TELEPHONE & DATA SYSTEMS INC /DE/

Sources of Liquidity

TDS believes that existing cash and investment balances, dividends, distributions from unconsolidated entities, expected cash flows from operating activities and funds available under its financing agreements will provide sufficient liquidity for TDS to meet its funding needs. TDS requires funding for, among other uses, day-to-day operations, capital expenditures, fiber deployments and E-ACAM builds, payment of dividends, debt service requirements, repurchases of shares and potential acquisitions of businesses, land, land easements or additional towers.

Cash and Cash Equivalents

Cash and cash equivalents include cash and money market investments. TDS does not have direct access to Array cash. Refer to Common Share Repurchase Program within this MD&A for additional information related to changes in Cash and cash equivalents subsequent to September 30, 2026.

In the first and second quarters of 2026, Array closed on various sales of certain wireless spectrum licenses to AT&T, Verizon and T-Mobile for total proceeds of $2,185.7 million and TDS incurred tax liabilities on the transactions of approximately $280.0 million. As of September 30, 2026, TDS has paid cash taxes related to these transactions of approximately $260.0 million, and expects to pay the remaining amounts during the fourth quarter of 2026.

Cash and Cash Equivalents

The majority of TDS’ Cash and cash equivalents are held in money market funds that purchase only debt issued by the U.S. Treasury or U.S. government agencies and bank deposit accounts. Refer to the Consolidated Cash Flow Analysis for additional information related to changes in Cash and cash equivalents.

Financing

Revolving Credit Agreements

TDS and Array have unsecured revolving credit agreements with maximum borrowing capacities of $400.0 million and $100.0 million, respectively. Amounts under the agreements may be borrowed, repaid and reborrowed from time to time until maturity in December 2030. As of September 30, 2026, there were no outstanding borrowings under the agreements, except for letters of credit, and TDS' and Array's unused borrowing capacity was $399.5 million and $99.9 million, respectively.

Term Loan Agreement

As of September 30, 2026, Array has outstanding borrowings of $323.0 million under a term loan agreement with CoBank, ACB. The maturity date of the term loan is June 2030. Borrowings bear interest at a rate of Secured Overnight Financing Rate (SOFR) plus 2.50%.

Export Credit Financing Agreement

In January 2026, TDS repaid the entire outstanding borrowings under its term loan agreement with Export Development Canada of $150.0 million.

Debt Covenants

The TDS and Array revolving credit agreements and the Array term loan agreement with CoBank require TDS or Array, as applicable, to comply with certain affirmative and negative covenants, which include certain financial covenants that may restrict the borrowing capacity available. TDS and Array are required to maintain a Consolidated Leverage Ratio, as defined in the agreements, as of the end of any fiscal quarter at a level not to exceed 3.50 to 1.00. TDS and Array are also required to maintain the Consolidated Interest Coverage Ratio at a level not lower than 3.00 to 1.00 as of the end of any fiscal quarter. TDS and Array believe that they were in compliance as of September 30, 2026 with all such financial covenants.

Capital Expenditures

TDS makes substantial investments to acquire, construct and upgrade telecommunications networks and facilities to remain competitive, meet E-ACAM build-out requirements and as a basis for creating long-term value for shareholders. In recent years, changes in technology have required substantial investments in TDS’ networks to remain competitive. Costs related to the deployment of fiber for TDS Telecom have increased in recent periods and could increase in future periods, in particular as TDS Telecom continues to meet its E-ACAM build-out obligations.

Capital expenditures for continuing operations (i.e., additions to property, plant and equipment), which include the effects of accruals and capitalized interest, for the nine months ended September 30, 2026 and 2025, were as follows:

Capital Expenditures

TDS Telecom’s capital expenditures for the nine months ended September 30, 2026 and 2025, were $556.6 million and $251.5 million, respectively.

Capital expenditures for the full year 2026 are expected to be approximately $750 million. These expenditures are expected to be used principally for the following purposes:

▪Continue fiber deployment in expansion markets and to meet E-ACAM build-out requirements;

▪Support broadband growth and success-based spending; and

▪Maintain and enhance existing infrastructure.

Array's capital expenditures for the nine months ended September 30, 2026 and 2025, were $16.5 million and $17.0 million, respectively.

Array's capital expenditures for 2026 are expected to be between $25.0 million and $35.0 million. These capital expenditures are expected to be used for purchases of land interests which are opportunistic in nature, tower maintenance, tower builds and one-time costs of migrating the tower light monitoring function to Array's long-term solution.

TDS intends to finance its capital expenditures for 2026 using existing cash balances and cash flows from operating activities.

Acquisitions and Divestitures

TDS is engaged and may in the future be engaged in negotiations (subject to all applicable regulations) relating to the acquisition or divestiture of companies, properties and assets. In general, TDS does not disclose such transactions until there is a definitive agreement.

See Note 7 — Acquisitions and Divestitures in the Notes to Consolidated Financial Statements for additional information related to acquisitions and divestitures.

Other Obligations

TDS will require capital for future spending on existing contractual obligations, including long-term debt obligations; preferred stock dividend obligations; lease commitments; E-ACAM obligations; and tax payments related to the 2026 wireless spectrum license transactions. Refer to the discussion elsewhere within this Liquidity and Capital Resources section for additional information.

Common Share Repurchase Program

During the three months ended September 30, 2026, TDS repurchased 5,958,218 Common Shares for $218.4 million, excluding commissions and taxes, at an average price per share of $36.65. As of September 30, 2026, the total maximum dollar value of the TDS Common Shares that may yet be repurchased under TDS' program was $305.8 million.

Subsequent to September 30, 2026, TDS repurchased 8,717,162 Common Shares for $301.7 million, excluding commissions and taxes, at an average price per share of $34.61. On November 6, 2026, TDS announced that its Board of Directors had authorized an additional $250.0 million stock repurchase program for TDS Common Shares.

For additional information related to the current repurchase authorization, see Unregistered Sales of Equity Securities and Use of Proceeds.

Dividends

TDS paid quarterly dividends per outstanding share of $0.04 in the third quarter of 2026 and 2025. TDS has no current plans to change its policy of paying dividends.

TDS paid quarterly dividends per outstanding Series UU depositary share (each representing 1/1,000th of a Preferred Share)of $0.414 in the third quarter of 2026 and 2025.

TDS paid quarterly dividends per outstanding Series VV depositary share (each representing 1/1,000th of a Preferred Share) of $0.375 in the third quarter of 2026 and 2025.

Array has not paid any regular cash dividends in past periods. In conjunction with the closeof the transaction of the sale of spectrum licenses to AT&T on January 13, 2026, on this same date, the Array Board of Directors declared a special dividend per Common and Series A outstanding share of $10.25 for shareholders of record on January 23, 2026, which was paid on February 2, 2026 for a total amount of$885.5 million. TDSreceived its pro-rata share of the $10.25 per share special dividend in the amount of $725.6 million. In conjunction with the close of the transaction of the sale of spectrum licenses to Verizon on June 1, 2026, on this same date, the Array Board of Directors declared a special dividend per Common and Series A outstanding share of $11.00 for shareholders of record on June 11, 2026, which was paid on June 25, 2026 for a total amount of $951.3 million. TDS received its pro-rata share of the $11.00 per share special dividend in the amount of $778.7 million.