Millicom(TIGO) - 2025 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company is on track to deliver $750 million in equity free cash flow for the year [3] - Adjusted EBITDA reached a new high of 46.7%, up 3.2 points year over year [5] - Equity free cash flow for the quarter was $218 million, bringing the H1 total to $395 million, an increase of nearly $126 million compared to $269 million in H1 of last year [21][32] - Service revenue for the quarter totaled €1.28 billion, representing a year-over-year decline of 5.9% due to foreign exchange impacts [17] - Organic service revenue growth accelerated to 2.4% when excluding FX impact [17] Business Line Data and Key Metrics Changes - The mobile business grew by mid-single digits, accelerating from 3.1% in the previous quarter [7] - Postpaid customer base grew by 14%, reaching nearly 9 million customers [7] - Home business added 41,000 customers, a growth of nearly 6% year on year [8] - B2B service revenue grew nearly 4% organically, driven by a 16% CAGR in digital services over the past two years [11] Market Data and Key Metrics Changes - In Colombia, service revenue accelerated to nearly 5% year over year, up from 3.6% in the previous quarter [12] - Guatemala's service revenue grew by 1.9% year on year, with a postpaid customer base expanding by 20% [13] - Panama's service revenue was nearly flat year on year at €170 million [24] - Bolivia's service revenue in local currency increased by 7%, but was insufficient to cover devaluation [25] Company Strategy and Development Direction - The company executed three major acquisitions, including Telefonica's operations in Uruguay and Ecuador, and a partial closing of an infrastructure transaction [4] - Focus on migrating prepaid customers to postpaid to increase ARPU and reduce churn [46] - Emphasis on convergence, with 25% of new sales being convergent, which reduces churn and increases customer lifetime value [49] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about recovery efforts, expecting positive growth in service revenue in 2025 [10] - The company is focused on cost optimization and operational efficiency, with a commitment to maintaining leverage below 2.5x [6][22] - Management highlighted the importance of digitalization and AI in improving operational processes and customer interactions [54] Other Important Information - The Board approved an interim dividend of $2.5 per share, reflecting a commitment to return value to shareholders [33] - The company is actively managing its foreign exchange exposure to sustain EBITDA margins and cash flow generation [22] Q&A Session Summary Question: Improvement in Guatemala and competitive environment - Management noted a significant improvement in Guatemala driven by prepaid to postpaid migrations and plans to build new sites [40] Question: Outlook for CapEx - CapEx is expected to be between $650 million to $700 million, representing 11% to 12% of revenues [42] Question: Drivers for accelerating service revenue growth - Increased demand for data, migration from prepaid to postpaid, and price increases are key drivers for revenue growth [46] Question: Cost control and restructuring costs - No significant restructuring costs are expected in H2, with ongoing cost control embedded in the company's operations [52] Question: Leverage target and refinancing plans - The leverage target remains below 2.5x, including dividends and M&A activities, with a focus on local currency debt [60][66] Question: Competitive landscape in Colombia - Management discussed aggressive pricing strategies from competitors but emphasized the importance of network quality and distribution [76] Question: Future acquisitions - The company is focused on completing announced acquisitions before considering new opportunities [85]