs and inflation, including fuel and employee costs. Adjusted EBITDA declined as a result of those expenses and revenue headwinds, Bothfeld said.

Residential fiber revenue increased 14%, or $12 million, from a year earlier, largely offsetting pressure on legacy revenue streams. Coax revenue fell 7%, including a one-time benefit; without that benefit, it would have declined 10%. Total residential revenue fell $3 million, but was relatively flat excluding divestitures.

TDS Chief Financial Officer Vicki Villacrez said the revenue inflection point is “around the corner” rather than years away. She did not give a specific timetable for EBITDA growth, but said the company remains on track to deliver $100 million in annualized transformation benefits by the end of 2028.

Fiber build and customer additions reach records

TDS Telecom delivered approximately 181,000 fiber service addresses in the first nine months of 2026 and maintained its full-year target of 250,000 to 300,000. It has more than 2 million total service addresses, with 63% served by fiber. Including coax, 82% can receive gigabit speeds, executives said.

The approximately 17,000 third-quarter residential fiber net additions were up about 50% year over year. TDS Telecom Chief Executive Ken Dixon said fiber churn improved by 20 basis points from a year earlier, even during a period when moving typically pushes churn higher.

The company delivered 27,000 new fiber addresses in its incumbent local exchange carrier markets during the quarter and expects that number to rise in the fourth quarter. Dixon said TDS also plans to deliver another 25% of its E-ACAM addresses next year and has begun work to convert another 30,000 coax addresses to fiber.

Villacrez said expansion markets continue to reach an average penetration rate of 25% by month 12, while the company targets a steady-state rate of 40%. For E-ACAM markets, TDS is targeting penetration of 65% to 75%.

Array maintains outlook and refines tower estimate

Array Digital Infrastructure left its 2026 outlook unchanged, including expected operating revenue of $205 million to $215 million and adjusted EBITDA of $220 million to $235 million.

Array CEO Anthony Carlson said cash site rental revenue rose 20% year over year when adjusted for DISH and excluding T-Mobile interim site revenue. Excluding the full impact of the T-Mobile master lease agreement as well, cash site rental revenue increased 7%.

Array refined its estimate of towers that will have no tenants following T-Mobile’s network integration to between 1,200 and 1,600. Carlson said T-Mobile has until January 2028 to designate its committed sites under the agreement. Array is working to reduce ground lease costs and identify uneconomic sites for decommissioning.

Carlson also said Array received regulatory approval for the sale of certain 600 MHz and 700 MHz spectrum licenses and expects the transaction to close by year-end, subject to FCC finality and customary conditions. The company continues to pursue monetization of its remaining spectrum, primarily C-band, but had no further specific update.

Buyback authorization follows withdrawn Array offer

TDS CEO Walter Carlson said the company withdrew its previously announced all-stock offer to acquire Array’s minority interest after the parties could not agree on value and the form of consideration. He said a combination could still have benefits but declined to predict whether TDS might try again.

After the offer was withdrawn, TDS virtually exhausted its prior $520 million share repurchase authorization, Villacrez said. The board approved an additional $250 million authorization with no set expiration, allowing the company to repurchase shares opportunistically.

TDS also completed its acquisition of Granite State Communications during the quarter, adding nearly 13,000 fully fibered service addresses in New Hampshire.

About Telephone and Data Systems (NYSE:TDS)

Telephone and Data Systems, Inc NYSE: TDS is a telecommunications holding company that provides broadband and communications services in communities across the United States. Its principal operating business is TDS Telecom, which serves residential, business and wholesale customers with internet access, fiber-optic and other broadband connections, voice services, video entertainment and related communications solutions.

TDS Telecom focuses on expanding high-speed broadband availability in rural and suburban markets.

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