Millicom International Cellular S.A. Q3 FY2025 earnings call

Key milestones: Completed Uruguay and Ecuador acquisitions and SBA tower transaction; organic service revenue grew 3.5% year-over-year; added nearly 250,000 postpaid mobile customers and ~60,000 new home subscribers; adjusted EBITDA $695 million with 48.9% margin; equity free cash flow $243 million; net leverage 2.09x. Regional performance: Colombia service revenue grew 6.5%, EBITDA margin 43.5%; Guatemala postpaid customers up 20%, operating cash flow up 22%; Panama postpaid customers up 15%, EBITDA margin 52.2%; Uruguay acquisition adds 700 cell sites, 33% market share, $246M annual revenue; Ecuador acquisition adds ~2,500 cell sites, 30% market share, ~$490M revenue.

Mobile Business: Organic service revenue grew 5.5% year-over-year, with postpaid base up 14% to 8.9 million customers and prepaid volumes stable. Home Business: Added 60,000 new home subscribers (5.4% year-over-year growth), home service revenue flat year-over-year but improved from prior year decline. B2B Business: Service revenue reached $231 million, up 5.3% year-on-year in constant currency; small business clients grew 10% to over 400,000; digital services (cloud, cybersecurity, SD-WAN) rose 10%, led by 35% growth in cloud, etc.

On track to deliver $750 million equity free cash flow for 2025; year-end leverage target below 2.5x; maintaining free cash flow target despite currency devaluation and legal settlements.

Ongoing DOJ investigation with $118 million provision; Costa Rica regulator prohibited proposed combination with Liberty Latin America, appeal filed; spectrum payments, cash CapEx, tax payments, etc. impact leverage and operations.

Q: What is the Ecuador and Uruguay transactions leverage? Where do you expect to be at the end of the year? What is the net impact from these transactions in year's cashflow?

A: Leverage now 2.09x, pro forma with tower transaction 2.33x; Uruguay and Ecuador add ~0.1x each; pro forma close to 2.3x as of Q3.

Q: Could you provide more details on the DOJ provision? What is the issue related to? And when can we expect there to be a resolution?

A: In process with DOJ, $118 million provision, details to be shared shortly.

Q: What is driving the higher tax provision in Nicaragua?

A: Tax litigation settlement with administration, payment partially in Q4 and Q1.

Q: What is the future course of action in Costa Rica and if the appeal for the regulatory decision gets rejected?

A: Appeal Sutel's decision, focus on operating model, invest in infrastructure and channels for growth.

Q: Outlook for CapEx for 2026 and margin expansion?

A: CapEx expected around $700 million; margin expansion from organic growth, operating leverage, and efficiency initiatives.

Q: Leverage and debt mix?

A: Leverage to peak around 2.5x, then reduce; debt mix with 50% local currency, $200 million raised in Uruguay, focus on local currency debt.

Q: Synergies in Uruguay and Ecuador, and price increases trend?

A: Synergies from efficiencies, network investment; price increases from prepaid to postpaid migration continuing.

Q: Paraguay spectrum and Colombia deal closing?

A: Working on spectrum in Paraguay; Colombia deals on track to close in Q1 2026.

Q: Costa Rica remedies, spectrum in Ecuador, Guatemala competition?

A: Sutel's remedies deemed insufficient, appeal filed; Ecuador spectrum renewal and 5G auction; Guatemala competition managed via point of sale, channel, and network improvements.