10-K: Array Digital Infrastructure Pivots to Towers, Boosts Revenue

Array Digital Infrastructure, formerly United States Cellular Corporation, reports significant strategic shifts in 2025, including the sale of its wireless operations and spectrum assets, alongside strong growth in site rental revenues and a new credit agreement.

Summary

• United States Cellular Corporation changed its name to Array Digital Infrastructure, Inc. on August 1, 2025, and its ticker symbol to 'AD' on August 12, 2025.
• The company sold its wireless operations and select spectrum assets to T-Mobile US, Inc. on August 1, 2025, for a total consideration of $4,293.8 million, comprising $2,628.8 million in cash and $1,665.0 million in debt assumed by T-Mobile.
• A loss of $242.2 million was recognized in 2025 from the sale of wireless operations and select spectrum assets.
• Array entered into a Master License Agreement (MLA) with T-Mobile, licensing space on a minimum of 2,015 Array-owned towers for at least 15 years, and extending existing leases for approximately 600 towers.
• Additional spectrum license sales agreements were signed with Verizon ($1,000.0 million, expected Q2/Q3 2026 close), AT&T ($1,018.0 million, closed January 13, 2026), and T-Mobile ($85.0 million for 700 MHz and $86.4 million for 600 MHz, both expected 2026 close).
• Net income from continuing operations significantly improved to $172.267 million in 2025, compared to a loss of $80.464 million in 2024.
• Site rental revenues increased by 51% to $154.654 million in 2025 from $102.610 million in 2024, primarily due to the T-Mobile MLA.
• Adjusted EBITDA from continuing operations grew 59% to $194.316 million in 2025 from $121.921 million in 2024.
• Array repaid $713.3 million in term loans and $150.0 million in export credit financing in August 2025, and subsequently borrowed $325.0 million under a new term loan with CoBank, ACB.
• The unsecured revolving credit agreement was amended in December 2025, extending its maturity to December 2030 but reducing its maximum borrowing capacity from $300.0 million to $100.0 million.
• Special dividends of $23.00 per share (August 2025) and $10.25 per share (January 2026) were declared and paid to shareholders.
• DISH Wireless has claimed its obligations under its Master Lease Agreement are excused, impacting $6.5 million in 2025 site rental revenues and future commitments, a claim Array believes is without merit.
• An impairment loss of $47.7 million was recorded on retained high-band wireless spectrum licenses in Q3 2025 due to suppressed pricing and decreased demand.

Sentiment

Score: 8

Explanation: StockSavvy.ai views this as a very positive report, reflecting a successful strategic transformation from a wireless carrier to a focused digital infrastructure company. The significant increase in site rental revenue and Adjusted EBITDA from continuing operations, coupled with substantial debt reduction and future spectrum monetization plans, indicates a strong financial trajectory despite the one-time loss from the wireless operations sale.

Positives

• Net income from continuing operations significantly improved from a loss of $80.464 million in 2024 to a gain of $172.267 million in 2025.
• Adjusted EBITDA from continuing operations increased by 59% year-over-year to $194.316 million, indicating strong operational performance in the core tower business.
• Site rental revenues increased by 51% to $154.654 million in 2025, driven by the execution of the T-Mobile Master License Agreement (MLA).
• Successful divestiture of wireless operations and significant spectrum assets generated substantial cash proceeds of $2,628.8 million and reduced debt by $1,665.0 million.
• The new long-term MLA with T-Mobile ensures stable revenue for a minimum of 15 years, covering at least 2,015 towers.
• Expected book gain of approximately $155.0 million ($116.0 million net of tax) from the AT&T spectrum sale, which closed in January 2026.
• Favorable reductions to valuation allowances on deferred tax assets due to the expected realization of taxable income from asset sales.
• The King Street False Claims Act case concluded in Array's favor, with the Supreme Court denying the petition for certiorari.
• Array's tower portfolio has a lower tenancy rate than other tower operators, providing ample capacity for additional tenants and greater opportunity for lease-up.
• Over one-third of Array's towers have no competing structure within a two-mile radius, indicating unique and valuable locations.

Negatives

• Recognized a loss of $242.2 million on the sale of wireless operations and select spectrum assets to T-Mobile in 2025.
• DISH Wireless has claimed its contractual obligations under its Master Lease Agreement are excused, potentially impacting $6.5 million in 2025 site rental revenues and future commitments through 2035.
• Incurred a $47.7 million impairment loss on retained high-band wireless spectrum licenses in Q3 2025 due to suppressed pricing and decreased demand.
• Uncertainty regarding which towers T-Mobile will permanently locate on, potentially leaving 800-1,800 towers without tenants, which may lead to significant decommissioning costs.
• Selling, general and administrative expenses in the second half of 2025 included costs to support the wind-down of legacy wireless operations, which are expected to persist at a declining rate into future periods.
• Interest expense increased to $(28.222) million in 2025 from $(12.405) million in 2024 due to a new term loan and lower capitalized interest.
• The maximum borrowing capacity of the unsecured revolving credit agreement was reduced from $300.0 million to $100.0 million.

Risks

• An inability to monetize remaining spectrum assets and ongoing costs to retain spectrum could adversely affect operations.
• Increasing competition in the tower industry could adversely affect Array's revenues, negatively impact future growth, and increase its costs to compete.
• Economic and business risks associated with fixed-rate annual escalators on colocation revenue contracts, particularly if ground lease escalations exceed revenue escalations or if high inflation persists.
• A substantial portion of Array's revenues are derived from a small number of tenants concentrated in the wireless industry, making Array vulnerable to their loss or financial difficulties.
• Inability to protect Array's real estate rights, with respect to land leases, could have an adverse effect on its business, financial condition, or results of operations.
• Advances or changes in technology could reduce the need for tower-based services.
• Array's business, financial condition, or results of operations may be adversely impacted by extreme weather events, climate-related events, natural disasters (including wildfires), and other unforeseen events.
• An inability to attract, develop, and retain outstanding talent throughout all levels of the organization could have an adverse effect on Array's business.
• Costs, integration problems, or other factors associated with acquisitions or divestitures of assets could have an adverse effect on Array's business.
• Uncertainty in Array's or TDS' future cash flow and liquidity, its level of indebtedness, or the inability to access capital could limit or restrict the availability of financing on acceptable terms and prices.
• Array has significant investments in wireless operating entities that it does not control, and losses in the value of or cash flows from such investments could have an adverse effect.
• Failure by Array to timely or fully comply with any existing applicable legislative and/or regulatory requirements or changes thereto could adversely affect Array's business.
• Settlements, judgments, restraints on its current or future manner of doing business, and/or costs resulting from pending and future legal and policy proceedings could have an adverse effect.
• Potential conflicts of interests between TDS (controlling shareholder) and Array.
• Certain matters, such as control by TDS and provisions in the Array Restated Certificate of Incorporation, may serve to discourage or make more difficult a change in control of Array.
• Array has experienced, and expects to experience, cyber-attacks or other breaches of information technology security of varying degrees on a regular basis, which could have an adverse effect.
• Disruption in credit or other financial markets, a deterioration of U.S. or global economic conditions, or other events could impede Array's access to or increase the cost of financing its operating and investment activities.

Future Outlook

Array expects Selling, general and administrative expenses related to the wind-down of legacy wireless operations to persist at a declining rate into future periods. T-Mobile is anticipated to cancel interim leases before their full 30-month duration, which will lead to a corresponding decline in revenue. The strategic alternatives review process is ongoing to finalize the Verizon and T-Mobile spectrum transactions and to opportunistically monetize remaining spectrum assets. Array expects to record a book gain of approximately $155.0 million ($116.0 million net of tax expense) during the first quarter of 2026 from the AT&T spectrum sale. Capital expenditures for 2026 are projected to be between $25.0 million and $35.0 million, allocated to land interests, tower maintenance, new tower builds, and migration of tower light monitoring. The Board of Directors expects to declare a special dividend upon the closure of the Verizon transaction and may consider declaring regular cash dividends thereafter. Array aims to unlock significant value from its towers without tenants through increased leasing, ground rent rationalization, and potential divestment or decommissioning. Starting in 2026, Array will no longer contribute to the TDS-sponsored defined contribution pension plan.

Management Comments

• "Array has built a strong and focused organization that has been and will be relied upon as an efficient and cost-effective partner for colocation."
• "Array believes that on balance there is significant value in its towers without tenants portfolio that it will strive to unlock through a combination of activities, including increased leasing, ground rent rationalization, and if necessary, divesting, including potential decommissioning, for these locations."
• "Array believes that it was in compliance as of December 31, 2025 with all such financial covenants."
• "Array believes that it was in compliance as of December 31, 2025, with all covenants and other requirements set forth in the Array long-term debt indentures."
• "Array believes that the Relators claims are without merit and that Advantages and King Streets participation in FCC auctions complied with applicable law and FCC Rules."
• "Array is unable at this time to determine whether the outcome of these actions would have a material impact on its results of operations, financial condition, or cash flows. Array intends to contest plaintiffs' claims vigorously on the merits."

Industry Context

StockSavvy.ai notes that Array Digital Infrastructure's strategic pivot from a wireless carrier to a pure-play digital infrastructure provider aligns with broader industry trends of infrastructure monetization and specialization. The high demand for tower infrastructure, driven by 5G deployment, spectrum build-outs, and efforts to bridge the digital divide, positions Array favorably, especially given its lower tenancy rate compared to larger competitors like American Tower, Crown Castle, and SBA Communications. The reliance on a few large wireless carriers (T-Mobile, AT&T, Verizon) is typical for the tower industry, but also introduces concentration risk. The challenges in monetizing high-band spectrum reflect industry-wide difficulties in operationalizing these frequencies.

Comparison to Industry Standards

• Array is the fifth largest tower owner and operator of shared wireless communications infrastructure in the United States.
• Array's tenancy rate is lower than other tower operators, providing sufficient capacity for additional tenants and greater opportunity for lease-up, contrasting with more mature tower portfolios that may have higher tenancy rates but less organic growth potential from new colocations.
• The fixed-rate annual escalators on colocation revenue contracts are a common industry practice, but the risk of ground lease escalators exceeding revenue escalators is a specific concern for tower companies.
• Array's credit ratings (Moody's Ba1, S&P BBB-, Fitch BB+) indicate a solid but not top-tier investment grade profile, which is comparable to other mid-cap infrastructure players but generally lower than the largest, more diversified tower companies.

Corporate Governance

Legal Proceedings

• **DOJ False Claims Act (Advantage Spectrum, L.P. case)**: An investigation by the United States Department of Justice (DOJ) regarding Array's participation in wireless spectrum license auctions. The D.C. Circuit reversed the district court's dismissal on September 26, 2025, remanding the case for further proceedings. Defendants filed a motion to dismiss on January 22, 2026. Array believes the claims are without merit.
• **DOJ False Claims Act (King Street Wireless, L.P. case)**: A similar case to Advantage Spectrum, L.P. The U.S. Court of Appeals for the D.C. Circuit affirmed the district court's dismissal in April 2025. The Supreme Court denied the petition for certiorari on January 12, 2026, concluding this case.
• **Stockholder Derivative Lawsuit**: Filed on January 31, 2025, in the Circuit Court of Cook County, Illinois, Chancery Division, against certain TDS and Array directors and officers, and nominal defendant TDS. The lawsuit alleges breach of fiduciary duty related to public statements. A motion to dismiss was filed on July 23, 2025, and a status conference is set for April 24, 2026. Array intends to contest the claims vigorously.

Related Party Transactions

• Array is billed for services received from TDS based on specific expenses and allocations of common expenses; billings from TDS to Array totaled $51.8 million in 2025.
• Some agreements between Array and TDS were established prior to Array's initial public offering and may not reflect terms obtainable from an unrelated third party through arms-length negotiations.
• TDS owns 100% of Array's Series A Common Shares and approximately 70% of its Common Shares, controlling 96% of Array's combined voting power, which allows TDS to effectively elect all of Array's nine directors.
• Six of Array's nine directors are also directors and/or executive officers of TDS and/or Array, creating potential for conflicts of interest.
• Subordination agreements exist between TDS, Array, and administrative agents for lenders, subordinating certain intercompany indebtedness from Array to TDS (in excess of specified thresholds) to the obligations of lenders under Array's credit agreements.

Stakeholder Impact

• **Shareholders**: Received significant special dividends ($23.00/share in August 2025 and $10.25/share in January 2026). Potential for future regular dividends and stock price influence from strategic shifts and asset sales.
• **Employees**: Experienced significant changes due to the wind-down of wireless operations, including costs related to employee compensation, severance, and stock awards.
• **Customers (Tenants)**: T-Mobile has a new long-term Master License Agreement, ensuring continued service. Other tenants benefit from Array's focused digital infrastructure business.
• **Creditors**: Benefited from substantial debt reduction through the T-Mobile transaction. New term loan and amended revolving credit agreement are in place, with Array reporting compliance with debt covenants.
• **Regulatory Authorities**: Ongoing regulatory approvals are required for spectrum sales. Array's tower operations remain subject to compliance with FCC and FAA regulations.

Next Steps

• Continue partnership with T-Mobile to implement the provisions of the long-term MLA, including the execution of 2,015 committed site lease agreements.
• Drive incremental tenancies above the T-Mobile MLA commitment.
• Increase ground ownership position through continued ground lease purchases and proactive renewals.
• Evaluate the portfolio of 800-1,800 towers without tenants to assess leasability, rationalize ground rent, and consider divestment or decommissioning.
• Work toward closing the Verizon and T-Mobile spectrum transactions signed during 2024 and 2025.
• Opportunistically monetize remaining spectrum assets not subject to executed agreements.
• Expects to record a book gain of approximately $155.0 million ($116.0 million net of tax expense) during the first quarter of 2026 from the AT&T spectrum sale.
• The Board of Directors expects to declare a special dividend upon the closure of the Verizon transaction and may consider declaring regular cash dividends thereafter.
• Capital expenditures for 2026 are expected to be between $25.0 million and $35.0 million.
• A status conference on the stockholder derivative lawsuit is set for April 24, 2026.
• Defendants filed a motion to dismiss in the Advantage Spectrum, L.P. case on January 22, 2026.

Key Dates

Recommendation

Array Digital Infrastructure has undergone a significant and largely successful strategic transformation, divesting its wireless operations to become a focused digital infrastructure provider. The substantial cash proceeds and debt reduction are positive, and the new T-Mobile MLA provides a strong revenue base. However, the company faces ongoing challenges in monetizing remaining spectrum, potential decommissioning costs for towers without tenants, and the unresolved DISH Wireless dispute. While the long-term outlook for digital infrastructure is strong, the immediate future involves integration, optimization, and resolution of existing issues, suggesting a 'hold' position until these factors provide clearer direction.

Keywords

Digital Infrastructure, Cell Towers, Spectrum Licenses, T-Mobile, AT&T, Verizon, Divestiture, Wireless Operations, Credit Agreement, Financial Performance, 10-K, Telecommunications, Debt, Dividends, Corporate Governance, Asset Sales