Millicom International Cellular S.A. (TIGO) Income Statement

The 58.8% YoY revenue surge in 2026Q2 is largely a function of USD depreciation against local currencies and the full consolidation of previously equity-accounted operations, rather than a step-change in subscriber or ARPU growth. Excluding these effects, the 0.3% YoY growth in the prior quarter suggests that organic top-line expansion remains muted, particularly in Colombia where competitive intensity is pressuring pricing. Investors should monitor whether the reported revenue acceleration translates into sustainable EBITDA growth or merely masks a stagnant underlying demand environment.

The 250 basis point YoY operating margin expansion in 2026Q2 suggests that TIGO is effectively managing its high fixed-cost base, likely benefiting from the shift toward higher-margin fixed broadband and B2B services. However, the margin remains below the 28.4% peak seen in 2025Q4, indicating that competitive pressures in mobile and rising network costs are capping profitability. The durability of this margin depends on TIGO's ability to maintain fixed-line penetration gains without resorting to aggressive promotional pricing that could erode ARPU.

The 70% increase in D&A over the past two years indicates that TIGO's capital-intensive network expansion is now translating into higher fixed charges, which directly pressures net income despite stable operating margins. With D&A consuming roughly 24% of revenue in 2026Q2, the company's earnings quality is increasingly dependent on generating incremental cash flow from these investments. If ARPU growth remains subdued, the elevated depreciation schedule could continue to compress net margins, which fell to 5.0% in 2026Q2 from 6.2% in 2024Q1.

TIGO's heavy investment in HFC/fiber and 5G has expanded its homes-passed footprint, but the associated D&A is outpacing revenue growth, leading to a 83.9% YoY EPS decline in 2026Q2. The company's ROE of 36.6% appears high, but this is likely inflated by the low equity base resulting from high leverage, not by strong operational returns. The current CAPEX cycle may be a necessary defensive investment to maintain competitive positioning, but it is not yet generating the incremental EPS growth that would justify the capital outlay, and investors should monitor whether penetration rates improve to drive returns.