Financial Analysis

Note 15 Commitments and Contingencies Indemnifications TDS enters into agreements in the normal course of business that provide for indemnification of counterparties. The terms of the indemnifications vary by agreement. The events or circumstances that would require TDS to perform under these indemnities are transaction specific; however, these agreements may require TDS to indemnify the counterparty for costs and losses incurred from litigation or claims arising from the underlying transaction. TDS is unable to estimate the maximum potential liability for these types of indemnifications as the amounts are dependent on the outcome of future events, the nature and likelihood of which cannot be determined at this time. Historically, TDS has not made any significant indemnification payments under such agreements. Legal Proceedings TDS is involved or may be involved from time to time in legal proceedings before the FCC, other regulatory authorities, and/or various state and federal courts. TDS had no material accruals with respect to legal proceedings and unasserted claims as of both December 31, 2025 and 2024. In April 2018, the United States Department of Justice (DOJ) notified TDS that it was conducting inquiries of Array and TDS under the federal False Claims Act relating to Arrays participation in wireless spectrum license auctions 58, 66, 73 and 97 conducted by the FCC. Array is or was a limited partner in several limited partnerships which qualified for the 25% bid credit …

CommitmentsAndContingenciesDisclosureTextBlock · excerpt; the full note is in the filing

Note 13 Debt Revolving Credit Agreements At December 31, 2025, TDS and Array had unsecured revolving credit agreements available for general corporate purposes. In December 2025, TDS and Array amended the agreements to extend the maturity date to December 2030 and the maximum borrowing capacity for the Array agreement was reduced from $300.0 million to $100.0 million. Amounts under the agreements may be borrowed, repaid and reborrowed from time to time until maturity. The following table summarizes the unsecured revolving credit agreements as of December 31, 2025: TDS Array (Dollars in thousands) Maximum borrowing capacity $ 400,000 $ 100,000 Letters of credit outstanding $ 592 $ 57 Amount available for use $ 399,408 $ 99,943 Borrowings under the TDS and Array revolving credit agreements bear interest at a rate of Secured Overnight Financing Rate (SOFR) plus 1.50%. TDS and Array may select a borrowing period of either one, two, three or six months (or other period of twelve months or less if requested by TDS or Array and approved by the lenders). TDS and Arrays credit spread and commitment fees on their revolving credit agreements may be subject to increase if their current credit ratings from nationally recognized credit rating agencies are lowered, and may be subject to decrease if the ratings are raised. Unsecured Term Loan Agreements In August 2025, TDS repaid the entire outstanding borrowings under all of its unsecured term loan credit agreements of $781.3 million. TDS i …

DebtDisclosureTextBlock · excerpt; the full note is in the filing

In the following table, TDS' revenues are disaggregated by type of service, which represents the relevant categorization of revenues for TDS reportable segments, and timing of recognition. Service revenues are recognized over time and Equipment and product sales are recognized at a point in time. Year Ended December 31, 2025 TDS Telecom Array All Other Total (Dollars in thousands) Revenues from contracts with customers: Type of service: Residential $ 729,978 $ $ $ 729,978 Commercial 137,258 137,258 Wholesale 167,457 167,457 Other service 8,307 (1,842) 6,465 Service revenues from contracts with customers 1,034,693 8,307 (1,842) 1,041,158 Equipment and product sales 623 29,122 29,745 Total revenues from contracts with customers 1 $ 1,035,316 $ 8,307 $ 27,280 $ 1,070,903 Year Ended December 31, 2024 TDS Telecom Array All Other Total (Dollars in thousands) Revenues from contracts with customers: Type of service: Residential $ 739,952 $ $ $ 739,952 Commercial 147,564 147,564 Wholesale 169,352 169,352 Other service 323 48,914 49,237 Service revenues from contracts with customers 1,056,868 323 48,914 1,106,105 Equipment and product sales 821 69,723 70,544 Total revenues from contracts with customers 1 $ 1,057,689 $ 323 $ 118,637 $ 1,176,649 Year Ended December 31, 2023 TDS Telecom Array All Other Total (Dollars in thousands) Revenues from contracts with customers: Type of service: Residential $ 699,747 $ $ $ 699,747 Commercial 155,372 155,372 Wholesale 168,810 168,810 Other service …

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Note 19 Stock-Based Compensation TDS Consolidated The following table summarizes stock-based compensation expense for continuing operations recognized during 2025, 2024 and 2023: Year Ended December 31, 2025 2024 2023 (Dollars in thousands) Stock option awards $ $ 64 $ 360 Restricted stock unit awards 10,883 12,917 12,898 Performance share unit awards 15,158 4,402 5,398 Deferred compensation bonus and matching stock unit awards 61 64 34 Awards under Non-Employee Director compensation plan 1,072 888 894 Total stock-based compensation, before income taxes 27,174 18,335 19,584 Income tax benefit (6,703) (4,523) (4,851) Total stock-based compensation expense, net of income taxes $ 20,471 $ 13,812 $ 14,733 At December 31, 2025, unrecognized compensation cost for all stock-based compensation awards was $22.4 million and is expected to be recognized over a weighted average period of 2.0 years. The following table provides a summary of the classification of stock-based compensation expense for continuing operations included in the Consolidated Statement of Operations for the years ended: December 31, 2025 2024 2023 (Dollars in thousands) Selling, general and administrative expense $ 27,120 $ 18,197 $ 19,504 Cost of operations expense 54 138 80 Total stock-based compensation expense $ 27,174 $ 18,335 $ 19,584 TDS tax benefits realized from the vesting of awards totaled $21.6 million in 2025. TDS (Excluding Array) The information in this section relates to stock-based compensation plan …

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Note 8 Intangible Assets Licenses Prior to 2009, TDS accounted for Arrays share repurchases as step acquisitions, allocating a portion of the share repurchase value to TDS Licenses. Consequently, Array's Licenses on a stand-alone basis do not equal the TDS consolidated Licenses related to Array. Activity related to TDS' Licenses is presented below. Array TDS Telecom Total (Dollars in thousands) Balance at December 31, 2024 3,285,648 4,000 3,289,648 Impairment (47,679) (900) (48,579) Transferred to Assets held for sale 1 (1,595,731) (2,400) (1,598,131) Divestitures (4,062) (4,062) Capitalized interest 4,096 4,096 Balance at December 31, 2025 $ 1,642,272 $ 700 $ 1,642,972 1 See Note 7 Acquisitions and Divestitures for additional information. Wireless Spectrum License Impairment Array Wireless spectrum licenses are considered to be indefinite-lived assets, and therefore are not amortized but are tested for impairment annually or more frequently if there are events or circumstances that cause Array to believe that their carrying values exceed their fair values. Wireless spectrum licenses are tested for impairment at the level of reporting referred to as a unit of accounting. During the third quarter of 2025, Array continued its efforts to monetize its spectrum assets not subject to pending sale agreements. Based on information obtained through that process, specifically suppressed pricing and decrease in demand for high-band spectrum, Array concluded that there were events and ci …

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Note 5 Income Taxes TDS current income taxes balances at December 31, 2025 and 2024, were as follows: December 31, 2025 2024 (Dollars in thousands) Federal income taxes payable $ (22,863) $ (581) Net state income taxes receivable 1,292 2,487 Income tax expense (benefit) from continuing operations is summarized as follows: Year Ended December 31, 2025 2024 2023 (Dollars in thousands) Current Federal $ (17) $ (17) $ (1,631) State 4,023 (1,073) 1,108 Deferred Federal 5,348 (17,940) (31,085) Federal - valuation allowance adjustment (46,308) State 19,491 (3,037) 15,809 State - valuation allowance adjustment (44,721) Total income tax expense (benefit) $ (62,184) $ (22,067) $ (15,799) TDS' cash tax payments (refunds) made to (received from) significant jurisdictions are as follows: Year Ended December 31, 2025 2024 2023 (Dollars in thousands) Federal $ 87,272 $ 1,640 $ (53,770) Maine (464) Oregon 1,680 Texas 243 Virginia 638 Other 4,358 528 3,311 Total income taxes paid (refunded) $ 91,630 $ 4,265 $ (50,459) A reconciliation of TDS income tax expense from continuing operations computed at the statutory rate to the reported income tax expense from continuing operations, and the statutory federal income tax rate to TDS effective income tax rate is as follows: Year Ended December 31, 2025 2024 2023 Amount Rate Amount Rate Amount Rate (Dollars in thousands) Statutory federal income tax expense and rate $ 18,682 21.0 % $ (21,712) 21.0 % $ (118,331) 21.0 % State income taxes, net of feder …

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Note 11 Leases Lessee Agreements TDS most significant leases are for land, network facilities, and offices, all of which are classified as operating leases. Many of TDS' leases include renewal and early termination options. Lease terms include options to extend or terminate when it is reasonably certain that TDS will exercise the option. TDS has recognized a right-of-use asset and a corresponding lease liability that represents the present value of TDS obligation to make payments over the lease term. The present value of the lease payments is calculated using an incremental borrowing rate, which was determined using a portfolio approach based on TDS' unsecured rates, adjusted to approximate the rates at which TDS would be required to borrow on a collateralized basis over a term similar to the recognized lease term. Lease and nonlease components are accounted for separately and the cost of nonlease components (e.g., utilities and common area maintenance) are typically expensed as incurred at their relative standalone price. TDS recognizes variable lease expense related to lease payments that were not originally included in the lease liability calculation, which primarily relate to lease payment escalations that are tied to an index, real estate taxes, or additional payments linked to performance. The following table shows the components of lease cost included in the Consolidated Statement of Operations: Year Ended December 31, 2025 2024 2023 (Dollars in thousands) Operating le …

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In November 2024, the FASB issued Accounting Standards Update (ASU) 2024-03 Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40). ASU 2024-03 requires more detailed information about specific types of expenses included in the expense captions presented on the face of the Consolidated Statement of Operations. ASU 2024-03 is effective on a prospective or retrospective basis for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. TDS is evaluating the impact this ASU will have on its financial statement disclosures. In September 2025, the FASB issued ASU 2025-06 Intangibles Goodwill and Other Internal-Use Software (Subtopic 350-40) Targeted Improvements to the Accounting for Internal-Use Software . ASU 2025-06 provides targeted improvements to the accounting for software costs to increase the operability of the recognition guidance considering different methods of software development. ASU 2025-06 is effective on a prospective or retrospective basis for annual reporting periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods. TDS will follow ASU 2025-06 to account for its internal-use software after the effective date. However, this ASU is not expected to have a material impact on TDS' financial statements. In December 2025, the FASB issued ASU 2025-10 Government Grants (Topic 832) Accounting for Gover …

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Note 3 Revenue Recognition Nature of goods and services The following is a description of principal activities from which TDS generates its revenues. Services and products Nature, timing of satisfaction of performance obligations, and significant payment terms Wireline and cable services Wireline and cable services include broadband, video, voice and wireless services. Revenue is recognized in Service revenues as service is provided to the customer. Wireline and cable services are generally billed and paid in advance on a monthly basis. Wholesale revenues Wholesale revenues include network access services primarily to interexchange and wireless carriers for carrying data and voice traffic on TDS Telecoms network, special access services and state and federal support payments, including E-ACAM. Wholesale revenues are recorded as the related service is provided. Installation fees TDS Telecom charges its end customers installation fees in connection with the sale of certain services. Installation fees are deferred and recognized over the period benefited. Tower rents Array receives tower rental revenues when a customer leases space on an Array-owned tower. Array recognizes Site rental revenue on a straight-line basis over the term of the contract. Site rental revenues are generally billed and paid in advance on a monthly basis. Other services Array recognizes revenue for tower site inspections, structural analyses and other fees when billed to the customer. IT hardware sales 1 T …

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"Note 20 Business Segment Information TDS has the following reportable segments: TDS Telecom and Array. TDS Telecom generates its revenues by providing broadband, video, voice and wireless services. As of September 30, 2025, the wireless operations and select spectrum assets sold to T-Mobile qualified as discontinued operations. See Note 2 Discontinued Operations for additional information. The wireless operations and select spectrum assets sold were reported within the Wireless segment in prior periods and as a result of the sale, the previously reported Wireless and Towers segments no longer meet the criteria to be reportable segments and Array is now a single reportable segment. Array generates its revenues primarily by leasing tower space on Array-owned towers to customers. The reportable segments are billed for services they receive from TDS, consisting primarily of information processing, accounting, finance, and general management services.Such billings are based on expenses specifically identified to the reportable segments and on allocations of common expenses.Management believes the method used to allocate common expenses is reasonable and that all expenses and costs applicable to the reportable segments are reflected in the accompanying business segment information. Adjusted earnings before interest, taxes, depreciation, amortization and accretion (Adjusted EBITDA) is the segment measure of profit or loss reported to the chief operating decision maker for purposes …

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Note 1 Summary of Significant Accounting Policies and Recent Accounting Pronouncements Nature of Operations Telephone and Data Systems, Inc. (TDS) is a diversified telecommunications company providing high-quality communications services. TDS provides broadband, video, voice and wireless services to 1.1 million connections at December 31, 2025 through its wholly-owned subsidiary, TDS Telecommunications LLC (TDS Telecom). Array Digital Infrastructure, Inc. (Array), a 82.0%-owned subsidiary of TDS, leases tower space to tenants and provides ancillary services, holds noncontrolling interests in primarily wireless operating companies and holds certain wireless spectrum licenses. As of December 31, 2025 , Array owns 4,450 towers in 19 states. Through July 31, 2025, Array provided wireless communication services; these operations and certain wireless spectrum licenses were disposed of on August 1, 2025. On August 1, 2025, United States Cellular Corporation changed its name to Array. Array is used throughout this report even when referring to historical periods. The Notes to Consolidated Financial Statements are presented for continuing operations, except for Note 2 Discontinued Operations. TDS has the following reportable segments: TDS Telecom and Array. TDS non-reportable other business activities are presented as All Other, which includes its wholly-owned subsidiary Suttle-Straus, Inc. (Suttle-Straus). TDS' wholly-owned hosted and managed services (HMS) subsidiary, which operated …

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Note 18 Shareholders Equity Common Stock Series A Common Shares are convertible on a share-for-share basis into Common Shares. In matters other than the election of directors, each Series A Common Share is entitled to ten votes per share, compared to one vote for each Common Share. The Series A Common Shares are entitled to elect eight directors, and the Common Shares elect four. TDS has reserved 7,541,000 Common Shares at December 31, 2025, for possible issuance upon conversion of Series A Common Shares. On August 2, 2013, the Board of Directors of TDS authorized a $250.0 million stock repurchase program for the purchase of TDS Common Shares from time to time pursuant to open market purchases, block transactions, private purchases or otherwise, depending on market conditions. This authorization does not have an expiration date. On November 7, 2025, TDS Announced that its Board of Directors had authorized an additional $500.0 million stock repurchase program for TDS Common Shares, which program is incremental to and has similar terms as, the existing program. During 2025, TDS repurchased 2,843,427 Common Shares for $108.1 million at an average cost per share of $38.03. As of December 31, 2025, the maximum dollar value of TDS Common Shares that may yet be purchased under TDS' program was $523.9 million. In November 2009, Array announced by Form 8-K that the Board of Directors of Array authorized the repurchase of up to 1,300,000 Common Shares on an annual basis beginning in 20 …

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Note 22 Subsequent Events On January 13, 2026, Array closed on the sale of certain 3.45 GHz and 700MHz wireless spectrum licenses to AT&T for total proceeds of $1,018.0 million and TDS expects to record a book gain on the transaction of approximately $150.0 million ($114.0 million net of tax expense) during the first quarter of 2026. The expected book gain recorded at TDS is lower than the expected book gain recorded at Array due primarily to transaction costs paid by TDS. On January 13, 2026, the Array Board of Directors declared a special dividend per Common and Series A outstanding share of $10.25 for shareholders of record on January 23, 2026, which was paid on February 2, 2026 for a total amount of $885.5 million. TDS, which owns 82.0% of the equity of Array as of December 31, 2025, received its pro-rata share of the special dividend in the amount of $725.6 million. On January 15, 2026, TDS repaid the entire outstanding borrowing under its export credit financing agreement of $150.0 million.

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