Millicom International Cellular S.A.

Hello, everyone, and welcome to our first quarter 2026 results call. This event is being recorded. Our speakers today will be our CEO, Marcelo Benitez, and Bart Van Aeren, CFO of the company. The slides for today's presentations are available on our website, along with the earnings release and our financial statements. Now, please turn to slide two for the safe harbor disclosure. We'll be making forward-looking statements, which involve risks and uncertainties, which could have a material impact on our results. On slide 3, we find the non-IFRS metrics that we will be referencing throughout this presentation, that you can find the consideration tables 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 Enites. Marcelo?

Thank you, Luca, and thank you everyone for joining our call today. We are off to a solid start in 2026, both operationally and from a financial perspective. From an operational standpoint, post-paid net additions amounted to $5.6 million, while home net adds amounted to $1.5 million. These significant increases reflect the relevance of the Colombia acquisition and the opportunity that lies ahead. Importantly, Even excluding inorganic growth, post-pay net additions amounted to 250,000 and home net additions amounted to 46,000. This is a testament of the health of our underlying business and the strength of our customer value proposition. From the financial perspective, organic service revenue growth was a robust 4.9% year over year. This not only represents a solid continuation of the momentum achieved in our seasonally strong fourth quarter in 2025, but also reinforces the expectation of our top-line acceleration throughout 2026. The quarter ranks among one of the strongest growth performances in recent history. As a result, total service revenue for the quarter reached $1.9 billion. This robust top-line performance combined with our tireless focus on cost efficiencies delivered expanding operating leverage. As a result, adjusted EBITDA in the quarter totaled $857 million, representing a margin of 43.2%. This is a very solid outcome. particularly as it already reflects the impact of integration and restructuring charges related to the Coltel acquisition. Excluding Coltel, the adjusted EBITDA margin would have reached 47.9%. Our relentless focus on efficiencies also improves equity free cash flow by 48 million year-over-year, reaching a strong 225 million for the quarter. This is a robust entry point for the year, especially when considering that EFCF excluding LATI transaction would have increased 90 million year over year. As we mentioned in our fourth quarter call, we acquired Telefonica Chile together with NJJ, and we have started to apply the Millicom playbook in that market. During the quarter, we also took important steps to strengthen our position in Colombia. We completed the purchase of EPM 50% ownership stake in Tigo Une and Telefónica's two-thirds stake in Coltel. Since we acquired the majority ownership of Coltel at the beginning of the quarter, we are already fully consolidating Coltel's performance in our results. Importantly, we finalized the transaction and acquired the remaining stake in Coltel from La Nación just two weeks ago. By unifying these operations, we are creating the resilience and the scale needed to move faster, invest more effectively, and ensure that our infrastructure supports the long-term sustainable development of the country. I will come back to both Colombia and Chile later in the call. Now, let's turn to our mobile business performance on slide number six. Our mobile business continued to perform very well in the quarter. Underlying customer growth was 4% year-on-year, with post-paid customer increasing 25% and prepaid customers growth largely flat due to our pre- to post-migration efforts, seasonal effects, and customer-based cleanup initiatives. Including acquisitions, reported growth was 38%, reflecting the addition of Coltel in Colombia. The customer base is steadily migrating toward post-pay, which now comprises roughly 29% of our mobile customers, highlighting the substantial opportunity ahead to continue executing our pre- to post-migration strategy. In the center of this slide, you can see the progress we are making on set strategy, today's Almost seven out of every 10 postage sales are migration sales, an increase of over 10% points year-on-year. This reflects the strong execution of our commercial teams and the attractive value proposition we are offering to our customers. Bringing all this together, mobile service revenue totaled $1.1 billion, including $120 million contribution from two months of operation in Coltel. Excluding inorganic growth, mobile service revenue grew 7% or 63 million year-on-year. This represents a clear acceleration over the previous quarter and shows that our commercial strategy continues to gain traction. Now let's turn to our home business on slide number seven. Our efforts to provide the best network experience and higher speeds continues to resonate with customers. Our home customer base expanded 4.6% organically year-on-year, reaching 4.2 million customers. This growth was mostly driven by broadband-only customers, which increased 5% year-on-year. Here, too, the recent total acquisition meaningfully increases our customer base, adding 1.5 million customers, reaching a total of 5.7 million customers. More importantly, the fixed networks are highly complementary. Tigo is comparatively stronger in managing, whereas ColorTel is more dominant in Bogota. We have also made significant progress in fixed mobile convergence. Almost 36% of our customer base now have both fixed and at least one mobile line with us. This is important for two reasons. First, it shows that our convergent offer is compelling for customers. And second, it materially improves the customer lifetime value. As churned for convergent customers is almost 50% lower than for non-convergent customers. We are very pleased with this progress and we will continue working to expand our convergent customer base. As a result, Home service revenues continue its recovery trend, reaching 374 million flat year-on-year on an organic basis. We remain committed to building the right foundation to return this business to positive revenue growth in the near future. Now let's turn to B2B on slide number eight. Our B2B business continues to play an important role in our growth strategy. Digital service revenue, which increased almost 19% year-over-year, continues to be a key growth driver, supporting mainly by strong demand for cybersecurity and cloud solutions. Both of these categories grew more than 20% year-over-year, reflecting the continued need from businesses and governments for a secure, reliable, and scalable digital infrastructure. At the same time, total B2B revenue reached $306 million for the quarter, excluding hotel. Growth was driven primarily by the entrepreneur customer segment, where the customer base increased more than 13% year over year. This expansion reflects the strength of our convergent fixed mobile offering, which provides small businesses with a simple, reliable, and convenient connectivity solution. Importantly, customer loyalty remains high, supported by the quality of our network, the value of our plans, and the improvement that we have made in our customer service channels. Overall, B2B remains a strong platform for growth. Next, I would like to discuss our operation in Guatemala. Guatemala continues to deliver strong results. Our pre-to-post conversion strategy remains an important driver for growth. Post-pay customer growth was 20% year-on-year, reaching 1.5 million customers at quarter end. Thanks to our targeted sales offers, we continue to make progress on pre-to-post migration. More than 85% of our new sales in post-pay are coming from our existing prepaid base. This strategy improves output per customer and materially enhances customer lifetime value. All in all, Guatemala remains a strong market for us, with mobile revenues expanding 6.6% year on year, reaching $288 million for the quarter. Let's now turn to slide 10 to review our performance in Colombia. We are very pleased with organic performance in Colombia. Postpaid customers increased almost 9% year on year. This, combined with our streamlined commercial offering and our simple, easy-to-understand multi-annual pricing strategy, allowed us to increase mobile ARPU 4.4% year-over-year. Importantly, with the core telequisition, we increased by 42% our prepaid base. This creates a meaningful opportunity to apply our pre- to post-migration strategy, which increased 15 percentage points over the last 12 months to a much larger customer base. Home also continues on the positive trend we have now been seeing for the several quarters. Organic customer growth reached 8.3% year-on-year, bringing Tigo Une base to 1.7 million customers. We also delivered improvements in fixed mobile penetration, which reached 37.1% at the quarter end. As our most recent commercial efforts continue to resonate with customers, we are very pleased with this addition of Coltel's fiber network to our portfolio, which added another 1.5 million customers to our client base, which reached 3.2 million. We are particularly excited about this addition because of the complementary nature of the network. As I mentioned in my opening remarks, it is strengthening our position in key urban areas and creates significant opportunities for convergence, cross-selling, and more efficient network investment. I would now like to discuss our vision for the integration in Colombia and the potential we see in the market. Since obtaining operational control, we have been working with urgency and discipline to ensure a smooth transition and rapid turnaround. Our integration plan is based on three key pillars. The first pillar is a reset of our cost base. This includes a rigorous cash management, a supplier payment program, debt renegotiation, and liability management to align with the overall Millicom capital structure. As part of our Open Efficiency Program, we have identified more than 100 million in expected savings to be achieved in year one. These opportunities includes contract renegotiation, company resizing, and sponsorship rationalization. The second pillar is network improvement. we are moving on two strategic fronts. First, we are improving the quality of our network, planning to increase four times our 5G coverage in 2026 and to add more than 1,000 new sites during the next 24 months. Second, we are focused to efficiently improve our network operating model. The objective here is to reduce complexity, improve execution, and create a more efficient and scalable platform. The third pillar is commercial uplift. This includes simplification of commercial offers with a clear focus on profitability, accelerating pre- to post-migration, and supporting ARPU improvement. It also includes increasing cross-sell opportunities across complementary fixed networks, which should help us drive high fixed mobile convergence. We have defined clear milestones together with the team in Colombia and we are already seeing encouraging early results. We are excited about the road ahead in Colombia. We believe this transaction gives us the scale, network asset and customer base needed to create a stronger, more sustainable business in one of our most important markets. But this is not just theory. We have already put this approach in play in Ecuador and Uruguay and are seeing great results. On slide 12, you can see the tangible results of applying the Millicom Playbook in Ecuador and Uruguay. We are pleased with the progress we have made in both countries in a short period of time. adjusted EBDA expanded meaningfully, reflecting the disciplined execution of our efficiency program. Importantly, both Ecuador and Uruguay are already operating above or in line with the minimum average adjusted EBITDA margin. In practical terms, this means these businesses have quickly moved into what we would consider business-as-usual performance within our operating model. We also saw a material uplift in equity-free cash flow in both countries. In Ecuador specifically, the improvement was offset by a $70 million payment related to Spectrum in 700 MHz and 3.5 GHz bands, which supports the long-term quality and capacity of our network and comes up for renewal in 2038. Overall, the results achieved so far are encouraging. At the same time, we continue to fine-tune our operations in both markets, with a clear focus on driving sustainable margin expansion and stronger cash flow generation over time. Before turning the call over to Bart, I want to spend a moment updating you on our operations in Chile. As you will recall, we acquired Telefónica Operations in Chile jointly with NJJ on February 10th. Since then, we have moved quickly. We appointed a new general manager, a new CFO, and a new CTO. Within the first two weeks, the new leadership team began applying the Millicom Playbook. This includes a significant organization restructuring with an approximately 30% headcount reduction. We also took initial steps to improve the capital structure, including 85 million debt reduction, which lowered leverage by approximately 0.4 times. We launched our mobile network enhancement plan by optimizing the frequency layers, delivering rapid improvements in coverage and service quality. Importantly, we have also identified key regional white spaces, and we are committed to increasing our physical retail presence in those areas. Taken together, we are already seeing promising results from our turnaround plan. In the first two months, the business generated positive equity free cash flow before restructuring charges. We are therefore optimistic that Chile will meet its full-year target of being neutral to equity free cash flow. With that, let me turn the call over to Bart, who will walk you through our financial performance.

Thank you, Marcelo. Before we dive into the numbers, Just a heads up that this quarter is a bit more complex to read even than multiple acquisitions we've completed over the past six months. So please bear with me as I walk you through the results. With that out of the way, let's now look at our financial performance for the quarter. Service revenue increased 45% year-on-year to nearly $1.9 billion, benefiting from the consolidation of two months of operations of Coltel, and our acquisitions in Ecuador and Uruguay, as well as the year-on-year increase across our business lines. Let me split this up for you. Coltel contributed approximately $243 million to service revenue in the quarter, as shown on this slide. Excluding this inorganic contribution, service revenue would have increased 4.9% year-on-year. As a reminder, We are including Ecuador and Uruguay in both periods for purposes of organic growth. If we would exclude all M&A that we did, including the MFS business of Paraguay that is now recorded as an asset held for sale, that perimeter grew a staggering 13%, continuing the trend we saw last year. Reported adjustability reached 857 million for the quarter, increasing 35.5% year-on-year, with Cotel contributing $33 million. Organic adjusted EBITDA growth was 9.6%. All that translates to an adjusted EBITDA margin of 43.2%, a robust result, particularly given that we incurred nearly $70 million in restructuring charges during the quarter, most of which related to a voluntary leave plan in Colombia. excluding Kotel, adjusted EBITDA margin would have reached 47.9%. We are very pleased with the performance across the region, thanks to our focus on sustainable margin improvement across all our business units and all our countries. But also here, benefiting from FX tailwinds. Equity Free Cash Flow hits a new Millicom first quarter record of 225 million. I remember two years ago when I had to report to you the first positive Q1 of Medicom with just $1 million. And actually, that included some M&A. As we look at the year-on-year increase and exclude last year's one-time asset sale proceeds, equity-free cash flow increased by 66% or $90 million. This is a strong result, particularly given the increase in lease obligation following our infrastructure sale and incremental spectrum payments during the quarter, notably in Ecuador. Let's now review our performance country by country on slide 16. Starting with Guatemala, service revenue reached $370 million, increasing 5.5% year-on-year. Growth was mainly driven by our pre- to post-take conversion strategy, together with the price increase implemented in February and March, which supported the art pool improvement that Marcelo mentioned earlier. In Colombia, service revenue reached 653 million, with Cotel contributing approximately 243 million, as mentioned earlier. Adjusting for this inorganic contribution, service revenue increased 8.4% year-on-year. Growth was driven by price increases in our B2C and home businesses, as well as cybersecurity services provided to the government, which Marcelo discussed earlier. In Panama, service revenue was slapped year on year at 172 million for the quarter. Growth was slower than expected, but we remain optimistic that the top line momentum will improve. In Paraguay, service revenue increased a robust 4.9% year-on-year to 158 million. As mentioned before, our Paraguayan MFS business is now recorded as an asset held for sale and excluded from both reporting periods. Next, I would like to review Ecuador for the first time since our acquisition of Telefonica's operations in the fourth quarter of 2025. Please note that we are providing 2025 results as a reference point only. Service revenue reached 110 million, increasing about a percent compared to last year. We have reverted last year's negative revenue trend under former ownership and are convinced that our disciplined approach positions the business for more sustainable and higher growth over the medium term. Service revenue in our other markets, which now comprises El Salvador, Nicaragua, Costa Rica, Bolivia, and Uruguay, increased 4.8% to 402 million. This was mainly due to robust top-line growth in Nicaragua and Uruguay. Let's now move to our adjusted EBITDA performance. In Guatemala, adjusted EBITDA increased 6% year-on-year to 237 million, implying strong adjusted EBITDA margin of 55.4%. This was driven by service revenue expansion and continuous operating leverage for colombia adjusted evita reached 205 million with coltel contributing 33 million for the two months under our ownership adjusted evita margin was 30 which includes 65 million of restructuring charges when excluding coltel colombia grew adjusted ebda 13.7%, reaching an adjusted EBITDA margin of 41%. Allow me a little sidestep here. Despite it being early days, we feel very positive about our turnaround of Core 10. As I mentioned last quarter, Prior to the acquisition, we were thinking of COTEL as a risk factor and were taking into consideration the possible negative equity free cash flow. But at this stage, we believe it will be already a net contributor, fully accepting the aforementioned restructuring charges as well as the acquisition financing cost. In Panama, adjusted EBITDA declined slightly to 91 million with an adjusted EBITDA margin of 50.7%. Turning to Paraguay, adjusted EBITDA increased 15% year-on-year to 92 million, delivering a record adjusted EBITDA margin of 56.3%. This growth came from the team's continued focus on operational efficiencies, some phasing, and others. So well-deserved congratulations to our Paraguayan general manager, Roberto, and our newly internally promoted CFO, Ford. Besides the stellar performance, We also benefited from effects in Paraguay, increasing the year-on-year growth of reported adjusted EBITDA to almost 39%. Turning to Ecuador, we are pleased with the initial performance. Our priority has been to stabilize the operation and expand margins sustainably. Adjusted EBITDA totaled $56 million in the quarter, corresponding to an adjusted EBITDA margin of 48.3%. in line with what I signaled to you already during our Q4 call. This represents a margin uplift of about 13% compared with Ecuador's reported profitability for 2025. I'm intentionally referring to a full year number here because last year, under former ownership, Ecuador had an exceptionally high margin from one-offs in the first quarter. So here as well, I would like to congratulate our general manager, Bobby, and our initial CFO, Paul, leading the integration, who has now been succeeded by an internally promoted CFO, Fernanda. Congratulations. We are encouraged by the results achieved and continue to fine-tune the operation to deliver meaningful and sustainable margin expansion over the coming quarters. Just to manage expectations, later in the year we will be rebranding. so there will be some margin effects during the time for one-off marketing expenses. Adjusted EBITDA in our other markets reached 202 million, increasing 11.4% year-on-year, with an adjusted EBITDA margin of 47.7%. These robust results were particularly driven by Bolivia, where continued cost focus and more stable effects supported margin expansion. Before discussing equity-free cash flow, I also want to echo Marcelo's comments on Chilean. We are pleased with the initial results from our joint operation with NJJ. The Chilean business generated approximately $200 million of revenues in the first two months of ownership and delivered positive equity-free cash flow. This is a tremendous result for an operation which was losing $500,000 per day when we were handed the keys. I initially said we were looking at Chile as a calculated bet entering the market with a low chip purchase option. We now see the operation delivering positive equity free cash flow already in year one despite the turnaround costs like severance and significant investments into the network as well as the retail footprint. This is a good start and we believe the business is moving in the right direction. Let's now turn to slide 18 to walk through equity free cash flow for the quarter. As we've already discussed, adjusted EBITDA for the quarter was 857 million, up 221 million year-on-year, despite the restructuring charges in Colten. Cash CapEx was 221 million, up 107 million year-on-year. This was mainly due to the 42 million one-time impact related to last year's lapis sale in Nicaragua, which was accounted as negative capex, considering an asset sale. And increased capex execution in Colombia and Bolivia, as well as incremental capex related to our inorganic growth projects. A nice way of saying we are investing in the networks of the acquired businesses. Spectrum Pays was $99 million, increased on $63 million year-on-year. This increase was mainly related to $70 million of Spectrum payments in Ecuador, as Marcelo already mentioned. Changes in working capital and other was negative $27 million for the quarter. This is common in the first quarter, when working capital is usually a drag on cash flow due to the tagging of certain payments, fees, licenses, and employee bonuses. That said, working capital improved by $49 million year-on-year, mostly due to payment spacing and improved collections. Taxes paid were $53 million, representing a year-on-year reduction of $13 million. This was mainly because prior year taxes were elevated by one-off incremental taxes on gains from infrastructure since. Finance charges were $126 million, increasing $19 million year-on-year mainly due to incremental charges related to acquisition financing. These payments increased $68 million year-on-year to $140 million, consistent with last year's tower sale, which added approximately $22 million, as well as our inorganic growth, which contributed another $36 million at least. Endura's repatriation was $34 million for the quarter improving $11 million year-on-year. As a result of these factors, equity-free cash flow was a record $225 million for the first quarter of the year. Let me now briefly walk you through our net debt bridge on slide 19. As just discussed, equity-free cash flow was $225 million for the quarter. The opening balance sheet of Cortel added approximately $1.5 billion of net debt, increasing leverage by 0.6. we had an increase of leverage of 0.3 times related to acquisitions for about 773 million. These included the purchase of EPM's equity stake in Tigo, UNE, the acquisition of two-thirds of equity in Cortel held by Telefonica, and 25 million from the joint acquisition of Telefonica Chile in partnership with NJJ. We also paid 125 million in regular dividends to our shareholders during the quarter. which also added approximately 0.05 times the leverage. Finally, derivatives, FX, and other impacts increased net debt by 67 million, mostly related to the appreciation of local currency denominated debt. Yes, FX tailwinds benefit your P&L, but it also has a negative effect on the value of local currency denominated debt. Putting it all together, net debt for the quarter was 7.6 billion, with a total leverage of 2.76 times, which is in line with the expectations we communicated on our last earnings calls. You might see leverage creeping up a little bit more in Q2 due to the remaining acquisition of Cortel Equity held by La Nacion, a transaction that is now closed, as well as extraordinary dividends paid in April. We remain confident that this leverage will come down again and get around 2.5 times by year end. With that, let's now discuss our financial targets for 2026. In summary, our financial objectives for the year have not changed. We continue to target equity-free cash flow of at least $900 million and leverage of around 2.5 times by year-end. Regarding equity-free cash flow, and I mentioned this before, I would want to point out that when we introduced our 2026 guidance in our fourth quarter 2025 call, we had only recently acquired the controlling state in COTEL. At that time, our initial assumption was that COTEL would be broadly neutral to equity-free cash flow in 2026, possibly even negative due to integration costs. Since then, we've begun implementing our playbook and see the turnaround happening. We are now cautiously optimistic that Koltel will be a net contributor, fully offsetting integration costs and acquisition financing charges. In addition, we are more constructive on foreign exchange assumptions for the remainder of the year and now have greater clarity around the debt associated with our recent acquisitions. All of this gives us added confidence in our 2026 targets. While we are not updating guidance today, we expect to be in a much better position to do so on our Q2 earnings call, following the completion of our integration and portfolio optimization work. Until then, we remain focused on discipline, execution, and margin expansion.