United States Cellular Leans on Fiber in Earnings Call

United States Cellular ((AD)) has held its Q1 earnings call. Read on for the main highlights of the call.

United States Cellular’s latest earnings call struck a cautiously optimistic tone as management balanced clear operational wins against ongoing legacy drag and transition costs. Executives stressed record fiber deployment, strong fiber demand, and robust tower rental growth as proof the strategy is working, even as revenue and EBITDA dipped modestly and uncertainty around DISH payments and wind-down expenses cloud near-term margins.

All-stock Array deal aims to simplify structure

Management opened with a proposed all-stock merger to acquire the remaining public shares of Array Digital Infrastructure at an exchange ratio of 0.86 TDS shares per Array share, assuming a sizable dividend funded by spectrum monetization. The move is pitched as a way to streamline the corporate structure, cut duplicative costs, improve share liquidity and strengthen the combined balance sheet.

Record Q1 fiber build positions for 2026 targets

TDS Telecom reported its highest-ever first-quarter fiber construction pace, delivering 40,000 marketable fiber service addresses, nearly triple last year’s level. Management said this performance keeps the company firmly on track to reach its 2026 goal of adding 200,000 to 250,000 new fiber locations, supported by a strong project pipeline and record deployment crews.

Fiber footprint expands with gig-capable coverage

The company now serves about 1.1 million fiber addresses, representing roughly 58% of its total footprint, highlighting its evolution into a fiber-centric operator. Roughly 79% of addresses can receive gigabit speeds, underscoring a step-change in network capability and supporting premium pricing and customer retention.

Fiber demand drives net adds and revenue growth

Residential fiber net additions reached about 11,000 in the quarter, up 32% year over year, signalling healthy take-rates in newly lit markets. Fiber revenue climbed 13%, adding roughly $11 million and partially offsetting declines from legacy copper and cable services that continue to shrink.

Operations and systems modernization gains traction

TDS completed a major billing system conversion in its cable markets and rolled out a new FieldForce platform to improve technician efficiency and service quality. It also enabled multi-gig speeds across the entire cable footprint, with management noting these modernization efforts are beginning to deliver tangible cost and productivity benefits.

Disciplined capital deployment and targeted M&A

The company underscored disciplined capital allocation, highlighting an agreement to acquire Granite State Communications, adding 11,005 fiber addresses adjacent to existing New Hampshire markets. A $520 million share repurchase authorization remains in place but was not used in the quarter, giving TDS optionality as it balances growth investments and shareholder returns.

Cost savings program progresses toward $100 million goal

Transformation initiatives reduced cash expenses by 3% in the quarter, aligning with a longer-term plan to achieve $100 million of run-rate savings by the end of 2028. Management expects some of these savings to start benefiting earnings in 2026, supporting margins as legacy revenues fade and fiber expansion continues.

Array towers deliver strong rental growth and tenancy

Array’s tower business reported a 55% year-over-year increase in cash site rental revenue, or 64% when adjusting for DISH nonpayment, reflecting strong underlying demand. Including interim revenue from T-Mobile, tower rental growth reached 86% year over year, or 98% normalized, and the normalized tenancy ratio ticked up from 0.95 to 0.96.

Spectrum monetization advances toward completion

Array has now monetized or agreed to monetize about 70% of its spectrum portfolio, highlighted by the closing of a major sale to AT&T that funded a February dividend. A smaller T-Mobile deal has closed and additional sales to T-Mobile and Verizon are expected to close in the coming quarters, though remaining C-band holdings are being preserved for fair value rather than sold aggressively.

Top-line and EBITDA decline amid portfolio changes

Despite operational progress, TDS total operating revenues fell 3% year over year, or 1% excluding divestitures, reflecting the shrinking legacy base. Adjusted EBITDA declined 3%, with management pointing to revenue losses from divested copper-heavy markets and ongoing transition costs as primary drivers.

Legacy cable and video revenues under continued pressure

Cable revenues dropped about 10% versus the prior year, while total residential revenue slipped roughly $5 million, with about $3 million attributed to divestitures. Management cited industry-wide declines in video attachment rates and structural erosion in legacy services, reinforcing the need for rapid fiber penetration to offset the drag.

DISH nonpayment creates uncertainty for Array

Array disclosed that DISH has asserted relief from its master lease obligations and has generally failed to make required payments, prompting Array to stop recognizing DISH revenue in the quarter. The company fully reserved 2025 receivables from DISH and removed those collocations from tenancy metrics, creating near-term cash flow pressure and adding uncertainty to future tower revenue.

Wind-down and transition costs weigh on near-term margins

Array continues to incur SG&A and wind-down costs linked to its exit from direct wireless operations, expenses that management expects will persist through 2026. These costs are depressing current EBITDA and contributing to wider guidance ranges, particularly because of timing uncertainties around the T-Mobile master lease arrangement and interim revenue streams.

Guidance skewed to lower range amid cautious stance

TDS noted that while overall guidance remains unchanged, current trends in copper and cable push expectations toward the lower half of its total telecom revenue range. Adjusted EBITDA guidance likewise assumes continued short-term margin pressure as the company invests in fiber growth and absorbs transition expenses during the transformation.

Divestitures accelerate legacy exit but pressure revenue

The company continued to divest predominantly copper-based markets, which reduced residential revenue by about $3 million in the quarter but also trimmed structurally challenged assets. Management framed these exits as necessary to sharpen focus on fiber, even though they create a visible near-term revenue headwind that must be offset with higher fiber conversion and penetration.

Complexity in monetizing remaining spectrum and partnerships

While a large portion of spectrum has been sold or is under contract, TDS is holding its remaining C-band assets for value rather than rushing to monetize. The company also cited low tax bases in certain partnership interests, which complicate potential sales and may limit near-term monetization, suggesting residual value realization will be more gradual and selective.

Guidance reinforces fiber focus and investment discipline

Management reaffirmed 2026 guidance for TDS Telecom, calling for total telecom revenues between $1.015 billion and $1.055 billion and adjusted EBITDA of $310 million to $350 million. Capital expenditures are expected to run $550 million to $600 million to support delivery of 200,000 to 250,000 new fiber addresses, while Array maintained its own revenue and EBITDA outlook despite wider ranges tied to T-Mobile and interim tower revenue uncertainty.

TDS’s earnings call painted a picture of a company in the thick of a strategic transition, leveraging fiber and tower growth to replace a fading legacy portfolio. While revenue and earnings remain under pressure from divestitures, cable declines and transition costs, management emphasized that record fiber deployment, disciplined capital use and steady progress on spectrum monetization are building a more resilient platform for long-term value creation.