TDS Q2 Earnings Beat Estimates on Spectrum Gains, Fiber Growth

Telephone and Data Systems, Inc. TDS reported second-quarter 2026 earnings of $2.24 per share, up from a loss of $0.05 cents in the year-ago quarter, while total operating revenues rose 3.6% year over year to $309.3 million. Earnings topped the Zacks Consensus Estimate, delivering the 100% surprise provided in the earnings data, while revenue missed the $315 million consensus by 1.83%.

The sharp earnings improvement reflected gains from Array Digital Infrastructure’s wireless spectrum sales, while TDS Telecom continued expanding its fiber footprint. TDS Telecom delivered approximately 66,000 marketable fiber service addresses in the quarter, and residential fiber net additions rose 47% year over year to 15,100.

TDS Gains From Spectrum Sales

TDS benefited materially from Array’s spectrum monetization during the quarter. Array closed a transaction with Verizon in June for $1 billion and completed additional sales to T-Mobile in May totaling about $168 million. The transactions helped lift TDS’ net income attributable to common shareholders to $260.6 million from a $6.0 million loss in the year-ago period.

Array’s license sales also boosted its operating profile. Second-quarter operating revenues rose 90% year over year to $54.1 million, while adjusted EBITDA increased 56% to $56.2 million. The gain on license sales was excluded from adjusted EBITDA, which provides a clearer view of underlying operating performance.

Telephone and Data Systems Expands Fiber

TDS Telecom remained focused on its fiber-led transformation. The business added approximately 66,000 marketable fiber service addresses in the second quarter, bringing the first-half total to about 106,000. Management called this the strongest first-half delivery in company history and raised the full-year address target to 250,000-300,000.

The fiber build is translating into customer gains. Residential fiber net additions reached 15,100, up 47% year over year. TDS Telecom now serves nearly 1.2 million fiber service addresses, representing 60% of its footprint, while 80% of addresses are capable of gig speeds.

TDS Telecom Faces Legacy Pressure

TDS Telecom generated $248 million of operating revenues, down 6% year over year. Revenue pressure from copper and cable operations remained the key headwind, while divestitures also reduced the top line. Residential revenues fell to $178 million from $183 million, with fiber revenues rising 13% to help offset declines elsewhere.

Cash expenses were $180 million, unchanged from the year-ago quarter, as cost-management savings offset spending tied to expansion markets and inflation. Adjusted EBITDA declined 21% to $70 million, while capital expenditures nearly doubled to $179 million as construction activity accelerated.

Telephone and Data Systems Optimizes Towers

Array’s tower business continued to improve its operating momentum. Cash site rental revenue increased 65% year over year when excluding T-Mobile interim revenues and DISH revenues. The tower tenancy rate rose to 0.98 from 0.96 in the first quarter, excluding DISH colocations.

The company also continued addressing its tenantless tower portfolio. T-Mobile has until January 2028 to finalize committed site selections, after which Array expects to own between 1,000 and 1,700 tenantless towers. Management is pursuing lease-up, ground lease optimization and decommissioning where economic viability is limited.

Telephone and Data Systems Improves Financial Flexibility

Telephone and Data Systems strengthened its liquidity position during the first half of 2026, helped by proceeds from spectrum monetization. Cash and cash equivalents totaled $2.19 billion as of June 30, 2026, compared with $765.95 million at the end of 2025. Long-term debt, net, declined to $670.65 million from $823.36 million over the same period.

Net cash provided by operating activities from continuing operations was $151.07 million in the first half of 2026, up from $125.96 million in the year-ago period. However, free cash flow from continuing operations was negative $168.03 million versus negative $25.36 million a year earlier, reflecting higher capital spending as TDS accelerated its fiber deployment.

TDS Updates 2026 Outlook

TDS Telecom lowered its full-year revenue outlook to $1.00 billion-$1.025 billion from $1.015- billion-$1.055 billion and narrowed adjusted EBITDA guidance to $310 million-$330 million from $310 million-$350 million. At the same time, fiber service address guidance increased, prompting a higher capital expenditure range of $625 million-$675 million.

Array narrowed revenue guidance to $205 million-$215 million and raised adjusted EBITDA guidance to $220 million-$235 million. Its capital expenditure range remained $25 million-$35 million. Array also paid a special dividend of $11 per common share in June, while TDS had about $520 million remaining under its share repurchase authorization at quarter-end.

TDS’s Zacks Rank

TDS currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Other Upcoming Releases

Keysight Technologies, Inc. KEYS is scheduled to release third-quarter fiscal 2026 earnings on Aug. 18. The Zacks Consensus Estimate for earnings is pegged at $2.46 per share, suggesting growth of 43.02% from the year-ago reported figure.

Keysight has a long-term earnings growth expectation of 19.44%. The company delivered an average earnings surprise of 9.46% in the last four reported quarters.

Analog Devices, Inc. ADI is set to release third-quarter fiscal 2026 earnings on Aug. 19. The Zacks Consensus Estimate for earnings is pegged at $3.33 per share, implying growth of 62.44% from the year-ago reported figure.

Analog Devices has a long-term earnings growth expectation of 31.04%. The company delivered an average earnings surprise of 5.48% in the last four reported quarters.

Applied Materials, Inc. AMAT is scheduled to release third-quarter fiscal 2026 earnings on Aug. 13. The Zacks Consensus Estimate for earnings is pegged at $3.36 per share, suggesting growth of 35.48% from the year-ago reported figure.

Applied Materials has a long-term earnings growth expectation of 32.44%. The company delivered an average earnings surprise of 6.06% in the last four reported quarters.

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