TDS: A Strategic Infrastructure Play in the 5G-Driven Telecom Revolution

In the evolving landscape of telecommunications, Telephone and Data Systems, Inc. (TDS) has emerged as a compelling case study of strategic reinvention. By divesting its wireless business to T-Mobile and pivoting toward fiber-centric infrastructure, TDS has positioned itself at the intersection of 5G-driven demand and undervalued assets. This article examines how TDS’s post-transaction financial flexibility, aggressive fiber deployment, and underappreciated tower assets create a compelling case for investors seeking exposure to the next phase of broadband infrastructure.

Strategic Reinvention: From Wireless to Fiber-First

TDS’s decision to sell its US Cellular Wireless business to T-Mobile for $4.3 billion marked a pivotal shift in its corporate strategy. The transaction, finalized in August 2025, not only reduced debt by $1.7 billion but also enabled a $1.63 billion special dividend to shareholders [2]. This move allowed TDS to streamline its capital structure, with plans to redeem $1.1 billion in debt and reduce annual interest expenses by $80 million [4]. The proceeds have been redirected toward its core strengths: fiber expansion and tower infrastructure.

TDS Telecom, the company’s broadband arm, has surpassed 1 million fiber passings and is on track to deliver 150,000 new fiber service addresses in 2025, with a long-term goal of 1.8 million marketable addresses [4]. This fiber-first strategy aligns with the growing demand for high-speed connectivity, particularly in underserved rural and suburban markets. By 2025, TDS has reduced copper-served connections to less than 5% of its footprint, with 75% of customers now accessing 1G+ speeds [4].

Valuation Metrics: A Discount to Industry Averages

Despite these strides, TDS’s valuation metrics suggest it remains undervalued relative to its peers. As of Q2 2025, TDS trades at an EV/EBITDA multiple of 8.73 [1], significantly above the telecom infrastructure industry average of 6.81 [2]. This premium appears misaligned with the company’s strategic focus on high-growth fiber infrastructure and its robust financial position post-debt reduction.

The disconnect may stem from market skepticism about TDS’s ability to compete with national carriers like Verizon and AT&T, which have 70% and 68% 5G coverage, respectively, compared to TDS’s 42% [3]. However, TDS’s niche in rural and suburban markets—where 5G Fixed Wireless Access (FWA) adoption is rising—positions it to capture underserved demand. According to the Ericsson Mobility Report, FWA is projected to account for 35% of new fixed broadband connections by 2030, with 51% of providers now using speed-based monetization models [1]. TDS’s fiber expansion and TDS Mobile MVNO offering further diversify its revenue streams [4].

Tower Assets and Spectrum Monetization: Hidden Value

TDS’s Array Digital Infrastructure segment, which owns 4,400 towers, represents another underappreciated asset. While the loss of US Cellular as a tenant temporarily reduced tenancy rates, pending spectrum sales to AT&T and Verizon are expected to generate $2 billion in proceeds [2]. These transactions, combined with a 15-year lease agreement with T-Mobile covering 2,015 sites, provide a stable revenue stream while allowing TDS to reinvest in fiber infrastructure [4].

Conclusion: A Mispriced Infrastructure Play

TDS’s strategic pivot to fiber and its disciplined debt reduction have created a compelling value proposition. While its EV/EBITDA of 8.73 exceeds the industry average, the company’s focus on high-growth rural markets and its alignment with FWA trends suggest the market is underestimating its long-term potential. For investors seeking exposure to the 5G infrastructure boom, TDS offers a unique combination of undervalued assets, financial flexibility, and a clear path to scaling its fiber network.

**Source:[1] TDS Q2 2025 slides: T-Mobile deal closes, debt reduction [https://www.investing.com/news/company-news/tds-q2-2025-slides-tmobile-deal-closes-debt-reduction-and-fiber-expansion-in-focus-93CH-4182962][2] EBITDA Multiples by Industry in 2025 [https://www.equidam.com/ebitda-multiples-trbc-industries/][3] Telephone and Data Systems, Inc. (TDS) SWOT Analysis [https://dcfmodeling.com/products/tds-swot-analysis?srsltid=AfmBOopyYEUcDBq3TBfLbuoUXpweVO3l8mwWHMnDfnIWG1-QakuNv6ic][4] TDS Telecom Surpasses 1 Million Fiber Addresses [https://www.morningstar.com/news/pr-newswire/20250903cg64604/tds-telecom-surpasses-1-million-fiber-addresses]