UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

 Washington, D.C. 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16 OF THE

SECURITIES EXCHANGE ACT OF 1934

For the month of July, 2023.

Commission File Number: 001-38763

MILLICOM INTERNATIONAL CELLULAR S.A.

(Exact Name of Registrant as Specified in Its Charter)

2, Rue du Fort Bourbon,

L-1249 Luxembourg

Grand Duchy of Luxembourg

(Address of principal executive office)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:

Form 20-F x Form 40-F ¨

MILLICOM INTERNATIONAL CELLULAR S.A.

INDEX TO FURNISHED MATERIAL

Item
______

Item 1

Millicom International Cellular S.A.

Half year report

June 30, 2023

 

Contents

 

Interim Management Report

Purpose

This half-year report for the six-month period ended June 30, 2023 has been prepared in accordance with the requirements of Article 4 of the Luxembourg Transparency Law of 11 January 2008, and should be read in conjunction with the annual report of Millicom International Cellular S.A. ("Millicom" or "the Company") for the year ended December 31, 2022 (including the consolidated financial statements included therein) and the unaudited interim condensed consolidated financial statements included in this half-year report.

Cautionary statement considering 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:

 

A further list and description of risks, uncertainties and other matters can be found in Millicom’s Registration Statement on Form 20-F for the year ended December 31, 2022, filed with the U.S Securities and Exchange Commission on February 28, 2023 (the "2022 Annual Report"), including those risks outlined in “Item 3. Key Information—D. Risk Factors,” and in Millicom’s subsequent U.S. Securities and Exchange Commission filings, all of which are available at www.sec.gov.

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.

Group performance

Revenue

Group revenue decreased 3.3% ($93 million) year-on-year to $2,762 million in H1 2023. The decrease is largely due to the impact of weaker currencies in some countries and lower telephone and equipment sales.

Cost of sales

Cost of sales decreased at a rate of 1.7% ($13 million) year-on-year to $752 million, mainly due to lower handset sales which was partially offset by a $10 million provision related to a legal ruling in Colombia, higher bad debt provision, and higher programming costs.

Operating expenses

Operating expenses increased 4.1% ($39 million) year-on-year to $988 million, mainly due to a one-off expense of $21 million related to the cost reduction project ("Everest"), incremental costs related to investments to protect our leadership position in Guatemala and an increase in share based compensation cost ($12m) reflecting the higher share price.

 

Depreciation and Amortization

Depreciation decreased 5.3% ($27 million) year-on-year to $482 million, mostly due to the foreign exchange impact and revision of the estimated useful life of towers and civil works (refer to note 2). Amortization expense increased 3.6% ($6 million) year-on-year to $177 million mainly due to the renewal of the spectrum license related to 1900 Mhz band in Colombia (refer to note 10).

Share of profit in Honduras joint venture

Millicom's share of profit in joint ventures was $21 million in H1 2023, an increase of 5.8% year-on-year reflecting the performance of our joint venture in Honduras.

Other operating income (expenses), net

Other operating income (expenses), net, increased by $4 million year-on-year mainly due to gains on PP&E disposals in our operations in Guatemala and Colombia offset partially by losses on similar disposals on our operations in Panama and Bolivia.

Financial income/(expense), net

Financial income (expenses), net increased by $35 million year-on year to $340 million mainly due to higher interest rates on our variable rate debt (primarily in Colombia) as well as recently introduced commissions on dollar purchases in Bolivia.

Other non-operating (expenses) income, net

Gain from other non-operating items was $27 million in H1 2023 compared to a loss of $7 million in H1 2022 mainly driven by foreign exchange gains in Colombia.

Charges for taxes, net

Tax expense was $141 million in H1 2023, decreasing from $147 million in H1 2022 primarily due to the effect of a tax amnesty booked in H1 2022 in one of our operations partially offset by the impairment of some tax credits in H1 2023.

Net profit/ (loss) for the period

Net loss attributable to the owners of the Company was $19 million or 0.11 per share for H1 2023 compared to a net profit of $152 million or $1.42 per share in H1 2022.

Non-controlling interests share of net loss was $49 million in H1 2023 compared to a net loss of $17 million in H1 2022, reflecting the share of losses of the Group's partners in Tigo Colombia.

Share Capital

At June 30, 2023, Millicom had 172.1 million issued and paid up common shares of par value $1.50 each (2022: 172.1 million). T. Out of the 172.1 million issued and paid up common shares, 757 thousand were held by the Company as treasury shares (2022: 1,229 thousand). During H1 2023, the Company withheld approximately 100 thousand shares for the settlement of tax obligations on behalf of the employees under the share-based compensation schemes and issued around 556 thousand shares to management under the same schemes as part of their annual remuneration and directors as part of director remuneration.

 

Risks and uncertainty factors

Inflation across the region has generally declined in line with global trends. Nevertheless, interest rates remain high, impacting the Group's variable interest rate debt and financing. This is particularly visible for the Group's operations in Colombia where inflation has remained elevated near 12% and where a significant portion of the debt is at variable interest rates. The Group has also experienced a generalized softening of consumer demand which has translated into slower service revenue growth, as well as energy and labor cost pressure on margins. This trend began in H2 2022 and has continued throughout H1 of 2023. Over the past year, the Group has taken meaningful steps to mitigate these impacts, including the implementation of numerous price increases, cost efficiency and investment optimization initiatives which position the Group to sustain positive service revenue and cash flow growth going forward.

The Group continues to monitor the developments of the aforementioned events and their potential impact on performance and accounting considerations.

Financial risk management objectives and policies

Millicom’s financial risk management policies and objectives remain unchanged compared to what the Group presented in Section D. Financial risk management of the 2022 consolidated financial statements (included in Group's 2022 Annual Report).

Internal controls and Governance in the preparation of the consolidated financial statements are set out in the Governance section from pages 53 to 116 in Group's 2022 Annual Report.

Related-Party transactions

Millicom conducts transactions with certain related parties on normal commercial terms and conditions. Material related party transactions are subject to the review of the audit and compliance committee of the Company's board of directors. For further details on Millicom Group’s significant related parties please refer to note G.5. of the 2022 consolidated financial statements (included in Group's 2022 Annual Report).

Outlook¹

As communicated on June 28, 2023, Millicom targets cumulative equity free cash flow of at least $500 million for the 2022-2024 period. Based on the company’s outlook, 2024 is expected to be the strongest year in the three-year period due to savings from Project Everest and lower expected spectrum investment and lower one-time items compared to 2023.

¹ Equity Free Cash Flow ('EFCF') is a non-IFRS measures. Please refer to our 2022 Annual Report for a list and description of non-IFRS measures. 

 

Subsequent events

On July 14, 2023, the Group received an adverse legal ruling in Colombia related to actors' guild public performance royalty rights. Although we have already filed an appeal, an additional $10 million provision has been reflected in the Group's interim condensed consolidated financial statements as adjusting subsequent event.

/s/ José Antonio Ríos García

Chairman of the Board of Directors 

Luxembourg, July 27, 2023

 

Responsibility Statement

The Board of Directors and the executive management of the company reaffirm their responsibility to ensure the maintenance of proper accounting records disclosing the consolidated financial position of the Group with reasonable accuracy at any time, and ensuring that an appropriate system of internal controls is in place to ensure that the Group’s business operations are carried on efficiently and transparently.

In accordance with Article 4 of the law of January 11, 2008 on transparency requirements in relation to information about issuers whose securities are admitted to trading on a regulated market, Millicom declares that, to the best of our knowledge, the interim condensed consolidated financial statements for the six-month period ended June 30, 2023, prepared in accordance with IAS 34 ‘Interim Financial Reporting’ as adopted for use in the European Union, give a true and fair view of the assets, liabilities, financial position and results of the interim period.

In addition, management’s report includes a fair review of the development and performance of the Group’s operations during the interim period and of business risks, where appropriate, faced by the Group.

Signed on July 27, 2023

On behalf of Millicom International Cellular S.A., by:

/s/ Mauricio Ramos

Chief Executive Officer

/s/ Sheldon Bruha

Chief Financial Officer

Report on review of interim condensed consolidated financial statements

To the Shareholders, 

Millicom International Cellular S.A. 

2, rue du Fort Bourbon 

L – 1249 - Luxembourg

Introduction

We have reviewed the accompanying interim condensed consolidated financial statements of Millicom International Cellular S.A. as of 30 June 2023, which comprise the interim condensed consolidated statement of financial position as at 30 June 2023 and the related interim condensed consolidated statement of income, the interim condensed consolidated statement of comprehensive income, the interim condensed consolidated statement of changes in equity, the interim condensed consolidated statement of cash flow for the six-month period then ended and explanatory notes. Management is responsible for the preparation and fair presentation of these interim condensed financial statements in accordance with the International Accounting Standard 34, Interim Financial Reporting, (“IAS 34”) as issued by the International Accounting Standards Board and as adopted by the European Union. Our responsibility is to express a conclusion on these interim condensed consolidated financial statements based on our review.

Scope of Review

We conducted our review in accordance with International Standard on Review Engagements 2410, “Review of Interim Financial Information Performed by the Independent Auditor of the Entity.” A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the accompanying interim condensed consolidated financial statements are not prepared, in all material respects, in accordance with IAS 34 as issued by the International Accounting Standards Board and as adopted by the European Union.

Ernst & Young 

Société anonyme 

Cabinet de révision agréé

Bruno Di Bartolomeo 

Luxembourg, 27 July 2023

Unaudited Interim Condensed Consolidated Financial Statements for the three and six- month period ended June 30, 2023

 

Unaudited interim condensed consolidated statement of income for the three and six-month periods ended June 30, 2023

The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements

Unaudited Interim Condensed Consolidated Financial Statements for the three and six- month period ended June 30, 2023

 

Unaudited interim condensed consolidated statement of comprehensive income for the three and six-month periods ended June 30, 2023

The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements

Unaudited Interim Condensed Consolidated Financial Statements for the three and six- month period ended June 30, 2023

 

Unaudited interim condensed consolidated statement of financial position as at June 30, 2023

The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements

Unaudited Interim Condensed Consolidated Financial Statements for the three and six- month period ended June 30, 2023

 

Unaudited interim condensed consolidated statement of financial position as at June 30, 2023 (continued)

The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements

Unaudited Interim Condensed Consolidated Financial Statements for the three and six- month period ended June 30, 2023

 

Unaudited interim condensed consolidated statement of cash flows for the six-month period ended June 30, 2023

Unaudited Interim Condensed Consolidated Financial Statements for the three and six- month period ended June 30, 2023

 

The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements

Unaudited Interim Condensed Consolidated Financial Statements for the three and six- month period ended June 30, 2023

 

Unaudited interim condensed consolidated statements of changes in equity for the six-month period ended June 30, 2023

The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements

Unaudited Interim Condensed Consolidated Financial Statements for the three and six- month period ended June 30, 2023

 

Notes to the 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 July 26, 2023, 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, 2022, 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, 2022 consolidated financial statements, except for the changes described in item III 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.

Inflation across the region has generally declined in line with global trends. Nevertheless, interest rates remain high, impacting the Group's variable interest rate debt and financing. This is particularly visible for the Group's operations in Colombia where inflation has remained elevated near 12% and where a significant portion of the debt is at variable interest rates. The Group has also experienced a generalized softening of consumer demand which has translated into slower service

Unaudited Interim Condensed Consolidated Financial Statements for the three and six- month period ended June 30, 2023

 

revenue growth, as well as energy and labor cost pressure on margins. This trend began in H2 2022 and has continued throughout H1 of 2023. Over the past year, the Group has taken meaningful steps to mitigate these impacts, including the implementation of numerous price increases, cost efficiency and investment optimization initiatives which position the Group to sustain positive service revenue and cash flow growth going forward.

The Group continues to monitor the developments of the aforementioned events and their potential impact on performance and accounting considerations.

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:

Amendments to standards effective for annual periods starting on January 1, 2023 (not yet endorsed by the EU):

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:

Unaudited Interim Condensed Consolidated Financial Statements for the three and six- month period ended June 30, 2023

 

During the six-month period ended June 30, 2023, the estimated useful lives of some property, plant and equipment were revised. As a result, the estimated useful lives of the Group's towers, poles and ducts were changed from 15 to 25 years, while the related civil works' useful lives were increased from 10 to 15 years. These changes are considered as a change in accounting estimate per IAS 8 'Accounting Policies, Changes in Accounting Estimates and Errors' and are therefore accounted for prospectively, meaning that no changes should be accounted for past periods. This also applies to assets that are fully depreciated – and for which no new cost should be reset. i.e., they remain fully depreciated.

For the full year 2023, the expected net effect of the changes is a decrease in depreciation expense of approximately $27 million compared to what we expected the depreciation charge to be using previous estimated useful lives. Management considers it is impracticable to estimate the net effect of the changes in depreciation for the future years.

This change in accounting estimate also affects the lease right-of-use assets (for those being depreciated over the shorter of useful life and lease term) and on asset retirement obligation provisions. Though, its impact is immaterial.

Unaudited Interim Condensed Consolidated Financial Statements for the three and six- month period ended June 30, 2023

 

3. ACQUISITION AND DISPOSAL OF SUBSIDIARIES, JOINT VENTURES, ASSOCIATES AND OTHER NON-CONTROLLING INTERESTS

Acquisitions for the six-month period ended June 30, 2023

There were no material acquisitions during the six-month period ended June 30, 2023.

Acquisitions 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.

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 consolidated statement of income under 'Profit (loss) from discontinued operations, net of tax'.

On April 5, 2022, Millicom completed the sale for an initial cash consideration of approximately $101 million (subject to final price adjustment). The net assets de-consolidated on the date of the disposal amounted to $79 million and the net gain on disposal was calculated at $109 million.

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 interim condensed consolidated financial statements and no longer report it in our consolidated financial statements. The Group now only operates in a single region, Latin America.

Unaudited Interim Condensed Consolidated Financial Statements for the three and six- month period ended June 30, 2023

 

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.

Revenue, operating profit (loss), EBITDA and other segment information for the three- and six-month periods ended June 30, 2023 and 2022, are shown on the following pages.

Unaudited Interim Condensed Consolidated Financial Statements for the three and six- month period ended June 30, 2023

 

5. SEGMENT INFORMATION (Continued)

Unaudited Interim Condensed Consolidated Financial Statements for the three and six- month period ended June 30, 2023

 

5. SEGMENT INFORMATION (Continued)

Unaudited Interim Condensed Consolidated Financial Statements for the three and six- month period ended June 30, 2023

 

5. SEGMENT INFORMATION (Continued)

Unaudited Interim Condensed Consolidated Financial Statements for the three and six- month period ended June 30, 2023

 

5. SEGMENT INFORMATION (Continued)

6. OTHER NON-OPERATING (EXPENSES) INCOME, NET

The Group’s other non-operating (expenses) income, net comprised the following:

Unaudited Interim Condensed Consolidated Financial Statements for the three and six- month period ended June 30, 2023

 

7. EARNINGS PER COMMON SHARE

Earnings per common share (EPS) attributable to owners of the Company are comprised as follows:

Unaudited Interim Condensed Consolidated Financial Statements for the three and six- month period ended June 30, 2023

 

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. Our investments in joint ventures is comprised solely of Honduras.

At June 30, 2023, the equity accounted net assets of our joint venture in Honduras totaled $419 million (December 31, 2022: $401 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, 2022: $3 million) represent statutory reserves that are unavailable to be distributed to the Group. During the six-month period ended June 30, 2023, Millicom's joint venture in Honduras repatriated cash of $62 million in the form of management fees, dividend advances and repayment of a shareholder loan (June 30, 2022: $26 million).

At June 30, 2023, Millicom had $102 million payable to Honduras joint venture which were mainly made up of loan advances (December 31, 2022: $48 million). In addition, as of June 30, 2023, Millicom had a total receivable from Honduras of $15 million, (December 31, 2022: $13 million) mainly corresponding to other operating receivables.

The table below summarizes the movements for the year in respect of the Group's joint ventures carrying values:

(i) Share of profit is recognized under ‘Share of profit in Honduras joint ventures’ in the statement of income for the period ended June 30, 2023.

9. PROPERTY, PLANT AND EQUIPMENT

During the six-month period ended June 30, 2023, Millicom added property, plant and equipment for $315 million (June 30, 2022: $378 million) and received $7 million from disposal of property, plant and equipment (June 30, 2022: $7 million).

10. INTANGIBLE ASSETS

During the six-month period ended June 30, 2023, Millicom added intangible assets for $368 million of which $317 million related to spectrum and licenses, and $52 million to additions of other intangible assets (June 30, 2022: $192 million of which $116 million related to an adjustment on spectrum and licenses and $76 million to additions of intangible assets) and did not receive any proceeds from disposal of intangible assets (June 30, 2022: nil).

Unaudited Interim Condensed Consolidated Financial Statements for the three and six- month period ended June 30, 2023

 

On February 3, 2023, the Colombian 'Ministerio de Tecnologias de la Informacion y las Comunicaciones' (MINTIC) approved the renewal of the spectrum license related to 1900 Mhz band, which was initially granted on February 3, 2003, for an additional period of 20 years. The total preliminary consideration amounts to COP 1.14 billion (approximately $271 million at June 30, 2023 exchange rate). While the total acquisition consideration is known, final payment terms and conditions are still under negotiation. Tigo Colombia filed an appeal in that respect and is currently waiting for an answer from MINTIC. As of June 30, 2023, the spectrum license of approximately $297 million - including the estimated cost of bank guarantees of $14 million - has been recorded as an intangible asset with a corresponding liability under 'Payables and accruals for capital expenditure' in the statement of financial position.

On May 8, 2023, the Guatemalan Superintendence of Telecommunications (SIT) announced a public auction of 120 MHz of radio spectrum in the 2.5 GHz band which was held on June 2, 2023. The auction included 8 blocks, 7 of which were awarded to Comunicaciones Celulares, S.A. ("Comcel") for a total cash consideration of approximately $33 million.

Unaudited Interim Condensed Consolidated Financial Statements for the three and six- month period ended June 30, 2023

 

11. FINANCIAL OBLIGATIONS

A. Debt and financing

The most significant movements in debt and financing for the six-month period ended June 30, 2023 were as follows. When applicable, local currency amounts are translated in USD using the exchange rate at the time of occurrence.

Luxembourg

On May 10, 2023, MIC SA notified holders of its SEK 2,000 million stibor plus 2.35% Senior Unsecured Floating Rate Sustainability Notes due 2024 of the early voluntary redemption of the Notes in full. The notes, amounting to SEK 2,000 million (approximately $184 million), have been redeemed on June 8, 2023. These were hedged through cross currency swaps for which the Group paid $23 million on the settlement date (see note 13).

Colombia

On January 5, 2023, UNE EPM Telecomunicaciones S.A. ("UNE") issued a COP230 billion (approximately $50 million) bond consisting of two tranches with three and four and a half-year maturities. Interest rates are variable, based on CPI + a margin, and interest is payable in Colombian peso.

Guatemala

The $150 million debt outstanding with Banco Industrial initially due on 2025 was extended to October 31, 2028.

On June 13, 2023, our principal subsidiary in Guatemala, Comcel, executed a new 7-year loan with Banco Industrial up to GTQ 400 million of which GTQ 250 million (approximately $32 million) have been disbursed, mainly to finance the acquisition of spectrum (refer to note 10).

Bolivia

In February 2023, Tigo Bolivia signed three new bank loan agreements in local currency for a corresponding total amount of approximately $10 million and a repayment period of 5 years.

Analysis of debt and financing by maturity

The total amount of debt and financing is repayable as follows:

Unaudited Interim Condensed Consolidated Financial Statements for the three and six- month period ended June 30, 2023

 

The table below describes the outstanding and maximum exposure under guarantees and the remaining terms of the guarantees as at June 30, 2023 and December 31, 2022.

(i) If non-payment by the obligor, the guarantee ensures payment of outstanding amounts by the Group's guarantor.

11. FINANCIAL OBLIGATIONS (Continued)

The Group’s interest and other financial expenses comprised the following:

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 June 30, 2023, the total amount of claims brought against MIC SA and its subsidiaries is $279 million (December 31, 2022: $239 million). The Group's share of the comparable exposure for its joint venture in Honduras is $13 million (December 31, 2022: $13 million).

As at June 30, 2023, $31 million has been provisioned by its subsidiaries for these risks in the unaudited interim condensed consolidated statement of financial position (See also note 14) (December 31, 2022: $25 million). The Group's share of provisions made by the joint venture was $1 million (December 31, 2022: $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 June 30, 2023, the tax risks exposure of the Group's subsidiaries is estimated at $200 million, for which provisions of $38 million have been recorded in tax liabilities; representing management's assessment of the probable cash outflow of eventual claims and required payments related to those risks (December 31, 2022: $221 million of which provisions of $38 million were recorded). The Group's share of comparable tax exposure and provisions in its joint venture amounts to $108 million (December 31, 2022: $97 million) and $7 million (December 31, 2022: $7 million), respectively.

Unaudited Interim Condensed Consolidated Financial Statements for the three and six- month period ended June 30, 2023

 

Capital commitments

At June 30, 2023, the Company and its subsidiaries had fixed commitments to purchase network equipment, other fixed assets and intangible assets of $443 million of which $374 million are due within one year (December 31, 2022: $406 million of which $259 million are due within one year). The Group’s share of commitments in its Honduras joint venture is $27 million of which $27 million are due within one year. (December 31, 2022: $29 million and $29 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 June 30, 2023 and December 31, 2022:

(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) issued in May 2019 and January 2022, respectively with maturity dates May 2024 and January 2027, respectively. All swap contracts attached to the 2024 SEK 2 billion bond were terminated on May 10, 2023, after the early redemption of the bond (refer to note 11) and were settled against a cash payment of $23 million.

In January 2023, MIC S.A. also entered into two currency swap agreements to hedge an intercompany receivable of COP 206 billion (approximately $41 million) owed by UNE (refer to note 11). These swaps are accounted for as cash flow hedges as hedging relationships are highly effective.

The fair value of MIC S.A. swaps, amounts to a liability of $61 million as of June 30, 2023 (December 31, 2022: a liability of $53 million) and are recorded through other comprehensive income.

In 2020 and 2018, respectively, the Group's operations in Colombia and El Salvador 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. On January 12, 2023, the interest rate swap in El Salvador matured, with a settlement payment of $21 thousand (fair value at December 31, 2022:nil) and the fair value of Colombia swaps amounted to an asset of $10 million as of June 30, 2023 (December 31, 2022: an asset of $19 million).

The net fair value of the derivative financial instruments for the Group, as of June 30, 2023 amounted to a liability of $51 million (December 31, 2022: a liability of $34 million )

Interest rate and currency swaps are measured with reference to Level 2 of the fair value hierarchy.

Unaudited Interim Condensed Consolidated Financial Statements for the three and six- month period ended June 30, 2023

 

There are no other derivative financial instruments with a significant fair value at June 30, 2023.

14. SUBSEQUENT EVENTS

Colombia litigation

On July 14, 2023, the Group received an adverse legal ruling in Colombia related to actors' guild public performance royalty rights. Although we have already filed an appeal, an additional $10 million provision has been reflected in the Group's interim condensed consolidated financial statements as adjusting subsequent event.

Item 2

Earnings Release Q2 2023

Luxembourg, July 27, 2023

Millicom (Tigo) Q2 2023 Earnings Release

Highlights*

*See page 12 for a description of non-IFRS measures and for reconciliations to the nearest equivalent IFRS measures.

Millicom Chief Executive Officer Mauricio Ramos commented:

"The second quarter saw both continued challenges and positive trends. On the positive side, our B2B operation continued to perform very well, with organic growth of 6%, along with postpaid, which grew almost 9% during the quarter.

In contrast, growth in our Home business remained challenged, especially in Colombia and Bolivia, two of our largest Home markets, and we have adjusted our investment plans accordingly. In Guatemala, we took additional steps to defend our mobile market leadership, which impacted profitability during the quarter but allowed us to maintain our customer base and market leadership, maximizing value creation potential over the long term. We also expect the

Earnings Release Q2 2023

recent acquisition of high-band spectrum will further strengthen our competitive position as we start to utilize it in coming months. With this, we remain optimistic about the outlook in our most important market.

Looking ahead, our four key priorities are to: (1) deliver the expected efficiencies from Project Everest, (2) sustain market leadership and improve cash generation in Guatemala, (3) accelerate cash flow improvement in Colombia via organic and inorganic initiatives, and (4) capture value from Lati, our tower and infrastructure company. Delivering on these priorities will position the company to generate robust and sustainable equity free cash flow and create significant shareholder value."

Financial Targets

As communicated on June 28, 2023, Millicom targets cumulative equity free cash flow of at least $500 million for the 2022-2024 period. Based on the company’s outlook, 2024 is expected to be the strongest year in the three-year period due to savings from Project Everest and lower expected spectrum investment and lower one-time items compared to 2023.

Subsequent Event

On July 14, 2023, we received an adverse legal ruling in Colombia related to actors' guild public performance royalty rights. Although we have already filed an appeal, an additional $10 million provision was reflected in these Q2 results.

Earnings Release Q2 2023

Group Quarterly Financial Review - Q2 2023

In Q2 2023, revenue declined 3.8% year-on-year mainly due to currency depreciation (mostly from the Colombian peso down 12.0% year-on-year and the Paraguayan guarani down 5.2% year-on-year). Excluding the effect of foreign exchange rates, total revenue declined 0.2%, while service revenue increased 1.9%.

Cost of sales decreased 3.8% year-on-year due to lower handset sales which was partially offset by a $10 million provision related to a legal ruling in Colombia. Operating expenses increased 4.8% year-on-year due to several non-recurring or unusual items, including: organizational restructuring costs related to Project Everest, higher non-cash share-based compensation, largely due to a higher stock price, as well as higher legal fees, stemming in part from the buyout discussions that have now concluded.

Depreciation decreased 5.6% year-on-year to $238 million, reflecting a revision to the estimated useful life of towers, as well the impact of a weaker Colombian peso, which appreciated 5.5% during the quarter but remains below year ago levels. Meanwhile, amortization was flat at $90 million. As a result of the above factors, operating profit declined 19.8% year-on-year.

Earnings Release Q2 2023

Net financial expenses increased by $10 million year-on-year, mostly due to higher interest rates on our variable rate debt (primarily in Colombia) as well as recently introduced commissions on dollar purchases in Bolivia. Other non-operating income of $8 million mostly related to foreign exchange gains in Colombia.

Tax expense increased to $81 million in Q2 2023 compared to $78 million in Q2 2022, mainly due to the impairment of some Colombia tax credits in Q2 2023. Non-controlling interests of $26 million in Q2 2023 compares to $18 million in Q2 2022, reflecting our partners' share of net losses in both years in Colombia. In Q2 2022, we recognized a profit from discontinued operations of $117 million reflecting a gain on the sale of our former Tanzania operation.

As a result of the above items, net loss attributable to owners of the company was $22 million, or $0.13 per share, compared to a net profit of $129 million ($1.14 per share) in Q2 2022.

The weighted average number of shares outstanding during the quarter was 171.29 million. As of June 30, 2023, there were 172.10 million shares issued and outstanding, including 0.76 million held as treasury shares.

Cash Flow

* See page 12 for a description of non-IFRS measures discussed in the above table. 2022 cash flow data includes our operation in Tanzania until its disposal on April 5, 2022.

Earnings Release Q2 2023

Operating Free Cash Flow (OFCF) of $153 million in H1 2023 compares to $248 million in H1 2022. The decline of $95 million largely reflects the following items:

Finance charges increased $37 million year-on-year to $230 million. The increase largely reflects the $23 million payment in Q1 of the semi-annual coupon on the Comcel bonds issued in January 2022, as well as higher interest paid on our variable rate debt and the recently introduced commissions on the purchase of dollars in Bolivia.

Lease interest and lease principal payments totaled $142 million in H1 2023, representing a decline of $11 million from $153 million in H1 2022, due to the 2022 disposal of our Africa operation which had large lease liabilities, as well as the effect of a weaker Colombian peso on leases denominated in local currency in that country.

Finally, repatriation from joint ventures and associates was $62 million in H1 2023, an increase of $34 million compared to H1 2022, reflecting timing differences in our repatriation plans for 2023 compared to 2022. As a result of the above, Equity Free Cash Flow (EFCF) in H1 2023 was an outflow of $157 million, compared to an outflow of $62 million (excluding Africa) in H1 2022.

Debt

* Net Debt, Net financial obligations, EBITDA and Leverage are non-IFRS measures and are IFRS consolidated figures. See page 12 for a description of non-IFRS measures and for reconciliations to the nearest equivalent IFRS measures. Cash includes term deposits of $7 million as of June 30, 2023. Proforma adjustments relate to the acquisition of the Guatemala operation on November 12, 2021.

Earnings Release Q2 2023

During the quarter, gross debt declined $111 million to $6,735 million as of June 30, 2023, compared to $6,845 million at the end Q1 2023, as a result of the early redemption of the SEK2.0 billion Senior Unsecured Sustainability Notes due 2024. The percent of gross debt in local currency¹ remained unchanged at 42%, while 80% of our debt was at fixed rates² with an average maturity of 5.2 years. Approximately 65% of gross debt at June 30, 2023 was held at our operating entities, while the remaining 35% was at the corporate level. All these debt metrics are in line with our targets.

The average interest rate on our debt was 6.6%. On our dollar-denominated debt³, the average rate was 5.6% with an average maturity of 5.8 years as of June 30, 2023.

Our cash position was $703 million as of June 30, 2023, a decline of $201 million compared to $904 million as of March 31, 2023, due to the early redemption of the SEK bond, and 69% was held in U.S. dollars. As a result, our net debt was $6,083 million as of June 30, 2023, an increase of $100 million during the quarter, reflecting mostly the effect of currency appreciation during the quarter on our local currency denominated debt, as well as the $24 million of EFCF outflow in Q2.

Including lease liabilities of $1,027 million, net financial obligations were $7,110 million as of June 30, 2023, an increase of $101 million during the quarter, in line with the increase in net debt. Leverage, which includes lease obligations, was 3.37x as of June 30, 2023, up from 3.23x as of March 31, 2023. Excluding the impact of leases, the ratio of net debt to EBITDAaL was 3.34x, compared to 3.18x as of March 31, 2023.

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. Fixed network 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.

¹ Or swapped for local currency

² Or swapped for fixed rates  

³ Including SEK denominated bonds that have been swapped into US dollars.

Earnings Release Q2 2023

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

Most countries continued to experience subdued economic activity in the second quarter. Inflation across the region has declined in line with global trends, although the rate in Colombia has remained elevated at more than 12%. Foreign exchange rate volatility remained elevated in some of our markets, with nearly all floating currencies appreciating during the quarter, led by the Costa Rican colon and the Colombian peso up 3.5% and 5.5%, respectively, from March 31, 2023, levels. Despite the strengthening trend observed during the first half of 2023, the average exchange rate for the quarter for the Colombia peso and the Paraguayan guarani remained below year ago levels by 12.0% and 5.2%, respectively. Foreign exchange rates and movements are presented on page 15.

Key Performance Indicators

Mobile services

During Q2 2023, our mobile customer base increased by 35,000 to end at 40.6 million, an increase of 1.9% year-on-year. Postpaid continued to perform very strongly with net additions of 189,000 in Q2, including more than 122,000 in Colombia, where our customer base is up 11.2% over the last twelve months.

Mobile ARPU declined 3.5% mostly due to the effect of the weaker Colombian peso. Excluding the impact of foreign exchange, organic ARPU was flat year-on-year, driven by local currency growth in Colombia, Paraguay, El Salvador and Nicaragua. The improvement in local currency ARPU trends reflects price increases implemented in recent quarters, as well as the shift in mix toward postpaid in markets such as Colombia.

Broadband and other fixed services

At the end of Q2 2023, our fixed networks passed 13.1 million homes, an increase of 96,000 during the quarter, reflecting reduced Home investment in some markets where demand has moderated and returns have declined over the past year. During the quarter, HFC/FTTH customer relationships declined 91,000 net, in part due to a one-time adjustment of 52,000 to our customer count. Excluding this impact, HFC/FTTH customers declined 39,000, as we continued to prioritize price discipline and installation fees amidst a challenging macroeconomic environment with heightened competition in some markets.

Home ARPU declined 2.3% year-on-year, due largely to the weaker Colombian peso. Organically, Home ARPU was flat year on year, marking an improvement compared to declines of 1.0% in Q1 2023 and of 2.5% for the full year 2022, reflecting price increases implemented across our footprint over the past year. In local currency, ARPU increased in Paraguay, Colombia and Costa Rica.

Earnings Release Q2 2023

* 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.

Financial indicators

In Q2 2023, revenue declined 3.8% year-on-year to $1,393 million, while service revenue declined 1.8% to $1,291 million. Excluding currency movements, organic service revenue growth was 1.9% year-on-year, reflecting growth in all business units, including 6.1% organic growth in B2B and 8.6% organic growth in postpaid, as well as growth in most countries, as described below:

Earnings Release Q2 2023

* 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 12 for a description of non-IFRS measures and for reconciliations to the nearest equivalent IFRS measures.

By business unit, Home service revenue increased 0.2% organically, as sustained growth in our smaller Home markets such as Nicaragua, Paraguay and El Salvador was partially offset by weaker results in some of our larger markets including Bolivia, Panama and Colombia. In our Mobile B2C business, organic service revenue grew 1.7% year-on-year, driven by postpaid, which grew 8.6% due to continued customer conversion from prepaid to postpaid as well as price increases implemented over the last year. Finally, organic B2B service revenue accelerated to 6.1%, fueled by a 29.2% increase in digital services and growth in all countries except for Costa Rica, which was negatively impacted by foreign exchange.

EBITDA was $515 million, a decrease of 10.8% year-on-year. Excluding the impact of foreign exchange, EBITDA declined 7.9% organically year-on-year. Several factors contributed to the decline, including:

Earnings Release Q2 2023

Excluding all of these items, EBITDA would have declined approximately 3% organically. By country, EBITDA was as follows:

Capex was $182 million in the quarter. In Mobile, we added more than 250 Points of Presence to our 4G network, ending with more than 18,500, an increase of 11% year-on-year. At the end of Q2 2023, our 4G networks covered approximately 81% of the population⁴, up from approximately 78% as of Q2 2022. During the quarter, we acquired 2.6GHz spectrum in Guatemala for $33 million.

Operating Cash Flow (OCF) increased year-on-year to $333 million in Q2 2023 from $322 million in Q2 2022. Excluding the impact of currencies, OCF increased 9.5% organically.

⁴ The population is approximately 105 million in our markets, excluding Costa Rica and Honduras.

Earnings Release Q2 2023

ESG highlights – Q2 2023

The Annual General Meeting (AGM) of shareholders approved the share-based incentive plans for Millicom employees, allocating 10% of the long term incentive target to ESG metrics. The five key ESG metrics that will be used to measure progress are:

This is another step in our commitment to grow our business in a sustainable and responsible way.

On June 15, we signed the pledge regarding the Rule of Law in El Salvador, Guatemala, and Honduras promoted by the Partnership for Central America with nine other companies such as Mastercard, Microsoft, and PepsiCo, among others. We believe that by fostering a culture of transparency, integrity, and ethical practices, we can drive positive change, not only within our own organization but also in the wider private sector, contributing to a more sustainable business environment in Central America.

On June 30, Millicom released its first Report on eligibility and alignment with the EU taxonomy regulation. Also, in June, we launched a group-wide Human Rights Policy, which highlights our commitment to protecting the rights of our customers, workforce, and stakeholders. Our policy outlines the seriousness with which we take these issues and the robust governance framework we have in place to safeguard our practices and mitigate related risks.

Environment

In Q2, Millicom commemorated three important dates related to the environment: April 22nd World Earth Day, May 17th Global Recycling Day, and June 5th Environmental Day. During these days, Millicom and our operations performed volunteering activities focused on the environment, awareness on reducing and correct disposal of e-waste, and sensitizing people on reducing pollution.

Society

Digital Education

In Q2, we surpassed the public commitment target set for our Conéctate Seguro Program, reaching a total of 769,621 trained children on the safe and creative use of the Internet. The initial target, set in 2018, was 700,000 by 2023.

Earnings Release Q2 2023

Our two other flagship programs are making significant progress. We carried out extensive upgrades to the Conectadas platform and are adding new educational content to expand the scope of digital inclusion through skilling. In the first half of 2023, a total of 74,865 women and girls have been trained by the program. Our Maestr@s Conectad@s program held its first virtual event gathering almost 4,000 participants on June 29. In the first half of 2023, 9,763 teachers were trained by the program.

Governance

On May 31, 2023, the AGM elected the ten Directors proposed by the Nomination Committee. Nine of the ten Directors are Non-Executive and three are women. As detailed in the Nomination Committee's Motivated Statement, the Nomination Committee applies rule 4.1 of the Swedish Corporate Governance Code as its diversity policy. Accordingly, the Committee gives particular consideration to the importance of increased diversity on the Board, including with respect to gender, age, nationality and tenure, as well as depth of experience, professional backgrounds and business disciplines. The Nomination Committee believes that a diverse Board promotes constructive discussion and multiple opinions, views and insights. This enriches decision-making and prevents group-think at the Board level. The Committee further assesses that the composition of the proposed Board is fit-for-purpose in respect of different nationalities and backgrounds and exhibits a solid mix of directors with highly relevant skillsets aligned with Millicom’s strategy.

Millicom is committed to having a Board comprised by at least 30% female Directors, which was fully reflected in the Committee proposal approved by a majority of shareholders at the AGM.

Compliance

During Q2 2023, we launched our flagship Annual Code of Conduct Training to the entire organization, including contracted staff. We have attained great completion rates thus far and expect to fully meet our ESG commitment on this front. This year’s iteration included traditional Compliance topics, such as Anti-Corruption, Gifts & Hospitality, Speak Up, and AML, with an added Data Privacy component. Along with the Annual Code of Conduct Training, we also launched the global Conflicts of Interest campaign, which will be followed by remediation efforts to address declared conflicts.

Video conference details

A video conference to discuss these results will take place on July 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 819-5108-0974. Please dial a number base on your location:

Additional international numbers are available at the following link.

Earnings Release Q2 2023

Financial calendar

2023

For further information, please contact

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 June 30, 2023, Millicom, including its Honduras Joint Venture, employed approximately 19,300 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 July 27, 2023.

Earnings Release Q2 2023

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:

Earnings Release Q2 2023

Earnings Release Q2 2023

A further list and description of risks, uncertainties and other matters can be found in Millicom’s Registration Statement on Form 20-F, including those risks outlined in “Item 3. Key Information—D. Risk Factors,” and in Millicom’s subsequent U.S. Securities and Exchange Commission filings, all of which are available at www.sec.gov. All forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by this cautionary statement. Readers are cautioned not to place undue reliance on these forward-looking statements that speak only as of the date hereof. Except to the extent otherwise required by applicable law, we do not undertake any obligation to update or revise forward-looking statements, whether as a result of new information, future events or otherwise.

Earnings Release Q2 2023

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.

The following changes were made to some definitions of the Group's non-IFRS financial measures as disclosed in the 2022 Annual Report: the definition of 'EBITDA after leases' has changed from lease cash payments to income statement line items (interest expense and depreciation charge). This does not change the manner in which we calculate Equity Free Cash Flow, but aligns our calculation for leverage purposes with peers. The definition of Net Debt has changed to include derivative financial instruments in order to have a more comprehensive view of our financial obligations. Finally, Home ARPU has changed to include equipment rental in our Home revenue, as these are long-term payment plans.

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 expense and depreciation charge.

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, including derivative instruments (assets and liabilities), less cash and pledged and time deposits.

Earnings Release Q2 2023

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.