Telephone and Data Systems, Inc. Aktie

Ladies and gentlemen, thank you for joining us, and welcome to the TDS and Array Second Quarter 2026 Operating Results Conference Call. [Operator Instructions].

I will now hand the conference over to John Toomey, Treasurer, Vice President and Head of Corporate Relations. Please go ahead.

Good morning, and thank you for joining us. The presentation we prepared to accompany our comments this morning can be found on the Investor Relations sections of the TDS and Array websites. With me today and offering prepared comments are -- on behalf of TDS, Walter Carlson, President and CEO; Vicki Villacrez, Executive Vice President and Chief Financial Officer. On behalf of TDS Telecom, Ken Dixon, President and CEO of TDS Telecom; Kris Bothfeld, Vice President of Financial Analysis and Strategic Planning of TDS. On behalf of Ray Digital Infrastructure, Anthony Carlson, President and CEO of Array.

This call is being simultaneously webcast on the TDS and Array Investor Relations website. Please see the websites for the slides referenced on this call, including non-GAAP reconciliations. TDS and Array filed their SEC Forms 8-K, including the press releases earlier this morning. As shown on Slide 2, the information set forth in the presentation and discussed during this call contain statements about expected future events and financial results that are forward-looking and subject to risks and uncertainties.

Please review the safe harbor paragraphs in our press releases and the full description of risk factors included in our SEC filings.

I will now turn the call over to TDS President and CEO, Walter Carlson. Walter?

Thanks, John, and good morning, everyone. Today, we are pleased to share the second quarter results for TDS and array digital infrastructure. Before we get to those results, I wanted to note that we will not be providing an update today on the status of TDS' previously announced offer to acquire the minority interest of Array in an all-stock transaction. That process is ongoing. TDS will not be commenting further or taking questions on this topic during today's call.

Now turning to our 2026 enterprise priorities, we are at the midpoint of the year, and we continue to make steady progress across each of these 5 focus areas. As I've noted previously, our focus remains on advancing our strategy with financial and operational discipline. In addition, both business units continue to advance their individual operational goals. TDS Telecom added meaningful fiber addresses and customers during the quarter. Array increased tower tenancy quarter-over-quarter and has now successfully completed transactions to monetize virtually all of its spectrum outside of the C-band.

I continue to be pleased with the progress each business unit is making and by the work underway to strengthen our culture during this period of transformation. I would like to personally thank every associate across the enterprise for their continued commitment and contributions.

I will now turn the call over to Vicki.

Thank you, Walter, and good morning, everyone. The transactions we have completed over the past year, including array spectrum sale to Verizon in June, have strengthened our balance sheet and created meaningful capital flexibility. That improved flexibility provides a strong foundation for how we approach capital allocation and strategic opportunities. It allows us to continue to make decisions with a clear focus on financial health, strategic alignment and long-term value.

Slide 4 provides an update on our progress. First, TDS Telecom continues to advance its long-term objective of 2.1 million marketable fiber service addresses and delivered approximately 66,000 addresses in the second quarter. The team's execution and momentum in this area drove our decision to increase Telecom's fiber service address and capital guidance for the year.

While each market build is evaluated with our traditional financial discipline, our build cadence is not currently constrained by capital. That allows us to accelerate in attractive markets where we can take advantage of the opportunity to be the first to fiber. Our fiber network continues to perform well with consumers, both financially and operationally, and our transition to be fully fiber is the right strategic imperative and one that we believe will provide sustained value to TDS.

Second, we remain committed to M&A and are actively evaluating opportunities that align with our strategy in a financially disciplined accretive business case-driven fashion. In mid-April, we announced an agreement to acquire Granite State Communications and are on track for a third quarter close that will add 11,000 fully fiber service addresses to the portfolio.

As I've communicated in the past, we are primarily focused on small- to medium-sized opportunities that are either already fibered up or have an accretive economic path to all fiber and support our clustering strategy.

Finally, with respect to shareholder returns, TDS continues to pay a modest quarterly dividend and Array issued a special dividend in the quarter of $11 per common share. TDS was not in the market for share repurchases during the second quarter because we were restricted from doing so due to the TDS offer to Array. As of the end of the quarter, we had $520 million remaining under the TDS share repurchase authorization, and we remain committed to executing on that program as business, market and other conditions permit.

Across all 3 elements, the company intends to continue to be disciplined, balancing the needs of the business, evaluating future returns and taking into account market and other conditions as we move forward.

Thank you. And now I will turn the call over to Ken Dixon to discuss TDS' fiber business.

Thank you, Vicki, and good morning, everyone. TDS Telecom continues to execute on our fiber growth plan. building fiber addresses, driving fiber sales and transforming our operations. This quarter, we again made progress across all 3 priorities.

As shown on Slide 6, we delivered approximately 66,000 marketable fiber service addresses in the quarter, bringing us to approximately $106,000 for the first half of the year. This represents the strongest first half delivery in company history and even exceeds what we accomplished in the second half of 2025, which is typically our peak construction period. It reflects both strong execution by our teams as well as expanded construction capacity. We have a robust pipeline of addresses currently under construction. -- positioning us well for the remainder of the year.

This pipeline includes a mix of addresses from our fiber expansion in new areas as well as fiber upgrades in our existing markets through our fiber deeper program and federal EA CAM program. As a reminder, we are the largest recipient of ACAM which provides federal support to bring high-speed broadband to hard-to-reach rural areas where it would otherwise not be economical.

We are leveraging this support to accelerate our fiber expansion in 22 states, bringing fiber to more than 300,000 addresses in our incumbent footprint. We have already met the 2026 obligations in 3 states and now have the highest crew counts ever in the remaining EA-CAM markets to deliver on our 2026 milestones.

In summary, our build teams are delivering at a record pace. This gives us confidence to increase our 2026 guidance for fiber service address delivery to 250,000 to 300,000, increasing our range by 50,000. Turning to sales. We ended the quarter with approximately 15,000 fiber net adds, up 47% year-over-year.

As we continue to grow our fiber footprint, we are hyper-focused on converting these new service addresses into customers and improving the overall customer experience. We continue to build out our sales teams across all our markets. These sales teams are focused on both prelaunch sales as well as penetrating new open-for-sale addresses aftermarket delivery.

We have significantly expanded our door-to-door sales capacity and we're pleased with the improved performance of our dot-com channel. In our cable markets, we're beginning to see the benefit of expanded sales teams and targeted investment, which are now driving increased gross adds.

As I mentioned last quarter, our cable markets are some of the best in the country, and we see significant opportunity to grow here. Overall, we have good sales momentum as we head into the back half of the year. However, we have more work to do. Our operational transformation is centered on efficiency improving the customer experience and simplification.

We continue to make progress modernizing our systems and remain on track with our transformation road map, making it easier for customers to do business with us. For example, our technicians now utilize the same platform across all of our markets, which simplifies our back-office processes and provides an improved customer experience.

Further, we have several additional enhancements underway that are on schedule to be completed in the back half of the year. We will provide updates on these transformation initiatives as they advance.

Turning to Slide 7. Our long-term goals reflect our continued focus on executing our fiber growth strategy that delivers scale, speed and long-term value. We believe fiber is the superior broadband technology, not only for today, but into the future, with the delivery of approximately 66,000 fiber addresses in the quarter.

Now we serve nearly 1.2 million fiber service addresses, representing 60% of our total footprint with 80% of addresses capable of gig speeds. I want to take a moment to explain how we think about our footprint competitively. Our expansion markets, which are new geographies that we've entered and continue to build are 100% fiber.

In our incumbent markets, we've already overbuilt 52% of our addresses with fiber. And with the assistance of EA-CAM, we plan to deliver another 300,000 addresses with fiber over the next 2 years, further reducing copper in our network. Finally, in our cable markets, 22% of our addresses are already served by fiber and we continue to expand fiber across our footprint where it is economical to upgrade.

As I noted earlier, we know there is more work ahead, but the progress we're making gives us confidence in the path forward as we continue transforming into a fiber-centric company.

I'll now turn it over to Chris to walk through our second quarter results.

Thanks, Ken. Turning to Slide 8. The chart on the left shows our quarterly fiber service address delivery over the past 6 quarters and reflects the build momentum we are experiencing. As Ken highlighted, our second quarter fiber address delivery more than doubled year-over-year and the first half of 2026 is more than 2.5x our delivery from the first half of 2025. The chart on the right illustrates the continued expansion of our fiber footprint. Over the past 3 years, we have increased the number of fiber service addresses across our markets by approximately 80%, demonstrating steady and meaningful progress.

On Slide 9, residential fiber net adds were 15,100 in the second quarter, a 47% increase compared to prior year, driven by continued footprint expansion and ongoing copper to fiber conversions. Residential fiber connections have nearly doubled over the past 3 years, outpacing our fiber footprint growth. We expect continued fiber connection growth as we expand our footprint.

Turning to Slide 10. The chart on the left depicts our residential revenue per connection, which increased 1% year-over-year. This growth reflects annual price increases offset by ongoing industry-wide declines in video attachment rates. The chart on the right highlights total residential revenue between copper, cable and fiber. You'll see our fiber revenue is up 13% or $11 million versus prior year, which helps offset the legacy revenue stream pressures we are experiencing.

In cable, revenues are down roughly 10% versus the second quarter of 2025. As Ken highlighted, we are increasing investment and sales capacity in our cable markets to stem these declines. Overall, total residential revenue declined $6 million compared to prior year. Roughly $2 million of this decrease reflects the divestitures of primarily copper-based markets.

Beyond that, we are continuing to experience faster declines in copper. In response, we are deploying fiber across our ILEC footprint at a record pace to help mitigate those headwinds.

Slide 11 summarizes our financial performance. Total operating revenues declined 6% in the quarter or 4% excluding the impact of divestitures. Discrete adjustments to wholesale revenues that benefited 2025 are driving roughly half of the year-over-year decrease.

The remaining decline reflects continued legacy revenue stream pressures partially offset by growth in fiber connections and modest improvement in revenue per connection. Cash expenses were flat as savings from ongoing cost management initiatives were offset by costs to support our growing expansion markets and inflationary increases.

The decline in adjusted EBITDA for the quarter reflects top line pressure from divestitures as well as legacy revenue streams. Capital expenditures totaled $179 million in the quarter. reflecting higher construction activity and a robust funnel of addresses under construction.

Slide 12 reflects our guidance for 2026, which has been updated. We are projecting total telecom revenues of $1 billion to $1.025 billion, down from our prior guidance, primarily due to the headwinds we are experiencing in our copper and cable markets. We narrowed the adjusted EBITDA range to $310 million to $330 million as these legacy revenue challenges are largely falling to the bottom line.

As Ken noted, we increased our 2026 fiber service address guidance range by 50,000 and now expect to deliver between 250,000 and 300,000 new fiber service addresses. To support this increased address delivery, we have increased our CapEx guidance range to $625 million to $675 million.

Before turning over the call, I want to thank the entire TDS team for their continued execution and focus. Their efforts across fiber delivery, customer growth and operational transformation are critical to the progress we're making toward achieving our long-term objectives.

I'll now turn the call over to Anthony.

Thanks, Chris, and good morning. Momentum continued throughout the second quarter with our focus still squarely on fully optimizing our tower operations and monetizing our spectrum. In the second quarter, we saw cash site rental revenue increased 65% versus Q2 of last year. We also continued to demonstrate sequential tower tenancy growth.

Finally, we continued advancing our spectrum monetization strategy by closing transactions with both T-Mobile and Verizon during the quarter. Before I get into the details of the quarter, I want to mention the receipt of TDS' proposal to acquire the shares of Array that it does not already own. As previously disclosed, our Board has formed a special committee of independent directors who've retained independent advisers to carefully evaluate the proposal and make a recommendation as to what is in the best interest of Array's shareholders. We won't be commenting further or taking questions regarding the proposal today.

Starting with Slide 16, you'll see continued sequential improvement in our tenancy ratio, which increased from 0.98 to 0.96 at the end of the prior quarter. As a reminder, DISH generally stopped making payments under its contracts with us in December. In addition, DISH wireless and other DISH entities have filed for bankruptcy. Arrays ceased recognizing revenue from DISH in the first quarter, and all outstanding 2025 balances have been fully reserved.

As a result, DISH colocations are no longer included in our tenancy ratio. Excluding this impact, we are encouraged by the consistent and steady growth in our tenancy ratio.

As noted on Slide 17, cash site rental revenue in Q2 increased 55% year-over-year from all customers and when normalized for the DISH impact, this increase was 65%. The addition of T-Mobile interim site revenue drove the year-over-year increase to 81% or 92% when normalized for DISH. As T-Mobile works through its integration process, we will see the interim site revenue decline, which began in the quarter.

Importantly, our existing pipeline and application volume remains strong and will drive continued revenue growth both this year and into the next.

Turning to Slide 18. Integration with T-Mobile continues to be at the forefront of our focus and strong progress continues to be made. As a reminder, T-Mobile hasn't until January 2028 to finalize its 2015 committed sites under the new MLA. Given the ongoing integration work, we are narrowing our range of projected tenantless towers post T-Mobile integration to 1,000 to 1,700.

Our ground lease optimization work remains one of our top priorities. -- and we continue to see notable progress reducing the cash burden of these negative cash flow assets. We still expect this work to be a multiyear effort focused on cost avoidance, lease-up, evaluating long-term demand and decommissioning where it makes sense.

This process is well underway and allows us to assess all potential outcomes for the tenant less tower portfolio, including removing from the portfolio subset of sites with no path to economic viability.

As shown on Slide 19 and presented in prior quarters, we have reached agreements to monetize roughly 70% of our spectrum holdings. During the quarter, we closed on multiple transactions, including the $168 million sale of the 600 megahertz, 700 megahertz and AWS licenses to T-Mobile in May and the $1 billion transaction with Verizon in June.

The remaining transactions with T-Mobile are expected to close by the end of 2026, depending on regulatory approval and closing conditions. As stated in prior quarters, we continue to work to opportunistically monetize our remaining spectrum, primarily C-band. Our C-band spectrum is highly compelling 5G asset with a mature ecosystem ready for carrier deployment and we believe, given no near-term build-out requirements, we have ample time to realize its value.

Slide 20 summarizes the results of our partnership or noncontrolling investment interests. As a reminder, 2025 investment income and distributions were impacted by several onetime factors, including the impact of the Iowa partnership selling their wireless operations to T-Mobile and distributions received from Verizon related to their transaction with Vertical Bridge.

Equity income for the 6 months ending June 30 was $75 million with the Q1 results elevated due to prior period adjustments recorded by the managers of certain investee entities.

Slide 22 summarizes Array's financial results. Revenue growth year-over-year continues to be driven largely by the T-Mobile MLA, but with solid additional growth from our other customers. The prospective classification shift noted in prior quarters related to property taxes and insurance inclusion in our cost of operations rather than SG&A, over over half the year-over-year increase in cost of operations.

SG&A expenses continue to include costs to support the wind down of the legacy wireless operations. We have seen a decline in these costs in the first half of 2026. But as we have indicated in the past, we expect these wind-down costs to persist throughout 2026 but at a declining level.

Additionally, for the quarter, you'll see elevated strategic alternatives costs relating to the evaluation of the proposal the Array board received from TDS to acquire the remaining public shares of Array. Given the classification of strategic alternatives costs, these are subtracted from a raised calculation of adjusted OIBDA.

On Slide 23, we've updated our guidance for total operating revenue, adjusted EBITDA and OIBDA, while guidance for capital expenditures remained unchanged. We have narrowed our total operating revenues range, increasing the low end to $205 million from $200 million, driven by an expectation for higher T-Mobile Entrance site revenue based on the current pace of integrations.

The top end of the revenue range remains unchanged. For adjusted OIBDA, we've increased our guidance range to $60 million to $75 million, up from $50 million to $65 million previously. This upward revision reflects the higher revenue outlook combined with expectations for modestly lower operating expenses.

The expense benefit is driven in part by lower cost of services, consistent with our current assumptions regarding the pace of T-Mobile integration. Adjusted EBITDA guidance has increased to a range of $220 million to $235 million, up from $200 million to $250 million previously. This increase reflects the higher adjusted OIBDA outlook discussed earlier as well as updated expectations for both equity income and interest and dividend income.

With respect to equity income, we've increased our estimate to $145 million from $140 million, reflecting year-to-date performance trends and budgets received from certain partnerships. As a reminder, these are passive investments and our forecasting approach is generally aligned with recent operating trends and partner provided expectations.

We've also increased our interest and dividend income estimate to $15 million from $10 million. This revision is primarily driven by a higher cash balance due to timing of cash inflows and outflows related to the spectrum transactions.

In closing, we recently marked Array's first anniversary as a stand-alone tower company. I continue to be incredibly proud of the dedication, commitment and hard work our associates demonstrate every day as we execute on our strategy, drive operational efficiencies and deliver growth. I want to personally thank the team for their contributions over the past year. and I'm excited about the opportunities ahead and the continued progress we will achieve together.

I will now turn the call back to Walter.

Thank you, Anthony. As I noted in my opening remarks, TDS continues to make solid progress advancing our strategic priorities. Our execution over the first half of alongside the momentum we are seeing across the businesses gives us confidence as we move forward into the year.

I'd like to again thank all of the outstanding associates across the TDS enterprise for their continued dedication and hard work in serving our customers and supporting the advancement of our business.

Operator, please now open the line for questions.

[Operator Instructions]. And your first question comes from Ric Prentiss with Raymond James.

Thanks for the update. First question is a high-level question, 30,000 -- well, I guess, 300,000 kilometers up the satellite question. Can you elaborate a little bit on, Ken, I think you said you think fiber is a great solution. But can you give us your thoughts on how does satellite reflect into competition for fiber versus copper versus coax.

And on the other side, what does it mean for wireless and towers, particularly because I think people view TBS and Array Digital is maybe a more rural type company, so maybe also address kind of the rural aspect.

In the markets where TDS has deployed fiber, we're not seeing a material impact from satellite. As you just saw in our reported marketable addresses and we're seeing strong demand across the business with a nice sequential improvement in our fiber net adds. So we are -- what you're seeing from us is we're increasing the pace of our fiber build. And what we find every day is how important it is for TDS to be first to fiber.

So where you're seeing us really deploy the most amount of crews right now, is to our EA-CAM markets where that is obviously copper. And along the route getting to those EA-CAM markets, we have the ability to deploy fiber. So that's where we have record crews right now. And we're in the peak summer months, and we're going to continue to see that build capacity increase.

And where we're deploying fiber in those copper markets, we're seeing very strong demand for our products and services. So to us, that's the biggest thing we can do right now in the marketplace is to continue to focus on that copper plant with our fiber build and bring fiber into those respective marketplaces.

Sure. And from the rate perspective, what I'd say is that nothing we have seen or heard suggest anything other than that terrestrial networks are going to be the bedrock mobile data delivery and that macro sites, from our perspective, continue to be the most efficient and reliable way to do that. And as far as macro sites, so we think we'd be a great collection of assets and we are very excited to continue to help our customers deploy their networks on them.

Second question for me. Vicki, I think you mentioned no stock buyback in the quarter because of the restriction with the TDS offer. How should we think about when can you get back into the stock buyback market given what the process might be a related question on a calendar basis and also the quiet period for spectrum transactions with the previous auction, we think ended back on July 13, and another auction, which we're glad to see another auction coming, quiet period probably starts first quarter next year. So how are you thinking about those calendar questions? When can you get back into stock buyback? And is there now kind of an open window for C-band discussions?

Yes. Okay, Rick. Let me just start also big picture. First off, I'd like to say we're really pleased with where we are today. We executed a lot of our transactions. We've got T-Mobile, AT&T, Verizon transactions closed and behind us. We've put in our strong balance sheet, which is giving us a lot of flexibility going forward.

Having said that, as you mentioned, we were not in the market for our share buyback program. We are very committed to executing on that program as soon as we're able to do so and the business and market conditions warrant so -- but we have $520 million authorization left as of the second quarter, and we remain committed to executing on that.

I can't comment on when I can't speculate on when, as you know, we have -- TDS has a pending offer to Array, and we are not commenting on the timing of that potential transaction.

And then on spectrum?

So in terms of the C-band, we don't have a specific process update to share. What we will say is that we're encouraged by the results of the AWS reaction in terms of the implication it may have for the value of spectrum. -- which we continue to believe is extremely valuable. It's available to deploy now. There's an existing ecosystem for it. and it's adjacent to the upper C band. So that provides the opportunity for easy deployment for whoever acquires the lower end of that range.

As you pointed out, we are not in a plant to right now. And as you imagine, we're going to -- whenever permitted by regulation to explore sale and all that sectors parties, but I do again, we're not going to be a forced seller -- we believe the cost of maintaining that spectrum by building it out, it needs to be is very reasonable relative to the overall value of it. And so our position on that has remained unchanged.

It's good to have probably that C2, C3, C4 kind of blocks, which, like we said, kind of can help bridge that gap between lower and upper C-band.

Your next question comes from the line of Sebastiano Petti with JPMorgan.

If you could help us on the TDS Telecom EBITDA guide. I mean it looks like the second half run rate implies a $350 million annualized TDS Telecom EBITDA, I mean what's the confidence underlying that inflection that you're seeing there? Then I have a follow-up.

Yes. Sebastiano. This is Kris. So yes, we did revise our guidance across the board for revenue, adjusted EBITDA, CapEx, service addresses. With respect to adjusted EBITDA, -- we are seeing increased pressure from legacy revenue stream declines, and our adjusted EBITDA was also impacted by divestitures. However, what we are seeing nice momentum is on our fiber revenue growth. we reported residential fiber revenue growth of 13% in the quarter, and we expect that to continue to grow continue to grow as we're even fueling more service address delivery in the back half of the year and expect those revenues to come. And so that's on the top line side in the back half of the year.

And then also on the spend side, our transformation efforts, we are seeing savings there, and that's helping to offset the increased costs associated with inflationary increases, increases to support our growing footprint -- and as Ken said, we're also investing a lot more in our sales capacity. So that transformation program is helping mitigate those costs as well. And our midpoint is guiding to a 2% reduction in costs for the full year. So again, it's -- what's driving that turnaround is the fiber revenue growth and our cost transformation program.

And that would imply that goodness would dictate to 2027, right and no reason to think -- not that you're guiding, but no reason to think that momentum and the cost efforts, there's any -- that should persist into 2017. Is that fair, Kris?

Absolutely.

Got it. And I guess for Vicki and the broader TS fiber, I mean, telecom team, Obviously, M&A remains a key focus of yours on the fiber side. To the extent, could you comment on -- what is the -- what are the valuations or the conversations in that market look like? Have they changed at all over the last 6 to 12 months? Obviously, to Rick's question, satellite broadband competition fears remain a bit of an overhang across the broader ecosystem. Not sure if that's dictating to a bid-ask spread occurring on fiber assets.

And then to the -- and also another question just on M&A and I guess Anthony, for you, I guess, I don't know Vicki, you've said in the past M&A on the fiber side is the most paramount. But Anthony, how are you thinking about M&A or just overall the landscape on the tower side. Obviously, valuations on the public market side have kind of come in here. I wasn't sure if that's dictating to the private market as well.

Yes. Sabastiano, as you know, we did sign an agreement earlier in the quarter. We expect to close next quarter on a very attractive small tuck-in that's adjacent to our current footprint at tds.com and this was 11,000 fiber service alerts that was for $25 million.

So if you do the math, I think that shows that we are really looking for opportunities where we can make the economics work and we can see the growth, the future growth in the footprint as well as in the customers that are being fibered up with our bundled products that Ken and Kris have talked about. So we'll continue to -- and we are actively active in the space in looking for these types of opportunities, both in the small and the medium-sized sector.

And from a rate perspective, we keep an eye on what's going on in the private markets and the prices that we see are a bit high for what we think are other uses of our time and energy. We're laser focused on improving rate operations. across multiple dimensions, including improving our ground lease situation and those are much more attractive uses money at these prices than buying tool in the private market.

Your next question comes from the line of Vikash Harlalka with New Street Research.

When I look at the FCC broadband map, it looks like there has been a significant increase in fiber overbuild activity in your footprint. Can you just tell us like what you're seeing in terms of profitable activity? And then if an overbuilder starts building in your footprint, do you still deploy fiber in those markets? Or do you pull back on the on? Then I have a couple of follow-ups.

Yes. what we're seeing from an overbuilder perspective is we've seen some activity in some of our cable markets. But what I will tell you about our cable markets is today, they're 22% fiber already. And as we were going through to look at our edge-out opportunities that we updated the market at in the first quarter, we used that same process to run our cable markets through. And what we found was there were tremendous opportunities still to fiberize in our cable markets we've approved some of that in some of our markets recently.

And I think we're going to continue to see that activity from us over the next couple of quarters. where we see a very economical path to fiber in those cable markets, we'll look to expand. But we have seen some fiber builder activity in cable, but we think we still have a great opportunity with fiber ourselves.

Got it. And I may have missed this in the prepared remarks, but your broadband churn both on the fiber and the cable side increased year-over-year. Any color on what drove that?

So we saw a sequential fiber churn improvement in the second quarter to 1.2%, and our overall churn improved in the second quarter sequentially as well. In our fiber business right now, we feel like we're very competitive in the marketplace, and we're right where we thought we would be from a churn perspective.

Got it. And then I just want to follow up on Sebastian's question about fiber valuations. Could you just provide us like any color as to what's the framework you use for evaluating fiber asset valuations.

Yes. When we look at fiber opportunities, we really look at where they are, what is the competition in the marketplace. We look at the percent of fiber up or an economic is a viable economic path to Fibria.

As you know, we are driving towards the goal of fiber across our entire network and driving copper out of our businesses. So as we're looking at opportunities, we're looking for contiguous tuck-ins or something that's going to advance our current clustering strategy. I would say our clustering strategy has been very successful, where we've been investing in anchor markets and overbuilding the fiber in new markets, but we see really strong growth in the area -- the population area as well as density to expand for the future. So those are -- that's largely what we're focused on.

Your next question comes from the line of Michael Rollins with Citigroup.

I was curious, going over to towers and the leasing opportunity as now you've had time to incrementally engage with all of your customers.

Is there a way to frame the longer-term leasing opportunity in terms of whether you want to describe it in revenue or activity dollars or colocation, like where do you see that growth path taking the business to?

Well, I think that what we're seeing is a trend going up, right? And I think a little bit of the color that I'd give on this is that if you take a look at the towers that -- we anticipate ultimately having been naked at the end of this T-Mobile integration or the ones based on what they originally said, like we are seeing demand on both those towers and on our tower at portfolio that already get tenants.

We believe there's a significant amount of rotates possible if egos downs. And what the endpoint is going to be for a lot of factors and not stimulate on what they are. But I will say that I give you a strong potential for growth across may....

So when it comes to the investments in cellular that you have. Is there any changes from the controlling partners that you're seeing in terms of how they value these stakes, whether they want to clean these minority outstanding investments up at some point that can help close whatever bid-ask spread has been there historically?

Yes. Without getting into any specific conversations, right, I'd say that, as you pointed out, there continues to be a bit of a bid-ask spread, right? I mean low tax basis in these. I mean if you were to do a net present value calculation of these, taking a look at historical growth rates and cost of capital, you find the value ascribed to these assets that is significantly higher than just taking the EBITDA multiple of a wireless company and putting it on top of that. And that's the way that we deal with that said, as we've said before, -- we remain open to offers that reflect the value that we see in these businesses, net of all other considerations.

Now these are valuable assets for us, and they generate significant cash flow for the business.

Your next question comes from the line of Sergey Dluzhevskiy with GAMCO Investors.

My first question is on TDS Telecom side. So obviously, you guys have been making investments in sales and marketing, including increasing door-to-door sales force. I guess, -- what is your assessment of your sales efficiency today? What are some of the things that have worked well for you year-to-date? And what are some of the initiatives that you're still kind of contemplating on sales and marketing and go-to-market front that potentially could improve your conversion rate on fiber even further, basically converting fiber passings into paying customers.

Yes. I think the first thing is address delivery because that's ultimately how we create sales. So as you've seen in the first quarter and then again in the second quarter, we had very good address delivery. And obviously, with the EA-CAM, a lot of the addresses that are now coming into our sales cycle are ones that would traditionally be in the ILEC markets in copper. So it's a great opportunity for us to migrate those copper customers over to fiber. So address delivery has been very, very strong, and that has helped us see sequential improvement in our fiber net adds.

Second thing is with our game plan here, we've always had a very, very robust presale execution to where as soon as we know that the new market is coming open for sale, we immediately put our door-to-door teams and our marketing efforts in and that has helped us with that low 20% presale penetration, which I think is key to your successful fiber business. You did mention, we've been putting a tremendous amount of sales capacity into the market.

One of the things that we've been doing is not only increasing the productivity significantly at our own door-to-door teams, but we've been going out to find vendors that can give us selling capacity in our cable markets, in our ILEC footprint with all of this new copper plant now turning into fiber, as well as our expansion markets.

So the more open for sale that we bring in, the more vendor capacity that we brought in. We brought on several new vendors Sergey in the second quarter, and we just brought another 1 on in the very beginning of July. So we have done a turf analysis -- we've looked at our entire geography, and we say we need more and more door-to-door both internal and external vendors, especially with the pipeline of addresses that we expect in the back half of the year.

The other big development from us has been our dot-com business. We've seen significant improvement. Why that's so important is because it's the most important channel because it's your lowest cost of acquisition channel and has the greatest overall reach.

We have business transformation efforts underway to do tremendous work on our website as we go into the back -- the very later part of 2026. And - but 2027, I think we'll see the full capabilities of it. The next thing that I think is super important is we've brought in some new leadership from a sales perspective.

Most recently, we brought in someone to run our multi-dwelling channel business because 22% of the addresses that we're bringing ultimately into the market or MDU, this is where we're seeing housing growth. We expect to -- we want to win here, and we've added that additional capacity in on top of our focus on single family. So a lot going on in sales and a lot going on in terms of address delivery.

Great. And maybe a question or 2 on the tower side. So I guess, with several spectrum -- obviously, the auction is over. But prior to that, there were several spectrum transactions involving satellite players like SpaceX and Amazon. So with those transactions, do you see potential to expand the universe of parties interested in C-band spectrum that you guys have.

So we would -- I think that as you pointed out, there's growing demand for spectrum for a growing number of parties. And we certainly would -- we're not going to discriminate in who we sell the C-band spectrum 2. We're focused on achieving the highest possible value for it. And if it's not a traditional party, then we'd be more than happy to sell it to them.

Got it. And another question from kind of on the operational side. And obviously, you're increasing tenancy of your towers -- maybe if you can provide more color on the initiatives that worked well for you during the course of the year and also sound of the new things that maybe you're trying or started implementing that potentially could lead to further improvement, maybe somewhat of a step change in your tenancy ratio.

Yes. So there are 2 elements on the tenancy ratio. Of course, there is the number of co-locations in the number of towers. So we've been doing a number of things to increase the number of tenants, right? I think you saw the announcement that we made with Verizon about the deal that we had, we think that has been helpful in stimulating demand horizon -- we have stood up -- we have in-sourced our sales team over the last 18 months. That sales team has been doing excellent work to support our customers' needs and encourage colocation with us by being a good partner.

In addition, we have stood up a vertical sales business and where basically we didn't have one before, and we've been getting a lot of traction throughout the pures we serve from a variety of players to a lot of fees singing from hirers to with facility as you name it. So we've gone from basically not having that at all and to actually being able to do that.

So we're seeing a lot of things on the Tevetside. Now as you probably noticed, our power -- the count of towers has been going up at certain legacy brand programs that occurred from -- in the U.S. Cellular days is has been developing.

Now eventually, that's going to conclude. And at the same time, we are evaluating every single tower continuously on its economic viability. And the worst of the worst of those towers that don't have a path to economic we will exit our portfolio. And that's going to reduce the denominator and therefore test the overall tenancy ratio.

And let's say the on start to get some of the worst those ones on the path to defining and being out of our portfolio. So we have 2 things that are driving on either side. We're quite encouraged by that. I think that we also have the potential to get more revenue, if not additional tenancy from some of the deployments that we're seeing from potential deployments that we're seeing, for example, if and as AT&T deploys 600 megahertz spectrum and as other companies deploy more spectrum and develop their networks further. So we think about it.

And we have a follow-up question from Sebastiano Petti with JPMorgan.

I guess, Ken, to just discussing the ACAM markets. in converting this to copper subscribers over to fiber. I mean, what's the penetration rate maybe in some of these ECM markets as we kind of think about what's the migration opportunity versus penetration opportunity in those markets? And that's my follow-up.

Thank you. We're not sharing the overall penetration rate. But what I can tell you is, as we have been bringing fiber into these markets, we're seeing very nice early cohort penetration, and we're seeing the penetration curves that we had anticipated, and we're seeing very strong demand in these markets. So -- not -- we're not sharing externally what the penetration target is.

But I will tell you, we're seeing very, very strong demand as soon as we bring fiber into these unserved markets.

And there are no further questions at this time. I will now turn the call back to John Toomey for closing remarks.

Thank you, and thanks, everyone, for joining us again today. As always, please reach out with any additional questions. And I hope everyone has a nice weekend.

This concludes today's call. Thank you for attending. You may now disconnect.

Thank you, Alexia.

Good morning, ladies and gentlemen. I'm Walter Carlson, President and CEO and Chair of TDS, and I will be chairing this Annual Meeting of the TDS shareholders. At this meeting, at this time, I call the meeting to order, and I would like to thank everyone present and on the webcast for participating in this meeting. It is now -- oh my gosh, I would say 8:59. So we got to wait for a second as we decided 9:00. Would you like me to start again? It's -- now it's 9:00 (sic) [ 10:00 ]. Very good. Okay. So we will call the meeting to order. And at this time, polls are open for voting on the matters before this annual meeting as set forth in the notice of annual meeting and proxy statement and on the agenda for this meeting. The rules of conduct that we will follow for this meeting are set forth on the reverse side of the agenda. If you do not have a copy of the agenda and rules of conduct and would like a copy, please raise your hand and one will be brought to you. Does anybody need an agenda?

I'd like to take this opportunity to introduce the directors, officers and special guests of TDS. I'd first like to introduce the other directors of TDS who are present. LeRoy T. Carlson, Jr., Director and Vice Chair of TDS. Okay, that's better. Okay. Dr. Letitia G. Carlson, Director of TDS and Physician and Clinical Professor at George Washington University Medical Center; Prudence E. Carlson, Director of TDS; Kenneth S. Dixon, Director of TDS and President and Chief Executive Officer of TDS Telecommunications LLC; Kimberly D. Dixon, Director of TDS and former Executive Vice President and Chief Operating Officer of FedEx Office; Christopher D. O'Leary, Director of TDS and former Executive Vice President and Chief Operating Officer, International of General Mills; George W. Off, Director of TDS and former Chair and CEO of Checkpoint Systems; Wade Oosterman, Director of TDS and former President, Bell Media and Vice Chair of BCE and Bell. I'm introducing Napoleon. He is joining us, and I don't know whether he's had a chance to dial in, but Napoleon B. Rutledge, Director of TDS and Senior Vice President and Chief Accounting Officer; of McKesson Corporation; Vicki L. Villacrez, Director of TDS and Executive Vice President and Chief Financial Officer at TDS. And finally, our last Director, Dirk Woessner, Director of TDS and Senior Vice President at Warburg Pincus.

I'd also like to take this time to introduce the other officers of the company and officers of subsidiaries who are present today. So Joseph R. Hanley, Senior Vice President, Strategy and Corporate Development. And Joe has been at many annual meetings, and this is Joe's last annual meeting. Joe, thank you for your years of service. AnneMarie I. Kreitzer, Senior Vice President and Chief Human Resources Officer; William Case, Senior Vice President and Chief Information Officer; Elsa B. Ansani, Vice President, Internal Audit and Corporate Secretary; Kristina S. Bothfeld, Vice President, Financial Analysis and Strategic Planning; John P. Kelsh, General Counsel of TDS and partner of Sidley Austin LLP; Kenneth M. Cutillo, Vice President, Corporate Development; Ilan S. Pragaspathy, Vice President, Growth and Transformation; Rachel M. Tippery, Vice President, Supply Chain, Sourcing and Logistics; John M. Toomey, Treasurer and Vice President, Corporate Relations.

Now from the subsidiaries, we have Mark Nachman, Senior Vice President, sales at TDS Telecommunications. Welcome, Mark. Also from TDS Telecommunications, Curtis Adamson, Vice President, Customer Service. Welcome, Curtis. And then from Array Digital Infrastructure, Anthony Carlson, CEO and President of Array Digital Infrastructure. Welcome everyone.

I know there are many other guests, but there are 2 other people I want to call out today. First is Julie Mathews, and the second is Mitch Mick. And if you would both stand up together. Stand up. You got to stay standing up. So for those of you who don't know this, Julie Matthews and Mitch Mick have been the underpinnings of this annual meeting and the annual meetings at Array for many years. Each of them have sadly told me that they're interested in retiring. And so in all likelihood, other than as shareholders, they won't be back here next year, but everybody should give them a round of applause for the wonderful work that they've done.

PricewaterhouseCoopers, our independent registered public accountant, is also in attendance. Shaun Goldfarb of PricewaterhouseCoopers has advised me they have no formal statement to make and will be available to answer any appropriate questions during the Q&A portion at the end of this meeting.

To act as inspectors of election, I have appointed Julie Mathews of Telephone and Data Systems, Inc. and Douglas Ives of Computershare Investor Services, our independent transfer agent and registrar. Will the holders of any undelivered proxies, please hold them up so that they may be picked up by the inspectors of election at this time.

Okay. Seeing none, we'll proceed with our agenda here. So all matters scheduled for business at this meeting will be introduced by the Chair. If any shareholder with a proper purpose would like to address the business at hand, I would ask you to raise your hand and address the chair, identifying yourself and disclosing the nature of your business.

In addition, shareholders will have an opportunity following the formal part of the meeting and management presentation to ask any questions they may have. In the interest of time, we will dispense with the reading of the notice of the meeting and the affidavit of mailing of the notice. We will also dispense with the reading of the minutes of the Annual Meeting of Shareholders held on May 22, 2025. The Secretary has copies of these documents if any shareholder would like to examine them after the meeting.

The Board of Directors has set March 23, 2026, as the record date for this shareholders' meeting. By order of the Board of Directors, management of the company distributed a notice of annual meeting and proxy statement on April 8, 2026, and the company's solicited proxies from the shareholders for this meeting. The inspectors have tabulated the proxies received before this meeting and advised me of the voting results immediately prior to the commencement of this meeting. Virtually all votes are received through proxies and and the voting results with respect to all matters are generally known before the meeting starts.

Accordingly, the inspectors of election have been instructed to advise me prior to the announcement of such results only in the event that there are changes of outcome considering any votes delivered, changed or revoked after the commencement of this meeting and prior to the closing of the polls for voting. Subject to formal certification by the inspectors of election, I have been informed that a majority of the voting power of each requisite voting group of TDS shares issued and outstanding on March 23, 2026, the record date for this annual meeting, is represented at today's meeting. Accordingly, the formal business of the meeting will proceed on the basis that a quorum is present. The only matters which may properly come before the meeting involving a vote of shareholders are those that were set forth in the notice of annual meeting and proxy statement.

The 4 proposals in the notice of annual meeting and proxy statement are: number one, the election of directors; number two, the ratification of auditors; number three, approval of amendment to the company's restated certificate of incorporation to allow for exculpation of officers and number four, advisory vote on executive compensation.

The first item of business is the election of directors nominated by the Board of Directors. As indicated in the notice of annual meeting and proxy statement, 4 directors will be elected by the holders of common shares, and 8 directors will be elected by the holders of Series A common shares. The Board of Directors has nominated Kimberly D. Dixon, Christopher D. O'Leary, Wade Oosterman and Dirk S. Woessner for election as directors by the holders of common shares. The Board of Directors has also nominated LeRoy T. Carlson, Jr.; Letitia G. Carlson; Prudence Carlson; myself, Walter Carlson; Kenneth S. Dixon; George W. Off; Napoleon B. Rutledge, Jr.; and Vicki L. Villacrez [Technical Difficulty]

Ladies and gentlemen, thank you for joining us, and welcome to the TDS and Array First Quarter 2026 Operating Results Conference Call. [Operator Instructions]

I will now hand the conference over to John Toomey, Treasurer, Vice President. Corporate Relations. Please go ahead.

Good morning, and thank you for joining us. The presentation we prepared to accompany our comments this morning can be found on the Investor Relations section of the TDS and Array websites. With me today and offering prepared comments are on behalf of TDS, Walter Carlson, President and CEO; and Vicki Villacrez, Executive Vice President and Chief Financial Officer. On behalf of TDS Telecom; Ken Dixon, President and CEO of TDS Telecom; Kris Bothfeld, Vice President of Financial Analysis and Strategic Planning of TDS and on behalf of Array digital infrastructure; Anthony Carlson, President and CEO of Array.

This call is being simultaneously webcast on the TDS and Array Investor Relations websites. Please see the websites for the slides referenced on this call, including non-GAAP reconciliations. TDS and Array filed their SEC Forms 8-K, including the press releases earlier this morning. As shown on Slide 2, the information set forth in the presentation and discussed during this call contains statements about expected future events and financial results that are forward-looking and subject to risks and uncertainties. Please review the safe harbor paragraphs in our press releases and the extended version included in our SEC filings.

I will now turn the call over to TDS President and CEO, Walter Carlson. Walter?

Thanks, John, and good morning, everyone. Today, we are pleased to share the first quarter results for TDS and Array digital infrastructure. But before doing so, I want to take a moment to address in my capacity as CEO and Chair of TDS, the proposal TDS submitted to the Board of Directors of Array to acquire the remaining shares of Array not currently owned by TDS in an all-stock transaction. As TDS continues its transformation, this proposal is the next step in executing our strategy, simplifying our corporate structure and enhancing our ability to invest in targeted areas of growth.

Array has successfully completed its transition into a tower-focused company with strong fundamentals, and we believe this transaction will position the combined company for long-term growth. By bringing Array fully under TDS' ownership, Array's stockholders would retain a significant interest in the tower business while gaining exposure to TDS' growing fiber business. Under the terms of the proposal, TDS would acquire all of the outstanding common shares of Array that TDS does not currently own by way of a merger in which each Array common share not owned by TDS would be exchanged for 0.86 of a TDS common share.

This exchange ratio assumes that the previously announced spectrum license sales identified in our offer letter, we'll have closed prior to the closing of the transaction contemplated by TDS' proposal and that the Array Board consistent with its treatment of net proceeds from prior spectrum sales will have declared and paid dividends of $10.40 per share to Array's stockholders prior to the closing. At $10.40 per share, Array would distribute approximately $900 million in net proceeds. This exchange ratio reflects an at-market offer based subject to the assumptions just described on yesterday's closing prices for TDS and Array.

The transaction is expected to qualify as a tax-free reorganization for U.S. federal income tax purposes. TDS expects the transaction to eliminate duplicative corporate costs, streamline corporate governance, increase share liquidity and strengthen the capital structure of the enterprise providing greater flexibility to pursue strategic investments across all our businesses, including towers and fiber.

As noted in this morning's press release, the proposal is subject to review and recommendation by a special committee of Array's disinterested directors and the approval of the majority of the disinterested shareholders of Array based on votes cast. It would also require approval of TDS' shareholders and the satisfaction of customary closing conditions. TDS does not intend to sell or otherwise transfer its interest in Array and will not entertain any third-party offers for Array or its assets in lieu of this proposal. TDS continues to support Array's previously disclosed intention to opportunistically monetize its remaining unsold wireless spectrum. TDS looks forward to working constructively with the Array Board's Special Committee as they evaluate this proposal.

Beyond what I just disclosed, and the information included in our press release and proposal letter to Array, we are not going to comment further on or take questions regarding the offer on today's call.

With that, let's turn to Slide 3. The enterprise is making good progress on its 2026 priorities. Our focus remains on advancing our strategy with financial and operational discipline. As I just mentioned, the proposal announced this morning will aid in strengthening TDS' corporate and capital structure and we look forward to working with Array's Special Committee. Both business units continue to make progress toward their operational goals. TDS Telecom continued to add fiber addresses and customers in the quarter. Array is off to a strong start in 2026 and is making good progress growing tower tenancy.

In the arena of spectrum, Array closed on a small transaction with T-Mobile earlier this week and expect the remaining announced T-Mobile and Verizon Spectrum sales to close in the second or third quarter, subject to regulatory approval and other customary conditions. I am pleased with the progress each business unit is making and with the efforts we have underway to strengthen our culture as we go through this period of transformation. I would like to personally thank every associate across the enterprise for their continued commitment and contribution.

And I will now turn the call over to Vicki.

Thank you, Walter, and good morning, everyone. Slide 4 updates you on our capital allocation priorities. TDS Telecom continues to make nice progress toward achieving its long-term objective of reaching 2.1 million marketable fiber service addresses, delivering 40,000 in the quarter. Ken and Kris will discuss more about the opportunities and momentum we are seeing in that space in a moment.

We continue to evaluate M&A opportunities in a financially disciplined accretive business case-driven fashion. In mid-April, we announced an agreement to acquire Granite State Communications. As I've communicated in the past, we are primarily focused on small- to medium-sized opportunities that are already fibered up or have an accretive economic path to all fiber and support our clustering strategy. Granite is just like that, fully fibered with over 11,000 service addresses that are adjacent to several of our existing markets in New Hampshire. We are excited to welcome these associates and customers into the TDS family and expect the transaction to close in the third quarter subject to regulatory approval.

Finally, in the area of shareholder return in the form of TDS share buybacks, we were not in the market during the quarter. At the end of the first quarter, we had a $520 million authorization for TDS share buybacks available, and we remain committed to executing on that program. Across all 3 priorities, the company intends to continue to be disciplined, balancing the needs of the business, evaluating future returns, along with market and other conditions as we move forward.

Thank you. And now I'll turn the call over to Ken Dixon to discuss TDS' fiber business.

Thank you, Vicki, and good morning, everyone. At TDS Telecom, 2026 is focused on executing our fiber growth plan, building fiber dresses, driving fiber sales and continuing to transform our operations. This quarter, we made progress across all 3 priorities as we scale our fiber network and advance our long-term strategy. As shown on Slide 6, our fiber builds are off to a good start. We delivered 40,000 marketable fiber service addresses in the first quarter. This is the highest first quarter total in our company's history and nearly 3x our delivery in the first quarter of 2025. This performance reflects both effective execution and increased construction capacity including our highest ever internal and external construction crew counts.

While we are pleased with the record construction number, we still have more work to do. We continue to invest in our internal construction teams by adding headcount, upgrading tools and equipment to support increased build capacity, giving us a strategic advantage. We believe these investments provide greater control over our execution and improve long-term efficiency.

In addition, we have a robust pipeline of addresses currently under construction, positioning us very well for the spring and summer build season. This pipeline includes a mix of addresses from our fiber expansion into new areas as well as fiber upgrades in our existing markets through our fiber deeper program and the federal EA-CAM program. As a reminder, the EA-CAM program provides federal support that enables us to bring fiber to approximately 300,000 service addresses, including those along the route, where it would otherwise not be economical helping to drive copper out of our network.

Looking at sales. We ended the quarter with approximately 11,000 fiber net adds, up 32% year-over-year. As we continue to scale our fiber footprint, we remain focused on converting new service addresses into customers and improving the overall customer experience. During the quarter, we strengthened leadership in key sales and customer experience roles to support these priorities. Our operational transformation is centered on efficiency, improving the customer experience and simplification. We continue to make progress modernizing our systems and remain on track with our transformation road map.

I'm happy to announce that we have now completed the billing conversion in our cable markets and have also introduced a new field force platform to support our technicians. These updates simplify our back office processes and provide an improved customer experience. We are now able to launch multi-gig speeds in our entire cable footprint. These areas are some of the best markets in the country, and we continue to see great opportunity here. So expect more to come.

Finally, as Vicki noted, in mid-April, we signed an agreement to acquire a fiber-based telecommunications business in New Hampshire. The transaction adds over 11,000 fiber addresses that are contiguous with existing TDS markets and supports our clustering strategy along with approximately 30 associates who will join the TDS team. We are excited about the opportunity to continue to deliver excellent service in this area, and look forward to closing this transaction in the third quarter, subject to regulatory approval.

Turning to Slide 7. Our long-term goals reflect our continued focus on executing our growth strategy that delivers scale, speed and long-term value. With the delivery of 40,000 fiber addresses in the quarter, we now serve approximately 1.1 million fiber service addresses, representing 58% of our total footprint and with 79% of addresses capable of gig speeds. While there is more work ahead, the progress we are making reinforces our confidence and the path forward as we continue transforming into a fiber-centric company.

I'll now turn it over to Kris to walk through our first quarter results.

Turning to Slide 8. The chart on the left shows our quarterly fiber service address delivery over the past 5 quarters. As Ken highlighted, our first quarter fiber address delivery nearly tripled year-over-year. This significant increase reflects the additional construction capacity we introduced last year and are continuing to scale this year. Our execution in the first quarter demonstrates the effectiveness of the strategy and the momentum we are building as we advance toward our long-term goals. The chart on the right illustrates the continued expansion of our fiber footprint. Over the past 3 years, we have nearly doubled the number of fiber service addresses across our markets, demonstrating steady and meaningful progress.

On Slide 9, residential fiber net adds were approximately 11,000 in the first quarter, a 32% increase compared to prior year, driven by continued footprint expansion and ongoing copper to fiber conversions. Residential fiber connections have also nearly doubled over the past 3 years, and we expect continued growth as we expand our fiber footprint.

Turning to Slide 10. The chart on the left depicts our residential revenue per connection, which increased 1% year-over-year. This growth reflects annual price increases offset by ongoing industry-wide declines in video attachment rates. The chart on the right is new this quarter and breaks down total residential revenue between copper, cable and fiber. You'll see our fiber revenue is up 13% versus prior year, an uplift of approximately $11 million, which helps offset the legacy revenue stream pressures we are experiencing.

In cable, revenues are down roughly 10% versus the first quarter of 2025. As Ken highlighted, we are increasing investment in our cable markets to stem these declines. Overall, total residential revenue declined $5 million compared to prior year. Approximately $3 million of this decline is attributable to divestitures of markets that were predominantly copper-based. We remain hyper-focused on driving fiber revenue at a pace that's expected to more than offset legacy declines.

Slide 11 summarizes our financial performance. Total operating revenues declined 3% in the quarter or 1% excluding the impact of divestitures. This reflects continued legacy revenue stream pressures partially offset by growth in fiber connections and modest improvement in revenue per connection. Cash expenses decreased 3%, driven primarily by benefits from our transformation initiatives including lower cost for billing, circuits and facilities. Adjusted EBITDA declined 3% in the quarter, driven largely by the revenue losses from divestitures. Capital expenditures totaled $126 million in the quarter, reflecting higher construction activity, a robust funnel of addresses under construction and accelerated investments in our internal construction crews and equipment.

Slide 12 reflects our guidance for 2026, which remains unchanged. We are projecting total telecom revenues of $1.015 billion to $1.055 billion. Current headwinds in our copper and cable markets are guiding us toward the lower half of this range. Adjusted EBITDA guidance remains between $310 million and $350 million as we continue our transformation efforts. Capital expenditures for the year are projected to be between $550 million and $600 million to support our goal of delivering between 200,000 and 250,000 new fiber service addresses.

Before turning over the call, I want to thank the entire TDS team for their continued execution and focus their efforts across fiber delivery, customer growth, and operational transformation are critical to the progress we're making toward achieving our long-term objectives.

I'll now turn the call over to Anthony.

Thanks, Kris, and good morning. 2026 has got off to a busy but great start. The organization is laser-focused on fully optimizing our tower operations and monetizing our spectrum. In the first quarter, we saw cash site rental revenue up 64% over Q1 of last year. We also demonstrated sequential tower tenancy growth when adjusted for DISH, and we continue to move our announced spectrum transactions forward.

Before I get to the details of the quarter, I want to acknowledge the Array Board's receipt of TDS' proposal to acquire the remaining public shares of Array. Our Board has formed a special committee of independent directors, who have retained independent advisers to carefully evaluate the proposal and make a recommendation as to what is in the best interest of Array's shareholders. Array will be providing updates as appropriate, but we won't be commenting further or taking questions regarding this proposal today.

Moving along to Slide 16. I want to provide an update regarding DISH. As previously disclosed, we received a letter from DISH Wireless in September 2025 in which DISH asserted that unforeseeable FCC actions impacted its master lease agreement with Array. And as a result, DISH believes it is relieved of its obligations under the MLA. Since early December, DISH has generally failed to make the required payments and is, therefore, in breach of its obligations. Array continues to take actions that deems necessary to protect its rights under the MLA.

Given the ongoing nonpayments, in the first quarter, Array ceased recognizing DISH revenue and all unpaid 2025 balances have now been fully reserved. Accordingly, our tenancy ratio no longer includes DISH colocations. When normalizing for this impact, we continue to see sequential growth in our tenancy ratio as depicted on the right from $0.95 in Q4 2025 and up to $0.96 in Q1 2026. Importantly, in Q1, we grew revenue and secured healthy colocation application volumes while supporting T-Mobile and its integration.

As noted on Slide 17, cash site rental revenue in Q1 increased 55% year-over-year from all customers. And when normalized for DISH impact, this increase was 64%. When layering in the T-Mobile Entrance site revenue, the increase was 86% year-over-year or 98% when normalized for DISH. Our application volume remains robust, and coupled with our existing pipeline will drive additional revenue growth in 2026 and beyond.

Turning to Slide 18. T-Mobile has until January 2028 to finalize its 2015 committed sites under the new MLA. We continue to anticipate 800 to 1,800 tenantless towers after the integration is completed and all interim sites are terminated. Our ground lease optimization work remained a priority in Q1, and we are making progress on reducing the cash burden of these negative cash flow assets. As noted previously, this will be a multiyear effort focused on cost avoidance additional lease-up, evaluating long-term command and decommissioning in situations where it makes sense, a process we have already begun on a subset of sites with no path to economic viability. This approach allows us to thoughtfully assess all potential outcomes for the tenantless tower portfolio.

As shown on Slide 19, and presented in prior quarters, we have reached agreements to monetize roughly 70% of our spectrum holdings. As a reminder, the sale of spectrum to AT&T closed on January 13, 2026, with the Array Board declaring a $10.25 per share dividend that was paid on February 2. In Q1, the FCC approved the sale of certain 700 megahertz licenses to T-Mobile, and that transaction closed earlier this week. Additionally, the FCC approved the sale of the 600 megahertz in AWS licenses to T-Mobile and pending closing conditions, we expect that sale to close in Q2.

We continue to anticipate that the transaction with Verizon will close in Q2 or Q3 of this year, subject to regulatory approval and normal closing conditions. The remaining transactions with T-Mobile are expected to close by the end of 2026, once again dependent on regulatory approval and closing conditions.

We continue to pursue opportunistic monetization of our remaining spectrum, primarily C-band. We view our C-band spectrum as a highly compelling 5G asset with a mature ecosystem ready for carrier deployment and with no near-term build-out requirements, we have ample time to realize its value.

Slide 20 summarizes the results of our partnership or noncontrolling investment interests. As discussed last quarter, investment income and distributions for full year 2025 were impacted by several onetime factors, including the impact of the Iowa partnership selling their wireless operations to T-Mobile and distributions received from Verizon related to their transaction with Vertical Bridge. For Q1, equity income was elevated due to prior period adjustments recorded by the managers of certain investee entities. Regarding cash distributions, certain entities distribute cash only twice per year, resulting in an uneven distribution pattern throughout the year.

Slide 22 summarizes Array's financial results. Year-over-year, we continue to see the impact of the T-Mobile MLA driving revenue growth. As noted last quarter, there was a prospective change in classification of property taxes and insurance from SG&A to cost of operations. As such, that is driving roughly half of the year-over-year increase in cost of operations. SG&A expenses continue to include costs to support the wind down of legacy wireless operations, but sequential quarter-over-quarter results are declining as planned. We expect these wind down expenses to persist throughout 2026 but with additional reductions over future periods.

On Slide 23, our guidance across all metrics, total operating revenue, adjusted EBITDA and OIBDA and capital expenditures is unchanged. As a reminder, our guidance ranges are wider than industry norm due to uncertainty with the T-Mobile MLA and the timing of interim site terminations.

In closing, I want to again thank Array's associates for their continued passion and dedication to driving operational efficiencies and growth as we continue to move through our first year as a stand-alone tower company.

I will now turn the call back to Walter.

Thank you, Anthony. As I noted in my opening remarks, TDS continues to make solid progress advancing our strategic priorities. Our first quarter execution combined with the momentum we are seeing across the business, positions us well as we move forward into the year. I'd like to again thank all of the outstanding associates across the TDS enterprise for their continued dedication and hard work in serving our customers and supporting the advancement of our business.

Operator, please now open the line for questions.

[Operator Instructions] Your first question comes from Rick Prentiss with Raymond James & Associates.

Man, you continue to be very busy. A couple of questions. On the fiber side, the TDS Telecom side, have you looked at -- is there an ability to put fiber into a REIT structure or any desire at some point to put fiber into a REIT-like structure to be more tax efficient?

Yes, Rick, this is Vicki. I'll take that one. We've looked at a number of options, structural options. But given where we're at today, they're just not optimal. And I'm not going to speculate going forward, what we may or may not do in the future. But as I think about fiber in our program that we have this year, we're in a really good position. We've got a strong balance sheet, and we are focused on funding fiber with our cash.

Second question, I think this is a legit one. Can you update us as far as the number of shares or percent of ownership TDS has of Array digital just so we can understand exactly how many of the disinterested might be out there?

Well, let me take that. I think the press releases that have been issued speak to that, Rick. I think 81.9% is the right rough number and we can get back to you with precise numbers off-line.

Okay. That's good. We had some people [indiscernible] spoilers, saying there were some Bloomberg numbers out there stating like 70% we knew it was something. So I appreciate that. And then the last question for me, a little more strategic looking. I know you guys have been looking at maybe providing more reporting metrics on the fiber business. Any update to what you think you could provide or help people understand what's happening with the fiber business as far as any cohort analysis or any trend lines to help us kind of look at the value of that business as it's going through a [indiscernible] spending cycle, some EBITDA pressure as you watch the market. Just trying to think through, is there a burn rate? Or what can you give us to help understand the traction you're gaining in the future look at what the fiber business might be?

Yes. Okay. So lots of questions there, Rick. We'll try to piece part those. Let me just start out with the disclosures first. We added -- this quarter, we added disclosures for our residential revenues, and we broke them out by technology. So you'll see the reporting by fiber, cable and copper. And we think this is something that will be helpful to investors going forward. And furthermore, we've included metrics in our trending schedules on our Investor Relations website. So I'll point you to there.

But I will -- Ken, do you want to jump in on the rest of Rick's questions?

Yes. I think the metrics that I think are most important as we're going to a fiber-centric business, is how well are we delivering marketable addresses from a build plan perspective. And then what are our fiber net sales in terms of as we're selling into that new open for sale and then also increasing our overall penetration into those new cohorts. So those are the 2 big things that build velocity and also our overall fiber net performance.

Great. And I would assume as you get fiber out there, it becomes a significant maintenance capital or ongoing capital once you're done with the bill drops to pretty low levels?

Yes. We definitely see the cash cost per customer improvements on everything from just the trouble tickets, copper versus fiber, the call-in rate is lower. So we love the fiber business, and we think the faster we migrate away from copper and bring it to fiber, we'll continue to see improvements in the bottom line.

Your next question comes from the line of Sebastiano Petti from JPMorgan.

I guess sticking with TDS Telecom. And Ken, first, I can hear, you hired some sales folks and customer experience folks to kind of help support your priorities. Maybe just help us think about -- I think you had touched about -- touched on this on the last call, but where you are maybe from a process improvement or trying to maybe instill some of your decades of experience running fiber businesses into TDS Telecom? What inning are we in, in terms of priorities, what some of the near-term low-hanging fruit that you still think maybe you can achieve to improve process performance improvement and construction build? Just double-clicking on the investment idea.

And then it's interesting, you talked about, Ken, investing in the cable footprint which I think is -- it seems like some we haven't heard talked about in a bit here. Is that strategic? Is that core? How do you think about maybe the blocking and tackling and improvements needed for the cable KPIs to maybe to begin stabilizing? Just given the backdrop of what we hear from some of the larger cable guys out there, pretty competitive, pretty intense, some repricing pressures. Just maybe a little bit of color around that would be great.

Right. Thank you for the question. I would say we're in the early innings, very early innings, and I think we're starting to make what I would say very nice progress, and I continue to say to my team, I'm starting to see wind in our sales. But let me start off with address delivery. I'm very happy with the team's 40,000 service address delivery almost 3x more than last year. So what was important to us is that we had to prove that we could keep our crews working all winter and we accomplished that. And now we've started the spring and summer months with what I would consider record crew counts for the -- what -- the most important 2 quarters of the year were you have the most amount of day light and the most amount of opportunity to build fiber. So I think we've done that.

But speaking of crew counts, we're also at record numbers through the start of April. And what I could say to you it's a combination of our internal crews, but also external crews, and we continue to see sequential month-over-month crew count improvements as we're now heading into the month of May. So going into the second quarter, I'm bullish on what we can accomplish with service addresses because we had the largest funnel of addresses that we've ever had in our company's history in terms of addresses that are under some form of address.

So you asked me, early innings? Yes. But I like what we're starting to see, and I think we have good momentum. You are correct, I brought in some folks to run customer experience and sales and they're off to a wonderful start. I'll give you some updates. We continue to see the opportunity as fast as we can deliver a new address, how quickly can we try and penetrate that new to address and get a fiber customer in there. So we're very happy with our presales velocity. We typically go in 60 days before an address becomes marketable. And we are seeing excellent results again in that low 20% range. So very happy with that.

We have put a tremendous amount of sales capabilities into our door-to-door channel. We see that as a huge opportunity. We have been very, very aggressive in terms of bringing new vendors in. We added several last year in the fourth quarter, but we also have more door-to-door vendors who have been part of our April and May distribution plan, and we have several others in our funnel. We believe we have to be in the markets, and we have to use door-to-door to continue to drive our sales agenda. We've also expanded significantly our dot-com business. We have seen sales candidly improve significantly in a channel that's open 365 days a year and candidly 24 hours a day. So we will continue to put more resources in that.

But yet, we're in the early innings because we still have, in our opinion, we're now developing our multi-dwelling unit sales capabilities. And I think that there's a tremendous opportunity there. But again, early innings, but we're starting to see nice progress. The 11,000 fiber net adds, again, up 32% year-over-year, a very good start to the year but we have momentum.

The last question you asked was in reference to our cable business. And I want to tell you, I love our cable markets. I think we're in some of the best markets in the country. And last year, we made a decision that we were going to convert those markets first onto our new billing system and get them on a single stack across the whole company. We also, last year, made a significant investment in terms of enabling a new field service tool with our technicians to improve our overall service delivery. And at the end of the day, we think we're just getting started in terms of what we can do in those markets.

So a lot going on, but I like what I'm seeing. And I will tell you that we've got a lot more work to do, but we are definitely moving in the right direction.

And then I guess maybe for Vic -- Vicki and maybe -- or you, Ken. But the deal for Granite, is this kind of like what we should anticipate as you guys look for bolt-ons. It's like some of these maybe smaller systems that are adjacent versus like a big chunky deals out there? And then just to clarify that. And then I guess, one question not related to the deal, but just take a shot on this one. But does the combined entity does that make it easier to reach the tower business over time versus the current structure?

Yes, Sebastiano, thank you for the 2 questions. I'll take the last one first. Again, we're not going to comment on any impacts or implications of of the offer on the table. But again, we just can't speculate what we're what the future will look like at this point. So -- and on the second one, this is -- this acquisition is consistent with our capital allocation priorities -- three-pronged priorities, building fiber and M&A acquisitions in the space of fiber, and this is perfectly aligned with that. It's a tuck-in. It's accretive. It's adjacent to our current markets in New Hampshire. It's 100% fiber [indiscernible]. We're really excited to bring this company on board and welcome all of the associates with Granite State Communications, and it brings 11,000 fiber service addresses to our portfolio.

[Operator Instructions] Your next question comes from the line of -- a follow-up from Sebastiano Petti from JPMorgan.

For Kris, question, I guess, just about the cost transformation efforts, remind us about that is that $100 million run rate by 2028, is that still the right kind of figure to kind of think about? And is there -- are we at a point now where the cost savings maybe are falling to the bottom line here in 2026? Or related to my question is for Ken, is there some kind of reinvestment that's kind of going back in the business just to kind of contextualize, I guess, the cost program?

Yes. Sebastian. Yes, we remain on track to hit $100 million of run rate savings by year-end 2028. And as you heard in my remarks, we are starting to see some of those benefits this year, the bigger benefits you'll see in '27 and '28, but we absolutely are starting to see some of those benefits drop to the bottom line. As I've said before, we don't expect that entire $100 million to fall to the bottom line because some of that is helping offset inflationary cost increases, increases as we continue to expand our fiber footprint and our customer base and we do plan to reinvest some of those savings. But we are seeing some nice benefits and are still optimistic about the full potential of this program.

And then I guess one for Anthony. Any -- Anthony, the upcoming auction here for the AWS-3 re-auction and then upper C-band coming down the pipe next year. I think Chairman [ Car ] was out this week or maybe in the last couple of days, even just suggesting that there's more auctions or more stuff could be coming. Obviously, they have the 800 megahertz mandate by the One Big Beautiful Bill. But any change in your conversations that you're having perhaps regarding monetization of the remaining C-band and CBRS? I mean, to the extent that you can comment, that would be great.

Thanks for the question. I will start off by saying, as I've said many times, that we continue to believe that the C-band section we hold is excellent and valuable spectrum, [indiscernible] property available today with an ecosystem to support it. So we -- and additionally, we are not going to be a force seller of that in these circumstance. We believe the carrying costs are modest. And so while we are open to a deal at a fair value, we do not feel that we are in a position where its burning a hole in our pocket. So we don't have any further updates to give on any developments on the sale of our CBM spectrum at this time. But that said, we continue to be very optimistic about realizing fair value for it at the appropriate time.

Your next question is from Rick Prenstiss with Raymond James & Associates.

We'll do some tag team today. Question, just wanted to make sure on the service addresses, Ken, you obviously point out that the funnel is important top metric you're looking at. Is the build plan still this year targeting 200,000 to 250,000 service addresses? And what would cause you to miss it versus hit it or beat it?

Yes. That's still the target. And again, I have a very good degree of confidence based on true counts that we have that started the second quarter funnel and pipeline of addresses that are at a new record in terms of some form of construction. So I'm very confident that we're going to deliver in that target you referenced.

And Anthony, obviously, getting back from ConnectX, busy conference down there. One of the themes was the HRR high-rent relocation kind of efforts. Some of the carriers are looking at. I assume you guys don't probably have a whole lot of high-rent locations given the low level of tenancy. But what are you seeing out there on that? Do you have an appetite to do some new builds? What's the ability or capital commitment that you might put to work there?

Yes. So to be very clear, as we've stated multiple times, we are laser-focused on optimizing the value of the assets we have in hand, right? And we have a significant upside that we believe we can achieve on the towers that are currently in our portfolio. That's not to say that we're not going to be open to opportunities that appear. But what I will say is from what I've heard anecdotally and some of the numbers that I've seen, the current going rates for higher-end relocations for us to participate in new builds for higher-end relocations, we haven't seen numbers that are in constant with what we think we can get from optimizing our current portfolio. And in terms of higher-end relocation on our side, the only thing that I will say a little nugget for you guys is that we had only one total tenant churn in the entire first quarter. So that, I think, speaks to strength of our portfolio in terms of its relevant susceptibility to high revenue location.

Could be account churn on one hand and one finger is even better. One for Walter, obligatory satellite question. As you think about your assets, both broadband with fiber, and towers supporting the wireless world, how are you thinking about the somewhat existential threat of satellite coming into terrestrial?

That's an excellent question, Rick, and it's technology that has gotten a substantial additional focus, I'd say, over the last 18 months and substantial additional investment over the last 12 months. And I think satellites will have a substantial influence going forward on the communications industry. That being said, we feel very strongly about the continued benefit of a terrestrial tower portfolio, and we feel very strongly about the superior capabilities of fiber networks delivering specific communication into individuals' homes and businesses without interruption, without fear of being impacted by weather. But we are paying attention, and we feel very good about the thrust of both of our businesses, and we're watching.

Your next question comes from the line of Sergey Dluzhevskiy with GAMCO Investors, Inc.

First question on TDS Telecom side, last quarter, you obviously expanded the fiber build target by 300,000 edge outpacing in, I believe, 50 adjacent markets to your current expansion footprint. How do the demographics and the return profiles of these markets compared to your older cohorts? And also among this new cohort of markets, I guess, what types of markets are you prioritizing for build sooner rather than later?

Yes. Thank you for the question. We -- obviously, you're looking at markets that we've already planted a flag where we have established our brand, and we've deployed fiber. So we already have technicians, we already have sales capacity. And we've looked at the demographics and the overall market and the competitive intensity and studied very closely what our build cost ultimately would be and then what our return rates would be and then we prioritize those markets. That's what we're calling the edge-out opportunity. And we think those are excellent markets in terms of checking all the boxes that I just referenced. And the key is we were first to the original market with fiber and now it's just a natural extension. And we've -- we think that we've prioritized the right markets first with the highest opportunities and also the highest returns. So we like the markets that we've selected.

And in terms of cable, maybe following up on the previous question, could you talk a little bit about what you like the most about your cable footprint, maybe comment on the competitive environment? And in terms of investments that you're planning to make, if you could just maybe at a high level highlight where the dollars are going to go to? And how quickly do you expect those investments to pay off?

I would say from an investment perspective, our focus now is going to a multi-gig environment in our cable business. And I think that's the opportunity for 2026. In terms of the markets that we're operating in, we think that there's very -- what I'd say is they're highly attractive markets. Some of the cable businesses are in some of the markets that have some of the highest housing growth right now in the United States. So that's why we look at these markets, and we think there's definitely an opportunity going forward.

And the question on the Array side. Obviously, the wireless partnerships produce nice cash flow for you every year. And you are focused on, as you said, optimizing your tower business and monetizing spectrum, what are your -- any updated thoughts on partnerships? Obviously, if you look at [indiscernible] the recent transactions, I think the last transaction of size was Verizon acquiring minority stakes and some partnerships which consolidated that about 11.5x cash distributions. So at this multiple, obviously, your stakes could be versus significant amount. So kind of any updated thoughts on monetizing those stakes? And what could potentially move you closer to taking that step?

Yes. So thanks for the question. As we've said before, we like the cash flows from these assets. We think that, and moreover, there are some challenges with transactions for us, similar to the ones that you mentioned, right, the -- we have them in a very low tax basis. Candidly, I think if you were to look at those -- the performance of those investments over the very long term, and you would DCF on those, you would -- it would be challenging to get a multiple that was consummate what the full value of that. And that said, we're -- as we've said previously, we are open to offers that are -- that would deliver full value on that, but they would have to deliver full value net of taxes, and we like those cash flows, so we're not in a hurry to sell.

Got it. And in terms of -- last question also on Array side. Obviously, EBITDA is expected to be somewhat depressed in the medium term pressured by transition, wind down costs, some other cost. But if you can talk a little bit about kind of your targets, maybe more qualitatively than quantitatively in terms of taking cost out of the business and improving margins in 2026 and 2027? And also longer term, post T-Mobile transition, what kind of margins do you believe are realistic for Array?

Yes. So we do think there is significant opportunity to improve raise margins, particularly, we focus on the tower cash flow side because Array's -- we believe that we are on the trend of some of those legacy costs coming out of the business and the Array's direct team is also quite lean, right? So we focus most of our efforts on the tower cash flow side. And there are a couple of areas where we believe we have a significant opportunity to improve. The first, as we've said in previous forum, is our land ownership. Land is our largest cost for our tower business, and we also have a much lower rate of land ownership than many of the large public players in the market. So we think there is a significant opportunity and value to be realized by where appropriate, purchasing more of the land interest under our towers.

Second, we think we are a new tower company. We believe that we have opportunities as we transition from a maintenance posture that was more in line with operating a full fled wireless company to a tower company to improve our margins on that dimension. So those are the 2 big opportunities that we see to improve our target [indiscernible] just increasing colocations, which is something we work very hard to do every day.

There are no further questions at this time. I will now turn the call back to John Toomey for closing remarks.

Thank you again for joining us today. As always, please reach out to us if you have any questions. I hope everyone has a wonderful weekend. Thank you.

And this concludes today's call. Thank you all for attending. You may now disconnect.

Ladies and gentlemen, thank you for joining us, and welcome to the TDS and Array Fourth Quarter 2025 Operating Results Conference Call. [Operator Instructions]

I will now hand the conference over to John Toomey, Treasurer and Vice President of Corporate Relations. John, please go ahead.

Good morning, and thank you for joining us. The presentation we prepared to accompany our comments this morning can be found on the Investor Relations sections of the TDS and Array websites.

With me today and offering prepared comments are, on behalf of TDS, Walter Carlson, President and CEO; Vicki Villacrez, Executive Vice President and Chief Financial Officer. On behalf of TDS Telecom; Ken Dixon, President and CEO of TDS Telecom; Kris Bothfeld, Vice President of Financial Analysis and Strategic Planning of TDS, and on behalf of Array Digital Infrastructure, Anthony Carlson, President and CEO of Array. This call is being simultaneously webcast on the TDS and Array Investor Relations websites. Please see the websites for slides referred to on this call, including non-GAAP reconciliations. TDS and Array filed their SEC Forms 8-K, including the press releases, earlier this morning.

As shown on Slide 2, the information set forth in the presentation and discussed during this call contain statements about expected future events and financial results that are forward-looking and subject to risks and uncertainties. Please review the safe harbor paragraphs in our releases and the extended version included in our SEC filings.

I will now turn the call over to Walter Carlson. Walter?

Thanks, John, and good morning, everyone. We are pleased to report to you today our fourth quarter performance, review the progress made on our priorities for 2025 and share our goals for the future.

As set forth on Slide 3, 2025 was a transformative year. We completed the largest transaction in our company's history and significantly strengthened our balance sheet. 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. Our speakers this morning will highlight many of these accomplishments in more detail shortly, but let me summarize by saying that the TDS team of associates accomplished much in 2025 during a year of significant change.

As we look forward to 2026, we have 5 fundamental objectives for the enterprise as outlined on Slide 4. We plan to continue our efforts to strengthen the TDS corporate and capital structure. Vicki will share more details on those topics in a moment. We will continue to grow TDS Telecom's fiber business and work to delight our customers. Ken and Kris will share with you updated fiber address goals and other success targets.

We intend to support Array's success as a tower company and continue our efforts to successfully monetize Array's remaining spectrum holdings. Anthony will highlight Array's expectations for the year. We also intend to strengthen TDS' culture while delivering strong operational and financial results across all of our businesses. I want to personally thank every associate across the enterprise for their contributions in 2025 and look forward to all that we will accomplish together in 2026.

And I will now turn the call over to Vicki.

Thank you, Walter, and good morning, everyone. As I shared last quarter, across the enterprise, we continue to focus on moving the announced spectrum transactions forward, as well as executing on our capital allocation plans. Slide 5 highlights our progress in these areas.

In January 2026, Array closed on the announced spectrum sale to AT&T for $1.018 billion, and the same day, the Array Board declared a special dividend of $10.25 per share that was paid on February 2 to Array shareholders of record as of January 23. TDS received its pro rata share of the special dividend or $726 million.

Additionally, in January, TDS repaid the last of our outstanding term loan debt of $150 million. With this further debt reduction and cash from the proceeds of the those transactions, we are pleased with the flexibility this affords us to execute on our capital allocation priorities.

As a reminder, our TDS capital allocation plan has 3 key elements. First, continued investment in fiber. With the proceeds from the special dividend related to the AT&T spectrum, we are increasing our fiber goals. As you will hear from Ken in a moment, while we are still in the early stages, we have identified 300,000 additional fiber edge-out service address opportunities across approximately 50 new communities where we believe we can be first to market and achieve returns in the mid-teens, and we are increasing our marketable fiber service address goals.

Second, as it relates to M&A, we continue to evaluate fiber opportunities in a financially disciplined accretive business case-driven fashion. Third is shareholder returns. In the quarter, we invested $67 million to repurchase 1.8 million TDS common shares, bringing our total 2025 repurchase volume to $2.8 million. As announced in November, the TDS Board authorized a $500 million increase to the then existing share repurchase program. As of the end of 2025, we had $524 million remaining on this open authorization. The company intends to continue to be disciplined in the timing of its repurchase activity, balancing the needs of the business and market conditions as we move forward.

Looking back at 2025, we made great progress in transforming our businesses. We continue to unlock significant value and generated significant returns for our shareholders, particularly in the form of transaction-related special dividends at Array. I'm incredibly pleased with how we have positioned the businesses for the future and aligned our capital allocation strategy with our growth opportunities and return to shareholders.

Thank you. And now I'll turn the call over to Ken Dixon to discuss TDS' fiber business.

Thank you, Vicki, and good morning, everyone. I'd like to provide an update on our fiber strategy progress. We still have work to do to improve execution, modernize our systems and continue to scale our build and install operations. The foundation we have built positions us well for the future.

Before I talk about where we're headed, I want to share our 2025 full year and fourth quarter performance. As set forth on Slide 7, in the fourth quarter, we added 58,000 new marketable fiber addresses, up sequentially over Q3 and up 39% year-over-year. For the full year 2025, we delivered 140,000 new marketable fiber addresses and expanded our broadband footprint. Execution improved throughout the year. We delivered 40,000 marketable addresses in the first half of 2025, and $100,000 in the second half, showing momentum as our construction engine accelerated.

The fourth quarter was our strongest build quarter since 2023, and it was supported by record high construction crew cuts. We didn't reach our 150,000 address goal. However, we continue to make progress. We know what it will take to reach the level of output that we are targeting, and we are focused on carrying this progress into 2026.

Looking at sales. In each quarter, we delivered sequential growth in residential fiber net adds. We ended the fourth quarter with approximately 15,000 fiber net adds, up 11% from the fourth quarter of 2024, bringing us to approximately 45,000 residential fiber net adds for the year. Driving sales and increasing penetration across our fiber markets remains a top priority as we work to achieve our long-term objectives.

We also made progress in our business transformation program in 2025. Through process improvements, organizational alignment and targeted investments in best-in-class tools, we are strengthening the efficiency and agility of our operations, all with the focus on providing a superior customer experience. These improvements will be foundational to delivering consistent, scalable performance as we continue expanding our network.

We are continuing to optimize our portfolio to strengthen our strategic focus. The divestitures in 2025, which included the midyear sale of Colorado. And in December, the sale of our Oklahoma [ ILEC ] have concentrated our footprint in markets with an economic path to fiber.

Turning to Slide 8. The progress we made in 2025 and the availability of additional capital to invest gives us confidence to expand our long-term fiber goals. We have identified 300,000 fiber address opportunities in new edge-out markets that are increasing our long-term goal from 1.8 million to 2.1 million fiber addresses. With that updated target in place, let's move on to the priorities that will guide us in 2026.

Slide 9 sets forth our TDS Telecom priorities for 2026. First, we're focused on delivering our fiber build plan. In 2026, our goal is to deliver between 200,000 and 250,000 new marketable fiber addresses, as we ramp up construction in [indiscernible] markets, continuing expansion in growth markets, and enter targeted edge-out communities. This work is critical when we execute the build plan, we can see sales opportunities in these key markets.

Second, we are focused on driving sales and expanding our fiber customer growth. We delivered approximately 45,000 residential fiber net adds in 2025. And in 2026, we expect to increase that number by driving higher sales in both new and established fiber markets.

Third, we are committed to creating a best-in-class customer experience. That means improving every interaction from installation to service, to long-term retention, and ensuring the systems and processes behind these touch points support a seamless high-quality experience.

Fourth, we will continue executing on business transformation. The work underway will streamline processes and modernize systems in 2026, positioning us to operate as a faster, more efficient fiber-first organization. As part of this work, we remain on track to deliver $100 million in savings by year-end 2028. These priorities align the organization for future success.

I'll now hand it over to Kris to walk through our 2025 results and our financial outlook for 2026. Kris?

Turning to Slide 10. The chart on the left shows the last 5 quarters of fiber service address delivery which strengthened throughout the year. Our address cadence quarter-over-quarter reflects seasonality, but it also highlights the actions we took to increase crew counts in the second half of the year. In addition, EA-CAM activity contributed to this acceleration as those builds started to ramp in the fourth quarter.

As Ken mentioned, Q4 represents our highest production quarter since 2023, demonstrating the momentum we're seeing in our fiber build engine. On the right, you can see the continued expansion of our fiber footprint. Over the last 3 years, we've nearly doubled the number of fiber addresses across our markets.

Turning to the next slide. The chart on the left shows the last 5 quarters of residential fiber net adds. In the fourth quarter, we delivered over 15,000 residential fiber net adds, representing year-over-year, as well as sequential improvement. This growth reflects the investments we've made in fiber address delivery during the year.

The chart on the right highlights the growth in our residential fiber connections, which have also nearly doubled over the last 3 years. This growth is driven by ongoing footprint expansion, as well as copper to fiber conversions. We expect fiber connections to grow as we continue to expand our fiber footprint.

Turning to Slide 12. Average residential revenue per connection was up 2% year-over-year. As we've seen across the industry, fewer broadband customers are choosing to bundle with video, which puts downward pressure on this metric. In 2025, we indicated that we expected more modest revenue per connection growth and our results this quarter remain consistent with that outlook. The chart on the right shows our year-over-year revenue comparison. As a reminder, the markets we divested accounted for $3 million of the revenue decline in the quarter versus prior year. Additional detail on the recent divestitures is available in the trending schedule on our Investor Relations website.

Slide 13 focuses on the full year and quarterly financial results. Total operating revenues decreased 1% for the quarter and 2% for the full year. Excluding the impact of divestitures, revenues were flat year-over-year for both periods. This reflects continued secular declines in our cable and [indiscernible] markets, offset by growth in fiber connections and modest improvement in revenue per connection. Cash expenses decreased 4% in the quarter, but were up 1% for the full year, reflecting the impact of our transformation efforts in the second half of the year.

As a result of lower expenses, adjusted EBITDA improved 6% in the fourth quarter. For the full year, adjusted EBITDA declined 6%, primarily due to the impact of divestitures, as well as the first quarter's noncash adjustment to stock-based compensation. After a big fourth quarter, full year capital expenditures were $406 million as we prioritize investments in our internal construction crews and equipment to support future builds.

On Slide 14, we provide our guidance for 2026. We are forecasting total telecom revenues of $1.015 billion to $1.055 billion. This reflects top line growth from our fiber investments, offset by industry-wide declines in video, voice and wholesale revenues. These ranges also reflect a full year impact from the 2025 divestitures, which contributed $19 million in annual revenues.

Adjusted EBITDA is projected to be between $310 million and $350 million in 2026. The 2025 divestitures and legacy revenue stream declines put pressure on this metric, but continued advancement of our fiber program and the benefits from our transformation initiatives will help mitigate these pressures. In 2026, our goal is to deliver 200,000 to 250,000 fiber service addresses, up from what we delivered in 2025, and we expect capital expenditures to be in the range of $550 million to $600 million, up from $406 million in 2025. The increased CapEx is driven by EA-CAM builds, continued growth in our expansion markets, as well as spending on new edge-out opportunities.

Before turning over the call, I want to thank the entire TDS team. Because of your hard work and dedication, we ended the year on a strong footing. We're energized for 2026 and the opportunities ahead.

I'll now turn the call over to Anthony.

Thanks, Kris, and good morning. As I reflect on what the Array team accomplished in 2025, I am extremely grateful for the team's hard work and perseverance during a year of enormous change and new beginnings. I am honored to have the responsibility to lead Array and look forward to growing the business over the coming years.

As set forth on Slide 16, Array's business portfolio has 3 significant yet distinct drivers of value. First, we own a portfolio of more than 4,400 towers across the United States. Originally constructed to support U.S. Cellular's wireless network, these sites are primarily located in suburban and rural areas. Notably, about 1/3 of our towers have no competing site within a 2-mile radius, making them especially valuable as carriers expand 5G and other advanced technologies to meet increasing mobile data demand.

Second, we continue to hold wireless spectrum, principally C-band. This is a valuable asset with an existing ecosystem for deploying 5G that we are opportunistically seeking to monetize. Finally, we have minority interest in a number of primarily wireless partnerships referred to in our financials as noncontrolling investment interests. These are passive investments that have historically generated substantial income and cash distributions.

As I think about our strategic imperatives for 2026, as shown on Slide 17, and how we extract value from our business, you'll see the same key elements discussed last quarter. A laser focus on fully optimizing our tower operations and monetizing our spectrum.

First, a brief update on our spectrum monetization process. As shown on Slide 18, we have reached agreements to monetize roughly 70% of our spectrum holdings. As a reminder, in conjunction with the sale of our wireless operations on August 1, we conveyed 30% of our spectrum to T-Mobile. In addition, as previously announced, we signed agreements to sell spectrum to Verizon and AT&T in separate transactions in exchange for roughly $1 billion each. In August and October of 2025, we signed additional agreements with T-Mobile to sell spectrum for total gross proceeds of $178 million. This primarily includes the sale of 700 megahertz [ A-Block ] and the exercise of approximately 80% of T-Mobile's call option on the 600 megahertz spectrum.

In December 2025, we received regulatory approval for the spectrum sale to AT&T, and that transaction closed on January 13, 2026, with the Array Board declaring a $10.25 per share dividend that was paid on February 2. The remaining pending spectrum transactions are subject to regulatory approval and closing conditions.

Our retained spectrum principally consists of C-band. And as I previously noted, we continue to believe this is a highly attractive spectrum for 5G with an existing ecosystem that carriers can immediately put to use. While there are build-out requirements for the spectrum, the first fund does not apply until 2029, leaving us plenty of time to monetize the spectrum.

Turning to Slide 21. As noted with our Q3 results, the T-Mobile MLA significantly increases our revenue, and we continue to focus on a strong partnership with T-Mobile to ensure the integration process is well executed. The team has made material progress in Q4, processing over 2,000 applications, and completing structural analysis on over 95% of the applications. This is the first key step in the integration process, and we've executed seamlessly, and are now shifting focus to subsequent phases of integration.

Growing colocation revenue outside of the T-Mobile MLA continues to be a key priority, and both revenue growth and new colocation application volume remains strong. In Q4, cash site rental revenue increased 64% year-over-year from all customers and increased 8% when excluding the T-Mobile MLA committed sites. When layering in the T-Mobile interim site revenue, the increase was 96% year-over-year. We also continue to see a strong pipeline with full year 2025 new colocation applications, excluding the T-Mobile MLA, exceeding prior year by 47%.

Like others in the industry, we disclosed in Q3 that we received a letter dated September 2025 from [ DISH ] Wireless, whereby DISH asserts its master lease agreement with Array has been impacted by unforeseeable actions of the SEC and therefore, DISH believes it is relieved of its obligations under the MLA. And despite this, DISH continues to operate certain sites for a period of time. Array continues to believe that DISH's assertions are without merit, and DISH's obligations under the MLA remain intact. Since early December, DISH has generally failed to make contractually required payments. Array will take such actions that deems necessary to protect its rights under the MLA. For full year 2025, Array recognized approximately $7 million of site rental revenue from the DISH MLA. And DISH's obligations at similar levels from 2026 through 2031 with a declining revenue commitment in 2032 through 2035.

Slide 22 summarizes Array's financial results. Q4 was the first full quarter of T-Mobile MLA revenue, both the revenue from the MLA minimum committed sites as well as the full population of interim sites. The aforementioned T-Mobile integration volume in Q4 drove elevated service revenues as well as higher cost of operations expense due to the high volume of structural analyses conducted in Q4. Additionally, in Q4, there was a prospective change in classification of property taxes and insurance from SG&A to cost of operations. SG&A expenses in the second half of 2025 include costs to support the wind down of the legacy wireless operations. And while we began to see reductions in these costs, we continue to expect these expenses to persist into 2026, but declining over future periods.

Turning to Slide 24. As a reminder, T-Mobile has until January of 2028 to finalize its selection of 2015 committed sites under the new MLA. Once these selections have been made in addition to any incremental sites above the MLA commitment, Array expects to have between 800 to 1,800 tenantless or naked towers. As laid out in our strategic imperatives, we are hyper focused on ground lease optimization and more specifically, reducing the cash burden of our negative cash flow towers.

Those efforts are coupled with our sales team continuing to aggressively market our full portfolio of towers, which will aid in reducing the naked tower portfolio. We are also assessing the future leasability of these towers and will prudently evaluate all outcomes and options over a multiyear period as we determine a path forward for the naked Tower portfolio.

Slide 25 summarizes the results of our partnership or noncontrolling investment interests. This investment income and distributions are primarily from 4 wireless entities operated and managed by AT&T and Verizon. As discussed last quarter, investment income and distributions for full year 2025 were impacted by several onetime factors, including the impact of the Iowa partnerships, selling their wireless operations to T-Mobile and distributions received from Verizon related to their transaction with Vertical Bridge.

Shifting our focus to 2026. On Slide 26, we have provided guidance for Array for the following metrics. Total operating revenue, adjusted EBITDA and OIBDA and capital expenditures. Notably, our guidance ranges are wider than the industry norm, but there are a few key factors driving this dynamic for 2026.

First, there is uncertainty with the T-Mobile MLA and timing of interim site terminations, as well as the potential for incremental committed sites above the MLA minimum. And second, on the expense side, we discussed the currently elevated SG&A expenses and the wind down of these expenses that we expect throughout 2026 and beyond.

For total operating revenue, we are forecasting a range from $200 million to $215 million. This reflects a range of outcomes related to the T-Mobile MLA as uncertainty and includes anticipated colocation and amendment revenue driven from applications we received in 2025, and expect to receive in early 2026. Our guidance range does not include DISH revenues given the uncertainty related to their recent actions.

For adjusted EBITDA, we are forecasting a range from $200 million to $215 million. Given the passive nature of our noncontrolling investment interests, our guidance range assumes equity income similar to 2025, excluding the onetime events outlined on Slide 25. Adjusted OIBDA guidance of $50 million to $65 million simply removes the equity method investments. Finally, for capital expenditures, we are forecasting $25 million to $35 million. This range is largely driven by a degree of uncertainty around ground lease purchase volume. Our CapEx spending in the first half of 2026 will continue to include onetime tower light monitoring migration costs of about $6 million, as we complete our efforts to migrate tower light monitoring to our long-term solution.

In closing, I want to again thank the entire Array and TDS teams who have dedicated countless hours and energy to the stand-up of our tower company. Array's future is bright, and 2025 was a transformative year. I am excited about the opportunity to lead this team through a year of integration, growth and a focus on operational efficiency.

I will now turn the call back to Walter.

Thank you, Anthony. As you can see, TDS is in the midst of a vital period of transformative change. The successful close of the T-Mobile and AT&T transactions have unlocked tremendous value, enabling us to expand and deepen our fiber program, stand up a strong and growing tower business, and strengthen our capital structure. Let me again thank all of the outstanding associates across the TDS enterprise for the fine work you do every day to serve our customers and advance our business.

Operator, please now open the line for questions.

[Operator Instructions] Your first question comes from the line of Rick Prentiss with Raymond James. [Operator Instructions]

Sorry for the technical problems. I appreciate it, Anthony, good to talk to you. Thanks for update on the [indiscernible] wondering if it was in or out of guidance. So -- as I understand, then DISH is completely out of your '26 guidance from revenue to OIBDA to free cash flow then?

Correct.

And so any settlement from that would be upside from here?

Correct.

Okay. And when you think about what you're seeing in the tower leasing application area, how are you feeling about the application pipeline? It does feel like a lot of carriers are focusing on rural America, T-Mobile, Verizon and even AT&T, but what can you give us as far as some insight into what growth rates might look like from new lease activity?

Yes. So thank you, Rick, for the question. We're feeling quite optimistic about our, sort of both, prospects for 2026, of course. The T-Mobile MLA on a full year basis to present significant growth. But we also expect to see, excluding DISH and excluding the T-Mobile MLA, a significant same-store growth, right.

So for example, there are elements such as when [indiscernible] cellular was the market, we provided roaming to a lot of other carriers. And so without leaving the market, some carriers have elected to use to replace the roaming that they had with us building out some of their own sites. So that is one element that is driving the forward.

In addition, other elements, other actions that we've taken, such as insourcing our sales team and the agreement that we signed with Verizon, we have already seen positive results for in terms of driving our sales growth, and we expect that to continue into 2026.

And how is it coming along as far as other tower companies that have been focus as tower companies for longer than you guys, they're able to break out the cash revenue contribution, say, from escalators versus new lease activity, versus churn, call it, legacy churn versus kind of carrier consolidation churn, or audience like T-Mobile, Sprint and T-Mobile, U.S. Cellular and DISH. How is the company as far as getting reporting out there on new leasing activity escalators in churn?

We will -- we are continually in the process of evaluating which of these metrics we will put in our public reporting. Right now, we are focused on standing up an effective tower company's operations, and we reserve the right to make those changes in future reporting if and as we fit.

Yes, Rick, this is Vicki. I'll just jump in here. I was really pleased. We had a really strong fourth quarter. As you know, it's our first full quarter of reporting for Array, and we'll continue to focus on this as we go forward and keep our [indiscernible] in front of us.

Great. Okay. And on the TDS Telecom side -- thanks for, as we called it, [indiscernible] the number. So we now know the number of service addresses for the long-term target. Thanks for that, Vicki and Ken. So the $2.1 million, a couple of related questions, of course, to that is, what's the definition of long term? Because it does feel like there is a race to be first of fiber, as you mentioned, the markets you've identified. You think you've got a good chance to be first of fiber there. But help us understand why is 2.1 now the right number? What the competitive dynamics look like in that?

And what's the pacing? I know you mentioned 200,000 to 250,000 service addresses this year is the target. Is that something that could accelerate? But it was kind of -- give us a sense of what's that long term mean? What's the pacing to get there?

Rick, this is Kris. I'm going to take the first part of this question, and then I'm going to hand it off to Ken to add more color.

So yes, we are very excited to be raising our long-term fiber address target from $1.8 million to $2.1 million. These goals reflect 2 multiyear fiber programs that we have in place. We have our EA-CAM program, as well as our ongoing fiber expansion that we're building out to those 100 communities where we initially planted [ flags ] and now we're taking advantage of additional edge-out opportunities to further expand those strategic clusters. So these goals reflect when those builds are substantially complete.

And as we shared last year, we said that roughly a 5-year time horizon from our initial goal was a reasonable time frame, and that time frame has not changed with these increased goals. So still that 2029, 2030 time frame, but we're doing everything we can to accelerate these goals because, as you said, we see a window of opportunity to be first of fiber is new expansion markets, and we want to make sure to seize that opportunity.

Yes. So I will add to that. I absolutely love the markets that have been selected prior to my joining. And we still see very favorable competitive landscapes. And as Chris mentioned, we have a great opportunity to be first to fiber and continue to plant those flags in the marketplace.

We also see these edge-outs candidly, where we're already building and have a presence, and it allows us to expand into a bigger strategic cluster. So we're very bullish on the markets that we've chosen, and we have confidence in that incremental 300,000 to bring us to the $2.1 million.

Great. And a couple of extra color questions around that. Can you break out for us how much is going to be EA-CAM versus expansion markets? Because I would assume the capital spending is greater in the EA-CAM markets and the expansion markets. So maybe a rough breakout on how much is the EA-CAM versus expansion of the $2.1 million target?

And then you mentioned, Ken, I think in your prepared remarks talking about focusing on sales, and that you still have a top priority and what your long-term objective is, and maybe update us on what that long-term objective is for fiber penetration?

This is Vicki. I'll just jump in, say, our guidance is a total capital number. But specifically, as you're thinking about the size of the EA-CAM program relative to our full fiber target. Kris, do you want to comment on that?

Yes. So raising our goals from $1.8 million to $2.1 million, that is entirely for these additional 300,000 agile communities adjacent to existing expansion communities. So this does not include any incremental EA-CAM addresses. When we raised our guidance last year, that included 300,000 EA-CAM addresses. And so we are not moving off of that.

Right. I'll give you a quick update to your sales question. Obviously, address delivery create sales opportunities. So our plan for 2026 is to continue our momentum. We're seeing very good presales volumes 60 days in advance of launch.

The other update I will give you is we're spending a lot of time on sales channel development. In addition, we brought on some new door-to-door vendors based on all of the markets that we've launched, and the markets that we're expecting to bring in into these new agile opportunities. So that allows us to increase our sales capabilities.

We've also put significant improvement into our dot-com channel and we have a great road map of go-to-market execution outlined for the remainder of 2026. We also are very focused in penetration rates. And you'll see us focus more on multi-dwelling unit in 2026 in addition to single-family homes. And we've also brought in some new leadership to help run sales in our call center environment, and sales throughout our various distribution channels, 2 folks that are very tenured in the industry and have a great background in fiber sales. Thank you.

Your next question comes from the line of Sebastiano Petti with JPMorgan.

I guess maybe, cleaning up there on the fiber questions. Any help in terms of thinking about the shaping of in-year service delivery? I think, Ken, you kind of talked about -- I mean the fourth quarter delivery was, I think, the strongest you said since 2023. How should we think about that [ 200 to 250 ] ratably over the balance of 2026? Obviously, weather implications in 1Q, 4Q. So just trying to help think about that.

And then, I guess, in the press release, I feel like the comments regarding the C-band or just spectrum monetization. It seemed a little bit new, a little bit more pointed. So I was just wondering if you can help update us on how you're thinking about that, the level of conversations you might be having in the market. Obviously, the re-auction of the [ AWS-3 ] midyear this year, you have visibility into the upper C-band next year. So any color there would be helpful.

And then lastly, I'll just throw it out there. As it pertains to the buyback, any interest, or what's your view on potentially buying back [ AD ] shares in the market as opposed to the TDS shares given the implied look-through discount on your own shares? How is the Board perhaps maybe evaluating that? How do you think about that?

I'll start off with the fiber goals for 2026. As I mentioned earlier, we have -- I love the markets that we're currently operating in. One of the first things that the team focused on was how do we absolutely get as many crews into the markets, constructing our service addresses as possible.

As you saw in my opening remarks, in the fourth quarter, we had record true counts, and we were able to keep those crews throughout those, what I'd say, winter months and that gives us confidence going into 2026.

One of the other big things that we did in 2025 as we made some very strategic investments in our internal construction capacity. We added additional equipment and plan to have additional proved capacity throughout 2026. I believe one of the biggest advantages that TDS has in the marketplace is the fact that we have internal construction crews, and we also have contractors throughout the marketplace.

And I mentioned with those construction crew count levels in the fourth quarter, it gave us, what I'd say, a very healthy funnel of service addresses coming in 2026, which we had not had coming into 2025. So I'm very bullish on what we can accomplish in 2026, and I'll hand it off over the tower question.

Yes. So in terms of the spectrum, right, as you know, the primary spectrum -- from a value [indiscernible]. We believe that spectrum is very attractive. [indiscernible] mid-band spectrum, is an established infrastructure ecosystem. All major carriers can use it, and it's deployable immediately. And in addition to the major big 3 carriers, of course, there may even be other potential acquirers, such as cable regional carriers, speculators, what have you.

Certainly, the availability of other spectrum could affect demand, but that could be positive for us as well because of where companies were potential acquirers of the of the upper C-band spectrum line up [ in ] the band range. So we think that, that is a potential upside for us as well. And then we want to reiterate simply that the C-band is very attractive spectrum, and we are optimistic that it has significant value.

I'm going to hand over the capital structure questions to Vicki.

Yes. Thank you for the question. Sebastiano, each company's board determines their own capital allocation based on a number of multiple factors. As you know, TDS has announced that share repurchases are a part of its capital allocation plan and use of proceeds that have come from the transactions in the special dividends. The array organization is very focused right now on standing up the new tower business. We're excited with the fourth quarter results and our outlook for next year, and very focused on growing that business going forward. So I can't comment that's a decision that each individual board makes.

Yes. But would TDS consider buying AD shares rather than its own TDS shares? To not only accrete yourselves higher, but also buy back your stock at a discount to the market?

Sebastiano, this is Walter. I think that Vicki has given the guidance that we can offer in response to your question. Issue of share buybacks is one that each Board thinks about. And we don't have any further comments at this time.

Okay. And then one last question. Is the implied EBITDA guide at TDS. Does that imply ex divestitures? Does that imply growth? Or how should we think about that?

Yes, Sebastiano, I can take this. This is Kris. So for our adjusted EBITDA guidance for 2026, we are seeing an impact from the divestitures, as well as those legacy revenue stream declines. [ The past, that noise ], there is growth there. And really, that's coming from not only our investments in our fiber markets, but our continued business transformation efforts, and we're really liking the potential we're seeing from that program.

Your next question comes from the line of Michael Rolands with Citi.

Thanks to the additional disclosures in the deck today. If I can turn to Slide 21. So in that slide where it walks through the tower revenues, you described 8% growth, excluding the committed and interim sites. And just curious if we take that now to 2026, what growth rate is embedded within the revenue guidance for '26? And then I have a question on TDS Telecom afterwards.

Sure. So assuming I'm [indiscernible] correctly your question which is sort of same-store growth, right? So I want to -- like -- if you take out the DISH revenue, right, the fact that that's going to zero, we're expecting the growth of around 6% or so on a same-store basis. With DISH included, that would be closer to -- if you -- with DISH included, it would be closer to zero. So flattish, if you assume DISH was still around, about 6% excluding DISH.

And when you think about same store, is that the combination of existing leases and then new colocation, or amendment leases signed on those locations?

Yes, correct, excluding all the T-Mobile activity.

Great. And including any churn, normal course churn?

Correct.

Great. Very helpful. And moving over to the TDS Telecom side of the equation. You mentioned some of the issues with video take rates influencing overall account [indiscernible] ARPA. And just kind of curious how you're thinking about video on a go-forward basis? Are you able to discern in your current footprint the types of customer lifetime value, churn, margin and economics of customers that are just like stand-alone broadband, versus those that bundle video?

And at some point, is there going to -- call a fork in the road where you decide you know what, if you just kind of let video be handled by others, in terms of streaming and so forth that you could deliver a more efficient, effective broadband E&L for investors?

Thank you. So I will tell you, when I came to TDS Telecom, I was very, very happy with the video business and what I would say, very strong margins out of that video business. So I do not see us looking to outdoor video. I think it's a critical part of our overall value proposition to attract a bundled customer that still wants broadband. And we still do hear loud and clear from some segments of customers that if we did not offer a video bundle they would not have chosen TDS for their broadband service. So I still think it's very important.

So I would say the other big opportunity for us in long-term value and churn reduction by having a bundled customer. We see that, and we think it's still very important to our business. As you know, in 2025, we launched [ the mobile ] product to have a quad-play offering to our customers. And you will see us, again, as we have with video bundles also look to bundle the mobile product much stronger throughout 2026.

But we have a very healthy video business. We're happy with the margins. And I think the team has done a very good job in terms of the content packaging. And I like where we are positioned in the market for '26.

Your next question comes from the line of David [ Barden ] with New Street Research.

So you guys have been pretty clear about your strategy to monetize the C-band? I'm interested in your cost or on monetizing specifically the naked towers that you foresee that may emerge over the course of this decision-making that T-Mobile makes between now and 2008, but also the unconsolidated investment interest that you have largely with Verizon. How actively you're considering the monetization of those?

Or if you consider them kind of the anchor tenants of a going concern business and that we should really think about this as a terminal value run rate cash flow business, or is a sale value business? Or which ones we should consider which?

All right. So starting on -- with the second question first on the noncontrolling interest. We like the cash flow from these investments. We're not in any hurry to sell them. There's only one natural buyer for those investments.

If those companies are interested in buying them at a price that is attractive to us, of course, we will entertain that, but we are in no hurry to sell the that we like the cash flow through [indiscernible]

In terms of the naked towers, our perspective on those are those that there is significant latent value in the majority of those naked towers, right? Some obviously we will need to, at some point, decommission or otherwise [indiscernible], although decommissioning is quite expensive, and it's an interesting map exercise [indiscernible] take a look at that versus the cost of retaining them. But we view it as an option, and it is our objective at Array to reduce the holding cost to that option as quickly as possible in order to get the potential value from those towers. Because we do think that there is substantial lease-up opportunity on those naked towers over the long term.

So the kind of industry standard has been to underwrite a 0.1 incremental tenant per tower per year. Is that something that you would underwrite? Or are you not confident in underwriting that? Or are you more optimistic than that?

We're not going to take a position on that at this time given just how new situation we are in with this portfolio of towers no longer having the U.S. Cellular [indiscernible] that.

Your next question comes from the line of Sergey Dluzhevskiy with GAMCO Investors, Inc.

My first question is on the TDS Telecom side. Obviously, you're increasing the run rate of the build, although in the fourth quarter, it was pretty close to the lower end of your guidance. As you look into 2026, and maybe if you look at your past build history -- and what are sound the lessons learned and maybe what are some of the best practices that you're planning to utilized in 2026 to -- and going forward to make sure that the build is more efficient and more successful? Obviously, you didn't meet your target in 2025 by about 10,000. But in 2026, obviously, you feel much better about the opportunity.

So thank you for the question. What I will tell you is our focus is around execution of how many crews we have out in the marketplace that is vital to our success to deliver our targets for 2026. What we have seen at TDS in the past is that you have typically good service address delivery in the fourth quarter, but you lose most of your external construction crews through what I would say, the winter months post holiday, and then it's very difficult in the past to get those crews back in time for spring. So we have monitored that very, very closely and kept our crew counts stable in the fourth quarter, and we now are monitoring those crew counts and have those same levels here in the first quarter. So that gives us much better confidence than we have had in years past about getting off to a strong start with our service address delivery at the beginning of the year.

Got it. Great. My second question is on the Array digital side. And Anthony, it's nice to meet you virtually. I guess my question is, obviously, you have made progress on improving tenancy ratios since the T-Mobile transaction and running this company as a more focused tower business. As you look into 2026 and maybe even 2027, what are some of the initiatives that are working well for you in terms of improving this tenancy ratio ex T-Mobile?

And also what are some of the new things that you're potentially contemplating and maybe would focus more on in 2026 and 2027 to accelerate tenancy rate increase?

So Sergey, thanks for the question, and nice to meet you virtually as well. So there are a number of initiatives that are in place that we expect will help our performance in terms of increasing our [indiscernible] ratio.

So first, as we've mentioned before, we in-sourced our sales team, and we believe that, that is already paying significant dividends in terms of getting our tenancy ratios up. The new deal that we signed with Verizon that we announced last year also was having an impact, as well as I mentioned the fact that some carriers are doing roaming replacement builds for the old U.S. cellular network.

Finally, we did not have much of a focus at all on non-tower carriers within our sales team. We do have roles that are doing that now, and we believe are seeing early results from approaching more vertical potential tenants. So all of those are elements that we believe are going to help us increase our tenancy ratio going forward in 2026 and beyond.

Great. And maybe my last question is also on the Array side. So you have talked already about your focus on monetizing C-band spectrum. Obviously, we've seen several transactions last year involving [ EchoStar ] and their spectrum, we have several spectrum auctions coming up. So maybe if you can just provide more color on how you're thinking about the monetization opportunities for C-band? Maybe the time line, and to what degree some of those developments, either with other third-party transactions, or these auctions are putting, or creating more urgency to find an appropriate transaction sooner [indiscernible]?

So a couple of comments on that. First, I think those transactions with [ EchoStar ] show that there is a very robust demand for spectrum. And I think that bodes well for the spectrum that we indeed do have. Second is that we believe our spectrum is very valuable. We believe that if we have to, the carrying cost of maintaining that spectrum are manageable relative to the potential value that we project for it.

So we are not going to be a fourth seller of the spectrum and nor do we feel that we need to be. With all that said, we continue to look for opportunities to monetize it, and we are going to continue to be active in pursuing those.

There are no further questions at this time. I will now turn the call back to John for closing remarks.

Thank you. And thanks again to everyone for joining the call this morning. As always, please don't hesitate to reach out with further questions or follow-up. And I hope everyone has a wonderful weekend. Thank you.

Hello, and welcome to the TDS [indiscernible] Array Third Quarter 2025 Operating Results Conference Call. [Operator Instructions] I would now like to turn the call over to John Toomey. Please go ahead.

Good morning, and thank you for joining us today. I'm pleased to be here in my new role as Treasurer and Vice President of Corporate Relations. I've been with TDS for 25 years, serving as Treasurer since 2018, and I look forward to meeting and talking with you as part of my expanded role. We want to make you aware of the presentation that has been prepared to accompany our comments this morning, which you can find on the Investor Relations sections of the TDS and Array websites.

With me today and offering prepared comments are: from TDS, Walter Carlson, President and CEO; Vicki Villacrez, Executive Vice President and Chief Financial Officer; from TDS Telecom; Ken Dickson, President and CEO; Chris Botfeld, Vice President of Finance; and from Array Digital infrastructure, Doug Chambers, Interim President and CEO.

This call is being simultaneously webcast on the TDS and Array Investor Relations websites. Please see the websites for the slides referred to on this call, including non-GAAP reconciliations. TDS and Array filed their SEC Forms 8-K, including the press releases and our 10-Qs earlier this morning.

Finally, as shown on Slide 2, the information set forth in the presentation and discussed during this call contain statements about expected future events and financial results that are forward-looking and subject to risks and uncertainties. Please review the safe harbor paragraphs in our press releases and the extended version included in our SEC filings.

I will now turn over the call to Walter Carlson.

Thanks, John, and good morning, everyone. We are pleased to report to you on our third quarter performance and the progress we have made on our priorities for 2025. Our priorities for 2025 are set forth on Slide 3.

As we reported to you in August, the T-Mobile transaction closed on August 1. The close of that transaction and the subsequent transition activities have gone well and the successful close has enabled us to continue our progress on all our other priorities. Array digital infrastructure has seamlessly transitioned into an independent tower company and has hit the ground running, already showing nice growth, as Doug Chambers will highlight shortly.

Doug has done an excellent job leading Array during this transition. With Array established as a stand-alone tower company, we are pleased to name Anthony Carlson as the President and CEO to lead the Array team into the future. Anthony has an outstanding business background and has led significant teams at both U.S. Cellular and TDS Telecom for the past 6 years. We are confident that he will be an excellent leader for Array.

Turning to TDS Telecom. The third quarter was Ken Dixons first full quarter as its CEO. TDS Telecom continues to be laser-focused on its fiber transformation. In the quarter, the company achieved an important milestone of 1 million fiber addresses. You'll hear more from Ken and Chris Barfield on this achievement and TDS Telecom's other accomplishments later in the presentation.

TDS has also strengthened its capital structure, having received a $1.6 billion special dividend from Array in August and we expect to receive additional proceeds after the close of the pending spectrum transactions. The proceeds received to date have enabled the substantial paydown of debt and will support the existing fiber expansion program at TDS Telecom. As we receive the proceeds from the additional spectrum sales, we expect to further expand our fiber program, and to use a significant portion to support the new $500 million share repurchase program that the company announced this morning.

Vicki Villacrez will provide additional details on our capital allocation program during her remarks. And lastly, we are keenly focused on our culture. Transformational changes are never easy, but TDS has a strong culture and our associates are effectively executing against our objectives through their continued hard work, collaboration and professionalism. I want to personally thank all of the teams whose efforts to put the enterprise in this strong position heading into 2026.

I will now turn the call over to Vicki.

Thank you, Walter, and good morning, everyone. At TDS, we are focusing heavily on capital allocation decisions in light of the U.S. Cellular transaction to T-Mobile, the debt reduction at TDS and Array and the anticipated closing of Array Spectrum sales to AT&T and Verizon within the next year.

At Array, we anticipate, as we have disclosed previously that cash received upon closing of the AT&T and Verizon transactions will be used subject to the determination of the Array Board primarily to fund ongoing business operations and special dividends. We anticipate the pending AT&T transaction of $1 billion to close either in the fourth quarter of 2025 or the first half of 2026, depending on government approval. While any decision on dividends will be made by the Array Board, we anticipate that following the closing of the AT&T transaction, the Array Board would declare a special dividend in the amount of approximately $10 per share.

At TDS, our capital allocation plan has 3 priorities. The first is to invest in our fiber business. As Walter highlighted, we continue to believe that our fiber business has numerous opportunities for investments with attractive return profiles. We will use a portion of the anticipated special dividend proceeds to fund both our current fiber program and additional fiber builds that are incremental to our current goals. These additional opportunities are mostly edge-out communities adjacent to our markets and could be at least several hundred thousand service addresses or more. We believe there's an immediate window of opportunity to plant our flag and pursue investments in communities without a fiber provider. We are currently working through the business cases, and we'll update you in February.

Our second priority is to achieve inorganic growth through M&A. We intend to be opportunistic and disciplined. Only considering those opportunities that are accretive and meet our return objectives. To that end, we would specifically be interested in smaller, highly synergistic, accretive M&A fiber opportunities, particularly adjacent to our existing markets. As we have demonstrated in the past, TDS will remain financially disciplined and business case-driven and any M&A pursuits. Clustering to achieve synergies will continue to be an important strategy at TDS Telecom. The company has recently divested ILEC markets that were not a strategic fit to its fiber objectives.

Our third priority is to return capital directly to shareholders. In September, TDS began repurchasing its stock and bought back a little over 1 million shares. During the third quarter under its existing stock repurchase authorization. In addition, TDS' Board authorized a $500 million increase to our existing share repurchase program, leaving the remaining authorization intact. This authorization reflects the Board's confidence in the company's long-term strategy and the belief that repurchasing TDS shares at present valuation is an attractive use of the company's capital.

The timing and manner will be determined at the company's discretion and will be dependent on closings of the announced spectrum transactions as well as general business and market conditions. We believe share repurchase is tax-efficient for our shareholders. while also providing flexibility for the company.

To be clear, TDS also expects to retain its current regular quarterly dividend. All decisions regarding dividends in future quarters, of course, are subject to the determination of our Board. I think these balanced capital allocation priorities will make TDS stronger, both operationally as we make investments in our fiber business and by returning capital to our shareholders in a measured way.

Thank you, and I now will turn the call over to Ken Dickson to discuss his vision for TDS' fiber business. Ken?

Thank you, Vicki. Good morning, everyone. My first quarter at TDS Telecom has been fantastic. One highlight, of course, was achieving 1 million fiber passings. It was a significant milestone for the business and years in the making. I have also enjoyed traveling to our markets and listening to our TDS frontline associates who are executing every day on our fiber build plans and growth strategy. Before we get into the slides, I'd like to take a moment to reaffirm our strategic priorities.

These include executing on our build plan accelerating fiber penetration, advancing our business transformation program and delivering an excellent customer experience. These pillars are central to our long-term growth strategy and will continue to shape our path forward.

Turning to Slide 6. We delivered 42,000 fiber addresses in the quarter, which puts us just over halfway to our goal of 150,000 service addresses for the full year. Consistent with historical trends, we expect to have our strongest address delivery here in the fourth quarter. We generated 11,200 residential fiber net adds in the quarter, contributing to a 19% growth in residential fiber connections since last year.

Fiber net adds have improved sequentially every quarter this year. On the sales and build front, we recognize that performance isn't where we want it to be. We are taking actions to change this trajectory. Since the end of the second quarter, we have nearly doubled the number of construction crews we have across our markets and are continuing to increase crew counts through the end of the year. We are focused on executing our build plan so we have a large funnel of addresses to sell into and increasing penetration rates in our existing launched fiber areas.

And lastly, our enhanced ACAM or EA-CAM builds are very well underway, which will help bring fiber to the most rural markets in our footprint over the next several years. On the next slide, I want to share a little bit more about EA-CAM which will be absolutely a transformative program to our network, our business and our customers. First, this program enables us to replace a substantial portion of legacy copper infrastructure.

This will add approximately 300,000 new fiber addresses, which includes EA-CAM addresses as well as addresses that will be picked up along the route. This directly supports our long-term goal of reducing copper to less than 5% of our total network footprint. This will greatly improve network reliability and the customer experience. As construction activity ramps up, we expect to see strong copper to fiber conversions as well as new customer growth throughout our rural footprint.

Second, the program delivers over $1.2 billion in regulatory revenue support over a 15-year period, providing a funding stream that supports this continued investment in fiber. Third, these markets are uniquely positioned for success. With no gig capable competitors, we anticipate penetration rates between 65% and 75%, which translates into very attractive returns. In short, ACAM is an outstanding program strategically, operationally and financially. It allows us to bring world-class fiber services to communities that were previously cost-prohibitive, while delivering meaningful value to both our customers and to our business.

Before turning over the call, I want to say how much I've enjoyed my first quarter here. We have a lot of work to do, but I'm excited about the direction we're heading and the opportunities ahead as we transform TDS Telecom into a fiber-centric company.

I'll now let Chris Baufeld take us through the quarter results. Chris?

Thanks, Ken. Turning to Slide 8. You can see our progress towards the long-term fiber goals we shared earlier this year. We are targeting 1.8 million marketable fiber service addresses and we crossed the 1 million fiber address mark this quarter. Across our entire footprint, our goal is to have 80% of total addresses served by fiber compared to 55% today.

We expect this percentage to grow as our EA-CAM deployments ramp. And finally, we expect to offer speeds of 1 gig or higher to at least 95% of our footprint. We finished the quarter with 76% of our footprint at gig speeds. As a reminder, we will use a combination of fiber and coax technologies to reach this target.

Turning to Slide 9. The graph on the left shows the most recent 5 quarters of fiber service address delivery. Address delivery typically increases throughout the year given seasonality impacts. As Ken said, we are behind schedule for the year, and we are working to get our build plan back on track and are expecting the fourth quarter to be the strongest of the year. The graph on the right shows the significant growth in our fiber footprint nearly doubling over the last 3 years.

Turning to Slide 10. The graph on the left shows the last 5 quarters of residential fiber net additions. We delivered 11,200 this quarter, up 8% year-over-year. We have seen year-over-year and sequential improvement in residential fiber net adds this quarter and we expect to see improvement in fiber net adds in the fourth quarter. The graph on the right highlights our residential fiber connection growth. Connections have nearly doubled over the last 3 years, driven by our expansion efforts and copper to fiber conversions.

As we continue to invest in fiber, we expect broadband connection growth to continue. Broadband penetration remains a key metric for our fiber program. with our expansion markets hitting 20% to 25% penetration on average within the first 12 months of launch and approximately 40% in steady state by year 4 to 5.

On Slide 11, average residential revenue per connection was up slightly year-over-year. Consistent with industry trends, fewer broadband customers are bundling with our video product, which dilutes this metric. As we shared earlier this year, we anticipate more modest growth in residential revenue per connection as we focus on driving penetration. The chart on the right shows our revenue comparison year-over-year. As a reminder, divested markets accounted for a $6 million decrease in revenues compared to the prior year.

Now let's talk about revenues on Slide 12. Total operating revenues were down 3% in the quarter compared to prior year. Excluding the impact of divestitures, revenues were down 1%, driven by continued declines in our legacy cable and copper markets, partially offset by growth from our fiber investments. Adjusted EBITDA is down 3% year-over-year, which is pressured by the divestitures and legacy revenue stream declines offset in part by disciplined cost control. A key priority for the company is to drive business transformation, and we are starting to see benefits from these efforts to improve our cost structure. Capital expenditures are up compared to the same period last year due to spending on the EA-CAM program as well as higher expansion address delivery. We expect both CapEx and service address delivery to continue to increase in the fourth quarter as we accelerate construction to meet our full year address target.

Over 80% of our 2025 capital expenditures will be focused on fiber. Slide 13 shows our 2025 guidance. which remains unchanged from last quarter. In closing, Ken and I want to thank the entire TDS Telecom team. We have significant opportunities and transformation ahead of us and it would not be possible without the hard work and dedication of our associates.

I will now turn the call over to Doug.

Thanks, Chris. Good morning. The third quarter was momentous as we closed the sale of our wireless operations and returned significant value to shareholders in the form of a special dividend. We also launched our operations as an independent tower company, and the team has done an outstanding job of executing a seamless transition and delivering strong results which were bolstered by the new T-Mobile MLA that commenced on August 1.

In addition, we continue to make progress on our process to opportunistically monetize our spectrum as we entered into additional agreements to sell spectrum. As a reminder, Arrays business has 3 significant value drivers: retained wireless spectrum, tower operations and noncontrolling investment interests.

Further, our strategic imperatives included on Slide 17 and continued to be focused on fully optimizing our tower operations and monetizing our spectrum. I will discuss these value drivers and progress on our strategic imperatives as I walk through our third quarter results. From a financial reporting standpoint, given the divestiture of our wireless business in the third quarter, results from wireless operations, including the book loss on sale of such operations are presented as discontinued operations in our financial statements. This discussion is solely focused on our continuing operations and therefore excludes wireless operations results and the related book loss on sale.

Further, now that we are an independent tower company, we have adjusted our reporting to include relevant tower company financial measures, including adjusted free cash flow, which is similar to the adjusted funds from operations or AFFO measure reported by other tower companies and also includes the cash flows from our noncontrolling investment interest which are a significant portion of Array's total cash flows.

Starting with an update on our spectrum monetization process, as shown on Slide 18, we have made substantial progress and to date, have reached agreements to monetize 70% of our spectrum holdings. In conjunction with the sale of our wireless operations on August 1, we conveyed 30% of our spectrum to T-Mobile. In addition, as previously announced, we signed agreements to sell spectrum to Verizon and AT&T in separate transactions in exchange for $1 billion on each transaction. In August and October of 2025, we signed additional agreements with T-Mobile to sell spectrum for total gross proceeds of $178 million. This primarily includes the sale of 700 megahertz A-Block and the exercise of approximately 80% of T-Mobile's call option on the 600 megahertz spectrum. The pending spectrum transactions are subject to regulatory approval and closing conditions. As it relates to expected close dates on the pending spectrum transactions we expect the timing of regulatory approval to be impacted by the ongoing federal government shutdown.

Given this, as mentioned by Vicki, we expect the pending AT&T transaction to close in either the fourth quarter of 2025 or the first half of 2026 and the remaining transactions to close in 2026. Our remaining spectrum principally consists of C-band spectrum, and we continue to believe that this is attractive beachfront spectrum for 5G and there is an existing ecosystem, so carriers are easily able to put this spectrum to use. And although there are build-out requirements for this spectrum, the first one does not apply until 2029. So there's plenty of time to monetize this spectrum.

Turning to Slide 21. The T-Mobile MLA significantly increases our revenue and we are focused on partnering with T-Mobile to ensure the integration process is well executed. Growing colocation revenue outside of the T-Mobile MLA also remains a priority in both revenue growth and new colocation application volume remains strong. Overall, site rental revenue, excluding noncash amortization components grew 68% on a year-over-year basis in the third quarter of 2025 and excluding the impact of T-Mobile revenue and interim sites grew 46%. This reflects both the significant impact of the MLA with T-Mobile as well as strong revenue growth from other tenants.

Further, our decision to in-source our sales and intake operations at the beginning of 2025 has helped enhance our sales results as new colocation applications excluding T-Mobile applications, which are subject to the MLA have increased 125% on a year-to-date basis through September 30, 2025 relative to 2024. Related to site rental revenues, we received a letter dated September 2025 from DISH Wireless whereby DISH asserts its master lease agreement with Array has been impacted by unforeseeable actions by the FCC, and therefore, DISH believes it is relieved of its obligations under the MLA. And despite this, DISH plans to continue to operate certain sites for a period of time.

Array believes DISH's assertions are completely without merit, and DISH's obligations under the MLA remain intact. Array plans to enforce DISH's performance and payment obligations under the MLA. Array expects to recognize approximately $7 million of site rental revenue from the DISH MLA in 2025, and DISH's obligations at similar levels from 2026 through 2031 and with the declining revenue commitment in 2032 through 2035.

Slide 22 summarizes a raised financial results. In the third quarter of 2025, we estimate approximately 40% of selling, general and administrative or SG&A expenses include costs to support the following activities wireless operations prior to divestiture that are not reflected as discontinued operations, wireless operations wind-down costs incurred after the August 1 close date administrative expenses associated with managing spectrum assets and expenses associated with the ongoing strategic alternatives review.

We expect legacy wireless operations wind down expenses to persist into the first half of 2026 at levels similar to the third quarter of 2025 and while some wind-down expenses will remain after that time, we expect such expenses to begin declining in the second half of 2026.

Turning to Slide 24. T-Mobile has until January 2028 to finalize the selection of 2015 committed sites under the new MLA. Based on these final selections, Array expects to have between 800 to 1,800 tenantless or naked towers. We are aggressively continuing our efforts to lease these Daka towers and we'll also plan on working with our ground lessors to rationalize ground rents based on the economics associated with naked towers. Over time, based on the results of these efforts, and the projected future lease potential of each tower, we will assess the economics of each naked tower and evaluate alternatives, including potential decommissioning.

Slide 25 summarizes the result of noncontrolling investment interest. As noted, historically, greater than 80% of our investment income and related distributions are attributable to 4 wireless operating entities operated and managed by Verizon and AT&T. Investment income and distributions for the 9 months ended September 30, 2025 were impacted by several events, including the following 2 items: First, we own noncontrolling interest in 3 additional entities that had wireless operations and have tower operations in the state of Iowa. These 3 entities sold their wireless operations to T-Mobile in 3 separate transactions on August 1, 2025, the same date that Array sold its wireless operations to T-Mobile.

As a result of these 3 separate transactions, Array recognized $34 million of equity income and received $42 million of distributions in the third quarter of 2025. Second, in the first half of 2025, Array received distributions from Verizon managed entities of $25 million related to proceeds from Verizon's prepaid tower lease transaction with Vertical Bridge.

I want to thank the entire array and TDS teams who have worked tirelessly to close the sale of our wireless operations and stand up an independent tower company. It has been a transformational and highly successful quarter. I also want to thank the Array board for their trust in me to lead Array for the past several months. It has been an absolute pleasure to lead our outstanding array team. Lastly, I am pleased to turn the reins over to Anthony. I had the pleasure of working alongside Anthony, while we are both members of the U.S. Cellular leadership team and have great confidence in Anthony as both an outstanding strategic thinker and leader and combined with the existing array team, I am confident that Array has a very bright future.

I will now turn the call back to Walter.

Thank you, Doug. As you can see, TDS is in a vital period of transformative change. The successful close of the T-Mobile transaction has unlocked tremendous value enabling us to expand and deepen our fiber program, stand up a strong and growing tower business and strengthen our capital structure. We are making good progress but there is much more to do. Let me again thank all of the outstanding associates across the TDS enterprise for the fine work you do every day to serve our customers and advance our business.

Operator, please now open the line for questions.

[Operator Instructions] Your first question comes from the line of Rick Prentiss with Raymond James & Associates.

A lot of moving pieces, but a lot of interesting things going on here. First, Doug, I have enjoyed working with you good luck in the future, and I appreciate the adjusted free cash flow similar to AFFO calculation that we've been asking for. So thanks for that, again, thanks for working with you.

Thanks, Rick. I appreciate it.

Yes. Vicki, I think one of the more interesting things is obviously we're looking for an update in February on the fiber plan. You mentioned several hundred thousand or more might be added. So that helps us frame it a little bit. One of the other things we're interested in is, can you give us some cohort analysis or something to take a look at how the older markets of fiber, say, 1, 2, 3, 4 years ago are doing because it's kind of blurred, right?

You guys are spending CapEx, you're spending OpEx and trying to understand the progress towards those penetration rates. So any thoughts on -- when you give that update in February, can we start getting some maybe some cohort analysis or some thoughts on how the prior markets are doing?

Yes. Thank you, Rick. Two piece parts to your question. Let me take the first one and then -- and address the several hundred thousand fiber opportunity. First of all, we are a fiber a fiber-centric company, and we love the markets that we're operating in. And so we see a lot of opportunity, and I'm going to have -- can talk about some of the opportunities he sees as he's joined the company.

We are currently right now in the process of evaluating our business cases and our engineering designs as we evaluate those opportunities. And we do see several hundred thousand or more, and we'll come back and update investors in February on that on what that looks like from a capital allocation perspective. Second, on the cohort penetration. We've heard you loud and clear, for sure. And to be honest, we did go back and we looked at what the industry is reporting. And we didn't find a lot. There seems to be little reporting out there. And quite frankly, it wasn't enough information really to set a clear industry standard for us.

With that said, with Ken just coming on board, we are internally aligned as a team as we're ramping up our fiber builds in a number of markets. evaluating our edge-out opportunities. And so we're aligning on what the appropriate success measures are going to look like.

As Vicki said, I'm very bullish on the markets that we selected. I think they're fantastic the ATM program, along with our expansion program gives us tremendous fiber opportunities going forward, especially to convert our copper to fiber transition -- so great programs all along. But as Vicki said, when we look at these expansion markets as we've been first to fiber and have planted our flag we look around and we see adjacent neighborhoods, adjacent communities that candidly do not have a fiber provider and we can continue to be first to fiber. And so we're evaluating all those markets now, and -- but we do see several hundred thousand as an opportunity.

I think one of the other interesting and exciting things actually, Vicki, was the stock buyback program. Historically, TDS USM, AD, have not done a lot of buybacks except for really kind of handling stock comp kind of creep. So it sounds like this is something a big change for you guys, that you are seeing. You did some in September, you're seeing value in the stock. How should we think about that sizing of the $500 million, the execution of that? And am I right to interpret that this is actually a pretty big change for TDS.

Yes. Well, thanks, Rick. First off, I think that this move and the authorization, the recent authorization by the Board really demonstrates the Board's confidence in the company's long-term strategy and belief that repurchasing its shares is an attractive use of capital. I see it as a really important part of our capital allocation plan, and we are going to balance that with investment back into the business.

So first and foremost is investing into the business. We see a lot of fiber opportunity. We're in the process of evaluating and quantifying that. But I think this is a real balance. And it's going to be something that's balanced with timing and the opportunity and the timing of our builds over time. Execution of it, I would say, certainly to the management's discretion, but the timing and matter first and foremost, is dependent on the successful closing of our spectrum transactions. And that is a priority. It's a top focus for the leadership team. And then, of course, we'll execute in a disciplined opportunistic manner as we evaluate the current business environment and the market environment.

Great. Okay. And last one for me, more mundane question back to Doug. Obviously, calling out the SG&A at array 40% kind of not your tower operating kind of numbers. Can you help us understand how much was that wind-down component, so we can understand a little more what run rate going forward might be for the next couple of quarters? And I got to admit, I'm just wanting to understand a little bit more about spectrum management. What is that? How long will that go on as you kind of wind down your spectrum position? Because I think there was some spectrum management up in cost of service as well.

Yes. Thanks, Rick. So with respect to the 40%, we're not going to break down those 4 components individually. What I would say about that, though, if you're trying to triangulate to a run rate is -- there's at 40%. But in addition, there's structural costs that we have being a large wireless company that we also have to work on within the SG&A infrastructure. So it's not just at 40%. It goes beyond that, think about IT platforms that we use to support wireless and the related IT support we had for that.

That's an example of additional opportunity that is beyond the 40%. So just keep that in mind as you're thinking about a run rate for SG&A. There's still quite a bit of work for us to do on SG&A. We completely expected the SG&A cost to be high in Q3, we expect them to be high through the first half of next year, as we indicated. Spectrum management costs, I mean, we still hold spectrum, as you know. And so we incur costs. So we're still fulfilling coverage requirements for certain spectrum incurring some cell site rental costs and that. We have legal costs, we have personnel that manage the spectrum. All that is owning of costs for incurring ultimately be temporary as we're, of course, in a process of opportunistically monetizing the spectrum. So with time, those will eventually go away.

Your next question comes from the line of Eric Lucha with Wells Fargo.

[Operator Instructions]

We will move on to our next question from Vikash Harlalka with New Street Research.

I have a couple of questions on the array side and then some on the TDS Telecom side. On the side, what is the Naked tower strategy from a go-to-market standpoint but also from a sale or decommissioning standpoint, how long is too long to wait and do you have exit rights on the land leases. And then I'll ask the PD questions after this.

So with respect to the naked towers, in the slide that we included is, at a high level, particulate strategy, which, obviously, we're working hard to lease up all our towers.

That continues, and we hope over time, that minimize the naked towers. The other thing we're doing is an initiative going to our ground lessors, and we obviously can't rationalize the rents we're paying on a lot of our naked towers, and we're going to seek to reduce those rents over time. We also have fairly robust analysis, and we're continuing to refine it on future leasability of the towers.

So where competitor towers are using crowdsourced traffic, understanding our view of what the leasability is. And then after going through all those steps, and this will be a multiyear process, and it will be on a tower-by-tower basis, we will make decisions as to what to do with each tower hold some other strategic option and then potentially decommission some as well.

And then Vikash, sorry, you asked the question, what was your second question?

My question was, do you have exit rights on the land leases?

The land commitments by and large, we have some that are extended, but they're fairly minimal. A large portion of our ground leases, we're able to terminate upon very short notice. So those are not significant commitments overall in our portfolio. There's some, but they're minor.

Got it. And then I have 1 sort of financial question on the -- on TDS side and then 1 strategic question on the on your leverage target of 1.5x for TDS telecom, it's probably the lowest that I've heard from any of the wireline operators. One, does it include the impact from the several hundred thousand fiber passing that you're going to announce next year in February? And then two, just help us understand like how did you land on this target? And I mean why not just lever more in return more capital to shareholders?

Okay. Thank you, yes, let me -- this is Vicki. Let me address the leverage target question. First off, let me just say, we're really pleased with where our current leverage is and our balance sheet strength with our preferreds. We think it maximizes our future flexibility and we feel comfortable with where our leverage is at currently.

When you think about our leverage at TDS currently as of the end of the quarter, on a gross basis, we're at 1.4x. And we intend to stay under that leverage ratio. Now we've got cash on the balance sheet as we're anticipating the funding the fiber builds through the rest of the fourth quarter and into 2026 and through 2026. And at the same time, we also have tax obligations that are -- that will come due with the closing in the sale of the transaction to T-Mobile.

So our leverage targets are intended to -- with the principle that we're going to put our cash to use over time. And therefore, that plays into our philosophy on our capital allocation strategy. Vikash, he did ask about, does this include the updated fiber goals? What we publicly stated so far is that we plan to double our fiber addresses from where we ended 2024 from around $900,000 to $1.8 million, and we said we will do that over roughly a 5-year period. What that doesn't include are the additional edge-out opportunities that we've been discussing that we believe are several hundred thousand or more.

And in February, we will come back and update everyone on our new goals.

Got it. That's super helpful. And my last question, sort of a strategic question. So you obviously gave us some color on potential fiber targets, that's helpful. Just flipping that a little bit, would you be open to getting acquired by someone like a Verizon or AT&T?

Vikash, this is Walter, and thank you for the question. TDS has been in business for a long time. Our objective is to remain in business and be very successful for all of our shareholders for a long time going forward.

Your next question will come from the line of Eric Luebchow with Wells Fargo. [Operator Instructions] Eric, are you there?

Let me try that again, I apologize. Just a couple of questions for Doug on the tower side. Doug, I know you talked about getting to a 45% to 50% margin longer term. Maybe you could just talk about some of the moving parts there between the decommissioning of the towers, the expense rationalization, your ability to bring down ground rents. Like how should we think about the patient of that over the next couple of years as we kind of think about the growth, not just at the top line but at the bottom line as well.

You hit on a lot of them in your question. So when we think about increasing margins over time, obviously, growing our colo revenue is a priority and that we're very focused on. I talked about the SG&A expenses. We expected them to be high in Q3. We expect to be high through the first half of next year. But also over time, need those to go down, obviously, as wind down and other cost side as well as what I talked about in response to Rick's question, making structural changes as well to some of our SG&A infrastructure.

So focused on that. Ground rents, there's really 2 components of that. One is, I talked about rent rationalization with our ground lessors and that initiative. So we're focused on that. And then at the end of the day, if towers are uneconomical, making the decision as to potentially decommissioning them to again, rationalize ground rents. Offsetting that somewhat, I mean, on I think recognized that the interim revenues on the T-Mobile sites are going to go away over time.

T-Mobile has the ability to cancel those on fairly short notice in the third month period. But certainly, margins we're looking to increase over time, and we expect that as we launched Array because of all the reasons I just went through, that margins were going to be lower and will increase over time.

Great. I appreciate that. And maybe just 1 follow-up. I know you're looking at potential spectrum monetization, and you still have some extended build-out time frames for the C-band kind of the bulk of your remaining spectrum assets. I guess given there's an auction plan in the upper C band in a couple of years, how does that kind of influence the timing of when you may look to monetize that just in terms of the supply of spectrum coming to market?

Eric, all one, our objective has been to get the best price. I mean certainly, injections of supply may impact that. But the reality is mobile traffic is still increasing at a rate of 30% per year. Our spectrum is available now and can be deployed immediately and the carriers have the ecosystem from an equipment standpoint to do that. So we still think our spectrum has a lot of value, notwithstanding the fact that supply has been dynamic with that and Equistar sales and so forth.

[Operator Instructions] Our next question comes from the line of Sergey Dluzhevskiy with Gamco Investors.

First of all, Doug, it has been a pleasure working with you over the years, and good luck to is everything going forward.

Likewise. Sergey, thank you.

Great. And maybe my first question is for you. So you talked a lot about the kind of organic opportunity for the tower business. I guess my question is, -- what role do you expect M&A to play in the tower business strategy what types of assets could potentially amplify or accelerate your strategy? And also -- on the flip side, are there disposal opportunities? Obviously, you're going to look at naked towers, but just looking maybe at cluster of towers. I mean, you have some towers in California, Oregon, Washington, that appear to be not as clusters, maybe as others. So I was wondering if there is a monetization opportunity there.

Yes, Sergey. Thanks for the question. So with respect to our inorganic acquisition and our disposals, that's not a strategic focus right now. We have so much on our plate operationally and really great things on with integrating the T-Mobile MLA. I mentioned you saw our tenant growth on a cash basis -- cash revenue basis for the quarter grew 8% this quarter, and our apps are up year-to-date, 125%. So operationally, things are going so well, and we have so much to execute on. That is our sole focus. Longer term, after a few years, whether we start focusing on inorganic M&A or disposing towers, that's always something that what we looked at over time. But right now, that's not our strategic focus.

Got it. Great. And my next question is for Walter or for kind of also on the M&A side, but also related to edge-out opportunities that you're considering at telecom. So you mentioned that you see a number of edge-outs where you have the ability to be first to fiber but you're not the only one looking obviously at those spaces and a number of larger companies are looking at remaining white space as well.

So maybe I understand that you're going to provide more guidance in February, but maybe if you could provide more color on how you think about those opportunities in terms of age outs, what is realistic for the company the size of TDS Telecom.

And in regards to M&A, what would be the primary determining factors for you to in choosing to buy something versus doing and are gaining fiber build.

All right. From an edge perspective, the areas that we're really looking at are the areas that are adjacent to current operations. So think of these as Tier 2, Tier 3 markets, what we would refer to as not urban areas, but rural markets where we already operate, already have facilities already have garages and candidly already have a brand and customers, and we see the opportunity to edge out into additional communities because we've already been first to plant the fiber flag in these rural markets. It's just extending our plant to these additional communities.

And the advantage that we have is because we were first in fiber, these are opportunities we already have the transport, we already have our operations there. So it's just a natural extension. So those are -- when we talk about agile opportunities, it's expanding and flexing from where we're today already operating in the Tier 2 and Tier 3 markets. Okay?

Got it. And in terms of kind of buying something versus building organically. What are the primary determining reasons for it.

So Serge, this is Walter. I think your question is, in addition to the potential edge out opportunities, what sort of possible M&A opportunities and without getting into specifics, as Vicki described, we are very much focused on those types of ILEC or other owners who are proximate to our existing footprint where we believe that in a disciplined way, we could expand our footprint in a clustered basis -- we don't know whether that's going to be successful, but there are opportunities there, and they are being very closely looked at.

Yes, Sergey, I would just follow up and say again, with respect to M&A, we're going to be highly disciplined -- it will be accretive to our business. And it fits in with the organic cluster strategy that Ken was describing. We've embarked on this fiber strategy out of footprint and our selection of our markets. We're very centered around where we saw clusters of growth. And so whether it's organic or we see a synergistic M&A opportunity, that's how the whole picture will fit together. So it's really executing on that strategy going forward.

Great. And my last question is for Ken. So I think earlier this year, TDS Telecom has been making investments in sales and marketing, including door-to-door sales force. I guess with you coming in, what are your thoughts on kind of the level of success an improvement in gross additions that you could attribute to some of those efforts? And what other initiatives as part of your go-to-market day that -- do you expect to improve and contribute to kind of improving your conversion rate of fiber pricings into paying customers?

Yes. Thank you. One of the things that I've noticed is that a lot of our sales activity is based on address delivery. So if we have a quarter where we don't deliver the addresses, we see sales suffer.

So mission #1 is to get our build plan to execute and to deliver service address delivery in the markets that we're building. And I will tell you that we have doubled our crew counts in our expansion markets here in the third quarter. So we had a record amount of crew counts for 2025. And we actually increased our crew counts here in October of '25, and that's key in delivering on our targets in the fourth quarter.

So we will execute on that new open for sale when it comes in. We also are looking at additional vendors that we've brought on to Canvas our different communities and help us with presale and also with our door-to-door efforts. And I think that variable cost model will help us win penetration. And we're also, as part of our transformation efforts, we are putting a lot of time, effort and energy into our dot-com business.

As you know, website is open 24 hours a day, 7 days a week and we think that's a big opportunity for us as well to penetrate some of these new cohorts. But also, we recognize that we have a lot of ILEC fiber that we can still sell into.

So a tremendous amount of initiatives in place. I believe we have some nice momentum but that is a key focus, is go-to-market strategy, executing on the fundamentals and delivering sales and penetration goals.

There are no further questions at this time. This concludes today's call. Thank you for attending. You may now disconnect.

Hi, everyone. Good morning. I am Mark Schilsky, Citi's TMT sector specialist. Obviously, not Mike Rollins. I'm pinch-hitting for him today. Welcome to day 2 of Citi's Global TMT Conference.

Today, we're going to be talking about TDS. We've got Kris Bothfeld, the CFO of TDS Telecom, and I've got Doug Chambers, Interim President and CEO of the newly minted Array Digital Infrastructure. So we're talking about both companies today. Thank you, both for coming.

The deal, the T-Mobile, U.S. mobile deal closed August 1. So we've been about a month past. So Kris, if you want to give us a quick update, just remind everyone what happened, you learned anything in the incremental month since then, and then we'll take it from there.

Yes. Maybe I can take that one. That impacts our business more so. So as Mark said, we closed the deal with T-Mobile to sell our wireless operations on August 1. Array always a tower business embedded within our UScellular wireless business. Now we're a separate Array business. We own 4,400 towers. We're the fifth largest tower company, and we are solely focused on towers at this point. And we are very operationally focused right now. We have a lot of exciting opportunities ahead of us operationally and 4 key areas of focus. One is we have pending spectrum sales, $1 billion sale with AT&T, $1 billion with Verizon, focused on getting those through regulatory approval and close, we're confident we'll do that.

We have remaining spectrum. We have -- we sold 70% of our spectrum through deals that have closed with T-Mobile or the pending deals I just spoke of, but we also have remaining spectrum, including C-Band. We're going to -- we are opportunistically monetizing that. We're ensuring that we extract the maximum value we can. We have time. The C-Band does not have build requirements until 2029 first build, 2031 second build. So we feel good about the fact we're well positioned to sell that spectrum and have time to do it.

Third thing, colocation growth. So we're doing quite well from a colocation growth perspective. In Q2, we grew revenues 12%. Some of that's application fees, even taking that out, we grew revenues 7%. Our colo apps in the first half of 2025 are up over 100% year-over-year. We're doing really, really well operationally. From a colo growth standpoint, we brought sales in-house in the fourth quarter of 2024. It's been a huge tailwind with respect to customer relationships. We have MLAs with all 3 major carriers. We're very easy to do business with.

And of course, the other thing with colo growth is T-Mobile has committed to 2015 colocations with us. And we're currently working through that with them. That's a lot of work for me and my team. It's great work. It's going to increase our cash revenues in the order of magnitude of 50% from the level where we are now. So very excited about that.

And the fourth thing I'll say is we're really focused on our ground leases. One is in the normal course, buying that land, gaining control of it as well as extending our leases. It's always been a focus. We're doubling down on that.

The other opportunity we have is because of the fact we're no longer a wireless carrier, and after T-Mobile completes their integration, we will have between 800 and 1,800 naked towers, that gives us the opportunity to go to our landlords, seek rent abatements, sequence rent reductions. We're going to do that. And after we finish that process, we'll have optionality as to what to do with the naked towers, hold on to them for future co-locations, we may decommission some, sell, give away. That really depends on where we end up with our rent abatement program. So operationally, a lot in front of us, but a lot of great opportunities and things are going very, very well for us here in 2025.

And then -- so at TDS Telecom, we're on a path to transform into a fiber-centric company. And earlier this year, we came out with new bold fiber goals. So we're planning to double our fiber footprint from where we ended at the end of 2024, around 900,000 addresses to 1.8 million addresses over the next roughly 5 years or so.

And just yesterday, we passed a really significant milestone for the company as we transform into a fiber company, and we surpassed 1 million fiber addresses. So there's only a handful of companies in the U.S. who have passed this milestone, and we're really excited and really excited about the momentum we have with this program going into the second half of the year.

All right. Perfect. Doug, let's continue with you. So you mentioned spectrum sales, AT&T, Verizon, you even have some that has not been sold. Can you talk about the timing for that, the level and then when those deals are done and what are you doing with the cash?

So the AT&T deal, $1 million, we expect it to close before the end of this year. The gating item is regulatory approval from the FCC. As I mentioned, we're optimistic we'll receive that. And we do expect our Board of Directors to declare a dividend, a special dividend after that AT&T sale. The Verizon pending spectrum sale, that's also $1 billion spectrum sale. We expect that to close in the third quarter of next year. That sale is -- needs the T-Mobile spectrum lease we have in place for a year to expire. So therefore, that one needs to close later. When we receive that $1 billion, which we expect, we also expect our Board of Directors to declare a special dividend for those funds. And so similar to the T-Mobile deal we just closed in this year plus span, we're returning a lot of funds to shareholders.

Right. And then you still have a chunk of spectrum left to potentially sell?

We do. And it's -- as I mentioned in my initial comments, it's primarily our C-Band spectrum. And we feel really good about the marketability of that spectrum. It's beachfront, mid-band spectrum. All the carriers can use that spectrum. There's an established equipment ecosystem for that spectrum. And I mentioned the build deadlines. We have time. We're not in a rush to sell it. We're not a wireless carrier. We'll sell it as soon as we're able. But certainly, we'll wait for the right value before we agree to sell it.

And then assuming that it does get sold, should we assume that the base case is it also would result in a special dividend?

I would expect the Board to declare a special dividend, correct?

Okay. Perfect.

We have -- our business generates sufficient cash. We have plenty of liquidity. So we don't have sort of a need for that level of funding at this juncture.

Right. And so the deal closed August 1. We're going to get kind of like, call it, normalized financials, I believe, on Q3 when we get that. Can you walk us through that? So you talked about you're now the fifth largest tower company. Do you comp yourself to Crown Castle, American Tower? How do you think about disclosures to investors? Is it going to look a lot the same? Could you give us any preview on what that will look like in Q3?

Sure, sure, happy to. We are now a tower company, and we're going to provide tower companies disclosure. Through the second quarter of this year, we're primarily a wireless company, and our financial statements look like wireless company financial statements. We did provide insights into our tower business, tenancy ratio and the like. We're converting to full tower company reporting, things like AFFO, showing adjusted EBITDA for our tower segment, all the metrics related to tendency rate and so forth. And then showing the impact of the T-Mobile transaction.

I will say in our financial statements, there's going to have to be a story we have to tell related to certain items that are nonrecurring. For example, we're incurring wind-down costs as we complete the full divestiture of our wireless operations. Those are temporary costs, but they'll be in our financial statements for a period of time.

Likewise, we have start-up costs. As we ramp up this T-Mobile MLA, it's a lot of temporary work for our business for a period of 1, 2, maybe 2.5 years. That's going to be in the financial statements. And the other thing longer term that I mentioned we're working on is all of our naked towers and working on that ground lease expense over time. That's not going to move right away because T-Mobile has interim leases. And until they cancel those interim leases, we're not going to be able to abate rent substantially. But as those interim leases start to be canceled by T-Mobile, we'll have that opportunity to address ground rents.

All right. Perfect. And then can you talk a little bit about capital structure, capital return, what are your medium, long-term plans for that?

Yes. We have a leverage ratio target right now of 3x, and we're satisfied at that level. And one thing about being at that level, it gives us future flexibility to extend. I mean, right now, as I mentioned, our sole focus is operations, and we have a lot in front of us. So we're not looking at any substantial inorganic growth or other transactions. But being at 3x affords us the ability in 2, 4, 6 years. If we decide to do something, we have flexibility to move that upward if we need to.

Are you at 3x like post deal? Or what are you today?

3x.

Yes, you are...

Yes.

And also -- so capital return, what are your priorities there for shareholders?

Well, it's really -- as I mentioned, our focus is we're -- just speaking about a dividend. So what we're doing is, I mentioned we have a series of special dividends. We have the one we just declared here in August. We'll have the AT&T dividend. And then, as I mentioned, I expect our Board to declare a dividend from Verizon. As we generate cash from operations over the next 1.5 years, that cash can be subsumed in the dividends that we declare the special dividends.

Once we get past the special dividends, I expect our Board to declare a regular recurring dividend much like the other tower companies do. We're going to be a cash-flowing company, and we -- I expect our Board to return most of that cash to shareholders, but I wouldn't expect that regular recurring dividend to be instituted until late 2026 or early 2027.

All right. Perfect. And then as you mentioned earlier, you were for a long time, just a wireless company, gone to T-Mobile. Anything from a strategic standpoint that changes now that, that retail wireless business is gone or status quo, like how should we think about that going forward, if any material change?

Yes. I would say no major strategy changes, but there are some important things that we've done over the last year. I mentioned bringing our sales in-house and having that team report directly to me as opposed to outsourcing sales. We've seen substantial dividends from that in our business and the relationship building that's going on. And we're really -- because of that, that's one of the drivers of the increase in our colo app. So that's a significant operational improvement that we've made.

I'd also cite the fact that being a separate tower company is a slight tailwind. There's no more perception of us also being a carrier, so that is helpful. And also focus. Organizationally, I'm not saying we weren't focused on UScellular, but there is no more wireless company. We have our people solely focused on making our tower companies succeed. And we have the right people in place. We've built a lean organization. We rely on TDS for a lot of shared services like finance, IT, and HR and other administrative services. And so we are really well equipped for future success.

Perfect. And then nothing is, again, relatively new company. Where are you in terms of the management team, you're Interim President and CEO, just what's the timing to have like, let's call it, a permanent management team in place at all levels?

Well, I would say we have a permanent team in place. Under me, I have 4 direct reports that are not interim. They are the right people. I'm Head of Operations. My Head of Sales had a legal and my Head of Finance that report to me are all people that are permanently there, and they run the business and they're very high-performing people. My role, I'm here until the Board will assess it over time, and we'll see how that plays out. But right now, I'm the guy.

Okay. Sounds good. Kris, I'm going to pivot to you. I asked the strategy question of Doug, but same thing. So you're one of the larger fiber companies out there. Has anything changed as a result of this deal? Or it's still, again, status quo and like how do you look out over the next several years in terms of what your plans are?

I'd say not a change in strategy, but if anything, kind of doubling down on our existing strategy. So we're really bullish on our fiber program. And really with additional proceeds from the sale, what we're looking to do is, one, accelerate our existing program, build programs that we have in flight. So we have 2 big build programs, our expansion program where we've gone out into brand-new communities that we've hand selected based on their growth characteristics, competitive landscape, among other factors. So we're continuing to build those out and want to accelerate those builds.

And then the other big program is our EA-CAM program. So this is in our more rural areas in our incumbent footprint, converting those existing copper addresses to fiber addresses, also great economics with that program, and we're looking to accelerate that. So first and foremost, accelerating our existing plans.

We're also looking at additional organic edge-out opportunities. So we handpicked those expansion markets because of great kind of clustering and growth characteristics, and we see significant opportunity to continue to expand those clusters. So we're currently evaluating all of that across our footprint.

And then lastly, M&A. So with M&A, I do want to say that our focus is going to be on highly synergistic opportunities that are adjacent to our existing strategic clusters. And I'll also say that any additional organic or inorganic opportunities, we're going to be very financially disciplined, business case driven, anything would have to make economic sense and also be a really good, great strategic fit. So again, we're just very bullish on the fiber program, and we think that there's a lot more opportunity ahead, and we're still kind of evaluating and we plan to share more in the upcoming quarters on any updates to those plans.

Yes. So have you been explicit in the past in terms of what your annual passing looks like and how -- when you said accelerate, like how much?

Yes. So this year, we're committed to 150,000 addresses. And we have to increase that at a slight clip to hit our 1.8 million in kind of that 5-year time frame. So that's the context of what we came out kind of pre-deal close. So now we're evaluating that, and we haven't shared any updated goals beyond that. But kind of on that 150,000 to 200,000 addresses.

Did your plans change at all, by the way, post one big beautiful bill as a result of some of the cash tax savings that I assume you're going to get as a result of that?

So not yet, that also will go into the -- factor into the analysis. Yes, we're very pleased with that legislation. It's definitely going to help us advance our goals and then also help as we take on additional opportunities. It will provide material cash tax savings over the upcoming years, not as much so in 2025, but definitely in 2026 and beyond.

You mentioned EA-CAM and can you talk about potential opportunities there as well as BEAD and is one materially larger or better than the other?

Yes. So EA-CAM, so we actually accepted EA-CAM in all of our states. So it's over 20 states, all of our states except for one. And what that means is that those areas are actually not BEAD eligible. So we will not be participating in BEAD. EA-CAM is the program that we've chosen. And we really love this program because not only did it extend our regulatory revenue, so it's approximately $90 million annually that we receive in revenues, and it was extended an additional 10 years by accepting this enhanced EA-CAM program. So that's one great benefit.

And then we're going to be bringing fiber to approximately 300,000 addresses in our footprint. And that includes not only the EA-CAM-eligible addresses, but also ones that will pick up along the route as we get to those more rural areas. But even those rural addresses represent roughly 1/3 of our incumbent footprint. And there's no other gig capable provider in those areas. So we expect like 65% to 75% penetration in those areas. So it's a really good business case to not only extend the regulatory revenues but also have very high penetration rates in some of these rural communities in the future.

I think can we talk a little bit about mobile? I actually do want to talk about fixed wireless. Like so how do you view fixed wireless as -- I'm going to characterize it as a potential threat?

I'd say not a material threat to our fiber or cable businesses in the long run. Definitely, in the -- right now, where we see it as the biggest threat is actually in our DSL footprint, as you can imagine. But again, with this EA-CAM program, we're going to be bringing significant fiber to these areas. And we do believe that once we bring fiber there, we can win back those customers. It's a superior -- it's absolutely the superior technology, fastest speeds, symmetrical speeds, reliability. And so -- and with EA-CAM and our fiber investments, we're actually going to minimize our copper footprint to just -- to less than 5% in the future. So we -- so across our landscape, we actually don't view it as a material threat.

And then is there a meaningful price difference between your standard offerings in fiber versus fixed wireless in a lot of your footprint?

It's very competitive, yes.

Yes. Okay. And then recently, I think you announced TDS Mobile. Could you walk us through what that looks like and what the strategy is to roll that out?

Correct. So we do believe that offering a fixed mobile offering is very important to achieve our penetration targets. We have high penetration goals, and there's a segment of the customer base that really values that bundle. And so we're very pleased that we initially launched our MVNO that we call TDS Mobile at the end of 2024 to select markets. We really wanted to take a phased approach to work out the kinks and make sure we have a great customer experience.

And just recently, we launched across all of our footprint. So now we do offer a converged mobile fixed bundle across our entire footprint. And we're very excited because that allows us to offer the same product as our competitors. And then in some areas like in our cable markets, it's actually a differentiator against our competition. It also should help us attract customers and also retain customers because we see that customers who are part of a bundle have lower churn characteristics. So we're very excited. One more thing regarding the rollout is we are planning on doing kind of a more full holistic marketing and advertising push in a couple of months to end the year.

Right. Do you have a target penetration rate for TDS Mobile amongst your footprint?

So we're just getting started is what I would say, but everything that we -- some of the analysis that we had done prior to launching is that really like 1 in 10 gross adds should probably take the mobile bundle.

Right. And I know the rollout is new, so it's like it's really hard to ask exactly what the churn improvement characteristics are, but like give us a sense for how much better churn has gotten once someone takes...

It's too new, but we do -- we offer video, voice. And so what we tend to see is that customers who are single play versus double play or triple play, I mean, it's meaningful churn benefits like 30 to 50 basis points. So we do expect meaningful churn, but it's too early to really say if we're seeing that on the mobile side. That's our thinking.

Okay. And then can we just talk briefly about ACP. I mean that was really a 2024 event, but like is there any sort of tail of that? Is that done? Is that in the rearview mirror or that's still potentially impacting your...

That's a review mirror. That was kind of Q2, Q3 last year, and now that's behind us.

Okay. I think you talked about obviously ramping up fiber investments. Your CapEx intensity is reasonably high. Can you talk about is there a longer-term -- medium- to long-term target for CapEx intensity or CapEx dollars? And does that ramp down eventually? Because I'm sure a lot of your shareholders are excited about the future possibilities of free cash flow ramping, but could you walk us through that, your thoughts there?

Yes. So what I'd say about capital is -- obviously, I'm not going to give any specific guidance beyond 2025. But as we have EA-CAM obligations that we need to meet, we're going to continue to ramp up our expansion program builds. And as we look to take advantage of additional edge-out opportunities, we do expect to increase our capital from this year to next year and plan to keep it elevated for a few years as we really accelerate and build out those programs.

But from a free cash flow perspective, what I would say is that after our build what we see is in a given market, once our build completes, we generate positive free cash flow. So when we're heavy in those build years, we expect a drag on free cash flow. However, once those -- more and more of those builds complete, we expect to turn free cash flow positive. And then we also have a transformation program that we've recently launched that's really focused on trying to streamline processes, find efficiencies in our business and we expect that to also help improve margins and free cash flow over time.

Sure. And obviously, the deal just closed in August, business delevered meaningfully. So where are you today? What's your long-term target? And then you mentioned M&A earlier, like talk a little bit more about your strategy there and like where could that leverage go if you found the right dealer deals?

Yes. So what I'd say is we recently announced that we have -- at the TDS level, have paid off almost all of our debt. We have a small portion of debt still left, and we still have our preferreds. But we really like this because it gives us, in the near term, a lot of balance sheet strength, flexibility as we continue to evaluate these additional opportunities. And so in the near term, we're going to kind of stay at the overall TDS consolidated level around 1.5x leverage. But again, that's in the near term, and we'll continue to evaluate over time.

Right. But we should expect at the TDS Telecom level, leverage at some point in the future is going to go up. I mean you are a telecom company, right, running unlevered is probably inefficient.

Correct. Yes. I'll just say that we're continuing to evaluate that. I'm just going to comment kind of on where we are in the near term. And yes, we have a lot of great opportunities ahead, and we'll talk more about that in the future.

Sure. And then along with that, Doug talked about a recurring dividend in the future. You talked about capital return plans, again, medium to long term, what your plans are down the road?

So on the Q2 call, really, what we shared is that there's a handful of key priorities from a use of proceeds perspective, one, advancing the fiber program. Also with that includes potentially some M&A opportunities, more focused on the fiber side and again, very highly synergistic opportunities and then third, return to shareholders. So definitely, that's -- there'll be more to come is what I would say. We're still -- the deal just closed, and we're evaluating a lot of opportunities.

Sure. I think just talk a little bit about margin opportunities. Do you think today's EBITDA margins are appropriate for the business? Like are there efficiencies you can find? Like what are you kind of looking to target in the future to kind of potentially get those margins up?

Yes. I would say, no, we have a lot of opportunity and really kind of -- I touched on this a little bit in one of my earlier comments, but I'll say it again. So as we transform into a fiber-centric company, like fiber networks are absolutely the most efficient networks to run. So we're going to see a lot of nice margin improvement just from that kind of network transformation. But then we also have a business transformation program that's all the back office, like IT systems. We have like 3 different systems today. We're getting that to 1 system. There's a whole set of initiatives to really streamline operations, enhance elements of the customer experience, drive more to the web and more digital transformation. So all of that, we expect meaningful margin improvement over time.

Sure. And I feel like I'm obligated to ask a question about AI, just how are you utilizing it in your business, whether to generate revenue or to lower OpEx or both?

Yes, I'd say both. So I would say we're just scratching the surface right now on AI capabilities. I think that there's significant opportunity to streamline our operations, help drive margin improvement. So that's on the OpEx side. And then, yes, on the revenue side, I mean, I think that new AI applications are going to drive the need for even more fiber in the future, which could help on the revenue side as well.

Doug, same question to you on AI.

Yes. I mean, in our wireless business, we're using it extensively for things like network management and customer care. On the tower side, I would say there's less current uses that we have in our business right now, but a lot of opportunity. We have obviously 4,400 towers. It's 4,400 payments coming in every quarter, our ground lease payments. So we have a lot of opportunity and we're looking at our operational systems that we have in place, our lease administration system as well as our operational project planning system that we have in place. And that's one of the things that we're focused on is how we can use AI to enhance efficiency.

All right. Perfect. And then, Kris, can you talk a little bit about macro? Have you seen any noticeable change in customer payment behavior as inflation cut into the ability for your customers to pay? Are people potentially down trading? Are you seeing any of that?

We haven't seen any impacts from the economy this year. The great thing about our product is that it's highly desirable and it's sort of recession resistant. So no, our churn is actually down year-over-year. Some of that is due to kind of the ACP headwinds kind of being behind us. But no, we haven't seen any changes, material changes due to the macro economy this year.

Sure. And then I did want to talk a little bit about -- so we talked about FWA earlier, but anything notable with cable -- with overbuilders anywhere in your footprint, anything that's noticeably changing in the competitive landscape?

Yes. So what I -- because you're talking about overbuilders, I'll go right there. So in our cable markets, the vast majority of our cable footprint had very low like fiber. So that was the perfect opportunity for an overbuilder to come in and overbuild those markets. So we are seeing pickup in pace of overbuilder activity in our cable markets. But the thing is that it's still just introducing one more gig capable competitor. So instead of us having the vast majority of the market share and being the only gig-capable provider in the area, we now face another competitor. And so just that other competitor coming in and offering choice, we're seeing declines in our market share and our net adds this year. And we expect that to continue for the next couple of years, but we do expect that to stabilize after those builds are complete and we kind of hit that new equilibrium. So that's in the cable market.

But what I will say, too, is we have a very competitive product in our cable footprint, gig speeds. We just launched TDS Mobile. That's a differentiator against a lot of the overbuilder competition in cable. We can get aggressive on price if we need to, where there's more fiber competition. And we also will do things like automatic speed upgrades to also help kind of stem those cable losses.

In our incumbent footprint, what -- I touched on it earlier, really where we're seeing more of the competition is in our DSL areas. But again, we're going to be bringing a lot more fiber to those areas. So that's more of a near term versus a longer-term risk.

And then in our expansion markets, we handpicked these markets for their favorable competitive characteristics. And really, it had very LEC fiber, and we specifically picked kind of Tier 2, Tier 3 cities that we thought would be low priority for the LEC to upgrade. And so far, we've seen that play out, and we are pleased with our competitive landscape in that area.

And one other thing I'll say is that because we are planning to accelerate our fiber builds in those markets, that should even further solidify us being first to fiber and making it a lot tougher for the economics to work for the LEC to upgrade.

And one more competition question in the last, say, a year. I started to get questions about Starlink satellite-based broadband. Just any thoughts on how that potentially impacts you in the medium to long term. Do you see that as a potential threat?

I'd put it right. I'd have a very similar answer to fixed wireless in that we just do not view it as a material threat, especially in the long run.

Yes. Doug, does like Starlink or any satellite-based company impact your business in any obvious way?

No, not substantially. I mean, obviously, the terrestrial networks, when you think about capacity, you're still king, and it's not really impacting colocations and rural edge-outs and things that we're seeing in our business. In fact, rural edge-outs are part of the tailwind we're experiencing now particularly with T-Mobile and what they're doing. And it's not just them, but other carriers. And so I would say no.

All right. And I just want to talk business, SMB, in particular, just could you just walk us through real quick what that opportunity in fiber looks like, what your penetration rates are like how do you think about that? Could that be like a meaningful tailwind for the business?

Yes. So SMB, I do think that it's an opportunity. We're definitely under-penetrated in that segment, really we are very focused on kind of residential first in our markets. But SMB, a lot of SMB is very much resi like. And so we are launching some more aggressive offers there, and we think that we can drive some improved penetration rates there.

Okay. We only have a small amount of time left. Is there any questions from the audience? No, if not, I guess last one for me is just, again, a lot has been going on with the company. You have some -- you're going to probably provide incremental disclosures for Array. Just any future plans to do something more than just an earnings call, whether it's an Investor Day or some sort of way to just kind of reframe and kind of reintroduce yourselves to the investing community. Is there any potential plans for that? How do you think about that?

We don't have any current plans for that. We're going to -- one of our goals on our third quarter earnings call is to give a really clear view of the tower business with tower company reporting and a detailed understanding of nonrecurring costs and what's going on in the business. And we've been very transparent with our strategic priorities. So something we'll consider in the future, but we have no current plans to do that. And again, we're going to provide very fulsome disclosure as part of our third quarter earnings call.

And I'd say for third quarter, we also plan on just continuing to try to tell our story better about us being a fiber company and not just a telco -- an old school telco. So we plan on providing more penetration metrics and things like that over time. And then once we have evaluated all these additional opportunities that I talked about, more likely that would be kind of the Q4 call, we plan on kind of sharing what those updates are.

Okay. Sounds great. I look forward to it. All right. Kris, Doug, thank you so much.

Yes, thank you.

Thank you, everyone.