20-F: Millicom Expands LatAm, Sells Towers, Posts Strong 2025 Profit

Millicom International Cellular S.A. reported a significant increase in net profit for 2025, driven by strategic acquisitions in Ecuador and Uruguay, tower infrastructure monetization, and operational efficiencies.

Summary

• Net profit attributable to owners of the Company surged to $1,316 million in 2025, a substantial increase from $253 million in 2024, with basic earnings per share rising to $7.86 from $1.47.
• Revenue for 2025 reached $5,819 million, a slight increase from $5,804 million in 2024, with organic revenue growth of 2.0%.
• Adjusted EBITDA for the Group increased to $2,749 million in 2025 from $2,469 million in 2024, reflecting improved profitability across segments.
• Equity Free Cash Flow (EFCF) reached a record $916 million in 2025, up from $777 million in 2024, demonstrating robust cash generation.
• Millicom completed the monetization of over 7,000 tower assets in Central America and Paraguay through sales to SBA Communications Corp. and Atis Group, generating a gain on sale of $741 million.
• The company expanded its footprint by acquiring operations in Ecuador (Otecel, S.A.) and Uruguay (Telefónica Móviles del Uruguay S.A.) in Q4 2025.
• A significant legacy matter was resolved with a settlement with the U.S. Department of Justice (DOJ) in November 2025, involving a $60 million criminal monetary penalty and $58.2 million forfeiture related to historical improper payments in Guatemala.
• Total consolidated indebtedness (excluding lease liabilities) increased to $6,886 million in 2025 from $5,815 million in 2024, primarily due to new financings for acquisitions.
• The Bolivian Boliviano (BOB) was determined to lack exchangeability into other currencies as of January 1, 2025, requiring the use of estimated exchange rates and impacting financial results in Bolivia.
• The merger petition for Tigo Costa Rica with Liberty Latin America was rejected by the telecommunications regulator in November 2025, leading to the termination of the transaction agreement in January 2026.

Sentiment

Score: 9

Explanation: StockSavvy.ai views this filing very positively due to the substantial increase in net profit and EFCF, successful execution of strategic tower divestitures, and significant market expansion through acquisitions. The resolution of a major legal matter further de-risks the company, positioning it for continued growth despite some regional currency volatility.

Positives

• Net profit attributable to owners of the Company significantly increased to $1,316 million in 2025 from $253 million in 2024.
• Basic earnings per share rose to $7.86 in 2025 from $1.47 in 2024.
• Adjusted EBITDA for the Group grew to $2,749 million in 2025 from $2,469 million in 2024, indicating strong operational performance.
• Equity Free Cash Flow reached a record $916 million in 2025, up from $777 million in 2024, highlighting robust cash generation.
• Successful monetization of over 7,000 tower assets in Central America and Paraguay generated a $741 million gain on sale.
• Strategic acquisitions of operations in Ecuador and Uruguay in Q4 2025 expanded Millicom's regional footprint and diversified its earnings profile.
• Resolution of the DOJ investigation with a settlement in November 2025 provides greater clarity and allows management to focus on future growth.
• A new shareholder remuneration policy was approved in January 2025, resuming regular cash dividends and proposing a $3.00 per share annual dividend for 2026.

Negatives

• Revenue growth was modest at 0.2% in 2025, despite acquisitions, indicating underlying challenges in some markets.
• Revenue in Bolivia declined by 41.9% year-on-year due to the significant depreciation of the Bolivian Boliviano (BOB) following the application of IAS 21 amendments.
• Total consolidated indebtedness (excluding lease liabilities) increased by $1,071 million to $6,886 million in 2025, raising leverage.
• The telecommunications regulator in Costa Rica rejected the merger petition for Tigo Costa Rica with Liberty Latin America, leading to the termination of the transaction.
• Operating expenses included $20 million of restructuring costs in 2025, following $115 million in 2024, indicating ongoing efficiency programs with associated costs.

Risks

• Rapid technological change and evolving industry standards, such as 5G and FTTH, may render existing technologies obsolete and require substantial, potentially unrecoverable, investments.
• Inability to successfully develop and operate mobile, cable, and broadband networks, Mobile Financial Services (MFS), and distribution systems could lead to loss of market share and revenue.
• Rising content and programming costs, especially for exclusive rights, may not be fully passed on to customers, impacting profitability.
• Competition from alternative content and programming platforms (OTT services) could reduce demand for pay-TV services.
• Limited, closely regulated, and increasingly expensive spectrum availability may hinder the ability to acquire or renew necessary licenses.
• Licenses may be suspended or revoked, or fines imposed for alleged violations of laws or regulations, impacting operations.
• Equipment and network systems failures, including those caused by natural disasters, sabotage, terrorist attacks, or cyber-attacks, could disrupt services and operations.
• Cyber-attacks, including phishing, ransomware, and unauthorized data access, pose significant risks to network operability and confidential information, with potential for regulatory penalties and reputational damage.
• Reliance on interconnection and capacity agreements means terms could become less favorable due to market participants or regulatory changes.
• Dependence on third parties to operate and maintain parts of the network infrastructure, including leased towers, introduces risks if these parties fail to meet obligations.
• The outbreak of pandemics or other public health crises could significantly disrupt business operations, as seen with COVID-19.
• Operating in emerging markets exposes the company to significant political, legal, and economic risks, including instability, corruption, and rapid policy reversals.
• Inability to successfully implement strategic priorities, including acquisitions, divestitures, or mergers, could adversely affect the business.
• The amount, structure, and obligations connected with debt could impair liquidity and the ability to expand or finance future operations.
• A significant proportion of mobile revenue is generated from prepaid customers, which is short-term in nature and susceptible to churn.
• Fluctuations or devaluations in local currencies against the U.S. dollar, particularly the Bolivian Boliviano, can materially adversely affect financial results and the ability to convert local currencies for debt payments.
• Unpredictable tax systems in emerging markets give rise to significant uncertainties and risks, including arbitrary interpretations and potential for substantial penalties.
• Litigation and claims, especially in less transparent judicial systems, can be complex, costly, and disruptive.
• Inappropriate conduct by employees, business partners, and counterparties, including fraud and money laundering, could lead to legal sanctions and reputational harm.
• Threats to the safety of employees or contractors in high-danger regions could affect service provision and incur additional costs.
• Failing to maintain intellectual property rights and the reputation of brands, such as Tigo, could adversely affect the business.
• Work stoppages resulting from labor union renegotiations could incur additional costs or disrupt operations.
• Cash flow is highly dependent on operations in Guatemala; deterioration there could impact overall liquidity.
• Xavier Niel's significant ownership (42.2%) gives him substantial management influence that may not align with the interests of other shareholders.
• Luxembourg law, under which Millicom is incorporated, may afford less protection to shareholders compared to U.S. law.

Future Outlook

Millicom aims to continue expanding its high-speed data networks (4G, HFC, FTTH), facilitate growth in mobile data and fixed broadband segments, implement 5G technology, and pursue cost efficiency programs. The company plans to integrate recent acquisitions rigorously and allocate capital to maximize long-term shareholder value. It anticipates continued demand for connectivity and digital services in Latin America, driven by low penetration rates for mobile and fixed broadband. Millicom expects to continue renewing most of its current spectrum licenses and acquiring new ones as they become available.

Management Comments

• "At Millicom (Tigo), our mission is clear: to connect people, businesses, and communities across Latin America through reliable, high-quality digital infrastructure."
• "The year marked an important step in our transformation, with tangible improvements in operational performance, financial results, and strategic positioning."
• "This progress translated into strong financial results. For the year, we generated $5.8 billion in Revenue while Net profit attributable to owners of the Company reached $1.3 billion, representing a significant improvement compared to the prior year and underscoring the operating leverage inherent in our model following the completion of our restructuring program as well as the monetization of our tower infrastructure."
• "Our cash generation demonstrates the resilience and quality of our earnings, even amid ongoing foreign exchange volatility in parts of the region."
• "Taken together, our operational performance, disciplined capital allocation, and decisive actions on legacy matters reinforced the strength and resilience of Millicom's financial profile."
• "As we look ahead, Millicom enters the next phase of its journey as a more focused, disciplined, and diversified company."
• "Our strategic priorities remain clear: delivering the best possible customer experience, integrating recent acquisitions with rigor, operating with efficiency and financial discipline, and allocating capital in a manner that maximizes long-term value for our shareholders."

Industry Context

StockSavvy.ai notes that Millicom operates in a rapidly expanding digital economy across Latin America, characterized by accelerating demand for connectivity and digital services. The company's strategy to expand high-speed data networks (4G, 5G, HFC, FTTH) aligns with the region's low broadband penetration rates compared to global averages, indicating significant growth potential. The industry is also experiencing consolidation, a trend Millicom is actively participating in through acquisitions like those in Ecuador, Uruguay, and Colombia, which could intensify competition but also strengthen market position. The increasing scrutiny on ESG practices and evolving fintech legislation for mobile financial services are broader industry trends that Millicom is actively addressing.

Comparison to Industry Standards

• Mobile broadband penetration rates in Millicom's markets (ranging from 51% in Guatemala to 73% in Bolivia) are low relative to penetration rates in more developed markets globally, indicating significant room for growth.
• Fixed and other services penetration rates (residential broadband customers as a percentage of households) in Millicom's markets (ranging from 22% in Nicaragua to 59% in Colombia) are also low compared to global benchmarks, suggesting substantial untapped market potential.
• The telecommunications industry in Millicom's operating regions is characterized by intense competition from major international and regional providers like América Móvil and Telefónica, some of whom have substantially greater resources.
• Millicom's strategy to standardize network equipment and contract with a limited number of international suppliers (e.g., Huawei, Ericsson, Nokia) is a common industry practice to achieve economies of scale and ensure compatibility.
• The company's engagement in tower sale-leaseback transactions (e.g., with SBA Communications Corp. and Atis Group) aligns with a broader industry trend where operators monetize passive infrastructure to focus capital on core services and improve return on invested capital.

Management Changes

Corporate Governance

Legal Proceedings

• Settlement with the U.S. Department of Justice (DOJ) in November 2025 regarding historical improper payments by Comunicaciones Celulares S.A. (TIGO Guatemala) to Guatemalan government officials. TIGO Guatemala paid a criminal monetary penalty of $60 million and forfeited $58.2 million in proceeds. A two-year Deferred Prosecution Agreement (DPA) is in effect.
• Mutual settlement reached with Telefónica in July 2025 for a breach of contract claim related to Millicom's termination of the acquisition of Telefónica's Costa Rican business. This includes a $30 million installment payable by July 15, 2026, and a $32 million installment payable by July 15, 2027.
• Ongoing tax claims and disputes in most operating markets, relating to differences in tax authority interpretations, deductibility of expenses, withholding taxes, and application of territoriality principles. Total tax risks exposure for subsidiaries is estimated at $376 million, with $32 million provisioned.
• The Group is contingently liable for various lawsuits, legal, regulatory, and commercial claims arising in the normal course of business, with total claims against the company and its subsidiaries amounting to $146 million as of December 31, 2025, and $37 million provisioned.

Related Party Transactions

• Purchases of goods and services from EPM (non-controlling shareholder in Colombian operations) amounted to $57 million in 2025.
• Purchases of goods and services from Iliad Holding Group (related to Xavier Niel, a major shareholder) amounted to $6 million in 2025.
• Sales of goods and services to EPM amounted to $16 million in 2025.
• Payables to Honduras joint venture (66.67% equity interest) were $192 million as of December 31, 2025, mainly for dividends.
• Payables to EPM were $38 million as of December 31, 2025.
• Payable to Iliad Holding Group was $195 million as of December 31, 2025.
• Receivables from Honduras joint venture were $19 million as of December 31, 2025.

Stakeholder Impact

• Shareholders: Benefited from a significant increase in net profit, record Equity Free Cash Flow, and the approval of a new shareholder remuneration policy resuming regular cash dividends. The resolution of the DOJ matter and strategic acquisitions are expected to enhance long-term value.
• Customers: Will benefit from expanded and upgraded high-speed data networks (4G, 5G, HFC, FTTH) and a broader portfolio of digital services due to strategic investments and acquisitions in Ecuador and Uruguay.
• Employees: Affected by ongoing cost-reduction projects and restructuring, with $20 million in restructuring costs in 2025. The company emphasizes talent development and competitive compensation, including share-based incentive plans.
• Suppliers: Engaged in supplier finance arrangements to extend payment terms, supporting working capital flexibility. However, reliance on a limited number of key suppliers for network equipment introduces dependency risks.
• Creditors: The increase in total consolidated indebtedness to $6,886 million in 2025, while managed within covenants, indicates higher leverage. The company's strong cash flow generation and strategic asset sales aim to ensure debt service capacity.
• Regulatory Authorities: Engaged in significant regulatory matters, including the DOJ settlement and the rejected Costa Rica merger, highlighting the complex regulatory environment in operating markets.

Next Steps

• Integrate newly acquired operations in Ecuador and Uruguay with rigor and efficiency.
• Comply with the terms and obligations of the two-year Deferred Prosecution Agreement (DPA) with the U.S. Department of Justice.
• Complete the acquisition of 100% of UNE EPM Telecomunicaciones S.A. (Tigo Colombia) and Telefónica's controlling 67.5% stake in Colombia Telecomunicaciones S.A. E.S.P. (Coltel).
• Finalize the acquisition of Telefónica Moviles Chile S.A. through a joint venture with NJJ, including potential contingent earn-outs.
• Seek regulatory approvals for the sale of the Mobile Finance business in Paraguay (Mobile Cash Paraguay S.A. and Transcom S.A.).
• Continue to expand high-speed data networks (4G, HFC, FTTH) and implement 5G technology.
• Allocate capital to maximize long-term value for shareholders, including potential future dividend payments as per the new remuneration policy.
• Monitor and manage cybersecurity risks, including those related to AI tools and supply chain vulnerabilities.
• Address ongoing tax disputes and ensure compliance with evolving tax regulations, including Pillar Two model rules.

Key Dates

Recommendation

Millicom's 2025 performance demonstrates robust financial health, marked by a substantial increase in net profit and record Equity Free Cash Flow. The successful monetization of tower assets and strategic acquisitions in key Latin American markets significantly strengthen its competitive position and diversify its earnings. The resolution of the DOJ investigation removes a major overhang, allowing management to focus on core business growth. While increased debt and currency volatility in Bolivia present challenges, the overall strategic execution and financial discipline warrant a 'strong buy' recommendation for long-term investors.

Keywords

Telecommunications, Latin America, Mobile Services, Broadband, Tower Infrastructure, Acquisitions, Divestitures, Financial Results, SEC Filing, Millicom, Tigo, El Salvador, Ecuador, Uruguay, Colombia, Guatemala, Panama, Paraguay, Bolivia, Nicaragua, Costa Rica, SOFR, Debt, ESG, Net Profit, Equity Free Cash Flow, DOJ Settlement, Spectrum Licenses