TELEPHONE & DATA SYSTEMS INC /DE/

Business Overview

Array connects America through digital infrastructure by leasing tower space to tenants and providing ancillary services. Array also holds noncontrolling interests in primarily wireless operating companies and holds certain wireless spectrum licenses. As of September 30, 2026, Array is an 81.9%-owned subsidiary of Telephone and Data Systems, Inc. (TDS).

Towers

Array seeks to grow tower revenue primarily through increasing colocations on existing towers and amendments to existing colocations. Array seeks to provide unique tower locations, attractive terms and streamlined implementation to wireless network operators, internet service providers, government and public safety agencies, broadcast and media companies, and other businesses. As of September 30, 2026, Array owns 4,455 towers in 19 states.

Noncontrolling interest investments

Array holds noncontrolling interests in primarily wireless operating companies that generate material amounts of income and cash distributions. These entities primarily consist of wireless entities managed by Verizon and AT&T. The noncontrolling entities that are managed by Array consist primarily of tower operations.

Retained spectrum

Array holds wireless spectrum that is subject to sale agreements described above, and additional wireless spectrum not subject to pending sale agreements that Array seeks to opportunistically monetize. As of September 30, 2026, the book value of the remaining spectrum not subject to pending sale agreements was $1,584.7 million and includes primarily C-Band spectrum. Array incurred costs related to the management of the retained spectrum as a standalone tower company of $3.1 million and $7.1 million during the three and nine months ended September 30, 2026, respectively and $2.4 million during the three months ended September 30, 2025.

OPERATIONS

1 Includes T-Mobile MLA committed site minimum of 2,015. Excludes Interim Sites whereby T-Mobile is leasing up to 1,800 sites for a period of up to 30 months subject to the terms and conditions of the MLA. As of March 31, 2026, the Number of colocations and the Tower tenancy rate exclude DISH Wireless. Normalized to exclude DISH Wireless, the prior period Tower tenancy rate would have been 0.94. See Financial Overview within this MD&A for additional information.

Financial Overview — Array

N/M - Percentage change not meaningful

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

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

Key components of changes in the statement of operations items were as follows:

Site rental revenues

Site rental revenues increased for the three and nine months ended September 30, 2026, primarily as a result of the execution of the T-Mobile MLA, pursuant to which T-Mobile leases space on an additional minimum 2,015 Array-owned towers, which were not under existing leases for T-Mobile, for a minimum of 15 years and leases space on approximately 1,800 Array-owned towers on an interim basis. The duration of the interim lease is 30 months, and T-Mobile may cancel such interim leases at their option on a tower-by-tower basis at any time. Array expects interim lease revenue, which was $4.9 million and $19.8 million for the three and nine months ended September 30, 2026, respectively, to continue to decline in future periods as T-Mobile terminates these interim leases over the course of the 30-month integration period, which ends January 2028. Further, the MLA extended the license term for approximately 600 existing T-Mobile colocations on Array towers for a new 15-year term that commenced on August 1, 2025.

This was partially offset by a $1.8 million and $7.8 million decrease in site rental revenues from DISH Wireless for the three and nine months ended September 30, 2026, including a $2.9 million write-off of contractual assets and liabilities that was recorded in the first quarter of 2026. In September 2025, Array received a letter from DISH Wireless claiming that its obligations under its Master Lease Agreement with Array were excused due to actions taken by the FCC and subsequent agreements to sell spectrum assets. DISH Wireless subsequently failed to make certain payments due to Array under its contractual commitment. Beginning in the first quarter of 2026, Array is no longer recognizing revenue in connection with DISH. Site rental revenues from DISH Wireless were $6.5 million in 2025. In June 2026, DISH Wireless and other DISH entities filed for bankruptcy and Array is monitoring those proceedings.

Cost of operations

Cost of operations increased for the three and nine months ended September 30, 2026 due primarily to a change in the classification of property tax and property insurance following the sale of the wireless business and an increase in cell site ground rent due to incremental expense related to customer growth, new leases, lease amendments and escalations.

Selling, general and administrative

Selling, general and administrative expenses decreased for the three and nine months ended September 30, 2026 due primarily to decreases in shared overhead costs, employee expenses, bad debts expense and a change in the classification of property tax and property insurance following the sale of the wireless business, partially offset by an increase in strategic alternatives review expenses.

Selling, general and administrative expenses in the three months ended September 30, 2025, and the three and nine months ended September 30, 2026, include costs to support the winddown of the legacy wireless operations.

Loss on impairment of licenses

Loss on impairment of licenses decreased for the three and nine months ended September 30, 2026, due to an impairment recorded in the third quarter of 2025 on high-band wireless spectrum licenses.

(Gain) loss on asset disposals, net

(Gain) loss on asset disposals, net increased for the three and nine months ended September 30, 2026 due primarily to the disposal of assets no longer required to maintain certain spectrum licenses.

(Gain) loss on license sales and exchanges, net

(Gain) loss on license sales and exchanges, net increased for the nine months ended September 30, 2026 due primarily to the sale of certain AWS, Cellular and PCS wireless spectrum licenses to Verizon in the second quarter of 2026 and the sale of certain 3.45 GHz and 700 MHz wireless spectrum licenses to AT&T in the first quarter of 2026. See Note 7 — Acquisitions and Divestitures in the Notes to Consolidated Financial Statements for additional information.

Equity in earnings of unconsolidated entities

Equity in earnings of unconsolidated entities represents Array’s 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. Array holds noncontrolling interests in three entities 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 is the primary driver of the year-over-year decrease in the three and nine months ended September 30, 2026. See Note 8 — Investments in Unconsolidated Entities in the Notes to Consolidated Financial Statements for additional information.

Interest and dividend income

Interest and dividend income decreased for the three months ended September 30, 2026 due primarily to a decrease in interest income earned on the proceeds from the sale of the wireless operations to T-Mobile.

Interest expense

Interest expense from continuing operations excludes interest costs in all periods associated with term loans repaid, and debt exchanged, in conjunction with the sale of Array's wireless operations to T-Mobile. As a result, the increase in interest expense for the three months ended September 30, 2026 is primarily attributable to the new term loanthat Array entered into in August 2025, and the increase in interest expense for the nine months ended September 30, 2026 is primarily attributable to the new term loanthat Array entered into in August 2025 and a decrease in capitalized interest.

Short-term imputed spectrum lease income

Short-term imputed spectrum lease income decreased for the three months ended September 30, 2026 due to the expiration of the Short-Term Spectrum Manager Lease Agreement and Short-Term Spectrum Manager Sublease Agreements on July 31, 2026. The agreements provided T-Mobile with an exclusive license to use certain Array spectrum assets and leases at no cost for up to one year from closing. The portion of the purchase price allocated to the use of this spectrum was amortized over one year following the close.

Short-term imputed spectrum lease income increased for the nine months ended September 30, 2026 due to the execution of the Short-Term Spectrum Manager Lease Agreement and Short-Term Spectrum Manager Sublease Agreements. See Note 2 — Discontinued Operations in the Notes to Consolidated Financial Statements for additional information related to the spectrum leases.

Income tax expense (benefit)

Income tax benefit on continuing operations decreased for the three months ended September 30, 2026, due primarily to favorable reductions to valuation allowances on deferred tax assets recorded in the third quarter of 2025 that did not recur in 2026, partially offset by favorable changes in estimated state taxes on the sale of wireless spectrum licenses and a benefit related to transferable federal tax credits purchased during the current period.

Income tax expense on continuing operations increased for the nine months ended September 30, 2026, due primarily to the increase in Income before income taxes that resulted from the gains on license sales in the current period and favorable reductions to valuation allowances on deferred tax assets recorded in the third quarter of 2025 that did not recur in 2026, partially offset by a benefit related to transferable federal tax credits purchased during the current period.