USM Proposes to Consolidate Array Digital Infrastructure: A Bold Simplification Amid Fiber and Spectrum Momentum
TDS/USM moves to bring tower and spectrum assets fully in-house while fiber builds hit a record pace and DISH fallout reshapes tower economics.
USM · Earnings Call · 2026-05-08
A Strategic Pivot: Consolidating the Tower Business
The headline from USM's first-quarter 2026 call is not the quarter itself, but the proposal to acquire all outstanding shares of Array Digital Infrastructure (AD) that it doesn’t already own. CEO Walter Carlson framed it as the next step in the company’s transformation, saying, “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.” — Walter Carlson, CEO and Chair · 2026-05-08 Under the all-stock offer, each AD share would convert to 0.86 TDS shares, assuming AD’s board pays a $10.40 per share dividend from pending spectrum sales. The move would give AD stockholders exposure to TDS’s fiber business while keeping a stake in towers. This is a significant structural change, and it ties directly to the transaction with T Mobile that has been reshaping the asset base.
Fiber Build Hits a Record, Spectrum Monetization Moves Forward
Operationally, TDS Telecom delivered 40,000 marketable fiber service addresses in the quarter—nearly triple the prior-year first quarter. Ken Dixon noted, “We delivered 40,000 marketable fiber service addresses in the first quarter.” — Ken Dixon, Senior Executive (likely head of fiber or operations) · 2026-05-08 The company now serves ~1.1 million fiber addresses, representing 58% of its footprint, with 79% capable of gig speeds. This build velocity is critical as legacy copper and cable revenues decline; fiber revenue rose 13% year-over-year, offsetting ~$5 million of legacy revenue pressure. Management remains confident in the 2026 guidance of 200,000–250,000 new addresses, citing record crew counts and a robust construction funnel.
Spectrum monetization continues to be a major value driver. AD has agreed to sell roughly 70% of its spectrum holdings, with the small remaining spectrum—primarily C-band—held opportunistically. Anthony Carlson reiterated that they are not forced sellers, saying, “We continue to believe that the C-band spectrum we hold is excellent and valuable spectrum.” — Anthony Carlson, Senior Executive (likely head of tower operations or similar) · 2026-05-08 The remaining T-Mobile and Verizon deals are expected to close through 2026, with the associated proceeds funding fiber expansion and shareholder returns.
Tower Economics Face DISH Default, but Tenancy Grows
The tower business is navigating DISH’s payment default, which led AD to fully reserve unpaid 2025 amounts and cease recognizing DISH revenue. Excluding DISH, tower tenancy grew sequentially from 0.95 to 0.96, and cash site rental revenue rose 64% year-over-year (normalized). Encouragingly, churn is minimal—Carlson noted, “we had only one total tenant churn in the entire first quarter.” — Anthony Carlson, Senior Executive (likely head of tower operations or similar) · 2026-05-08 This resilience supports the company’s confidence in the cell tower portfolio, particularly as T-Mobile’s new master lease agreement drives long-term demand.
Discipline Amid Transformation
Despite the strategic moves, financial discipline remains intact. Total operating revenues declined 3% (1% ex-divestitures), but adjusted EBITDA also declined 3% due to legacy revenue losses, while capex ramped to $126 million. Guidance for 2026 was reaffirmed: revenues of $1.015–$1.055 billion and adjusted EBITDA of $310–$350 million. The company is also progressing a $100 million cost transformation program, with early benefits already appearing. As Kris Bothfeld said in a prior quarter, “by month 12, we expect around 25% to 30% penetration” — Kristina Bothfeld, VP of Finance & CFO · 2025-08-11 in new fiber markets, and the company is adding disclosure to help investors track this. Walter Carlson’s earlier comment that “this is a transformative time” — Walter Carlson, CEO · 2025-02-21 perfectly captures the current moment—USM is not just managing a portfolio; it is re-engineering its corporate structure to unlock value from its two most promising assets, fiber and towers.