Millicom (TIGO) - Buy the Colombia Consolidation, Sell the Uncertainty: Infrastructure Re-rate Trade

Hook & thesis

Millicom (TIGO) just accelerated the most important strategic pivot it has attempted in years: consolidation in Colombia. Between the public auction win for EPM's stake in UNE (01/27/2026) and the successful conclusion of the tender offer for Teleff3nica's controlling stake in Colombia Telecomunicaciones S.A. E.S.P. (Coltel) (02/05/2026), Millicom now controls the levers needed to build scale in a market where it already has strong customer penetration. This isn't a one-off M&A story. It's a case where scale creates a platform for infrastructure monetization (tower/fiber sale-leaseback), capex efficiency, and structurally higher free cash flow per share - the classic ingredients for an infrastructure multiple re-rating.

Stocks trade on what can be delivered, not what could happen. The market has begun to price in the upside - the share price has rallied from roughly $26 a year ago to about $66.95 at the last close - but the path from consolidation to cash returns is still early. My trade idea: a defined long with clear entry, stop and targets that captures a 20-50% upside if Millicom executes the Colombia plan and avoids integration missteps.

What Millicom does and why the market should care

Millicom offers wireless and fixed-line telecom services across several Latin American countries, including fully-owned operations in Bolivia, Nicaragua, Panama, El Salvador, Guatemala and Paraguay, and partial ownership stakes in Colombia (50%) and Honduras (67%, not consolidated). The company serves ~42 million customers on wireless (~120 million people covered) and ~4 million broadband customers on a fixed footprint that reaches ~14 million homes. The company has been cross-selling converged bundles (mobile + broadband) to raise ARPU and customer stickiness.

Why Colombia matters: Colombia is one of Millicom's largest addressable markets by population and ARPU potential in the region. Winning UNE and securing control of ColTel give Millicom a dominant playbook - more spectrum, deeper fiber, and a larger tower/base station footprint - which together lower unit capex and increase potential for wholesale monetization. For a capital-intensive telecom, the ability to monetize infrastructure (sell towers or fiber to wholesale buyers and lease them back) can convert capex into near-term cash return while keeping network control.

From the company's announcements: Millicom concluded the UNE win on 01/27/2026 and completed the Teleff3nica ColTel tender offer on 02/05/2026. Those two moves are not just market share grabs - they set the table for combined network optimization and a potential infrastructure carve-out transaction that could drive both EPS and FCF per share.

Support from market action and dividends

The market is already responding. The stock closed at $66.95 on the latest session (previous close $65.21) and traded intraday up to $67.26 with volume around 1.72 million. That follows a massive run from the prior year when the share price climbed from the mid-$20s to the mid-$60s - an outsized rerating consistent with large strategic wins being priced in.

Cash returns look meaningful and visible. Recent dividend activity shows regular common dividends in the $0.75 per share range, paid quarterly, with special/one-off items noted (e.g., special cash entries of $1.25). Using the routine cash dividend cadence (0.75 per quarter x 4 = $3.00 annualized) implies an approximate yield around 4.5% at current levels (3.00 / 66.95 = ~4.48%). That yield is a rough benchmark - the company has signaled continued shareholder returns via the dividend schedule (ex-dividend entries for 01/08/2026 and upcoming dates), which supports the notion that Millicom intends to convert the Colombia consolidation into shareholder distributions as well as reinvestment.

Valuation framing

Exact market capitalization and line-item financials are not provided here, but valuation should be thought of qualitatively: Millicom has traded like a telecom/infrastructure composite. Historically, operators that secure dominant positions in a country and unlock infrastructure monetization command higher EV/EBITDA multiples because monetization reduces visible net debt and raises recurring EBITDA margins (via sale-leaseback accounting and elimination of duplicative capex).

Key valuation anchors for investors to watch post-deal:

• Dividend run-rate stability and any special distributions tied to asset sales.
• Evidence of tower/fiber monetization transactions and the implied multiple received relative to peers in the infrastructure market.
• Operational synergies and margin expansion in Colombia once networks are integrated.

Given the large rerate already visible in the share price, the remaining upside is primarily execution-dependent - and therefore tradeable with disciplined risk controls rather than a blind buy-and-hold.

Catalysts (2-5)

• Integration milestones for UNE and ColTel - public statements on cost synergies and combined network metrics (expected within the next 3-6 months).
• Announcement of an infrastructure monetization transaction (tower/fiber sale-leaseback) - a classic re-rating catalyst for telecoms when executed at attractive multiples.
• Regulatory approvals or concrete commercial agreements that lock in market share or wholesale access in Colombia (reduces political/regulatory execution risk).
• Quarterly dividends and any special distribution tied to M&A proceeds - will materially change FCF per share dynamics.

Trade plan - actionable with entry, stop, targets and timeframe

This is a tactical-to-medium-term directional trade that assumes Millicom executes on Colombia integration and begins to show cash returns or monetization progress within 3-12 months. Trade parameters below balance upside capture and event risk control.

• Trade direction: Long TIGO
• Entry: 66.00 - 68.50 (favor averaging in if price moves to the lower end). The stock closed at 66.95 on the latest session.
• Stop: 59.00 (a hard stop - ~11% below the midpoint of entry; invalidates thesis if price breaks material pre-deal support and suggests adverse macro/regulatory reaction).
• Target 1: 85.00 (about +27% from 67 - achievable on a successful infrastructure monetization announcement and visible synergy guidance).
• Target 2 (stretch): 100.00 (about +50% - contingent on both monetization and consistent dividend increases or a sizeable special distribution).
• Time horizon: 3-12 months (swing to position trade - catalysts expected in that window).

Position sizing note: keep this as a defined allocation in a diversified portfolio. The trade has clear upside but also execution and country risk; a 2-5% portfolio allocation is reasonable for risk-tolerant investors depending on diversification.

Risks and counterarguments

Every structured M&A-led rerate has a downside path. Below I list primary risks and then provide a frank counterargument to the bullish thesis.

• Integration risk - Combining UNE, ColTel and existing Tigo Colombia operations is operationally complex. Disruption to service, customer churn or delayed synergies would compress cash flow and remove the re-rating rationale.
• Regulatory/political risk - Telecoms in Latin America frequently face political scrutiny over competition, foreign ownership or spectrum allocation. Any regulatory injunctions or onerous conditions could materially reduce the value of the consolidated assets.
• Execution on monetization - The re-rate depends on Millicom successfully monetizing towers/fiber at attractive multiples. If market conditions for infrastructure assets are weak or strategic buyers demand discounts, the monetization may leave value on the table.
• Emerging market macro / FX - Earnings and cash flow are exposed to Colombian peso and other local currencies. Currency depreciation or macro stress could compress local-currency EBITDA and raise dollar-reported costs (or vice versa), complicating dividend sustainability.
• Balance sheet & refinancing - Detailed debt figures are not provided here; the company has signaled note activity (a subsidiary announced intent to partially redeem senior notes due 2027). If Millicom needs to refinance at higher rates, expected free cash flow improvement may be offset by higher interest costs.

Counterargument: The most persuasive bear case is that Millicom overpaid for Colombia assets or fails to capture expected synergies. If that happens, the stock could revert materially - remember the share price already reflects a good portion of the upside. In that scenario, dividend cuts or lower-than-expected monetization proceeds would likely lead to a significant downside, and the trade should be closed.

What would change my mind

I am constructive conditional on disciplined execution. The following outcomes would materially change my view to either more bullish or bearish:

• More bullish - Millicom announces a large, well-priced tower/fiber sale-leaseback (clear proceeds and capex runway), provides cadence for additional special distributions, and delivers near-term synergy guidance that raises consolidated EBITDA margins in Colombia by several hundred basis points.
• More bearish - Regulatory mandates that force structural divestitures, public evidence of large customer churn post-integration, or a meaningful suspension/cut to the dividend. Any of these would remove the re-rating mechanics and force a rethink of valuation.

Conclusion & stance

Millicom's rapid consolidation in Colombia - winning UNE (01/27/2026), completing the Teleff3nica ColTel tender (02/05/2026), and the strategic agreement with EPM (08/14/2025) - materially changes the company's optionality. The playbook is clear: use scale to reduce unit capex, monetize infrastructure, and deliver cash to shareholders. The market has started to price these moves, which is why the stock has already rallied, but the path from strategic wins to monetizable value is now visible and tradeable.

My recommended tactical posture is a disciplined long: enter in the 66.00-68.50 range, place a hard stop at 59.00, and target 85.00 and 100.00 on successful execution over 3-12 months. This trade balances meaningful upside from an infrastructure re-rating with tight risk controls against the real execution and regulatory risks that accompany cross-country telecom consolidation.

If Millicom delivers clear evidence of monetization and recurring dividend increases, I will become more aggressive. If regulatory conditions harden, synergies prove elusive, or the dividend is under threat, I will trim or exit the position.

Key dates to watch

• UNE public auction announcement - 01/27/2026
• ColTel tender offer conclusion - 02/05/2026
• Upcoming ex-dividend / pay dates listed in the company's dividend schedule (next ex-dividend 04/08/2026, pay date 04/15/2026)

Disclosure: This is a trade idea - not personalized investment advice. Position sizing, stop levels and trade suitability depend on individual circumstances.

Actionable trade summary: Long TIGO at 66.00-68.50, stop 59.00, targets 85 / 100, horizon 3-12 months, risk level medium.