TDS Q2 Earnings Highlight Fiber Growth and Spectrum Monetization Gains

TDS Earnings Benefit From Spectrum Sales

TDS reported $2.24 per share in second-quarter earnings, up from a loss of 5 cents in the year-ago quarter. Earnings topped the Zacks Consensus Estimate, producing a 100% surprise, while revenues missed the $315 million consensus estimate by 1.83%.

Array’s spectrum monetization was a major contributor to the earnings improvement. Array completed a $1 billion spectrum transaction with Verizon Communications Inc. VZ in June and about $168 million of additional spectrum sales to T-Mobile US, Inc. TMUS in May. The transactions helped lift net income attributable to TDS common shareholders to $260.6 million from a $6 million loss a year earlier.

The distinction between transaction-related gains and recurring operations is important. Array’s license sales boosted reported results, but TDS excludes the gain on license sales and exchanges when calculating Adjusted EBITDA. That measure provides a clearer view of underlying operating performance.

TDS Fiber Growth Broadens the Revenue Base

TDS Telecom continued to expand its fiber footprint during the quarter. The business delivered approximately 66,000 new marketable fiber service addresses, bringing the first-half total to about 106,000. Residential fiber net additions reached 15,100, up 47% year over year. Marketable fiber service addresses totaled approximately 1.17 million, with 60% of service addresses served by fiber.

Fiber growth is beginning to offset pressure from legacy operations, but it has not yet reversed the broader revenue decline. TDS Telecom generated $248 million of operating revenues, down 6% year over year, as copper and cable declines and divestitures outweighed a 13% increase in fiber revenue. Adjusted EBITDA declined 21% to $70 million, while capital expenditures nearly doubled to $179 million as construction activity accelerated.

Management raised its 2026 fiber service address delivery target to 250,000-300,000 from 200,000-250,000 previously. The company continues to target 2.1 million marketable fiber service addresses over the long term.

TDS Guidance Shows a Costly Transition

The updated outlook captures the trade-off between faster fiber deployment and weaker near-term financial performance. TDS Telecom’s 2026 revenue guidance was reduced to $1-$1.025 billion from $1.015-$1.055 billion, while Adjusted EBITDA guidance was narrowed to $310-$330 million from $310-$350 million. At the same time, fiber service address guidance increased and capital expenditure guidance rose to $625-$675 million from $550-$600 million.

The higher spending reflects the construction required to expand the fiber footprint. TDS Telecom’s second-quarter capital expenditures nearly doubled to $179 million, making cash generation an important measure of whether the additional fiber investment will translate into sustainable operating gains.

The earnings picture therefore remains mixed. Fiber deployment and customer additions are accelerating, but legacy revenue declines and higher investment are keeping pressure on the telecom segment’s near-term profitability.

TDS Array Shifts Toward Tower Operations

Array’s second-quarter results also reflected its transition toward a tower-focused operating model. Operating revenues increased 90% year over year to $54.1 million, while Adjusted EBITDA rose 56% to $56.2 million.

The underlying tower indicators improved as well. Cash site rental revenue increased 65% year over year excluding T-Mobile interim revenues and DISH revenues, while the tower tenancy rate increased to 0.98 from 0.96 in the first quarter, excluding DISH colocations.

Spectrum monetization is helping Array reduce its exposure to retained wireless licenses while it focuses more heavily on recurring tower operations. TDS said Array completed transactions that monetized virtually all of its spectrum outside the C-Band. The company also issued an $11 special dividend per common share in June.

TDS Ratings Frame the Earnings Signal

TDS currently carries a Zacks Rank #1 (Strong Buy). Its Zacks Style Scores are Value Score of C, Growth Score of F, Momentum Score of B and VGM Score of F. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Style Scores provide additional context to the Zacks Rank. The Style Score framework uses Value, Growth and Momentum characteristics alongside the Zacks Rank, while the VGM Score combines the three individual styles. The Zacks Style Score Education material emphasizes that earnings estimate revisions remain the key factor behind the Zacks Rank, while favorable Style Scores can provide an additional signal.

For TDS, the second-quarter results present both sides of the investment case. The earnings beat, faster fiber deployment and improving tower metrics provide evidence of operational progress. However, a material portion of the earnings increase came from spectrum monetization, while TDS Telecom continues to face legacy declines and higher capital requirements. Investors therefore need to distinguish the one-time benefit from spectrum sales from the recurring earnings potential of the company’s expanding fiber and tower businesses.

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