The Guatemalan government reacted to the
pandemic by imposing a curfew since March, and it has communicated a plan to re-open the economy in July following a phased approach.
As of late July, the number of COVID-19 cases continued to increase but with encouraging signs of stabilization. Overall during
Q2, restrictions on mobility were less severe in Guatemala than in our other markets. That said, many people elected to reduce
their movements, and we observed lower walk-ins in our stores and other points of sale, and demand for our mobile services softened
somewhat. Our mobile customer base declined by 132,000 during the quarter, mostly due to prepaid.
In contrast, demand for our residential
cable services remained strong. We added 17,000 customer relationships during the quarter, ending Q2 2020 with 550,000 customer
relationships, an increase of 10.2% year-on-year.
Service revenue proved more resilient in
Guatemala than in most of our other markets, declining 1.7% ($5 million) year-on-year, as double-digit growth in cable was offset
by a low-single-digit decline in mobile. EBITDA declined 2.4% ($4 million) due to the lower service revenue, and the margin remained
very healthy at 51.4%.
Honduras
|
|
Q2 2020
|
Q2 2019
|
% change
|
H1 2020
|
H1 2019
|
% change
|
|
Mobile customers ('000)
|
4,279
|
4,624
|
(7.5)%
|
4,279
|
4,624
|
(7.5)%
|
|
Home customer relationships* ('000)
|
165
|
170
|
(3.2)%
|
165
|
170
|
(3.2)%
|
|
Revenue ($ millions)
|
124
|
148
|
(16.3)%
|
265
|
295
|
(10.2)%
|
|
Organic growth
|
(15.2)%
|
4.4%
|
(19.6) pt
|
(9.0)%
|
4.7%
|
(13.7) pt
|
|
Service revenue ($ millions)
|
119
|
138
|
(13.5)%
|
252
|
275
|
(8.5)%
|
|
Organic growth
|
(12.4)%
|
2.4%
|
(14.8) pt
|
(7.3)%
|
2.8%
|
(10.1) pt
|
|
EBITDA ($ millions)
|
55
|
70
|
(20.9)%
|
119
|
136
|
(12.7)%
|
|
Organic growth
|
(19.9)%
|
12.5%
|
(32.4) pt
|
(11.6)%
|
8.4%
|
(20.0) pt
|
|
EBITDA margin %
|
44.4%
|
47.1%
|
(2.6) pt
|
44.8%
|
46.1%
|
(1.3) pt
|
* Home Customer Relationships includes (1)
HFC (2) DTH (3) Others.
Honduras was very quick to impose restrictions
related to COVID-19, implementing a strict mandatory home isolation and curfew restricting circulation for shopping and essential
activity based on national identity or passport numbers. The re-opening process began in early June with a phased opening approach
for each region of the country. The national curfew was extended through the end of June, requiring stay-at-home policies during
the weekend and restricting transit during the week. The government-imposed restrictions in Honduras were among the most severe
globally.
As a result, the impact of COVID-19 on our
Q2 performance was more material in Honduras than in our other markets. Our mobile customer base declined by 309,000 during the
quarter, and we ended the quarter with 4.3 million, a decline of 7.5% year-on-year. In our Home business, the impact was less severe,
as our customer base declined by 11,000 in the quarter, resulting in a year-on-year decline of 3.2% home customer relationships.
Service revenue decreased 13.5% year-on-year,
reflecting a 1.3% depreciation of the Honduran lempira and an organic decline of 12.4%, due to a slowdown in our Mobile and B2B
units, as growth in Home remained stable year-on-year.
EBITDA decreased 20.9% year-on-year due
to the lower revenue. The margin decreased slightly, declining 2.6 percentage points to 44.4%, compared to the EBITDA margin of
47.1% in Q2 2019.
Panama
|
|
Q2 2020
|
Q2 2019
|
% change
|
H1 2020
|
H1 2019
|
% change
|
|
Mobile customers ('000)
|
1,675
|
—
|
NM
|
1,675
|
—
|
n/a
|
|
Home customer relationships* ('000)
|
438
|
452
|
(3.0)%
|
438
|
452
|
(3.0)%
|
|
Revenue ($ millions)
|
139
|
99
|
39.9%
|
291
|
199
|
n/a
|
|
Organic growth
|
(14.1)%
|
(0.7)%
|
(13.4) pt
|
(9.6)%
|
1.8%
|
n/a
|
|
Service revenue ($ millions)
|
136
|
99
|
36.6%
|
283
|
199
|
n/a
|
|
Organic growth
|
(12.5)%
|
(0.7)%
|
(11.9) pt
|
(8.9)%
|
1.8%
|
n/a
|
|
EBITDA ($ millions)
|
60
|
47
|
28.0%
|
129
|
91
|
n/a
|
|
Organic growth
|
(14.9)%
|
4.0%
|
(18.9) pt
|
(7.1)%
|
6.0%
|
n/a
|
|
EBITDA margin %
|
43.1%
|
47.1%
|
(4.0) pt
|
44.4%
|
45.9%
|
(1.4) pt
|
* Home Customer Relationships includes (1)
HFC (2) DTH (3) Others. ** Q2 20 organic growth rates pertain to both the fixed and mobile operations and are calculated using
the 2019 financials of Telefonica Moviles Panama S.A., which was acquired in August 2019. Q2 2019 organic growth rates are calculated
using the 2018 financials as reported by Cable Onda to the Panama Stock Exchange.
Panama has been very hard hit by the pandemic.
The country was very quick to implement restrictions limiting circulation for shopping and essential activity based on gender and
national identity or passport numbers. The six phase reopening process began in May with the resumption of technical services,
although beginning in June a stricter quarantine went into effect for the province of Panama, which includes the capital. The lockdown
resulted in a significant reduction in mobility in the country. Nonetheless, infections have continued to grow rapidly, and Panama's
infection rate of 13.0 per thousand now exceeds the USA (11.7) and Brazil (10.0), and it is well above the rate seen in our other
markets, which range from 5.4 (Bolivia) to 0.5 (Paraguay)6. As a consequence of the health crisis, some economists
now project GDP will contract by about 10% in 2020.
Our mobile business was severely affected
by the government measures, and our customer base declined by 100,000 during the quarter. Notwithstanding the short term challenges
caused by COVID-19, our mobile operation has performed well in a highly-competitive marketplace, solidifying its position as the
largest provider of mobile services in the country. We continue to invest in our ongoing mobile network modernization project and
to execute on our integration plan, and our expectations for opex synergies have increased relative to our initial expectations.
Since the acquisition, our new mobile operation has generated annualized free cash flow of more than $40 million, with much of
the expected synergies still to be realized.
Our Home business has proven resilient,
and our HFC customer base continued to grow, fueled by strong demand for broadband; we added 7,000 net new HFC broadband customers
in the quarter, for a total of 17,000 in the first half of 2020, our two strongest quarters since the acquisition. On a year-on-year
basis, our broadband customer base has increased 7%. In contrast, we have been proactively reducing the size of customer base in
our DTH business, which is not strategic and has a lower return profile.
Service Revenue in Q2 2020 was $136 million,
up significantly from $99 million in Q2 2019 due to the acquisition of our mobile business in August 2019. On an organic basis,
service revenue decreased 12.5% year-on-year, due to a mid-teen decline in in mobile, and an even steeper drop in B2B in the quarter,
as businesses across sectors of significant importance for Panama's economy have been severely impacted by the pandemic.
6 Source: Bloomberg,
as of July 21, 2020.
EBITDA was $60 million, up from $47 million
in Q2 2019 due to contribution from our acquired mobile business. On an organic basis, EBITDA declined 14.9% year-on-year due to
the lower revenue. The EBITDA margin decreased 4.0 percentage points year-on-year to reach 43.1%.
El Salvador
|
|
Q2 2020
|
Q2 2019
|
% change
|
H1 2020
|
H1 2019
|
% change
|
|
Mobile customers ('000)
|
2,416
|
2,459
|
(1.7)%
|
2,416
|
2,459
|
(1.7)%
|
|
Home customer relationships* ('000)
|
288
|
274
|
4.9%
|
288
|
274
|
4.9%
|
|
Revenue ($ millions)
|
88
|
97
|
(9.0)%
|
184
|
193
|
(4.8)%
|
|
Organic growth
|
(9.0)%
|
(6.0)%
|
(2.9) pt
|
(4.8)%
|
(6.5)%
|
1.7 pt
|
|
Service revenue
|
82
|
87
|
(6.1)%
|
169
|
175
|
(3.5)%
|
|
Organic growth
|
(6.1)%
|
(7.6)%
|
1.5 pt
|
(3.5)%
|
(7.6)%
|
4.1 pt
|
|
EBITDA ($ millions)
|
25
|
30
|
(14.9)%
|
61
|
65
|
(6.5)%
|
|
Organic growth
|
(14.9)%
|
(14.4)%
|
(0.5) pt
|
(6.5)%
|
(14.1)%
|
7.6 pt
|
|
EBITDA margin %
|
28.9%
|
30.9%
|
(2.0) pt
|
33.1%
|
33.7%
|
(0.6) pt
|
* Home Customer Relationships includes (1)
HFC (2) DTH (3) Others.
El Salvador implemented containment measures
in mid-March before the first confirmed case of COVID-19 in the country. Stricter lockdown restrictions began in May, and a re-opening
plan began in mid-June. The government also announced several orders related to COVID-19, including a three-month deferral of utility
bills, including postpaid mobile and cable telecommunications services, allowing subscribers affected by the pandemic to pay for
services over the next two years. Government approval of our lifeline products took longer than in other countries, and we rolled
out these services only in early July.
The severe lockdowns had a direct impact
on our mobile business, and our customer base declined by 113,000 during the quarter, mostly in our prepaid segment. During the
quarter we made significant progress on our AWS network deployment project, which we completed in July. This has allowed us to
capture and monetize additional traffic, while greatly improving customer experience on our network. In Home, customer relationships
increased by 15,000 during the quarter to 288,000, an increase of 4.9% year-on-year.
Service revenue of $82 million decreased
6.1% year-on-year, due to the lockdown, as well as tropical storms Amanda and Cristobal, which impacted the country and our operations
in June. EBITDA declined 14.9% to $25 million, and the EBITDA margin contracted by 2.0 percentage points to 28.9%, due to the reduced
revenue, as well as the significant increase in bad debt provisions caused by the government-imposed payment deferral.
Nicaragua & Costa
Rica
|
|
Q2 2020
|
Q2 2019
|
% change
|
H1 2020
|
H1 2019
|
% change
|
|
Mobile customers ('000)
|
3,354
|
3,297
|
1.7%
|
3,354
|
3,297
|
1.7%
|
|
Revenue ($ millions)
|
90
|
78
|
15.4%
|
185
|
119
|
55.7%
|
|
Service revenue ($ millions)
|
87
|
75
|
16.0%
|
179
|
115
|
56.5%
|
|
EBITDA ($ millions)
|
34
|
29
|
19.4%
|
64
|
42
|
51.4%
|
|
EBITDA margin %
|
38.5%
|
37.2%
|
1.3 pt
|
34.5%
|
35.5%
|
(1.0)pt
|
In Nicaragua, the government did not implement
measures to restrict mobility and business activity, and thus our stores and prepaid points of sales remained opened throughout
Q2 2020. That said, we have observed a material reduction in mobility and business activity.
In Home, we continued to add customers in
Q2 2020, and our customer base continues to grow very rapidly from a relatively small base. In mobile, our customer base declined
during the quarter but remained up slightly year-on-year, and we have maintained our market share stable at around 53%7
since the acquisition, one year ago. We continue to execute on our integration plans, having recently re-branded the business,
and we now anticipate exceeding our initial synergy expectations. In its first year of operation, our Nicaragua mobile operation
contributed more than $45 million to the Group's equity free cash flow.
In Costa Rica, the government responded
to the pandemic by implementing a curfew on vehicular movements and by closing national parks, beaches and churches around the
country. In addition, the government closed its borders since early April, effectively shutting down tourism, an important driver
of economic activity for the country. Beginning in early May the country began a phased opening process.
During the quarter, customer churn increased
noticeably due to the creation of a rival soccer Pay-TV channel and to suspension of soccer league play due to the pandemic, which
have curtailed demand for our Pay TV services. As a result, service revenue declined mid-single-digit, and EBITDA declined low-double-digit
in the quarter.
Africa segment - Key
Performance Indicators8
|
Key Performance Indicators (‘000)
|
Q2 20
|
Q2 19
|
Q2 20 vs Q2 19
|
|
Mobile customers
|
12,812
|
11,888
|
7.8%
|
|
MFS customers
|
6,548
|
6,443
|
1.6%
|
|
Mobile ARPU ($)
|
2.2
|
2.4
|
(7.4)%
|
Our Africa segment operations
now only comprises Tanzania. During Q2 2020, mobile customer net additions were 1.1 million, marking a strong recovery following
disconnections in Q1 related to the implementation of a biometric customer registration system. As a result, our total mobile based
increased 7.8% year-on-year, ending the period with 12.8 million.
In Q2 2020, the number of
customers that used mobile financial services (MFS) was 6.5 million, an increase of 1.6% from Q2 2019, as net additions of 318,000
were consistent with the growth of our mobile customer base during the quarter. As of June 30, 2020, our MFS customers represent
approximately 51% of our Mobile customer base. ARPU declined 7.4%, due mostly to a reduction in regulated interconnection rates
which occurred in January 2020.
7
Source: Tutela
8 The comparative 2019
financial information in this earnings release has been adjusted for the classification of our operations in Chad as discontinued
operations. Our operations in Chad were disposed of on June 26, 2019.
Africa segment financial
results
Please refer to Note 5 of
our Unaudited Interim Condensed Consolidated Financial Statements for more details on our segments.
|
Africa Financial Highlights*
|
Q2 2020
|
Q2 2019
|
% change
|
H1 2020
|
H1 2019
|
% change
|
|
($m, unless otherwise stated)
|
|
Revenue
|
86
|
92
|
(6.4)%
|
175
|
186
|
(5.9)%
|
|
Service revenue
|
86
|
92
|
(6.3)%
|
175
|
186
|
(5.6)%
|
|
EBITDA
|
29
|
14
|
114.9%
|
59
|
45
|
30.5%
|
|
EBITDA margin %
|
33.7%
|
14.7%
|
19.0 pt
|
33.6%
|
24.2%
|
9.4 pt
|
|
Capex
|
12
|
8
|
56.9%
|
18
|
15
|
19.4%
|
* Service revenue, EBITDA and Capex are non-IFRS
measures. See page 21 for a description of non-IFRS measures and for reconciliations to the nearest equivalent IFRS measures. 2019
EBITDA has been re-presented as a result in the change in cost allocation. Please refer to page 9 for a description and reconciliation
of this representation. 2019 numbers have been restated to exclude Chad.
In Tanzania, the government
implemented mobility restrictions that were not as strict as in our other markets. For example, they banned large gatherings, suspended
school, cancelled international flights and mandated the wearing of masks in Dar Es Salaam. During the quarter, the government
lifted many of these restrictions including those on flights and schools, and most measures related to COVID-19 had been lifted
as of July. Still, many citizens are choosing to stay at home, and we have witnessed a sizeable drop in foot traffic in commercial
establishments, which has affected mobile top-ups, as well transaction volumes on our Tigo Money platform, an important revenue
driver for our business in the country.
Service revenue declined
6.3% in Q2 2020 due to a decline in ARPU during the quarter, caused by lower levels of mobility, as well as by a
50% cut to regulated interconnection rates. EBITDA increased 114.9% year-on-year due to a $21 million one-off in Q2 2019
that did not repeat in 2020. EBITDA margin of 33.7% was stable compared to Q1 2020.
Capex was $12 million in
the quarter and $18 million for the first six months of the year, compared to $15 million in H1 2019.
Corporate Responsibility highlights –
Q2 2020
Responsible Leadership
in Action: adapting our programs to the Covid-19 pandemic
Responsible
Leadership in Action comprises our flagship programs which are aimed at empowering people and promoting
social good. These programs, focused on protecting children, empowering women and connecting our communities, have been adapted
as follows to help address needs arising from the pandemic:
|
|
•
|
We established a new regional program - Maestr@s Conectad@s - to meet the pressing need to train
teachers on how to use digital and internet platforms to provide
virtual classes to their students. The program was launched in March, and 120,000 teachers are enrolled in the program for 2020
in Bolivia. The program will also be rolled out in Guatemala, El Salvador, Nicaragua and Paraguay, where we are tailoring the training
content to meet local needs.
|
|
|
•
|
We continued to build on our partnership with UNICEF to communicate key messages on child health and safety during the pandemic
and have conducted joint webinars reaching over 5,000 people.
|
|
|
•
|
As our countries have been transitioning to providing online training for participants in our Connected Women program, we are
expanding the use of an online training platform developed by FUNDEMAS. Through this platform, women can take courses on the productive
use of the internet and online safety.
|
Responsible Supply Chain Management
Due to the pandemic, we have
postponed our 2020 supplier training program to 2021. In the meantime, we have developed a strategy so that we can continue promoting
sustainable supplier growth through the creation of Corrective Action Plans (CAPs). We have invited 99 suppliers who have previously
participated in the training to create CAPs in the areas in which they have most opportunities for improvement.
Health, safety and environment
Millicom’s corporate
office has continued working hand-in-hand with country operations to ensure the safety of our people as well as service continuity
for the communities we serve throughout the COVID-19 pandemic. As the health and safety of our workforce and customers is our top
priority, we continue to implement workplace health & safety measures in line with the latest guidelines from the WHO and the
U.S. CDC at all our critical sites and operations. The vast majority of our employees continue to work remotely from the safety
of their homes.
Compliance and anti-corruption program
During Q2, we continued to
provide training to targeted groups, such as Finance and Procurement, via videoconference. Topics included Third Party Due Diligence,
Books and Records integrity in COVID-19 times, as well as Tone from the Top.
Compliance communications focused on potential risks
observed during the COVID-19 crisis, and are enhanced with the incorporation of micro-learning modules, a useful tool to reach
employees working remotely. Notable risks include vendor fraud in the purchase of Personal Protective Equipment, and COVID-19-related
corruption scandals in Latin America, including relating to governments of certain countries where we operate. The task force established
in Q1 to process COVID-19 contribution requests continues to operate, ensuring responsiveness, establishing adequate controls,
as well as mitigation of potential corruption risks.
As part of our engagement with the compliance community
at large, our Costa Rica operation recently joined the local chapter of the World Compliance Association, a body of organizations
and professionals dedicated to the promotion and evaluation of compliance programs in Latin America and Africa.
Conference call details
A presentation and conference
call to discuss these results will take place on July 30, 2020 at 15:00 (Stockholm) / 14:00 (London) / 09:00 (Miami). Please dial
in 5-10 minutes before the scheduled start time to register your attendance. Dial-in numbers for the call are as follows:
|
Sweden:
|
+46 (0) 8566 18467
|
Luxembourg:
|
+352 2786 0549
|
|
UK:
|
+44 (0) 8444 819752
|
US:
|
+1 646 741 3167
|
The access code is: 8857678.
A live audio stream, slides, and replay details can be accessed at www.millicom.com.
Financial calendar
2020
|
Date
|
Event
|
|
October 30
|
Q3 2020 results and conference call
|
For further information, please contact
|
Press:
|
Investors:
|
|
Vivian Kobeh, Corporate Communications Director
|
Michel Morin, VP Investor Relations
|
|
+1 (786) 628-5300
|
+1 (786) 628-5270
|
|
press@millicom.com
|
investors@millicom.com
|
|
|
|
|
|
Sarah Inmon, Investor Relations Senior Manager
|
|
|
+1 (786) 628-5303
|
|
|
investors@millicom.com
|
About Millicom
Millicom (NASDAQ U.S.: TIGO,
Nasdaq Stockholm: TIGO_SDB) is a leading provider of cable and mobile services dedicated to emerging markets in Latin America and
Africa. Millicom sets the pace when it comes to providing high-speed broadband and innovation around The Digital Lifestyle services
through its principal brand, TIGO. As of December 31, 2019, Millicom operating subsidiaries and joint ventures employed more than
22,000 people and provided mobile services to approximately 52 million customers, with a cable footprint of more than 11 million
homes passed. Founded in 1992, Millicom International Cellular S.A. is headquartered in Luxembourg.
Forward-Looking Statements
Statements included herein
that are not historical facts, including without limitation statements concerning future strategy, plans, objectives, expectations
and intentions, projected financial results, liquidity, growth and prospects, are forward-looking statements. Such forward-looking
statements involve a number of risks and uncertainties and are subject to change at any time. In the event such risks or uncertainties
materialize, Millicom’s results could be materially adversely affected. In particular, there is uncertainty about the spread
of the COVID-19 virus and the impact it may have on Millicom's operations, the demand for Millicom's products and services, global
supply chains and economic activity in general. The risks and uncertainties include, but are not limited to, the following:
|
|
•
|
global economic conditions and foreign exchange rate fluctuations as well as local economic conditions in the markets we serve;
|
|
|
•
|
potential disruption due to diseases, pandemics, political events, piracy or acts by terrorists, including the impact of the
recent outbreak of the COVID-19 virus and the ongoing efforts throughout the world to contain it;
|
|
|
•
|
telecommunications usage levels, including traffic and customer growth;
|
|
|
•
|
competitive forces, including pricing pressures, the ability to connect to other operators’ networks and our ability
to retain market share in the face of competition from existing and new market entrants as well as industry consolidation;
|
|
|
•
|
legal or regulatory developments and changes, or changes in governmental policy, including with respect to the availability
of spectrum and licenses, the level of tariffs, tax matters, the terms of interconnection, customer access and international settlement
arrangements;
|
|
|
•
|
adverse legal or regulatory disputes or proceedings;
|
|
|
•
|
the success of our business, operating and financing initiatives and strategies, including partnerships and capital expenditure
plans;
|
|
|
•
|
the level and timing of the growth and profitability of new initiatives, start-up costs associated with entering new markets,
the successful deployment of new systems and applications to support new initiatives;
|
|
|
•
|
relationships with key suppliers and costs of handsets and other equipment;
|
|
|
•
|
our ability to successfully pursue acquisitions, investments or merger opportunities, integrate any acquired businesses in
a timely and cost-effective manner and achieve the expected benefits of such transactions;
|
|
|
•
|
the availability, terms and use of capital, the impact of regulatory and competitive developments on capital outlays, the ability
to achieve cost savings and realize productivity improvements;
|
|
|
•
|
technological development and evolving industry standards, including challenges in meeting customer demand for new technology
and the cost of upgrading existing infrastructure;
|
|
|
•
|
the capacity to upstream cash generated in operations through dividends, royalties, management fees and repayment of shareholder
loans; and
|
|
|
•
|
other factors or trends affecting our financial condition or results of operations.
|
A further list and description
of risks, uncertainties and other matters can be found in Millicom’s Registration Statement on Form 20-F, including those
risks outlined in “Item 3. Key Information—D. Risk Factors,” and in Millicom’s subsequent U.S. Securities
and Exchange Commission filings, all of which are available at www.sec.gov. To the extent COVID-19 adversely affects Millicom's
business and financial results, it may also have the effect of heightening many of the risks described in its filings.
All forward-looking statements
attributable to us or any person acting on our behalf are expressly qualified in their entirety by this cautionary statement. Readers
are cautioned not to place undue reliance on these forward-looking statements that speak only as of the date hereof. Except to
the extent otherwise required by applicable law, we do not undertake any obligation to update or revise forward-looking statements,
whether as a result of new information, future events or otherwise.
Non IFRS Measures
This press release contains
financial measures not prepared in accordance with IFRS. These measures are referred to as “non-IFRS” measures and
include: non-IFRS service revenue, non-IFRS EBITDA, and non-IFRS Capex, among others defined below. Annual growth rates for these
non-IFRS measures are often expressed in organic constant currency terms to exclude the effect of changes in foreign exchange rates,
the adoption of new accounting standards such as IFRS 16, and are proforma for material changes in perimeter due to acquisitions
and divestitures. The non-IFRS financial measures are presented in this press release as Millicom’s management believes they
provide investors with an additional information for the analysis of Millicom’s results of operations, particularly in evaluating
performance from one period to another. Millicom’s management uses non-IFRS financial measures to make operating decisions,
as they facilitate additional internal comparisons of Millicom’s performance to historical results and to competitors' results,
and provides them to investors as a supplement to Millicom’s reported results to provide additional insight into Millicom’s
operating performance. Millicom’s Remuneration Committee uses certain non-IFRS measures when assessing the performance and
compensation of employees, including Millicom’s executive directors.
The non-IFRS financial measures
used by Millicom may be calculated differently from, and therefore may not be comparable to, similarly titled measures used by
other companies - refer to the section “Non-IFRS Financial Measure Descriptions” for additional information. In addition,
these non-IFRS measures should not be considered in isolation as a substitute for, or as superior to, financial measures calculated
in accordance with IFRS, and Millicom’s financial results calculated in accordance with IFRS and reconciliations to those
financial statements should be carefully evaluated.
Financial Measure Descriptions
Service
revenue is revenue related to the provision of ongoing services such as monthly subscription
fees, airtime and data usage fees, interconnection fees, roaming fees, mobile finance service commissions and fees from other telecommunications
services such as data services, short message services and other value-added services excluding telephone and equipment sales.
EBITDA
is operating profit excluding impairment losses, depreciation and amortization, and gains/losses on
fixed asset disposals.
Proportionate
EBITDA is the sum of the EBITDA in every country where Millicom operates, including its
Guatemala and Honduras joint ventures, pro rata for Millicom’s ownership stake in each country, less corporate costs that
are not allocated to any country and inter-company eliminations.
Organic
growth represents year-on-year growth excluding the impact of changes in FX rates, perimeter,
and accounting. Changes in perimeter are the result of acquisitions and divestitures. Results from divested assets are immediately
removed from both periods, whereas the results from acquired assets are included in both periods at the beginning (January 1) of
the first full calendar year of ownership.
Net debt
is Gross debt less cash and pledged and term deposits.
Net financial
obligations is Net debt plus lease obligations.
Proportionate
net financial obligations is the sum of the net financial obligations in every country
where Millicom operates, including its Guatemala and Honduras joint ventures, pro rata for Millicom’s ownership stake in
each country.
Leverage
is the ratio of net financial obligations over LTM (last twelve month) EBITDA, proforma for acquisitions
made during the last twelve months.
Proportionate
leverage is the ratio of proportionate net financial obligations over LTM proportionate
EBITDA, proforma for acquisitions made during the last twelve months.
Capex
is balance sheet capital expenditure excluding spectrum and license costs and finance lease capitalizations
from tower sale and leaseback transactions.
Cash Capex
represents the cash spent in relation to capital expenditure, excluding spectrum and licenses costs
and lease capitalizations from tower sale and leaseback transactions.
Operating
Cash Flow (OCF) is EBITDA less Capex.
Operating
Free Cash Flow is OCF less changes in working capital and other non-cash items and taxes
paid.
Equity Free
Cash Flow is Operating Free Cash Flow less finance charges paid (net), less advances for
dividends to non-controlling interests, plus dividends received from joint ventures.
Operating
Profit After Tax displays the profit generated from the operations of the company after
statutory taxes.
Return on
Invested Capital (ROIC) is used to assess the Group’s efficiency at allocating the
capital under its control to and is defined as Operating Profit After Tax, including Guatemala and Honduras as if fully consolidated,
divided by the average invested Capital during the period.
Average
Invested Capital is the capital invested in the company operation throughout the year and
is calculated with the average of opening and closing balances of the total assets minus current liabilities (excluding debt, joint
ventures, accrued interests, deferred and current tax, cash as well as investments and non-controlling interests), less assets
and liabilities held for sale.
Underlying
measures, such as Underlying service revenue, Underlying
EBITDA, Underlying equity free cash flow, Underlying net debt, Underlying leverage, etc.,
include Guatemala and Honduras, as if fully consolidated.
Average
Revenue per User per Month (ARPU) for our Mobile customers is (x) the total mobile and
mobile financial services revenue (excluding revenue earned from tower rentals, call center, data and mobile virtual network operator,
visitor roaming, national third parties roaming and mobile telephone equipment sales revenue) for the period, divided by (y) the
average number of mobile subscribers for the period, divided by (z) the number of months in the period. We define ARPU for our
Home customers in our Latin America segment as (x) the total Home revenue (excluding equipment sales, TV advertising and equipment
rental) for the period, divided by (y) the average number of customer relationships for the period, divided by (z) the number of
months in the period. ARPU is not subject to a standard industry definition and our definition of ARPU may be different to other
industry participants.
Please refer to our
2019 Annual Report for a complete list of non-IFRS measures and their descriptions.
Non-IFRS Reconciliations
Reconciliation from Reported Growth to Organic
Growth for the Latam segment9
|
Latam Segment ($ millions)
|
Revenue
|
Service Revenue
|
EBITDA
|
OCF
|
|
Q2 2020
|
Q2 2019
|
Q2 2020
|
Q2 2019
|
Q2 2020
|
Q2 2019
|
Q2 2020
|
Q2 2019
|
|
A- Current period
|
1,360
|
1,461
|
1,270
|
1,358
|
544
|
577
|
354
|
353
|
|
B- Prior year period
|
1,461
|
1,384
|
1,358
|
1,280
|
577
|
516
|
353
|
307
|
|
C- Reported growth (A/B)
|
(6.9)%
|
5.6%
|
(6.4)%
|
6.1%
|
(5.7)%
|
11.7%
|
0.3%
|
15.0%
|
|
D- Accounting change impact
|
—
|
—
|
—
|
—
|
—
|
7.3%
|
—
|
12.4%
|
|
E- Change in Perimeter impact
|
5.5%
|
9.9%
|
5.3%
|
10.6%
|
5.3%
|
11.0%
|
7.0%
|
9.7%
|
|
F- FX impact
|
(4.6)%
|
(6.5)%
|
(4.7)%
|
(6.5)%
|
(4.4)%
|
(6.3)%
|
(7.1)%
|
(10.6)%
|
|
G- Other
|
(0.3)%
|
0.1%
|
(0.2)%
|
0.1%
|
1.5%
|
(1.9)%
|
3.3%
|
(2.9)%
|
|
H- Organic Growth (C-D-E-F-G)
|
(7.5)%
|
2.1%
|
(6.8)%
|
2.0%
|
(8.1)%
|
1.5%
|
(2.9)%
|
6.4%
|
|
Latam Segment ($ millions)
|
Revenue
|
Service Revenue
|
EBITDA
|
OCF
|
|
H1 2020
|
H1 2019
|
H1 2020
|
H1 2019
|
H1 2020
|
H1 2019
|
H1 2020
|
H1 2019
|
|
A- Current period
|
2,865
|
2,887
|
2,665
|
2,689
|
1,144
|
1,164
|
781
|
772
|
|
B- Prior year period
|
2,887
|
2,736
|
2,689
|
2,538
|
1,164
|
1,034
|
772
|
673
|
|
C- Reported growth (A/B)
|
(0.8)%
|
5.5%
|
(0.9)%
|
6.0%
|
(1.7)%
|
12.5%
|
1.2%
|
14.6%
|
|
D- Accounting change impact
|
—
|
—
|
—
|
—
|
—
|
7.7%
|
—
|
11.9%
|
|
E- Change in Perimeter impact
|
6.7%
|
8.5%
|
6.7%
|
9.1%
|
6.6%
|
9.3%
|
8.8%
|
7.3%
|
|
F- FX impact
|
(4.0)%
|
(6.0)%
|
(4.1)%
|
(6.0)%
|
(3.7)%
|
(6.0)%
|
(5.7)%
|
(9.2)%
|
|
G- Other
|
(0.1)%
|
0.1%
|
(0.1)%
|
0.1%
|
0.8%
|
(1.5)%
|
1.5%
|
(2.2)%
|
|
H- Organic Growth (C-D-E-F-G)
|
(3.3)%
|
2.9%
|
(3.3)%
|
2.8%
|
(5.2)%
|
3.0%
|
(3.5)%
|
6.9%
|
Reconciliation from Reported Growth to Organic
Growth for the main Latam markets
|
Service Revenue ($ millions)
|
Q2 2020
|
Q2 2019
|
Organic
|
FX
|
Accounting
|
Perimeter
|
Other
|
Reported
|
|
Guatemala
|
305
|
310
|
(1.6)%
|
(0.1)%
|
—
|
—
|
—
|
(1.7)%
|
|
Colombia
|
288
|
355
|
(3.9)%
|
(15.1)%
|
—
|
—
|
0.2%
|
(18.9)%
|
|
Paraguay
|
128
|
142
|
(5.1)%
|
(5.3)%
|
—
|
—
|
0.2%
|
(10.2)%
|
|
Honduras
|
119
|
138
|
(12.4)%
|
(1.6)%
|
—
|
—
|
0.4%
|
(13.5)%
|
|
Bolivia
|
131
|
156
|
(15.9)%
|
—
|
—
|
—
|
—
|
(15.9)%
|
|
Panama
|
136
|
99
|
(12.5)%
|
—
|
—
|
56.1%
|
(7.0)%
|
36.6%
|
|
El Salvador
|
82
|
87
|
(6.1)%
|
—
|
—
|
—
|
—
|
(6.1)%
|
|
Nicaragua, Costa Rica & Eliminations
|
82
|
71
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
|
Latam*
|
1,270
|
1,358
|
(6.8)%
|
(4.7)%
|
—
|
5.3%
|
(0.2)%
|
(6.4)%
|
* Perimeter impact on Latam segment reflects
acquisition of mobile businesses in Panama and Nicaragua during 2019.
9 See Note 5 of our
Unaudited Interim Condensed Consolidated Financial Statements for details on our segments.
|
EBITDA ($ millions)
|
Q2 2020
|
Q2 2019
|
Organic
|
FX
|
Accounting
|
Perimeter
|
Other
|
Reported
|
|
Guatemala
|
184
|
188
|
(2.3)%
|
(0.1)%
|
—
|
—
|
—
|
(2.4)%
|
|
Colombia
|
110
|
121
|
6.9%
|
(16.3)%
|
—
|
—
|
(0.3)%
|
(9.7)%
|
|
Paraguay
|
63
|
69
|
(3.1)%
|
(5.3)%
|
—
|
—
|
0.1%
|
(8.3)%
|
|
Honduras
|
55
|
70
|
(19.9)%
|
(1.8)%
|
—
|
—
|
0.7%
|
(20.9)%
|
|
Bolivia
|
40
|
64
|
(37.3)%
|
—
|
—
|
—
|
—
|
(37.3)%
|
|
Panama
|
60
|
47
|
(14.9)%
|
—
|
—
|
50.5%
|
(7.5)%
|
28.0%
|
|
El Salvador
|
25
|
30
|
(14.9)%
|
—
|
—
|
—
|
—
|
(14.9)%
|
|
Nicaragua, Costa Rica, Corp Costs & Eliminations
|
7
|
(12)
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
|
Latam*
|
544
|
577
|
(8.1)%
|
(4.4)%
|
—
|
5.3%
|
1.5%
|
(5.7)%
|
* Perimeter impact on Latam segment reflects
acquisition of mobile businesses in Panama and Nicaragua during 2019.
ARPU reconciliations
|
Latam Segment - Mobile ARPU Reconciliation
|
Q2 20
|
Q2 19
|
H1 2020
|
H1 2019
|
|
Mobile service revenue ($m)
|
750
|
802
|
1,593
|
1,580
|
|
Mobile Service revenue ($m) from non Tigo customers ($m) *
|
(6)
|
(16)
|
(18)
|
(35)
|
|
Mobile Service revenue ($m) from Tigo customers (A)
|
744
|
786
|
1,575
|
1,545
|
|
Mobile customers - end of period (000)
|
37,777
|
37,162
|
37,777
|
37,162
|
|
Mobile customers - average (000) (B) **
|
38,613
|
35,527
|
39,024
|
34,915
|
|
Mobile ARPU (USD/Month) (A/B/number of months)
|
6.4
|
7.4
|
6.7
|
7.4
|
* Refers to TV advertising, production services,
MVNO, DVNO, equipment rental revenue, call center revenue, national roaming, equipment sales, visitor roaming, tower rental, DVNE,
and other non-customer driven revenue.
** Average QoQ for the quarterly view is the
average of the last quarter.
|
Latam Segment - Home ARPU Reconciliation
|
Q2 20
|
Q2 19
|
H1 2020
|
H1 2019
|
|
Home service revenue ($m)
|
367
|
381
|
751
|
757
|
|
Home service revenue ($m) from non Tigo customers ($m) *
|
(7)
|
(9)
|
(15)
|
(18)
|
|
Home service revenue ($m) from Tigo customers (A)
|
360
|
372
|
736
|
739
|
|
Customer Relationships - end of period (000) **
|
4,296
|
4,246
|
4,296
|
4,246
|
|
Customer Relationships - average (000) (B)
|
4,343
|
4,217
|
4,342
|
4,184
|
|
Home ARPU (USD/Month) (A/B/number of months)
|
27.6
|
29.4
|
28.2
|
29.4
|
* TV advertising, production services, equipment
rental revenue, call center revenue, equipment sales and other non customer driven revenue.
** Represented by homes connected all technologies
(HFC + Other Technologies + DTH & Wimax RGUs).
*** Average QoQ for the quarterly view is the
average of the last quarter.
One-off Summary
|
2020
|
Q2 20
|
H1 20
|
|
|
($ millions)
|
Revenue
|
EBITDA
|
Revenue
|
EBITDA
|
Comment (Q2 2020)
|
|
Latam
|
—
|
—
|
—
|
—
|
|
|
Nicaragua
|
—
|
—
|
—
|
(8)
|
|
|
Latam Total
|
—
|
—
|
—
|
(8)
|
|
|
2019
|
Q2 19
|
H1 19
|
|
|
($ millions)
|
Revenue
|
EBITDA
|
Revenue
|
EBITDA
|
Comment (Q2 2019)
|
|
Colombia
|
—
|
(4)
|
—
|
(4)
|
Mostly due to a legal case
|
|
Paraguay
|
5
|
2
|
5
|
2
|
Deferred revenue adjustment, partially offset by smaller items
|
|
Latam Total
|
5
|
(2)
|
5
|
(2)
|
|
|
Africa
|
—
|
(21)
|
—
|
(21)
|
Regulatory fine
|
|
Corporate
|
—
|
(16)
|
—
|
(16)
|
Acquisition and integration costs
|
|
Total
|
5
|
(39)
|
5
|
(39)
|
|
Foreign Exchange rates used to support FX
impact calculations in the above Organic Growth reconciliations
|
|
|
Average FX rate (vs. USD)
|
End of period FX rate (vs. USD)
|
|
|
|
Q2 20
|
Q1 20
|
QoQ
|
Q2 19
|
YoY
|
|
Q2 20
|
Q1 20
|
QoQ
|
Q2 19
|
YoY
|
|
Bolivia
|
BOB
|
6.91
|
6.91
|
0.00%
|
6.91
|
0.0%
|
|
6.91
|
6.91
|
0.0%
|
6.91
|
0.0%
|
|
Colombia
|
COP
|
3,881
|
3,573
|
(7.94)%
|
3,247
|
(16.4)%
|
|
3,759
|
4,065
|
8.1%
|
3,206
|
(14.7)%
|
|
Costa Rica
|
CRC
|
580
|
577
|
(0.42)%
|
591
|
1.9%
|
|
583
|
587
|
0.7%
|
580
|
(0.6)%
|
|
Guatemala
|
GTQ
|
7.70
|
7.68
|
(0.20)%
|
7.69
|
(0.1)%
|
|
7.70
|
7.68
|
(0.2)%
|
7.71
|
0.1%
|
|
Honduras
|
HNL
|
24.87
|
24.77
|
(0.39)%
|
24.55
|
(1.3)%
|
|
24.80
|
24.84
|
0.2%
|
24.59
|
(0.8)%
|
|
Nicaragua
|
NIO
|
34.21
|
33.96
|
(0.73)%
|
32.92
|
(3.8)%
|
|
34.34
|
34.09
|
(0.7)%
|
33.12
|
(3.5)%
|
|
Paraguay
|
PYG
|
6,630
|
6,514
|
(1.74)%
|
6,233
|
(6.0)%
|
|
6,807
|
6,563
|
(3.6)%
|
6,190
|
(9.1)%
|
|
Ghana
|
GHS
|
5.79
|
5.61
|
(3.03)%
|
5.32
|
(8.1)%
|
|
5.79
|
5.76
|
(0.5)%
|
5.45
|
(5.9)%
|
|
Tanzania
|
TZS
|
2,311
|
2,300
|
(0.47)%
|
2,304
|
(0.3)%
|
|
2,315
|
2,301
|
(0.6)%
|
2,301
|
(0.6)%
|
Reconciliation Net financial obligations to
EBITDA to Proportionate net financial obligations to EBITDA as of June 30, 2020 and December 31, 2019
|
Debt Information - June 30, 2020
|
Financial obligations
|
EBITDA
|
Proforma
|
|
$ millions
|
Gross
|
Cash
|
Net
|
|
Adjustments*
|
EBITDA
|
Leverage
|
|
Millicom Group (IFRS)
|
6,972
|
1,186
|
5,786
|
1,553
|
—
|
—
|
—
|
|
Plus: Guatemala
|
1,168
|
228
|
939
|
748
|
—
|
—
|
—
|
|
Plus: Honduras
|
431
|
64
|
367
|
262
|
—
|
—
|
—
|
|
Less: Corporate Costs
|
—
|
—
|
(1)
|
(37)
|
—
|
—
|
—
|
|
Underlying Millicom Group (Non-IFRS)
|
8,570
|
1,478
|
7,092
|
2,526
|
16
|
2,542
|
2.79x
|
|
Less: 50% Minority Stake in Colombia
|
530
|
64
|
466
|
240
|
—
|
—
|
—
|
|
Less: 45% Minority Stake in Guatemala
|
525
|
103
|
423
|
337
|
—
|
—
|
—
|
|
Less: 33% Minority Stake in Honduras
|
144
|
21
|
122
|
87
|
—
|
—
|
—
|
|
Less: 20% Minority Stake in Panama
|
206
|
20
|
186
|
52
|
3
|
—
|
—
|
|
Less: 1.5% Minority Stake in Tanzania
|
6
|
—
|
6
|
2
|
—
|
—
|
—
|
|
Proportionate Millicom Group (Non-IFRS)
|
7,159
|
1,270
|
5,889
|
1,807
|
13
|
1,820
|
3.24x
|
* Proforma adjusted EBITDA
related to mobile acquisitions in Nicaragua and Panama.
|
December 31, 2019
|
Financial obligations
|
EBITDA
|
Proforma
|
|
$ millions
|
Gross
|
Cash
|
Net
|
|
Adjustments*
|
EBITDA
|
Leverage
|
|
Millicom Group (IFRS)
|
7,068
|
1,166
|
5,903
|
1,530
|
—
|
—
|
—
|
|
Plus: Guatemala
|
1,172
|
189
|
983
|
748
|
—
|
—
|
—
|
|
Plus: Honduras
|
423
|
40
|
383
|
280
|
—
|
—
|
—
|
|
Less: Corporate Costs
|
—
|
—
|
—
|
(36)
|
—
|
—
|
—
|
|
Underlying Millicom Group (Non-IFRS)
|
8,664
|
1,395
|
7,269
|
2,522
|
95
|
2,617
|
2.78x
|
|
Less: 50% Minority Stake in Colombia
|
606
|
107
|
499
|
255
|
—
|
—
|
—
|
|
Less: 45% Minority Stake in Guatemala
|
528
|
85
|
442
|
337
|
—
|
—
|
—
|
|
Less: 33% Minority Stake in Honduras
|
141
|
13
|
128
|
93
|
—
|
—
|
—
|
|
Less: 20% Minority Stake in Panama
|
208
|
12
|
196
|
45
|
13
|
—
|
—
|
|
Less: 1.5% Minority Stake in Tanzania
|
6
|
—
|
6
|
2
|
—
|
—
|
—
|
|
Proportionate Millicom Group (Non-IFRS)
|
7,175
|
1,177
|
5,998
|
1,791
|
82
|
1,873
|
3.20x
|
* Proforma adjusted EBITDA
related to mobile acquisitions in Nicaragua and Panama.
Debt maturity profile
|
|
2020
|
2021
|
2022
|
2023
|
2024
|
2025
|
2026
|
2027
|
2028
|
2029
|
>2030
|
|
International Bonds
|
—
|
—
|
—
|
—
|
1,013
|
500
|
500
|
550
|
500
|
750
|
600
|
|
Floating MIC S.A. Sustain. Bond Due 2024*
|
|
|
|
|
213
|
|
|
|
|
|
|
|
6.875% Comcel $800m Bond Due 2024
|
|
|
|
|
800
|
|
|
|
|
|
|
|
6.000% MIC S.A. $500m Bond Due 2025
|
|
|
|
|
|
500
|
|
|
|
|
|
|
6.625% MIC S.A. $500m Bond Due 2026
|
|
|
|
|
|
|
500
|
|
|
|
|
|
5.875% Telecel $550m Bond Due 2027
|
|
|
|
|
|
|
|
550
|
|
|
|
|
5.125% MIC S.A. $500m Bond Due 2028
|
|
|
|
|
|
|
|
|
500
|
|
|
|
6.250% MIC S.A. $750m Bond Due 2029
|
|
|
|
|
|
|
|
|
|
750
|
|
|
4.500% Cable Onda $600m Bond Due 2030
|
|
|
|
|
|
|
|
|
|
|
600
|
|
Local Bonds (Colombia, Bolivia, Paraguay & Panama)
|
39
|
44
|
46
|
103
|
106
|
200
|
105
|
4
|
2
|
15
|
61
|
|
Bank and DFI
|
43
|
86
|
79
|
366
|
789
|
410
|
25
|
116
|
44
|
115
|
47
|
|
Total
|
81
|
130
|
124
|
468
|
1,907
|
1,110
|
630
|
670
|
546
|
880
|
709
|
|
% of Total
|
1.1%
|
1.8%
|
1.7%
|
6.5%
|
26.3%
|
15.3%
|
8.7%
|
9.2%
|
7.5%
|
12.1%
|
9.8%
|
Capex Reconciliation
|
Capex Reconciliation
|
Q2 2020
|
Q2 2019
|
H1 2020
|
H1 2019
|
|
Consolidated:
|
|
|
|
|
|
Additions to property, plant and equipment
|
131
|
173
|
240
|
286
|
|
Additions to licenses and other intangibles
|
419
|
62
|
463
|
89
|
|
Of which spectrum and license costs
|
399
|
48
|
420
|
49
|
|
Total consolidated additions
|
550
|
235
|
703
|
374
|
|
Of which capital expenditures related to corporate offices
|
5
|
4
|
5
|
4
|
|
Latin America Segment
|
Q2 2020
|
Q2 2019
|
H1 2020
|
H1 2019
|
|
Additions to property, plant and equipment
|
166
|
207
|
311
|
344
|
|
Additions to licenses and other intangibles
|
422
|
65
|
555
|
96
|
|
Of which spectrum and license costs
|
399
|
48
|
503
|
48
|
|
Latin America Segment total additions (Underlying)
|
589
|
272
|
866
|
440
|
|
Capex excluding spectrum and lease capitalizations
|
190
|
224
|
364
|
392
|
|
Africa Segment
|
Q2 2020
|
Q2 2019
|
H1 2020
|
H1 2019
|
|
Additions to property, plant and equipment
|
12
|
8
|
18
|
15
|
|
Additions to licenses and other intangibles
|
—
|
—
|
—
|
—
|
|
Of which spectrum and license costs
|
—
|
—
|
—
|
—
|
|
Africa Segment total additions
|
12
|
8
|
18
|
15
|
|
Capex excluding spectrum and lease capitalizations
|
12
|
8
|
18
|
15
|
Operating Free Cash Flow Reconciliation
|
Cash Flow Data
|
Q2 20
|
Q2 19
|
H1 2020
|
H1 2019
|
|
Net cash provided by operating activities
|
218
|
176
|
324
|
323
|
|
Purchase of property, plant and equipment
|
(123)
|
(179)
|
(302)
|
(349)
|
|
Proceeds from sale of property, plant and equipment
|
1
|
3
|
1
|
12
|
|
Purchase of intangible assets and licenses
|
(75)
|
(24)
|
(166)
|
(103)
|
|
Proceeds from sale of intangible assets
|
—
|
—
|
—
|
—
|
|
Net purchase/proceeds for property, plant and equipment and intangible assets
|
(197)
|
(200)
|
(467)
|
(441)
|
|
(Less) Proceeds from sale of towers part of tower sale and leaseback transactions
|
—
|
(5)
|
—
|
(13)
|
|
(Less) Purchase of spectrum and licenses
|
53
|
4
|
91
|
11
|
|
(Less) Finance charges paid, net
|
128
|
126
|
269
|
221
|
|
Operating free cash flow
|
202
|
101
|
217
|
102
|
Equity Free Cash Flow Reconciliation
|
Cash Flow Data
|
Q2 20
|
Q2 19
|
H1 2020
|
H1 2019
|
|
Net cash provided by operating activities
|
218
|
176
|
324
|
323
|
|
Purchase of property, plant and equipment
|
(123)
|
(179)
|
(302)
|
(349)
|
|
Proceeds from sale of property, plant and equipment
|
1
|
3
|
1
|
12
|
|
Proceeds from sale of towers part of tower sale and leaseback transactions
|
—
|
(5)
|
—
|
(13)
|
|
Purchase of intangible assets
|
(75)
|
(24)
|
(166)
|
(103)
|
|
Proceeds from sale of intangible assets
|
—
|
—
|
—
|
—
|
|
Purchase of spectrum and licenses
|
53
|
4
|
91
|
11
|
|
Finance charges paid, net
|
128
|
126
|
269
|
221
|
|
Operating free cash flow
|
202
|
101
|
217
|
102
|
|
Interest (paid), net
|
(128)
|
(126)
|
(269)
|
(221)
|
|
Free cash flow
|
74
|
(25)
|
(52)
|
(119)
|
|
Dividends received from joint ventures (Guatemala and Honduras)
|
35
|
54
|
58
|
105
|
|
Dividends paid to non-controlling interests
|
(2)
|
(1)
|
(2)
|
(12)
|
|
Equity free cash flow
|
107
|
28
|
4
|
(26)
|
OCF (EBITDA- Capex) Reconciliation
|
Latam OCF Underlying
|
Q2 20
|
Q2 19
|
H1 2020
|
H1 2019
|
|
Latam EBITDA
|
544
|
577
|
1,144
|
1,164
|
|
(-) Capex (Ex. Spectrum)
|
190
|
224
|
364
|
392
|
|
Latam OCF
|
354
|
353
|
781
|
772
|
|
Africa OCF
|
Q2 20
|
Q2 19
|
H1 2020
|
H1 2019
|
|
Africa EBITDA
|
29
|
14
|
59
|
45
|
|
(-) Capex (Ex. Spectrum)
|
12
|
8
|
18
|
15
|
|
Africa OCF
|
17
|
6
|
41
|
30
|
Guatemala and Honduras Financial Information
(unaudited)
Until 2015, Millicom group
results included Guatemala and Honduras on a 100% consolidation basis. Since 2016, these businesses are treated as joint ventures
and are consolidated using the equity method. To aid investors to better track the evolution of the company’s performance
over time, we provide the following indicative unaudited financial statement data for the Millicom group as if our Guatemala and
Honduras joint ventures had been fully consolidated.
|
Income statement data Q2 2020
|
Millicom (IFRS)
|
Guatemala and Honduras JVs
|
Eliminations
|
Underlying (non-IFRS)
|
|
($millions)
|
|
Revenue
|
970
|
476
|
—
|
1,446
|
|
Cost of sales
|
(296)
|
(116)
|
—
|
(412)
|
|
Gross profit
|
673
|
361
|
—
|
1,034
|
|
Operating expenses
|
(330)
|
(132)
|
—
|
(462)
|
|
EBITDA
|
343
|
229
|
—
|
572
|
|
EBITDA margin
|
35.4%
|
48.1%
|
—
|
39.6%
|
|
Depreciation & amortization
|
(304)
|
(113)
|
—
|
(417)
|
|
Share of net profit in joint ventures
|
34
|
—
|
(34)
|
—
|
|
Other operating income (expenses), net
|
20
|
—
|
—
|
20
|
|
Operating profit
|
93
|
116
|
(34)
|
175
|
|
Net financial expenses
|
(167)
|
(25)
|
—
|
(191)
|
|
Other non-operating income (expenses), net
|
22
|
(1)
|
—
|
21
|
|
Gains (losses) from associates
|
(1)
|
—
|
—
|
(1)
|
|
Profit (loss) before tax
|
(53)
|
90
|
(34)
|
4
|
|
Net tax credit (charge)
|
(65)
|
(27)
|
—
|
(92)
|
|
Profit (loss) for the period
|
(118)
|
63
|
(34)
|
(88)
|
|
Non-controlling interests
|
4
|
(30)
|
—
|
(26)
|
|
Profit (loss) from discontinued operations
|
(1)
|
—
|
—
|
(1)
|
|
Net profit (loss) for the period
|
(115)
|
34
|
(34)
|
(115)
|
|
Income statement data H1 2020
|
Millicom (IFRS)
|
Guatemala and Honduras JVs
|
Eliminations
|
Underlying (non-IFRS)
|
|
($millions)
|
|
Revenue
|
2,057
|
981
|
—
|
3,038
|
|
Cost of sales
|
(601)
|
(232)
|
—
|
(832)
|
|
Gross profit
|
1,456
|
750
|
—
|
2,206
|
|
Operating expenses
|
(731)
|
(273)
|
—
|
(1,004)
|
|
EBITDA
|
725
|
477
|
—
|
1,202
|
|
EBITDA margin
|
35.2%
|
48.6%
|
—
|
39.6%
|
|
Depreciation & amortization
|
(599)
|
(227)
|
—
|
(826)
|
|
Share of net profit in joint ventures
|
79
|
—
|
(79)
|
—
|
|
Other operating income (expenses), net
|
23
|
—
|
—
|
22
|
|
Operating profit
|
226
|
250
|
(79)
|
398
|
|
Net financial expenses
|
(308)
|
(50)
|
—
|
(358)
|
|
Other non-operating income (expenses), net
|
(136)
|
(4)
|
—
|
(140)
|
|
Gains (losses) from associates
|
(1)
|
—
|
—
|
(1)
|
|
Profit (loss) before tax
|
(220)
|
196
|
(79)
|
(102)
|
|
Net tax credit (charge)
|
(49)
|
(50)
|
—
|
(99)
|
|
Profit (loss) for the period
|
(270)
|
147
|
(79)
|
(201)
|
|
Non-controlling interests
|
32
|
(67)
|
—
|
(35)
|
|
Profit (loss) from discontinued operations
|
(1)
|
—
|
—
|
(1)
|
|
Net profit (loss) for the period
|
(238)
|
79
|
(79)
|
(238)
|
|
Balance Sheet data ($ millions)
|
Millicom IFRS
|
Guatemala and Honduras JVs
|
Underlying (non-IFRS)
|
|
Assets
|
|
|
|
|
Intangible assets, net
|
3,477
|
2,871
|
6,348
|
|
Property, plant and equipment, net
|
2,605
|
884
|
3,489
|
|
Right of Use Assets
|
901
|
286
|
1,187
|
|
Investments in joint ventures and associates
|
2,696
|
(2,673)
|
23
|
|
Other non-current assets
|
335
|
54
|
389
|
|
Total non-current assets
|
10,014
|
1,423
|
11,437
|
|
Inventories, net
|
36
|
36
|
71
|
|
Trade receivables, net
|
354
|
87
|
440
|
|
Other current assets
|
792
|
351
|
1,143
|
|
Restricted cash
|
167
|
16
|
183
|
|
Cash and cash equivalents
|
1,186
|
291
|
1,477
|
|
Total current assets
|
2,534
|
780
|
3,314
|
|
Assets held for sale
|
4
|
—
|
4
|
|
Total assets
|
12,552
|
2,203
|
14,755
|
|
|
|
|
|
|
Equity and liabilities
|
|
|
|
|
Equity attributable to owners of the Company
|
2,106
|
(41)
|
2,065
|
|
Non-controlling interests
|
219
|
488
|
706
|
|
Total equity
|
2,325
|
447
|
2,772
|
|
Debt and financing
|
6,750
|
1,551
|
8,302
|
|
Other non-current liabilities
|
1,228
|
(77)
|
1,151
|
|
Total non-current liabilities
|
7,978
|
1,475
|
9,453
|
|
Debt and financing
|
221
|
47
|
268
|
|
Other current liabilities
|
2,027
|
235
|
2,263
|
|
Total current liabilities
|
2,249
|
282
|
2,531
|
|
Liabilities directly associated with assets held for sale
|
—
|
—
|
—
|
|
Total liabilities
|
10,227
|
1,756
|
11,984
|
|
Total equity and liabilities
|
12,552
|
2,203
|
14,755
|
|
Cash Flow Data
|
Millicom IFRS
|
Guatemala and Honduras JVs
|
Underlying (non-IFRS)
|
|
($millions)
|
|
Profit (loss) before taxes from continuing operations
|
(220)
|
117
|
(102)
|
|
Profit (loss) for the period from discontinued operations
|
(1)
|
—
|
(1)
|
|
Profit (loss) before taxes
|
(221)
|
117
|
(103)
|
|
Net cash provided by operating activities (incl. discontinued ops)
|
324
|
393
|
716
|
|
Net cash used in investing activities (incl. discontinued ops)
|
(284)
|
(271)
|
(555)
|
|
Net cash from (used by) financing activities (incl. discontinued ops)
|
9
|
(59)
|
(50)
|
|
Exchange impact on cash and cash equivalents, net
|
(26)
|
(2)
|
(28)
|
|
Net (decrease) increase in cash and cash equivalents
|
23
|
61
|
84
|
|
Cash and cash equivalents at the beginning of the period
|
1,164
|
229
|
1,393
|
|
Effect of cash in disposal group held for sale
|
—
|
—
|
—
|
|
Cash and cash equivalents at the end of the period
|
1,186
|
291
|
1,477
|
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 30/07/2020.
Item
2
Millicom International
Cellular
S.A.
(A public limited liability company
(société anonyme) incorporated under the laws of Luxembourg)
(Registration number RCS B 40630)
Management Report and Unaudited Interim Condensed
Consolidated Financial Statements
For the three- and six-month periods
ended June 30, 2020
Contents
|
|
•
|
Responsibility Statement
|
|
|
•
|
Review Report of the Independent Auditors
|
|
|
•
|
Unaudited Interim Condensed Consolidated Financial Statements
|
Management Report
Group performance
Revenue
Group revenue decreased 1.5% ( $32 million) year-on-year
to $2,057 million in H1 2020. The decrease is largely due to the negative impact of the COVID-19 pandemic, the translation impact
of weaker currencies in Colombia and Paraguay, as well as a drop in equipment sales, partially offset by increased revenue from
acquisitions completed in 2019 in Panama and Nicaragua.
Cost of sales
Cost of sales increased 2.1% ($12 million) year-on-year
to $601 million due to the same reasons as explained above and a significant increase in bad debt provisions, which more than doubled
on a year-on-year basis, as a result of lower cash collections due to current crisis.
Operating expenses
Operating expenses decreased 8.3% ($66 million)
year-on-year to $731 million. The decrease reflects the slowdown of commercial activities as a result of the pandemic, a better
cost control and currency devaluation in Colombia, partly offset by the effect of the acquisitions as explained above. Last year
operating expenses also included one-off charges related to a $21 million fine in Tanzania and $16 million in Corporate costs stemming
from the Central America acquisitions.
Depreciation and Amortization
Depreciation increased 8.3% ($34 million) year-on-year
to $443 million, mostly due to the effect of the acquisitions. Amortization expense increased 28.4% ($35 million) year-on-year
to $157 million, from a higher intangible asset base due to the recent acquisitions as well as the commencement of amortization
of recently acquired spectrum in Colombia and El Salvador.
Share of profit in joint ventures in Guatemala
and Honduras
Millicom's share of profit in the Guatemala
and Honduras joint ventures was $79 million in H1 2020, a decrease of 13.0% year-on-year mainly due to a $7 million tax provision
in Guatemala and the impact of the pandemic, especially in Honduras, where the lock-down was very restrictive.
Other operating income (expenses), net
Other operating income of $23 million increased
by $15 million year-on-year due primarily to gains on disposal of shares in the Jumia and Helios Towers equity investments .
Financial income/(expense)
Financial expenses increased $44 million
to $316 million. The increase is due to higher levels of gross debt to fund the recent acquisitions of the Group.
Other non-operating (expenses) income,
net
Loss from other non-operating items was $136
million in H1 2020 compared to a gain of $45 million in H1 2019 due mainly to the marked-to-market revaluation of Jumia and
Helios Towers equity investments of the Group as well as exchange losses driven by currency devaluation in Colombia and Paraguay
vs. US dollars.
Loss from other joint ventures and associates,
net
Loss from associates and other joint ventures
amounted to $1 million in H1 2020 compared to a loss of $15 million in H1 2019 as the book value of Millicom's investment in Ghana
is nil since 2019 year-end.
Charges for taxes, net
Tax expense was $49 million in H1 2020,
increasing from $41 million in H1 2019 due to higher withholding tax on cash upstream partially offset by a lower profitability
in the operations of the Group.
Profit (loss) for the period from discontinued
operations
Profit from discontinued operations of $64 million
in H1 2019 mainly reflects the gain on the sale of Millicom's operations in Chad, which Millicom disposed of on June 26, 2019.
Loss for the year
Net loss for the owners of the Company was
$238 million or $(2.35) per share for H1 2020 compared to a gain of $58 million or $0.57 per share in H1 2019.
Non-controlling interests share of net loss was $32 million in H1 2020 compared to a positive $1 million in H1 2019, reflecting
the share of losses of the Group's partners in Colombia and Panama subsidiaries.
Share Capital
At June 30, 2020, Millicom had 101.7 million
issued and paid up common shares of par value $1.50 each, of which 563 thousand were held by the Company as treasury shares (2019:
616 thousand). During the six months ended June 30, 2020, the Company acquired approximately 463 thousand shares and issued around
480 thousand shares to management and employees under the share-based remuneration plans as part of their annual remuneration.
Distribution to shareholders and proposed
distributions
As the Group prioritizes client service, employee
health and safety and the preservation of financial strength and liquidity, it has been decided to suspend all share repurchases
for the foreseeable future, and the Group's shareholders decided not to recommend the payment of a dividend in
2020 related to 2019 profits.
Risks and uncertainty factors
COVID-19 - Qualitative
and quantitative assessment on business activities, financial situation and economic performance
On March 11, 2020, the World
Health Organization declared the coronavirus outbreak a pandemic. Most countries globally, including a majority of the countries
where we operate, reacted by implementing severe restrictions on travel and public gatherings, including the closing of offices,
businesses, schools, retail stores and other public venues, and by instituting curfews or quarantines. These restrictions, as well
as the dangers posed by the virus, produced a significant reduction in mobility and a severe disruption in global economic activity
during Q2.
Impact on our markets
and business
Most governments in our
markets implemented restrictions beginning in mid-March, and these were generally maintained throughout April, with some gradual
relaxation of measures beginning in late May and June. According to data compiled by the University of Oxford, the lockdowns in
the vast majority of our markets were among the most stringent in the world. As a result, many of our stores and distribution channels
were forced to close temporarily and a majority of our markets experienced very sharp reductions in mobility during the quarter.
This produced an immediate and significant decline in our prepaid mobile business, which is gradually recovering, in tandem with
the gradual easing of government restrictions and the recovery in population mobility. In postpaid mobile, the revenue erosion
has been more gradual than in prepaid, but so has the recovery.
Our residential cable "Home"
business has proven more resilient, but revenue growth has nonetheless eroded noticeably during Q2 due in large part to our commercial
decision to temporarily support our neediest customers with basic connectivity, or "lifeline" services at no cost to
them, and for which no revenue was recognized. During the quarter, we provided lifeline services to approximately 900,000 Home
customers, although we have successfully resumed normal service to about 650,000 of these. We expect to re-connect a portion of
the remaining 250,000 during Q3. Finally, revenue from our business-to-business "B2B" services eroded gradually during
Q2 and through June, as many small and mid-sized businesses struggle to cope with the health and economic crises.
Beside the recent developments
related to Covid-19 crisis as explained above, Millicom continues to operate in a dynamic industry characterized by rapid evolution
in technology, consumer demand, and business opportunities. Combined with a focus on emerging markets in various geographic locations,
the Group has a proactive approach to identifying, understanding, assessing, monitoring and acting on balancing risks and opportunities.
For further description of risks and Millicom’s approach to risk management, please refer to the 2019 Annual Report (http://www.millicom.com/investors/reporting-centre).
Financial risk management objectives and policies
As a consequence of the current pandemic, Millicom
has been mainly focusing on the liquidity risk that the Group might encounter as a result of the slowdown in commercial activities
and cash collections from subscribers.
As of June 30, 2020, the Group had $1.5 billion
in cash and cash equivalents, including $0.3 billion of cash held in Millicom's joint ventures in Guatemala and Honduras. During
the six month period ended June 30, 2020, the Group drew $400 million from the $600 million revolving credit facility (RCF), which
was fully repaid in late June 2020, such that we ended Q2 2020 with approximately $2.1 billion of liquidity, when considering both
the Group's cash (including joint ventures) and the undrawn portion of the RCF.
In contrast, including the joint ventures in
Guatemala and Honduras, Millicom has relatively modest financial obligations maturing near term, including $81 million in 2020
and $130 million in 2021 and $124 million in 2022 . The Group is currently in compliance with all of its covenants, and continues
to have significant headroom over its principal leverage covenant.
Beside the above, Millicom’s financial
risk management policies and objectives remain unchanged compared to what the Group presented in Section D. Financial risk management
of the 2019 consolidated financial statements (included in Group's 2019 Annual Report).
Internal controls and risk management in the
preparation of the consolidated financial statements are set out in the Governance section from pages 66 to 100 in Group's 2019
Annual Report.
Non-financial information
Non-financial information, such as environmental,
social, human rights and the fight against corruption, are set out in the Corporate Responsibility Performance Appendix of the
Group's 2019 Annual Report.
Outlook
Notwithstanding improvement
relative to April and May, our performance in June remained well below pre-COVID levels, and heightened macro risks will likely
persist and continue to pressure our business at least through the remainder of 2020. However, the mobility restrictions have made
our network infrastructure and our broadband services in particular more essential than ever. Thus, we continue to believe that
the long-term opportunity we have been pursuing has likely been enhanced by recent events, and we are leaving unchanged our medium
term goals to deliver mid-single-digit organic service revenue growth, mid-to-high single-digit organic EBITDA growth, and around
10% OCF (EBITDA less Capex) organic growth for the Latam segment.
Subsequent events
There are no significant subsequent events.
/s/ José Antonio Ríos García
Chairman of the Board of Directors
Luxembourg, July 29, 2020
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 11
January 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 30 June 2020, 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 29, 2020
On behalf of Millicom International Cellular
S.A., by:
/s/ Mauricio Ramos
Chief Executive Officer
/s/ Tim Pennington
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 2020, which comprise the interim condensed consolidated
statement of financial position as at 30 June 2020 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 International
Financial Reporting Standard IAS 34 Interim Financial Reporting as adopted by the European Union (“IAS 34”).
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.
Ernst & Young
Société anonyme
Cabinet de révision agréé
/s/
Bruno di Bartolomeo
Luxembourg, 29 July 2020
Unaudited interim condensed consolidated statement
of income for the three- and six-month periods ended June 30, 2020
|
in millions of U.S dollars except per share data
|
Notes
|
Six months ended June 30, 2020
|
Six months ended June 30, 2019 (i)
|
Three months ended June 30, 2020
|
Three months ended June 30, 2019 (i)
|
|
Revenue
|
5
|
2,057
|
2,089
|
970
|
1,054
|
|
Cost of sales
|
|
(601)
|
(589)
|
(296)
|
(298)
|
|
Gross profit
|
|
1,456
|
1,500
|
673
|
757
|
|
Operating expenses
|
|
(731)
|
(798)
|
(330)
|
(424)
|
|
Depreciation
|
3
|
(443)
|
(409)
|
(220)
|
(210)
|
|
Amortization
|
|
(157)
|
(122)
|
(84)
|
(62)
|
|
Share of profit in the joint ventures in Guatemala and Honduras
|
15
|
79
|
90
|
34
|
46
|
|
Other operating income (expenses), net
|
14
|
23
|
8
|
20
|
3
|
|
Operating profit
|
5
|
226
|
270
|
93
|
109
|
|
Interest and other financial expenses
|
10
|
(316)
|
(272)
|
(169)
|
(132)
|
|
Interest and other financial income
|
|
7
|
8
|
2
|
4
|
|
Other non-operating (expenses) income, net
|
6
|
(136)
|
45
|
22
|
33
|
|
Profit (loss) from other joint ventures and associates, net
|
|
(1)
|
(15)
|
(1)
|
(18)
|
|
Profit (loss) before taxes from continuing operations
|
|
(220)
|
36
|
(53)
|
(5)
|
|
Tax (charge) credit, net
|
|
(49)
|
(41)
|
(65)
|
(24)
|
|
Profit (loss) from continuing operations
|
|
(269)
|
(5)
|
(118)
|
(28)
|
|
Profit (loss) from discontinued operations, net of tax
|
4
|
(1)
|
64
|
(1)
|
64
|
|
Net profit (loss) for the period
|
|
(270)
|
59
|
(119)
|
36
|
|
|
|
|
|
|
|
|
Attributable to:
|
|
|
|
|
|
|
The owners of Millicom
|
|
(238)
|
58
|
(115)
|
45
|
|
Non-controlling interests
|
|
(32)
|
1
|
(4)
|
(9)
|
|
|
|
|
|
|
|
|
(Loss)/Earnings per common share for net profit/ (loss) attributable to the owners of the Company:
|
|
|
|
|
|
|
Basic ($)
|
7
|
(2.35)
|
0.57
|
(1.14)
|
0.44
|
|
Diluted ($)
|
7
|
(2.35)
|
0.57
|
(1.14)
|
0.44
|
(i) Restated
as a result of the finalization of the purchase accounting of latest acquisitions (see note 3).
The accompanying notes are an integral part of
these unaudited interim condensed consolidated financial statements
Unaudited interim condensed consolidated statement
of comprehensive income for the three- and six-month periods ended June 30, 2020
|
in millions of U.S dollars
|
Six months ended June 30, 2020
|
Six months ended June 30, 2019 (i)
|
Three months ended June 30, 2020
|
Three months ended June 30, 2019 (i)
|
|
Net profit (loss) for the period
|
(270)
|
59
|
(119)
|
36
|
|
Other comprehensive income (to be reclassified to statement of income in subsequent periods), net of tax:
|
|
|
|
|
|
Exchange differences on translating foreign operations
|
(74)
|
14
|
25
|
7
|
|
Change in value of cash flow hedges, net of tax effects
|
(6)
|
(11)
|
13
|
(10)
|
|
Other comprehensive income (not to be reclassified to statement of income in subsequent periods), net of tax:
|
|
|
|
|
|
Total comprehensive income (loss) for the period
|
(349)
|
62
|
(82)
|
33
|
|
|
|
|
|
|
|
Attributable to
|
|
|
|
|
|
Owners of the Company
|
(301)
|
59
|
(84)
|
43
|
|
Non-controlling interests
|
(48)
|
3
|
3
|
(10)
|
|
|
|
|
|
|
|
Total comprehensive income for the period arises from:
|
|
|
|
|
|
Continuing operations
|
(349)
|
(2)
|
(81)
|
(39)
|
|
Discontinued operations
|
(1)
|
64
|
(1)
|
72
|
(i) Restated
as a result of the finalization of the purchase accounting of latest acquisitions (see note 3).
The accompanying notes are an integral part of
these unaudited interim condensed consolidated financial statements
Unaudited interim condensed consolidated statement
of financial position as at June 30, 2020
|
in millions of U.S dollars
|
Notes
|
June 30, 2020
|
December 31, 2019(i)
|
|
ASSETS
|
|
|
|
|
NON-CURRENT ASSETS
|
|
|
|
|
Intangible assets, net
|
9
|
3,477
|
3,214
|
|
Property, plant and equipment, net
|
8
|
2,605
|
2,883
|
|
Right of use assets
|
|
901
|
1,012
|
|
Investments in joint ventures
|
15
|
2,673
|
2,797
|
|
Investments in associates
|
|
23
|
25
|
|
Contract costs, net
|
|
4
|
5
|
|
Deferred tax assets
|
|
224
|
200
|
|
Derivative financial instruments
|
13
|
12
|
—
|
|
Other non-current assets
|
12
|
95
|
104
|
|
TOTAL NON-CURRENT ASSETS
|
|
10,014
|
10,240
|
|
|
|
|
|
|
CURRENT ASSETS
|
|
|
|
|
Inventories
|
|
36
|
32
|
|
Trade receivables, net
|
2
|
354
|
371
|
|
Contract assets, net
|
|
36
|
41
|
|
Amounts due from non-controlling interests, associates and joint ventures
|
12
|
39
|
29
|
|
Prepayments and accrued income
|
|
187
|
156
|
|
Current income tax assets
|
|
95
|
119
|
|
Supplier advances for capital expenditure
|
|
26
|
22
|
|
Equity investments
|
14
|
237
|
371
|
|
Other current assets
|
|
172
|
185
|
|
Restricted cash
|
|
167
|
155
|
|
Cash and cash equivalents
|
|
1,186
|
1,164
|
|
TOTAL CURRENT ASSETS
|
|
2,534
|
2,645
|
|
Assets held for sale
|
4
|
4
|
5
|
|
TOTAL ASSETS
|
|
12,552
|
12,890
|
(i) Restated
as a result of the finalization of the purchase accounting of latest acquisitions (see note 3).
The accompanying notes are an integral part of
these unaudited interim condensed consolidated financial statements
Unaudited interim condensed consolidated statement
of financial position as at June 30, 2020 (continued)
|
in millions of U.S dollars
|
Notes
|
June 30, 2020
|
December 31, 2019(i)
|
|
EQUITY AND LIABILITIES
|
|
|
|
|
EQUITY
|
|
|
|
|
Share capital and premium
|
|
631
|
633
|
|
Treasury shares
|
|
(32)
|
(51)
|
|
Other reserves
|
|
(620)
|
(544)
|
|
Retained profits
|
|
2,365
|
2,222
|
|
Profit (loss) for the period attributable to equity holders
|
|
(238)
|
149
|
|
Equity attributable to owners of the Company
|
|
2,106
|
2,410
|
|
Non-controlling interests
|
|
219
|
271
|
|
TOTAL EQUITY
|
|
2,325
|
2,680
|
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
NON-CURRENT LIABILITIES
|
|
|
|
|
Debt and financing
|
10
|
5,857
|
5,786
|
|
Lease liabilities
|
10
|
894
|
988
|
|
Derivative financial instruments
|
13
|
26
|
17
|
|
Amounts due to non-controlling interests, associates and joint ventures
|
12
|
219
|
337
|
|
Payables and accruals for capital expenditure
|
9
|
444
|
61
|
|
Provisions and other non-current liabilities
|
|
290
|
322
|
|
Deferred tax liabilities
|
|
249
|
280
|
|
TOTAL NON-CURRENT LIABILITIES
|
|
7,978
|
7,792
|
|
|
|
|
|
|
CURRENT LIABILITIES
|
|
|
|
|
Debt and financing
|
10
|
103
|
186
|
|
Lease liabilities
|
10
|
118
|
107
|
|
Put option liability
|
13
|
268
|
264
|
|
Payables and accruals for capital expenditure
|
|
233
|
348
|
|
Other trade payables
|
|
256
|
289
|
|
Amounts due to non-controlling interests, associates and joint ventures
|
12
|
161
|
161
|
|
Accrued interest and other expenses
|
|
434
|
432
|
|
Current income tax liabilities
|
|
113
|
75
|
|
Contract liabilities
|
|
77
|
82
|
|
Provisions and other current liabilities
|
|
486
|
474
|
|
TOTAL CURRENT LIABILITIES
|
|
2,249
|
2,417
|
|
Liabilities directly associated with assets held for sale
|
4
|
—
|
—
|
|
TOTAL LIABILITIES
|
|
10,227
|
10,209
|
|
TOTAL EQUITY AND LIABILITIES
|
|
12,552
|
12,890
|
(i) Restated
as a result of the finalization of the purchase accounting of latest acquisitions (see note 3).
The accompanying notes are an integral part of
these unaudited interim condensed consolidated financial statements
Unaudited interim condensed consolidated statement
of cash flows for the six-month period ended June 30, 2020
|
in millions of U.S dollars
|
Notes
|
June 30, 2020
|
June 30, 2019 (i)
|
|
Cash flows from operating activities (including discontinued operations)
|
|
|
|
|
Profit (loss) before taxes from continuing operations
|
|
(220)
|
36
|
|
Profit (loss) before taxes from discontinued operations
|
4
|
(1)
|
66
|
|
Profit (loss) before taxes
|
|
(221)
|
102
|
|
Adjustments to reconcile to net cash:
|
|
|
|
|
Interest expense on leases
|
|
78
|
75
|
|
Interest expense on debt and other financing
|
|
238
|
198
|
|
Interest and other financial income
|
|
(7)
|
(8)
|
|
Adjustments for non-cash items:
|
|
|
|
|
Depreciation and amortization
|
5
|
599
|
542
|
|
Share of profit in Guatemala and Honduras joint ventures
|
|
(79)
|
(90)
|
|
(Gain) on disposal and impairment of assets, net
|
4, 14
|
(22)
|
(82)
|
|
Share based compensation
|
|
14
|
14
|
|
Loss from other joint ventures and associates, net
|
|
1
|
15
|
|
Other non-cash non-operating (income) expenses, net
|
6
|
136
|
(45)
|
|
Changes in working capital:
|
|
|
|
|
Decrease (increase) in trade receivables, prepayments and other current assets, net
|
|
(104)
|
(141)
|
|
Decrease in inventories
|
|
(6)
|
(8)
|
|
Increase (decrease) in trade and other payables, net
|
|
4
|
19
|
|
Changes in contract assets, liabilities and costs, net
|
|
4
|
3
|
|
Total changes in working capital
|
|
(102)
|
(128)
|
|
Interest paid on leases
|
|
(74)
|
(66)
|
|
Interest paid on debt and other financing
|
|
(204)
|
(161)
|
|
Interest received
|
|
8
|
6
|
|
Taxes paid
|
5
|
(43)
|
(49)
|
|
Net cash provided by operating activities
|
|
324
|
323
|
|
Cash flows from (used in) investing activities (including discontinued operations):
|
|
|
|
|
Acquisition of subsidiaries, joint ventures and associates, net of cash acquired
|
3
|
3
|
(430)
|
|
Proceeds from disposal of subsidiaries and associates, net of cash disposed
|
4
|
18
|
110
|
|
Purchase of intangible assets and licenses
|
9
|
(166)
|
(103)
|
|
Purchase of property, plant and equipment
|
8
|
(302)
|
(349)
|
|
Proceeds from sale of property, plant and equipment
|
8
|
1
|
12
|
|
Proceeds from disposal of equity investment, net of costs
|
14
|
89
|
—
|
|
Dividends and dividend advances received from joint ventures
|
15
|
58
|
105
|
|
Cash (used in) provided by other investing activities, net
|
|
15
|
9
|
|
Net cash used in investing activities
|
|
(284)
|
(646)
|
|
Unaudited interim condensed consolidated statement of cash flows for the six-month period ended June 30, 2020 (continued)
|
|
|
|
|
|
|
Cash flows from financing activities (including discontinued operations):
|
|
|
|
|
Proceeds from debt and other financing
|
10
|
797
|
1,646
|
|
Repayment of debt and other financing
|
10
|
(723)
|
(795)
|
|
Lease capital repayment
|
|
(53)
|
(60)
|
|
Advances and dividends paid to non-controlling interests
|
|
(2)
|
(12)
|
|
Share repurchase program
|
|
(10)
|
—
|
|
Dividends paid to owners of the Company
|
|
—
|
(133)
|
|
Net cash provided by (used in) financing activities
|
|
9
|
646
|
|
Exchange impact on cash and cash equivalents, net
|
|
(26)
|
—
|
|
Net (decrease) increase in cash and cash equivalents
|
|
23
|
322
|
|
Cash and cash equivalents at the beginning of the year
|
|
1,164
|
528
|
|
Effect of cash in disposal group held for sale
|
4
|
—
|
(9)
|
|
Cash and cash equivalents at the end of the period
|
|
1,186
|
840
|
(i) Restated
as a result of the finalization of the purchase accounting of latest acquisitions (see note 3).
The accompanying notes are an integral part of
these unaudited interim condensed consolidated financial statements
Unaudited interim condensed consolidated statements
of changes in equity for the periods ended June 30, 2020 and years ended December 31, 2019 and 2018
|
in millions of U.S dollars
|
Number of shares (000’s)
|
Number of shares held by the Group (000’s)
|
Share capital
|
Share premium
|
Treasury shares
|
Retained profits(i)
|
Other reserves
|
Total
|
Non- controlling interests
|
Total equity
|
|
Balance on December 31, 2018
|
101,739
|
(914)
|
153
|
482
|
(81)
|
2,525
|
(538)
|
2,542
|
251
|
2,792
|
|
Total comprehensive income for the period
|
—
|
—
|
—
|
—
|
—
|
61
|
1
|
62
|
4
|
65
|
|
Dividends
|
—
|
—
|
—
|
—
|
—
|
(268)
|
—
|
(268)
|
—
|
(268)
|
|
Dividends to non controlling interests
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
(1)
|
(1)
|
|
Purchase of treasury shares
|
—
|
(108)
|
—
|
—
|
(10)
|
3
|
—
|
(7)
|
—
|
(7)
|
|
Share based compensation
|
—
|
—
|
—
|
—
|
—
|
—
|
14
|
14
|
—
|
15
|
|
Issuance of shares under share-based payment schemes
|
—
|
405
|
—
|
(2)
|
36
|
(11)
|
(22)
|
1
|
—
|
1
|
|
Balance on June 30, 2019 (ii)
|
101,739
|
(616)
|
153
|
481
|
(54)
|
2,310
|
(545)
|
2,343
|
254
|
2,597
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance on December 31, 2019 (ii)
|
101,739
|
(581)
|
153
|
480
|
(51)
|
2,372
|
(544)
|
2,410
|
271
|
2,680
|
|
Total comprehensive income for the period
|
—
|
—
|
—
|
—
|
—
|
(238)
|
(63)
|
(301)
|
(48)
|
(349)
|
|
Dividends
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|
Dividends to non controlling interests
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
(5)
|
(5)
|
|
Purchase of treasury shares (iii)
|
—
|
(463)
|
—
|
—
|
(19)
|
3
|
—
|
(16)
|
—
|
(16)
|
|
Share based compensation
|
—
|
—
|
—
|
—
|
—
|
—
|
13
|
13
|
1
|
14
|
|
Issuance of shares under share-based payment schemes
|
—
|
480
|
—
|
(2)
|
38
|
(10)
|
(25)
|
—
|
—
|
—
|
|
Balance on June 30, 2020
|
101,739
|
(563)
|
153
|
478
|
(32)
|
2,127
|
(620)
|
2,106
|
219
|
2,325
|
|
|
(i)
|
Retained profits – includes profit for the period attributable to equity holders, of
which at June 30, 2020, $304 million (2019: $306 million; 2018: $324 million) are not distributable to equity holders.
|
|
|
(ii)
|
Restated as a result of the finalization of the purchase accounting of latest acquisitions
(see note 3).
|
|
|
(iii)
|
During the six-month period ended June 30, 2020, Millicom repurchased 350,000 shares for a
total amount of $10 million and withheld approximately 113,000 shares for settlement of tax obligations on behalf of employees
under share-based compensation plans.
|
|
|
(iv)
|
Dividends - A dividend distribution of $2.64 per share was approved by the Annual General Meeting of shareholders on May
2, 2019 and paid in equal portions in May and November 2019.
|
The accompanying notes are an integral part of
these unaudited interim condensed consolidated financial statements
Notes to the unaudited interim condensed consolidated
statements
1. ORGANIZATION
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 an international telecommunications and media company providing
digital lifestyle services in emerging markets, through mobile and fixed telephony, cable, broadband, and Pay-TV in Latin America
and Africa.
On July 29, 2020, the Board of Directors
authorized these unaudited interim condensed consolidated financial statements for issuance.
2. SUMMARY OF CONSOLIDATION AND ACCOUNTING
POLICIES
These interim condensed consolidated financial
statements of the Group are unaudited. They are presented in US dollars and have been prepared in accordance with International
Accounting Standard (“IAS”) 34 ‘Interim Financial Reporting’ as issued by the International Accounting
Standards Board and as adopted by the European Union. In the opinion of management, these unaudited interim condensed consolidated
financial statements reflect all adjustments that are necessary for a proper presentation of the results for interim periods. Millicom’s
operations are not affected by significant seasonal or cyclical patterns.
These unaudited interim condensed consolidated
financial statements should be read in conjunction with the audited consolidated financial statements for the period ended December
31, 2019. These financial statements are prepared in accordance with consolidation and accounting policies consistent with the
December 31, 2019 consolidated financial statements, except for the changes described below.
COVID-19 - Qualitative and quantitative
assessment on business activities, financial situation and economic performance
On March 11, 2020, the World Health Organization
declared the coronavirus outbreak a pandemic. Most countries globally, including a majority of the countries where we operate,
reacted by implementing severe restrictions on travel and public gatherings, including the closing of offices, businesses, schools,
retail stores and other public venues, and by instituting curfews or quarantines. These restrictions, as well as the dangers posed
by the virus, produced a significant reduction in mobility and a severe disruption in global economic activity during Q2.
Impact on our markets and business
Most governments in our
markets implemented restrictions beginning in mid-March, and these were generally maintained throughout April, with some gradual
relaxation of measures beginning in late May and June. According to data compiled by the University of Oxford, the lockdowns in
the vast majority of our markets were among the most stringent in the world. As a result, many of our stores and distribution channels
were forced to close temporarily and a majority of our markets experienced very sharp reductions in mobility during the quarter.
This produced an immediate and significant decline in our prepaid mobile business, which is gradually recovering, in tandem with
the gradual easing of government restrictions and the recovery in population mobility. In postpaid mobile, the revenue erosion
has been more gradual than in prepaid, but so has the recovery.
Our residential cable "Home"
business has proven more resilient, but revenue growth has nonetheless eroded noticeably during Q2 due in large part to our commercial
decision to temporarily support our neediest customers with basic connectivity, or "lifeline" services at no cost to
them, and for which no revenue was recognized. During the quarter, we provided lifeline services to approximately 900,000 Home
customers, although we have successfully resumed normal service to about 650,000 of these. We expect to re-connect a portion of
the remaining 250,000 during Q3. Finally, revenue from our business-to-business "B2B" services eroded gradually during
Q2 and through June, as many small and mid-sized businesses struggle to cope with the health and economic crises.
Impact on liquidity and financial resources
As of June 30, 2020, the Group had $1.5 billion
in cash and cash equivalents, including $0.3 billion of cash held in Millicom's joint ventures in Guatemala and Honduras. During
the six month period ended June 30, 2020, the Group drew $400 million from the $600 million revolving credit facility (RCF), which
was fully repaid in late June 2020, such that we ended Q2 2020 with approximately $2.1 billion of liquidity, when considering both
the Group's cash (including joint ventures) and the undrawn portion of the RCF.
In contrast, including the joint ventures in
Guatemala and Honduras, Millicom has relatively modest financial obligations maturing near term, including $81 million in 2020
and $130 million in 2021 and $124 million in 2022 . The Group is currently in compliance with all of its covenants, and continues
to have significant headroom over its principal leverage covenant.
2. SUMMARY OF CONSOLIDATION AND ACCOUNTING
POLICIES (Continued)
Impact on accounting matters
As COVID-19 continues to spread, the potential
impacts, including a global, regional or other economic recession, are increasingly uncertain and difficult to assess. Nevertheless,
Millicom have identified potential significant accounting implications in the following areas:
|
|
•
|
Impairment of non-financial assets/goodwill/investments
in joint ventures
|
Millicom have
noticed reduced economic activity across the countries where it operates, and its operations are suffering lower revenues, EBITDA
and margins, which might indicate potential impairments.
For the first
quarter of 2020, management had updated the sensitivity analysis performed in the framework of its 2019 goodwill impairment testing
by deteriorating EBITDA sensitivity from initially 2% to 10% decrease. In parallel, discount rates used in the 2019 impairment
tests had also been increased by 100 bps to 500 bps depending on the countries. As a result of these changes, management noted
an increased impairment risk for its cash generating units (CGUs) in Nicaragua, El Salvador and Costa Rica. The other CGUs still
showed a comfortable headroom.
During the second
quarter of 2020, management carried out an updated impairment test for the CGUs listed above and identified at risk in Q1 2020.
These tests have been performed in line with the methodology used for the annual impairment tests using Group's latest forecasts.
The results of these tests showed that sufficient headroom exists and that there is no impairment charge to be recognized. The
other CGUs have not been tested given the significant headroom noted in Q1 and the fact that assumptions used in Q1 sensitivity
analysis were actually more aggressive than the operations' actual performance.
|
|
•
|
Impairment of trade receivables
|
During Q2 2020,
and as a result of worsening collections, the Group has recognised additional bad debt provisions for an amount of $32 million
compared to the level of provisions recorded during Q1 2020 and $33 million compared to Q2 2019. As of June 30, 2020, the total
bad debt provisions cover close to 100% of the receivables overdue by more than 90 days.
For countries
restricted from disconnecting non paying customers, such as El Salvador, the Group established a policy whereby operations stopped
recognizing revenue after a certain number of invoices remained unpaid (usually 3 invoices - as these customers would be disconnected
after 3 unpaid invoices in normal circumstances). The Group believes it is unlikely that it will collect the overdue invoiced amounts
from these subscribers i.e. the 'Covid subscribers'. From that moment onwards after consideration of the guidance under IFRS 15.13,
for 'Covid subscribers' the Group will only recognize revenue up to an amount equal to the consideration (cash) as and when received.
During the three-month
period ended June 30, 2020, and as a result of applying the above policy, the Group has not recognised revenue for an amount of
$9 million.
Note that there might be implications on other
accounting areas such as inventory obsolescence or share-based payments, but the Group currently do not expect these to be significant.
Finally, as of the date of this report, the Group has determined there are no material uncertainties that might cast significant
doubt upon the Group's or any of its operations' ability to continue as a going concern.
2. SUMMARY OF CONSOLIDATION AND ACCOUNTING
POLICIES (Continued)
New and amended IFRS standards
The following changes to standards effective
for annual periods starting on January 1, 2020 have been adopted by the Group and did not have any significant impact on the Group’s
accounting policies or disclosures and did not require retrospective adjustments:
|
|
•
|
Amendments to the conceptual framework. The IASB has revised its conceptual framework.
|
|
|
•
|
Amendments to IAS 1, ‘Presentation of financial statements’, and IAS 8, ‘Accounting policies, changes in
accounting estimates and errors’.
|
|
|
•
|
Amendments to IFRS 9, IAS 39 and IFRS 7 - Interest Rate Benchmark Reform.
|
|
|
•
|
Amendments to IFRS 3 - definition of a business. This amendment revises the definition of a business.
|
The following changes to standards not yet effective
are not expected to materially affect the Group:
|
|
•
|
IFRS 17, ‘Insurance contracts’ - effective for annual periods starting on January 1, 2023- IFRS 17 will not have
an impact for the Group. IFRS 17 has not been yet endorsed by the EU.
|
|
|
•
|
Amendments to IAS 1, 'Presentation of Financial Statements' - effective for annual periods starting on January 1, 2022- This
amendment clarifies that liabilities are classified as either current or non-current, depending on the rights that exist at the
end of the reporting period. The amendment also clarifies what IAS 1 means when it refers to the ‘settlement’ of a
liability. These amendments have not yet been endorsed by the EU.
|
|
|
•
|
Amendment to IFRS 16, 'Leases' - COVID 19 Rent Concessions - effective for annual periods starting on June 1, 2020. This amendment
provides an optional practical expedient for lessees from assessing whether a rent concession related to COVID-19 is a lease modification.
Lessees can elect to account for such rent concessions in the same way as they would if they were not lease modifications. In many
cases, this will result in accounting for the concession as variable lease payments in the period(s) in which the event or condition
that triggers the reduced payment occurs. This amendment is still subject to EU endorsement.
|
|
|
◦
|
IFRS 3 'Business Combinations' - Reference to Conceptual Framework
|
|
|
◦
|
IAS 16 'Property, Plant and Equipment' - Proceeds before intended use
|
|
|
◦
|
IAS 37 'Provisions, Contingent Liabilities and Contingent Assets' - Cost of fulfilling a contract
|
|
|
◦
|
Annual improvements to IFRS Standards 2018-2020, affecting IFRS 1, IFRS 9, IFRS 16 and IAS 41
|
All of these amendments are effective
for annual periods starting on January 1, 2022. These amendments have not yet been endorsed by the EU.
3. ACQUISITION AND DISPOSAL OF SUBSIDIARIES,
JOINT VENTURES, ASSOCIATES AND OTHER NON-CONTROLLING INTERESTS
Acquisitions 2020
There were no acquisitions in 2020.
Acquisitions 2019
On February 20, 2019, MIC S.A., Telefonica Centroamerica
and Telefonica S.A. entered into 3 separate share purchase agreements (the “Telefonica CAM Acquisitions”) pursuant
to which, subject to the terms and conditions contained therein, Millicom agreed to purchase 100% of the shares of Telefonica Moviles
Panama, S.A., a company incorporated under the laws of Panama, from Telefonica Centroamerica (the “Panama Acquisition”),
100% of the shares of Telefonica de Costa Rica TC, S.A., a company incorporated under the laws of Costa Rica, from Telefonica (the
“Costa Rica Acquisition”) and 100% of the shares of Telefonia Celular de Nicaragua, S.A., a company incorporated under
the laws of Nicaragua, from Telefonica Centroamerica (the “Nicaragua Acquisition”). The Telefonica CAM Acquisitions
Share Purchase Agreements contain customary representations and warranties and termination provisions. While Millicom completed
both acquisitions in Nicaragua and Panama, it announced on May 1, 2020 that it terminated the Share Purchase Agreement in relation
to the Costa Rica Acquisition (see note 11). The aggregate purchase price for the Telefonica Panama and Nicaragua Acquisitions
was $1.08 billion, subject to potential purchase price adjustments.
Nicaragua Acquisition
This transaction closed on May 16, 2019 after
receipt of the necessary approvals and, since that date, Millicom holds all voting rights in Telefonia Celular de Nicaragua ("Nicaragua")
and controls it. On the same day, Millicom paid an original cash consideration of $437 million, which was adjusted to $430 million
as of December 31, 2019 and finally adjusted to $426 million. For the purchase accounting, Millicom determined the final fair values
of Nicaragua's identifiable assets and liabilities based on transaction and relative fair values. The purchase accounting has been
finalized by May 16, 2020 and has not materially changed since December 31, 2019, with the exception of the final price adjustment.
The final purchase accounting and differences
compared to the provisional fair values reported as at December 31, 2019 are shown below:
|
|
Provisional Fair values (100%)
|
Final Fair values (100%)
|
Differences
|
|
|
(US$ millions)
|
(US$ millions)
|
(US$ millions)
|
|
Intangible assets (excluding goodwill) (i)
|
131
|
131
|
—
|
|
Property, plant and equipment (ii)
|
149
|
149
|
—
|
|
Right of use assets (iii)
|
131
|
131
|
—
|
|
Other non-current assets
|
2
|
2
|
—
|
|
Current assets (excluding cash) (iv)
|
23
|
23
|
—
|
|
Trade receivables (v)
|
17
|
17
|
—
|
|
Cash and cash equivalents
|
7
|
7
|
—
|
|
Total assets acquired
|
459
|
459
|
—
|
|
Lease liabilities (iii)
|
131
|
131
|
—
|
|
Other liabilities (vi)
|
118
|
118
|
—
|
|
Total liabilities assumed
|
249
|
249
|
—
|
|
Fair value of assets acquired and liabilities assumed, net
|
210
|
210
|
—
|
|
Acquisition price
|
430
|
426
|
(4)
|
|
Final Goodwill
|
220
|
216
|
(4)
|
|
|
(i)
|
Intangible assets not previously recognized at
the date of acquisition, are mainly customer lists for an amount of $81 million, with estimated useful lives ranging from 4 to
10 years. In addition, a fair value step-up of $39 million on the spectrum held by Nicaragua has been recognized, with a remaining
useful life of 14 years.
|
|
|
(ii)
|
A fair value step-up of $39 million has been recognized
on property, plant and equipment, mainly on the core network ($25 million) and owned buildings ($8 million). The expected remaining
useful lives were estimated at 6-7 years on average.
|
|
|
(iii)
|
The Group measured the lease liability at the present
value of the remaining lease payments (as defined in IFRS 16) as if the acquired lease were a new lease at the acquisition date.
The right-of-use assets have been adjusted by $7 million to be measured at the same amount as the lease liabilities.
|
|
|
(iv)
|
Current assets include indemnification assets for
tax contingencies at fair value for an amount of $11 million - see (vi) below.
|
|
|
(v)
|
The fair value of trade receivables acquired was
$17 million.
|
|
|
(vi)
|
Other liabilities include the fair value of certain
possible tax contingent liabilities for $1 million and a deferred tax liability of $50 million resulting from the above adjustments
|
3. ACQUISITION AND DISPOSAL OF SUBSIDIARIES,
JOINT VENTURES, ASSOCIATES AND OTHER NON-CONTROLLING INTERESTS (Continued)
The completion of the purchase price allocation
did not result in any material impact on the statement of income in respect of values previously recorded in the provisional purchase
accounting for the year ended December 31, 2019 or for the interim periods within the years 2019 and 2020. The impact on the statement
of financial position as at December 31, 2019 is summarized in the table at the bottom of this note.
Panama Acquisition
This transaction closed on August 29, 2019 after
receipt of the necessary approvals and, since that date, Cable Onda, which is 80% owned by Millicom, holds all voting rights in
Telefonica Moviles Panama, S.A. ("Panama") and controls it. On the same day, Cable Onda paid an original cash consideration
of $594 million to acquire 100% of the shares of Panama, subject to a final price adjustment expected in H2 2020. The purchase
consideration also includes potential indemnifications from the sellers (including potential tax contingencies and litigations).
No non-controlling interests are recognized at acquisition date as Cable Onda acquired 100% of the shares of Panama. However, non-controlling
interests are recognized in Panama's results from the date of acquisition.
For the purchase accounting, Millicom determined
the fair value of Panama's identifiable assets and liabilities based on transaction and relative fair values. During Q2 2020, the
Group completed the policy alignment and evaluation in respect of the right-of-use assets and lease liabilities. The related effect
of these adjustments is shown in the table below.
As of June 30, 2020, the purchase accounting
is still provisional, particularly in respect of the evaluation of property, plant and equipment, the final purchase price adjustment
and their resulting impact on the current valuation of intangible assets. Management will finalize the purchase accounting not
later than Q3 2020.
The updated provisional purchase accounting and
differences compared to the provisional fair values reported as at December 31, 2019 are shown below:
|
|
Provisional Fair values (100%)
|
Provisional Fair values (100%)
|
Differences
|
|
|
December 31, 2019
|
June 30, 2020
|
|
|
|
(US$ millions)
|
(US$ millions)
|
(US$ millions)
|
|
Intangible assets (excluding goodwill) (i)
|
178
|
178
|
—
|
|
Property, plant and equipment (ii)
|
110
|
110
|
—
|
|
Right of use assets (iii)
|
47
|
81
|
34
|
|
Other non-current assets
|
3
|
3
|
—
|
|
Current assets (excluding cash)
|
23
|
23
|
—
|
|
Trade receivables (iv)
|
21
|
21
|
—
|
|
Cash and cash equivalents
|
10
|
10
|
—
|
|
Total assets acquired
|
391
|
425
|
34
|
|
Lease liabilities
|
48
|
81
|
33
|
|
Other debt and financing
|
74
|
74
|
—
|
|
Other liabilities (v)
|
101
|
102
|
1
|
|
Total liabilities assumed
|
224
|
257
|
34
|
|
Fair value of assets acquired and liabilities assumed, net
|
167
|
168
|
1
|
|
Acquisition price
|
594
|
594
|
—
|
|
Provisional Goodwill
|
426
|
425
|
(1)
|
|
|
(i)
|
Intangible assets not previously recognized at the date of acquisition, are mainly customer lists for an amount of $58 million,
with estimated useful lives ranging from 3 to 17 years. In addition, a fair value step-up of $3 million on the spectrum held by
Panama has been recognized, with a remaining useful life of 17 years.
|
|
|
(ii)
|
Final valuation is still in progress and will be
finalized by August 29, 2020.
|
|
|
(iii)
|
The accounting policy alignment resulted in an increase in the right-of-use assets and lease liabilities of approximately
$30 million. Subsequently, the right-of-use assets have been adjusted by $4 million to be measured at the same amount as the lease
liabilities.
|
|
|
(iv)
|
The fair value of trade receivables acquired was
$21 million.
|
|
|
(v)
|
Other liabilities include a deferred tax liability
of $16 million resulting from the above adjustments.
|
3. ACQUISITION AND DISPOSAL OF SUBSIDIARIES,
JOINT VENTURES, ASSOCIATES AND OTHER NON-CONTROLLING INTERESTS (Continued)
Impact on the statement of financial position
of the finalization/update of the purchase accounting for recent acquisitions
The finalization/update of the purchase accounting
for the recent acquisitions had an effect on the following financial statements line items on the statement of financial position
as of December 31, 2019:
|
|
|
Impact of finalization/update of purchase accounting of
|
|
|
|
$ millions
|
December 31, 2019
|
Nicaragua
|
Panama
|
December 31, 2019
|
Reason for the change
|
|
As reported
|
Restated
|
|
STATEMENT OF FINANCIAL POSITION
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
Intangible assets, net
|
3,219
|
(4)
|
(1)
|
3,214
|
(i)
|
|
Right-of-use asset (non-current)
|
977
|
—
|
34
|
1,012
|
(ii)
|
|
Other current assets
|
181
|
4
|
—
|
185
|
(iii)
|
|
LIABILITIES
|
|
|
|
|
|
|
Lease liabilities (non-current)
|
967
|
—
|
22
|
988
|
(ii)
|
|
Lease liabilities (current)
|
97
|
—
|
11
|
107
|
(ii)
|
|
Deferred tax liabilities
|
279
|
—
|
1
|
280
|
(iv)
|
|
|
(i)
|
Impact on goodwill resulting from the adjustments
explained above for Nicaragua and Panama.
|
|
|
(ii)
|
See Panama section above. Refers to IFRS 16 accounting
policy alignment and purchase accounting adjustment..
|
|
|
(iii)
|
See Nicaragua
section above. Reflects the final price adjustment agreed for Nicaragua.
|
|
|
(iv)
|
Deferred
tax impact of these previously explained adjustments.
|
Impact on the statement of income of the finalization/update
of the purchase accounting for recent acquisitions
The Group finalized Cable Onda's purchase accounting
in December 2019 by adjusting the provisional fair values mainly on tangible assets. The impact on the statement of income for
the three- and six-month periods ended June 30, 2019 was mainly on depreciation as an additional charge was recorded for $2 million
and $4 million, respectively, compared to what the Group reported last year.
The impact of the finalization of Nicaragua's
purchase accounting (and update on Panama's) on the 2019 Group statement of income is immaterial. Therefore, no adjustments were
made in that respect on comparative figures.
4. DISCONTINUED OPERATIONS AND ASSETS HELD
FOR SALE
Summary
Financial information relating to the discontinued
operations for the three- and six-month periods ended June 30, 2019 are set out below. Figures shown below are after inter-company
eliminations. 2019 figures include Chad only (6 months).
|
Results from Discontinued Operations ($ millions)
|
Six months ended June 30, 2019
|
Three months ended June 30, 2019
|
|
Revenue
|
50
|
19
|
|
Cost of sales
|
(14)
|
(5)
|
|
Operating expenses
|
(27)
|
(13)
|
|
Depreciation and amortization
|
(11)
|
(4)
|
|
Gain/(loss) on disposal of discontinued operations
|
74
|
74
|
|
Other expenses linked to the disposal of discontinued operations
|
(5)
|
(4)
|
|
Operating profit (loss)
|
68
|
67
|
|
Interest income (expense), net
|
(2)
|
(1)
|
|
Profit (loss) before taxes
|
66
|
65
|
|
Credit (charge) for taxes, net
|
(2)
|
(1)
|
|
Net Profit/(loss) from discontinuing operations
|
64
|
64
|
|
Cash flows from discontinued operations ($ millions)
|
Six months ended June 30, 2019
|
|
Cash from (used in) operating activities, net
|
(8)
|
|
Cash from (used in) investing activities, net
|
5
|
|
Cash from (used in) financing activities, net
|
7
|
|
Net cash inflows/(outflows)
|
5
|
|
|
|
|
|
Rwanda
On January 31, 2018, Millicom completed the sale
of its Rwanda operations to subsidiaries of Bharti Airtel Limited for cash consideration of $51 million. The consideration included
a deferred cash payment of $17 million, which was received in Q1 2020.
5. SEGMENT INFORMATION
Management determines operating and reportable
segments based on information used by the chief operating decision maker (CODM) to make strategic and operational decisions from
both a business and geographic perspective. The Group’s risks and rates of return are predominantly affected by operating
in different geographical regions. The Group has businesses in two main regions: Latin America (“Latam”) and Africa.
The Latam figures below include Honduras and Guatemala as if they are fully consolidated by the Group, as this reflects the way
management reviews and uses internally reported information to make decisions. Honduras and Guatemala are shown under the Latam
segment. The joint venture in Ghana is not reported as if fully consolidated.
As from June 30, 2020, Millicom is allocating
corporate costs to each segment based on their contribution to underlying revenue, and only non-recurring costs, such as the M&A-related
fees incurred in both 2018 and 2019, will remain unallocated going forward. This change in presentation has no impact on Group
EBITDA.
In order to facilitate comparisons of June 30,
2020 figures with prior periods, comparative figures have been re-presented to conform with this new segment EBITDA reporting.
Revenue, operating profit (loss), EBITDA and
other segment information for the three- and six-month periods ended June 30, 2020 and 2019, are as follows:
Six months ended June 30, 2020
(in millions of U.S dollars)
|
Latin America
|
Africa
|
Unallocated
|
Guatemala and Honduras(vii)
|
Eliminations and
Transfers
|
Total
|
|
Mobile revenue
|
1,593
|
171
|
—
|
(718)
|
—
|
1,046
|
|
Cable and other fixed services revenue
|
1,045
|
4
|
—
|
(146)
|
—
|
903
|
|
Other revenue
|
28
|
—
|
—
|
(3)
|
—
|
25
|
|
Service revenue (i)
|
2,665
|
175
|
—
|
(867)
|
—
|
1,973
|
|
Telephone and equipment and other revenue (i)
|
200
|
—
|
—
|
(115)
|
—
|
84
|
|
Revenue
|
2,865
|
175
|
—
|
(981)
|
—
|
2,057
|
|
Operating profit (loss)
|
371
|
14
|
13
|
(250)
|
79
|
226
|
|
Add back:
|
|
|
|
|
|
|
|
Depreciation and amortization
|
775
|
45
|
6
|
(227)
|
—
|
599
|
|
Share of profit in joint ventures in Guatemala and Honduras
|
—
|
—
|
—
|
—
|
(79)
|
(79)
|
|
Other operating income (expenses), net
|
(3)
|
—
|
(19)
|
—
|
—
|
(23)
|
|
EBITDA (ii)
|
1,144
|
59
|
(1)
|
(477)
|
—
|
725
|
|
EBITDA from discontinued operations
|
—
|
—
|
—
|
—
|
—
|
—
|
|
EBITDA incl discontinued operations
|
1,144
|
59
|
(1)
|
(477)
|
—
|
725
|
|
Capital expenditure (iii)
|
(469)
|
(19)
|
(5)
|
118
|
—
|
(376)
|
|
Changes in working capital and others (iv)
|
405
|
—
|
(475)
|
(19)
|
—
|
(89)
|
|
Taxes paid
|
(95)
|
(5)
|
(1)
|
58
|
—
|
(43)
|
|
Operating free cash flow (v)
|
985
|
35
|
(482)
|
(321)
|
—
|
217
|
|
Total Assets (vi)
|
13,701
|
916
|
4,562
|
(5,292)
|
(1,335)
|
12,552
|
|
Total Liabilities
|
9,134
|
938
|
3,921
|
(2,172)
|
(1,595)
|
10,227
|
5. SEGMENT INFORMATION (Continued)
Six months ended June 30, 2019
(in millions of U.S dollars)
|
Latin America
|
Africa (viii)
|
Unallocated
|
Guatemala and Honduras (vii)
|
Eliminations and transfers
|
Total
|
|
Mobile revenue
|
1,580
|
181
|
—
|
(741)
|
—
|
1,020
|
|
Cable and other fixed services revenue
|
1,085
|
4
|
—
|
(136)
|
—
|
953
|
|
Other revenue
|
25
|
—
|
—
|
(3)
|
—
|
22
|
|
Service revenue (i)
|
2,689
|
186
|
—
|
(879)
|
—
|
1,996
|
|
Telephone and equipment revenue (i)
|
198
|
—
|
—
|
(105)
|
—
|
93
|
|
Revenue
|
2,887
|
186
|
—
|
(983)
|
—
|
2,089
|
|
Operating profit (loss)
|
468
|
(3)
|
(14)
|
(272)
|
91
|
270
|
|
Add back:
|
|
|
|
|
|
|
|
Depreciation and amortization
|
699
|
49
|
4
|
(221)
|
—
|
531
|
|
Share of profit in joint ventures in Guatemala and Honduras
|
—
|
—
|
—
|
—
|
(91)
|
(91)
|
|
Other operating income (expenses), net
|
(3)
|
(1)
|
—
|
(4)
|
—
|
(8)
|
|
EBITDA (ii)
|
1,164
|
45
|
(10)
|
(496)
|
—
|
703
|
|
EBITDA from discontinued operations
|
—
|
4
|
—
|
—
|
—
|
4
|
|
EBITDA incl discontinued operations
|
1,164
|
49
|
(10)
|
(496)
|
—
|
707
|
|
Capital expenditure (iii)
|
(548)
|
(27)
|
(4)
|
136
|
—
|
(442)
|
|
Changes in working capital and others (iv)
|
(62)
|
15
|
(67)
|
—
|
—
|
(113)
|
|
Taxes paid
|
(95)
|
(6)
|
(6)
|
58
|
—
|
(50)
|
|
Operating free cash flow (v)
|
459
|
31
|
(87)
|
(302)
|
—
|
102
|
|
Total Assets (vi)
|
13,105
|
947
|
3,510
|
(5,666)
|
(226)
|
11,670
|
|
Total Liabilities
|
7,390
|
889
|
4,067
|
(2,106)
|
(1,164)
|
9,075
|
5. SEGMENT INFORMATION (Continued)
|
Three months ended June 30, 2020 (in millions of U.S dollars)
|
Latin America
|
Africa (viii)
|
Unallocated
|
Guatemala and Honduras (vii)
|
Eliminations and transfers
|
Total
|
|
|
|
|
|
|
|
|
|
Mobile revenue
|
750
|
84
|
—
|
(345)
|
—
|
490
|
|
Cable and other fixed services revenue
|
506
|
2
|
—
|
(73)
|
—
|
435
|
|
Other revenue
|
14
|
—
|
—
|
(2)
|
—
|
12
|
|
Service revenue (i)
|
1,270
|
86
|
—
|
(419)
|
—
|
937
|
|
Telephone and equipment revenue (i)
|
90
|
—
|
—
|
(57)
|
—
|
33
|
|
Revenue
|
1,360
|
86
|
—
|
(476)
|
—
|
970
|
|
Operating profit (loss)
|
152
|
7
|
16
|
(116)
|
34
|
93
|
|
Add back:
|
|
|
|
|
|
|
|
Depreciation and amortization
|
392
|
22
|
3
|
(113)
|
—
|
304
|
|
Share of profit in joint ventures in Guatemala and Honduras
|
—
|
—
|
—
|
—
|
(34)
|
(34)
|
|
Other operating income (expenses), net
|
(1)
|
—
|
(19)
|
—
|
—
|
(20)
|
|
EBITDA (ii)
|
544
|
29
|
—
|
(229)
|
—
|
343
|
|
EBITDA from discontinued operations
|
—
|
—
|
—
|
—
|
—
|
—
|
|
EBITDA incl discontinued operations
|
544
|
29
|
—
|
(229)
|
—
|
343
|
|
Capital expenditure (iii)
|
(185)
|
(9)
|
(1)
|
51
|
—
|
(144)
|
|
Changes in working capital and others (iv)
|
470
|
—
|
(416)
|
(19)
|
—
|
35
|
|
Taxes paid
|
(62)
|
(2)
|
—
|
32
|
—
|
(32)
|
|
Operating free cash flow (v)
|
767
|
19
|
(418)
|
(165)
|
—
|
202
|
5. SEGMENT INFORMATION (Continued)
Three months ended June 30, 2019
(in millions of U.S dollars)
|
Latin America
|
Africa
|
Unallocated
|
Guatemala and Honduras (vii)
|
Eliminations and transfers
|
Total
|
|
|
|
|
|
|
|
|
|
Mobile revenue
|
802
|
90
|
—
|
(373)
|
—
|
519
|
|
Cable and other fixed services revenue
|
543
|
2
|
—
|
(69)
|
—
|
476
|
|
Other revenue
|
13
|
—
|
—
|
(1)
|
—
|
12
|
|
Service revenue (i)
|
1,358
|
92
|
—
|
(444)
|
—
|
1,007
|
|
Telephone and equipment revenue (i)
|
103
|
—
|
—
|
(55)
|
—
|
48
|
|
Revenue
|
1,461
|
92
|
—
|
(499)
|
—
|
1,054
|
|
Operating profit (loss)
|
219
|
(11)
|
(10)
|
(135)
|
46
|
109
|
|
Add back:
|
|
|
|
|
|
|
|
Depreciation and amortization
|
359
|
24
|
2
|
(112)
|
—
|
273
|
|
Share of profit in joint ventures in Guatemala and Honduras
|
—
|
—
|
—
|
—
|
(46)
|
(46)
|
|
Other operating income (expenses), net
|
—
|
—
|
—
|
(2)
|
—
|
(3)
|
|
EBITDA (ii)
|
577
|
14
|
(9)
|
(249)
|
—
|
333
|
|
EBITDA from discontinued operations
|
—
|
(4)
|
—
|
—
|
—
|
(4)
|
|
EBITDA incl discontinued operations
|
577
|
10
|
(9)
|
(249)
|
—
|
329
|
|
Capital expenditure (iii)
|
(242)
|
(17)
|
(2)
|
59
|
—
|
(201)
|
|
Changes in working capital and others (iv)
|
24
|
22
|
(36)
|
10
|
—
|
19
|
|
Taxes paid
|
(72)
|
(3)
|
(7)
|
36
|
—
|
(46)
|
|
Operating free cash flow (v)
|
286
|
11
|
(53)
|
(144)
|
—
|
101
|
|
|
(i)
|
Service revenue is Group revenue related to the provision of ongoing services such as monthly subscription fees, airtime
and data usage fees, interconnection fees, roaming fees, mobile finance service commissions and fees from other telecommunications
services such as data services, SMS and other value-added services excluding telephone and equipment sales. Revenues from other
sources comprises rental, sub-lease rental income and other non-recurring revenues. The Group derives revenue from the transfer
of goods and services over time and at a point in time. Refer to the table below.
|
|
|
(ii)
|
EBITDA is operating profit excluding impairment losses, depreciation and amortization and gains/losses on the disposal of
fixed assets. EBITDA is used by the management to monitor the segmental performance and for capital management.
|
(iii) Excluding
spectrum and licenses of $91 million (2019: $11 million) and cash received on tower deals of nil (2019: $13 million).
|
|
(iv)
|
‘Changes in working capital and others’ include changes in working capital as stated in the cash flow statement
as well as share based payments expense and non-cash bonuses.
|
|
|
(v)
|
Operating Free Cash Flow is EBITDA less cash capex (excluding spectrum and license costs) less change in working capital,
other non-cash items (share-based payment expense and non-cash bonuses) and taxes paid.
|
(vi) Segment
assets include goodwill and other intangible assets.
(vii) Including
eliminations for Guatemala and Honduras as reported in the Latin America segment.
(viii) Restated
as a result of classification of certain of Millicom's African operations as discontinued operations (see note 4).
5. SEGMENT INFORMATION (Continued)
Revenue from contracts with customers from continuing
operations
|
|
|
Six months ended June 30, 2020
|
Six months ended June 30, 2019
|
Three months ended June 30, 2020
|
Three months ended June 30, 2019
|
|
|
in millions of U.S dollars
|
Timing of revenue recognition
|
Latin America
|
Africa
|
Total Group
|
Latin America
|
Africa
|
Total Group
|
Latin America
|
Africa
|
Total Group
|
Latin America
|
Africa
|
Total Group
|
|
|
Mobile
|
Over time
|
861
|
117
|
977
|
824
|
127
|
951
|
398
|
57
|
455
|
422
|
63
|
484
|
|
|
Mobile Financial Services
|
Point in time
|
14
|
53
|
68
|
15
|
54
|
70
|
8
|
27
|
34
|
7
|
27
|
34
|
|
|
Cable and other fixed services
|
Over time
|
899
|
4
|
903
|
949
|
4
|
953
|
433
|
2
|
435
|
474
|
2
|
476
|
|
|
Other
|
Over time
|
24
|
—
|
25
|
23
|
—
|
23
|
12
|
—
|
12
|
11
|
—
|
12
|
|
|
Service Revenue
|
|
1,798
|
175
|
1,973
|
1,810
|
186
|
1,996
|
851
|
86
|
937
|
914
|
92
|
1,007
|
|
|
Telephone and equipment
|
Point in time
|
85
|
—
|
85
|
93
|
—
|
94
|
33
|
—
|
33
|
48
|
—
|
48
|
|
|
Revenue from contracts with customers
|
|
1,883
|
175
|
2,057
|
1,904
|
186
|
2,089
|
884
|
86
|
970
|
962
|
92
|
1,054
|
|
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
|
Six months ended June 30, 2020
|
Six months ended June 30, 2019
|
Three months ended June 30, 2020
|
Three months ended June 30, 2019
|
|
Change in fair value of derivatives (Note 13)
|
(6)
|
—
|
(6)
|
—
|
|
Change in fair value in investment in Jumia (Note 14)
|
(18)
|
57
|
—
|
57
|
|
Change in fair value in investment in HT (Note 14)
|
(45)
|
—
|
16
|
—
|
|
Change in value of call option and put option liability (Note 13)
|
8
|
(15)
|
(1)
|
(15)
|
|
Exchange gains (losses), net (i)
|
(78)
|
1
|
12
|
(11)
|
|
Other non-operating income (expenses), net
|
2
|
2
|
1
|
1
|
|
Total
|
(136)
|
45
|
22
|
33
|
(i) Exchange
losses in 2020 are mainly due to the devaluation of the Colombia peso against US dollar.
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
|
Six months ended June 30, 2020
|
Six months ended June 30, 2019(i)
|
Three months ended June 30, 2020
|
Three months ended June 30, 2019(i)
|
|
Basic and Diluted
|
|
|
|
|
|
Net profit (loss) attributable to equity holders from continuing operations
|
(237)
|
(6)
|
(114)
|
(20)
|
|
Net profit (loss) attributable to equity holders from discontinuing operations
|
(1)
|
64
|
(1)
|
64
|
|
Net profit/(loss) attributable to all equity holders to determine the basic earnings (loss) per share
|
(238)
|
58
|
(115)
|
45
|
|
|
|
|
|
|
|
in thousands
|
|
|
|
|
|
Weighted average number of ordinary shares for basic and diluted earnings per share
|
101,136
|
101,105
|
101,149
|
101,110
|
|
|
|
|
|
|
|
in U.S dollars
|
|
|
|
|
|
Basic and diluted
|
|
|
|
|
|
EPS from continuing operations attributable to owners of the Company
|
(2.34)
|
(0.06)
|
(1.13)
|
(0.20)
|
|
EPS from discontinued operations attributable to owners of the Company
|
(0.01)
|
0.63
|
(0.01)
|
0.64
|
|
EPS for the period attributable to owners of the Company
|
(2.35)
|
0.57
|
(1.14)
|
0.44
|
|
|
(i)
|
Restated as a result of the finalization of the
purchase accounting of latest acquisitions (see note 3).
|
8. PROPERTY, PLANT AND EQUIPMENT
During the six-month period ended June 30, 2020,
Millicom added property, plant and equipment for $240 million (June 30, 2019: $286 million) and received $1 million from disposal
of property, plant and equipment (June 30, 2019: $12 million).
9. INTANGIBLE ASSETS
During the six-month period ended June 30, 2020,
Millicom added intangible assets for $463 million of which $420 million related to acquisition of spectrum and licenses, and $44
million to additions of other intangible assets (June 30, 2019: $49 million and $40 million, respectively ) and did not receive
any proceeds from disposal of intangible assets (June 30, 2019: nil).
In December 2019, Telemovil El Salvador S.A.
de C.V. ('Telemovil') acquired spectrum in 50Mhz AWS band and paid an advance of $14 million. On January 8, 2020, Telemovil made
a final payment of $20 million and started using the spectrum.
In December 2019, Tigo Colombia participated
in an auction launched by the Ministerio de Tecnologias de la Informacion y las Comunicaciones (MINTIC), and acquired licenses
granting the right to use a total of 40 MHz in the 700 MHz band. The 20-year license will expire in 2040. As a result of this auction,Tigo
Colombia has strengthened its spectrum position, which also includes 55 MHz in the 1900 band and 30 MHz of AWS. Tigo Colombia agreed
to a total notional consideration of COP$2.45 billion (equivalent to approximately US$650 million using the June 30, 2020 exchange
rate), of which approximately 55% will be payable in cash and 45% in coverage obligations to be met by 2025.
An initial payment of approximately $33 million
was made in Q2 2020, with the remainder payable in 12 annual installments beginning in 2026 and ending in 2037. The 55% cash portion
bears interest at Colombia's 10 years bond rate. In April and May 2020, local management received the permission to operate the
40 Mhz in the 700 MHz band and accounted for the spectrum at an amount of $388 million corresponding to the net present value of
the future payments, plus other costs directly attributable to this acquisition. The related future interest commitments will be
recognized as interest expense over the next 17 years. The remaining 45% consideration due as coverage obligations will be recognized
in the statement of financial position as capex additions once built and in use.
10. FINANCIAL OBLIGATIONS
A. Debt and financing
The most significant movements in debt and financing
during the period were as follows:
MIC S.A.
Revolving Credit Facility
On June 29, 2020, the Company reimbursed the
whole $400 million that were drawn down on March 25, 2020.
El Salvador
On June 29, 2020, Telemovil El Salvador, S.A
de C.V. repaid in its entirety $150 million of principal repayment under a credit agreement dated as of January 12, 2018 entered
into with the Bank of Nova Scotia, as lender, and the company as guarantor.
Honduras
On June 1, 2020, the Group executed a $32 million
bank loan agreement in equivalent amount in local currency for a10 year term.
Costa Rica
On June 29, 2020 Millicom Cable Costa Rica S.A.
partially repaid an amount of $30 million towards its $150 million syndicated credit agreement dated as of April 13, 2018, and
guaranteed by the Company.
Paraguay
On May 4, 2020, Telefónica Celular de
Paraguay, S.A.E., completed the acquisition of another Millicom subsidiary in Paraguay - Mobile Cash Paraguay S.A , and further
on June 30, 2020, the acquisition of Servicios y Productos Multimedia S.A.. Effective as of those dates, these new entities now
form part of the borrower's group for purposes of the $550 million 5.875% Senior Notes due 2027 issued by Telefónica Celular
de Paraguay, S.A.E..
Guatemala
On June 19, 2020, Guatemala operation entered
into a credit agreement with Banco Industrial for QTZ 500 million (approximately $65 million using the exchange rate as of June
30, 2020 ) for a 5 year term.
10. FINANCIAL OBLIGATIONS (Continued)
Analysis of debt and financing by maturity
The total amount of debt and financing is repayable
as follows:
|
in millions of U.S dollars
|
As at June 30, 2020
|
December 31, 2019
|
|
Due within:
|
|
|
|
One year
|
103
|
|
186
|
|
|
One-two years
|
109
|
|
155
|
|
|
Two-three years
|
379
|
|
145
|
|
|
Three-four years
|
831
|
|
517
|
|
|
Four-five years
|
1,084
|
|
1,085
|
|
|
After five years
|
3,453
|
|
3,884
|
|
|
Total debt and financing
|
5,960
|
|
5,972
|
|
As at June 30, 2020, the Group's share of total
debt and financing secured by either pledged assets, pledged deposits issued to cover letters of credit or guarantees was $295
million (December 31, 2019: $464 million).
In addition to the above, in 2019, MIC Tanzania
Public Limited Company entered into a loan facility agreement, with the Standard Bank of South Africa acting as an agent and a
consortium of banks acting as the original lenders. The facility agreement, maturing in 2025, has an all asset debenture securing
the whole amount, as well as a pledge over the shares of the immediate holding company of the borrower.
The table below describes the outstanding and
maximum exposure under guarantees and the remaining terms of the guarantees as at June 30, 2020 and December 31, 2019.
|
|
Bank and financing guarantees (i)
|
|
in millions of U.S dollars
|
As at June 30, 2020
|
As at December 31, 2019
|
|
Terms
|
Outstanding exposure
|
Maximum exposure
|
Outstanding exposure
|
Maximum exposure
|
|
0-1 year
|
47
|
|
47
|
|
29
|
|
29
|
|
|
1-3 years
|
248
|
|
248
|
|
134
|
|
134
|
|
|
3-5 years
|
—
|
|
—
|
|
300
|
|
300
|
|
|
More than 5 years
|
—
|
|
—
|
|
—
|
|
—
|
|
|
Total
|
295
|
|
295
|
|
464
|
|
464
|
|
(i) If non-payment by the obligor, the guarantee
ensures payment of outstanding amounts by the Group's guarantor.
The Group’s interest and other financial
expenses comprised the following:
|
in millions of U.S dollars
|
Six months ended June 30, 2020
|
Six months ended June 30, 2019
|
Three months ended June 30, 2020
|
Three months ended June 30, 2019
|
|
Interest expense on bonds and bank financing
|
(195)
|
|
(169)
|
|
(98)
|
|
(83)
|
|
|
Interest expense on leases
|
(78)
|
|
(75)
|
|
(39)
|
|
(38)
|
|
|
Early redemption charges
|
—
|
|
(10)
|
|
—
|
|
(3)
|
|
|
Others
|
(43)
|
|
(17)
|
|
(32)
|
|
(8)
|
|
|
Total interest and other financial expenses
|
(316)
|
|
(272)
|
|
(169)
|
|
(132)
|
|
10. FINANCIAL OBLIGATIONS (Continued)
B. Lease liabilities
In early 2020, and following a change in regulation
in Colombia, lease payments for the use of certain public assets have been significantly decreased. This triggered a lease modification
and a decrease of the related lease liabilities (and right-of-use assets) of approximately $45 million.
Except for the change above, there have been
no other significant events affecting lease liabilities (and right-of-use assets) during the six-month period ended June 30, 2020.
11. COMMITMENTS AND CONTINGENCIES
Litigation & claims
The Company and its operations are contingently
liable with respect to lawsuits, legal, regulatory, commercial and other legal risks that arise in the normal course of business.
As of June 30, 2020, the total exposure for claims and litigation risks against Millicom and its subsidiaries is $195 million (December
31, 2019: $204 million). The decrease is mainly due to currency devaluation in Colombia. The Group's share of the comparable exposure
for joint ventures is $4 million (December 31, 2019: $4 million).
As at June 30, 2020, $26 million has been provided
by its subsidiaries for these risks in the consolidated statement of financial position (December 31, 2019: $30 million). The Group's
share of provisions made by the joint ventures was $3 million (December 31, 2019: $3 million). While it is not possible to ascertain
the ultimate legal and financial liability with respect to these claims and risks, the ultimate outcome is not anticipated to have
a material effect on the Group’s financial position and operations.
On May 25, 2020, Telefonica SA (“TEF”)
filed a breach of contract claim against Millicom, seeking specific performance to compel Millicom to close the acquisition of
Telefonica de Costa Rica TC, S.A., as well as declaratory relief. Millicom believes the TEF claim is without merit and is vigorously
defending the claim on the basis that Millicom did not breach the relevant share purchase agreement with TEF and was entitled to
terminate the transaction, since the required closing conditions under the share purchase agreement were not met by the contractual
end date.
Taxation
At June 30, 2020, the tax risks exposure of the
Group's subsidiaries is estimated at $319 million, for which provisions of $67 million have been recorded in tax liabilities; representing
the probable amount of eventual claims and required payments related to those risks (December 31, 2019: $300 million of which provisions
of $50 million were recorded). The Group's share of comparable tax exposure and provisions in its joint ventures amounts to $60
million (December 31, 2019: $49 million) and $7 million (December 31, 2019: $4 million), respectively.
Capital commitments
At June 30, 2020, the Company and its subsidiaries
had fixed commitments to purchase network equipment, land and buildings, other fixed assets and intangible assets of $328 million
of which $276 million are due within one year (December 31, 2019: $122 million of which $102 million are due within one year).
The Group’s share of commitments in the joint ventures is $68 million and $65 million. (December 31, 2019: $52 million and
$51 million).
12. RELATED PARTY TRANSACTIONS
The following transactions were conducted with
related parties during the three- and six-month periods ended June 30, 2020 and June 30, 2019:
|
in millions of U.S dollars
|
Six months ended June 30, 2020
|
Six months ended June 30, 2019
|
Three months ended June 30, 2020
|
Three months ended June 30, 2019
|
|
Expenses
|
|
|
|
|
|
Purchases of goods and services from Miffin
|
(102)
|
|
(93)
|
|
(49)
|
|
(43)
|
|
|
Purchases of goods and services from EPM
|
(18)
|
|
(20)
|
|
(9)
|
|
(10)
|
|
|
Lease of towers and related services from HTA (i)
|
—
|
|
(13)
|
|
—
|
|
(12)
|
|
|
Other expenses
|
(8)
|
|
(2)
|
|
(3)
|
|
(1)
|
|
|
Total
|
(128)
|
|
(128)
|
|
(61)
|
|
(67)
|
|
(i) HTA
ceased to be a related party on October 15, 2019 (note 14).
|
in millions of U.S dollars
|
Six months ended June 30, 2020
|
Six months ended June 30, 2019
|
Three months ended June 30, 2020
|
Three months ended June 30, 2019
|
|
Income / gains
|
|
|
|
|
|
Sale of goods and services to Miffin
|
155
|
|
148
|
|
77
|
|
75
|
|
|
Sale of goods and services to EPM
|
7
|
|
6
|
|
4
|
|
3
|
|
|
Other income / gains
|
1
|
|
1
|
|
—
|
|
—
|
|
|
Total
|
163
|
|
154
|
|
81
|
|
79
|
|
As at June 30, 2020 and December 31, 2019, the
Group had the following balances with related parties:
|
in millions of U.S dollars
|
As at June 30, 2020
|
As at December 31, 2019
|
|
Liabilities
|
|
|
|
Payables to Guatemala joint venture(i)
|
228
|
|
361
|
|
|
Payables to Honduras joint venture(ii)
|
147
|
|
133
|
|
|
Payables to EPM
|
18
|
|
37
|
|
|
Payables to Panama non-controlling interests
|
1
|
|
—
|
|
|
Total
|
395
|
|
531
|
|
|
|
(i)
|
Interest bearing shareholder loans of which $219
million are due after more than one year.
|
|
|
(ii)
|
Mainly advances for dividends expected to be declared
in 2020 and shareholder loans.
|
12. RELATED PARTY TRANSACTIONS (Continued)
|
in millions of U.S dollars
|
As at June 30, 2020
|
As at December 31, 2019
|
|
Assets
|
|
|
|
Receivables from Guatemala and Honduras joint ventures
|
34
|
|
23
|
|
|
Receivables from EPM
|
4
|
|
3
|
|
|
Receivable from AirtelTigo Ghana (i)
|
44
|
|
43
|
|
|
Other accounts receivable
|
5
|
|
4
|
|
|
Total
|
87
|
|
73
|
|
|
|
(i)
|
Disclosed under Other non-current assets in the
statement of financial position.
|
13. FINANCIAL INSTRUMENTS
Other than the items disclosed below, the fair
values of financial assets and financial liabilities approximate their carrying values as at June 30, 2020 and December 31, 2019:
|
in millions of U.S dollars
|
Carrying value
|
Fair value(i)
|
|
|
As at June 30, 2020
|
As at December 31, 2019
|
As at June 30, 2020
|
As at December 31, 2019
|
|
Financial liabilities
|
|
|
|
|
|
Debt and financing
|
5,960
|
|
5,972
|
|
5,989
|
|
6,229
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(i)
|
Fair values are measured with reference to Level
1 (for listed bonds) or 2.
|
Derivative financial instruments
Currency and interest rate swap contracts
MIC S.A. entered into swap contracts in order
to hedge the foreign currency and interest rate risks in relation to the SEK 2 billion (approximately $211 million) senior unsecured
sustainability bond issued in May 2019. These swaps are accounted for as cash flow hedges as the timing and amounts of the cash
flows under the swap agreements match the cash flows under the SEK bond. Their maturity date is May 2024. The hedging relationship
is highly effective and related fluctuations are recorded through other comprehensive income. At June 30, 2020, the fair values
of the swaps amount to a liability of $10 million (December 31, 2019: a liability of $0.2 million).
El Salvador and Costa Rica Operations have also
entered into several swap agreements in order to hedge foreign currency and interest rate risks on certain long term debts. These
swaps are accounted for as cash flow hedges and related fair value changes are recorded through other comprehensive income. At
June 30, 2020, the fair values of these swaps amount to liabilities of $16 million (December 31, 2019: liabilities of $17 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 June 30, 2020.
Call and put options - Panama
As of June 30, 2020, the put option liability
is valued at $268 million (December 31, 2019: $264 million) (being the higher of the value of the 'Transaction Price' put option
and fair market value - for further details refer to the Group's 2019 consolidated financial statements). Changes in the value
of the put option liability are recorded in the Group's statement of income under 'other non-operating (expenses) income, net'
(see note 6).
As of June 30, 2020, call options have a fair
value of $12 million (December 31, 2019: nil).
14. EQUITY INVESTMENTS
As at June 30, 2020 and December 31, 2019, Millicom
has the following investments in equity instruments measured at fair value through profit and loss under IFRS 9:
|
in millions of U.S dollars
|
June 30, 2020
|
December 31, 2019
|
|
Investment in Jumia
|
—
|
|
32
|
|
|
Investment in HT
|
237
|
|
338
|
|
|
Equity investment - total
|
237
|
|
371
|
|
Jumia Technologies AG (“Jumia”)
In the course of June 2020, Millicom disposed
of its entire stake in Jumia (approximately 6%) for a total net consideration of $29 million, triggering a net gain on disposal
of $15 million recorded in the statement of income for the three-month period ended June 30, 2020 under ‘other operating
income (expenses), net’.
Helios Towers plc (“HT”)
In June 2020, Millicom disposed of 33 million
shares that it owned in HT for a total net consideration of GBP 49 million ($62 million), triggering a net gain on disposal of
$5 million recorded under ‘other operating income (expenses), net’. Following these disposals, Millicom owns a remaining
shareholding of 12.9% in HT, valued at $237 million (level 1) at the June 30, 2020 share price (GBP 1.49). The changes in fair
value are shown under 'Other non-operating (expenses) income, net' (see note 6).
15. INVESTMENTS IN JOINT VENTURES
Joint ventures are businesses over which Millicom
exercises joint control as decisions over the relevant activities of each, such as the ability to upstream cash from the joint
ventures, require unanimous consent of shareholders. Millicom determines the existence of joint control by reference to joint venture
agreements, articles of association, structures and voting protocols of the board of directors of those ventures.
At June 30, 2020, the equity accounted net assets
of Millicom's joint ventures in Guatemala, Honduras and Ghana totaled $3,120 million (December 31, 2019: $3,346 million). These
net assets do not necessarily represent statutory reserves available for distribution as these include consolidation adjustments
(such as goodwill and previously unrecognized assets and assumed liabilities recognized as part of the purchase accounting). Out
of these reserves, $153 million (December 31, 2019: $142 million) represent statutory reserves that are unavailable to be distributed
to the Group. During the period ended June 30, 2020, Millicom’s joint ventures paid $58 million (December 31, 2019: $237
million) as dividends or dividend advances to the Company.
|
in millions of U.S dollars
|
2020
|
|
Guatemala(i)
|
Honduras (i)
|
|
Opening Balance at January 1, 2020
|
2,089
|
|
708
|
|
|
Results for the period
|
73
|
|
5
|
|
|
Dividends declared during the period
|
(199)
|
|
—
|
|
|
Currency exchange differences
|
—
|
|
(3)
|
|
|
Closing Balance at June 30, 2020
|
1,963
|
|
710
|
|
(i) Share of profit is recognized under ‘Share
of profit in the joint ventures in Guatemala and Honduras’ in the statement of income.
16. IPO – MILLICOM’S OPERATIONS
IN TANZANIA
In June 2016, an amendment to the Electronic
and Postal Communications Act (“EPOCA”) in the Finance Act 2016 required all Tanzanian licensed telecom operators to
sell 25% of the authorized share capital in a public offering on the Dar Es Salaam Stock Exchange. In December 2019, the Group
filed the draft prospectus with the Tanzania Capital Market and Securities Authority with the view to initiate the listing process
in H2 2020.
17. SUBSEQUENT EVENTS
There are no significant subsequent events.
SIGNATURES
Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
|
|
MILLICOM INTERNATIONAL CELLULAR S.A.
(Registrant)
|
|
|
|
By:
|
/s/ Salvador Escalon
|
|
|
|
|
Name:
|
Salvador Escalon
|
|
|
|
|
Title:
|
Executive Vice President, General Counsel
|
Date: July 30, 2020
Millcom Swed Dep Rec (PK) (USOTC:MICCF)
Gráfica de Acción Histórica
De Jun 2024 a Jul 2024
Millcom Swed Dep Rec (PK) (USOTC:MICCF)
Gráfica de Acción Histórica
De Jul 2023 a Jul 2024
