Fitch Ratings on July 22 affirmed Millicom International Cellular S.A.'s long-term foreign and local currency issuer default ratings at 'BB+' with a stable outlook, citing the telecom operator's strong market positions and solid cash flow generation despite challenging operating environments across Latin America.

The ratings agency also affirmed the company's senior unsecured debt at 'BB+'.

Millicom's ratings reflect its geographic diversification, strong brand recognition and network quality, which support the company's leading positions in key markets and robust subscriber base. However, the ratings are constrained by the operating environments of its subsidiaries, which contribute significant upstream cash flows.

The Luxembourg-based company, whose main shareholder is French billionaire Xavier Niel, operates under the Tigo brand across nine Latin American countries – namely Bolivia, Colombia, Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, Panama and Paraguay – providing mobile services, fixed telephony, pay TV and broadband services, as well as mobile finance solutions.

'Millicom's ratings are constrained by the challenging operating environments in the Latin American countries where it operates,' Fitch said, noting these are characterised by weak systemic governance, relatively low sovereign ratings and vulnerability to economic shocks.

Despite these challenges, Millicom maintains leading market positions, ranking either number one or two in most of its markets. Fitch expects the company to retain these positions, supported by superior network quality and extensive coverage, underpinning robust EBITDA margins of around 37%.

The stable outlook reflects Fitch's expectation that Millicom will maintain consolidated net leverage below 3.5x despite potential acquisitions, adhere to its established financial policy, and continue demonstrating market leadership.

Fitch expects Millicom's strong free cash flow before dividends of around $780mn in 2025, supported by improved operational performance and lower capital expenditure intensity. This cash flow is expected to be largely upstreamed, with dividend distributions estimated at $760mn in 2025.

The company is pursuing acquisitions in Colombia, Ecuador and Uruguay, representing a total investment of around $1.82bn. Fitch said these transactions should have limited impact of 0.5x on net leverage, with the metric expected to decline to 2.5x post-acquisitions.

'These acquisitions will strengthen Millicom's network position and consolidate its status as the second-largest operator in each market, with expected market shares between 30% and 40% upon completion,' Fitch noted. The transactions are anticipated to close in late 2025 or first quarter 2026, subject to regulatory approvals.

Despite Iliad Holding S.A.S.'s current 40% indirect ownership stake in Millicom, Fitch rates the company on a standalone basis, reflecting the high proportion of publicly listed shares and the composition of its board of directors.

As of March 31, 2025, Millicom had readily available cash of $582 mn, comfortably covering short-term debt obligations of $254mn. The company also has access to a $600mn undrawn revolving credit facility.

Millicom's financial flexibility will be further improved by the LATI transaction, involving the sale of about 7,000 towers across Guatemala, Honduras, Panama, El Salvador and Nicaragua to SBA Communications Corporation for approximately $975mn.

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