Hook & thesis
Millicom (Tigo) just cleared the plumbing necessary for an infrastructure re-rating in Colombia. Over the last months the company has completed multiple strategic moves: a successful tender to buy Telef F3nica's 67.5% stake in Colombia Telecomunicaciones (Coltel) (closing expected 02/06/2026), and a win of EPM's remaining interest in UNE (closing expected 01/29/2026). Those two transactions plus prior purchases in the region give Millicom near-full ownership in Colombia and a clearer path to scale-driven investment in fiber and 5G.
We view the combination of scale, faster capex deployment and a healthy dividend yield as a catalyst to a multiple expansion from current levels. The stock trades at $67.75 today and the company has a market cap of roughly $11.56 billion. With a P/E near 10.2 and a dividend yield around 4.48%, the market is beginning to price the operational optionality but has not fully reflected the cost synergies and margin lift likely from a consolidated Colombian operation.
What Millicom does and why the market should care
Millicom operates cable and mobile services across Latin America and parts of Africa. The business mix is capital intensive: networks (fiber, mobile radio access) require upfront capex, then monetization follows through subscriptions, broadband ARPU and digital services. Scale matters in this model - it lowers per-subscriber capex and operating expenses while enabling faster network densification and fiber penetration.
Colombia was fragmented between Tigo-UNE and other incumbents. By acquiring Telef F3nica E2 80 99s 67.5% stake in Coltel for $214.4 million (tender offer) and winning EPM's remaining stake in UNE for approximately COP 2.1 trillion (~$571 million), Millicom consolidates control and can:
- Prioritize capital allocation across a single operator in Colombia rather than duplicate overlapping assets.
- Capture scale economies in procurement, towers and fiber rollout.
- Reallocate marketing and product development to higher-margin digital services and bundling.
Evidence & support from the tape
Market action is consistent with the narrative. The shares are trading around $67.75, near their 52-week high of $67.26, and average daily volume has picked up (two-week average about 1,075,865). Technical momentum is strong: the 9-day EMA is around $62.996, the 21-day EMA about $60.175 and the 50-day EMA ~$56.533, while the MACD shows bullish momentum. That said, the RSI is elevated (~75.8), so short-term pullbacks are likely even as the structural story plays out.
From a valuation and capital return perspective the stock offers an appealing mix: market cap ~$11.56 billion, P/E ~10.24, PB ~3.35 and a dividend yield near 4.48%. Recent transaction sizes are meaningful but not balance-sheet breaking: the Telef F3nica-Coltel stake cost $214.4 million, the UNE EPM stake was ~COP 2.1 trillion (~$571 million), and the prior Telef F3nica Ecuador deal was $380 million in late 2025. All told these moves represent roughly $1.165 billion of deployments/acquisitions in the last several quarters - material relative to free float but roughly ~10% of market cap, not a levered overreach.
Valuation framing
At ~10.2x earnings the market is not applying a premium telecom multiple to Millicom yet. In telecom, an infrastructure consolidation followed by a disciplined capex plan and stable or growing free cash flow is typically rewarded with a multiple expansion of 2-4x P/E over 12-18 months if execution validates synergy targets. Given Millicom's dividend yield (~4.48%) and improving operational leverage from consolidation, a move from low-teens to mid-teens P/E would be plausible as investors price in better long-term cash flows.
Quantitatively: a 15x forward P/E (vs current ~10x) on the existing market cap implies a substantial price upside if earnings hold or grow post-synergies. The company also has a history of managing local financing (for example, subsidiary-level note redemptions) which suggests access to capital for integration and capex without a dramatic equity dilution.
Catalysts (what to watch)
- Integration milestones and announced synergy capture from the Colombia consolidation - expected operating cost and procurement savings in the coming quarters.
- Regulatory approvals and completion of Phase 2 privatization (timelines point toward April) - clears ownership and allows further simplification of corporate structure.
- Announcements of accelerated fiber and 5G capex plans for Colombia - clear timelines for rollout and ARPU uplift would be a positive re-rating event.
- Quarterly results showing margin expansion or free cash flow improvement after consolidation-driven restructuring.
- Dividend safety and possible increases tied to higher cash flow visibility - the ex-dividend date is 04/08/2026 with payable on 04/15/2026, which keeps income-focused buyers engaged.
Trade plan - actionable idea
Thesis: Go long Tigo ahead of integration-driven margin expansion and faster network investment in Colombia. Entry is a pullback-based buy to manage near-term technical heat and to get a better cost basis if momentum pauses.
| Parameter | Value |
|---|---|
| Entry | $67.00 |
| Target | $80.00 |
| Stop loss | $62.00 |
| Trade direction | Long |
| Horizon | long term (180 trading days) |
| Risk level | Medium |
Rationale for levels: Entry at $67.00 is a reasonable pullback below the intraday highs and close to the short-term EMA support (~$63–$63). The stop at $62.00 protects against a deeper technical reversal and sits just below the 9-day EMA and short-term volume support, limiting downside if investors re-price the consolidation risk. The $80.00 target assumes material synergy capture and modest multiple expansion to the mid-teens P/E over the next 6–9 months, supported by dividend yield and stronger free cash flow.
Note on timing: this trade is intended to play through integration, synergy realization, and early capex redeployments tied to the consolidation in Colombia. Expect the trade to last up to long term (180 trading days) while watching quarterly updates for evidence of cost and network deployment execution.
Risks and counterarguments
- Execution risk on integration - combining large operations in emerging markets can create short-term churn (customer attrition, IT/system migration costs) that delays margin improvement.
- Regulatory or political risk - telecom consolidation in Colombia may invite closer scrutiny, conditions, or obligations that could blunt expected synergies.
- Financing and leverage risk - while deal sizes to date are manageable relative to market cap (~$1.165 billion of recent deals), additional funding needs for aggressive capex could increase leverage if financed with debt or cause dilution if funded by equity.
- Valuation complacency / technical pullback - RSI is elevated (~75.8) and short-term momentum could reverse, producing a steeper pullback than expected that triggers the stop and forces re-evaluation.
- Macroeconomic and FX exposure - Millicom operates in multiple currencies and emerging markets that are sensitive to macro swings; weaker consumer demand or currency depreciation could pressure ARPU and reported earnings.
Counterargument: A skeptics' view is that Millicom is simply paying up for market share in low-margin segments and that consolidation will not yield the magnitude of synergies priced into the stock. This is plausible if the company underestimates integration costs or if competitors respond aggressively on price. We counter that the deals are incremental relative to total market cap, and the company has signaled clear capital allocation toward higher-return fiber and 5G investments which should improve long-term unit economics. Still, the stop is placed to limit losses if execution proves more difficult than anticipated.
What would change our mind
We would reduce or reverse the position if any one of the following occurs: a) regulatory conditions materially limit the ability to integrate assets in Colombia or force divestitures; b) company guidance shows a sustained decline in free cash flow or materially higher-than-expected integration costs; c) the board signals a change away from disciplined capex allocation (for example, heavy debt-funded expansion without clear ROI); or d) macro shocks in key markets cause durable ARPU erosion despite network consolidation.
Conclusion
Millicom's Colombia consolidation is a high-quality operational initiative: it creates a single, scale-efficient operator ready to accelerate fiber and 5G investment. The market cap (~$11.56B), current P/E (~10.2) and 4.48% yield make Tigo an attractive candidate for a long trade on a disciplined entry. Expect volatility - technicals are stretched - but if integration progresses and synergy capture becomes visible, the combination of rising free cash flow and a solid yield should drive multiple expansion toward our $80 target over the next ~180 trading days. We recommend a long position on a pullback to $67.00, with a protective stop at $62.00 to manage execution and technical risk.