Hook / Thesis
Millicom (TIGO) has moved from restructuring to cash generation. Over the past 18 months management executed a string of deals and infrastructure transactions that have materially de-risked operations in its growth markets. The company now sits at the top end of its 52-week range at $61.04, trading at a P/E of 9.3 and yielding roughly 4.9% - metrics that look conservative relative to the current run-rate of profitability and the potential for recurring free cash flow.
In short - the turnaround is over, and the rerating should come from cash flow, not promise. This is an actionable long trade for investors who want exposure to Latin American and select African telecom markets via a stable cash generator with improving capital return optionality.
What the company does and why the market should care
Millicom provides cable and mobile services across Latin America and parts of Africa. It is the parent of the Tigo consumer brands in markets such as Colombia, Paraguay, Guatemala, Honduras and Tanzania. The company has a clear playbook: consolidate market positions where scale matters, monetize infrastructure selectively to de-lever or pay returns, and redeploy proceeds into adjacent markets or buybacks/dividends.
The market should care because Millicom now checks important boxes investors prize: scale in growing data markets, a visible path to steady adjusted EBITDA and free cash flow, and recent strategic moves that simplify the ownership structure in Colombia and expand presence in Ecuador.
Recent financials and supporting numbers
- Q2 2025 results showed revenue of $1.37 billion, record adjusted EBITDA of $641 million, and net profit of $676 million - a combination of strong margins and one-off items that drove headline profitability (reported on 08/07/2025).
- Management completed a partial infrastructure transaction that generated over $500 million of proceeds, and it paid a $2.50 per share interim dividend following those actions.
- Market snapshot: market cap is $10,196,121,600, shares outstanding 167,040,000, float ~92,440,938, P/E 9.33, P/B 3.05, and dividend yield ~4.92%.
- Recent M&A: acquired EPM's remaining stake in UNE (Tigo Colombia) for COP 2.1 trillion (approx $571 million) and bought Telefónica Ecuador for $380 million - moves that consolidate Colombian ownership and expand the South American footprint (announced 01/27/2026 and 10/30/2025 respectively).
Valuation framing - why the stock can re-rate
Use of the Q2 2025 adjusted EBITDA gives a straightforward way to think about valuation. Q2 adjusted EBITDA was $641 million. Extrapolated naively to a run-rate (x4), that implies approximately $2.56 billion of annualized adjusted EBITDA. On a market cap of roughly $10.2 billion, that implies a market-cap-to-annualized-EBITDA multiple near 4.0x. Another angle: the market cap is only ~16x Q2 EBITDA taken at face value - which is a tell that the current price already bakes in substantial operating momentum.
The company also trades at a P/E of 9.3 and yields close to 4.9%. Those metrics are conservative for a business with improving cash conversion, recent asset-sale proceeds exceeding $500 million, and near-term capital return mechanics (interim dividend, potential for buybacks or further redemptions as seen in past partial note redemptions).
Absent a full set of balance-sheet metrics here, the clearest point: the market is valuing Millicom like a mature cash generator rather than a growth compounder. If management converts improved EBITDA into steady free cash flow - or if the company continues rational M&A into high-return markets like Ecuador - multiples have room to expand.
Technicals and positioning
- Price is trading near its 52-week high of $62.74 while the 10-day SMA ($60.43) and 50-day SMA ($54.62) show an upward slope, consistent with a trending setup.
- Momentum indicators: RSI is 64.5 (healthy but not frothy) and MACD shows bullish momentum (MACD line 2.248 vs signal 1.789).
- Short interest trends show days to cover near 1.84 as of 01/15/2026, indicating limited structural short pressure.
Catalysts
- Integration and synergies realization from full ownership of Tigo Colombia after the EPM stake acquisition - cost and revenue synergies could flow through to EBITDA rapidly once integration completes (closing noted 01/29/2026).
- Monetization of infrastructure or further partial sales - prior infrastructure transaction generated over $500 million; repeatable deals could fund buybacks or accelerated debt reduction.
- Dividend and capital return policy clarity - the interim $2.50/share payment signals a willingness to return cash; an ongoing program would attract yield-focused investors ahead of the ex-dividend date (ex-dividend 04/08/2026, payable 04/15/2026).
- Operational improvements in Ecuador following the Telefónica acquisition - revenue and ARPU uplift are plausible as Millicom brings distribution and product bundles into the market.
Trade plan - actionable and time-bound
I recommend a long position with the following parameters. This is a time-boxed trade that assumes continued integration and visible cash conversion over the next several quarters.
| Entry | Target | Stop | Horizon |
|---|---|---|---|
| $60.00 | $75.00 | $54.00 | long term (180 trading days) |
Rationale: enter at $60 to capture a small buffer below current price while staying inside the upward trend. A $75 target reflects a 25% upside that is reasonable if the market re-rates Millicom to a mid-single-digit EV/EBITDA premium and/or the company executes repeat infrastructure monetizations and meaningful buybacks/dividends. The $54 stop sits below the 50-day SMA and caps downside to roughly 10% from entry.
Risks and counterarguments
- Macro and currency risk - Millicom's revenues and cash flows are concentrated in emerging markets; FX swings or macro shocks in key markets like Colombia could compress margins and translate into weaker dollar results.
- Integration execution - the Colombia consolidation and the Telefónica Ecuador acquisition must be integrated smoothly. Unexpected costs or regulatory hurdles could delay synergies or inflate capital needs.
- One-off earnings distortion - reported net profit of $676 million in Q2 2025 included material one-time items tied to asset sales; if recurring earnings do not match headline numbers, multiples could re-compress.
- Leverage and refinancing risk - Millicom has used asset monetization to improve the balance sheet; if further liquidity needs arise or credit markets tighten, refinancing costs could bite.
- Dividend sustainability - the recent interim $2.50 dividend is positive, but the company must keep cash flow steady to sustain regular dividends; a cut would weigh heavily on valuation given the current yield.
Counterargument: One credible counterargument is that much of the current earnings strength is cyclical and driven by one-off asset monetizations. If Millicom cannot replace these proceeds with recurring free cash flow, the stock could trade sideways or lower despite solid reported EBITDA. This is a legitimate concern and why the trade uses a strict stop and a medium-to-long horizon that requires evidence of cash conversion over upcoming quarters.
What would change my mind
I would downgrade this thesis if any of the following occur: a) meaningful downward revisions to recurring EBITDA in company releases, b) signs management is spending monetization proceeds on low-return M&A rather than returns to shareholders or debt paydown, c) a marked deterioration in operating metrics in core markets (ARPU, churn, broadband penetration), or d) major currency depreciation that materially impacts reported dollar results and the company's ability to service foreign-currency obligations.
Conclusion
Millicom looks like a classic post-turnaround telecom: the operational heavy lifting is largely complete, and the market is starting to price a path to durable cash flow. At a market cap of ~$10.2 billion, a P/E of 9.3 and a near-5% yield, the risk-reward favors a long position that is event-driven (integration, infrastructure monetization, dividend clarity). The trade plan above provides a disciplined entry, stop and target tied to a 180 trading day horizon to allow the company to prove sustainable cash generation.
Trade idea summary: Buy TIGO at $60.00, target $75.00, stop $54.00 - horizon long term (180 trading days). Monitor integration progress in Colombia, cash proceeds deployment, and the sustainability of reported EBITDA and dividends.