Millicom Intl Cellular Q3 2026 Earnings Call Transcript

Millicom Intl Cellular (NASDAQ:TIGO) reported third-quarter financial results on Thursday. The transcript from the company’s third-quarter earnings call has been provided below.

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Summary

Millicom Intl Cellular reported a strong Q3 2026 with record adjusted EBITDA and solid revenue growth driven by a clear strategy and consistent execution.

Service revenue reached approximately $2.1 billion, growing 5.4% organically year over year, while adjusted EBITDA reached $1.1 billion, with a 48% margin.

Significant milestones include the integration under the Tigo brand in Colombia and Ecuador and an ambitious four-year investment plan to enhance 5G coverage and network capacity.

The company continues its strategy of migrating prepaid customers to postpaid, achieving 31% year-over-year growth in the postpaid customer base.

Equity free cash flow increased by 27% to $316 million, keeping the company on track to meet its full-year guidance of $1.1 billion.

Management highlighted the resilience and efficiency of operations despite challenges like the earthquakes in Colombia and Panama.

Future outlook includes maintaining strong cash generation, continuing strategic investments, and focusing on commercial execution for sustainable growth.

The company maintains its full-year financial guidance and deleveraging objectives with a leverage ratio reduction to 2.53.

Full Transcript

OPERATOR

Hello everyone. Welcome to our third quarter 2026 results call. This event is being recorded. Our speakers today will be our CEO, Marcelo Benitez, and Bart Vanhaeren, 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 reconciliation tables in the back of the 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.

Marcelo Benitez (Chief Executive Officer)

Thank you, Luca, and welcome everyone to our third quarter 2026 results call. I’m very pleased to report another strong quarter for Millicom with record adjusted EBITDA, solid revenue growth, and strong cash flow generation. I want to start by emphasizing that these results are not happening by chance. They are the result of a clear strategy and consistent execution. Across our operations, we continue to focus on the same priorities: improving customer experience, investing in our networks, strengthening commercial execution, and making our organization more efficient every day.

On the commercial side, we continue to see very positive results from our More for More strategy. We are giving customers larger allowances, better connectivity, and a better overall experience while gradually increasing ARPU in prepaid. It’s not simply about increasing prices; it’s about giving customers more value, keeping them more engaged, and building stronger customer relationships. At the same time, we continue migrating prepaid customers to postpaid, increasing bundles in our home business, and expanding our digital services offering for B2B customers.

And of course, efficiency remains a fundamental part of our culture. We continue simplifying operations, improving productivity, and applying the Millicom playbook across our markets. This combination of strong commercial execution and cost discipline is driving our financial performance while we continue investing in the long-term growth of our business. Before going into the quarterly results, I want to highlight two important milestones from October. On October 1 in Colombia and October 14 we officially brought our combined operations under the Tigo brand, bringing together the strengths of Tigo and Movistar. This is another important step in our integration and in building a stronger and more competitive operation. Together with the brand consolidation, we announced an ambitious investment plan for the next four years.

This includes doubling our 5G coverage, increasing network capacity at more than 5,000 sites, expanding coverage through more than 1,000 new sites, and continuing to invest in fixed and digital infrastructure. This is a significant commitment to improving network quality and the experience of millions of customers in Colombia. We also reached another important milestone in Ecuador. On October 1st, we officially launched the Tigo brand in the country. And just as in Colombia, our focus goes well beyond the brand itself. We have already increased network capacity at more than 2,000 sites, and our plan includes building at least 500 additional sites, mainly expanding coverage along the coastal region. Our objective is clear: bring better connectivity to more people, improve customer experience, and build a stronger business over time.

Both initiatives show how we are combining network investment with strong commercial execution to deliver profitable and sustainable growth. Before reviewing the numbers, I also want to acknowledge two difficult events during the quarter. Both Colombia and Panama experienced significant earthquakes. Sadly, in Colombia, we lost one of our employees and one of our contractors. Our thoughts are with their families and loved ones, and we continue to support them during this difficult time. The earthquake also affected our networks and disrupted services for many customers. I want to recognize our teams in both countries for their extraordinary response despite very challenging conditions, particularly in Colombia.

Our colleagues restored service at all affected mobile sites within just two days and worked tirelessly to keep our customers connected. Fortunately, our operations in Panama were not materially affected. In Colombia, the impact on our fixed network lasted longer and contributed to a decline in home customer additions during the quarter. I’ll come back to this when we discuss our home business. Now, turning to our results at the group level, service revenue reached approximately $2.1 billion, growing 5.4% organically year over year. Adjusted EBITDA reached a new quarterly record of $1.1 billion, growing 7.7% organically with an adjusted EBITDA margin of 48%. Equity free cash flow reached $316 million for the quarter, up 27% compared to last year. This brings our equity free cash flow for the first nine months to approximately $870 million, keeping us on track to deliver our full year guidance of around $1.1 billion.

What I particularly want to highlight is the consistency of our performance. We continue growing revenues, improving efficiency, and converting that performance into stronger cash generation. Our commercial strategy also continues to deliver. We added almost 390,000 postpaid customers during the quarter. In Home, we lost 86,000 customers sequentially, reflecting both the earthquake in Colombia and our deliberate approach to pricing and customer value. I will explain these dynamics in more detail shortly. But importantly, Home service revenue increased 3.4% year over year. Overall, these results demonstrate the strength of our operating model.

We continue generating strong earnings and cash flow while investing in the quality and competitiveness of our business. Starting with Mobile, we continue to see strong results from our commercial strategy. As we have discussed in previous quarters, one of our main priorities is migrating prepaid customers to postpaid. This quarter, 73% of our postpaid sales came from customers migrating from our existing prepaid base. This shows the strength of our commercial execution and our ability to move customers to higher-value plans, giving them more data, greater predictability, and a better overall experience.

Our postpaid customer base reached 17.2 million, growing almost 31% year over year. Importantly, our prepaid base also grew 7.8% year over year. So we continue growing postpaid while maintaining a large prepaid customer base, which gives us a significant opportunity for future migration. At the same time, our More for More strategy continues to deliver. We are offering larger allowances and better value, supported by continued investment in our networks. In prepaid, we are also focused on improving customer engagement and helping customers to stay connected more consistently. And when customers migrate to postpaid, they typically stay connected for nearly twice as many days each month. This improves their experience while also supporting loyalty and long-term customer value.

Together with disciplined pricing, these initiatives continue to support ARPU growth. As a result, Mobile service revenue reached $1.3 billion, growing 7.2% organically year over year. These results demonstrate how customer migration, better monetization, and consistent execution are supporting our mobile growth. Turning to our Home business, we continue to focus on improving customer value, increasing convergence, and delivering a better broadband experience. Our customer base declined mainly due to two factors. The first was the earthquake in Colombia, which affected our fixed network and disrupted services for a significant number of customers. Approximately one third of the sequential decline in Home customers was related to the earthquake. The second and more significant factor was our deliberate commercial approach.

We continue implementing our More for More strategy, offering customers faster speeds, better productivity, and more value while adjusting our pricing. We recognize that this can lead to higher churn, particularly among more price-sensitive customers. But our priority is to increase customer value and revenue rather than grow subscribers at any cost, and we are seeing encouraging results. Home service revenue reached $542 million, growing 3.4% organically year over year.

Despite the pressure on subscriber additions, another important driver is convergence. Our fixed-mobile convergence penetration reached 30%. The slight sequential decline was driven by the inclusion of Coltel’s FMC metrics for the first time this quarter, as Coltel has a lower FMC penetration than the group average. Convergence remains a very important part of our strategy because these customers tend to be more loyal, with churn historically around half that of non-FMC customers.

We will continue investing in our fixed networks, upgrading speed, and expanding our convergent offers. We expect some continued pressure on subscriber additions in the fourth quarter as we maintain our pricing strategy, but our priority remains the same: delivering a better customer experience, increasing customer value, and supporting sustainable revenue growth. Let’s now turn to our B2B business. In B2B, we continue to see good opportunities, particularly in digital services and the SME segment. During the quarter, B2B service revenues reached $404 million, growing 2.1% organically year over year. Digital services revenue reached $105 million, growing 5.9% organically compared with last year, supported by continued demand for cloud, cybersecurity, and managed services. Compared with the second quarter, digital services revenues declined mainly because certain B2B and government projects came to an end.

As a result, we expect some moderation in the near term as those projects’ revenues roll off. Looking ahead, we remain confident in the opportunity across our B2B business. Our focus is on expanding our services portfolio, improving sales productivity, and strengthening our position in the SME and corporate segments. Next, I would like to discuss our two largest markets, Colombia and Guatemala. I’m very pleased with the progress we are making in Colombia following the acquisition of Coltel. Our teams moved quickly to integrate operations, simplify the business, improve efficiencies, and implement our commercial strategy. With the most intensive phase of the integration largely behind us, our focus is now shifting more toward commercial execution and capturing the opportunities from our expanded customer base, and we are already seeing encouraging results.

Our prepaid-to-postpaid migration strategy continues to perform very well. During the quarter, 71% of our postpaid sales came from customers migrating from prepaid. Our postpaid customer base reached 10.2 million, growing 7.4% year over year, excluding Coltel. This is a strong result, particularly considering the size of the combined operation. At the same time, our More for More strategy continues to support ARPU growth. On the Home side, our customer base declined 2.8% year over year, again excluding Coltel. As I mentioned earlier, this reflects both the impact of the earthquake and our deliberate pricing strategy. Convergence is another important opportunity. Our FMC penetration in Colombia, now including Coltel, reached 40%, reflecting continued progress in bringing fixed customers and mobile services together across our combined customer base. And with the recent consolidation under the Tigo brand, together with the investments announced in October, we are entering a new phase for our business in Colombia.

We now have the scale, the network investment plan, and the commercial strategy to increase customer value and improve profitability over time. There is still work ahead, but the progress we have made gives us even more confidence in the combined operation in Colombia. Guatemala continues to deliver excellent results and remains one of our best examples of what consistent execution of the Millicom playbook can achieve. Our prepaid-to-postpaid migration strategy continues to perform extremely well. During the quarter, 87% of our postpaid sales came from existing prepaid customers. Our postpaid customer base reached 1.6 million, growing 18.7% year over year. And importantly, this is not just a one-quarter result.

We have delivered postpaid customer growth above 18% in every quarter so far this year. At the same time, our More for More strategy continues to support ARPU growth. We’re offering customers larger allowances and better value, supported by continued network improvements and disciplined pricing. Together with our prepaid-to-postpaid migration, this is improving our customer mix and building stronger customer relationships. And these commercial trends continue to translate into strong revenue growth.

Mobile service revenue reached $301 million, growing 6.8% organically year over year. Guatemala continues to demonstrate how this strategy, executed consistently over time, can deliver strong and sustainable results. Before handing the call over to Bart, let me briefly update you on Chile. During the third quarter, service revenue was broadly stable compared with last year, with only a marginal decline. At the same time, the team has made significant progress in simplifying the operation and improving its cost structure. With the initial restructuring program largely completed, we are now seeing the benefits in profitability. Adjusted EBITDA margin improved by almost 10 percentage points year over year, reaching approximately 33% during the quarter.

This is an encouraging result, particularly given the competitive environment in Chile. As a reminder, we hold a 49% stake in the business. Revenue and adjusted EBITDA are not consolidated into Millicom’s group results. There is still work ahead, but the progress achieved in just eight months shows what disciplined execution can deliver. I want to congratulate Carolina, our CEO in Chile, and the entire team for their commitment and the progress they have made.

Before closing, I want to reinforce one message. We are very pleased with our financial results, but what gives us more confidence is how we are achieving them. We have a clear strategy. We are investing in our networks, improving customer experience, growing ARPU through More for More, and becoming more efficient every day. And we are applying this approach consistently across all our operations. Our priority is not just to deliver one strong quarter; it’s to build a stronger Millicom for the long term. I want to thank all our Tigo teams across Latin America for their commitment and outstanding execution. With that, let me hand over the call to Bart to review our financial results in more detail. Thank you.

Bart Vanhaeren (Chief Financial Officer)

Thank you, Marcelo. Let me now walk you through financial performance for the third quarter. We delivered another solid quarter with reported service revenue increasing 61% year over year to $2.3 billion. Importantly, organic service revenue growth, which excludes foreign exchange movement and the Coltel acquisition, reached 5.4% year over year. This marks our fourth consecutive quarter of organic service revenue growth in the mid single digits and demonstrates the continued execution of our commercial strategy supported by prepaid to postpaid migration and disciplined pricing that continues to support ARPU expansion across most of our markets.

Adjusted EBITDA reached a quarterly record of $1.1 billion, increasing 7.7% organically year over year. Once again, adjusted EBITDA grew faster than service revenue, demonstrating the operating leverage we have been focusing on. On a side comment amplifying this message, adding Coltel on a pro forma basis, adjusted EBITDA increased by 12.7% year over year. This further highlights the underlying momentum of the business and the scalability of our operating model.

As a result, our adjusted EBITDA margin reached 48% even after absorbing approximately $30 million in severance-related expenses during the quarter. Importantly, our operating performance continues to translate into healthy cash generation. Equity free cash flow reached $316 million for the quarter, increasing almost 30% year over year. With that, total equity free cash flow for the first nine months of the year reached approximately $870 million, close to our original full-year equity free cash flow target in just nine months.

Let’s now review the performance of our individual markets, starting with Colombia. We can now say that the most intensive phase of the integration is behind us, with our local team increasingly focused on commercial execution. Service revenue increased organically 7.5% year over year, reaching now $908 million, supported by the continued application of our commercial strategies across the customer base. Turning to Guatemala, we delivered another solid quarter with organic service revenue increasing 6.5% year over year to $392 million, supported by postpaid customer growth and disciplined pricing.

In Panama, we saw a further acceleration in top line growth with service revenue increasing 5.2% year over year to $179 million, driven by mobile subscriber growth and incremental B2B projects. Paraguay, Ecuador and our other markets are growing 3.3% and 4% on the back of continued prepaid to postpaid migration and, again, disciplined pricing. Let’s now turn to the profitability of our operations for the country. Profitability, let’s start again with Colombia. We are very pleased with the speed of execution and the resulting turnaround. Adjusted EBITDA organically increased 6.3% year over year to $470 million for the quarter, including approximately $20 million in severance expenses. As a reminder, we expect approximately $40 million in additional restructuring expenses during the remainder of the year.

So now, half a year into the integration, we reached an adjusted EBITDA margin of 44.2%, bringing up the acquired lower-margin business from Coltel to our highest EBITDA margin in Colombia ever, despite still incurring integration costs. Given that Coltel integration was widely viewed as one of the key execution risks for Millicom, the results shown to you today reinforce our confidence that this risk is largely behind us and that the combined operation offers further upside potential towards profitability levels in line with other Millicom countries.

Turning to Guatemala, the business continues to demonstrate the strength of our operating model. Adjusted EBITDA increased 7.6% year over year to $255 million, supported by healthy service revenue growth and continued cost discipline. I would believe that the third quarter benefited from a $4 million one-time benefit coming from reversing certain legal liabilities. Including this reversal, the adjusted EBITDA margin reached 57.2%, a new quarterly record for the operation.

I would like to use this moment to provide an important update regarding the litigation proceedings in Guatemala that we disclosed in our second quarter results. I am pleased to report that we have reached a settlement resolving all pending material litigations and claims. Under the agreement, we recorded a high double-digit million dollar expense in the quarter, recognized as other non-operating income and expenses. With these matters now resolved, we have removed a significant source of financial and regulatory uncertainty in the country.

This outcome allows our local management team to now focus fully on commercial execution, operational efficiency and sustaining the strong underlying performance that Guatemala has consistently delivered. Now turning to Panama, adjusted EBITDA increased 3.5% year over year to $96 million, representing an adjusted EBITDA margin of 51.9%. Paraguay once again delivered strong operating leverage with adjusted EBITDA increasing 11% organically year over year to $101 million, reaching a margin of 54.8%. Turning to Ecuador, as of today, we have passed the first anniversary of our acquisition and we are very pleased with the progress achieved. Adjusted EBITDA increased 36.8% year over year to $57 million, representing a margin of 47.8%.

Following the launch of the Tigo brand on October 1, we expect some margin moderation in the fourth quarter as we increase marketing and promotional investments consistent with what we communicated in our previous earnings call. Finally, our other markets also delivered strong results with adjusted EBITDA increasing 5.9% year over year to $94 million, reaching an adjusted EBITDA margin of 47.7%. Let’s now turn to the equity free cash flow bridge for the quarter. As discussed, adjusted EBITDA reached $1.1 billion, increasing by almost $400 million year over year. Cash capex totaled $263 million, up $91 million year over year. This primarily reflecting continued investment in our recently acquired businesses and the incoming differences previously disclosed in our second quarter earnings call. Spectrum payments amounted to $67 million, increasing $46 million year over year, mainly due to the spectrum-related payments in Colombia and Paraguay.

Taxes paid, finance charges and lease payments increased year over year, mainly due to the expansion of our operating perimeter through acquisitions as well as profitability. Honduras Retrievalization remained broadly unchanged year over year at $22 million for the quarter. Put it all together, equity free cash flow increased almost 30% year over year to $316 million. Importantly, we continue to deliver strong cash generation while absorbing the incremental investments, financing costs and restructuring-related cash requirements.

Before moving on to the net debt bridge, let me remind you that the fourth quarter is typically the strongest quarter for cash generation. However, the improvements we have implemented across the business have significantly reduced the seasonality of our cash flows. As a result, we expect a solid and orderly finish to the year supported by continued robust cash generation in the fourth quarter to reach our guidance equity free cash flow level for the year, but as well starting strongly next year.

Now turning to our net debt and leverage progression, the key message here is straightforward. Our strong operating performance continues to translate into healthy cash generation, supporting our deleveraging objectives. During the quarter we generated $360 million of equity free cash flow, which more than offset our regular dividend distribution and the adverse impact from derivatives and foreign exchange movements. Together with continued earnings growth, this resulted in a reduction in leverage ratio, now down to 2.53 at quarter end, again in line with our guidance for the full year, but now achieved in nine months.

In summary, we are reducing leverage while continuing to invest in our networks and return capital to shareholders, reflecting the cash-generating capacity of our expanded operation. To summarize the third quarter: 1) another solid continuation of the trends we have seen throughout the year; 2) the integration risks are now largely behind us; 3) Guatemala risks legal and regulatory removed; 4) setting us up for continued focus on our strategy to deliver healthy growth, further margin expansion and growing equity free cash flow; and 5) converting this performance into strengthening of our balance sheet while maintaining our commitment to shareholder distributions.

As a quick update on our non-controlled subsidiary in Chile, we recently renegotiated the earnout arrangement with the seller, providing greater flexibility around capital allocation and future upstream distributions in exchange for an additional earnout payment. Importantly, this obligation is financed at the joint venture level and carries no cost to Millicom Intl Cellular. The business is already generating mid to high double-digit millions of equity free cash flow annually and we expect this to be triple-digit million next year.

Together with our partners, we are evaluating the optimal use of this cash generation including distributions, accelerated deleveraging and incremental commercial investments to support future growth. Based on our year-to-date results and our expectations for the remainder of the year, we are maintaining our full-year financial guidance. We continue to expect equity free cash flow of around $1.1 billion and our path to leverage below 2.5 remains intact based on current operations, perimeter and cash flow generation. With that, let me now open the call for questions.

OPERATOR

We will now begin our question and answer session. As a reminder, if you’d like to ask a question, please let us know by emailing us@investorsillicom.com and we will add you to the queue. Our first question of the day comes from Gustavo Farias from UES.

Gustavo Farias (Analyst at UES)

Can you hear me? Oh, thanks for the opportunity to ask questions. So two on my end. First of all, congrats on the results. Very strong, very positive. So first question regarding the investment program for the next four years in Colombia and also in Ecuador, what should we expect in terms of capex intensity along that period? And I’m asking that in the light of what we are seeing, capex intensity very stable so far. And my second question, just to get an update on the current opportunities that you guys are seeing in Latam for M&A, and right now I’d like to be very specific on potential opportunities in Brazil and Venezuela.

If you could give us an updated view on those markets. Thank you.

Marcelo Benitez (Chief Executive Officer)

Thank you for your question, Gustavo. I will take the first part of your question and we’ll ask Bart to answer the second part. Basically what we saw in Colombia is an opportunity to strengthen our network. We announced that we will double the 5G coverage. Second, that we will increase capacity in mainly urban areas in mobile and fixed and third, we are going to build more than Hey Gustavo, I think we lost you. Are we back?

Gustavo Farias (Analyst at UES)

Yeah, yeah. For some reason the audio was interrupted. I didn’t hear your answers.

Marcelo Benitez (Chief Executive Officer)

No worries, we’ll start again. Yeah, no worries. So the strategy in Colombia and Ecuador is very similar. In Colombia now we have the scale to invest. So we are on an aggressive plan to increase coverage of 5G to double our existing coverage to increase capacity mainly in the urban areas where the demand is extremely high. And third, we are building new sites, more than 1,000 sites that will cover 3 million customers that today have either no option or no connectivity, or they have only one option.

So that’s more or less the same playbook we are doing in Ecuador. Basically, with the purchase of the 700 spectrum, we already increased the capacity immediately in all our sites. Also, we are investing in new 40 sites and capacity in the Quito region, or let’s say in the region where we have strong competition. We also found that on the coast we had very, very small coverage compared to our competitors. So we are investing in 500 new sites in the coastal region. All that is made by our team with a very, very specific design of the network.

And also we are using the Millicom Intl Cellular price list when it comes to negotiating with vendors. So we do not expect the ratio of capex to increase. We expect to do all this investment under the same envelope.

Bart Vanhaeren (Chief Financial Officer)

On the M&A side, I think our story there is consistent. So first, I think we looked at minorities and this was largely executed to look at in-market consolidation. You’ve seen us doing this, an example in Colombia, but there are more opportunities as we have still multiple players in some of our markets. But then, coming to your question, number three would be adjacent markets. In a past quarterly call, I mentioned Peru and Venezuela as kind of a spot-on strategy.

Venezuela, specific to your question, has still a number of capital flight mechanisms, especially related to the dollar, in place. So it makes it still a hard investment. Brazil is generally too big, a different culture, limited synergies, limited turnaround stories. Many of these companies are already at 50% EBITDA margin. So it’s not, let’s say, our first area to look at. In some of the past stories I mentioned Brazil and Mexico as areas that are not necessarily top of our mind.

So we’re looking more at the rest of Latam. I would say

Gustavo Farias (Analyst at UES)

Very clear. Thank you, guys.

Marcelo Benitez (Chief Executive Officer)

Thank you, Gustavo.

Bart Vanhaeren (Chief Financial Officer)

Thank you, Gustavo.

OPERATOR

Our next question comes from Anders Jolson.

Anders Jolson (Analyst)

Hello everyone. Question from my side. First of all, you mentioned this part on the cash flow and the seasonality. Is there anything that we should be more aware of for Q4? I mean implicitly you need to deliver in line with what you did in Q1 in order to reach the full-year guidance. Now you have a much better position in Colombia, for instance. So given that, it seems quite reachable. So just thinking of how we should think for Q4 and also the run rate into 2027.

And my next question is on Rubia, which you also alluded to, that the profitability is now level. Would you think you can reach that within the sort of short to midterm and then have a sustainable development from once you reach that level? And finally from my side, I think maybe I’m not up to date, but it seems like you are increasing the dividend by $0.75 per quarter. Should we see that as an extra dividend or is that more an ordinary dividend going forward as well?

Thank you.

Marcelo Benitez (Chief Executive Officer)

Let me just take the one Colombia and then you do the other two. Hi, Andreas. In Colombia the main drivers for profitability, to sustain the top line growth at a high single digit. Second is that we are going to see 27 the full run-rate effect of all the efficiencies we did during the transition and the merge, and also we do see further efficiencies mainly in commercial activities. So all that should bring us very close to the 50 Club level next year.

Of course, our ambition is to get there, but we do see at least to be very close on that 50. We have now half of our countries in Club 50. So definitely we want to bring more countries into the group, and we want to open the Club 60. No, that’s a challenge for Guatemala.

Bart Vanhaeren (Chief Financial Officer)

Sure. But back to your first question and this. So the equity free cash flow, you pointed out that we removed quite some of the seasonality out of the business. If you see a lot of negative Q1 equity free cash flow and then a lot in Q4, we don’t have that. We brought it more in line with the dividend distribution, basically, so to have a smoother path during the year. You may have heard me in a prior call saying for the performance of a year, you start to win it in the Q4 of the year before, and in Q1 and Q2 you risk losing it, and in Q3 you protect it.

So we are now looking at opportunities for our 2027 year, so we could bring in some investment forward and things like this to be prepared for our 2027. Our teams are really looking at 2027. I think those are the big parts. To your last question, dividend distributions: we announced in the last quarter extraordinary dividends of $0.75 on top of the existing $0.75 per quarter for both Q1 and Q2 of next year. We have our AGM in May. The AGM declares from May to May our dividend policy, with the first dividend paying after an AGM being 15th of July. So in May of next year we will know the July ’27 to June ’28 dividend policy. But meanwhile, thank you. 1.5 in Q1, 1.5 in Q2.

Anders Jolson (Analyst)

I’ll pay better attention to the extra dividend in the future. Thanks.

Bart Vanhaeren (Chief Financial Officer)

It’s always good news, you know. Thank you, Anderson.

OPERATOR

Thanks, Andres. Our next question comes from Fani Kanamuri with HSBC. Fani,

Fani Kanamuri (Analyst at HSBC)

Thanks, Marcelo and Bart, for taking my question. So the first question is on your prepaid to postpaid conversion. You know you have, you’re converting well. You have a lot of base that you can convert. But what we observed in other markets is that you need access to digital banking, whether it’s credit cards or others, to actually do this conversion. Is that a risk for you in terms of conversion, or are you using some kind of cash mechanism to overcome this risk, especially in the Central America markets?

And then the second question is regarding Colombia with the brand integration. What are the benefits that you are expecting in Colombia? Thank you.

Marcelo Benitez (Chief Executive Officer)

Thank you, Fani, for your question. On the first one, remember, we have only one third of our customers in postpaid and we are growing 5 percentage points per year. And on the other hand, you have countries like Chile and Uruguay where 90% of the customers are postpaid already. So all this is to say that there is a long runway to increase the days connected for prepaid customers. We are targeting the customers that are using more than 20 days to migrate them to postpaid, and then we are migrating customers that are connected 7 days, 10 days to 15 days.

So there is a lot of work to do there. In terms of collecting the bills, we have two sources of collection— or three, if you want. Number one is digital. Of course, you do see that bancarization in countries like Paraguay and Panama through a very aggressive digital wallet penetration incentivized by the biggest banks there. You do have access to pay it from your bank account. Second, we do have a very large capillarity of banks collecting these bills on our behalf.

And number three, there are a lot of mom-and-pop shops, collectors that are very well distributed across the country for cash-in and cash-out purposes, and in those places we have also the ability to— and these are third parties— the ability to collect. So we don’t see any issues with collection and a long runway to increase postpaid. The second question was about Colombia, right?

Bart Vanhaeren (Chief Financial Officer)

Yeah, Fani, I also missed the second question.

Fani Kanamuri (Analyst at HSBC)

So you are integrating your Tigo versus the Movistar brands. How do you expect that to benefit Millicom going forward in Q4 and 2027?

Marcelo Benitez (Chief Executive Officer)

So this was not only a change of color or a change of name. There is a strong investment behind. So number one, we are going to have more presence of 5G—double our presence. So we are going to be in the main cities. We are going to have full coverage of 5G. That, of course, is going to bring more customers, and also customers are going to be able to upgrade to 5G phones with higher plans. Second, we improved the quality of service across our network, because before, when we were two companies, we didn’t have the scale to really be able to offer a good experience, a good navigation experience.

Now we are investing in increasing capacity. Number three is that we are starting to get into cities where we were not before. Naturally, there we are going to cover 3 million new Colombians. Naturally, there these customers have either no connectivity—so a big opportunity for us to penetrate those areas. And second, these customers may have just one operator as an option. So it’s natural that we will grab a piece of that market as well. So this is going to, of course, bring a lot of strength to the brand, combined with, as you know, we are very, very good at commercial execution. So this may bring customers, and also in prepaid, so that allows us to start migrating to postpaid and the value ladder that is very well known from us.

Bart Vanhaeren (Chief Financial Officer)

So, Fani, maybe just to add to the financial side of this, you know, bringing to one brand also brings the front end in one company. Let’s say at the moment you can have KPIs for the sales reps harmonized to the best in class in between the two companies and hence decrease your commercial cost. So linking it to the question before of getting, you know, aspiring towards the 50%, this is an essential step that allows to reduce commercial costs and improve further margin expansion in Colombia.

Fani Kanamuri (Analyst at HSBC)

Yeah, thanks, Marcelo. Thanks a lot.

Marcelo Benitez (Chief Executive Officer)

Thank you, Fani.

OPERATOR

Thank you, Fani. Our next question comes from Marcelo Santos with JP Morgan.

Marcelo Santos (Analyst at JP Morgan)

Good morning. Thanks for taking the questions. I have two on my side. The first is about Chile. I mean, it seems a lot of the operating turnaround seems done, at least from the margin levels you’re showing. It’s below your average margin, but for a four-player market, seems pretty high. What’s next on your playbook on Chile, given that it looks like you cut a lot of the costs already? The second question is about, we saw this potential $50 million bonus in case you reach $2 billion of free cash flow in the midterm was disclosed in the financial statements.

What is midterm here? Could you talk a bit more about this? I mean, is this something that you’re envisioning? Thank you very much.

Marcelo Benitez (Chief Executive Officer)

Thank you. Thank you, Marcelo. So on Chile, the first priority is to return to growth on the top line. We are very close to be there. This quarter we had marginal negative growth. So that is the first: to stabilize the commercial operation to start increasing the base and start increasing the ARPU. So that’s the first priority. We do see positive trends from that perspective. From the cost perspective, I mean that’s our day to day. We are going to still have opportunities to be more efficient in Chile and we will grab all these opportunities. So we do see a much better profile in Chile and we are improving the commercial execution and operation. It is starting to be translated, as I said, into better margins and positive cash flow. And next year Bart mentioned that we are going to be in triple-digit equity free cash flow.

So that is outstanding. For a company that was losing 400,000, I think the trajectory is positive, but we are very cautious because we are in a competitive market. So that’s why the target number one is to return to growth. And that’s the most complex task we have in Chile. So on the bonus, we love to put ambitious targets to our team. That’s the way we are very, very motivated to get there. Important to understand what are the levers and what’s the accelerator that we see. I mean, the levers are the ones you see: high-middle single-digit growth, predicated on basically what I said to Fani, that is we have a long runway for increasing the postpaid base and we’re increasing ARPU, also increasing ARPU prepaid in home.

I think it’s important to look at it differently because three metrics in home are net adds and cash-to-revenues. So you see a very flat top-line growth or shy top-line growth. We are growing the contribution from cash-to-revenues around 3 to 4%. So we do believe that in home the main opportunity is to become more and more efficient in the way we capture customers, in the way we retain customers, and that’s where we’re pointing towards. Then we have the efficiency program. We do see a lot of AI adoption already in the day-to-day operations. So we are going to translate that into efficiencies. Just next year in cost to care, just migrating to digital use cases and AI is going to give us a million dollars in savings. So we do a lot of that. Also being part of this new ambition of being in 2 billion. I just want to say, and Bart is going to, I think, repeat this. This is not guidance.

This is an internal target that we do want to share with you because that’s the way we operate, very transparently. And this is of course bringing a lot of internal work to start thinking on how to do things differently. And we call it how to find accelerators to be there as fast as we can.

Bart Vanhaeren (Chief Financial Officer)

Thank you, Marcelo. Just to complement on the financial side, and indeed we’re not opening new guidance here. I recall when we had our first budget on the turnaround was $600 million and the teams were laughing. This is an Excel budget or a paper budget. So we set an ambitious target and then you kind of develop what you need to do. So in line with what Marcelo said, if mid single digit will be quickly, growth will be quickly at, you know, just add mid single digit to this year, we will be at $9 billion revenues. You want to target 50% EBITDA margin, we’re at 48. You want to then reach 20% equity free cash flow on that. So 20% of 9 billion or 1.8 billion. And from there you continue either organic growth for some time. So that’s the midterm range, operational leverage on that growth.

The accelerators that Marcelo talked about, and why not M&A. M&A is always tricky. You have your cost of debt that increase. So to become accretive, look globally it’s not that easy. We’ve done it a few times now. Why not? So we have multiple angles to get there. It’s not crazy. But again, it’s not new guidance to the market here. It’s a disclosure obligation on the back of an incentive plan that we received as management.

Marcelo Santos (Analyst at JP Morgan)

And just follow up. Roughly midterm means what, like three years, five years, six years? I don’t know if you can add that.

Bart Vanhaeren (Chief Financial Officer)

Yeah, otherwise it becomes guidance.

Marcelo Santos (Analyst at JP Morgan)

Okay, thank you.

Marcelo Benitez (Chief Executive Officer)

But it’s not the first time we did this. I mean we had an internal target of 1 billion to the team, and that worked well. And this triggers very positive, you know, people start thinking on doing things differently, taking more advantage of new technologies. So it’s triggering the right behavior from the team. So we do believe that ambitious target is what we want in the company.

OPERATOR

Perfect. Thank you very much. Thank you. Our next and final question comes from Ernest Gonzalez.

Ernest Gonzalez (Analyst)

Thank you for taking our question. It’s two. The first one is on the recent earthquakes in Colombia and Panama. If you comment on the financial and operational impact, anything you’ve seen or expect. And the next one is on B2B. We saw growth slow down slightly from the second quarter to the third quarter. Could you comment on what drove this and what are your expectations of the segment? Thank you.

Marcelo Benitez (Chief Executive Officer)

Sure. The impact to the first one, the impact in Colombia was more or less, we lost 27,000 customers. The financial impact is around $10 million. Of course, for the size of Colombia it’s something that nevertheless demanded a lot of effort from our team, as I said, to establish the services. In B2B, we have two dimensions. One is the organic growth that has to do with connectivity and basic digital services by segment. But also we are entering into big projects. We have big projects in Colombia, for example, we used to manage all the traffic of Medellín. So we developed that solution many years ago. Also in Panama, we do telemedicine. It’s a very big project for Panama. But these big projects expire just because the contract expires, and then we need to find new ones.

So the transition is where there’s a little bit of a disruption, and that’s what happened here. We had big projects that are phasing down in this quarter. We’re going to see that as well in the next quarter because we had in Q4 of last year a big project in Panama. So we’re going to see the effect of that as well. But the most important thing is that our organic growth is solid. The corporate is growing at 8% in connectivity, plus the corporate segment, that is a bigger segment, at 8%, and the small SME segment is growing at 5%. So there is going to be a moment where we are going to be less dependent on big projects. But also we have a pipeline of big projects. So you will see the seasonal effect of the big projects, which is, I think, positive because all these big projects come with, as well—not the same as connectivity—but very positive margins.

Ernest Gonzalez (Analyst)

Thank you.

OPERATOR

Thank you very much, Ernesto. This concludes our question and answer session. Thank you, everyone.

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