Array Digital Infrastructure, Inc. (AD) Q4 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call summary highlights several positive aspects such as a 64% increase in cash site rental revenue and a 6% improvement in adjusted EBITDA in Q4. The Q&A section reinforces optimism with growth prospects from T-Mobile MLA and tower leasing. Despite excluding DISH, the company projects growth in adjusted EBITDA for 2026. The focus on fiber expansion, new partnerships, and share repurchases further supports a positive outlook. However, the exclusion of DISH from guidance and unclear management responses may slightly temper enthusiasm, leading to a positive but not strong positive sentiment.
Key Financial Performance
Spectrum Sale to AT&T $1.018 billion sale closed in January 2026. This transaction significantly strengthened the balance sheet and provided financial flexibility for capital allocation priorities.
Special Dividend $10.25 per share declared by Array Board, paid on February 2, 2026. TDS received $726 million as its pro-rata share.
Debt Repayment $150 million term loan debt repaid in January 2026, enhancing financial flexibility.
Fiber Address Expansion 140,000 new marketable fiber addresses delivered in 2025, up 39% year-over-year. Fourth quarter saw 58,000 new addresses, the strongest build quarter since 2023, supported by record high construction crew counts.
Residential Fiber Net Adds 45,000 net adds in 2025, with 15,000 in Q4, up 11% year-over-year. Growth driven by footprint expansion and increased penetration in fiber markets.
Revenue Total operating revenues decreased 1% for Q4 and 2% for the full year 2025. Excluding divestitures, revenues were flat year-over-year, reflecting declines in cable and copper markets offset by fiber growth.
Adjusted EBITDA Improved 6% in Q4 2025 due to lower expenses but declined 6% for the full year, impacted by divestitures and noncash adjustments to stock-based compensation.
Capital Expenditures $406 million in 2025, prioritizing investments in construction crews and equipment for future builds.
Cash Site Rental Revenue Increased 64% year-over-year in Q4 2025, driven by T-Mobile MLA and other customer growth.
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Operating Highlights
Fiber Expansion: TDS Telecom added 140,000 new marketable fiber addresses in 2025, with 58,000 added in Q4 alone. The company plans to increase its long-term fiber address goal from 1.8 million to 2.1 million, identifying 300,000 new opportunities in Edge-Out markets.
Tower Operations: Array owns over 4,400 towers, with 1/3 having no competing site within a 2-mile radius. The company is focused on optimizing tower operations and monetizing spectrum assets.
Spectrum Monetization: Array closed a $1.018 billion spectrum sale to AT&T in January 2026 and declared a $10.25 per share special dividend. Agreements to monetize 70% of spectrum holdings have been reached, with remaining C-band spectrum being highly attractive for 5G.
Fiber Market Expansion: TDS Telecom is targeting 50 new communities for fiber expansion, aiming to be first to market and achieve mid-teen returns.
Operational Efficiency: TDS Telecom aims to deliver $100 million in savings by 2028 through process improvements, system modernization, and business transformation.
Debt Reduction: TDS repaid $150 million in term loan debt in January 2026, improving financial flexibility.
Divestitures: TDS divested wireless operations and sold Colorado and Oklahoma ILECs in 2025 to focus on fiber and tower businesses.
Capital Allocation: TDS allocated $67 million to repurchase 1.8 million shares in Q4 2025 and increased its share repurchase program by $500 million.
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Risk or Challenges
Execution Challenges in Fiber Build Plan: TDS Telecom did not meet its 2025 goal of delivering 150,000 new marketable fiber addresses, achieving only 140,000. This highlights challenges in execution, scaling operations, and modernizing systems, which could impact future growth targets.
DISH Wireless Contract Dispute: Array is facing a legal dispute with DISH Wireless, which has stopped making contractually required payments under its master lease agreement. This could lead to revenue losses and legal costs.
Naked Towers and Revenue Uncertainty: Array expects to have between 800 to 1,800 tenantless towers by 2028, which could result in negative cash flow and challenges in monetizing these assets.
Regulatory Approval Delays: Pending spectrum transactions are subject to regulatory approval, which could delay monetization and impact financial planning.
Declining Legacy Revenue Streams: TDS Telecom is experiencing declines in video, voice, and wholesale revenues, which are only partially offset by growth in fiber connections.
Elevated SG&A Expenses: Array is incurring high SG&A expenses related to the wind-down of legacy wireless operations, which could persist into 2026 and beyond, impacting profitability.
Economic and Competitive Pressures: TDS Telecom faces economic pressures and competitive challenges in expanding its fiber footprint, particularly in achieving returns in new markets.
Customer Retention and Experience: Efforts to improve customer experience and retention are ongoing, but any failure in this area could impact long-term growth and profitability.
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Guidance & Outlook
TDS Telecom Fiber Expansion: TDS Telecom plans to deliver between 200,000 and 250,000 new marketable fiber addresses in 2026, expanding its long-term fiber address goal from 1.8 million to 2.1 million. The company has identified 300,000 additional fiber address opportunities in new Edge-Out markets.
Fiber Customer Growth: TDS Telecom aims to increase residential fiber net adds beyond the 45,000 achieved in 2025 by driving higher sales in both new and established fiber markets in 2026.
Capital Expenditures: TDS Telecom expects capital expenditures to range between $550 million and $600 million in 2026, up from $406 million in 2025, driven by EA-CAM builds, growth in expansion markets, and new Edge-Out opportunities.
Operational Efficiency: TDS Telecom is on track to deliver $100 million in savings by year-end 2028 through business transformation efforts, including process improvements and system modernization.
Array Tower Operations: Array expects total operating revenue of $200 million to $215 million in 2026, with adjusted EBITDA also forecasted in the same range. The company is focused on optimizing tower operations and monetizing spectrum assets, including C-band spectrum.
Spectrum Monetization: Array has agreements to monetize roughly 70% of its spectrum holdings, with pending transactions subject to regulatory approval. Retained C-band spectrum is expected to be monetized before 2029.
Array Capital Expenditures: Array forecasts capital expenditures of $25 million to $35 million in 2026, including $6 million for tower light monitoring migration costs.
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Shareholder Return Plan
Special Dividend: In January 2026, Array closed on the announced spectrum sale to AT&T for $1.018 billion. On the same day, the Array Board declared a special dividend of $10.25 per share, which was paid on February 2 to Array shareholders of record as of January 23. TDS received its pro rata share of the special dividend, amounting to $726 million.
Share Repurchase Program: In 2025, TDS invested $67 million to repurchase 1.8 million TDS common shares, bringing the total 2025 repurchase volume to 2.8 million shares. In November 2025, the TDS Board authorized a $500 million increase to the existing share repurchase program. As of the end of 2025, $524 million remained on this open authorization. The company plans to continue disciplined repurchase activity, balancing business needs and market conditions.
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Key Q&A
Q:Is DISH included in the 2026 guidance for revenue, OIBDA, and free cash flow?
A:No, DISH is completely excluded from the 2026 guidance for revenue, OIBDA, and free cash flow.
Q:What is the outlook for the tower leasing application pipeline and growth rates from new lease activity?
A:The company is optimistic about growth prospects for 2026, with significant growth expected from the T-Mobile MLA on a full-year basis and same-store growth excluding DISH and T-Mobile MLA. Actions like in-sourcing the sales team and agreements with Verizon are driving sales growth.
Q:How is the company progressing in reporting metrics like new leasing activity, escalators, and churn?
A:The company is evaluating which metrics to include in public reporting and is focused on establishing effective tower company operations. They may make changes to reporting in the future.
Q:What is the long-term target for fiber service addresses, and what is the timeline to achieve it?
A:The long-term target is 2.1 million fiber service addresses, up from 1.8 million. The timeline to achieve this is by 2029-2030, with efforts to accelerate progress.
Q:What is the breakdown of the 2.1 million fiber service addresses between EA-CAM and expansion markets?
A:The additional 300,000 addresses are entirely from Edge-Out communities adjacent to existing expansion communities. No incremental EA-CAM addresses are included in the new target.
Q:What are the company's plans for sales and penetration rates in fiber markets?
A:The company plans to focus on increasing sales capabilities through new door-to-door vendors, improving the dot-com channel, and targeting multi-dwelling units in addition to single-family homes. They have also brought in new leadership for sales.
Q:What is the company's view on monetizing C-band spectrum?
A:The company views C-band spectrum as very attractive and believes it has significant value. They are optimistic about its potential and are actively pursuing monetization opportunities.
Q:What is the company's stance on share buybacks, particularly for AD shares?
A:The decision on share buybacks is made by each company's Board. TDS has announced share repurchases as part of its capital allocation plan, but there is no further comment on buying back AD shares.
Q:Does the adjusted EBITDA guidance for 2026 imply growth?
A:Yes, despite impacts from divestitures and legacy revenue declines, there is growth driven by investments in fiber markets and business transformation efforts.
Q:What is the expected same-store growth rate for tower revenues in 2026?
A:Excluding DISH, the expected same-store growth rate is around 6%. Including DISH, it would be closer to 0%.
Q:What is the company's strategy for video services in fiber markets?
A:The company plans to retain video services as part of its bundled offerings, as it is seen as critical for attracting and retaining customers. They are also focusing on bundling mobile products.
Q:What is the company's approach to monetizing naked towers and noncontrolling investments?
A:The company sees significant latent value in naked towers and is working to reduce holding costs. They are not in a hurry to sell noncontrolling investments but may consider offers at attractive prices.
Q:What are the lessons learned and best practices for fiber build efficiency in 2026?
A:The company is focusing on maintaining stable crew counts throughout the year to ensure efficient service address delivery. They have also made strategic investments in internal construction capacity.
Q:What initiatives are in place to improve tenancy ratios for towers?
A:Initiatives include in-sourcing the sales team, a new deal with Verizon, roaming replacement builds, and targeting non-tower carriers for lease opportunities.
Q:What is the company's timeline and urgency for monetizing C-band spectrum?
A:The company is not in a hurry to sell the spectrum but is actively pursuing monetization opportunities. They believe the spectrum is very valuable and can manage its carrying costs.
Q:Review of Unclear Management Responses
A:Management avoided giving a direct answer on whether TDS would consider buying back AD shares instead of its own TDS shares. They also did not provide a clear position on underwriting incremental tenant growth for naked towers, citing the newness of the situation.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
ATT
DISH
Mobile MLA
President
Relations
Slide
TDS Telecom
application
build
capital
cash
connection
divestiture
dividend
effort
fiber address
fiber net
focus
footprint
goal fiber
integration
investment
market
opportunity
plan
portfolio
priority
process
progress
result
revenue
sale
service
share
site
spectrum
term
tower
transaction
uncertainty
volume
work
AD Transcript
Array Digital Infrastructure, Inc. (AD) Q4 2025 Earnings Call Transcript
Positive2-20
The earnings call summary highlights several positive aspects such as a 64% increase in cash site rental revenue and a 6% improvement in adjusted EBITDA in Q4. The Q&A section reinforces optimism with growth prospects from T-Mobile MLA and tower leasing. Despite excluding DISH, the company projects growth in adjusted EBITDA for 2026. The focus on fiber expansion, new partnerships, and share repurchases further supports a positive outlook. However, the exclusion of DISH from guidance and unclear management responses may slightly temper enthusiasm, leading to a positive but not strong positive sentiment.
Array Digital Infrastructure, Inc. (AD) Presents At Citi's 2025 Global Technology, Media And Telecommunications Conference Transcript
Neutral9-4
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