Array Digital Infrastructure (AD) Q2 2024 earnings summary

Executive summary

• Announced a definitive agreement to sell wireless operations and select spectrum assets to T-Mobile for $4.4 billion, with the transaction expected to close in mid-2025; company will retain 4,400 towers, equity partnerships, and about 70% of spectrum assets, with monetization efforts ongoing.

• Entered a definitive agreement to sell OneNeck IT Solutions, with proceeds supporting fiber expansion at TDS Telecom.

• Both UScellular and TDS Telecom reported strong Adjusted EBITDA growth, improved leverage, and increased free cash flow, driven by cost optimization and network investments.

• Regulatory approval process for the T-Mobile transaction is underway, with optimism for a favorable outcome.

• UScellular continues to invest in 5G deployment and is focused on monetizing remaining spectrum assets not included in the T-Mobile deal.

Financial highlights

• Q2 2024 total operating revenues were $927 million, down 3% year-over-year; service revenues declined 2% to $743 million.

• Adjusted OIBDA grew 14% to $227 million, and Adjusted EBITDA increased 13% to $268 million year-over-year.

• Free cash flow for the first half of 2024 was $226 million, compared to $20 million in the prior year period.

• Capital expenditures for Q2 were $165 million, up from $143 million a year ago; full-year guidance is $550–$650 million.

• TDS Telecom Q2 2024 total operating revenues rose 4% year-over-year to $267 million, with Adjusted EBITDA up 32% to $91 million.

Outlook and guidance

• 2024 guidance reaffirmed: service revenues $2.95–$3.05 billion, Adjusted OIBDA $750–$850 million, Adjusted EBITDA $920–$1,020 million, and capital expenditures $550–$650 million.

• TDS Telecom updated 2024 guidance: total operating revenues $1.05–$1.08 billion, Adjusted OIBDA/EBITDA $330–$360 million, capital expenditures $310–$340 million.

• Guidance does not reflect anticipated costs or results from the strategic alternatives review.

• Higher free cash flow anticipated due to increased adjusted EBITDA and unchanged capital spending.

• The T-Mobile transaction is expected to close in mid-2025, subject to regulatory approvals.