Array Digital Transitions to a Tower-Focused Business: Worth a Buy?
Array Digital Infrastructure, Inc. AD is undergoing a major transformation after divesting its wireless operations, positioning itself as a pure-play digital infrastructure provider centered on its tower portfolio. The transition is strengthening recurring revenues and creating opportunities for margin expansion.
Tower Business Picks Up Steam
Array owned 4,456 towers across 19 states at the end of second-quarter 2026. The company plans to grow its tower business primarily through additional colocations and amendments to existing sites, which should generate incremental revenue without requiring proportionate increases in operating costs.
Momentum is already visible. Second-quarter site rental revenues surged 95% year over year to $53.2 million, supported by the Master License Agreement (MLA) signed with T-Mobile US Inc. TMUS. The agreement requires T-Mobile to lease space on at least 2,015 additional Array towers for a minimum of 15 years and extends leases on roughly 600 existing colocations.
Tower operating metrics are also moving in the right direction. Colocations increased sequentially to 4,362 at June-end from 4,290 at March-end, while the tower tenancy rate improved to 0.98 from 0.96. Increasing tenancy should be particularly important because adding tenants to existing infrastructure can support attractive incremental economics and improve tower cash flow.
Spectrum Monetization Lends Support
Spectrum monetization provides substantial financial flexibility. Array has already completed major spectrum transactions with AT&T, T-Mobile and Verizon and continues to pursue monetization of its remaining spectrum assets, primarily C-Band.
Array also expects margins to improve as it evolves from an infrastructure base built to support a wireless operator into a standalone tower company. Management is targeting ground-lease optimization, including acquiring land interests where economically attractive, while reducing costs associated with maintaining the tower portfolio.
Price Performance
Array has declined 33.1% over the past year against the industry’s growth of 95.5%, outperforming peers like Gogo Inc. GOGO and Cogent Communications Holdings, Inc. CCOI. GOGO has lost 74.1%, while CCOI is down 80.6% over this period.
One-Year AD Stock Price Performance
Image Source: Zacks Investment Research
End Note
Array's transition toward a tower-focused model appears encouraging. Long-duration T-Mobile leases provide improved revenue visibility, while rising colocations, cost optimization and spectrum monetization offer avenues for stronger cash generation.
Sequential tenancy gains and higher site rental revenue support the operating transition. Spectrum sales have added liquidity, while the company returned capital through a special dividend. Consequently, the stock appears to be an enticing investment option in the volatile market.
Array currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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This article originally published on Zacks Investment Research (zacks.com).
