Array Digital Infrastructure, Inc.

Company Overview

Business Model: Array connects America through digital infrastructure by leasing tower space to tenants and providing ancillary services. The company's primary revenue generation mechanism involves tenants leasing space on Array's communications infrastructure to install network equipment on tower structures. Revenues are influenced by factors such as the quantity and location of installed equipment on the tower. Array also holds noncontrolling interests in primarily wireless operating companies and retains certain wireless spectrum licenses.

Market Position: Array is the fifth largest tower owner and operator of shared wireless communications infrastructure in the United States, owning 4,450 cell towers across 19 states. The company leverages over 40 years of experience in owning and operating towers, providing a robust understanding of wireless customer needs. Array possesses a lower tenancy rate than other tower operators, offering ample leasable vertical real estate in rural, suburban, and urban areas. Over one-third of Array's tower portfolio has no competing structure within a two-mile radius, providing a competitive advantage for colocation growth.

Recent Strategic Developments:

• Business Transformation: On August 1, 2025, United States Cellular Corporation changed its name to Array Digital Infrastructure, Inc., marking a strategic pivot to focus solely on digital infrastructure.
• Wireless Operations Divestiture: On August 1, 2025, Array sold its wireless operations and select spectrum assets to T-Mobile US, Inc. for a total consideration of $4,293.8 million, comprising $2,628.8 million in cash proceeds and $1,665.0 million in debt assumed by T-Mobile.
• Master License Agreement (MLA) with T-Mobile: Concurrent with the divestiture, Array entered into an MLA with T-Mobile, under which T-Mobile agreed to license space on a minimum of 2,015 Array-owned towers for at least 15 years, and extended existing leases for approximately 600 T-Mobile colocations for a new 15-year term. T-Mobile also leases space on approximately 1,800 Array-owned towers on an interim basis for up to 30 months.
• Spectrum Asset Monetization: Array has entered into agreements to sell additional spectrum licenses:
  • To Verizon Communications Inc.: AWS, Cellular, and PCS licenses for $1,000.0 million, expected to close in Q2/Q3 2026.
  • To AT&T: 3.45 GHz and 700 MHz licenses for $1,018.0 million, which closed on January 13, 2026.
  • To T-Mobile: 700 MHz licenses for $85.0 million and 600 MHz licenses for $86.4 million (following a call option exercise), both expected to close in 2026.
• Ground Lease Optimization: Array is actively pursuing strategies to increase ground ownership through purchases and proactive renewals of ground leases.
• Towers Without Tenants Evaluation: Array anticipates having 800 to 1,800 towers without tenants post-T-Mobile integration and is evaluating strategies to unlock value from these assets, including increased leasing, ground rent rationalization, and potential divestment or decommissioning.

Geographic Footprint: Array owns 4,450 towers located in 19 states, with primary operational regions in New England, the Mid-Atlantic, the Midwest and Great Plains, and the Pacific Northwest.

Financial Performance

Revenue Analysis

Profitability Metrics:

• Gross Margin: 51.2% (2025)
• Operating Margin: -56.8% (2025)
• Net Margin: 105.7% (2025)

Investment in Growth:

• R&D Expenditure: Not explicitly disclosed for continuing operations.
• Capital Expenditures: $29.9 million (2025)
• Strategic Investments: Capital expenditures were primarily directed towards tower maintenance, purchases of land interests, new tower builds, and one-time costs associated with migrating the tower light monitoring function to Array's long-term solution. Array also completed the acquisition of the remaining interest of King Street Wireless, LLC and Sunshine Spectrum, LLC for $16.7 million in 2025.

Business Segment Analysis

Array operates as a single reportable segment focused on digital infrastructure.

Digital Infrastructure

Financial Performance:

• Revenue: Site rental revenue was $154.654 million in 2025, representing a 50.7% year-over-year increase from $102.610 million in 2024.
• Operating Margin: -56.8% (2025)
• Key Growth Drivers: The significant increase in revenue was primarily driven by the execution of the T-Mobile MLA, which added a minimum of 2,015 new committed site lease agreements and interim leases for approximately 1,800 towers. The insourcing of sales and leasing operations in early 2025 also contributed to increased service revenue from application and structural analysis fees. Future growth is expected from increasing colocations on existing towers, amendments to existing colocations, and leveraging Array's lower tenancy rate and unique tower locations.

Product Portfolio: Array's product portfolio includes leasing space on its communications infrastructure (monopole, self-support, and guyed towers) and providing ancillary services such as tower site inspections and structural analyses.

Market Dynamics: Array is the fifth largest tower owner in the U.S. and serves major wireless carriers including T-Mobile, AT&T, and Verizon. The demand for tower infrastructure remains high due to continued growth in mobile data consumption, 5G deployment, spectrum build-outs, efforts to bridge the digital divide, and the emergence of next-generation technologies. Array's portfolio offers significant capacity for additional tenants.

Capital Allocation Strategy

Shareholder Returns:

• Share Repurchases: In 2025, Array repurchased 328,835 Common Shares for $20.9 million at an average cost of $63.49 per share. As of December 31, 2025, 658,107 Common Shares remained authorized for repurchase.
• Dividend Payments: Array declared and paid a special dividend of $23.00 per Common and Series A outstanding share on August 19, 2025, following the T-Mobile transaction. A further special dividend of $10.25 per Common and Series A outstanding share was declared on January 13, 2026, and paid on February 2, 2026, totaling $885.5 million, in conjunction with the AT&T spectrum sale.
• Future Capital Return Commitments: Array anticipates declaring another special dividend upon the closure of the Verizon spectrum transaction and may consider regular cash dividends thereafter.

Balance Sheet Position:

• Cash and Equivalents: $113.4 million as of December 31, 2025.
• Total Debt: $674.321 million as of December 31, 2025.
• Net Cash Position: Array held a net debt position of $(560.921) million as of December 31, 2025.
• Credit Rating:
  • Moody's: Ba1 (stable outlook, issued August 2025)
  • Standard & Poor's: BBB- (stable outlook, issued August 2025)
  • Fitch Ratings: BB+ (stable outlook, issued September 2025)
• Debt Maturity Profile: Annual principal payments on long-term debt are approximately $4.1 million (2026), $8.1 million (2027), $8.1 million (2028), $12.2 million (2029), and $292.5 million (2030). The weighted-average interest rate on long-term debt was 6.1% as of December 31, 2025.

Cash Flow Generation:

• Operating Cash Flow: Net cash provided by operating activities from continuing operations was $75.1 million in 2025.
• Free Cash Flow: $45.2 million in 2025 (Operating Cash Flow of $75.1 million minus Capital Expenditures of $29.9 million).

Operational Excellence

Production & Service Model: Array's operational philosophy centers on being an efficient and cost-effective partner for colocation, connecting America through digital infrastructure. The company leases tower space and provides ancillary services, with a recent strategic move to fully insource sales and leasing operations in early 2025.

Supply Chain Architecture: Key Suppliers & Partners:

• Ground Lessors: Array's operations are significantly dependent on ground leases, with approximately 18% of its portfolio on deeded land or perpetual easements. Over 65% of towers on leased land have lease expiration dates ten years or more in the future.
• T-Mobile US, Inc.: A key strategic partner through the Master License Agreement, which commits T-Mobile to lease space on Array's towers.

Facility Network:

• Towers: Array owns 4,450 towers across 19 states. These towers, with an average height of 260 feet (ranging from 60 to 600 feet), consist of monopole, self-support (lattice), and guyed structures. Substantially all towers have adequate capacity and ground space for additional tenants. Over one-third of the portfolio has no competing structure within a two-mile radius.

Operational Metrics:

• Owned towers: 4,450 (as of December 31, 2025)
• Number of colocations: 4,572 (as of December 31, 2025), including T-Mobile MLA committed sites.
• Tower tenancy rate: 1.03 (as of December 31, 2025)

Market Access & Customer Relationships

Go-to-Market Strategy: Distribution Channels: Array employs a direct sales approach, utilizing a dedicated sales team to support both carrier and non-carrier customers. The company has recently expanded its team to enhance relationships with non-carrier clients.

Customer Portfolio: Enterprise Customers: Array's largest tenants include T-Mobile, AT&T, and Verizon. The business is substantially dependent on these large carriers, particularly T-Mobile, due to the Master License Agreement.

• Customer Concentration: A significant portion of Array's revenues is derived from a small number of tenants in the wireless industry. DISH Wireless, a contractual customer, has failed to make certain payments due to Array under their Master Lease Agreement, which generated $6.5 million in site rental revenues in 2025 and has contractual commitments through 2035.

Geographic Revenue Distribution: Array's operations span 19 states, with sites primarily located in New England, the Mid-Atlantic, the Midwest and Great Plains, and the Pacific Northwest. Specific revenue distribution percentages by region are not disclosed.

Competitive Intelligence

Market Structure & Dynamics

Industry Characteristics: The tower industry is characterized by robust competition and high demand for infrastructure, driven by continuous growth in mobile data consumption, 5G deployments, spectrum build-outs, efforts to bridge the digital divide, and the emergence of next-generation technologies.

Competitive Positioning Matrix:

Direct Competitors

Primary Competitors: Array faces competition from large tower operators such as American Tower Corporation, Crown Castle Inc, and SBA Communications Corporation, as well as regional tower operators, build-to-suit providers, owners of non-tower infrastructure (e.g., rooftops), and wireless providers that own their infrastructure. Many of these competitors are larger, have greater financial resources, and possess more advantageous tower locations and nationwide scale.

Emerging Competitive Threats: Potential threats include the development and implementation of new technologies that enhance wireless network efficiency or architecture, such as satellites and mesh transmission systems, which could reduce demand for traditional tower-based services, particularly in rural markets. The lack of viable use cases to monetize new 6G technologies could also impact future demand.

Competitive Response Strategy: Array's strategy focuses on driving increased colocation on its portfolio of unique tower locations, leveraging its lower tenancy rate to accommodate additional tenants, and supporting connectivity in its communities. The company has a dedicated sales team to foster growth with both carrier and non-carrier customers.

Risk Assessment Framework

Strategic & Market Risks

Market Dynamics: Array faces risks from increasing competition in the tower industry, which could negatively impact revenues and growth. A substantial portion of Array's revenues is derived from a small number of wireless industry tenants, making the company particularly reliant on relationships with major carriers like T-Mobile. The failure of DISH Wireless to meet contractual payment obligations highlights customer concentration risk. Technology Disruption: Advances or changes in wireless network technologies, such as satellites or mesh transmission systems, could reduce the need for tower-based services and adversely affect Array's business.

Operational & Execution Risks

Real Estate Rights: A significant portion of Array's towers are on leased land, posing a risk if landowners do not renew agreements, lose land rights, or transfer interests to ground lease aggregators, potentially impacting Array's ability to renew on commercially viable terms. Talent Management: The inability to attract, develop, and retain outstanding talent, including key management and technical personnel, could adversely affect Array's business and strategy execution. Acquisitions & Divestitures: Future acquisitions or divestitures carry risks related to identification of assets, competition, negotiation of terms, integration, expenditures, and regulatory approvals.

Financial & Regulatory Risks

Market & Financial Risks: Array's future cash flow and liquidity, level of indebtedness, and access to capital are subject to uncertainty. Deterioration in capital markets, changes in interest rates, or credit rating downgrades (for Array or its parent, TDS) could limit financing availability or increase costs. Fixed-rate annual escalators on colocation revenue contracts pose a risk if ground lease escalations exceed revenue escalations, or if high inflation erodes real dollar revenues and margins. Credit & Liquidity: Array's revolving credit and term loan agreements contain financial covenants, including a Consolidated Leverage Ratio not to exceed 3.50 to 1.00 and a Consolidated Interest Coverage Ratio not lower than 3.00 to 1.00. Non-compliance could restrict borrowing capacity. Regulatory & Compliance Risks: Array's operations are subject to extensive federal, state, and local regulations (FCC, FAA, land use, environmental). Failure to comply with existing or new requirements, or adverse regulatory decisions, could lead to penalties, increased costs, or operational delays. Legal Proceedings: Array is involved in legal proceedings, including a False Claims Act inquiry by the United States Department of Justice related to past spectrum license auctions (with the King Street case concluded, but the Advantage case remanded for further proceedings) and a stockholder derivative lawsuit. Outcomes of such proceedings could impose restraints on business or result in significant costs.

Geopolitical & External Risks

Geographic Dependencies: Array's business is exposed to risks from extreme weather events, climate-related events, natural disasters (e.g., wildfires), and structural deficiencies, which could damage towers, interrupt service, or incur significant costs.

Leadership & Governance

Executive Leadership Team

Leadership Continuity: Array conducts annual talent reviews and succession planning for the CEO and executive leadership team, reviewed at least annually by the Board of Directors.

Board Composition: Array's Board of Directors consists of nine directors. Telephone and Data Systems, Inc. (TDS) owns over 80% of Array's combined common shares and controls 96% of its combined voting power, enabling TDS to elect all nine directors. Six of the nine directors also serve as directors and/or executive officers of TDS and/or Array, creating potential for conflicts of interest.

Human Capital Strategy

Workforce Composition: As of December 31, 2025, Array had approximately 60 full-time and part-time associates.

Talent Management: Acquisition & Retention: Array is committed to attracting, recruiting, and retaining qualified and experienced associates, including key management personnel. The company offers a competitive wage and benefits package, a safe workplace, and an engaging environment. Diversity & Development: Array provides job-specific, safety, security, and fraud awareness training, along with programs for continuous growth such as educational assistance, developmental assignments, and mentoring. Associate Resource Groups promote dynamic community experiences and professional development.

Environmental & Social Impact

Social Impact Initiatives: Array is committed to supporting and enhancing the communities it serves through local and philanthropic initiatives, encouraging associates to volunteer and support local organizations.

Regulatory Environment & Compliance

Regulatory Framework: Industry-Specific Regulations: Array's operations are subject to regulation by the Federal Communications Commission (FCC) and Federal Aviation Administration (FAA) concerning tower construction, modification, maintenance, registration, lighting, and marking. New tower construction and modifications are also subject to the National Environmental Policy Act, National Historic Preservation Act, and other federal, state, and local regulations, including land use, subdivision, and zoning restrictions. As a real estate owner and operator, Array is also subject to environmental and hazardous materials regulations. Legal Proceedings:

• DOJ False Claims Act Inquiry: An inquiry by the United States Department of Justice under the federal False Claims Act, initiated in 2018, related to Array's participation in wireless spectrum license auctions. While the King Street case was concluded in January 2026 with the Supreme Court denying certiorari, the Advantage case was remanded to the district court for further proceedings, with a motion to dismiss filed by defendants in January 2026.
• Stockholder Derivative Lawsuit: A stockholder derivative lawsuit was filed in January 2025 against certain TDS and Array directors and officers, alleging breach of fiduciary duty related to public statements on Array's business strategies. A status conference on the motion to dismiss is scheduled for April 24, 2026.

Tax Strategy & Considerations

Tax Profile: Array is included in a consolidated federal income tax return with other members of the TDS consolidated group but calculates its income tax expense for financial statement purposes as if it were a separate affiliated group. The effective income tax rate for continuing operations was -22.1% in 2025.

Insurance & Risk Transfer

Risk Management Framework: Array maintains insurance coverage for estimated costs of replacing damaged towers and property damage. However, there is no assurance that such coverage will remain readily available or adequate for all potential exposures.