Millicom Shows Modest Improvement During Q2

Millicom showed improvement in several areas during the second quarter, with most markets posting wireless customer growth and average revenue per wireless customer moving back in the right direction. Total service revenue increased 4.5% versus a year ago, roughly in line with the prior quarter, while the EBITDA margin held steady versus a year ago at 40%. Free cash flow was negative during the first half of the year on elevated capital spending, but management expects sharp improvement in the second half of the year, leaving the firm on track to generate $800 million-$1 billion cumulatively through 2024. The firm also completed several transactions during the quarter, including the equity rights offering announced earlier this year, the sale of its remaining African business, and the buyout of minority partners in Panama. These moves further simplify Millicom's operating structure and improve its financial position. Our fair value estimate remains $34, reflecting the impact of the rights offering on per-share valuation.