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SEC filingArray Digital Infrastructure's continuing operations swung to profitability in Q3 2025, driven by the T-Mobile MLA and higher equity income, though the overall net loss widened due to discontinued operations.
Array Digital Infrastructure's continuing operations delivered a strong turnaround in Q3 2025, reporting net income attributable to shareholders of $108.8 million compared to a loss of $95.9 million in the prior-year quarter. The improvement was driven primarily by a 79% surge in site rental revenue to $45.8 million (from $25.7 million) following the execution of the T-Mobile Master License Agreement (MLA) on August 1, 2025, which added minimum leases on 2,015 towers and extended terms on approximately 600 existing colocations. Revenue from interim leases (up to 1,800 towers) contributed $5.4 million in the two months since closing. Total operating revenues increased 83% to $47.1 million.
Operating expenses declined 46% to $100.4 million from $185.9 million, largely due to a $136.2 million impairment charge in the prior year versus $47.7 million this quarter. However, the remaining operating loss of $53.3 million still reflects significant SG&A ($20.5 million) and cost of operations ($21.0 million) relative to revenue. Equity in earnings of unconsolidated entities jumped to $69.8 million (from $43.1 million), boosted by a $34.1 million gain from the sale of wireless operations by Iowa-based equity method investees. Interest income rose to $8.9 million on cash balances from the T-Mobile sale proceeds. The effective tax benefit of $62.7 million (rate of -132.8%) resulted from favorable valuation allowance adjustments.
Discontinued operations (wireless business sold to T-Mobile) recorded a net loss of $130.5 million attributable to shareholders, including a $239.3 million loss on sale, partially offset by operating income before the sale. As a result, total net loss attributable to Array was $38.5 million, versus a loss of $79.2 million in Q3 2024.
Total assets fell sharply to $4.9 billion from $10.4 billion at year-end 2024, reflecting the deconsolidation of wireless assets. Cash and cash equivalents increased to $325.6 million (from $143.7 million). Current assets of discontinued operations were eliminated. Non-current assets held for sale rose to $1.585 billion, representing spectrum licenses under agreement to sell to Verizon, AT&T, and T-Mobile. Licenses (continuing) dropped to $1.649 billion from $3.282 billion, mainly due to transfers to held-for-sale and impairments.
On the liability side, current liabilities increased to $539 million (from $884 million) despite the removal of discontinued op liabilities, driven by a $262.8 million increase in accrued taxes (tax on T-Mobile gain) and a $120.4 million increase in customer deposits/deferred revenues (spectrum lease deferral). Long-term debt net decreased to $671.9 million from $1.202 billion, as $875.3 million was repaid (term loans and export credit) and $325 million was borrowed under a new CoBank term loan. The debt exchange with T-Mobile reduced senior notes by $1.68 billion while retaining $363.9 million. Total equity fell to $2.537 billion from $4.592 billion due to the $1.99 billion special dividend.
For the nine months ended September 30, 2025, continuing operations generated $22.5 million in cash from operations, aided by $149.7 million in distributions from equity method investees (including special distributions of $42.5 million from Iowa entities and $25.3 million from Verizon-managed entities), partially offset by $110.8 million in working capital outflows. Capital expenditures from continuing operations were $17.0 million, resulting in free cash flow of approximately $3.9 million (9M). Discontinued operations provided $380.4 million in operating cash and $2.46 billion from investing activities (T-Mobile sale). Financing activities used $2.66 billion, mainly for the special dividend ($1.99B), debt repayment ($875M), and tax withholdings ($63.5M). The overall cash increase was $166.5 million.
Management highlighted that the sale of wireless operations to T-Mobile closed on August 1, 2025, transforming Array into a pure-play tower and spectrum company. The MLA with T-Mobile provides a foundation for tower revenue, but the interim leases (1,800 sites) are expected to be cancelled by T-Mobile, causing revenue declines. The company is continuing its strategic alternatives process, focusing on closing pending spectrum sales to Verizon ($1.0B), AT&T ($1.018B), and T-Mobile ($85M + $86.4M from a put/call). These are subject to regulatory approvals and, in Verizon's case, termination of the short-term spectrum lease with T-Mobile. The ongoing government shutdown may delay approvals.
SG&A expenses of $20.5 million in Q3 2025 include costs to support winddown of wireless operations and the strategic review, which are expected to persist at Q3 levels into H1 2026 and then decline. The company expects a cash tax liability of $250-$300 million on the T-Mobile transaction, most payable in Q4 2025. No specific quantitative guidance for future periods was provided.