10-K/A: Array 10-K/A adds LA Partnership audit

Array Digital Infrastructure filed a 10-K/A solely to include audited financials for its 5.5% Los Angeles SMSA Limited Partnership interest, plus auditor consent and updated CEO/CFO certifications, with no other changes to the original 10-K.

Summary

• Filed Amendment No. 1 to Form 10-K for year ended December 31, 2025 to include separate audited financial statements of Los Angeles SMSA Limited Partnership (LA Partnership), a significant equity investee under Rule 3-09; added auditor consent and updated Section 302 and 906 certifications; no other updates to the original 10-K.
• Array holds a 5.5% limited partnership interest in LA Partnership and accounts for it under the equity method.
• LA Partnership (dollars in thousands): 2025 operating revenues $6,015,848; operating income $1,152,790; net income $1,137,226; operating cash flow $537,331; distributions to partners $1,446,000.
• LA Partnership balance sheet (12/31/2025, $ in thousands): total assets $6,293,986; total partners’ capital $4,353,927; operating lease liabilities PV $940,782 (current $174,332; long term $766,450); financing obligation $177,874 (current $28,035; long term $149,839).
• LA Partnership remaining performance obligations totaled $2,746,866 at 12/31/2025, with substantially all expected to be recognized over the next 36 months.
• LA Partnership spectrum service agreement obligations to Verizon Wireless total $2,688,370 over future periods.
• EY issued an unqualified opinion on LA Partnership’s financials dated March 30, 2026; EY consent filed as Exhibit 23.2.
• CEO and CFO provided updated Section 302 and 906 certifications dated March 30, 2026.
• Array share data: as of February 28, 2026, 53.4 million Common Shares and 33.0 million Series A Common Shares outstanding; aggregate market value of non‑affiliate Common Shares approximately $923 million based on June 30, 2025 price of $63.97.
• Subsequent event (LA Partnership note): Verizon completed the acquisition of Starry on January 30, 2026, expected to enhance fixed wireless access capabilities in the Los Angeles market; LA Partnership will receive net economic benefit in its market.

Sentiment

Score: 6

Explanation: StockSavvy.ai views this as a neutral-to-slightly-positive procedural update: compliance achieved with a clean audit for a profitable investee, but no incremental guidance or company-wide financial changes.

Positives

• Procedural compliance: added required Rule 3-09 audited financials for LA Partnership, plus auditor consent and updated executive certifications.
• Clean audit for LA Partnership: EY issued an unqualified opinion dated March 30, 2026.
• LA Partnership remains strongly profitable: 2025 net income $1,137,226k on operating revenues of $6,015,848k; operating income $1,152,790k.
• Robust scale and liquidity sources at LA Partnership: operating cash flow $537,331k in 2025 and $933,528k net cash provided by investing activities (driven by beneficial interest collections).
• No impairment indicated on wireless licenses; qualitative assessments in 2025 supported carrying values.
• Tower monetization structures in place; financing obligations manageable ($177,874k total; current $28,035k, long-term $149,839k at 12/31/2025).
• Subsequent event tailwind: Verizon’s acquisition of Starry (Jan 30, 2026) expected to augment fixed wireless access capabilities in LA Partnership’s market.

Negatives

• No new company-wide (Array) financial updates or guidance; amendment is administrative in scope.
• LA Partnership distributions ($1,446,000k in 2025) exceeded operating cash flow ($537,331k), with the gap funded by other investing/financing sources.
• LA Partnership equipment revenues ($1,132,571k) trailed cost of equipment ($1,250,846k) in 2025, highlighting negative equipment margins typical in the industry.
• Credit metrics show elevated write-offs at LA Partnership: device payment plan receivable write-offs of $50,055k and wireless service receivable write-offs of $23,433k in 2025; allowance for device receivables rose to $28,615k.

Risks

• Affiliate dependence and pricing: many LA Partnership revenues/costs are processed by or allocated from Verizon Wireless and may not reflect arm’s-length market rates.
• Legal and regulatory exposure: lawsuits and claims (including consumer class actions) could incur costs; no accrual recorded and outcomes not predictable.
• Spectrum service agreement obligations to Verizon Wireless total $2,688,370k over future periods, representing significant ongoing costs.
• Asset-backed securitization exposure: continuing involvement via beneficial interests; maximum loss exposure limited to outstanding beneficial interest net of allowance, but collections depend on customer payments.
• Lease and tower monetization obligations: operating lease liabilities PV of $940,782k and financing obligations of $177,874k at 12/31/2025; potential (though considered remote) requirement to pay certain ground leases if counterparties default.
• Credit losses on device payment plan and service receivables necessitate ongoing provisioning and could increase in adverse conditions.
• Tax examinations: the partnership (pass-through) remains subject to examinations back to 2021; outcomes could require reevaluation of tax positions.

Future Outlook

LA Partnership’s subsequent event disclosure notes Verizon’s January 30, 2026 acquisition of Starry is expected to provide additional fixed wireless access capabilities and enhance delivery of high-speed internet to multi-dwelling units and urban communities in the Los Angeles market, with LA Partnership receiving the net economic benefit in its market.

Management Comments

• Amendment filed solely to add LA Partnership audited financial statements as Exhibit 99.1; also adds the LA Partnership auditor’s consent and new CEO/CFO certifications; no other updates to the original Form 10-K.
• CEO certification: Based on my knowledge, this report does not contain any untrue statement of a material fact or omit a material fact needed to make the statements not misleading (dated March 30, 2026).
• CFO certification: Based on my knowledge, this report does not contain any untrue statement of a material fact or omit a material fact needed to make the statements not misleading (dated March 30, 2026).
• Section 906 certifications: The 10-K/A fully complies with Exchange Act requirements and fairly presents, in all material respects, the financial condition and results of operations (dated March 30, 2026).

Industry Context

StockSavvy.ai notes this amendment aligns with standard SEC Rule 3-09 practices when an equity-method investee becomes significant. The LA Partnership disclosures reflect common U.S. wireless industry trends: ongoing tower monetization (Vertical Bridge and American Tower arrangements), widespread use of device receivable securitizations and beneficial interests, growing fixed wireless access (boosted by Verizon’s Starry acquisition), and significant long-term lease and spectrum commitments typical among carriers.

Comparison to Industry Standards

• LA Partnership’s structural reliance on affiliate transactions and cost allocations is typical for regional wireless partnerships managed by national carriers (e.g., Verizon-affiliated partnerships), and consistent with industry practice.
• Tower monetization and sale-leaseback-style structures with major tower companies (e.g., Vertical Bridge, American Tower) mirror broader U.S. carrier strategies to unlock capital while maintaining network access.
• Use of asset-backed securitizations of device installment receivables and retention of beneficial interests is standard among large U.S. carriers (e.g., Verizon, AT&T, T-Mobile) to optimize funding and liquidity for handset programs.
• Fixed wireless access expansion (aided by the Starry acquisition) is consistent with industry emphasis on FWA growth by nationwide carriers leveraging existing spectrum and network assets.

Legal Proceedings

• LA Partnership (through Verizon Wireless) is subject to various lawsuits and claims (including consumer class actions and wireless usage-related claims); no accrual recorded; outcomes not currently predictable.

Related Party Transactions

• LA Partnership revenues and expenses substantially processed by or allocated from Verizon Wireless; not necessarily at arm’s-length market rates.
• Spectrum service agreements with Verizon Wireless totaling $2,688,370k in future obligations.
• Due to/from affiliate balances with Verizon reflecting cash management, cost allocations, and asset transfers; interest based on short-term Applicable Federal Rate.
• Asset-backed securitization of device and service receivables via Verizon ABS LLC and trust entities; LA Partnership holds beneficial interests and Verizon services the receivables.
• LA Partnership receives proportionate net economic benefit from TracFone operations in its market (insignificant in 2025, 2024, 2023).

Stakeholder Impact

• Shareholders: Procedural compliance reduces regulatory risk; investee profitability supports equity-method earnings contribution.
• Creditors: No new indebtedness disclosed in this amendment; LA Partnership lease and spectrum obligations remain sizable but scheduled.
• Employees and customers: No operational changes disclosed; subsequent event suggests potential service enhancements via FWA expansion.
• Partners (LA Partnership): Significant distributions ($1,446,000k in 2025) continue, reflecting cash return from operations/investing activities.

Next Steps

• Recognize LA Partnership’s remaining performance obligations ($2,746,866k) substantially over the next 36 months.
• Realize net economic benefits in LA Partnership’s market from Verizon’s January 30, 2026 Starry acquisition as integration proceeds.

Key Dates

Recommendation

This amendment is administrative, adding audited financials for a significant investee with no changes to Array’s previously reported results or guidance. While the LA Partnership remains profitable with a clean audit and potential FWA tailwinds, the filing itself does not alter the investment thesis; maintaining a hold is appropriate pending broader strategic or financial updates.

Keywords

Array Digital Infrastructure, 10-K/A, Los Angeles SMSA Limited Partnership, Rule 3-09, equity method investee, audited financial statements, Ernst & Young LLP, Verizon Wireless, device payment plan receivables, asset-backed securities, beneficial interest, tower monetization, Vertical Bridge, American Tower, operating leases, spectrum service agreements, fixed wireless access, Starry acquisition