Telephone and Data Systems, Inc. (TDS) Income Statement

The dramatic revenue decline from roughly $1.2B to $309M per quarter aligns with the divestiture of the wireless segment, as the remaining revenue base is consistent with TDS Telecom's fiber and wireline operations. This structural shift means future revenue growth will depend on fiber subscriber additions and ARPU expansion rather than the scale of the former wireless business. Investors should monitor whether the new revenue base stabilizes and whether management can grow it organically.

Excluding the one-time gain, the underlying business appears to be operating at a loss, as evidenced by the -1.2% operating margin in 2026Q1 and -22.0% in 2025Q3. This suggests that the remaining fiber and wireline operations have not yet achieved sustainable profitability, possibly due to high depreciation and integration costs. The reported margin improvement is not indicative of operational efficiency but rather a non-recurring event.

While D&A declined from roughly $235M to $88M per quarter, it still represents a substantial portion of the reduced revenue base, consuming about 29% of revenue. This suggests that the fiber network expansion continues to require heavy capital investment, and the associated depreciation will continue to weigh on earnings until the asset base generates sufficient incremental revenue. The company may need to achieve higher fiber penetration to absorb these fixed costs.

The company's strategic pivot to fiber is evident in the continued D&A charges, but the revenue base has not expanded correspondingly. This may indicate that the fiber build-out is still in its early stages, with many service addresses passed but not yet connected, or that competitive pressures are limiting subscriber growth. The success of this capex program will be critical to future earnings, but current data suggests a lag between investment and returns.