TDS raises telecom capex as fiber gains lag legacy pressure

By Tom Whitfield

TDS raised 2026 telecom capital spending by $100 million to about $750 million, even as it cut full-year revenue and adjusted EBITDA guidance. The larger fiber budget still depends on legacy declines slowing and planned customer uptake.

How much did 2026 guidance change?

• Revenue: $990 million to $1.01 billion.
• Adjusted EBITDA: $290 million to $310 million.
• Capital expenditure: approximately $750 million.

Both revenue and EBITDA ranges fell from prior guidance. Nearly half of the spending increase pulls future investment forward to support 2027 address deliveries. Much of the remainder covers higher E-ACAM construction costs and more buried construction in expansion markets.

Third-quarter capital expenditure was $251 million. Some E-ACAM costs rose because of more expensive construction techniques and additional fiber mileage, although management still considers the program’s economics attractive.

“We were anticipating fiber revenues to more than offset legacy declines during the second half of 2026, but continue to work toward that inflection point,” said Kris Bothfeld, TDS vice president of financial analysis and strategic planning.

Takeaway: The lowered ranges show that fiber has not yet covered the legacy shortfall.

Do fiber records offset older copper and coax services?

TDS Telecom added approximately 76,000 marketable fiber service addresses and 17,000 residential fiber connections in the third quarter, both company records. Residential fiber net additions rose about 50% year over year.

Residential fiber revenue increased 14%, or $12 million, largely offsetting pressure on legacy revenue streams. Coax revenue fell 7% with a one-time benefit; without it, the decline would have been 10%. Total residential revenue fell $3 million but was relatively flat excluding divestitures.

Total telecom operating revenue declined 3%, or 1% excluding divestitures. Cash expenses rose 4% on expansion costs and inflation, including fuel and employee costs. Adjusted EBITDA fell because of those expenses and revenue headwinds.

CFO Vicki Villacrez called the revenue inflection point “around the corner,” rather than years away. She gave no timetable for EBITDA growth but said TDS remains on track for $100 million in annualized transformation benefits by the end of 2028.

Takeaway: Fiber revenue cushions legacy erosion, but record address additions have not yet reversed the telecom revenue decline.

Can the fiber build reach profitable scale?

TDS Telecom delivered approximately 181,000 fiber service addresses in the first nine months of 2026 and maintained its 250,000-to-300,000 full-year target. It has more than 2 million total service addresses, 63% served by fiber. Including coax, 82% can receive gigabit speeds.

The company added 27,000 new fiber addresses in incumbent local exchange carrier markets in the quarter and expects that number to rise in the fourth quarter. It plans to deliver another 25% of its E-ACAM addresses next year and has begun converting another 30,000 coax addresses to fiber.

Chief Executive Ken Dixon said fiber churn improved by 20 basis points from a year earlier, even though moves typically push churn higher. Expansion markets average 25% penetration by month 12 against a 40% steady-state target; E-ACAM markets target 65% to 75%.

Takeaway: The pipeline is substantial, but penetration and conversion must turn record construction into EBITDA.

What does Array’s tower outlook show?

Array Digital Infrastructure left its 2026 outlook unchanged:

• Operating revenue: $205 million to $215 million.
• Adjusted EBITDA: $220 million to $235 million.

CEO Anthony Carlson said cash site rental revenue rose 20% year over year after adjusting for DISH and excluding T-Mobile interim site revenue. Excluding the full T-Mobile master lease impact as well, cash site rental revenue increased 7%.

Array estimates 1,200 to 1,600 towers will have no tenants after T-Mobile’s network integration. T-Mobile has until January 2028 to designate committed sites under the agreement. Array is working to reduce ground lease costs and identify uneconomic sites for decommissioning.

Array received regulatory approval to sell certain 600 MHz and 700 MHz spectrum licenses, with closing expected by year-end subject to FCC finality and customary conditions. It continues to pursue monetization of remaining spectrum, primarily C-band, without a further specific update.

Takeaway: Array preserves its forecast, but tenant losses and lease costs could erode the expected benefit.

What followed the withdrawn Array offer?

TDS Chief Executive Walter Carlson said TDS withdrew its previously announced all-stock offer for Array’s minority interest after the parties could not agree on value and the form of consideration. He said a combination could still offer benefits but declined to predict whether TDS would try again.

After the withdrawal, TDS virtually exhausted its prior $520 million share-repurchase authorization. The board added $250 million with no expiration date, allowing opportunistic repurchases.

TDS also completed its Granite State Communications acquisition in the quarter, adding nearly 13,000 fully fibered service addresses in New Hampshire.

Telephone and Data Systems is a US telecommunications holding company that provides broadband and communications in communities across the United States. Its principal operating business, TDS Telecom, serves residential, business and wholesale customers with broadband, fiber, voice, video and related communications. Its focus is expanding high-speed broadband in rural and suburban markets.

Takeaway: The acquisition adds fiber reach, but the withdrawn offer and new authorization leave capital allocation unsettled.

Fiber construction has reached records, but lower guidance, higher spending and tower vacancy risk make execution the decisive test.