TIGO

Hello, everyone, and welcome to our first quarter 2026 results call. This event is being recorded. Our speakers today will be our CEO, Marcelo Benítez, and Bart Vanhaeren, CFO of the company. The slides for today's presentations 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 this presentation, and you can find reconciliation 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 Benítez. Marcelo?

Thank you, Lucas Munoz, 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, postpaid 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, postpaid 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 represent 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 will have reached 47.9%.

Our relentless focus on efficiencies also improved 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 Latam transaction, would have increased $90 million year-over-year. As we mentioned in our fourth quarter call, we acquired Telefónica 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-third 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 2 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 6. Our mobile business continued to perform very well in the quarter. Underlying customer growth was 4% year-over-year, with postpaid customer increasing 25% and prepaid customers growth largely flat due to our pre to post migration efforts, seasonal effects, and customer base cleanup initiatives. Including acquisitions, reported growth was 38%, reflecting the addition of Coltel in Colombia.

The customer base is steadily migrating toward postpaid, 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, almost 7 out of every 10 postpaid sales are migration sales, an increase of over 10 percentage 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 represent a clear acceleration over previous quarter and shows that our commercial strategy continues to gain traction.

Let's turn to our home business on slide 7. 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-over-year, reaching 4.2 million customers. This growth was mostly driven by broadband-only customers, which increased 5% year-over-year. Here, too, the recent Coltel 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 Medellin, whereas Coltel 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.

Second, it materially improves the customer lifetime value, as churn 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-over-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 8. 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, supported 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 Coltel. 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. postpaid 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 postpaid are coming from our existing prepaid base. This strategy improves ARPU per customer and materially enhanced 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, more familiar pricing strategy, allowed us to increase mobile ARPU 4.4% year-over-year. Importantly, with the Coltel acquisition, 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 continued 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 has strengthened 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 3 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 OpEx efficiency program, we have identified more than $100 million in expected savings to be achieved in year 1. These opportunities includes contract renegotiation, company rightsizing, and sponsorship rationalization. The second pillar is network improvement. We are moving on 2 strategic fronts. First, we are improving the quality of our network, planning to increase 4 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. 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 EBITDA expanded meaningfully, reflecting the disciplined execution of our efficiency program. Importantly, both Ecuador and Uruguay are already operating above or in line with the Millicom 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 organizational 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 given the multiple acquisitions we've completed over the past six months. 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 a year-on-year increase across our business lines. Let me split this out 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 adjusted EBITDA reached $857 million for the quarter, increasing 35.5% year-on-year, with Coltel 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 Coltel, 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. Also here, benefiting from FX tailwinds. Equity free cash flow hits a new Millicom first quarter record of $225 million. I remember 2 years ago when I had to report to you the first positive Q1 of Millicom 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 prepaid to postpaid conversion strategy together with the price increase implemented in February and March, which supported the ARPU improvement that Marcelo mentioned earlier. In Colombia, service revenue reached $653 million, with Coltel 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 flat year-on-year at $172 million for the quarter. Growth was slower than expected, 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 Telefónica'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 1% 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-over-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 EBITDA reached $205 million, with Coltel contributing $33 million for the 2 months under our ownership. Adjusted EBITDA margin was 30%, which includes $65 million of restructuring charges. Excluding Coltel, Colombia grew adjusted EBITDA 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 Coltel.

As I mentioned last quarter, prior to the acquisition, we were thinking of Coltel as a risk factor, and we're taking into consideration a possible negative equity free cash flow. At this stage, we believe it will be already a net contributor, fully offsetting 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. Well-deserved congratulations to our Paraguayan General Manager, Roberto, and our newly internally promoted CFO, Flor.

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.

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-over-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 Chile.

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-cost 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 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 have already discussed, adjusted EBITDA for the quarter was $857 million, up $221 million year-on-year, despite the restructuring charges in Coltel. 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 Lati sale in Nicaragua, which was accounted as negative CapEx, considering an asset sale. 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 paid was $99 million, increasing $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 timing of certain payments, fees, licenses, and employee bonuses. That said, working capital improved by $49 million year-on-year, mostly due to payments phasing 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.

Lease payments increased $58 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 in leases. 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 Millicom. 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 Coltel 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 2/3 of equity in Coltel held by Telefónica, and $25 million from the joint acquisition of Telefónica Chile in partnership with NJJ. We also paid $125 million in regular dividends to our shareholders during the quarter, which also added approximately 0.05x the leverage. Finally, derivatives, effects, and other impacts increased net debt by $67 million, mostly related to the appreciation of local currency denominated debt. 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 2.7 to 6 times, which is in line with the expectations we communicated on our last earnings calls. We might see leverage creeping up a little bit more in Q2 due to the remaining acquisition of Coltel equity held by La Nación, 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 stake in Coltel. At that time, our initial assumption was that Coltel 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 Coltel 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 disciplined execution and margin expansion.

We will now begin the Q&A session. As a reminder, if you'd like to ask a question, please let us know by emailing us at [email protected], and we will add you to the queue. Our first question of the day comes from Marcelo Santos, J.P. Morgan. Marcelo.

Hello, good morning. Thanks for taking my questions. I have 2. The first is regarding the near-term sustainability of Coltel margins. I mean, if we add back the non-recurring expenses that you had in the quarter, we calculate around 37%, which is close to Tigo Colombia levels at the start. Is this something recurring in the next couple of quarters, or was there something that we need to take into consideration? That's the first. The second also on margins. I mean, Paraguay margins were ahead of Guatemala. Just wanted to see if also this is kind of a sustainable level. 2 questions on sustainability of margins. Thank you.

Thank you, Marcelo. Thanks for your question. On the first one on Colombia, we are as we said in the call, we are very optimistic about the early results on the integration. What we see happening is the combined companies growing the top line at the level of 8%. We see that as something sustainable during the year. Second, we are somehow offsetting the integration cost with savings. We do believe that that will bring us positive margins for the full year in 2026. It will be around the same levels that we had in Tigo Une, including the restructuring cost.

Very positive on Colombia and on our ability to sustain margins for the year to go. In Paraguay, we are very competitive here, Marcelo, so we are very happy that Guatemala is receiving some competition from another country. Yes, it is extraordinary what the Paraguayan team is doing in terms of keeping the cost under control despite the fact that we are growing the top line. Having said that, this also has to do with some one-offs. We do expect more or less an uplift compared to last year in terms of margins in Paraguay, but it's not gonna be at 56%. It might be more or less between 50 and 56. That will be the range expected.

Thank you. Just to follow up on the first question. When you say, full year 2026 for Colombia, same levels as Tigo Une, which period of Tigo Une? Just to be 100% clear.

Twenty-five.

Okay, 25. Perfect. Very clear. Thank you very much for the answers.

Thank you, Marcelo.

Our next question will come from Gustavo Farias from UBS. Gustavo.

Everyone, good morning. Thanks for taking my questions. Two on my end. The first one, I believe in the last conference call you commented about Coltel restructuring costs is in the triple digits millions of dollars for the year. And Q1 came in at $65 million. If you could elaborate on if there's anything left, what's your updated view on this line? The second one, on capital allocation. How could we think about the path of deleveraging going forward? And also if you could update us on your current appetite, if any, for further inorganic moves. Thank you.

I will take the first question, I will pass to Bart for the second, and maybe you wanna take the third. That's just because that's the preferred topic of our CFO. The first question, what's remaining? I mean, we did $65 million, as we said, in the first quarter. We do believe that we do have still some restructuring cost of around $100 million for year to go. That will be offsetted by a lot of savings that we are doing as the first phase of our integration plan, that is the reset phase. All in all, we do believe that Coltel is gonna be positive will have a positive effect in the EFCF, as Bart said, for the full year.

Yep. On the capital allocation and the debt, let me start with the debt. You've seen our current leverage rates. If you think about Q2, we have the acquisition of La Nación stake that a transaction that we announced and was so close, so we now fully own all of the different assets in Colombia. That's adding to leverage because there's no incremental consolidated EBITDA, right? We're already taking that. Additionally, there is the exceptional dividend that was paid in April. Q2 might creep up a little bit just on the back of those two elements. We are still very confident that we'll land around 2.5 at the end of the year.

In your modeling, you might think about, besides the very strong equity free cash flow that we've signaled, you might as well think about the currency impact. You know, we have de-dollarized a lot of our costs. Whatever happens a year to go, either we're gonna have more, you know, equity free cash flow and EBITDA uplift from stronger currencies, or we're gonna have less debt from weaker currencies. You know, we feel we're in a very good position at this moment in time. In terms of capital allocation, you may have seen the convening notice for the AGM, it's a shareholder decision ultimately.

What we recommended to the board and to the AGM is that we would keep our dividend policy at $3 per share until we reach that 2.5. We explicitly mention, you know, an approval to be able to pay incremental dividends in case we come below the 2.5. And we also typically ask for 10% of equity in terms of share buyback as a general policy within Millicom. Without doing any forward-looking statements, we do open, you know, the flexibility to do additional shareholder remuneration, either in form of dividend or in share buybacks by the end of the year, depending on how the leverage is trending.

In terms of inorganic growth, you know, you hear me saying this every quarter that, you know, the focus is on execution. I hope that we demonstrate that execution. In Q4, we had Ecuador and Uruguay that we said, "Guys, we're already in run rate. We're already in business as usual." Coltel and Chile are a little bit bigger. As you know, we go very deep into our analysis. If you analyze, I don't know, 1,000 towers in Uruguay, it's 10,000 towers in Colombia. It's just magnitude of the asset. We also said, "Hey, we're very confident.

We see the transformation happening, and we're seeing assets being net contributors in equity free cash flow. That's by far our first priority, and things seem to be on track. I'm not gonna dive too deep into additional M&A. The menu of M&A remains the same. I think in Q4 I mentioned, you know, as attractive markets, just from a menu perspective, Peru and Venezuela, which remain, you know, good targets to look at. Again, the priority should be on the execution.

If I can add to that, Gustavo, the playbook we have, we do believe, it is very well suited to companies like to the recent acquisitions in Ecuador, Uruguay, Chile, and also with the emergence of Colombia. The speed of execution of this playbook is accelerating. We are getting better and better. At the same time, we are preparing the bench for any new targets, any new opportunities that may come in the future.

Very clear. Thank you, Marcelo and Bart.

Thank you, Gabriel. Gustavo, our next question comes from Gabriel Vaz de Lima from Morgan Stanley. Gabriel?

Can you hear me? Thank you. I just wanted to ask on equity free cash flow. Your target is unchanged for the year, but you've been mentioning that things are running maybe a little bit better than your expectation in Colombia and Chile. Anything that you can share on your outlook for equity free cash flow on top of the guidance?

I always say in our industry, we make the year in Q4 and Q1, and you get risks in Q2 and Q3. I just believe it's too early to do any updates to the guidance. As well as we're going to start now our forecast one efforts, so we'll be in a good position at the end of Q2. With that caveat out of the way, I do believe, you know, we have a very strong start of the year. You know, last year we had a number of one-offs in our numbers, both positive and negative. Remember, we are slightly below, above $900, excluding Lati, let's say $865 million equity free cash flow.

We had in that number, a number of one-offs, like the DOJ settlement, like restructuring charges and weaker currencies. All those are going very well for us this year. Currencies have been very particularly strong. One-offs seem to be covered by equity free cash flow generated by the acquired assets. While we saw more risk factors at the beginning of the year, things seem to be much more constructive. Very good start of the year. We just believe it's too early in the year to adjust guidance.

Two additional comments to what Bart just said. Number 1 is we're having strong tailwinds on currency. That is very difficult for us to predict, but it's somehow unprecedented the level of appreciation of the Colombian pesos and the Paraguayan guaranis. The Bolivian Boliviano, it is very still volatile. That's number 1. Number 2 is bear in mind that we have been operating Coltel as a separated entity until end of April. We are really just 1 company from the 1st week of May. We are still learning our what is the real potential to execute our playbook this year and what will be the effect on the numbers. As Bart said, in during Q2, we are gonna feel much more comfortable to predict what's gonna come for the year to go.

Thank you, Gabriel. Our next question comes from Fani Kanamori from HSBC.

I thank you for taking my questions. The first one is regarding Colombia. I mean, I want to pick up on the comment that the revenue growth is going to continue to be strong. Is that for the Tigo asset or is that for the Coltel asset also? What is driving the growth in Colombia at this point of time in terms of revenues? The second one is regarding your CapEx outlook. Like, now that you have all the assets integrated, how do you see the CapEx outlook for the year and maybe in future years going forward? Thank you.

Yes, Fani, I will take the revenue question and the CapEx question maybe, and you can complement the rest, Bart. The growth is, the top-line growth is coming from the 3 business units. I mean, mobile is growing very strong. You saw that 8 out of 10 new postpaid customers are coming from our prepaid base. Why is that working so well is because we are profiling better and better our prepaid base, and we are defining the sweet spot on how much ARPU and allowance each customer needs. Additionally to that, we are not forcing them to pay something they cannot afford or to buy something they will not use. Additionally to that, we are doing it very simple. I mean, it's very simple to migrate from pre to post. It's literally 2 clicks, right?

One is to accept the offer. Second, you just need to put your name and your data information. Everything is electronic, no bills, et cetera. That is creating a momentum, and that same model we're gonna apply to the Coltel prepaid base. The Coltel prepaid is adding 50% more prepaid customers. As you can imagine, the runway, I mean, the opportunity has expanded for us to implement our playbook. Second, in home, we do believe that we can accelerate our FMC penetration because of the volume that Coltel is adding in home that is more or less the same volume we have in our existing base in Tigo. That's also a second factor that's gonna drive growth for the future. Number three, B2B is growing very well in both companies.

On the Coltel side, has to do with large corporations, and in Tigo, has to do with small. It's totally complementary. We are gonna apply the corporate model from Coltel to Tigo, or let's say we will merge, and we are gonna accelerate the small segment growth. The 8% that we are estimating is coming from different sources and very well, I would say, balanced. On CapEx, we are investing in Colombia. We do believe that to compete with the main competitor, with Claro there, we do need to strengthen our network. This year we're gonna expand our 5G coverage four times, so we're gonna have 4x coverage of 5G, and we are gonna launch or install, develop, deploy 1,000 sites in the next 18-24 months.

That additional investment will not change the total envelope, because what we are doing is we are refocusing the investment into what we believe is the network we need to compete in Colombia.

As it comes to CapEx, I think you can more or less apply the same CapEx % we had last year to the new revenue forecasted for this year. Now we get into the $1 billion territory for the total CapEx wallet. I hate that KPI, as you know, but this is how it's gonna land more or less, we believe.

Thank you. Just one maybe follow-up on the Colombia thing: You see a lot of revenue synergies because of the complementary strategies. Is that how simply we can put that, like you can see a lot more revenue synergies going forward?

Yeah. The synergies from the combined comes as well from less churn, et cetera. You get the growth portion of that, you also have, you know, how the operational leverage and ultimately the equity free cash flow will benefit from that.

Perfect. Thank you.

Thank you. Our next question comes from Andreas Joelsson from DNB. Andreas?

Hello, everyone. Just one question from my side. I would like to dwell a little bit more into exactly or at least discuss a little bit what you have done in Ecuador and Uruguay to expand the margin as much as you have done and that quickly. If you could walk us through what you have done. Thank you.

Thank you, Andreas. The first phase of our playbook, it's the same playbook we applied 2 and a half years ago in all the existing operations at that time, is to reset all costs. We do define a specific strategy or framework of investment. For example, we don't believe that sponsorships are more important than stores, right? We focus on investing in stores, less sponsorship. We do review each and every purchase orders for not only Ecuador and Uruguay, but for all the other operations. It's more or less like a zero base cost operation. You're always challenging the inertia.

When you are so focused on each and every spend, in also OpEx and CapEx, then you start receiving very, very early results of practical savings, because we are focusing on just three things: the network, the capillarity, the channels and our offers, and everything else is a distraction. Basically, we put all the money where we do believe are the drivers for growth, and all the rest is not just eliminated from the equation. On the other hand, we simplified our operating structure. That's why we do the organization resizing, and that simplifies the way we operate and makes it easy to implement all these efficiency programs.

Additionally to that, I would say that there are other 2 factors, and it's we do have a very good negotiation framework with big suppliers and payment terms with big suppliers. That is something that we implemented in the existing perimeter, and we expanded to Ecuador and Uruguay. We do believe that the current EBITDA margin levels in Uruguay are sustainable, and this is just the first phase of our playbook. Comes a second phase that has to do with top line growth contribution. We're not there yet in Ecuador and Uruguay since we are investing in the network, and we're preparing our commercial or our new commercial setup.

In the case of Ecuador, it's gonna be a little bit less because we are planning to launch the Tigo brand at the end of the year, and that will come with additional commercial expenses. That will come a little bit down for what we have today.

Just a follow-up on your comment on Colombia and cost savings. You mentioned $100 million. I assume that is dollars because it would offset the severance pay.

Yes

that we would do.

Yes. Yes.

Perfect. I don't get mixed up in effects.

Exactly, yes. Both are in dollars, Andreas, for once.

Perfect. Thank you.

Thank you.

Cheers.

Thank you, Andreas. This was our final question and concludes our question and answer session for today. Thank you very much for connecting, everyone, and see you in our next earnings call in August.

Thank you.

Thank you.