Telephone and Data Systems Inc (TDS) Q3 2025 Earnings Call Highlights: Strategic Moves and ...

This article first appeared on GuruFocus.

Special Dividend from Array: $1.6 billion received in August. Share Repurchase Program: New $500 million authorization announced. Fiber Addresses: Achieved 1 million fiber addresses milestone. Residential Fiber Net Adds: 11,200 in the quarter, 19% growth year-over-year. Fiber Service Address Delivery: 42,000 in the quarter, halfway to the 150,000 annual goal. Operating Revenues: Down 3% year-over-year; excluding divestitures, down 1%. Adjusted EBITDA: Down 3% year-over-year. Capital Expenditures: Increased due to EA-CAM program and fiber expansion. Site Rental Revenue: Grew 68% year-over-year, excluding noncash amortization. Spectrum Monetization: Agreements to monetize 70% of spectrum holdings. Pending Spectrum Transactions: $1 billion each from AT&T and Verizon, plus $178 million from T-Mobile.

Warning! GuruFocus has detected 11 Warning Signs with TDS. Is TDS fairly valued? Test your thesis with our free DCF calculator.

Release Date: November 07, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

Telephone and Data Systems Inc (NYSE:TDS) successfully closed the T-Mobile transaction, unlocking significant value and enabling further expansion of their fiber program. Array Digital Infrastructure has transitioned into an independent tower company, showing promising growth and operational success. TDS Telecom achieved a milestone of 1 million fiber addresses, indicating progress in their fiber transformation strategy. The company has strengthened its capital structure with a $1.6 billion special dividend from Array, aiding in debt reduction and supporting fiber expansion. TDS announced a new $500 million share repurchase program, reflecting confidence in the company's long-term strategy and providing a tax-efficient return of capital to shareholders.

Negative Points

TDS Telecom's fiber address delivery is behind schedule for the year, requiring increased efforts to meet targets. Total operating revenues for TDS were down 3% in the quarter compared to the prior year, impacted by divestitures and declines in legacy markets. Adjusted EBITDA decreased by 3% year-over-year, pressured by divestitures and legacy revenue stream declines. Array Digital Infrastructure faces challenges with DISH Wireless, which disputes its obligations under the master lease agreement, potentially impacting future revenues. The company anticipates high SG&A expenses through the first half of 2026 due to wireless operations wind-down costs and other structural expenses.

Story Continues

Q & A Highlights

Q: Can you provide an update on the fiber plan and potential expansion opportunities? A: Vicki Villacrez, Executive Vice President and CFO, mentioned that TDS is evaluating several hundred thousand additional fiber opportunities. The company is currently assessing business cases and engineering designs and will update investors in February. Ken Dixon, CEO of TDS Telecom, added that they are bullish on their current markets and see opportunities to expand into adjacent areas without a fiber provider.

Q: What is the strategy behind the $500 million stock buyback program? A: Vicki Villacrez explained that the buyback reflects the Board's confidence in TDS's long-term strategy and is part of a balanced capital allocation plan. The execution will depend on the successful closing of spectrum transactions and will be conducted in a disciplined manner, considering business and market conditions.

Q: How is TDS managing the costs associated with the wind-down of wireless operations? A: Douglas Chambers, Interim President and CEO of Array Digital Infrastructure, stated that 40% of SG&A expenses are related to wireless operations wind-down, spectrum management, and strategic alternatives review. These costs are expected to persist into the first half of 2026, with a decline anticipated in the second half.

Q: What is the strategy for managing naked towers and potential decommissioning? A: Douglas Chambers outlined that Array is focused on leasing up towers, rationalizing ground rents, and assessing future leasability. Decisions on decommissioning will be made on a tower-by-tower basis, considering economic viability.

Q: How does TDS view potential M&A opportunities in the fiber space? A: Walter Carlson, Chairman and CEO, and Vicki Villacrez emphasized a disciplined approach to M&A, focusing on opportunities that are accretive and synergistic, particularly those that align with TDS's existing footprint and fiber strategy.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

View Comments