TELEPHONE & DATA SYSTEMS INC /DE/

The following discussion summarizes TDS' cash flow activities in 2025, 2024 and 2023. Cash flows may fluctuate from quarter to quarter and year to year due to timing and other factors. This discussion is intended to highlight the significant changes and is not intended to fully reconcile the changes.

2025 Commentary

TDS’ Cash, cash equivalents and restricted cash increased $386.9 million. Net cash provided by operating activities related to continuing operations was $338.3 million due to net income of $151.1 million adjusted for non-cash items of $209.9 million and distributions received from unconsolidated entities of $215.6 million, including $79.5 million in distributions from the Los Angeles SMSA Limited Partnership (LA Partnership). Distributions from noncontrolling wireless entities managed by Array included a special distribution of $42.5 million related to the proceeds received by three entities in the state of Iowa that sold their wireless operations to T-Mobile on August 1, 2025. In addition, distributions from certain equity method investments operated by Verizon included a special distribution of $25.3 million related to proceeds received by Verizon managed entities related to Verizon's tower transaction with Vertical Bridge that closed in December 2024. This was partially offset by lower current year distributions due to adjustments made by certain equity method investees for prior period activity. The changes in working capital items which decreased net cash by $238.4 million were primarily driven by the payment of associate bonuses, deferred revenue related to spectrum leases, increase in receivable balances and the timing of tax payments. Net cash provided by operating activities related to discontinued operations were $251.6 million.

Cash flows used for investing activities related to continuing operations were $318.3 million, due primarily to payments for property, plant and equipment of $390.5 million, partially offset by cash received from divestitures of $72.3 million. Cash flows provided by investing activities related to discontinued operations were $2,462.4 million.

Cash flows used for financing activities related to continuing operations were $2,326.5 million, due primarily to repayments on TDS and Array long-term debt agreements of $1,962.1 million, the payment of $358.6 million in Array dividends, the repurchase of TDS Common Shares of $108.1 million, the payment of $87.7 million in TDS dividends, tax withholdings, net of cash receipts, for Array stock-based compensation awards of $63.4 million due to Array awards that accelerated upon change in control and associate terminations, distributions to noncontrolling interests of $21.9 million due to the sale of the wireless operations to T-Mobile and the repurchase of Array Common Shares of $21.4 million. These were partially offset by $325.0 million borrowed under the Array CoBank term loan agreement. Cash flows used for financing activities related to discontinued operations were $20.5 million.

2024 Commentary

TDS’ Cash, cash equivalents and restricted cash increased $113.9 million. Net cash provided by operating activities related to continuing operations was $295.8 million due to net loss of $81.3 million adjusted for non-cash items of $257.0 million and distributions received from unconsolidated entities of $168.7 million, including $74.8 million in distributions from the LA Partnership. This was partially offset by changes in working capital items which decreased net cash by $48.6 million. The working capital changes were primarily driven by the timing of vendor payments. Net cash provided by operating activities related to discontinued operations were $850.1 million.

Cash flows used for investing activities related to continuing operations were $235.9 million, due primarily to payments for property, plant and equipment of $365.4 million and payments for wireless spectrum licenses of $19.2 million, partially offset by cash received from divestitures of $147.3 million. Cash flows used for investing activities related to discontinued operations were $518.6 million.

Cash flows used for financing activities related to continuing operations were $210.8 million, due primarily to repayments on TDS and Array long-term debt agreements of $455.5 million, the payment of $104.4 million in TDS dividends, the repurchase of Array Common Shares of $54.1 million, and the payment of debt issuance costs of $16.2 million. These were partially offset by $440.0 million borrowed under TDS and Array long-term debt agreements. Cash flows used for financing activities related to discontinued operations were $66.6 million.

2023 Commentary

TDS’ Cash, cash equivalents and restricted cash decreased $130.0 million. Net cash provided by operating activities related to continuing operations was $306.7 million due to net loss of $547.7 million adjusted for non-cash items of $715.0 million and distributions received from unconsolidated entities of $150.3 million, including $69.1 million in distributions from the LA Partnership. This was partially offset by changes in working capital items which decreased net cash by $10.9 million. The working capital changes were primarily driven by an increase in receivable balances and changes in other assets and liabilities, partially offset by the timing of tax payments. Net cash provided by operating activities related to discontinued operations were $834.4 million.

Cash flows used for investing activities related to continuing operations were $759.1 million, due primarily to payments for property, plant and equipment of $643.1 million and payments for wireless spectrum licenses of $128.6 million. Cash flows used for investing activities related to discontinued operations were $568.0 million.

Cash flows provided for financing activities related to continuing operations were $121.6 million, due primarily to borrowings on TDS and Array long-term debt agreements of $1,081.0 million. These were partially offset by repayments on TDS and Array long-term debt agreements of $723.3 million, repayments on an Array short-term debt agreement of $60.0 million and the payment of $152.7 million in TDS dividends. Cash flows used for financing activities related to discontinued operations were $65.6 million.