Millicom International Cellular S.A. (TIGO) Earnings

Management highlights

### Overall Financial Performance - Total consolidated service revenue increased 45% year-over-year to nearly $1.9 billion, with 4.9% organic year-over-year growth (13% organic growth excluding all recent M&A activity). - Reported adjusted EBITDA reached $857 million, up 35.5% year-over-year, with 9.6% organic adjusted EBITDA growth. The adjusted EBITDA margin was 43.2%, reaching 47.9% excluding Coltel and its associated integration/restructuring charges. - Equity free cash flow (EFCF) hit a Q1 record of $225 million, up 66% ($90 million) year-over-year excluding one-time prior year asset sale proceeds. - Net debt totaled $7.6 billion, with a leverage ratio of 2.76x, in line with prior expectations. ### Recent Acquisitions and Integration Progress - Completed full acquisition of Coltel in Colombia (acquired majority control at the start of Q1 2026, purchased the remaining stake from La Nacion in mid-Q1) and acquired Telefonica Chile in a joint venture with NJJ in February 2026, with both businesses now integrated and consolidated. - Colombia integration is built on three core pillars: 1) Cost base reset: Identified $100 million in first-year cost savings from contract renegotiation, organization rightsizing, and sponsorship rationalization, 2) Network improvement: Target 4x 5G coverage expansion in 2026 and 1,000 new sites over 24 months, 3) Commercial uplift: Simplified offers, accelerated pre-to-post migration, and leveraged complementary networks to drive cross-selling and fixed mobile convergence (FMC). - Early results from the Millicom turnaround playbook (already successfully deployed in Ecuador and Uruguay post-acquisition) show both markets now operate at or above Millicom's average adjusted EBITDA margin, with meaningful EFCF improvements. - Chile turnaround progress: New leadership appointed, ~30% headcount reduction implemented, $85 million debt reduction completed, network optimization launched, and retail expansion planned. The business generated positive EFCF in its first two months under new ownership, on track to hit full-year EFCF neutrality. ### Core Commercial Strategy Execution - Pre-to-post migration remains a core growth driver: 7 out of 10 new postpaid sales are conversions from prepaid, up more than 10 percentage points year-over-year. Postpaid churn is lower, ARPU is higher, and the large new Coltel prepaid base (a 42% increase to Millicom Colombia's prepaid base) creates significant additional upside. - FMC expansion: 36% of home customers now have at least one convergent mobile line, and convergent customers have nearly 50% lower churn than non-convergent customers, improving lifetime value. The complementary Coltel fiber footprint in urban Colombia creates additional FMC cross-selling opportunities. - B2B growth: Cybersecurity and cloud solutions are driving double-digit digital service growth, with strong demand from enterprise, small business, and government clients. Cost and Capital Discipline - Sustained focus on cost efficiency has delivered expanding operating leverage across all markets, with ongoing 0-based budgeting and rigorous review of all spending to prioritize growth-driving investments.

Guidance

- Full year 2026 financial targets are maintained: management still targets at least $900 million in annual equity free cash flow and a year-end leverage ratio of ~2.5x. - Initial guidance assumed Coltel would be broadly neutral to 2026 EFCF (possibly negative) due to integration costs; management is now cautiously optimistic Coltel will be a net EFCF contributor that fully offsets integration costs and acquisition financing charges. - Added confidence in full-year targets comes from stronger-than-expected early integration progress, improved FX outlook, and clearer visibility into acquisition-related debt. - Management will not update guidance in Q1, and plans to provide updated guidance on the Q2 2026 earnings call after integration and portfolio optimization work is further completed. - Leverage is expected to increase slightly in Q2 2026 due to the completed full acquisition of Coltel and an extraordinary dividend paid in April, before declining to ~2.5x by year-end. - Full year 2026 CapEx is expected to land in the ~$1 billion range, consistent with prior CapEx-to-revenue percentages applied to the expanded revenue base.

Segment performance

1. **Mobile**: Total mobile service revenue reached $1.1 billion, including $120 million from two months of Coltel operations. Excluding inorganic growth, mobile service revenue grew 7% year-over-year. Organic underlying mobile customer growth was 4% year-over-year, with postpaid customers up 25% and prepaid growth flat due to pre-to-post migration efforts; including acquisitions, total reported mobile customer growth was 38% year-over-year. Postpaid now accounts for 29% of total mobile customers. 2. **Home**: Organic home customer base growth was 4.6% year-over-year to 4.2 million customers (broadband customers up 5% year-over-year). The Coltel acquisition added 1.5 million home customers, bringing the total to 5.7 million customers. Total home service revenue reached EUR 374 million, flat year-over-year on an organic basis. 3. **B2B**: Total B2B revenue (excluding Coltel) reached $306 million. Digital service revenue (driven by cybersecurity and cloud solutions, both up over 20% year-over-year) grew almost 19% year-over-year. The entrepreneur customer segment grew more than 13% year-over-year, driven by strong demand for convergent fixed-mobile offerings. 4. **Guatemala**: Service revenue reached EUR 370 million, growing 5.5% year-over-year. Adjusted EBITDA increased 6% year-over-year to EUR 237 million, with an adjusted EBITDA margin of 55.4%. Postpaid customers grew 20% year-over-year to 1.5 million, with mobile revenue expanding 6.6% year-over-year to EUR 288 million. 5. **Colombia**: Total service revenue reached EUR 653 million, with Coltel contributing EUR 243 million for two months of consolidation. Excluding inorganic contribution, organic service revenue grew 8.4% year-over-year. Adjusted EBITDA reached EUR 205 million (Coltel contributed EUR 33 million), with a margin of 30% including $65 million in restructuring charges; excluding Coltel, adjusted EBITDA grew 13.7% year-over-year with a 41% margin. Organic postpaid customers grew almost 9% year-over-year, mobile ARPU grew 4.4% year-over-year, and organic home customer growth reached 8.3% year-over-year. 6. **Panama**: Service revenue was flat year-over-year at EUR 172 million. Adjusted EBITDA declined slightly to $91 million, with an adjusted EBITDA margin of 50.7%. 7. **Paraguay**: Service revenue grew 4.9% year-over-year to EUR 158 million (the MFS business is classified as held for sale and excluded from reporting). Adjusted EBITDA grew 15% year-over-year (39% including FX tailwinds) to $92 million, with a record adjusted EBITDA margin of 56.3%. 8. **Ecuador**: Service revenue reached EUR 110 million, growing ~1% year-over-year, reversing prior negative revenue trends. Adjusted EBITDA totaled EUR 56 million, with an adjusted EBITDA margin of 48.3%, a 13 percentage point margin uplift from 2025. 9. **Other Markets (El Salvador, Nicaragua, Costa Rica, Bolivia, Uruguay)**: Service revenue grew 4.8% year-over-year to EUR 402 million, driven by robust growth in Nicaragua and Uruguay. Adjusted EBITDA grew 11.4% year-over-year to $202 million, with an adjusted EBITDA margin of 47.7%, supported by cost focus and stable FX in Bolivia.

Risks & headwinds

- Q2 and Q3 historically carry more execution and earnings risk than the first and fourth quarters, creating uncertainty for full-year performance forecasting early in the year. - Currency volatility remains a risk: while FX appreciation is currently providing tailwinds to P&L, it increases the reported value of local currency-denominated net debt. - Rebranding of acquired operations (Ecuador) will incur one-time marketing expenses in the second half of 2026 that will pressure margins temporarily. - Full consolidation of Coltel only completed at the start of May 2026, so there remains limited visibility into the full extent of potential synergy and cost savings this year.

Analyst Q&A

• Q: What is the expected sustainability of current Coltel margins, and can you confirm the full-year margin target for Colombia?

  A: Management expects 8% top-line growth in the combined Colombian business for 2026 to be sustainable. Cost savings will offset ongoing restructuring costs, leading to full-year 2026 margins that align with prior Tigo Colombia levels of ~41%. Early integration progress is better than expected, and management is positive about long-term margin sustainability.

• Q: How much 2026 restructuring cost for Coltel remains after Q1, what is the deleveraging path, and what is management's appetite for additional M&A?

  A: Around $100 million in 2026 Coltel restructuring costs remain after Q1's $65 million charge, but these will be offset by early cost savings, leading to a net positive EFCF contribution for the full year. Leverage will tick up slightly in Q2 due to the full Coltel acquisition and an extraordinary April dividend, but remains on track to hit 2.5x by year-end, with a favorable currency hedge position. Current priority is executing integration of recent acquisitions; Peru and Venezuela remain attractive long-term targets, but no immediate M&A is planned.

• Q: With stronger-than-expected early performance in Colombia and Chile, will you raise your full-year EFCF guidance now?

  A: Management maintains it is too early to update guidance, as the full year is typically driven by results in the back half, and Coltel only fully consolidated at the start of May. While the year started very strongly, with positive FX tailwinds and acquired assets already covering one-time integration costs, management will wait until Q2 to update guidance once it has clearer full-year visibility.

• Q: What steps drove the fast margin expansion in Ecuador and Uruguay post-acquisition, and can those margins be sustained?

  A: The first phase of the Millicom playbook focuses on a full cost reset: 0-based budgeting, eliminating non-growth spending (such as excess sponsorships), simplifying organizational structure, and renegotiating supplier contracts and payment terms. All investment is reallocated to core growth drivers (network, distribution channels, customer offers). Uruguay's current margin levels are sustainable; Ecuador's margin will dip slightly in the second half due to one-time rebranding costs before resuming expansion.