TDS Q2 2026 earnings: Spectrum gains drive profit as Telecom revenue falls

Telephone and Data Systems (NYSE: TDS) reported Q2 2026 revenue from continuing operations of $309.3 million, up 4% from $298.5 million, while diluted EPS from continuing operations attributable to common shareholders rose to $2.24 from a $0.05 loss. Array’s spectrum-license gains drove the sharp increase in GAAP profit, while TDS Telecom’s revenue and adjusted EBITDA declined despite continued fiber expansion.

Core earnings data

The consolidated revenue increase was driven by Array, where revenue nearly doubled and more than offset a 6% decline at TDS Telecom. The swing to operating profit primarily reflected a $409.8 million gain on license sales and exchanges recorded by Array rather than recurring operations.

N/M means the percentage change is not meaningful. Adjusted EBITDA is a non-GAAP measure, and the two adjusted EBITDA figures shown above are segment measures rather than a consolidated total.

Business and segment performance

TDS Telecom

TDS Telecom revenue fell 6% to $248.4 million. Residential fiber revenue grew 13%, but that increase was more than offset by divestitures and continued declines in legacy services. By category, expansion-market residential revenue rose 25%, while incumbent and cable residential revenue each declined 10%; commercial and wholesale revenue decreased 5% and 19%, respectively.

The segment recorded an $8.3 million operating loss, compared with $14.0 million of operating income a year earlier. Adjusted EBITDA declined to $70.4 million as lower revenue and a 4% increase in operating costs outweighed a 4% reduction in selling, general and administrative expenses.

Fiber deployment continued to expand. TDS Telecom added approximately 66,000 marketable fiber service addresses and recorded 15,100 residential fiber net additions. Total residential broadband net additions were 5,700, up from 3,900 a year earlier. Quarterly capital expenditures increased to $179.2 million from $90.2 million as the company accelerated construction.

Array

Array revenue increased 90% to $54.1 million, led by a 95% increase in site-rental revenue to $53.2 million. Services revenue declined 31% to $0.9 million. Adjusted EBITDA rose to $56.2 million, while adjusted OIBDA improved to $15.1 million from a $9.5 million loss.

Tower operating indicators also improved sequentially. Colocations increased to 4,362 from 4,290 in the first quarter, and the tower tenancy rate rose to 0.98 from 0.96. Array owned 4,456 towers at quarter-end.

During the quarter, Array closed three spectrum transactions with proceeds of approximately $1.16 billion in total. Management said these transactions monetized virtually all of Array’s spectrum outside the C-Band.

Spectrum sales lifted GAAP earnings while fiber spending pressured free cash flow

The gap between reported profit and underlying operating performance was substantial. Array’s $409.8 million quarterly license-sale gain pushed consolidated operating income to $373.2 million, even though TDS Telecom moved into an operating loss. Adjusted results present a more mixed picture: Array’s recurring performance improved, but TDS Telecom’s adjusted EBITDA declined.

Cash flow also shows the effect of increased investment. For the six months ended June 30, continuing-operations cash flow rose to $151.1 million from $126.0 million, but property and equipment spending increased to $317.9 million from $150.5 million. As a result, continuing-operations free cash flow was negative $168.0 million, compared with negative $25.4 million a year earlier.

Spectrum and other divestiture proceeds strengthened the balance sheet despite the free-cash-flow deficit. Cash and cash equivalents reached $2.19 billion at June 30, up from $766.0 million at the end of 2025, while noncurrent long-term debt declined to $670.6 million from $823.4 million. Array also issued an $11-per-common-share special dividend on June 25.

2026 guidance

TDS Telecom raised its expected fiber construction volume to 250,000–300,000 marketable service addresses and increased capital expenditure guidance. At the same time, it lowered and narrowed its revenue range and reduced the upper ends of its adjusted profitability ranges. Array raised its adjusted EBITDA outlook and increased the lower end of its revenue range, citing higher interim site revenue.

Recent insider transactions

The supplied six-month insider summary reports 23 purchases totaling 1,245,255 shares and one sale of 5,811 shares, resulting in net purchases of 1,239,444 shares. Total insider holdings were listed at 9.99 million shares. However, the latest individual records were derivative-security conversions and equity awards rather than open-market purchases, so they should not be treated as evidence of insider sentiment.

All ten transactions below were reported as direct holdings.

Risks investors should watch

• Telecom growth remains uneven: Fiber revenue and connections are increasing, but divestitures and declines in incumbent, cable, wholesale and other legacy services continued to reduce TDS Telecom’s overall revenue and profitability.
• Higher construction spending is weighing on cash flow: The accelerated fiber build led to substantially higher capital expenditures and a wider continuing-operations free-cash-flow deficit during the first six months.
• Reported earnings include large asset-sale gains: The spectrum gains that drove Q2 GAAP profit do not represent recurring tower or broadband operating income.
• Some Array revenue is temporary: Array’s higher guidance reflects interim site revenue, while the disclosed interim-site arrangements can run for up to 30 months.
• The Array proposal remains unresolved: TDS submitted a nonbinding proposal to acquire the Array shares it does not already own, but an independent special committee is still evaluating the proposal.

Summary

TDS’s Q2 2026 results combined a large spectrum-driven GAAP profit with divergent operating trends. Array delivered higher tower revenue, adjusted profitability and sequential tenancy, while TDS Telecom’s fiber expansion did not offset legacy-service declines and higher spending. The main items to monitor are whether accelerated fiber construction can improve Telecom’s revenue mix, how the higher capital budget affects cash flow, and whether Array can sustain its operating improvement after interim revenue and spectrum-sale effects fade.