Millicom International Cellular S.A. (TIGO) Earnings

Management highlights

### Core Commercial Strategy Execution - The core growth strategy is built on a "more-for-more" pricing framework for prepaid mobile, targeted prepaid-to-postpaid migration, and fixed-mobile convergence (FMC) to increase customer lifetime value, loyalty, and ARPU. - Prepaid-to-postpaid conversion rates, which softened temporarily in Q1 2026 during COTEL (Colombia) commercial alignment, have returned to historical levels across a doubled-size customer base, creating a larger platform for future growth. - Q2 2026 home revenue benefited from one-time FIFA World Cup content sales, and the competitive landscape has become more rational, with less aggressive entry-level pricing and greater focus on network quality. ### M&A and Integration Progress - COTEL Colombia integration is running ahead of plan, with cost-saving initiatives progressing faster than expected. Colombia delivered 11% organic year-over-year service revenue growth to $816 million, with 39.4% adjusted EBITDA margin despite $30 million in Q2 severance costs. - Chile's first full quarter of operations saw completion of 90% of planned restructuring, with adjusted EBITDA and EFCF margin improving 10 percentage points year-over-year. - Ecuador's business has stabilized after acquisition, reversing prior service revenue erosion; adjusted EBITDA margin increased 15.4 percentage points to 48.9% year-over-year (pro forma). - All recent acquisitions are already EFCF-accretive within the first year of closing, matching management's original expectations. ### Operational Efficiency and Culture - Efficiency discipline is now embedded as standard business practice across the organization, with no signs of cross-functional fatigue. The company is expanding efficiency gains via AI automation of customer contacts and internal transactional operations. - Guatemala posted its strongest quarterly performance in 10 years, with a 55.6% adjusted EBITDA margin (up 1 percentage point year-over-year). Paraguay delivered a company record 56.9% adjusted EBITDA margin, up 6.4 percentage points year-over-year, driven by cost efficiency and currency tailwinds.

Guidance

- Full-year 2026 equity free cash flow guidance was raised to around 1.1 billion, from the prior target of at least 900 million. This upward revision reflects stronger-than-expected first half performance and faster COTEL integration progress. - The year-end 2026 leverage target was upgraded to below 2.5x net debt to adjusted EBITDA, down from the prior target range, reflecting confidence in the expanded portfolio's cash generation capacity. - Full-year 2026 group restructuring charges are projected to total between $160 million and $170 million, with ~60% booked in the first half and ~$80 million in remaining expenses to be recognized in the second half. - Full-year 2026 cash capex as a percentage of revenue is expected to be ~12%, with capex acceleration in the second half driven by 5G network deployment and new site buildouts in Colombia. - The board of directors approved an additional interim dividend of $1.50 per share, payable in two equal 75 cent installments in January and April 2027. Management reaffirmed a long-term capital allocation policy of distributing two-thirds of annual equity free cash flow to shareholders.

Segment performance

### Product Segments 1. **Mobile**: Organic year-over-year service revenue growth of 6.9% to $1.2 billion, contributing 60% of total Q2 2026 service revenue. Postpaid customer base grew 31% year-over-year, driven by prepaid-to-postpaid migration, which now accounts for two-thirds of new postpaid sales. 2. **Home**: Organic year-over-year service revenue growth of 3% to $513 million, contributing 25.65% of total Q2 2026 service revenue. FMC penetration reached nearly 40% company-wide, and 44% in Colombia. Modest customer growth continued despite subscriber reporting harmonization adjustments. 3. **B2B**: Organic year-over-year service revenue growth of 3.8% to $401 million, contributing 20.05% of total Q2 2026 service revenue. High-value digital services (cloud, cybersecurity, managed services) grew 14% year-over-year to $120 million; SME segment revenue grew 8% year-over-year. ### Total Company Reported total service revenue of $2 billion, up 60.1% year-over-year (5.4% organic). Adjusted EBITDA hit a company record of $1 billion (9.1% organic year-over-year growth) with a 46.3% margin. Record equity free cash flow (EFCF) of $327 million, up more than 50% year-over-year.

Risks & headwinds

- Chile remains a highly competitive market with aggressive pricing, low ARPUs, and elevated customer churn, which could pressure near-term profitability. - Currency volatility in emerging markets (including Paraguay, Colombia, and Bolivia) can impact reported equity free cash flow and margin, even with partial localization of debt and hedging. - The upcoming Tigo brand launch in Ecuador in late 2026 will require incremental marketing and promotional investment, expected to reduce adjusted EBITDA margin by a few percentage points in the second half of 2026. - Q2 2026's record equity free cash flow benefited from favorable working capital timing and expense phasing that will not repeat across the remaining quarters of 2026. - Satellite competitor Starlink has emerged as a niche competitor for fixed broadband service in remote, low-density areas that are uneconomical to serve with fiber.

Analyst Q&A

• Q: What extraordinary factors drove Q2's strong ARPU growth, can this momentum continue, and is there risk of efficiency fatigue after years of cost discipline?

  A: Mobile ARPU growth is driven by long-term structural strategy: granular network investment that expands connected days for prepaid customers, and data-driven targeted migration of qualified prepaid users to higher-value postpaid plans. Home ARPU growth has a one-time component from exclusive FIFA World Cup content sales, but also reflects a sustained shift to more rational industry competition. Efficiency discipline is now embedded as standard business practice with no fatigue, and the company is expanding gains via AI automation.

• Q: How does management view competitive risk from Starlink following its parent SpaceX's IPO, and what are the expected integration cost phasing for Colombia?

  A: Starlink delivers poor experience for mobile use with limited indoor coverage and low throughput, trailing the company's widespread 4G and expanding 5G networks. For fixed broadband, Starlink is a complementary solution for remote uncovered areas, not a competitive threat for urban markets. Full-year 2026 restructuring charges are projected at $160-$170 million, with 60% booked in H1, and ~$80 million of remaining costs to hit in H2 2026.

• Q: What is your outlook for competition in Chile after recent industry pricing moves, and what is your strategy?

  A: Management confirms Chile remains a highly competitive, fragmented market with low ARPUs and ongoing promotional activity. The recent industry pricing increase is viewed as a positive long-term sign for market sustainability. The company's primary focus remains on completing the first phase of its playbook: efficiency gains, operational simplification, and aligning the business with its core strategy, with early results already showing strong EFCF margin improvement.

• Q: What drove the unexpected strong margin expansion in Paraguay, and is this level sustainable?

  A: The large Q2 2026 margin gain came primarily from material appreciation of the local Guarani currency. Many of the company's content and sports rights costs are denominated in USD, so currency appreciation reduces these costs when converted to local currency and USD reporting. While the currency effect is not guaranteed to persist, core operational efficiency and revenue growth trends in Paraguay remain strongly positive.