TELEPHONE & DATA SYSTEMS INC /DE/ 10-K

Leases

12 Months Ended

Dec. 31, 2025

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 lease cost	$	69,109	$	64,641	$	62,750




Variable lease cost	7,537		7,459		6,875

Total	$	76,646	$	72,100	$	69,625

The following table shows supplemental cash flow information related to lease activities:


Year Ended December 31,	2025		2024		2023
(Dollars in thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	62,928	$	63,691	$	62,161


Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	36,406	$	40,747	$	53,753

The table below shows a weighted-average analysis for lease terms and discount rates for operating leases:


December 31,	2025		2024

Weighted Average Remaining Lease Term	20 years		19 years



Weighted Average Discount Rate	5.1	%	4.9	%

The maturities of lease liabilities are as follows:


	Operating Leases
(Dollars in thousands)
2026	$	54,663
2027	57,308
2028	54,587
2029	52,598
2030	46,702
Thereafter	793,312
Total lease payments	$	1,059,170
Less: Imputed interest	483,373
Present value of lease liabilities	$	575,797

Lessor Agreements

TDS’ most significant lessor leases are for tower space, 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 the lessee will exercise the option. Underlying assets leased to customers under operating leases are included in Communications infrastructure assets in Note 10 — Property, Plant and Equipment.

Lessor agreements with lease and nonlease components are generally accounted for separately.

TDS recognizes variable lease income related to lease payments that were not originally included in the lease receivable calculation, which primarily relate to lease payment escalations that are tied to an index.

The following table shows the components of lease income which are included in Site rental and Services revenues in the Consolidated Statement of Operations:

The maturities of expected lease payments to be received are as follows. The table below does not include lease payments for Interim Sites whereby T-Mobile is leasing up to 1,800 sites for a period of up to 30 months subject to the terms and conditions of the MLA.


	Operating Leases
(Dollars in thousands)
2026	$	146,994
2027	146,361
2028	137,905
2029	128,353
2030	116,661
Thereafter	1,073,518
Total future lease maturities	$	1,749,792

Year Ended December 31,

(Dollars in thousands)

Operating lease income