Earnings Release
Q3 2020
|
|
Panama
|
Q3 2020
|
Q3 2019
|
% change
|
9M 2020
|
9M 2019
|
% change
|
Mobile customers ('000)
|
1,838
|
1,744
|
5.4%
|
1,838
|
1,744
|
5.4%
|
Home customer relationships* ('000)
|
453
|
442
|
2.4%
|
453
|
442
|
2.4%
|
Revenue ($ millions)
|
144
|
116
|
23.8%
|
435
|
315
|
n/a
|
Organic growth
|
(8.5)%
|
(2.9)%
|
(5.6) pt
|
(9.3)%
|
0.2%
|
n/a
|
Service revenue ($ millions)
|
139
|
115
|
20.9%
|
422
|
314
|
n/a
|
Organic growth
|
(9.4)%
|
(2.9)%
|
(6.5) pt
|
(9.0)%
|
0.2%
|
n/a
|
EBITDA ($ millions)
|
63
|
59
|
7.3%
|
192
|
150
|
n/a
|
Organic growth
|
(15.6)%
|
5.0%
|
(20.6) pt
|
(10.1)%
|
5.7%
|
n/a
|
EBITDA margin %
|
43.7%
|
50.5%
|
(6.7) pt
|
44.2%
|
47.6%
|
(3.4) pt
|
* Home Customer Relationships includes (1)
HFC (2) DTH (3) Others. ** Q3 2020 organic growth rates pertain to both the fixed and mobile operations and are calculated using
the 2019 financials of Telefonica Moviles Panama S.A., which was acquired in August 2019. Q3 2019 organic growth rates are calculated
using the 2018 financials as reported by Cable Onda to the Panama Stock Exchange.
In
Panama, the COVID-19 infection rate remained among the highest in the world on a per capita basis. As a result, the government
has had to maintain strict mobility restrictions throughout the third quarter. The economic impact of the restrictions has been
severe, as unemployment reached 25% during Q3 2020, and many economists expect GDP to contract by more than 10% in 2020.
Despite
these external challenges, we experienced robust customer growth during our Q3. In Mobile, net additions were 163,000, more than
offsetting the loss of 100,000 customers reported in Q2, even as we re-branded the mobile business to our flagship Tigo brand.
Additionally, we have continued to invest in modernizing our network, and we have upgraded 800 sites since our acquisition one
year ago. In Home, we added 14,000 customer relationships, a quarterly record, while ARPU improved sequentially relative to Q2.
Demand for residential broadband was particularly robust, and we added three times more customers in Q3 than in the full year 2019,
taking our customer base 12% higher year-on-year.
Service
Revenue in Q3 2020 was $139 million, up from $115 million in Q3 2019 due to the acquisition of our mobile business in August 2019.
On an organic basis, service revenue decreased 9.4% year-on-year, an improvement from the 12.1% decline reported in Q2, as a Mobile
and Home performed sequentially better, while B2B remained weak.
EBITDA
was $63 million, up from $59 million in Q3 2019 due to contribution from our acquired mobile business. On an organic basis, EBITDA
declined 15.6% year-on-year due mostly to the lower revenue, and the EBITDA margin decreased 6.7 percentage points year-on-year
to reach 43.7%. Although EBITDA has declined organically amidst the pandemic, the business has proven resilient, generating operating
cash flow of $160 million in the last twelve months, even as we continue to execute on our integration plans.
Earnings Release
Q3 2020
|
|
El Salvador
|
Q3 2020
|
Q3 2019
|
% change
|
9M 2020
|
9M 2019
|
% change
|
Mobile customers ('000)
|
2,533
|
2,475
|
2.3%
|
2,533
|
2,475
|
2.3%
|
Home customer relationships* ('000)
|
269
|
273
|
(1.7)%
|
269
|
273
|
(1.7)%
|
Revenue ($ millions)
|
96
|
95
|
0.2%
|
279
|
288
|
(3.1)%
|
Organic growth
|
0.2%
|
(2.6)%
|
2.8 pt
|
(3.1)%
|
(5.2)%
|
2.1 pt
|
Service revenue
|
84
|
86
|
(2.6)%
|
253
|
261
|
(3.2)%
|
Organic growth
|
(2.6)%
|
(4.9)%
|
2.3 pt
|
(3.2)%
|
(6.7)%
|
3.5 pt
|
EBITDA ($ millions)
|
32
|
35
|
(9.1)%
|
93
|
100
|
(7.4)%
|
Organic growth
|
(9.1)%
|
8.2%
|
(17.3) pt
|
(6.5)%
|
(7.4)%
|
0.9 pt
|
EBITDA margin %
|
33.4%
|
36.8%
|
(3.4) pt
|
33.2%
|
34.8%
|
(1.5) pt
|
* Home Customer Relationships includes (1)
HFC (2) DTH (3) Others.
El
Salvador began slowly loosening restrictions related to COVID-19 in July and fully reopened the economy at the end of August. As
the lockdown eased, our prepaid business began to recover, and we added 117,000 customers during the quarter, offsetting the 113,000
decline in Q2. During the quarter, we have continued to invest in expanding our network, and we have upgraded 800 sites in order
to leverage our newly-acquired spectrum.
In
Home, customer relationships decreased by 19,000, as we introduced our lifeline service only on July 1, and we have yet
to re-connect enough of the customers still on this temporary service, which provides them with basic connectivity during the pandemic,
free of charge.
Service
revenue of $84 million decreased 2.6% year-on-year, a notable improvement from a decline of 6.1% in Q2. EBITDA improved to $32
million from $25 million in Q2 but remained down 9.1% year-on-year, due to the lower revenue, higher service provider fees and
municipality taxes. The EBITDA margin declined 3.4 percentage points to 33.4%, due to the reduced revenue.
Nicaragua & Costa
Rica
|
Q3 2020
|
Q3 2019
|
% change
|
9M 2020
|
9M 2019
|
% change
|
Mobile customers ('000)
|
3,396
|
3,297
|
3.0%
|
3,396
|
3,297
|
3.0%
|
Revenue ($ millions)
|
86
|
96
|
(10.6)%
|
271
|
215
|
26.1%
|
Service revenue ($ millions)
|
83
|
92
|
(10.1)%
|
262
|
207
|
26.8%
|
EBITDA ($ millions)
|
31
|
39
|
(20.0)%
|
95
|
81
|
17.0%
|
EBITDA margin %
|
36.7%
|
41.0%
|
-4.3 pt
|
35.2%
|
37.9%
|
(2.7)pt
|
In
Nicaragua, the government has not implemented any measures aimed at restricting mobility, but we have nonetheless observed a reduction
in both mobility and business activity since March, and only a modest improvement from Q2 to Q3, as we added 42,000 mobile customers
in Q3, which compares to the 102,000 that we lost in Q2. In Home, we continued to add customers in Q3 2020, and our customer base
and revenue continue to grow rapidly from a small base. We have continued to invest in modernizing our mobile network, and we have
upgraded more than 1,100 sites since our acquisition just over one year ago.
Earnings Release
Q3 2020
|
|
In
Costa Rica, the government implemented a controlled reopening beginning in early September, maintaining restrictions on large gatherings
at commercial venues. Contrary to trends seen in our other markets, service revenue weakened in Costa Rica during the third quarter,
as a result of customer losses that occurred in the first half of the year, due to the cancellation of live soccer matches due
to the pandemic and to the creation of a competing soccer channel, which has dampened demand for our Pay TV services. However,
during the third quarter, we reached an agreement to create a new non-exclusive soccer channel, coinciding with the resumption
of national soccer league play during the quarter. As a result, subscriber trends improved during Q3, but this was insufficient
to offset customer losses incurred during the first half of the year.
Africa segment - Key
Performance Indicators
Key Performance Indicators (‘000)
|
Q3 2020
|
Q3 2019
|
Q3 2020 vs Q3 19
|
Mobile customers
|
12,427
|
12,075
|
2.9%
|
MFS customers
|
6,727
|
6,459
|
4.1%
|
Mobile ARPU ($)
|
2.4
|
2.6
|
(7.5)%
|
Our Africa segment comprises
our Tanzania operations. During Q3 2020, our mobile customer base declined by 385,000, due to disconnections stemming from the
recently-implemented biometric customer registration system. Still, our customer base has increased 2.9% year-on-year to end the
period at 12.4 million, a solid performance in light of the pandemic and the implementation of new biometric registration system
beginning in Q1 2020.
Meanwhile, the number of
customers that used mobile financial services (MFS) increased 4.1% to 6.7 million. As of September 30, 2020, our MFS customers
represent approximately 54% of our Mobile customer base. ARPU declined 7.5%, due mostly to a reduction in regulated interconnection
rates which occurred in January 2020.
Africa segment financial
results
Please refer to Note 5 of
our Unaudited Interim Condensed Consolidated Financial Statements for more details on our segments.
Africa Financial Highlights*
|
Q3 2020
|
Q3 2019
|
% change
|
9M 2020
|
9M 2019
|
% change
|
($m, unless otherwise stated)
|
Revenue
|
94
|
98
|
(4.5)%
|
269
|
284
|
(5.2)%
|
Service revenue
|
94
|
98
|
(4.5)%
|
269
|
284
|
(5.1)%
|
EBITDA
|
32
|
39
|
(16.7)%
|
91
|
84
|
8.6%
|
EBITDA margin %
|
34.4%
|
39.4%
|
(5.0) pt
|
33.7%
|
29.5%
|
4.3 pt
|
Capex
|
11
|
7
|
55.7%
|
28
|
22
|
31.0%
|
* Service revenue, EBITDA and Capex are non-IFRS
measures. See page 20 for a description of non-IFRS measures and for reconciliations to the nearest equivalent IFRS measures. 2019
EBITDA has been re-presented as a result in the change in cost allocation. 2019 numbers have been restated to exclude Chad.
Earnings Release
Q3 2020
|
|
In Tanzania, the government
implemented mobility restrictions that were not as strict as in our other markets, these restrictions were lifted in the second
quarter, although the local economy was negatively affected during the quarter. Service revenue declined 4.5% in Q3 2020 due to
a decline in ARPU during the quarter, caused by lower levels of mobility, a 50% cut to regulated
interconnection rates, and by lower data pricing due to competition. Encouragingly, service revenue of $94 million in Q3
2020 marks a meaningful improvement compared to $86 million in Q2 and $89 million in Q1 of 2020 driven by higher MFS customers
and increased usage in Q3.
EBITDA
declined 16.7% year-on-year due to the drop in revenue as well as a bad debt charge related to the B2B segment. On a sequential
basis, EBITDA improved to $32 million in Q3 2020 from $29 million in Q2 and $30 million in Q1, consistent with the improved revenue
trend seen during the third quarter. The EBITDA margin improved to 34.4% in Q3 from 33.6% in Q2 2020.
Capex was $11 million in
the quarter and $28 million for the first nine months of the year, compared to $22 million in the first nine months of 2019.
Corporate Responsibility highlights –
Q3 2020
Responsible Leadership
in Action: adapting our programs to the Covid-19 pandemic
We continue our work with
NGO and government partners to help local communities meet the challenges and opportunities presented by COVID-19 through the digital
transformation of our flagship programs, while providing the resources that communities need during the crisis.
Digital tools for teachers
and businesses
Our Maestr@s Conectad@s
(Connected Teachers) program was expanded to Guatemala, Nicaragua and Paraguay, joining Bolivia, where the program was first implemented.
The response from teachers has been very positive, with thousands enrolling in the first week of the launch. We are currently in
conversations with AHYU – the organization which trains teachers on online education – to expand the program to all
our Latam operations in 2021. We will also continue to work with Ministries of Education to ensure our actions support national
efforts to continue virtual education and prepare students and teachers for an eventual return to the classroom.
We signed an Addendum to
our agreement with UNICEF to confirm our commitment and plan to benefit children throughout our Latam region during this crisis.
Additionally, Tigo Business
has launched a series of webinars at no cost for SMEs across the Latam region to support them with the adoption of digital tools
for growth, efficiency and security during times of crisis. The webinars are available to our more than 300,000 B2B customers.
Health, safety and environment
As in the previous months, Millicom’s Executive
Team and the Health & Safety function have continued working hand-in-hand with country operations to ensure the safety of our
people as well as service continuity for the communities we serve throughout the COVID-19 pandemic.
Earnings Release
Q3 2020
|
|
We continue to implement
and adapt workplace health & safety measures in line with the guidelines from the World Health Organization and the U.S. Center
for Disease Control at all our critical sites and operations region-wide as the situation evolves. The vast majority of our employees
continue to work remotely from the safety of their homes.
We began preparations in
all our countries of operation for external audits to meet re-certification of ISO Health & Safety (ISO 45001) and Environmental
(ISO 14001) Standards. Due to COVID-19 and travel restrictions, these audits will be conducted virtually by a certified third party
during October/November 2020.
Diversity and Inclusion
We have continued making
progress on our Diversity & Inclusion (D&I) initiative. Between Q2 and Q3 of this year, we reached important milestones,
such as executive team approval for our D&I Strategic Framework. The strategy focuses on building leadership accountability
for creating an inclusive work environment, reducing bias in internal processes, developing and advancing our talent, and increasing
affiliation of diverse employees.
To achieve these objectives,
we are working on a change management and communication strategy aimed at raising awareness of the most common issues that are
barriers to inclusive behaviors, which included messages from our top executives at our latest CEO Townhall, a video from our COO
on the importance and value of D&I, as well as in country townhalls, strategy and functional business meetings.
Simultaneously, we have
reviewed our internal processes to reduce bias and are implementing a number of practices aimed at building more transparency and
bias-free practices in our recruiting activities, such as gender-neutral job descriptions, diverse panel of interviewers, diverse
slate of candidates, and feedback to internal candidates that have reached final stage but were not selected.
To embed the Framework throughout
our organization, an education program is currently underway, to develop inclusive leadership behaviors with a target of 250 leaders
for 2020. We will continue to roll out the program over the next couple of years. We will provide a more detailed account of our
2020 D&I journey in our 2020 Annual Report, scheduled to be published in the first quarter of 2021.
Responsible supply chain
management
We are currently adapting
our Supplier CR Training program to a virtual model for 2021, with the objective of reaching more suppliers and improving our selection
processes for suppliers that may present higher risks and tailoring specific trainings to those risks. This modality will enhance
our public commitment to train 100% of our supplier base with over $1M in spend by 2023.
Our CR and Procurement teams
are currently evaluating how we integrate our suppliers´ CR scores into our supplier management processes to optimize the
ways in which we monitor and leverage corrective action plans for suppliers and to improve the assessment of our business partners’
CR risk management.
Compliance and anti-corruption program
During Q3, the Legal and
Ethics & Compliance Departments were merged to create one Legal, Ethics and Compliance function. This change allows Millicom
to continue its strong and continuous focus on compliance, while leveraging increased synergies across these functions.
We continued our focus on
risk-based efforts, training, and communications. We also launched our annual mandatory Compliance E-Learning and Conflicts of
Interest campaigns to all Company employees and contracted staff. Full engagement of local CEOs, global heads of function, and
Millicom’s CEO was key in obtaining high completion rates. This year, e-learning included traditional compliance topics such
as anti-corruption and gifts and hospitality, and a module on Anti-Money Laundering was added.
Earnings Release
Q3 2020
|
|
As part of our Communications
strategy, we published a series of compliance key messages. This quarter, compliance explicit messaging came from our Executive
Team. Our Chief Human Resources Officer reminded all employees of the importance of our Speak Up culture, and our Chief Legal and
Compliance Officer reinforced our responsibility to avoid and disclose potential Conflicts of Interest. Other similar initiatives
included a virtual Coffee & Learn session entitled “Connections that Matter,” which went over Ethics & Compliance
communications and where to find these messages on the company intranet.
Lastly, we started preparing
for this year’s Corporate Compliance & Ethics Week campaign, which will take place in November 2020.
Conference call details
A presentation and conference
call to discuss these results will take place on October 30, 2020 at 13:00 (Stockholm) / 12:00 (London) / 08:00 (Miami). Please
dial in 5-10 minutes before the scheduled start time to register your attendance. Dial-in numbers for the call are as follows:
Sweden:
|
+46 (0) 8566-19361
|
Luxembourg:
|
+352-2786-6996
|
UK:
|
+44 (0) 2031-070289
|
US:
|
+1-914-987-7208
|
The access code is: 4064116.
A live audio stream, slides, and replay details can be accessed at www.millicom.com.
Financial calendar
2021
Date
|
Event
|
February 11
|
Q4 2020 results and conference call
|
April 29
|
Q1 2021 results and conference call
|
May 4
|
2021 AGM
|
July 29
|
Q2 2021 results and conference call
|
October 28
|
Q3 2021 results and conference call
|
For further information, please contact
Press:
|
Investors:
|
Vivian Kobeh, Corporate Communications Director
|
Michel Morin, VP Investor Relations
|
+1 (786) 628-5300
|
+1 (786) 628-5270
|
press@millicom.com
|
investors@millicom.com
|
|
|
|
Sarah Inmon, Investor Relations Senior Manager
|
|
+1 (786) 628-5303
|
|
investors@millicom.com
|
About Millicom
Millicom (NASDAQ U.S.: TIGO,
Nasdaq Stockholm: TIGO_SDB) is a leading provider of cable and mobile services dedicated to emerging markets in Latin America and
Africa. Millicom sets the pace when it comes to providing high-speed broadband and innovation around The Digital Lifestyle services
through its principal brand, TIGO. As of December 31, 2019, Millicom operating subsidiaries and joint ventures employed more than
22,000 people and provided mobile services to approximately 52 million customers, with a cable footprint of more than 11 million
homes passed. Founded in 1992, Millicom International Cellular S.A. is headquartered in Luxembourg.
Earnings Release
Q3 2020
|
|
Forward-Looking Statements
Statements included herein
that are not historical facts, including without limitation statements concerning future strategy, plans, objectives, expectations
and intentions, projected financial results, liquidity, growth and prospects, are forward-looking statements. Such forward-looking
statements involve a number of risks and uncertainties and are subject to change at any time. In the event such risks or uncertainties
materialize, Millicom’s results could be materially adversely affected. In particular, there is uncertainty about the spread
of the COVID-19 virus and the impact it may have on Millicom's operations, the demand for Millicom's products and services, global
supply chains and economic activity in general. The risks and uncertainties include, but are not limited to, the following:
|
•
|
global economic conditions and foreign exchange rate fluctuations as well as local economic conditions in the markets we serve;
|
|
•
|
potential disruption due to diseases, pandemics, political events, piracy or acts by terrorists, including the impact of the
recent outbreak of the COVID-19 virus and the ongoing efforts throughout the world to contain it;
|
|
•
|
telecommunications usage levels, including traffic and customer growth;
|
|
•
|
competitive forces, including pricing pressures, the ability to connect to other operators’ networks and our ability
to retain market share in the face of competition from existing and new market entrants as well as industry consolidation;
|
|
•
|
legal or regulatory developments and changes, or changes in governmental policy, including with respect to the availability
of spectrum and licenses, the level of tariffs, tax matters, the terms of interconnection, customer access and international settlement
arrangements;
|
|
•
|
adverse legal or regulatory disputes or proceedings;
|
|
•
|
the success of our business, operating and financing initiatives and strategies, including partnerships and capital expenditure
plans;
|
|
•
|
the level and timing of the growth and profitability of new initiatives, start-up costs associated with entering new markets,
the successful deployment of new systems and applications to support new initiatives;
|
|
•
|
relationships with key suppliers and costs of handsets and other equipment;
|
|
•
|
our ability to successfully pursue acquisitions, investments or merger opportunities, integrate any acquired businesses in
a timely and cost-effective manner and achieve the expected benefits of such transactions;
|
|
•
|
the availability, terms and use of capital, the impact of regulatory and competitive developments on capital outlays, the ability
to achieve cost savings and realize productivity improvements;
|
|
•
|
technological development and evolving industry standards, including challenges in meeting customer demand for new technology
and the cost of upgrading existing infrastructure;
|
|
•
|
the capacity to upstream cash generated in operations through dividends, royalties, management fees and repayment of shareholder
loans; and
|
|
•
|
other factors or trends affecting our financial condition or results of operations.
|
A further list and description
of risks, uncertainties and other matters can be found in Millicom’s Registration Statement on Form 20-F, including those
risks outlined in “Item 3. Key Information—D. Risk Factors,” and in Millicom’s subsequent U.S. Securities
and Exchange Commission filings, all of which are available at www.sec.gov. To the extent COVID-19 adversely affects Millicom's
business and financial results, it may also have the effect of heightening many of the risks described in its filings.
All forward-looking statements
attributable to us or any person acting on our behalf are expressly qualified in their entirety by this cautionary statement. Readers
are cautioned not to place undue reliance on these forward-looking statements that speak only as of the date hereof. Except to
the extent otherwise required by applicable law, we do not undertake any obligation to update or revise forward-looking statements,
whether as a result of new information, future events or otherwise.
Earnings Release
Q3 2020
|
|
Non IFRS Measures
This press release contains
financial measures not prepared in accordance with IFRS. These measures are referred to as “non-IFRS” measures and
include: non-IFRS service revenue, non-IFRS EBITDA, and non-IFRS Capex, among others defined below. Annual growth rates for these
non-IFRS measures are often expressed in organic constant currency terms to exclude the effect of changes in foreign exchange rates,
the adoption of new accounting standards such as IFRS 16, and are proforma for material changes in perimeter due to acquisitions
and divestitures. The non-IFRS financial measures are presented in this press release as Millicom’s management believes they
provide investors with an additional information for the analysis of Millicom’s results of operations, particularly in evaluating
performance from one period to another. Millicom’s management uses non-IFRS financial measures to make operating decisions,
as they facilitate additional internal comparisons of Millicom’s performance to historical results and to competitors' results,
and provides them to investors as a supplement to Millicom’s reported results to provide additional insight into Millicom’s
operating performance. Millicom’s Remuneration Committee uses certain non-IFRS measures when assessing the performance and
compensation of employees, including Millicom’s executive directors.
The non-IFRS financial measures
used by Millicom may be calculated differently from, and therefore may not be comparable to, similarly titled measures used by
other companies - refer to the section “Non-IFRS Financial Measure Descriptions” for additional information. In addition,
these non-IFRS measures should not be considered in isolation as a substitute for, or as superior to, financial measures calculated
in accordance with IFRS, and Millicom’s financial results calculated in accordance with IFRS and reconciliations to those
financial statements should be carefully evaluated.
Financial Measure Descriptions
Service
revenue is revenue related to the provision of ongoing services such as monthly subscription
fees, airtime and data usage fees, interconnection fees, roaming fees, mobile finance service commissions and fees from other telecommunications
services such as data services, short message services and other value-added services excluding telephone and equipment sales.
EBITDA
is operating profit excluding impairment losses, depreciation and amortization, and gains/losses on
fixed asset disposals.
EBITDA Margin
represents EBITDA in relation to Revenue.
Proportionate
EBITDA is the sum of the EBITDA in every country where Millicom operates, including its
Guatemala and Honduras joint ventures, pro rata for Millicom’s ownership stake in each country, less corporate costs that
are not allocated to any country and inter-company eliminations.
Organic
growth represents year-on-year growth excluding the impact of changes in FX rates, perimeter,
and accounting. Changes in perimeter are the result of acquisitions and divestitures. Results from divested assets are immediately
removed from both periods, whereas the results from acquired assets are included in both periods at the beginning (January 1) of
the first full calendar year of ownership.
Net debt
is Debt and financial liabilities less cash and pledged deposits.
Net financial
obligations is Net debt plus lease liabilities.
Proportionate
financial obligations is the sum of the net financial obligations in every country where
Millicom operates, including its Guatemala and Honduras joint ventures, pro rata for Millicom’s ownership stake in each country.
Leverage
is the ratio of net financial obligations over LTM (last twelve month) EBITDA, proforma for acquisitions
made during the last twelve months.
Proportionate
leverage is the ratio of proportionate net financial obligations over LTM proportionate
EBITDA, proforma for acquisitions made during the last twelve months.
Capex
is balance sheet capital expenditure excluding spectrum and license costs and lease capitalizations.
Cash Capex
represents the cash spent in relation to capital expenditure, excluding spectrum and licenses costs.
Operating
Cash Flow (OCF) is EBITDA less Capex.
Operating
Free Cash Flow is OCF less changes in working capital and other non-cash items and taxes
paid.
Earnings Release
Q3 2020
|
|
Equity Free
Cash Flow is Operating Free Cash Flow less finance charges paid (net), less advances for
dividends to non-controlling interests, plus dividends received from joint ventures.
Operating
Profit After Tax displays the profit generated from the operations of the company after
statutory taxes.
Return on
Invested Capital (ROIC) is used to assess the Group’s efficiency at allocating the
capital under its control to and is defined as Operating Profit After Tax, including Guatemala and Honduras as if fully consolidated,
divided by the average invested Capital during the period.
Average
Invested Capital is the capital invested in the company operation throughout the year and
is calculated with the average of opening and closing balances of the total assets minus current liabilities (excluding debt, joint
ventures, accrued interests, deferred and current tax, cash as well as investments and non-controlling interests), less assets
and liabilities held for sale.
Underlying
measures, such as Underlying service revenue, Underlying
EBITDA, Underlying equity free cash flow, Underlying net debt, Underlying leverage, etc.,
include Guatemala and Honduras, as if fully consolidated.
Average
Revenue per User per Month (ARPU) for our Mobile customers is (x) the total mobile and
mobile financial services revenue (excluding revenue earned from tower rentals, call center, data and mobile virtual network operator,
visitor roaming, national third parties roaming and mobile telephone equipment sales revenue) for the period, divided by (y) the
average number of mobile subscribers for the period, divided by (z) the number of months in the period. We define ARPU for our
Home customers in our Latin America segment as (x) the total Home revenue (excluding equipment sales, TV advertising and equipment
rental) for the period, divided by (y) the average number of customer relationships for the period, divided by (z) the number of
months in the period. ARPU is not subject to a standard industry definition and our definition of ARPU may be different to other
industry participants.
Please refer to our
2019 Annual Report for a complete list and description of non-IFRS measures.
Non-IFRS Reconciliations
Reconciliation from Reported Growth to Organic
Growth for the Latam segment4
Latam Segment ($ millions)
|
Revenue
|
Service Revenue
|
EBITDA
|
OCF
|
Q3 2020
|
Q3 2019
|
Q3 2020
|
Q3 2019
|
Q3 2020
|
Q3 2019
|
Q3 2020
|
Q3 2019
|
A- Current period
|
1,445
|
1,500
|
1,318
|
1,383
|
581
|
619
|
362
|
372
|
B- Prior year period
|
1,500
|
1,368
|
1,383
|
1,268
|
619
|
524
|
372
|
278
|
C- Reported growth (A/B)
|
(3.7)%
|
9.7%
|
(4.7)%
|
9.0%
|
(6.1)%
|
18.0%
|
(2.7)%
|
33.6%
|
D- Accounting change impact
|
—
|
—
|
—
|
—
|
—
|
8.3%
|
—
|
15.7%
|
E- Change in Perimeter impact
|
2.7%
|
12.7%
|
2.8%
|
13.4%
|
2.6%
|
14.1%
|
2.9%
|
16.2%
|
F- FX impact
|
(4.2)%
|
(5.4)%
|
(4.3)%
|
(5.4)%
|
(4.0)%
|
(4.9)%
|
(6.6)%
|
(9.3)%
|
G- Other
|
—
|
0.1%
|
—
|
0.1%
|
0.9%
|
(0.2)%
|
2.0%
|
1.0%
|
H- Organic Growth (C-D-E-F-G)
|
(2.2)%
|
2.2%
|
(3.1)%
|
1.0%
|
(5.6)%
|
0.7%
|
(1.0)%
|
10.0%
|
4 See
Note 5 of our Unaudited Interim Condensed Consolidated Financial Statements for details on our segments.
Earnings Release
Q3 2020
|
|
Latam Segment ($ millions)
|
Revenue
|
Service Revenue
|
EBITDA
|
OCF
|
9M 2020
|
9M 2019
|
9M 2020
|
9M 2019
|
9M 2020
|
9M 2019
|
9M 2020
|
9M 2019
|
A- Current period
|
4,309
|
4,387
|
3,984
|
4,072
|
1,725
|
1,782
|
1,142
|
1,143
|
B- Prior year period
|
4,387
|
4,104
|
4,072
|
3,807
|
1,782
|
1,558
|
1,143
|
951
|
C- Reported growth (A/B)
|
(1.8)%
|
6.9%
|
(2.2)%
|
7.0%
|
(3.2)%
|
14.4%
|
(0.1)%
|
20.2%
|
D- Accounting change impact
|
—
|
—
|
—
|
—
|
—
|
7.9%
|
—
|
13.0%
|
E- Change in Perimeter impact
|
5.4%
|
9.9%
|
5.4%
|
10.5%
|
5.2%
|
10.9%
|
6.9%
|
9.9%
|
F- FX impact
|
(4.1)%
|
(5.8)%
|
(4.2)%
|
(5.8)%
|
(3.8)%
|
(5.6)%
|
(6.0)%
|
(9.2)%
|
G- Other
|
(0.1)%
|
0.1%
|
(0.1)%
|
0.1%
|
0.8%
|
(1.0)%
|
1.7%
|
(1.3)%
|
H- Organic Growth (C-D-E-F-G)
|
(2.9)%
|
2.7%
|
(3.3)%
|
2.2%
|
(5.4)%
|
2.2%
|
(2.7)%
|
7.8%
|
Earnings Release
Q3 2020
|
|
Reconciliation from Reported Growth to Organic
Growth for the main Latam markets
Service Revenue ($ millions)
|
Q3 2020
|
Q3 2019
|
Organic
|
FX
|
Accounting
|
Perimeter
|
Other
|
Reported
|
Guatemala
|
314
|
304
|
3.9%
|
(0.4)%
|
—
|
—
|
—
|
3.5%
|
Colombia
|
311
|
351
|
(0.2)%
|
(11.2)%
|
—
|
—
|
—
|
(11.4)%
|
Paraguay
|
124
|
146
|
(5.0)%
|
(10.5)%
|
—
|
—
|
0.2%
|
(15.2)%
|
Honduras
|
128
|
136
|
(6.0)%
|
(0.3)%
|
—
|
—
|
0.2%
|
(6.1)%
|
Bolivia
|
141
|
158
|
(10.6)%
|
—
|
—
|
—
|
—
|
(10.6)%
|
Panama
|
139
|
115
|
(9.4)%
|
—
|
—
|
33.4%
|
(3.1)%
|
20.9%
|
El Salvador
|
84
|
86
|
(2.6)%
|
—
|
—
|
—
|
—
|
(2.6)%
|
Nicaragua, Costa Rica & Eliminations
|
78
|
88
|
—
|
—
|
—
|
—
|
—
|
—
|
Latam*
|
1,318
|
1,383
|
(3.1)%
|
(4.3)%
|
—
|
2.8%
|
—
|
(4.7)%
|
* Perimeter impact on Latam segment reflects
acquisition of mobile businesses in Panama and Nicaragua during 2019.
EBITDA ($ millions)
|
Q3 2020
|
Q3 2019
|
Organic
|
FX
|
Accounting
|
Perimeter
|
Other
|
Reported
|
Guatemala
|
191
|
186
|
3.2%
|
(0.4)%
|
—
|
—
|
—
|
2.8%
|
Colombia
|
111
|
122
|
2.6%
|
(11.5)%
|
—
|
—
|
—
|
(8.9)%
|
Paraguay
|
62
|
76
|
(8.7)%
|
(10.3)%
|
—
|
—
|
0.4%
|
(18.6)%
|
Honduras
|
61
|
72
|
(15.7)%
|
(0.6)%
|
—
|
—
|
0.5%
|
(15.8)%
|
Bolivia
|
57
|
64
|
(11.6)%
|
—
|
—
|
—
|
—
|
(11.6)%
|
Panama
|
63
|
59
|
(15.6)%
|
—
|
—
|
27.1%
|
(4.2)%
|
7.3%
|
El Salvador
|
32
|
35
|
(9.1)%
|
—
|
—
|
—
|
—
|
(9.1)%
|
Nicaragua, Costa Rica, Corp Costs & Eliminations
|
4
|
4
|
—
|
—
|
—
|
—
|
—
|
—
|
Latam*
|
581
|
619
|
(5.6)%
|
(4.0)%
|
—
|
2.6%
|
0.9%
|
(6.1)%
|
* Perimeter impact on Latam segment reflects
acquisition of mobile businesses in Panama and Nicaragua during 2019.
ARPU reconciliations
Latam Segment - Mobile ARPU Reconciliation
|
Q3 2020
|
Q3 2019
|
9M 2020
|
9M 2019
|
Mobile service revenue ($m)
|
790
|
819
|
2,383
|
2,398
|
Mobile Service revenue ($m) from non Tigo customers ($m) *
|
(7)
|
(18)
|
(26)
|
(53)
|
Mobile Service revenue ($m) from Tigo customers (A)
|
782
|
800
|
2,357
|
2,345
|
Mobile customers - end of period (000)
|
39,483
|
38,588
|
39,483
|
38,588
|
Mobile customers - average (000) (B) **
|
38,630
|
37,875
|
39,139
|
35,833
|
Mobile ARPU (USD/Month) (A/B/number of months)
|
6.8
|
7.0
|
6.7
|
7.3
|
* Refers to TV advertising, production services,
MVNO, DVNO, equipment rental revenue, call center revenue, national roaming, equipment sales, visitor roaming, tower rental, DVNE,
and other non-customer driven revenue.
** Average QoQ for the quarterly view is the
average of the last quarter.
Earnings Release
Q3 2020
|
|
Latam Segment - Home ARPU Reconciliation
|
Q3 2020
|
Q3 2019
|
9M 2020
|
9M 2019
|
Home service revenue ($m)
|
371
|
386
|
1,122
|
1,143
|
Home service revenue ($m) from non Tigo customers ($m) *
|
(8)
|
(11)
|
(23)
|
(28)
|
Home service revenue ($m) from Tigo customers (A)
|
363
|
375
|
1,099
|
1,114
|
Customer Relationships - end of period (000) **
|
4,453
|
4,316
|
4,453
|
4,316
|
Customer Relationships - average (000) (B)
|
4,374
|
4,281
|
4,370
|
4,217
|
Home ARPU (USD/Month) (A/B/number of months)
|
27.7
|
29.2
|
27.9
|
29.4
|
* TV advertising, production services, equipment
rental revenue, call center revenue, equipment sales and other non customer driven revenue.
** Represented by homes connected all technologies
(HFC + Other Technologies + DTH & Wimax RGUs).
*** Average QoQ for the quarterly view is the
average of the last quarter.
One-off Summary - Items above EBITDA only
2020
|
Q3 2020
|
9M 2020
|
|
($ millions)
|
Revenue
|
EBITDA
|
Revenue
|
EBITDA
|
Comment (Q3 2020)
|
Latam
|
—
|
—
|
—
|
—
|
|
Nicaragua
|
—
|
—
|
—
|
(8)
|
|
Latam Total
|
—
|
—
|
—
|
(8)
|
|
2019
|
Q3 2019
|
9M 2019
|
|
($ millions)
|
Revenue
|
EBITDA
|
Revenue
|
EBITDA
|
Comment (Q3 2019)
|
Colombia
|
—
|
(5)
|
—
|
(9)
|
Bad Debt related to wholesale
|
Paraguay
|
5
|
4
|
10
|
6
|
Revenue accrual and others
|
Latam Total
|
5
|
(1)
|
10
|
(3)
|
|
Africa
|
—
|
—
|
—
|
(21)
|
|
Corporate
|
—
|
(11)
|
—
|
(27)
|
Acquisition and integraton costs
|
Total
|
5
|
(12)
|
10
|
(51)
|
|
Foreign Exchange rates used to support FX
impact calculations in the above Organic Growth reconciliations
|
|
Average FX rate (vs. USD)
|
End of period FX rate (vs. USD)
|
|
|
Q3 20
|
Q2 20
|
QoQ
|
Q3 19
|
YoY
|
|
Q3 20
|
Q2 20
|
QoQ
|
Q3 19
|
YoY
|
Bolivia
|
BOB
|
6.91
|
6.91
|
0.0%
|
6.91
|
0.0%
|
|
6.91
|
6.91
|
0.0%
|
6.91
|
0.0%
|
Colombia
|
COP
|
3,784
|
3,881
|
2.6%
|
3,348
|
(11.5)%
|
|
3,879
|
3,759
|
(3.1)%
|
3,462
|
(10.7)%
|
Costa Rica
|
CRC
|
594
|
580
|
(2.4)%
|
577
|
(2.8)%
|
|
607
|
583
|
(3.8)%
|
584
|
(3.8)%
|
Guatemala
|
GTQ
|
7.73
|
7.70
|
(0.4)%
|
7.70
|
(0.4)%
|
|
7.79
|
7.70
|
(1.1)%
|
7.74
|
(0.6)%
|
Honduras
|
HNL
|
24.66
|
24.87
|
0.8%
|
24.64
|
(0.1)%
|
|
24.53
|
24.80
|
1.1%
|
24.71
|
0.7%
|
Nicaragua
|
NIO
|
34.47
|
34.21
|
(0.7)%
|
33.33
|
(3.3)%
|
|
34.60
|
34.34
|
(0.7)%
|
33.53
|
(3.1)%
|
Paraguay
|
PYG
|
6,921
|
6,630
|
(4.2)%
|
6,205
|
(10.3)%
|
|
6,990
|
6,807
|
(2.6)%
|
6,380
|
(8.7)%
|
Ghana
|
GHS
|
5.78
|
5.79
|
0.1%
|
5.42
|
(6.2)%
|
|
5.79
|
5.79
|
0.0%
|
5.41
|
(6.6)%
|
Tanzania
|
TZS
|
2,317
|
2,311
|
(0.3)%
|
2,297
|
(0.9)%
|
|
2,319
|
2,315
|
(0.2)%
|
2,294
|
(1.1)%
|
Earnings Release
Q3 2020
|
|
Reconciliation Net financial obligations to
EBITDA to Proportionate net financial obligations to EBITDA as of September 30, 2020 and December 31, 2019
Debt Information - September 30, 2020
|
Financial obligations
|
EBITDA
|
Leverage
|
$ millions
|
Gross
|
Cash
|
Net
|
|
|
Millicom Group (IFRS)
|
6,897
|
1,144
|
5,753
|
1,520
|
3.79x
|
Plus: Guatemala
|
1,169
|
279
|
890
|
753
|
|
Plus: Honduras
|
431
|
80
|
352
|
251
|
|
Less: Corporate Costs
|
—
|
1
|
(1)
|
(38)
|
|
Underlying Millicom Group (Non-IFRS)
|
8,498
|
1,503
|
6,995
|
2,486
|
2.81x
|
Less: 50% Minority Stake in Colombia
|
518
|
62
|
455
|
235
|
|
Less: 45% Minority Stake in Guatemala
|
526
|
126
|
400
|
339
|
|
Less: 33% Minority Stake in Honduras
|
144
|
27
|
117
|
84
|
|
Less: 20% Minority Stake in Panama
|
205
|
20
|
185
|
53
|
|
Less: 1.5% Minority Stake in Tanzania
|
6
|
—
|
6
|
2
|
|
Proportionate Millicom Group (Non-IFRS)
|
7,098
|
1,268
|
5,831
|
1,774
|
3.29x
|
December 31, 2019
|
Financial obligations
|
EBITDA
|
Proforma
|
$ millions
|
Gross
|
Cash
|
Net
|
|
Adjustments*
|
EBITDA
|
Leverage
|
Millicom Group (IFRS)
|
7,068
|
1,166
|
5,903
|
1,530
|
—
|
—
|
—
|
Plus: Guatemala
|
1,172
|
189
|
983
|
748
|
—
|
—
|
—
|
Plus: Honduras
|
423
|
40
|
383
|
280
|
—
|
—
|
—
|
Less: Corporate Costs
|
—
|
—
|
—
|
(36)
|
—
|
—
|
—
|
Underlying Millicom Group (Non-IFRS)
|
8,664
|
1,395
|
7,269
|
2,522
|
95
|
2,617
|
2.78x
|
Less: 50% Minority Stake in Colombia
|
606
|
107
|
499
|
255
|
—
|
—
|
—
|
Less: 45% Minority Stake in Guatemala
|
528
|
85
|
442
|
337
|
—
|
—
|
—
|
Less: 33% Minority Stake in Honduras
|
141
|
13
|
128
|
93
|
—
|
—
|
—
|
Less: 20% Minority Stake in Panama
|
208
|
12
|
196
|
45
|
13
|
—
|
—
|
Less: 1.5% Minority Stake in Tanzania
|
6
|
—
|
6
|
2
|
—
|
—
|
—
|
Proportionate Millicom Group (Non-IFRS)
|
7,175
|
1,177
|
5,998
|
1,791
|
82
|
1,873
|
3.20x
|
* Proforma adjusted EBITDA
related to mobile acquisitions in Panama.
Earnings Release
Q3 2020
|
|
Debt maturity profile
|
2020
|
2021
|
2022
|
2023
|
2024
|
2025
|
2026
|
2027
|
2028
|
2029
|
>2030
|
International Bonds
|
800
|
—
|
—
|
—
|
221
|
500
|
500
|
550
|
500
|
750
|
600
|
Floating MIC S.A. Sustain. Bond Due 2024*
|
|
|
|
|
221
|
|
|
|
|
|
|
6.875% Comcel $800m Bond Due 2024
|
800
|
|
|
|
|
|
|
|
|
|
|
6.000% MIC S.A. $500m Bond Due 2025
|
|
|
|
|
|
500
|
|
|
|
|
|
6.625% MIC S.A. $500m Bond Due 2026
|
|
|
|
|
|
|
500
|
|
|
|
|
5.875% Telecel $550m Bond Due 2027
|
|
|
|
|
|
|
|
550
|
|
|
|
5.125% MIC S.A. $500m Bond Due 2028
|
|
|
|
|
|
|
|
|
500
|
|
|
6.250% MIC S.A. $750m Bond Due 2029
|
|
|
|
|
|
|
|
|
|
750
|
|
4.500% Cable Onda $600m Bond Due 2030
|
|
|
|
|
|
|
|
|
|
|
600
|
Local Bonds (Colombia, Bolivia, Paraguay & Panama)
|
—
|
44
|
46
|
102
|
104
|
200
|
102
|
4
|
2
|
14
|
59
|
Bank and DFI
|
7
|
102
|
91
|
367
|
792
|
406
|
25
|
115
|
43
|
114
|
46
|
Total
|
807
|
146
|
137
|
469
|
1,118
|
1,106
|
627
|
669
|
545
|
879
|
706
|
% of Total
|
11.2%
|
2.0%
|
1.9%
|
6.5%
|
15.5%
|
15.3%
|
8.7%
|
9.3%
|
7.6%
|
12.2%
|
9.8%
|
Earnings Release
Q3 2020
|
|
Capex Reconciliation
Capex Reconciliation
|
Q3 2020
|
Q3 2019
|
9M 2020
|
9M 2019
|
Consolidated:
|
|
|
|
|
Additions to property, plant and equipment
|
149
|
173
|
388
|
459
|
Additions to licenses and other intangibles
|
34
|
39
|
497
|
127
|
Of which spectrum and license costs
|
7
|
16
|
427
|
65
|
Total consolidated additions
|
182
|
212
|
885
|
586
|
Of which capital expenditures related to corporate offices
|
1
|
2
|
6
|
6
|
Latin America Segment
|
Q3 2020
|
Q3 2019
|
9M 2020
|
9M 2019
|
Additions to property, plant and equipment
|
188
|
221
|
499
|
565
|
Additions to licenses and other intangibles
|
38
|
31
|
594
|
127
|
Of which spectrum and license costs
|
7
|
4
|
510
|
53
|
Latin America Segment total additions (Underlying)
|
227
|
252
|
1,093
|
692
|
Capex excluding spectrum and license costs
|
220
|
247
|
583
|
639
|
Africa Segment
|
Q3 2020
|
Q3 2019
|
9M 2020
|
9M 2019
|
Additions to property, plant and equipment
|
11
|
7
|
28
|
22
|
Additions to licenses and other intangibles
|
—
|
12
|
—
|
12
|
Of which spectrum and license costs
|
—
|
12
|
—
|
12
|
Africa Segment total additions
|
11
|
19
|
28
|
34
|
Capex excluding spectrum and license costs
|
11
|
7
|
28
|
22
|
Operating Free Cash Flow Reconciliation
Cash Flow Data
|
Q3 2020
|
Q3 2019
|
9M 2020
|
9M 2019
|
Net cash provided by operating activities
|
201
|
209
|
525
|
532
|
Purchase of property, plant and equipment
|
(138)
|
(177)
|
(440)
|
(526)
|
Proceeds from sale of property, plant and equipment
|
5
|
9
|
6
|
21
|
Purchase of intangible assets and licenses
|
(35)
|
(41)
|
(201)
|
(144)
|
Proceeds from sale of intangible assets
|
—
|
—
|
—
|
—
|
Net purchase/proceeds for property, plant and equipment and intangible assets
|
(169)
|
(209)
|
(636)
|
(650)
|
(Less) Proceeds from sale of towers part of tower sale and leaseback transactions
|
—
|
(9)
|
—
|
(21)
|
(Less) Purchase of spectrum and licenses
|
4
|
32
|
95
|
43
|
(Less) Finance charges paid, net
|
147
|
126
|
416
|
347
|
Operating free cash flow
|
183
|
150
|
400
|
252
|
Earnings Release
Q3 2020
|
|
Equity Free Cash Flow Reconciliation
Cash Flow Data
|
Q3 2020
|
Q3 2019
|
9M 2020
|
9M 2019
|
Net cash provided by operating activities
|
201
|
209
|
525
|
532
|
Purchase of property, plant and equipment
|
(138)
|
(177)
|
(440)
|
(526)
|
Proceeds from sale of property, plant and equipment
|
5
|
9
|
6
|
21
|
Proceeds from sale of towers part of tower sale and leaseback transactions
|
—
|
(9)
|
—
|
(21)
|
Purchase of intangible assets
|
(35)
|
(41)
|
(201)
|
(144)
|
Proceeds from sale of intangible assets
|
—
|
—
|
—
|
—
|
Purchase of spectrum and licenses
|
4
|
32
|
95
|
43
|
Finance charges paid, net
|
147
|
126
|
416
|
347
|
Operating free cash flow
|
183
|
150
|
400
|
252
|
Interest (paid), net
|
(147)
|
(126)
|
(416)
|
(347)
|
Free cash flow
|
36
|
24
|
(16)
|
(95)
|
Dividends received from joint ventures (Guatemala and Honduras)
|
9
|
76
|
67
|
181
|
Dividends paid to non-controlling interests
|
(3)
|
—
|
(5)
|
(12)
|
Equity free cash flow
|
42
|
100
|
46
|
73
|
OCF (EBITDA- Capex) Reconciliation
Latam OCF Underlying
|
Q3 2020
|
Q3 2019
|
9M 2020
|
9M 2019
|
Latam EBITDA
|
581
|
619
|
1,725
|
1,782
|
(-) Capex (Ex. Spectrum)
|
220
|
247
|
583
|
639
|
Latam OCF
|
362
|
372
|
1,142
|
1,143
|
Africa OCF
|
Q3 2020
|
Q3 2019
|
9M 2020
|
9M 2019
|
Africa EBITDA
|
32
|
39
|
91
|
84
|
(-) Capex (Ex. Spectrum)
|
11
|
7
|
28
|
22
|
Africa OCF
|
22
|
32
|
63
|
62
|
Earnings Release
Q3 2020
|
|
Guatemala and Honduras Financial Information
(unaudited)
Until 2015, Millicom group
results included Guatemala and Honduras on a 100% consolidation basis. Since 2016, these businesses are treated as joint ventures
and are consolidated using the equity method. To aid investors to better track the evolution of the company’s performance
over time, we provide the following indicative unaudited financial statement data for the Millicom group as if our Guatemala and
Honduras joint ventures had been fully consolidated.
Income statement data Q3 2020
|
Millicom (IFRS)
|
Guatemala and Honduras JVs
|
Eliminations
|
Underlying (non-IFRS)
|
($millions)
|
Revenue
|
1,026
|
512
|
—
|
1,538
|
Cost of sales
|
(286)
|
(128)
|
—
|
(414)
|
Gross profit
|
740
|
384
|
—
|
1,124
|
Operating expenses
|
(369)
|
(142)
|
—
|
(511)
|
EBITDA
|
371
|
242
|
—
|
613
|
EBITDA margin
|
36.1%
|
47.3%
|
—
|
39.8%
|
Depreciation & amortization
|
(305)
|
(114)
|
—
|
(419)
|
Share of net profit in joint ventures
|
22
|
—
|
(22)
|
—
|
Other operating income (expenses), net
|
9
|
—
|
—
|
8
|
Operating profit
|
97
|
128
|
(22)
|
202
|
Net financial expenses
|
(140)
|
(60)
|
—
|
(200)
|
Other non-operating income (expenses), net
|
(10)
|
(4)
|
—
|
(14)
|
Gains (losses) from associates
|
1
|
—
|
—
|
1
|
Profit (loss) before tax
|
(53)
|
64
|
(22)
|
(11)
|
Net tax credit (charge)
|
1
|
(23)
|
—
|
(21)
|
Profit (loss) for the period
|
(51)
|
41
|
(22)
|
(32)
|
Non-controlling interests
|
9
|
(19)
|
—
|
(10)
|
Profit (loss) from discontinued operations
|
(8)
|
—
|
—
|
(8)
|
Net profit (loss) for the period
|
(51)
|
22
|
(22)
|
(51)
|
Earnings Release
Q3 2020
|
|
Income statement data 9M 2020
|
Millicom (IFRS)
|
Guatemala and Honduras JVs
|
Eliminations
|
Underlying (non-IFRS)
|
($millions)
|
Revenue
|
3,083
|
1,494
|
—
|
4,577
|
Cost of sales
|
(887)
|
(360)
|
—
|
(1,247)
|
Gross profit
|
2,196
|
1,134
|
—
|
3,330
|
Operating expenses
|
(1,101)
|
(414)
|
—
|
(1,515)
|
EBITDA
|
1,096
|
719
|
—
|
1,815
|
EBITDA margin
|
35.5%
|
48.2%
|
—
|
39.7%
|
Depreciation & amortization
|
(904)
|
(341)
|
—
|
(1,245)
|
Share of net profit in joint ventures
|
101
|
—
|
(101)
|
—
|
Other operating income (expenses), net
|
31
|
(1)
|
—
|
30
|
Operating profit
|
323
|
377
|
(101)
|
600
|
Net financial expenses
|
(448)
|
(110)
|
—
|
(559)
|
Other non-operating income (expenses), net
|
(147)
|
(8)
|
—
|
(154)
|
Gains (losses) from associates
|
—
|
—
|
—
|
—
|
Profit (loss) before tax
|
(272)
|
260
|
(101)
|
(113)
|
Net tax credit (charge)
|
(48)
|
(73)
|
—
|
(120)
|
Profit (loss) for the period
|
(320)
|
187
|
(101)
|
(233)
|
Non-controlling interests
|
40
|
(86)
|
—
|
(46)
|
Profit (loss) from discontinued operations
|
(9)
|
—
|
—
|
(9)
|
Net profit (loss) for the period
|
(288)
|
101
|
(101)
|
(288)
|
Earnings Release
Q3 2020
|
|
Balance Sheet data ($ millions)
|
Millicom IFRS
|
Guatemala and Honduras JVs
|
Underlying (non-IFRS)
|
Assets
|
|
|
|
Intangible assets, net
|
3,375
|
2,853
|
6,227
|
Property, plant and equipment, net
|
2,559
|
861
|
3,421
|
Right of Use Assets
|
874
|
280
|
1,154
|
Investments in joint ventures and associates
|
2,673
|
(2,649)
|
25
|
Other non-current assets
|
348
|
55
|
403
|
Total non-current assets
|
9,829
|
1,400
|
11,229
|
Inventories, net
|
47
|
35
|
82
|
Trade receivables, net
|
338
|
91
|
429
|
Other current assets
|
801
|
331
|
1,131
|
Restricted cash
|
170
|
18
|
188
|
Cash and cash equivalents
|
1,144
|
359
|
1,502
|
Total current assets
|
2,498
|
835
|
3,333
|
Assets held for sale
|
2
|
—
|
2
|
Total assets
|
12,330
|
2,234
|
14,564
|
|
|
|
|
Equity and liabilities
|
|
|
|
Equity attributable to owners of the Company
|
2,059
|
(42)
|
2,018
|
Non-controlling interests
|
207
|
477
|
684
|
Total equity
|
2,266
|
436
|
2,702
|
Debt and financing
|
6,668
|
746
|
7,413
|
Other non-current liabilities
|
1,195
|
(81)
|
1,114
|
Total non-current liabilities
|
7,863
|
665
|
8,528
|
Debt and financing
|
230
|
855
|
1,085
|
Other current liabilities
|
1,971
|
279
|
2,250
|
Total current liabilities
|
2,200
|
1,134
|
3,334
|
Liabilities directly associated with assets held for sale
|
—
|
—
|
—
|
Total liabilities
|
10,063
|
1,799
|
11,862
|
Total equity and liabilities
|
12,330
|
2,234
|
14,564
|
Earnings Release
Q3 2020
|
|
Cash Flow Data
|
Millicom IFRS
|
Guatemala and Honduras JVs
|
Underlying (non-IFRS)
|
($millions)
|
Profit (loss) before taxes from continuing operations
|
(272)
|
159
|
(113)
|
Profit (loss) for the period from discontinued operations
|
(9)
|
—
|
(9)
|
Profit (loss) before taxes
|
(281)
|
159
|
(122)
|
Net cash provided by operating activities (incl. discontinued ops)
|
525
|
573
|
1,098
|
Net cash used in investing activities (incl. discontinued ops)
|
(446)
|
(361)
|
(807)
|
Net cash from (used by) financing activities (incl. discontinued ops)
|
(71)
|
(80)
|
(152)
|
Exchange impact on cash and cash equivalents, net
|
(28)
|
(2)
|
(30)
|
Net (decrease) increase in cash and cash equivalents
|
(20)
|
130
|
110
|
Cash and cash equivalents at the beginning of the period
|
1,164
|
229
|
1,393
|
Effect of cash in disposal group held for sale
|
—
|
—
|
—
|
Cash and cash equivalents at the end of the period
|
1,144
|
359
|
1,502
|
Regulatory Statement
This
information was prior to this release inside information and is information that Millicom is obliged to make public pursuant to
the EU Market Abuse Regulation. This information was submitted for publication, through the agency of the contact person set out
above, at 11:00 CET on October 30, 2020.
Item
2
Unaudited
Interim Condensed Consolidated Financial Statements
For
the three- and nine-month periods ended September 30, 2020
October 30,
2020
Unaudited Interim Condensed Consolidated Financial Statements
for the three- and nine-month periods ended September 30, 2020
|
|
Unaudited interim condensed consolidated
statement of income for the three- and nine-month periods ended September 30, 2020
in millions of U.S dollars except per share data
|
Notes
|
Nine months ended September 30, 2020
|
Nine months ended September 30, 2019 (i)
|
Three months ended September 30, 2020
|
Three months ended September 30, 2019 (i)
|
Continuing Operations
|
|
|
|
|
|
Revenue
|
5
|
3,083
|
3,186
|
1,026
|
1,097
|
Cost of sales
|
|
(887)
|
(891)
|
(286)
|
(302)
|
Gross profit
|
|
2,196
|
2,295
|
740
|
795
|
Operating expenses
|
|
(1,101)
|
(1,189)
|
(369)
|
(392)
|
Depreciation
|
3
|
(660)
|
(612)
|
(217)
|
(203)
|
Amortization
|
|
(244)
|
(191)
|
(88)
|
(69)
|
Share of profit in the joint ventures in Guatemala and Honduras (ii)
|
15
|
101
|
137
|
22
|
46
|
Other operating income (expenses), net
|
14
|
31
|
7
|
9
|
(1)
|
Operating profit
|
5
|
323
|
446
|
97
|
176
|
Interest and other financial expenses
|
10
|
(457)
|
(407)
|
(141)
|
(135)
|
Interest and other financial income
|
|
8
|
15
|
1
|
7
|
Other non-operating (expenses) income, net
|
6
|
(147)
|
(82)
|
(10)
|
(127)
|
Profit (loss) from other joint ventures and associates, net
|
|
—
|
(31)
|
1
|
(17)
|
Profit (loss) before taxes from continuing operations
|
|
(272)
|
(59)
|
(53)
|
(96)
|
Tax (charge) credit, net
|
|
(48)
|
(89)
|
1
|
(47)
|
Profit (loss) from continuing operations
|
|
(320)
|
(148)
|
(51)
|
(143)
|
Profit (loss) from discontinued operations, net of tax
|
4
|
(9)
|
60
|
(8)
|
(4)
|
Net profit (loss) for the period
|
|
(329)
|
(88)
|
(59)
|
(147)
|
|
|
|
|
|
|
Attributable to:
|
|
|
|
|
|
Owners of Millicom
|
|
(288)
|
(73)
|
(51)
|
(131)
|
Non-controlling interests
|
|
(40)
|
(15)
|
(9)
|
(16)
|
|
|
|
|
|
|
(Loss)/Earnings per common share for net profit/ (loss) attributable to the owners of the Company:
|
|
|
|
|
|
Basic and Diluted ($ per share) (iii)
|
7
|
(2.85)
|
(0.73)
|
(0.50)
|
(1.30)
|
|
(i)
|
Restated for finalization of purchase accounting for
Cable Onda acquisition (see note 3).
|
|
(ii)
|
Includes an $18 million charge related to early redemption
of bonds (see Note 10)
|
|
(iii)
|
There are no dilutive potential ordinary shares
|
The accompanying notes are an integral part
of these unaudited interim condensed consolidated financial statements
Unaudited Interim Condensed Consolidated Financial Statements
for the three- and nine-month periods ended September 30, 2020
|
|
Unaudited interim condensed consolidated
statement of comprehensive income for the three- and nine-month periods ended September 30, 2020
in millions of U.S dollars
|
Nine months ended September 30, 2020
|
Nine months ended September 30, 2019 (i)
|
Three months ended September 30, 2020
|
Three months ended September 30, 2019 (i)
|
Net profit (loss) for the period
|
(329)
|
(88)
|
(59)
|
(147)
|
Other comprehensive income (to be reclassified to statement of income in subsequent periods), net of tax:
|
|
|
|
|
Exchange differences on translating foreign operations
|
(82)
|
(37)
|
(8)
|
(51)
|
Change in value of cash flow hedges, net of tax effects
|
(4)
|
(18)
|
2
|
(7)
|
Other comprehensive income (not to be reclassified to statement of income in subsequent periods), net of tax:
|
|
|
|
|
Total comprehensive income (loss) for the period
|
(415)
|
(143)
|
(66)
|
(205)
|
|
|
|
|
|
Attributable to
|
|
|
|
|
Owners of the Company
|
(356)
|
(121)
|
(54)
|
(180)
|
Non-controlling interests
|
(59)
|
(23)
|
(11)
|
(26)
|
|
|
|
|
|
Total comprehensive income for the period arises from:
|
|
|
|
|
Continuing operations
|
(407)
|
(203)
|
(57)
|
(201)
|
Discontinued operations
|
(8)
|
60
|
(8)
|
(4)
|
|
(i)
|
Restated for finalization of purchase accounting for
Cable Onda acquisition (see note 3).
|
The accompanying notes are an integral part
of these unaudited interim condensed consolidated financial statements
Unaudited Interim Condensed Consolidated Financial Statements
for the three- and nine-month periods ended September 30, 2020
|
|
Unaudited interim condensed consolidated
statement of financial position as at September 30, 2020
in millions of U.S dollars
|
Notes
|
September 30, 2020
|
December 31, 2019(i)
|
ASSETS
|
|
|
|
NON-CURRENT ASSETS
|
|
|
|
Intangible assets, net
|
9
|
3,375
|
3,195
|
Property, plant and equipment, net
|
8
|
2,559
|
2,899
|
Right of use assets
|
|
874
|
1,012
|
Investments in joint ventures
|
15
|
2,649
|
2,797
|
Investments in associates
|
|
25
|
25
|
Contract costs, net
|
|
4
|
5
|
Deferred tax assets
|
|
227
|
200
|
Derivative financial instruments
|
13
|
13
|
—
|
Other non-current assets
|
12
|
104
|
104
|
TOTAL NON-CURRENT ASSETS
|
|
9,829
|
10,238
|
|
|
|
|
CURRENT ASSETS
|
|
|
|
Inventories
|
|
47
|
32
|
Trade receivables, net
|
2
|
338
|
371
|
Contract assets, net
|
|
33
|
41
|
Amounts due from non-controlling interests, associates and joint ventures
|
12
|
23
|
29
|
Prepayments and accrued income
|
|
180
|
156
|
Current income tax assets
|
|
91
|
119
|
Supplier advances for capital expenditure
|
|
24
|
22
|
Equity investments
|
14
|
260
|
371
|
Other current assets
|
|
188
|
192
|
Restricted cash
|
|
170
|
155
|
Cash and cash equivalents
|
|
1,144
|
1,164
|
TOTAL CURRENT ASSETS
|
|
2,498
|
2,652
|
Assets held for sale
|
4
|
2
|
5
|
TOTAL ASSETS
|
|
12,330
|
12,895
|
|
(i)
|
Restated for finalization of purchase accounting for
Nicaragua and Panama acquisitions (see note 3).
|
The accompanying notes are an integral part
of these unaudited interim condensed consolidated financial statements
Unaudited Interim Condensed Consolidated Financial Statements
for the three- and nine-month periods ended September 30, 2020
|
|
Unaudited interim condensed consolidated
statement of financial position as at September 30, 2020 (continued)
in millions of U.S dollars
|
Notes
|
September 30, 2020
|
December 31, 2019(i)
|
EQUITY AND LIABILITIES
|
|
|
|
EQUITY
|
|
|
|
Share capital and premium
|
|
630
|
633
|
Treasury shares
|
|
(30)
|
(51)
|
Other reserves
|
|
(617)
|
(544)
|
Retained profits
|
|
2,365
|
2,222
|
Profit (loss) for the period attributable to equity holders
|
|
(288)
|
149
|
Equity attributable to owners of the Company
|
|
2,059
|
2,410
|
Non-controlling interests
|
|
207
|
271
|
TOTAL EQUITY
|
|
2,266
|
2,680
|
|
|
|
|
LIABILITIES
|
|
|
|
NON-CURRENT LIABILITIES
|
|
|
|
Debt and financing
|
10
|
5,791
|
5,786
|
Lease liabilities
|
10
|
876
|
988
|
Derivative financial instruments
|
13
|
11
|
17
|
Amounts due to non-controlling interests, associates and joint ventures
|
12
|
219
|
337
|
Payables and accruals for capital expenditure
|
9
|
439
|
61
|
Provisions and other non-current liabilities
|
|
302
|
322
|
Deferred tax liabilities
|
|
223
|
285
|
TOTAL NON-CURRENT LIABILITIES
|
|
7,863
|
7,797
|
|
|
|
|
CURRENT LIABILITIES
|
|
|
|
Debt and financing
|
10
|
114
|
186
|
Lease liabilities
|
10
|
116
|
107
|
Put option liability
|
13
|
268
|
264
|
Payables and accruals for capital expenditure
|
|
228
|
348
|
Other trade payables
|
|
267
|
289
|
Amounts due to non-controlling interests, associates and joint ventures
|
12
|
117
|
161
|
Accrued interest and other expenses
|
|
448
|
432
|
Current income tax liabilities
|
|
84
|
75
|
Contract liabilities
|
|
93
|
82
|
Provisions and other current liabilities
|
|
468
|
474
|
TOTAL CURRENT LIABILITIES
|
|
2,200
|
2,417
|
Liabilities directly associated with assets held for sale
|
4
|
—
|
—
|
TOTAL LIABILITIES
|
|
10,063
|
10,215
|
TOTAL EQUITY AND LIABILITIES
|
|
12,330
|
12,895
|
|
(i)
|
Restated for the finalization of purchase accounting
for Nicaragua and Panama acquisitions (see note 3).
|
The accompanying notes are an integral part
of these unaudited interim condensed consolidated financial statements
Unaudited Interim Condensed Consolidated Financial Statements
for the three- and nine-month periods ended September 30, 2020
|
|
Unaudited interim condensed consolidated
statement of cash flows for the nine-month period ended September 30, 2020
in millions of U.S dollars
|
Notes
|
September 30, 2020
|
September 30, 2019 (i)
|
Cash flows from operating activities (including discontinued operations)
|
|
|
|
Profit (loss) before taxes from continuing operations
|
|
(272)
|
(59)
|
Profit (loss) before taxes from discontinued operations
|
4
|
(9)
|
62
|
Profit (loss) before taxes
|
|
(281)
|
2
|
Adjustments to reconcile to net cash:
|
|
|
|
Interest expense on leases
|
|
117
|
113
|
Interest expense on debt and other financing
|
|
340
|
295
|
Interest and other financial income
|
|
(8)
|
(15)
|
Adjustments for non-cash items:
|
|
|
|
Depreciation and amortization
|
5
|
904
|
814
|
Share of net profit in Guatemala and Honduras joint ventures
|
|
(101)
|
(137)
|
(Gain) on disposal and impairment of assets, net
|
4, 14
|
(22)
|
(81)
|
Share based compensation
|
|
20
|
22
|
Loss from other joint ventures and associates, net
|
|
—
|
31
|
Other non-cash non-operating (income) expenses, net
|
6
|
147
|
82
|
Changes in working capital:
|
|
|
|
Decrease (increase) in trade receivables, prepayments and other current assets, net
|
|
(90)
|
(143)
|
Increase (decrease) in inventories
|
|
(18)
|
(6)
|
Increase (decrease) in trade and other payables, net
|
|
35
|
(25)
|
Changes in contract assets, liabilities and costs, net
|
|
7
|
(1)
|
Total changes in working capital
|
|
(66)
|
(175)
|
Interest paid on leases
|
|
(111)
|
(103)
|
Interest paid on debt and other financing
|
|
(313)
|
(257)
|
Interest received
|
|
8
|
12
|
Taxes paid
|
5
|
(108)
|
(73)
|
Net cash provided by operating activities
|
|
525
|
532
|
Cash flows from (used in) investing activities (including discontinued operations):
|
|
|
|
Acquisition of subsidiaries, joint ventures and associates, net of cash acquired
|
3
|
3
|
(1,013)
|
Proceeds from disposal of subsidiaries and associates, net of cash disposed
|
4
|
10
|
110
|
Purchase of intangible assets and licenses
|
9
|
(201)
|
(144)
|
Purchase of property, plant and equipment
|
8
|
(440)
|
(526)
|
Proceeds from sale of property, plant and equipment
|
8
|
6
|
21
|
Proceeds from disposal of equity investment, net of costs
|
14
|
91
|
—
|
Dividends and dividend advances received from joint ventures
|
15
|
67
|
181
|
Cash (used in) provided by other investing activities, net
|
|
19
|
14
|
Net cash used in investing activities
|
|
(446)
|
(1,357)
|
Unaudited Interim Condensed Consolidated Financial Statements
for the three- and nine-month periods ended September 30, 2020
|
|
Unaudited interim condensed consolidated
statement of cash flows for the nine-month period ended September 30, 2020 (continued)
|
|
|
|
Cash flows from financing activities (including discontinued operations):
|
|
|
|
Proceeds from debt and other financing
|
10
|
810
|
2,106
|
Repayment of debt and other financing
|
10
|
(783)
|
(923)
|
Lease capital repayment
|
|
(83)
|
(82)
|
Advances and dividends paid to non-controlling interests
|
|
(5)
|
(12)
|
Share repurchase program
|
|
(10)
|
—
|
Dividends paid to owners of the Company
|
|
—
|
(133)
|
Net cash provided by (used in) financing activities
|
|
(71)
|
955
|
Exchange impact on cash and cash equivalents, net
|
|
(28)
|
(16)
|
Net (decrease) increase in cash and cash equivalents
|
|
(20)
|
114
|
Cash and cash equivalents at the beginning of the year
|
|
1,164
|
528
|
Effect of cash in disposal group held for sale
|
4
|
—
|
(9)
|
Cash and cash equivalents at the end of the period
|
|
1,144
|
633
|
|
(i)
|
Restated for the finalization of purchase accounting
for Cable Onda acquisition (see note 3).
|
The accompanying notes are an integral part
of these unaudited interim condensed consolidated financial statements
Unaudited Interim Condensed Consolidated Financial Statements
for the three- and nine-month periods ended September 30, 2020
|
|
Unaudited interim condensed consolidated
statements of changes in equity for the nine-month period ended September 30, 2020 and the nine-month period ended September 30,
2019
in millions of U.S dollars
|
Number of shares (000’s)
|
Number of shares held by the Group (000’s)
|
Share capital
|
Share premium
|
Treasury shares
|
Retained profits(i)
|
Other reserves
|
Total
|
Non- controlling interests
|
Total equity
|
Balance on December 31, 2018
|
101,739
|
(914)
|
153
|
482
|
(81)
|
2,525
|
(538)
|
2,542
|
251
|
2,792
|
Total comprehensive income for the period(i)
|
—
|
—
|
—
|
—
|
—
|
(73)
|
(47)
|
(121)
|
(23)
|
(143)
|
Dividends
|
—
|
—
|
—
|
—
|
—
|
(268)
|
—
|
(268)
|
—
|
(268)
|
Dividends to non controlling interests
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
(1)
|
(1)
|
Purchase of treasury shares
|
—
|
(120)
|
—
|
—
|
(11)
|
3
|
—
|
(7)
|
—
|
(7)
|
Share based compensation
|
—
|
—
|
—
|
—
|
—
|
—
|
22
|
22
|
1
|
23
|
Issuance of shares under share-based payment schemes
|
—
|
437
|
—
|
(2)
|
39
|
(12)
|
(24)
|
1
|
—
|
1
|
Balance on September 30, 2019 (ii)
|
101,739
|
(596)
|
153
|
480
|
(53)
|
2,176
|
(587)
|
2,168
|
228
|
2,396
|
|
|
|
|
|
|
|
|
|
|
|
Balance on December 31, 2019 (ii)
|
101,739
|
(581)
|
153
|
480
|
(51)
|
2,372
|
(544)
|
2,410
|
271
|
2,680
|
Total comprehensive income for the period
|
—
|
—
|
—
|
—
|
—
|
(288)
|
(66)
|
(355)
|
(59)
|
(414)
|
Dividends
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
Dividends to non controlling interests
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
(5)
|
(5)
|
Purchase of treasury shares (iii)
|
—
|
(467)
|
—
|
—
|
(19)
|
3
|
—
|
(16)
|
—
|
(16)
|
Share based compensation
|
—
|
—
|
—
|
—
|
—
|
—
|
19
|
19
|
1
|
20
|
Issuance of shares under share-based payment schemes
|
—
|
521
|
—
|
(2)
|
40
|
(11)
|
(26)
|
1
|
—
|
1
|
Balance on September 30, 2020
|
101,739
|
(526)
|
153
|
478
|
(30)
|
2,076
|
(617)
|
2,059
|
207
|
2,266
|
|
(i)
|
Retained profits – includes profit for the period attributable to equity holders, of
which at September 30, 2020, $305 million (2019: $306 million; 2018: $324 million) are not distributable to equity holders.
|
|
(ii)
|
Restated for the finalization of purchase accounting for the latest acquisitions (see note
3).
|
|
(iii)
|
During the nine-month period ended September 30, 2020, Millicom repurchased 350,000 shares
for a total amount of $10 million and withheld approximately 117,000 shares for settlement of tax obligations on behalf of employees
under share-based compensation plans.
|
The accompanying notes are an integral part
of these unaudited interim condensed consolidated financial statements
Unaudited Interim Condensed Consolidated Financial Statements
for the three- and nine-month periods ended September 30, 2020
|
|
Notes to the unaudited interim condensed
consolidated statements
1. GENERAL
Millicom International Cellular S.A. (the
“Company” or “MIC SA”), a Luxembourg Société Anonyme, and its subsidiaries, joint ventures
and associates (the “Group” or “Millicom”) is a provider of cable and mobile services dedicated to emerging
markets in Latin America and Africa. Millicom provides high speed broadband and innovation around The Digital Lifestyle® services
through its principal brand, TIGO.
On October 29, 2020, the Board of Directors
authorized these unaudited interim condensed consolidated financial statements for issuance.
2. SUMMARY OF ACCOUNTING POLICIES
These interim condensed consolidated financial
statements of the Group are unaudited. They are presented in US dollars ($) and have been prepared in accordance with International
Accounting Standard (“IAS”) 34 ‘Interim Financial Reporting’ as issued by the International Accounting
Standards Board and as adopted by the European Union. In the opinion of management, these unaudited interim condensed consolidated
financial statements reflect all adjustments that are necessary for a proper presentation of the results for interim periods. Millicom’s
operations are not affected by significant seasonal or cyclical patterns.
These unaudited interim condensed consolidated
financial statements should be read in conjunction with the audited consolidated financial statements for the period ended December
31, 2019. These financial statements are prepared in accordance with consolidation and accounting policies consistent with the
December 31, 2019 consolidated financial statements, except for the changes described below.
We have made rounding adjustments to reach some
of the figures included in these unaudited interim condensed consolidated financial statements. Accordingly, numerical figures
shown as totals in some tables may not be an arithmetic aggregation of the figures that preceded them and percentage calculations
using these adjusted figures may not result in the same percentage values as are shown in these unaudited interim condensed consolidated
financial statements.
|
II.
|
COVID-19 - Qualitative and quantitative assessment
on business activities, financial situation and economic performance
|
On March 11, 2020, the
World Health Organization declared the coronavirus outbreak a pandemic. Most countries globally, including a majority of the countries
where we operate, reacted by implementing severe restrictions on travel and public gatherings, including the closing of offices,
businesses, schools, retail stores and other public venues, and by instituting curfews or quarantines. These restrictions, as well
as the dangers posed by the virus, produced a significant reduction in mobility and a severe disruption in global economic activity,
the effect of which was felt in our markets beginning in mid-March 2020.
Impact on our markets
and business
Most governments in our
markets implemented restrictions beginning in mid-March, and these were generally maintained throughout April, with some gradual
relaxation of measures beginning in late May and June. According to data compiled by the University of Oxford, the lockdowns in
the vast majority of our markets were among the most stringent in the world. As a result, many of our stores and distribution channels
were forced to close temporarily and a majority of our markets experienced very sharp reductions in mobility during the second
quarter. This produced an immediate and significant decline in our prepaid mobile business. Since then, most of the governments
in the countries in which we operate have gradually eased these restrictions and we have seen a corresponding increase in the mobility
of people. Our prepaid mobile business was affected much faster than postpaid, and recovery has also been significantly quicker.
Unaudited Interim Condensed Consolidated Financial Statements
for the three- and nine-month periods ended September 30, 2020
|
|
2. SUMMARY OF ACCOUNTING
POLICIES (Continued)
|
II.
|
COVID-19 - Qualitative and quantitative assessment on business activities, financial situation
and economic performance (continued)
|
Impact of the crisis
on accounting matters
As a consequence of this crisis, Millicom had
identified potential significant accounting implications in the following areas:
|
•
|
Impairment of non-financial assets/goodwill/investments
in joint ventures
|
As a result of
this crisis, Millicom have noticed reduced economic activity across the countries where it operates, and its operations are suffering
lower revenues, EBITDA and margins, which might indicate potential impairments.
In the third
quarter of the year, our operations have shown encouraging signs of recovery and are actually over performing the forecasts used
by management to carry out the impairment test as of June 30, 2020. The discount rates have also significantly decreased since
the declaration of the outbreak and they have gradually returned to pre-pandemic levels. There were therefore no such indicators
requiring management to carry out another impairment test for Q3.
|
•
|
Impairment of trade receivables
|
During Q2 2020,
and as a result of worsening collections, the Group had recognised additional bad debt provisions for an amount of $32 million
compared to the level of provisions recorded during Q1 2020 (pre-pandemic level) and $33 million compared to Q2 2019. However,
collections have significantly improved during Q3 2020 and bad debt levels have returned to their pre-pandemic level comparing
to Q1 2020. As of September 30, 2020, the total bad debt provisions cover close to 100% of the receivables overdue by more than
90 days.
For countries
previously restricted from disconnecting non paying customers, such as El Salvador and Bolivia, the Group established a policy
whereby operations stopped recognizing revenue after a certain number of invoices remained unpaid (usually 3 invoices - as these
customers would be disconnected after 3 unpaid invoices in normal circumstances). The Group believed it was unlikely that it would
collect the overdue invoiced amounts from these subscribers i.e. the 'Covid subscribers'. From that moment onwards after consideration
of the guidance under IFRS 15.13, for 'Covid subscribers' the Group had only recognized revenue up to an amount equal to the consideration
(cash) as and when received. Noteworthy, all our operations were finally allowed to apply a Lifeline product for non-paying customers,
with El Salvador and Bolivia being the latest to be able to apply it as from mid-2020.
As mentioned
above, our markets and operations showed encouraging signs of recovery, and therefore any unrecognized revenue during Q3 has been
offset with the invoicing effect of prior unrecognized revenue. For the nine-month period ended September 30, 2020, the Group invoiced
but unrecognized revenue amounts to $4.2 million,
|
III.
|
New and amended IFRS standards
|
The following changes to standards effective
for annual periods starting on January 1, 2020 have been adopted by the Group and did not have any significant impact on the Group’s
accounting policies or disclosures and did not require retrospective adjustments:
|
•
|
Amendments to the conceptual framework. The IASB has revised its conceptual framework.
|
|
•
|
Amendments to IAS 1, ‘Presentation of financial statements’, and IAS 8, ‘Accounting policies, changes in
accounting estimates and errors’.
|
|
•
|
Amendments to IFRS 9, IAS 39 and IFRS 7 - Interest Rate Benchmark Reform.
|
|
•
|
Amendments to IFRS 3 - definition of a business. This amendment revises the definition of a business.
|
|
•
|
Amendment to IFRS 16, 'Leases' - COVID 19 Rent Concessions - effective for annual periods starting on June 1, 2020. This amendment
provides an optional practical expedient for lessees from assessing whether a rent concession related to COVID-19 is a lease modification.
Lessees can elect to account for such rent concessions in the same way as they would if they were not lease modifications. In many
cases, this will result in accounting for the concession as variable lease payments in the period(s) in which the event or condition
that triggers the reduced payment occurs.
|
Unaudited Interim Condensed Consolidated Financial Statements
for the three- and nine-month periods ended September 30, 2020
|
|
2. SUMMARY OF ACCOUNTING POLICIES (Continued)
The following changes to standards not yet effective
are not expected to materially affect the Group:
|
•
|
IFRS 17, ‘Insurance contracts’ - effective for annual periods starting on January 1, 2023- IFRS 17 will not have
an impact for the Group. IFRS 17 has not been yet endorsed by the EU.
|
|
•
|
Amendments to IFRS 4 'Insurance contracts' (deferral of effective date of IFRS 9) - effective for annual periods starting on
January 1, 2021- These amendments extend the effective date to apply IFRS 9 for insurance contracts to January 1, 2023 in order
to align with the effective date of IFRS 7. These amendments have not been endorsed by the EU and will not have an impact for the
Group.
|
|
•
|
Amendments to IAS 1, 'Presentation of Financial Statements' - effective for annual periods starting on January 1, 2023- This
amendment clarifies that liabilities are classified as either current or non-current, depending on the rights that exist at the
end of the reporting period. The amendment also clarifies what IAS 1 means when it refers to the ‘settlement’ of a
liability. This amendment has not yet been endorsed by the EU.
|
|
•
|
Amendments to IFRS 9, IAS 39 and IFRS 7 - Interest Rate Benchmark Reform - Phase 2 - effective for annual periods starting
on January 1, 2021. The amendments address issues that arise during the reform of an interest rate benchmark, including the replacement
of one benchmark with an alternative one. The amendments are still subject to EU endorsement.
|
|
◦
|
IFRS 3 'Business Combinations' - Reference to Conceptual Framework
|
|
◦
|
IAS 16 'Property, Plant and Equipment' - Proceeds before intended use
|
|
◦
|
IAS 37 'Provisions, Contingent Liabilities and Contingent Assets' - Cost of fulfilling a contract
|
|
◦
|
Annual improvements to IFRS Standards 2018-2020, affecting IFRS 1, IFRS 9, IFRS 16 and IAS 41
|
All of these amendments are effective
for annual periods starting on January 1, 2022. These amendments have not yet been endorsed by the EU.
Unaudited Interim Condensed Consolidated Financial Statements
for the three- and nine-month periods ended September 30, 2020
|
|
3. ACQUISITION AND DISPOSAL OF SUBSIDIARIES,
JOINT VENTURES, ASSOCIATES AND OTHER NON-CONTROLLING INTERESTS
Acquisitions 2020
There were no acquisitions in 2020.
Acquisitions 2019
On February 20, 2019, MIC S.A., Telefonica Centroamerica
and Telefonica S.A. entered into 3 separate share purchase agreements (the “Telefonica CAM Acquisitions”) pursuant
to which, subject to the terms and conditions contained therein, Millicom agreed to purchase 100% of the shares of Telefonica Moviles
Panama, S.A., a company incorporated under the laws of Panama, from Telefonica Centroamerica (the “Panama Acquisition”),
100% of the shares of Telefonica de Costa Rica TC, S.A., a company incorporated under the laws of Costa Rica, from Telefonica (the
“Costa Rica Acquisition”) and 100% of the shares of Telefonia Celular de Nicaragua, S.A., a company incorporated under
the laws of Nicaragua, from Telefonica Centroamerica (the “Nicaragua Acquisition”). The Telefonica CAM Acquisitions
Share Purchase Agreements contain customary representations and warranties and termination provisions. While Millicom completed
both acquisitions in Nicaragua and Panama, it announced on May 1, 2020 that it had terminated the Share Purchase Agreement in relation
to the Costa Rica Acquisition (see note 11). The aggregate purchase price for the Telefonica Panama and Nicaragua Acquisitions
was $1.08 billion, which have been subject to purchase price adjustments.
The finalization of the purchase accounting
for the recent acquisitions had an effect on the following financial statements line items on the statement of financial position
as of December 31, 2019:
|
|
Impact of finalization/update of purchase accounting of
|
|
|
(in millions of U.S dollars)
|
December 31, 2019
As reported
|
Nicaragua
|
Panama
|
December 31, 2019
Restated
|
Reason for the change
|
STATEMENT OF FINANCIAL POSITION
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
Intangible assets, net
|
3,219
|
(4)
|
(20)
|
3,195
|
(i)
|
Property, plant and equipment, net
|
2,883
|
—
|
17
|
2,899
|
(ii)
|
Right-of-use asset (non-current)
|
977
|
—
|
34
|
1,012
|
(ii)
|
Other current assets
|
181
|
4
|
7
|
192
|
(iii)
|
LIABILITIES
|
|
|
|
|
|
Lease liabilities (non-current)
|
967
|
—
|
22
|
988
|
(ii)
|
Lease liabilities (current)
|
97
|
—
|
11
|
107
|
(ii)
|
Deferred tax liabilities
|
279
|
—
|
6
|
285
|
(iv)
|
|
|
|
|
|
|
EQUITY
|
|
|
|
|
|
Retained profits
|
2,222
|
|
|
2,222
|
|
Non-controlling interests
|
271
|
|
|
271
|
|
|
(i)
|
Impact on goodwill resulting from the adjustments
explained below for Nicaragua and Panama.
|
|
(ii)
|
See Panama section below. Mainly relates to lease
accounting policy alignment, final property, plant and equipment step-up and final purchase price adjustment.
|
|
(iii)
|
See Nicaragua
and Panama section below. Reflects the final price adjustment agreed for Nicaragua and Panama.
|
|
(iv)
|
Deferred
tax impact of these previously explained adjustments.
|
The impact of the finalization of Nicaragua
and Panama's purchase accounting on the 2019 Group statement of income is immaterial. Therefore, no adjustments were made in that
respect on comparative figures.
Further details of Nicaragua and Panama acquisitions
are provided below.
Unaudited Interim Condensed Consolidated Financial Statements
for the three- and nine-month periods ended September 30, 2020
|
|
3. ACQUISITION AND DISPOSAL OF SUBSIDIARIES,
JOINT VENTURES, ASSOCIATES AND OTHER NON-CONTROLLING INTERESTS (Continued)
Nicaragua Acquisition
This transaction closed on May 16, 2019 after
receipt of the necessary approvals and, since that date, Millicom holds all voting rights in Telefonia Celular de Nicaragua ("Nicaragua")
and controls it. On the same day, Millicom paid a cash consideration of $437 million, which was adjusted to $430 million as of
December 31, 2019 and finally adjusted to $426 million. For the purchase accounting, Millicom determined the final fair values
of Nicaragua's identifiable assets and liabilities based on transaction and relative fair values. The purchase accounting has been
finalized by May 16, 2020 and has not materially changed since December 31, 2019, with the exception of the final price adjustment.
The final purchase accounting and differences
compared to the provisional fair values reported as at December 31, 2019 are shown below:
|
Provisional Fair values (100%)
|
Final Fair values (100%)
|
Differences
|
(in millions of U.S dollars)
|
|
|
|
Intangible assets (excluding goodwill) (i)
|
131
|
131
|
—
|
Property, plant and equipment (ii)
|
149
|
149
|
—
|
Right of use assets (iii)
|
131
|
131
|
—
|
Other non-current assets
|
2
|
2
|
—
|
Current assets (excluding cash) (iv)
|
23
|
23
|
—
|
Trade receivables (v)
|
17
|
17
|
—
|
Cash and cash equivalents
|
7
|
7
|
—
|
Total assets acquired
|
459
|
459
|
—
|
Lease liabilities (iii)
|
131
|
131
|
—
|
Other liabilities (vi)
|
118
|
118
|
—
|
Total liabilities assumed
|
249
|
249
|
—
|
Fair value of assets acquired and liabilities assumed, net
|
210
|
210
|
—
|
Acquisition price
|
430
|
426
|
(4)
|
Goodwill
|
220
|
216
|
(4)
|
|
(i)
|
Intangible assets not previously recognized at
the date of acquisition, are mainly customer lists for an amount of $81 million, with estimated useful lives ranging from 4 to
10 years. In addition, a fair value step-up of $39 million on the spectrum held by Nicaragua has been recognized, with a remaining
useful life of 14 years.
|
|
(ii)
|
A fair value step-up of $39 million has been recognized
on property, plant and equipment, mainly on the core network ($25 million) and owned buildings ($8 million). The expected remaining
useful lives were estimated at 6-7 years on average.
|
|
(iii)
|
The Group measured the lease liability at the present
value of the remaining lease payments (as defined in IFRS 16) as if the acquired lease were a new lease at the acquisition date.
The right-of-use assets have been adjusted by $7 million to be measured at the same amount as the lease liabilities.
|
|
(iv)
|
Current assets include indemnification assets for
tax contingencies at fair value for an amount of $11 million - see (vi) below.
|
|
(v)
|
The fair value of trade receivables acquired was
$17 million.
|
|
(vi)
|
Other liabilities include the fair value of certain
possible tax contingent liabilities for $1 million and a deferred tax liability of $50 million resulting from the above adjustments
|
Panama Acquisition
This transaction closed on August 29, 2019 after
receipt of the necessary approvals and, since that date, Cable Onda, which is 80% owned by Millicom, holds all voting rights in
Telefonica Moviles Panama, S.A. ("Panama") and controls it. On the same day, Cable Onda paid a cash consideration of
$594 million to acquire 100% of the shares of Panama, finally adjusted to $587 million during Q3 2020. The purchase consideration
also includes potential indemnifications from the sellers (including potential tax and litigation contingencies). No non-controlling
interests are recognized at acquisition date as Cable Onda acquired 100% of the shares of Panama. However, non-controlling interests
are recognized in Panama's results from the date of acquisition.
For the purchase accounting, Millicom determined
the fair value of Panama's identifiable assets and liabilities based on transaction and relative fair values. During Q2 and Q3
2020, the Group completed the policy alignment and evaluation in respect of the right-of-use assets and lease liabilities, and
the property plant and equipment, as well as their related effect on the final valuation of the fixed assets. The related effects
of these adjustments are shown in the table below.
Unaudited Interim Condensed Consolidated Financial Statements
for the three- and nine-month periods ended September 30, 2020
|
|
3. ACQUISITION AND DISPOSAL OF SUBSIDIARIES,
JOINT VENTURES, ASSOCIATES AND OTHER NON-CONTROLLING INTERESTS (Continued)
The updated provisional purchase accounting
and differences compared to the provisional fair values reported as at December 31, 2019 are shown below:
|
Provisional Fair values (100%)
|
Final Fair values (100%)
|
Differences
|
(in millions of U.S dollars)
|
|
|
|
Intangible assets (excluding goodwill) (i)
|
178
|
182
|
4
|
Property, plant and equipment (ii)
|
110
|
127
|
17
|
Right of use assets (iii)
|
47
|
81
|
34
|
Other non-current assets
|
3
|
3
|
—
|
Current assets (excluding cash)
|
23
|
23
|
—
|
Trade receivables (iv)
|
21
|
21
|
—
|
Cash and cash equivalents
|
10
|
10
|
—
|
Total assets acquired
|
391
|
446
|
55
|
Lease liabilities
|
48
|
81
|
33
|
Other debt and financing
|
74
|
74
|
—
|
Other liabilities (v)
|
101
|
107
|
6
|
Total liabilities assumed
|
224
|
262
|
39
|
Fair value of assets acquired and liabilities assumed, net
|
167
|
184
|
16
|
Acquisition price
|
594
|
587
|
(7)
|
Goodwill
|
426
|
403
|
(23)
|
|
(i)
|
Intangible assets not previously recognized at the date of acquisition, are mainly customer lists for an amount of $55 million,
with estimated useful lives ranging from 3 to 17 years. In addition, a fair value step-up of $7 million on the spectrum held by
Panama has been recognized, with a remaining useful life of 17 years. Finally, a fair value step-up of $3 million has been
recognised on certain software.
|
|
(ii)
|
A fair value step-up of $17 million has been recognized on property, plant and equipment, mainly on the core network
($11 million) and owned land and buildings ($4 million). The expected remaining useful lives were estimated at 3 to 8
years.
|
|
(iii)
|
The accounting policy alignment resulted in an increase in the right-of-use assets and lease liabilities of approximately
$30 million. Subsequently, the right-of-use assets have been adjusted by $4 million to be measured at the same amount
as the lease liabilities.
|
|
(iv)
|
The fair value of trade receivables acquired was $21
million.
|
|
(v)
|
Other liabilities include a deferred tax liability
of $21 million resulting from the above adjustments
|
Cable Onda acquisition
The Group finalized Cable Onda's purchase accounting
in December 2019 by adjusting the provisional fair values mainly on tangible assets. The impact on the statement of income for
the three- and nine-month periods ended September 30, 2019 was mainly on depreciation as an additional charge was recorded for
$2 million and $6 million, respectively, compared to what the Group reported last year.
Unaudited Interim Condensed Consolidated Financial Statements
for the three- and nine-month periods ended September 30, 2020
|
|
4. DISCONTINUED OPERATIONS AND ASSETS HELD
FOR SALE
Summary
Financial information relating to discontinued
operations for the three- and nine-month periods ended September 30, 2019 are set out below. The figures shown below are after
inter-company eliminations. 2019 figures include Chad only (9 months). There have been no significant movements in 2020 except
for those events disclosed at the bottom of the following tables.
Results from Discontinued Operations ($ millions)
|
Nine months ended September 30, 2019
|
Three months ended September 30, 2019
|
Revenue
|
50
|
—
|
Cost of sales
|
(14)
|
—
|
Operating expenses
|
(29)
|
—
|
Depreciation and amortization
|
(11)
|
—
|
Other operating income (expenses), net
|
—
|
—
|
Gain/(loss) on disposal of discontinued operations
|
74
|
—
|
Other expenses linked to the disposal of discontinued operations
|
(8)
|
(4)
|
Operating profit (loss)
|
64
|
(4)
|
Interest income (expense), net
|
(2)
|
—
|
Other non-operating (expenses) income, net
|
—
|
—
|
Profit (loss) before taxes
|
62
|
(4)
|
Credit (charge) for taxes, net
|
(2)
|
—
|
Net profit/(loss) from discontinuing operations
|
60
|
(4)
|
Cash flows from discontinued operations ($ millions)
|
Nine months ended September 30, 2019
|
Cash from (used in) operating activities, net
|
(8)
|
Cash from (used in) investing activities, net
|
5
|
Cash from (used in) financing activities, net
|
7
|
Net cash inflows/(outflows)
|
5
|
Rwanda
On January 31, 2018, Millicom completed the
sale of its Rwanda operations to subsidiaries of Bharti Airtel Limited for cash consideration of $51 million. The consideration
included a deferred cash payment of $17 million, which was received in Q1 2020.
Chad
In August 2020, the Group and the buyer of our
operations in Chad agreed on a final price adjustment of $8 million. This price adjustment was disbursed in September 2020
and recorded under the results from discontinued operations in the Group's statement of income.
Unaudited Interim Condensed Consolidated Financial Statements
for the three- and nine-month periods ended September 30, 2020
|
|
5. SEGMENT INFORMATION
Management determines operating and reportable
segments based on information used by the chief operating decision maker (CODM) to make strategic and operational decisions from
both a business and geographic perspective. The Group’s risks and rates of return are predominantly affected by operating
in different geographical regions. The Group has businesses in two main regions: Latin America (“Latam”) and Africa.
The Latam figures below include Honduras and Guatemala as if they are fully consolidated by the Group, as this reflects the way
management reviews and uses internally reported information to make decisions. Honduras and Guatemala are shown under the Latam
segment. The joint venture in Ghana is not reported as if fully consolidated.
As from January 1, 2020, Millicom is allocating
corporate costs to each segment based on their contribution to underlying revenue, and only non-recurring costs, such as the M&A-related
fees incurred in 2019, will remain unallocated going forward. This change in presentation has no impact on Group EBITDA.
In order to facilitate comparisons of September
30, 2020 figures with prior periods, comparative figures have been re-presented to conform with this new segment EBITDA reporting.
Revenue, operating profit (loss), EBITDA and
other segment information for the three- and nine-month periods ended September 30, 2020 and 2019, are as follows:
Nine months ended September 30, 2020
(in millions of U.S dollars)
|
Latin America
|
Africa
|
Unallocated
|
Guatemala and Honduras(vii)
|
Eliminations and
Transfers
|
Total
|
Mobile revenue
|
2,383
|
263
|
—
|
(1,078)
|
—
|
1,568
|
Cable and other fixed services revenue
|
1,558
|
6
|
(1)
|
(222)
|
—
|
1,341
|
Other revenue
|
43
|
1
|
(1)
|
(5)
|
—
|
38
|
Service revenue (i)
|
3,984
|
269
|
(2)
|
(1,304)
|
—
|
2,947
|
Telephone and equipment and other revenue (i)
|
326
|
—
|
—
|
(190)
|
—
|
136
|
Revenue
|
4,309
|
269
|
(2)
|
(1,494)
|
—
|
3,083
|
Operating profit (loss)
|
565
|
23
|
11
|
(377)
|
101
|
323
|
Add back:
|
|
|
|
|
|
|
Depreciation and amortization
|
1,170
|
67
|
8
|
(341)
|
—
|
904
|
Share of profit in joint ventures in Guatemala and Honduras
|
—
|
—
|
—
|
—
|
(101)
|
(101)
|
Other operating income (expenses), net
|
(10)
|
—
|
(21)
|
(1)
|
—
|
(31)
|
EBITDA (ii)
|
1,725
|
91
|
(2)
|
(719)
|
—
|
1,096
|
EBITDA from discontinued operations
|
—
|
—
|
—
|
—
|
—
|
—
|
EBITDA incl discontinued operations
|
1,725
|
90
|
(2)
|
(719)
|
—
|
1,095
|
Capital expenditure (iii)
|
(692)
|
(32)
|
(7)
|
191
|
—
|
(541)
|
Changes in working capital and others (iv)
|
14
|
2
|
(24)
|
(38)
|
—
|
(46)
|
Taxes paid
|
(196)
|
(8)
|
(1)
|
97
|
—
|
(108)
|
Operating free cash flow (v)
|
852
|
52
|
(33)
|
(470)
|
—
|
400
|
Total Assets (vi)
|
13,185
|
915
|
4,338
|
(5,241)
|
(868)
|
12,330
|
Total Liabilities
|
8,680
|
945
|
3,598
|
(2,155)
|
(1,004)
|
10,063
|
Unaudited Interim Condensed Consolidated Financial Statements
for the three- and nine-month periods ended September 30, 2020
|
|
5. SEGMENT INFORMATION (Continued)
Nine months ended September 30, 2019
(in millions of U.S dollars)
|
Latin America
|
Africa
|
Unallocated
|
Guatemala and Honduras (vii)
|
Eliminations and transfers
|
Total
|
Mobile revenue
|
2,398
|
277
|
—
|
(1,104)
|
—
|
1,571
|
Cable and other fixed services revenue
|
1,637
|
7
|
—
|
(206)
|
—
|
1,438
|
Other revenue
|
37
|
—
|
—
|
(5)
|
—
|
32
|
Service revenue (i)
|
4,072
|
284
|
—
|
(1,315)
|
—
|
3,041
|
Telephone and equipment revenue (i)
|
315
|
—
|
—
|
(170)
|
—
|
145
|
Revenue
|
4,387
|
284
|
—
|
(1,485)
|
—
|
3,186
|
Operating profit (loss)
|
734
|
13
|
(31)
|
(408)
|
137
|
446
|
Add back:
|
|
|
|
|
|
|
Depreciation and amortization
|
1,057
|
72
|
6
|
(331)
|
—
|
803
|
Share of profit in joint ventures in Guatemala and Honduras
|
—
|
—
|
—
|
—
|
(137)
|
(137)
|
Other operating income (expenses), net
|
(9)
|
(1)
|
9
|
(6)
|
—
|
(7)
|
EBITDA (ii)
|
1,782
|
84
|
(15)
|
(744)
|
—
|
1,106
|
EBITDA from discontinued operations
|
—
|
—
|
—
|
—
|
—
|
—
|
EBITDA incl discontinued operations
|
1,782
|
84
|
(15)
|
(744)
|
—
|
1,106
|
Capital expenditure (iii)
|
(776)
|
(37)
|
(4)
|
189
|
—
|
(628)
|
Changes in working capital and others (iv)
|
(67)
|
19
|
(89)
|
(15)
|
—
|
(153)
|
Taxes paid
|
(147)
|
(8)
|
(7)
|
89
|
—
|
(73)
|
Operating free cash flow (v)
|
792
|
58
|
(115)
|
(482)
|
—
|
252
|
Total Assets (vi)
|
13,740
|
953
|
3,606
|
(5,668)
|
(694)
|
11,937
|
Total Liabilities
|
8,119
|
904
|
4,239
|
(2,090)
|
(1,632)
|
9,541
|
Unaudited Interim Condensed Consolidated Financial Statements
for the three- and nine-month periods ended September 30, 2020
|
|
5. SEGMENT INFORMATION (Continued)
Three months ended September 30, 2020 (in millions of U.S dollars)
|
Latin America
|
Africa
|
Unallocated
|
Guatemala and Honduras (vii)
|
Eliminations and transfers
|
Total
|
|
|
|
|
|
|
|
Mobile revenue
|
790
|
92
|
—
|
(360)
|
—
|
522
|
Cable and other fixed services revenue
|
513
|
2
|
—
|
(76)
|
—
|
439
|
Other revenue
|
15
|
—
|
—
|
(2)
|
—
|
13
|
Service revenue (i)
|
1,318
|
94
|
—
|
(438)
|
—
|
974
|
Telephone and equipment revenue (i)
|
126
|
—
|
—
|
(75)
|
—
|
52
|
Revenue
|
1,445
|
94
|
—
|
(512)
|
—
|
1,026
|
Operating profit (loss)
|
194
|
9
|
(1)
|
(128)
|
22
|
97
|
Add back:
|
|
|
|
|
|
|
Depreciation and amortization
|
394
|
22
|
2
|
(114)
|
—
|
305
|
Share of profit in joint ventures in Guatemala and Honduras
|
—
|
—
|
—
|
—
|
(22)
|
(22)
|
Other operating income (expenses), net
|
(7)
|
1
|
(1)
|
—
|
—
|
(9)
|
EBITDA (ii)
|
581
|
32
|
(1)
|
(242)
|
—
|
371
|
EBITDA from discontinued operations
|
—
|
—
|
—
|
—
|
—
|
—
|
EBITDA incl discontinued operations
|
581
|
32
|
(1)
|
(242)
|
—
|
370
|
Capital expenditure (iii)
|
(223)
|
(13)
|
(2)
|
73
|
—
|
(165)
|
Changes in working capital and others (iv)
|
(391)
|
1
|
451
|
(19)
|
—
|
42
|
Taxes paid
|
(100)
|
(3)
|
—
|
39
|
—
|
(65)
|
Operating free cash flow (v)
|
(134)
|
17
|
448
|
(149)
|
—
|
183
|
Unaudited Interim Condensed Consolidated Financial Statements
for the three- and nine-month periods ended September 30, 2020
|
|
5. SEGMENT INFORMATION (Continued)
Three months ended September 30, 2019
(in millions of U.S dollars)
|
Latin America
|
Africa
|
Unallocated
|
Guatemala and Honduras (vii)
|
Eliminations and transfers
|
Total
|
|
|
|
|
|
|
|
Mobile revenue
|
819
|
96
|
—
|
(364)
|
—
|
551
|
Cable and other fixed services revenue
|
553
|
2
|
—
|
(70)
|
—
|
485
|
Other revenue
|
12
|
—
|
—
|
(2)
|
—
|
10
|
Service revenue (i)
|
1,383
|
98
|
—
|
(436)
|
—
|
1,046
|
Telephone and equipment revenue (i)
|
117
|
—
|
—
|
(65)
|
—
|
51
|
Revenue
|
1,500
|
98
|
—
|
(501)
|
—
|
1,097
|
Operating profit (loss)
|
267
|
16
|
(17)
|
(136)
|
46
|
176
|
Add back:
|
|
|
|
|
|
|
Depreciation and amortization
|
358
|
23
|
2
|
(111)
|
—
|
272
|
Share of profit in joint ventures in Guatemala and Honduras
|
—
|
—
|
—
|
—
|
(46)
|
(46)
|
Other operating income (expenses), net
|
(6)
|
(1)
|
9
|
(1)
|
—
|
1
|
EBITDA (ii)
|
619
|
39
|
(5)
|
(249)
|
—
|
404
|
EBITDA from discontinued operations
|
—
|
(4)
|
—
|
—
|
—
|
(4)
|
EBITDA incl discontinued operations
|
619
|
34
|
(5)
|
(249)
|
—
|
399
|
Capital expenditure (iii)
|
(228)
|
(9)
|
—
|
53
|
—
|
(186)
|
Changes in working capital and others (iv)
|
(5)
|
4
|
(23)
|
(15)
|
—
|
(40)
|
Taxes paid
|
(51)
|
(2)
|
(1)
|
30
|
—
|
(24)
|
Operating free cash flow (v)
|
333
|
26
|
(29)
|
(180)
|
—
|
150
|
|
(i)
|
Service revenue is Group revenue related to the provision of ongoing services such as monthly subscription fees, airtime
and data usage fees, interconnection fees, roaming fees, mobile finance service commissions and fees from other telecommunications
services such as data services, SMS and other value-added services excluding telephone and equipment sales. Revenues from other
sources comprises rental, sub-lease rental income and other non-recurring revenues. The Group derives revenue from the transfer
of goods and services over time and at a point in time. Refer to the table below.
|
|
(ii)
|
EBITDA is operating profit excluding impairment losses, depreciation and amortization and gains/losses on the disposal of
fixed assets. EBITDA is used by the management to monitor the segmental performance and for capital management.
|
|
(iii)
|
Excluding spectrum and licenses of $95 million (2019:
$43 million) and cash received on tower deals of nil (2019: $21 million).
|
|
(iv)
|
‘Changes in working capital and others’ include changes in working capital as stated in the cash flow statement
as well as share based payments expense and non-cash bonuses.
|
|
(v)
|
Operating Free Cash Flow is EBITDA less cash capex (excluding spectrum and license costs) less change in working capital,
other non-cash items (share-based payment expense and non-cash bonuses) and taxes paid.
|
|
(vi)
|
Segment assets include goodwill and other intangible
assets.
|
|
(vii)
|
Including eliminations for Guatemala and Honduras as
reported in the Latin America segment.
|
Unaudited Interim Condensed Consolidated Financial Statements
for the three- and nine-month periods ended September 30, 2020
|
|
5. SEGMENT INFORMATION (Continued)
Revenue from contracts with customers from continuing
operations
|
|
Nine months ended September 30, 2020
|
Nine months ended September 30, 2019
|
Three months ended September 30, 2020
|
Three months ended September 30, 2019
|
in millions of U.S dollars
|
Timing of revenue recognition
|
Latin America
|
Africa
|
Total Group
|
Latin America
|
Africa
|
Total Group
|
Latin America
|
Africa
|
Total Group
|
Latin America
|
Africa
|
Total Group
|
Mobile
|
Over time
|
1,282
|
177
|
1,459
|
1,270
|
194
|
1,465
|
421
|
60
|
482
|
447
|
68
|
515
|
Mobile Financial Services
|
Point in time
|
22
|
86
|
108
|
23
|
83
|
105
|
8
|
32
|
40
|
8
|
28
|
36
|
Cable and other fixed services
|
Over time
|
1,336
|
6
|
1,342
|
1,432
|
7
|
1,438
|
438
|
2
|
439
|
483
|
2
|
485
|
Other
|
Over time
|
37
|
1
|
38
|
33
|
—
|
33
|
13
|
—
|
14
|
10
|
—
|
10
|
Service Revenue
|
|
2,678
|
269
|
2,947
|
2,757
|
284
|
3,041
|
881
|
94
|
975
|
948
|
98
|
1,046
|
Telephone and equipment
|
Point in time
|
136
|
—
|
136
|
145
|
—
|
145
|
51
|
—
|
51
|
51
|
—
|
51
|
Revenue from contracts with customers
|
|
2,814
|
269
|
3,083
|
2,902
|
284
|
3,186
|
932
|
94
|
1,026
|
999
|
98
|
1,097
|
6. OTHER NON-OPERATING (EXPENSES) INCOME,
NET
The Group’s other non-operating (expenses)
income, net comprised the following:
in millions of U.S dollars
|
Nine months ended September 30, 2020
|
Nine months ended September 30, 2019
|
Three months ended September 30, 2020
|
Three months ended September 30, 2019
|
Change in fair value of derivatives (Note 13)
|
(5)
|
—
|
1
|
—
|
Change in fair value in investment in Jumia (Note 14)
|
(18)
|
(32)
|
—
|
(89)
|
Change in fair value in investment in HT (Note 14)
|
(22)
|
—
|
23
|
—
|
Change in value of call option and put option liability (Note 13)
|
8
|
(18)
|
—
|
(4)
|
Exchange gains (losses), net (i)
|
(113)
|
(40)
|
(34)
|
(40)
|
Other non-operating income (expenses), net
|
2
|
8
|
—
|
6
|
Total
|
(147)
|
(82)
|
(10)
|
(127)
|
|
(i)
|
Exchange losses in 2020 are mainly due to the devaluation
of the Colombia peso against US dollar.
|
Unaudited Interim Condensed Consolidated Financial Statements
for the three- and nine-month periods ended September 30, 2020
|
|
7. EARNINGS PER COMMON SHARE
Earnings per common share (EPS) attributable
to owners of the Company are comprised as follows:
in millions of U.S dollars
|
Nine months ended September 30, 2020
|
Nine months ended September 30, 2019(i)
|
Three months ended September 30, 2020
|
Three months ended September 30, 2019(i)
|
Basic and Diluted
|
|
|
|
|
Net profit (loss) attributable to equity holders from continuing operations
|
(279)
|
(133)
|
(43)
|
(127)
|
Net profit (loss) attributable to equity holders from discontinued operations
|
(9)
|
60
|
(8)
|
(4)
|
Net profit/(loss) attributable to all equity holders to determine the basic earnings (loss) per share
|
(288)
|
(73)
|
(51)
|
(131)
|
|
|
|
|
|
in thousands
|
|
|
|
|
Weighted average number of ordinary shares for basic and diluted earnings per share
|
101,158
|
101,125
|
101,201
|
101,151
|
|
|
|
|
|
in U.S dollars
|
|
|
|
|
Basic and diluted
|
|
|
|
|
EPS from continuing operations attributable to owners of the Company
|
(2.76)
|
(1.32)
|
(0.42)
|
(1.25)
|
EPS from discontinued operations attributable to owners of the Company
|
(0.09)
|
0.59
|
(0.08)
|
(0.04)
|
EPS for the period attributable to owners of the Company
|
(2.85)
|
(0.73)
|
(0.50)
|
(1.30)
|
|
(i)
|
Restated as a result of the finalization of the purchase
accounting of Cable Onda(see note 3).
|
8. PROPERTY, PLANT AND EQUIPMENT
During the nine-month period ended September
30, 2020, Millicom added property, plant and equipment for $388 million (September 30, 2019: $459 million) and received $6 million
from disposal of property, plant and equipment (September 30, 2019: $21 million).
9. INTANGIBLE ASSETS
During the nine-month period ended September
30, 2020, Millicom added intangible assets for $497 million of which $427 million related to acquisition of spectrum and licenses,
and $70 million to additions of other intangible assets (September 30, 2019: $65 million and $63 million, respectively ) and did
not receive any proceeds from disposal of intangible assets (September 30, 2019: nil).
In December 2019, Telemovil El Salvador S.A.
de C.V. ('Telemovil') acquired spectrum in 50Mhz AWS band and paid an advance of $14 million. On January 8, 2020, Telemovil made
a final payment of $20 million and started using the spectrum.
In December 2019, Tigo Colombia participated
in an auction launched by the Ministerio de Tecnologias de la Informacion y las Comunicaciones (MINTIC), and acquired licenses
granting the right to use a total of 40 MHz in the 700 MHz band. The 20-year license will expire in 2040. As a result of this auction,Tigo
Colombia has strengthened its spectrum position, which also includes 55 MHz in the 1900 band and 30 MHz of AWS. Tigo Colombia agreed
to a total notional consideration of COP$2.45 billion (equivalent to approximately US$650 million using the September 30, 2020
exchange rate), of which approximately 55% will be payable in cash and 45% in coverage obligations to be met by 2025.
An initial payment of approximately $33 million
was made in Q2 2020, with the remainder payable in 12 annual installments beginning in 2026 and ending in 2037. The 55% cash portion
bears interest at the Colombia-10 years Treasury Bond rate. In April and May 2020, local management received permission to operate
40 Mhz in the 700 MHz band and accounted for the spectrum at an amount of $388 million corresponding to the net present value of
the future payments, plus other costs directly attributable to this acquisition. The related future interest commitments will be
recognized as interest expense over the next 17 years. The remaining 45% consideration due as coverage obligations are currently
being estimated and will be recognized in the statement of financial position as incurred.
Unaudited Interim Condensed Consolidated Financial Statements
for the three- and nine-month periods ended September 30, 2020
|
|
10. FINANCIAL OBLIGATIONS
A. Debt and financing
The most significant movements in debt and financing
for the nine month period ended September 30, 2020 were as follows:
El Salvador
On June 29, 2020, Telemovil El Salvador, S.A
de C.V. repaid in its entirety $150 million of the principal under a credit agreement dated as of January 12, 2018 entered into
with the Bank of Nova Scotia, as lender, and the Company as guarantor.
Honduras
On June 1, 2020, the Honduras Cellular executed
a $32 million bank loan agreement in equivalent amount in local currency for a10 year term.
Costa Rica
On June 29, 2020 Millicom Cable Costa Rica S.A.
partially repaid an amount of $30 million towards its $150 million syndicated credit agreement dated as of April 13, 2018, and
guaranteed by the Company.
Paraguay
On May 4, 2020, Telefónica Celular de
Paraguay, S.A.E., completed the acquisition of another Millicom subsidiary in Paraguay - Mobile Cash Paraguay S.A , and further
on June 30, 2020, the acquisition of Servicios y Productos Multimedia S.A.. Effective as of those dates, these new entities now
form part of the borrower's group for purposes of the $550 million 5.875% Senior Notes due 2027 issued by Telefónica Celular
de Paraguay, S.A.E.. Also, as of July 7, 2020 Servicios y Productos Multimedia S.A. became guarantor of the 5.875% Notes due 2027.
Guatemala
On June 19, 2020, the Guatemala operation entered
into a credit agreement with Banco Industrial for GTQ 500 million (approximately $64 million using the exchange rate as of September
30, 2020) for a 5 year term.
During Q3 2020, Comcel's board of directors
decided to early redeem the $800 million aggregate principal amount of its outstanding 6.875% Senior Notes due 2024 on November
18, 2020. The redemption was officially announced on October 1, 2020 at a redemption price equal to 102.292% of the principal amount
of the Notes to be redeemed plus accrued and unpaid interest of $16 million, resulting in an aggregate amount of $834 million payable
on November 18, 2020. This redemption is conditional on Comcel obtaining approximately $300 million of local currency (GTQ) financing.
The redemption premium ($18 million) and additional interest ($7 million), as well as the remaining unamortized deferred costs
amounting to $8 million, have been accrued in Comcel's statement of income for the nine-months ended September 30, 2020. The impact
on the Group's statement of income is therefore a $18 million expense (at 55% ownership) recorded on the line "Share of profit
in the joint ventures in Guatemala and Honduras". As of October 28, 2020, Comcel already obtained the full $300 million of
local currency (GTQ) financing.
Unaudited Interim Condensed Consolidated Financial Statements
for the three- and nine-month periods ended September 30, 2020
|
|
10. FINANCIAL OBLIGATIONS (Continued)
Analysis of debt and financing by maturity
The total amount of debt and financing is repayable
as follows:
in millions of U.S dollars
|
As at September 30, 2020
|
December 31, 2019
|
Due within:
|
|
|
One year
|
114
|
|
186
|
|
One-two years
|
102
|
|
155
|
|
Two-three years
|
393
|
|
145
|
|
Three-four years
|
828
|
|
517
|
|
Four-five years
|
1,258
|
|
1,085
|
|
After five years
|
3,210
|
|
3,884
|
|
Total debt and financing
|
5,905
|
|
5,972
|
|
As at September 30, 2020, the Group's share
of total debt and financing secured by either pledged assets, pledged deposits issued to cover letters of credit or guarantees
was $293 million (December 31, 2019: $464 million).
In addition to the above, in 2019, MIC Tanzania
Public Limited Company entered into a loan facility agreement, with the Standard Bank of South Africa acting as an agent and a
consortium of banks acting as the original lenders. The facility agreement, maturing in 2025, has an all asset debenture securing
the whole amount, as well as a pledge over the shares of the immediate holding company of the borrower.
The table below describes the outstanding and
maximum exposure under guarantees and the remaining terms of the guarantees as at September 30, 2020 and December 31, 2019.
|
Bank and financing guarantees (i)
|
in millions of U.S dollars
|
As at September 30, 2020
|
As at December 31, 2019
|
Terms
|
Outstanding exposure
|
Maximum exposure
|
Outstanding exposure
|
Maximum exposure
|
0-1 year
|
63
|
|
63
|
|
29
|
|
29
|
|
1-3 years
|
230
|
|
230
|
|
134
|
|
134
|
|
3-5 years
|
—
|
|
—
|
|
300
|
|
300
|
|
More than 5 years
|
—
|
|
—
|
|
—
|
|
—
|
|
Total
|
293
|
|
293
|
|
464
|
|
464
|
|
|
(i)
|
If non-payment by the obligor, the guarantee ensures
payment of outstanding amounts by the Group's guarantor.
|
The Group’s interest and other financial
expenses comprised the following:
in millions of U.S dollars
|
Nine months ended September 30, 2020
|
Nine months ended September 30, 2019
|
Three months ended September 30, 2020
|
Three months ended September 30, 2019
|
Interest expense on bonds and bank financing
|
(288)
|
|
(255)
|
|
(93)
|
|
(86)
|
|
Interest expense on leases
|
(117)
|
|
(113)
|
|
(39)
|
|
(39)
|
|
Early redemption charges
|
—
|
|
(10)
|
|
—
|
|
—
|
|
Others
|
(52)
|
|
(28)
|
|
(9)
|
|
(11)
|
|
Total interest and other financial expenses
|
(457)
|
|
(407)
|
|
(141)
|
|
(135)
|
|
Unaudited Interim Condensed Consolidated Financial Statements
for the three- and nine-month periods ended September 30, 2020
|
|
10. FINANCIAL OBLIGATIONS (Continued)
B. Lease liabilities
In early 2020, and following a change in regulation
in Colombia, lease payments for the use of certain public assets have been significantly decreased. This triggered a lease modification
and a decrease of the related lease liabilities (and right-of-use assets) of approximately $45 million.
Except for the change above, there have been
no other significant events affecting lease liabilities (and right-of-use assets) during the nine-month period ended September
30, 2020.
11. COMMITMENTS AND CONTINGENCIES
Litigation & claims
The Company and its operations are contingently
liable with respect to lawsuits, legal, regulatory, commercial and other legal risks that arise in the normal course of business.
As of September 30, 2020, the total amount of claims brought against Millicom and its subsidiaries is $284 million (December 31,
2019: $204 million). The Group's share of the comparable exposure for joint ventures is $7 million (December 31, 2019: $4 million).
As at September 30, 2020, $43 million has been
provisioned by its subsidiaries for these risks in the consolidated statement of financial position (December 31, 2019: $30 million).
The Group's share of provisions made by the joint ventures was $3 million (December 31, 2019: $3 million). While it is not possible
to ascertain the ultimate legal and financial liability with respect to these claims and risks, the ultimate outcome is not anticipated
to have a material effect on the Group’s financial position and operations.
On May 25, 2020,
as a result of the termination of the Costa Rica acquisition (see Note 3), Telefonica filed a complaint, followed by an amended
complaint on August 3, 2020, against us in the Supreme Court of New York. The amended complaint asserts claims for breach of contract
and alleges, among other things, that we were required to close because the closing conditions specified in the sale and purchase
agreement for the acquisition had been satisfied. The complaint seeks, among other relief, a declaration of Telefonica’s
rights, and unspecified damages, costs, and fees. We believe the complaint is without merit and on September 2, 2020, filed a motion
to dismiss the amended complaint. The motion to dismiss is still pending.
Taxation
At September 30, 2020, the tax risks exposure
of the Group's subsidiaries is estimated at $310 million, for which provisions of $68 million have been recorded in tax liabilities;
representing the probable amount of eventual claims and required payments related to those risks (December 31, 2019: $300 million
of which provisions of $50 million were recorded). The Group's share of comparable tax exposure and provisions in its joint ventures
amounts to $65 million (December 31, 2019: $49 million) and $7 million (December 31, 2019: $4 million), respectively.
Capital commitments
At September 30, 2020, the Company and its subsidiaries
had fixed commitments to purchase network equipment, land and buildings, other fixed assets and intangible assets of $289 million
of which $259 million are due within one year (December 31, 2019: $122 million of which $102 million are due within one year).
The Group’s share of commitments in the joint ventures is $74 million and $71 million. (December 31, 2019: $52 million and
$51 million).
Unaudited Interim Condensed Consolidated Financial Statements
for the three- and nine-month periods ended September 30, 2020
|
|
12. RELATED PARTY TRANSACTIONS
The following transactions were conducted with
related parties during the three- and nine-month periods ended September 30, 2020 and September 30, 2019:
in millions of U.S dollars
|
Nine months ended September 30, 2020
|
Nine months ended September 30, 2019
|
Three months ended September 30, 2020
|
Three months ended September 30, 2019
|
Expenses
|
|
|
|
|
Purchases of goods and services from Miffin
|
(157)
|
|
(156)
|
|
(53)
|
|
(63)
|
|
Purchases of goods and services from EPM
|
(27)
|
|
(28)
|
|
(8)
|
|
(8)
|
|
Lease of towers and related services from HTA (i)
|
—
|
|
(20)
|
|
—
|
|
(7)
|
|
Other expenses
|
(11)
|
|
(4)
|
|
(4)
|
|
(1)
|
|
Total
|
(194)
|
|
(208)
|
|
(66)
|
|
(79)
|
|
|
(i)
|
HTA ceased to be a related party on October 15, 2019
(note 14).
|
in millions of U.S dollars
|
Nine months ended September 30, 2020
|
Nine months ended September 30, 2019
|
Three months ended September 30, 2020
|
Three months ended September 30, 2019
|
Income / gains
|
|
|
|
|
Sale of goods and services to Miffin
|
237
|
|
222
|
|
82
|
|
75
|
|
Sale of goods and services to EPM
|
11
|
|
10
|
|
4
|
|
4
|
|
Other income / gains
|
2
|
|
1
|
|
1
|
|
—
|
|
Total
|
249
|
|
233
|
|
86
|
|
78
|
|
As at September 30, 2020 and December 31, 2019,
the Group had the following balances with related parties:
in millions of U.S dollars
|
As at September 30, 2020
|
As at December 31, 2019
|
Liabilities
|
|
|
Payables to Guatemala joint venture(i)
|
229
|
|
361
|
|
Payables to Honduras joint venture(ii)
|
105
|
|
133
|
|
Payables to EPM
|
14
|
|
37
|
|
Payables to Panama non-controlling interests
|
1
|
|
—
|
|
Total
|
350
|
|
531
|
|
|
(i)
|
Interest bearing shareholder loans of which $219 million
are due after more than one year.
|
|
(ii)
|
Mainly advances for dividends expected to be declared
in 2020 and shareholder loans.
|
Unaudited Interim Condensed Consolidated Financial Statements
for the three- and nine-month periods ended September 30, 2020
|
|
12. RELATED PARTY TRANSACTIONS (Continued)
in millions of U.S dollars
|
As at September 30, 2020
|
As at December 31, 2019
|
Assets
|
|
|
Receivables from Guatemala and Honduras joint ventures
|
18
|
|
23
|
|
Receivables from EPM
|
3
|
|
3
|
|
Receivables from Cable Onda
|
1
|
|
—
|
|
Receivable from AirtelTigo Ghana (i)
|
45
|
|
43
|
|
Other accounts receivable
|
5
|
|
4
|
|
Total
|
72
|
|
73
|
|
|
(i)
|
Disclosed under Other non-current assets in the statement
of financial position.
|
13. FINANCIAL INSTRUMENTS
Other than the items disclosed below, the fair
values of financial assets and financial liabilities approximate their carrying values as at September 30, 2020 and December 31,
2019:
in millions of U.S dollars
|
Carrying value
|
Fair value(i)
|
|
As at September 30, 2020
|
As at December 31, 2019
|
As at September 30, 2020
|
As at December 31, 2019
|
Financial liabilities
|
|
|
|
|
Debt and financing
|
5,905
|
|
5,972
|
|
5,999
|
|
6,229
|
|
|
|
|
|
|
|
|
|
|
|
(i)
|
Fair values are measured with reference to Level 1
(for listed bonds) or 2.
|
Derivative financial instruments
Currency and interest rate swap contracts
MIC S.A. entered into swap contracts in order
to hedge the foreign currency and interest rate risks in relation to the SEK 2 billion (approximately $211 million) senior unsecured
sustainability bond issued in May 2019. These swaps are accounted for as cash flow hedges as the timing and amounts of the cash
flows under the swap agreements match the cash flows under the SEK bond. Their maturity date is May 2024. The hedging relationship
is highly effective and related fluctuations are recorded through other comprehensive income. At September 30, 2020, the fair values
of the swaps amount to an asset of $0.5 million (December 31, 2019: a liability of $0.2 million).
Colombia, Bolivia, El Salvador and Costa Rica
operations have also entered into several swap agreements in order to hedge foreign currency and interest rate risks on certain
long term debts. These swaps are accounted for as cash flow hedges and related fair value changes are recorded through other comprehensive
income. At September 30, 2020, the fair values of El Salvador and Costa Rica swaps amount to liabilities of $11 million (December
31, 2019: liabilities of $17 million) and the fair values of Colombia and Bolivia swaps amount to an asset of $1 million (December
31, 2019: nil).
Interest rate and currency swaps are measured
with reference to Level 2 of the fair value hierarchy
There are no other derivative financial instruments
with a significant fair value at September 30, 2020.
Call and put options - Panama
As of September 30, 2020, the put option liability
is valued at $268 million (December 31, 2019: $264 million) (being the higher of the value of the 'Transaction Price' put option
and fair market value - for further details refer to the Group's 2019 consolidated financial statements). Changes in the value
of the put option liability are recorded in the Group's statement of income under 'other non-operating (expenses) income, net'
(see note 6).
As of September 30, 2020, call options have
a fair value of $12 million (December 31, 2019: nil).
Unaudited Interim Condensed Consolidated Financial Statements
for the three- and nine-month periods ended September 30, 2020
|
|
14. EQUITY INVESTMENTS
As at September 30, 2020 and December 31, 2019,
Millicom has the following investments in equity instruments measured at fair value through profit and loss under IFRS 9:
in millions of U.S dollars
|
September 30, 2020
|
December 31, 2019
|
Investment in Jumia
|
—
|
|
32
|
|
Investment in HT
|
260
|
|
338
|
|
Equity investment - total
|
260
|
|
371
|
|
Jumia Technologies AG (“Jumia”)
In the course of June 2020, Millicom disposed
of its entire stake in Jumia (approximately 6%) for a total net consideration of $29 million, triggering a net gain on disposal
of $15 million recorded in the statement of income for the nine-month period ended September 30, 2020 under ‘other operating
income (expenses), net’. The changes in fair value prior to the disposal were shown under "Other non-operating (expenses)
income, net" (note 6).
Helios Towers plc (“HT”)
In June 2020, Millicom disposed of 33 million
shares that it owned in HT for a total net consideration of GBP 49 million ($62 million), triggering a net gain on disposal of
$5 million recorded in the statement of income for the nine-month period ended September 30, 2020 under ‘other operating
income (expenses), net’. Following these disposals, Millicom owns a remaining shareholding of 12.8% in HT, valued at $260
million (level 1) at the September 30, 2020 share price (GBP 1.57). The changes in fair value are shown under 'Other non-operating
(expenses) income, net' (see note 6).
15. INVESTMENTS IN JOINT VENTURES
Joint ventures are businesses over which Millicom
exercises joint control as decisions over the relevant activities of each, such as the ability to upstream cash from the joint
ventures, require unanimous consent of shareholders. Millicom determines the existence of joint control by reference to joint venture
agreements, articles of association, structures and voting protocols of the board of directors of those ventures.
At September 30, 2020, the equity accounted
net assets of Millicom's joint ventures in Guatemala, Honduras and Ghana totaled $3,085 million (December 31, 2019: $3,346 million).
These net assets do not necessarily represent statutory reserves available for distribution as these include consolidation adjustments
(such as goodwill and previously unrecognized assets and assumed liabilities recognized as part of the purchase accounting). Out
of these reserves, $153 million (December 31, 2019: $142 million) represent statutory reserves that are unavailable to be distributed
to the Group. During the nine-month period ended September 30, 2020, Millicom’s joint ventures paid $67 million (December
31, 2019: $237 million) as dividends or dividend advances to the Company.
|
2020
|
in millions of U.S dollars
|
Guatemala(i)
|
Honduras (i)
|
Opening Balance at January 1, 2020
|
2,089
|
|
708
|
|
Capital increase
|
—
|
|
—
|
|
Results for the period
|
91
|
|
10
|
|
Dividends declared during the period
|
(199)
|
|
(50)
|
|
Currency exchange differences
|
(3)
|
|
3
|
|
Closing Balance at September 30, 2020
|
1,978
|
|
671
|
|
|
(i)
|
Share of profit is recognized under ‘Share of
profit in the joint ventures in Guatemala and Honduras’ in the statement of income.
|
Unaudited Interim Condensed Consolidated Financial Statements
for the three- and nine-month periods ended September 30, 2020
|
|
16. IPO – MILLICOM’S OPERATIONS
IN TANZANIA
In June 2016, an amendment to the Electronic
and Postal Communications Act (“EPOCA”) in the Finance Act 2016 required all Tanzanian licensed telecom operators to
sell 25% of the authorized share capital in a public offering on the Dar Es Salaam Stock Exchange. In December 2019, the Group
filed the draft prospectus with the Tanzania Capital Market and Securities Authority with the view to initiate the listing process
in H2 2020.
The Regulator has since requested that local
Tanzanian operation retains an underwriter to ensure the success of the IPO. Together with its investment bank advisers, the local
Tanzanian operation has been seeking an underwriter active in the Tanzanian and Eastern African markets, a process currently underway.
17. SUBSEQUENT EVENTS
Revolving Credit Facility
On October 15, 2020 Millicom entered into a
5 year, $600 million ESG-linked revolving credit facility (the "Facility") with a syndicate of 11 commercial banks. This
facility will be used to refinance Millicom's existing multi-currency revolving credit facility which was due to expire in 2022
and for general corporate purposes.
2031 Senior Notes
On October 27, 2020 Millicom completed the issuance
of its 4.5% $500 million senior notes due on 2031 in a private offering, following its proposed offering announcement dated October
19, 2020. The proceeds will be used to redeem Millicom’s 6.0% senior notes due 2025 (the “2025 Notes”) at a redemption
price equal to 103% of the principal amount, plus accrued and unpaid interest. Pursuant to the notice of redemption delivered on
October 19, 2020, the 2025 Notes will be redeemed on October 29, 2020.
SIGNATURES
Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
|
MILLICOM INTERNATIONAL CELLULAR S.A.
(Registrant)
|
|
|
|
|
|
|
By:
|
/s/ Salvador Escalon
|
|
|
|
Name:
|
Salvador Escalon
|
|
|
|
Title:
|
Executive Vice President, General Counsel
|
Date: October 30, 2020
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