TDS Swings to Loss Amid Array Divestiture, Tax Benefit Boosts Continuing Ops

TL;DR

**TDS is shedding its wireless baggage, but the immediate financial hit is steep; watch for how they deploy that T-Mobile cash.**

AI Summary

TELEPHONE & DATA SYSTEMS INC (TDS) reported a net loss attributable to common shareholders of -$99.06 million for the three months ended September 30, 2025, a 19% increase from the -$83.04 million loss in the same period last year. Total operating revenues decreased by 6% to $308.52 million, primarily due to an 84% decline in 'All other' revenues, while Array's revenues surged 83% to $47.12 million. The company's net income from continuing operations attributable to TDS shareholders was $57.55 million, a significant turnaround from a -$83.14 million loss in Q3 2024, driven by a $72.77 million income tax benefit. However, net loss from discontinued operations attributable to TDS shareholders was -$139.30 million, largely due to the sale of Array's wireless operations to T-Mobile for $4.29 billion on August 1, 2025. Interest expense increased 45% to $47.28 million, and capital expenditures rose 31% to $109.99 million.

Why It Matters

This filing reveals a pivotal moment for TDS as it navigates a significant strategic shift following the divestiture of Array's wireless operations. For investors, the -$99.06 million net loss attributable to common shareholders, despite a strong tax benefit in continuing operations, highlights the immediate financial impact of this restructuring. The substantial cash proceeds from the T-Mobile sale, along with pending spectrum sales to Verizon and AT&T totaling over $2 billion, provide TDS with significant liquidity to reinvest in its remaining TDS Telecom fiber expansion and potentially return value to shareholders. The competitive landscape in telecommunications remains fierce, and TDS's ability to effectively deploy this capital will determine its long-term viability against larger players like T-Mobile, Verizon, and AT&T.

Risk Assessment

Risk Level: medium — The risk level is medium due to the ongoing strategic alternatives review and the significant impact of discontinued operations. While the sale of Array's wireless operations generated substantial cash, the net loss from discontinued operations was -$151.90 million for the quarter, and the company still faces regulatory approvals for over $2 billion in pending spectrum sales to Verizon and AT&T, which could be impacted by the duration of the ongoing U.S. federal government shutdown.

Analyst Insight

Investors should closely monitor TDS's capital allocation strategy following the Array divestiture. Focus on how the company plans to reinvest the $2.63 billion cash proceeds from the T-Mobile sale into TDS Telecom's fiber deployment and potential shareholder returns. Evaluate the progress and closing of the pending spectrum sales to Verizon and AT&T, as these will further impact liquidity and future strategic moves.

Financial Highlights

debt To Equity

N/A

revenue

$308.52M

operating Margin

N/A

total Assets

N/A

total Debt

N/A

net Income

-$99.06M

eps

N/A

gross Margin

N/A

cash Position

N/A

revenue Growth

-6%

Revenue Breakdown

Key Numbers

• -$99.06M — Net income (loss) attributable to TDS common shareholders (Increased 19% from -$83.04M in Q3 2024)
• $308.52M — Total operating revenues (Decreased 6% from $327.50M in Q3 2024)
• $47.12M — Array operating revenues (Increased 83% from $25.74M in Q3 2024)
• $57.55M — Net income from continuing operations attributable to TDS shareholders (Turnaround from -$83.14M loss in Q3 2024)
• -$139.30M — Net income (loss) from discontinued operations attributable to TDS shareholders (Significant loss compared to $17.40M income in Q3 2024)
• $4.29B — Total consideration from T-Mobile sale (Received on August 1, 2025)
• $72.77M — Income tax benefit (Primary driver for improved continuing operations income)
• $47.28M — Interest expense (Increased 45% from $32.69M in Q3 2024)
• $109.99M — Capital expenditures (Increased 31% from $83.68M in Q3 2024)
• $34.1M — Array's proportionate share of gain from Iowa entities' wireless operations sale (Included in Equity in earnings of unconsolidated entities)

Key Players & Entities

• TELEPHONE & DATA SYSTEMS INC /DE/ (company) — Registrant
• Array Digital Infrastructure, Inc. (company) — 82.0%-owned subsidiary of TDS, formerly United States Cellular Corporation
• TDS Telecommunications LLC (company) — Wholly-owned subsidiary of TDS
• T-Mobile US, Inc. (company) — Buyer of Array's wireless operations and select spectrum assets
• Verizon (company) — Buyer of AWS, Cellular and PCS spectrum licenses from Array
• AT&T (company) — Buyer of 3.45 GHz and 700 MHz spectrum licenses from Array
• $4,293.8 million (dollar_amount) — Total consideration received from T-Mobile sale
• $2,628.8 million (dollar_amount) — Cash proceeds from T-Mobile sale
• $1,000,000 (dollar_amount) — Purchase price for spectrum licenses sold to Verizon
• $1,018,044 (dollar_amount) — Purchase price for spectrum licenses sold to AT&T

FAQ

Risk Factors

• Integration of Acquired/Divested Assets [medium — operational]: The company's financial results are significantly impacted by the sale of Array's wireless operations to T-Mobile. The integration of acquired assets and the management of divested operations present ongoing operational risks that could affect future performance.
• Increased Interest Expense [medium — financial]: Interest expense increased by 45% to $47.28 million. This rise, coupled with significant capital expenditures, could strain cash flow and impact profitability if not managed effectively.
• Spectrum Licenses and Wireless Operations [medium — regulatory]: Array holds wireless spectrum licenses and noncontrolling interests in wireless operating companies. Changes in regulatory requirements or market dynamics affecting these assets could have a material impact on the company.
• Competitive Landscape [medium — market]: TDS operates in a competitive telecommunications market, facing pressure from larger players and evolving technologies. Maintaining market share and adapting to industry shifts are critical for sustained revenue growth.

Industry Context

The telecommunications industry is characterized by intense competition, rapid technological advancements, and significant capital investment requirements. Companies like TDS operate in a landscape that demands continuous innovation in services such as broadband, wireless, and video, while also navigating the complexities of spectrum management and infrastructure deployment.

Regulatory Implications

TDS operates under various regulatory frameworks governing telecommunications services, including spectrum allocation and data privacy. Compliance with these regulations is crucial, and changes in policy could impact service offerings, operational costs, and market access.

What Investors Should Do

1. Monitor the integration and performance of Array Digital Infrastructure post-divestiture.
2. Analyze the sustainability of the net income from continuing operations.
3. Evaluate the impact of increased interest expense and capital expenditures on cash flow.

Key Dates

• 2025-08-01: Sale of Array's wireless operations to T-Mobile — Generated $4.29 billion in total consideration, significantly impacting the company's financial structure and segment reporting, leading to a large loss from discontinued operations.
• 2025-09-30: End of Q3 2025 — Reporting period for the 10-Q, showing a net loss attributable to common shareholders of -$99.06 million and a 6% decrease in total operating revenues.

Glossary

Array Digital Infrastructure, Inc. (Array)

Formerly United States Cellular Corporation, an 82.0%-owned subsidiary of TDS that leases tower space, provides ancillary services, and holds noncontrolling interests in wireless operating companies. (Its performance and strategic changes, like the sale of wireless operations, significantly impact TDS's overall financial results.)

TDS Telecommunications LLC (TDS Telecom)

A wholly-owned subsidiary of TDS that provides broadband, video, voice, and wireless services. (Represents a core operating segment of TDS, contributing to overall revenue and operations.)

Continuing Operations

Refers to the ongoing business activities of a company that are expected to continue into the future, as opposed to discontinued operations which have been or will be disposed of. (The significant turnaround in net income from continuing operations to $57.55 million, driven by a tax benefit, is a key positive indicator for the company's core business.)

Discontinued Operations

Represents the results of a segment of a business that the company has disposed of or plans to dispose of. These are reported separately from continuing operations. (The large net loss of -$139.30 million from discontinued operations highlights the financial impact of the Array wireless operations sale.)

Non-GAAP Financial Measures

Financial metrics that are not calculated in accordance with Generally Accepted Accounting Principles (GAAP), often used to provide a different perspective on financial performance. (TDS uses these measures, and reconciliations to GAAP are provided, indicating a focus on specific performance indicators beyond standard reporting.)

Year-Over-Year Comparison

Compared to the prior year's third quarter, TDS reported a 6% decrease in total operating revenues, falling to $308.52 million. This decline was largely offset by an 83% surge in Array's revenues to $47.12 million, though 'All other' revenues saw an 84% drop. The net loss attributable to common shareholders widened by 19% to -$99.06 million, primarily due to a substantial loss from discontinued operations related to the sale of Array's wireless business, contrasting with a net income from continuing operations that turned positive due to a significant income tax benefit.

Key Financial Figures

• $4,293.8 million — ment). Total consideration received was $4,293.8 million after adjustments which included a comb
• $2,628.8 million — stments which included a combination of $2,628.8 million in cash proceeds and $1,665.0 million i
• $1,665.0 million — f $2,628.8 million in cash proceeds and $1,665.0 million in debt assumed by T-Mobile through the
• $20.2 million — rchase price true-up due to T-Mobile of $20.2 million. At closing, Array and T-Mobile entered
• $4.1 million — ns and strategic alternatives review of $4.1 million and $6.2 million for the three and nine
• $6.2 million — alternatives review of $4.1 million and $6.2 million for the three and nine months ended Sep
• $1.5 million — d September 30, 2025, respectively, and $1.5 million and $31.1 million for the three and nin
• $31.1 million — 025, respectively, and $1.5 million and $31.1 million for the three and nine months ended Sep
• $34.1 m — nconsolidated entities in the amount of $34.1 million, which was the primary driver of

Filing Documents

• tds-20250930.htm (10-Q) — 2499KB
• tds9302025ex311.htm (EX-31.1) — 9KB
• tds9302025ex312.htm (EX-31.2) — 10KB
• tds9302025ex321.htm (EX-32.1) — 5KB
• tds9302025ex322.htm (EX-32.2) — 5KB
• tds-20250930_g1.jpg (GRAPHIC) — 9KB
• tds-20250930_g10.jpg (GRAPHIC) — 45KB
• tds-20250930_g11.jpg (GRAPHIC) — 106KB
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• tds-20250930_g3.jpg (GRAPHIC) — 58KB
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• tds-20250930_g5.jpg (GRAPHIC) — 89KB
• tds-20250930_g6.jpg (GRAPHIC) — 50KB
• tds-20250930_g7.jpg (GRAPHIC) — 51KB
• tds-20250930_g8.jpg (GRAPHIC) — 49KB
• tds-20250930_g9.jpg (GRAPHIC) — 41KB
• 0001051512-25-000071.txt ( ) — 13607KB
• tds-20250930.xsd (EX-101.SCH) — 52KB
• tds-20250930_cal.xml (EX-101.CAL) — 83KB
• tds-20250930_def.xml (EX-101.DEF) — 411KB
• tds-20250930_lab.xml (EX-101.LAB) — 719KB
• tds-20250930_pre.xml (EX-101.PRE) — 585KB
• tds-20250930_htm.xml (XML) — 1729KB

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 43

Financial Statements (Unaudited)

Financial Statements (Unaudited) 44 Consolidated Statement of Operations 44 Consolidated Statement of Cash Flows 46 Consolidated Balance Sheet 48 Consolidated Statement of Changes in Equity 50

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements 54

Controls and Procedures

Controls and Procedures 72

Legal Proceedings

Legal Proceedings 73 Unregistered Sales of Equity Securities and Use of Proceeds 74 Other Information 75 Exhibits 76 Form 10-Q Cross Reference Index 77

Signatures

Signatures 78 Table of Contents Telephone and Data Systems, Inc.

Management's Discussion and Analysis of

Management's Discussion and Analysis of Financial Condition and Results of Operations Executive Overview The following discussion and analysis compares Telephone and Data Systems, Inc.'s (TDS) financial results for the three and nine months ended September 30, 2025, to the three and nine months ended September 30, 2024. It should be read in conjunction with TDS' interim consolidated financial statements and notes included herein, and with the description of TDS' business, its audited consolidated financial statements and Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) included in TDS' Annual Report on Form 10-K (Form 10-K) for the year ended December 31, 2024. Certain numbers included herein are rounded to thousands or millions for ease of presentation; however, certain calculated amounts and percentages are determined using the unrounded numbers. This report contains statements that are not based on historical facts, which may be identified by words such as "believes," "anticipates," "estimates," "expects," "plans," "intends," "projects," "will" and similar expressions. These statements constitute and represent "forward looking statements" as this term is defined in the Private Securities Litigation Reform Act of 1995. Such forward looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results, events or developments to be significantly different from any future results, events or developments expressed or implied by such forward looking statements. See the disclosure under the heading Private Securities Litigation Reform Act of 1995 Safe Harbor Cautionary Statement elsewhere in this report for additional information. The accounting policies of TDS conform to accounting principles generally accepted in the United States of America (GAAP). However, TDS uses certain "non-GAAP financial measures" in the MD&A and the business segment information. A discussion of the re

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