Earnings call transcript: Millicom’s Q2 2025 EPS Surges, Stock Climbs

Millicom International Cellular SA (TIGO) reported a remarkable second quarter of 2025, with earnings per share (EPS) significantly exceeding expectations. The company posted an EPS of $4.03, far surpassing the forecasted $0.54, resulting in a surprise of 646.3%. Despite a slight revenue miss, with actual revenue at $1.37 billion against a forecast of $1.4 billion, the market responded positively. Millicom’s stock rose by 5.28% in pre-market trading, closing at $42.05 from a previous $39.94. According to InvestingPro analysis, TIGO maintains a "GREAT" financial health score of 3.32, and current valuations suggest the stock is undervalued compared to its Fair Value.

Key Takeaways

• Millicom’s EPS dramatically exceeded expectations, reflecting strong operational performance.
• The stock price increased by 5.28% in pre-market trading following the earnings release.
• Service revenue faced a year-over-year decline due to foreign exchange headwinds.
• Millicom is making significant strides in postpaid customer growth and digital service expansion.
• The company maintains a strong focus on network expansion and market penetration.

Company Performance

Millicom’s performance in Q2 2025 was marked by a robust increase in EPS, driven by improved operational efficiencies and strategic customer acquisitions. Despite a 5.9% year-over-year decline in service revenue, primarily due to foreign exchange challenges, the company achieved an organic growth rate of 2.4%. Millicom’s focus on converting prepaid customers to postpaid and enhancing digital services has been pivotal in maintaining its competitive edge in the Latin American market.

Financial Highlights

• Revenue: €1,280 million, a 5.9% decline year-over-year.
• Earnings per share: $4.03, significantly above the forecasted $0.54.
• Adjusted EBITDA: €641 million, with a 46.7% margin.
• Equity free cash flow: $218 million for Q2.

Earnings vs. Forecast

Millicom’s actual EPS of $4.03 was a substantial surprise compared to the forecasted $0.54, marking a 646.3% increase. This impressive performance highlights the company’s effective cost management and strategic initiatives, which have contributed to a stronger-than-expected bottom line. However, revenue slightly missed expectations, coming in at $1.37 billion against a forecast of $1.4 billion, a surprise of -2.14%.

Market Reaction

Following the earnings announcement, Millicom’s stock experienced a notable increase of 5.28% in pre-market trading, closing at $42.05. The stock’s movement aligns with investor optimism fueled by the EPS beat, even as revenue fell short. This positive sentiment reflects confidence in Millicom’s strategic direction and growth potential, particularly in its expanding postpaid customer base and digital services. The stock has demonstrated remarkable momentum, posting a year-to-date return of 98.05% and currently trading near its 52-week high of $45.73.

Outlook & Guidance

Millicom maintains a positive outlook, with a 2025 equity free cash flow target of $750 million and a year-end leverage target below 2.5x. The company’s strong financial position is further evidenced by its impressive 14% free cash flow yield, as reported by InvestingPro. For detailed analysis of TIGO’s valuation metrics and growth potential, investors can access the comprehensive Pro Research Report, which provides expert insights and actionable intelligence for smarter investment decisions. The company plans to continue its focus on mergers and acquisitions integration, particularly in Uruguay, Ecuador, and Colombia. Forward EPS forecasts suggest continued growth, with expectations set at $0.75 for Q4 2025 and $0.81 for Q1 2026.

Executive Commentary

CEO Marcelo Benitez emphasized the company’s strategic growth, stating, "We’re not just growing, we’re growing the right way." CFO Bart Van Han highlighted ongoing efforts to improve margins, noting, "We continue to find opportunities every week to improve margins." These statements underscore Millicom’s commitment to sustainable growth and operational excellence.

Risks and Challenges

• Foreign exchange volatility remains a significant risk, affecting revenue streams.
• The competitive landscape in Latin America poses challenges to market share expansion.
• Economic uncertainties in key markets could impact consumer spending and demand.
• Integration of recent acquisitions may present operational challenges.
• Regulatory changes in telecommunications could affect business operations.

Q&A

During the earnings call, analysts inquired about Millicom’s competitive position in Colombia, the company’s 5G rollout strategy, and plans for leverage and refinancing. Executives provided clarity on these topics, reinforcing the company’s strategic initiatives and financial health.

Full transcript - Millicom International Cellular SA (TIGO) Q2 2025:

Bart Van Han, CFO, Millicom: Hello, everyone, and welcome to our Second Quarter twenty twenty five Results Call. This event is being recorded. Our speakers today will be our CEO, Marcelo Benitez and myself, Bart Van Han, CFO of the company. The slides for today’s presentation are available on our website, along with the earnings release and our financial statements. Now please turn to Slide two for the safe harbor disclosure.

We will be making forward looking statements, which involve risks and uncertainties and which could have a material impact on our results. On Slide three, we define the non IFRS metrics that we will reference throughout this presentation, and you can find reconciliation tables at the back of our earnings release and on our website. With those disclaimers out of the way, let me turn the call over to our CEO, Marcelo Benitez.

Marcelo Benitez, CEO, Millicom: Thanks, Bart. Good morning, everyone, and thank you for joining us today. The 2025 was a defining moment in our journey, one where strong operational execution met with strategic acceleration. We’re firing on all cylinders across commercial, financial and strategic fronts, And we’re doing it with discipline focus and results. Most importantly, we are right on track to deliver our commitment of $750,000,000 in equity free cash flow for the year.

This was a quarter of strategic acceleration. We executed three major milestones in just a few weeks. Acquisition of Telefonica’s Uruguay operations, definitive agreement for Telefonica Ecuador and the partial closing of our infrastructure transaction with SBA. We allot over $500,000,000 in proceeds declaring a special interim dividend of $2.5 per share, a clear sign of our confidence and capital discipline. To mark this pivotal momentum, we rang the NASDAQ opening bell in June, together with the TIGO top management team, a symbolic step forward as we deepened our footprint in South America and reaffirmed our long term commitment to the region and to shareholder value.

Now turning to our performance. We added nearly 250,000 net postpaid customers, up from 178,000 a year ago. Home gained 41,000 customers, nearly four times more than Q2 last year. Commercial traction and efficiencies are delivering profitable growth. Adjusted EBITDA reached a new high of 46.7%, up 3.2 points year over year.

In this quarter, more than half of our operations achieved margins above 50%. Equity free cash flow for the quarter came at $218,000,000 bringing our H1 total to $395,000,126 million euros ahead of last year. Leverage dropped to 2.18 times and we remain committed to keeping leverage below 2.5x. In short, we’re not just growing, we’re growing the right way. Now let’s review each of these highlights in more detail beginning with the mobile business on the next slide.

Over the past quarter, we’ve seen promising results across our core business. Our mobile business outperformed expectations in Q2. On the right, you can see that our mobile business grew by mid single digit this quarter, an acceleration from 3.1% in previous quarter. Zooming in into our main segments, prepaid fast tracked on the back of higher ARPU, while postpaid continue propelled by momentum, with an amazing 14% growth in base reaching near 9,000,000 customers. We’re executing the playbook, pre to post migrations, network upgrades and convergence, all designed to build lifetime value and reduce churn.

Now please turn to the next slide to look at our home business. We added 41,000 home customers in the quarter, about four times the intake we saw in Q2 last year. This is a remarkable growth of nearly 6% year on year. Our broadband customer base was up roughly 8%. Pay TV is flat, while fixed telephony is in structural decline, mainly displayed by mobile.

Although service revenue remained slightly negative at minus 1.4%, that’s a major improvement from minus 6.1% last year. The trajectory suggests that our recovery efforts are gaining traction, and we’re optimistic about positive growth in the 2025. Our strategic playbook is fully in motion. We are scaling our networks through targeted capital deployment, delivering faster broadband experiences to more customers, boosting go to market efficiency with smarter linear execution and accelerating convergence across mobile and fixed. Now please turn to the next slide for a brief glance at our B2B business.

Service revenue grew nearly 4% organically, fueled by 16% CAGR in digital services over the past two years and 13% year on year increase in mobile B2B, an acceleration from Q1. At the same time, we expanded our SME base by 6% year on year, strengthening our position in this very important segment. Now let’s review our performance in the three largest countries, beginning with Colombia on the next slide. This slide underscores three main takeaways. In Colombia, service revenue accelerated to nearly 5% year over year on an organic basis, stepping up from 3.6% in the previous quarter.

This performance uplift is fueled by mobile postpaid with customer base growing by 15%, surpassing the 4 million mark. And home that did the same at a rate of 12% year on year. All these sustaining a notable adjusted EBITDA margin of 39.5% despite higher commercial investments supporting top line growth. Congratulations to our outstanding team in Colombia. Your strong commitment and disciplined execution are powering this extraordinary momentum.

Now please turn to the next slide to look at Guatemala. We are delighted to see that our postpaid customer base expanded 20% year over year, triggering healthy growth in the mobile service revenue of more than 5% in real terms. Organically, the growth went from 1.5% in the previous quarter to 4%. As I mentioned in Q1, one of our levers is a migration of prepaid to postpaid, which is particularly relevant in Guatemala. And to cap it off, operating cash flow reached a record of $191,000,000 this quarter, a clear reflection of strong execution and sustained financial momentum.

Great work by our team in Guatemala, the combination of top line growth recovery and focus on efficiency is delivering record breaking financial results. Please turn to the next slide to look at Panama. This slide highlights another record high adjusted EBITDA margin this quarter, the second in a row. Mobile postpaid customer base grew about 20% year on year and mobile service revenues grew 4%. We continue to leverage our postpaid business as a foundational catalyst for steady growth in mobile.

Before turning it over to Bart, let me close with our M and A update. We made decisive progress, closed the sale of Latiparaguay and executed the partial closing of the SBA tower deal, generating more than €500,000,000 in proceeds. In Costa Rica, we await regulatory approval and target closing in Q1 twenty twenty six. In Uruguay and Ecuador, we signed definitive agreements and expect approval in Q3 and Q4 respectively. In Colombia, the Coltel acquisition remains on track for Q1 twenty twenty six closing.

In parallel, we’re in active discussions with EPM and aim to reach an agreement as soon as possible. Since negotiations are ongoing, I prefer not to comment further. But as soon as we land something, we’ll communicate it to the market. Now let me turn the call over to Bart to review the financials for this quarter.

Bart Van Han, CFO, Millicom: Thank you, Marcelo. Now let’s look at our financial performance beginning on Slide 14. Service revenue for the quarter totaled €1,280,000,000 representing a year over year decline of 5.9% due to the adverse impact of foreign exchange this quarter, causing around €110,000,000 in total FX headwinds. Now about €84,000,000 of this originated in Bolivia, primarily due to the application of accounting standard IAS 21. Excluding FX impact, organic service revenue growth accelerated to 2.4% as our commercial push continues to drive performance.

I think the story is clear and revenue is progressing in line with expectations. Mobile postpaid is growing double digit, boosted by pre to postpaid migrations and FMC, while mobile prepaid remains on positive growth creating the funnel for the future. B to b growth is driven by digital, and our homes business was creating a drag to top line. But as Marcelo explained, we are almost getting to positive territory, which then in turn will naturally uplift our year over year growth rate later on. EBITDA was up 1.1% year on year to €641,000,000 now reaching a margin of 46.7.

On an organic basis, EBITDA grew a solid 9.3% in the quarter, up from 6.9% in Q1 ’twenty five. This performance reflects ongoing discipline in cost optimization, which is now deep in our DNA, and operating leverage, which continue to drive margin enhancement and operational efficiency. As a side note, I want to congratulate our Honduras and Nicaragua teams under the leadership of our GMs Santiago and Mauricio as well as our CFOs, Mauricio and Mario, in joining Club fifty. These are our operations with 50% or more EBITDA margin. We now have five countries out of nine in Club fifty.

As a reminder, starting since last quarter, we’ve adopted the term adjusted EBITDA in place of EBITDA to align with SEC interpretative guidance. In our case, this was simply a change in label as there is no change to the underlying methodology we have historically applied, providing a consistent analytical view of the business. Equity free cash flow was $218,000,000 in the quarter and $395,000,000 in H1, up almost $126,000,000 compared to $269,000,000 in H1 of last year. This despite already prepaying around $20,000,000 in CapEx originally scheduled for 2026 in order to benefit from an exceptional supplier offer. We continue to make solid progress in working capital management with concrete actions to optimize cash conversion cycles and reduce the seasonality of our cash flow throughout the year.

We were able to deliver a strong H1 despite the continued adverse foreign exchange impact, thanks to our efforts to reduce our FX exposure. Reduced FX exposure led to both more sustainable EBITDA margins and better EFCF generation. So we’re very pleased to see all these initiatives are now contributing to delivering a strong H1 EFCF. Here as well a reminder, our definition of EFCF includes also both the proceeds and the costs and taxes paid related to LAPTY asset sales, In line with our approach to isolating recurring cash generation from one off items, we’ve highlighted those in gray. The one offs for the 2025 relate all to Q1 transactions.

Let’s now look at it on a per country basis per component. First, please turn to Slide 15, where we will drill down further into the service revenue by country. Guatemala service revenue of $358,000,000 represented year on year growth of 1.9%. Growth in Guatemala is now sustainable, and we hope to see a good second half of the year as we have a soft comparable from last year’s second half. Colombia service revenue of EUR $339,000,000 grew a nice 4.9%.

Our Home business in Colombia is now in positive territory, and you can immediately see the effects on top line. Panama’s service revenue was €170,000,000 nearly flat year on year. The government contracts are now in maintenance stage, so are substantially lower. On top, we had some adverse effects from social unrest caused by social security reforms. Paraguay service revenue was €132,000,000 which is an increase of 4.6 year on year, which is not bad at all.

However, this is offset by adverse currency effects. Bolivia service revenue in local currency increased by 7%, effectively showing results from our price increases. However, this is still largely insufficient to cover devaluation. On a positive note, the devaluation now seems to have stabilized, which, if sustained, will allow us to catch up again over time. Service revenue in our other markets comprised of El Salvador, Nicaragua and Costa Rica increased 0.4% in US dollar terms.

Note that El Salvador is now larger than Bolivia, and together with the possible upcoming inclusions of Ecuador and Uruguay, we may consider restructuring our management and reporting of the portfolio. Now please turn to the next slide for a look at EBITDA by country. Guatemala adjusted EBITDA increased 4.1% year on year to two twenty eight million dollars largely driven by sustained mobile top line growth. We can see here evidence of operational leverage in action. Colombia adjusted EBITDA increased 3.6% year on year to 136,000,000 and the adjusted EBITDA margin was 39.5%.

EBITDA growth slowed down compared to the previous quarter as we incurred higher commercial OpEx to support customer base intake. Despite this, the operation was able to deliver better margins versus Q1. Panama adjusted EBITDA grew 2% year on year to $92,000,000 and the adjusted EBITDA margin reached a new record of 51.7% driven by OpEx discipline. Paraguay adjusted EBITDA grew 9.2% to 69,000,000 in Q2 twenty twenty five. And the adjusted EBITDA margin was 50.5%, largely driven by top line consistently delivering exceptional operational leverage.

Bolivia increased 16.7% to EUR 33,000,000, improving its margin to 45.5%, mainly from top line acceleration and cost efficiencies. As we made a massive effort on de dollarization of the cost basis, the margins are sustainable and pave the way for operational leverage even in an environment of devaluation. Adjusted EBITDA in our Other segment increased 9.2% in U. S. Dollar terms.

Now please turn to Slide 17 for a look at equity free cash flow and leverage. As we’ve already discussed, adjusted EBITDA for the quarter was EUR $641,000,000, that’s up $7,000,000 from last year. Cash CapEx was $2.00 $1,000,000 and that’s up $47,000,000 from last year, but again includes a prepayment of about $20,000,000 for CapEx scheduled in 2026. Spectrum was $5,000,000 down $17,000,000 compared to last year due to an equal mix between one offs last year on spectrum purchases, reduced payment schedule and reduction of performance bond costs resulting from changed regulations. Changes in working capital and others were positive at EUR 30,000,000 as we continued to focus on cash management with suppliers.

However, this is also $31,000,000 lower than last year as we are now catching up on payments that we froze in Bolivia due to the rapid devaluation and lower collections from government projects in Panama. Taxes paid were EUR 106,000,000. This is an increase of EUR 24,000,000, mainly due to increased profitability. Finance charges were EUR 82,000,000, an improvement of EUR 22,000,000, thanks to a mix of FX rates, lower gross debt and lower commissions in Bolivia as the devaluation is now recognized under the new IAS 21 standard. Lease payments were EUR 82,000,000, a decrease of EUR 7,000,000.

Honduras repatriation was EUR 24,000,000 in the quarter, which is very much in line with last year. As a result of all these factors, equity free cash flow for the quarter was EUR $218,000,000. This is down EUR 50,000,000 compared to Q2 twenty twenty four, mainly due to the successful effort to stabilize EFCF between quarters and avoid the typical Q1 dip, as I indicated to you during the Q1 call. 125,000,000 dividends were paid as part of our approved dividend policy. Now please turn to the next slide to review our financial targets for 2025, which actually remain unchanged from what we communicated at our Q1 results with 2025 equity free cash flow of around $750,000,000 and year end leverage below 2.5.

These targets in general do not include the impact of any of the strategic M and A project that Marcelo talked about, Though depending on the date of closing of each of those projects, we still expect to have the leverage remain below 2.5 at year end. Finally, as we have just announced, the Board approved an interim dividend of $2.5 per share to be paid in two installments, first in October 2025 and then in April 2026. This represents an approximate aggregate dividend of €423,000,000 and reflects our commitment to return value to our shareholders. We are now ready for your questions. Hello?

Hello? Let’s see if we can have the first question. We’re on mute.

Analyst: Good morning. Thanks for taking my questions. Absolutely. I have can can you hear me? Or

Bart Van Han, CFO, Millicom: Yes. Yeah. Perfect. Thank you.

Analyst: Perfect. Well, the first question is about Guatemala. There a visible improvement there. You mentioned a bit prepaid to postpaid. I just wonder if you could deep dive a bit more on the improvement and on the competitive environment that you’re seeing in that country.

And the second question is more about CapEx. So you mentioned in the release some acceleration CapEx to advance revenue generation. What is the outlook for CapEx especially in the coming years? These are the two questions.

Marcelo Benitez, CEO, Millicom: Good morning, Marcelo. Thanks for the questions. On Guatemala, what you can see here is if you remember last year, we started defending some territories when we were operating alone. So the first quarter was about the stabilization. But at the same time, we started to aggressively migrate our prepaid customers to postpaid.

That’s where you see the 20% growth. Remember that in Guatemala, the postpaid penetration is one of the lowest of the group. It’s only 12%. The target for all the operations is to reach 50%. So it’s a long runway for Guatemala to grow on postpaid.

What we see additionally to that, we are building more or less three fifty new sites in Guatemala to capture new communities or extension of existing communities. All in all is to say that we do see sustainable growth predicated on prepaid to postpaid migrations, ARPU increasing prepaid that we are doing within the first half of the year and we will continue to do the second half of the year. Our competitors are following and the new coverage. Regarding the competitive environment, Marcelo, there are some sites where we are going to feel some pressure because we do have very high market share and this is normal. So this is becoming part of our business as usual.

That’s why we are more focused on developing ARPU within our existing customer base. So that’s what we see going forward. And the question on CapEx, what we did the way we are operating is extremely granular. So we do look side by side and node by node. And this allow us to allocate CapEx very, very focused on what are the returns expected there, where the traffic is high, where the disposal to pay is there.

So we do expect to be between $650,000,000 $650,000,000 to $700,000,000 this year and also to keep more or less that rate in the following years.

Analyst: Just clarification, when you say that rate is like rate to revenues, should we CapEx to revenues to be more or less that? Is that what we should understand?

Marcelo Benitez, CEO, Millicom: Yes. That will be between 11% to 12% of revenues. But we do look at it as a dollar, right? I mean, because it is very, very granular and we look I mean, the way we look at it is not percentage wise. The result is 11% to 12%, but we really want to be between $650,000,000 and $700,000,000 Perfect.

Analyst: Very clear. Thank you very much.

Bart Van Han, CFO, Millicom: Hey. Thank you. Then we have question from Andreas from DNB Carnegie. He might not be online, so we received a question through the investors at minicom.com. First question, Marcelo, you post accelerating service revenue growth base in basically all countries.

Can you discuss a bit more the drivers for this and how you can maintain these levels or even improve them further?

Marcelo Benitez, CEO, Millicom: Yeah. Well, basically, to give you a little bit of context, the constant is the increased demand for data. So in order to capture that what we’re doing is we are increasing the days connected, and developing ARPU. So basically, the drivers are in increasing the days connected is a migration from prepaid to postpaid. Remember that we are only at 20% penetration of postpaid over total mobile customer base.

There are countries like Peru or that are at 45%, close to 50% and countries like Brazil that are over 50. Our target is to reach 50% in all the territories. This brings an ARPU uplift of 50% compared to the prepaid ARPU. So there is a long run a long runway there to increase the days connected and also to increase ARPU. The other driver is a price increase.

More or less the since we sell days connected, the traffic increases around 15% every year. So we need to capture that increase through ARPU development. So we are doing price increases in all the countries. So to give you an example, this year the ARPU increase in prepaid is around 5%. Then we have Home where basically we are focusing on increasing the penetration in low penetrated nodes.

So second is to increase the quality of new acquisitions and reducing churn. So with all that, we can see a momentum in new net adds, sustainable new net adds that comes with high quality. And as you see, we are coming from minus 6% to minus 1.4% in service revenue growth. And we do expect that to that trend to continue in the second half of the year and next year. And last, I mean, are very serious about convergence.

Currently 25% of all of our new sales are convergent. What does this brings is a convergent customer has a half of the churn of our regular home customer, and that increases the customer lifetime value. So the more penetration we have on convergence, the more solid is going to be the service revenue growth. And B2B is about SMB volumes and digital solution penetration in medium and large corporations. So we do expect this trend to continue.

In Q1, we saw 0% growth in local currency. Now we are at 2.4% and we expect this trend to continue in Q3 and Q4.

Bart Van Han, CFO, Millicom: Thank you, Marcelo. And the second question from Andreas was solid cost control, but have you identified further potential on the cost side? And is it correct that there is no restructuring cost booked for q two? Do you expect any additional severance payments restructuring costs in h two? So maybe I can answer that one.

On the cost control, I think most of the big ticket item is initiatives were were taken last year and completed last year, and we now start to see the the full run rate effect of that. So the associated cost with that also were mostly incurred in 2024. We continue to have restructuring costs. I think it’s a handful of millions this quarter, but I don’t want to call that out as every quarter there will be something, and it’s not, you know, therefore exceptional in nature. So let’s just stick to the to the to the reported numbers rather than adjusting for it.

We have, at this stage, no significant or material plans for for further redundancy, so no big ticket items severance payments expected in in h two. Now this being said, the cost control sits now deeply within our DNA. And and so so there’s much less exercise to do from from from HQ and from our local leadership because, you know, we’re operated like this, but we continue to find opportunities every every week. So and that’s also evidenced by now two additional countries getting into club 50 as we continue to work everywhere to improve margins further. Also, EBITDA percentage for for for Millicom as a group.

Marcelo Benitez, CEO, Millicom: If I can add there, Bart, I mean, our biggest fight is against inertia. So what we’re doing is we’re still reviewing all the purchase orders from $1 to millions of dollars. But on the other hand, there is a big opportunity in the digitalization of the customer interface journey of the customer journey and also the digitalization of our internal processes. So we are exploring new tools. We are using machine learning.

We are using AI. We have bought agents for sales, etcetera, etcetera. So those initiatives, we do believe that is going to start impacting

Bart Van Han, CFO, Millicom: next year. The last question from Andreas was, with regards to cash flow, do you see any material changes to the various line items versus the explanations in q one? No. I think it’s it’s quite steady state with the exceptions for the strategic initiatives that we talked about. So Lati is now partially closed.

We also closed the deal in in Paraguay on our towers. So that will have an impact on the leases, you know, on revenues and OpEx. It kind of balance each other out. You know? We don’t have tenancy income collocation.

It come from from the towers. We also don’t have the OpEx associated with the towers, but we have additional leases. You know, there could be, you know, a 25 to $35,000,000 impact on the leases. And, otherwise, maybe the currency in Bolivia, it’s not different from q one. IAS ’21 has now been adopted.

So compared to last year, you will see less cost of commissions This is or or exchange costs in in Bolivia, but it immediately flows to the p and l as a whole. So that’s a little bit of a shift compared to last year and not compared to q one. Thank you. Then we have next question from Eduardo Nieto from JPMorgan.

Eduardo Nieto, Analyst, JPMorgan: Good morning, Tim. Thanks for taking my question. So first, I wanted to discuss on your leverage target and the leverage guidance that you gave on under 2.5x, just first to confirm that, that includes your latest M and A, latest dividends. And just if I think more medium term, if that’s the level where you’re comfortable or if there’s any room to go any lower than that or basically the excess cash is going to be directed either to shareholders or other projects. And then on refinancing, you have mentioned that you want to reduce exposure to dollars.

You do have some bond maturity in 2027. So just thinking what you expect for those refi exercises maybe next year, if there’s any room to maybe move eventually some of the whole cadets to some of the operations, and just what are you thinking on that front, please?

Bart Van Han, CFO, Millicom: Yep. So on the leverage, two and a half times. So, originally, we always said this was excluding the strategic initiatives because they they kind of come on top and outside of the of the budget. But what I can say so at this time, 2.5, definitely including all of the dividends and and special dividends. So that’s included.

Yes. And then depending on the time of closing, I would say, of the of the different transactions, as Marcelo explained in the in the presentation, you know, if we follow that path, then, yes, we’ll we’ll still, including the M and A, be around or below 2.5 times leverage. We don’t expect it to to increase significantly above that even if everything should close this year, but we might go a little bit over it to then rapidly decline again on the back of our cash flow generation and and EBITDA growth.

Eduardo Nieto, Analyst, JPMorgan: Got it. And then more medium term, I guess, this is the level where you would expect to be.

Bart Van Han, CFO, Millicom: Yeah. At at this time, I think in between two and two point five is is still our our our desired level. Perfect. Yeah. And your second question

Eduardo Nieto, Analyst, JPMorgan: It was on the refi plans.

Bart Van Han, CFO, Millicom: No refinancing. Yeah. Yeah. So so I think our strategy remains the same. Right?

We I like to raise local currency debt. So prioritize in country local currency debts and repay US Dollar debt preferably at HQ. You know, from from a capital allocation and from risk perspective, it’s it’s just better. You know, just even look at at Bolivia where, historically, the it was pegged to the dollar, but still we we had our debt denominated in local currency, thankfully, because that that helped tremendously navigate through the through this period. So we continue to do that.

Now the m and a projects cloud are our standard liability management a little bit because we have we have quite a bit. So we will use the Lati proceeds for the payments of the M and A. As you know, there’s still, you know, $270,000,000 to $300,000,000 net cash proceeds coming in the in the next months from from the Lati sales. We have our EFCF generation. You know, two thirds of that goes to our our dividends, and then one third of the equity free cash flow is is then still reserved for for paying for for for the m and a.

And then I’m actively raising that in countries to to, you know, to to to pay for the rest. You saw the announcement of the IDB loan in in Salvador, but also I’m raising local currency debt in Guatemala, in Paraguay, and even already raising in in Uruguay to anticipate the closing. So once all of that is kind of stable and paid, We’ll look at our liability management. We’ll make the the required decisions, and you rightfully point out to our twenty seventh. This is our, you know, upcoming shortest maturity bonds both in the Paraguay issuance and the seg bond in Sweden.

But at this stage, nothing nothing to announce there yet.

Eduardo Nieto, Analyst, JPMorgan: Very clear. Thank you very much.

Bart Van Han, CFO, Millicom: Thank you. Then we have next question from Gustavo Farias from UBS.

Gustavo Farias, Analyst, UBS: Morning, everyone. Thanks for for taking my questions. And there there are two. So the first one on Colombia. We’ve seen, recently, warm launching new, low cost mobile plans, which seem very, very aggressive.

So just wanted to to to get a color on how you’re seeing, the price and and the competitive landscape in the country. And if you could further comment on the regulatory agenda for the acquisition, of Dev’s stake in Cotel? And the second one, if you could, just a follow-up maybe on the on the question from Marcelo Santos and considering the five g, rollout, which you’re seeing, all over, Latin America. How how how you see that impacting, CapEx, going forward? Thank you.

Marcelo Benitez, CEO, Millicom: Perfect. I will take the first part of the first question. You can take the second part of the first question. So basically, without, yes, WOM launched a limited offer in prepaid for $7 Telefonica has already an even more aggressive offer in the market. So basically, what we see is in order to succeed in prepaid, our understanding and our experience has to do with not only pricing.

You need to have a strong network and a strong distribution. We’ve seen this kind of behavior in many of our countries. As an example, Digicel in Panama. So these are very tactic offers. But since they are not complemented by network experience and channels, they are not typically sustainable.

So because the customers are expecting the full experience, right? So on that side, I do believe that this is tactics, business as usual and not a long term trend. On on the second part, is a regulatory part? Yeah.

Bart Van Han, CFO, Millicom: I think so. In Colombia, we have, well, two transactions basically in parallel. Right? So on the one side, we have a minority partner, EPM. They announced the minimum price.

They’re now listing the shares on the local stock market to prepare for phase one of law two two six, which is the privatization law in in Colombia, after which they can raise launch phase one, which is to the sector solidario, and then to auction to sell their their shares. So the listing is should be done very soon, and then they will start phase one to sector solidario. And there’s no more regulatory approvals on that side, so it’s more of a of a process driven process. So on on our side, we are discussing there with them our participation in in that in that auction and and how administratively we’re gonna execute on that. But, obviously, it’s an auction, and other participants could be there.

As soon as we have an agreement, we’ll announce that. But, you know, this is an active discussion, so probably better not to comment more than this at the moment. On the other side with with Koltel, the first step there is for the government to release the minimum price at which they will be authorized to to sell the process. They already have their shares listed, so then it’s phase one or phase two of law two to six process. We expect this, you know, the the the minimum price to come, you know, still in q three.

And, you know, around that time, hopefully, well, the regulatory approval for the merger, probably the regulatory approval in early q four, And then both transactions to happen around year end, probably slipping into q one, considering the timing and the the process steps that need to happen.

Marcelo Benitez, CEO, Millicom: And the last question was now about five g. The way we look at it is, five g networks needs to follow five five g devices penetration. In many of our countries penetration of five gs over the total base are very, very low. I was managing the Panama operation when you walk the streets, you don’t see any five gs phones on the counter because of the affordability issue, right? These are expensive handsets.

Having said that, we do see that five gs devices are devices base are increasing in Colombia, in El Salvador and new operations like Uruguay. So when the demand is there because the handset has a capability, we will invest in five gs on a granular base, right? Because these people are mainly in urban cities and then we will expand following the device trend. Regarding auctions, we do have an ongoing auction in Paraguay. We are also on an ongoing auction in El Salvador.

And we will always be active and proactive in participating in those auctions. When the conditions and terms are there for us to participate.

Bart Van Han, CFO, Millicom: You, Marcelo.

Marcelo Benitez, CEO, Millicom: Thanks. So

Bart Van Han, CFO, Millicom: the next question we have from Andres Guayo from Scotiabank. Can you discuss further acquisitions on the pipeline? Are you looking at Telefonica subsidiaries in Chile, Mexico or like Puerto Rico business? Which company intends to to separate? So I think, honestly, our our first priority is to close on what we already announced.

You know, we we have Colombia. That’s gonna be a big integration. It’s gonna take a lot of our attention. And, you know, also, at the same time, a large opportunity for synergy. So there definitely, you know, a lot of focus will go go there in in 2026.

First, we will have Ecuador and Uruguay. In a sense, it’s adding two countries to to our portfolio of nine. I like the fact to have to to have this type of portfolio when you when you see the diversity kind of balance the risks out of each country. So this year, we had the huge impact, exceptional impact from from Bolivia, you know, a very significant impact to to equity free cash flow, and still we can cover and stay within our guidance comfortably despite what’s happening. Now we’re gonna add a dollarized economy and an investment grade count country.

So so this is gonna even further improve the diversity within that with our portfolio. So are are we looking at others? We will always have a have a peek at at what is interesting. But you know? And and so if there are deals possible, yes, why not?

But definitely not our focus right now. And, you know, especially things like Mexico is is probably too big for us at this stage and too complex. So so, you know, let us focus on on on what we announced first. I think with this, we have no more questions in the queue. So with that, I would like to thank everyone and Marcelo for the quarterly results, and congratulations to all the teams who helped us deliver on these results.

Thank you very much, everyone. Thank you. See you soon.

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