Full Transcript: Millicom Intl Cellular Q2 2026 Earnings Call

Millicom Intl Cellular (NASDAQ: TIGO ) released second-quarter financial results and hosted an earnings call on Thursday. Read the complete transcript below. APIs provide real-time access to earnings call transcripts and financial data. Visit to learn more.

Access the full call at Summary Millicom Intl Cellular reported a strong second quarter with service revenue reaching $2 billion, a 5% organic year-over-year increase, and a record adjusted EBITDA of $1 billion. 5 times. Operational highlights include successful integration and performance in Colombia, a strong mobile pre-to-post strategy, and solid growth in digital services within the B2B segment. 50 per share, reflecting confidence in its cash-generating capacity.

Management emphasized the success of its efficiency initiatives and the positive impact of recent acquisitions on cash flow and profitability. Full Transcript OPERATOR Hello everyone and welcome to our second quarter 2026 results call. This event is being recorded. Our speakers today will be our CEO, Marcelo Benitez, and Bart Van Areen, CFO of the company.

The slides for today's presentation are available on our website along with the earnings release and our financial statements. Please turn to Slide 2 for the safe harbor disclosure. We will be making forward-looking statements which involve risks and uncertainties which could have a material impact on our results. On Slide 3, we define the non-IFRS metrics that we will be referencing throughout the presentation, and you can find the reconciliation table in the back of our earnings release and on our website.

With those disclaimers out of the way, let me now turn the call over to our CEO, Marcelo Benitez. Bart Van Areen (Chief Financial Officer) Thank you, Marcelo. The second quarter of this year has truly been an exceptional quarter. 1% year on year on a reported basis.

4% year on year. This is more than twice the growth rate we reported in the second quarter of last year. As Marcelo discussed, this acceleration was supported by our pre- to postpaid migration strategy, disciplined pricing, and offer management across our business lines. Adjusted EBITDA reached $1 billion for the quarter.

1% year on year, once again growing faster than organic service revenue and demonstrating the operating leverage built into our business. I want to highlight the 58% year-on-year reported EBITDA growth, almost as fast as the reported revenue growth. Despite having acquired lower-margin businesses and despite having incurred approximately $35 million restructuring charges in Q2, our strong operating performance drove a record $327 million of equity free cash flow, an increase of more than 50% year on year. This means our recent acquisitions are contributing positively to equity free cash flow within their first year of ownership.

Achieving that level of accretion so quickly underscores the strength of our M&A execution, the effectiveness of our integration efforts, and our ability to convert acquired earnings into tangible cash flows. The second quarter equity free cash flow benefited from favorable expense timing and working capital movements. Therefore, please remain cautious forecasting the remainder of the year. With that, let's review our performance by country, starting for the first time with Colombia.

Given its increased relevance in our portfolio, we are very pleased with the progress achieved so far. Organic service revenue increased 11% year on year to $816 million as we began applying our commercial strategies across a significantly larger customer base. Importantly, all three business lines, Mobile, Home, and B2B, contributed to the growth. This broad-based performance is encouraging and demonstrates a commercial opportunity created by the combined operation.

9% year on year to $382 million. As Marcelo explained, growth was driven primarily by our prepaid-to-postpaid migration strategy together with pricing and offer management. Overall, this was a record quarter for one of our strongest operations. 1% year over year to $175 million, marking a return to top-line growth.

As a reminder, first-quarter performance was impacted by the temporary suspension of a price increase following regulatory intervention. With the price adjustment reinstated in the second quarter, the business returned to growth, and we remain focused on sustaining this trend. 4% year on year to $169 million. Growth was supported by a 10% expansion in our postpaid customer base together with a low single-digit increase in mobile ARPU.

This combination of customer growth and disciplined monetization supported another healthy quarter. Turning to Ecuador, service revenue was broadly flat year on year at $112 million, which means we reversed the service revenue erosion observed under prior ownership and stabilized the business. Note that the second quarter 2025 results are provided on a pro forma basis for comparison purposes only. 8% year on year to $398 million.

Let's now turn to the profitability of our operations, starting again with Colombia. Our cost-saving initiatives are running ahead of plan, and Kalteo's profitability has already moved towards levels comparable with our legacy TIGO UNE operation. 9% year on year. This result includes more than $30 million of severance payments executed during the quarter and roughly $100 million year-to-date.

4%. While there is still work to be completed, the results reinforce our confidence that the integration and efficiency program is progressing very well. 3% year on year to $245 million. 6%, improving by almost 1 percentage point year on year.

This expansion was driven mainly by operating leverage, together with the solid service revenue growth I just discussed. In Panama, adjusted EBITDA was broadly stable year on year at $92 million. 7%. We remain focused on converting the renewed top-line growth into stronger operating leverage over time.

Next, let's turn to Paraguay, which delivered another excellent quarter. Adjusted EBITDA increased almost 17% year on year to $100 million. 9%. This improvement is a testimony to the team's relentless focus on efficiency, particularly within direct costs, while also benefiting from FX tailwinds.

I would like to congratulate our General Manager in Paraguay, Roberto, supported by Flor, our new Paraguay CFO that moved from our Guatemalan operation, as well as the entire team for these excellent results. Turning to Ecuador, the Millicom playbook continues to produce solid results. Adjusted EBITDA increased almost 40% year on year on a pro forma basis to $58 million. 4 percentage points year on year.

This represents substantial progress in a relatively short period and is a direct result of the continuous execution of our efficiency initiatives. That said, I want to manage expectation for the second half. We plan to launch a Tigo brand in Ecuador later this year. This will require incremental marketing and promotional investments, and we therefore expect margin to contract a few percentage points during the remainder of 2026.

7% year on year, faster than the growth, again demonstrating our operational leverage. 3%. Let's now review the equity free cash flow bridge for the quarter. As discussed, adjusted EBITDA reached $1 billion for the quarter, increasing $369 million year on year.

Cash CapEx totaled $274 million, up $72 million compared to prior year, and this increase mainly reflects continued investment in our recently acquired businesses together with higher spending on leased mobile devices under Colombia's customer device leasing program. Spectrum payments were $41 million during the quarter, mainly related to Colombia. Working capital and other contributed $47 million, representing an improvement of $17 million year on year, benefiting from payment phasing and improved inventory management. Taxes paid increased $40 million year on year in line with the increased contribution from our acquired businesses.

Finance charges were $131 million, increasing $49 million year on year, mainly as a result of the additional financing associated with our acquisitions. Lease payments increased $79 million year on year to $161 million. As in the first quarter, the increase was primarily the result of the expansion in our operating perimeter and the impact of the tower sale and leaseback transaction last year. Putting all of these factors together, equity free cash flow increased by more than 50% year on year to a company record of $327 million.

Let's now turn to our net debt and leverage progression. 76 times. 11 times. This benefit was largely offset by shareholder distributions.

During the quarter we paid $125 million in ordinary dividends, but also $210 million in extraordinary dividends related to last year's tower transaction, for total dividend payments of $335 million. In addition, we made $221 million of M&A-related payments, mainly associated with the acquisition of the remaining call tel stake previously held by Lanacion that does not come with incremental consolidated EBITDA. Finally, we also have an increase of net debt that is predominantly related to the appreciation of local currency denominated debt.

73 times, better than I expected during our Q1 call, giving us a solid starting point from which to reduce leverage further during the remainder of the year. That brings me to our 2026 financial targets. When we last spoke, I committed to updating our 2026 guidance once we had greater visibility into the progress of our turnaround initiatives, integration costs, and the performance of the combined businesses. First, based on the strong operating and financial performance achieved during the first half of this year, we are raising our full-year equity free cash flow guidance.

1 billion compared with our previous target of at least $900 million. Second, our first-half performance strengthens our conviction in achieving our leverage objectives. 5 times, a level at which we are comfortable operating the business. This updated guidance reflects the strength of the underlying business, continued progress on integration initiatives, and greater visibility into the cash-generating potential of the expanded portfolio.

50 payable in two equal installments in January and April 2027. At the same time, we remain focused on disciplined execution, including the delivery of our integration plans, investment in our networks, and prudent management of leverage. With that, let me now open the call for questions. Thank you.

OPERATOR We'll now begin our question and answer session. com and we'll add you to the queue. Our first question for the day comes from Andreas Jolson from DNB. Andreas Jolson, Analyst at DNB Good morning and good afternoon.

Don't know where you are. Very strong result I must say, so congratulations. I have three questions. First of all, what can you say about phasing of cash flow for the remainder of the year?

I think after or in connection to the Q1 conference call, we said that cash flow is mainly generated in Q1—Q4. Now we have a very strong Q2. So how should we look at the phasing of the cash flow for the remainder of the year? And secondly, ARPU levels are coming up quite nicely.

Do you agree that we could see that as sort of a leading indicator for further continuous service revenue growth going forward? Or is there something extraordinary in the ARPU numbers for Q2 that we should be aware of? And thirdly, we managed to keep the improved profitability in the, so to say, old Millicom countries. What is the main challenge you see to continue this sustainable improved profitability?

Is there a risk that there is a sort of cost-discipline fatigue in the organization as we have had a strong cost discipline for quite some time now? How should we see that? Thanks a lot. Marcelo Benitez, Chief Executive Officer So let me take two and three, and Bart, you take the first one.

Hello, Andres, good to see you. I mean, we are here in Tegucigalpa, Honduras, visiting the operations and having this call at the same time. On the ARPU topic, let me just go back over where the strategy, what was the strategy from the beginning? First we invested in strengthening our networks with a very granular approach, looking site by site, sector by sector, node by node and understanding where the untapped demand is.

So this untapped demand starts in mobile with prepaid, where prepaid customers are just connected 15 days per month, and nobody wants to be connected only 15 days per month. So what we are doing is we are extending the days connected, starting in prepaid with more allowances and more days connected with a slightly higher ticket. And through a very, very well-designed and very mature analytics model, we are selecting and pre-approving prepaid customers that are ready to move to postpaid. In combination, this is increasing the total ARPU of the base.

In Home, the challenge is a little bit different and the results do have a one-off. So the challenge in Home has to do with stabilizing churn, again with a very granular investment on the network, and also has to do with calibrating the ARPU. So the new offers are coming with a high ARPU and, as I mentioned in the call, we do see good response from the industry from that perspective. Promotional heat and activities are coming a little bit down.

So that, in combination with low churn, is creating a new inflection point towards growth. The one-off we have in Home has to do with the World Cup rights. We did have, in almost all our countries, exclusivity on all the games for the World Cup and it was a total success. The revenues coming from the World Cup have to do with selling packages to watch the games, more data packages, more pop-ups, more sales in Home, and advertising revenues.

So you will see a 3% growth in Home, but 80% of that growth comes from the World Cup effect. You will see this effect in Q2 and in Q3—60% of the World Cup effect is in Q2 and 40% is in Q3. So that was the first question. The second question was on profitability.

No. Okay. Fatigue. Well, I would say we are in a very healthy cultural momentum.

We did incorporate the efficiency model as business-as-usual. So we don't see any fatigue at this time. It's more now an obsession to fight inertia. From the countries, we started the purchase order review.

As you may understand, at the beginning there was a lot of pushback from the center, but now that pushback is gone because basically the operations and the countries are already adopting this new criteria on where to put each dollar in OPEX and capex. So it's part of business-as-usual and we do see the results. Also, it is clear that that is the model we want to follow. Incremental efficiencies is something that we are looking at using AI tools and automating mainly the contacts from the customers and internal operational heavy transactional operations.

Bart Van Areen (Chief Financial Officer) Yep. Then on the phasing, Andreas, I think you know, the equity free cash flow is not made in Q4—Q1. It's more the business is made in Q4—Q1 in the sense that, you know, the entry point customer is the one that will generate 12 months of revenue. So Q4, you win them for the entry point; Q1, you keep them; and then the rest of the year, you know, if a customer won in Q4 will add much less to equity free cash flow than one gained in general.

But, you know, we do have phasing in the rest of the year. I think we have on spectrum, we have on interest charges, we have a little bit of working capital. So we have, you know, some phasing in the first half of the year. Our Q2 is an absolute record equity free cash flow for the company.

So that's why I wanted to be a bit cautious. Don't just do Q2 with another two-fourths in Q3 and Q4. I think it will look a little bit like the first half of the year. I think that's a fair way to look at it for the rest of the year: a lower Q3 and then a strong Q4 to end the year.

Andreas Jolson, Analyst at DNB Very good. Thanks a lot. Marcelo Benitez, Chief Executive Officer Thank you, Andres. OPERATOR Our next question comes from Vanikanamuri from HSBC.

Vanikanamuri, Analyst at HSBC Hi. Thanks, Marcelo. Thanks, Bart.