TELEPHONE & DATA SYSTEMS INC /DE/

TDS Consolidated

1 Consists of corporate and other operations and intercompany eliminations.

2 Refer to Supplemental Information Relating to Non-GAAP Financial Measures within this MD&A for a reconciliation of this measure.

3 Refer to Liquidity and Capital Resources within this MD&A for additional information on Capital expenditures.

Refer to individual segment discussions in this MD&A for additional details on operating revenues and expenses at the segment level.

Equity in earnings of unconsolidated entities

Equity in earnings of unconsolidated entities represents TDS' share of net income from entities in which it has a noncontrolling interest and that are accounted for using the equity method or the net asset value practical expedient. The noncontrolling interests in three entities managed by Array in the state of Iowa that sold their wireless operations to T-Mobile in three separate transactions on August 1, 2025, the same date that Array sold its wireless operations to T-Mobile. As a result of the Iowa entities' sale of their wireless operations, these entities recognized a gain on sale, and Array's proportionate share of that gain was included in Equity in earnings of unconsolidated entities in the amount of $34.1 million, which was the primary driver of the year-over-year increase in the three and nine months ended September 30, 2025. See Note 9 — Investments in Unconsolidated Entities in the Notes to Consolidated Financial Statements for additional information.

Interest expense

Interest expense increased for thethree and nine months ended September 30, 2025 due primarily to the write-off of unamortized debt costs for TDS debt facilities that were repaid in August 2025, a borrowing on the Array CoBank term loan in August 2025 and lower capitalized interest at Array. See Market Risk for additional information regarding maturities of long-term debt and weighted average interest rates.

Income tax expense (benefit)

Income tax benefit on continuing operations increased for the three and nine months ended September 30, 2025, due primarily to favorable reductions to valuation allowances related to deferred tax assets that are now likely to be realized by the taxable income generated from the sale of wireless operations and select spectrum assets to T-Mobile, and/or the pending License Purchase Agreements currently classified as held for sale as of September 30, 2025. This increase was partially offset by a decrease in the deferred tax benefit on the impairment of certain wireless spectrum licenses, which was smaller in the third quarter of 2025 than the impairment recorded in the third quarter of 2024.

On July 4, 2025, H.R.1 – the One big beautiful bill Act (“OBBBA”) was enacted into law. The OBBBA makes several impactful changes, including 100% bonus depreciation, domestic research cost expensing, and increasing the business interest expense limitation threshold. The Company expects these changes to result in favorable deferral of cash taxes in 2025 and future periods.

Net income (loss) from continuing operations attributable to noncontrolling interests, net of tax

Net income (loss) from continuing operations attributable to noncontrolling interests, net of tax includes the noncontrolling public shareholders’ share of Array’s net income from continuing operations, the noncontrolling shareholders’ or partners’ share of certain Array subsidiaries’ net income from continuing operations and other TDS noncontrolling interests.

Net income (loss) from discontinued operations attributable to TDS shareholders

Net income (loss) from discontinued operations attributable to TDS shareholders decreased for the three and nine months ended September 30, 2025 as a result of the sale of the wireless operations on August 1, 2025 and the corresponding loss on sale recognized on that date. See Note 2 —Discontinued Operations in the Notes to Consolidated Financial Statements for additional information related to the components of Net income (loss) from discontinued operations.

Earnings

Three and Nine Months Ended

Net income increased due primarily to lower operating expenses, an income tax benefit, short-term imputed spectrum lease income and higher equity in earnings of unconsolidated entities, partially offset by lower operating revenues and higher interest expense.

Adjusted EBITDA increased due primarily to lower operating expenses and higher equity in earnings of unconsolidated entities, partially offset by lower operating revenues.

*Represents a non-GAAP financial measure. Refer to Supplemental Information Relating to Non-GAAP Financial Measures within this MD&A for a reconciliation of this measure.