TDS (TDS) Q4 2025: Fiber Address Target Rises to 2.1 Million as Spectrum Monetization Unlocks Capital
TDS enters 2026 with a reshaped balance sheet and expanded fiber ambitions, leveraging proceeds from major spectrum divestitures to accelerate infrastructure investment. The company’s pivot toward fiber-first execution and array tower optimization signals a multi-year transformation, but legacy revenue pressures and integration risks remain critical watchpoints. Investors should track operational scaling in fiber and the evolving monetization of spectrum and tower assets for forward value creation.
Summary
- Fiber Expansion Accelerates: TDS boosts its long-term fiber address goal by 300,000, targeting first-mover advantage.
- Capital Structure Reset: Spectrum sales and debt repayment provide new flexibility for growth and buybacks.
- Execution and Monetization in Focus: Success hinges on scaling fiber builds and extracting value from towers and spectrum.
Performance Analysis
TDS’s fourth quarter capped a year of major transformation, highlighted by the divestiture of wireless operations and the completion of over $2 billion in spectrum sales to AT&T and Verizon. The resulting $726 million special dividend and full repayment of a $150 million term loan have left the company with a streamlined balance sheet and sharpened capital allocation priorities.
Fiber deployment momentum continued, with 58,000 new marketable fiber addresses added in Q4, up 39% year over year, and a total of 140,000 for 2025. Residential fiber net additions reached 15,000 in Q4, up 11% from the prior year, with annual net adds of 45,000. This growth offset ongoing secular declines in legacy cable and copper segments, though total operating revenues were down 1% for the quarter and 2% for the year. Adjusted EBITDA improved 6% in Q4, driven by lower expenses and operational transformation, but full-year EBITDA declined 6% due to divestitures and non-cash compensation adjustments.
- Fiber Build Acceleration: Construction crew counts hit record highs, driving a sequential ramp in address delivery and positioning TDS for a 200,000–250,000 address build target in 2026.
- Spectrum Monetization Impact: Proceeds from spectrum sales funded both debt reduction and a $67 million share buyback in Q4, with $524 million remaining on the repurchase authorization.
- Tower Revenue Growth: Array’s site rental revenue rose 64% year over year excluding T-Mobile MLA, with new co-location application volume up 47% for 2025, though DISH revenue uncertainty clouds visibility.
The company’s capital expenditures rose to $406 million in 2025, prioritizing internal construction capacity, and are set to increase further in 2026 as fiber ambitions scale. Despite headwinds from divestitures and legacy declines, TDS’s fiber-driven revenue growth is expected to offset these pressures over time.
Executive Commentary
"By divesting our wireless operations, We believe we have now positioned Array for success as a growing tower company, and we now have the financial capacity to support TDS Telecom as it continues to expand and grow its fiber operations."
Walter Carlson, President and CEO
"With this further debt reduction and cash from the proceeds of the closed transactions, we are pleased with the flexibility this affords us to execute on our capital allocation priorities."
Vicki Villacrez, Executive Vice President and CFO
Strategic Positioning
1. Fiber-First Growth Model
TDS is doubling down on its fiber strategy, raising its long-term addressable goal from 1.8 million to 2.1 million, driven by 300,000 new edge-out opportunities across 50 communities. The company seeks to be first to fiber in these markets, targeting mid-teens returns and leveraging internal construction capacity to accelerate execution.
2. Capital Allocation and Shareholder Returns
Proceeds from spectrum sales have enabled aggressive capital allocation, including full debt repayment and a $500 million share repurchase authorization. The company’s discipline in timing buybacks and evaluating fiber M&A reflects a focus on sustainable, accretive growth.
3. Array Tower Optimization
Array, TDS’s tower business, is focused on maximizing value from its 4,400-site portfolio, with one-third of towers lacking competition within two miles. The T-Mobile MLA (Master Lease Agreement) integration is a major revenue driver, but management is also prioritizing new co-location growth, ground lease optimization, and managing the future “naked tower” portfolio as committed sites are finalized.
4. Spectrum Monetization and Optionality
Monetization of spectrum, especially C-band, remains a core pillar. Management is not compelled to sell quickly, citing manageable carrying costs and robust industry demand, but continues to seek opportunistic transactions as market dynamics evolve.
5. Operational Transformation and Efficiency
Business transformation initiatives, including process improvements, system modernization, and organizational alignment, are targeting $100 million in savings by 2028. These efforts are foundational to scaling fiber builds and delivering a best-in-class customer experience.
Key Considerations
TDS’s transformation hinges on successful execution of its fiber and tower strategies, balanced against legacy headwinds and integration risks.
Key Considerations:
- Fiber Execution Pace: Achieving 200,000–250,000 new fiber addresses in 2026 is critical for revenue growth and market share gains.
- Capital Deployment Discipline: Allocation of spectrum proceeds between fiber investment, share buybacks, and M&A will shape long-term returns.
- Tower Portfolio Optimization: Managing the transition to a pure-play tower model and reducing the cost burden of “naked towers” will impact cash flow and valuation.
- Spectrum Sale Optionality: Timing and pricing of remaining C-band monetization could provide upside, but also carries market risk.
- Legacy Revenue Decline: Ongoing secular declines in cable, copper, and video remain a drag, with fiber growth required to offset these pressures.
Risks
Execution risk remains elevated, with fiber build pacing, crew retention, and market penetration all critical to delivering on growth targets. Tower revenue visibility is clouded by DISH payment disputes and the timing of T-Mobile site selections, while spectrum monetization depends on market demand and regulatory approvals. Legacy business declines may outpace fiber ramp, pressuring near-term financials if operational scaling lags.
Forward Outlook
For Q1 2026 and full-year, TDS guided to:
- Telecom revenues of $1.015 billion to $1.055 billion, reflecting fiber growth offset by legacy declines and divestitures.
- Adjusted EBITDA of $310 million to $350 million, with pressures from divestitures and legacy segments partially mitigated by fiber and transformation benefits.
- Capital expenditures of $550 million to $600 million, up from $406 million in 2025, driven by expanded fiber build and EACAM programs.
Management cited confidence in fiber address acceleration, a strong construction funnel, and ongoing transformation savings as key drivers. Guidance excludes any revenue from DISH, with any settlement representing potential upside.
- Fiber build targets are front-loaded for operational momentum.
- Array revenue guidance reflects uncertainty in T-Mobile MLA site timing and excludes DISH revenue.
Takeaways
TDS’s pivot to a fiber-first and tower-optimized model has reset its growth trajectory, but the next phase hinges on scaling execution and realizing asset monetization.
- Fiber Build Is the Core Growth Lever: Address delivery and penetration gains are essential to offsetting secular declines and supporting long-term revenue expansion.
- Capital Flexibility Enables Strategic Moves: Spectrum proceeds have strengthened the balance sheet and enabled active buybacks, but disciplined deployment is key to value creation.
- Monitor Integration and Monetization Risks: Investors should watch for operational scaling in fiber, progress in tower tenancy, and clarity on spectrum monetization timelines.
Conclusion
TDS’s 2025 transformation has set the stage for accelerated fiber expansion and tower monetization, but execution risks and legacy headwinds require vigilant monitoring. The next 12–24 months will be pivotal in determining whether the company can deliver on its growth ambitions and fully realize the value of its restructured platform.
Industry Read-Through
TDS’s aggressive fiber build and tower pivot reflect a broader industry trend of legacy telecoms divesting wireless operations and redeploying capital into high-return infrastructure. The race to be first to fiber in edge-out and rural markets will intensify competition, with capital discipline and operational scalability distinguishing winners. Spectrum monetization remains a key value unlock for asset-heavy operators, and the evolving tower landscape—particularly around “naked towers” and master lease transitions—offers a playbook for peers navigating post-divestiture integration and optimization. Investors in the sector should track how capital is recycled from legacy to growth, and how execution risks are managed in the transition.