Eduardo Nieto Leal

Eduardo Nieto Leal inquired about the expected peak leverage level for 2026, considering the pending M&A payments primarily in Q1. He also asked at what leverage point the company would consider halting dividend payments and followed up on the CFO's comfort level regarding leverage.

Answer

CFO Bart Vanhaeren detailed the M&A payment schedule for Q1 and Q4 2026, confirming that leverage will temporarily exceed 2.5x in H1 2026 but is expected to return to around 2.5x by year-end 2026. He stated that cutting dividends is 'not on the radar at all,' with the focus on sustaining and potentially growing them as leverage decreases. He expressed a desire for a strong balance sheet and noted that while any leverage makes him uncomfortable, the current level, including Coltel, is manageable, with a focus on deleveraging before further balance sheet actions.

Eduardo Nieto Leal asked about where Millicom expects leverage to peak in 2026 and at what level, and at what point the CFO would be uncomfortable enough to consider stopping dividend payments.

Answer

CFO Bart Vanhaeren detailed pending M&A payments: $570 million for EPM's stake in Tigo Colombia and $220 million for Telefónica's shares in Coltel in Q1, and an expected $220 million for La Nación's stake in Coltel in Q4. He confirmed that leverage would temporarily exceed 2.5x in the first half of 2026 but is expected to return to around 2.5x by year-end and within the 2.0-2.5x range in 2027. He stated that cutting dividends is 'not on the radar at all,' with the aim to sustain and potentially grow them as leverage decreases. While acknowledging that 'any leverage makes me uncomfortable,' he emphasized that the strong balance sheet enabled four acquisitions in one year, and the non-recourse structure for Chile was specifically designed to protect the balance sheet. He desires to see deleveraging before pursuing further balance sheet actions.

Eduardo Nieto Leal sought confirmation that the sub-2.5x leverage target includes recent M&A and dividends, asked about the medium-term comfort with this level, and inquired about refinancing plans for the 2027 bond maturity.

Answer

CFO Bart Vanhaeren confirmed the sub-2.5x leverage target includes all dividends and, depending on closing times, the M&A transactions. He stated that 2.0x-2.5x remains the desired medium-term range. Regarding refinancing, Vanhaeren reiterated the strategy of prioritizing local currency debt to repay USD debt and noted that while the 2027 maturity is on the radar, there were no specific announcements at this time.

Eduardo Nieto from JPMorgan Chase & Co. asked about the company's debt maturity profile, plans for refinancing with local currency debt, and the potential for new U.S. dollar bond issues. He also inquired about the long-term comfort level with the 2.5x leverage target.

Answer

CFO Bart Vanhaeren stated that while the goal is to increase the average debt maturity to over five years and prioritize local currency debt, major refinancing decisions are paused pending the timing of M&A cash flows. Regarding leverage, he noted that the current 2.47x is at the higher end of their 2.0x-2.5x target range but expressed comfort with cash flow generation, which he expects to improve throughout the year.

Eduardo Nieto Leal questioned the company's plans for its large cash position, particularly concerning debt reduction for bonds maturing in 2025 and 2026. He also asked about discussions with rating agencies and the primary risks to maintaining an investment-grade rating.

Answer

CFO Carlos Phillips Margain affirmed the company's strong liquidity position and its intention to use cash to reduce gross leverage and address upcoming maturities, reinforcing its commitment to its investment-grade rating. He noted that the dollar-denominated bonds due in 2025-2026 were hedged into peso exposure at a favorable rate. He added that rating agencies are concerned with operating trends at Sky, and the company is focused on demonstrating strong cash flow generation and liquidity to address this.