AD

Business Context and Reporting Period

This Form 10-Q covers the quarterly period ended June 30, 2025, for Array Digital Infrastructure, Inc. (formerly United States Cellular Corporation). As of the reporting date, Array was an 82.5%-owned subsidiary of Telephone and Data Systems, Inc. (TDS). The company operates two primary segments: Wireless (providing wireless services and equipment) and Towers (leasing tower space to third-party tenants). The filing notes that on August 1, 2025, the company changed its name to Array Digital Infrastructure, Inc., and its ticker symbol is expected to change to "AD."

Key Financial Metrics

Material Changes vs. Prior Period

• Revenue: Total operating revenues decreased 1% ($916M vs. $927M) for the three months ended June 30, 2025, and 4% ($1,807M vs. $1,877M) for the six-month period. Wireless revenues declined due to lower connections, while Towers revenues increased 7% and 6% respectively, driven by new colocations.
• Profitability: Net income attributable to Array shareholders increased 80% ($31M vs. $17M) for the quarter and 41% ($50M vs. $35M) year-to-date, primarily due to lower income tax expenses and higher equity in earnings of unconsolidated entities.
• Wireless Operations: Postpaid connections declined to 3.9 million (from 4.0 million in 2024), with net losses of 42,000 for the quarter. Churn rates increased to 1.29% from 1.16%.
• Capital Expenditures: CapEx decreased significantly by 52% for the quarter ($80M vs. $165M) and 55% year-to-date ($132M vs. $295M) as 5G deployment shifted from coverage expansion to capacity enhancement.

Guidance, Outlook, and Subsequent Events

The filing details significant transactions occurring subsequent to June 30, 2025, which fundamentally alter the company's future outlook:

• T-Mobile Transaction: On August 1, 2025, Array sold its wireless operations and select spectrum assets to T-Mobile for cash proceeds of $2,629 million. The transaction included a debt exchange where $1.68 billion of Array debt was exchanged for T-Mobile debt. Array expects a cash income tax liability of $250–$300 million on this sale.
• Special Dividend: The Board declared a special dividend of $23.00 per share (Common and Series A), payable August 19, 2025.
• Spectrum Sales: Array has pending agreements to sell spectrum to Verizon ($1,000 million) and AT&T ($1,018 million). These are expected to close in 2025 and 2026, respectively, subject to regulatory approval.
• Debt Repayment: On August 4, 2025, Array repaid $863 million in term loans and export credit financing. It expects to draw $325 million from a new term loan facility in August 2025.
• Future Costs: Management anticipates significant future costs related to the wind-down of wireless operations, including decommissioning towers, severance, and restructuring expenses.

Investor Verification Checklist

• Transaction Closing: Verify the final cash proceeds from the T-Mobile sale and the exact amount of debt exchanged, as these figures are subject to purchase price adjustments.
• Tax Liability: Confirm the final income tax liability associated with the T-Mobile transaction, currently estimated between $250 million and $300 million.
• Spectrum Sale Approvals: Monitor regulatory approval status for the pending spectrum sales to Verizon and AT&T, which are critical for future liquidity and potential special dividends.
• Decommissioning Costs: Assess the magnitude of future decommissioning and ground lease obligations for towers no longer used by T-Mobile, which could impact future cash flows.
• Dividend Payment: Confirm the payment of the $23.00 special dividend and the timing of any future dividends pending the spectrum sales.