For the month of October, 2022.
Indicate by check mark whether the registrant files
or will file annual reports under cover of Form 20-F or Form 40-F:
Indicate by check mark if the registrant is submitting
the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):
Indicate by check mark if the registrant is submitting
the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):
MILLICOM INTERNATIONAL CELLULAR S.A.
1. Unaudited Interim Condensed Consolidated Financial Statements
for the three- and nine-month periods ended September 30, 2022
2. Earnings Release for Q3 2022
The accompanying notes are an integral part of these unaudited interim
condensed consolidated financial statements
The accompanying notes are an integral part of these unaudited interim
condensed consolidated financial statements
The accompanying notes are an integral part of these unaudited interim
condensed consolidated financial statements
The accompanying notes are an integral part of these unaudited interim
condensed consolidated financial statements
The accompanying notes are an integral part of these unaudited interim
condensed consolidated financial statements
The accompanying notes are an integral part of these unaudited interim
condensed consolidated financial statements
1. GENERAL INFORMATION
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. Millicom provides
high speed broadband and innovation around The Digital Lifestyle® services through its principal brand, TIGO.
On November 12, 2021, Millicom acquired the remaining 45% equity interest
in its business in Guatemala (collectively, "Tigo Guatemala") and since that date owns 100% equity interest and fully consolidates
Tigo Guatemala (see note 3). As a consequence this affects the comparability of the statements of income and cash flows in these unaudited
interim condensed consolidated financial statements and the statement of financial position has been restated as a result of the finalization
of the purchase accounting (refer to note 3).
On March 10, 2022, our operations in Tanzania were classified as discontinued
operations in the statement of income and as assets held for sale in the statement of financial position after the Group obtained all
necessary approvals to conclude the announced divestiture. The sale was completed on April 5, 2022. As a result, the numbers in the statement
of income have been re-presented for all periods shown (see note 4).
On October 26, 2022, 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 ("IASB") and as adopted
by the European Union ("EU"). 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 year ended December 31, 2021, which have been
prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the IASB and in conformity with
IFRS as adopted by the EU. These financial statements are prepared in accordance with consolidation and accounting policies consistent
with the December 31, 2021 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. | Current macroeconomic environment and its effect on the Group's business activities, financial situation and economic performance
|
Inflation in many countries globally has been rising
for the past several months due to a variety of factors, including significant disruptions to the global production and distribution of
energy and food commodities caused by Russia’s invasion of Ukraine as well as the global response to that invasion. As a result,
global economic prospects have been severely affected, including in our Latin America markets, a situation that is expected to continue
at least throughout the remainder of 2022. During the quarter, the Group took meaningful steps to mitigate the impact of rising inflation,
including the implementation of numerous price increases, which position it to sustain healthy service revenue growth and margins going
forward.
Although the macro-economic backdrop has become
more challenging, business and financial performance through the first nine months of the year is broadly in line with our plans.
The Group continues to monitor the developments
of the aforementioned events and their potential impact on performance and accounting considerations.
Unaudited Interim Condensed Consolidated Financial Statements for the three- and nine-month periods ended September 30, 2022 | ![](https://content.edgar-online.com/edgar_conv_img/2022/10/27/0000950103-22-018482_logo_001.jpg) |
2. SUMMARY OF ACCOUNTING POLICIES
(Continued)
| III. | New and amended IFRS standards |
The following changes to standards 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:
| ◦ | 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. |
Amendments effective for annual periods starting on or after January
1, 2023 that are not expected to have a significant impact on the Group consolidated financial statements:
| ◦ | Amendments to IAS 1, 'Disclosure of Accounting Policies' that are intended to help preparers in deciding which accounting policies
to disclose in their financial statements. |
| ◦ | Amendments to IAS 1, 'Presentation of Financial Statements' (not yet endorsed by the EU): These amendments clarify that liabilities
are classified as either current or non-current, depending on the rights that exist at the end of the reporting period. The amendments
also clarify what IAS 1 means when it refers to the ‘settlement’ of a liability. |
| ◦ | IAS 8, 'Accounting Policies, Changes in Accounting Estimates and Errors' - Definition of accounting estimates. |
The following changes to standards are effective for annual periods
starting on January 1, 2023 and their potential impact on the Group consolidated financial statements is currently being assessed by Management:
| ◦ | Amendments to IAS 12, 'Income Taxes: Deferred tax related to Assets and liabilities arising from a Single Transaction' - These amendments
clarify that the initial recognition exception does not apply to the initial recognition of leases and decommissioning obligations. These
amendments apply prospectively to transactions that occur on or after the beginning of the earliest comparative period presented. In addition,
an entity should apply the amendments for the first time by recognizing deferred tax for all temporary differences related to leases and
decommissioning obligations at the beginning of the earliest comparative period presented. |
The following changes to standards are effective for annual periods
starting on January 1, 2024 and their potential impact on the Group consolidated financial statements is currently being assessed by Management:
| ◦ | Amendments to IFRS 16 'Leases: Lease Liability in a Sale and Leaseback' - The amendment specifies the requirements that a seller-lessee
uses in measuring the lease liability arising in a sale and leaseback transaction, to ensure the seller-lessee does not recognize any
amount of the gain or loss that relates to the right of use it retains. |
Unaudited Interim Condensed Consolidated Financial Statements for the three- and nine-month periods ended September 30, 2022 | ![](https://content.edgar-online.com/edgar_conv_img/2022/10/27/0000950103-22-018482_logo_001.jpg) |
3. ACQUISITION AND DISPOSAL OF SUBSIDIARIES, JOINT
VENTURES, ASSOCIATES AND OTHER NON-CONTROLLING INTERESTS
Acquisitions for the nine-month period ended September 30, 2022
As of June 14, 2022, the Group received the formal notification from
the minority shareholders of Cable Onda S.A. confirming the exercise of their put option right to sell their remaining 20% shareholding
to Millicom for an amount of approximately $290 million. The transaction closed on June 29, 2022 and the payment was applied against the
already recorded put option liability of $290 million.
As a result, the non-controlling interests' carrying value of $78 million
have been transferred to the Group's equity.
Acquisitions 2021
On November 12, 2021, Millicom announced that it has closed the previously-announced
agreement to acquire the remaining 45% equity interest in its joint venture business in Guatemala (collectively, "Tigo Guatemala")
from its local partner for $2.2 billion in cash. The acquisition was initially financed through a bridge facility (see note 11).
As of September 30, 2022, Millicom has finalized the purchase accounting
and determined the fair values of Tigo Guatemala's identifiable assets and liabilities and comparative figures as of December 31, 2021
have been restated accordingly. The finalization of the purchase accounting had an effect on the following financial position line items
previously reported as of December 31, 2021:
$ millions |
December 31, 2021 |
Impact of the finalization of the purchase accounting of Guatemala |
December 31, 2021 |
Reason for the change |
As reported |
As restated |
STATEMENT OF FINANCIAL POSITION |
|
|
|
|
ASSETS |
|
|
|
|
Intangible assets, net |
7,721 |
(163) |
7,558 |
(i) |
Property, plant and equipment, net |
3,198 |
184 |
3,382 |
(ii) |
Right-of-use asset (non-current), net |
1,008 |
17 |
1,024 |
(iii) |
Prepayments and accrued income |
168 |
(2) |
166 |
|
Other current assets |
302 |
(33) |
269 |
|
LIABILITIES |
|
|
|
|
Provisions and other current liabilities |
546 |
2 |
548 |
|
| (i) | Impact on intangibles resulting from the adjustments explained
below. |
| (ii) | See updated fair values section below. Mainly relates to
property, plant and equipment step up. |
| (iii) | See updated fair values section below. It relates to remeasurement
of the right of use assets. |
The impact of the finalization of Tigo Guatemala's purchase accounting
on the 2021 Group statement of income is immaterial. Therefore, no adjustments were made in that respect on comparative figures.
Further details of Tigo Guatemala acquisition are provided on the following
page.
Unaudited Interim Condensed Consolidated Financial Statements for the three- and nine-month periods ended September 30, 2022 | ![](https://content.edgar-online.com/edgar_conv_img/2022/10/27/0000950103-22-018482_logo_001.jpg) |
3. ACQUISITION AND DISPOSAL OF SUBSIDIARIES, JOINT
VENTURES, ASSOCIATES AND OTHER NON-CONTROLLING INTERESTS (Continued)
The table below shows the changes in fair values compared to the values
reported as of December 31, 2021.
At acquisition date - November 12, 2021
(in millions of U.S. dollars)
|
Provisional fair values (100%) |
Final fair values (100%) |
Changes |
Intangible assets (excluding goodwill) (i) |
1,294 |
1,917 |
623 |
Property, plant and equipment (ii) |
547 |
731 |
184 |
Right of use assets (iii) |
189 |
205 |
17 |
Other non-current assets |
5 |
5 |
— |
Current assets (excluding cash) |
210 |
210 |
— |
Trade receivables (iv) |
42 |
42 |
— |
Cash and cash equivalents |
199 |
199 |
— |
Total assets acquired |
2,486 |
3,309 |
823 |
Lease liabilities (iii) |
205 |
205 |
— |
Other debt and financing |
417 |
417 |
— |
Other liabilities |
281 |
281 |
— |
Total liabilities assumed |
903 |
903 |
— |
Fair value of assets acquired and liabilities assumed, net - A |
1,583 |
2,406 |
823 |
Purchase consideration (45%) - B |
2,195 |
2,195 |
— |
Implied fair value (100% of business) - C |
4,877 |
4,877 |
— |
Carrying value of our investment in joint venture at acquisition date - D |
2,013 |
2,013 |
— |
Goodwill arising on change of control - B+D-A=E |
2,625 |
1,802 |
(823) |
Revaluation of previously held interests - C-B-D=F (v) |
670 |
670 |
— |
Total goodwill - E+F=G |
3,295 |
2,472 |
(823) |
| (i) | Fair value step-up have been recognized mainly on the following intangible assets: |
a) the customer lists for an amount of $514 million, with
estimated weighted average useful lives of 9.3 years.
b) the spectrum and licenses held by Tigo Guatemala for
$51 million, with a remaining useful life of 11 years.
c) the trademarks and brand held and operated by Tigo Guatemala
for $62 million, bringing its carrying value to $910 million. Management determined that the latter have indefinite useful lives.
| (ii) | A fair value step-up of $184 million has been recognized on property, plant and equipment, mainly on the core network, network
equipment and owned towers. The weighted average remaining useful live is estimated at 6 years. |
| (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 $17 million to be measured at the same amount
as the lease liabilities. |
| (iv) | The fair value of trade receivables acquired approximate their carrying value of $42 million. |
| (v) | The acquisition has been determined as a business combination achieved in stages, requiring Millicom to remeasure its 55% previously
held equity investment in Tigo Guatemala at its acquisition date fair value; the resulting gain has been recognized in the statement of
income under the line "Revaluation of previously held interests" and is included in the goodwill calculation (see above). |
The goodwill is attributable to the workforce and the high profitability
of Tigo Guatemala. It is currently not expected to be tax deductible. From November 12, 2021 to December 31, 2021, Tigo Guatemala contributed
$223 million of revenue and $28 million of net profit to the Group. If Tigo Guatemala had been acquired on January 1, 2021, incremental
revenue for the year 2021 would have been $1.38 billion and incremental net profit for
the same period of $147 million. Acquisition related costs included in the statement of income under operating expenses were immaterial.
Unaudited Interim Condensed Consolidated Financial Statements for the three- and nine-month periods ended September 30, 2022 | ![](https://content.edgar-online.com/edgar_conv_img/2022/10/27/0000950103-22-018482_logo_001.jpg) |
3. ACQUISITION AND DISPOSAL OF SUBSIDIARIES, JOINT
VENTURES, ASSOCIATES AND OTHER NON-CONTROLLING INTERESTS (Continued)
Ghana's divestiture
On October 13, 2021, Millicom, along with its joint venture partner
Bharti Airtel Limited, closed the disposal of AirtelTigo Ghana to the Government of Ghana. As part of the closing conditions, each partner
committed up to $37.5 million for the reimbursement of certain local bank facilities.
Disposals 2022 - Tanzania
On March 10, 2022, Millicom obtained the
final necessary regulatory approvals to sell its operations in Tanzania. The transaction was completed on April 5, 2022 (see note
4).
4. DISCONTINUED OPERATIONS AND ASSETS HELD FOR SALE
Discontinued operations - Tanzania
As from March 10, 2022, and in
accordance with IFRS 5, all assets and liabilities of our operations in Tanzania were classified as held for sale and their results
have been removed from the results of continuing operations and are shown as a single line item on the face of the statement of comprehensive
income under 'Profit (loss) from discontinued operations, net of tax'. Comparative figures of the statement of income have been re-presented
accordingly.
On April 5, 2022, Millicom completed
the sale for an initial cash consideration of approximately $101 million (subject to final price adjustment). As per the sale agreement,
the initial sale price is adjusted to consider some outstanding tax and legal contingencies which management believes is sufficient to
cover any future claims on pre-closing matters. Should the price adjustments not be sufficient, Millicom might be liable and need to
make additional provisions that are not covered by the latter. In addition, the agreement also provides an IPO1 adjustment
clause valid until April 5, 2024, whereby Millicom would reimburse the buyer for any negative difference
between the share price per share on the IPO date and the one implied by this sale. As of September 30, 2022,
no additional provisions have been made by management in respect of the aforementioned items.
(a) The net assets de-consolidated
on the date of the disposal, as well as the gain on disposal, were as follows:
Details of the sale of the subsidiary ($ millions) |
April 5, 2022 |
Carrying amount of net assets sold (A) |
(79) |
Initial sale consideration (B) |
101 |
Gross gain on sale (B) - (A) |
180 |
Other operating expenses linked to the disposal |
(11) |
Other operating income/expenses, net |
(5) |
Gain on sale before reclassification of foreign currency translation reserve |
165 |
Reclassification of foreign currency translation reserve |
(56) |
Net gain on sale |
109 |
(b) The operating results and
cash flows of the discontinued operation for the three- and nine-month periods ended September 30, 2022 and September 30, 2021 are set
out below. The figures shown below are after inter-company eliminations.
1 The
Tanzanian government implemented in 2016 legislation requiring telecommunications companies to list their shares on the Dar es Salaam
Stock Exchange and offer 25% of their shares in a Tanzanian public offering. The ´Tanzania Communications Regulatory Authority´
(TCRA) ordered the Tanzanian operations to complete such public offering by December 31, 2025, at the latest.
Unaudited Interim Condensed Consolidated Financial Statements for the three- and nine-month periods ended September 30, 2022 | ![](https://content.edgar-online.com/edgar_conv_img/2022/10/27/0000950103-22-018482_logo_001.jpg) |
4. DISCONTINUED OPERATIONS AND ASSETS HELD FOR SALE
(Continued)
Results from Discontinued Operations
(in millions of U.S. dollars)
|
Nine months ended September 30, 2022 |
Nine months ended September 30, 2021 |
Three months ended September 30, 2022 |
Three months ended September 30, 2021 |
Revenue |
88 |
264 |
— |
87 |
Cost of sales |
(26) |
(77) |
— |
(25) |
Operating expenses |
(27) |
(94) |
— |
(33) |
Depreciation and amortization |
(21) |
(63) |
— |
(21) |
Other operating income (expenses), net |
4 |
1 |
— |
— |
Gain/(loss) on disposal of discontinued operations (see (a) above) |
120 |
— |
— |
— |
Other expenses linked to the disposal of discontinued operations (see (a) above) |
(11) |
— |
2 |
— |
Operating profit (loss) |
127 |
30 |
2 |
8 |
Interest income (expense), net |
(12) |
(24) |
— |
4 |
Profit (loss) before taxes |
116 |
6 |
2 |
11 |
Credit (charge) for taxes, net |
(3) |
(18) |
— |
(30) |
Net profit/(loss) from discontinued operations |
113 |
(12) |
2 |
(19) |
Cash flows from discontinued operations
(in millions of U.S. dollars)
|
Nine months ended September 30, 2022 |
Nine months ended September 30, 2021 |
Cash from (used in) operating activities, net |
18 |
49 |
Cash from (used in) investing activities, net |
(10) |
(32) |
Cash from (used in) financing activities, net |
(9) |
(19) |
Net cash inflows |
(1) |
(2) |
Unaudited Interim Condensed Consolidated Financial Statements for the three- and nine-month periods ended September 30, 2022 | ![](https://content.edgar-online.com/edgar_conv_img/2022/10/27/0000950103-22-018482_logo_001.jpg) |
5. SEGMENT INFORMATION
Management determines operating and reportable segments based on the
reports that are used by the chief operating decision maker to make strategic and operational decisions from both a business and geographic
perspective. The Millicom Group’s risks and rates of return for its operations were predominantly affected by operating in different
geographical regions. Until the divestiture of our Tanzania business, as discussed above, the Millicom Group had businesses in two main
regions, Latin America and Africa, which constituted our two reportable segments. As a result of the sale of the Tanzania business and
its classification as a discontinued operation, we no longer report an Africa segment in our unaudited condensed consolidated financial
statements included elsewhere in this Report and will no longer report it in our consolidated financial statements for future periods.
The Group now only operates in a single region, Latin America.
As a result, the Group now reports a single segment, called the ‘Group
Segment’, which includes the results of our Latin American operations, and regional and central corporate costs. Group segment figures
will continue to include our Honduras joint venture as if it was fully consolidated, as this reflects the way management reviews and uses
internally reported information to make decisions about operating matters and to provide increased transparency to investors on those
operations. Group segment figures also include our operations in Guatemala as if they were fully consolidated for all comparative periods,
for the same reasons. On November 12, 2021, we acquired the remaining 45% equity interest in our Guatemala joint venture business, and
we now fully consolidate our operations in Guatemala. Prior to this date, we held a 55% stake in our operations in Guatemala and accounted
for it using the equity method of accounting, along with our operations in Honduras.
Revenue, operating profit (loss), EBITDA and other segment information
for the three- and nine-month periods ended September 30, 2022 and 2021, are shown on the following pages.
Unaudited Interim Condensed Consolidated Financial Statements for the three- and nine-month periods ended September 30, 2022 | ![](https://content.edgar-online.com/edgar_conv_img/2022/10/27/0000950103-22-018482_logo_001.jpg) |
5. SEGMENT INFORMATION (Continued)
Nine months ended September 30, 2022
(in millions of U.S. dollars)
|
Group Segment (viii) |
Honduras (vii) |
Eliminations and transfers |
Group |
Mobile revenue |
2,545 |
(324) |
1 |
2,222 |
Cable and other fixed services revenue |
1,696 |
(80) |
4 |
1,620 |
Other revenue |
55 |
(3) |
— |
52 |
Service revenue (i) |
4,296 |
(407) |
5 |
3,895 |
Telephone and equipment revenue |
376 |
(28) |
— |
349 |
Revenue |
4,672 |
(434) |
5 |
4,243 |
Operating profit (loss) |
743 |
(90) |
25 |
678 |
Add back: |
|
|
|
|
Depreciation and amortization |
1,104 |
(83) |
1 |
1,021 |
Share of profit in joint ventures (viii) |
— |
— |
(25) |
(25) |
Other operating expenses (income), net |
3 |
3 |
— |
6 |
EBITDA (ii) |
1,849 |
(170) |
1 |
1,680 |
EBITDA from discontinued operations |
24 |
— |
— |
24 |
EBITDA incl discontinued operations |
1,874 |
(170) |
1 |
1,705 |
Capital expenditure (iii) |
(843) |
66 |
— |
(777) |
Spectrum paid |
(75) |
— |
— |
(75) |
Changes in working capital and others (iv) |
(199) |
(3) |
— |
(202) |
Taxes paid |
(258) |
36 |
— |
(222) |
Operating free cash flow (v) |
498 |
(71) |
1 |
427 |
Total Assets (vi) |
14,581 |
(1,055) |
630 |
14,155 |
Total Liabilities |
11,194 |
(671) |
52 |
10,575 |
| (i) | Service revenue is revenue related to the provision of ongoing services such as monthly subscription fees for mobile and broadband,
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, installation fees and other value-added services excluding telephone and equipment
sales. |
| (ii) | EBITDA is operating profit excluding impairment losses, depreciation and amortization and gains/losses on the disposal of fixed
assets. |
| (iii) | Excluding spectrum and licenses |
| (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. |
| (v) | Operating Free Cash Flow is EBITDA less capex, less spectrum paid, less change in working capital, other non-cash items (share-based
payment expense) and taxes paid. From 2022, the Group changed the definition of Operating Free Cash Flow to include spectrum paid in response
to feedback from users of our financial statements who prefer a more comprehensive view of our cash flow generation. |
| (vi) | Segment assets include goodwill and other intangible assets. |
| (vii) | Including eliminations for Guatemala (prior to acquisition) and Honduras as reported in the Group segment. |
| (viii) | As further explained above, Group Segment numbers include Guatemala (until acquisition in November 2021) and Honduras as if they
were fully consolidated, and excludes Africa. |
Unaudited Interim Condensed Consolidated Financial Statements for the three- and nine-month periods ended September 30, 2022 | ![](https://content.edgar-online.com/edgar_conv_img/2022/10/27/0000950103-22-018482_logo_001.jpg) |
5. SEGMENT INFORMATION (Continued)
Nine months ended September 30, 2021
(in millions of U.S. dollars)
|
Group Segment (viii) |
Guatemala and Honduras (vii) |
Eliminations and transfers |
Group |
Mobile revenue |
2,509 |
(1,136) |
— |
1,373 |
Cable and other fixed services revenue |
1,696 |
(270) |
— |
1,425 |
Other revenue |
51 |
(7) |
— |
44 |
Service revenue (i) |
4,256 |
(1,413) |
— |
2,843 |
Telephone and equipment revenue |
365 |
(201) |
— |
164 |
Revenue |
4,621 |
(1,614) |
— |
3,006 |
Operating profit (loss) |
713 |
(482) |
185 |
416 |
Add back: |
|
|
|
|
Depreciation and amortization |
1,154 |
(338) |
— |
816 |
Share of profit in joint ventures |
— |
— |
(185) |
(185) |
Other operating expenses (income), net |
9 |
— |
— |
9 |
EBITDA (ii) |
1,876 |
(820) |
— |
1,056 |
EBITDA from discontinued operations |
93 |
— |
— |
93 |
EBITDA incl discontinued operations |
1,969 |
(820) |
— |
1,149 |
Capital expenditure (iii) |
(775) |
196 |
— |
(580) |
Spectrum paid |
(47) |
21 |
— |
(25) |
Changes in working capital and others (iv) |
(155) |
(22) |
— |
(177) |
Taxes paid |
(199) |
119 |
— |
(80) |
Operating free cash flow (v) |
793 |
(505) |
— |
287 |
Total Assets (vi) |
13,267 |
(4,659) |
2,792 |
11,400 |
Total Liabilities |
10,727 |
(1,666) |
194 |
9,255 |
Unaudited Interim Condensed Consolidated Financial Statements for the three- and nine-month periods ended September 30, 2022 | ![](https://content.edgar-online.com/edgar_conv_img/2022/10/27/0000950103-22-018482_logo_001.jpg) |
5. SEGMENT INFORMATION (Continued)
Three months ended September 30, 2022 (in millions of U.S. dollars) |
Group Segment (viii) |
Honduras(vii) |
Eliminations and transfers |
Group |
Mobile revenue |
843 |
(108) |
— |
735 |
Cable and other fixed services revenue |
554 |
(27) |
1 |
528 |
Other revenue |
18 |
(2) |
— |
16 |
Service revenue (i) |
1,415 |
(137) |
2 |
1,280 |
Telephone and equipment revenue |
118 |
(10) |
— |
108 |
Revenue |
1,532 |
(146) |
2 |
1,388 |
Operating profit (loss) |
221 |
(31) |
6 |
196 |
Add back: |
|
|
|
|
Depreciation and amortization |
372 |
(30) |
— |
342 |
Share
of profit in joint ventures (viii) |
— |
— |
(5) |
(5) |
Other operating expenses (income), net |
3 |
5 |
(1) |
6 |
EBITDA (ii) |
596 |
(57) |
— |
539 |
EBITDA from discontinued operations |
2 |
— |
— |
2 |
EBITDA incl discontinued operations |
597 |
(57) |
— |
541 |
Capital expenditure (iii) |
(273) |
20 |
— |
(253) |
Spectrum paid |
(26) |
|
|
(26) |
Changes in working capital and others (iv) |
(6) |
(11) |
— |
(16) |
Taxes paid |
(77) |
11 |
— |
(66) |
Operating free cash flow (v) |
216 |
(37) |
— |
180 |
Unaudited Interim Condensed Consolidated Financial Statements for the three- and nine-month periods ended September 30, 2022 | ![](https://content.edgar-online.com/edgar_conv_img/2022/10/27/0000950103-22-018482_logo_001.jpg) |
5. SEGMENT INFORMATION (Continued)
Three months ended September 30, 2021
(in millions of U.S. dollars)
|
Group Segment(viii) |
Guatemala and Honduras (vii) |
Eliminations and transfers |
Group |
Mobile revenue |
840 |
(378) |
— |
462 |
Cable and other fixed services revenue |
568 |
(94) |
— |
474 |
Other revenue |
18 |
(3) |
— |
15 |
Service revenue (i) |
1,426 |
(475) |
— |
951 |
Telephone and equipment revenue |
121 |
(66) |
— |
55 |
Revenue |
1,547 |
(541) |
— |
1,006 |
Operating profit (loss) |
291 |
(159) |
56 |
189 |
Add back: |
|
|
|
|
Depreciation and amortization |
360 |
(112) |
— |
248 |
Share of profit in joint ventures |
— |
— |
(56) |
(56) |
Other operating expenses (income), net |
(28) |
— |
— |
(29) |
EBITDA (ii) |
622 |
(271) |
— |
352 |
EBITDA from discontinued operations |
28 |
— |
— |
28 |
EBITDA incl discontinued operations |
651 |
(271) |
— |
380 |
Capital expenditure (iii) |
(249) |
77 |
— |
(173) |
Spectrum paid |
(11) |
7 |
— |
(4) |
Changes in working capital and others (iv) |
34 |
(22) |
— |
12 |
Taxes paid |
(65) |
35 |
— |
(30) |
Operating free cash flow (v) |
360 |
(175) |
— |
185 |
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, 2022 |
Nine months ended September 30, 2021 (i) |
Three months ended September 30, 2022 |
Three months ended September 30, 2021 (i) |
Change in fair value of derivatives (Note 13) |
12 |
2 |
1 |
— |
Change in fair value in investment in Helios Towers (ii) |
— |
18 |
— |
— |
Change in value of call option and put option liability |
(1) |
(26) |
— |
— |
Exchange gains (losses), net |
(53) |
(33) |
(36) |
(19) |
Other non-operating income (expenses), net |
1 |
1 |
— |
— |
Total |
(41) |
(37) |
(35) |
(19) |
| (i) | Re-presented for discontinued operations (see note 4). |
| (ii) | In June 2021, Millicom disposed of its remaining shareholding
in HT. |
Unaudited Interim Condensed Consolidated Financial Statements for the three- and nine-month periods ended September 30, 2022 | ![](https://content.edgar-online.com/edgar_conv_img/2022/10/27/0000950103-22-018482_logo_001.jpg) |
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, 2022 |
Nine months ended September 30, 2021 (ii) (iii) |
Three months ended September 30, 2022 |
Three months ended September 30, 2021 (ii) (iii) |
Basic and Diluted |
|
|
|
|
Net profit (loss) attributable to equity holders from continuing operations |
7 |
(41) |
(33) |
24 |
Net profit (loss) attributable to equity holders from discontinued operations |
113 |
(12) |
2 |
(19) |
Net profit (loss) attributable to all equity holders to determine the basic profit (loss) per share |
120 |
(53) |
(32) |
5 |
|
|
|
|
|
in thousands |
|
|
|
|
Weighted average number of ordinary shares for basic and diluted earnings per share |
128,321 |
128,926 |
170,872 |
128,849 |
Potential shares as a result of long term incentive plans |
375 |
416 |
335 |
560 |
Weighted average number of ordinary shares (excluding treasury shares) adjusted for the effect of dilution (i) |
128,697 |
129,341 |
171,207 |
129,409 |
|
|
|
|
|
in U.S. dollars |
|
|
|
|
Basic |
|
|
|
|
Earnings (loss) per common share for profit (loss) from continuing operations attributable to owners of the Company |
0.05 |
(0.32) |
(0.20) |
0.19 |
Earnings (loss) per common share for profit (loss) from discontinued operations attributable to owners of the Company |
0.88 |
(0.09) |
0.01 |
(0.15) |
Earnings (loss) per common share for profit (loss) for the period attributable to owners of the Company |
0.94 |
(0.41) |
(0.18) |
0.04 |
Diluted |
|
|
|
|
Earnings (loss) per common share for profit (loss) from continuing operations attributable to owners of the Company |
0.05 |
(0.32) |
(0.20) |
0.18 |
Earnings (loss) per common share for profit (loss) from discontinued operations attributable to owners of the Company |
0.88 |
(0.09) |
0.01 |
(0.15) |
Earnings (loss) per common share for profit (loss) for the period attributable to owners of the Company |
0.93 |
(0.41) |
(0.18) |
0.04 |
| (i) | For the purpose of calculating the diluted earnings (loss) per common share, the weighted average outstanding shares used for the
basic earnings (loss) per common share were increased only by the portion of the shares which have a dilutive effect on the earnings (loss)
per common share. |
| (ii) | Re-presented for discontinued operations (see note 4). |
| (iii) | As required by IAS 33 ‘Earnings per share’ the impact of the bonus element included within the rights offering (see
note 14) has been included in the calculations of the basic and diluted earnings per share for the current year/period and comparative
figures have been re-presented accordingly. |
Unaudited Interim Condensed Consolidated Financial Statements for the three- and nine-month periods ended September 30, 2022 | ![](https://content.edgar-online.com/edgar_conv_img/2022/10/27/0000950103-22-018482_logo_001.jpg) |
8. 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, 2022, the equity accounted net assets of our joint
venture in Honduras totaled $384 million (December 31, 2021: Honduras: $406 million). These net assets do not necessarily represent statutory
reserves available for distribution as these include consolidation adjustments (such as goodwill and identified assets and assumed liabilities
recognized as part of the purchase accounting). Out of these net assets, $3 million (December 31, 2021: $3 million) represent statutory
reserves that are unavailable to be distributed to the Group. During the nine-month period ended September 30, 2022, Millicom's joint
venture in Honduras repatriated cash of $62 million under the form of management fees and repayment of a shareholder loan. For the same
period last year, Millicom's joint ventures in Guatemala and Honduras repatriated cash of $50 million, out of which $13 million represented
dividends and dividends advances paid to the Company.
At September 30, 2022, Millicom had $33 million payables to Honduras
joint venture which were mainly made up of loan advances (December 31, 2021: $69 million). In addition, Millicom had a total of $17 million
receivable from Honduras (December 31, 2021: $62 million), mainly composed of a sale consideration following a shareholding restructuring
in 2020, which is payable in several installments with a final settlement in November 2023.
The table below summarizes the movements for the year in respect of
the Group's joint ventures carrying values:
in millions of U.S. dollars |
2022 |
Honduras (i) |
Opening Balance at January 1, 2022 |
596 |
Results for the period |
25 |
Dividends declared during the period |
(35) |
Currency exchange differences |
(8) |
Closing Balance at September 30, 2022 |
578 |
(i) Share of profit is recognized under ‘Share of profit in
the joint ventures’ in the statement of income for the period ended September 30, 2022.
9. PROPERTY, PLANT AND EQUIPMENT
During the nine-month period ended September 30, 2022, Millicom added
property, plant and equipment for $588 million (September 30, 2021: $450 million) and received $8 million from disposal of property, plant
and equipment (September 30, 2021: $6 million).
10. INTANGIBLE ASSETS
During the nine-month period ended September 30, 2022, Millicom added
intangible assets for $280 million of which $161 million related to spectrum and licenses, and $119 million to additions of other intangible
assets (September 30, 2021: $98 million of which $10 million related to an adjustment on spectrum and licenses and $89 million to additions
of intangible assets) and did not receive any proceeds from disposal of intangible assets (September 30, 2021: nil).
During the nine-month period ended September 30,
2022, Millicom early terminated an IT software contract and also decommissioned the existing software. As a result, Millicom recorded
a settlement provision of $7 million under operating expenses and recorded a decommissioning cost of this software for a total amount
of $12 million, as accelerated amortization and impairment charges.
Unaudited Interim Condensed Consolidated Financial Statements for the three- and nine-month periods ended September 30, 2022 | ![](https://content.edgar-online.com/edgar_conv_img/2022/10/27/0000950103-22-018482_logo_001.jpg) |
11. FINANCIAL OBLIGATIONS
A. Debt and financing
The most significant movements in debt and financing for the nine-month
period ended September 30, 2022 were as follows:
Luxembourg
On January 10, 2022, Millicom placed a SEK 2.2 billion (approximately
$201 million at the September 30, 2022 exchange rate) senior unsecured sustainability bond (the "Bond") within its Sustainability
bond framework. The Bond is due on 2027 and carries a floating coupon priced at 3m Stibor+300bps, the Bond is listed on the Nasdaq Stockholm
sustainable bond list. On January 13, 2022, Millicom executed a swap on the principal amount to hedge it to USD (see note 13).
On April 13, 2022, Millicom repaid $100 million of the bridge loan with
the proceeds received from the disposal of our operations in Tanzania. The remaining balance of $350 million has been repaid in June 2022
with the proceeds of the rights offering (see note 14).
Colombia
On January 21, 2022, Colombia Movil S.A. repaid $100 million of the
outstanding amount of the Syndicated Loan Agreement dated June 8, 2017. On January 19, 2022, the respective cross currency swaps with
Bancolombia and JP Morgan for $25 million, each, were terminated. As of September 30, 2022, there is still $50 million outstanding under
the syndicated loan, which is covered by cross currency and interest rate swaps.
Guatemala
On January 27, 2022, our principal subsidiary in Guatemala, Comunicaciones
Celulares, S.A. ("Comcel"), completed the issuance of a new 10-year $900 million Bond with a coupon of 5.125% per annum. The
proceeds from this bond were used to repay a significant portion of the bridge financing that was used to fund the acquisition of the
remaining 45% equity interest in the Tigo Guatemala operations (see note 3).
On March 31, 2022, Comcel executed a new 5-year $150 million loan agreement
with Banco de Desarrollo Rural, S.A.. Proceeds were disbursed on April 27, 2022 and were used to refinance some of the credit agreements
Comcel had with Banco Industrial.
Bolivia
On July 29, 2022, Tigo Bolivia. signed two new loan agreements for a
total amount of approximately $8 million and a repayment period of 5 years.
Nicaragua and El Salvador
On September 12, 2022, Telefonia Celular de Nicaragua, S.A. ("Nicaragua")
and Telemovil El Salvador, S.A. de C.V. ("Telemovil") entered into a new Credit and Guaranty Agreement with Bank of Nova Scotia
as Administrative Agent and Citigroup and Bladex as Joint Lead Arrangers, and with Millicom International Cellular, S.A. as Guarantor
for $225 million Unsecured Term Loan with a 5 year maturity. The allocated portion for Telemovil is $75 million and the allocated portion
for Nicaragua is $150 million. The proceeds will be used to partially repay loans with other companies within the Group. The interest
rate for this loan is SOFR based plus a margin.
Unaudited Interim Condensed Consolidated Financial Statements for the three- and nine-month periods ended September 30, 2022 | ![](https://content.edgar-online.com/edgar_conv_img/2022/10/27/0000950103-22-018482_logo_001.jpg) |
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, 2022 |
As at December 31, 2021 |
Due within: |
|
|
One year |
129 |
1,840 |
One-two years |
363 |
206 |
Two-three years |
270 |
486 |
Three-four years |
662 |
843 |
Four-five years |
1,585 |
758 |
After five years |
3,856 |
3,610 |
Total debt and financing |
6,865 |
7,744 |
The table below describes the outstanding and maximum exposure under
guarantees and the remaining terms of the guarantees as at September 30, 2022 and December 31, 2021.
|
Bank and financing guarantees (i) |
Supplier guarantees |
in millions of U.S. dollars |
As at September 30, 2022 |
As at December 31, 2021 |
As at September 30, 2022 |
As at December 31, 2021 |
Terms |
Outstanding and Maximum exposure |
Outstanding and Maximum exposure(ii) |
0-1 year |
13 |
71 |
— |
82 |
1-3 years |
71 |
6 |
— |
— |
3-5 years |
415 |
223 |
— |
— |
Total |
499 |
300 |
— |
82 |
(i) If non-payment by the obligor, the guarantee ensures payment
of outstanding amounts by the Group's guarantor.
(ii) Guarantee from Tanzania ceased to exist after the completion
of the sale in our operations in Tanzania, see note 4.
The Group’s interest and other financial expenses comprised the
following:
in millions of U.S. dollars |
Nine months ended September 30, 2022 |
Nine months ended September 30, 2021 (i) |
Three months ended September 30, 2022 |
Three months ended September 30, 2021 (i) |
Interest expense on bonds and bank financing |
(321) |
(236) |
(107) |
(77) |
Interest expense on leases |
(94) |
(84) |
(31) |
(27) |
Early redemption charges |
— |
(5) |
— |
— |
Others |
(54) |
(41) |
(22) |
(12) |
Total interest and other financial expenses |
(469) |
(365) |
(160) |
(116) |
(i) Re-presented for discontinued operations (see note 4)
12. 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, 2022,
the total amount of claims brought against Millicom and its subsidiaries is $244 million (December 31, 2021: $246 million). The Group's
share of the comparable exposure for its joint venture in Honduras is $13 million (December 31, 2021: $13 million).
Unaudited Interim Condensed Consolidated Financial Statements for the three- and nine-month periods ended September 30, 2022 | ![](https://content.edgar-online.com/edgar_conv_img/2022/10/27/0000950103-22-018482_logo_001.jpg) |
As at September 30, 2022, $27 million has been provisioned by its subsidiaries
for these risks in the consolidated statement of financial position (December 31, 2021: $36 million). The Group's share of provisions
made by the joint venture was $1 million (December 31, 2021: $1 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.
Taxation
At September 30, 2022, the tax risks exposure of the Group's subsidiaries
is estimated at $204 million, for which provisions of $33 million have been recorded in tax liabilities; representing the probable amount
of eventual claims and required payments related to those risks (December 31, 2021: $343 million of which provisions of $69 million were
recorded). The decrease compared to December 31, 2021 mainly relates to the sale of our operations in Tanzania (see note 4) as well as
the adherence to a tax amnesty in one of our operations. The Group's share of comparable tax exposure and provisions in its joint venture
amounts to $93 million (December 31, 2021: $68 million) and $6 million (December 31, 2021: $3 million), respectively.
Capital commitments
At September 30, 2022, the Company and its subsidiaries had fixed commitments
to purchase network equipment, other fixed assets and intangible assets of $499 million of which $338 million are due within one year
(December 31, 2021: $761 million of which $428 million are due within one year). The Group’s share of commitments in the joint ventures
is $33 million of which $33 million are due within one year. (December 31, 2021: $41 million and $41 million respectively).
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, 2022 and December 31, 2021:
in millions of U.S. dollars |
Carrying value |
Fair value (i) |
|
As at September 30, 2022 |
As at December 31, 2021 |
As at September 30, 2022 |
As at December 31, 2021 |
Financial liabilities |
|
|
|
|
Debt and financing |
6,865 |
7,744 |
5,858 |
7,817 |
(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 2024 SEK 2 billion bond and the foreign currency risk in relation to the 2027 SEK 2.2 billion
bond (approximately $211 million and $236 million, respectively, using the exchange rate at the time of the issuance of each bond) senior
unsecured sustainability bonds issued in May 2019 and January 2022, respectively). 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 dates are May
2024 and January 2027, respectively. The hedging relationships are highly effective and related fluctuations are recorded through other
comprehensive income. At September 30, 2022, the fair values of the swaps amount to a liability of $80 million (December 31, 2021: an
asset of $6 million).
Unaudited Interim Condensed Consolidated Financial Statements for the three- and nine-month periods ended September 30, 2022 | ![](https://content.edgar-online.com/edgar_conv_img/2022/10/27/0000950103-22-018482_logo_001.jpg) |
Colombia and El Salvador 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, 2022, the fair value of El
Salvador swap amount to nil, (December 31, 2021: a liability of $1 million) and the fair value of Colombia swaps amount to an asset of
$17 million (December 31, 2021: an asset of $15 million). On January 19, 2022, a portion of the cross-currency swaps with Bancolombia
and JP Morgan were settled in cash for an amount of $8 million.
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, 2022.
14. RIGHTS OFFERING
On May 18, 2022, the Board of Directors of Millicom resolved on a rights
offering (the "Rights Offering") granting preferential subscription rights to existing holders of shares and Swedish Depositary
Receipts ("SDRs") to subscribe for up to 70,357,088 shares in aggregate.
Those who were registered as holders of shares/SDR register on May 23,
2022, received one subscription right for each share ("Share Right") or SDR ("SDR right") held in Millicom. 10 share
rights entitled a holder thereof to subscribe for 7 new shares in Millicom and 10 SDR Rights entitled a holder thereof to subscribe 7
new SDRs in Millicom. The subscription price was set at SEK 106 per new SDR and $10.61 per new share. The subscription price in SEK was
determined based on the subscription price in U.S dollars as resolved by Millicom, $10.61 per new share, using the SEK-U.S dollar exchange
rate published by the Swedish Central Bank on May 17, 2022.
The record date for participation in the Rights Offering was May 23,
2022. The subscription period ran from May 27, 2022 up to June 13, 2022.
The result of the Rights Offering showed that 68,822,675 shares, including
those represented by SDRs, have been subscribed for by the exercise of basic subscription rights. The remaining 1,534,413 shares, including
those represented by SDRs, were allotted to those investors who subscribed for them pursuant to over subscription privileges. The Rights
Offering was thus fully subscribed, and Millicom received proceeds amounting to approximately $717 million after deducting underwriting
commissions and other offering expenses of $28 million.
The Rights Offering resulted in the issuance of 70,357,088 new shares,
which increased the number of outstanding shares in Millicom from 101,739,217 to 172,096,305. As a result, the share capital increased
by $106 million to $258 million from $153 million. The remaining $612 million have been allocated to the Group's share premium account.
15. SUBSEQUENT EVENTS
There are no significant subsequent event to report.
ITEM 2
Luxembourg, October 27, 2022
Staying the Course
Highlights Q3 2022*
| • | Reported revenue up 37.9% reflecting the Guatemala acquisition. |
| • | Service revenue up 2.7% organically with positive growth across the majority of the countries and in all business units, with continued
strength in Mobile and B2B, offset by slower growth in Home. |
| • | Reported EBITDA up 53.3%, with organic EBITDA down 1.9%, or 0.6% excluding a $7 million one-time charge, due in part to continued
investment to support the planned Tower and Tigo Money carve-outs. |
| • | Reported Operating Cash Flow up 134.4% year-on-year reflecting the Guatemala transaction and an acceleration from H1 levels, on an
organic basis. |
Financial highlights ($ millions) |
Q3 2022 |
Q3 2021 |
% change |
Organic % Change |
9M 2022 |
9M 2021 |
% change |
Organic % Change |
Revenue |
1,388 |
1,006 |
37.9% |
2.4% |
4,243 |
3,006 |
41.1% |
4.1% |
Operating Profit |
196 |
189 |
3.9% |
|
678 |
416 |
62.9% |
|
Net Profit (Loss) |
(32) |
5 |
NM |
|
120 |
(53) |
NM |
|
Non-IFRS measures (*) |
|
|
|
|
|
|
|
|
Service Revenue |
1,280 |
951 |
34.5% |
2.7% |
3,895 |
2,843 |
37.0% |
3.9% |
EBITDA |
539 |
352 |
53.3% |
(1.9)% |
1,680 |
1,056 |
59.1% |
1.0% |
Capex |
253 |
229 |
10.2% |
|
707 |
538 |
31.4% |
|
Operating Cash Flow |
286 |
122 |
134.4% |
2.0% |
973 |
518 |
87.9% |
(2.7)% |
*See page 11 for a description of non-IFRS measures
and for reconciliations to the nearest equivalent IFRS measures.
Millicom Chief Executive Officer Mauricio Ramos commented:
"Q3 was another solid quarter for Millicom,
and once again we delivered positive organic service revenue growth across the vast majority of our country markets and in all three business
lines, even as we faced a more challenging macroeconomic backdrop.
We have entered this period of increased volatility
from a position of strength of our networks, our people and our brand. This is the result of our consistent and sustained investment,
aimed at creating sustainable shareholder value over the long term.
Our long-term focus allows us to stay the course
and execute on the plans we laid out at the Investor Day last February. Consistent with those plans, organic OCF growth accelerated in
Q3 as we had anticipated, even as we continue to invest throughout the business to sustain healthy growth over the medium to long term.
During the quarter, we took meaningful steps to
mitigate the impact of rising inflation, including the implementation of numerous price increases, which position the company to sustain
healthy service revenue growth and margins going forward."
Outlook
Although the macro backdrop has become more challenging,
business and financial performance through the first nine months of the year is broadly in line with our plans. We therefore re-affirm
our 2022 target of organic OCF growth of around 10%. In addition, we expect equity free cash flow of between $150 million and $200 million
for the full year 2022, implying very robust cash generation in Q4, consistent with historical seasonal patterns.
Group Quarterly Financial Review - Q3 2022
Income statement data (i) (IFRS) |
Q3 2022 |
Q3 2021 |
% change |
9M 2022 |
9M 2021 |
% change |
$ millions (except EPS in $) |
Revenue |
1,388 |
1,006 |
37.9% |
4,243 |
3,006 |
41.1% |
Cost of sales |
(369) |
(288) |
(28.2)% |
(1,134) |
(851) |
(33.3)% |
Gross profit |
1,019 |
718 |
41.8% |
3,109 |
2,155 |
44.2% |
Operating expenses |
(479) |
(367) |
(30.7)% |
(1,429) |
(1,099) |
(30.0)% |
Depreciation |
(249) |
(193) |
(28.8)% |
(757) |
(583) |
(29.8)% |
Amortization |
(93) |
(55) |
(70.0)% |
(264) |
(233) |
(13.6)% |
Share of profit in joint ventures |
5 |
56 |
(90.7)% |
25 |
185 |
(86.4)% |
Other operating income (expenses), net |
(6) |
29 |
NM |
(6) |
(9) |
28.2% |
Operating profit |
196 |
189 |
3.9% |
678 |
416 |
62.9% |
Net financial expenses |
(157) |
(99) |
(58.1)% |
(462) |
(344) |
(34.4)% |
Other non-operating income, (expense) net |
(35) |
(19) |
(81.9)% |
(41) |
(37) |
(12.0)% |
Losses from other JVs and associates, net |
— |
(35) |
99.2% |
— |
(39) |
100.0% |
Profit (loss) before tax |
4 |
35 |
(88.2)% |
174 |
(3) |
NM |
Net tax expense |
(53) |
(12) |
NM |
(200) |
(66) |
NM |
Profit (loss) for the period from continuing ops. |
(49) |
23 |
NM |
(26) |
(69) |
62.2% |
Non-controlling interests |
16 |
1 |
NM |
33 |
28 |
18.8% |
Profit (loss) from discontinued operations |
2 |
(19) |
NM |
113 |
(12) |
NM |
Net profit (loss) for the period |
(32) |
5 |
NM |
120 |
(53) |
NM |
Weighted average shares outstanding (millions) |
170.87 |
128.85 |
32.6% |
128.32 |
128.93 |
(0.5)% |
EPS |
(0.18) |
0.04 |
NM |
0.94 |
(0.41) |
NM |
(i) Since acquiring the remaining 45% equity
interest on November 12, 2021, the Guatemala business is fully consolidated in our financial statements.
The
consolidation of Guatemala is the most important factor affecting most lines of the Q3 2022 financial data when compared to Q3 2021. For
brevity purposes, we omit repeated mentions of the Guatemala transaction when discussing the reasons for changes in financial performance
year-on-year. To facilitate comparisons, proforma income statement data are included in the Financial & Operating Data Excel file
published at www.millicom.com/investors
alongside this earnings release.
In Q3 2022, revenue increased 37.9% year-on-year,
as the Guatemala transaction more than offset the impact of a weaker Colombian peso, which depreciated 9.2% during the quarter to end
12.1% weaker year-on-year. Excluding these effects, revenue increased 2.4% on an organic
basis, with all business lines and most countries sustaining positive growth amidst decelerating economic activity and rising inflation.
Operating expenses increased 30.7% year-on-year,
reflecting increased sales and marketing costs to support customer growth, especially in our Colombia mobile business, as well as increased
investment to support the development and expansion of our Tigo Money fintech business. Energy costs, which amount to approximately 2%
of revenue, increased by 17% in aggregate. Operating expenses also include
a one-time $7 million charge related to the early termination of a software contract. On an organic basis and excluding the one-time
charge, operating expenses increased by 5.7%.
Depreciation
increased 28.8% year-on-year to $249 million, while amortization rose 70.0% to $93
million, both reflecting mostly the Guatemala transaction.
Other operating
expenses of $6 million in Q3 2022 includes $7 million related to the software contract termination, and this compares to income
of $29 million in Q3 2021 related to our exit from Ghana.
As a result of the above factors, Operating profit
increased 3.9% year-on-year.
Net financial expenses increased $58 million
year-on-year, as a result of the increase in debt to fund the Guatemala acquisition as well as a one-time $15 million gain in Q3 2021.
Other non-operating expense of $35 million compared
$19 million in Q3 2021 related to increased foreign exchange losses in Q3 2022 mostly coming from the depreciation of the Colombian peso.
Charge for taxes increased to $53 million in Q3
2022 from $12 million in Q3 2021 primarily due to the Guatemala acquisition and a $9 million tax amnesty. Non-controlling interests of
$16 million in Q3 2022 compared to $1 million in Q3 2021 reflecting our partners' share of net losses
in Colombia.
Net loss attributable to owners of the
company was $32 million, or $0.18 per share, compared to a net profit of $5 million ($0.04 per share) in Q3 2021. The weighted
average number of shares outstanding during the quarter was 170.87 million, reflecting the rights offering completed in June 2022. As
of September 30, 2022, there were 172.10 million shares outstanding, including 1.21 million held in treasury.
Cash Flow
Cash flow data* ($ millions) |
Q3 2022 |
Q3 2021 |
% change |
9M 2022 |
9M 2021 |
% change |
EBITDA from continuing operations |
539 |
352 |
53.3% |
1,680 |
1,056 |
59.1% |
EBITDA from discontinued operations |
2 |
28 |
(93.0)% |
24 |
93 |
(73.7)% |
EBITDA including discontinued operations |
541 |
380 |
42.5% |
1,705 |
1,149 |
48.4% |
Cash capex (excluding spectrum and licenses) |
(253) |
(173) |
(46.6)% |
(777) |
(580) |
(34.0)% |
Spectrum paid |
(26) |
(4) |
NM |
(75) |
(25) |
NM |
Changes in working capital |
(20) |
7 |
NM |
(214) |
(185) |
(15.6)% |
Other non-cash items |
4 |
5 |
(10.7)% |
11 |
8 |
42.7% |
Taxes paid |
(66) |
(30) |
NM |
(222) |
(79) |
NM |
Operating free cash flow |
180 |
185 |
(3.0)% |
427 |
287 |
48.8% |
Finance charges paid, net |
(120) |
(85) |
(40.8)% |
(312) |
(267) |
(17.1)% |
Lease interest payments, net |
(30) |
(40) |
24.7% |
(100) |
(109) |
8.5% |
Lease principal repayments |
(37) |
(28) |
(31.6)% |
(120) |
(90) |
(33.0)% |
Free cash flow |
(7) |
32 |
NM |
(105) |
(179) |
41.4% |
Repatriation from joint ventures and associates |
36 |
13 |
NM |
63 |
50 |
26.4% |
Dividends and advances to non-controlling interests |
(1) |
— |
NM |
(3) |
(6) |
45.3% |
Equity free cash flow |
28 |
45 |
(37.0)% |
(45) |
(135) |
66.7% |
Equity free cash flow - Africa |
2 |
(12) |
NM |
(10) |
(12) |
17.6% |
Equity free cash flow - excluding Africa |
26 |
57 |
(53.9)% |
(35) |
(123) |
71.3% |
* See page 11 for a description of non-IFRS measures discussed in
the above table. On November 12, 2021, we acquired the remaining 45% interest in our Guatemala operation, and we began to consolidate
Guatemala as of that date. As a result, Cash Flow metrics for 2022 are not directly comparable to those of 2021, which did not include
Guatemala. Additionally, cash flow data includes our operation in Tanzania until its disposal on April 5, 2022.
Given
meaningful seasonal variations, commentary in this section emphasizes year-to-date rather than quarterly performance.
Operating
Free Cash Flow (OFCF) was $427 million in 9M 2022, an increase of $140 million year-on-year, with most line items impacted primarily by
the consolidation of Guatemala. Working capital investment of $214 million reflects timing differences that largely revert in Q4.
Taxes paid
increased to $222 million in 9M 2022 from $79 million in 9M 2021, primarily due to the consolidation
of Guatemala and $7 million mainly related to our adherence to a tax amnesty in one of our operations. Finance charges increased $46 million
year-on-year to $312 million due to higher average debt levels in 2022 compared to 2021.
Lease interest
and lease principal payments totaled $220 million in 9M 2022, up $21 million from $200 million in 9M 2021 due to the Guatemala
consolidation, expansion of our network, as well as higher payments on renewals.
Finally,
repatriation from joint ventures and associates was $63 million in 9M 2022, an increase of $13 million compared to 9M 2021,
which also included Guatemala, due to increased repatriation from Honduras.
Equity Free
Cash Flow (EFCF) in 9M 2022 was negative $45 million, of which $10 million relates to the Africa operation. Excluding Africa, EFCF increased
by $88 million, as a result of the Guatemala consolidation and improved performance. The
negative EFCF in 9M 2022 is consistent with historical seasonal patterns, which primarily reflects the timing of annual cash payments
for capex booked in Q4 but paid in Q1, income taxes, frequency and software licenses, and variable compensation, as well as the benefit
of increased commercial activity and lower inventory in Q4.
Debt
($ millions) |
September 30, 2022 |
December 31, 2021 |
USD Debt |
4,140 |
4,827 |
Local Currency Debt |
2,725 |
2,917 |
Debt |
6,865 |
7,744 |
Cash |
884 |
930 |
Net Debt* |
5,981 |
6,814 |
Leases |
1,025 |
1,167 |
Net Financial Obligations* |
7,006 |
7,981 |
EBITDA* (LTM) |
2,141 |
1,639 |
Proforma Adjustments |
103 |
747 |
Proforma EBITDA* |
2,244 |
2,385 |
Leverage* |
3.12x |
3.34x |
* Net Debt, Net financial obligations, EBITDA and
Leverage are non-IFRS measures and are IFRS consolidated figures. See page 11 for a description of non-IFRS measures and for reconciliations
to the nearest equivalent IFRS measures. Proforma adjustments relate to the acquisition of the Guatemala operation on November 12, 2021.
As of September 30, 2022, debt of
$6,865 million was stable compared to $6,864 million at the end Q2 2022.
Approximately 63% of debt at September 30, 2022
was held at our operating entities, and 37% was at the corporate level. The average interest rate on our debt increased to 6.0% from
5.8% at the end of Q2 2022 mainly as a result of the increase in variable rates in USD and COP debt. As of September 30, 2022, 40% of
our debt was in local currency or swapped for local currency slightly down from 41% as of June 30, 2022. In addition, 82% of our debt
was at fixed rates or swapped for fixed rates with an average maturity of 5.9 years, in line with our targets. On our dollar-denominated
debt1, the average rate was 5.3% with an average maturity of 6.5 years as of
September 30, 2022, slightly increasing from levels as of June 30, 2022.
Our cash position was $884
million as of September 30, 2022, an increase of $105 million compared
to $779 million as of June 30, 2022. Of our cash balance, 79% was held in U.S. dollars. As
a result, our net debt was $5,981 million as of September 30, 2022, a decrease of
$103 million during the quarter, reflecting the benefit of weaker foreign exchange rates on our local currency debt, as
well as the positive EFCF generation during the quarter.
1 Including
also SEK denominated bonds that have been swapped into US dollars.
In addition, as of September 30, 2022, we had lease
liabilities of $1,025 million, which represented 13% of gross financial obligations. Including these lease liabilities, net financial
obligations were $7,006 million as of September 30, 2022, a decrease of $112 million during
the quarter. Leverage, which includes our lease obligations, was 3.12x as of September 30, 2022, decreasing from
3.14x as of June 30, 2022. Excluding the impact of leases, the ratio of net debt to EBITDAaL* was
3.03x, compared to 3.04x as of June 30, 2022.
Operating performance
The information contained herein can also be accessed electronically
in the Financial & Operating Data Excel file published at www.millicom.com/investors
alongside this earnings release.
Business units
We discuss our performance under two principal
business units:
1. Mobile, including mobile data, mobile voice,
and mobile financial services (MFS) to consumer, business and government customers;
2. Cable and other fixed services, including broadband,
Pay TV, content, and fixed voice services for residential (Home) customers, as well as voice, data and value-added services and solutions
to business and government customers.
On occasion, we also discuss our performance by
customer type, with B2B referring to our business and government customers, while B2C includes residential and personal consumer groups.
Market environment
Economic activity slowed noticeably in our markets
during Q3 2022. Inflation steadily increased, in line with global trends, impacting consumer spending, although remittances from the U.S.
to Central America sustained strong growth year-on-year. Foreign exchange rate volatility increased in some of our markets, with the average
rate in the quarter for the Costa Rican colón and the Colombian peso down 5.8% and 12.1%, respectively, year-on-year, while currencies
in other markets were broadly stable. Foreign exchange rates and movements are presented on page 14.
Key Performance Indicators
Mobile
services
We ended Q3 2022 with
40.0 million customers, an increase of 160,000 during the quarter with customer gains in almost every country, except Guatemala and Bolivia,
which experienced declines in prepaid. During the quarter, approximately 200,000 customers were reclassified from postpaid to prepaid
upon completion of a large government contract in Colombia.
Mobile ARPU declined 3.6% year-on-year partly due
to the weaker Colombian peso. In local currency terms, ARPU declined by 1.0% on average, but it
rose in three countries including a 6% uplift in Colombia, driven by the ongoing shift in mix toward postpaid. During Q3, we implemented
price increases in many of our markets, the full effect of which is expected in future periods.
Key Performance Indicators* (‘000) |
Q3 2022 |
Q2 2022 |
Q1 2022 |
Q4 2021 |
Q3 2021 |
Q3 2022 vs Q3 2021 |
Mobile customers |
40,014 |
39,855 |
39,956 |
39,802 |
38,971 |
2.7% |
Of which 4G customers |
19,806 |
19,134 |
19,282 |
19,046 |
18,123 |
9.3% |
Of which postpaid subscribers |
6,155 |
6,161 |
5,935 |
5,615 |
5,278 |
16.6% |
Mobile ARPU ($) |
6.0 |
6.2 |
6.1 |
6.3 |
6.3 |
(3.6)% |
Homes passed |
12,700 |
12,448 |
12,237 |
12,083 |
11,936 |
6.4% |
Of which HFC/FTTH |
12,433 |
12,179 |
11,965 |
11,810 |
11,660 |
6.6% |
Customer relationships |
4,780 |
4,767 |
4,762 |
4,704 |
4,672 |
2.3% |
Of which HFC/FTTH |
4,109 |
4,083 |
4,062 |
3,988 |
3,928 |
4.6% |
HFC/FTTH revenue generating units |
8,636 |
8,572 |
8,524 |
8,360 |
8,180 |
5.6% |
Of which Broadband Internet |
3,764 |
3,740 |
3,719 |
3,637 |
3,578 |
5.2% |
Home ARPU ($) |
26.2 |
27.3 |
27.5 |
27.9 |
28.1 |
(6.9)% |
* KPIs re-presented to include Guatemala in all periods and exclude
both Africa, which has been classified as discontinued operations, and our joint venture in Honduras, which is not consolidated in the
Group figures.
Broadband
and other fixed services
At the end of Q3 2022, our networks passed 12.7
million homes, an increase of 252,000 during the quarter and 6.4% year-on-year, as we have ramped up to our target build rate as planned.
In the quarter, we added 26,000 net HFC/FTTH customer relationships, reflecting the impact of continued price discipline amidst a more
challenging macroeconomic environment, as well as increased competition in some markets. Penetration on our HFC/FTTH network was 33.1%,
down slightly from 33.7% in Q3 2021, as we increased our build rate significantly in the quarter.
Home ARPU declined 6.9%
year-on-year, due largely to the weaker Colombian peso. Excluding the currency impact, Home ARPU declined 2.8% due to the shift in mix
toward Broadband-only customers, which generate lower ARPU, as well as lower cost and capex. In local currency, ARPU increased in three
countries, and we increased prices across our footprint, which should help produce improved ARPU trends going forward.
Financial indicators
In Q3 2022, revenue increased
37.9% year-on-year to $1,388 million, while service revenue increased 34.5% to $1,280 million. Adjusting for the acquisition of Guatemala
and for currency movements, organic service revenue growth was 2.7% year-on-year,
reflecting growth in all countries except Guatemala and Bolivia and growth in all business units.
El Salvador had the strongest performance in the
quarter, with service revenue growing 6.0%. Colombia grew 5.7% in local currency driven by mobile growth in the mid-teens. Panama grew
3.9%, led by mobile up high-single-digits and B2B up mid-single-digits in this consolidating
market. In Paraguay, 2.3% service revenue growth reflected strong performance in mobile and
B2B, which offset a decline in Home. Guatemala service revenue declined 0.5%, as we took
additional steps to defend our market leadership. Bolivia declined 0.6%, impacted by a change in regulation that took effect in August.
Finally, local currency service revenue grew 5.9% in
Nicaragua, and 1.5% in Costa Rica. The Honduras joint venture (not consolidated) grew 2.2%.
Financial Highlights* |
Q3 2022 |
Q3 2021 |
% change |
Organic % change |
9M 2022 |
9M 2021 |
% change |
Organic % change |
($m, unless otherwise stated) |
Revenue |
1,388 |
1,006 |
37.9% |
2.4% |
4,243 |
3,006 |
41.1% |
4.1% |
Service revenue |
1,280 |
951 |
34.5% |
2.7% |
3,895 |
2,843 |
37.0% |
3.9% |
Mobile |
735 |
462 |
59.1% |
|
2,222 |
1,373 |
61.8% |
|
Cable and other fixed services |
528 |
475 |
11.3% |
|
1,620 |
1,425 |
13.7% |
|
Other |
16 |
15 |
9.8% |
|
52 |
44 |
17.7% |
|
EBITDA |
539 |
352 |
53.3% |
(1.9)% |
1,680 |
1,056 |
59.1% |
1.0% |
EBITDA margin |
38.9% |
34.9% |
3.9 pt |
|
39.6% |
35.1% |
4.5 pt |
|
Capex |
253 |
229 |
10.2% |
|
707 |
538 |
31.4% |
|
OCF |
286 |
122 |
134.4% |
2.0% |
973 |
518 |
87.9% |
(2.7)% |
* Service revenue, EBITDA, EBITDA margin, Capex, OCF and organic
growth are non-IFRS measures. Capex is defined as capital expenditures excluding spectrum, license costs and lease capitalizations. See
page 11 for a description of non-IFRS measures and for reconciliations to the nearest equivalent IFRS measures.
By business
unit, Home service revenue was flat, growing 0.2% organically, impacted by lower customer
intake due to pricing discipline and the macroeconomic environment. In our Mobile business, organic service revenue grew a healthy 3.2%
year-on-year, driven by postpaid, which grew 8.9% in local currency. Finally, B2B maintained its strong momentum, with service revenue
growing 5.9% organically, with Paraguay and El Salvador posting double-digit growth in B2B during the quarter.
EBITDA was
$539 million, an increase of 53.3% year-on-year. Excluding the acquisition of Guatemala and changes in FX rate, EBITDA declined 1.9% organically
year-on-year, impacted by a $7 million one-time charge related to the early termination of a software contract. Excluding this one-off,
EBITDA would have declined 0.6% organically, reflecting the low single-digit service revenue growth, offset by the inflationary impacts
on our cost structure and the ongoing investments to support growth and independence of our Tower Company and Tigo Money businesses, which
we are planning to carve-out in 2023. Also impacting EBITDA in Q3 were costs related to our new content agreement with Vix, which includes
rights to the Spanish soccer league ("La Liga") matches. We began commercializing Vix in mid-September and will begin generating
revenue in Q4.
By country, EBITDA local currency growth was positive
in Nicaragua (13.2%), Colombia (6.6%), Panama (6.0%), El Salvador (3.9%) and Costa Rica (0.4%).
Growth was negative 2.6% in Guatemala, as the decline in prepaid and incoming international long distance impacted margins, as did investments
to protect market share. Bolivia declined 3.7%, impacted
by the regulatory change implemented in August, and Paraguay declined 2.7% due to
phasing of opex related to our exclusive soccer rights and advertising and promotional campaigns. Finally,
the Honduras joint venture (not consolidated) grew 3.5%.
Capex was
$253 million in the quarter. In Mobile, we added more than 500 points of presence to our 4G network during the quarter, and we
ended with more than 17,000 points of presence, an increase of 15% year-on-year. At the end of Q3 2022, our 4G networks covered approximately
79% of the population2, which is up from approximately
76% as of September 30, 2021.
Operating
Cash Flow (OCF) increased 134.4% year-on-year to $286 million in Q3 2022. Excluding
the impact of the acquisition of Guatemala and currencies, OCF increased 2.0% organically, impacted by the EBITDA one-off related to a
software contract. Excluding the impact of this one-off, OCF would have increased 4.5% organically.
ESG highlights
– Q3 2022
Environment
With our near-term Science-Based Targets validated
and officially announced in July 2022, we have continued our work to ensure progress towards the commitments. This includes monitoring
of current initiatives, plans for upcoming projects and efforts, training, and building internal and external partnerships to promote
the development of a low-carbon economy in our markets.
Society
Culture
Millicom has been recognized as one of the World's
Best Workplaces by Great Place To Work, ranking number 5. This achievement rewards Millicom's SangreTigo culture and investment in its
people, and is in addition to the recognition as the second place in the Great Place to Work Latin America ranking received in August,
2022, and the fifth place in the Great Place to Work Central America Ranking received in April, 2022.
Digital Education
Our Conectadas program has trained over 80,000
year-to-date Q3 2022 as we continue to work towards our targets. We are currently working with our partner Grameen Foundation on including
new content in the platform, which will be provided by GSMA's Mobile Internet Skills Training Toolkit. As of year-to-date Q3 2022, we
have trained over 58,000 teachers. We also held two in person events for teachers in Bolivia and Paraguay, with over 2,200 teachers attending.
2 The
population is approximately 120 million in our markets.
In September 2022, at an event honoring Millicom,
Glasswing International and Millicom announced a new mentorship program in Guatemala, El Salvador, and Honduras. Professionals from Tigo
will engage in mentoring sessions with groups of students, and an initial pilot is expected to be launched in November.
Activities with the Fundación Real Madrid
continue across our footprint, and more than 6,000 people have attended our training sessions.
Supply Chain Management
We launched a revised and updated version of our
Supplier training module, enhancing the content related to climate change and Scope 3 emissions reduction. Furthermore, we are reaching
out to vendors in key Scope 3 emissions categories, to join forces in working towards a more efficient and resilient value chain.
Governance
Compliance
In Q3 2022, we launched the annual mandatory Compliance
training, covering all relevant aspects of the program (Code of Conduct, Anti-Corruption, Gifts & Hospitality, Speak Up, Sponsorships
& Donations, Conflicts of Interest, Third Party Due Diligence, and AML -Anti Money Laundering-). The training targets all active employees
and contracted staff of the company. Also, in tandem with our training efforts, we are conducting our global Conflicts of Interest campaign.
Video conference details
A
video conference to discuss these results will take place on October 27 at 14:00 (Luxembourg/Stockholm) / 13:00 (London) / 08:00 (Miami).
Registration for the live event is required and is available at the following link.
After registering, participants will receive a confirmation
email containing details about joining the video conference. Alternatively, participants can join in a listen-only mode, by dialing any
of the following numbers and using webinar ID number 879-9645-2403. Please dial a number base on your location:
US |
+1 929 205 6099 |
Sweden: |
+46 850 539 728 |
UK: |
+44 330 088 5830 |
Luxembourg: |
+352 342 080 9265 |
Additional international numbers are available
at the following link.
Financial calendar
2023
Date |
Event |
February 10 |
Q4 2022 results |
April 27 |
Q1 2023 results |
May 4 |
2023 AGM |
July 27 |
Q2 2023 results |
October 26 |
Q3 2023 results |
For further information, please contact
Press: |
Investors: |
Karim Lesina, EVP Chief External Affairs Officer |
Michel Morin, VP Investor Relations |
Yocasta Valdez, Group Sr. Manager Digital Media & Communications |
Sarah Inmon, Director Investor Relations |
press@millicom.com |
investors@millicom.com |
About Millicom
Millicom (NASDAQ U.S.: TIGO, Nasdaq Stockholm:
TIGO_SDB) is a leading provider of fixed and mobile telecommunications services in Latin America. Through our TIGO® and
Tigo Business® brands, we provide a wide range of digital services and products, including TIGO Money for mobile financial
services, TIGO Sports for local entertainment, TIGO ONEtv for pay TV, high-speed data, voice, and business-to-business solutions such
as cloud and security. As of September 30, 2022, Millicom employed approximately 20,000 people and
provided mobile and fiber-cable services through its digital highways to more than 45 million customers, with a fiber-cable footprint
over 13 million homes passed. Founded in 1990, Millicom International Cellular S.A. is headquartered
in Luxembourg.
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 12:00 CET on October 27, 2022.
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 global economic activity and inflation, the demand for Millicom's products
and services, and global supply chains. The risks and uncertainties include, but are not limited to, the following:
| • | global
economic conditions, foreign exchange rate fluctuations and high inflation, as well as local
economic conditions in the markets we serve, which can be impacted by geopolitical developments
outside of our principal geographic markets, such as the armed conflict between Russia and
the Ukraine and related sanctions; |
| • | potential disruption due to diseases, pandemics, political events, armed conflict, acts by terrorists,
including the impact of the outbreak of the COVID-19 virus and the ongoing efforts throughout the world to contain it; |
| • | telecommunications usage levels, including traffic, customer growth and the accelerated transition from traditional to digital services; |
| • | competitive forces,including pricing pressures, piracy, 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; |
| • | the achievement of our operational goals, financial targets and strategic plans, including the acceleration of cash flow growth, the
reduction in net leverage, the expansion of our fixed broadband network, and the implementation of a share repurchase program and environmental,
social and governance standards; |
| • | 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, laws and regulations which require the provision of services to customers without charging, tax matters,
the terms of interconnection, customer access and international settlement arrangements; |
| • | our ability to grow our mobile financial services business in our Latin American markets; |
| • | adverse legal or regulatory disputes or proceedings; |
| • | the success of our business, operating and financing initiatives and strategies, including partnerships and capital expenditure plans; |
| • | our expectations regarding the growth in fixed broadband penetration rates and the return that our investment in broadband networks
will yield; |
| • | 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; |
| • | our ability to create new organizational structures for the Tigo Money and Towers businesses and manage them independently to enhance
their value; |
| • | relationships with key suppliers and costs of handsets and other equipment; |
| • | disruptions in our supply chain due to economic and political instability, the outbreak of war or other hostilities, public health
emergencies, natural disasters and general business conditions; |
| • | 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 under the heading “Risk Factors” in Item 1 of Millicom’s Report on Form 6-K, filed with the U.S. Securities
and Exchange Commission (the “SEC”) on May 10, 2022, and in Millicom’s subsequent SEC 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.
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,
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.
Following the changes in perimeter following the
Guatemala acquisition and the Africa disposal, Millicom's management modified the company's external reporting with the primary objective
of simplifying it. As a result, the Group has discontinued the use of the following non-IFRS measures: Proportionate financial obligations,
Proportionate leverage, Proportionate leverage after leases, and all Underlying measures (as these mainly reflected the full consolidation
of Guatemala). The definitions of EBITDA and Return on Invested Capital have been adjusted to reflect this change. In addition, the Group
changed the definition of Equity Free Cash Flow to include spectrum paid and lease principal repayments in response to feedback from users
of our financial statements who prefer a more comprehensive view of our cash flow generation. As a result we no longer refer to Equity
Free Cash Flow 'after Leases'.
Non-IFRS Financial Measure Descriptions
Service revenue
is revenue related to the provision of ongoing services such as monthly subscription fees for mobile and broadband, 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, installation fees 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 after Leases
(EBITDAaL) represents EBITDA after lease interest and principal repayments.
EBITDA Margin
represents EBITDA in relation to Revenue.
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 and time deposits.
Net financial obligations
is Net debt plus lease liabilities.
Leverage
is the ratio of net financial obligations over LTM (Last twelve month) EBITDA, proforma for acquisitions made during the last twelve months.
Leverage after
leases is the ratio of net debt over LTM (Last twelve month) EBITDA after leases, proforma for acquisitions and disposals 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 (OFCF) is EBITDA, less cash capex, less spectrum paid, working capital and other non-cash items, and taxes paid.
Equity Free Cash
Flow (EFCF) is OFCF less finance charges paid (net), lease interest payments, lease principal repayments, and advances for
dividends to non-controlling interests, plus cash repatriation from joint ventures and associates.
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 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.
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 from other industry participants.
Please refer to our 2021 Annual Report for a list
and description of non-IFRS measures.
Non-IFRS Reconciliations
Reconciliation from Reported Growth to Organic Growth
for the Group
($ millions) |
Revenue |
Service Revenue |
EBITDA |
OCF |
Q3 2022 |
Q3 2022 |
Q3 2022 |
Q3 2022 |
A- Current period |
1,388 |
1,280 |
539 |
286 |
B- Prior year period |
1,006 |
951 |
352 |
122 |
C- Reported growth (A/B) |
37.9% |
34.5% |
53.3% |
134.4% |
D- Perimeter |
39.4% |
35.6% |
60.7% |
141.8% |
E- FX and other |
(3.8)% |
(3.8)% |
(5.4)% |
(9.4)% |
F- Organic Growth (C-D-E) |
2.4% |
2.7% |
(1.9)% |
2.0% |
*Organic growth calculated by re-basing all periods to the budget
FX rates of the current year. This creates small differences captured in "Other". Capex included in OCF is assumed to be in
USD and is not rebased.
($ millions) |
Revenue |
Service Revenue |
EBITDA |
OCF |
9M 2022 |
9M 2022 |
9M 2022 |
9M 2022 |
A- Current period |
4,243 |
3,895 |
1,680 |
973 |
B- Prior year period |
3,006 |
2,843 |
1,056 |
518 |
C- Reported growth (A/B) |
41.1% |
37.0% |
59.1% |
87.9% |
D- Perimeter |
39.2% |
35.4% |
60.9% |
99.9% |
E- FX and other |
(2.1)% |
(2.4)% |
(2.7)% |
(9.3)% |
F- Organic Growth (C-D-E) |
4.1% |
3.9% |
1.0% |
(2.7)% |
*Organic growth is calculated by re-basing all periods to the budget
FX rates of the current year. This creates small differences captured in "Other". Capex included in OCF is assumed to be in
USD and is not rebased.
Reconciliation of Net financial obligations to EBITDA
as of September 30, 2022
Debt Information - September 30, 2022 |
Financial obligations |
|
LTM EBITDA |
|
$ millions |
Gross |
Cash |
Net |
|
Reported |
Adjustments* |
Proforma |
Leverage |
Millicom Group (IFRS) |
7,890 |
884 |
7,006 |
|
2,141 |
103 |
2,244 |
3.12x |
*Related to Guatemala acquisition completed on November 12, 2021.
One-off Summary - Items above EBITDA
2022 |
Q3 2022 |
9M 2022 |
Comment (Q3 2022) |
($ millions) |
Revenue |
EBITDA |
Revenue |
EBITDA |
Panama |
— |
— |
— |
5 |
|
Colombia |
— |
— |
— |
(4) |
|
Corporate |
— |
(7) |
— |
(7) |
Early termination of software contract |
Group Total |
— |
(7) |
— |
(7) |
|
2021 |
Q3 2021 |
9M 2021 |
Comment (Q3 2021) |
($ millions) |
Revenue |
EBITDA |
Revenue |
EBITDA |
Paraguay |
— |
— |
(4) |
(4) |
|
Group Total |
— |
— |
(4) |
(4) |
|
ARPU reconciliations
Mobile ARPU Reconciliation |
Q3 2022 |
Q3 2021 |
9M 2022 |
9M 2021 |
Mobile service revenue ($m) |
735 |
732 |
2,222 |
2,181 |
Mobile Service revenue ($m) from non-Tigo customers ($m) * |
(12) |
(8) |
(33) |
(21) |
Mobile Service revenue ($m) from Tigo customers (A) |
723 |
724 |
2,189 |
2,160 |
Mobile customers - end of period (000) |
40,014 |
38,971 |
40,014 |
38,971 |
Mobile customers - average (000) (B) ** |
39,935 |
38,567 |
39,907 |
38,040 |
Mobile ARPU (USD/Month) (A/B/number of months) |
6.0 |
6.3 |
6.1 |
6.3 |
* Refers to 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.
Home ARPU Reconciliation |
Q3 2022 |
Q3 2021 |
9M 2022 |
9M 2021 |
Home service revenue ($m) |
383 |
400 |
1,180 |
1,189 |
Home service revenue ($m) from non-Tigo customers ($m) * |
(8) |
(8) |
(24) |
(21) |
Home service revenue ($m) from Tigo customers (A) |
375 |
392 |
1,156 |
1,168 |
Customer Relationships - end of period (000) ** |
4,780 |
4,672 |
4,780 |
4,672 |
Customer Relationships - average (000) (B) *** |
4,774 |
4,640 |
4,754 |
4,542 |
Home ARPU (USD/Month) (A/B/number of months) |
26.2 |
28.1 |
27.0 |
28.6 |
* 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/FTTH + Other
Technologies + DTH & Wimax RGUs).
*** Average QoQ for the quarterly view is the average of the last
quarter.
OCF (EBITDA- Capex) Reconciliation
Group OCF |
Q3 2022 |
Q3 2021 |
9M 2022 |
9M 2021 |
|
EBITDA |
539 |
352 |
1,680 |
1,056 |
|
(-)Capex (Ex. Spectrum) |
253 |
229 |
707 |
538 |
|
OCF |
286 |
122 |
973 |
518 |
|
Capex Reconciliation
Capex Reconciliation |
Q3 2022 |
Q3 2021 |
9M 2022 |
9M 2021 |
Consolidated: |
|
|
|
|
Additions to property, plant and equipment |
210 |
189 |
588 |
450 |
Additions to licenses and other intangibles |
88 |
64 |
280 |
98 |
Of which spectrum and license costs |
45 |
24 |
161 |
10 |
Total consolidated additions |
298 |
253 |
868 |
548 |
Of which capital expenditures related to headquarters |
5 |
3 |
12 |
7 |
Foreign Exchange rates
|
|
Average FX rate (vs. USD) |
End of period FX rate (vs. USD) |
|
|
Q3 22 |
Q2 22 |
QoQ |
Q3 21 |
YoY |
Q3 22 |
Q2 22 |
QoQ |
Q3 21 |
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 |
4,340 |
3,939 |
(9.2)% |
3,817 |
(12.1)% |
4,532 |
4,127 |
(8.9)% |
3,835 |
(15.4)% |
Costa Rica |
CRC |
663 |
680 |
2.5% |
625 |
(5.8)% |
633 |
692 |
9.4% |
630 |
(0.5)% |
Guatemala |
GTQ |
7.78 |
7.70 |
(1.1)% |
7.74 |
(0.5)% |
7.88 |
7.76 |
(1.6)% |
7.73 |
(1.9)% |
Honduras |
HNL |
24.57 |
24.46 |
(0.5)% |
23.98 |
(2.4)% |
24.70 |
24.50 |
(0.8)% |
24.17 |
(2.2)% |
Nicaragua |
NIO |
35.96 |
35.78 |
(0.5)% |
35.26 |
(2.0)% |
36.05 |
35.87 |
(0.5)% |
35.34 |
(2.0)% |
Paraguay |
PYG |
6,929 |
6,866 |
(0.9)% |
6,877 |
(0.8)% |
7,091 |
6,848 |
(3.4)% |
6,914 |
(2.5)% |
Equity Free Cash Flow Reconciliation
Cash Flow Data |
Q3 2022 |
Q3 2021 |
9M 2022 |
9M 2021 |
|
Net cash provided by operating activities |
309 |
237 |
868 |
516 |
|
Purchase of property, plant and equipment |
(219) |
(149) |
(625) |
(479) |
|
Proceeds from sale of property, plant and equipment |
2 |
2 |
8 |
6 |
|
Purchase of intangible assets |
(36) |
(26) |
(161) |
(107) |
|
Purchase of spectrum and licenses |
(26) |
(4) |
(75) |
(25) |
|
Proceeds from sale of intangible assets |
— |
— |
— |
— |
|
Finance charges paid, net |
150 |
125 |
412 |
376 |
|
Operating free cash flow |
180 |
185 |
427 |
287 |
|
Interest (paid), net |
(150) |
(125) |
(412) |
(376) |
|
Lease Principal Repayments |
(37) |
(28) |
(120) |
(90) |
|
Free cash flow |
(7) |
32 |
(105) |
(179) |
|
Repatriation from joint ventures and associates |
36 |
13 |
63 |
50 |
|
Dividends paid to non-controlling interests |
(1) |
— |
(3) |
(6) |
|
Equity free cash flow |
28 |
45 |
(45) |
(135) |
|
Equity free cash flow - Africa |
2 |
(12) |
(10) |
(12) |
|
Equity free cash flow - excluding Africa |
26 |
57 |
(35) |
(123) |
|