Telephone and Data Systems (NYSE:TDS) reported second-quarter progress in its fiber expansion and tower operations, while lowering revenue expectations for its telecom business amid continued pressure from legacy copper and cable services. The company also said Array Digital Infrastructure completed major spectrum transactions during the quarter and raised several elements of its full-year outlook.
TDS Chief Executive Officer Walter Carlson said the company would not provide an update on its previously announced all-stock proposal to acquire the Array shares it does not already own. Array’s board has formed an independent special committee to evaluate the proposal.
Telecom raises fiber build targets
The company increased its 2026 fiber address delivery guidance by 50,000 addresses and now expects to add between 250,000 and 300,000 new marketable fiber service addresses this year. TDS Telecom also raised its capital-expenditure outlook to a range of $625 million to $675 million to support the accelerated construction activity.
TDS Telecom ended the quarter with nearly 1.2 million fiber service addresses, representing 60% of its total footprint, with 80% capable of gigabit speeds. The company said it is using federal Enhanced Alternative Connect America Cost Model, or E-ACAM, support to expand fiber to more than 300,000 addresses in 22 states within its incumbent footprint over the next two years.
Dixon said TDS Telecom has already met its 2026 E-ACAM obligations in three states and has its highest crew counts ever in its remaining E-ACAM markets. He added that the company is seeing strong demand when it brings fiber to markets previously served by copper infrastructure.
Residential fiber net additions totaled approximately 15,100 in the second quarter, up 47% from a year earlier. TDS said it has expanded door-to-door sales capacity, added outside sales vendors, and improved performance through its online channel. The company is also adding sales resources in cable and multi-dwelling-unit markets.
Legacy revenue pressures lead to revised guidance
Despite fiber growth, TDS Telecom reported total operating revenue declined 6% year over year in the second quarter, or 4% excluding divestitures. Kristina Bothfeld, vice president of financial analysis and strategic planning, said approximately half of the year-over-year decline reflected discrete wholesale revenue adjustments that benefited 2025 results. The rest was tied to legacy revenue pressure, partly offset by fiber connection growth and higher revenue per connection.
Residential fiber revenue rose 13%, or $11 million, from a year earlier, while cable revenue declined roughly 10%. Total residential revenue decreased by $6 million, including approximately $2 million related to divestitures of primarily copper-based markets.
Cash expenses were flat as cost-management savings were offset by expenses tied to expansion markets and inflation. Capital expenditures totaled $179 million during the quarter.
TDS Telecom reduced its full-year revenue guidance to $1 billion to $1.025 billion, citing pressure in its copper and cable markets. The company narrowed its adjusted EBITDA outlook to $310 million to $330 million.
- 2026 telecom revenue guidance: $1.0 billion to $1.025 billion.
- 2026 adjusted EBITDA guidance: $310 million to $330 million.
- 2026 fiber address delivery guidance: 250,000 to 300,000.
- 2026 capital-expenditure guidance: $625 million to $675 million.
Chief Financial Officer Vicki Villacrez said the company’s balance sheet has been strengthened by transactions completed during the past year, including Array’s June spectrum sale to Verizon. TDS expects its acquisition of Granite State Communications to close in the third quarter, adding 11,000 fully fibered service addresses for $25 million.
Villacrez said TDS continues to evaluate small- and medium-sized fiber acquisition opportunities that fit its clustering strategy and have either existing fiber infrastructure or an economically viable path to full fiber deployment.
Array completes spectrum sales and lifts outlook
Array Digital Infrastructure said cash site rental revenue increased 55% year over year from all customers, or 65% when normalized for the impact of DISH. The company stopped recognizing revenue from DISH during the first quarter after DISH generally stopped making payments under its contracts in December and certain DISH entities entered bankruptcy proceedings.
Array reported a tenancy ratio of 0.96 at quarter-end, compared with 0.98 at the end of the prior quarter. The company said that, excluding the removal of DISH co-locations from the metric, it continues to see steady tenancy growth.
Anthony Carlson, Array’s president and CEO, said T-Mobile interim site revenue drove the year-over-year increase in site rental revenue. That revenue began to decline during the quarter as T-Mobile progresses through its network integration. T-Mobile has until January 2028 to finalize 2,015 committed sites under its master lease agreement with Array.
Array narrowed its forecast for tenantless towers following the T-Mobile integration to between 1,000 and 1,700. The company said it is evaluating lease-up opportunities, ground-lease costs, long-term demand and potential decommissioning for sites without a path to economic viability.
During the quarter, Array closed a $168 million sale of 600 MHz, 700 MHz and AWS spectrum licenses to T-Mobile and a $1 billion spectrum transaction with Verizon. Array said it has agreements to monetize roughly 70% of its spectrum holdings, with remaining T-Mobile transactions expected to close by the end of 2026, subject to regulatory approval and other closing conditions.
The company continues to seek opportunities to monetize its remaining spectrum, primarily C-Band holdings. Carlson said Array is not a forced seller and believes the spectrum has substantial value given its availability for deployment and proximity to Upper C-Band spectrum.
Array raised its 2026 total operating revenue outlook to $205 million to $210 million from a prior range beginning at $200 million. It increased adjusted OIBDA guidance to $60 million to $75 million and adjusted EBITDA guidance to $220 million to $235 million. Capital-expenditure guidance was unchanged.
About Telephone and Data Systems (NYSE:TDS)
Telephone and Data Systems, Inc (NYSE: TDS) is a diversified telecommunications company headquartered in Chicago, Illinois. Through its subsidiaries, the company provides a broad array of communications services, including wireless voice and data, wireline broadband and voice, cable television, and managed IT and cloud solutions. Its two primary operating units—TDS Telecom and U.S. Cellular—serve residential, business and wholesale customers across the United States.
TDS Telecom focuses on delivering broadband internet, digital voice, video and data communications services in primarily rural and suburban markets.
