Prepared remarks
Hello, everyone, and welcome to our second quarter 2026 results call. This event is being recorded. Our speakers today will be our CEO, Marcelo Benitez; and Bart Vanhaeren, CFO of the company. The slides for today's presentations are available on our website, along with the earnings release and our financial statements. Please turn to Slide 2 for the safe harbor disclosure. We will be making forward-looking statements, which involve risks and uncertainties, which could have a material impact on our results. On Slide 3, we define the non-IFRS metrics that we will be referencing throughout the presentation, and you can find the reconciliation table in the back of our earnings release and on our website. With those disclaimers out of the way, let me now turn the call over to our CEO, Marcelo Benitez. Marcelo?
Thank you, Luca, and thank you, everyone, for joining our call today. Before I begin, I want to thank our teams across all markets. These results are a direct reflection of their commitment to our customers and their relentless focus on execution. They are the reason why we're delivering another quarter of strong performance. Last quarter, I spoke about the strength of our operating model and our ability to keep growing while integrating new businesses and absorbing the associated restructuring costs. This quarter reinforces that point. We are executing against the same priorities we outlined throughout the year: delivering better customer service, increasing ARPU through our more-for-more strategy, simplifying the business, improving efficiency and turning that operational execution into stronger cash flow. Before reviewing the operational highlights, let me provide some context around our mobile and home subscriber performance this quarter.
As part of the Coltel integration, we deliberately reduced promotional activity to avoid overlapping commercial offers between the two brands. At the same time, we completed the harmonization of subscriber reporting standards across the organization, improving consistency and transparency. As a result, our reported prepaid and home subscriber figures in Colombia include a normalization effect this quarter. This is simply an accounting and reporting alignment. It does not reflect any deterioration in our underlying business. With this work now substantially behind us, we expect subscriber trends to normalize and growth rates to return to more typical levels over the coming quarters. More importantly, the underlying commercial momentum remains very healthy. Our pre-to-post strategy continues to deliver excellent results. Excluding M&A, postpaid net adds increased by 167,000 sequentially, demonstrating the continued strength of our commercial execution.
Home net adds were broadly stable versus the first quarter, reflecting the normalization I just described. Even so, home service revenue delivered another strong quarter. Better pricing execution, combined with the positive impact of the FIFA World Cup broadcasting rights, allowed us to grow revenue despite modest subscriber growth. That's exactly the kind of balance we want to achieve: growing value, not simply volume. At the group level, service revenue reached $2 billion, growing 5% organically year-over-year, our strongest organic growth since 2021. Combined with our continued focus on efficiency, this translated into record adjusted EBITDA of $1 billion — the first time Millicom has surpassed that milestone in a single quarter. Adjusted EBITDA margin remained solid at 46.3%, only slightly below last year's level despite the restructuring costs associated with the Colombian integration.
Most importantly, our operating performance translated into record equity free cash flow of $327 million. I believe this is one of the most important messages for the quarter. These results are not only the contribution from our recent acquisitions, but also after absorbing the financing costs associated with those transactions. Even after absorbing those costs, our acquisitions are already equity free cash flow accretive within the first year. That is exactly the outcome we expected when we made these investments, and it reflects both the quality of the assets and the discipline of our execution. Given our first half performance, the progress we are making with the Colombian integration and the visibility we now have for the balance of the year, we are raising our 2026 equity free cash flow guidance from at least $900 million to around $1.1 billion. At the same time, we're improving our year-end leverage target to below 2.5x.
These upgrades reflect our confidence in the cash-generating capacity of our expanded portfolio and our ability to continue executing with discipline. Consistent with our confidence, our Board has approved an additional interim dividend of $1.50 per share payable in two equal installments of $0.75 per share in January and April of next year. With that, let me turn to our mobile business. The strength of our commercial strategy is clearly reflected in our mobile results. As we've discussed before, that strategy is built on two simple principles. The first is disciplined management of our prepaid base through our more-for-more strategy, where we're giving more value primarily through laser data bundles while driving healthy and sustainable ARPU growth. The second is our targeted pre-to-post migration strategy. Our analytics allowed us to identify the customers who are ready to move to a postpaid plan, creating value both for the customer and for Millicom.
For our customers, the benefit is significantly better experience. On average, they remain connected nearly twice as many days each month after migrating to postpaid. For us, it strengthens customer loyalty, improves unit economics and increases lifetime value. This strategy continues to deliver strong results. Our postpaid customer base has grown by more than 31% over the past year, supported by our expanded perimeter and continued commercial execution. Approximately two-thirds of our new postpaid sales comes from prepaid customers migrating to higher-value plans, demonstrating our ability to monetize our customer base while creating long-term value. Following the Coltel acquisition, conversion rates temporarily softened in the first quarter as we aligned commercial practices across the combined business. That process is now largely complete, and conversion rates have returned to levels consistent with our historical performance.
The important point is that we are now achieving those same conversion rates across a customer base that is roughly twice the size, giving us a much larger platform for future growth. As a result, strong postpaid momentum, together with healthy ARPU trends, drove mobile service revenue growth to 6.9% organically year-over-year to $1.2 billion this quarter. We're very pleased with this performance and it gives us confidence as we move into the second half of the year. With that, let me turn to our Home business. We're encouraged by the continued improvement of the competitive environment across our markets. Competition is becoming more rational with less emphasis on aggressive entry-level pricing and greater focus on network quality, higher broadband speeds and differentiated content. We believe this is creating a healthier market structure and a more sustainable foundation for long-term growth.
Despite the subscriber harmonization actions we discussed earlier, our Home customer base continued to grow modestly during the quarter. At the same time, our fixed-mobile convergence strategy continued to gain traction with FMC penetration now approaching 40%. This not only extends customer loyalty and lifetime value, but also improves the overall quality of our subscriber base. These commercial trends translated into another solid quarter for the Home business. Service revenue grew 3% organically to $513 million, supported by disciplined pricing, high-value broadband offers, continued growth in convergence and strong customer response to our FIFA World Cup content. We believe we are now seeing the benefits of the strategy we've been executing over the past several quarters: a more rational competitive environment, continued ARPU expansion and increasing convergence, creating a strong and more sustainable Home business.
While there is still more work to do, this quarter represents another important step in the turnaround of the Home segment and reinforces our confidence in the path ahead. Let us now discuss the B2B segment. The strong momentum we saw in the first quarter continued into the second. Digital services remained one of our fastest-growing businesses, with revenue increasing 14% year-over-year to $120 million. This reflects the continued demand for cloud, cybersecurity, managed services and other high-value solutions that are becoming an increasingly important part of our B2B portfolio. We are also seeing encouraging performance across all customer segments. In the SME segment, our strategy continues to deliver consistent results. Simple commercial offers, disciplined channel execution and greater conversion helped drive revenue growth of 8% year-over-year for this segment. In the Corporate segment, we continue to benefit from our regional footprint and our ability to deliver integrated cross-border technology solutions for large multinational customers.
This remains an attractive market where we can differentiate beyond basic connectivity. We are also seeing good opportunities in the government segment, where our network capabilities and experience managing large mission-critical projects position us well to support the digital transformation of public institutions. As a result, B2B service revenue grew 3.8% year-over-year to $401 million. Overall, we are pleased with the continued evolution of the business. Our strategy of expanding beyond connectivity and increasing the mix of higher-value digital services continues to strengthen the quality of our B2B revenue base. With that, let's move to our two most important markets, beginning with Guatemala. Guatemala delivered another outstanding quarter, and it continues to set the benchmark across our operations. Our prepaid-to-postpaid migration strategy remains a key driver of performance. During the quarter, 86% of our new customers' postpaid sales came from prepaid.
That's an exceptional conversion rate and a clear demonstration that our commercial strategy continues to resonate with customers. As a result, our postpaid customer base grew almost 20% year-over-year, combined with healthy ARPU. This translated into mobile service revenue growth of 6.4% to $295 million. Overall, Guatemala delivered its strongest quarterly performance in the last 10 years. Congratulations to Carlos, our General Manager, and to the entire team for another exceptional quarter. Let me now turn to Colombia. This is our first full quarter reporting Coltel under full ownership following the completion of the transaction in April. I'm pleased with the progress we're making. The underlying commercial performance remained strong. Postpaid customers grew 7.1% organically year-over-year with nearly two-thirds of new postpaid sales coming from prepaid migrations. This continues to strengthen customer loyalty, improve ARPU and increase long-term value.
In Home, our customer base grew 2.4% organically year-over-year. We are also making good progress with convergence. Fixed-mobile penetration has reached 44%, reinforcing customer value while creating additional opportunities for cross-selling and long-term value creation. Overall, I'm encouraged by the progress we are making. The integration remains on track, and we're beginning to see the benefits of applying the Millicom playbook to a much larger business. Before I hand the call over to Bart, let me briefly update you on Chile. This was our first quarter of operations, and the team has made an excellent start. The vast majority of our planned restructuring has been completed during the second quarter, allowing management to shift its focus toward commercial execution and operational improvement. The early results are encouraging. We've already improved adjusted EBITDA sustainability, while our eFCF margin increased by 10 percentage points year-over-year.
We are also seeing growing confidence from our banking partners who have been refinancing upcoming maturities and, in some cases, extending additional credit. That said, we remain realistic. Chile continues to be a highly competitive market with aggressive pricing and elevated churn, but we've entered challenging markets before, and we know what disciplined execution can achieve. It's still early, but the progress we've made in just a few months reinforces our confidence that we can build a stronger, more profitable and more sustainable business over time. With that, let me turn the call over to Bart.
Thank you, Marcelo. The second quarter of this year has truly been an exceptional quarter. Service revenue reached $2 billion, increasing 60.1% year-on-year on a reported basis. On an organic basis, service revenue increased a solid 5.4% year-on-year. This is more than twice the growth rate we reported in the second quarter of last year. As Marcelo discussed, this acceleration was supported by our pre-to-postpaid migration strategy, disciplined pricing and offer management across our business lines. Adjusted EBITDA reached $1 billion for the quarter. On an organic basis, adjusted EBITDA increased 9.1% year-on-year, once again growing faster than organic service revenue and demonstrating the operating leverage built into our business. I want to highlight the 58% year-on-year reported EBITDA growth was almost as fast as the reported revenue growth despite having acquired lower-margin businesses and despite having incurred approximately $35 million restructuring charges in Q2.
Our strong operating performance drove a record $327 million of equity free cash flow, an increase of more than 50% year-on-year. This means our recent acquisitions are contributing positively to equity free cash flow within their first year of ownership. Achieving that level of accretion so quickly underscores the strength of our M&A execution, the effectiveness of our integration efforts and our ability to convert acquired earnings into tangible cash flows. The second quarter equity free cash flow benefited from favorable expense timing and working capital movements. Therefore, please remain cautious forecasting the remainder of the year. With that, let's review our performance by country. Starting for the first time with Colombia, given its increased relevance in our portfolio, we are very pleased with the progress achieved so far. Organic service revenue increased 11% year-on-year to $816 million as we began applying our commercial strategies across a significantly larger customer base.
Importantly, all three business lines — Mobile, Home and B2B — contributed to the growth. This broad-based performance is encouraging and demonstrates the commercial opportunity created by the combined operation. Turning to Guatemala, service revenue increased 5.9% year-on-year to $382 million. As Marcelo explained, growth was driven primarily by our prepaid-to-postpaid migration strategy, together with pricing and offer management. Overall, this was a record quarter for one of our strongest operations. In Panama, service revenue grew 3.1% year-on-year to $175 million, marking a return to top-line growth. As a reminder, first-quarter performance was impacted by the temporary suspension of a price increase following regulatory intervention. With the price adjustment reinstated in the second quarter, the business returned to growth and we remain focused on sustaining this trend. In Paraguay, service revenue increased 3.4% year-on-year to $169 million.
Growth was supported by a 10% expansion in our postpaid customer base together with a low single-digit increase in mobile ARPU. This combination of customer growth and disciplined monetization supported another healthy quarter. Turning to Ecuador, service revenue was broadly flat year-on-year at $112 million, which means we reversed the service revenue erosion observed under prior ownership and stabilized the business. Note that the second quarter 2025 results are provided on a pro forma basis for comparison purposes only. In our other markets, comprising Nicaragua, El Salvador, Costa Rica, Bolivia and Uruguay, service revenue increased 2.8% year-on-year to $398 million. Let's now turn to the profitability of our operations. Starting again with Colombia, our cost-saving initiatives are running ahead of plan and Coltel's profitability has already moved towards levels comparable with our legacy Tigo UNE operation.
Adjusted EBITDA reached $336 million for the quarter, increasing 3.9% year-on-year. This result includes more than $30 million of severance payments executed during the quarter and roughly $100 million year-to-date. Despite these costs, the operation delivered an adjusted EBITDA margin of 39.4%. While there is still work to be completed, the results reinforce our confidence that the integration and efficiency program is progressing very well. Turning to Guatemala, adjusted EBITDA increased 6.3% year-on-year to $245 million. The adjusted EBITDA margin reached 55.6%, improving by almost one percentage point year-on-year. This expansion was driven mainly by operating leverage, together with the solid service revenue growth I just discussed. In Panama, adjusted EBITDA was broadly stable year-on-year at $92 million. The adjusted EBITDA margin was 50.7%. We remain focused on converting the renewed top-line growth into stronger operating leverage over time.
Next, let's turn to Paraguay, which delivered another excellent quarter. Adjusted EBITDA increased almost 17% year-on-year to $100 million. The adjusted EBITDA margin expanded by 6.4 percentage points to a company record of 56.9%. This improvement is a testimony to the team's relentless focus on efficiency, particularly within direct costs while also benefiting from FX tailwinds. I would like to congratulate our General Manager in Paraguay, Roberto, supported by Flor, our new Paraguay CFO who moved from our Guatemalan operation, as well as the entire team for these excellent results. Turning to Ecuador, the Millicom playbook continues to produce solid results. Adjusted EBITDA increased almost 40% year-on-year on a pro forma basis to $58 million. The adjusted EBITDA margin reached 48.9%, an improvement of 15.4 percentage points year-on-year. This represents substantial progress in a relatively short period and is a direct result of the continuous execution of our efficiency initiatives.
That said, I want to manage expectations for the second half. We plan to launch our Tigo brand in Ecuador later this year. This will require incremental marketing and promotional investments, and we therefore expect margin to contract a few percentage points during the remainder of 2026. Adjusted EBITDA in our other markets reached $194 million, increasing 4.7% year-on-year, again faster than the growth and demonstrating our operational leverage. The adjusted EBITDA margin was 46.3%. Let's now review the equity free cash flow bridge for the quarter. As discussed, adjusted EBITDA reached $1 billion for the quarter, increasing $369 million year-on-year. Cash CapEx totaled $274 million, up $72 million compared to prior year and this increase mainly reflects continued investment in our recently acquired businesses, together with higher spending on leased mobile devices under Colombia's customer device leasing programs.
Spectrum payments were $41 million during the quarter, mainly related to Colombia. Working capital and other contributed $47 million, representing an improvement of $17 million year-on-year, benefiting from payment phasing and improved inventory management. Taxes paid increased $40 million year-on-year, in line with the increased contribution from our acquired businesses. Finance charges were $131 million, increasing $49 million year-on-year, mainly as a result of the additional financing associated with our acquisitions. Lease payments increased $79 million year-on-year to $161 million. As in the first quarter, the increase was primarily the result of the expansion in our operating perimeter and the impact of the Lati tower sale and leaseback transaction last year. Putting all of these factors together, equity free cash flow increased by more than 50% year-on-year to a company record of $327 million.
Let's now turn to our net debt and leverage progression. We began the quarter with net debt of $7.6 billion and leverage of 2.76x. Equity free cash flow of $327 million and EBITDA growth reduced leverage by approximately 0.11x. This benefit was largely offset by shareholder distributions during the quarter. We paid $125 million in ordinary dividends, but also $210 million in extraordinary dividends related to last year's Lati tower transaction for total dividend payments of $335 million. In addition, we made $221 million of M&A-related payments, mainly associated with the acquisition of the remaining Coltel stake previously held by La Nacion. That does not come with incremental consolidated EBITDA. Finally, we also have an increase of net debt that is predominantly related to the appreciation of local currency-denominated debt. The key takeaway is that despite the increase in net debt to $8.1 billion, leverage actually declined modestly from 2.76x to 2.73x, better than I expected during our Q1 call, giving us a solid starting point from which to reduce leverage further during the remainder of the year.
That brings me to our 2026 financial targets. When we last spoke, I committed to updating our 2026 guidance once we had greater visibility into the progress of our turnaround initiatives, integration costs and the performance of the combined businesses. First, based on the strong operating and financial performance achieved during the first half of this year, we are raising our full-year equity free cash flow guidance. We now expect 2026 equity free cash flow of around $1.1 billion compared with our previous target of at least $900 million. Second, our first-half performance strengthens our conviction in achieving our leverage objectives. We continue to expect leverage to improve now to below 2.5x, a level at which we are comfortable operating the business. This updated guidance reflects the strength of the underlying business, continued progress on integration initiatives and greater visibility into the cash-generating potential of the expanded portfolio.
Our strong performance allowed the Board to approve an incremental interim dividend of $1.50 payable in two equal installments in January and April 2027. At the same time, we remain focused on disciplined execution, including the delivery of our integration plans, investment in our networks and prudent management of leverage. With that, let me now open the call for questions. Thank you.
Operator provided instructions. Our first question for the day comes from Andreas Joelsson from DNB.
Questions and answers
Very strong result, I must say. So congratulations. I have three questions. First of all, what can you say about phasing of cash flow for the remainder of the year? I think after — or in connection to the Q1 conference call, you said that cash flow is mainly generated in Q4 to Q1. Now we have a very strong Q2. So how should we look at the phasing of the cash flow for the remainder of the year? And secondly, ARPU levels are coming up quite nicely. Do you agree that we could see that as a sort of a leading indicator for further continued service revenue growth going forward? Or is there something extraordinary in the ARPU numbers for Q2 that we should be aware of? And thirdly, you managed to keep the improved profitability in the, so to say, old Millicom countries. What is the main challenge you see to continue this sustainable improved profitability? Is there a risk that there is a sort of cost-discipline fatigue in the organization as we have had a strong cost discipline for quite some time now. How should we see that?
So let me take questions two and three, and Bart, you take the first one. Hello, Andreas, good to see you. On the ARPU topic, let me just go back to where the strategy started. First, we invested in strengthening our networks with a very granular approach, looking side-by-side, sector by sector, node by node and understanding where the untapped demand is. This untapped demand starts in Mobile with prepaid. Our prepaid customers are just connected 15 days per month, and nobody wants to be connected only 15 days per month. So what we are doing is we are extending the days connected, starting in prepaid with more allowances and more days connected with a slightly higher ticket and through a very well-designed and mature analytics model. We are selecting and preapproving prepaid customers that are ready to move to postpaid. In combination, this is increasing the total ARPU of the base. In Home, the challenge is a little bit different and the result does have a one-off.
The challenge in Home has to do with stabilizing churn, again, with a very granular investment on the network and also calibrating the ARPU because the new offers are coming with a higher ARPU. And as I mentioned in the call, we do see good response from the market from that perspective. Promotional heat and activities are coming down somewhat. So that, in combination with low churn, is creating a new inflection point towards growth. The one-off we have in Home has to do with the World Cup rights. We did have in almost all our countries exclusivity on all the games for the World Cup and it was a total success. The revenues coming from the World Cup have to do with selling packages to watch the games, more data packages, more top-ups, more sales in Home and advertising revenues. So you will see a 3% growth in Home, but about 80% of that growth comes from the World Cup effect. You will see this effect in Q2 and in Q3. Sixty percent of the World Cup effect is in Q2 and 40% is in Q3. So that was the first question. The second question was?
Yes, then on the phasing, Andreas, I think equity free cash flow is not made in Q4 or Q1 specifically. It's more that the business cycle is such that customers acquired in Q4 will generate 12 months of revenue starting then. Q2 is an absolute record equity free cash flow for the company, so I wanted to be a bit cautious. Don't assume Q2 repeats across Q3 and Q4. I think a fair way to look at the rest of the year is a lower Q3 and then a strong Q4 — so the remainder of the year will look a bit like the first half overall but with phasing effects. We have some timing in spectrum, some interest charges, and working capital items that create phasing, so remain cautious forecasting the remainder of the year.
Our next question comes from Phani Kanumuri from HSBC.
So the first question is on how you see the competition or disruption from satellite players in the light of SpaceX initiating an IPO? Do you see them as complementary? Is there potential for partnership with them? The second one is on the integration costs. How do you see the phasing of integration costs over the next couple of quarters? And do you stick with your guidance from last quarter that the full-year guidance for Colombia EBITDA margin would be similar to 2025?
Thank you, Phani. Good to see you. I'll take the first one and Bart's going to take the second. SpaceX's Starlink solutions in our countries, if you analyze it from the Mobile perspective, the benefits and experience are still very limited: very poor indoor coverage and very low throughput. In our countries we have deployed 4G at near 100% of our coverage and we are launching additional coverage and investing in 5G. So when you compare the experience of SpaceX satellite to a phone on 4G and 5G, there is a long way for satellite to improve. For the fixed business, it is a very good solution for remote areas where we don't have coverage, and there we do see SpaceX gaining a small piece of customers — for example, in Paraguay in remote cattle areas. But for urban areas, it remains a poor experience compared to fiber. In a nutshell, we see it as a complementary product for our customers, but not as a broad threat.
On the restructuring charges, overall for the group, we continue to find new opportunities in the operation, and it shows in the margin expansion. From the visibility I have today, I would say we have roughly $160 million to $170 million of restructuring charges for the full year. We already have booked about 60% of that in H1. On a paid basis, we have probably paid roughly half in H1 and the remainder in H2 — so roughly $80 million in H1 and another $80 million or so in H2.
Okay. And then on Colombia, full-year margin, do we still expect to be in line with FY 2025, as you had indicated in the previous conference call?
Yes, roughly, roughly.
Our next question comes from Gustavo Farias with UBS.
So two questions. First one on CapEx. The numbers came a little bit below what we expected. Could you comment on the outlook for CapEx ahead? Is there any timing-related things to consider? Specifically about Colombia CapEx, has this already reached its run rate? The second question is related to Argentina. With new remedies on the Telecom Argentina and Telefonica deal, the regulator requires a third player in the mobile market. Does this change anything in your current strategy or is there nothing to be said here?
Gustavo, I'll take the first one and Bart can take the second. Regarding CapEx, there is phasing. We are investing in Colombia with a very aggressive approach: we plan to have full 5G coverage and also deploy an additional 1,000 sites in the next 12 to 18 months. So there will be an acceleration in Colombia and on a full-year basis you should expect CapEx to be around 12% of revenues. Today, including the new perimeter, you see more or less 11% and we expect to be around 12% for the full year, mainly because of Colombia.
To add a little on numbers, on a cash basis, we are probably around 50% of cash CapEx through the year. On a booked basis, we were around 40% at mid-year and will ramp up into the second half. On Argentina, as we mentioned in previous calls, Argentina is not on our radar, same for Brazil or Mexico, so there is nothing changing for us there.
Our next question comes from Gabriel Vaz de Lima from Morgan Stanley.
Congratulations on the results. I just wanted to get your thoughts on how competition has been in Chile, with some movements on front-book prices in the last few weeks. How are you seeing the market?
Thank you, Gabriel. Let me step back on Chile. First, we saw this as an opportunity to apply our playbook to the Telefónica operation. That playbook starts with efficiencies, so the first phase is doing very well and the execution is going as planned. For example, if you compare the last quarter, the eFCF was only 2% of revenues, and this quarter we're talking about 13% of revenue. So the first chapter of our playbook is producing immediate results. Regarding competition, we recognize it's a tough market: fragmented, low ARPUs and strong promotional activities from all players. Nevertheless, we did see movement in pricing a couple of weeks ago, and we see this as a positive sign for the industry because it is key to make investments sustainable for all operators. Our primary focus is what is under our control: finishing Phase I related to efficiency, focus and simplification of our Chile operations.
Our next question comes from Livea Mizobata from JPMorgan.
I have two questions. First, could you elaborate a little bit on the margin outlook for Colombia? Could you provide an update on the outlook for 2026 and also for the long term? Second, regarding Paraguay, you mentioned in your release phasing effects impacting margins. Can you elaborate what the driver was and what we can expect from this operation?
On the Colombia margin, Q2 is 39.4%. We had very solid second-quarter performance with organic revenue growth of 11% which drives operational efficiencies and some currency tailwinds. We want to remain a little conservative for the rest of the year. We have some rebranding and marketing investments that will cause a little margin contraction, but we also have savings from run-rate employee-related costs. So I don't expect a dramatic shift in the full-year margin. Month-to-month you might see some contraction and then ending the year strongly. On Paraguay, we are growing nicely. The team is delivering efficiencies and that growth brings operational leverage and margin expansion. The risk remains currency exposure — Paraguay, Colombia and Bolivia are countries where currency movements can affect eFCF. We have localized a lot of our P&L and hedged debt by issuing local currency debt, accepting a slightly higher interest rate, so we've mitigated some risk, but currency remains a factor.
May I make just one follow-up since we are talking about free cash flow? You're generating a lot of cash. Do you have any visibility on what to do in 2027 with the amount of cash that you're generating? Any updates on your capital allocation strategy, room to increase dividends eventually, what is the outlook?
Yes. We just announced additional dividends of $1.50 payable in two equal installments in January and April. If you consider our raised eFCF guidance to $1.1 billion and our historical preference to distribute roughly two-thirds of eFCF, that would be about $750 million. With 169 million shares, that approximates to $4.50 to be distributed from AGM to AGM. On the back of Q4, we will issue guidance for 2027, and the Board will recommend a dividend policy for 2027. My recommendation to the Board would again be two-thirds of the eFCF that we will guide on the back of Q4 results.
Our next question comes from Marcelo Santos from JPMorgan.
Actually, I'm together with Livea here, but I would just double down a bit on the Paraguay margin part from the release. You mentioned phasing effects on the margin. Was there anything unusual about the margin in Paraguay that should revert in the coming quarters? Or is that Paraguay margin sustainable?
I think what's really outstanding is the currency appreciation in Paraguay. Even though we've localized many costs, we still have significant soccer and content rights that are denominated in dollars. As the Guarani appreciated versus the dollar, our dollar-denominated costs fell, which had an inorganic positive impact in Q2. We can't predict currency moves, but that appreciation materially helped margins in Q2.
Thank you, Marcelo. This was our last question for today and concludes our question-and-answer session.
Thank you very much, everyone.
Thank you.