Millicom Intl Cellular (NASDAQ: TIGO) delivered a record $327 million in equity free cash flow for the second quarter of 2026, driven by strong operational leverage and successful integration of recent acquisitions. The telecom operator raised its full-year equity free cash flow guidance to approximately $1.1 billion, up from a previous target of at least $900 million.

Service revenue reached $2 billion, marking a 5.4% organic year-over-year increase. This growth outpaced the prior year’s rate by more than double, supported by disciplined pricing and a strategic migration from prepaid to postpaid plans across key markets.

Financial Performance

The company reported adjusted EBITDA of $1 billion for the quarter, representing a 9.1% organic year-over-year increase. On a reported basis, service revenue surged 60.1% year-over-year, while adjusted EBITDA grew 58%. Despite acquiring lower-margin businesses and incurring approximately $35 million in restructuring charges during the quarter, Millicom maintained robust profitability.

Cash capital expenditure totaled $274 million, up $72 million year-over-year, primarily reflecting investments in recently acquired businesses and higher spending on leased mobile devices in Colombia. Spectrum payments were $41 million, mainly related to Colombia operations.

Regional Highlights

Colombia emerged as a key growth driver, with organic service revenue increasing 11% year-over-year to $816 million. All three business lines—Mobile, Home, and B2B—contributed to this broad-based performance. Adjusted EBITDA for Colombia reached $336 million, with a margin of 39.4%, despite more than $30 million in severance payments executed during the quarter.

Guatemala posted a record quarter with service revenue rising 5.9% to $382 million. Adjusted EBITDA increased 6.3% to $245 million, with margins expanding by nearly one percentage point to 55.6%. Paraguay also delivered strong results, with adjusted EBITDA increasing almost 17% to $100 million and margins expanding by 6.4 percentage points to a company record of 56.9%.

Panama returned to top-line growth with service revenue up 3.1% to $175 million, following the reinstatement of price adjustments after regulatory intervention in the first quarter. Ecuador stabilized its business, reversing prior revenue erosion, though management expects margin contraction later in 2026 due to planned marketing investments for the Tigo brand launch.

What the Numbers Show

The divergence between reported revenue growth (60.1%) and organic growth (5.4%) underscores the significant impact of acquisitions on Millicom’s top line. However, the fact that adjusted EBITDA grew at a comparable reported rate (58%) indicates that these acquired entities are contributing positively to profitability within their first year of ownership. This rapid accretion suggests effective integration execution, although management cautioned that Q2 cash flow benefited from favorable expense timing and working capital movements, advising against linear extrapolation for the remainder of the year.

Balance Sheet and Capital Allocation

Net debt increased to $8.1 billion from $7.6 billion at the start of the quarter, largely due to shareholder distributions and M&A-related payments rather than operational cash burn. Leverage declined modestly from 2.76 times to 2.73 times. The company improved its year-end leverage target to below 2.5 times.

Millicom paid total dividends of $335 million during the quarter, including $125 million in ordinary dividends and $210 million in extraordinary dividends related to last year’s tower transaction. Additionally, the Board approved an incremental interim dividend of $1.50 per share, payable in two equal installments in January and April 2027. Management noted that approximately two-thirds of equity free cash flow is targeted for distribution, aligning with historical policy.

Millicom International Cellular S.A. raised its 2026 Equity Free Cash Flow (EFCF) guidance to around $1.1 billion, up from a previous target of at least $900 million, while lowering its year-end leverage target to below 2.5x from approximately 2.5x. The Luxembourg-based telecommunications group also declared an interim dividend of $1.50 per share, reflecting management’s confidence in its strong year-to-date performance and improved cash flow visibility across its Latin American operations.

The Board of Directors approved the dividend on August 6, 2026, to be paid in two equal installments of $0.75 per share. The first installment is payable on or around January 15, 2027, with a record date of January 8, 2027, and an ex-dividend date of January 8, 2027. The second installment will be paid on or around April 15, 2027, with a record date of April 8, 2027, and an ex-dividend date of April 8, 2027. Dividends will be paid in U.S. dollars, net of a 15% withholding tax as per Luxembourg income tax law, though reduced rates or exemptions may apply under certain conditions.

Financial Guidance and Shareholder Returns

Millicom’s decision to raise its EFCF target follows robust operational execution and disciplined cost management. CEO Marcelo Benitez stated that the company’s strategy of delivering superior customer experience and focusing on efficiency continues to drive sustainable results. The enhanced cash flow outlook supports the reduction in net leverage, signaling improved financial flexibility for future investments in connectivity and digital inclusion across its markets.

Operational Context

This update complements Millicom’s Q2 2026 results, where net profit fell 83.9% year-on-year to $109 million due to integration costs from recent acquisitions in Colombia, Ecuador, and Uruguay. Despite the earnings contraction, the group delivered record equity free cash flow of $327 million in Q2 2026, up 50.1% year-on-year. Service revenue grew 5.4% organically, and adjusted EBITDA reached a record $1.009 billion, up 9.1% organically.

What the Numbers Show

The divergence between reported net profit and underlying cash generation underscores the transitional nature of Millicom’s expansion strategy. While one-time acquisition costs weighed on bottom-line profitability, the record EFCF demonstrates strong operational cash conversion. Raising the full-year EFCF guidance to $1.1 billion suggests that these integration costs are temporary and that the acquired assets are beginning to contribute positively to cash flows, validating the company’s aggressive growth thesis in Latin America.