Millicom (TIGO) Q1 FY26 earnings call: guidance and Q&A

Are the strong margins seen in Coltel (after adjusting for non-recurring expenses) and Paraguay sustainable in the near term?

Management is optimistic about Coltel's margins, expecting the combined company's top-line growth of 8% to be sustainable and integration savings to offset costs, leading to positive full-year margins similar to Tigo Colombia's 2025 levels. For Paraguay, while Q1's 56.3% margin included one-offs, the full-year margin is expected to be between 50% and 56%, still an uplift from last year.

“In Paraguay, we it is very -- we are very competitive here, Marcelo. So we are very happy that Guatemala is receiving some competition from another country. Yes. It is extraordinary what the Paraguayan team is doing in terms of keeping the cost under control despite the fact that we are growing the top line. Having said that, this also has to do with some one-offs. So we do expect more or less an uplift compared to last year in terms of margins in Paraguay, but it's not going to be at 56%. It might be more or less between 50% and 56%.”

asked by Marcelo Santos · answered by Marcelo Benitez

What is the updated view on remaining Coltel restructuring costs, and how should investors think about the path to deleveraging and future M&A appetite?

Management expects approximately $100 million in remaining restructuring costs for Coltel, which will be offset by savings, leading to a positive EFCF effect for the full year. On deleveraging, leverage might slightly increase in Q2 due to the final Coltel acquisition and extraordinary dividends, but the company remains confident in reaching 2.5x by year-end, supported by strong EFCF and currency impacts. The focus remains on execution of current integrations, with M&A in Peru and Venezuela noted as attractive but not a priority.

“In terms of capital allocation, you may have seen the convenience notice for the AGM, so it's a shareholder decision. Ultimately, what we recommended to the Board and to the AGM is that would keep our dividend policy at $3 per share until we reach that $2.5. We explicitly mentioned an approval to be able to incremental dividends in case we come below the $2.5. And we also typically ask for 10% of equity in terms of share buyback as a general policy within Millicom.”

asked by Gustavo Farias · answered by Bart Vanhaeren

Given better-than-expected performance in Colombia and Chile, is there an updated outlook for equity free cash flow beyond the current guidance?

Management stated it's too early to update the full-year guidance, as they are just starting Q2 forecast efforts. However, they noted a very strong start to the year, with risk factors from the beginning of the year (one-offs, restructuring, weaker currencies) now appearing much more constructive. They highlighted strong currency tailwinds and the recent full integration of Coltel as factors that will provide more clarity for a potential guidance update in Q2.

“So for our guidance, I always say in our industry, we make the year in Q4 and Q1 and you get risks in Q2 and Q3. So I just believe it's too early to do any updates to the guidance as well as we're going to start now our forecast 1 efforts -- so we'll be in a good position at the end of Q2. So with that caveat out of the way, I do believe we have a very strong start of the year.”

asked by Unknown Analyst · answered by Bart Vanhaeren

What is driving the strong revenue growth in Colombia, for both Tigo and Coltel assets, and what is the CapEx outlook for the year now that assets are integrated?

Colombia's 8% top-line growth is driven by mobile (pre-to-post migration, profiling prepaid base), home (FMC penetration, complementary fixed networks), and B2B (digital services, entrepreneur segment growth). The Coltel acquisition significantly expands the opportunity for the pre-to-post playbook. CapEx for the year is expected to be around $1 billion, with increased investment in Colombia to strengthen the network (4x 5G coverage, 1,000 new sites) without changing the total CapEx envelope, as investments are refocused.

“On CapEx, we are investing more in Colombia. We do believe that to compete with the main competitor with Claro there, we do need to strengthen our network. This year, we're going to expand our 5G coverage 4 times, so we're going to have 4x coverage of 5G, and we are going to launch or install develop, deploy 1,000 sites in the next 18 to 24 months. That additional investment will not change the total envelope because what we are doing is we are refocusing the investment into what we believe is a network we need to compete in Colombia.”

asked by Unknown Analyst · answered by Marcelo Benitez

What specific actions were taken in Ecuador and Uruguay to achieve such rapid and significant margin expansion?

The margin expansion in Ecuador and Uruguay resulted from applying Millicom's playbook, which involves resetting all costs, defining a strict investment framework (e.g., prioritizing stores over sponsorships), challenging inertia with a zero-based cost approach, and simplifying operating structures. This focuses spending on growth drivers (network, channels, offers) and eliminates distractions. The company also leveraged its negotiation framework with large suppliers. While current EBITDA margins are sustainable, Ecuador will see some margin effects later in the year due to rebranding expenses.

“The first phase of our playbook and is the same playbook we applied 2.5 years ago in all the existing operations at that time is to reset all costs. And we do define a specific strategy or framework of investment. So for example, we don't believe that sponsorships are more important than stores. right? So we focus on investing in stores, less sponsorship. We do review each and every purchase orders for not only Ecuador and Uruguay, but for all the other operations. So it's more or less like a 0-based cost operation.”

asked by Andreas Joelsson · answered by Marcelo Benitez