TELEPHONE & DATA SYSTEMS INC /DE/

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. 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 increased for the three and nine months ended September 30, 2026, due primarily to higher cash balances following the sale of the wireless spectrum licenses in 2026.

Interest expense

Interest expense decreased for thethree and nine months ended September 30, 2026 due primarily to the repayment of TDS debt facilities in August 2025 and January 2026, partially offset by the new term loan that Array entered into in August 2025 and a decrease in capitalized interest. Interest expense from continuing operations excludes interest costs in all periods associated with Array term loans repaid, and Array debt exchanged, in conjunction with the sale of Array's wireless operations to T-Mobile. See Market Risk for additional information regarding maturities of long-term debt and weighted average interest rates.

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.

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

Net income 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

See Note 2 —Discontinued Operationsin the Notes to Consolidated Financial Statements for additional information related to the components of Net income from discontinued operations.