TDS Inc.'s 2025 Q1 Earnings Call: Unpacking Contradictions in Reporting, Divestitures, and Cash Flow Strategies

Tower company reporting details, divestiture strategy, free cash flow and debt exchange offer impact, spectrum monetization strategy are the key contradictions discussed in Telephone and Data Systems, Inc.'s latest 2025Q1 earnings call.



Transaction with T-Mobile and Financial Impact:
- TDS and UScellular are expected to close the proposed transaction with T-Mobile in mid-2025, with UScellular Board approval needed for a special dividend post-closing.
- The transaction is expected to provide substantial proceeds, with the transaction price expected to be approximately $4.3 billion instead of the stated $4.4 billion due to contingent performance metrics.

Fiber Expansion and Market Growth:
- TDS Telecom delivered 14,000 new fiber service addresses in Q1, aiming for 150,000 fiber addresses in 2025.
- Growth is driven by expanding the fiber footprint and increased penetration rates, particularly in Wisconsin and the Pacific Northwest, with plans to reach 40% average broadband penetration in steady-state markets.

Wireless Tower Business and Colocation Activity:
- UScellular's Tower business increased third-party tower revenue by 6% in Q1, driven by new colocation and escalators on renewed leases.
- The growth is attributed to increased demand for tower capacity from wireless carriers, particularly AT&T and Verizon, seeking to fill service gaps in coverage and data demand.

Divestiture Strategy in Wireline and Cable Portfolios:
- TDS Telecom divested certain ILEC properties in Colorado, receiving $18 million in proceeds.
- The divestiture strategy focuses on selling markets that lack an economic path to fiber, aligning with the company's goal to minimize copper network exposure and reduce overhead costs.