Core Insights - Array Digital Infrastructure, Inc. (formerly U.S. Cellular) reported strong Q2 2025 results, with both revenue and net income exceeding Zacks Consensus Estimates, despite a year-over-year revenue decline due to reduced retail connections [1][9] Financial Performance - Net income for the quarter was $31 million, or $0.36 per share, compared to $17 million, or $0.20 per share, in the same quarter last year, beating estimates by $0.03 [2][9] - Operating revenues totaled $916 million, down from $927 million year-over-year, but still surpassing the Zacks Consensus Estimate of $904 million [3][9] - Service revenues decreased to $736 million from $743 million, while equipment sales generated $180 million compared to $184 million in the prior-year quarter [3] Business Segments - The tower business showed healthy momentum, generating $62 million in revenues, a 7% increase year-over-year, while wireless revenue was $888 million, down 1% year-over-year [4] - Handset connections fell to 70,000 from 73,000 year-over-year, with a churn rate of 1.12%, up from 0.97% [5] - Total postpaid connections decreased to 3,904,000 from 4,027,000, and total prepaid connections were 429,000, down from 439,000 [5] Revenue Metrics - Postpaid average revenue per account (ARPA) improved to $131.89 from $130.41, while postpaid ARPU rose to $51.91 from $51.45 [6] - Prepaid ARPU decreased to $31.72 from $32.37, with a churn rate of 3.58%, down from 3.6% [6] Operational Efficiency - Adjusted EBITDA for the quarter was $254 million, down from $268 million year-over-year, with total operating expenses at $881 million, a 1% decrease [7] - Operating income was reported at $35 million, slightly down from $36 million in the prior-year quarter [7] Cash Flow and Liquidity - Cash generated from operating activities was $325 million, compared to $313 million in the year-ago quarter, with cash and cash equivalents at $386 million and long-term debt at $2.81 billion as of June 30, 2025 [8]

Financial Performance - For the quarter ended June 2025, United States Cellular (USM) reported revenue of $916 million, down 1.2% year-over-year, with EPS at $0.36 compared to $0.20 in the same quarter last year [1] - The reported revenue exceeded the Zacks Consensus Estimate of $904.19 million by +1.31%, while the EPS surprise was +9.09% against the consensus estimate of $0.33 [1] Key Metrics - U.S. Cellular's shares returned +6.1% over the past month, outperforming the Zacks S&P 500 composite's +2.7% change [3] - The company experienced net losses in retail connections, with postpaid at -42 million versus an estimate of -30 million, and prepaid at -2 million against an estimate of 4 million [4] - Gross additions for postpaid retail connections were 109 million, exceeding the average estimate of 101.81 million [4] Customer and Revenue Insights - Total connections stood at 4.33 million, slightly below the average estimate of 4.39 million [4] - Average Revenue Per User (ARPU) for prepaid was $31.72, above the average estimate of $31.08, while postpaid ARPU was $51.91, also exceeding the estimate of $51.77 [4] - Operating revenues from service were reported at $736 million, surpassing the estimate of $728.62 million, but reflecting a -0.9% change year-over-year [4] - Net operating revenues from service retail were $652 million, compared to an estimate of $650.86 million, indicating a -2.1% year-over-year change [4] - Equipment sales generated $180 million, exceeding the estimate of $175.58 million, with a -2.2% change year-over-year [4]

Financial Performance - U.S. Cellular reported quarterly earnings of $0.36 per share, exceeding the Zacks Consensus Estimate of $0.33 per share, and up from $0.20 per share a year ago [1] - The earnings surprise was +9.09%, while the previous quarter saw a surprise of -43.24% with actual earnings of $0.21 per share against an expectation of $0.37 [2] - The company posted revenues of $916 million for the quarter, surpassing the Zacks Consensus Estimate by 1.31%, but down from $927 million year-over-year [3] Market Performance - U.S. Cellular shares have increased approximately 18.4% since the beginning of the year, compared to an 8.6% gain for the S&P 500 [4] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the market in the near future [7] Future Outlook - The current consensus EPS estimate for the upcoming quarter is $0.31 on revenues of $899.42 million, and for the current fiscal year, it is $0.61 on revenues of $3.64 billion [8] - The Wireless National industry is ranked in the top 41% of over 250 Zacks industries, suggesting a favorable outlook compared to the bottom 50% [9]

Financial Data and Key Metrics Changes - The company completed the sale of its U.S. Cellular wireless business and certain spectrum assets to T-Mobile for $4.3 billion, which is expected to unlock significant value for shareholders and strengthen the balance sheets of both Array and TDS [5][11]. - Following the transaction, approximately $364 million remains on the Array balance sheet, with $1.7 billion in debt assumed by T-Mobile [11]. - A special dividend of $23 per share was declared, with TDS expected to receive approximately $1.63 billion [12]. - The company anticipates annual interest savings of about $80 million, reducing TDS's average cost of debt to just over 6% [12][14]. - S&P raised TDS's credit rating to BBB- from BB, reflecting a strong balance sheet and growth outlook [18]. Business Line Data and Key Metrics Changes - Array's tower business operates approximately 4,400 towers and has a new master license agreement with T-Mobile, which is expected to enhance revenue and profitability [8][25]. - Third-party tower revenues increased by 12%, and the number of third-party colocations grew by 6% year-over-year [25][26]. - TDS Telecom added 27,000 new fiber service addresses, with a total of 10,300 fiber net additions leading to a 19% growth in total fiber connections since last year [32][33]. Market Data and Key Metrics Changes - The company is focusing on expanding its fiber footprint, targeting 1.8 million marketable fiber service addresses, with 968,000 addresses at the end of the quarter [34]. - The company expects to achieve 150,000 new fiber addresses this year, with significant growth anticipated in the second half of the year [32][37]. - Demand for higher broadband speeds remains strong, with 83% of residential broadband customers taking 100 meg or higher, and 26% taking one gig or higher [39]. Company Strategy and Development Direction - The company aims to focus on its tower and fiber businesses, believing it is well-positioned to win in these areas [6][8]. - A capital allocation strategy is being developed, focusing on fiber investments, M&A opportunities, and shareholder returns [15][18]. - The company plans to maintain a conservative balance sheet while targeting a three times bank leverage ratio at Array [14]. Management's Comments on Operating Environment and Future Outlook - Management expressed excitement about the new chapter for the company following the T-Mobile transaction, emphasizing the focus on tower and fiber businesses [6][10]. - The management team is optimistic about growth opportunities in the tower business due to increasing demand for data and communication services [8][25]. - The company expects to incur additional wind-down costs as it transitions from a wireless service provider to an independent tower company, which may negatively impact profitability in the short term [29]. Other Important Information - The company is working to opportunistically monetize its remaining spectrum, with significant proceeds expected from pending spectrum sales to AT&T and Verizon [21][22]. - The company has a strong sales leadership team in place, which is expected to drive future revenue growth [26][90]. Q&A Session Summary Question: Update on TDS Telecom's fiber expansion plans - Management indicated that there is significant opportunity to expand the fiber footprint and that updates will be shared in upcoming quarters [50][52]. Question: Long-term leverage expectations for TDS Telecom - Management expects to maintain leverage below 1.5 times while evaluating opportunities for both fiber and tower businesses [54]. Question: Access to construction resources for fiber expansion - Management expressed confidence in meeting the 150,000 service address goal for the year, with significant ramp-up in construction efforts expected [56][57]. Question: Insights on fiber market penetration and competitive landscape - Management shared that they expect high presales penetration and are focusing on markets with favorable competitive dynamics [60][73]. Question: Update on mobile launch and pricing strategy - The company launched its MVNO product TDS Mobile in select markets and is testing aggressive pricing strategies [81][84]. Question: M&A opportunities and focus areas - Management is considering fiber opportunities that would synergize with existing properties and footprint [85]. Question: Growth strategy for the tower business - Management highlighted the importance of bringing sales operations in-house and the positive impact on revenue growth [90].

Financial Data and Key Metrics Changes - The company completed the sale of its U.S. Cellular wireless business and certain spectrum assets to T-Mobile for $4.3 billion, which strengthens the balance sheets of both Array and TDS [5][12] - Following the transaction, approximately $364 million remains on Array's balance sheet, with $1.7 billion in debt assumed by T-Mobile [12] - A special dividend of $23 per share was declared, with TDS receiving approximately $1.63 billion [13] - The company expects to achieve annual interest savings of about $80 million, reducing the average cost of debt to just over 6% [13][15] - S&P raised TDS' credit rating to BBB- from BB, reflecting a strong balance sheet and growth outlook [18] Business Line Data and Key Metrics Changes - Array's tower business consists of approximately 4,400 towers, with a new master license agreement (MLA) with T-Mobile expected to significantly increase revenue and profitability [6][26] - Third-party tower revenues increased by 12%, and the number of third-party colocations rose by 6% year-over-year [26] - Distributions from noncontrolling investment interests increased from $58 million to $77 million [29] Market Data and Key Metrics Changes - The company anticipates receiving $2 billion from previously announced spectrum sales, with a portion expected later this year [15] - The AT&T and Verizon transactions are expected to close in 2025 and 2026, respectively, subject to regulatory approval [21][22] Company Strategy and Development Direction - The company aims to focus on its tower and fiber businesses, believing it is well-positioned for growth in these areas [6][10] - Key strategic priorities include closing pending spectrum transactions and optimizing ground lease agreements [24] - The company plans to develop a capital allocation strategy focusing on fiber investments, M&A opportunities, and shareholder returns [17] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the growth of colocations and margins due to increasing demand for data and communication services [6] - The company is optimistic about its future as an independent tower company, with a strong management team in place [19][24] - Management acknowledged the challenges of transitioning from a wireless service provider to an independent tower company, expecting wind-down costs to impact profitability in the near term [30] Other Important Information - The company is developing a regular dividend policy once spectrum transactions are completed [16] - The transition to an independent tower company is expected to enhance focus and operational efficiency [19][24] Q&A Session Summary Question: Update on TDS Telecom's fiber expansion - Management indicated that there is significant opportunity to expand the fiber footprint and will provide updates in upcoming quarters [54][55] Question: Long-term leverage stabilization for TDS Telecom - Management expects to maintain leverage under 1.5 times while evaluating opportunities for growth [56] Question: Access to construction resources for fiber expansion - Management remains confident in achieving the target of 150,000 new fiber service addresses for the year, with ramping construction efforts [59] Question: Cohort analysis for fiber penetration - Management is working on providing cohort penetration reporting and expects high presales penetration in new markets [63][66] Question: Update on mobile launch and pricing strategy - The company launched TDS Mobile in select markets and is testing various pricing strategies to optimize customer acquisition [85][86] Question: M&A opportunities - Management is beginning to consider M&A opportunities focused on fiber assets that synergize with existing properties [88]

Array Transaction and Debt - The T-Mobile transaction closed on August 1, 2025 [15] - $1.7 billion of Array debt was exchanged into T-Mobile debt [8] - TDS is expected to receive $1.6 billion from Array special dividend [8] - Array is expected to have $700 million debt [8] - Array's board approved a special dividend of $23.00 per Common Share and Series A Common Share, totaling $2.0 billion [9] Spectrum Monetization - Agreements reached to monetize approximately 70% of Array's total spectrum holdings, based on MHz-Pops, including the T-Mobile transaction [14] - AT&T spectrum sale gross purchase price is $1.018 billion [12] - Verizon spectrum sale gross purchase price is $1.0 billion [12] Tower Business - The company owns 4,418 towers in the U S [18, 22] - Third-party tower revenue distribution: AT&T 34%, Verizon 27%, T-Mobile 25%, Other 14% in Q2 2025 [22] - Tower tenancy rate was 1.57, with 2,527 colocations as of June 30, 2025 [22] - Third-party revenues for the towers segment were $28 million in Q2 2025, a 12% increase year-over-year [23] TDS Telecom Fiber Expansion - Deployed 27,000 new marketable fiber addresses in Q2 2025 [24, 25] - The company is on track for 150,000 marketable fiber addresses in 2025 [24] - Residential fiber connections have grown 1.9x from Q2 2022 to Q2 2025 [34] TDS Telecom Financials - Total operating revenues for TDS Telecom were $265 million in Q2 2025, a 1% decrease year-over-year [44] - Capital expenditures for TDS Telecom were $90 million in Q2 2025, a 16% increase year-over-year [44] - Adjusted EBITDA for TDS Telecom was $89 million in Q2 2025, a 3% decrease year-over-year [44]

Management Discussion and Analysis of Financial Condition and Results of Operations [Executive Overview](index=3&type=section&id=Executive%20Overview) The company, now Array, is undergoing a strategic transformation by divesting wireless operations to focus on its Towers business - Company Name Change: United States Cellular Corporation changed its name to **Array Digital Infrastructure, Inc.** on August 1, 2025[8](index=8&type=chunk) - Strategic Divestitures: - Wireless operations and select spectrum assets sold to T-Mobile on August 1, 2025, for **$2,629 million** cash proceeds[14](index=14&type=chunk)[15](index=15&type=chunk) - Pending sale of AWS, Cellular, and PCS wireless spectrum licenses to Verizon for **$1,000 million**, expected to close Q3 2026[16](index=16&type=chunk) - Pending sale of 3.45 GHz and 700 MHz wireless spectrum licenses to AT&T for **$1,018 million**, expected to close in 2025[20](index=20&type=chunk) - Future Business Focus: Grow Towers operations, manage noncontrolling interests in wireless operating companies, and opportunistically monetize remaining wireless spectrum[12](index=12&type=chunk)[13](index=13&type=chunk)[17](index=17&type=chunk) - Subsequent Events (Post June 30, 2025): - Acquisition of King Street Wireless, Inc and Sunshine Spectrum, Inc for **$17 million**, expecting a **$50 million** income tax benefit - Termination of receivables securitization agreement on July 31, 2025 - T-Mobile transaction closed on August 1, 2025, resulting in **$2,629 million** cash proceeds and an expected **$250-$300 million** cash income tax liability - Debt exchange offer concluded, exchanging **$1,680 million** of long-term debt - Master License Agreement (MLA) with T-Mobile for 15-year leases on a minimum of **2,015** Array-owned towers - Special dividend of **$23.00 per share** declared on August 1, 2025 - Repayment of **$863 million** in term loans and export credit financing on August 4, 2025[19](index=19&type=chunk)[20](index=20&type=chunk) [Terms Used by Array](index=7&type=section&id=Terms%20Used%20by%20Array) This section defines key industry-specific and non-GAAP financial terms to ensure clarity and consistent understanding - Definitions provided for industry terms like 5G, Account, Churn Rate, Colocations, Connected Devices, Postpaid ARPA, Postpaid ARPU, Retail Connections, Tower Tenancy Rate, and Universal Service Fund (USF)[21](index=21&type=chunk) - Definitions provided for non-GAAP financial measures: EBITDA, Adjusted EBITDA, Adjusted OIBDA, and Free Cash Flow[21](index=21&type=chunk) [Financial Overview – Array](index=8&type=section&id=Financial%20Overview%20%E2%80%93%20Array) Array's recent financial performance shows decreased revenue and operating income but significantly higher net income due to tax benefits Consolidated Financial Performance (YoY Change) | Metric | Q2 2025 vs Q2 2024 | YTD 2025 vs YTD 2024 | | :--- | :--- | :--- | | Total operating revenues | (1)% | (4)% | | Operating income | (4)% | (13)% | | Income before income taxes | 13% | (9)% | | Income tax expense | (73)% | (42)% | | Net income | 77% | 24% | | Net income attributable to Array shareholders | 80% | 41% | | Adjusted OIBDA (Non-GAAP) | (9)% | (7)% | | Adjusted EBITDA (Non-GAAP) | (6)% | (7)% | | Capital expenditures | (52)% | (55)% | - Equity in earnings of unconsolidated entities increased by **8% for Q2 2025** and decreased by **3% for YTD 2025**, with the LA Partnership contributing **$20 million** and **$35 million** for the respective periods[23](index=23&type=chunk)[24](index=24&type=chunk) - Interest expense decreased for the three and six months ended June 30, 2025, due primarily to a decrease in the average principal balance outstanding on the term loan and receivables securitization agreements[25](index=25&type=chunk) - Income tax expense decreased for the three and six months ended June 30, 2025, due primarily to excess stock compensation deductions for awards vesting in the current period[26](index=26&type=chunk) - Enactment of H.R.1 – the One big beautiful bill Act (OBBBA) is expected to result in favorable deferral of cash taxes in future periods[27](index=27&type=chunk) [Wireless Operations](index=10&type=section&id=Wireless%20Operations) Prior to divestiture, wireless operations showed declining retail connections and revenues, with increased postpaid net losses from higher churn Retail Connections – End of Period | Metric | June 30, 2025 | June 30, 2024 | Change | | :--- | :--- | :--- | :--- | | Postpaid | 3,904,000 | 4,027,000 | (3.05)% | | Prepaid | 429,000 | 439,000 | (2.28)% | | Total | 4,333,000 | 4,466,000 | (3.00)% | Postpaid Activity and Churn (YoY Change) | Metric | Q2 2025 vs Q2 2024 | YTD 2025 vs YTD 2024 | | :--- | :--- | :--- | | Total Gross Additions | (7)% | (4)% | | Total Net Additions (Losses) | (75)% | (21)% | | Churn (Handsets) | 1.12% (vs 0.97%) | 1.08% (vs 1.00%) | | Churn (Connected Devices) | 2.36% (vs 2.47%) | 2.38% (vs 2.50%) | | Total Churn | 1.29% (vs 1.16%) | 1.25% (vs 1.19%) | - Total postpaid handset net losses increased for the three and six months ended June 30, 2025, due to **higher defections** as a result of elevated churn and aggressive industry-wide competition[29](index=29&type=chunk) - Total postpaid connected device net additions decreased for the three and six months ended June 30, 2025, due to **lower gross additions** for home internet and connected watches[30](index=30&type=chunk) Postpaid Revenue Metrics (YoY Change) | Metric | Q2 2025 vs Q2 2024 | YTD 2025 vs YTD 2024 | | :--- | :--- | :--- | | Postpaid ARPU | 1% | 1% | | Postpaid ARPA | 1% | 1% | Wireless Financial Performance (YoY Change) | Metric | Q2 2025 vs Q2 2024 | YTD 2025 vs YTD 2024 | | :--- | :--- | :--- | | Retail service revenues | (2)% | (2)% | | Equipment sales | (2)% | (13)% | | Total operating revenues | (1)% | (4)% | | Operating income | (21)% | (27)% | | Adjusted OIBDA (Non-GAAP) | (11)% | (9)% | | Adjusted EBITDA (Non-GAAP) | (11)% | (9)% | | Capital expenditures | (52)% | (55)% | - Retail service revenues decreased due to a **decline in average postpaid and prepaid connections**, partially offset by an increase in Postpaid ARPU[38](index=38&type=chunk) - Equipment sales revenues decreased for the six months ended June 30, 2025, primarily driven by a **lower volume of upgrades**[38](index=38&type=chunk) - System operations expenses increased for Q2 2025 due to higher maintenance and utilities, but decreased for YTD 2025 due to the **shutdown of the 3G CDMA network**[40](index=40&type=chunk)[41](index=41&type=chunk) - Cost of equipment sold decreased for the six months ended June 30, 2025, due to a **decline in smartphone devices sold**[43](index=43&type=chunk) - (Gain) loss on license sales and exchanges increased due to the **write-off of the liability** associated with the Put/Call Agreement with T-Mobile in 2025[44](index=44&type=chunk) [Towers Operations](index=15&type=section&id=Towers%20Operations) Towers operations demonstrated growth in key metrics and revenues, though future performance will be impacted by the wireless divestiture Towers Operational Metrics (as of June 30) | Metric | 2025 | 2024 | Change | | :--- | :--- | :--- | :--- | | Owned towers | 4,418 | 4,388 | 1% | | Number of colocations | 2,527 | 2,392 | 6% | | Tower tenancy rate | 1.57 | 1.55 | 2% | Towers Financial Performance (YoY Change) | Metric | Q2 2025 vs Q2 2024 | YTD 2025 vs YTD 2024 | | :--- | :--- | :--- | | Third-party revenues | 12% | 9% | | Intra-company revenues | 3% | 3% | | Total tower revenues | 7% | 6% | | Operating income | 11% | 2% | | Adjusted OIBDA (Non-GAAP) | 9% | 4% | | Adjusted EBITDA (Non-GAAP) | 9% | 4% | | Capital expenditures | (51)% | (47)% | - Third-party revenues increased primarily as a result of **new colocations** and escalators on renewed leases[48](index=48&type=chunk) - Intra-company revenues increased primarily as a result of **rent escalations** and an increase in the number of owned towers[48](index=48&type=chunk) - Post-divestiture, Array expects an increase in Third-party revenues from the T-Mobile MLA, but **Intra-company revenues have ceased**, which will significantly lower future tower rental revenues[49](index=49&type=chunk) - Total operating expenses increased due to higher cell site rent and maintenance expenses[50](index=50&type=chunk) - Following the T-Mobile transaction, Array expects to incur costs related to **decommissioning certain towers** and executing strategic alternatives for its remaining spectrum[51](index=51&type=chunk) [Liquidity and Capital Resources](index=17&type=section&id=Liquidity%20and%20Capital%20Resources) Array maintains sufficient liquidity through cash, financing agreements, and asset sales, with significant undrawn borrowing capacity - Array believes existing cash, investments, financing agreements, and asset dispositions will provide **sufficient liquidity** for operating needs and debt service[53](index=53&type=chunk) Available Undrawn Borrowing Capacity (as of June 30, 2025) | Facility | Amount (Millions) | | :--- | :--- | | Revolving Credit Agreement | $300 | | Term Loan Agreements | $800 | | Receivables Securitization Agreement | $450 | | **Total** | **$1,550** | - Revolving Credit Agreement: Amended in April 2025 to **extend maturity to July 2027** and allow for permitted dispositions[60](index=60&type=chunk) - Term Loan Agreements: **$713 million** outstanding at June 30, 2025, was fully repaid on August 4, 2025, with an additional **$800 million** of borrowing capacity secured[61](index=61&type=chunk)[62](index=62&type=chunk) - Export Credit Financing Agreement: **$150 million** outstanding at June 30, 2025, was fully repaid on August 4, 2025[63](index=63&type=chunk) - Receivables Securitization Agreement: **Terminated on July 31, 2025**[64](index=64&type=chunk) - Debt Covenants: Array was in compliance as of June 30, 2025, with key leverage and interest coverage ratios[65](index=65&type=chunk)[66](index=66&type=chunk)[67](index=67&type=chunk) - Credit Ratings: On August 1, 2025, Standard & Poor's updated the Array issuer credit rating from BB to **BBB- with a stable outlook**[69](index=69&type=chunk) - Capital expenditures **decreased by 55% to $132 million** for the six months ended June 30, 2025, in line with expectations for 5G deployment[70](index=70&type=chunk)[72](index=72&type=chunk) - Common Share Repurchase Program: During the six months ended June 30, 2025, Array repurchased **328,835 Common Shares for $21 million**[75](index=75&type=chunk) - Dividends: On August 1, 2025, the Array Board of Directors declared a **special dividend of $23.00 per share**[76](index=76&type=chunk) [Consolidated Cash Flow Analysis](index=20&type=section&id=Consolidated%20Cash%20Flow%20Analysis) Array's cash position significantly increased due to strong operating cash flows and reduced investing and financing activities - Net increase in cash, cash equivalents and restricted cash: **$242 million** for YTD 2025 vs **$36 million** for YTD 2024[79](index=79&type=chunk)[81](index=81&type=chunk) - Net cash provided by operating activities: **$485 million** for YTD 2025, driven by net income adjusted for non-cash items and distributions from unconsolidated entities[79](index=79&type=chunk)[81](index=81&type=chunk) - Cash flows used for investing activities: **$150 million** for YTD 2025, primarily for payments for property, plant and equipment[80](index=80&type=chunk)[82](index=82&type=chunk) - Cash flows used for financing activities: **$93 million** for YTD 2025, primarily for tax withholdings, share repurchases, and software license agreements[80](index=80&type=chunk)[82](index=82&type=chunk) [Consolidated Balance Sheet Analysis](index=21&type=section&id=Consolidated%20Balance%20Sheet%20Analysis) The balance sheet reflects a decrease in net inventory from sales and a reduction in accrued compensation following bonus payments - Inventory, net **decreased $53 million** due primarily to the sell through of inventory on hand and seasonality[84](index=84&type=chunk) - Accrued compensation **decreased $39 million** due primarily to associate bonus payments in March 2025[85](index=85&type=chunk) [Supplemental Information Relating to Non-GAAP Financial Measures](index=22&type=section&id=Supplemental%20Information%20Relating%20to%20Non-GAAP%20Financial%20Measures) This section reconciles non-GAAP measures like EBITDA and Free Cash Flow, which management uses to evaluate business performance - Non-GAAP financial measures used in the MD&A and business segment information include EBITDA, Adjusted EBITDA, Adjusted OIBDA, and Free cash flow[90](index=90&type=chunk) Array Consolidated Non-GAAP Reconciliation (YoY Change) | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | Net income (GAAP) | $32 | $18 | $52 | $42 | | EBITDA (Non-GAAP) | $244 | $242 | $485 | $503 | | Adjusted EBITDA (Non-GAAP) | $254 | $268 | $506 | $542 | | Adjusted OIBDA (Non-GAAP) | $208 | $227 | $422 | $456 | | Operating income (GAAP) | $35 | $36 | $76 | $88 | Array Wireless Non-GAAP Reconciliation (YoY Change) | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | EBITDA (Non-GAAP) | $165 | $171 | $336 | $355 | | Adjusted EBITDA and Adjusted OIBDA (Non-GAAP) | $174 | $196 | $355 | $392 | | Operating income (GAAP) | $14 | $17 | $34 | $47 | Array Towers Non-GAAP Reconciliation (YoY Change) | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | EBITDA (Non-GAAP) | $33 | $30 | $65 | $62 | | Adjusted EBITDA and Adjusted OIBDA (Non-GAAP) | $34 | $31 | $67 | $64 | | Operating income (GAAP) | $21 | $19 | $42 | $41 | Free Cash Flow (Non-GAAP) (YoY Change) | Metric | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | | Cash flows from operating activities (GAAP) | $485 | $516 | | Cash paid for additions to property, plant and equipment | $(147) | $(270) | | Cash paid for software license agreements | $(20) | $(20) | | Free cash flow (Non-GAAP) | $318 | $226 | [Application of Critical Accounting Policies and Estimates](index=25&type=section&id=Application%20of%20Critical%20Accounting%20Policies%20and%20Estimates) Array's financial statements adhere to GAAP, with critical accounting policies consistent with its 2024 Form 10-K - Array prepares its consolidated financial statements in accordance with GAAP[95](index=95&type=chunk) - Array's application of critical accounting policies and estimates is discussed in detail in its Form 10-K for the year ended December 31, 2024[95](index=95&type=chunk) [Private Securities Litigation Reform Act of 1995 Safe Harbor Cautionary Statement](index=26&type=section&id=Private%20Securities%20Litigation%20Reform%20Act%20of%201995%20Safe%20Harbor%20Cautionary%20Statement) This section cautions that forward-looking statements involve risks and uncertainties, and actual results may differ materially - This Form 10-Q contains forward-looking statements, as defined in the Private Securities Litigation Reform Act of 1995[97](index=97&type=chunk) - Such forward-looking statements involve known and unknown risks that may cause actual results to be significantly different[97](index=97&type=chunk) - Readers should carefully consider the factors and other information contained in this Form 10-Q to understand the material risks relating to Array's business[97](index=97&type=chunk) [Risk Factors](index=28&type=section&id=Risk%20Factors) Key risks include uncertainties in pending spectrum sales, reliance on T-Mobile, and competition in the tower industry - Closing of the T-Mobile transaction will require **significant changes** to Array's remaining business, which is of a substantially smaller scale[106](index=106&type=chunk) - Uncertainty regarding the consummation of the **Verizon and AT&T spectrum sales** could impact the availability of funds[109](index=109&type=chunk)[111](index=111&type=chunk) - Array's business is **substantially dependent upon T-Mobile** due to the Master License Agreement (MLA) for tower leases[108](index=108&type=chunk) - An **inability to monetize the remaining spectrum assets**, coupled with ongoing costs, could adversely affect Array's operations[115](index=115&type=chunk)[116](index=116&type=chunk) - **Increasing competition** in the tower industry from larger, better-resourced competitors could adversely affect Array's revenues and future growth[117](index=117&type=chunk) - A substantial portion of Array's revenues are derived from a **small number of tenants** concentrated in the wireless industry[118](index=118&type=chunk)[119](index=119&type=chunk) - Uncertainty in Array's future cash flow and liquidity, its level of indebtedness, and inability to access capital could impact business operations[127](index=127&type=chunk)[128](index=128&type=chunk)[129](index=129&type=chunk)[130](index=130&type=chunk) - Array's assets and revenue are **concentrated in the U.S. wireless telecommunications industry**, representing increased risk[131](index=131&type=chunk) - Potential **conflicts of interest** exist between TDS (controlling shareholder) and Array[138](index=138&type=chunk)[140](index=140&type=chunk) - **Cyber-attacks** or other breaches of information technology security are expected to occur regularly and could have an adverse effect on Array's business[145](index=145&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=35&type=section&id=Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Array's primary market risk is interest rate fluctuation on its debt, which is a mix of fixed and variable rates - As of June 30, 2025, approximately **70%** of Array's long-term debt was in fixed-rate senior notes and approximately **30%** in variable-rate debt[147](index=147&type=chunk) Scheduled Principal Payments on Long-Term Debt (as of June 30, 2025) | Period | Long-Term Debt Obligations (Millions) | Weighted-Avg. Interest Rates | | :--- | :--- | :--- | | Remainder of 2025 | $10 | 6.1% | | 2026 | $36 | 6.1% | | 2027 | $351 | 5.9% | | 2028 | $286 | 6.4% | | 2029 | $5 | 6.9% | | Thereafter | $2,222 | 6.1% | | **Total** | **$2,910** | **6.1%** | - The debt exchange offer with T-Mobile concluded on August 1, 2025, resulting in the exchange of **$1,680 million** of long-term debt, and Array subsequently repaid **$863 million** of other borrowings[149](index=149&type=chunk) Financial Statements (Unaudited) [Consolidated Statement of Operations](index=36&type=section&id=Consolidated%20Statement%20of%20Operations) Array's operating revenues slightly decreased, but net income attributable to shareholders increased due to lower income tax expense Consolidated Statement of Operations (YoY Change) | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | Total operating revenues | $916 | $927 | $1,807 | $1,877 | | Operating income | $35 | $36 | $76 | $88 | | Income before income taxes | $36 | $32 | $76 | $83 | | Income tax expense | $4 | $14 | $24 | $41 | | Net income | $32 | $18 | $52 | $42 | | Net income attributable to Array shareholders | $31 | $17 | $50 | $35 | | Basic earnings per share | $0.37 | $0.20 | $0.58 | $0.41 | | Diluted earnings per share | $0.36 | $0.20 | $0.57 | $0.40 | - (Gain) loss on license sales and exchanges, net: **$4 million gain** for Q2 2025 (vs $8 million loss for Q2 2024) and **$5 million gain** for YTD 2025 (vs $7 million loss for YTD 2024)[152](index=152&type=chunk) [Consolidated Statement of Cash Flows](index=37&type=section&id=Consolidated%20Statement%20of%20Cash%20Flows) Array's cash position significantly increased due to strong operating cash flows and reduced investing and financing activities Consolidated Statement of Cash Flows (YTD Change) | Metric | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $485 | $516 | | Net cash used in investing activities | $(150) | $(284) | | Net cash used in financing activities | $(93) | $(196) | | Net increase in cash, cash equivalents and restricted cash | $242 | $36 | | Cash, cash equivalents and restricted cash, end of period | $401 | $215 | - Distributions from unconsolidated entities: **$88 million** for YTD 2025 (vs $80 million for YTD 2024)[154](index=154&type=chunk) - Cash paid for additions to property, plant and equipment: **$(147) million** for YTD 2025 (vs $(270) million for YTD 2024)[154](index=154&type=chunk) - Repayment of long-term debt: **$(12) million** for YTD 2025 (vs $(198) million for YTD 2024)[154](index=154&type=chunk) - Repurchase of Common Shares: **$(21) million** for YTD 2025 (vs $0 for YTD 2024)[154](index=154&type=chunk) [Consolidated Balance Sheet](index=38&type=section&id=Consolidated%20Balance%20Sheet) Total assets and liabilities decreased slightly, while cash and cash equivalents saw a significant increase Consolidated Balance Sheet (as of) | Metric | June 30, 2025 | December 31, 2024 | Change | | :--- | :--- | :--- | :--- | | Cash and cash equivalents | $386 | $144 | $242 | | Total current assets | $1,509 | $1,345 | $164 | | Licenses | $4,583 | $4,579 | $4 | | Property, plant and equipment, net | $2,313 | $2,502 | $(189) | | Total assets | $10,377 | $10,449 | $(72) | | Total current liabilities | $808 | $884 | $(76) | | Long-term debt, net | $2,819 | $2,837 | $(18) | | Total liabilities and equity | $10,377 | $10,449 | $(72) | | Total Array shareholders' equity | $4,600 | $4,577 | $23 | - Equipment installment plan receivables, net: **$957 million** at June 30, 2025 (vs $1,028 million at December 31, 2024)[195](index=195&type=chunk) - Consolidated VIEs assets: **$1,871 million** at June 30, 2025 (vs $1,982 million at December 31, 2024)[160](index=160&type=chunk)[222](index=222&type=chunk) - Consolidated VIEs liabilities: **$109 million** at June 30, 2025 (vs $110 million at December 31, 2024)[160](index=160&type=chunk)[222](index=222&type=chunk) [Consolidated Statement of Changes in Equity](index=40&type=section&id=Consolidated%20Statement%20of%20Changes%20in%20Equity) Total shareholders' equity increased slightly, driven by net income partially offset by share repurchases Total Array Shareholders' Equity | Date | Amount (Millions) | | :--- | :--- | | December 31, 2024 | $4,577 | | June 30, 2025 | $4,600 | - Net income attributable to Array shareholders: **$50 million** for the six months ended June 30, 2025[168](index=168&type=chunk) - Repurchase of Common Shares: **$(21) million** for the six months ended June 30, 2025[168](index=168&type=chunk) Notes to Consolidated Financial Statements [Note 1 Basis of Presentation](index=44&type=section&id=Note%201%20Basis%20of%20Presentation) The financial statements are prepared under GAAP for Array Digital Infrastructure, Inc, an 82.5%-owned subsidiary of TDS - United States Cellular Corporation changed its name to **Array Digital Infrastructure, Inc (Array)** on August 1, 2025[174](index=174&type=chunk) - As of June 30, 2025, Array is an **82.5%-owned subsidiary** of Telephone and Data Systems, Inc (TDS)[174](index=174&type=chunk) - Array's business segments are **Wireless and Towers**, operating only in the United States[176](index=176&type=chunk) - Array has not changed its significant accounting and reporting policies from those disclosed in its Form 10-K for the year ended December 31, 2024[178](index=178&type=chunk) Reconciliation of Cash, cash equivalents and restricted cash | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $386 | $144 | | Restricted cash included in Other current assets | $15 | $15 | | Cash, cash equivalents and restricted cash in the statement of cash flows | $401 | $159 | [Note 2 Revenue Recognition](index=45&type=section&id=Note%202%20Revenue%20Recognition) Revenue is disaggregated by service type and timing, with service revenues recognized over time and equipment sales at a point in time Disaggregated Revenue (YoY Change) | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | Retail service | $652 | $666 | $1,312 | $1,344 | | Other service | $56 | $52 | $109 | $102 | | Service revenues from contracts with customers | $708 | $718 | $1,421 | $1,446 | | Equipment sales | $180 | $184 | $330 | $380 | | Total revenues from contracts with customers | $888 | $902 | $1,751 | $1,826 | | Operating lease income (Towers) | $28 | $25 | $56 | $51 | | Total operating revenues | $916 | $927 | $1,807 | $1,877 | Contract Balances (as of) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Contract assets | $4 | $4 | | Contract liabilities | $320 | $334 | - Revenue recognized related to contract liabilities existing at January 1, 2025, was **$154 million** for the six months ended June 30, 2025[184](index=184&type=chunk) Transaction Price Allocated to Remaining Performance Obligations (Service Revenues) | Period | Amount (Millions) | | :--- | :--- | | Remainder of 2025 | $171 | | 2026 | $114 | | Thereafter | $73 | | **Total** | **$358** | - The contract cost asset balance related to commission fees and other costs was **$129 million** at June 30, 2025[187](index=187&type=chunk) [Note 3 Fair Value Measurements](index=46&type=section&id=Note%203%20Fair%20Value%20Measurements) Array had no material assets or liabilities recorded at fair value, and the fair value of long-term debt is estimated using market prices - As of June 30, 2025 and December 31, 2024, Array did not have any material financial or nonfinancial assets or liabilities required to be recorded at fair value[188](index=188&type=chunk) Fair Value of Long-term Debt (as of) | Metric | June 30, 2025 (Book Value) | June 30, 2025 (Fair Value) | December 31, 2024 (Book Value) | December 31, 2024 (Fair Value) | | :--- | :--- | :--- | :--- | :--- | | Long-term debt | $2,873 | $2,702 | $2,890 | $2,785 | - The fair values of Cash and cash equivalents and restricted cash approximate their book values due to the short-term nature of these financial instruments[192](index=192&type=chunk) [Note 4 Equipment Installment Plans](index=46&type=section&id=Note%204%20Equipment%20Installment%20Plans) Array sells devices via equipment installment plans, with the allowance for credit losses decreasing in the first half of 2025 Equipment Installment Plan Receivables, Net (as of) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Equipment installment plan receivables, gross | $1,032 | $1,110 | | Allowance for credit losses | $(75) | $(82) | | Equipment installment plan receivables, net | $957 | $1,028 | Allowance for Credit Losses Activity (YTD) | Metric | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | | Allowance for credit losses, beginning of period | $82 | $90 | | Bad debts expense | $30 | $33 | | Write-offs, net of recoveries | $(37) | $(38) | | Allowance for credit losses, end of period | $75 | $85 | [Note 5 Earnings Per Share](index=47&type=section&id=Note%205%20Earnings%20Per%20Share) Basic and diluted earnings per share are calculated based on net income attributable to Array shareholders and weighted average shares Earnings Per Share (YoY Change) | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | Net income attributable to Array shareholders | $31 | $17 | $50 | $35 | | Basic earnings per share | $0.37 | $0.20 | $0.58 | $0.41 | | Diluted earnings per share | $0.36 | $0.20 | $0.57 | $0.40 | - Weighted average basic shares outstanding: **86 million** for both the three and six months ended June 30, 2025[198](index=198&type=chunk) [Note 6 Divestitures](index=48&type=section&id=Note%206%20Divestitures) Array is pursuing strategic alternatives, including the closed sale of wireless operations to T-Mobile and pending spectrum sales to Verizon and AT&T - Strategic alternatives process initiated on **August 4, 2023**[199](index=199&type=chunk) - Wireless operations and select spectrum assets sold to T-Mobile (**closed August 1, 2025**)[199](index=199&type=chunk) - Pending sale of AWS, Cellular, and PCS wireless spectrum licenses to Verizon for total proceeds of **$1,000 million**, expected to close in Q3 2026[200](index=200&type=chunk) - Pending sale of 3.45 GHz and 700 MHz wireless spectrum licenses to AT&T for total proceeds of **$1,018 million**, expected to close in 2025[201](index=201&type=chunk) - Third-party expenses related to announced transactions and strategic alternatives review: **$12 million** for Q2 2025 and **$22 million** for YTD 2025[203](index=203&type=chunk) - Put/Call Agreement with T-Mobile for **$106 million** spectrum assets; the entire fair value of the net written call option was written off as of June 30, 2025[204](index=204&type=chunk) [Note 7 Investments in Unconsolidated Entities](index=49&type=section&id=Note%207%20Investments%20in%20Unconsolidated%20Entities) Array holds noncontrolling interests in various entities, which contributed significantly to its equity in earnings Total Investments in Unconsolidated Entities (as of) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Equity method investments | $431 | $440 | | Measurement alternative method investments | $5 | $5 | | Investments recorded using the net asset value practical expedient | $8 | $9 | | **Total** | **$444** | **$454** | Combined Results of Operations of Equity Method Investments (YoY Change) | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | Revenues | $1,933 | $1,821 | $3,841 | $3,663 | | Operating expenses | $1,511 | $1,413 | $3,028 | $2,828 | | Operating income | $422 | $408 | $813 | $835 | | Net income | $419 | $416 | $798 | $834 | [Note 8 Debt](index=50&type=section&id=Note%208%20Debt) Array manages various debt instruments, with significant repayments and amendments to credit facilities occurring post-quarter end - Revolving Credit Agreement: **$300 million** maximum borrowing capacity, amended in April 2025 to extend maturity to July 2027[209](index=209&type=chunk) - Term Loan Agreements: **$713 million** outstanding at June 30, 2025, with an additional **$800 million** borrowing capacity secured in June 2025[210](index=210&type=chunk)[211](index=211&type=chunk) - Export Credit Financing Agreement: **$150 million** outstanding at June 30, 2025[212](index=212&type=chunk) - Receivables Securitization Agreement: No outstanding borrowings at June 30, 2025, and **terminated on July 31, 2025**[213](index=213&type=chunk) - Debt Covenants: Array was in compliance as of June 30, 2025, with key leverage and interest coverage ratios[214](index=214&type=chunk)[215](index=215&type=chunk)[216](index=216&type=chunk) [Note 9 Variable Interest Entities](index=50&type=section&id=Note%209%20Variable%20Interest%20Entities) Array consolidates certain Variable Interest Entities (VIEs) where it holds a controlling financial interest - Array consolidates VIEs in which it has a controlling financial interest, including special purpose entities for securitized borrowings and designated entities for wireless spectrum licenses[217](index=217&type=chunk)[218](index=218&type=chunk)[219](index=219&type=chunk)[223](index=223&type=chunk) Consolidated VIEs' Assets and Liabilities (as of) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total assets | $1,871 | $1,982 | | Total liabilities | $109 | $110 | - Array manages but does not consolidate certain other limited partnerships where it is not the primary beneficiary[224](index=224&type=chunk)[225](index=225&type=chunk) - Array made contributions, loans or advances to its VIEs totaling **$6 million** during the six months ended June 30, 2025[226](index=226&type=chunk) [Note 10 Business Segment Information](index=54&type=section&id=Note%2010%20Business%20Segment%20Information) Array operates in two reportable segments, Wireless and Towers, with Adjusted EBITDA as the key performance measure - Array has two reportable segments: **Wireless and Towers**[227](index=227&type=chunk) - **Adjusted EBITDA** is the segment measure of profit or loss reported to the chief operating decision maker[228](index=228&type=chunk) Wireless Segment Financials (YoY Change) | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | Revenues from external customers | $888 | $902 | $1,751 | $1,826 | | Segment Adjusted EBITDA (Non-GAAP) | $174 | $196 | $355 | $392 | | Capital expenditures | $77 | $160 | $127 | $286 | Towers Segment Financials (YoY Change) | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | Revenues from external customers | $28 | $25 | $56 | $51 | | Intersegment revenues | $34 | $33 | $67 | $65 | | Segment Adjusted EBITDA (Non-GAAP) | $34 | $31 | $67 | $64 | | Capital expenditures | $3 | $5 | $5 | $9 | [Note 11 Subsequent Events](index=58&type=section&id=Note%2011%20Subsequent%20Events) Significant events after June 30, 2025 include acquisitions, the T-Mobile sale closing, debt restructuring, and a special dividend - On July 14, 2025, Array completed the acquisition of King Street Wireless, Inc and Sunshine Spectrum, Inc for **$17 million**, expecting a **$50 million** tax benefit[239](index=239&type=chunk) - On July 31, 2025, Array **terminated the receivables securitization agreement**[239](index=239&type=chunk) - On August 1, 2025, the sale of the wireless operations to T-Mobile closed, and Array received cash proceeds of **$2,629 million**[239](index=239&type=chunk) - The debt exchange offering concluded on August 1, 2025, resulting in the exchange of **$1,680 million** of long-term debt[239](index=239&type=chunk) - On August 1, 2025, Array and T-Mobile entered into a **Master License Agreement (MLA)** for T-Mobile to license space on a minimum of 2,015 towers[239](index=239&type=chunk) - On August 1, 2025, the Array Board of Directors declared a **special dividend of $23.00 per share**[239](index=239&type=chunk) - On August 4, 2025, Array repaid **$863 million** in outstanding borrowings under its term loan and export credit financing agreements[239](index=239&type=chunk) Controls and Procedures [Evaluation of Disclosure Controls and Procedures](index=59&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2025 - Array's principal executive officer and principal financial officer concluded that Array's disclosure controls and procedures were **effective** as of June 30, 2025, at the reasonable assurance level[242](index=242&type=chunk) [Changes in Internal Control Over Financial Reporting](index=59&type=section&id=Changes%20in%20Internal%20Control%20Over%20Financial%20Reporting) No material changes occurred in Array's internal control over financial reporting during the second quarter of 2025 - There have been **no changes** in internal controls over financial reporting that have occurred during the three months ended June 30, 2025, that have materially affected, or are reasonably likely to materially affect, Array's internal control over financial reporting[243](index=243&type=chunk) Legal Proceedings [Legal Proceedings](index=60&type=section&id=Legal%20Proceedings) Array is involved in several legal proceedings, including a False Claims Act inquiry and multiple stockholder lawsuits - Federal False Claims Act Inquiry: DOJ inquiries regarding Array's participation in FCC wireless spectrum license auctions, with one matter dismissed and another pending[244](index=244&type=chunk) - Stockholder Class Action: A settlement in principle was reached on February 28, 2025, with a final approval hearing set for September 2025[245](index=245&type=chunk) - Stockholder Derivative Lawsuits: Multiple lawsuits filed alleging breach of fiduciary duty, with some cases dismissed and others pending[246](index=246&type=chunk)[247](index=247&type=chunk)[248](index=248&type=chunk) - Array is unable at this time to determine whether the outcome of these actions would have a material impact on its financial condition or results of operations[249](index=249&type=chunk) Unregistered Sales of Equity Securities and Use of Proceeds [Unregistered Sales of Equity Securities and Use of Proceeds](index=61&type=section&id=Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) Array has an authorized share repurchase program with remaining capacity, but no purchases were made during the second quarter of 2025 - Array's Board of Directors authorized the repurchase of up to **1,300,000** additional Common Shares on an annual basis beginning in 2009[250](index=250&type=chunk) - The maximum number of shares that may yet be purchased under this program was **658,107** as of June 30, 2025[251](index=251&type=chunk) - There were **no purchases** made by or on behalf of Array of Array Common Shares during the quarter covered by this Form 10-Q[251](index=251&type=chunk) Other Information [Rule 10b5-1 Trading Arrangements](index=62&type=section&id=Rule%2010b5-1%20Trading%20Arrangements) No Rule 10b5-1 trading arrangements were adopted or terminated by directors or officers during the second quarter of 2025 - During the three months ended June 30, 2025, **none of Array's directors or officers** adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5–1 trading arrangement[253](index=253&type=chunk) Exhibits [Exhibits](index=63&type=section&id=Exhibits) This section lists exhibits filed with the Form 10-Q, including corporate amendments, debt agreements, and the T-Mobile MLA - Exhibit 3.1: Certificate of Amendment No 1 to the Restated Certificate of Incorporation of United States Cellular Corporation, dated as of August 1, 2025[254](index=254&type=chunk) - Exhibit 3.2: Amended and Restated Bylaws of Array Digital Infrastructure, Inc, as adopted on August 1, 2025[254](index=254&type=chunk) - Exhibits 4.1-4.4: Twelfth through Fifteenth Supplemental Indentures related to the Registrant's Senior Notes[254](index=254&type=chunk) - Exhibit 4.5: Fourth Amended and Restated Credit Agreement among the Registrant, CoBank, ACB, as Administrative Agent, and the other lenders party thereto, dated June 25, 2025[254](index=254&type=chunk) - Exhibit 10.3: Master License Agreement, dated as of August 1, 2025, between ADI Leasing Company, LLC and T-Mobile USA, Inc[254](index=254&type=chunk) Form 10-Q Cross Reference Index [Form 10-Q Cross Reference Index](index=64&type=section&id=Form%2010-Q%20Cross%20Reference%20Index) This section provides a cross-reference index to the various items and page numbers within the Form 10-Q - The index lists items such as Financial Statements, MD&A, Risk Factors, and Exhibits with their corresponding page numbers[256](index=256&type=chunk) Signatures [Signatures](index=65&type=section&id=Signatures) The report is duly signed by Array's President and CEO, and its Executive Vice President and CFO, on August 11, 2025 - The report is signed by **Douglas W Chambers**, President and Chief Executive Officer, and **Vicki L Villacrez**, Executive Vice President, Chief Financial Officer and Treasurer[259](index=259&type=chunk) - The signing date is **August 11, 2025**[259](index=259&type=chunk)

[Company Overview and Q2 2025 Highlights](index=1&type=section&id=Company%20Overview%20%26%20Q2%202025%20Highlights) [Company Name Change and Earnings Announcement](index=1&type=section&id=Company%20Name%20Change%20and%20Earnings%20Announcement) Array Digital Infrastructure, Inc. (formerly United States Cellular Corporation) announced its Q2 2025 results, reporting a slight year-over-year decrease in total operating revenues but significant growth in net income and diluted earnings per share attributable to Array shareholders - United States Cellular Corporation was renamed **Array Digital Infrastructure, Inc.** on August 1, 2025[1](index=1&type=chunk) Q2 2025 Consolidated Financial Highlights (Year-over-Year) | Metric | Q2 2025 | Q2 2024 | Change (%) | | :-------------------------- | :-------- | :-------- | :--------- | | Total Operating Revenues | $916M | $927M | (1)% | | Service Revenues | $736M | $743M | (1)% | | Net Income Attributable to Array Shareholders | $31M | $17M | 82% | | Diluted Earnings Per Share | $0.36 | $0.20 | 80% | [Recent Highlights and Strategic Initiatives](index=1&type=section&id=Recent%20Highlights%20and%20Strategic%20Initiatives) Array completed its T-Mobile transaction, declared a special dividend, and is transitioning to a tower-centric business, with pending spectrum deals with Verizon and AT&T anticipated in H2 2025 and Q3 2026 - Array completed the sale of its wireless business and certain spectrum assets to T-Mobile on August 1, 2025, for a total consideration of **$4.3 billion** (including cash and assumed debt)[5](index=5&type=chunk) - A special dividend of **$23.00 per share** was declared, payable on August 19, 2025[5](index=5&type=chunk) - Third-party tower revenues increased by **12% year-over-year**[9](index=9&type=chunk) - Pending spectrum transactions with AT&T and Verizon are expected to close in **H2 2025** and **Q3 2026**, respectively[9](index=9&type=chunk) [About Array and Business Description](index=2&type=section&id=About%20Array%20and%20Business%20Description) Array Digital Infrastructure, Inc. is a leading US owner and operator of shared wireless communication infrastructure, managing over 4,400 cellular towers to support 5G and other wireless technologies, with Telephone and Data Systems, Inc. holding approximately 82% equity as of August 1, 2025 - Array is a leading US owner and operator of shared wireless communication infrastructure[11](index=11&type=chunk) - The company owns over **4,400 cellular towers**, supporting 5G and other wireless technology deployments[11](index=11&type=chunk) - As of August 1, 2025, Telephone and Data Systems, Inc. holds approximately **82% of Array's equity**[11](index=11&type=chunk) [Safe Harbor Statement](index=2&type=section&id=Safe%20Harbor%20Statement) This report contains forward-looking statements subject to various risks and uncertainties that could cause actual results to differ materially from expectations, including operational changes, strategic decisions for the tower business, tenant dependency, extreme weather, spectrum sale completion, and industry competition - Forward-looking statements are subject to risks and uncertainties, including Array's remaining business operations, strategic decisions for the tower business, revenue dependency on a few tenants, extreme weather events, completion of spectrum license sales to Verizon and AT&T, and competition in the tower industry[12](index=12&type=chunk) [Summary Operating Data](index=3&type=section&id=Summary%20Operating%20Data) [Retail Connections and ARPU/ARPA](index=3&type=section&id=Retail%20Connections%20and%20ARPU%2FARPA) In Q2 2025, Array experienced a quarter-over-quarter and year-over-year decline in postpaid and prepaid connections, while postpaid ARPU slightly decreased QoQ but increased YoY, and prepaid ARPU increased QoQ but decreased YoY Retail Connections (Quarter-over-Quarter and Year-over-Year) | Metric | 6/30/2025 | 3/31/2025 | 6/30/2024 | QoQ Change | YoY Change | | :-------------------- | :-------- | :-------- | :-------- | :--------- | :--------- | | Postpaid Total | 3,904,000 | 3,946,000 | 4,027,000 | (42,000) | (123,000) | | Postpaid Net Additions (Losses) | (42,000) | (39,000) | (24,000) | (3,000) | (18,000) | | Prepaid Total | 429,000 | 431,000 | 439,000 | (2,000) | (10,000) | | Prepaid Net Additions (Losses) | (2,000) | (17,000) | 3,000 | 15,000 | (5,000) | Average Revenue Per User (ARPU) and Average Revenue Per Account (ARPA) | Metric | 6/30/2025 | 3/31/2025 | 6/30/2024 | QoQ Change | YoY Change | | :-------------------- | :-------- | :-------- | :-------- | :--------- | :--------- | | Postpaid ARPU | $51.91 | $52.06 | $51.45 | ($0.15) | $0.46 | | Postpaid ARPA | $131.89 | $132.25 | $130.41 | ($0.36) | $1.48 | | Prepaid ARPU | $31.72 | $30.76 | $32.37 | $0.96 | ($0.65) | [Churn Rates](index=3&type=section&id=Churn%20Rates) Postpaid churn rates increased both quarter-over-quarter and year-over-year, primarily driven by handset churn, while prepaid churn rates significantly decreased QoQ but remained largely flat YoY Churn Rates (Quarter-over-Quarter and Year-over-Year) | Metric | 6/30/2025 | 3/31/2025 | 6/30/2024 | QoQ Change (bps) | YoY Change (bps) | | :-------------------- | :-------- | :-------- | :-------- | :--------------- | :--------------- | | Postpaid Churn Rate | 1.29% | 1.21% | 1.16% | 8 | 13 | | Postpaid Handsets Churn | 1.12% | 1.03% | 0.97% | 9 | 15 | | Postpaid Connected Devices Churn | 2.36% | 2.40% | 2.47% | (4) | (11) | | Prepaid Churn Rate | 3.58% | 4.17% | 3.60% | (59) | (2) | [Infrastructure and Capital Expenditures](index=3&type=section&id=Infrastructure%20and%20Capital%20Expenditures) Array's owned towers and colocations continued to grow, with a slight improvement in tower tenancy rate, while Q2 2025 capital expenditures significantly decreased year-over-year, reflecting a shift in strategic focus Infrastructure and Tenancy Metrics | Metric | 6/30/2025 | 3/31/2025 | 6/30/2024 | QoQ Change | YoY Change | | :-------------------- | :-------- | :-------- | :-------- | :--------- | :--------- | | Total Cell Sites in Service | 7,061 | 7,009 | 6,990 | 52 | 71 | | Owned Towers | 4,418 | 4,413 | 4,388 | 5 | 30 | | Number of Colocations | 2,527 | 2,469 | 2,392 | 58 | 135 | | Tower Tenancy Rate | 1.57 | 1.56 | 1.55 | 0.01 | 0.02 | Capital Expenditures (in millions) | Period | 6/30/2025 | 3/31/2025 | 6/30/2024 | QoQ Change | YoY Change | | :----- | :-------- | :-------- | :-------- | :--------- | :--------- | | Q2 | $80 | $53 | $165 | $27 | ($85) | [Consolidated Financial Statements](index=4&type=section&id=Consolidated%20Financial%20Statements) [Consolidated Statement of Operations](index=4&type=section&id=Consolidated%20Statement%20of%20Operations) Total operating revenues slightly decreased year-over-year in Q2 2025, mainly due to reduced equipment sales, yet net income attributable to Array shareholders surged by **80% to $31 million**, and diluted EPS grew by **81% to $0.36**, primarily driven by a substantial reduction in income tax expense Consolidated Statement of Operations Highlights (Q2 2025 vs Q2 2024) | Metric (in millions) | Q2 2025 | Q2 2024 | YoY Change (%) | | :------------------------------------ | :------ | :------ | :------------- | | Total Operating Revenues | $916 | $927 | (1)% | | Service Revenues | $736 | $743 | (1)% | | Equipment Sales | $180 | $184 | (2)% | | Total Operating Expenses | $881 | $891 | (1)% | | Operating Income | $35 | $36 | (4)% | | Income Before Income Taxes | $36 | $32 | 13% | | Income Tax Expense | $4 | $14 | (73)% | | Net Income Attributable to Array Shareholders | $31 | $17 | 80% | | Diluted EPS Attributable to Array Shareholders | $0.36 | $0.20 | 81% | [Consolidated Statement of Cash Flows](index=5&type=section&id=Consolidated%20Statement%20of%20Cash%20Flows) For the six months ended June 30, 2025, net cash provided by operating activities slightly decreased to **$485 million**, net cash used in investing activities significantly reduced to **$150 million** due to lower capital expenditures, and net cash used in financing activities also decreased to **$93 million**, resulting in a substantial increase in cash, cash equivalents, and restricted cash to **$401 million** at period-end Consolidated Statement of Cash Flows Highlights (Six Months Ended June 30) | Metric (in millions) | 2025 | 2024 | YoY Change | | :------------------------------------ | :--- | :--- | :--------- | | Net Cash Provided by Operating Activities | $485 | $516 | ($31) | | Net Cash Used in Investing Activities | ($150) | ($284) | $134 | | Net Cash Used in Financing Activities | ($93) | ($196) | $103 | | Net Increase in Cash, Cash Equivalents and Restricted Cash | $242 | $36 | $206 | | Cash, Cash Equivalents and Restricted Cash, End of Period | $401 | $215 | $186 | [Consolidated Balance Sheet](index=6&type=section&id=Consolidated%20Balance%20Sheet) As of June 30, 2025, total assets slightly decreased to **$10,377 million** from December 31, 2024, with a significant increase in cash and cash equivalents offset by reductions in accounts receivable and inventory, while total liabilities also decreased, mainly due to lower current liabilities, and total equity attributable to Array shareholders increased to **$4,600 million** Consolidated Balance Sheet Highlights (June 30, 2025 vs December 31, 2024) | Metric (in millions) | June 30, 2025 | Dec 31, 2024 | Change | | :------------------------------------ | :------------ | :----------- | :----- | | **Assets:** | | | | | Cash and Cash Equivalents | $386 | $144 | $242 | | Total Current Assets | $1,509 | $1,345 | $164 | | Licenses | $4,583 | $4,579 | $4 | | Property, Plant and Equipment, net | $2,313 | $2,502 | ($189) | | Total Assets | $10,377 | $10,449 | ($72) | | **Liabilities & Equity:** | | | | | Total Current Liabilities | $808 | $884 | ($76) | | Long-Term Debt, net | $2,819 | $2,837 | ($18) | | Total Array Shareholders' Equity | $4,600 | $4,577 | $23 | | Total Liabilities and Equity | $10,377 | $10,449 | ($72) | [Segment Results](index=8&type=section&id=Segment%20Results) [Overall Segment Performance](index=8&type=section&id=Overall%20Segment%20Performance) In Q2 2025, Array's total operating revenues decreased by **1% year-over-year**, primarily due to a decline in wireless segment revenue offset by a **7% growth** in tower segment revenue, leading to a **4% decrease** in consolidated operating income, with wireless operating income declining and tower operating income rising Consolidated Segment Operating Performance (Q2 2025 vs Q2 2024) | Metric (in millions) | Q2 2025 | Q2 2024 | YoY Change (%) | | :-------------------------- | :------ | :------ | :------------- | | **Operating Revenues:** | | | | | Wireless | $888 | $902 | (1)% | | Towers | $62 | $58 | 7% | | Total Operating Revenues | $916 | $927 | (1)% | | **Operating Income:** | | | | | Wireless | $14 | $17 | (21)% | | Towers | $21 | $19 | 11% | | Total Operating Income | $35 | $36 | (4)% | | **Adjusted OIBDA (Non-GAAP):** | | | | | Consolidated | $208 | $227 | (9)% | | **Adjusted EBITDA (Non-GAAP):** | | | | | Consolidated | $254 | $268 | (6)% | [Array Wireless Segment Performance](index=9&type=section&id=Array%20Wireless%20Segment%20Performance) The wireless segment's total operating revenues decreased by **1% year-over-year** in Q2 2025, driven by lower retail service revenues and equipment sales, with operating income declining by **21%** and capital expenditures significantly reduced by **52%** Array Wireless Segment Financial Data (Q2 2025 vs Q2 2024) | Metric (in millions) | Q2 2025 | Q2 2024 | YoY Change (%) | | :------------------------------------ | :------ | :------ | :------------- | | Retail Service Revenues | $652 | $666 | (2)% | | Equipment Sales | $180 | $184 | (2)% | | Total Operating Revenues | $888 | $902 | (1)% | | Total Operating Expenses | $874 | $885 | (1)% | | Operating Income | $14 | $17 | (21)% | | Adjusted OIBDA (Non-GAAP) | $174 | $196 | (11)% | | Capital Expenditures | $77 | $160 | (52)% | [Array Towers Segment Performance](index=9&type=section&id=Array%20Towers%20Segment%20Performance) The tower segment demonstrated strong performance in Q2 2025, with total tower revenues growing by **7% year-over-year to $62 million**, including a **12% increase** in third-party revenues, while operating income rose by **11% to $21 million**, Adjusted OIBDA increased by **9%**, and capital expenditures decreased by **51%** Array Towers Segment Financial Data (Q2 2025 vs Q2 2024) | Metric (in millions) | Q2 2025 | Q2 2024 | YoY Change (%) | | :------------------------------------ | :------ | :------ | :------------- | | Third-Party Revenues | $28 | $25 | 12% | | Intra-Company Revenues | $34 | $33 | 3% | | Total Tower Revenues | $62 | $58 | 7% | | Total Operating Expenses | $41 | $39 | 5% | | Operating Income | $21 | $19 | 11% | | Adjusted OIBDA (Non-GAAP) | $34 | $31 | 9% | | Capital Expenditures | $3 | $5 | (51)% | [Non-GAAP Financial Measures](index=10&type=section&id=Non-GAAP%20Financial%20Measures) [Free Cash Flow](index=10&type=section&id=Free%20Cash%20Flow) Array's Free Cash Flow (Non-GAAP) significantly increased to **$239 million** in Q2 2025, up from **$165 million** in Q2 2024, primarily due to reduced additions to property, plant, and equipment, with a substantial increase also observed for the six months ended June 30, 2025 Free Cash Flow (Non-GAAP) (in millions) | Metric | Q2 2025 | Q2 2024 | YoY Change | | :------------------------------------ | :------ | :------ | :--------- | | Cash flows from operating activities (GAAP) | $325 | $313 | $12 | | Cash paid for additions to property, plant and equipment | ($75) | ($137) | $62 | | Cash paid for software license agreements | ($11) | ($11) | $0 | | Free Cash Flow (Non-GAAP) | $239 | $165 | $74 | - Free Cash Flow is a non-GAAP financial measure used to assess liquidity, representing net cash generated from operations after deducting cash paid for additions to property, plant, and equipment and software license agreements[29](index=29&type=chunk) [EBITDA, Adjusted EBITDA, and Adjusted OIBDA Reconciliations](index=10&type=section&id=EBITDA%2C%20Adjusted%20EBITDA%2C%20and%20Adjusted%20OIBDA%20Reconciliations) Array provides reconciliations for non-GAAP metrics such as EBITDA, Adjusted EBITDA, and Adjusted OIBDA, which management uses to assess profitability and operational performance by excluding significant non-cash expenses, non-recurring items, and investing activities - EBITDA, Adjusted EBITDA, and Adjusted OIBDA are non-GAAP financial measures used by management as indicators of profitability, providing additional relevant and useful information for evaluating operating efficiency and potential business trends by excluding significant non-cash expenses, non-recurring charges, gains or losses, and other items[30](index=30&type=chunk) Consolidated EBITDA, Adjusted EBITDA, and Adjusted OIBDA (Q2 2025 vs Q2 2024) | Metric (in millions) | Q2 2025 | Q2 2024 | YoY Change | | :------------------------------------ | :------ | :------ | :--------- | | Net Income (GAAP) | $32 | $18 | $14 | | Income Before Income Taxes (GAAP) | $36 | $32 | $4 | | EBITDA (Non-GAAP) | $244 | $242 | $2 | | Adjusted EBITDA (Non-GAAP) | $254 | $268 | ($14) | | Adjusted OIBDA (Non-GAAP) | $208 | $227 | ($19) | Segment Adjusted EBITDA and Adjusted OIBDA (Q2 2025 vs Q2 2024) | Segment (in millions) | Q2 2025 Adjusted EBITDA/OIBDA | Q2 2024 Adjusted EBITDA/OIBDA | YoY Change | | :-------------------- | :---------------------------- | :---------------------------- | :--------- | | Array Wireless | $174 | $196 | ($22) | | Array Towers | $34 | $31 | $3 |

Core Insights - Array Digital Infrastructure, Inc. reported total operating revenues of $916 million for Q2 2025, a decrease of 1% from $927 million in Q2 2024 [1][10] - Service revenues were $736 million, down from $743 million year-over-year [1][10] - Net income attributable to Array shareholders increased to $31 million, up 80% from $17 million in the same period last year, with diluted earnings per share rising to $0.36 from $0.20 [1][10][15] Financial Performance - Total operating revenues for the first half of 2025 were $1.807 billion, a decline of 4% compared to $1.877 billion in the first half of 2024 [15] - Operating income for Q2 2025 was $35 million, down 4% from $36 million in Q2 2024 [15] - Adjusted EBITDA for Q2 2025 was $254 million, a decrease of 6% from $268 million in Q2 2024 [21][25] Operational Highlights - The company completed the sale of its wireless operations and select spectrum assets to T-Mobile for $4.3 billion, which includes cash and assumed debt [10] - Array has 4,400 towers and a new Master License Agreement with T-Mobile, providing a stable revenue stream and growth opportunities [3][7] - Third-party tower revenues increased by 12% year-over-year [10] Future Transactions - Pending spectrum transactions with Verizon and AT&T are expected to close in the second half of 2025 and Q3 2026, respectively, subject to regulatory approvals [4][5][10] - The company is not providing financial guidance for 2025 [5] Shareholder Returns - A special dividend of $23.00 per share was declared, payable on August 19, 2025 [10]

Earnings Projections - Analysts project United States Cellular (USM) will announce quarterly earnings of $0.33 per share, reflecting a 65% increase year over year [1] - Revenues are expected to reach $904.19 million, a decline of 2.5% from the same quarter last year [1] - The consensus EPS estimate has remained unchanged over the past 30 days, indicating analysts' reassessment of projections [1] Revenue Estimates - 'Operating Revenues- Service' is estimated at $728.62 million, indicating a year-over-year change of -1.9% [4] - 'Net operating revenues- Service- Retail' is projected to be $650.86 million, reflecting a year-over-year change of -2.3% [4] - 'Operating Revenues- Equipment sales' is expected to reach $175.58 million, showing a year-over-year change of -4.6% [4] Customer Metrics - 'Net additions (losses) - Retail Connections - Prepaid' are expected to reach 4.00 million, up from 3.00 million a year ago [5] - 'Gross additions - Retail Connections - Postpaid' are projected at 101.81 million, down from 117.00 million in the same quarter last year [5] - 'Customers - Total (Total connections)' is likely to reach 4.39 million, compared to 4.47 million a year ago [6] Stock Performance - U.S. Cellular shares have recorded returns of +12.9% over the past month, compared to the Zacks S&P 500 composite's +0.5% change [6] - Based on its Zacks Rank 3 (Hold), USM is expected to perform in line with the overall market in the upcoming period [6]