S.D. Codified Laws § 9-41-1
Every first or second class municipality by itself or in conjunction with others within or without such municipality, subject to the supervision of the Public Utilities Commission as otherwise provided by law, may establish, maintain, operate, and regulate a telephone system and related services for its customers, and such power shall include, without being limited by this section, the power to contract with the owners of rural telephone lines serving the surrounding area and, under such contracts, the municipality may build and maintain telephone lines or cable to connect with the rural lines at the boundaries of the municipality and the municipality may perform the switching service for such rural telephone lines, or permit the owner of such rural lines to do the switching in the central office of the municipality on a lease basis, and, in general, facilitate telephone service between the municipality and the country, and, if such rural lines are financed in whole or in part by the United States government or an agency thereof, such contract or lease between the municipality and the owner of the rural lines may be for the duration of the loan made by the government or its agency.
SDCL 9-41-1