Q2 2025 Millicom International Cellular SA Earnings Call

Speaker #2: Hello, everyone, and welcome to our second quarter 2025 results call. This event is being recorded. Our speakers today will be our CEO, Marcelo Benitez, and myself, Bart Vanhaeren, CFO of the company.

Speaker #2: The slides for today's presentation are available on our website. Along with the earnings release and our financial statements. Now, please turn to slide two for the safe harbor disclosure.

Speaker #2: We will be making forward-looking statements which involve risks and uncertainties, and which could have a material impact on our results. On slide three, we define the non-IFRS metrics that we will reference throughout this presentation.

Speaker #2: And ou can find reconciliation tables at the back of our earnings release and on our website. With those disclaimers out of the way, let me turn the call over to our CEO, Marcelo Benitez.

Speaker #3: Thanks, Bart. Good morning, everyone, and thank ou for joining us today. The second quarter of 2025 was a defining moment in our journey, one where strong operational execution met with strategic acceleration.

Speaker #3: We're firing on all cylinders, across commercial, financial, and strategic fronts, and we're doing it with discipline, focus, and results. Most importantly, we are right on track to deliver our commitment of $750 million in equity-free cash flow for the year.

Speaker #3: This was a quarter of strategic acceleration, we executed three major milestones in just a few weeks. Acquisition of Telefónica's Uruguay operations, definitive agreement for Telefónica Ecuador, and the partial closing of our infrastructure transaction with SBA.

Speaker #3: We are locked over $500 million in proceeds declaring a special interim dividend of 2.5 dollars per share. A clear sign of our confidence and capital discipline.

Speaker #3: To mark this pivotal momentum, we rank the Nasdaq opening bell in June. Together with the Tiggo top management team, a symbolic step forward as we deepened our footprint in South America and reaffirmed our long-term commitment to the region and to shareholder value.

Speaker #3: Now, turning to our performance. We added nearly 250,000 net prospect customers, up from 178,000 a year ago. Home gained 41,000 customers, nearly four times more than Q2 last year.

Speaker #3: Commercial traction and efficiencies are delivering profitable growth. Adjusted EBITDA reached a new high of 46.7%, up 3.2 points year over year. In this of our operations achieved margins above 50%.

Speaker #3: Equity-free cash flow for the quarter came at 218 million, bringing our H1 total to 395 million, 126 million ahead of last year. Leverage dropped to 2.18 times, and we remained committed to keeping leverage below 2.5x.

Speaker #3: In short, we're not just growing; we're growing the right way. Now, 's review each of these highlights in more detail beginning with the mobile business on the next slide.

Speaker #3: Over the past quarter, we've seen promising results across our core business. Our mobile business outperformed expectations in Q2. On the right, you can see that our mobile business grew by mid-single-digit this quarter.

Speaker #3: An acceleration from 3.1% in previous quarter. Zooming into our main segments, prepaid fast tracked on the back of higher ARPU, while postpaid continued propelled by momentum.

Speaker #3: With an amazing 14% growth in base, reaching near 9 million customers. We're executing the playbook. Pre-to-post migrations, network upgrades, and convergence. All designed to build lifetime value and reduce churn.

Speaker #3: Now, please turn to the next slide to look at our home business. We added 41,000 home customers in the quarter, about four times the intake we saw in Q2 last year.

Speaker #3: This is a remarkable growth of nearly 6% year on year. Our broadband customer base was up roughly 8%, pay TV is flat, while fixed telephony is in structural decline, mainly displayed by mobile.

Speaker #3: Although service revenue remains slightly negative at minus 1.4%, that's a major improvement from minus 6.1% last year. The trajectory suggests that our recovery efforts are gaining traction.

Speaker #3: And we're optimistic about positive growth in the second half of 2025. Our strategic playbook is fully in motion. We are scaling our networks through targeted capital deployment, delivering faster broadband experiences to more customers, boosting go-to-market efficiency with smarter, learner execution, and accelerating convergence across mobile and fixed.

Speaker #3: Now, please turn to the next slide for a brief glance at our B2B business. Service revenue grew nearly 4% organically, fueled by a 16% CAGR in digital services over the past two years, and a 13% year-on-year increase in mobile B2B.

Speaker #3: An acceleration from Q1. At the same time, we expanded our SME base by 6% year on year, strengthening our in this very important segment.

Speaker #3: Now, let's review our performance in the three largest countries, beginning with Colombia, on the next slide. This slide underscores three main takeaways. In Colombia, service revenue accelerated to nearly 5% year over year on an organic basis, stepping up from 3.6% in the previous quarter.

Speaker #3: This performance uplift is fueled by mobile postpaid, with customer base growing by 15%, surpassing the 4 million mark. And home, that did the same at a rate of 12% year on year.

Speaker #3: All this was sustained at a notable adjusted EBITDA margin of 39.5%, despite higher commercial investments supporting top-line growth. Congratulations to our outstanding team in Colombia; your strong commitment and disciplined execution are powering this extraordinary momentum.

Speaker #3: Now, please turn to the next slide to look at Guatemala. We are delighted to see that our postpaid customer base expanded 20% year over year.

Speaker #3: Triggering healthy growth in the mobile service revenue of more than 5% in real terms. Organically, the growth went from 1.5% in the previous quarter to 4%.

Speaker #3: As I mentioned in Q1, one of our levers is the migration of prepaid to postpaid, which is particularly relevant in Guatemala. And to cap it off, operating cash flow reached a record of 191 million this quarter.

Speaker #3: A clear reflection of strong execution and sustained financial momentum. Great work by our team in Guatemala. The combination of top line growth recovery and focus on efficiency is delivering record-breaking financial results.

Speaker #3: Please turn to the next slide to look at Panama. This slide highlights another record high adjusted EBITDA margin this quarter, the second in a row.

Speaker #3: Mobile postpaid customer base grew about 20% year on year, and mobile service revenues grew 4%. We continue to leverage our postpaid business as a foundational catalyst for steady growth in mobile.

Speaker #3: Before turning it over to Bart, let me close with our M&A update. We made decisive progress. Close the sale of Latin Paraguay and executed the partial closing of the SBA tower deal, generating more than $500 million in proceeds.

Speaker #3: In Costa Rica, we await a regulatory approval and target closing in Q1 26. In Uruguay and Ecuador, we signed definitive agreements and expect approval in Q3 and Q4, respectively.

Speaker #3: In Colombia, the Coltel acquisition remains on track for Q1 26, closing. In parallel, we're in active discussions with EPM and aim to reach an agreement as soon as possible.

Speaker #3: Since negotiations are ongoing, I prefer not to comment further. But as soon as we land something, we'll communicate it to the market. Now, me turn the call over to Bart to review the financials for this quarter.

Speaker #4: Thank ou, Marcelo. Now let's look at our financial performance beginning on slide 14. Service revenue for the quarter totaled 1.28 billion, representing a year over year decline of 5.9% due to the adverse impact of foreign exchange this quarter.

Speaker #4: Causing around $110 million in total FX headwinds. Now, about 84 million of this originated in Bolivia, primarily due to the application of accounting standard IS 21.

Speaker #4: Excluding FX impact, organic service revenue growth accelerated to 2.4%, as our commercial push continues to drive performance. I think the story is clear, and revenues progressing in line with expectations.

Speaker #4: Mobile postpaid is growing double digit, boosted by pre-to-postpaid migrations and FMC. While mobile prepaid remains on positive growth, creating the funnel for the future.

Speaker #4: B2B growth is driven by digital, and our home's business was creating a drag to top line that, as Marcelo explained, we're almost getting to positive territory which then in turn will naturally uplift our year over year growth rate later on.

Speaker #4: EBITDA was up 1.1% year on year to $641 million. Now reaching a margin of 46.7%. On an organic basis, EBITDA grew a solid 9.3% in the quarter, up from 6.9% in Q1 25.

Speaker #4: This performance reflects ongoing discipline in cost optimization which is now deep in our DNA. And operating leverage, which continues to drive margin enhancement and operational efficiency.

Speaker #4: As a side note, I want to congratulate our Honduras and Nicaragua teams under the leadership of our GM, Santiago and Mauricio, as well as our CFOs, Mauricio and Mario, in joining Club 50.

Speaker #4: These are our operations with 50% or more EBITDA margin. We now have five countries out of nine in Club 50. As a reminder, starting since last quarter, we've adopted the term adjusted EBITDA.

Speaker #4: It plays off EBITDA to align with SEC interpretative guidance. In our case, this was simply a change in label, as there is no change to the underlying methodology we have historically applied.

Speaker #4: Providing a consistent analytical view of the business. Equity-free cash flow was 218 million in the quarter, and 395 million H1. Up almost 126 million compared to 2169 million in H1 of last year.

Speaker #4: This despite already prepaying around $20 million in CapEx originally scheduled for 2026. In order to benefit from an exceptional supplier offer. We continue to make solid progress in working capital management, with concrete actions to optimize cash conversion cycles and reduce the seasonality our cash flow throughout the year.

Speaker #4: We were able to deliver a strong H1, despite the continued adverse foreign exchange impact. Thanks to our efforts to reduce our FX exposure. Reduced FX exposure led to both more sustainable EBITDA margins and better EFCF generation.

Speaker #4: So, we're very pleased to see all these initiatives are now contributing to delivering a strong H1 EFCF. Here as well, a reminder, our definition of EFCF includes also both the proceeds and the cost and tax paid related to Latin asset sales.

Speaker #4: In line with our approach to isolating recurring cash generation from one items, we've lighted those in gray. The one-offs for the first half of 2025 relate all to Q1 transactions.

Speaker #4: Let's now look at it on a per country basis, per component. First, please turn to slide 15 where we will drill down further into the service revenue by country.

Speaker #4: Guatemala service revenue of 358 million represented year on year growth of 1.9%. Growth in Guatemala is now sustainable, and we hope to see a good second half of the year as we have a soft comparable from last year's second half.

Speaker #4: Colombia service revenue of 339 million grew a nice 4.9%. Our home business in Colombia is now in positive territory, and you can immediately see the effects on top line.

Speaker #4: Panama's service revenue was 170 million nearly flat year on year. The government contracts are now in maintenance stage, so our substantially lower. On top, we had some adverse effects from social unrest caused by Social Security reforms.

Speaker #4: Paraguay's service revenue was $132 million, which is an increase of 4.6% year-on-year. This is not bad at all. However, this is offset by adverse currency effects.

Speaker #4: Bolivia's service revenue and local currency increased by 7%. Effectively showing results from our price increases. However, this is still largely insufficient to cover devaluation.

Speaker #4: On a positive note, the devaluation now seems to have stabilized, which, if sustained, will allow us to catch up again over time. Service revenue in our other markets comprised of El Salvador, Nicaragua, and Costa Rica increased 0.4% in US dollar terms.

Speaker #4: Note that El Salvador is now larger than Bolivia, and together with the possible upcoming inclusions of Ecuador and Uruguay, we may consider restructuring our management and reporting of the portfolio.

Speaker #4: Now, please turn to the next slide for a look at EBITDA by country. Guatemala adjusted EBITDA increased 4.1% year on year to 228 million, largely driven by sustained mobile top line growth.

Speaker #4: We can see here evidence of operational leverage in action. Colombia adjusted EBITDA increased 3.6% year on year to $136 million, and the adjusted EBITDA margin was 39.5%.

Speaker #4: EBITDA growth slows down compared to the previous quarter, as we incurred higher commercial OPEX to support customer base intake despite this the operation was able to deliver better margins versus Q1.

Speaker #4: Panama adjusted EBITDA grew 2% year on year to 92 million. And the adjusted EBITDA margin reached a new record of 51.7%, driven by OPEX discipline.

Speaker #4: Paraguay adjusted EBITDA grew 9.2% to 69 million in Q2 2025. And the adjusted EBITDA margin was 50.5%, largely driven by top line consistently delivering exceptional operational leverage.

Speaker #4: Bolivia increased 16.7% to 33 million. Improving its margin to 45.5% mainly from top line acceleration and cost efficiencies. As we made a massive effort on de-dollarization of the cost basis, the margins are sustainable and pave the way for operational leverage even in an environment of devaluation.

Speaker #4: Adjusted EBITDA in ur other segment increased 9.2% in US dollar terms. Now, please turn to slide 17 for a look equity-free cash flow and leverage.

Speaker #4: As we've already discussed, adjusted EBITDA for the quarter was 641 million, that's up 7 million from last year. Cash CapEx was 201 million, and that's up 47 million from last year, but again includes the prepayment of about 20 million for CapEx scheduled in 2026.

Speaker #4: Spectrum was 5 million, down 17 million compared last year, due to unequal mix between one-offs last year and Spectrum purchases, reduced payment schedule, and reduction of performance bond cost resulting from change regulation.

Speaker #4: Changes in working capital and others were positive at 30 million, as we continue to focus on cash management with suppliers. However, this is also 31 million lower than last year, as we are now catching up on payments that we froze in Bolivia due to the rapid devaluation, and lower collections from government projects in Panama.

Speaker #4: Tax is paid, we're 106 million, this is an increase of 24 million, mainly due to increased profitability. Finance charges were 82 million, an improvement of 22 million thanks to a mix of FX rates, lower gross debt, and lower commissions in Bolivia as the devaluation is now recognized under the new IS 21 standard.

Speaker #4: These payments were 82 million, a decrease of 7 million. Honduras recreation was 24 million a quarter, which is very much in line with last year.

Speaker #4: As a result of all these factors, equity-free cash flow for the quarter was $218 million. This is down $50 million compared to Q2 2024, mainly due to the successful effort to stabilize EFCF between quarters and avoid the typical Q1 dip.

Speaker #4: As I indicated to you during the Q1 call. 125 million dividends were paid as part of our approved dividend policy. Now, please turn to the next slide to review our financial targets 2025.

Speaker #4: Which actually remain unchanged from what we communicated at our Q1 results, with 2025 equity-free cash flow of around 750 million, and year-end leverage below 2.5.

Speaker #4: These targets, in general, do not include the impact of any of the strategic M&A projects that Marcelo talked about. Though, depending on the date of closing of each of those projects, we still expect to have the leverage remain below 2.5 at year-end.

Speaker #4: Finally, as we have just announced, the board approved an interim dividend of 2.5 dollars per share to be paid in two installments. First in October 2025, and then in April 2026.

Speaker #4: This represents an approximate aggregate dividend of 423 million, and reflects our commitment to return value to our shareholders. We are now ready for your estions.

Speaker #5: Hello? Hello? Let's see if we can have the the first question. We're muted.

Speaker #6: Hi, good morning. Thanks for taking my estions.

Speaker #5: Absolutely.

Speaker #6: I have, can you hear me? Sorry.

Speaker #5: Yes, yeah, you're fect. Thank you.

Speaker #6: Perfect. well, the first question is about Guatemala. There was a visible improvement there. You mentioned a bit prepaid to postpaid. I just wonder if you could deep dive a bit more on on on on the improvement and on the competitive environment that you're seeing that country.

Speaker #6: And the second question is more about CapEx. You mentioned in the release some acceleration in CapEx to advance revenue generation. What is the outlook for CapEx, especially in the coming years?

Speaker #6: These are the two questions.

Speaker #5: Good morning, Marcelo. Thanks for the questions. on Guatemala, what you can see here, is if you remember last year, we started defending some territories when we were, operating alone.

Speaker #5: so, the first quarter was about the stabilization. but at the same time, we started to aggressively migrate our prepaid customers to postpaid. That's where you see the 20% growth.

Speaker #5: Remember that in Guatemala, the the the the postpaid penetration is one of the lowest of the group. It's, it's only 12%. The target for all the operations is to reach a 50%.

Speaker #5: So it's a long runway, for Guatemala to grow. On postpaid. What we see, additionally to that, we are building, more or ess 300 and 50 new sites in Guatemala.

Speaker #5: To capture, new communities or extension of existing communities. All in all, it is to say that we do see a sustainable growth, predicated on prepaid to postpaid migrations.

Speaker #5: ARPU increase in prepaid that we are doing, we did the first half of the year, and we will continue to do the second half of the year.

Speaker #5: Our competitors are following. And, and the new coverage. Regarding the competitive environment, Marcelo, there are some sites where we are going to feel some pressure.

Speaker #5: Because we do have a very high market share, and this is normal, this is becoming part of our business as usual. That's why we are more focused on developing ARPU within our existing customer base.

Speaker #5: So that's that's what we see going forward. And the question on CapEx, what we did, the way we are operating is extremely granular. So we do, look, side by side and node by node and this allow us to allocate, CapEx, very, very focused on on on what are the returns expected there, where the traffic is high, where the disposal to pay is there.

Speaker #5: So, we do expect, to be between 650 and 650 million dollars to 700 million dollars, this year. And also to keep more or less that rate, in the following years.

Speaker #6: Just clarification, when you say that rate is like rate to revenue, should we CapEx to revenues to be more or less that? Is that what we could understand?

Speaker #5: Yes, that would be between 11 to 12%, of revenues. but we do we do look at it, as as a dollar, right? I mean, because, it is very, very granular and and we, we we we look, I mean, the way we look at it is not percentage-wise.

Speaker #5: The result is 11 to 12%. but we really want to be between 650 and 700.

Speaker #6: Perfect, very clear. Thank ou very much.

Speaker #7: Okay, thank you. Then we have, questions from Andreas from, DNB Carnegie. he might not be online, so we received a question through the investors at Millicom.com.

Speaker #7: First question, Marcelo, you post accelerating service revenue growth base in basically all countries. Can you discuss a bit more the drivers for this and how you can maintain these levels or even improve them further?

Speaker #5: Yeah, well, basically, to give you a little bit of context, the constant is the increase in demand for data. So in order to capture that, what we're doing is we are increasing the days connected.

Speaker #5: and developing ARPU. So basically, the drivers are, in increasing the days connected, is a migration from prepaid to postpaid. Remember that we are only at 20%, penetration of postpaid over total mobile customer base.

Speaker #5: there are, countries like Peru or, that are at a 45%, close to 50, and countries like Brazil that are over 50%. Our target is to reach 50%, in all in all the territories.

Speaker #5: This brings an ARPU uplift of 50% compared to the prepaid ARPU. Sorry, there is a long runway ahead to increase the days connected and also to increase ARPU.

Speaker #5: The other driver is a price increase, more or less the, since we we sell, days connected, the traffic increases around 15% every year. So we ed to capture that increase through ARPU development.

Speaker #5: So we are doing price increases in all the countries, so to give you an example, this year, the ARPU increase in, in in prepaid is around 5%.

Speaker #5: Then we then we have, home, where basically, we are focusing on increasing the penetration in low penetrated nodes. So, second is to increase the quality of new acquisitions and reducing churn.

Speaker #5: So with all that, we can see a momentum in new net ads, sustainable new net ads that with that comes with high quality, and as you see, we are coming from minus 6 to minus 1.4 in service revenue growth, and we do expect that to that trend to continue in the second half of the year and next year.

Speaker #5: And, and and last, I mean, we are we are very serious about convergence. the currently 25% of all our new sales are convergent. what does this brings is a convergent customer has is half has a half of the churn of our regular home customer.

Speaker #5: And that increases the customer lifetime value. So the more penetration we have on convergence, the more solid is going to be the the service revenue growth.

Speaker #5: And B2B is about SMB volumes and digital solution penetration in medium and large corporations. So we do expect this trend to continue, in Q1 we saw 0% growth in, in in in in local currency.

Speaker #5: Now we are at at 2.4%, and we expect this trend to continue in Q3 and Q4.

Speaker #6: Thank you, Marcelo. Then the second question for Andreas was, solid cost control, but have you identified further potential on the cost side? And is it correct that there is no restructuring cost booked for Q2?

Speaker #6: Do you expect any additional severance payments, restructuring costs in HQ? So, maybe I can answer that one on the cost control. I ink, most of the big ticket item is initiatives, were were taken last year and completed last year, and we now start to see the the full run rate effect, of that.

Speaker #6: So, the associated cost with that also were mostly incurred in 2024. we'll continue to have restructuring costs. I think, it's a handful of millions this quarter, but I don't want to call that out as every quarter there will be something.

Speaker #6: and it's not, you know, therefore exceptional in nature. so let's just stick to the to the to the report that's, numbers rather than adjusting, for it.

Speaker #6: we have at this stage no, significant or material plans for for further redundancy, so no big ticket item severance, payments expected in, in H2.

Speaker #6: now, this being said, the cost control sits now deeply within our DNA. and and, so so there's much less exercise to do from from from HQ and from our, local leadership.

Speaker #6: because, you know, we're operated like this, but we continue to find opportunities, every every week. So, and that's also evidenced by now two additional countries getting into, Club 50.

Speaker #6: as we continue to work everywhere, to improve margins further, also record, EBITDA percentage for for for Millicom as a group. If if I can add there, Bart, I mean, our biggest fight is against inertia.

Speaker #6: So what we're doing is we're still reviewing all the purchase orders from $1 to millions of dollars. But on the other hand, there is a big opportunity in the digitalization of the customer interface journey of the customer journey, and also the digitalization of our internal processes.

Speaker #6: So we are exploring, new, new tools. We are using machine learning. We are we are using AI. We have a bot agents for sales, etc., etc.

Speaker #6: So those initiatives, we do believe that it's going to start impacting, next year. The last question from, Andreas was, with regard to cash flow, do you see any material changes to the various line items versus the explanations in Q1?

Speaker #6: no, I think it's it's quite steady state. with the exceptions for the strategic initiatives that we talked about. So LATI is now partially closed.

Speaker #6: we also closed, dealing in Paraguay on our towers. So that will have an impact on the leases. you know, on revenues and OPEX, it kind balances each other out.

Speaker #6: You know, we don't have tenancy income, colocation. income from from the towers, we also don't have the OPEX associated with the towers, but we have, additional leases.

Speaker #6: you know, that could be, you ow, a 25 to 35 million dollar, impact. on the leases. and otherwise, maybe the currency in Bolivia, it's not different from Q1.

Speaker #6: IS 21 has now been adopted. so compared to last year, you will see less cost of commissions because or or exchange cost in in Bolivia, but it immediately flows through the P&L, as a whole.

Speaker #6: So that's a little bit of a shift compared to last year, not compared to Q1. Thank ou. Then we have, next question from Eduardo Nieto from JPMorgan.

Speaker #8: Yeah. Hey, good morning, Tim. Thanks for taking my estion. So first I wanted to discuss on your leverage target and the leverage guidance that you gave on under two and a half times.

Speaker #8: Just first to confirm that that includes your latest M&A, latest dividends, and just if I think more medium term, is that if that's the level where you're comfortable or if there's any room to go any lower than that or basically the excess cash is going to be directed either to shareholders or other projects.

Speaker #8: And then on refinancing, you have mentioned that you want to reduce exposure to dollars. You do have some bond maturities in 2027. So just thinking what your expect for those prefi exercises, maybe next year, if there's any room to maybe move eventually some of the HOLCO debt to some of the operations.

Speaker #8: And just what you're thinking on that front, please.

Speaker #5: Yep. so on the leverage, two and a half times, so originally we always said this was excluding, the strategic initiatives because they they kind of come on top and outside of the of the budget.

Speaker #5: but what I can say, so at this time, 2.5 definitely including all of the dividends and and special dividends. so that's included yes. And then depending on the time of closing, I say of the of the different transactions, as Marcelo explained in the in the presentation, you ow, if we follow that path, then yes, we'll we'll still include in M&A be around or below 2.5 times, leverage.

Speaker #5: we 't expect it to to increase significantly above that, even if everything should close this year. but we might go a ittle bit over it to then rapidly decline again on the back of our cash flow generation and and EBITDA growth.

Speaker #8: Got it. And then more medium term, I ess, this is the level where you would expect to be?

Speaker #5: Yeah, at this time, I think in between 2 and 2.5 is is still our our our desired level.

Speaker #8: Perfect. Yeah.

Speaker #5: And your second question.

Speaker #8: It was on the refi plan.

Speaker #5: On the refinancing, yeah. Yeah. So so I think our strategy remains the same. Like we I like to raise local currency debt. so prioritize in-country local currency debt and repay US dollar debt preferably at HQ.

Speaker #5: you know, from from a capital allocation and from risk perspective, it's it's just better, you know, just even look at at Bolivia where historically the it was pegged to the dollar, but still we we had our debt denominated in local currency.

Speaker #5: Thankfully, because that that helped tremendously navigate through the through this period. So we continue to do that. now the M&A, projects cloud are our standard liability management a little bit because we have we have quite a bit.

Speaker #5: so we will use the LATI proceeds for the payments of the M&A. As you know, there's still, you ow, 270 to 300 million dollar net cash proceeds coming in in the in the next months.

Speaker #5: from from the LATI sales. We have our EFCF generation. You know, two-thirds of that goes through our our dividends. And then one-third of the equity-free cash flow is is and still reserved for for paying for for for the M&A.

Speaker #5: And then I'm actively raising debt in countries. to to, you know, to to to pay for the rest. you saw the announcement of the IDB loan in in Salvador, but also I'm raising local currency debt in Guatemala, in Paraguay, and even already raising in in Uruguay.

Speaker #5: to anticipate the closing. So once all of that is kind of stable, and paid, we'll look at our liability management. We'll ake the the required decisions.

Speaker #5: And you're rightfully pointed out to our 27th. This is our, ou know, upcoming shortest maturity bonds, both in the Paraguay issuance and the SEC bond, in Sweden.

Speaker #5: But at this stage, nothing, nothing to announce there yet.

Speaker #8: Very clear. Thank you very much.

Speaker #5: Thank you. Then we have, next question from Gustavo Farias from UBS.

Speaker #9: Good morning, everyone. thanks for for taking my questions. and there are two. so the first one on Colombia. we've seen, recently, warm launching new, low-cost mobile plans.

Speaker #9: we've seen a very, very aggressive. So just wanted to to to get a caller on higher scene, the price and and the competitive landscape in the country.

Speaker #9: and if you could, for the comment on the regulatory agenda, for the acquisition, of dev stake in Coltel, and the second one, if you could, I just a follow-up maybe on the on the question from Marcelo Santos.

Speaker #9: And considering the 5G, rollout, which you're seeing, all over, Latin America, how how how you see that impacting, CapEx, going forward. Thank you.

Speaker #5: Perfect. I would take the first, part of the first question, if you could take the second part of the first question. so, basically, without, yes, a warm launch done unlimited offer in prepaid, for $7, Telefónica has already an even more aggressive offer.

Speaker #5: In the market, so basically what we see is in order to to succeed, in prepaid, our understanding and our experience, has to do with not only pricing.

Speaker #5: You need to have a strong network and a strong distribution. we've seen this kind of, behavior in in in in many of our countries, as an example, Digicell in Panama, so, these are, very tactic offers.

Speaker #5: But since they are not complemented by network experience and channels, they are not typically sustainable. So because the customers are expecting the full experience.

Speaker #5: Right? so on that side, I I do believe that this is a tactics, business as usual, and, not, not a long-term trend. On on the second part that is the regulatory part.

Speaker #5: Yeah, I think so in Colombia, we have, well, two transactions, basically in parallel, right? so on the one side, we have, a minority partner EPM, they announced the minimum price.

Speaker #5: They're now listing the shares on the local stock market to prepare for phase one of law 226, which is the privatization law in, in Colombia.

Speaker #5: After which they can, raise, launch phase one, which is to the sector solidario, and then two auction, to sell, their their shares. So the listing is, should be done very soon.

Speaker #5: And then they will start, phase one to, sector solidario. And there's no more regulatory approvals on that side. So it's more of a of a process-driven, process.

Speaker #5: So on on our side, we are, discussing there with them our participation, in in that, in that auction. And and how administratively we're going to execute on that.

Speaker #5: but obviously, it's an auction and not a participants could be there. as soon as we have an agreement, we'll announce that. but you know this is an active discussion.

Speaker #5: So probably better not to comment more than this, at the moment. On the other side, with with Coltel, the first step there is, for the government to release the minimum price, at which they will be authorized to to sell the process.

Speaker #5: They already have their shares listed. So then it's ase one and phase two of law 226, process. We expect this, you know, the the, the, minimum price to come, you ow, still in Q3.

Speaker #5: and, you know, around that time, hopefully as well, the regulatory approval for the merger probably the regulatory approval in early Q4. and then both transactions to happen, around year end, probably slipping into Q1, considering the timing and the the process that that need to happen.

Speaker #5: And the last question, Gustavo, about 5G. The way we look at it is, 5G networks needs to follow 5G devices penetration. In many of our countries, penetration of 5G over the total base are very, very low.

Speaker #5: I I was, managing the Panama operation when you walk the streets, you don't see any 5G phones. on the counter, because of the affordability issue, right?

Speaker #5: These are expensive handsets. Having said that, we do see that, 5G, devices are, devices based are increasing in Colombia. in El Salvador, and a new operations like Uruguay.

Speaker #5: So when the demand is there, because the handset has the capability, we will invest in 5G. On a granular base, right? Because these people are, mainly in urban cities, and then we will expand following the device trend.

Speaker #5: Regarding auctions, we do have, an ongoing auction in Paraguay. we are also, on an ongoing auction in El Salvador. And we will always be, active and proactive, in participating in those auctions.

Speaker #5: When the conditions and terms are, are are there for us to participate.

Speaker #6: Thank you for the wers, Bart and Marcelo.

Speaker #5: Thanks. So the next question we have from Andres Cuello from Scotiabank. Can you discuss further acquisitions on the pipeline? Are you looking at Telefónica subsidiaries in Chile, and Mexico, or like Puerto Rico business?

Speaker #5: Which company intends to to separate? So I ink, honestly, our first priority is to close on what we already announced. you know, we we have Colombia that's going to be a big integration.

Speaker #5: It's going to take a lot of our ention. and, you know, also at the same time, a large opportunity for synergy. so they're itely you ow, a lot of focus will go go there.

Speaker #5: In in 2026. first, we'll have Ecuador and Uruguay. in a sense, it's adding two countries to to our portfolio of nine. I like the fact to have to to have this type of portfolio.

Speaker #5: And when you when you see the diversity kind of balance the risks out of each country. So this year, had the huge impact exceptional impact from from Bolivia.

Speaker #5: you ow, very significant impact to to equity-free cash flow. And still, we can cover and stay in our guidance comfortably despite what's happening. Now we're going to add a dollarized economy and an investment grade country so so this is going to even further improve that diversity within our with our portfolio.

Speaker #5: So are we looking at others? We will always have a have a peek at at what is interesting. but you ow, and so if there are deals possible, yes, why not?

Speaker #5: but definitely not our focus right now. And you know, especially things like Mexico is is probably too big for us at this stage. and too complex.

Speaker #5: so so you know, let us focus on on on what we announced first. I think with this, we have no more questions. in the queue.

Speaker #5: So with that, I would like to thank everyone and Marcelo for the quarterly results and congratulations to all the teams who helped us deliver on these results.