TELEPHONE & DATA SYSTEMS INC /DE/TDS
TELEPHONE & DATA SYSTEMS INC /DE/ Revenue Disclosure
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 Telecom’s 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 sales1 | TDS recognized equipment revenue when it no longer had any requirements to perform, when title had passed and when the products were accepted by the customer. | ||||
Hosted and managed services1 | HMS Service revenues consisted of cloud and hosting solutions, managed services, Enterprise Resource Planning (ERP) application management, colocation services, and IT hardware and related maintenance and professional services. Revenues related to these services were recognized as services are provided. | ||||
1The HMS operations were sold to a third-party on September 3, 2024. See Note 7 — Acquisitions and Divestitures for additional information.
Significant Judgments
As a practical expedient, TDS groups similar contracts or similar performance obligations together into portfolios of contracts or performance obligations if doing so does not result in a significant difference from accounting for the individual contracts discretely. TDS applies this grouping method for the following types of transactions: contract acquisition costs, contract fulfillment costs, and certain customer promotions. Contract portfolios are recognized over the respective expected customer lives or terms of the contracts.
Each month of services promised is a performance obligation. The series of monthly service performance obligations promised over the course of the contract are combined into a single performance obligation for purposes of the revenue allocation.
TDS has made judgments regarding transaction price, including but not limited to issues relating to variable consideration and non-cash consideration. When determined to be significant in the context of the contract, these items are considered in the valuation of transaction price at contract inception or modification, as appropriate.
Multiple Performance Obligations
TDS Telecom sells bundled service and equipment offerings. In these instances, TDS recognizes its revenue based on the relative standalone selling prices for each distinct service or equipment performance obligation, or bundles thereof. TDS estimates the standalone selling price of service to be the price offered to customers on month-to-month contracts.
Incentives
Discounts and incentives to end customers that are deemed cash are recognized as a reduction of Operating revenues concurrently with the associated revenue.
Amounts Collected from Customers and Remitted to Governmental Authorities
TDS records amounts collected from customers and remitted to governmental authorities on a net basis within a liability account if the amount is assessed upon the customer and TDS merely acts as an agent in collecting the amount on behalf of the imposing governmental authority. If the amount is assessed upon TDS, then amounts collected from customers are recorded in Service revenues and amounts remitted to governmental authorities are recorded in Selling, general and administrative expenses in the Consolidated Statement of Operations. The amounts recorded gross in revenues that are billed to customers and remitted to governmental authorities totaled $24.6 million, $25.7 million and $25.6 million for 2025, 2024 and 2023, respectively.
Disaggregation of Revenue
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 customers1 | $ | 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 customers1 | $ | 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 | — | 87 | 74,563 | 74,650 | |||||||||||||||||||
| Service revenues from contracts with customers | 1,023,929 | 87 | 74,563 | 1,098,579 | |||||||||||||||||||
| Equipment and product sales | 847 | — | 128,700 | 129,547 | |||||||||||||||||||
Total revenues from contracts with customers1 | $ | 1,024,776 | $ | 87 | $ | 203,263 | $ | 1,228,126 | |||||||||||||||
Numbers may not foot due to rounding.
1Revenue line items in this table will not agree to amounts presented in the Consolidated Statement of Operations as the amounts in this table only include revenue resulting from contracts with customers. This table does not include lease income. See Note 11 — Leases for additional information.
Contract Balances
When consideration is received in advance of delivery of goods or services, a contract liability is recorded. A contract asset is recorded when revenue is recognized in advance of TDS’ right to receive consideration. The contract asset or liability is reduced over the contract term as service is provided and billed to the customer.
The following table provides balances for contract assets from contracts with customers, which are recorded in Other current assets and Other assets and deferred charges in the Consolidated Balance Sheet, and contract liabilities from contracts with customers, which are recorded in Customer deposits and deferred revenues and Other deferred liabilities and credits in the Consolidated Balance Sheet.
| December 31, | 2025 | 2024 | |||||||||
| (Dollars in thousands) | |||||||||||
| Contract assets | $ | 3,508 | $ | 4,139 | |||||||
| Contract liabilities | $ | 39,936 | $ | 48,826 | |||||||
Revenue recognized related to contract liabilities existing at January 1, 2025 was $46.6 million for the year ended December 31, 2025.
Transaction price allocated to the remaining performance obligations
TDS Telecom provides residential internet, video, mobile, and voice services primarily through monthly subscription arrangements. Each subscription period is treated as a distinct performance obligation, with revenue recognized on a straight-line basis over the service period as the services are delivered. Customers are typically billed in advance and may cancel their subscriptions at the end of any monthly term without incurring penalties.
In addition, as of December 31, 2025, TDS Telecom expects to recognize approximately $74.5 million of revenue in the future related to performance obligations associated with existing circuit contracts that are partially or wholly unsatisfied. As of December 31, 2025, the transaction price related to unsatisfied performance obligations that are expected to be recognized for the remainder of 2026, 2027, and thereafter was $33.2 million, $22.4 million, and $18.9 million, respectively.
Contract Cost Assets
TDS Telecom expects that commission fees paid as a result of obtaining contracts are recoverable, and therefore TDS defers and amortizes these costs. As a practical expedient, costs with an amortization period of one year or less are expensed as incurred. TDS also incurs fulfillment costs, such as installation costs, where there is an expectation that a future benefit will be realized. Deferred commission fees and fulfillment costs are amortized based on the timing of transfer of the goods or services to which the assets relate, typically the contract term. Contract cost asset balances, which are recorded in Other assets and deferred charges in the Consolidated Balance Sheet, were as follows:
| December 31, | 2025 | 2024 | |||||||||
| (Dollars in thousands) | |||||||||||
| Costs to obtain contracts | |||||||||||
| Sales commissions | $ | 14,770 | $ | 13,359 | |||||||
| Fulfillment costs | |||||||||||
| Installation costs | 1,872 | 1,975 | |||||||||
| Total contract cost assets | $ | 16,642 | $ | 15,334 | |||||||
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Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 24, 2026 | Showing above |
| 2018 | Feb 22, 2019 | |
About Revenue Disclosures
Revenue disclosures under ASC 606 explain how a company identifies performance obligations, allocates transaction prices, and determines when revenue is recognized. This section is essential for understanding whether reported revenue reflects genuine economic activity or aggressive accounting choices. Analysts examine the mix of point-in-time versus over-time recognition, which directly affects revenue timing and comparability.
Key signals: rising contract liabilities (deferred revenue) suggest strong future revenue visibility, while declining contract assets may indicate slowing project milestones. Watch for variable consideration estimates — rebates, returns, and performance bonuses that require management judgment. Significant changes in disaggregated revenue by geography or product line can reveal shifting business mix before it appears in headline numbers. Compare revenue growth against contract liability growth to assess sustainability, and scrutinize any changes in the timing of recognition that coincide with earnings pressure.