AD (AD) Q4 2025: Fiber Build Target Raised by 300,000 Addresses, Array Tower Revenue Up 64%

2026-02-20 | By EarningsIQ Research

TDS and Array entered 2026 transformed, with TDS Telecom expanding its fiber ambitions by 300,000 new addresses and Array Digital Infrastructure posting a 64% year-over-year surge in cash site rental revenue. The divestiture of wireless operations and spectrum monetization have reshaped both capital allocation and business focus, setting the stage for a fiber-first TDS and a growth-oriented tower operator in Array. Execution on ambitious build and lease-up targets will define the coming year’s trajectory.

Summary

• Fiber Expansion Ambition: TDS Telecom increased its long-term fiber address target by 300,000, signaling aggressive market capture intent.
• Array Tower Revenue Acceleration: Array’s tower business delivered 64% site rental revenue growth, excluding T-Mobile MLA effects.
• Capital Structure Reset: Divestitures and spectrum sales have fortified balance sheets and unlocked disciplined capital deployment capacity.

Business Overview

TDS is a diversified communications holding company with two major segments: TDS Telecom, a regional broadband and fiber provider, and Array Digital Infrastructure, a national tower and spectrum monetization platform. TDS Telecom generates revenue through residential and business broadband, video, and voice services, with a strategic shift toward fiber. Array earns recurring revenue from tower site leasing, spectrum transactions, and minority interests in wireless partnerships.

Performance Analysis

TDS Telecom’s fiber build engine accelerated in Q4 2025, delivering 58,000 new marketable fiber addresses (up 39% YoY), though it narrowly missed its 150,000 annual target by 10,000. The quarter was the strongest in address delivery since 2023, enabled by record crew counts and improved internal construction capacity. Residential fiber net additions reached 15,000 in Q4 (up 11% YoY), totaling 45,000 for the year, as the company expanded its broadband footprint and focused on higher penetration in both new and established markets.

Array Digital Infrastructure’s tower segment posted a 64% YoY increase in cash site rental revenue (excluding T-Mobile MLA-committed sites), with total rental revenue up 96% when including T-Mobile MLA intern site revenue. The company processed over 2,000 applications and completed structural analyses on more than 95% of them, supporting robust co-location growth. However, legacy revenue stream declines and divestitures weighed on overall telecom revenues, which decreased 1% for the quarter (2% for the year), while adjusted EBITDA at TDS Telecom improved 6% in Q4 due to lower expenses, but fell 6% for the year.

• Fiber Build Momentum: Second-half 2025 saw 100,000 new fiber addresses delivered versus 40,000 in the first half, reflecting operational acceleration.
• Revenue Mix Shift: Growth in fiber and broadband offset secular declines in cable and copper, while divested markets reduced top-line by $3 million in Q4.
• Capital Reallocation: Proceeds from the $1.018 billion spectrum sale to AT&T enabled TDS to repay $150 million in term loan debt and fund increased share repurchases.

Transformation initiatives and business divestitures have repositioned both segments for disciplined growth, but execution on fiber build, customer acquisition, and tower lease-up will be critical to sustaining momentum in 2026.

Executive Commentary

Strategic Positioning

1. Fiber-First Growth and Market Capture

TDS Telecom raised its long-term fiber address goal from 1.8 million to 2.1 million, targeting 300,000 new edge-out opportunities in 50 communities where it expects to be first to market. This expansion is backed by proceeds from spectrum monetization, with a focus on building in areas that offer mid-teens returns and favorable competitive dynamics.

2. Tower Platform Scale and Lease-Up

Array Digital Infrastructure is leveraging its 4,400-tower portfolio—one-third of which are located in areas with no competing sites within two miles— to capture rural and suburban 5G demand. The T-Mobile MLA is a growth driver, but the company is also prioritizing new co-location activity, insourcing sales, and ground lease optimization to improve tenancy ratios and reduce negative cash flow from “naked” towers.

3. Capital Allocation and Shareholder Returns

Capital allocation priorities center on fiber investment, disciplined M&A, and share repurchases, with $67 million spent on TDS buybacks in Q4 and $524 million remaining on the current authorization. Debt reduction and transaction-related special dividends have further strengthened financial flexibility.

4. Monetization of Spectrum and Investment Holdings

Array has monetized roughly 70% of its spectrum holdings, with the remaining C-band spectrum positioned as a valuable asset for future sale. Minority interests in wireless partnerships remain a steady cash flow source, with management signaling no urgency to divest absent compelling offers.

5. Business Transformation and Operational Efficiency

Process improvements, internal crew expansion, and systems modernization are foundational to scaling fiber operations and achieving $100 million in targeted savings by 2028, as TDS Telecom seeks to operate as a faster, more efficient, fiber-centric organization.

Key Considerations

The quarter marked a strategic inflection for both TDS and Array, with capital unlocked from legacy divestitures now being channeled into high-return growth vectors. Investors should weigh the following:

• Fiber Build Execution Risk: Achieving the 200,000–250,000 new address target in 2026 requires sustaining high crew counts and operational discipline, especially through seasonal and labor challenges.
• Tower Lease-Up Leverage: Array’s tenancy ratio initiatives, including insourced sales and new verticals, must translate into sustained co-location growth to offset legacy churn and naked tower risk.
• Spectrum Monetization Optionality: Remaining C-band spectrum offers upside, but timing and transaction value are subject to market dynamics and regulatory windows.
• Shareholder Return Discipline: Buyback pacing and allocation between TDS and Array shares will influence capital return efficiency and market valuation.

Risks

Execution risk on fiber build and customer acquisition is elevated given the ambitious address targets and competitive fiber landscape. Array faces revenue uncertainty from the DISH MLA dispute (excluded from guidance), and the integration of tower operations post-divestiture remains a multi-year challenge. Regulatory delays in spectrum sales or shifts in carrier capital deployment could also impact monetization timelines and tower lease-up rates.

Forward Outlook

For 2026, TDS Telecom guided to:

• Total telecom revenues of $1.015 billion to $1.055 billion
• Adjusted EBITDA of $310 million to $350 million
• Capital expenditures of $550 million to $600 million
• 200,000 to 250,000 new fiber service addresses

Array Digital Infrastructure expects:

• Total operating revenue of $200 million to $215 million
• Adjusted EBITDA of $200 million to $215 million
• Capital expenditures of $25 million to $35 million

Management cited tailwinds from fiber address expansion and co-location growth as offsets to legacy revenue declines, with cost transformation and ongoing spectrum monetization providing further upside potential.

Takeaways

• Fiber Ambition Escalates: TDS Telecom’s 2.1 million address target and expanded build pace signal a race to capture first-mover advantage in underpenetrated markets, but require flawless execution.
• Array Tower Revenue Inflection: 64% site rental revenue growth and a robust co-location pipeline underscore successful transition from legacy wireless to infrastructure-driven growth, yet DISH and naked tower risks linger.
• Capital Structure Reset: Spectrum sales and debt reduction have reset both companies’ balance sheets, enabling disciplined investment and shareholder returns, but capital allocation choices remain under scrutiny.

Conclusion

TDS and Array have emerged from a transformative year with sharpened strategic focus and enhanced financial flexibility. The next phase hinges on delivering on expanded fiber and tower targets, monetizing remaining spectrum, and balancing growth with capital returns. Investors should monitor execution milestones and evolving competitive dynamics as 2026 unfolds.

Industry Read-Through

The aggressive fiber build targets and capital reallocation at TDS reflect a broader industry pivot toward infrastructure scale and first-to-market advantage in broadband. Array’s rapid tower revenue growth and focus on rural/suburban co-location opportunities signal sustained carrier demand for distributed infrastructure, especially as 5G deployment deepens outside urban cores. The exclusion of DISH revenues from guidance and the naked tower strategy highlight sector-wide risks tied to tenant concentration and legacy asset repositioning. These trends suggest that operators with balance sheet flexibility and operational discipline will be best positioned to capitalize on network densification and rural broadband expansion over the next cycle.

AD Telecommunications Infrastructure Fiber Towers Capital allocation Spectrum Share repurchase