Telephone and Data Systems, Inc. (TDS) | Investment Case

1. Company Snapshot

1.a. Company Description

Telephone and Data Systems, Inc., a telecommunications company, provides communications services in the United States.It operates through two segments: UScellular and TDS Telecom.The company offers wireless solutions to consumers and business and government customers, including a suite of connected Internet of things (IoT) solutions, and software applications for monitor and control, business automation/operations, communication, fleet and asset management, smart water solutions, private cellular networks and custom, and end-to-end IoT solutions; wireless priority services and quality priority and preemption options; smartphones and other handsets, tablets, wearables, mobile hotspots, routers, and IoT devices; and accessories, such as cases, screen protectors, chargers, and memory cards, as well as consumer electronics, including audio, home automation and networking products.

It also provides replace and repair services; Trade-In program through which it buys customers' used equipment; internet connections and all-home WI-FI services; TDS TV+, an integrated cloud television platform that offers video content; local and long-distance telephone service, VoIP, and enhanced services; and broadband, IP-based services, and hosted voice and video collaboration services.The company sells its products through retail sales, direct and indirect sales, third-party retailers, and independent agents, as well as through ecommerce and telesales.As of December 31, 2021, it offers its services to customers 5 million wireless connections, and 1.2 million wireline and cable connections.

The company was incorporated in 1968 and is headquartered in Chicago, Illinois.

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1.b. Last Insights on TDS

Telephone and Data Systems' recent performance was driven by several positive factors. The company's Q3 earnings beat estimates, fueled by growth in fiber connections and tower rentals. A new $500 million share repurchase authorization also boosted investor sentiment. Additionally, the company's debt reduction efforts, with net debt dropping from $6.6 billion to $2.2 billion, have strengthened its balance sheet. Furthermore, TDS Telecom is accelerating fiber builds in underserved markets, leveraging FCC subsidies to convert rural copper to high-penetration fiber.

1.c. Company Highlights

Last Price	45.11
Change Percentage	1.90%
Open	43.92
Previous Close	44.27
Market Cap ( Millions)	4872
Volume	347729
Year High	47.8
Year Low	31.07
M A 50	43.61
M A 200	39.21

FCF Yield	3.97%
Dividend Yield	0.35%
ROE	-0.13%
Debt / Equity	37.10%
Net Debt / EBIDTA	129.41%
Price To Book	0.98
Price Earnings Ratio	-824.65
Price To FCF	25.22
Price To sales	1.64
EV / EBITDA	6.6

2. TDS Surpasses Estimates with Strong Q4 2025 Performance

TDS reported actual EPS of $0.07, beating estimates of -$0.06. Revenue growth is expected to be around 3.0% next year, according to analysts' estimates. The company's financial performance was highlighted by the completion of its largest transaction in history, the divestiture of its wireless operations, and a strengthened balance sheet. TDS Telecom revenues are forecasted to be between $1,015 million and $1,055 million, with adjusted EBITDA ranging from $310 million to $350 million. As Chris Bautfeldt noted, the adjusted EBITDA guidance for 2026 includes an impact from divestitures and legacy revenue stream declines, but there is growth due to investments in fiber markets and business transformation efforts.

Publication Date: Feb -24

                                    📋 Highlights
                                    Spectrum Sale & Debt Repayment:
                                                Closed $1,018M spectrum sale to AT&T and repaid $150M term loan debt, strengthening balance sheet.
Fiber Expansion & CapEx:
                                                TDS Telecom targets 200,000–250,000 new fiber service addresses in 2026, with $550M–$600M capital expenditure increase.
Array Guidance:
                                                Array forecasts $200–$215M revenue and $200–$215M adjusted EBITDA in 2026, excluding DISH revenue due to contractual dispute.
C-Band Monetization:
                                                C-band spectrum deemed "attractive" with potential upside from acquirers; no immediate plan to sell noncontrolling interests.
Telecom Revenue & Growth:
                                                TDS forecasts $1.015B–$1.055B telecom revenue in 2026; 6% growth expected excluding DISH, flat with DISH inclusion.

                                

Segment Performance and Outlook

TDS Telecom is expected to drive sales and expand fiber customer growth, with a target of delivering 200,000 to 250,000 new marketable fiber addresses in 2026. Array's business portfolio has three significant drivers of value: a portfolio of over 4,400 towers, wireless spectrum, and minority interests in wireless partnerships. Array is forecasting total operating revenue of $200-$215 million and adjusted EBITDA of $200-$215 million. Excluding DISH revenue, Array expects significant same-store growth, with a growth rate of around 6%.

Valuation and Key Metrics

The current valuation metrics for TDS indicate a P/E Ratio of -799.79, P/B Ratio of 0.95, and EV/EBITDA of 7.89. The company's ROE is -0.13%, and Net Debt / EBITDA is 2.18. The dividend yield is 0.37%, and Free Cash Flow Yield is 4.09%. These metrics suggest that the market is pricing in a challenging environment, but the company's efforts to strengthen its balance sheet and drive growth in its fiber business may lead to improved financial performance.

Growth Initiatives and Strategic Focus

TDS is focused on growing its fiber business, with increased capital expenditures to $550-$600 million, and has identified 300,000 additional fiber edge out service address opportunities. Array is focused on optimizing tower operations and monetizing spectrum, with agreements to sell spectrum to Verizon and AT&T. The company is also exploring opportunities to buy back AD shares in the market, given the implied look-through discount.

3. NewsRoom

VR Advisory Initiated a Position in Telephone and Data Systems. Is the Stock a Buy?

Mar -03

Source: fool.com

What to Know About a $34 Million Exit From Telephone and Data Systems Stock

Feb -26

Source: fool.com

TDS and Array to present at Raymond James 47th Annual Institutional Investors Conference

Feb -24

Source: prnewswire.com

TDS Q4 Earnings Beat Estimates on Strong Revenue Growth

Feb -23

Source: zacks.com

TDS reports fourth quarter and full year 2025 results

Feb -20

Source: prnewswire.com

TDS announces first quarter 2026 dividends

Feb -20

Source: prnewswire.com

Stay Ahead of the Game With TDS (TDS) Q4 Earnings: Wall Street's Insights on Key Metrics

Feb -18

Source: zacks.com

TDS and Array to release fourth quarter operating results and host conference call on February 20, 2026

Feb -13

Source: prnewswire.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (1.00%)

6. Segments

United States Cellular

Expected Growth: 1.0%

United States Cellular's 1.0% growth is driven by increasing postpaid subscribers, higher average revenue per user (ARPU), and growing demand for data services. Additionally, the company's focus on 5G network expansion, cost savings initiatives, and strategic partnerships contribute to its steady growth.

Telephone and Data Systems Telecom

Expected Growth: 1.0%

Telephone and Data Systems Telecom's 1.0% growth is driven by increasing demand for high-speed internet and data services, expansion of 5G network infrastructure, and growing adoption of IoT devices. Additionally, the segment benefits from a strong brand presence, strategic partnerships, and cost savings initiatives.

Corporate, Eliminations and Other

Expected Growth: 1.0%

Corporate: Cost savings initiatives and operational efficiencies drive 1.0% growth. Eliminations: Intersegment eliminations of revenues and expenses between TDS and U.S. Cellular offset, resulting in minimal impact. Other: Growth in TDS' IT and consulting services, as well as its HMS business, contributes to the 1.0% growth rate.

7. Detailed Products

Wireline

Provides wireline services including voice, data, and video services to residential and business customers

Cable

Offers cable television, high-speed internet, and voice services to residential and business customers

Hosted and Managed Services

Provides cloud-based IT solutions, managed services, and data center services to business customers

Wireless

Offers wireless voice and data services to customers through its U.S. Cellular subsidiary

8. Telephone and Data Systems, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for Telephone and Data Systems, Inc. is medium due to the presence of alternative communication services such as VoIP and messaging apps.

Bargaining Power Of Customers

The bargaining power of customers for Telephone and Data Systems, Inc. is low due to the lack of switching options and the company's strong brand presence.

Bargaining Power Of Suppliers

The bargaining power of suppliers for Telephone and Data Systems, Inc. is medium due to the presence of multiple suppliers and the company's moderate dependence on them.

Threat Of New Entrants

The threat of new entrants for Telephone and Data Systems, Inc. is low due to the high barriers to entry and the company's established market presence.

Intensity Of Rivalry

The intensity of rivalry for Telephone and Data Systems, Inc. is high due to the presence of multiple competitors and the company's need to constantly innovate to stay competitive.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	49.71%
Debt Cost	4.65%
Equity Weight	50.29%
Equity Cost	8.03%
WACC	6.35%
Leverage	98.87%

11. Quality Control: Telephone and Data Systems, Inc. passed 1 out of 9 key points

Strong Liquidity

Low Deb

Strong Interest Coverage

Healthy Cash Flow

Operating Inefficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

ATN International

A-Score: 5.3/10

Value: 9.0

Growth: 4.7

Quality: 3.2

Yield: 6.0

Momentum: 5.5

Volatility: 3.7

1-Year Total Return ->

TDS

A-Score: 5.3/10

Value: 8.3

Growth: 3.2

Quality: 3.3

Yield: 3.0

Momentum: 8.5

Volatility: 5.3

1-Year Total Return ->

Shentel

A-Score: 4.7/10

Value: 8.0

Growth: 5.1

Quality: 2.6

Yield: 6.0

Momentum: 2.0

Volatility: 4.7

1-Year Total Return ->

Crexendo

A-Score: 4.6/10

Value: 2.4

Growth: 7.7

Quality: 7.4

Yield: 0.0

Momentum: 8.0

Volatility: 2.3

1-Year Total Return ->

Cable One

A-Score: 3.8/10

Value: 9.8

Growth: 4.1

Quality: 3.1

Yield: 3.0

Momentum: 0.0

Volatility: 2.7

1-Year Total Return ->

Consolidated Communications Holdings

A-Score: 2.8/10

Value: 6.5

Growth: 0.7

Quality: 1.2

Yield: 0.0

Momentum: 6.5

Volatility: 1.7

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

4.33%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

6.35%

Telephone and Data Systems, Inc. - US8794338298

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on TDS

1.c. Company Highlights

Higher Yield

Strong Momentum

Lower Quality

Earnings Beats

Lower Growth

Medium Volatility

Revenues Miss

Earnings Miss

Revenues Beats

Average Growth

Average Yield

Average Quality

Fairly Valued

2. TDS Surpasses Estimates with Strong Q4 2025 Performance

Segment Performance and Outlook

Valuation and Key Metrics

Growth Initiatives and Strategic Focus

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (1.00%)

6. Segments

United States Cellular

Expected Growth: 1.0%

Telephone and Data Systems Telecom

Expected Growth: 1.0%

Corporate, Eliminations and Other

Expected Growth: 1.0%

7. Detailed Products

Wireline

Cable

Hosted and Managed Services

Wireless

8. Telephone and Data Systems, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: Telephone and Data Systems, Inc. passed 1 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

45.11$

Current Price

45.11$

Potential

-0.00%

Expected Cash-Flows

12.e Scoring ^Insights

12.f DCF ^BETA