TIGO

Business Context and Reporting Period

Company: Millicom International Cellular S.A. (Tigo)
Filing Type: Form 6-K (Unaudited Interim Condensed Consolidated Financial Statements)
Reporting Period: Three months ended March 31, 2025
Filing Date: May 8, 2025
Business Overview: Millicom is a leading provider of fixed and mobile telecommunications services in Latin America, operating in Guatemala, Colombia, Panama, Honduras, Bolivia, Paraguay, El Salvador, Nicaragua, and Costa Rica. The company operates under the TIGO brand.

Key Financial Metrics

Material Changes vs. Prior Period

• Revenue Decline: Total revenue decreased 7.6% year-over-year to $1.37 billion. This was primarily driven by weaker foreign exchange rates in Bolivia, Colombia, and Paraguay, and the absence of large B2B projects in Panama that occurred in Q1 2024. Organic service revenue was flat (0.0%).
• Profitability Surge: Operating profit increased 30.8% to $423 million, and Net Profit attributable to owners more than doubled to $193 million. This improvement was driven by cost savings from efficiency programs and one-time gains of approximately $95 million related to asset disposals in Colombia and Nicaragua.
• Cash Flow Improvement: Equity Free Cash Flow (excluding disposals) improved significantly to $135 million from a negative $37 million in Q1 2024, aided by better working capital management and reduced spectrum payments.
• Debt Reduction: Gross debt decreased by $44 million to $5.77 billion, and leverage improved to 2.47x from 3.10x in Q1 2024, despite shareholder remuneration totaling approximately $289 million (dividends and share repurchases).
• Accounting Policy Change: The adoption of the Amendment to IAS 21 regarding the non-exchangeability of the Bolivian Boliviano (BOB) resulted in a negative impact of $188 million on equity due to remeasurement and translation effects.

Guidance, Outlook, and Risks

• 2025 Financial Targets: Management targets full-year 2025 Equity Free Cash Flow of approximately $750 million and year-end leverage below 2.5x. These targets assume full-year run-rate savings from 2024 efficiency measures but exclude proceeds from strategic asset sales.
• Dividend Policy: The Board proposed an annual dividend of $3.00 per share, to be paid in four quarterly installments of $0.75, subject to shareholder approval at the AGM on May 21, 2025.
• Share Repurchases: The company completed a $150 million share repurchase plan in Q1 2025, spending $119 million during the quarter.
• Strategic Transactions:
  • Colombia Acquisition: Signed a definitive agreement to acquire Telefonica's 67.5% stake in Coltel for approximately $400 million (subject to adjustments).
  • Asset Disposals: Agreed to sell Lati Paraguay to Atis Group and is awaiting regulatory approval for the sale of Lati International (Central America towers) to SBA Communications.
• Risks and Contingencies:
  • Foreign Exchange: Continued volatility in local currencies, particularly the 40% devaluation impact in Bolivia due to IAS 21 adoption.
  • Legal/Tax: Total litigation claims against the group are $206 million, with $102 million provisioned. Tax risk exposure is estimated at $296 million, with $46 million provisioned.
  • Regulatory: Risks related to spectrum availability, tariff regulations, and interconnection terms in Latin American markets.

Investor Verification Checklist

• One-Time Gains: Verify the sustainability of the $95 million in one-time gains included in Net Profit, which stem from asset sales in Colombia and Nicaragua.
• Bolivia FX Impact: Assess the long-term financial impact of the IAS 21 amendment on the Bolivian Boliviano and the resulting $188 million equity adjustment.
• Colombia Acquisition: Monitor the closing conditions and regulatory approvals for the $400 million acquisition of Telefonica's stake in Coltel.
• Asset Sale Timelines: Track the regulatory approval status for the sale of Lati International to SBA Communications, expected to close in mid-2025.
• Dividend Approval: Confirm shareholder approval of the proposed $3.00 per share annual dividend at the May 21, 2025 AGM.