Telephone and Data Systems, Inc. Q1 FY2026 earnings call

Acquisition Announcement - Announced proposal to acquire remaining shares of Array in an all - stock transaction, aiming to simplify corporate structure and enhance growth investment ability; Array has transitioned to tower - focused company with strong fundamentals. ### TDS Telecom Progress - Focused on fiber growth plan: delivered 40k marketable fiber service addresses in Q1, highest ever; invested in internal construction teams; had robust pipeline of addresses; ended quarter with 11k fiber net adds, up 32% y/y; completed billing conversion in cable markets and introduced new Field Force platform; signed agreement to acquire Granite State Communications, adding over 11k fiber addresses. ### Array Progress - Cash site - rental revenue up 64% y/y; ceased recognizing DISH revenue; made progress in ground - lease optimization; reached agreements to monetize roughly 70% of spectrum holdings; FCC approved certain spectrum sales and others expected to close in Q2 or Q3

TDS Telecom: Delivered 40 thousand marketable fiber service addresses in Q1, highest first - quarter total in company history; residential fiber net adds were approximately 11 thousand, up 32% year over year; fiber revenue up 13% versus prior year, offsetting legacy revenue stream pressures; total operating revenues declined 3% in the quarter, or 1% excluding divestitures impact; cash expenses decreased 3%; adjusted EBITDA declined 3% largely due to divestiture revenue losses; capital expenditures totaled $126 million. Array: Cash site - rental revenue increased 64% over Q1 of last year; ceased recognizing DISH revenue due to non - payment; FCC approved certain spectrum sales, with some transactions closing in Q2 or Q3, and remaining transactions expected to close by end of 2026 subject to regulatory approval and closing conditions; equity income elevated due to prior - period adjustments; SG&A expenses continue to include costs to support wind - down of legacy wireless operations but are declining sequentially

TDS Telecom - Projecting total Telecom revenues of $1.015 billion to $1.055 billion, current headwinds guiding toward lower half of range; adjusted EBITDA guidance between $310 million and $350 million; capital expenditures projected to be between $550 million and $600 million to support delivery of 200k - 250k new fiber service addresses. ### Array - Guidance across all metrics unchanged, ranges wider than industry norm due to uncertainty with T - Mobile MLA and timing of interim site terminations

Array - Ongoing non - payment by DISH leading to breach of obligations and cessation of recognizing DISH revenue; uncertainty with T - Mobile MLA and timing of interim site terminations affecting guidance ranges; regulatory approval and closing conditions needed for spectrum sales which could impact their timing and completion

Q: On the fiber side, have you looked at whether there is an ability to put fiber into a REIT structure, or any desire at some point to put fiber into a REIT - like structure to be more tax efficient?

A: Vicki said they have looked at a number of structural options, but given where they are today, they are just not optimal, and they are focused on funding fiber with cash.

Q: Can you update us as far as the number of shares or percent ownership Telephone and Data Systems, Inc. has of Array Digital?

A: Walter said 81.9% is the rough number, and they can get precise numbers offline.

Q: Any update to what you think you could provide to help people understand what is happening with the fiber business—any cohort analysis or trend lines?

A: Vicki said this quarter they added disclosures for residential revenues and broke them out by technology, and they have included metrics in trending schedules on Investor Relations website; Ken said the most important metrics are build velocity and overall fiber net performance.

Q: Sticking with TDS Telecom and Ken for a second: you hired some sales folks and customer - experience folks to support your priorities. Where are you from a process - improvement standpoint—instilling some of your decades of experience running fiber businesses into TDS Telecom? What inning are we in? What near - term low - hanging fruit remains to improve process performance and construction build?

A: Ken said they are in very early innings, focused on delivery of marketable addresses from build - plan perspective and fiber net sales; have started the spring and summer months with record crew counts; presales velocity is good; have put sales capabilities into door - to - door channel and expanded.com business; are developing MDU sales capabilities.

Q: For Vicki, on Granite—should we anticipate bolt - ons like this going forward: smaller systems that are adjacent versus big chunky deals? And does combining entities make it easier to REIT the tower business over time versus the current structure?

A: Vicki said the acquisition is consistent with capital allocation priorities, it is a tuck - in, accretive, and adjacent to current markets in New Hampshire, and they cannot speculate on REIT implications.

Q: For Chris, on the cost - transformation efforts, is the $100 million run - rate savings by 2028 still the right figure? Are we at a point where the cost savings are falling to the bottom line in 2026, or is there reinvestment going back into the business?

A: Chris said they remain on track to hit $100 million of run - rate savings by year - end 2028, starting to see some benefits this year, bigger benefits in 2027 and 2028, and they do plan to reinvest some savings.

Q: For Anthony, on the upcoming AWS - 3 reauction and upper C - band next year—any change in conversations regarding monetization of the remaining C - band and CBRS?

A: Anthony said they continue to believe the C - band spectrum they hold is excellent and valuable, are not forced sellers, and are open to deals at fair value but do not have further updates on sale at this time.

Q: On the service addresses, Ken, is the build plan still targeting 200 thousand to 250 thousand service addresses this year, and what would cause you to miss it versus hit it or beat it?

A: Ken said the target is still there, and he is very confident based on crew counts starting the second quarter and the construction pipeline.

Q: Richard Hamilton Prentiss asked on the Array side, one of the themes at Connect(X) was high - rent relocation efforts. Do you have an appetite to do some new builds there, and what capital commitment might you put to work?

A: Anthony said they are laser - focused on optimizing value of existing assets and have seen going rates for high - rent relocations not consistent with optimizing current portfolio, but are open to opportunities.

Q: One for Walter—an obligatory satellite question. How are you thinking about the somewhat existential threat of satellite coming into terrestrial, given your assets in broadband fiber and towers?

A: Walter said satellite will have substantial influence, but they feel strongly about continued benefit of terrestrial tower portfolio and superior capabilities of fiber networks.

Q: First question on the TDS Telecom side. Last quarter, you expanded the fiber build target by 300 thousand edge - out passings in 50 adjacent markets to your current expansion footprint. How do the demographics and churn profiles of these markets compare to your older cohorts? Among this new cohort, what types of markets are you prioritizing for a build sooner rather than later?

A: Ken said they are looking at markets where they have already planted a flag, considering demographics, competitive intensity, build costs, and expected returns, and prioritizing accordingly.

Q: On cable, what do you like most about your cable footprint? Can you comment on the competitive environment and the investments you are planning—where the dollars will go and how quickly you expect those investments to pay off?

A: Ken said focus now is going to a multi - gig environment in cable business, operating in highly attractive markets with high housing growth, seeing opportunity going forward.

Q: On the Array side, the wireless partnerships produce nice cash flow every year. Any updated thoughts on monetizing those stakes? For example, recent transactions valued stakes at about 11.5x cash distributions. At that multiple, your stakes could be worth a significant amount. What could move you closer to taking that step?

A: Anthony said they like the cash flows from these assets, but have challenges with transactions like mentioned due to low tax basis, and are open to offers that would deliver full value net of taxes, but are not in a hurry to sell.

Q: Lastly on Array, EBITDA is expected to be somewhat depressed in the medium term, pressured by transition and wind - down costs. Can you talk about your targets, qualitatively and quantitatively, to take cost out and improve margins in 2026 and 2027? Longer term, post T - Mobile transition, what kind of margins are realistic?

A: Anthony said there is significant opportunity to improve Array's margins by purchasing more land interests under towers where appropriate and transitioning from maintenance posture aligned with wireless company to tower company, also expanding margins by increasing colocations