Millicom International Cellular SA Q3 FY2024 earnings call

• Q3 was a strong quarter with record equity free cash flow of $271 million. - Mobile business had 4% service revenue growth from prepaid price increases and postpaid net adds. - Home business saw improvement with simplified offers, increased customer satisfaction, and net adds back in positive territory. - B2B business grew 5% organically, with digital solutions up 27%. - Announced strategic transactions in Colombia, Costa Rica, and a tower deal in Central America, expected to close in 2025 and enhance return on capital. - Efficiency programs made the company leaner, more cash generative, and commercially agile.

The mobile business had service revenue growth of about 4% in Q3, driven by prepaid price increases and postpaid net adds of almost 300,000. The home business saw net adds of nearly 70,000 in Q3, with customer satisfaction up and churn down. The B2B business had 5% organic growth in service revenue, with digital solutions growing 27%. By country: Colombia had strong customer net additions, mobile service revenue growing at 8% in local terms; Guatemala had service revenue growth accelerating to 4% in Q3 with a record EBITDA of $220 million and margin of 55%; Panama had steady growth in mobile and B2B, with service revenue up 5.3% year-on-year. Revenue contributions varied by segment, with mobile, home, and B2B each playing key roles in overall performance.

• Revised full-year equity free cash flow guidance to around $650 million, up from previous expectations. - Factors influencing guidance include expected $50 million more cash CapEx and $50 million less tailwind from working capital in Q4 2024 compared to Q3. - Confident in staying below $700 million for 2024 CapEx target and expecting recurring and sustainable CapEx levels in 2025.

• Competitive pressure in Guatemala impacting ARPUs and gross adds. - Currency issues and political instability in Bolivia affecting P&L and cash flow. - Regulatory and political risks in Colombia related to M&A processes. - Uncertainties in M&A transactions, including regulatory filings and government processes in Colombia. - Impact of potential devaluation in Bolivia on financials.

Q: About CapEx guidance for 2024 and 2025?

A: Marcelo Benitez said they are comfortable staying below $700 million for 2024 CapEx, with CapEx increasing in Q4. Bart Vanhaeren added that 2025 CapEx levels are expected to be recurring and sustainable, with preparation for strong 2025 ahead.

Q: Thoughts on the recent tower transaction and its impact?

A: Marcelo Benitez said the tower transaction has a net equity free cash flow impact of around $40 million annually, with details on leaseback agreements and avoiding CapEx. Bart Vanhaeren mentioned a BTS agreement avoiding around $30 million of CapEx per year.

Q: Update on M&A process in Colombia and share buyback?

A: Bart Vanhaeren said negotiations for the Coltel acquisition are ongoing with regulatory filings, and share buyback is part of capital allocation discussed in strategic sessions with the board. Marcelo Benitez added confidence in landing the transaction in H2 2025.

Q: Impact of competition in Guatemala and cost savings?

A: Marcelo Benitez discussed defending in Guatemala with availability, affordability, and accessibility strategies. Bart Vanhaeren complemented on strong postpaid net adds. Regarding cost savings, Marcelo Benitez mentioned severance payments and OpEx savings run rate, with Q4 restructuring charges expected to be lower than Q3.

Q: CapEx for 2025 and Colombian Home business?

A: Marcelo Benitez explained CapEx in 2025 will focus on capacity, commercial, and IT, with steady levels. Regarding Colombian Home business, growth in net adds with lower ARPU from FMC offers and BBI gross adds, but revenues taking time to reflect growth.

Q: B2B performance and tower sale impact?

A: Marcelo Benitez discussed B2B growth avenues in SME, digital solutions, and converging services. Bart Vanhaeren noted B2B sequential growth adjusted for FX. Regarding tower sale, $40 million impact is on an annual run rate basis, with no impact in 2024 yet.