No Iran dip: Millicom stock up 63% YTD on steady LatAm demand

Millicom International Cellular S.A. (TIGO) has climbed 63% year-to-date, a rally that has drawn little notice in U.S. markets but reflects steady demand for mobile data and cable broadband across Latin America. The stock sits at $32.70, up from $20.12 on Jan. 2.

The company, headquartered in Luxembourg and listed on NASDAQ, operates under the Tigo brand in markets including Colombia, Honduras, Paraguay, Bolivia, and Guatemala. Its revenue mix tilts heavily toward postpaid mobile plans and fixed-line cable internet, two segments where Latin American subscribers have shown consistent payment behavior despite the region's uneven economic backdrop.

A 3% dividend yield has helped the case. Millicom has paid a quarterly distribution of $0.22 since the third quarter of 2023, and the payout ratio, at roughly 35% of free cash flow, leaves room for either reinvestment or a future increase. The board approved a $300 million share buyback program in February, with $143 million still available.

The company's debt load is the counterpoint. Millicom carries net debt of roughly $2.6 billion, a figure that has crept up as it spends on fiber builds and 5G spectrum. Free cash flow for the trailing twelve months was $340 million, down from $400 million in the prior period, largely due to interest costs and capital expenditure timing. Ratings agencies Moody's and S&P both peg Millicom at B1 and B+ respectively, speculative grade but stable.

In Colombia, the company's largest market by subscribers, competition from CLARO and Telefónica's Movistar has kept ARPU growth to around 2% annualized. Honduras and Paraguay have been stronger, with ARPU up 6% and 5% respectively, according to the company's most recent quarterly earnings call.

The broader LatAm telecom sector has seen similar equity performance. America Movil, the region's biggest operator, is up 22% year-to-date. Telefônica Brasil has gained 18%. Millicom's 63% run reflects a narrower base and a higher beta to local currency improvement – the Colombian peso has strengthened 12% against the dollar this year, boosting the value of local-currency earnings when reported in dollars.

On the operational side, fixed-line broadband subscribers passed 2.1 million in Q1, up from 1.9 million a year earlier, while mobile data subscribers grew to 28 million from 26 million. Average revenue per user in the fixed-line segment stands at $18.50, roughly 3x the mobile ARPU of $6.20.

Management has guided for revenue growth of 4-6% in 2025 and EBITDA margin of roughly 41-43%, both broadly in line with consensus. The next quarterly report is due in early August.