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The scene takes place in a corporate office setting. Telephone & Data Systems (TDS) executives are gathered around a large conference table, with one executive holding a microphone. The background is filled with modern technology equipment and graphs displaying financial data. The executives are discussing the company's Q2 2025 earnings and its strategic transformation, with a focus on expanding fiber networks and tower operations. The mood is professional and optimistic, with the executives using gestures to emphasize their points.

Telephone & Data Systems, Inc. (TDS) has reported its Q2 2025 earnings, highlighting significant strategic shifts and financial performance. The company's Q2 sales reached USD 1,186 million, a decline of 1% compared to the same period last year [2]. Net income improved to USD 12 million, up from USD 3 million in Q2 2024 [2].

A key highlight of the earnings report is the successful sale of TDS's US Cellular Wireless business and certain spectrum assets to T-Mobile for USD 4.3 billion. This transaction included a debt assumption of USD 1.7 billion by T-Mobile, leaving USD 364 million on TDS's balance sheet. TDS also announced a special dividend of USD 23 per share, totaling approximately USD 1.63 billion, and a plan to redeem approximately USD 1.1 billion in debt, reducing annual interest expenses by USD 80 million [1].

The transaction has resulted in a reduction of TDS's average cost of debt to just over 6%, and an estimated transaction tax reduction to USD 150 million. Additionally, S&P raised TDS's credit rating to BBB- from BB [1]. TDS has also delivered 27,000 new fiber service addresses in the quarter, with 10,300 fiber net additions, representing a 19% year-over-year growth in total fiber connections [1].

The company's revised revenue guidance for the year is USD 1.03 billion to USD 1.05 billion, with adjusted EBITDA guidance of USD 320 million to USD 350 million. Adjusted OIBDA guidance is expected to be USD 310 million to USD 340 million [1]. Capital expenditures are focused on fiber, with over 80% of spending directed towards the E-ACAM program [1].

However, the divestiture of the US Cellular Wireless operations will result in a decline in reported tenancy rates for TDS's tower business. The company expects additional wind-down costs as it transitions from a wireless service provider to an independent tower company, negatively impacting profitability and adjusted EBITDA. The sale of legacy copper markets also impacts short-term results, contributing to a decline in overall revenue [1].

TDS's total operating revenues were down 1% in the second quarter compared to the prior year, partly due to divestitures and ongoing declines in legacy cable and copper markets. The company faces potential challenges in monetizing its remaining spectrum holdings, with market conditions and regulatory approvals influencing the timing and value of future transactions [1].

Executives emphasized the company's focus on expanding fiber networks and tower operations. TDS expects to deliver 150,000 new fiber service addresses this year, with strong growth in fiber connections and marketable fiber service addresses. The company is also evaluating opportunities to accelerate its fiber expansion plans and plans to share more details in upcoming quarters [1].

References:
[1] https://finance.yahoo.com/news/telephone-data-systems-inc-tds-070423552.html
[2] https://www.marketscreener.com/news/telephone-and-data-systems-inc-reports-earnings-results-for-the-second-quarter-and-six-months-ende-ce7c5ed2d18bf32c